Superior Court Takes a “Moody” Approach to Earning Capacity
As readers of this blog can easily discern, the writer is opinionated. But the January 24, 2024 decision in Moody v. Moody offers a case which attempts to focus on how earning capacity should be determined where a person has a lengthy career as a self employed professional. The problem with the non-precedential decision reversing the trial court is that it’s not clear what the lower court is supposed to do on remand.
Husband is a self employed consumer bankruptcy lawyer in Washington County, outside Pittsburgh. He has been at that trade for 22 years. As is often the case, the data concerning his reported income and whether there were add-backs for personal expenses is light. But it appears that he was reporting $85,000-125,000 a year in gross revenue before expenses. Wife put on forensic evidence that the average attorney in Washington/Allegheny County earned $128,000 a year and the trial court adopted that as husband’s earning capacity.
The appellate decision dutifully pays homage to the principle that an obligor cannot work at less than his or her earning capacity but then grapples with the question of what is that capacity. In so doing the panel opinion states that it is only after assessing that a party’s income is “inappropriate” that a court may turn to the matter of whether the person could/should be earning more.
The challenge in these kinds of case is what is the standard to decide inappropriate income. We can all accept the fact that in most instances people should be expected to work full time at a job they are capable of doing. We have a challenge in this case because most consumer bankruptcy lawyers work on a fixed fee basis. The range of fees we are seeing in and around Philadelphia is $2,000-4,000 per case depending upon what chapter relief is sought in. Using $3,000 as an average, it would seem that husband is bringing in 30-40 cases per annum or one case every ten days or so. Is this full-time employment? Bear in mind, that sometimes outside factors can muddy the waters. In this case the obligee was working with an $8,200 a month net income while the intake support official put obligor’s net income from the practice of law at $2,600 or just over $30,000 a year.
As we tell clients; try putting yourself in the judge’s chair. In Washington County average per capita income is $42,000. That number takes in people without high school degrees and people, like the obligor, who have graduate degrees. The person with the graduate degree is reporting earnings before taxes of about $20/hour. The trial judge had him at $60 an hour and the Superior Court is signaling “too much!” But what evidence are you supposed to hear to decide how low to go. The man is “appropriately” employed in the sense that he is a lawyer. Yet the earnings do not signal graduate degree/professional license/22 years in practice.
Meanwhile in many of the state’s 67 counties, if you are a hair stylist or a factory worker, it is common for you to see a judge or hearing officer reaching for something called PA Workstats. Here’s what is published for Washington County.
For lawyers it says the average wage is $143,340; the median is $123,660; starting salaries average $70,660 and experienced workers are averaging $179,690. Based on those numbers, it could be advocated that the trial court has conferred leniency in assessing the obligor’s capacity to earn at the median.
In a word, how far under the hood of the wage information provided by the parties is the judge supposed to look and how does she get there in an evidentiary sense. Lots of judges will tell you that under Pa. Rule of Evidence 803(17) Pa. Workstats data is admissible without an expert. By definition, averages and medians telegraph that there are wage earners both above and below. But what is a busy judge to do in a case like Moody v. Moody? In most appeals the word going in is that appellate courts don’t second guess facts decided by the judges who heard the case. Here they did, but what’s next? The appellate court seems to infer that bankruptcy practice is defined by incomes on the lower end of the wage scale. Unfortunately, the opinion offers no basis for such a conclusion.
