Ohio Case Law Review by Topic: July 31, 2020 through September 30, 2020

Ostanek v. Ostanek, 11th Dist. Lake No. 2000 DR 000178, 2019-L-140, 2020-Ohio-3930

Civ. R. 60(B): void
QDRO: coverture (traditional v. frozen), impermissible modification, survivorship
Witness: expert

Dated: August 3, 2020
Affirming in Part, Reversing in Part, and Remanding

The Court concluded the Court Order Acceptable for Processing (COAP) to divide H’s marital Federal Employees Retirement System (FERS) benefits was not inconsistent with the divorce decree as to the method of calculation.

Something look off? The Ohio flag is a triangular swallowtail flag, and -to the chagrin of many stock photographers- is the only non-rectangle state flag in the U.S.

The divorce decree unambiguously established the total value of the FERS pension at the stated date, and that the plan was to be divided on a 50/50 basis pursuant to a QDRO. The Court found that the COAP did not conflict with the divorce decree by utilizing the “traditional coverture” method of calculating the marital portion of H’s monthly annuity as of the date of his retirement. The COAP assigned to W an amount equal to 50% of the marital portion of H’s monthly annuity, determined as of H’s date of retirement. The Court found that the COAP did not vary, diminish, or enlarge the relief granted in the divorce decree. The COAP ordered that the marital portion was to be determined by multiplying H’s monthly annuity by a fraction; the fraction being the total number of months of creditable service earned by H during the marriage, divided by the total number of months of creditable service accrued by H under FERS. H contended that the divorce decree ordered division of his pension using the “frozen coverture” method.

Under the frozen coverture method, the trial court ‘freezes’ the pension benefits at the amount in the account as of the divorce date. Sometimes called the ‘hypothetical’ approach, it calculates the value of the participant spouse’s retirement account had he or she retired on the same day the parties divorced, using the then-present base pay and years of service. Where the participant spouse started working before the marriage, the court can apply a coverture fraction to determine the marital portion of the ‘frozen’ amount. It does so by dividing the number of years in the plan while the parties were married by the total number of years in the plan at the time of the divorce. * * * Under this approach, the non-participant spouse receives no interest the account accrues after that date. Hoyt v. Hoyt, 53 Ohio St.3d 177, 182 (1990) at ¶17, citing Reising v. Reising, 2d Dist. Clark No. 2010-CA 92, 2012-Ohio-1097, ¶24.

The Court discussed Borton v. Borton, 6th Dist. Fulton No. F-10-003, 2011-Ohio-143 (noting simply that the divorce entry did not establish a cap or maximum on the distribution to W, it established the total value at the stated date and that the plan be divided equally on a 50/50 basis. “As such, any appreciation or depreciation occurring between that valuation date and the payout date must be shared equally between the parties to comport with the unambiguous order of a 50/50 split of the value of the account. To suggest otherwise breaches the clear terms of the agreement”).

The Court discussed that the facts of this case were similar: the divorce decree unambiguously established the total value of the FERS pension at the stated date and that the plan was to be divided on a 50/50 basis pursuant to a QDRO. As such, the COAP was not found to conflict with the divorce decree in its utilization of the “traditional coverture” method of calculating the marital portion of H’s monthly annuity as of the date of his retirement. Nor was it found to vary, diminish, or enlarge the relief granted in the divorce decree. The Court noted, however, that H’s argument would possibly have had merit if the divorce decree had ordered a one-half division of the FERS pension as of the date the marriage terminated. See, e.g., Johnson v. McCarthy, 10th Dist. Franklin No. 17AP-655, 2019-Ohio-3489, ¶20 (citation omitted) (“Where a trial court awards a percentage of an unmatured pension to a non-participant spouse as of the date a marriage terminates, the only permissible method for determining the amount owed to the non-participant spouse is the frozen coverture method.”); Cameron v. Cameron, 10th Dist. Franklin No. 12AP-349, 2012-Ohio-6258, at ¶25 (recognizing courts have held that, when a property award specifies a date certain for the division of an unmatured pension, the frozen coverture method applies).

The Court also concluded that the parties’ stipulations and the trial court’s divorce decree did not include any agreement or order as to survivorship benefits from H’s FERS pension. Further, the unrebutted evidence at the trial on the motion to vacate was that the parties did not intend for W to receive a survivor annuity and that H never reviewed or approved a COAP granting her that benefit. W asserted that H’s argument ignored the testimony of her expert witness (who also prepared the COAP) who testified that FERS grants survivorship benefits as part of the pension package. W’s expert further testified that if a pension division is silent as to those benefits, the default position of the Office of Personnel Management’s (OPM), the administrator for FERS, is to grant the right of survivorship to the nonparticipant former spouse.

Editor’s Note: There is a critical point of confusion on the part of the Court and/or Wife’s expert here regarding the existence of a ‘silent default rule.’ To the contrary, controlling federal regulations are clear that a COAP must expressly provide an FSSA, and expressly require OPM to pay the former spouse directly. See 5 CFR § 838.804. If the intent is to provide a FSSA, the parties’ agreement or trial order should include such provisioning and the COAP must also include such provisioning.

The Court noted that there are cases where this default position may be appropriate. In Redding, the Twelfth District held that the trial court was justified in clarifying its original property division to allow a provision in the QDRO granting W survivorship benefits, where the separation agreement provided for W to receive one half of H’s retirement benefits in such manner “as may be of benefit to her.” Redding v. Redding, 12th Dist. Clinton No. CA99-06-015, 1999 WL 1238834, *3 (Dec. 20, 1999). Also, in Gordon, the Eighth District held that the trial court was justified in reissuing a new QDRO to grant W survivorship rights because the court had used those rights as part of the calculation of the parties’ shares of the marital estate. Gordon v. Gordon, 144 Ohio App.3d 21, 25 (8th Dist.2001).

Drawing a distinction in this case, the Court wrote that the trial court approved a COAP that “filled in the gaps” by expanding and modifying the silent divorce decree, without any evidence that the parties intended W to receive survivorship benefits from H’s pension. The Court found that the trial court was without jurisdiction to approve a COAP that granted W survivorship benefits, rendering the order void, and making the timeliness requirement of Civ. R. 60(B)(5) irrelevant.

In its adoption of the magistrate’s conclusion that H’s motion to vacate was not filed within a reasonable time, the trial court wrote that H, “acknowledged his strategy for the QDRO preparation was to do nothing and wait for something to come to him. [H] now reaps the consequences of his own inaction and procrastination as to the division of his FERS pension. [H’s] Civ. Rule 60(B)(5) motion, which resulted from his own indifference and inaction over 17 years, was properly dismissed by the Magistrate.” However, on appeal, H did not assign error to the conclusion that he failed to file his motion within a reasonable time. Rather, he circumvented the possibility of mootness by arguing under both assignments of error that the COAP was void, not voidable, and that the timeliness requirement of Civ. R. 60(B)(5) was therefore irrelevant. H argued the COAP was void ab initio because it was inconsistent with the divorce decree and contrary to the parties’ stipulations. Specifically, he contended that the COAP failed to accurately implement the divorce decree by utilizing the incorrect method of calculation and by granting a survivor annuity that inures solely to W’s benefit, with the cost allocated to both parties.

When a party claims a judgment is void, that party need not comply with, and the trial court need not rely on, Civ. R. 60(B). Rather, the trial court retains inherent authority to vacate a void judgment. See Angelo v. Angelo, 11th Dist. Trumbull No. 2012-T-0094, 2013-Ohio-5265, ¶19, quoting State ex rel. Sullivan v. Ramsey, 124 Ohio St.3d 355, 2010-Ohio-252, ¶19; see also Blaine v. Blaine, 4th Dist. Jackson No. 10CA15, 2011-Ohio-1654, ¶17 (collecting cases). “A trial court may exercise that inherent power by treating a Civ. R. 60(B) motion as a common law motion to vacate a void judgment.” Plummer v. Plummer, 2d Dist. Montgomery No. 23743, 2010-Ohio-3450, ¶27 (citation omitted); see also Beachler v. Beachler, 12th Dist. Preble No. CA2006-03-007, 2007-Ohio-1220, ¶19 and Angelo, supra, at ¶18-22 (treating a Civ. R. 60(A) motion as a motion to vacate void judgment). Whether a judgment is void is a question of law this Court reviews de novo. “Moreover, whether a QDRO conflicts with a separation agreement incorporated into a dissolution or divorce decree presents a question of law that we review de novo.” Blaine, supra, at ¶19 (citation omitted).

Editor’s Note: This case was subsequently appealed to the Supreme Court of Ohio. Click here for our summary of its decision. And click here for our summary of the subsequent Appeals Court decision on remand.

Jose v. Jose, 9th Dist. Summit No. DR 2008-05-1392, 29633, 2019-Ohio-3953

Marital Property: retirement benefits (military)
Nunc Pro Tunc: void
Spousal Support: modification (change in circumstances), retirement benefits

Dated: August 5, 2020
Vacating in Part, Affirming in Part

H argued three assignments of error related to the trial court awarding permanent spousal support to W after H waived his pension and began receiving disability benefits.

The parties divorced in November of 2014. As part of the property division, the decree provided that W was entitled to 50% of the marital portion of H’s disability retirement pension (which was already in pay-status), resulting in a 36.50% monthly award commencing to W on June 1, 2014. The trial court reserved jurisdiction, specifically noting that “[i]f necessary, the court may enforce other orders including the recharacterization of the benefits if payable under another retirement system or as spousal support, if applicable.”

The decree further found that H was retired from the Army Reserve on disability for PTSD with disability retirement pay of $4,600 per month. The trial court ordered H to pay spousal support for a period of 15 months, commencing June 12, 2014. The divorce decree provided that the spousal support award was “modifiable within the term upon a showing of a substantial change of circumstances by either party.”

Approximately 7 months later, W filed a motion captioned “Ex Parte Motion to Recharacterize Pension as Permanent Spousal Support.” In that motion, W argued that because H’s pension consisted of disability benefits, she could not directly receive the portion of those payments assigned to her as part of the property division. Consequently, she argued that the trial court should recharacterize the proportion of H’s pension allocated to W as part of the property division as permanent spousal support. The trial court approved the magistrate’s July 26, 2016 order recommending that the trial court grant W’s motion and ordered H to pay spousal support.

H filed timely objections, arguing that the magistrate erred by concluding that W was entitled to 36.50% of his disability payment, by recharacterizing the pension aspect of the property division as spousal support, and by modifying spousal support in the absence of a substantial change in circumstances. On December 5, 2017, the trial court resolved H’s objection that W was not entitled to receive 36.50% of his disability payments from the Veteran’s Administration (VA) with reference to the reservation of jurisdiction in the divorce decree. The trial court concluded that W’s inability to receive her share of the property division constituted a substantial change in circumstances. Although the December 5, 2017 order did not provide an effective date for the change to spousal support, the July 26, 2016 order provided it was effective as of June 1, 2014. On December 27, 2017, the trial court journalized another order that purported to amend the December 5, 2017 order, nunc pro tunc, by providing for a hearing to determine when the change in spousal support would be effective. However, the Court noted that this date had already been set forth unequivocally in the July 26, 2016 judgment as June 1, 2014, which was the date that the trial court adhered to when it ruled on H’s objections.

On June 6, 2019, the magistrate issued an additional order in conformity with the purported December 27, 2017 nunc entry. The June 6, 2019 order repeated much of the content of the prior orders ruling on H’s objections (issued on July 26, 2016 and December 5, 2017), and concluded that the commencement date for spousal support was June 1, 2014. Once adopted by the trial court, H filed objections reiterating the substance of his prior objections. On December 10, 2019, the trial court overruled H’s objections and H brought this appeal.

The Court explained that the trial court’s December 27, 2017 order did not correct an omission to reflect what the trial court actually decided. The Court ruled that the trial court’s December 27, 2017 order was void because it attempted to modify the final judgment in a manner not contemplated by the Ohio Rules of Civil Procedure; as such, the order was vacated. As the Supreme Court of Ohio has explained:

The power to make nunc pro tunc entries is restricted ordinarily to the subsequent recording of judicial action previously and actually taken. It is a simple device by which a court may make its journal speak the truth.’ It ‘speaks the truth’ by correcting a judicial record that fails to show an order or a judgment of the court because the order or judgment was not recorded at all in the first instance. (Emphasis omitted.) State v. Lester, 130 Ohio St.3d 303, 2011-Ohio-5204, ¶ 19., quoting State v. Breedlove, 46 Ohio App.3d 78, 81 (1st. Dist.1998), quoting Natl. Life Ins. Co. v. Kohn, 133 Ohio St. 111, 113 (1937).

The Court observed that H’s position was that, by remanding the matter to the magistrate for further proceedings, the December 27, 2017 order changed the nature of the July 26, 2016 and December 5, 2017 judgments from final judgments that were appealable at that time to interlocutory orders that were subject to modification in the trial court. The December 27, 2017 order was void, however, and the judgments were final appealable orders at that time. H did, in fact, file a timely appeal pursuant to App. R. 4(B)(2)(c), but he abandoned that appeal by failing to comply with this Court’s order that required him to file a completed docketing statement with a copy of the judgments from which he appealed. This Court dismissed H’s appeal on that basis, not because of a lack of jurisdiction, as H represented. The Court ruled H’s attempt to appeal as untimely to the extent that H attempted to appeal from the July 26, 2016, and December 5, 2017, judgments now. See generally App. R. 4(A)(1); App. R. 4(B)(2)(c).

Similarly, as the trial court recognized, H could not move for reconsideration of those final orders because “[t]he Ohio Rules of Civil Procedure do not prescribe motions for reconsideration after a final judgment in the trial court[,]” such motions are a nullity. Pitts v. Ohio Dept. of Transp., 67 Ohio St.2d 378, 379 (1981). Any order in response to a motion for reconsideration is also a nullity. Armbruster v. Loach, 9th Dist. Lorain No. 05CA008851, 2006-Ohio-5049, ¶ 7, citing Kauder v. Kauder, 38 Ohio St.2d 265, 267 (1974). The Court wrote that it does not have jurisdiction to consider the merits of appeals from orders that deny a motion for reconsideration. See Bozsik v. Burkhart, 9th Dist. Wayne No. 04CA0072, 2005-Ohio-3794, ¶ 14. See also Lorain Edn. Assn. v. Lorain City School Dist. Bd. of Edn., 46 Ohio St.3d 12, 17 (1989) (Douglas, J., concurring) (“[S]ince a motion for reconsideration is not recognized and, in any event, does not meet any of the prongs of R.C. 2505.02, a denial of such a motion does not present a final appealable order.”). H attempted to appeal from the trial court’s order that denied his motion for reconsideration, but he filed a motion to dismiss that appeal. The Court granted his motion without determining whether it had jurisdiction to consider the appeal on the merits. As noted above, however, the Court did not find it had jurisdiction to consider an appeal from an order that denies a motion for reconsideration. See Bozsik at ¶ 14. Thus, to the extent that H attempted to appeal from that order, such appeal was determined improper.

The Court finally considered the nature of the trial court’s June 6, 2019 and December 10, 2019 orders overruling H’s objections, and found that it did not appear those orders changed the substance of the trial court’s judgment on W’s motion. However, H’s arguments addressing the substance of that judgment were properly the subject of his appeal in C.A. No. 28919, which the Court dismissed when he failed to respond to an order of the Court. H was not permitted to raise those arguments in the context of this appeal, but all his assignments of error still attempted to do so. H had not raised any arguments related to the trial court’s June 6, 2019 and December 10, 2019 orders. As such, his assignments of error, to the extent that they related to those orders, were overruled.

Caleshu v. Caleshu, 10th Dist. Franklin No. 17DR-2788, 19AP-742, 2020-Ohio-4075

Marital Property: equitable division, debts

Dated: August 11, 2020
Affirming

The Court ruled that the trial court did not abuse its discretion in determining the equitable division of marital property and debts.

H argued that the trial court abused its discretion in dividing the parties’ debts by determining that the debts should not be equalized, resulting in an inequitable division of property and debts. The Court concluded that the trial court did not abuse its discretion in ordering the parties to be separately responsible for the credit card balances on their individual credit cards. The Court discussed that the trial court had noted an equal division of the credit card debt would have resulted in one party paying for the temporary order obligations and attorney fees that the trial court had previously ordered the parties to pay individually.

Schneider v. Schneider, 2nd Dist. Montgomery No. 1991-DM-43, 28675, 2020-Ohio-4326

Marital property: retirement benefits

Dated: September 4, 2020
Affirming

The Court ruled that the trial court did not err by finding that H’s retirement from federal government service in 2002 triggered his obligation to pay W under the terms of their separation agreement.

The parties divorced in 1991 and the decree of dissolution incorporated their separation agreement, which was prepared by H without attorney assistance. Paragraph 12 of the agreement concerned H’s pension:

Pensions. At the present time, the Husband is beneficial owner of vested, non-contingent pension rights in the Civil Service Retirement System (hereafter referred to as “Plan”). At this time, the Husband is entitled to full benefits of this plan after completing thirty (30) years of full-time employment and is at least fifty-five (55) years of age. At this time, Husband would receive a reduced amount of annuity from this plan if the conditions for years of service and age are not fully met, due to conditions such as layoff, sickness, or premature termination of employment. Details of the plan are available for inspection. Upon Husband’s retirement from federal government service and receipt of full benefits from the Plan, the Husband shall cease payment of child support and alimony payments under the terms of this Agreement, and shall pay to Wife a monthly sum Sufficient [sic] to augment Wife’s gross income from all sources to attain a total of $3,600.00 per month; however, Husband’s payment shall not exceed $2,000.00 per month. * * * First payment shall occur upon Husband's receipt of first monthly annuity payment from the Plan.

H retired from work as a federal government employee at Wright Patterson Air Force Base (WPAFB) in 2002 and began receiving full pension benefits. H continued to work as a self-employed consultant with a Florida-based defense contractor, doing the same work he had done at WPAFB. H stopped working and fully retired in 2017.

In 2006, W’s attorney sent a letter to H reminding him of his pension obligation set forth in paragraph 12 of the separation agreement and asking him whether he was retired and, if not, when he planned to retire. H responded that he was still working and had no plans to retire.

In 2010, W was having trouble making ends meet to the extent of executing a $50,000.00 promissory note with her daughter, under which she would pay W $500.00/month, and W would pay her back with interest. W secured the note with a mortgage on her home.

Over the continuing years, H never sent W any money. In July 2018, after she learned that H was no longer working, W filed a motion for a finding of contempt, claiming that H had retired from federal government service in 2002, but had not paid her the pension benefits he owed under paragraph 12 of their separation agreement.

In March 2019, after a hearing, the magistrate found H in contempt and sentenced H to 30 days in jail, but suspended the sentence on the condition that he pay everything he owed, and allowed H to purge his contempt by paying W a certain amount to show his good faith. The trial court overruled all of H’s objections to the magistrate’s decision and determined that H was in contempt for failing to pay W beginning in 2002 when he retired from federal government service and began collecting his full pension benefits. The trial court pointed out that H had still not begun paying her in 2017, when even H admitted his obligation was triggered. The trial court determined that H owed W $349,479.87, for the period from 2002 to December 31, 2018, and owed her $2,000 for each month in 2019; it also determined that, going forward, H would pay W whatever amount was necessary to make her monthly income $3,600. The trial court sentenced H to 30 days in jail but suspended the sentence on the condition that, by April 30, 2020, he pay W what he owed through December 31, 2019. The court said that H could purge his contempt by paying W $100,000 by March 1, 2020, as a good-faith effort to discharge his debt.

H argued that he did not retire because he continued doing the exact same work for the federal government that he had been doing at WPAFB. However, the trial court found this irrelevant because what mattered was that he ceased being an employee of the federal government, not that he decided to continue working for himself. The Court found that the conditions precedent to H’s paragraph 12 obligation were unambiguous: the phrase “federal government service” plainly referred to the federal civil service and there was no doubt that H retired from the federal civil service in 2002. That he then chose to keep working outside the federal civil service had no bearing on his paragraph 12 obligation. No reasonable person would conclude that one who is self-employed and does contract work for the government is in “federal government service.” In affirming, the Court found the trial court correctly determined that H “retire[d] from federal government service” in 2002, triggering his obligation to pay W. Further, the trial court did not err by finding that the reverse-mortgage payments that W received were not part of her “gross income.” Finally, the court did not err by holding H in contempt for not paying W or in awarding W attorney fees related to the contempt proceedings.

Anderson v. Anderson, 12th Dist. Warren No. 18DR40675, CA2019-10-118, 2020-Ohio-4415

Marital Property: constructive trust, vest, stock (RSU)

Dated: September 14, 2020
Affirming

The Court found that the trial court’s classification of unvested restricted stock units (or RSUs) as marital property was not against the manifest weight of the evidence because there was competent, credible evidence that the restricted stock units were granted to H by his employer for his performance during the marriage.

The trial court found that H’s employer granted him 241 restricted stock units in the company as part of his total compensation for his employment during the marriage and divided the amount equally between the parties. Since the stock had not vested at the time of the divorce decree, the trial court ordered a constructive trust for W’s benefit where H must notify W when the stock vests pursuant to the employer’s vesting schedule and H must inquire then how W wishes to exercise her portion.

H argued that the restricted stock units should not be considered marital property because the stock did not vest during the marriage; the stock will vest, in nearly equal parts, over a 4-year period after the divorce decree. Additionally, H argued that even if some of the restricted stock units are marital property, the trial court abused its discretion in dividing all of the restricted stock units equally because the unvested stock units are not currently “owned” by H.

The Court found that H did not provide any evidence regarding the nature or conditions of the restricted stock unit plan. The Court discussed that even if the restricted stock units are subject to some conditions and susceptible to forfeiture, it does not change the character of these restricted stock units because the evidence in the record establishes that the restricted stock units were granted to H by the company for his performance and service during the marriage. Moreover, there was no evidence that the company granted the stock as a motivation for future performance or an incentive for continued employment.

The Court applied the framework of Daniel v. Daniel, 139 Ohio St.3d 275, 2014-Ohio-1161 (explaining that R.C. 3105.171 does not distinguish between vested and unvested retirement benefits so that unvested military retirement benefits earned during the marriage constitute marital property subject to division on divorce) in determining that the unvested status of the restricted stock units does not otherwise deprive the asset of its character as marital property.

Editor’s note: see my blog post covering the Daniel Opinion HERE.

The Court found that there was no abuse of discretion by the trial court in the division of the restricted stock units because H did not show how it was unreasonable, arbitrary, or unconscionable for the trial court to divide the restricted stock units equally between the parties when viewed in combination with the other marital property.

Weber v. Devanney, 9th Dist. Summit No. 2010-05-1534, 29374, 2020-Ohio-4450

Attorney Fees: abuse of discretion
Marital Property: equalization, retirement benefits

Dated: September 16, 2020
Affirming in Part, Reversing in Part and Remanding

The Court agreed with W’s argument that the trial court erred in determining that H’s $30,797 pre-marital interest in the marital property should be deducted from W’s interest in H’s retirement account. W noted that there was no equity in the marital residence when it was sold; in fact, H owed money when the residence was sold.

The trial court had concluded that H had a $30,797 separate property interest in the marital home; then determined that amount should be deducted from W’s interest in H’s retirement accounts because W was responsible for the lack of equity in the marital residence (due to her failure to pay the mortgage as ordered). The Court had concluded that the magistrate’s prior order no longer required W to pay the mortgage as it removed the mortgage from W’s expenses. Accordingly, the Court found that the trial court abused its discretion in concluding that the lack of equity in the marital residence was due to W’s failure to abide by a court order. Similarly, the Court found the trial court also abused its discretion in deducting $30,797 from W’s interest in H’s retirement accounts.

The Court also found that W did not demonstrate that the trial court abused its discretion in refusing to award either party attorney fees. W’s argument focused solely on H’s conduct, while ignoring her actions which also contributed to delay and the trial court had determined that an award of attorney fees to either party would not be equitable.

Blog Posts are intended to bring attention to developments in the law and are not intended as legal advice for any particular client or any particular situation. Please consult with counsel of your choice regarding any specific questions you may have.