Ohio Case Law Review by Topic: December 1, 2020 through January 31, 2020

In fairness to Ohio, it was pretty much cold everywhere last month.

Sangeri v. Yerra, 10th Dist. Franklin No. 17-DR-4265, 19AP-675, 2020-Ohio-5520

Marital Property: equitable division, separate property, stock (ESOP)

Dated: December 3, 2020; Nunc pro tunc replaced decision dated December 1, 2020
Affirming

The Court found that the trial court did not err in its determinations pursuant to R.C. 3105.171 regarding the parties' marital and non-marital property and dividing marital property equitably, where the trial court's findings of facts and conclusions of law in divorce proceeding were supported by the evidence in the record.

Additionally, the trial court’s award of attorney fees to W was explained in its decision and was within the trial court's discretion. H asserted the trial court erred in ordering him to pay W half the marital value of stock. However, the trial court had addressed this issue under the stipulations section of the divorce decree and the trial court stated in the decree that the ordered distribution was determined under principles of equity.

Halliwell v. Halliwell, 6th Dist. Erie No. 2015-DR-0189, E-19-057, 2020-Ohio-5548

Marital Property: ambiguity, tax liability

Dated: December 4, 2020
Affirming in Part, Reversing in Part

The Court found the trial court erred in its interpretation of the income tax provision in the divorce decree. The trial court had adopted the magistrate’s findings that H inappropriately withdrew funds from his 401(k) retirement account and ordered H to pay W $6,565 for the “additional tax liability” resulting from the taxable event, pursuant to the decree.

The divorce decree stated that H must pay W “any and all additional tax liability resulting from his 401(k) withdrawal.” The Court discussed that the word “additional” is an adjective, defined as “more than is usual or expected.” A “tax liability” is defined as “the amount which a taxpayer owes under the tax law after properly computing gross income and deductions, using the appropriate tax rate and subtracting any applicable tax credits.” Black’s Law Dictionary (6th Ed.1990).

Under the plain language of this provision, H’s obligation to pay W arises, not just for any tax liability, but for any “additional” tax liability created by the 401(k) withdrawal. The Court found no support for the trial court’s conclusion that H must pay W for any refunds that would have been owed by the taxing agencies but for H’s 401(k) withdrawal. A “refund” is defined as “the amount a taxpayer or reporting entity would receive from the government due to an overpayment of taxes.” Black’s Law Dictionary (6th Ed.1990). That is, a tax refund is money owed by the taxing agencies; a tax liability is money owed to the taxing agencies.

The Court discussed that the decree specifically provided that H must pay W for “any and all additional tax liability” that may have “result[ed]” from the 401(k) withdrawal; however, it did not provide that H must pay W for any and all tax refunds that may have been missed due to the 401(k) withdrawal. The Court noted that the parties expressly referred to refunds and liabilities in other portions of the decree—stating, for example, that the parties would share “any refund and/or liability” equally—"which lends further support to our conclusion that the parties did not intend ‘additional tax liability’ to include missed tax refunds.”

The Court ruled that, under the “plain and unambiguous language of the divorce decree,” H must pay the additional tax liability that resulted from his early withdrawal of his 401(k)— which the magistrate concluded to be $980—but he was not obligated to pay W for any tax refunds that may have been missed due to his early withdrawal of those funds. The Court remanded to the trial court with the instruction that it issue a judgment entry accordingly.

Swick v. Swick, 9th Dist. Wayne No. 2018 DR-B 000320, 20AP0009, 2020-Ohio-6884

Marital Property: separate property, valuation

Dated: December 28, 2020
Reversing and remanding

The Court remanded to the trial court to reevaluate the allocation of the marital residence. H argued that the trial court erred in failing to grant him a separate property interest in the marital residence and in ordering it sold and that the trial court failed to value the marital residence.

Boolchand v. Boolchand, 1st Dist. Hamilton No. DR-1802085, C-200111, C-200120, 2020-Ohio-6951

Marital Property: tracing, valuation
QDRO: coverture

Dated: December 30, 2020
Affirming

The Court ruled that the trial court did not abuse its discretion when it held that the coverture fraction method was not appropriate to divide the separate and marital portions of a defined contribution retirement plan, even though the participant spouse had begun employment before the marriage, because the value of the defined contribution retirement benefit was based on contributions left in the defined contribution account and market forces, not years of employment or another formula. The magistrate had determined H’s defined contribution retirement plan account with TIAA-CREF, a retirement savings benefit offered by his employer, the University of Cincinnati (UC), was entirely marital property, even though H began his employment with UC approximately 7 ½ years before the marriage.

The value of [H’s] account and ultimately his retirement benefit depend on how much was contributed for investment and how well the investment performed; it was not calculated based on a formula that took into consideration years of service. See 29 U.S.C. 1002(34); Hoyt v. Hoyt, 53 Ohio St.3d 177, 559 N.E.2d 1292 (1990), fn. 11.

At the time of the divorce proceedings, [H] was 75 years old and still employed by UC. The defined contribution account had a value of over $5,500,000. Although the parties agreed that [W] would be entitled to share only in the marital portion of the account, which would be divided equally, the parties disagreed with respect to the method for determining the marital portion of the account.

To determine the marital portion of the defined contribution account, [H] relied on a “coverture formula,” based on a ratio of the number of years of his employment at UC during the marriage to the total number of years of his employment. Thus, he claimed 18 percent of the value of the account at the time of divorce as his separate property and only 78 percent as marital.

W argued that the use of the coverture fraction was inappropriate to determine the marital and separate portions of the defined contribution account because the retirement benefit would be based on contributions and market forces, not a formula that would take into account years of service. W argued the plan was entirely marital property to be divided equally because H failed to provide any tracing evidence, such as the value of the plan at the date of marriage, the value of contributions made during the marriage, or the percentage of salary contributed by him or his employer before or during the marriage.

The trial court rejected the application of the coverture fraction to divide the defined contribution plan and additionally found the asset to be entirely marital because H failed to establish, by a preponderance of the evidence, the value of any claimed separate interest. The trial court ultimately awarded W 50% of the value of the account as of December 1, 2018, plus growth or losses on her share until actual division of the asset. The Court explained that Hoyt set “guidelines” to be used by the trial courts, recognizing that “no specific rule can apply in every case.”

“When considering a fair and equitable distribution of pension or retirement benefits in a divorce, the trial court must apply its discretion based on the circumstances of the case, the status of the parties, the nature, terms and conditions of the pension or retirement plan, and the reasonableness of the result.” Id. at paragraph one of the syllabus.

The Court discussed that the Hoyt court repeatedly rejected the use of a bright-line rule, announcing that “flat rules have no place in determining a property division.” Id. at 180. The Court found that the trial court’s analysis was supported by sound reasoning and that it did not abuse its discretion when selecting a method for determining the marital and separate portions of the defined contribution account. “In this case, the value of the defined contribution retirement benefit is based on contributions left in the account and market forces, not years of employment or another formula. Therefore, the use of the coverture fraction would be an arbitrary and unnecessary method for determining the marital portion of the account.”

As for the trial court’s determination that the account was entirely marital, the Court found that H failed to show error. H had the burden to prove, by a preponderance of the evidence, that the defined contribution account contained premarital, separate property.

[H] did not present evidence of the value of his account at the time of marriage. As the trial court noted, [H] submitted no evidence as to contributions to the account before the marriage. He did submit a letter showing he “enrolled” in the plan in 1969, but this, without more, was insufficient evidence for tracing contributions. Consequently, the trial court’s determination that the asset was entirely marital was supported by sufficient evidence and was not against the manifest weight of the evidence.

Johnson v. Johnson, 2nd Dist. Clark No. 2018-DR-783, 2020-CA-25, 2021-Ohio-16

Marital Property: equitable division (unequal division), debts
OPERS

Dated: January 8, 2021
Reversing and Remanding

The Court sustained W’s three assignments of error concerning: H’s OPERS benefits, the allocation of marital debts, and W’s spousal support award (the latter on the grounds that equitable division of marital property must come prior to any spousal support award).

W argued that the trial court abused its discretion when it failed to award her a portion of H’s OPERS benefit. W’s arguments cited the statutory nature of H’s entitlement, its inclusion in H’s property affidavit and elsewhere, including in subsequent exchanges in court (wherein H’s counsel and the trial court appeared to conflate the OPERS benefit with an emptied deferred compensation account belonging to H). In its decision, the trial court noted H’s deferred compensation account, but found it had insufficient evidence for any other benefits “with anything other than nominal equity.”

The court agreed with W, and remanded the matter to the trial court to address H’s OPERS benefits in its division of the parties’ marital property, along with the other assignments of error.

Jenkins v. Jenkins, 4th Dist. Highland No. 19CA19, 2021-Ohio-153

DOPO: OPERS
Marital Property: disability, equitable division, retirement benefits
Witness: expert

Dated: January 14, 2021
Affirming

H and W were married for 31 years, during which H began receiving a disability pension stemming from his OPERS participation, and the parties acquired a large property that they used as their marital residence, as well as a property they intended to sell W’s sister and brother-in-law.

H and W both appealed the trial court’s judgment and divorce decree, assigning two errors each for review. W disputed the trial court’s awarding H the exclusive right to purchase the non-marital residence (in the event her sister and brother-in-law failed to do so), and the overall division of property and marital debt. The Court found against both assignments of error, and affirmed the trial court’s decision.

In his first cross assignment of error, H disputed the trial court’s decision concerning the valuation and assignability of his OPERS benefits, and W’s award therefrom. In his second, H argues that the trial court erred in ordering him to choose a joint and survivor retirement benefit at age 60, which he asserted would drastically reduce the lifetime value of his OPERS benefits.

As explained by W’s expert, H received his benefit under “the original OPERS disability retirement.” Where the “revised” disability benefit provides payments until the participant reaches age 65 (at which time he/she must commence their retirement benefit), the “original” OPERS disability plan provided H with benefits through age 60, adding service credit until he reaches retirement age. Thus, in determining W’s award, the trial court would have to decide when H’s disability would end, and his retirement commence. Based on H’s $3,556.73 monthly benefit (and presuming a 2% cost-of-living adjustment), W’s expert testified that the present value of the marital portion of H’s benefit at age 60 would be $596,855.97.

H did not present an expert witness, but provided an affidavit from a OPERS representative which stated that, if his disability benefit were terminated, at age 60 his monthly benefit would be $986.91. Based on this, factoring in the marital property settlement and an ‘offset’ for W’s Social Security entitlement, H argued he should instead retain the entirety of his benefit.

The magistrate found that H’s benefit at age 60 would be retirement income, and that the disability portion thereof would “transmute” into a retirement benefit subject to marital property division. W was awarded $160,773.40 of W’s OPERS benefits, and H was ordered to select a joint and survivor annuity at age 60 to provide W survivor benefits to the extent of her award. The trial court overruled H’s objections, and its decree adopted the magistrate’s decisions concerning H’s OPERS benefits, and other marital property.

In its decision, the Court drew a distinction between disability benefits as a form of wage replacement, and disability benefits accepted in lieu of retirement pay, citing Messer v. Messer, 2nd Dist. Darke No. 1570, 2002-Ohio-4196, Mann v. Mann, 4th Dist. Athens No. 09CA38, 2011-Ohio-1646, a book co-authored by W’s expert witness, and a wealth of other sources. The Court went on to reject the other aspects of H’s first assignment of error.

In H’s second cross assignment of error, H argued that the trial court’s orders would reduce his overall benefit at age 60 by the amount which would otherwise be disability income (i.e., the overall payment would reduce to the $986.91 referred to in the OPERS affidavit). The Court found that the trial court did not abuse its discretion in ordering him to elect a retirement survivor annuity, and that H’s assertion that his benefit would reduce to that amount was not supported by the record.

Ohio courts have upheld trial court orders that require the participating spouse, upon retirement, to elect a joint and survivor annuity to protect the nonparticiping spouse’s interest in a pension if the participating spouse dies prematurely. Thompson v. Thompson, 196 Ohio App.3d 764, 2011-Ohio-6286, 965 N.E.2d 377, ¶ 19 (10th Dist.). A joint and survivor annuity “provides for payments to a designated beneficiary for the lifetime of the beneficiary.” Id. at ¶ 48. A joint and survivor annuity thus ensures that the participating spouse’s death “will not cut off the flow of [the nonparticipating spouse’s] portion of the pension benefits” if the nonparticipating spouse outlives the participant spouse. Id.; Purdy v. Purdy, 12th Dist. No. CA2002–11–089, 2003-Ohio-7214, 2003 WL 23095483, ¶ 32 (finding no abuse of discretion in requiring the election of a joint and survivor annuity because “[s]uch a division ensures that the benefits [the nonmember spouse] receives under the plan will not cease if she outlives [the member spouse]”); Gatie v. Gatie, 9th Dist. Summit No. 18156, 1997 WL 537667 (concluding that trial court did not abuse its discretion by ordering the husband to provide a joint and survivorship annuity for the wife when parties had been married for thirty years, among other things).

Murphy v. Murphy, 3rd Dist. Seneca No. 15 DR 0011, 13-20-10, 2021-Ohio-101

Civ. R. 53: facial review of a magistrate decision
DOPO: impermissible modification, OPERS

Dated: January 19, 2021
Affirming in Part, Reversing in Part, and Remanding

Stemming from a 2016 divorce, W was awarded 62.5% or H’s OPERS benefit (red flag!), as well as 100% of his Ohio Deferred Compensation (ODC) account as of 12/02/2015. The following year, W filed a motion to reopen the case upon learning that her OPERS award was not permissible, and could not be effected via DOPO. The trial court then issued a QDRO to ODC, and a DOPO providing W with a permissible award of 50% of a fraction of H’s OPERS benefit, instead. W then withdrew her motion to reopen the case.

In 2018, W filed a motion for contempt, alleging H had failed to follow-through concerning the division of his ODC account. At the show-cause hearing, H signed the QDRO, and W’s attorney announced the following:

“As a condition of [W] agreeing to dismiss the contempt and waive pursuit for reimbursement for attorney fees and reimbursement for court costs and having the special process server to find [H], my understanding is [H] agrees and consents to do whatever is required of him to enable [W] to obtain her one-half of the Deferred Compensation referenced in the parties’ final judgment for divorce. He has signed an authorization and release of account information. We believe that in order for [W] to obtain her one half of that account in a lump sum, that means that [H] would have to agree to take his one-half of the account in a lump sum, and that he would do so forthwith and provide us the information so we can get her half of the Deferred Comp. So once we have that, * * * that’s part and parcel of the agreement for us to dismiss the contempt.”

The following year, W filed a new motion for contempt, this time alleging H had failed to follow-through concerning the division of his OPERS benefits. She filed a subsequent motion in October, 2019 in which she argued that her (now former) attorney had misspoke, above, and was in fact referring to H’s OPERS benefits. Her motion requested that the trial court journalize the 2018 agreement to affect the OPERS award “as intended,” and permit her to receive her share in a lump-sum (another red flag!). H filed a motion to dismiss the motion to journalize the agreement, and W withdrew her motion for contempt.

At a 2020 hearing, the magistrate agreed with W that the 2018 agreement obviously related to her OPERS award, but found that she waived her right to have it journalized when she did not request it at the time. W objected and filed an additional motion, this time seeking an order for a joint and survivorship annuity ensuring her continued OPERS benefit, should H predecease her after his commencement.

In June, 2020 the trial court issued its judgment on W’s objection, finding it well-taken and sustained. The trial court then determined sua sponte that every order subsequent to the 2017 hearing on W’s motion to reopen the case was void, based on the trial court’s lack of jurisdiction to modify the original (non-permissible) DOPO award amount.

In her first assignment of error, W argued the trial court abused its discretion when it dismissed her motion seeking survivorship, and voided all orders subsequent to the 2017 hearing. The Court wrote that, although neither party had asked the trial court to vacate the orders, “the trial court had the power to do so, provided that it correctly determined that the orders are void.”

Because such a determination “is a question of law,” the Court applied a de novo standard of review. In its review, the Court noted that a DOPO “generally cannot be used to modify the property division in a divorce decree,” but the Court continued:

“[I]f a DOPO improperly modifies the terms of the divorce decree, the DOPO is deemed voidable.” Fiedler at ¶ 13; Reynolds v. Turull, 12th Dist. Butler No. CA2018-10-197, 2019-Ohio-2863, ¶ 15; Fitzgerald v. Fitzgerald, 8th Dist. Cuyahoga Nos. 105474 and 105476, 2018-Ohio-387, ¶ 14; Archer v. Dunton, 9th Dist. Summit No. 28519, 2017-Ohio-8846, ¶ 13-14; Pearl at ¶ 16-17; contra Ostanek v. Ostanek, 11th Dist. Lake No. 2019-L-140, 2020-Ohio-3930, ¶ 32 (noting the Eleventh District’s position that “[w]here the terms of a QDRO conflict with the property division set forth in the divorce decree, * * * the QDRO is void or a legal nullity”);2 Patten v. Patten, 4th Dist. Highland No. 10CA15, 2011-Ohio-4254, ¶ 17 (“When a QDRO is inconsistent with the final divorce decree it is void and the trial court lacks jurisdiction to issue it.”).

Editor’s Note: The 11th District’s holding in Ostanek, referenced in the quote block above, was subsequently overturned by the Supreme Court of Ohio. Click here to read about it.

Finding that the DOPO was voidable, only, the Court found the trial court had no inherent authority to vacate it and the other orders at issue, and sustained W’s first assignment of error insofar as it related to the trial court’s decision to vacate the orders. As it related to her motion for a survivorship annuity, the Court found it lacked jurisdiction because the trial court’s dismissal without prejudice was not a final, appealable order.

In her second assignment of error, W argued that the trial court had abused its discretion when it denied her motion to journalize the 2018 agreement. W contended that the trial court “failed to give proper consideration to the merits of [her] objection to the magistrates decision” and that it “did not address the merits of [her] motion or the facts leading to [its] filing.”

Noting that “[a]n appellate court reviews the trial court’s decision to adopt, reject, or modify the magistrate’s decision under an abuse of discretion standard,” and that under Civ. R. 53, “[i]n ruling on objections, the court shall undertake an independent review as to the objected matters to ascertain that the magistrate has properly determined the factual issues and appropriately applied the law,” the Court agreed with W and remanded to the trial court.

Toki v. Toki, 5th Dist. Perry No. 22480, 20 CA 00010, 2021-Ohio-128

OPERS

Dated: January 21, 2021
Reversing and Remanding

Editor’s Note: to read Eileen’s previous two posts on this case, when it was remanded to trial court on other matters, click here and here.

In her sole assignment of error, W asserted that the trial court abused its discretion when it calculated gains and losses on her award, beginning June 30, 2002 through the end of the year.

This award, stemming from a 1994 divorce, was barred by laches from accruing any interest after 2002 by a previous Court ruling which remanded the matter back to the trial court once again. W had been awarded a dollar amount from H’s OPERS pension, and received a small sum from H when he later commenced. Her first two appeals have been discussed on this blog, and are worth reviewing in the links above. In agreeing with W on this appeal, the Court wrote:

As noted above, this Court held, “Appellant was awarded earned interest on the $53,531.48 as of the date of Appellee’s retirement.” Id. This Court also stated, “laches applies to any growth on the amount after June, 2002.” Id. In other words, the interest should be calculated from the date of the judgment entry through the Appellee’s date of retirement.

The Court reversed the trial court’s decision as it related to interest on W’s award, and found that interest on W’s award must be calculated as of the 1994 award date through June of 2002, and remanded the matter back to the trial court.

Speece v. Speece, 11th Dist. Geauga No. 2015 DC 00460, 2019-G-0193, 2019-G-0225, 2021-Ohio-170

Marital Property: tracing

Dated: January 25, 2021
Modifying and Affirming

This appeal arose from a nearly 25-year marriage, throughout which most of the parties’ income came from a business of which H was the sole owner. Following the trial court’s final judgment and decree, both parties appealed and filed additional motions, with W ultimately asserting two assignments of error, and H 20. Much of the parties’ contentions center on the value of H’s assets in and from the company, including his alleged financial misconduct in making large transfers upon receiving W’s complaint for divorce.

This review focuses on H’s sixth assignment of error, which asserts the trial court erred in not allocating certain settlement proceeds and an IRA to him as his separate property. In its decision, the Court noted that the determination of whether property is marital or separate is a prerequisite of equitable division. This determination was complicated for the trial court in this case, as the assets in controversy were acquired many years prior to the divorce, and subsequently commingled with marital property.

The trial court found -and the Court affirmed- that no direct evidence was presented to support H’s claims, and that “the arguments asserted on appeal rel[ied] heavily on [H’s] testimony regarding the events, which the trial court found unreliable.” Based on the paucity of evidence or records by which the amounts claimed by H could be ‘traced’ as separate property, the trial court concluded H failed to establish a separate property interest, and the Court affirmed this judgment, noting:

“The trial court is required to make findings as to whether a party requesting the court to classify an asset as separate property has met his [or her] burden of proof and successfully traced an asset to separate property.” Id., citing Letson v. Letson, 11th Dist. Trumbull No. 95-T-5356, 1997 Ohio App. LEXIS 4445, *3, (Sept. 30, 1997).

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.