Ohio Case Law Review by Topic: May 1, 2022 through July 31, 2022

Once housing the legislative body of the 7th most populace (and one of the richest) states in the country, the Ohio Statehouse now offers CCW training Wednesdays at 7, hosts traditional services at 9, and recently began offering a contemporary service at 10:45 (for those who prefer a later start + modern vibe).

Chaney v. Chaney, 12th Dist. Warren No. 20DR41732, CA2021-09-087, 2022-Ohio-1442

Marital Property: separate property; stock (options), tracing
Spousal Support

Dated: May 5, 2022
Affirming

Following the parties’ September 2020 final divorce hearing and a December 2020 magistrate decision, Husband filed objections and was overruled. His appeal followed, in which he argued (among other issues) that the trial court had erred in: not recognizing his pre-marital interest in the marital home; not assigning him stock options awarded from his employer as his separate property; not awarding him reimbursement for income received after the de facto termination date of the marriage; and the amount of spousal support it awarded Wife.

In arguing for his pre-marital interest in the home, Husband attempted to trace alleged funds put toward the parties’ prior home purchase, which he argued he had partially funded using pre-marital assets. But he offered scant evidence for this, documentary or otherwise:

In reaching this decision, we note that Husband could not even remember the exact amount that he and Wife had paid to purchase the home in Utah in 2001, the total amount of separate property that he supposedly used to pay the down payment for the purchase of the home in Utah, or the amount for which he and Wife sold the home in Utah prior to purchasing the marital home in Mason in 2004. Husband instead testified that he did not “remember exactly” what he and Wife paid for the home in Utah, but that it was somewhere around $390,000 “[g]ive or take a few… a thousand.

Noting that the party seeking to establish a separate property claim has the burden of proof “by a preponderance of the evidence,” and Husband’s failure to provide such evidence, the Court rejected Husband’s claim and affirmed the trial court’s decision.

Husband’s arguments concerning his employer-awarded stock options fell on similar grounds: the Court found that he once again failed to establish or support his separate interest claim.

Given this lack of documentary support, the trial court clearly found Husband’s testimony that his employer granted him with the restricted stock units as a motivator for future performance or an incentive for continued employment with the company was not credible. This was well within the trial court’s purview as the trier of fact tasked with determining what constitutes the parties’ marital and separate property.

The Court similarly found that Husband’s argument that he be reimbursed for employment income deposited after the de facto termination date of the marriage, which was accessed by Wife, lacked merit. The Court noted that, while Husband’s paycheck was deposited after the parties’ de facto termination date of marriage, said payment was for work performed during the marriage.

Noting its abuse of discretion standard for the reversal or modification of any spousal support decision, the Court also found no basis for Husband’s argument that the trial court erred in its support award, or failed to properly consider the other property that had been awarded to Wife. The Court noted the length of the parties’ marriage, and the considerable assets which were likewise awarded to Husband, as well as his “much greater earning capacity,” when it affirmed the trial court’s decision.

Allan v. Allan, 8th Dist. Cuyahoga No. CV-18-907570, CV-19-922868, 110177, 110179, and 2022-Ohio-1488

Marital Property: financial misconduct

Dated: May 5, 2022
Reversing and Remanding

Editor’s Note: Click here to read our previous case law summary, detailing the Court’s dismissal of Husband’s appeal, upholding the trial court’s ‘marital’ designation of the two properties.

Following the trial court’s award of one of two gas stations to Wife, which were the subject of Husband’s unsuccessful appeal (and attempted transfer to his brother, prior to the divorce), Wife filed suit against Husband, his brother, and entities associated with both businesses. In her amended complaint, Wife argued that the transfers of both businesses to Husband’s brother were fraudulent, and she sought recovery therefrom of the $550,000 awarded to her in the divorce decree.

Husband, et al. responded with a motion for summary judgment alleging Wife’s claims were barred by the statute of limitations, and the doctrines of issue preclusion, collateral estoppel, and res judicata. In a subsequent complaint for declaratory judgment, Husband, et al. sought a determination that the underground storage tanks and other equipment of the gas station were separate from the real property awarded to Wife, and were instead the property of one of Husband/his brother’s business entities.

Despite inspection filings which had been signed by Husband, and Wife thereafter, the trial court granted Husband, et al.’s motions, and assigned ownership of the equipment to Husband/his brother’s business entity.

Wife appealed, arguing that: (1 and 2) her claims were neither barred by the statute of limitations nor the doctrine of res judicata; (3 and 4) the trial court erred in denying her a default judgment against Husband and in allowing Husband’s brother and their business entities to oppose summary judgment on his behalf; and (5) the trial court erred in awarding ownership of the equipment to Husband/his brother’s business entity.

Noting the requirements for transfer recission under the Ohio Uniform Transfer Act, irregularities indicating some form of continued ownership by Husband, and the lack of any consideration paid for the business (based upon which Wife argued the transfer was never perfected), the Court found that the trial court erred to the extent it granted summary judgment based on the statute of limitations.

The Court similarly sustained Wife’s second assignment of error, finding first that Husband’s brother had not been subject to personal judgment or damages in the parties’ divorce proceedings (even if he and Husband’s/his business entities were joined thereto), and second that the actual legitimacy of the business transfers had not been subject to the proceedings.

Noting a lack of explanation for the trial court’s denial of Wife’s motion for default judgment, and its findings for her first and second assignments of error, the Court likewise sustained Wife’s third and fourth assignments of error.

The Court finally reversed the award of the equipment to Husband/his brother’s business entity, and remanded the matter back to the trial court to determine when the transfer of the business was perfected.

Morrison v. Walters, 1st Dist. Hamilton No. DR-2000523, C210398, 2022-Ohio-1740

Marital Property: equitable division, financial misconduct
Spousal Support

Dated: May 25, 2022
Affirming

After unsuccessfully objecting to findings which were incorporated into the decree, Husband appealed, citing the following assignments of error: (1) the trial court erred in finding his earning potential comparable to Wife, and not awarding him spousal support; (2) the trial court abused its discretion in not finding Wife had engaged in financial misconduct; (3) the trial court erred in evenly dividing a joint brokerage account; and (4) the trial court abused its discretion in removing Wife’s name from the parties’ rental holding company.

Noting Husband’s prior decision to retire from a high earning, information technology position, compared to Wife’s continued employment, the Court affirmed the trial court’s decision not to award spousal support. The Court was not persuaded that Husband could not, if he wished, earn a similar income to Wife, either in information technology or in property management (based on his management of the parties’ rentals). In making its decision, the Court further noted Husband’s overall financial position, property awarded to him in the divorce, and his substantial retirement benefits from his previous employment.

The Court similarly dismissed Husband’s second assignment of error, which he based on Wife’s admitted gambling and interest-only loan payments. Unlike in the cases cited by Husband, Wife made no attempt to conceal her gambling: Husband had often vacationed with her to casinos, and Wife’s winnings had been properly recorded in the parties’ tax returns. Husband provided no basis for why Wife’s interest-only payments constituted misconduct.

In dismissing Husband’s third assignment, the Court noted the lack of any citation to the record or legal authority upon which Husband’ argument could be based: “[Husband] neglected to provide the roadmap necessary for meaningful appellate review.” The Court further noted the very substantial amounts of other property awarded to Husband, upon which he could reasonably draw for the expenses he claimed merited an unequal division of the parties’ brokerage account.

Finally, the Court was unsure what detriment to Husband and abuse of discretion by the trial court occurred when it ordered the removal of Wife’s name from the parties’ rental holding company. Noting the parties’ continued mutual responsibilities to pay for any expenses or repairs prior to the sale of the properties, the Court once again affirmed.

Editor’s Note: An EZ QDRO Law shout-out to Wife’s attorney, the inimitable Zachary D. Smith!

Vaughn v. Vaughn, 12th Dist. Warren No. 17DR39921, CA2021-08-078, 2022-Ohio-1805

Marital Property: tracing
Witness: credibility, expert

Dated: May 31, 2022
Affirming

Editor’s Note: Much of the narrative history in this case, and the Court’s opinion, covers the truly jaw-dropping efforts (deliberate or not) on the part of Husband to delay and obstruct the proceedings. He was aided in his efforts by the outbreak of COVID in March of 2020, some “bad Mexican food,” and no less than 6 different attorneys. Wife was aided by, and prevailed against Husband’s appeal with the assistance of, Michaela M. Stagnaro, who is apparently as good as a half dozen attorneys combined.

With the above said, this summary focuses on the assignments of error which relate to or intersect with the general case law themes of this blog, only.

In his fifth assignment of error, Husband argued that the trial court erred in imputing his income at $127,708 annually (based on the testimony of Wife’s vocational expert) for child support purposes. Husband alleged that his income had been substantially reduced, following the revocation of his securities license, but provided no credible evidence to back his claim.

The [trial] court, however, did not “impute income” to Husband. The [trial] court, just like the magistrate before it, instead accepted the only evidence establishing Husband’s income that the [trial] court found credible: the expert testimony offered by Wife’s vocational expert…

As part of his sixth assignment of error, Husband alleged that the trial court erred in overruling his objection to a magistrate’s decision classifying a PNC Trust account as entirely marital. But, once again, he failed to provide any evidence tracing his separate interest claim. Noting first that his argument, due to the lack of support offered, was in violation of the Ohio Rules of Appellate Procedure, the Court continued:

[J]ust like with many of Husband’s and Wife’s other assets, the record is devoid of any evidence the PNC Bank trust account at issue held any monies that were earned by either Husband or Wife prior to their marriage… “The party seeking to have a particular asset classified as separate property has the burden of proof, by a preponderance of the evidence, to trace the asset to separate property.” Casper v. Casper, 12th Dist. Warren Nos. CA2012-12-128 and CA2012-12-129, 2013-Ohio-4329, ¶ 16, citing Zollar v. Zollar, 12th Dist. Butler No. CA2008-03-065, 2009-Ohio-1008, ¶ 9.

Lewis v. Lewis, 3rd Dist. Hancock No. 2017 DR 00303, 5-21-32, 2022-Ohio-2090

Marital Property: de facto date (termination of marriage), totality of circumstances, valuation
Witness: expert, valuation

Dated: June 21, 2022
Affirming

Among the property to be valued and allocated to the respective parties in this divorce was a dental practice solely owned by Wife. The trial court ultimately adopted the magistrate’s decision, which itself adopted Wife’s expert’s valuation of the business at $1,640,000 (this number included a 20% discount for ‘lack of marketability,’ related to the asset’s illiquidity and challenge to transfer). Husband appealed, raising three assignments of error.

In his first assignment of error, Husband argued that the trial court failed to account for additional loan payments made by Wife, subsequent to the valuation date and prior to the termination of marriage date, which unencumbered the business and added to its value. Reviewing for an abuse of discretion, and giving deference to the trial court’s findings of fact, the Court rejected Husband’s argument.

Wife’s expert relied on different methodologies in valuating Wife’s business, including the asset-based approach, earnings approach, and the market approach. Finding they yielded similar results, she utilized portions of each to come up with a value of $2,050,000, which she then discounted by 20% for lack of marketability. At the final hearing, Wife’s expert was requested to recalculate her valuation of the business, taking into account Wife’s subsequent loan repayments, which resulted in an increased value of $1,780,000 after the 20% discount. Wife’s expert recommended that the trial court should not, however, utilize this second amount because it was “disconnected” from the variables utilized in her prior valuation due to the time elapsed. The trial court thus adopted Wife’s expert’s findings, without accounting for any subsequent loan repayments, and noting the trial court’s discretion in making such determinations, the Court affirmed.

In his next assignment of error, Husband argued the trial court erred in its reduction of the value of Wife’s business for lack of marketability. Husband cited case law in which a similar discounting of a party’s classic car collection was rejected because of a lack of any evidence the party planned to sell the collection. As part of this same case, however, the same party’s car dealerships were discounted for a lack of marketability. Noting the distinction, the Court wrote:

[Husband] attempts to analogize the marketability discount applied to the valuation of [Wife’s] dental practice to the reduction for the cost of sale applied to the antique car collection at issue in Sweet. Specifically, [Husband] contends that the lack of marketability discount applied to [Wife’s] interest in her dental practice relates exclusively to the cost of sale of the business, and, because no sale is contemplated, such a discount is inappropriate. We disagree.

Noting Husband’s decision not to hire his own expert witness to rebut Wife’s expert witness, or present alternative valuation methods, the Court continued:

Although [Husband] was not required to present an expert witness regarding the value of [Wife’s] dentistry practice, by not presenting another witness or evidence to challenge [Wife’s Expert’s] valuation of the dentistry practice, [Wife’s Expert’s] valuation of the dental practice was largely unrefuted.

Husband’s third assignment of error relied upon the arguments rejected in his first and second assignments, and was thus overruled.

Ostanek v. Ostanek, 11th Dist. Lake No. 2000 DR 000178, 2019-L-140, 2022-Ohio-2197

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

Dated: June 27, 2022
Reversing and Remanding

Editor’s note: Few cases have been highlighted in this blog as much as this one. For the whole backstory, and a better understanding of the void vs. voidable dilemma that led to the below decision on remand from the Supreme Court of Ohio, please read my prior appeals court summary here, and my subsequent Supreme Court summary here.

On remand from the Supreme Court of Ohio, the Court revisited Husband’s appeal of the trial court’s denial of his Civ. R. 60(B) motion to vacate the Court Order Acceptable for Processing (COAP) dividing his Federal Employees Retirement System (FERS) pension.

The parties in this case divorced in 2001, and Wife was awarded a portion of Husband’s FERS pension. To implement Wife’s assignment ahead of Husband’s planned retirement, her counsel entered a COAP in 2013, to which Husband was not a signatory (not a requirement), nor apparently served.

Under the terms of the COAP, Wife was awarded her marital share of the benefits calculated via a coverture fraction ([months of Creditable Service earned while married]/[total months of Creditable Service earned at retirement] X total benefit at retirement), along with a Former Spouse Survivor Annuity to preserve her interest should Husband predecease her, the costs for which were shared between the parties. Husband commenced his benefits and remained unaware of the actual terms of the COAP until a copy was provided to him by newly retained counsel in 2018. He subsequently filed a motion to vacate the order, arguing he had never been provided with a copy of the order, and that Wife was receiving $1,300 more per month than had been stipulated.

Husband’s motion was denied by the trial court, which found (1) he had failed to file the motion within a reasonable time; and (2) that the coverture method utilized in the COAP was not inconsistent with the decree. Ruling on Husband’s subsequent (but prior to this matter) appeal, the Court agreed with the trial court’s findings concerning the coverture division, but found it had erred in granting Wife a survivor annuity with the costs therefrom shared by the parties. The COAP was thus void, and the timeliness of Husband’s motion moot, the Court found.

Wife appealed, and the Supreme Court subsequently reversed the Court’s determination that the COAP was void, and remanded the matter back to the Court to make a determination on the no-longer-moot question of the timeliness of Husband’s motion to vacate.

In the current matter, the Court first noted its abuse of discretion standard of review, as well as the requirements for a successful Civ. R. 60(B) motion: (1) a meritorious claim for relief; (2) an entitlement to relief under Civ. R. 60(B)(1) through (5); and (3) that the motion was made within a reasonable time (or one year, if relief is sought under Civ. R. 60(B)(1), (2), or (3)).

Husband argued that the COAP impermissibly modified the decree, without his notice or consent, and that Wife was receiving outsized portion of the pension benefits. The Court found this constituted a meritorious claim for relief.

Husband argued he was entitled to relief under Civ. R. 60(B)(5), because he was never served with a copy of the COAP. Husband also argued that the trial court erred in finding his failure to prepare and enter the COAP, himself, contributed to the later lack of service thereof, and was thus not grounds for relief. Under the Office of Personnel Management regulations, the onus for preparing and filing a COAP is placed on the former spouse, Husband argued. The Court agreed.

Finally, based on the timeline and Husband’s non-receipt of the order until 2018, the Court found Husband’s motion was filed within a reasonable period of time, and reversed and remanded the matter back to the trial court.

Cusack v. Cusack, 9th Dist. Lorain No. 16 LS 081963, 21CA011774, 2022-Ohio-2248

Civ. R. 75
Marital Property: omission, stock (options), subject matter jurisdiction, vesting

Dated: June 30, 2022
Affirming

As part of the parties’ divorce, Wife was awarded an interest in Husband’s various retirement and investment accounts and shares of his employer’s stock, and $9,000/month in spousal support. Husband appealed, arguing among other assignments of error that the trial court abused its discretion in ordering an equal division of his employer stock options without addressing their value or means of division.

As of the trial court’s hearing on the matter, Husband owned 1538 shares of his employer’s stock, with a value of $78,669.00. While it was not clear whether or not he was fully vested in these shares, the Court deemed such status “Immaterial” in its opinion, noting: “Although the Supreme Court acknowledged that it may be difficult to determine the value of unvested benefits, that does not mean that they have no value.”

The Court further noted that the disposition of Husband’s shares in his employer’s stock was left unresolved in the trial court’s overall division of marital property. And while Husband argued that his stock options had been addressed in relation to Wife’s spousal support award, it was not clear whether he had in fact received any stock options at the time of the parties’ divorce hearing.

The judgment entry contains a paragraph that indicates that, “at such time as Husband receives bonuses and/or equity grants and such are available and able to be disbursed, [Husband] shall distribute one-half to [Wife]” The plain language of that paragraph concerns future equity awards that Husband might receive on top of his annual base salary. It does not divide the 1538 shares that he already possessed at the time of the divorce.

Finding that the trial court’s entry did not divide all of the parties’ property, and thus did not conform with Civ. R. 75(F)(1), the Court dismissed Husband’s appeal for lack of jurisdiction.

Devito v. Devito, 1st Dist. Hamilton No. DR1901095, C-210523, 2022-Ohio-2563

Marital Property: distributive award, financial misconduct, separate property
Spousal Support: retirement benefits

Dated: July 27, 2022
Affirming in Part, Reversing in Part, and Remanding

A relatively short time after the parties’ marriage and the birth of their daughter, Husband was arrested for producing child pornography. Wife filed for divorce the same year he was sentenced to a 30-year term.

As part of the proceedings the magistrate rendered a decision which was largely adopted by the trial court, concerning marital property, custody, and other items. Among the magistrate’s considerations in assigning the parties their respective shares of property were Husband’s long-term inability to provide support that he could have provided absent his criminal conduct. The magistrate found that Husband could have provided $185,635.56 of support over 201 months, had he not been incarcerated, to which Wife was thus entitled as a distributive award. Among other assets, the magistrate identified several retirement accounts, including a Pension, IRA, and several 401(k) plans, and awarded them in their entirety to Wife, “including any separate property portion.”

The magistrate further determined that Husband’s interactions with the parties’ daughter should be supervised by and at Wife’s discretion. Husband appealed, arguing three assignments of error.

In his first assignment, Husband argued that the trial court erred in providing him parenting time solely at Wife’s discretion. The Court disagreed, however, noting trial courts’ discretion in establishing parenting schedules, generally, the nature of Husband’s incarceration, and the guiding factors set forth in ORC § 3109.051(D).

In his second and third assignments, Husband alleges the trial court erred in failing to designate two 401(k)s and a small inheritance from a family member as his separate property, and its award to Wife thereof. While the trial court did, in fact, identify the two 401(k)s as Husband’s separate property, it did not separately identify his inheritance, despite sufficient means to do so. Husband argued that, absent evidence of financial misconduct on his part, the trial court had lacked the authority to make a distributive award of his separate property. Wife countered that the trial court’s authority for such awards is not strictly limited to findings of financial misconduct, and, based on ORC § 3105.171(D), may stem from any provision of ORC 3105.171.

The Court disagreed, however, noting that “there is no evidence that Husband’s wrongdoing interfered with Wife’s property rights, that Husband profited from his wrongdoing, or that the misconduct was committed to defeat Wife’s property rights.” More importantly, the Court noted: ORC § 3105.171(A)(1) states that distribute awards “do not constitute payments of spousal support.” But the magistrate’s decision could have been construed to have done just that. Based on this, the Court remanded the matter back to the trial court for a determination on Husband’s separate property.

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.