Ohio Case Law Review by Topic: July 2024

A.E. v. J.E., 8th Dist. Cuyahoga No. DR-19-377697, 112847, 2024-Ohio-2644

Attorney Fees: abuse of discretion
Marital Property: equalization, debts, distributive award, financial misconduct (dissipation), life insurance, stock (RSU), tax (liability)
Spousal Support: double-dipping

Dated: July 11, 2024
Reversing and Remanding

The parties married in 1997, and began divorce proceedings in 2019. Through his employment as an investment banker, Husband received a yearly salary of $251,326, with substantial supplemental and bonus income bringing his gross earnings to $876,423.

As part of a temporary support order, Husband was compelled to pay Wife $8,000 in temporary monthly spousal support, and $3,115 in temporary monthly child support, along with various mortgage and vacation home expenses. The trial court subsequently barred Husband’s employer from releasing any bonus or supplemental earnings, which left Husband unable to make estimated quarterly tax payments in addition to his support and expense payments, with only his regular salary.

Husband’s bonus income was held in an escrow account, and eventually transferred to Wife’s counsel’s IOLTA account. From this account, $11,225 was to be transferred each month toward Husband’s support obligations.

As part of trial proceedings, the parties’ equity in their marital home was divided based on the trial court’s determination of its overall $1,150,000 value, and the parties agreed to sell their vacation home. Wife was granted repayment of an amount refunded to Husband by CSEA (which he alleged had been an overpayment of child support), as well as ownership of a $500,000 life insurance policy to be maintained by Husband through the termination of his support obligations.

At the conclusion of the 2023 trial, Husband’s spousal support payments were set at $10,600 monthly, and Wife was awarded 50% of all bonus income. The trial court further found that Husband had dissipated $419,028 of marital funds through various means (including the liquidation of restricted stock units, or RSUs, without Wife’s knowledge or benefit) and had engaged in “gross financial misconduct” throughout the divorce proceedings. Based on Husband’s misconduct, the trial court ordered a $500,000 distributive award from Husband to Wife, which would be paid (A) through receipt of his equity interest in the marital home, and (B) a $16,663 payment to Wife.

The trial court also ordered payment of $110,000 in attorneys fees to Wife. Husband appealed, arguing 10 assignments of error:

The trial court erred and abused its discretion when it determined that [Husband] committed financial misconduct and found that [Husband] wrongfully dissipated $419,028.50 “that this court is aware of.”
The trial court erred and abused its discretion by ordering [Husband] to pay $10,600.00 per month as spousal support and $3,824.00 as child support plus fifty percent (50%) of all bonuses; deferred compensation; incentive payments; and all employment enhancements.
The trial court erred and abused its discretion when it substituted its own value for the marital residence, which was not based upon facts or evidence presented at trial.
The trial court erred and abused its discretion in dividing [Husband’s] income twice by ordering [Husband] to pay temporary support and then dividing the funds [Husband] had remaining in counsel for [Wife’s] IOLTA account after the payment of his support.
The trial court erred and abused its discretion in ordering [Husband] to pay $110,000.00 in attorney fees to [Wife’s] counsel.
The trial court erred and abused its discretion when it determined that [Wife’s] non-descript loan from her parents was marital property where the funds were used for the higher education of the parties’ emancipated children.
The trial court erred and abused its discretion in granting [Wife’s] ownership of an insurance policy that was no longer in existence.
The trial court erred and abused its discretion by not adopting [Husband’s] proposed shared parenting plan and reducing [Husband’s] parenting time.
The trial court failed to account for the funds missing from Stafford Law’s IOLTA account.
The trial court erred and abused its discretion by leaving restraining orders in effect and not dismissing third-party defendant.

In his first assignment of error, Husband alleges the trial court erred in its finding he dissipated marital income. According to submitted testimony and evidence Husband made $290,044 in tax payments in 2021 and 2022, and $69,476 of RSU proceeds received in 2023 were still in his employer-managed account at the time of trial. Finally, one of the RSUs he was alleged to have dissipated had already been liquidated prior to Wife’s filing for divorce. While technically Husband had been barred from liquidating RSUs during the pendency of the divorce, his tax liabilities continued to accrue, and the trial court’s restraining orders plus his support and expense obligations (encompassing most of his ‘regular’ salary) left him no means to pay them. The Court agreed, writing:

It was not unreasonable under these circumstances for Husband to conclude that he could use the RSUs to pay the parties’ tax liabilities since the RSUs were counted as income in the temporary support order. Indeed, Husband was left with a Hobson’s choice; he had to choose between violating the restraining order to pay the parties’ taxes or violating the support order by failing to pay the taxes. Moreover, liquidating the RSUs to pay the parties’ federal income taxes was not financial misconduct because Husband neither profited from the payment of the taxes nor did he intentionally defeat Wife’s interest in marital assets.

As for the missing funds from Husband’s checking account, totaling slightly less than $66,000, $30,388 of this had been transferred by Husband to Wife in compliance with the trial court’s order concerning CSEA refund payment, and could not have been dissipated by Husband. The Court further agreed Husband had used other checking account funds to pay expenses related to the parties’ marital and vacation homes.

Finding similarly, the Court agreed with Husband’s assertion it had been reasonable if not entirely accurate for him to assume money in his checking account was his separate, non-support funds, as when he paid the balance of a car loan for one of the parties’ children.

Finally, the Court agreed that the trial court erred in ruling that Husband had held Wife “economically hostage” through his failure to pay his support obligations. Noting Husband’s multiple motions to release part of his bonus payments, in order to pay said support and/or tax liabilities, the Court wrote:

Husband did not keep Wife “economically hostage.” The court’s restraining orders, coupled with its failure to rule on any motions for relief from those orders, kept Husband, and therefore Wife, economically hostage.

In his second assignment of error, Husband argued that the trial court ‘double counted’ his bonus income when it awarded Wife $10,600/month in spousal support (based on his gross income, with salary and bonuses) and half of Husband’s bonus income. Finding this assertion to be true, the Court again agreed.

As for the value of the parties’ marital home: at trial, Wife presented a 2019 appraisal for $1,000,000 which the trial court disregarded as out of date; Husband’s 2023 appraisal for $1,300,000 was rejected because the appraiser had not inspected the interior of the home. While a trial court has discretion to determine the value of property, it must do so based on evidence. In setting its own value, the trial court did not inspect the interior of the home, either, and thus there is no basis for assuming its valuation was superior to Husband’s appraiser. The Court sustained Husband’s third assignment of error.

The Court similarly sustained Husband’s fourth assignment of error, agreeing that the trial court erred in its award of temporary spousal support to Wife plus half of the balance in his checking account as of 01/20/2023, the latter of which necessarily included income Husband was entitled to keep.

In his next assignment of error, Husband argued the trial court abused its discretion when it awarded his payment of $110,000 in attorney fees to Wife’s lawyer. Wife had already been awarded half of the marital estate, and Husband had no greater means to pay the fees than she did. Further, Husband alleged, there was nothing in the record indicating that he had caused Wife to incur any increase in attorney fees. His motions during the proceedings alleged, and were correct, that the trial court had ‘double counted’ his income in its computation of his support obligations.

The Court also agreed that repayment of a loan from Wife’s parents, used toward real estate taxes and college tuition for one of the parties’ children, was not a marital obligation. Under the trial court’s temporary support order, Wife was responsible for payment of real estate taxes on the marital home, and tuition for a child over the age of 18 is not a valid marital obligation.

The Court sustained Husband’s assignment of error concerning the trial court’s order that he maintain a life insurance policy for Wife’s benefit, based on said policy having already lapsed, and language in the trial court’s order stating “all payments shall terminate upon the death of either party[.]”

Skipping to Husband’s tenth assignment of error, the Court again sustained. The trial court’s orders included conflicting language concerning the dismissal of Husband’s employer as a third-party defendant, and the temporary restraining orders on Husband’s bonus and supplemental income.

The Court reversed and remanded to the trial court to: vacate the distributive award; recalculate Husband’s support obligations; vacate the award of attorney fees; adopt Husband’s appraisal value for the home; deem repayment of Wife’s loan as non-marital; vacate the order for life insurance; adopt Husband’ shared parenting plan; account for an $11,225 payment from Wife’s attorney’s IOLTA account; and vacate all restraining orders.

Nobles v. Nobles, 5th Dist. Perry No. 21 DC 00101, 2023 CA 00005, 2024-Ohio-2750

Marital Property: equitable division, debts, personal injury, tracing
Witness: expert

Dated: July 18, 2024
Affirming

The parties married in 2004. In 2005, Husband was involved in a serious car accident, which left him with lifelong injuries. Husband was subsequently awarded $945,389 in a settlement for his claims related to the accident, as well as a separate prior payment of $50,000 for lost wages. The settlement proceeds were subsequently used to fund two IRA accounts (for each in their name), a brokerage account, and an annuity paying $1,200 per month.

The parties built a marital home in 2007, using injury settlement proceeds for the downpayment, and the aforesaid annuity for the mortgage payments. Husband was subsequently imprisoned in 2019 for drug trafficking, with a four-and-a-half-year sentence and $17,500 in fines and court costs. In addition to her own income, Wife used the parties’ annuity to help pay for marital expenses during Husband’s incarceration. Wife filed for divorce in 2021.

Following a hearing, the magistrate issued findings which stated Husband had failed to meet his burden to prove what portion of the remaining, commingled settlement proceeds were his separate property. The trial court adopted these findings in its subsequent entry, and awarded the marital home to Wife, including $223,630 equity therein. The trial court awarded the $372,533 in-pay annuity to Husband, and split the parties’ IRAs.

Recognizing that the division of marital property was not equal – [H]usband received $148,902.56 more than [W]ife - the trial court made two findings. First, it found that the settlement money was as a result of serious injuries the [H]usband sustained which likely affected his ability to earn future substantial earnings. In contrast, the [W]ife had the ability to continue to earn wages. Second, the trial court found that dividing the jointly held annuity would result in adverse consequences to the asset. “Therefore, the division of the marital residence and the annuity is equitable.”

Finally, the trial court apportioned Husband’s trial debts to Husband, Wife’s student loans to Wife, and the parties’ Social Security Administration debt (stemming from receipt of disability overpayments) equally.

Husband appealed, arguing the trial court abused its discretion when it: (1) failed to apportion his personal injury settlement as his separate property; (2) determined he failed to trace his non-marital personal injury settlement interest; (3) failed to apportion him his non-marital equity interest in the marital home; (4) failed to follow case law in determining it was his burden to show which components of equity were his separate property; and (5) apportioned repayment of his fines and court costs to him alone.

The Court considered Husband’s first four assignments of error together, as they all relate to his personal injury settlement proceeds. Said settlement did not delineate any specific loss of consortium claim for Wife, though it was made out to both of the parties. Husband allowed that $111,722 of the settlement had been marital, related to $50,000 for lost earnings and $61,722 in repayment for his medical bills, but he asserted that the remainder was his separate property.

Husband’s appeal relied in part on testimony from the parties’ personal injury lawyer, which he alleged proved that the entirety of the settlement (minus the portion mentioned above) was attributable to his non-economic damages. Noting that in that same testimony the witness called his calculations more an ‘art’ than a ‘science,’ and further that Husband’s claim placed no value whatsoever on Wife’s loss of consortium, the Court disagreed.

While there may be some dispute as to how the check was payable, there is no dispute that the settlement agreement and release was signed by both parties and released all claims of both parties. The majority of the proceeds were used to benefit the marriage and family. $54,000 of it was used for a marital residence owned jointly by the parties. A large portion was used to fund a joint cash management account and annuity. In short, husband and wife jointly held the majority of the funds as marital property.

Noting that, notwithstanding Husband’s failure to trace his non-marital claim, the trial court still awarded him $148,902 more than Wife, the Court sustained as to Husband’s first, second, third, and fourth assignments of error.

The Court further rejected Husband’s last assignment of error, finding that the fines and costs attributable to Husband’s criminal activity neither benefited the parties nor had a valid marital purpose.

Palmieri v. Palmieri, 10th Dist. Franklin Nos. 20DR-220, 21AP-146, 2024-Ohio-2720

QDRO: abuse of discretion, coverture

Dated: July 18, 2024
Affirming in Part, Reversing in Part, and Remanding

The parties married in 1988, separated in 2001 (maintaining separate finances, bedrooms, and lives), and began divorce proceedings in 2020. Following the trial court’s 2021 decree, both parties appealed, but Wife failed to file an appellate brief, and the Court considered Husband’s cross-appeal only.

Husband asserted six assignments of error, relating to the division of debt, personal property (held in POD storage units, following the vacating of the marital residence), and his employer pension.

In its decision, the trial court deemed the entirety of the parties’ credit card debt as marital, but then assigned it to Husband without any apparent explanation. Citing this omission, and the failure of the trial court to identify one of the parties’ more significant credit card debts in its decision, the Court agreed that this constituted an abuse of discretion.

The Court likewise sustained Husband’s assignments of error related to the parties’ personal property and items in the POD storage units.

Finally, the Court agreed with Husband that the trial court erred in its division of his (currently in-pay) employer pension:

In this case, the trial court found that “[a]ll retirement accounts were accumulated during the marriage.” (Decision/Entry-Decree of Divorce at 14.) [Husband] argues this finding is contrary to the manifest weight of the evidence because it is uncontroverted that he was employed by Lucent beginning in approximately 1973, some 15 years prior to the parties’ marriage on July 30, 1988. We agree with this contention.

Wife was entitled, the Court found, only to the share of the benefit accrued during the term of the marriage, and the trial court’s award instead of 50% of the entire benefit constituted an abuse of discretion.

The Court disagreed, however, that the trial court’s use of the date of the final hearing, rather than a de facto date several months prior, constituted an abuse of discretion.

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