Ohio Case Law Review by Topic: March 1, 2024 through April 31, 2024

Miller v. Miller, 10th Dist. Franklin No. 16DR-1690, 23AP-319, 2024-Ohio-821

Marital Property: equitable division, de facto date (termination of marriage), valuation
Witness: expert

Dated: March 7, 2024
Reversing

Editor’s Note: For our summary of a previous, separate Opinion in this case, click here .

As part of the parties’ 2018 divorce, different marital business valuations were presented for Husband’s Optometry business, based on the testimony of each party’s respective expert witnesses. Wife’s expert presented a marital value of $960,000-$875,000, whereas Husband’s expert gave a marital value of $220,000. Further, the parties stipulated to a marital ‘end date’ of 06/30/2016.

The trial court ultimately utilized the value provided by Wife’s expert, notwithstanding deficiencies noted in its order. Husband appealed, and the Court remanded the issue back to the trial court to more precisely outline its views as to the proper allocation and division of the business’ value, instead of wholly adopting the number provided by Wife’s expert.

On remand, the trial court heard testimony from Husband’s new expert (EZ QDRO LAW shout out to Rebekah Smith!), who testified that Wife’s prior expert had overestimated the value of the business by including discounts which the business only began a separate accounting of in 2016. Husband’s expert testified that—if properly accounting for discounts—the business had a marital value of only $300,000. Further, as part of the remand, Husband objected to Wife’s use of any evidence after the agreed-upon 06/30/2016 ‘end date,’ including evidence that related to the sale of the business in 2019.

In its Amended Decree, the trial court disregarded Husband’s new expert’s testimony and adopted the figure originally provided by Wife’s expert: $875.000. In doing so, the trial court sustained a supposed objection from Husband concerning “the admission of any new evidence” on remand. However, the Court could find no record of any such objection made by Husband, only that Husband objected to inclusion of evidence concerning the status of the business after the 06/30/2016 de facto termination date. Additionally, the Court found that the trial court gave no other explanation as to any possible reason for exclusion of Husband’s new expert’s testimony. Thus, the Court found the trial court abused its discretion in excluding Husband’s new expert’s report and testimony, remanding yet again back to the trial court:

The record in the present case affirmatively demonstrates the trial court failed to consider the testimony and report of Smith before determining the marital value of Eye Columbus. Smith’s valuation opinion was properly before the court and no party objected to her testimony. Accordingly, because the trial court rendered judgment without examining all the evidence contained in the record, we must reverse the Amended Decree and remand for further proceedings.

Bouncing into a QDRO docket near you.

Husband appealed, arguing that the trial court erred when it failed to consider his expert witness’ testimony for the business’ value; that the trial court erred by utilizing Wife’s expert report which it had already noted was “flawed”; and that the trial court erred in extending its award of spousal support payments to Wife, and making such assignment “non-modifiable.”

Noting a trial court’s “broad discretion” in valuing and dividing marital property, the Court agreed that the trial court’s exclusion of Husband’s expert witness’ testimony was erroneous. On remand, the Court wrote: “the [trial court] must simply consider all the evidence and determine the appropriate marital value of [Husband’s business] based on competent, credible evidence in the record… After considering all the evidence, the trial court remains free to believe all, part, or none of the expert’s valuation testimony.”

In reversing and remanding on Husband’s first assignment of error, the Court found that his second and third assignments were thus moot.

Gantous v. Basing, 11th Dist. Geauga No. 2018 DC 00017, 2023-G-0029, 2024-Ohio-1112

Marital Property: de facto date (termination of marriage), distributive award, equalization, equitable division (unequal division), life insurance (to secure property interest), retirement (OPERS), valuation
DOPO

Dated: March 25, 2024
Affirming

Editor’s Note: For our summary of a previous, separate Opinion in this case, click here.

Throughout the course of the parties’ marriage, the marital residence was used for security to obtain different financing and loans taken out by the parties. During their divorce, Wife argued that she be awarded the residence as her separate property, since she owned the property prior to the parties’ marriage. The trial court agreed, awarding the residence to Wife and ordering the payment of a distributive award to Husband. Both parties appealed, and the Court ultimately remanded the matter back to the trial court to determine the parties’ respective equity amounts in the residence.

[A]lthough she owned the home prior to the parties’ marriage, [Wife] failed to meet her burden of tracing her separate property, “i.e., the loan proceeds used for improvements, the marital funds used to pay off the loan, and the parties’ own labor-destroyed its identity as separate property.”

In its previous opinion also remanding, the Court directed the trial court to properly value and equitably divide the parties’ respective OPERS benefits. On remand, the trial court heard testimony from both parties, and received valuation reports for the OPERS benefits. Based on such valuations, and because Wife lacked means to make an equalizing cash payment to Husband, the trial court ordered the 50/50 division of marital interest within both their pensions. Both parties were entitled to maintain life insurance in the amount of the other party’s pension award, should they predecease, and Wife was ordered to pay Husband $54,007.34 for payments she received from OPERS (as she was already in pay-status) 03/10/2020 through 06/30/2023. In making these determinations, the trial court rejected Husband’s plea to value the parties’ OPERS as of the date of Wife’s retirement (in 2017), finding that the March 2020 date was appropriate even despite Wife’s earlier retirement, as Husband voluntarily chose to remain married and to continue his employment with associated OPERS contributions.

Wife appealed, arguing the trial court erred by (1) not considering her payment of a loan against the residence; and (2) awarding Husband a portion of her OPERS benefits, despite their disparity in incomes, and dividing the marital portion of the parties’ mutual OPERS by an in-kind 50-50% division pursuant to DOPO.

Noting a trial court’s broad discretion in valuing and dividing marital property, the Court overruled Wife’s first assignment of error:

We agree with the trial court that a loan billing statement on an equity line [Wife] took out for personal use and repaid herself is not relevant in the determination of the marital equity of the home.

As for the OPERS division, noting that the parties’ OPERS benefits constituted their largest assets, and that Wife was similarly awarded 50% of the marital portion of Husband’s OPERS benefits, the Court deemed Wife’s arguments to lack merit.

West v. West, 9th Dist. Wayne No. 2020 DR-B 000374, 22AP0053, 2024-Ohio-1086

Marital Property: valuation

Dated: 03/25/24
Affirming

The parties shared a business that the trial court valued and divided as part of the divorce. Initially, a magistrate’s decision valued the business at $541,067.57; following objections by Husband, however, the trial court instructed the magistrate to come up with a new value for the business, this time properly accounting for both assets and its liabilities (the previous calculation had been based on depreciable assets from a tax return totaling $477,866). The magistrate reached a new amount of $27,142.88, and the trial court adopted this new value in a nunc pro tunc decision. Wife objected, and was overruled. Her appeal followed.

In her overlapping assignments of error, Wife argued the trial court had erred when it independently determined the value of the parties’ business, instead of instructing that the parties submit their own valuations and evidence. (Note of interest: During the pendency of the appeal, Husband died, and the executor of Husband’s estate was party to the appeal on the estate’s behalf.)

Noting its abuse of discretion standard of review, the Court disagreed. The parties were provided ample opportunity to present their own evidence or testimony concerning valuation of the business, and had failed to do so.

Notably, on appeal, Wife does not reiterate or expound upon the arguments she made in her objections to the magistrate’s decision. Wife fails to explain how the trial court’s approach was unwarranted or discuss another approach that would be more accurate. Wife does not take issue with any particular figure used by the trial court in its valuation of the assets and the liabilities that ultimately led to the business valuation. Nor, on appeal, does Wife assert that trial court miscalculated or omitted an asset or liability in the process of valuing the business. Further, Wife does not assert that Husband’s testimony was not credible. While it is clear that Wife disagrees with the trial court’s valuation of J&J Performance, Inc., Wife has not sufficiently explained on appeal how the valuation is an abuse of discretion given the evidence that was actually before the trial court.

Machen v. Miller, 8th Dist. Cuyahoga No. DR-18-374625, 112453, 112454, 112479, 2024-Ohio-1270

Marital Property: de facto date (termination of marriage), valuation
Spousal Support: double-dipping

Dated: April 4, 2024
Affirming in Part, Reversing in Part, and Remanding

The divorce proceedings in this matter were lengthy, stretching from 2018 through 2023, and following a 2023 journal entry both parties appealed (Wife raising 18 assignments of error, and Husband raising three), which the Court consolidated for its review. For the purposes of this blog, this summary focuses on the Court’s findings related to the duration of the marriage, calculation of Wife’s income, valuation date for asset division, and ‘double-dipping’ by the trial court.

In her 2nd and 10th assignments of error, Wife argued that the trial court erred in using 11/04/2021 as the end date for the marriage, and should’ve instead used the date Wife filed for divorce, 11/30/2018. In doing so, she alleged, the trial court improperly valued and divided the parties’ marital and separate property. Noting the parties’ physical and financial separation since that date, the Court agreed. During the pendency of the case, both parties relocated to different states and maintained separate bank accounts and residences. Prior to 11/30/2018, the parties attended marriage counseling that ended in September 2018.

Overwhelming evidence in the record showed that all ten of the Dill factors, in addition to other relevant factors, weigh in favor of a de facto termination of marriage date being equitable. Given the lack of evidence to the contrary, we find that the trial court abused its discretion by using the date of the final hearing, November 4, 2021, as the termination date of the marriage.

In her 18th assignment of error, Wife alleged that the trial court erred in using 11/04/2021 for its valuation date for QDRO assignment to Husband. Based on its agreement above, the Court again reversed and remanded.

In her 5th and 11th assignments of error, Wife argued that the trial court erred in its determination of her income for spousal support purposes. Finding that the record and gross receipts for Wife’s business could not support the income determinations imputed to Wife by the trial court, the Court agreed and remanded the matter back to the trial court to make a redetermination of spousal support payable from Wife to Husband.

In Wife’s 7th assignment of error, she alleged that the trial court ‘double-dipped’ when it both counted her business ownership as marital property, and her earnings therefrom for the spousal support award. Finding that the trial court had included the cash balance for Wife’s business in her income for spousal support purposes, the Court agreed and remanded the matter back to the trial court.

Editor’s Note: A brief, companion Opinion for this case exists, which mostly just incorporates these findings.

Hall v. Bricker, 10th Dist. Franklin No. 18DR-3471, 23AP-140, 2024-Ohio-1339

Marital Property: appreciation (stock), equitable division (unequal division), debts, deferred distribution, distributive award, financial misconduct, loan, retirement benefits, stock (option), vesting

Dated: April 9, 2024
Reversing in Part, and Remanding

The parties married in 1989 and began a highly-contested divorce in 2017. The proceedings were lengthy and trial did not occur until 2022. As part of the decision that followed, the trial court (a) assigned a negligible value to Wife’s retained pension; (b) based on a finding of Husband’s financial misconduct, awarded Wife all of her retirement accounts; (c) based on a finding of Husband’s financial misconduct, assigned the balance of a HELOC debt to Husband (and ordered that he reimburse Wife for payments made); and (d) awarded Husband a share of Wife’s exercised stock which was not based on the actual proceeds therefrom. Husband appealed each of these determinations, among others not relevant to this post.

Addressing Husband’s first and second assignments of error together (concerning Wife’s pension and retirement accounts), the Court first found fault in the trial court’s assignment of marital property to Wife as a ‘distributive award.’ While a trial court may, the Court wrote, award one spouse more marital property when it finds the other spouse has engaged in financial misconduct, or make an unequal division of marital property based on factors in ORC § 3105.171(F), a trial court may not award make a distributive award from marital property.

“[ORC] § 3105.171(A) plainly states that distribute awards “are not made from marital property.” Thus, the trial court’s distributive award from marital property was contrary to law.

As for Husband’s alleged financial misconduct, this stemmed from Husband’s failed business venture during the parties’ marriage, several years prior to the beginning of the proceedings. Husband began running a VHS purchase/reseller business in the early aughts that suffered during the advent and proliferation of DVDs. To keep his business venture afloat, he liquidated his own retirement accounts and took out a substantial HELOC loan on the parties’ residence.

Although [Wife] disagreed with [Husband’s] decision to continue operating the business after 2007 and believed he acquired far too much inventory… there is no evidence to suggest that [Husband] committed fraud or otherwise acted unlawfully when he liquidated his retirement accounts and invested those funds into his Media Distributor’s business.

Observing that “making bad business or investment decisions does not, alone, rise to the level of financial misconduct contemplated by [ORC §] 3105.171(E)(4),” and citing Smith v. Smith and other caselaw concerning the line between financial irresponsibility and misconduct, the Court agreed with Husband and reversed the trial court’s finding of financial misconduct.

While evidence existed that Wife had opposed Husband’s continued business operations in 2007, no such evidence exists for 2003-2004, when Husband withdrew his retirement funds to invest into the business. The finding (as relied upon by the trial court in its determination) that Wife opposed Husband’s business venture from the onset is further belied by her cosigning of the HELOC loan in 2004. Further, the Court noted, Husband had been the sole earner from 2003-2007 using income from his now-defunct business, thus making it “difficult to see how” his investment into the business could not have been for a marital purpose.

Finally, the Court questioned the validity of Wife’s claim that she had not known of Husband’s retirement account distributions, based on the parties’ conflicting testimony and timeline presented.

We have repeatedly made clear that “financial misconduct” requires a showing of “knowing wrongdoing;” for example, where one party either profits or intentionally diminishes the value of another party’s share of the marital estate. See, e.g., Best, 2011-Ohio-6668 at ¶ 17. [Husband’s] decision to invest in a product that became outmoded by DVDs over time was a poor decision and resulted in a large loss. At the same time, we find no evidence in the record to suggest—and the trial court did not find—that [Husband] personally profited from his investment or intentionally sought to diminish [Wife’s] share of the marital estate. Rather, every indication is that [Husband] suffered just as much loss as [Wife].

Finding that the trial court’s award to Wife of 100% of the retirement accounts in her name relied heavily on the trial court’s financial misconduct finding, the Court remanded the question of an equitable division of retirement assets back to the trial court.

Finding similarly (and providing a summary for how vested, but unmatured pensions are treated under Ohio caselaw) with the trial court’s non-award of any interest in Wife’s pension to Husband -that it had heavily relied on a financial misconduct finding in doing so- the Court also remanded on the matter of Wife’s aforesaid pension.

As for repayment of the HELOC debt, the Court again agreed with Husband and remanded the matter back to the trial court to reallocate responsibility for the repayment of such debt between the two parties. Wife’s cosigning of the loan could not be squared, the Court wrote, with the allegation she was unaware of the loan getting taken out. Further, the Court wrote, the trial court had erroneously relied on case law pertaining to the unequal division of marital debt, in its decision to categorize this as separate debt.

Turning to Husband’s last assignment of error, the Court also reversed and remanded the trial court’s valuation and division of Wife’s now-exercised stock options. During the parties’ marriage, and following her reentry into the workplace, Wife was granted certain stock options amounting to 55 possible shares. During the marriage, and using marital funds for a total of $18,354, Wife exercised 14 options. At the time of the parties’ de facto date of divorce, she owned 14 shares of her employer’s stock and had 41 stock options that were not yet exercisable. Approximately four months later, she sold her 14 shares for a net deposit of $177,089. At roughly the same time, the sale of the company triggered the exercise and sale of Wife’s remaining options, resulting in an additional deposit of $300,657.

After hearing arguments from both parties, the trial court valued all 55 shares based on a 2016 stock option agreement, resulting in a total value of $72,105, of which it assigned half to Husband as his marital property.

In its decision, the Court noted the complexities of valuing stock options, typically attributable to their unknown value prior to sale. In this case, however, such limitations did not apply. As observed by the Court:

In this case 14 [employer] stock shares and 41 [employer] stock options were all sold 4 months after the de facto termination date of the parties’ marriage and approximately 4 years before trial in this case. Although objective evidence and actual events established the true value of the [employer] stock shares and stock options just a few months after the October 9, 2017 de facto termination date of the parties’ marriage, the trial court instead concluded it would be appropriate to value all stock shares and stock options using the exercise price contained in the stock options plan that granted these stock benefits to [Wife] in February 2016.

That decision was rooted in the trial court’s determination that [Wife’s] work for the company in the approximately four months after the de facto termination date of the marriage “must be said to have contributed, by whatever amount, to the appreciation of the stock”… There is no evidence in the record before us, however, to support this finding.

The company’s potential sale, the Court noted, was even reported in a news article published just three days after the de facto marriage termination date; the article indicated the company’s topline had grown 50% in that year. The Court reasoned it was likely the company’s growth was recorded long before the de facto date. Further, the Court found that Wife’s stock options were not based on her performance at the company, but were rather provided as an incentive for her continued employment. Thus, the options were not linked to the quality of her job performance.

On remand, the Court wrote, trial court would have to determine what portion of the $477,746 in proceeds from the stock sale would be subject to division as marital property and what portion should be set aside in consideration for Wife’s income taxes paid for receipt thereof.

Porter v. Porter, 12th Dist. Butler No. DR21 06 0457, CA2023-07-086, 2024-Ohio-1413

Marital Property: de facto date (termination of marriage), retirement benefits (401(k)), valuation
Spousal Support

Dated: April 15, 2024
Affirming

Following a 2022 divorce hearing, the trial court issued a decision that—among other things—awarded Wife a portion of Husband’s 401(k) based on its value as of said final hearing date. Husband appealed, raising two assignments of error.

In his first assignment of error, Husband argued that the trial court erred in using the date of final hearing for its valuation of his 401(k). The Court disagreed, noting the absence of any arguments Husband had made prior to his appeal concerning the use of a prior date, and that the parties’ physical separation prior to the hearing was intended at the time to be temporary. Noting that it would only overturn such a date if its use constituted an abuse of discretion, the Court affirmed.

In his second assignment of error, Husband alleged the trial court erred in its award of spousal support, due to his area’s much higher cost of living, when compared to Wife’s. The Court again disagreed, finding that the parties’ anticipated living expenses as set forth in the record were not disparate enough to support Husband’s argument.

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