Kaletta v. Kaletta , 2013 Ohio 1667 ( 2013 )

[Cite as Kaletta v. Kaletta, 2013-Ohio-1667.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 98821
LINDA A. KALETTA
PLAINTIFF-APPELLANT
vs.
ROBERT S. KALETTA
DEFENDANT-APPELLEE
JUDGMENT:
AFFIRMED IN PART, REVERSED IN PART,
AND REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Domestic Relations Division
Case No. D-337633
BEFORE: McCormack, J., Stewart, A.J., and Boyle, J.
RELEASED AND JOURNALIZED: April 25, 2013
ATTORNEY FOR APPELLANT
Richard J. Stahl
18051 Jefferson Park Rd.
Suite 102
Middleburg Heights, OH 44130
ATTORNEYS FOR APPELLEE
Richard A. Rabb
Kaitlyn D. Arthurs
McCarthy, Lebit, Crystal & Liffman
101 West Prospect Avenue
Suite 1800
Cleveland, OH 44115
TIM McCORMACK, J.:
{¶1} Plaintiff-appellant, Linda A. Kaletta (“Linda”), appeals the trial court’s
judgment of July 24, 2012, in which the court terminated the marriage between Linda and
defendant-appellee husband, Robert S. Kaletta (“Robert”), ordered spousal support to be
paid by Robert, and prescribed a division of the property of the parties. For the reasons
that follow, we affirm the trial court in part and reverse in part.
Procedural History
{¶2} On July 25, 2011, Linda filed a complaint for divorce, which was answered
by Robert on August 17, 2011. Following unsuccessful attempts at settlement, the
parties proceeded to a contested trial on May 30, 2012. Both Linda and Robert filed a
final argument with the court on June 29, 2012 and July 5, 2012, respectively.
{¶3} The trial court, having heard the evidence and testimony presented by the
parties during the one-day trial, issued its final judgment entry on July 24, 2012. The
judgment entry granted the parties a divorce and ordered the marriage dissolved and set
aside. In so doing, the court ordered Robert to pay Linda $1,500 per month for eight
years.1 This amount reflects a $500 credit to Robert for Linda’s share on a marital loan.
The trial court’s judgment entry contains contradicting statements regarding the award of
1
spousal support. The court initially orders that “Defendant shall pay spousal support to Plaintiff in
the amount of $1,500.00 per month * * * for a term of ninety-six (96) months.” However, in the
section of the entry pertaining to the division of property, the court finds that “”Defendant shall
assume the $1,000 per month payment [on the parties’ Direct Loans] and receive a credit of $500.00
per month towards the spousal support.” In so doing, the court “reduce[s] spousal support from
$2,000.00 per month to $1,500.00 per month.”
The overall spousal support amount is less than what both Linda requested and Robert
had offered. The court also made certain findings with respect to the parties’ marital
property, ordering the division of the parties’ assets and liabilities. The court retained
jurisdiction of the spousal support, and it declined to award attorney fees. Linda now
appeals the court’s final divorce decree, objecting to the amount and duration of spousal
support and alleging that the court inequitably divided certain property.
Substantive Facts
I. Income
{¶4} Linda and Robert were married on June 3, 1988. Two children were born
of this marriage, both of whom were emancipated at the time of trial. The parties met
while working at LTV Steel (“LTV”). Linda testified that she was employed by LTV
from 1976 to 1990. In 1990, she left employment upon having her first child. As a
result of her employment with LTV, Linda obtained pension benefits valued at
approximately $8,300. The parties were married for two years during Linda’s
employment with LTV.2
{¶5} Presently, Linda is employed by PSI Affiliates (“PSI”) and works as a
health aide for a school system. She works 30 hours per week, and her current salary is
$8.70 per hour. In 2011, Linda’s yearly salary was approximately $8,791. Through her
employment, she contributes to the School Employees Retirement System of Ohio
While the trial court provides in its judgment entry that Linda’s employment ended in
2
1991, thus finding the pension consists of three years of marital property, this court notes that the
evidence shows Linda left employment with LTV in 1990, two years into her marriage with Robert.
(“SERS”), which benefits she will receive upon her retirement. Linda’s accrued balance
with SERS is presently valued at $2,339.06. Linda last worked full time in 1990. She
testified that she has searched for full-time employment during the last year by searching
through the newspapers. She stated, however, that it “has been a few months” since she
has done so. Linda also testified that she received one offer for full-time employment
through PSI the previous year. She testified that she “was advised by Robert not to take
it.”
{¶6} On November 7, 2011, the court magistrate granted Linda’s request for
temporary spousal support. The court ordered Robert to pay Linda $500.00 per month,
effective September 26, 2011. There is some evidence indicating that there were
arrearages due as of April 30, 2012, in the approximate amount of $368.64. During the
trial, Robert’s attorney stipulated that no spousal support payments were made “in
September, October, and November.”
{¶7} Robert was previously employed by Larson-Juhl, earning approximately
$102,000 annually. During this time, Robert had a 401(k) account with Larson-Juhl.
Robert obtained a loan from this account for the purposes of paying down marital debt,
leaving an approximate 401(k) balance of $36,475. Robert testified that he made
bi-weekly payments of approximately $296 towards the balance on this loan. These
payments were withdrawn from Robert’s paychecks from Larson-Juhl. Robert
maintained this account during his marriage to Linda.
{¶8} Robert testified that he voluntarily left his employment with Larson-Juhl in
order to find “something that would give [him] some stability * * * other than living out
of a hotel room.” In doing so, he reduced his income from approximately $102,000 to
his present salary of $90,000. Furthermore, because he left Larson-Juhl, Robert testified
that he has defaulted on his 401(k) loan with his former employer. The balance on the
defaulted loan, according to Robert, “will be on the 1099 for $17,000 in expenses.”
{¶9} Presently, Robert is employed by ArcelorMittal as Process Manager of
Operations, earning approximately $90,000 per year, payable semi-monthly. Robert
received a signing bonus from ArcelorMittal in the amount of $15,000. The parties also
received a tax refund in the approximate amount of $5,000 for 2011.
II. Property
{¶10} The parties own a home located in North Royalton, Ohio. This home is
encumbered by a mortgage held by Select Portfolio Mortgage in the amount of $133,580
and an equity line of credit with Federal Savings and Loan in the amount of $37,587.
{¶11} Prior to the marriage and prior to the purchase of the marital home
referenced above, Linda owned and resided in a home in Cleveland, Ohio. Following the
parties’ marriage, Linda and Robert lived in the Cleveland property as husband and wife.
During such time, the parties made substantial repairs to the house. The home was sold
for approximately $62,000. The proceeds from the sale of the Cleveland property were
used for a down payment on a home in Middleburg Heights, where the parties resided
until they purchased the marital home in North Royalton. Linda testified that the
proceeds from the sale of the Cleveland property totaled approximately “$30,000 [or]
$40,000.” She did not produce any documents in support of this statement. There is
some dispute, however, over whether Linda’s attorney gave the documents supporting
Linda’s premarital interest in the Cleveland property to Robert’s attorney.
{¶12} The parties have also maintained several bank accounts, which hold monies
obtained from various sources. Linda had an account with FirstMerit Bank in the
approximate amount of $3,790. Linda testified that she withdrew this amount from the
parties’ joint savings account with Third Federal Savings & Loan. Linda also maintains
an account at Holy Family Credit Union with an approximate balance of $1,400, in
addition to a Total Control Account that had an approximate balance of $5,630, which
represents Linda’s inheritance from Robert’s uncle. Robert received the same amount,
$5,630, as an inheritance from his uncle.
{¶13} Additionally, the parties had two joint accounts at Third Federal with a
combined balance of $70.83. Robert maintains two accounts at Huntington Bank that
had a combined balance of approximately $12,787. This balance included Robert’s
inheritance from his uncle for $5,630 and the net proceeds of his signing bonus from
ArcelorMittal. Robert also has in his possession an uncashed 2011 tax refund of
approximately $5,000.
{¶14} Finally, the record demonstrates that four cars are titled in Robert’s name:
(1) 2001 Ford Windstar, driven by and in the possession of Linda; (2) 2001 Mercury
Marquis, driven by and in the possession of Robert; (3) 1998 Chrysler Sebring, driven by
and in the possession of the parties’ daughter; and (4) 2000 Honda Civic, driven by and in
the possession of the parties’ son.
III. Debt
{¶15} During the marriage, the parties acquired significant debt in the form of
credit card accounts and personal loans. Robert testified that he borrowed $22,000 from
his 401(k) with his former employer, Larson-Juhl, in order to apply payments to the
marital credit cards. The balance of this loan was approximately $17,000.
{¶16} At the time of this appeal, there were two outstanding credit cards with
substantial balances. Robert testified that he closed one of the accounts to prevent Linda
from using it. The majority of the purchases on the credit cards were marital. There is
some evidence that, on occasion, Robert used one of the cards for business purchases that
were later reimbursed by his employer. The Slate Chase credit card has an approximate
balance of $13,573, while the Capital One credit card has an approximate balance of
$13,462. Robert charged $2,000 on a credit card account for payment of his attorney’s
retainer fee. It is unclear which credit card contains this charge. Linda, on the other
hand, borrowed $750 from her mother for payment of her attorney fees thus far.
{¶17} Finally, Robert initiated three Direct Loans totaling approximately $64,000
for the purposes of paying a portion of the daughter’s college tuition. The loans are in
Robert’s name and were issued in October 2009, September 2010, and September 2011.
Payments were scheduled to begin in January 2013, unless deferred by certain
circumstances. As of the date of the trial court’s decision, the college loans were not in
repayment status. Linda testified that she disapproved of these loans, stating that the
interest rate of 7.9 percent was too high.
Assignments of Error
{¶18} Linda appeals the judgment entry of the trial court and raises the following
six assignments of error:
I. The trial court abused its discretion by failing to detail the factors used
to calculate spousal support.
II. The trial court abused its discretion by ordering a spousal support
obligation below what would be equitable.
III. The trial court abused its discretion by ordering spousal support for an
inequitable duration.
IV. The trial court abused its discretion by failing to credit
[plaintiff-appellant] for her pre-marital interest in the real property.
V. The trial court abused its discretion by inequitabl[y] dividing the
parties[’] personal property.
VI. The trial court abused its discretion by burdening the
[plaintiff-appellant] with student loan debt incurred by
[defendant-appellee].
Standard of Review
{¶19} We review a trial court’s determination in domestic relations cases under an
abuse of discretion standard. Booth v. Booth, 44 Ohio St.3d 142, 144, 541 N.E.2d 1028(1989).
Since it is axiomatic that a trial court must have discretion to do what is
equitable upon the facts and circumstances of each case, * * * it necessarily
follows that a trial court’s decision in domestic relations matters should not
be disturbed on appeal unless the decision involves more than an error of
judgment.
Id., citing Cherry v. Cherry, 66 Ohio St.2d 348, 355, 421 N.E.2d 1293 (1981). This
same standard applies to orders relating to spousal support and the division of marital
property. Id., citing Blakemore v. Blakemore, 5 Ohio St.3d 217, 218, 450 N.E.2d 1140(1983), and Martin v. Martin, 18 Ohio St.3d 292, 294, 480 N.E.2d 1112 (1985). An
abuse of discretion “connotes more than an error of law or judgment; it implies that the
court’s attitude is unreasonable, arbitrary or unconscionable.” Blakemore at 219.
Law and Analysis
I. Spousal Support
{¶20} Linda’s first three assignments of error pertain to the trial court’s award of
spousal support. We will, therefore, address them together. In her first assignment of
error, Linda argues that the trial court abused its discretion in failing to detail the factors
used to calculate spousal support. In her second and third assignments of error, Linda
maintains that the trial court abused its discretion by awarding an inequitable amount of
spousal support for an inequitable duration.
{¶21} In determining whether to grant spousal support and in determining the
amount and duration of the payments, the trial court must consider the factors outlined in
R.C. 3105.18(C)(1)(a)-(n). Kaechele v. Kaechele, 35 Ohio St.3d 93, 518 N.E.2d 1197(1988), paragraph one of the syllabus. R.C. 3105.18(C)(1) provides as follows:
(C)(1) In determining whether spousal support is appropriate and
reasonable, and in determining the nature, amount, and terms of payment,
and duration of spousal support, which is payable either in gross or in
installments, the court shall consider all of the following factors:
(a) The income of the parties, from all sources, including, but not limited to,
income derived from property divided, disbursed, or distributed under
section 3105.171 of the Revised Code;
(b) The relative earning abilities of the parties;
(c) The ages and the physical, mental, and emotional conditions of the
parties;
(d) The retirement benefits of the parties;
(e) The duration of the marriage;
(f) The extent to which it would be inappropriate for a party, because that
party will be custodian of a minor child of the marriage, to seek
employment outside the home;
(g) The standard of living of the parties established during the marriage;
(h) The relative extent of education of the parties;
(i) The relative assets and liabilities of the parties, including but not limited
to any court-ordered payments by the parties;
(j) The contribution of each party to the education, training, or earning
ability of the other party, including, but not limited to, any party’s
contribution to the acquisition of a professional degree of the other party;
(k) The time and expense necessary for the spouse who is seeking spousal
support to acquire education, training, or job experience so that the spouse
will be qualified to obtain appropriate employment, provided the education,
training, or job experience, and employment is, in fact, sought;
(l) The tax consequences, for each party, of an award of spousal support;
(m) The lost income production capacity of either party that resulted from
that party’s marital responsibilities;
(n) Any other factor that the court expressly finds to be relevant and
equitable.
R.C. 3105.18(C)(1)(a)-(n).
{¶22} The goal of spousal support is to reach an equitable result. Kaechele at 96.
While there is no set mathematical formula to reach this goal, the court must consider all
of the factors outlined above and “not base its determination upon any one of those
factors taken in isolation.” Id. The trial court is not required to enumerate each
statutory factor, however, it must demonstrate that it considered all of the “relevant
factors.” Marsh v. Marsh, 6th Dist. No. OT-09-036, 2010-Ohio-5023, ¶ 6. Essentially,
either the record or the trial court’s decision must articulate the basis for the award in
sufficient detail “to enable an appellate court to establish whether the award is fair,
equitable and in accordance with the law.” Kaechele at 97; Friedler v. Friedler, 8th Dist.
No. 92402, 2009-Ohio-4719, citing Stafinsky v. Stafinsky, 116 Ohio App.3d 781, 689
N.E.2d 112 (11th Dist.1996).
{¶23} In this case, the trial court found that the parties were married on June 3,
1988, and two children were born of this marriage. As of the date of trial, both children
had reached the age of majority. The court determined that “the duration of the marriage
shall be from June 3, 1988 until May 30, 2012.” As it pertains to spousal support, the
court deemed it appropriate for Robert to pay Linda spousal support. In reaching its
decision, the court stated that it “consider[ed] the factors set forth in Ohio Revised Code
3105.18.” It further considered the following factors:
The income of the parties demonstrates a disparity; Defendant is currently
employed at ArcelorMittal Cleveland at a salary of $90,000 per annum.
Plaintiff is employed at PSI Affiliates part-time at a rate of $8.70 per hour.
Plaintiff did not offer any evidence as to why she is not currently employed
full-time nor did she provide the Court with evidence she is seeking
full-time employ.
Both parties have retirement benefits; Plaintiff has retirement benefits from
her job at LTV Steel, with an approximate value of $8,000. Plaintiff’s
employ at LTV Steel began in 1976 and terminated in 1991, therefore only
three (3) years of the aforementioned pension is marital. Plaintiff also has
retirement benefits through SERS, with an approximate value of $2,339.06,
all of which is marital. Defendant has a 401(k) through Larson-Juhl, with
an approximate balance of $36,475.00, which is marital and shall be divided
accordingly.
{¶24} In a post-trial brief, Linda requested spousal support in the amount of
$2,500 per month for a period of seven years. In response, Robert requested that the
court order support in the amount of $2,000 for nine years. The trial court rejected both
parties’ positions and awarded spousal support in an amount less than even Robert was
willing to pay.
{¶25} Based upon the factors outlined above, the court ordered that “Defendant
shall pay spousal support to Plaintiff in the amount of $1,500.00 per month plus a
processing fee for a term of ninety-six (96) months [or eight years].”3 The court further
ordered that it shall retain jurisdiction to modify its order.
{¶26} While the trial court stated that it considered “the factors set forth in Ohio
Revised Code 3105.18,” it specifically delineated only the parties’ retirement benefits and
their present income, finding a “disparity.” In reviewing the trial court’s order, and in
This amount reflects the $2,000 support award less the $500 credit Robert receives for
3
payment of the student loan debt the court divided between the parties.
light of the evidence on the record, we find that the trial court failed to give sufficient
weight to the factors enumerated in R.C. 3105.18(C).
{¶27} The trial court is not required to enumerate each statutory factor, however, it
must demonstrate that it considered all of the “relevant factors.” Our review of the
record indicates that the trial court failed to give due consideration to the following
relevant factors: the relative earning abilities of the parties, the ages of the parties, the
duration of the marriage, the standard of living of the parties established during the
marriage, the tax consequences for each party of an award of spousal support, and the lost
income production capacity of either party that resulted from that party’s marital
responsibilities. See R.C. 3105.18(C)(1)(a)-(n).
{¶28} At the time of trial, Linda was 60 years old. Prior to having children, Linda
worked full-time at LTV, earning approximately $20,000. In 1990, upon the birth of
their first child, Linda left employment with LTV. Contrary to the evidence presented at
trial, the trial court incorrectly determined that Linda left her employ in 1991, thus
concluding that three years of her pension with LTV, rather than two, is marital property.
{¶29} The evidence demonstrates that Linda has not worked full-time since her
employment at LTV. Linda testified that she is presently employed for 30 hours per
week at a rate of $8.70 per hour. She earned approximately $8,790 in 2011, $8,938 in
2010, and $7,013 in 2009. In its order, the trial court concluded that “Plaintiff did not
offer any evidence as to why she is not currently employed full-time nor did she provide
the court with evidence she is seeking full-time employment.” During the trial, however,
Linda testified that she “did have an offer of full-time employment last year through PSI,
but [she] was advised by Robert not to take it.” While this testimony was not developed,
it is uncontroverted, and it directly contradicts the court’s finding that Linda did not
provide the court with evidence that she is seeking full-time employment.
{¶30} At 60 years of age, and having been a homemaker for the majority of their
marriage, leaving full-time employment upon the birth of their first child, Linda stands
today with little opportunity to develop meaningful employment. She has effectively
been prevented from re-establishing herself in a career at this point in her life and with
outdated skills, education, and training. Robert, on the other hand, is eight years younger
than Linda and has maintained a successful career. Based upon the evidence of
employment found in the record, Robert has a much higher earning capacity than Linda
ever will. While Robert contends that Linda failed to produce evidence of her “marital
contributions” and “familial duties,” this court finds that Linda’s undisputed testimony is
that she left full-time employ with LTV in 1990 upon the birth of the parties’ first child.
Impliedly, Linda’s reason for doing so was to care for the child (and an additional child
born in 1993).
{¶31} Linda and Robert were married for 24 years. This was a marriage of long
duration. Other than acknowledging the length of the marriage by identifying the date of
the marriage, there is no indication that the trial court gave due consideration to the
substantial duration of the marriage. Nor did the court adequately consider Linda’s
resources and her ability and potential to become self-supporting, in light of her limited
history of employment. See Kunkle v. Kunkle, 51 Ohio St.3d 64, 554 N.E.2d 83 (1990),
paragraph one of the syllabus (finding that a spousal award of indefinite duration may be
appropriate in cases involving a marriage of long duration, parties of advanced age or a
homemaker-spouse with little opportunity to develop meaningful employment outside the
home, where a payee spouse has the resources, ability, and potential to be
self-supporting).
{¶32} In a factually similar case, the Ninth District Court of Appeals recently
determined that while the trial court is not required to award spousal support, it must set
forth a sufficient basis to support its award. Kent v. Kent, 9th Dist. No. 26072,
2012-Ohio-2745, ¶ 17. In that case, the parties had been married for 26 years, the wife
stopped working the year after the parties’ first child was born, and she remained at home
caring for the children for 19 years. The wife returned to part-time employment after
having raised the children. The trial court awarded the wife 8.4 years of spousal support
without explanation for this duration. Upon review, the appellate court determined that
the fact that the marriage was one of substantial duration and the wife had little
opportunity to develop meaningful employment (as a result of her role as primary
caregiver), were weighty factors that should have been considered by the trial court in
awarding spousal support of a limited duration. Id. It concluded that “[a]bsent any
explanation on the part of the trial court for the limited duration of its award, we cannot
conclude that the court properly exercised its discretion” in awarding the wife 8.4 years of
support. Id.{¶33} The trial court in the instant matter failed to provide any explanation for its
spousal support in the amount of $1,500 for 96 months (eight years). Nor did it
demonstrate that it considered such factors as the substantial duration of the marriage,
Linda’s role as primary caregiver of the parties’ children, or her opportunity to return to
gainful full-time employment.
{¶34} Moreover, the court failed to explain why it awarded spousal support in an
amount less than both parties had requested. In Linda’s post-trial brief, she asked that
the court award spousal support in the amount of $2,500 for seven years. This award
would amount to $210,000 over the course of the support period. Robert, on the other
hand, requested the court order $2,000 spousal support for nine years, which amounts to
$216,000 over the duration of the support order. In ordering $2,000 in spousal support
for eight years (notwithstanding the $500 credit to Robert for the college loan), the court
awarded Linda support in the amount of $192,000 over the life of the order, which
amounts to $24,000 less than the amount Robert was willing to pay. As a result of the
above, we cannot conclude that the court properly exercised its discretion in awarding the
above support.
{¶35} Accordingly, Linda’s first, second, and third assignments of error are
sustained.
II. Division of Property
{¶36} In a divorce proceeding, marital property includes the following:
(i) All real and personal property that currently is owned by either or both of
the spouses, including, but not limited to, the retirement benefits of the
spouses, and that was acquired by either or both of the spouses during the
marriage;
(ii) All interest that either or both of the spouses currently has in any real or
personal property, including, but not limited to, the retirement benefits of
the spouses, and that was acquired by either or both of the spouses during
the marriage;
(iii) Except as otherwise provided in this section, all income and
appreciation on separate property, due to the labor, monetary, or in-kind
contribution of either or both of the spouses that occurred during the
marriage * * *.
R.C. 3105.171(A)(3)(a)(i)-(iii).
{¶37} R.C. 3105.171(C)(1) mandates an equal division of marital property, or “if
an equal division is inequitable, the court must divide the marital property equitably.”
Strauss v. Strauss, 8th Dist. No. 95377, 2011-Ohio-3831, ¶ 37, citing Neville v. Neville,
99 Ohio St.3d 275, 277, 2003-Ohio-3624, 791 N.E.2d 434. In order to determine what is
equitable, the trial court must consider the factors outlined in R.C. 3105.171(F). Id.Such factors include, among others, the duration of the marriage, the assets and liabilities
of the spouses, tax consequences of the property division, and any retirement benefits of
the spouses. R.C. 3105.171(F)(1)-(10). Moreover, the trial court must take into account
the parties’ marital debt when dividing marital property. Kehoe v. Kehoe, 8th Dist. No.
97357, 2012-Ohio-3357, ¶ 14, citing Barkley v. Barkley, 119 Ohio App.3d 155, 169, 694
N.E.2d 989 (4th Dist.1997).
{¶38} Marital property, however, does not include separate property. R.C.
3105.171(A)(3)(b). “Separate property” is any real and personal property and any
interest in real or personal property that was acquired by one spouse prior to the date of
the marriage. R.C. 3105.171(A)(6)(a)(ii). The commingling of separate property with
other property does not destroy the identity of the separate property “except when the
separate property is not traceable.” R.C. 3105.171(A)(6)(b). The party seeking to have
certain property classified as “separate property” has the burden of proof in tracing the
separate property. Strauss at ¶ 49, citing Peck v. Peck, 96 Ohio App.3d 731, 734, 645
N.E.2d 1300 (12th Dist.1994).
{¶39} The marital assets in this case consist of both personal and real property.
The real property includes the marital home located in North Royalton, which is
encumbered by a mortgage in the amount of $133,580 and an equity line of credit in the
approximate amount of $37,587. The parties also have personal assets, consisting of
various bank accounts, retirement accounts, inheritances, a tax refund from 2011,
Robert’s signing bonus from ArcelorMittal, and four vehicles titled in Robert’s name.
The parties’ debts or liabilities consist of the following: the mortgage and equity line on
the marital home, the $17,000 balance on a 401(k) loan from Robert’s former employer,
two credit cards with balances in excess of $13,000 each, and three Direct Loans for
payment of the daughter’s college education in the total approximate amount of
$64,315.44.
A. Cleveland Property
{¶40} Linda’s fourth assignment of error asserts that the trial court abused its
discretion in failing to provide Linda credit for her pre-marital assets that contributed to
the purchase of the marital home.
{¶41} Prior to purchasing the North Royalton home and prior to the marriage,
Linda owned the property in Cleveland, Ohio. The proceeds from the sale of the
Cleveland property were used for a down payment on a home in Middleburg Heights,
which was the marital home until the North Royalton property was purchased.
{¶42} In its judgment entry, the trial court ordered the marital property divided
between the parties. In so doing, the court found that all equity in the North Royalton
home was marital, as there was no tracing provided with respect to the monies from the
sale of the Cleveland property.
{¶43} In this case, there is no dispute that Linda owned the Cleveland property
prior to the parties’ marriage, and Linda and Robert lived there as husband and wife for a
period of time. During such time, the parties made substantial repairs to the property. It
was also not disputed that the proceeds from the sale of the Cleveland property were
applied toward the down payment of the marital home in Middleburg Heights. Linda
fails, however, to provide any evidence documenting such funds. She testified that the
Cleveland home sold for “$62,000, I believe.” She also testified that the down payment
for the Middleburg Heights home was “$30,000 [or] $40,000.” However, she failed to
present any documentation establishing an adequate trace of the funds acquired from the
sale of the Cleveland home or the monies used for the down payment of the Middleburg
Heights home. Accordingly, we find the trial court did not abuse its discretion in
designating all equity with respect to the real properties at issue as marital property and
dividing it equally between the parties. Linda’s fourth assignment of error is without
merit.
B. Inequitable Division
{¶44} In her fifth assignment of error, Linda states that the trial court abused its
discretion in equally dividing the parties’ property, yet producing an inequitable result.
For the following reasons, we agree.
{¶45} As previously stated, a trial court must divide the marital property of the
parties equitably, and in equitably dividing such property, the court must consider certain
statutory factors. Our review of the record, however, indicates that the trial court failed
to give due consideration to the relevant factors outlined in R.C. 3105.171(F) when it,
essentially, divided the parties’ assets and liabilities equally.
{¶46} The entry provides that Robert shall refinance the marital home. In so
doing, he shall pay Linda 50 percent of the net equity, which is the value of the property
less the balance of the mortgage and equity line of credit.
{¶47} In dividing the bank accounts, the court ordered as follows:
The parties have several bank accounts; Plaintiff holds an account at
FirstMerit in the amount of $3,790.11, an account at Holy Family Credit
Union with a balance of $1,400 and a Total Control Account with a balance
of $5,630.57, created from an inheritance from Defendant’s uncle.
There are two joint accounts held at Third Federal Savings and Loan with a
combined balance of $70.83. Defendant holds two (2) accounts at
Huntington Bank with [a] combined balance of $12,787.32. Included in
Defendant’s accounts are the inheritance of $5,600, leaving a remaining
balance of $7,187.32.
{¶48} The trial court concluded that the difference between the monies held by
Robert and the monies held by Linda is $1,982.46. It, therefore, ordered Robert to pay
half of this difference, amounting to $991.23. It is unclear how the court reached this
number and whether the joint account balance of $70.83 was divided equally and factored
into the equation. This court was unable to replicate the exact figure reached by the trial
court in calculating the parties’ accounts.
{¶49} Moreover, this court notes that both Robert and Linda received separate
inheritances from Robert’s uncle in the approximate amount of $5,630. These amounts
are considered separate property, and it is undisputed that such funds have been
maintained separately and not commingled. Therefore, the inheritance should not be
considered jointly in the division of the parties’ assets.
{¶50} With respect to the parties’ automobiles, the court ordered Robert to transfer
the title of the 2001 Ford Windstar to Linda. There is no further reference to the
remaining three vehicles titled to Robert. While the testimony provided that Robert and
the two children drive the remaining vehicles, the court failed to allocate such vehicles to
the parties or the children.
{¶51} In addressing the loan that Robert took out on his 401(k) with his former
employer, Larson-Juhl, the court found that there is a current balance of approximately
$17,000. The court stated that Robert “shall assume the entire amount of the 401(k) loan
* * * and as an offset shall be entitled to retain the entire amount of the [2011] tax
return.” In awarding spousal support, the trial court initially found that Robert has a
401(k) account through Larson-Juhl, “with an approximate balance of $36,475, which is
marital and shall be divided accordingly.” The court, however, does not provide further
instructions on its division, nor does the court specifically refer to the account in its order
dividing the property.
{¶52} With respect to the credit card accounts, the court finds that these accounts
are marital. The court determines that “[s]ince the balances are relatively equal,” Robert
shall assume sole liability on the Capital One account, with an approximate balance of
$13,462, and Linda shall assume sole liability on the Slate Chase account, with an
approximate balance of $13,573.
{¶53} Finally, concerning the Direct Loans incurred for the benefit of the daughter,
the trial court found that these loans, in the approximate amount of $64,315.44 are marital
property and shall be “equally divided.” In accordance with this finding, the court
ordered the loan to be repaid “in the amount of $1,000 per month, which equally divided
is $500.00 per party.”
{¶54} Despite the fact that the trial court appears to have attempted to divide the
properties equally, the court’s order fails to reflect that it considered the factors outlined
in R.C. 3105.171(F) to ensure that the division was equitable. Moreover, in considering
such factors, it appears from the evidence provided that such division was, in fact,
inequitable.
{¶55} In the first place, while outlining the various assets and liabilities of the
parties, the trial court failed to adequately consider the substantial disparity in the
incomes, the earning potential of the parties, the debt-to-income ratio, and the tax
consequences of the equal division of such assets and liabilities. While an exhaustive
discourse of each factor is not necessary, “there must be a ‘clear indication that the
statutory factors were considered and played a role in the ultimate division of property.’”
Renz v. Renz, 12th Dist. No. CA2010-05-034, 2011-Ohio-1634, ¶ 36, quoting Heslep v.
Heslep, 7th Dist. No. 825, 2000 WL 818909 (June 14, 2000). Moreover, the trial court
must consider the tax consequences of its property division, unless those consequences
are speculative. R.C. 3105.171(F)(6); Renz at ¶ 36.
{¶56} Secondly, the trial court failed to consider the substantial duration of the
parties’ marriage. As we previously stated, other than noting the beginning and ending
date of the marriage, the trial court failed to give due consideration to the 24-year
marriage of Linda and Robert.
{¶57} In this case, there is no clear indication that the aforementioned factors
played a role in the trial court’s division of the parties’ property. With respect to the
parties’ incomes, it is not clear what yearly salary the court imputed to Linda, merely
finding her salary to be “$8.70 per hour.” We do not know if the court considered
Linda’s base hours of 30 per week and whether her pay was calculated for nine months
(the school year) or 12 months. If we calculate Linda’s salary at $8,247.52 (the average
of her last three years’ salaries as evidenced by the parties’ tax returns), the substantial
disparity in the parties’ income is clear. Furthermore, the court failed to consider that
Robert’s salary of $90,000 per year (which was unilaterally reduced weeks before trial by
Robert’s changing employment) will potentially increase, while Linda’s earning capacity
is unlikely to change. The same is true for the parties’ retirement funds. While Robert’s
relative earning abilities increase, so does his retirement account. Linda’s retirement
account, on the other hand, will be substantially smaller, given her age and previous
employment history.
{¶58} While the trial court attempted to divide the large credit card balances and
the substantial balance on the Direct Loans equally, given the totality of the parties’
income, assets, and retirement benefits, this court cannot conclude that such division was
equitable. In equally dividing the credit card balances and the Direct Loans, the trial
court failed to consider that Robert’s income is nearly ten times that of Linda’s income.
Moreover, Robert’s income and retirement benefits will likely increase, given his age and
his established career.
{¶59} Without explanation, the trial court assigned the credit card with the largest
balance to Linda. It is not clear whether this balance includes Robert’s $2,000 attorney
fee that he charged to a credit card. Under the circumstances, we cannot conclude that
this distribution was reasonable.
{¶60} Further, again without explanation or consideration of any statutory factors,
the trial court divided the substantial Direct Loans balance of approximately $64,315.44
equally between the parties, ordering each party to pay $500 per month. With Robert’s
annual income at $90,000, with a higher earning capacity, and Linda’s income at
approximately $8,247.52, with a considerably lower income potential, we cannot
conclude that the parties’ debt-to-income ratio and their respective earning abilities
played a role in the ultimate division of this property.
{¶61} Moreover, the court failed to consider any tax consequences of the division
of the parties’ property, specifically with respect to the net equity Linda would receive
from the refinancing of the parties’ marital home or the receipt of her share of Robert’s
retirement fund with his former employer. The trial court does not provide explicit
instructions for the distribution of Robert’s retirement fund. However, for purposes of
this order, we interpret the trial court’s statement that the funds be “divide[d]
accordingly” to mean that Linda would receive half of this account and she would, as
such, be burdened by the tax consequences upon receiving her share of such funds.
Additionally, the court does not address the tax consequences of Robert’s default on the
401(k) loan caused by his leaving employment at Larson-Juhl, including any penalties
assessed for such default. Linda will also pay taxes on the spousal support she receives.
Finally, with respect to the Direct Loans incurred for the daughter’s college education, the
trial court divided the indebtedness equally. However, it failed to consider the
“education credit” Robert has received on his tax returns as a result of such loans. Linda
will receive no such credit.
{¶62} In light of the above, we find the trial court either failed to consider the
relevant factors outlined in R.C. 3105.171(F) or failed to provide enough detail in its
order to allow this court to determine that such factors were considered in its division of
property. Therefore, we cannot conclude the trial court properly exercised its discretion
in dividing the property in an equitable manner.
{¶63} Accordingly, we sustain Linda’s fifth assignment of error and order the trial
court to re-evaluate the evidence in light of the foregoing, in order to achieve a more
equitable result.
C. Direct Loans
{¶64} In Linda’s sixth assignment of error, she contests the trial court’s division of
Direct Loans taken out by Robert to pay for their daughter’s college education. As an
initial matter, Linda claims that the above referenced Direct Loans were incurred solely
by her husband and without her knowledge or consent. She states, therefore, that the
obligation on these loans should be borne by Robert alone.
{¶65} Assets and debts incurred during a marriage are presumed to be marital,
unless it can be proven that they are separate property. Kehoe, 8th Dist. No. 97357,
2012-Ohio-3357, ¶ 14, citing Vergitz v. Vergitz, 7th Dist. No. 05 JE 52, 2007-Ohio-1395,
¶ 12. In particular, this court has held that student loan obligations undertaken during the
marriage for the benefit of a couple’s emancipated child should be treated as any other
expense of the marriage and, thus, is considered marital debt. Id. at ¶ 16. The
determinative factor is whether the debt was incurred during the marriage. Nemeth v.
Nemeth, 11th Dist. No. 2007-G-2791, 2008-Ohio-3263, ¶ 50; Gallo v. Gallo, 11th Dist.
No. 2000-L-208, 2002-Ohio-2815 (refusing to treat college loan incurred by the husband
after the divorce was filed and after the effective date of the end of the marriage as
marital debt).
{¶66} In this case, Robert incurred approximately $64,315.44 in college direct
loans for the benefit of the parties’ emancipated daughter. The first loan, incurred on
October 28, 2009, and the second loan, incurred on September 20, 2010, were undertaken
prior to the commencement of divorce proceedings. The final loan, however, was
undertaken on September 22, 2011, almost two months after the divorce was filed, but
several months prior to the termination date of the marriage.
{¶67} The trial court in this case determined that the duration of the marriage is
from June 3, 1988 to May 30, 2012. Moreover, it stated that “the College Direct Loans,
in the amount of $64,315.44 * * * were taken out in furtherance of the daughter[’s] * * *
education.” The court then concluded that “because the loans were taken out during the
marriage and for the parties’ daughter [they] are hereby deemed marital debt.” We
cannot, therefore, conclude that the trial court’s determination that the Direct Loans were
marital property was an abuse of discretion in that regard.
{¶68} Nevertheless, in its entry, the trial court states that the “[e]vidence presented
demonstrates the loan is to be repaid in the amount of $1,000 per month, which equally
divided is $500 per party.” It, therefore, found that “[Robert] shall assume the $1,000
per month payment and receive a credit of $500 per month towards the spousal support.”
{¶69} The record, however, does not support the trial court’s finding in this regard.
The only evidence presented with respect to a monthly payment on the loan obligation is
a statement from Direct Loans, which itemizes the loans, the interest rate, and the original
loan amounts. This statement identifies the “payment amount due” as $811.39. The
court’s figures, therefore, are arbitrary and not supported by the evidence.
{¶70} Further, unless certain circumstances arise to cause deferment of this loan,
repayment would have begun January 2013, approximately seven months after spousal
support was ordered. It is not clear from the trial court’s order whether Robert is to pay
$2,000 in spousal support until the loan repayment potentially began in January 2013,
when Robert would begin receiving the Direct Loans “credit of $500.00” from Linda.
{¶71} In light of this evidence, we find the trial court’s decision regarding the
amount of the parties’ student loan obligation is arbitrary and unreasonable and, therefore,
it is an abuse of discretion. Accordingly, Linda’s sixth assignment of error is overruled
in part and sustained in part.
{¶72} This cause is affirmed in part, reversed in part, and remanded to the lower
court for further proceedings consistent with this opinion.
It is ordered that appellant and appellee share the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
___________________________________________________
TIM McCORMACK, JUDGE
MELODY J. STEWART, A.J., and
MARY J. BOYLE, J., CONCUR