Marron v. Marron , 2014 Ohio 2121 ( 2014 )

[Cite as Marron v. Marron, 2014-Ohio-2121.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
WARREN COUNTY
SANDRA L. MARRON, :
CASE NOS. CA2013-11-109
Plaintiff-Appellee/Cross- : CA2013-11-113
Appellant,
: OPINION
5/19/2014
- vs - :
:
MICHAEL G. MARRON,
:
Defendant-Appellant/Cross-
Appellee. :
APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS
DOMESTIC RELATIONS DIVISION
Case No. 12DR35329
Phyllis G.Bossin & Associates, LPA, Phyllis G. Bossin, Shannon F. Eckner, 105 East Fourth
Street, Suite 1200, Cincinnati, Ohio 45202, for appellee/cross-appellant
Cors & Bassett, LLC, Michael L. Gay, 537 East Pete Rose Way, Suite 400, Cincinnati, Ohio
45202-3502, for appellant/cross-appellee
PIPER, J.
{¶ 1} Appellant/cross-appellee, Michael G. Marron (Husband), appeals a divorce
decree of the Warren County Court of Common Pleas, Domestic Relations Division. For the
reasons stated below, we affirm in part, reverse and vacate in part, and remand the matter to
the trial court.
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{¶ 2} Husband and appellee/cross-appellant, Sandra L. Marron (Wife), were married
on May 4, 1996. The couple has four minor children born during the marriage. During most
of the marriage, Wife stayed at home and took care of the children and in December 2012,
Wife returned to the work force as a part-time substitute teacher. Husband works as a
manufacturer's representative for Apex Sales Agency, selling engineering metal and plastic
products. Husband's employment requires him to travel and entertain certain clients for
which he incurs a substantial amount of business expenses. Apex is owned by Husband and
his brother. Husband is employed as an independent contractor through Apex and operates
through Creevy Lake Limited, a corporation owned by Husband and Wife. Husband is also a
shareholder of three family-owned corporations: Marron Family Partnership, Hassett Family
Partnership, and Hassett Properties.
{¶ 3} All five of the corporations in which Husband owns an interest, Apex, Creevy
Lake, Marron Family Partnership, Hassett Family Partnership, and Hassett Properties, are
"S-Corporations." S-Corporations do not pay corporate income tax but instead the
shareholders are taxed on the corporate earnings as if the income was their personal
earnings regardless of whether those corporate earnings are distributed or retained by the
company. These earnings are then reported on a K-1 tax form and commonly referred to as
"K-1 income." In 2012, the K-1 income from Apex, Marron Family Partnership, Hassett
Family Partnership, and Hassett Properties was retained and Husband only received a
distribution intended to cover the tax consequences of this K-1 income. The K-1 income from
Creevy Lake was distributed to Husband.
{¶ 4} On February 10, 2012, Wife filed for divorce. The parties entered into an
agreed entry that addressed many of the property issues in the divorce. A trial was held
regarding Husband's spousal and child support obligations. At issue during the trial was the
calculation of Husband's income and Wife's employment status. Wife and Husband
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presented dueling experts regarding Husband's income.
{¶ 5} On August 28, 2013, the trial court issued its decision and agreed with Wife's
expert that Husband's income was $271,000. This amount included Husband's salary,
business expenses that were personal in nature, distributed K-1 income from Creevy Lake,
and retained K-1 income from the other businesses. The court also found that if Wife was a
full-time teacher she would earn $35,000 to $40,000 annually. The court ordered Husband to
pay Wife spousal support is the amount of $6,000 per month for five years and $1,510.16 per
1
month of child support. In the child support worksheet used to determine Husband's child
support obligation, the court did not include the "marginal, out of pocket costs, necessary to
provide health insurance for the children." The court also ordered the parties to divide the
household goods as set forth in Wife's exhibit.
{¶ 6} After the court's decision, Husband moved to reopen the evidence to allow him
to introduce evidence regarding the marginal cost of health insurance. Husband's motion
also requested the court to clarify its decision regarding the division of household goods. The
trial court overruled Husband's motion. On October 29, 2013, the trial court issued the
judgment entry and final decree of divorce. Husband now appeals asserting two
assignments of error. Wife cross-appeals and asserts two cross-assignments of error.
{¶ 7} Assignment of Error No. 1:
{¶ 8} THE TRIAL COURT ERRED TO THE PREJUDICE OF THE APPELLANT IN
FINDING THAT HUSBAND'S INCOME FOR COMPUTATION OF SPOUSAL SUPPORT
AND CHILD SUPPORT WAS $271,000.
{¶ 9} Husband argues that the court abused its discretion in determining his annual
1. The spousal support amount does not include the two percent processing fee. The child support amount is
the amount when private health insurance is being provided and does not include the two percent processing
charge.
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income as $271,000 for child and spousal support purposes. Specifically, Husband
maintains that the trial court included in his income, "phantom income" from the S-
corporations he owns. Husband maintains that the K-1 income retained by the corporations
should not be included in his income because he did not receive it, he had no legal right to
demand it, and he had never received any cash distribution from these companies with the
exception of a tax draw in later years.
{¶ 10} "A trial court's decision in matters concerning child support shall be reviewed
under an abuse of discretion standard." Combs v. Walsh, 12th Dist. Butler No. CA2005-07-
198, 2006-Ohio-7026, ¶ 16, citing Booth v. Booth, 44 Ohio St.3d 142, 144 (1989). The same
standard applies in our review of a trial's court's spousal support award. Gregory v. Kottman-
Gregory, 12th Dist. Madison Nos. CA2004-11-039, CA2004-11-041, 2005-Ohio-6558, ¶ 9.
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 v. Blakemore, 5
Ohio St.3d 217, 219 (1983).
{¶ 11} In this case, the trial court was required to determine both parties' annual
income for purposes of computing spousal support and child support obligations. See R.C.
3105.18 and R.C. 3119.02. R.C. 3105.18(C)(1)(a) directs domestic relations courts to
consider "the income of the parties, from all sources," in determining spousal support.
{¶ 12} For child support purposes, "income" for a parent who is employed to full
capacity is defined as "the gross income of the parent." R.C. 3119.01(C)(5). "Gross income"
is
the total of all earned and unearned income from all sources
during a calendar year, whether or not the income is taxable, and
includes income from salaries, wages, overtime pay, and
bonuses to the extent described in [R.C. 3119.05(D)];
commissions; royalties; tips; rents; dividends; severance pay;
pensions; interest * * * and all other sources of income. 'Gross
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income' includes * * * self-generated income; and potential cash
flow from any source.
(Emphasis added.) R.C. 3119.01(C)(7).
"Self-generated" income is defined as "gross receipts received by a parent from * * * [a]
closely held corporation, and rents minus ordinary and necessary expenses incurred by the
parent in generating the gross receipts." R.C. 3119.01(C)(13).
{¶ 13} The Ninth District has included retained K-1 earnings in the calculation of a
spouse's income for spousal and child support purposes. Poitinger v. Poitinger, 9th Dist.
Summit No. Civ. A. 22240, 2005-Ohio-2680. In Poitinger, the obligor spouse argued the
retained K-1 income was "phantom income" because he did not receive a cash distribution
from the income. Id. at ¶ 18. The court disagreed and noted that R.C. 3105.18 is silent as to
whether "phantom income" should be included in spousal support. Id. Additionally, the court
reasoned, "claims such as Appellant's require courts to make sure that the support obligor is
not merely attempting to manipulate his income and wrongfully shelter a portion of it from his
support obligations." Id. See Ulliman v. Ulliman, 2d Dist. Montgomery No. 22560, 2008-
Ohio-3876, ¶ 14.
{¶ 14} Additionally, this court has noted that courts must carefully examine corporate
expenses and deductions as related to possible personal income when a corporate
proprietorship is involved in a support case. Hayman v. Hayman, 12th Dist. Butler No.
CA2001-10-250, 2003-Ohio-76, ¶ 12. A review of all circumstances must be conducted "to
determine if the individual proprietor has taken or concealed anything of value from his
corporation which should be added to his personal income." Id. See Radford v. Radford, 8th
Dist. Cuyahoga Nos. 96267 and 96445, 2011-Ohio-6263, ¶ 27-28.
{¶ 15} At trial, each party presented expert witnesses regarding Husband's K-1
income. Terry Yoho, a Certified Public Accountant (CPA) and an expert in forensic
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accounting, testified that she investigated Husband's income. Yoho explained that in
conducting her investigation she used forensic accounting methodology and relied on source
documents provided by Husband and Husband's accountant as well as an interview with
Husband's accountant. Based upon Yoho's investigation and analysis, she determined within
a reasonable degree of accounting certainty that Husband's annual income is $271,000.2
Her computation of Husband's income included Husband's salary, commissions, K-1 income,
and discretionary nonbusiness expenses that Yoho added back to Husband's income.
{¶ 16} In the computation of Husband's annual income, Yoho included the K-1 income
attributable to Husband even if the corporation retained the income. In 2012, Husband
received: 1.) $1,997 of K-1 income from Marron Family Partnership; 2.) $65,791 of K-1
income from Hassett Family Partnership; and 3.) $2,370 of K-1 income through Hassett
Properties. While Husband was taxed on this K-1 income, Husband only received $23,073
as a distribution. Yoho explained that she included the entire amount of K-1 income from
these businesses in Husband's income because while Husband did not receive the income
as cash, the income was invested in the companies Husband partially owned and therefore
increased his wealth.
{¶ 17} Yoho also included K-1 income Husband received through his ownership
interest of Apex Sales Agency. In 2012, Husband received $35,751 of K-1 income from
Apex. Yoho included all of the K-1 income in her computation of Husband's income even
though the only distribution Husband received from Apex was $12,200. Yoho also disagreed
with Husband's characterizations that the distributions he received from Hassett Family
Partnership and Apex were required to cover the tax consequences of the K-1 income. Yoho
2. This amount includes the distributed K-1 income to wife through her 10 percent ownership interest in Creevy
Lake. Because wife's ownership interest is now allocated to Husband and Husband is now the 100 percent
owner of Creevy Lake.
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explained that the cash distribution was approximately $15,500 over what was required to
pay the tax obligations resulting from the K-1 income.
{¶ 18} Martin J. Wise, a CPA who has been the accountant for Husband and
Husband's family for 18 years, testified regarding his determination of Husband's income.
Wise explained that in his investigation of Husband's income, he relied on the information
provided to him by the corporations' management and Husband and did not audit any
underlying documents or request source documents. Wise is not a certified fraud examiner
and he does not do forensic fraud investigations. Based upon his investigation, Wise
determined Husband's income to be $123,158. In computing Husband's income, Wise did
not include the retained K-1 income from Apex, Marron Family Partnership, Hassett Family
Partnership, and Hassett Properties.
{¶ 19} Wise explained that he did not include the retained K-1 income because
Husband did not receive this money as cash, had no managerial control over these
companies, and had no ability to demand distribution of these funds. The three companies
which Husband and his siblings were shareholders, Marron Family Partnership, Hassett
Family Partnership, and Hassett Properties, were traditionally controlled by Husband's father
who was a "heavy-handed" majority owner "who like to take the profits and reinvest into
them as far as growth of the businesses and hope that the businesses would grow in
economic value." Wise explained that this business philosophy continues with the family-
owned businesses.
{¶ 20} Wise explained that the $23,073 from Hassett Family Partnership and $12,200
from Apex Husband received as a cash distribution were also not included in his annual
income. Husband received these distributions only to cover the tax liability incurred as a
result of the K-1 income from Hassett Family Partnership and Apex. Wise also testified that
Apex is "in a negative equity situation" because it lost half a million dollars in a lawsuit
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regarding an employment relationship about eight years ago. The lawsuit related to
Husband's former brother-in-law who divorced Husband's sister. The brother-in-law was an
employee of Apex.
{¶ 21} Lastly, Husband and Wife testified regarding Husband's income. Husband
testified regarding the cash distributions to cover the tax liabilities associated with the K-1
income. He explained that he did not initially receive distributions of cash to cover the tax
implications. However, he discussed the matter with Wise and his father and was able to
convince his father to make distributions to cover the tax implications associated with the K-1
income. Wife also testified regarding the structure of the companies and stated that the
companies were arranged to reduce support obligations in the event of a divorce. Wife
stated that Husband told her that the family had learned from the divorce of his siblings and
that "if [Wife] ever left him [Wife] would leave with nothing, that [Husband] would put [Wife]
on the street."
{¶ 22} The trial court did not abuse its discretion in including the retained K-1 earnings
in Husband's annual income and determining his annual income as $271,000. The court's
finding that Yoho is more credible was supported by the fact that Yoho is an expert in
forensic accounting who relied on source documents in her investigation and had not been
previously employed by the Marron family as their accountant. See Tokar v. Tokar, 8th Dist.
Cuyahoga No. 89522, 2008-Ohio-6467, ¶ 21. Additionally, whether or not Husband received
a cash distribution from the K-1 income, the retained K-1 income increased Husband's wealth
through his ownership interest in the companies. There was evidence that Husband
exercised significant control over the companies. Husband was able to convince his father to
make distributions from the family-owned corporations to cover the tax liabilities associated
with the K-1 income contrary to the previous custom. The "tax distributions" were
significantly larger than taxes due on the K-1 income. Further, Wife testified that Husband's
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family had shaped the companies to minimize a spouse's support obligation in a divorce. For
the reasons stated above, the court did not err in its calculation of husband's annual income.
{¶ 23} Husband's first assignment of error is overruled.
{¶ 24} Assignment of Error No. 2:
{¶ 25} THE TRIAL COURT ERRED TO THE PREJUDICE OF THE APPELLANT IN
DENYING HIS MOTION TO EXTEND ENTRY DATE, FOR AN ORDER PERMITTING A
BRIEF REOPENING OF THE EVIDENCE, AND FOR CLARIFICATION OF THE COURT'S
DECISION.
{¶ 26} Husband argues two issues in his second assignment of error. First, Husband
maintains that the court erred in refusing to reopen the evidence to allow him to submit
documentation on the marginal cost of health insurance for the minor children. Second,
Husband contends that the court abused its discretion "in ruling on an issue not litigated by
the parties at the court's direction." Specifically, Husband challenges the court's use of
Wife's list to divide the personal property between the parties when the court directed the
parties to submit a mutually agreed upon master list to divide the property
Health Insurance
{¶ 27} R.C. 3119.02 provides that, "in any action in which a court child support order is
issued * * * the court or agency shall calculate the amount of the obligor's child support
obligation in accordance with the basic child support schedule, the applicable worksheet, and
the other provisions of sections 3119.02 to 3119.24 of the Revised Code." The child support
computation worksheet provides for an adjustment to a parent's child support obligation for
"[m]arginal, out of pocket costs, necessary to provide for health insurance for the children
who are subject of this order." R.C. 3119.023.3
3. The marginal out-of-pocket cost of health insurance is defined as the "contributing cost of private family health
insurance, minus the contributing cost of private single health insurance, divided by the total number of
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{¶ 28} A parent is entitled to a credit for health insurance costs and childcare
expenses incurred by the parent when calculating child support. Carpenter v. Carpenter, 7th
Dist. Noble No. 09 NO 367, 2010-Ohio-6601. It is "error to exclude health insurance
payments for children from the child support computation worksheet." Harkey v. Harkey,
11th Dist. Lake No. 2006-L-273, 2008-Ohio-1027, ¶ 114, quoting Wachter v. Wachter, 9th
Dist. Summit No. 23170, 2006-Ohio-6970, ¶ 8.
{¶ 29} The decision whether to reopen a case is within the sound discretion of the trial
court. Souders v. Hyer, 12th Dist. Fayette No. CA97-05-013, 1997 WL 570699, *2 (Sept. 15,
1997), citing Ketcham v. Miller, 104 Ohio St. 372, 378 (1922). The trial court's decision
whether to reopen the case will not be disturbed on appeal absent an abuse of discretion.
Souders at *2.
{¶ 30} In the case at bar, the trial court completed the child support worksheet to
determine Husband's child support obligation. However, the court did not include the
"marginal, out of pocket costs, necessary to provide health insurance for the children." In
response to the court's decision, Husband filed a motion requesting a number of things,
including "an order permitting a brief reopening of the evidence" to allow Husband to
introduce evidence regarding the marginal cost of health insurance. Attached to Husband's
motion was a document indicating the cost of providing health insurance for Husband's
children. The trial court overruled this motion.
{¶ 31} The trial court did not abuse its discretion in denying Husband's motion to allow
him to present evidence regarding the cost of health insurance. Husband had a full and fair
opportunity to present his case, including the marginal cost of health insurance, before the
trial court. Husband was prejudiced by nothing other than his own failure to present evidence
dependents covered by the plan, including the children subject of the support order, times the number of children
subject of the support order." R.C. 3119.023.
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regarding the cost of health insurance as he was represented by counsel throughout the
proceedings and had access to evidence regarding the cost of health insurance.
Personal Property
{¶ 32} Husband also argues that the court erred in denying his motion to clarify the
divorce decree regarding the division of personal property. A trial court has jurisdiction to
enforce divorce decrees and to clarify matters in the divorce decree. R.C. 3105.65(B); Bell v.
Bell, 3d Dist. Hancock No. 5-04-34, 2005-Ohio-421, ¶ 11. "Where there is good faith
confusion over the requirements of the dissolution decree, a court has the power to enforce
its decree, to hear the matter, clarify the confusion, and resolve the dispute." Straw v. Straw,
9th Dist. Lorain No. 04CA008433, 2004-Ohio-4065, ¶ 4, quoting Bond v. Bond, 69 Ohio
App.3d 225, 228 (9th Dist.1990). The trial court "has broad discretion in clarifying ambiguous
language by considering not only the intent of the parties but the equities involved." Id. This
court reviews a trial court's interpretation of ambiguous language in a divorce decree under
an abuse of discretion standard. Bell at ¶ 11.
{¶ 33} The failure to timely advise a trial court of possible error, by objection or
otherwise, results in a waiver of the issue for purposes of appeal. Williams v. Williams, 12th
Dist. Warren No. CA2012-08-074, 2013-Ohio-3318, ¶ 9, citing Goldfuss v. Davidson, 79 Ohio
St.3d 116, 121 (1997). The fundamental rule is that an appellate court will not consider any
error which could have been brought to the trial court's attention, and hence avoided or
otherwise corrected. Williams at ¶ 9.
{¶ 34} Prior to trial, Husband and Wife submitted an agreed entry covering several
aspects of the divorce, including the division of personal property between the parties. The
entry stated that the property shall be divided by the parties pursuant to a master list and a
magistrate shall mediate the division of the personal property.
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{¶ 35} At the beginning of trial, the court addressed the personal property provision in
the agreed entry. The court indicated that it does not mediate personal property disputes
between parties and suggested that the parties create a list of personal property from which
Husband and Wife can alternatively select items. The court then inquired whether a master
list of personal property had been developed. Wife's counsel stated that they had created a
list and that Husband had not reviewed it. Wife's counsel then stated that they can email the
list during trial and print it out. The court stated that "at some time at lunch here…sometime
at lunch here today get [Husband] a list."
{¶ 36} During Wife's testimony, she introduced Exhibit 33, which was a list of the
household items of the parties and acknowledged that Husband and his counsel were seeing
the list for the first time. Husband's counsel did not object to the admission of this exhibit nor
did he cross-examine Wife regarding this list.
{¶ 37} In its decision, the trial court stated that "the parties will divide household goods
set forth in Exhibit 33 by alternative selection." Husband moved to clarify the court's decision
arguing that the decision contradicted what the court had instructed the parties at trial.
Specifically, Husband stated that the court "failed to recall his directive to the parties before
the hearing, and ordered the personal property to be divided based upon Wife's exhibit."
{¶ 38} The trial court did not abuse its discretion in denying Husband's motion to clarify
the divorce decree. The court's decision was not inconsistent with what it told the parties at
trial. Despite Husband's assertions, the court only stated to the parties that it needed to have
a master list of personal property and suggested that Wife give a copy of her list to Husband
during the lunch break. While Wife did not give Husband a copy of the list until her direct
examination, she acknowledged this in her testimony and Husband failed to object or
otherwise cross-examine Wife regarding the list. Husband's failure to object indicated his
acquiescence to the list and waived any potential error regarding the incorporation of this list
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into the divorce decree.
{¶ 39} Husband's second assignment of error is overruled.
{¶ 40} Cross-Assignment of Error No. 1:
{¶ 41} THE TRIAL COURT ERRED TO THE PREJUDICE OF CROSS APPELLANT
(WIFE) BY IMPUTING HER WITH $40,000 OF ANNUAL INCOME FOR PURPOSES OF
DETERMINING HUSBAND'S SPOUSAL SUPPORT AND CHILD SUPPORT OBLIGATION
AND THE ALLOCATION OF CHILD-RELATED EXPENSES BETWEEN THE PARTIES
WHEN WIFE WAS NOT DETERMINED TO BE "VOLUNTARILY UNDEREMPLOYED" OR
"VOLUNTARILY UNEMPLOYED" AND THERE WAS NO EVIDENCE THAT WIFE COULD
PRESENTLY EARN $40,000 OF ANNUAL INCOME.
{¶ 42} Wife argues the court erred by imputing $40,000 of annual income to her for
child support and spousal support purposes. Wife maintains that the court could not impute
income to her without making an express finding that she was "voluntarily underemployed" or
"voluntarily unemployed." Wife also contends that the imputation of $40,000 was in error
because she is not voluntarily underemployed and there was no evidence about the average
income of teachers to support the amount of income imputed to Wife.
{¶ 43} The decision to impute income for purposes of spousal support is within the
discretion of the trial court and shall not be overruled absent an abuse of discretion. Corwin
v. Corwin, 12th Dist. Warren Nos. CA2013-01-005 and CA2013-02-012, 2013-Ohio-3996, ¶
63, citing Havanec v. Havanec, 10th Dist. Franklin No. 08AP-465, 2008-Ohio-6966, ¶ 23.
"Whether a parent is 'voluntarily underemployed' within the meaning of R.C. 3119.01 is a
matter to be determined by the trial court based upon the facts and circumstances of each
case." Corwin at ¶ 73, citing Rock v. Cabral, 67 Ohio St.3d 108 (1993), syllabus. The trial
court's determination on this issue will not be disturbed on appeal absent an abuse of
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discretion. Corwin at ¶ 73.
{¶ 44} The trial court was required to determine both parties' annual income for
purposes of computing spousal support and child support obligations. See R.C. 3105.18 and
R.C. 3119.02. The statutory section on spousal support does not expressly address imputing
income to a spouse who is voluntarily unemployed or underemployed. Justice v. Justice,
12th Dist. Warren No. CA2006-11-134, 2007-Ohio-5186, ¶ 17. "However, this court and
others have approved a trial court's imputation of income for purposes of determining spousal
support." Id.{¶ 45} In regards to child support, "income," consists of the sum of the gross income
of the parent and any "potential income" of the parent if voluntarily underemployed or
voluntarily unemployed. R.C. 3119.01(C)(5)(b). Potential income includes imputed income
that a trial court determines the parent would have earned if fully employed based upon the
factors set forth in R.C. 3119.01(C)(11)(a). R.C. 3119.01(C)(11)(a). Factors include the
parties' prior employment experience, education, employment availability and local wage
rates. Id. A parent who claims that the other parent is voluntarily unemployed bears the
burden of proof on that issue. McLaughlin v. Kessler, 12th Dist. Fayette No. CA2011-09-021,
2012-Ohio-3317, ¶ 14.
{¶ 46} Before a trial court may impute income to a parent for child support purposes, it
must first find that the parent is voluntarily unemployed or underemployed. R.C.
3119.01(C)(11). Justice at ¶ 9. Nevertheless, an implicit finding of voluntary unemployment
or unemployment is sufficient to satisfy this requirement. Corwin, 2013-Ohio-3996 at ¶ 76.
See Drummer v. Drummer, 3d Dist. Putnam No. 12-11-10, 2012-Ohio-3064, ¶ 27.
{¶ 47} During the hearing, Wife explained that she holds a bachelor's degree in
elementary education and worked in this field prior to the marriage. However, for the majority
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of the parties' marriage, Wife stayed at home and took care of the couple's four children. In
December 2012, Wife returned to the work force as a substitute teacher and attended
classes so that she could renew her teaching certificate. Wife explained that she worked on
her coursework in between the children's activities and substitute teaching and she often
worked late into the night. At the time of the hearing, Wife had renewed her teaching
certificate and was a substitute teacher for Mason City Schools. Wife held a long-term
substitute position that was scheduled to continue to October 2013. Wife explained that as a
long-term substitute teacher, she works full-time but does not receive benefits. As a regular
substitute teacher, Wife earns $75 a day and as a long-term substitute teacher, Wife
receives $95 a day after ten days. Wife also testified the she has applied to over 26 different
schools for a full-time teaching position. Wife stated that she has not been offered a
permanent teaching position and she is "actively searching and building my resume."
{¶ 48} In its decision, the court discussed Wife's age, health, education, and
employment experience. The court noted that Wife is currently employed as a long-term
substitute teacher and the position ends October 2013. The court then stated,
Wife impresses this Court as a competent individual with the
personality and desire to obtain a fulltime teaching job very
quickly. Again no information was provided, but, given the
teacher salaries in the area, the Court assumes that Wife will
earn $35,000 to $40,000/year in the very near future.
In the child support worksheet, the court found Wife's annual income to be $40,000.
{¶ 49} While the trial court did not expressly find Wife to be voluntarily underemployed,
the court's decision shows that it implicitly made this finding. The court discussed several of
the imputation-of-income factors, including Wife's age, education, employment experience,
and earning capability. The court also discussed Wife's current part-time employment and
desire to seek full-time employment. The court then imputed to Wife an annual salary that is
much higher than her current income. Therefore, it is clear that the court implicitly found
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Wife to be voluntarily underemployed.
{¶ 50} However, we find that the trial court abused its discretion in finding Wife
voluntarily underemployed. Husband presented insufficient evidence during the hearing to
prove that Wife was voluntarily underemployed. In fact, the court's finding of Wife's voluntary
underemployment is in direct conflict with Wife's uncontroverted testimony as to her efforts to
obtain work. Husband offered no testimony or evidence at the hearing to refute Wife's
testimony and failed to elicit any testimony from Wife on cross-examination that established
she was not seeking full-time employment or that she had turned down full-time employment.
Instead, Wife's testimony clearly established that she has made every reasonable effort to
obtain a full-time teaching position by the date of the hearing. Additionally, we note that there
was no evidence that supported using $40,000 to impute income for a teacher in the Mason
area. Therefore, the trial court abused its discretion in finding that Wife was voluntarily
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underemployed and imputing $40,000 of annual income to her.
{¶ 51} Wife's first cross-assignment of error is sustained.
{¶ 52} Cross-Assignment of Error No. 2:
{¶ 53} THE TRIAL COURT ERRED TO THE PREJUDICE OF CROSS APPELLANT
(WIFE) BY MAKING SPOUSAL SUPPORT TERMINABLE UPON HUSBAND'S DEATH AND
THEREBY EFFECTIVELY NULLIFYING THE PARTIES' AGREEMENT THAT HUSBAND
MUST SECURE HIS SPOUSAL SUPPORT OBLIGATION WITH LIFE INSURANCE.
{¶ 54} Wife argues that the court erred when it made Husband's spousal support
obligation terminable upon his death. Wife contends that the trial court abused its discretion
when it ignored the parties' agreed entry that required Husband's spousal support to be
4. We note that the parties may always move to modify the child support and spousal support obligations if
wife's actions later demonstrate that she is voluntarily underemployed and the standards for modifying Husband's
supports obligations are met. See R.C. 3119.79; R.C. 3105.18(E)(1).
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secured by life insurance and instead made conflicting statements regarding whether spousal
support should terminate upon either party's death or whether it should be secured by life
insurance.
{¶ 55} The agreed entry entered into by the parties provided, "Husband shall name
Wife as beneficiary of sufficient life insurance to secure his spousal support obligation that he
has." However, the trial court's decision stated Husband's "spousal support shall terminate
upon the death of either party * * *." The judgment entry and decree of divorce reflected that,
The Court further finds that both parties have acknowledged
under oath that they have voluntarily entered into an Agreed
Entry * * * which addressed property issues and some aspects of
child support and spousal support * * * that Husband's spousal
support obligation would be secured by life insurance * * * The
Court finds that the terms of the Agreed Entry entered into
between the parties is fair and equitable and hereby approves it.
***
(Emphasis added.)
The judgment entry also stated, "[Husband's] spousal support shall continue for a period of
five years; provided, however, that it shall terminate earlier upon Wife's death * * *, or upon
Husband's death so long as his remaining obligation has been secured by life insurance as
ordered below."5
{¶ 56} A reviewing court may modify or reverse an award of spousal support only if it
finds that the trial court abused its discretion. Gregory, 2005-Ohio-6558 at ¶ 9. R.C. 3105.18
governs spousal support and provides that, "an award of spousal support made under this
section shall terminate upon the death of either party, unless the order containing the award
expressly provides otherwise." (Emphasis added.) R.C. 3105.18(B). When an obligor of
spousal support is required to secure his support obligation with life insurance, the spousal
support continues after the death of the obligor. Waller v. Waller, 163 Ohio App.3d 303,
5. The crossed-out portion is initialed by the trial court judge.
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2005-Ohio-4891, ¶ 87 (7th Dist.). Therefore, a trial court can require that spousal support be
secured with life insurance but the court must comply with the requirements of R.C.
3105.18(B) and "the order must 'expressly provide' that spousal support shall continue
beyond the obligor's death." Guenther v. Guenther, 12th Dist. Butler No. CA2001-04-072,
2002 WL 130247, *4 (Feb. 4, 2002).
{¶ 57} When a trial court order provides that both an obligor's death shall terminate the
spousal support award but also that life insurance shall secure the obligor's support
obligation, the life insurance provision must be vacated. Id. E.g., Faidley v. Faidley, 9th Dist.
Wayne No. 11CA0005, 2012-Ohio-1670, ¶ 17. Due to the requirements of R.C. 3105.18(B)
that a court must expressly provide that the spousal support award shall extend beyond the
death of either party, requiring spousal support to terminate upon the obligor's death but also
be secured by life insurance "is unreasonable and inappropriate." Sutmoller v. Sutmoller,
12th Dist. Warren No. CA2011-03-020, 2011-Ohio-5450, ¶ 15, overruled in part by Ornelas v.
Ornelas, 12th Dist. Warren No. CA2011-08-094, 2012-Ohio-4106. But see Waller v. Waller,
163 Ohio App.3d 303, 2005-Ohio-4891 (7th Dist.) (remand for further clarification when
spousal support terminates upon death but is also secured by life insurance).
{¶ 58} In the present case, the trial court ordered Husband's spousal support to
terminate upon his death. Accordingly, that portion of the divorce decree ordering Husband
to maintain life insurance in order to secure his spousal support obligation is unreasonable
and inappropriate and must be vacated. Other facts also indicate that the trial court's
intention was to terminate the support upon Husband's death including the numerous
provisions in the decree providing for the termination of support upon Husband's death and
the court's removal of a provision that required the support to be secured by life insurance.
Wife's attorney also prepared the divorce decree that provided for the life insurance
requirement.
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{¶ 59} Additionally, the trial court was not required to adopt the parties' agreed entry
requiring Husband to secure his spousal support obligation by life insurance. Where parties
reach a settlement agreement, the agreement "constitutes a binding contract and the trial
court may properly sign a judgment entry reflecting the settlement agreement." Booth v.
Booth, 11th Dist. Portage No. 2002-P-0099, 2004-Ohio-524, ¶ 6, citing Spercel v. Sterling
Industries, Inc., 31 Ohio St.2d 36 (1972), paragraph two of the syllabus. Although binding on
the parties, a settlement agreement is not binding on the court, which has the discretion to
adopt the agreement, reject the agreement, or adopt portions of the agreement while ruling
separately on other issues. In re Z.H., 7th Dist. Mahoning No. 12 MA 27, 2013-Ohio-1278.
See also Waddell v. Waddell, 12th Dist. Butler No. CA96-03-056, 1996 WL 723551, *1 (Dec.
16, 1996). Therefore the trial court did not abuse its discretion in failing to abide by all the
terms of the parties' agreed entry.
{¶ 60} Therefore, we agree with Wife to the extent that the trial court erred when it
made Husband's spousal support obligation terminable upon his death and required
Husband to secure the spousal support with life insurance. However, we disagree with Wife
that the trial court was required to follow the parties' agreed entry that required Husband to
secure his spousal support with life insurance. Instead, because the trial court's order did not
expressly state that spousal support shall continue beyond Husband's death, the provision
requiring Husband to secure his support with life insurance is in error and must be vacated.
Thus, we overrule Wife's second cross-assignment of error.
{¶ 61} We hereby reverse the trial court's finding that Wife was voluntarily
underemployed and vacate the $40,000 of imputed income to Wife and remand for
recalculation of Wife's income for purposes of determining spousal support and child support
obligations. We also vacate the trial court's order requiring Husband to secure his spousal
support obligation by maintaining a life insurance policy. In all other aspects, the trial court
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judgment is affirmed. The judgment of the trial court is affirmed in part, reversed and vacated
in part, and remanded for further proceedings.
RINGLAND, P.J., and M. POWELL, J., concur.
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