Gauthier v. Gauthier , 2019 Ohio 4208 ( 2019 )

[Cite as Gauthier v. Gauthier, 2019-Ohio-4208.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
WARREN COUNTY
SU KANG GAUTHIER, : CASE NOS. CA2018-09-098
CA2018-09-099
Appellee, :
OPINION
: 10/14/2019
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:
FORREST P. GAUTHIER, :
Appellant. :
CIVIL APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS
Case No. 13CV83644
Robert A. Klingler, Co., L.P.A., Robert A. Klingler, 525 Vine Street, Suite 2320, Cincinnati,
Ohio 45202, for appellee
Charles K. Fischer, 3727 Maple Park Avenue, Cincinnati, Ohio 45209, for appellant
Thomas E. Grossmann, 4533 Morris Court, Mason, Ohio 45040, for appellant
M. POWELL, J.
{¶ 1} Appellant, Forrest Gauthier, appeals a decision of the Warren County Court
of Common Pleas awarding $54,356.50 to his former wife and appellee, Su Kang Gauthier.
{¶ 2} The parties were divorced on March 3, 2009. Forrest is the "sole member" of
a corporate entity that owns several patents. Prior to their divorce being finalized, the
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parties entered into a Full Text Separation Agreement ("FTSA"). The FTSA divided the
parties' personal and marital property and provided that Forrest retain the patent
corporation. The FTSA further provided that the parties file joint income tax returns for 2006
through 2008 and separate income tax returns for 2009 and subsequent tax years.
{¶ 3} Section 7.5 of the FTSA established a fund of money (the "Funds") to be used
to pay certain joint obligations of the parties. Specifically, Section 7.5(a) through (d)
provided that the Funds be used to pay the parties' federal, state, and local income tax
obligations for the tax years 2006 through 2008, joint litigation expenses, and any
"outstanding Patent Costs." Section 7.5(e) further provided that any monies remaining after
the payment of the foregoing costs
will then be applied to any federal, state or local taxes
attributable to the Funds which have not been paid under 7.5(a)
such that any taxes attributable to the Funds are shared equally
by the parties and then to Patent Costs. If the Funds are
insufficient to make the payments required under this Paragraph
7.5(e), both parties will contribute equally to those payments.
{¶ 4} Section 7.5(c) of the FTSA defines Patent Costs as "any attorney fees,
expenses and/or costs related to the prosecution and/or maintenance of the Marital Patent
Portfolio (including, but not limited to, patent maintenance fees paid to the U.S. Patent
Office)."
{¶ 5} Subsequent to the execution of the FTSA, the parties' accountant advised
them that they may owe the Internal Revenue Service a tax penalty of $108,713.
{¶ 6} In January 2010, the parties entered into an addendum agreement (the
"Addendum") "to resolve disputes that ha[d] arisen between the parties regarding certain
rights, obligations and consideration found in Sections * * * 7.5 * * * of the [FTSA]."
{¶ 7} Paragraph 3 of the Addendum established a Tax Penalty Reserve Fund
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("TPR") and provided for its distribution as follows:
Su shall be entitled to 50% of any portion of the $108,713.00 tax
penalty reserve from the 2005 amended, 2006, 2006 amended,
2007 and 2008 tax filings of the parties, currently held by
Forrest, if permanently held back from the IRS. Su
acknowledges and agrees that Forrest has the sole discretion
to determine when and what portion of the $108,713.00, if any,
shall be paid to the Federal government or permanently held
back. Su expressly waives any claim to challenge any aspect
of the tax penalty reserve and any claim against Forrest * * *
relating in any way thereto. Upon Forrest's decision to
permanently hold any portion of the tax penalty reserve from the
IRS, Forrest will provide Su with written notification directly or
through her attorney and shall pay Su her 50% of any such
portion withheld within 2 business days of such notice unless
monies are owed and have not been paid by Su pursuant to
paragraph 4 of this Agreement, in which case Forrest may use
Su's portion of any tax penalty refund to pay some or all of such
Paragraph 4 obligation rather than distributing the Paragraph 3
monies directly to Su.
{¶ 8} Paragraph 4 of the Addendum addressed Su's tax liability and provided that
Su is liable for 50% of any penalties, payments, deficiencies,
taxes, or interest owed to the State of Ohio and/or the Federal
government related to the 2005 amended, 2006, 2006
amended, 2007 and 2008 tax filings of the parties and the tax
penalty reserve funds. Su waives any claim against Forrest * *
* arising out of or relating to any penalties, payments,
deficiencies, taxes or interest owed to the State of Ohio and/or
the Federal government related to the 2005 amended, 2006,
2006 amended, 2007, and 2008 tax filings of the Parties and the
tax penalty reserve funds. The parties shall each pay their 50%
share within 5 business days of notification by the government
of any monies owed.
{¶ 9} Paragraph 5 of the Addendum included the following waiver: "Su does hereby
and forever waive any and all claims, rights, money, obligations, consideration, costs,
attorney fees and/or causes of action against Forrest * * * arising out of or related to in any
way Sections * * * 7.5 * * * of the FTSA."
{¶ 10} Toward the end of 2012, Su, through her attorney, contacted Forrest's
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attorney and inquired about the status of the TPR. On January 1, 2013, Forrest's attorney
sent an email, advising that: Su was responsible for one-half of the patent taxes under the
parties' agreements; Forrest was permitted to offset Su's 50 percent share of the patent
taxes from any amounts owed to Su; Forrest had paid more than $92,000 in patent taxes;
and Su was responsible for $46,000 of those patent taxes, which amount was an offset
against Su's one-half share of the TPR. The next day, Forrest's attorney sent an email
clarifying that the term "patent taxes" referred to patent maintenance fees. On January 4,
2013, Forrest's attorney provided Su's attorney an accounting of the FTSA Section 7.5
Funds.
{¶ 11} On February 11, 2013, Su filed a complaint against Forrest, alleging breach
of the Addendum, anticipatory breach of the Addendum, unjust enrichment, and conversion,
and requested an accounting of the Funds established by the FTSA. The complaint was
premised upon Forrest's failure or anticipated failure to disburse to Su one-half of the TPR
after the three-year audit statute of limitations for their 2008 joint income tax return had
expired in December 2012. The complaint further requested a declaratory judgment to
declare the parties' rights and obligations regarding the TPR, including when Su should
receive her one-half of the TPR and whether there were any applicable setoffs. The
complaint was initially filed in the Warren County Domestic Relations Court but was later
transferred to the Warren County Court of Common Pleas, General Division.
{¶ 12} Forrest moved to dismiss the complaint as prohibited by the Addendum. The
trial court denied the motion. On July 23, 2014, Forrest filed an answer and counterclaim.
Forrest's counterclaim asserted that Su breached the Addendum by filing her lawsuit in
violation of the waiver provisions of the Addendum, and by failing to report the "alimony"
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payment set forth in Paragraph 1 of the Addendum in her 2010 income tax return.1 Forrest
asserted that Su's failure to report the alimony payment prompted the IRS to audit him.
{¶ 13} In the interim, Forrest filed a lawsuit against Su and her attorney in Hamilton
County, Ohio in April 2013. Forrest alleged that Su had converted his personal property
and breached the Addendum by negotiating an IRS refund check in violation of Paragraph
2 of the Addendum. Forrest ostensibly filed the lawsuit in Hamilton County because he was
seeking an award of damages that could not be granted by the Warren County Domestic
Relations Court, where Su had initially filed her complaint. Forrest's lawsuit was dismissed
on summary judgment on December 17, 2014. The First Appellate District upheld the grant
of summary judgment in favor of Su in October 2016.
{¶ 14} In the summer of 2015, the parties moved for summary judgment on Su's
claims for breach of contract, anticipatory breach of contract, and declaratory judgment, and
on Forrest's counterclaim for breach of contract. At the time the trial court considered the
parties' cross-motions for summary judgment, the FTSA had not been filed with the court.
{¶ 15} On December 15, 2015, the trial court issued a decision on the parties' cross-
motions for summary judgment. Regarding Su's breach of contract claim, the trial court
noted that Forrest had elected, as was his right, to wait until a six-year audit statute of
limitations would run before making a determination about the TPR, and that the parties
agreed that the six-year statute of limitations would run on December 17, 2015. The trial
court found that as the statute of limitations had not run at the time Su filed her complaint,
Forrest had not breached the Addendum.
1. Paragraph 1 of the Addendum required Forrest to pay Su a certain lump sum within two business days of
the Addendum's effective date. The provision further provided that $150,000 of the lump sum "shall be treated
as alimony and shall be taxable income for Su in the year 2010."
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{¶ 16} Regarding Su's anticipatory breach of contract claim, the trial court found that
Forrest had never unequivocally stated he did not intend to comply with the Addendum prior
to Su's complaint or that Su was not entitled to one-half of the TPR. Rather, Forrest had
only indicated that Su's one-half of the TPR was subject to setoffs under the FTSA. As a
result, the trial court found there was no anticipatory breach of the Addendum.
Consequently, the trial court granted summary judgment in favor of Forrest on Su's claims
for breach of contract and anticipatory breach of contract.
{¶ 17} The trial court granted Su's request for a declaratory judgment regarding the
parties' rights and obligations under the Addendum. Specifically, the trial court determined
that once the six-year audit statute of limitations would run on December 17, 2015, Forrest
was required to make a determination regarding the TPR and notify Su of that determination
within two days thereafter, and that Su was entitled to one-half of the TPR. The trial court
further found that Paragraph 4 of the Addendum "sets forth certain [setoff] rights." The trial
court acknowledged that "arguments were made regarding [setoff] rights existing under the
FTSA." However, because the FTSA was not before the trial court, the court found itself
"hampered in regard to declaring the entire [setoff] rights that may exist and the Court leaves
the issue between the parties to resolve. The Court may only construe what is before it."
{¶ 18} Regarding Forrest's counterclaim for breach of contract, the trial court found
that Su had not breached the Addendum by filing her lawsuit against Forrest. Noting that
the parties had been "locked in a serious dispute regarding the interpretation of the
contract's terms," the trial court found "it was not inappropriate for [Su] to seek a
determination of her rights through a declaratory judgment, particularly given the history of
animosity between the parties." The trial court declined to consider Forrest's counterclaim
for breach of contract regarding the alimony payment. The trial court noted that the
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Hamilton County Court of Common Pleas had issued a decision "on this identical issue and
this Court will not issue a separate ruling on a claim that has been resolved (or is on appeal)
in another court." Consequently, the trial court granted summary judgment in favor of Su
on Forrest's counterclaim for breach of contract. The trial court ordered counsel to prepare
a final judgment entry reflecting its decision. The parties were, however, unable to agree
on an entry and no entry was filed at that time.
{¶ 19} On April 7, 2016, Forrest moved to be declared the "prevailing party" in the
litigation for purposes of determining whether he was entitled to attorney fees under
Paragraph 8 of the Addendum. Forrest further moved to amend his counterclaim to set
forth two claims against Su, one for her share of the patent costs to be offset against her
share of the TPR, and one for Su's theft of his personal property based upon her September
2015 indictment for theft and perjury. Attached to the motion were a December 2015 invoice
representing Su's obligation to pay 50 percent of the Funds deficit under Section 7.5 of the
FTSA, and a December 19, 2015 letter indicating that Forrest had made the determination
to permanently hold back the TPR from the IRS and that having made no distributions from
the TPR, Su's "50% share is $54,356.50."
{¶ 20} On July 3, 2017, the trial court found that neither party was the prevailing party
under the court's December 2015 summary judgment decision because neither party had
sufficiently prevailed to declare it a prevailing party for purposes of awarding attorney fees
under the Addendum. The trial court characterized its decision as "an advisory opinion"
and noted that the Addendum was not part of the file. The trial court further denied Forrest's
motion to amend his counterclaim due to the prolonged pendency of the case, Forrest's
"substantial opportunity to amend his counterclaim years ago," and the additional delay
such an amendment would cause. The trial court ordered the parties to prepare a final
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judgment entry reflecting this decision and its December 15, 2015 summary judgment
decision. The trial court further advised the parties to file the Addendum with the court or
the case would be dismissed.
{¶ 21} Between October 2013 and August 2017, redacted versions of the Addendum
were appended to various filings in the trial court. In particular, Su attached a redacted
Addendum to her 2015 motion for summary judgment; Forrest attached a slightly less
redacted Addendum to his August 25, 2017 "Response to Request of the Court to File an
Unredacted Version of the 2010 Addendum Agreement and Related to an Entry of Final
Judgment." On August 25, 2017, for the first time, part of the FTSA was filed with the trial
court when Forrest attached Page 1 and Section 7.5 of the FTSA to the above response to
the trial court's request.2
{¶ 22} On July 23, 2018, the trial court issued two final judgment entries captioned
as nunc pro tunc judgment entries. One judgment entry reflected the trial court's 2017
decision that neither party was a prevailing party in the litigation and the denial of Forrest's
motion to amend his counterclaim.
{¶ 23} The other judgment entry reflected the trial court's 2015 decision on the
parties' cross-motions for summary judgment. The judgment entry granted summary
judgment in favor of Forrest and against Su on her claims for breach of contract and
anticipatory breach of contract, denied Forrest's motion for summary judgment on his
2. The reason the Addendum was not filed with Su's complaint and the FTSA was not filed for several years
was because of a confidentiality provision in both documents barring their public disclosure, were a dispute
to arise between the parties as to the documents. Rather, the parties were required to set forth the specific
terms of the documents only "in camera" to the trial court. The parties also sought to file the Addendum with
the trial court under seal. Throughout the proceedings, the trial court consistently denied the parties' request
for in camera review or filing under seal. We note that we granted Forrest's motion to supplement the record
for purposes of this appeal. Accordingly, an unredacted Addendum and the entire FTSA are part of the record
in this appeal.
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counterclaim for breach of contract, granted Su's motion for summary judgment on her claim
for declaratory judgment, and awarded Su $54,356.50, interest from the date of judgment,
and her costs.
{¶ 24} Forrest now appeals, raising seven assignments of error. To facilitate the
disposition of this appeal, several assignments of error will be considered out of order.
{¶ 25} Assignment of Error No. 2:
{¶ 26} THE TRIAL COURT ERRED IN GRANTING A DECLARATORY JUDGMENT.
{¶ 27} Forrest argues that the trial court erred in granting declaratory judgment. In
support of his argument, Forrest asserts that (1) Su's declaratory judgment claim did not
present a justiciable controversy because Forrest had sole discretion to make
determinations about the TPR under Paragraph 3 of the Addendum, (2) Forrest's sole
discretion included using the TPR to pay patent costs under Section 7.5 of the FTSA
because the TPR was a subfund of the FTSA Funds, (3) Su's lawsuit improperly challenged
Forrest's sole discretion to make determinations about the TPR under the Addendum, (4)
Su was precluded from seeking a declaration or challenging Forrest's actions regarding the
TPR under the waiver provision in Paragraph 3 of the Addendum, and (5) Su was further
precluded from seeking a declaratory judgment under Paragraph 5 of the Addendum.
{¶ 28} Stated more succinctly, Forrest's argument asserts that the TPR is a subfund
of the Funds under Section 7.5 of the FTSA, Forrest had sole discretion to make any
determination regarding the TPR pursuant to Paragraph 3 of the Addendum, including
whether to use the TPR to pay patent costs pursuant to Section 7.5 of the FTSA, and Su
was prohibited from challenging Forrest's sole discretion and from filing a lawsuit and
seeking a declaratory judgment under the waiver provisions of Paragraph 3 and 5 of the
Addendum.
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{¶ 29} At the core of Forest's argument is his assertion that the TPR is a subfund of
the FTSA Section 7.5 Funds. Based upon this assertion, Forrest avers that his sole
discretion to make determinations related to the TPR necessarily encompasses using the
TPR to pay certain joint obligations of the parties under Section 7.5 of the FTSA, including
patent costs.
{¶ 30} A review of the Addendum belies Forrest's assertion that the TPR is a subfund
of the FTSA Section 7.5. Funds. The TPR is solely discussed in and governed by
Paragraph 3 of the Addendum. Other than the language in the preamble of the Addendum
that its purpose was to address a dispute concerning certain sections of the FTSA, including
Section 7.5, and a reference to certain sections of the FTSA, including Section 7.5, in
Paragraphs 5 and 7 of the Addendum, there is nothing in the Addendum identifying the TPR
as a subfund of the FTSA Section 7.5 Funds or otherwise subjecting the TPR to Section
7.5 of the FTSA. We further note that in his answer to Su's complaint, Forrest asserted that
"[Su] is confusing the fund set up by 7.5 of the FTSA with the tax reserve fund set up by the
[Addendum]. There is a current deficit that [Su] owes to the 7.5 FTSA fund." Forrest's
assertion indicates that the TPR and the Section 7.5 Funds are two separate funds.
{¶ 31} Furthermore, while Paragraph 3 of the Addendum allows Forrest to use Su's
share of the TPR to pay some or all of her unpaid obligations, such obligations only refer to
Su's unpaid obligations pursuant to Paragraph 4 of the Addendum, namely, "any penalties,
payments, deficiencies, taxes or interest owed to the State of Ohio and/or the Federal
government related to the 2005 amended, 2006, 2006 amended, 2007, and 2008 tax filings
of the Parties and the [TPR]. * * * The parties shall each pay their 50% share within 5
business days of notification by the government of any monies owed." (Emphasis added.)
In other words, Paragraphs 3 and 4 of the Addendum only specifically authorizes Forrest to
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offset 50 percent of any penalties, payments, deficiencies, taxes, and interests owed to the
state or the federal government for the parties' 2005 - 2008 tax returns against any portion
of the TPR to which Su would be entitled.
{¶ 32} The Latin maxim expressio unius est exclusio alterius is instructive here. This
maxim means that the expression of one or more persons or things implies the exclusion
of those not expressed. Mercer v. 3M Precision Optics, Inc., 181 Ohio App. 3d 307, 2009-
Ohio-930, ¶ 13 (12th Dist.). Typically, expressio unius est exclusio alterius is applied where
there is a listing of items in an associated group or series, which "'justif[ies] the inference
that items not mentioned were excluded by deliberate choice, not inadvertence.'" Id.,
quoting Barnhart v. Peabody Coal Co., 537 U.S. 149, 168, 123 S. Ct. 748 (2003). Thus, by
specifically expressing that Forrest may offset amounts Su owes for taxes for the years
2005 through 2008 against her share of the TPR, Paragraph 3 of the Addendum excludes
other items such as patent costs.
{¶ 33} In light of the foregoing, we find that the TPR is not a subfund of the FTSA
Section 7.5 Funds.
{¶ 34} Forrest next asserts that Paragraph 3 of the Addendum grants him sole
discretion to make determinations about the TPR, including using the TPR to pay patent
costs under Section 7.5 of the FTSA.
{¶ 35} Contrary to Forrest's assertion, Paragraph 3 of the Addendum does not grant
Forrest sole discretion to make any determinations regarding the TPR. Rather, Paragraph
3 only grants Forrest sole discretion to determine when and what portion of the TPR "shall
be paid to the Federal government or permanently held back." In the event Forrest decides
to permanently withhold any portion of the TPR from the IRS, rather than pay it to the IRS,
Paragraph 3 provides that Forrest "shall pay Su her 50% of any such portion withheld * * *
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unless monies are owed and have not been paid by Su pursuant to paragraph 4" of the
Addendum. In other words, Forrest's sole discretion relates to his decision whether to pay
the IRS, and not whether to disburse to Su her share of the TPR Forrest determined not to
pay to the IRS. Furthermore, our holding that the TPR is not a subfund of the FTSA Section
7.5 Funds and that the Addendum does not otherwise subject the TPR to Section 7.5 of the
FTSA is dispositive of Forrest's assertion he had discretion to use the TPR to pay patent
costs under Section 7.5.
{¶ 36} Forrest next asserts that Paragraph 5 of the Addendum precluded Su from
seeking a declaratory judgment related to Section 7.5 of the FTSA. Paragraph 5 provides
that Su "does hereby and forever waive any and all claims, rights, money, obligations,
consideration, costs, attorney fees and/or causes of action against Forrest * * * arising out
of or related to in any way Section * * * 7.5 * * * of the FTSA." The applicability of the
Paragraph 5 waiver depends upon the validity of Forrest's argument that the TPR is a
subfund of the FTSA Section 7.5 Funds. Our holding that the TPR is not a subfund of the
Funds and that the Addendum does not otherwise subject the TPR to Section 7.5 of the
FTSA is dispositive of Forrest's assertion that Su was precluded from seeking a declaratory
judgment under Paragraph 5 of the Addendum.
{¶ 37} We now address the main issue under the second assignment of error,
namely, whether the trial court erred in granting a declaratory judgment. Forrest argues
that Su's declaratory judgment claim did not present a justiciable controversy because
Forrest had sole discretion to make determinations regarding the TPR, Su did not have a
right to challenge said sole discretion, and Su was precluded from seeking a declaration or
challenging Forrest's actions regarding the TPR under the waiver provision in Paragraph 3
of the Addendum, which provides, "Su expressly waives any claim to challenge any aspect
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of the [TPR] and any claim against Forrest * * * relating in any way thereto."
{¶ 38} "A declaratory judgment action provides a means by which parties can
eliminate uncertainty regarding their legal rights and obligations." Mid-Am. Fire & Cas. Co.
v. Heasley, 113 Ohio St. 3d 134, 2007-Ohio-1248, ¶ 8; Schreyer v. Preble Cty. Bd. of
Commrs., 12th Dist. Preble No. CA2012-12-018, 2013-Ohio-3087, ¶ 11. The purpose of a
declaratory judgment action is to dispose of "uncertain or disputed obligations quickly and
conclusively." Heasley at ¶ 8. The essential elements for declaratory relief are (1) a real
controversy between the parties, (2) the controversy is justiciable in character, and (3)
speedy relief is necessary to preserve the rights of the parties. Burchwell v. Warren Cty.,
12th Dist. Warren No. CA2013-09-079, 2014-Ohio-1892, ¶ 9. For purposes of a declaratory
judgment action, a "justiciable issue" requires the existence of a legal interest or right, and
a "controversy" exists where there is a genuine dispute between parties with adverse legal
interests. Wurdlow v. Turvy, 10th Dist. Franklin No. 12AP-25, 2012-Ohio-4378, ¶ 13.
{¶ 39} We review the trial court's decision granting declaratory judgment in favor of
Su under an abuse of discretion standard. Levy v. Clinton Mem. Hosp., 12th Dist. Clinton
No. CA2007-05-027, 2007-Ohio-7077, ¶ 19; Bilyeu v. Motorists Mutual Ins. Co., 36 Ohio
St.2d 35 (1973), syllabus. An abuse of discretion connotes that the trial court's decision was
unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St. 3d 217,
219 (1983).
{¶ 40} Contrary to Forrest's assertion, Su's declaratory judgment claim did not
"challenge any aspect of the [TPR]," but rather only sought a declaration of Su's rights and
responsibilities regarding the TPR. Furthermore, as stated above, Paragraph 3 of the
Addendum only grants Forrest the discretion to determine whether to pay the IRS. It does
not grant him discretion to determine whether he can use the TPR to pay patent costs or
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whether he can refuse to disburse to Su her share of the TPR that Forrest determined not
to pay to the IRS. Consequently, the waiver provision in Paragraph 3 only precludes Su
from challenging Forrest's discretion whether to pay the IRS. Su's declaratory judgment
claim did not challenge such discretion.
{¶ 41} We further find that Su properly sought a declaratory judgment because there
was a justiciable controversy between the parties regarding their rights and responsibilities
under Paragraph 3 of the Addendum. Specifically, there was a genuine issue as to whether
Forrest was required to make his determination at the end of a three-year statute of
limitations, as believed by Su, or at the end of a longer statute of limitations, as indicated
by the January 2013 emails Forrest's attorney sent to Su's attorney. In this regard, we note
that while one email referred to a six-year statute of limitations, it further emphasized that
the general statute of limitations for tax returns in Ohio was four years. Likewise, there was
a genuine dispute as to whether Forrest was entitled to use the TPR to pay patent costs,
as the emails indicated, or financial obligations other than the tax liabilities and penalties
relating to the parties' 2005-2008 tax filings specifically identified in Paragraphs 3 and 4 of
the Addendum.
{¶ 42} We therefore find that the trial court did not abuse its discretion in granting a
declaratory judgment. Forrest's second assignment of error is overruled.
{¶ 43} Assignment of Error No. 1:
{¶ 44} THE TRIAL COURT ERRED WHEN IT RULED THAT SU DID NOT BREACH
THE ADDENDUM.
{¶ 45} Forrest argues that the trial court erred in finding that Su did not breach the
Addendum when she filed her complaint. In support of his argument, Forrest asserts that
(1) Su's lawsuit improperly challenged Forrest's sole discretion to make determinations
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about the TPR as there was no real controversy that Forrest had such discretion under the
Addendum, (2) Forrest's sole discretion included using the TPR to pay patent costs under
Section 7.5 of the FTSA because the TPR was a subfund of the FTSA Funds, (3) Su was
precluded from seeking a declaration or bringing a lawsuit challenging Forrest's discretion
under the waiver provision in Paragraph 3 of the Addendum, and (4) the waiver provision
in Paragraph 5 of the Addendum further precluded Su from challenging Forrest's use of the
TPR to pay patent costs.
{¶ 46} We have already addressed and rejected Forrest's arguments that the TPR
is a subfund of the FTSA Funds, and that Forrest had sole discretion to make any
determinations about the TPR, including to pay patent costs under Section 7.5 of the FTSA.
For the reasons detailed in our resolution of the second assignment of error, we reject
Forrest's foregoing arguments.
{¶ 47} For the reasons detailed in our resolution of the second assignment of error,
we further find that (1) Su's lawsuit did not challenge Forrest's discretion to pay the IRS or
permanently withhold the TPR but only challenged Forrest's determination to use the TPR
to pay patent costs, (2) the waiver provision in Paragraph 3 of the Addendum only
precludes Su from challenging Forrest's discretion whether to pay the IRS, and Su's lawsuit
did not challenge such discretion, and (3) the waiver provision in Paragraph 5 of the
Addendum does not preclude Su from challenging Forrest's determination to use the TPR
to pay patent costs.
{¶ 48} We therefore find that the trial court did not err in ruling that Su did not breach
the Addendum when she filed her lawsuit. Forrest's first assignment of error is overruled.
{¶ 49} Assignment of Error No. 4:
{¶ 50} THE TRIAL COURT ERRED IN AWARDING SU $54,356.50 PLUS
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INTEREST AND COSTS.
{¶ 51} Forrest argues that the trial court erred in awarding Su $54,356.50. In support
of his argument, Forrest asserts that the trial court could not and should not have awarded
any of the TPR to Su because (1) such award contradicted Forrest's sole discretion to make
determinations about the TPR and violated the waiver provisions in Paragraphs 3 and 5 of
the Addendum, (2) the TPR, as a subfund of the FTSA Section 7.5 Funds, was properly
used to pay patent costs as required by the FTSA, and (3) Su waived her right to challenge
use of the TPR to pay patent costs under the waiver provisions in Paragraphs 3 and 5 of
the Addendum. For the reasons detailed in our resolution of the second assignment of
error, we reject Forrest's foregoing arguments.
{¶ 52} Forrest further argues that Su was not entitled to the monetary award because
she had lost on her breach of contract and anticipatory breach of contract claims and a trial
court lacks authority to award damages in a declaratory judgment action.
{¶ 53} Forrest's claim that monetary judgments are precluded in declaratory
judgment actions does not find support under Ohio caselaw. "While there is no express
statutory provision for the granting of a money judgment in a declaratory judgment action,
such relief may be granted so long as it is prayed for and warranted by the proof." Jeppe
v. Blue Cross, 67 Ohio App. 2d 87, 92 (8th Dist.1980); Shear v. West American Ins. Co., 11
Ohio St. 3d 162, 166 (1984) (money judgments and concomitant interest may be granted in
declaratory judgment actions as long as such relief is prayed for and warranted by the
proof). In order to obtain a money judgment in a declaratory judgment action, "'the prayer
for relief must contain either an express request for a money judgment or one which could
be construed as such, and that a money judgment, definite in amount, must be rendered.'"
Koch v. Cincinnati Ins. Co., 12th Dist. Clermont No. CA92-06-064, 1992 Ohio App. LEXIS
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6314, *9 (Dec. 14, 1992), quoting Jeppe at 92-93.
{¶ 54} Su's complaint prayed for a declaration of the parties' rights and obligations
regarding the TPR. Su's prayer for relief further specifically requested $54,356.50 in
damages and interest, which the trial court granted. We therefore reject Forrest's argument
that Su was not entitled to a monetary award in her declaratory judgment action.
{¶ 55} Forrest further challenges the monetary award, arguing it was not based upon
a justiciable or ripe claim when Su filed her complaint or when the trial court issued its
summary judgment decision on December 15, 2015, because Forrest still had sole
discretion to decide how the TPR would be used on either date. As stated above, the six-
year audit statute of limitations expired on December 17, 2015.
{¶ 56} We reject Forrest's argument. The trial court's December 2015 summary
judgment decision simply declared that upon expiration of the last available statute of
limitations on December 17, 2015, as agreed by the parties, Forrest was required to make
a determination regarding the TPR, that is, to pay the IRS or permanently withhold the TPR,
and then notify Su of such determination within two days thereafter. That is exactly what
Paragraph 3 of the Addendum provides.
{¶ 57} Additionally, the trial court's summary judgment decision did not award a
monetary judgment to Su but simply declared that Su "is entitled to ½ of the tax penalty
reserve" under the Addendum. It was the trial court's July 23, 2018 judgment entry that
ordered that Su "recover from [Forrest] the sum of $54,356.50 with interest thereon from
the date of judgment until paid, as provided by law, and her costs of this action." By the
time this judgment entry was journalized, the parties had filed further motions and
evidentiary material which confirmed that Forrest had elected to retain the entire TPR.
{¶ 58} Forrest further challenges the trial court's July 23, 2018 nunc pro tunc
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judgment entry and its monetary award, arguing it contradicted and did not reflect what the
trial court actually decided in its December 15, 2015 summary judgment decision. For ease
of discussion and readability, this issue will be addressed in the fifth assignment of error.
{¶ 59} In light of the foregoing, Forrest's fourth assignment of error is overruled.
{¶ 60} Assignment of Error No. 3:
{¶ 61} THE TRIAL COURT ERRED WHEN IT RULED THAT FORREST WAS NOT
THE PREVAILING PARTY.
{¶ 62} Forrest argues the trial court erred in ruling he was not the prevailing party.
Forrest asserts that he not only prevailed on Su's breach of contract claims, but he also
prevailed on Su's declaratory judgment claim, thereby entitling him to an award of attorney
fees under Paragraph 8 of the Addendum.
{¶ 63} "Attorney fees may be awarded when a statute or an enforceable contract
specifically provides for the losing party to pay the prevailing party's attorney fees[.]"
Wilborn v. Bank One Corp., 121 Ohio St. 3d 546, 2009-Ohio-306, ¶ 7. While an award of
attorney fees is subject to an abuse-of-discretion standard, the determination of a plaintiff
as the prevailing party is subject to a de novo standard." L.G. Harris Family Ltd. Partnership
I v. 905 S. Main St. Englewood, L.L.C., 2d Dist. Montgomery No. 26682, 2016-Ohio-7242,
¶ 37; Simbo Properties, Inc. v. M8 Realty, L.L.C., 8th Dist. Cuyahoga No. 107161, 2019-
Ohio-3091, ¶ 36; Hustler Cincinnati, Inc. v. Elm 411, L.L.C., 1st Dist. Hamilton No. C-
130754, 2014-Ohio-5648, ¶ 14.
{¶ 64} A prevailing party is the party "who successfully prosecutes the action or
successfully defends against it, prevailing on the main issue, even though not necessarily
to the extent of his original contention. The one in whose favor the decision or verdict is
rendered and judgment is entered." Wigglesworth v. St. Joseph Riverside Hosp., 143 Ohio
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App.3d 143, 150 (11th Dist.2001). "Denying costs to both parties can be appropriate when
neither party entirely prevails." State ex rel. Reyna v. Natalucci-Persichetti, 83 Ohio St. 3d
194, 198 (1998).
{¶ 65} We find no error in the trial court's ruling that Forrest was not the prevailing
party. Although Forrest was successful in defending against Su's breach of contract and
anticipatory breach of contract claims, Su prevailed in defending against Forrest's breach
of contract counterclaim. Additionally, Su obtained substantial success in the litigation by
obtaining a declaration that Forrest shall make a determination regarding the TPR within
two days after December 17, 2015, the date the six-year audit statute of limitations expired,
and that Su was entitled to one-half of the TPR. Contrary to Forrest's suggestion, he only
successfully prevailed on his claim that he had sole discretion to determine when and what
portion of the TPR should be paid to the federal government or permanently withheld once
the six-year statute of limitations ran. Forrest did not prevail on his claim that he had sole
discretion to make any and all determinations regarding the TPR, including using the TPR
to pay patent costs.
{¶ 66} Forrest's third assignment of error is overruled.
{¶ 67} Assignment of Error No. 5:
{¶ 68} THE NUNC PRO TUNC ENTRIES WERE ERRONEOUS AND
INCONSISTENT WITH THE PRIOR DECISIONS.
{¶ 69} Forrest generally argues that the trial court's July 23, 2018 nunc pro tunc
entries are erroneous because they do not reflect what the trial court decided or could have
decided in its earlier decisions. Specifically, Forrest argues that the nunc pro tunc entry
denying his motion to be declared the prevailing party is inconsistent with the trial court's
July 2017 "advisory" decision denying the motion. Forrest further argues that the nunc pro
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tunc entry awarding Su $54,356.50 contradicts the trial court's December 15, 2015
summary judgment decision and does not reflect what the trial court actually decided in its
decision. Forrest asserts that in awarding damages to Su when she was not owed any
money prior to the December 17, 2015 expiration of the statute of limitations, the nunc pro
tunc entry improperly decided a substantive issue contrary to the summary judgment
decision.
{¶ 70} While courts possess inherent authority to correct errors in judgment entries
so that the record speaks the truth, nunc pro tunc entries are limited in proper use to
reflecting what the court actually decided, not what the court might or should have decided
or what the court intended to decide. State ex. rel. Fogle v. Steiner, 74 Ohio St. 3d 158,
163-164 (1995). Errors subject to correction by the court include a clerical error, mistake,
or omission that is mechanical in nature and apparent on the record and do not involve a
legal decision or judgment. State v. Miller, 127 Ohio St. 3d 407, 2010-Ohio-5705, ¶ 15.
{¶ 71} "Just because [a] trial court refers to an entry as nunc pro tunc does not make
it so established." State v. Yeaples, 180 Ohio App. 3d 720, 2009-Ohio-184, ¶ 15 (3d Dist.).
The record shows that the trial court's summary judgment decision and its decision denying
Forrest's motion to be declared the prevailing party were not final appealable orders, but
rather were interlocutory orders. Neither decision included a Civ.R. 54(B) certification and
both decisions specifically ordered the parties to prepare a final judgment entry reflecting
the decisions. Despite the trial court's order, neither entry was promptly prepared and
submitted by the parties. Subsequently, more than a year after its decisions, the trial court
issued the nunc pro tunc entries.
{¶ 72} Although the trial court labeled the July 23, 2018 entries as nunc pro tunc, we
find that they were incorrectly labeled. These entries were the first entries that fully
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memorialized the trial court's prior decisions and included the trial court's consideration of
additional evidentiary material. Thus, the July 23, 2018 entries were the original judgment
entries from which an appeal could be made, and were not corrected entries. "The
mislabeling of [an] order does not void its otherwise finality[.]" State v. Shamaly, 8th Dist.
Cuyahoga No. 88409, 2007-Ohio-3409, ¶ 8; In re N.L., 3d Dist. Hancock Nos. 5-12-38 and
5-12-39, 2013-Ohio-3983, ¶ 33.
{¶ 73} We further find that the nunc pro tunc entries were neither inconsistent with
nor contradictory to the trial court's prior decisions.
{¶ 74} "An interlocutory order of summary judgment may be reconsidered and
revised at any time before final judgment is entered." Todd Dev. Co., Inc. v. Morgan, 12th
Dist. Warren No. CA2005-11-124, 2006-Ohio-4825, ¶ 51. At the time the trial court issued
its interlocutory summary judgment decision on December 15, 2017, the six-year statute of
limitations had not run yet; it would run two days later. The trial court's decision simply
declared that once Forrest made his determination regarding the TPR, Su was "entitled to
½ of the tax penalty reserve." By the time the trial court issued its July 23, 2018 entry
journalizing its prior summary judgment decision, the statute of limitations had expired and
Forrest had made his determination pursuant to Paragraph 3 of the Addendum. Therefore,
the final judgment entry does not contradict the summary judgment decision.
{¶ 75} Likewise, the trial court's July 23, 2018 final judgment entry journalizing its
prior decision denying Forrest's motion to be declared the prevailing party is not inconsistent
with the decision. As stated earlier, the trial court characterized its decision as an "advisory
opinion" and based its denial of the motion in part upon the fact that Forrest sought to be
declared the prevailing party for purposes of an award of attorney fees pursuant to the
Addendum, yet the Addendum was not part of the file. The decision further stated, "if the
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parties intend to pursue this matter further, the [Addendum] shall be filed with the Court and
made part of the record. The [Addendum] shall be filed within ten days of this Decision or
the case will be dismissed[.]"3
{¶ 76} Despite the trial court's order, the parties did not file the Addendum within ten
days of the decision. Rather, a redacted Addendum and Section 7.5 of the FTSA were filed
on August 25, 2017. In the interim and thereafter, the parties continued to file motions and
other pleadings. Such included Forrest's motion to vacate the trial court's July 3, 2017
decision and supplemental memorandum in support of his motion to be declared the
prevailing party. Contrary to Forrest's assertion and for the reasons detailed in our
resolution of the second assignment of error, we find that the Addendum and Section 7.5
of the FTSA do not prove that Forrest was the prevailing party. Thus, the trial court's July
23, 2018 entry denying Forrest's motion to be declared the prevailing party does not
contradict the trial court's prior decision on that issue.
{¶ 77} Forrest's fifth assignment of error is overruled.
{¶ 78} Assignment of Error No. 6:
{¶ 79} THE TRIAL COURT ERRED WHEN IT DENIED FORREST'S MOTION TO
FILE AMENDED COUNTERCLAIMS.
{¶ 80} Forrest argues the trial court erred in denying his motion to amend his
counterclaim to set forth two claims against Su, one for conversion of his personal property,
and one for Su's share of the patent costs. Challenging the trial court's finding he had
3. On appeal, Forrest asserts that the trial court's July 2017 decision was provisional pending the filing of the
unredacted Addendum and the FTSA. Contrary to Forrest's assertion, the trial court's decision only refers to
a "divorce agreement." A reading of the decision makes it clear that the "divorce agreement" referred to by
the trial court is the Addendum. We further note that Forrest's motion to be declared the prevailing party, Su's
memorandum in opposition, and Forrest's subsequent filings all refer to the Addendum as the January 2010
Agreement.
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"opportunity to amend his counterclaim years ago," Forrest asserts that the personal
property claim arose after Su's September 2015 indictment for theft and perjury, and that
the patent costs claim arose after Su refused to pay the patent costs invoiced in December
2015 and January 2016.
{¶ 81} Civ.R. 13(E) and (F) provide that a party may only amend its pleading to
include a counterclaim where that counterclaim matured or was acquired after the pleading,
or where the party omitted the counterclaim through oversight, inadvertence, or excusable
neglect, or when justice requires. Additionally, as applicable here, Civ.R. 15(A) provides
that "a party may amend his pleading only with the court's leave. The court shall freely give
leave when justice so requires."
{¶ 82} The grant or denial of leave to amend a pleading is within the trial court's
discretion and will not be reversed on appeal absent an abuse of that discretion. Textiles,
Inc. v. Design Wise, Inc., 12th Dist. Madison Nos. CA2009-08-015 and CA2009-08-018,
2010-Ohio-1524, ¶ 83. "Where a motion for leave to amend is not timely tendered and no
reason apparent to justify the delay, a trial court does not abuse its discretion in refusing to
allow the amendment." State ex rel. Smith v. Ohio Adult Parole Auth., 61 Ohio St. 3d 602,
603-604 (1991).
{¶ 83} This case began in February 2013 when Su filed her complaint against
Forrest. Forrest moved to amend his counterclaim in April 2016 after discovery was
completed and after the trial court ruled on the parties' cross-motions for summary
judgment. The record shows that Forrest filed a lawsuit against Su in Hamilton County,
Ohio in April 2013 for conversion of his personal property. He further asserted in his August
2015 motion for summary judgment that Su had "engaged in a massive 6 year fraud against
[him] involving her stealing tens of thousands of dollars of his personal property [and] ha[d]
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perjured herself on this matter multiple times[.]" Thus, Forrest had the opportunity to amend
his counterclaim for conversion of personal property earlier than April 2016 as the
amendment he sought involved facts he had previously raised in the course of the litigation.
{¶ 84} Regarding Su's share of the patent costs, the record likewise shows that
Forrest had the opportunity to amend his counterclaim earlier than April 2016. The January
2013 emails that Forrest's attorney sent to Su's attorney before she filed her complaint
asserted Su owed at least $46,000 for her share of the patent costs. Forrest's July 2014
answer to Su's complaint then asserted, "There is a current deficit that [Su] owes to the 7.5
FTSA fund," arguably referring to Su's share of patent costs. Thus, the amendment Forrest
sought involved facts he had previously raised even though he had not yet invoiced Su for
her share of the patent costs.
{¶ 85} The trial court, therefore, did not abuse its discretion in denying Forrest's
motion to amend his counterclaim to assert those two claims. Furthermore, Forrest has
filed a lawsuit in the trial court on March 13, 2018, asserting the very claims he sought to
raise in his motion to amend his counterclaim. Given the foregoing, Forrest's sixth
assignment of error is overruled.
{¶ 86} Assignment of Error No. 7:
{¶ 87} THE TRIAL COURT ERRED IN ITS DETERMINATION THAT IT DID NOT
HAVE SUBJECT MATTER JURISDICTION TO DECIDE FORREST'S ALIMONY TAX
COUNTERCLAIM.
{¶ 88} Forrest argues that the trial court erred when it declined to consider Forrest's
counterclaim for breach of contract regarding the alimony payment. Forrest's alimony
counterclaim was based upon Su's failure to report a $150,000 alimony payment in her
2010 income tax return in violation of Paragraph 1 of the Addendum. The trial court declined
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to consider the counterclaim, finding that the Hamilton County Court of Common Pleas had
issued a decision "on this identical issue and this Court will not issue a separate ruling on
a claim that has been resolved (or is on appeal) in another court."4 Forrest asserts that the
trial court had jurisdictional priority over the alimony tax counterclaim because the case at
bar was filed first.
{¶ 89} "The jurisdictional-priority rule provides that as between state courts of
concurrent jurisdiction, the tribunal whose power is first invoked acquires exclusive
jurisdiction to adjudicate the whole issue and settle the rights of the parties." State ex rel.
Vanni v. McMonagle, 137 Ohio St. 3d 568, 2013-Ohio-5187, ¶ 4; Triton Servs., Inc. v. Reed,
12th Dist. Warren Nos. CA2016-04-028 and CA2016-08-068, 2016-Ohio-7838, ¶ 8.
Generally, the rule only applies when the claims and parties are the same in both cases.
Reed at ¶ 8. However, the rule can apply even when the causes of action, relief requested,
and the parties are not exactly the same so long as the actions are part of the same "whole
issue." Id.; State ex rel. Otten v. Henderson, 129 Ohio St. 3d 453, 2011-Ohio-4082, ¶ 29.
{¶ 90} Su filed her complaint in the Warren County Domestic Relations Court in
February 2013. In April 2013, Forrest filed a lawsuit against Su and her attorney in Hamilton
County, Ohio, seeking damages and alleging conversion of his personal property and
breach of the Addendum regarding an IRS refund check. Forrest further alleged that he
had been audited by the IRS because Su failed to report alimony on her income tax return
in violation of Paragraph 1 of the Addendum. Forrest's lawsuit was dismissed on summary
judgment grounds on December 17, 2014. The grant of summary judgment in favor of Su
was subsequently upheld by the First Appellate District in October 2016.
4. The December 17, 2014 decision of the Hamilton County Court of Common Pleas was attached to Su's
motion for summary judgment.
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{¶ 91} In the interim, the case at bar was transferred to the trial court. While the
record does not indicate when this happened, it plainly shows that the case was in the trial
court by July 2014 at the latest, months before the Hamilton County Court of Common
Pleas' decision. Additionally, the record shows that at the request of the trial court, both
parties filed a memorandum in August 2013 discussing whether the trial court or the Warren
County Domestic Relations Court had jurisdiction over the case at bar. Both parties agreed
that the trial court had subject-matter jurisdiction. Nevertheless, Forrest never moved to
dismiss his Hamilton County lawsuit prior to the Hamilton County Court of Common Pleas'
December 2014 decision.
{¶ 92} It was not until after the First Appellate District upheld the Hamilton County
Court of Common Pleas' December 2014 decision in 2016, and after Su and her attorney
moved for an award of attorney fees in that action, that Forrest moved to dismiss the entire
action for lack of subject-matter jurisdiction prior to the hearing on the motion for attorney
fees. According to the First Appellate District,
[Forrest's] motion contended that the court "must dismiss this
matter in its entirety, and vacate all judgment entries and orders
entered because this Court does not possess subject-matter
jurisdiction." He specifically asserted that jurisdictional priority
of his claims had vested in the Warren County Court of Common
Pleas when Su filed her complaint asserting her own claims
under the addendum agreement. He argued that his
addendum-agreement claims were compulsory counterclaims
to Su's, and that because Su's case was filed first, the entire
Hamilton County action must be dismissed. The trial court
denied Forrest's motion.
Gauthier v. Gauthier, 1st Dist. Hamilton Nos. C-170387 and C-170398, 2018-Ohio-4970, ¶
30. The First Appellate District upheld the Hamilton County Court of Common Pleas' denial
of the motion as follows:
Here, Forrest's action in Hamilton County contained an
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additional party that was not part of the action in Warren County,
namely [Su's attorney]. And following our review of the record,
we cannot find that the two causes of action are part of the same
"whole issue." We therefore conclude that the trial court did not
err in failing to transfer the case to Warren County or in failing
to dismiss the case pursuant to the jurisdictional-priority rule.
Id. at ¶ 32.
{¶ 93} In light of the foregoing, we find no error in the trial court's refusal to consider
Forrest's alimony counterclaim. Forrest's seventh assignment of error is overruled.
{¶ 94} Judgment affirmed.
RINGLAND, P.J., and PIPER, J., concur.
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