Schneider v. Schneider ( 2020 )

[Cite as Schneider v. Schneider, 2020-Ohio-4326.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY
BERNARD A. SCHNEIDER :
:
Plaintiff-Appellant : Appellate Case No. 28675
:
v. : Trial Court Case No. 1991-DM-43
:
MARY L. SCHNEIDER : (Appeal from Common Pleas Court -
: Domestic Relations Division)
Defendant-Appellee :
:
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OPINION
Rendered on the 4th day of September, 2020.
...........
ROBERT L. MUES, Atty. Reg. No. 0017449, 1105 Wilmington Avenue, Dayton, Ohio
45420
Attorney for Plaintiff-Appellant
DEAN E. HINES, 5335 Far Hills Avenue, Suite 313, Dayton, Ohio 45429
Attorney for Defendant-Appellee
.............
HALL, J.
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{¶ 1} Bernard A. Schneider appeals from a judgment of the Montgomery County
Court of Common Pleas, Domestic Relations Division, which found him in contempt for
failing to pay his former wife Mary L. Schneider after his retirement from federal
government service in 2002 as required by the separation agreement incorporated into
their decree of dissolution. The judgment also ordered Bernard to pay the unpaid
amounts and Mary’s attorney fees. . Finding no error in the trial court’s judgment, we
affirm.
I. Factual and Procedural Background
{¶ 2} The parties were married in May 1966, and their marriage was dissolved in
February 1991, almost 25 years later. The decree of dissolution incorporated their
separation agreement, which was prepared by Bernard without the help of an attorney.
Paragraph 12 of the agreement concerned Bernard’s pension:
Pensions. At the present time, the Husband is beneficial owner of vested,
non-contingent pension rights in the Civil Service Retirement System
(hereafter referred to as “Plan”). At this time, the Husband is entitled to full
benefits of this plan after completing thirty (30) years of full-time
employment and is at least fifty-five (55) years of age. At this time, Husband
would receive a reduced amount of annuity from this plan if the conditions
for years of service and age are not fully met, due to conditions such as
layoff, sickness, or premature termination of employment. Details of the plan
are available for inspection.
Upon Husband’s retirement from federal government service and receipt of
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full benefits from the Plan, the Husband shall cease payment of child
support and alimony payments under the terms of this Agreement, and shall
pay to Wife a monthly sum Sufficient to augment Wife’s gross income from
all sources to attain a total of $3,600.00 per month; however, Husband’s
payment shall not exceed $2,000.00 per month. * * * First payment shall
occur upon Husband's receipt of first monthly annuity payment from the
Plan.
{¶ 3} At the time of the dissolution in 1991, Bernard worked as a federal
government employee at Wright Patterson Air Force Base (WPAFB). In 2002, he retired
from WPAFB and began receiving full pension benefits. He continued to work, though,
but as a self-employed consultant under an independent-consulting agreement with a
Florida-based defense contractor, doing the same work he had done at WPAFB. In 2017,
Bernard stopped working and fully retired.
{¶ 4} After their dissolution, the parties had little contact with each other. In 2006,
Mary began making plans for her own retirement, which included figuring out what her
income would be. She had an attorney send a letter to Bernard reminding him of his
pension obligation set forth in paragraph 12 of the separation agreement and asking him
whether he was retired and, if not, when he planned to retire. Bernard responded that he
was still working and had no plans to retire. In 2010, Mary was having trouble making
ends meet. She executed a $50,000 promissory note with her daughter and son-in-law
under which they would give her up to $500 per month and she would pay them back with
interest. The note was secured by a real-estate mortgage on Mary’s home.
{¶ 5} Bernard never sent Mary any money. In July 2018, after she learned that he
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was no longer working, Mary filed a motion for a finding of contempt, claiming that Bernard
had retired from federal government service in 2002 but had not paid her the pension
benefits he owed under paragraph 12 of their separation agreement. In March 2019, a
hearing was held before a magistrate. Afterward, the magistrate issued a decision finding
Bernard in contempt and also calculating the amount that he owed her. The magistrate
sentenced Bernard to 30 days in jail, but suspended the sentence on the condition that
he pay everything he owed, and allowed Bernard to purge his contempt by paying Mary
a certain amount to show his good faith.
{¶ 6} Bernard filed several objections to the magistrate’s decision with the trial
court. On December 20, 2019, the court overruled them all. The court determined that
Bernard was in contempt for failing to pay Mary beginning in 2002, when, the court found,
he retired from federal government service and began collecting his full pension benefits.
The court pointed out that Bernard had not even begun paying her in 2017, when he
admitted his obligation was triggered. The court determined that Bernard owed Mary
$349,479.87, for the period from 2002 to December 31, 2018, and owed her $2,000 for
each month in 2019; it also determined that, going forward, he must pay Mary whatever
amount was necessary to make her monthly income $3,600. In calculating her monthly
income, the court excluded the payments to Mary under the promissory note, finding that
they were in the nature of a loan secured by a mortgage on her home. The court also
determined that Mary was entitled to payment of her attorney fees. The trial court
sentenced Bernard to 30 days in jail but suspended the sentence on the condition that,
by April 30, 2020, he pay Mary what he owed her through December 31, 2019. The court
said that Bernard could purge his contempt by paying Mary $100,000 by March 1, 2020,
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as a good-faith effort to discharge his debt. The court noted that Bernard had been less
than forthcoming with Mary and that he had failed to pay her anything even after he
stopped working entirely in 2017.
{¶ 7} Bernard appeals.
II. Analysis
{¶ 8} Bernard assigns four errors to the trial court.
A. Bernard’s “retirement from federal government service”
{¶ 9} The first assignment of error alleges:
THE TRIAL COURT ERRED IN FINDING THAT MR. SCHNEIDER
RETIRED IN MARCH 2002 PER THE LANGUAGE OF THE PARTIES
SEPARATION AGREEMENT.
{¶ 10} The pertinent sentence in paragraph 12 of the separation agreement
provides:
Upon Husband’s retirement from federal government service and receipt of
full benefits from the Plan, the Husband shall cease payment of child
support and alimony payments under the terms of this Agreement, and shall
pay to Wife a monthly sum * * *[.]
(Emphasis added.) There is no dispute that Bernard began receiving full pension benefits
in 2002, when he left WPAFB. The question is whether at that time Bernard “retire[d] from
federal government service.” Bernard argues that he did not retire because he continued
doing the exact same work for the federal government that he had been doing. The trial
court found this irrelevant. What mattered was that he ceased being an employee of the
federal government, not that he decided to continue working for himself.
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{¶ 11} “A separation agreement is a contract and, as such, is subject to the same
rules of construction that apply to other contracts.” Troha v. Troha, 105 Ohio App.3d 327,
332, 663 N.E.2d 1319 (2d Dist.1995). “ ‘If the decree is clear and unambiguous, its
interpretation is a matter of law and will be reviewed de novo.’ ” Emery v. Emery, 2d Dist.
Darke No. 04CA1639, 2005-Ohio-207, ¶ 11, quoting Peters v. Peters, 2d Dist.
Montgomery No. 18445, 2001 WL 173214, *2 (Feb. 23, 2001).
{¶ 12} The conditions precedent to Bernard’s paragraph 12 obligation were
unambiguous. The phrase “federal government service” plainly referred to the federal civil
service, the civilian workforce of the federal government. There is no doubt that Bernard
retired from the federal civil service in 2002. That was when he stopped working for the
federal government and started receiving his pension benefits. That he then chose to
keep working outside the federal civil service had no bearing on his paragraph 12
obligation. No reasonable person would conclude that one who is self-employed and does
contract work for the government is in “federal government service.” The trial court
correctly determined that Bernard “retire[d] from federal government service” in 2002,
triggering his obligation to pay Mary.
{¶ 13} The first assignment of error is overruled.
B. The calculation of Mary’s “gross income”
{¶ 14} The second assignment of error alleges:
THE TRIAL COURT ERRED IN FAILING TO INCLUDE INCOME FROM
ALL APPELLEE’S SOURCES WHEN DETERMINING HER TOTAL
INCOME FOR PURPOSES OF SPOUSAL SUPPORT.
{¶ 15} Paragraph 12 stated that Bernard “shall pay to Wife a monthly sum
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Sufficient to augment Wife’s gross income from all sources to attain a total of $3,600.00
per month; however, Husband’s payment shall not exceed $2,000.00 per month.”
(Emphasis added.) These payments to Mary were in the nature of spousal support, with
the apparent goal of giving her a monthly income of at least $3,600. The trial court
determined that the money that Mary received under the promissory note was not income
to her and should not be used to calculate her gross income, because the payments were
in the nature of a loan secured by a mortgage on Mary’s home. Bernard basically argues
that “income from all sources” means all the money that Mary receives.
{¶ 16} The separation agreement did not define “gross income” or “income.” For
individuals, “gross income” is generally understood to be the sum of all wages, salaries,
profits, interest payments, rents, and other forms of earnings, before any deductions or
taxes. See Black’s Law Dictionary, Income (11th Ed.2019) (defining “gross income” as
“[t]otal income from all sources before deductions, exemptions, or other tax reductions”).
For individuals, the term is probably most commonly used in the context of income tax.
Indeed, the language in paragraph 12 echoes the definition of “gross income” found in
the Internal Revenue Code, which provides in part that “gross income means all income
from whatever source derived.” 26 U.S.C. 61(a).
{¶ 17} Income, for tax purposes, is generally understood as an “ ‘accession[ ] to
wealth.’ ” Milenbach v. C.I.R., 106 T.C. 184, 195 (1996), aff’d in part, rev’d in part, 318
F.3d 924 (9th Cir.2003), quoting C.I.R. v. Glenshaw Glass Co., 348 U.S. 426, 431, 75
S.Ct. 473, 99 L.Ed. 483 (1955). Loan proceeds do not actually increase one’s wealth,
because “the receipt of the loan is offset by the obligation to repay the loan.” Milenbach,
318 F.3d at 930, citing C.I.R. v. Tufts, 461 U.S. 300, 307, 103 S.Ct. 1826, 75 L.Ed.2d 863-8-
(1983). Thus, for tax purposes, “loan proceeds do not constitute income to the borrower.”
1 Mertens Law of Federal Income Taxation, Section 5:13 (July 2020 Update). A reverse
mortgage is a special type of loan that allows a homeowner to convert a portion of the
equity in the home into cash, so “reverse mortgages are considered loan advances and
not income.” 4 Gates, Internal Revenue Manual—Abridged & Annotated, Section
5.15.1.31 (June 2020).
{¶ 18} The reverse-mortgage payments that Mary received did not increase her
wealth. That money was an asset that she already owned: the equity in her home. To
include these payments in her gross income would have been at odds with the goal of
ensuring that she had an “ascension to wealth” of $3,600 per month and would have been
fundamentally unfair. There is no evidence that the parties intended this unfair result.
{¶ 19} The second assignment of error is overruled.
C. The contempt finding
{¶ 20} The third assignment of error alleges:
THE TRIAL COURT ERRED IN FINDING APPELLANT IN CONTEMPT OF
COURT AS HE WAS, AT ALL TIMES, IN COMPLIANCE WITH THE
COURT’S ORDER.
{¶ 21} A person may be found in contempt of court for “[d]isobedience of, or
resistance to, a lawful writ, process, order, rule, judgment, or command of a court[.]” R.C.
2705.02(A). “We review the trial court’s decision whether to find a party in contempt
under an abuse-of-discretion standard.” (Citation omitted.) Abrams v. Abrams, 2017-
Ohio-4319, 92 N.E.3d 368, ¶ 19 (2d Dist.).
{¶ 22} The trial court found Bernard in contempt for his failure to comply with the
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court’s order that he begin paying Mary upon his retirement and receipt of full pension
benefits. We have already concluded that Bernard’s obligation to pay Mary was triggered
in 2002. Not only did Bernard ignore his obligation in 2002, he ignored it even after he
stopped working in 2017, when he himself admits it was triggered. We cannot say that
the trial court abused its discretion by finding Bernard in contempt.
{¶ 23} The third assignment of error is overruled.
D. The award of attorney’s fees
{¶ 24} The fourth assignment of error alleges:
THE TRIAL COURT ABUSED ITS DISCRETION BY AWARDING
APPELLEE ATTORNEY FEES IN FURTHERANCE OF THE CONTEMPT
ACTION AS APPELLANT WAS IN COMPLIANCE WITH THE COURT’S
ORDER AT ALL TIMES.
{¶ 25} The trial court ordered Bernard to pay Mary’s attorney fees based on
paragraph 27 of their separation agreement, which provided:
Enforcement Expenses. If either Husband or Wife defaults in the
performance of any of the terms, provisions or obligations herein set forth,
and it becomes necessary to institute legal proceedings to effectuate the
performance of any provisions of this Agreement, then the party found to be
in default shall pay all expenses, including reasonable attorney fees,
incurred in connection with such enforcement proceedings.
{¶ 26} Bernard plainly defaulted in his performance of his obligation to pay Mary
under the separation agreement. Mary had no choice but to institute contempt
proceedings against him. The trial court did not abuse its discretion by awarding her
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attorney fees.
{¶ 27} The fourth assignment of error is overruled.
III. Conclusion
{¶ 28} We have overruled all of the assignments of error presented. The trial
court’s judgment is affirmed.
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FROELICH, J. and WELBAUM, J., concur.
Copies sent to:
Robert L. Mues
Dean E. Hines
Hon. Timothy D. Wood