Mullins v. Mullins , 2023 Ohio 3266 ( 2023 )

[Cite as Mullins v. Mullins, 2023-Ohio-3266.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
COREY L. MULLINS, : APPEAL NO. C-220389
TRIAL NO. DR2001444
Plaintiff-Appellee, :
O P I N I O N.
vs. :
BRYAN D. MULLINS, :
Defendant-Appellant. :
Appeal From: Hamilton County Court of Common Pleas, Domestic Relations
Division
Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause
Remanded
Date of Judgment Entry on Appeal: September 15, 2023
Martin E. Hubbell, for Plaintiff-Appellee,
J. Stephen Cox, for Defendant-Appellant.
OHIO FIRST DISTRICT COURT OF APPEALS
KINSLEY, Judge.
{¶1} Defendant-appellant Bryan Mullins appeals the decision of the
Hamilton County Domestic Relations Court finding that a stock brokerage account he
opened prior to his marriage was marital property and that plaintiff-appellee Corey
Mullins was accordingly entitled to one-half of this account. In three assignments of
error, Bryan argues that the trial court erred in characterizing the account as marital
property, in treating the brokerage account as all cash, and in implying the brokerage
account would need to be liquidated to divide the account.
{¶2} Following our review of the record, we hold that the trial court erred in
finding that the entire brokage account was marital property. Because Bryan provided
sufficient tracing evidence as to two blocks of stock in the brokerage account, we
reverse the trial court’s decision as to these two blocks of stock. But we affirm the trial
court’s decision as to the remaining blocks of stock, as Bryan failed to meet his burden
to demonstrate that the assets were his separate property. We further hold that the
trial court did not order liquidation of this brokerage account and therefore reject
Bryan’s argument in that regard. Accordingly, the judgment of the trial court is
reversed in part and affirmed in part.
Factual and Procedural Background
{¶3} Bryan and Corey were married on August 2, 2003. The parties
separated on December 31, 2019, and Corey filed for divorce on September 21, 2020.
They stipulated that the term of the marriage was from August 2, 2003, through
December 31, 2019. The trial court held a bench trial to determine the division of
property.
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{¶4} Specifically at issue at trial was the division of an E*Trade brokerage
account that Bryan opened prior to the parties’ 2003 marriage. The account held
numerous blocks of stock, as well as cash.
{¶5} At trial, Bryan presented evidence and testimony attempting to
demonstrate that the E*Trade account contained shares of stock which were still his
separate property. Specifically, he claimed the five specific blocks of stock shares
within the account as separate property: Ameren Corporation, American Electric
Power Company, Inc., Duke Energy Corporation, Proctor & Gamble Company
(“P&G”), and Mastercard, Inc. Bryan testified as to the traceability of each of these
shares of stock and submitted various financial statements in support of his testimony.
He further testified that there was some passive growth in the stock holdings he was
claiming as his separate property during the marital period. And he testified that he
sold some shares of the Mastercard stock to pay off a home equity line of credit, which
resulted in a tax liability in 2019.
{¶6} Bryan also hired an accounting firm, Flagel Huber Flagel (“FHF”), to
perform a forensic accounting of the parties’ accounts, investments, business assets,
and property and to trace and identify their premarital and separate property. In its
expert report, FHF concluded that the brokerage account was primarily Byran’s
separate property.
{¶7} But at trial, Randall Kuvin, Bryan’s expert witness from FHF, testified
that he did not review any financial statements from 2003 to 2013. And on cross-
examination, Kuvin testified as to classification errors in the report and admitted that
one incorrect entry in the report could have skewed the entire report.
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{¶8} Corey did not have any expert witnesses testify on her behalf. She
testified that she was aware that Bryan was making periodic deposits into the
brokerage account. Bryan testified that he was depositing what constituted marital
property into the brokerage account, but he withdrew roughly the same amount of
cash that was deposited into the account.
{¶9} The magistrate held Bryan failed to meet his burden of proof to establish
the brokerage account was his separate property. The magistrate reasoned that there
were many errors in FHF’s report, that Bryan failed to provide sufficient tracing
evidence, and that the 2019 tax liability was incurred due to Bryan selling his separate
interest in the Mastercard stock.
{¶10} Bryan filed objections to the magistrate’s decision. The trial court
overruled Bryan’s objections as to the magistrate’s findings regarding the brokerage
account. The trial court subsequently entered a final judgment entry and decree of
divorce.
{¶11} Bryan now appeals.
Classification of the Brokerage Account
{¶12} In his first assignment of error, Bryan asserts the trial court erred in
finding that the brokerage account was marital property, while also finding that the
2019 tax liability was Bryan’s sole responsibility because it was incurred due to the sale
of his separate interest in the Mastercard stock. And in his second assignment of error,
Bryan asserts the trial court erred in treating the value of the brokerage account as all
cash.
{¶13} “This court reviews the manner in which a domestic-relations court
executes an equitable division of property for an abuse of discretion.” (Internal
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quotation marks omitted.) Owens v. Owens, 1st Dist. Hamilton No. C-210488, 2022-
Ohio-3450, ¶ 14. “Factual issues, however, such as those arising in the classification
and valuation of property, are reviewed under the distinct sufficiency-and-manifest-
weight-of-the-evidence standards.” Id. Additionally, “[b]ecause traceability presents
a question of fact, we must give deference to the trial court’s findings, and the court’s
decision on the matter will not be reversed as against the manifest weight of the
evidence when it is supported by competent credible evidence.” Tyra v. Tyra, 1st Dist.
Hamilton No. C-210392, 2022-Ohio-2504, ¶ 15.
{¶14} “In divorce proceedings, the domestic relations court shall ‘determine
what constitutes marital property and what constitutes separate property.’ ” Devito v.
Devito, 1st Dist. Hamilton No. C-210523, 2022-Ohio-2563, ¶ 22, quoting R.C.
3105.171(B). In Devito, we explained the differences between marital and separate
property:
The parties’ marital property consists of real or personal property
owned by either spouse, including retirement benefits acquired during
the marriage and interest in those benefits. Marital property does not
include any separate property. Separate property consists of, among
other things, property acquired before the marriage and certain other
property, such as inheritances and gifts, acquired by one spouse during
the marriage. A spouse may retain separate property despite having
commingled it with marital property, because as long as it is traceable,
separate property retains its identity.
(Internal quotation marks and citations omitted.) Id. at ¶ 23. Martial property also
“includes the appreciation on separate property due to the labor, monetary, or in-kind
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OHIO FIRST DISTRICT COURT OF APPEALS
contributions of either or both spouses that occur during the marriage.” Dunn v.
Dunn, 1st Dist. Hamilton Nos. C-010282 and C-010292, 2002-Ohio-6247, ¶ 24.
{¶15} And in Tyra, we explained the traceability of property:
Traceable here refers to evidence demonstrating a connection between
property currently owned and some antecedent article of separate
property. Such proof overcomes the effect of commingling, by which
separate property may be transmuted into marital property. So in
determining whether property is separate or marital, the key issue is
traceability. The party in a divorce action claiming that specific property
owned when the marriage terminates is not marital but separate
property has the burden of proof by a preponderance-of-the-evidence
standard. Generally, the evidence of tracing must be specific, and oral
testimony unsupported by documentary evidence should not carry
much weight.
(Internal quotation marks and citations omitted.) Tyra at ¶ 15.
{¶16} Evidence to support oral testimony of traceability can include clearly
documented transactions. See, e.g., Owens, 1st Dist. Hamilton No. C-210488, 2022-
Ohio-3450, at ¶ 27 (holding that husband sufficiently traced shares of stock he had
purchased prior to marriage by submitting the sales history of the stock account);
Oliver v. Oliver, 5th Dist. Tuscarawas No. 2012 AP 11 0067, 2013-Ohio-4389, ¶ 82
(noting that wife’s testimony without supporting documents to trace funds in
retirement account was insufficient to establish that it was her separate property);
Bergman v. Bergman, 2d Dist. Montgomery No. 25378, 2013-Ohio-715, ¶ 33 (holding
husband sufficiently traced his separate interest in the real property at issue by
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OHIO FIRST DISTRICT COURT OF APPEALS
submitting evidence of how he paid the purchase price and mortgage payments); Reed
v. Reed, 3d Dist. Allen No. 1-09-63, 2010-Ohio-4550, ¶ 30-31 (concluding husband
was entitled to investment accounts as separate property because he provided
statements sufficient for tracing).
{¶17} At the outset, we note that Bryan does not contest the division of cash
in the brokerage account. He concedes that the cash in the brokerage account has been
extensively commingled and there was no way to adequately trace it. Rather, his
claims of separate property are limited to the shares of Ameren, American Electric
Power, Duke Energy, P&G, and Mastercard stock in the brokerage account.
{¶18} Bryan further asserts that he is no longer relying on FHF’s report to
support his arguments. Bryan does, however, argue that the trial court’s focus on
FHF’s report was misplaced, and we agree. In focusing on the issues in FHF’s report,
the trial court ignored the numerous E*Trade statements and consolidated 1099 tax
statements that Bryan also submitted as exhibits at trial.
{¶19} Thus, the only relevant inquiry here is the traceability of each of the
blocks of stock that Bryan claims as his separate property. We consider each of these
in turn below.
A. Traceability of the Ameren Stock
{¶20} At the end of the marital term, there were 122 shares of Ameren stock
in the brokerage account. Bryan contends he is entitled to these shares as his separate
property.
{¶21} Bryan testified at trial that he acquired shares of Ameren stock in 1998
through a dividend reinvestment plan. He further testified that under this plan, when
dividends were paid out on this stock, the dividends were automatically used to
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OHIO FIRST DISTRICT COURT OF APPEALS
purchase more shares of stock. According to a summary statement of Bryan’s dividend
reinvestment account with Ameren, which was submitted as an exhibit at trial, Bryan
had 32.6421 shares of Ameren stock in January 1998. The summary statement further
showed that in October 2017, Bryan accumulated 122.6143 shares, transferred 122 of
these shares to his brokerage account, and sold the remaining 0.6143 shares. Bryan
also submitted an October 2017 E*Trade statement as an exhibit at trial. This
statement confirmed the transfer of 122 shares of Ameren stock to his brokerage
account.
{¶22} Bryan’s testimony and these detailed statements establish that Bryan’s
ownership of these shares predated the marital term and that the increase in the
number of shares was merely the expected result of the dividend reinvestment plan
Bryan had enrolled in with Ameren. The appreciation of these shares was not due to
Bryan’s labor, money, or in-kind contribution. See Dunn, 1st Dist. Hamilton Nos. C-
010282 and C-010292 2002-Ohio-6247, at ¶ 24. Because Bryan sufficiently traced the
122 shares of Ameren stock as his separate property, the trial court’s classification of
these shares as marital property was against the manifest weight of the evidence and
is accordingly reversed.
B. Traceability of the American Electric Power Stock
{¶23} Bryan also asserts he is entitled to the 55 shares of American Electric
Power that were in the brokerage account at the end of the marital term as his separate
property.
{¶24} At trial, Bryan testified that he purchased 55 shares of American Electric
Power stock in 1999, and a June 2020 portfolio summary of the brokerage account
from E*Trade, which he submitted as an exhibit, confirmed this purchase. He also
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OHIO FIRST DISTRICT COURT OF APPEALS
submitted an August 2003 E*Trade statement as an exhibit, and this showed that he
entered the marriage with these 55 shares of American Electric Power in the brokerage
account.
{¶25} The June 2020 portfolio summary from E*Trade further demonstrated
that Bryan owned 100 shares of American Electric Power at that time, because he
purchased 45 additional shares in April 2015. But he does not claim these shares as
separate property. And the October 2017 and December 2019 E*Trade statements,
which he also submitted as exhibits, established that he never had more than 100
shares of American Electric Power in the brokerage account.
{¶26} Because the E*Trade statements and portfolio summary confirm
Bryan’s testimony that he had a block of 55 shares of American Electric Power Stock
before and after the marital term, he sufficiently traced these shares. The trial court’s
classification of these shares as marital property was also against the manifest weight
of the evidence and is therefore reversed.
C. Traceability of the Duke Energy Stock
{¶27} Next, Bryan contends he is entitled to the 52 shares of Duke Energy that
were in the brokerage account at the end of the marital term as his separate property.
{¶28} Bryan testified at trial that he purchased 52 shares of Duke Energy prior
to marriage, but he could not testify as to the date of the purchase. The June 2020
E*Trade portfolio summary showed a block of 52 shares of Duke Energy, but unlike
the other blocks of stock, there was no purchase date provided. Bryan testified that
this was because he originally purchased these 52 shares from Cincinnati Gas &
Electric, which became Cinergy Corporation (“Cinergy”) and was later purchased by
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OHIO FIRST DISTRICT COURT OF APPEALS
Duke Energy in 2006. But the August 2003 E*Trade statement showed that Bryan
entered the marriage with 100 shares of Cinergy stock.
{¶29} Now, on appeal, Bryan asserts he entered the marriage with 100 shares
of Cinergy stock. He further explains that when Cinergy was acquired by Duke Energy
in 2006, he received 1.56 shares of Duke Energy in exchange for each share of Cinergy
stock he owned and therefore held 156 shares of Duke Energy stock at that time. He
also asserts that because of a reverse three-for-one stock split in 2012, his holdings
were reduced to 52 shares. He argues this is all a matter of public record.
{¶30} Before the trial court, however, Bryan never argued that Duke Energy’s
acquisition of Cinergy, the resulting stock exchange, and subsequent stock split were
matters of public record. Rather, Bryan now contends we may now take judicial notice
of these events, despite his failure to request the same of the trial court.
{¶31} But “[t]he party seeking to have a particular asset classified as separate
property has the burden of proof, by a preponderance of the evidence, to trace the asset
to separate property.” Reed, 3d Dist. Allen No. 1-09-63, 2010-Ohio-4550, at ¶ 10. For
example, in Idone v. Idone, the court held that because there was no corroborating
evidence as to the alleged stock splits husband described other than his self-serving
testimony, he failed to prove by a preponderance of the evidence that the shares of
stock at issue were his separate property. Idone v. Idone, 11th Dist. Portage No. 2004-
P-0052, 2005-Ohio-2522, ¶ 21-22. Here, not only did Bryan fail to provide any
corroborating evidence to explain the changes in the number of shares of Duke Energy
stock he owned, but he also never testified as to a stock exchange and stock split at
trial. Because Bryan failed to meet his burden in tracing these shares, the trial court’s
classification of these shares is affirmed.
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D. Traceability of the P&G Stock
{¶32} At the end of the marital term, there were also 100 shares of P&G stock
in the brokerage account, which Bryan claims are his separate property.
{¶33} Bryan testified at trial that he purchased 100 shares of P&G stock in
March 2000, which is confirmed by the June 2020 E*Trade portfolio summary. But,
as Corey correctly notes, there were only 50 shares of P&G stock in the August 2003
E*Trade statement. In an attempt to explain this discrepancy, Bryan asserts there was
a two-for-one stock split in June 2004, which doubled the number of shares and
halved the price of shares for all P&G stockholders. Consequently, Bryan asserts his
position was left unchanged, despite an apparent increase in the number of shares he
owned.
{¶34} But again, Bryan never requested that the trial court take judicial notice
of this stock split, and he therefore failed to meet his burden in tracing these shares.
Accordingly, the trial court’s classification of these shares is affirmed.
E. Traceability of the Mastercard Stock
{¶35} Lastly, Bryan asserts that the 505 shares of Mastercard stock that were
in the brokerage account at the end of the marital term are his separate property.
{¶36} At trial, Bryan testified that he bought two blocks of Mastercard stock
in 2006 and 2007 using the proceeds of sales of stock that he owned prior to marriage.
According to the August 2003 E*Trade statement, Bryan entered the marriage with
120 shares of Sun Microsystems, Inc., stock, 50 shares of Oracle Corporation stock, 96
shares of Cisco Systems, Inc., stock, and 50 shares of Pfizer, Inc.
{¶37} Consolidated tax statements submitted as exhibits at trial showed that
Bryan sold his shares of Sun Microsystems in 2004 and Oracle stock in 2005. And on
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May 25, 2006, Bryan sold his shares of Cisco Systems stock and purchased 45 shares
of Mastercard stock. The sale of the Sun Microsystems, Oracle, and Cisco Systems
stock yielded $3,180.89 in profit for Bryan, and he purchased the 45 shares of
Mastercard stock for $2,009.79. Then, on August 2, 2007, Bryan sold his shares of
Pfizer stock for $1,174.49 and purchased an additional 13 shares of Mastercard stock
for $1,887.58.
{¶38} The timing and proceeds of these sales tended to corroborate Bryan’s
position that he purchased the Mastercard stock by selling shares of stock he owned
prior to marriage, although there were questions as to whether Bryan’s holdings in
Mastercard were too commingled with other funds to be traceable. But at trial, Bryan
attempted to resolve these questions by testifying that, due to a ten-for-one stock split
in 2014, he should have had 580 shares of Mastercard stock. He further testified that
in 2019, he sold 75 shares of Mastercard stock to pay off a home equity line of credit.
He testified that there were 505 shares of Mastercard stock left in the brokerage
account at the end of the marriage.
{¶39} Though Bryan testified as to the stock split at trial, he did not request
that the trial court take judicial notice of this fact. Like the court held in Idone, Bryan
cannot rely on his self-serving testimony alone. See Idone, 11th Dist. Portage No.
2004-P-0052, 2005-Ohio-2522, at ¶ 21-22. Because corroborating evidence as to this
stock split was required, Bryan should have requested that the trial court take judicial
notice of this fact. Evid.R. 201(D) provides that, “A court shall take judicial notice if
requested by a party and supplied with the necessary information.” Given Bryan did
not make such a request, he failed to meet his burden in tracing the shares of
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OHIO FIRST DISTRICT COURT OF APPEALS
Mastercard stock as his separate property. Thus, the trial court’s classification of these
shares as marital property is affirmed.
{¶40} Bryan also asserted that the trial court contradicted itself in holding him
solely responsible for the tax liability incurred in 2019 due to the sale of 75 Mastercard
shares. We agree. Because the Mastercard stock was classified as martial property by
the trial court, the responsibility for the tax liability should have been shared between
Bryan and Corey.1 The trial court’s error, however, does not prove that the Mastercard
stock was separate property as Bryan argues. It merely demonstrates that the trial
court incorrectly allocated tax liability to Bryan, a point Bryan does not raise in this
appeal other than to cite it as evidence of the character of the Mastercard stock.
{¶41} Accordingly, Bryan’s first assignment of error is overruled. While we
agree that the trial court should not have required Bryan to solely pay the taxes
associated with the 2019 Mastercard stock sale, as the Mastercard stock belonged to
the parties jointly, Bryan has not appealed that issue. The trial court’s characterization
of the Mastercard stock for tax purposes does not alleviate Bryan’s burden to
demonstrate that it was his separate property, a burden he did not meet at trial.
{¶42} However, Bryan’s second assignment of error is sustained as to the
shares of Ameren and American Electrical Power stock, because Bryan did sufficiently
trace these shares as his separate property. And because he did not meet his burden
as to the Duke Energy, P&G, and Mastercard stock, his second assignment of error is
overruled as to these shares. Therefore, the trial court’s judgment is reversed in part
and affirmed in part.
1 On appeal, neither party challenged the trial court’s allocation of the tax liability for the 2019
Mastercard stock sale solely to Bryan. Rather, Bryan only argues that because the trial court
assessed the tax liability solely to him, the Mastercard stock must be his separate property.
Therefore, the error is not before us, and we cannot provide relief to Bryan for the trial court’s
mistake in requiring him to individually pay the 2019 tax.
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Liquidation of the Brokerage Account
{¶43} In his third assignment of error, Bryan contends that the trial court
erroneously treated the brokerage account as a cash asset and implied that the stock
holdings would need to be liquidated to be divided.
{¶44} But the trial court never mandated a liquidation of the brokerage
account. Rather the trial court held that, “[Corey] shall be entitled to one-half of this
[brokerage] account as of 12/31/2019, plus or minus any gains or losses through the
date of distribution.” We do not interpret this language to mean that the trial court
suggested that the only means of dividing the brokerage account was through
liquidation. The trial court only held that Corey was entitled to one-half of the
brokerage account. As discussed above, we agree with this holding as applied to the
shares of Duke Energy, P&G, and Mastercard stock, but not as to the shares of Ameren
and American Electric Power stock. The third assignment of error is accordingly
overruled.
Conclusion
{¶45} For the reasons set forth in this opinion, the trial court’s judgment is
reversed in part and affirmed in part. This cause is remanded for proceedings
consistent with the law and this opinion.
Judgment affirmed in part, reversed in part, and cause remanded.
BERGERON, P.J., and BOCK, J., concur.
Please note:
The court has recorded its own entry on the date of the release of this opinion.
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