Collins v. Collins , 110 N.E.3d 999 ( 2018 )

[Cite as Collins v. Collins, 2018-Ohio-1512.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 105945
JACQUELINE G. COLLINS
PLAINTIFF-APPELLEE
vs.
LINCOLN W. COLLINS, SR.
DEFENDANT-APPELLANT
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Domestic Relations Division
Case No. DR-15-355643
BEFORE: E.T. Gallagher, J., Kilbane, P.J., and Celebrezze, J.
RELEASED AND JOURNALIZED: April 19, 2018
ATTORNEYS FOR APPELLANT
Stuart H. Lippe
Ann B. Maschari
55 Public Square, Suite 1550
Cleveland, Ohio 44113
ATTORNEY FOR APPELLEE
Sanjay K. Bhatt
Bhatt Law Office, Ltd.
2935 Kenny Road, Suite 225
Columbus, Ohio 43221
EILEEN T. GALLAGHER, J.:
{¶1} Defendant-appellant, Lincoln Collins, appeals an order finding him in contempt of
court for failure to comply with a judgment entry of divorce. He raises four assignments of
error:
1. The trial court (magistrate and judge) abused its discretion, acted contrary to
the law and facts, and committed reversible error by not dismissing appellee’s
motion to show cause, allowing appellee to invoke the contempt process, and
finding appellant in contempt of court.
2. The trial court abused its discretion and acted unreasonably, arbitrarily, and
contrary to the law and facts in its determination that it was defendant-appellant
who had the duty to perfect liens on the specified assets listed in Article 12 of the
judgment entry of divorce.
3. The trial court acted contrary to law and evidence, arbitrarily, unreasonably,
and abused its discretion in holding appellant in contempt for non-payment of the
said $80,000 to appellee and its determination that appellant provided no valid
defense thereto.
4. The trial court (magistrate and judge) abused its discretion and acted
unreasonably, arbitrarily, and contrary to the law and evidence in ordering, for the
alleged contempt, a 30-day jail sentence and purge orders consisting of $40,000 or
$30,000, respectively, lump sums to be paid by appellant within 30 days of the
magistrate’s and judge’s orders, and $1,000 per month starting within 30 days
thereafter.
{¶2} We find no merit to the appeal and affirm the trial court’s judgment.
I. Facts and Procedural History
{¶3} Plaintiff-appellee, Jacqueline Collins, filed a complaint for divorce in February
2015. Shortly thereafter, in June 2015, the parties reached a settlement agreement that was
incorporated into the court’s judgment entry of divorce. According to the judgment entry of
divorce, Lincoln operated a business referred to as Mad Hatter Automotive Service Center. The
Mad Hatter was owned by a trust, and Lincoln was the trustee of the trust. The parties also
owned a 2007 Hyundai Vera Cruz, a 2001 Honda Accord, a 1998 Lexus GS 300, a house, and
other unspecified property.
{¶4} Article 12 of the judgment entry of divorce settled the distribution of marital
property and provided that “Husband shall pay the Wife Eighty Thousand dollars ($80,000)
within 60 days of June 4, 2015 or by August 4, 2015 as settlement.” Article 12 states that “[i]f
Husband fails to give Wife this settlement amount of $80,000[,] this amount shall be considered
a lien against the Mad Hatter and the Vera Cruz * * * and Honda vehicles.” The judgment entry
of divorce also prohibited Lincoln from selling the Mad Hatter “without court approval as long as
he owes Wife the $80,000 or any portions of it or owes the wife spousal support.”1 Finally,
Article 12 provided that the trial court “retain[ed] jurisdiction to modify and amend this
provision in conformity with the intent of the parties.”
{¶5} Lincoln failed to pay Jacqueline the $80,000 by the August 4, 2015 deadline, and
Jacqueline filed a motion to show cause. Lincoln subsequently filed a Chapter 7 petition for
bankruptcy in the United States Bankruptcy Court for the Northern District of Ohio, which was
resolved a few months later.
{¶6} Following resolution of the bankruptcy proceedings, a magistrate held a hearing on
Jacqueline’s motion to show cause. Based on the parties’ testimony, the magistrate found that,
after the discharge of Lincoln’s debts in bankruptcy, Lincoln continued to operate the muffler
shop that he has operated for the last 22 years. At the time of the hearing, Lincoln had three
employees and owned real property located at 3025 Superior Avenue in Cleveland, where the
Mad Hatter was located. Based on this evidence, the magistrate found Lincoln in contempt of
1
The judgment entry of divorce required Lincoln to pay Jacqueline spousal support in the amount of $500 per
month for 24 months.
court for failure to pay Jacqueline the $80,000 required by the judgment entry of divorce and
sentenced him to 30 days in jail. Lincoln could purge the contempt by paying Jacqueline
$40,000 by March 1, 2017, and $1,000 per month for 40 months thereafter until the $80,000
marital property obligation is satisfied.
{¶7} Lincoln filed timely objections to the magistrate’s decision. He argued the
magistrate erred in ordering him to pay Jacqueline a specific sum of money because Article 12 of
the judgment entry of divorce provided that any amount of the $80,000 that remained unpaid by
the due date was considered a lien against the Mad Hatter and the Vera Cruz and Honda vehicles.
Lincoln argued that the liens “provided a built-in remedy” for failure to pay the $80,000, and
that the magistrate lacked authority to sentence him to jail for contempt.
{¶8} The trial court overruled the objections and found, in relevant part:
A review of the transcript of proceedings establishes that Defendant has failed to
pay his former spouse anything towards the $80,000 obligation. There was no
mention made at hearing the he had complied with lien safeguards to protect
Plaintiff’s interest. The Court is unclear whether Mr. Collins has any ownership
in this business known as the Mad Hatter but the testimony at trial suggests that
he is operating the business as though it were his. At a minimum, the Defendant
should have perfected liens on the specified assets. The Court is left to wonder
why no mention was made at [the] Hearing before [the magistrate] of liens. The
Court is left wondering whether Mr. Collins had the legal authority to even make
these liens effective.
Obviously, when Defendant filed his Bankruptcy Petition under Chapter 7[,] he
was experiencing severe financial problems. But the Court notes that the
Bankruptcy Stay was not effective until April 7, 2016. Defendant was to have
completed payment to Ms. Collins by August 15, 2015, which is more than eight
(8) months beforehand. Defendant is in contempt for having failed to pay Ms.
Collins anything towards the $80,000 that he owes her.
{¶9} As previously stated, the trial court retained jurisdiction in the judgment entry of
divorce “to modify and amend” the settlement of marital property outlined in Article 12.
Accordingly, the trial court modified the magistrate’s decision and the judgment entry of divorce
as follows:
The Defendant is ordered to prepare a Promissory Note, in the sum of $80,000,
with simple interest at a rate of 4% per annum from the date of the journalization
of this Entry. Defendant’s obligation under the note is to pay Plaintiff the sum of
$20,000 on or before July 1, 2017. Defendant may make monthly payments of
$1,000 on the balance of his obligation commencing August 1, 2017. Defendant
shall secure the note by giving Plaintiff a mortgage lien within thirty (30) days
from the date of this Order. The Mortgage shall adhere to Defendant’s interest in
the real property located at 3025 Superior Avenue Cleveland, Ohio 44114.
Terms of the note shall be $80,000, payable in accordance with the terms set forth
in this Order, until paid in full.
{¶10} Lincoln now appeals the trial court’s contempt order.
II. Law and Analysis
A. Standard of Review
{¶11} Civ.R. 53(D)(4)(d) directs that a trial court “shall undertake an independent review
as to the objected matters to ascertain that the magistrate has properly determined the factual
issues and appropriately applied the law.” On appeal, the reviewing court will not disturb the trial
court’s rulings on objections to a magistrate’s decision absent an abuse of discretion. Hissa v.
Hissa, 8th Dist. Cuyahoga Nos. 99498 and 100229, 2014-Ohio-1508, ¶ 17. An abuse of
discretion implies a decision that is unreasonable, arbitrary, or unconscionable. State ex rel.
DiFranco v. S. Euclid, 144 Ohio St. 3d 571, 2015-Ohio-4915, 45 N.E.3d 987, ¶ 13.
B. Invocation of Contempt Process
{¶12} In the first assignment of error, Lincoln argues the trial court erred in proceeding
on Jacqueline’s motion to show cause because the judgment entry of divorce automatically
provided liens against the Mad Hatter and the Vera Cruz and Honda vehicles upon Lincoln’s
failure to pay the $80,000. He contends the liens provided “a built-in remedy,” and that the
judgment entry of divorce does not authorize contempt proceedings.
{¶13} However, it was unclear whether Lincoln owned the Mad Hatter because the
judgment entry of divorce states that a trust owned the Mad Hatter. Indeed, the Mad Hatter was
named as a defendant in the divorce proceedings. Moreover, the judgment entry of divorce does
not describe how the liens would be perfected on the marital assets. Therefore, the liens
provision was not a “built-in remedy” since the liens did not automatically attach to the marital
assets upon Lincoln’s failure to comply with the judgment entry of divorce.
{¶14} The purpose of contempt is to secure compliance with the court’s lawful orders.
Robinson v. Robinson, 168 Ohio App. 3d 476, 2006-Ohio-4282, 860 N.E.2d 1027 ¶ 27 (2d Dist.),
citing Windham Bank v. Tomaszczyk, 27 Ohio St. 2d 55, 271 N.E.2d 815 (1971). Lincoln
admitted at the contempt hearing that he had not paid Jacqueline any part of the $80,000 required
by the judgment entry of divorce and that no liens had been perfected on the marital assets.
Therefore, Lincoln failed to comply with Article 12 of the judgment entry of divorce, and the
trial court was authorized to use its contempt power to enforce compliance with its prior order.
{¶15} Lincoln nevertheless argues that the trial court could not sentence him to a jail term
for failure to pay the $80,000 marital property obligation. He cites Sizemore v. Sizemore, 12th
Dist. Warren No. CA2009-04-045, 2010-Ohio-1525, to support his argument.
{¶16} In Sizemore, the Twelfth District held it was unconstitutional to hold a party in
contempt for failing to pay a child support arrearage that had been reduced to a lump sum
arrearage. The Sizemore court concluded that using contempt to imprison a party for failing to
pay a lump sum judgment would violate Article I, Section 15 of the Ohio Constitution, which
provides: “No person shall be imprisoned for debt in any civil action, on mesne or final process,
unless in cases of fraud.” Sizemore at ¶ 18.
{¶17} However, we are not bound by the Twelfth District, and the Ohio Supreme Court
has held that “punishment for violation of divorce decree provisions does not impinge upon the
constitutional prohibition against imprisonment for debts.” Pugh v. Pugh, 15 Ohio St. 3d 136,
142, 472 N.E.2d 1085 (1984), citing Harris v. Harris, 58 Ohio St. 2d 303, 390 N.E.2d 789
(1979). The court in Pugh specifically held that both alimony and property settlement
provisions of a divorce decree “‘are orders of the court, and represent more than a debt of one
spouse to the other.’” Id. at 142, quoting Harris at 311. Therefore, an order holding a spouse
in contempt of court and sentencing him to jail for failure to pay a property settlement provision
does not violate constitutional provisions against imprisonment for debts. Id.
{¶18} Neither the lien provision in the judgment entry of divorce nor the constitutional
prohibition against imprisonment for debts prohibited the trial court from holding Lincoln in
contempt of court for his failure to pay his $80,000 marital property obligation.
{¶19} Therefore, the first assignment of error is overruled.
C. Duty to Perfect Liens
{¶20} In the second assignment of error, Lincoln argues the trial court erred in finding he
was obligated to perfect liens on the marital assets specified in Article 12 of the judgment entry
of divorce.
{¶21} In his objections to the magistrate’s decision, Lincoln argued that the liens
provided Jacqueline’s sole remedy and that she should have perfected the liens on the marital
assets. In overruling Lincoln’s objections, the trial court observed that Lincoln might have
avoided a contempt finding if he had perfected liens on the marital assets. However, the trial
court did not find Lincoln in contempt for failing to perfect the liens; it found him in contempt
for failing to pay Jacqueline the $80,000 required under the divorce decree for her share of the
parties’ marital property.
{¶22} Moreover, the trial court concluded that perfection of liens on the assets specified
in the divorce decree might not have been feasible. The trial court found that it was “unclear
whether [Lincoln] has any ownership in this business known as the Mad Hatter but the testimony
at Trial suggests that he is operating the business as though it was his.” It was also unclear
“whether [Lincoln] had the legal authority to even make these liens effective.” Because
ownership of the assets was uncertain, the trial court exercised its jurisdiction to modify and
amend the judgment entry of divorce by fashioning a more specific remedy that no longer
required anyone to perfect liens on the marital assets.
{¶23} Therefore, the second assignment of error is overruled.
D. Inability to Pay
{¶24} In the third assignment of error, Lincoln argues the trial court abused its discretion
in disregarding evidence submitted in support of his defense that he was unable to pay the
$80,000 marital property obligation.
{¶25} In Pugh, the court distinguished between the failure to make a court-ordered
payment versus an inability to make the court-ordered payment. Pugh, 15 Ohio St. 3d at 140,
472 N.E.2d 1085. The inability to make a court ordered payment is a defense to a contempt
charge. Liming v. Damos, 133 Ohio St. 3d 509, 2012-Ohio-4783, 979 N.E.2d 297, ¶ 20.
However, the Pugh court explained that the divorce decree “‘imports a finding of the court that
he is able to pay,’” and the burden of proving an inability to pay is on the party subject to the
contempt order. Pugh at 140, quoting State ex. rel. Cook v. Cook, 66 Ohio St. 566, 64 N.E. 567
(1902).
{¶26} “[P]roof of purposeful, willing or intentional violation of a court order is not a
prerequisite to a finding of contempt.” Pugh at 140. The trial court’s order fixing the amount
to be paid and a party’s failure to comply with that order constitutes prima facie evidence of
contempt. Liming at ¶ 20. In other words, there is a presumption in favor of an ability to pay a
court-ordered obligation, and the party charged with contempt bears the burden of rebutting that
presumption. Id.
{¶27} Although the record shows that Lincoln filed a petition for bankruptcy, there is no
evidence in the record establishing his inability to pay the $80,000 marital property obligation.
Lincoln testified that the Mad Hatter is busy enough to employ three workers, including himself.
(Tr. 17.) Although title to the business is in the name of a trust, Lincoln admitted that the
business generates an income. (Tr. 16.) Lincoln also admitted that he owns the real property
where the business is located. (Tr. 17.)
{¶28} Lincoln nevertheless argues that business has been slow and that he does not earn
sufficient income from the business to make the court ordered payments. He also asserts that he
has other expenses that consume the profits generated from the business. However, in Liming,
the Ohio Supreme Court held that bare assertions claiming an inability to make payments are
insufficient to meet satisfy the contemnor’s burden of proving an inability to pay. Id. at ¶ 21.
Despite the bankruptcy proceedings and Lincoln’s self-serving testimony that he is unable to pay
the $80,000 obligation, there was evidence that Lincoln has assets with which he could make
court-ordered payments.
{¶29} Moreover, Lincoln offered no documentary evidence other than the bankruptcy
trustee’s final report that Lincoln had “no property available for distribution from the estate over
and above that exempted by law.” Lincoln did not produce any documents establishing his
current income and expenses such as bank statements, bills, or tax returns, nor did he offer any
documentary evidence regarding his assets and liabilities following the discharge of his debts in
bankruptcy. He admitted that the Mad Hatter generates income and that he owns real property,
but he failed to provide any documentary evidence establishing an inability to pay the $80,000
marital property obligation. Therefore, the trial court acted within its discretion when it
concluded that Lincoln failed to meet his burden of proving an inability to pay his marital
property $80,000 obligation.
{¶30} The third assignment of error is overruled.
E. Civil Contempt
{¶31} In the fourth assignment of error, Lincoln argues the trial court abused its
discretion by imposing a 30-day jail sentence and a purge order requiring him to pay a $20,000
lump sum followed by periodic payments of $1,000 per month. Again, Lincoln asserts that a jail
term violates Article I, Section 15 of the Ohio Constitution, which states, in relevant part that
“[n]o person shall be imprisoned for debt in any civil action * * * .”
{¶32} However, as previously explained, punishment for violation of a divorce decree
does not violate the constitutional prohibition against imprisonment for debts. Pugh, 15 Ohio
St.3d at 140, 472 N.E.3d 1085. And Lincoln failed to meet his burden of establishing that he
lacks the ability to pay a lump sum of $20,000 followed by monthly payments in the amount of
$1,000. If a $20,000 lump sum payment is beyond Lincoln’s means, he should have provided
documentary evidence to establish that fact. But in the absence of evidence establishing an
inability to make the court ordered payments, we cannot say that the trial court abused its
discretion by holding Lincoln in contempt and requiring him to make a lump sum payment of
$20,000 followed by monthly payments of $1,000 month until the entire $80,000 is paid in full to
purge the contempt order.
{¶33} The fourth assignment of error is overruled.
{¶34} Judgment affirmed.
It is ordered that appellee recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to the Cuyahoga County Court of Common
Pleas, Domestic Relations Division, to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the
Rules of Appellate Procedure.
EILEEN T. GALLAGHER, JUDGE
MARY EILEEN KILBANE, P.J., and
FRANK D. CELEBREZZE, JR., J., CONCUR