Elliot-Thomas v. Lewis , 2019 Ohio 3870 ( 2019 )

[Cite as Elliot-Thomas v. Lewis, 2019-Ohio-3870.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT )
KRISTEN H. ELLIOT-THOMAS C.A. No. 29164
Appellee
v. APPEAL FROM JUDGMENT
ENTERED IN THE
LEE Q. LEWIS COURT OF COMMON PLEAS
COUNTY OF SUMMIT, OHIO
Appellant CASE No. DR-2012-10-2922
DECISION AND JOURNAL ENTRY
Dated: September 25, 2019
TEODOSIO, Presiding Judge.
{¶1} Appellant, Lee Q. Lewis, appeals from a judgment of the Summit County Court
of Common Pleas, Domestic Relations Division, that granted him a divorce from appellee,
Kristen Elliot-Thomas, allocated their parental rights and responsibilities, divided the parties’
property, and ordered Mr. Lewis to pay child support. For the reasons stated below, this Court
reverses and remands.
I.
{¶2} Mr. Lewis and Ms. Elliot-Thomas were married on June 21, 2000. Two
daughters were born during the marriage. Although this case has a long history, this Court will
confine its review to the basic facts relevant to this appeal.
{¶3} On October 2, 2012, Ms. Elliot-Thomas filed a complaint for divorce. During
these proceedings, the parties agreed to a shared parenting plan that allocated their parenting
time with the children. During August 2018, the matter proceeded to a three-day contested
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hearing on the division of property and child support. Prior to the commencement of the hearing,
the parties stipulated that the date of filing the complaint would serve as the de facto date of the
divorce. The contested issues during the hearing included the valuation and division of the
parties’ separate and marital property and debt; whether Mr. Lewis committed financial
misconduct under R.C. 3119.171(E)(3) by failing to file or pay income taxes for several years
during the marriage; and the amount of child support that Mr. Lewis would pay.
{¶4} The trial court later issued the divorce decree that is the subject of this appeal.
Mr. Lewis appeals and raises seven assignments of error, which pertain to the primary issues that
were contested at the hearing. For ease of discussion, this Court will consolidate and rearrange
several of the assignments of error.
I.
ASSIGNMENT OF ERROR THREE
THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY FINDING
THAT MS. ELLIOT-THOMAS’ PNC CREDIT CARD HAD MORE THAN A
ZERO DOLLAR BALANCE ON THE DE FACTO DIVORCE DATE AND
THAT THE CHASE MASTERCARD WAS HER DEBT.
ASSIGNMENT OF ERROR FOUR
THE TRIAL COURT COMMITTED REVERSIBLE ERROR IN REFUSING TO
APPLY THE DE FACTO DATE TO THE FIRST MORTGAGE AND
IMPUTING TEMPORARY SPOUSAL SUPPORT IN A FINAL ORDER.
ASSIGNMENT OF ERROR FIVE
THE TRIAL COURT COMMITTED REVERSIBLE ERROR IN
DETERMINING THE PRE-MARITAL AND PRESENT VALUE OF THE
BUSINESS.
ASSIGNMENT OF ERROR SEVEN
THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY USING A
MARITAL BALANCE SHEET THAT CONFLICTED WITH ITS OWN
FINDINGS OF FACT AND BY CONCLUDING TRIAL WITHOUT
ADEQUATE NOTICE.
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During the Marriage
{¶5} This Court will address these assignment errors together because they pertain to
the trial court’s valuation and division of the parties’ separate and marital property and debt.
Underlying all these assigned errors is the argument that the trial court erred in using different
periods “during the marriage” for purposes of valuing and dividing certain property and debts.
Prior to dividing a couples’ property and debts, the trial court must determine the duration of the
marriage by pinpointing the time period that will be considered “during the marriage.” Tustin v.
Tustin, 9th Dist. Summit No. 27164, 2015-Ohio-3454, ¶ 17. The term “during the marriage” is a
term of art and is the period that is used to identify separate and marital property and debts and to
value the couples’ property and debt.
{¶6} Under R.C. 3105.171(A)(2), the phrase “during the marriage” means whichever
period is applicable:
(a) Except as provided in division (A)(2)(b) of this section, the period of time
from the date of the marriage through the date of the final hearing in an action for
divorce or in an action for legal separation;
(b) If the court determines that the use of either or both of the dates specified in
division (A)(2)(a) of this section would be inequitable, the court may select dates
that it considers equitable in determining marital property. If the court selects
dates that it considers equitable in determining marital property, “during the
marriage” means the period of time between those dates selected and specified by
the court.
(Emphasis added.) In other words, R.C. 3105.171(A)(2) requires the trial court to choose a
single time period for classifying and valuing the couple’s property and debts. R.C. 3105.171(G)
also contemplates that the trial court will choose a single period “during the marriage,” as it
requires the trial court make factual findings to support its division of property, which is required
to “specify the dates [beginning and termination of marriage] it used in determining the meaning
of ‘during the marriage.’”
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{¶7} Generally, the court must choose a specific date for purposes of valuation and use
it consistently; a party cannot pick and choose what dates to value certain items of marital
property. Brown v. Brown, 5th Dist. Licking No. 2008CA0111, 2009-Ohio-4913, ¶ 43, citing
Frohman v. Frohman, 11th Dist. Trumbull No. 2001-T-0021, 2002-Ohio-7274, ¶ 16. Although
the Fifth and Eleventh Appellate Districts have held that a trial court may sometimes use
different dates for valuation purposes, it emphasized that “this exception is very limited in
scope” and the trial court must explain its equitable reasons for doing so. Id., citing Frohman at
¶ 17.
{¶8} This Court, however, has not explicitly adopted that reasoning from the Eleventh
District, nor is the use of two different “during the marriage” time periods supported by a plain
reading of R.C. 3107.171. R.C. 3105.171(A)(2) grants the trial court the discretion to choose
“whichever is applicable” under subsection (a) or (b), but not both. The trial court was required
to choose one time period “during the marriage” for valuing and dividing the parties’ property.
{¶9} In this case, the parties had stipulated prior to the hearing that the period “during
the marriage” would be from the date of marriage until the date that Ms. Elliot-Thomas filed for
divorce on October 2, 2016. In its valuation of the parties’ marital and separate property and
debts, however, the trial court did not consistently use that time period. The trial court
repeatedly emphasized that several years had passed since the divorce complaint had been filed,
apparently attempting to justify using the date of the hearing for dividing some of the parties’
property. Had the trial court found that it was more equitable to determine that the marriage
ended at the time of the hearing, rather than the date of filing the complaint, it should have
consistently applied that as the end of the “during the marriage” period. The trial court was not
free to pick and choose different dates, several years apart, for valuing and dividing certain items
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of property, particularly when its use of those different dates repeatedly benefitted Ms. Elliot-
Thomas over Mr. Lewis.
{¶10} For example, the trial court credited Ms. Elliot Thomas for paying off two credit
card balances after she filed the complaint on October 2, 2016. In addition to the fact that one of
those credit cards belonged to her boyfriend and there was no evidence that she had an obligation
to pay that debt, the trial court gave her credit for paying off over $20,000 in marital debt. On
the other hand, Mr. Lewis received no credit for paying off other marital debts between the de
facto date of divorce and the date of the hearing, including over $55,000 he paid on a mortgage
on the marital residence.
{¶11} Because the trial court did not confine its valuation and division of property and
debts to a single “during the marriage” period, its property division must be reversed and
remanded. The trial court shall select a single, equitable period “during the marriage” and
identify, value, and divide the parties’ separate and marital property and debts using that specific
period.
{¶12} Although Mr. Lewis raises additional arguments within these assignments of
error, most of them have been rendered moot. He raises two arguments, however, that will not
be moot if the trial court relies on the same evidence on remand. Insofar as Mr. Lewis contends
that the trial court concluded the hearing without adequate notice to the parties, he forfeited this
issue by failing to raise a timely challenge in the trial court.
{¶13} Mr. Lewis also contends that the trial court erred in relying on the expert evidence
presented by Ms. Elliot-Thomas about the valuations of his business rather than on the testimony
of his witness. Mr. Lewis raised no objections to the qualifications of the witness to testify as a
business evaluation expert. Although he did object to the expert presenting an amended report,
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the expert explained that he had corrected mathematical errors, but that the remainder of the
report remained the same. Mr. Lewis’s own witness testified that he had identified the
mathematical errors when reviewing the initial report and that they were corrected in the
amended report that was admitted into evidence. Moreover, Mr. Lewis’s witness admitted that
he was not an expert in business valuation and that he had based part of his valuation on the 17-
year-old report of another witness who was not present at the hearing to testify. Consequently,
he has failed to establish that the trial court erred in considering the evidence presented by Ms.
Elliot-Thomas about the valuation of his business.
{¶14} Mr. Lewis’s third, fourth, fifth, and seventh assignments of error are sustained
insofar as they challenge the trial court’s identification, valuation, and division of separate and
marital property because it did not confine its property division to a single “during the marriage”
period. Except as stated above, this Court does not reach the merits of his other arguments
because they have been rendered moot.
ASSIGNMENT OF ERROR ONE
THE TRIAL COURT COMMITTED REVERSIBLE ERROR IN EXCLUDING
THE TAX LIABILITY ATTACHED TO THE MARITAL RESIDENCE FROM
THE OTHER MARITAL DEBTS ON GROUNDS THAT MR. LEWIS
ENGAGED IN FINANCIAL MISCONDUCT FOR NOT FILING THE
PARTIES TAXES FROM 2002 THROUGH 2012.
ASSIGNMENT OF ERROR TWO
THE TRIAL COURT COMMITTED REVERSIBLE ERROR IN ISSUING A
DISTRIBUTIVE AWARD IN THE AMOUNT OF $7,500 TO MS. ELLIOT-
THOMAS ON THE BASIS THAT MR. LEWIS ENGAGED IN FINANCIAL
MISCONDUCT FOR NOT FILING THE PARTIES’ TAXES FROM 2002
THROUGH 2012.
Financial Misconduct
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{¶15} This Court will address the first two assignments of error together because they
are both based on a challenge to the trial court’s conclusion that Mr. Lewis engaged in financial
misconduct. Mr. Lewis contends that the trial court applied the wrong legal standard to
determine whether he had engaged in financial misconduct under R.C. 3105.171(E)(3).
{¶16} Pursuant to R.C. 3105.171(E)(4), the trial court may compensate one spouse with
a distributive award or a greater share of marital property if it finds that the other spouse “has
engaged in financial misconduct, including, but not limited to, the dissipation, destruction,
concealment, or fraudulent disposition of assets[.]” The trial court determined that Mr. Lewis
had engaged in financial misconduct by failing to pay the couple’s income taxes, citing to a case
from another district that did not actually address that issue on appeal because it was the other
spouse who had appealed the trial court’s judgment. See Oliver v. Oliver, 5th Dist. Tuscarawas
No. 2012 AP 11 0067, 2013-Ohio-4389, ¶ 10-11.
{¶17} Moreover, this Court has adopted the reasoning of several other appellate districts
that irresponsible financial decisions and even dishonest financial behavior, in and of themselves,
do not constitute “financial misconduct” under R.C. 3105.171. Instead, for the trial court to find
the requisite “financial misconduct,” it must conduct a two-pronged analysis. The trial court
must find (1) a wrongdoing by one spouse that interferes with the other spouse’s property rights
and (2) that the wrongdoing results in profit to the wrongdoer “or stems from an intentional act
meant to defeat the other spouse’s distribution of assets.” Bucalo v. Bucalo, 9th Dist. Medina
No. 05CA0011-M, 2005-Ohio-6319, ¶ 30. Moreover, “[t]he burden of proving financial
misconduct is on the complaining party.” Id. at ¶ 23.
{¶18} The facts were not disputed that Mr. Lewis handled the couple’s finances and that
he did not pay income taxes or file returns for many years during their marriage and that, because
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of his failure to file, interest and penalties had been assessed against the couple. Consequently,
he engaged in financial wrongdoing to the detriment of both parties. The record does not appear
to include evidence to support the second prong of the test, that he profited from that wrongdoing
at the expense of Ms. Elliot-Thomas. Nevertheless, it is not for a reviewing court to make that
finding in the first instance on appeal. In re M.B., 9th Dist. Summit No. 21760, 2004-Ohio-597,
¶ 9, citing Murphy v. Reynoldsburg, 65 Ohio St. 3d 356, 360 (1992) and Article IV, Section
3(B)(2), Ohio Constitution. Because the trial court used the wrong legal standard to determine
whether Mr. Lewis had engaged in financial misconduct during the marriage, his first and second
assignments of error are sustained.
ASSIGNMENT OF ERROR SIX
THE TRIAL COURT COMMITTED REVERSIBLE ERROR IN
CALCULATING THE AMOUNT OF CHILD SUPPORT TO BE PAID BY MR.
LEWIS; FAILING TO GRANT HIM A DEVIATION; AND ORDERING HIM
TO PAY UP TO $14,750 PER YEAR IN EXTRACURRICULAR
ACTIVITIES[.]
Private School Tuition as Part of Child Support
{¶19} The sixth assignment of error pertains to the trial court’s order that Mr. Lewis pay
monthly child support of $1261.25, plus processing charges; and that he also pay $14,750 per
year to cover part of the cost of his daughters’ extracurricular activities and tuition for one of
them at a private, out-of-state dance academy. Mr. Lewis contends that the trial court erred in
requiring him to pay $14,750 toward the school tuition and extracurricular expenses for
numerous reasons, including that the trial court failed to consider his ability to pay and that the
parties never agreed that the older child would attend an out-of-state dance academy, the cost of
which was more than double the cost of both daughters’ private school tuition while the parties
resided together.
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{¶20} This Court reviews a trial court’s award of child support for an abuse of
discretion. Pauly v. Pauly, 80 Ohio St. 3d 386, 390 (1997). The trial court must exercise that
discretion, however, within the parameters of Ohio law. In this case, although Mr. Lewis also
disputes that trial court’s calculation of his annual income, he does not dispute that the parties’
combined annual income was over $150,000. Consequently, the trial court was required by
former R.C. 3119.04 to determine the child support award on a case-by-case basis, considering
the needs and standard of living of the children and their parents.
{¶21} This Court has held that a domestic relations court has authority to order a parent
to pay for private school tuition as a form of child support only if it determines that “1) it is in
the best interest of the child to have private schooling; 2) the payor(s) can afford to pay the
tuition; 3) the child[] [has] been in private schooling; and 4) private schooling would have
continued if not for the ending of the marriage.” (Internal quotations omitted.) Tustin v. Tustin,
9th Dist. Summit No. 27164, 2015-Ohio-3454, ¶ 31.
{¶22} In determining whether to order Mr. Lewis to pay a portion of the children’s
extracurricular activities and private school tuition, the trial court did not consider the four
factors listed above. Notably, although the children had attended private school and had been
involved in dance while the parties lived together, the cost of the one child’s tuition, room, and
board at the out-of-state dance academy was more than double the former cost of both children’s
dance expenses and private school tuition. There was also no evidence in the record about
whether this schooling would have occurred had the marriage continued or whether Mr. Lewis
had the ability to pay $14,750 above and beyond his annual child support obligation of over
$15,000.
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{¶23} Although the trial court purported to consider the parties’ standard of living
during the marriage, it is evident from the record that, while the parties lived together, they lived
beyond their financial means. For example, Mr. Lewis had stopped contributing to his
substantial, pre-marital retirement account and the couple had even borrowed $10,000 from that
account. They also borrowed against the marital residence and failed to pay income taxes for
several years during the marriage. Rather than paying for expenses incurred during the marriage,
the parties had accumulated tens of thousands of dollars in additional debt.
{¶24} Because the trial court failed to properly consider whether ordering Mr. Lewis to
pay $14,750 in private school tuition, in addition to annual child support of over $15,000, was
appropriate in this case, the matter is reversed and remanded for a new determination of child
support. Mr. Lewis’ sixth assignment of error is sustained.
III.
{¶25} Mr. Lewis’s assignments of error are sustained insofar as the trial court failed to
value and divide property based on a single “during the marriage” period; the court applied the
wrong legal standard to determine whether Mr. Lewis engaged in financial misconduct; and the
trial court failed to consider the requisite factors before ordering Mr. Lewis to pay $14,750
toward private school tuition and dance expenses in addition to the amount of child support
calculated on the worksheet. To that extent, the judgment of the Summit County Court of
Common Pleas, Domestic Relations Division, is reversed and remanded for proceedings
consistent with this opinion.
Judgment reversed
and cause remanded.
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There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellee.
THOMAS A. TEODOSIO
FOR THE COURT
HENSAL, J.
CALLAHAN, J.
CONCUR.
APPEARANCES:
WILLIAM A. VASILIOU, II, Attorney at Law, for Appellant.
JOHN M. DOHNER, Attorney at Law, for Appellee.