Soley v. Soley

[Cite as Soley v. Soley, 2017-Ohio-2817.]
IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
HURON COUNTY
Robert Stephen Soley Court of Appeals No. H-16-021
Appellee Trial Court No. CV 2012 0481
v.
Katalin Terezia Soley, et al. DECISION AND JUDGMENT
Appellant Decided: May 12, 2017
*****
Robert W. Gentzel and James J. Martin, for appellee.
Kathleen M. Amerkhanian, for appellant.
*****
JENSEN, P.J.
I. Introduction
{¶ 1} Appellant, Katalin Soley, appeals the judgment of the Huron County Court
of Common Pleas, adopting the decision of the magistrate, which found that certain real
property located in Huron County was appellee’s, Robert Soley, separate property.
Because we find that the trial court erred in classifying the property, we reverse.
A. Facts and Procedural Background
{¶ 2} This is the second time these parties have appeared before this court in this
action. In the first appeal, we resolved a dispute concerning Katalin’s sale of the Huron
County property located at 231 Butler Rd., New London, Ohio. Soley v. Soley, 6th Dist.
Huron No. H-13-028, 2014-Ohio-3965. In our decision, we recited the relevant facts as
follows:
Robert and Katalin were married on December 23, 1990. During the
course of their marriage, Robert decided to deed a portion of his real
property to Katalin in an effort to evade creditors. According to Robert, the
property was conveyed to Katalin, free of charge, under a constructive trust
in which Katalin was to hold title of the real estate for Robert’s benefit and
deed the property back to him upon demand.
Subsequent to the transfer, Robert and Katalin began experiencing
marital difficulties. As a result, Robert recorded an affidavit of dower with
the Huron County Recorder on March 30, 2008, evidencing the fact that
Katalin was the owner of the property and that he was entitled to a dower
interest as her husband. Eventually, the parties separated and divorce
proceedings were initiated in Budapest, Hungary, which is where the
parties were living at the time. According to a translated judgment entry
from the Hungarian court, the parties were ultimately divorced on May 10,
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2011. However, the division of the marital assets had not yet occurred.
Notably, the court expressly declined to distribute the real property located
in Huron County, as the court found that property within the United States
was beyond its jurisdiction.
Four months after the parties were divorced, but before the
Hungarian assets were distributed, Katalin reached an agreement with
[Robert and Mary Lou] Harris to sell the real property located in Huron
County for $170,000. The property was then transferred to Mr. and Mrs.
Harris by warranty deed.
Seeking to set aside the conveyance, Robert filed his complaint in
the underlying action on June 3, 2012, alleging that the transfer was
fraudulent because the property was subject to a constructive trust.
Moreover, Robert alleged that Mr. and Mrs. Harris knew or should have
known that the property was subject to a constructive trust in Robert’s
favor. As a result, Robert sought damages in excess of $25,000 and also
petitioned the court to set aside the conveyance and restore title to the real
estate in his name.
On January 7, 2013, [Katalin, along with Mr. and Mrs. Harris,] filed
a motion for summary judgment. In their motion, [the movants] argued that
Katalin, as the sole owner of the property, lawfully conveyed the property
to Mr. and Mrs. Harris. Because the marriage was dissolved prior to the
conveyance, [the movants] asserted that Robert had no interest in the
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property. Further, [the movants] averred that Mr. and Mrs. Harris were
bona fide purchasers for value insofar as they were without actual or
constructive notice of Robert’s claimed interest in the property. As to
Robert’s constructive trust argument, [the movants] contended that the
argument must fail under the statute of frauds because the agreement was
not reduced to writing. Finally, [the movants] argued that Robert was not
entitled to recover on the basis of any dower interest he may have had in
the property, because such interest was extinguished by operation of law as
of the date the marriage was dissolved.
In response to [the movants’] arguments, Robert argued that the
marriage was not dissolved at the time of the conveyance because the
marital estate had not been divided by the Hungarian court. Thus, he
contended that he possessed a dower interest in the property at the time of
the sale. Moreover, Robert noted the fact that the property had not been
classified as Katalin’s separate property at the time of the sale as the marital
assets had not yet been divided. He contended that the property was in fact
his own separate property because he owned the property prior to the
marriage. In the alternative, Robert claimed that the property would at least
amount to marital property, entitling him to a share in the proceeds from its
sale. Robert also took issue with [the] argument that the constructive trust
must be in writing in order to be enforceable under the statute of frauds. He
argued that a constructive trust is unwritten by its very nature. In
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supporting his arguments, Robert submitted several affidavits. In his own
affidavit, he averred that he transferred the property to Katalin “with the
specific understanding by both parties that the sole purpose of the transfer
was to avoid [his] creditors and that Katalin * * * would deed the property
back to [him] upon demand.”
Upon consideration of the parties’ arguments, the trial court issued
its decision on July 1, 2013. In its decision, the trial court granted Mr. and
Mrs. Harris’ motion for summary judgment, thereby quieting title to the
property in their name. At this point, Katalin had been dismissed from the
action due to service of process issues. When she was later properly
served, she renewed her motion for summary judgment, which was granted
on December 4, 2013. In granting Katalin’s motion for summary judgment,
the trial court found that Robert’s claim of a constructive trust was barred
by the statute of frauds. The court further found that the parties were
divorced at the time of the sale and that, as such, Robert’s dower interest
was extinguished. Robert’s timely appeal followed. Soley, 6th Dist. Huron
No. H-13-028, 2014-Ohio-3965, at ¶ 2-8.
{¶ 3} On appeal, we concluded that Robert deeded the Huron County property to
Katalin “‘for the sole purpose of placing the property beyond the reach of his creditors.’”
Id. at ¶ 22. We found no evidence of any wrongdoing in Katalin’s acquisition or
retention of the property, and thus concluded that the trial court did not err in rejecting
Robert’s constructive trust argument. Id. However, we found that the matter needed to
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be remanded to the trial court because a determination as to whether the real property was
marital property or separate property had not been made. Id. at ¶ 25. We noted that the
Hungarian court, in which the divorce proceedings were initiated, expressly declined to
exercise jurisdiction over the property. Id. Ultimately, we remanded the matter for “a
determination of whether the property is marital or separate, and a concomitant equitable
division of the property, if necessary, under R.C. 3105.171(B).” Id.
{¶ 4} On remand, the parties appeared for an evidentiary hearing before a
magistrate on the issue of whether the subject property was marital or separate. At the
hearing, several individuals testified, including Robert and Katalin. The magistrate
issued his decision, in which he concluded that the subject property was Robert’s separate
property. The magistrate specifically found that Robert’s transfer of the property to
Katalin did not constitute a gift and therefore did not convert the separate property into
marital property. The magistrate determined that Robert did not possess the requisite
donative intent when he executed the quitclaim deed for the purpose of avoiding his
creditors. Moreover, the magistrate stated that, “because the parcel remained wholly
traceable from prior to the Soley marriage until sale to Defendants Harris, the execution
of the quitclaim deed conveying [Robert’s] interest therein to [Katalin] had absolutely no
impact on the separate property characterization of the Butler road property.”
Consequently, the magistrate found that Robert was entitled to the $85,000 in proceeds
from the sale of the property that were being held in escrow, as well as a judgment
against Katalin for the remaining $85,000 that she had already received.
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{¶ 5} Two weeks after the magistrate issued his decision, Katalin filed objections
with the trial court. Upon consideration, the trial court overruled Katalin’s objections and
adopted the magistrate’s decision. In its judgment entry, the court directed the following:
1. After expiration of the appeal period following entry of judgment,
Attorney Mark Coriell shall be and hereby is directed to disburse the
amount of Eighty-five Thousand Dollars ($85,000) to Plaintiff Robert
Stephen Soley;
2. Judgment shall be and hereby is granted in favor of Plaintiff
Robert Stephen Soley and against Defendant Katalin Terzia Soley in the
amount of Eighty-five Thousand Dollars ($85,000), together with statutory
interest thereon from the date of judgment;
3. Any additional costs of these proceedings are assessed to
Defendant Katalin Terzia Soley.
{¶ 6} It is from this order that Katalin has timely appealed.
B. Assignments of Error
{¶ 7} On appeal, Katalin assigns the following errors for our review:
Assignment of Error I: The trial court’s order is void as Ohio courts
do not have subject matter jurisdiction to make a determination of whether
or not property is marital or separate property outside of a divorce or legal
separation proceeding.
Assignment of Error II: The trial court erred in finding the subject
property to be “separate” property in favor of Robert and such a finding
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constituted an abuse of discretion, plain error, and is against the manifest
weight of the evidence.
Assignment of Error III: The trial court erred when it determined
that the relevant marriage date for purposes of applying O.R.C. 3105.171
was a marriage date that had previously been invalidated as bigamous by
the Sixth District Court of Appeals.
Assignment of Error IV: The trial court’s determination that Katalin
Soley was not entitled to a distributive award was an abuse of discretion,
plain error, and against the manifest weight of the evidence.
II. Analysis
A. Subject Matter Jurisdiction Under R.C. 3105.171(B)
{¶ 8} In her first assignment of error, Katalin argues that the trial court’s order is
void because the court did not possess subject matter jurisdiction to classify the property
as marital or separate under R.C. 3105.171(B).
{¶ 9} The question of whether a trial court possesses subject matter jurisdiction is
a question of law that we review de novo. WFAL Constr. v. Dir., Ohio Dept. of Job &
Family Servs., 10th Dist. Franklin No. 14AP-985, 2015-Ohio-3044, ¶ 6. The authority to
classify property as either marital or separate and subsequently divide the property
equitably between spouses is granted to courts under R.C. 3105.171(B). Under that
section, courts are vested with such authority in the context of divorce and legal
separation proceedings.
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{¶ 10} As noted above in our recitation of the facts, this case presents the unique
circumstance in which a foreign court has granted the parties a divorce while expressly
declining to exercise jurisdiction over a piece of property located in the United States.
Given the foreign court’s refusal to classify and divide the subject property, Robert
brought this action before the trial court in order to set aside Katalin’s allegedly improper
conveyance of the property. While the action was not styled as a divorce or legal
separation proceeding as such, we find that the action was a necessary extension of the
property distribution action that was pending before the Hungarian court, and was
therefore akin to a divorce or legal separation action under R.C. 3105.171(B). Indeed,
the trial court is the only court that would possess subject matter jurisdiction over the
subject property in light of the Hungarian court’s refusal to exercise such jurisdiction.
{¶ 11} Were we to conclude that the trial court lacks subject matter jurisdiction,
we would leave the parties with no venue in which to resolve their dispute as to the
classification of the property incident to divorce. We refuse to construe R.C.
3105.171(B) in such a narrow fashion.
{¶ 12} In support of her argument that the trial court lacked subject matter
jurisdiction under R.C. 3105.171(B) to classify the property, Katalin cites the decision of
the Supreme Court of Ohio in Bolinger v. Bolinger, 49 Ohio St.3d 120, 551 N.E.2d 157(1990). In that case, the court held that a trial court’s subject matter jurisdiction to award
permanent alimony and to formulate an equitable division of marital assets under R.C.
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3105.011, 1 3105.17, 2 and 3105.18, 3 commences when either party files a complaint for
divorce and a division of the marital property. Id. at 123.
{¶ 13} Notably, Bolinger did not address Katalin’s jurisdictional argument under
R.C. 3105.171(B) concerning the classification and distribution of property in a divorce
or legal separation proceeding. Rather, the court was confronted with the question of
whether the trial court was required to retry a divorce action on remand from the court of
appeals on the basis that the subject matter jurisdiction of a domestic relations court is
“markedly different from that in an alimony-only action.” Id. at 121. The Supreme
Court of Ohio rejected this argument, finding that the aforementioned statutory sections
1
R.C. 3105.011 provides:
The court of common pleas including divisions of courts of domestic
relations, has full equitable powers and jurisdiction appropriate to the
determination of all domestic relations matters. This section is not a
determination by the general assembly that such equitable powers and
jurisdiction do not exist with respect to any such matter.
2
R.C. 3105.17 states, in relevant part:
(A) Either party to the marriage may file a complaint for divorce or for
legal separation, and when filed the other may file a counterclaim for
divorce or for legal separation. * * * The court of common pleas may grant
legal separation on a complaint or counterclaim, regardless of whether the
parties are living separately at the time the complaint or counterclaim is
filed * * *.
3
The version of R.C. 3105.18 that was in effect at the time of the court’s decision in
Bolinger provided, in relevant part:
(A) In divorce, dissolution of marriage, or alimony proceedings, the court
of common pleas may allow alimony it considers reasonable to either party.
The alimony may be allowed in real or personal property, or both, or by
decreeing a sum of money, payable either in gross or by installments, as the
court considers equitable.
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“make it abundantly clear that the court of common pleas has wide latitude in
determining the appropriateness of as well as the amount of alimony, regardless of
whether the complaint and counterclaims request alimony only, a divorce, or both a
divorce and alimony.” Id. at 122. Thus, the court found that the trial court possessed
subject matter jurisdiction to award permanent alimony and to formulate an equitable
division of the marital assets. Id. at 123.
{¶ 14} Because the court in Bolinger did not address the issue of subject matter
jurisdiction under R.C. 3105.171(B), and expressly relied on other statutory sections to
support its conclusion that the trial court possessed broad subject matter jurisdiction to
award alimony and divide the marital assets, we find that Bolinger is inapposite here.
{¶ 15} In sum, we hold that the trial court possessed subject matter jurisdiction
under R.C. 3105.171(B) to comply with our remand instructions to determine whether the
property was marital or separate, and, if necessary, equitably divide the property. We
recognize the unusual procedural backdrop of this case. Therefore, we stress that this
case is limited to its facts and should not be broadly construed.
{¶ 16} Accordingly, Katalin’s first assignment of error is not well-taken.
B. Classification of the Property
{¶ 17} In her second assignment of error, Katalin argues that the trial court’s
finding that the subject property was Robert’s separate property was against the manifest
weight of the evidence.
{¶ 18} “On appeal, a trial court’s classification of property as marital or separate is
reviewed under a manifest weight standard.” Miller v. Miller, 6th Dist. Sandusky No. S-
11.
12-035, 2013-Ohio-5071, ¶ 22. The standard of review for manifest weight is the same
in a civil case as in a criminal case. Eastley v. Volkman, 132 Ohio St.3d 328, 2012-Ohio-
2179, 972 N.E.2d 517, ¶ 17. As such, we must weigh the evidence and all reasonable
inferences, consider the credibility of witnesses, and determine whether in resolving
conflicts in the evidence, the finder of fact clearly lost its way and created such a
manifest miscarriage of justice that the judgment must be reversed and a new trial
ordered. Id. at ¶ 20. In so doing, “the court of appeals must always be mindful of the
presumption in favor of the finder of fact.” Id. at ¶ 21.
{¶ 19} Under R.C. 3105.171(A)(6)(a)(ii), any real or personal property that was
acquired by one spouse prior to the date of the marriage is considered separate property.
However, separate property can be converted to marital property if one spouse grants an
interest in the property to the other spouse. Helton v. Helton, 114 Ohio App.3d 683, 686,
683 N.E.2d 1157 (2d Dist.1996) (“Numerous appellate districts in Ohio have recognized
that separate real property can be transformed by the grantor spouse into marital property
by a gratuitous transfer to the grantee spouse of a present interest in the property.”)
Generally, conversion occurs when a donor spouse makes an inter vivos gift of the
property to the donee spouse. Id. at 685.
{¶ 20} The essential elements of an inter vivos gift are: “(1) [the] intent of the
donor to make an immediate gift, (2) delivery of the property to the donee, [and] (3)
acceptance of the gift by the donee.” Barkley v. Barkley, 119 Ohio App.3d 155, 694
N.E.2d 989 (4th Dist.1997), fn. 2, citing Bolles v. Toledo Trust Co., 132 Ohio St. 21, 4
N.E.2d 917 (1936). Generally, the donee has the burden of showing, by clear and
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convincing evidence, that the donor made an inter vivos gift. Kovacs v. Kovacs, 6th Dist.
Sandusky No. S-09-039, 2011-Ohio-154, ¶ 12, citing Helton at 686.
{¶ 21} Here, the parties do not dispute the fact that Robert acquired the property
prior to the marriage. Thus, the property was initially Robert’s separate property.
Katalin argues that Robert’s actions during the marriage, namely the transferring of the
title to the property to her in the form of a quitclaim deed, transmuted the property.
{¶ 22} We find that the mere execution of a deed transferring title from one spouse
to another does not convert property that is otherwise separate property into marital
property. Indeed, R.C. 3105.171(H) states: “Except as otherwise provided in this section,
the holding of title to property by one spouse individually or by both spouses in a form of
co-ownership does not determine whether the property is marital property or separate
property.” Under this section, Ohio courts employ “a flexible totality-of-the-
circumstances test to determine whether transmutation of the separate property has
occurred.” Hippely v. Hippely, 7th Dist. Columbiana No. 01 CO 14, 2002-Ohio-3015, ¶
18. Thus, “the form of title is relevant to, but not conclusive of, the classification of
property as being either marital or separate.” Barkley, supra, at 161.
{¶ 23} Having found no merit to Katalin’s argument that Robert’s execution of the
quitclaim deed converted the subject property into marital property per se, we
nonetheless find that the magistrate erred in completely disregarding the relevance of the
transfer of title when he stated that “the execution of the quitclaim deed conveying
[Robert’s] interest therein to [Katalin] had absolutely no impact on the separate property
characterization of the Butler road property.” Indeed, Ohio courts have held that the
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transfer of title by execution of a deed “can be some evidence of the parties’ intent as to
the nature of the asset being marital or separate.” Gallo v. Gallo, 11th Dist. Lake No.
2000-L-208, 2002-Ohio-2815, ¶ 25.
{¶ 24} The Tenth District examined a situation similar to the present case in
Neighbarger v. Neighbarger, 10th Dist. Franklin No. 05AP-651, 2006-Ohio-796. In that
case, the husband transferred farmland via quitclaim deed to his wife shortly before their
marriage. Because the husband acquired the property prior to the marriage, it was his
separate property that would normally not be subject to equitable distribution. Upon
divorce, the husband claimed that the farmland remained his separate property because he
did not intend to make a gift to the wife by transferring the property to her. Rather, the
husband argued that his motive in transferring the property was to shield it from potential
civil judgments against him. The Tenth District rejected the husband’s argument, stating:
There is no question that [husband] intended, in 1990 [the year in
which husband transferred the property to wife], to create a legal barrier
between himself and the property. His stated objective was to shelter his
assets from any financial risk arising from the criminal charges against him.
If the outcome of the criminal trial had been different, he most certainly
would have argued that he had no assets to satisfy whatever financial
liability might have arisen, including his child support obligations. Having
made that choice for his own benefit in 1990, to the detriment of his
children and creditors, we will not allow [husband] to turn his deliberate
action into a legal fiction for his own benefit again. He intended to transfer
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the property and, as evidenced by the quitclaim deed, he did transfer the
property. Id. at ¶ 25.
{¶ 25} Relying on the Neighbarger decision, the Third District has also held that
the relinquishment of all legal rights to farmland by transfer of the property via quitclaim
deed to a spouse for the purpose of avoiding creditors constitutes a gift for purposes of
classifying the property as separate or marital property. Strasburg v. Strasburg, 3d Dist.
Auglaize No. 2-10-12, 2010-Ohio-3672, ¶ 22. In Strasburg, the husband testified that he
inherited farmland from his father’s estate during the marriage, and that he conveyed the
property to his wife via quitclaim deed because he was concerned about the risk that he
would be sued. Id. Like the court in Neighbarger, the Third District found that the
husband
transferred his inherited farmland via quitclaim deed immediately upon his
inheritance, and that, had [husband] been sued, he doubtlessly would have
argued that the farmland was [wife’s] sole property, and was not an asset
subject to any ensuing financial liability. * * * Regardless of [husband’s]
testimony that he did not intend to relinquish ownership or waive his rights
to the property, the fact remains that [husband] deeded the farmland to
[wife] solely via quitclaim deed, and did not retain any reserved rights or
joint rights to the property. Thus, [husband’s] testimony about his motives
for the transfer was wholly inconsistent with his actions in making the
transfer. As [husband’s] testimony established that he relinquished all legal
rights to the farmland upon its transfer to [wife], we cannot find that the
15.
trial court erred in concluding that the farmland was not [husband’s]
separate property. Id.{¶ 26} Similar to the husbands in Neighbarger and Strasburg, the record in this
case reveals that Robert deeded the Huron County property to Katalin for the sole
purpose of placing the property beyond the reach of his creditors. We are in agreement
with the Third and Tenth Districts that a transferor of property acts with donative intent
when transferring property for the purpose of avoiding creditors. See Wolf-Sabatino v.
Sabatino, 10th Dist. Franklin No. 10AP-1161, 2011-Ohio-6819, ¶73, quoting Dever v.
Dever, 12th Dist. Clermont No. CA98-07-050, 1999 Ohio App. LEXIS 1625 (Apr. 12,
1999) (“Courts have held that when ‘a transferor transfers his interest in real property for
a specific purpose other than ownership, the transferor has demonstrated donative
intent.’”). Therefore, we find that the trial court’s determination that Robert lacked
donative intent when he transferred the subject property to Katalin was against the
manifest weight of the evidence. By extension, we find that the court’s classification of
the property as Robert’s separate property was also against the manifest weight of the
evidence since Robert gifted the property to Katalin during the marriage, making the
property marital.
{¶ 27} Accordingly, we find Katalin’s second assignment of error well-taken.
Having found that the subject property was marital property pursuant to an inter vivos
gift, we must remand this matter to the trial court once again for the court to equitably
distribute the property. Thus, Katalin’s remaining assignments of error are moot.
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III. Conclusion
{¶ 28} For the foregoing reasons, the judgment of the Huron County Court of
Common Pleas is reversed, and this matter is remanded to the trial court so that it may
make an equitable division of the property under R.C. 3105.171(B). Costs are to be
assessed to appellee pursuant to App.R. 24.
Judgment reversed.
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.
Arlene Singer, J. _______________________________
JUDGE
James D. Jensen, P.J.
_______________________________
Christine E. Mayle, J. JUDGE
CONCUR.
_______________________________
JUDGE
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