Calkins v. Calkins

[Cite as Calkins v. Calkins, 2016-Ohio-1297.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
GEAUGA COUNTY, OHIO
LINDSAY NOBLE CALKINS, : OPINION
Plaintiff-Appellee/ :
Cross-Appellant, CASE NOS. 2014-G-3203
: 2014-G-3218
- vs -
:
BENJAMIN CALKINS, et al.,
:
Defendant-Appellant/
Cross-Appellee. :
Civil Appeals from the Geauga County Court of Common Pleas.
Case No. 11 DC 000555.
Judgment: Affirmed.
Lynn B. Schwartz, Lynn B. Schwartz Attorney at Law LLC, 31100 Pinetree Road, Suite
225, Pepper Pike, OH 44124; Stanley Morganstern, 28482 North 77th Street,
Scottsdale, AZ 85266 (For Plaintiff-Appellee/Cross-Appellant).
Edgar H. Boles, Dinn, Hockman & Potter, LLC, 5910 Landerbrook Drive, Suite 200,
Cleveland, OH 44124 (For Defendant-Appellant/Cross-Appellee).
TIMOTHY P. CANNON, J.
{¶1} This matter emanates from a judgment of the Geauga County Court of
Common Pleas granting a divorce to Benjamin Calkins and Lindsay Noble Calkins and
dividing their marital estate. Benjamin (hereinafter “Husband”) filed an appeal from this
judgment, and Lindsay (hereinafter “Wife”) filed a cross-appeal. This court consolidated
the appeals for all purposes. For the following reasons, the judgment is affirmed.
{¶2} The parties were married in 1981 and had four children: three were
emancipated adults at the time of the divorce proceeding; one was a minor child, but is
now emancipated. Wife earned her Ph.D. and is an Associate Professor and the
Associate Dean of the School of Business at a university in Cuyahoga County, Ohio.
Her annual salary is approximately $106,000. Husband is a licensed attorney in Ohio,
New York, and Washington, D.C. During the marriage, Husband primarily practiced in
medium- to large-sized law firms. His yearly earnings from 1999 through 2005
averaged approximately $223,000. In 2006, he joined a law firm as a partner, where his
annual salary was $240,000. He left that firm in 2008 and was hired “of counsel” for
another firm at which he had no guaranteed salary. His gross annual income for the
years 2008 through 2011 was as follows: $57,505; $56,227; $34,494; and $13,018.
{¶3} In 2011, Wife filed an action for divorce against Husband, who filed an
answer and counterclaim. Wife joined three entities as defendants—Shady Hill Farms,
Ltd.; K-2000 Holdings, Inc.; and Chagrin Valley Land & Livestock Co.—none of which
are parties to this appeal.
{¶4} A contested trial was held before a magistrate on December 4, 2012. The
court heard testimony from Wife, Husband, and their son. One point of contention
between the parties concerned Husband’s farming activities. Husband was raised on a
family farm and continues to have an interest in farming. Throughout the marriage,
Husband made an increasing amount of expenditures in various farming operations,
which operated consistently at a loss. Wife claims most of the expenditures were made
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without her knowledge or consent. She further contends Husband’s farming operation
was a hobby and a form of financial misconduct; Husband claims it was a business.
{¶5} Shady Hill Farms, Ltd. was formed around 1996 and has sustained great
tax losses since 2003. Wife testified she repeatedly voiced her concerns regarding the
size and expenditures of the farm due to the fact that it was not producing any income.
During litigation, Wife learned Husband had hired full-time, live-in help on the farm,
contrary to her expressed wishes.
{¶6} K-2000 Holdings, Inc. is a real estate holding company created by
Husband in the late 1990s for the purpose of purchasing a parcel of land situated
across the street from the parties’ marital residence. On the property is a farmhouse,
garage, barn, and outbuildings. Wife testified that Husband told her the property had
been purchased by a client who was permitting Husband to use it. Husband began
putting some of his sheep on the property and, against Wife’s wishes, hired full-time,
live-in employees. In 2005, Wife apparently voiced her concerns that Husband was
using the property as though he owned it; Husband then told Wife he had been paying
the owner $1500 per month under a rent-to-own agreement since 2000. Wife testified
that Husband took out two mortgages for the property in the name of K-2000 without her
knowledge. In 2009, Husband and Wife jointly refinanced the property which increased
the mortgage debt by approximately $100,000. Wife testified that she agreed to the
mortgage because she believed she would receive 50% of the K-2000 stock; however,
tax returns for the years 2010 and 2011 show that Husband still owned 100% of the
stock. Wife also testified that Husband timbered the property in 2011 without her
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knowledge and received over $26,000 for the lumber. She claims she did not receive
any of the proceeds.
{¶7} Other points of contention involved various assets and debts accumulated
by Wife and Husband, many of which were depleted by Husband during the marriage
without Wife’s knowledge. The parties maintained separate finances and bank
accounts. They both accumulated retirement benefits through their respective
employment. Wife testified that Husband had approximately $500,000 in retirement
benefits in 2008. During litigation, Wife learned that Husband had nearly depleted his
retirement assets, which caused them to incur tax penalties of approximately $25,000.
Wife further testified that Husband took out approximately $31,000 in loans on a life
insurance policy and on a 401(k) account. Husband also received settlements and
judgments that totaled over $87,000, which he deposited into his personal accounts.
Wife claimed she did not become aware of these loans and proceeds until the divorce
proceedings.
{¶8} A great deal of testimony also concerned whether the couple’s joint tax
returns were made available to Wife or whether they were concealed by Husband. In
addition, there was a dispute over whether Wife was consulted by Husband before he
obtained Parent Plus student loans for their children in an amount that exceeded
$300,000.
{¶9} The magistrate issued her decision following trial and recommended the
parties be granted a divorce on the grounds of incompatibility, that their shared
parenting plan be approved and incorporated, and that their marital assets and debts be
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divided. The magistrate also concluded, based on the following facts, that Husband had
committed financial misconduct:
a. He willingly continued to maintain and expend funds on Shady
Hills, Inc., keeping the fact that the farm was failing from Plaintiff
to the extent of preventing her from seeing joint tax returns and
giving her fake/draft tax returns showing the losses to be less
than they were.
b. He willingly depleted $425,000 of retirement assets without
Plaintiff’s knowledge, and without a credible explanation of what
the funds were used for.
c. He amassed credit card debt in excess of $90,000 without
Plaintiff’s knowledge.
d. He incurred Parent Plus college loans in excess of $300,000
without Plaintiff’s knowledge.
e. He concealed, and appropriated for his own use, the following
marital assets without giving any credible justification for what
the money was used: Nationwide Insurance theft claim funds in
the amount of $37,500, timber funds in the amount of $26,500,
Rising Phoenix settlement funds in the amount of $37,500,
DeClemente Judgment Funds in the amount of $49,720, Taft
401(k) loan in the amount of $14,090. The total $182,753.17.
{¶10} Husband filed objections to the magistrate’s decision, arguing the financial
misconduct determination should not be adopted because Wife had not met her burden
of proof. In its entry granting the parties a divorce, the trial court agreed that Wife had
not proved Husband committed financial misconduct. However, the court agreed with
and approved the magistrate’s decision regarding the division of assets and debts. In
part, the trial court stated that although it did not find Wife proved Husband engaged in
financial misconduct, “the Court does find that [Husband’s] actions in regards to his
retirement accounts, timber sales proceeds, insurance claims, and other funds warrant
a division of property that is not equal in monetary value.”
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{¶11} The trial court made an award of marital assets to Wife in the amount of
$959,729.31 and an award or credit of marital assets to Husband in the amount of
$861,755.17. It also held Husband solely responsible for payment of all marital debts,
an amount in excess of $460,000, which included the Parent Plus student loans. The
mortgage loan secured by the marital residence became Wife’s sole obligation, and the
mortgage loan secured by the K-2000 property became Husband’s sole obligation. No
spousal support was awarded to either party, but Husband was ordered to pay child
support for their minor child until she turned 18 or graduated high school. The trial court
directed that within 30 days from entry of the judgment, Wife and Husband “shall
execute all deeds and other documents required to effectuate this judgment.”
{¶12} Husband filed a timely appeal and asserts the following five assignments
of error for our review:
[1.] The trial court erred and abused its discretion to the prejudice of
Appellant in its division of property in grossly unequal amounts in
Appellee’s favor, finding said unequal division equitable because
Appellant ‘acted in such a way that significant marital assets were
converted or dissipated in conducting his law practice and
operating a family farm on the marital residence premises without
Plaintiff’s meaningful participation or knowledge,’ and ‘with little to
no input from’ Appellee.
[2.] The trial court erred and abused its discretion to the prejudice of
Appellant in its division of property in grossly unequal amounts in
Appellee’s favor finding said unequal division equitable upon the
premise that there were ‘funds and marital property that cannot be
accurately traced or accounted for because of Defendant’s actions’
where the subject transactions were years prior to the divorce and
during the marriage, in the course of Appellant’s law business and
farming business, and the matter of their tracing and accounting
was Plaintiff-Appellee’s burden of proof at trial.
[3.] The trial court erred and abused its discretion to the prejudice of
Appellant in allocating to Appellant in the division of property 100%
of the parties’ marital debt including 100% of the parties’ children’s
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college loans of $332,881 upon Plaintiff-Appellee’s theory that she
had no participation in nor knowledge of such college loan debt.
[4.] The trial court erred and abused its discretion to the prejudice of
Appellant in its division of property in grossly unequal amounts in
Appellee’s favor in finding that Appellant’s operation of a family
farm on the parties’ residence at a tax deductible financial loss
resulted in or was a form of conversion or dissipation of marital
assets or was sanctionable against Appellant’s property division
because Appellee maintained that funds and marital property
transactions during the marriage could not be accurately traced or
accounted for at trial.
[5.] The trial court erred and abused its discretion to the prejudice of
Appellant in its division of property in grossly unequal amounts in
Appellee’s favor upon the premise that operating a family farm on
the marital residence premises at a loss is some form of conversion
or dissipation of marital assets as such farming operations were
carried out ‘without [the other spouse’s] meaningful participation or
knowledge’ and with ‘little to no input from [the spouse],’ and that
said farming operations thereby became an equitable basis for an
unequal division of property or the grounds for a finding of financial
misconduct warranting an unequal division of property.
{¶13} Wife also filed a timely cross-appeal and asserts the following two
assignments of error for our review:
[1.] The trial court committed prejudicial error in failing to find
defendant-appellant Benjamin Calkins guilty of financial
misconduct.
[2.] The trial court committed prejudicial error in failing to require the
parties to refinance.
{¶14} For ease of discussion, we initially consider Wife’s first assignment of
error. Wife argues the trial court erred in failing to adopt the magistrate’s conclusion
that Husband committed financial misconduct.
{¶15} “If a spouse has engaged in financial misconduct, including, but not limited
to, the dissipation, destruction, concealment, nondisclosure, or fraudulent disposition of
assets, the court may compensate the offended spouse with a distributive award or with
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a greater award of marital property.” R.C. 3105.171(E)(4). “[W]hile R.C.
3105.171(E)(3) does not set forth an exclusive listing of acts constituting financial
misconduct, those acts that are listed * * * all contain some element requiring wrongful
scienter. Typically, the offending spouse will either profit from the misconduct or
intentionally defeat the other spouse’s distribution of marital assets.” Hammond v.
Brown, 8th Dist. Cuyahoga No. 67268, 1995 Ohio App. LEXIS 3975, *9 (Sept. 14,
1995); see also Gentile v. Gentile, 8th Dist. Cuyahoga No. 97971, 2013-Ohio-1338,
¶55. The burden of proving financial misconduct is on the complaining party. Smith v.
Emery-Smith, 190 Ohio App.3d 335, 2010-Ohio-5302, ¶50 (11th Dist.).
{¶16} “‘The time frame in which the alleged misconduct occurs may often
demonstrate wrongful scienter, i.e., use of marital assets or funds during the pendency
of or immediately prior to filing for divorce.’” Lindsay v. Lindsay, 6th Dist. Sandusky No.
S-11-055, 2013-Ohio-3290, ¶21, quoting Jump v. Jump, 6th Dist. Lucas No. L-00-1040,
2000 Ohio App. LEXIS 5565, *12-13 (Nov. 30, 2000). In addition, an awareness of a
spouse’s wrongdoing during the marriage may weigh against a finding of financial
misconduct. See, e.g., Tustin v. Tustin, 9th Dist. Summit No. 27164, 2015-Ohio-3454,
¶45; Grow v. Grow, 12th Dist. Butler Nos. CA2010-08-209, CA2010-08-218, & CA2010-
11-301, 2012-Ohio-1680, ¶104. Another consideration is whether the spouse made
“critical and unilateral decisions concerning the parties’ retirement funds and other
assets in anticipation of his divorce.” Smith v. Smith, 9th Dist. Summit No. 26013, 2012-
Ohio-1716, ¶21.
{¶17} We note there is some discrepancy among Ohio appellate courts as to the
appropriate standard of review in this situation. Some courts hold that a finding of
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financial misconduct, as well as the distributive award, is within the trial court’s
discretion. However, as a finding of financial misconduct is a legal determination, it
must be supported by the weight of competent, credible evidence. We take this
opportunity, therefore, to clarify the standard of review: While a trial court enjoys broad
discretion in deciding whether to compensate one spouse for the financial misconduct of
the other, the initial finding of financial misconduct must be supported by the manifest
weight of the evidence. Davis v. Davis, 11th Dist. Geauga No. 2011-G-3018, 2013-
Ohio-1118, ¶77; Emery-Smith, supra, at ¶50. Under this standard, the reviewing court
must consider all the evidence in the record, the reasonable inferences, and the
credibility of the witnesses to determine whether the trier of fact clearly lost its way and
created such a manifest miscarriage of justice that the decision must be reversed.
State v. Thompkins, 78 Ohio St.3d 380, 387 (1997); Smith v. Smith, 11th Dist. Geauga
No. 2013-G-3126, 2013-Ohio-4101, ¶42, citing Eastley v. Volkman, 132 Ohio St.3d 328,
2012-Ohio-2179.
{¶18} Here, the record establishes Wife was aware of the farming operation
losses for over a decade before she filed for divorce. Wife’s exhibits also reveal her
awareness of other financial matters during the marriage, as she consulted
professionals who advised her to take immediate action over seven years before
litigation commenced. There is no evidence that Husband made critical and unilateral
decisions concerning marital assets in anticipation of divorce. The time frame of the
events at issue, some of which occurred during 2011 but many of which began years
prior to the divorce complaint, supports the trial court’s decision that Husband’s actions
were not committed with wrongful scienter.
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{¶19} The weight of the evidence supports the conclusion that Wife did not meet
her burden of establishing Husband engaged in financial misconduct under these
circumstances. Accordingly, we conclude the trial court’s finding that Husband did not
engage in financial misconduct was not against the manifest weight of the evidence.
{¶20} Wife’s first assignment of error is without merit.
{¶21} We next jointly consider Wife’s second assignment of error and Husband’s
five assignments of error, as they all argue the trial court’s division of marital property
and marital debt was an abuse of discretion. Whether the assets and liabilities
accumulated during the course of the marriage were marital or separate is not at issue
in this appeal: the trial court’s determination that all of the assets and debts it divided
were marital has not been assigned as error.
{¶22} A trial court is vested with broad discretion when fashioning a division of
both marital property and marital debt. Dilley v. Dilley, 11th Dist. Geauga No. 2010-G-
2957, 2011-Ohio-2093, ¶16; Onyshko v. Onyshko, 11th Dist. Portage No. 2008-P-0035,
2010-Ohio-969, ¶43. “However, a trial court’s discretion is not unbridled. The award
need not be equal, but it must be equitable. A reviewing court will not substitute its
judgment for that of the trial court unless the trial court’s decision is unreasonable,
arbitrary or unconscionable.” Bisker v. Bisker, 69 Ohio St.3d 608, 609 (1994) (internal
citations omitted). “When applying this standard of review, we must view the property
division in its entirety, consider the totality of the circumstances, and determine whether
the trial court abused its discretion when dividing the spouses’ marital assets and
debts.” Baker v. Baker, 4th Dist. Washington No. 07CA24, 2007-Ohio-7172, ¶28, citing
Briganti v. Briganti, 9 Ohio St.3d 220, 222 (1984).
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{¶23} A potentially equal division is to be the starting point in determining an
equitable distribution of property. See Cherry v. Cherry, 66 Ohio St.2d 348 (1981),
paragraph one of the syllabus. If an equal division would be inequitable, R.C.
3105.171(C)(1) provides that “the court shall not divide the marital property equally but
instead shall divide it between the spouses in the manner the court determines
equitable. In making a division of marital property, the court shall consider all relevant
factors, including those set forth in division (F) of this section.” The division (F) factors
are as follows:
(1) The duration of the marriage;
(2) The assets and liabilities of the spouses;
(3) The desirability of awarding the family home, or the right to
reside in the family home for reasonable periods of time, to the
spouse with custody of the children of the marriage;
(4) The liquidity of the property to be distributed;
(5) The economic desirability of retaining intact an asset or an
interest in an asset;
(6) The tax consequences of the property division upon the
respective awards to be made to each spouse;
(7) The costs of sale, if it is necessary that an asset be sold to
effectuate an equitable distribution of property;
(8) Any division or disbursement of property made in a separation
agreement that was voluntarily entered into by the spouses;
(9) Any retirement benefits of the spouses, excluding the social
security benefits of a spouse except as may be relevant for
purposes of dividing a public pension;
(10) Any other factor that the court expressly finds to be relevant
and equitable.
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{¶24} Husband argues the trial court erred to his prejudice in dividing marital
assets and debts in grossly unequal amounts in Wife’s favor. The unequal division was
recommended by the magistrate due to a finding of financial misconduct. As noted, the
trial court did not agree with this finding. As a result, Husband asserts that by adopting
the magistrate’s recommendation as to division of property while finding no financial
misconduct, the trial court made an award that is not only unequal but also inequitable.
{¶25} In its conclusions of law, the magistrate stated that Wife has proven
Husband committed financial misconduct. The decision goes on to state that, “[u]nder
the circumstances, it is not appropriate or equitable that the marital assets and debt be
divided equally, [and Wife] should be granted a larger award of the marital estate.” The
trial court, on the other hand, found that Wife did not prove Husband engaged in
financial misconduct. As stated above, we affirm this decision. The trial court did,
however, adopt the magistrate’s recommendation as to an unequal division of marital
property because it found Husband responsible for farming losses, depletion of his
retirement account, dissipation of numerous other marital assets, and accumulation of
significant debt without Wife’s knowledge. In support of its unequal division, the trial
court specifically stated the following:
The Court does find that [Husband’s] actions in regards to his
retirement accounts, timber sales proceeds, insurance claims, and
other funds warrant a division of property that is not equal in
monetary value.
Another factor that the Court feels is worthy of consideration is the
history of those parties in handling marital finances. Each of the
parties had his or her areas of responsibility for payment of marital
expenses and debts that were to be paid from each party’s income.
Clearly, the sheep farming business was within [Husband’s] area of
responsibility. The farming operation was a business, it was not a
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hobby; but, it was Defendant’s business. Although Plaintiff may
have indirectly benefitted from claims of losses or possibly from
CAUV real property tax reductions, there is no question that
Defendant ran the farming operation with little to no input from his
wife. Even when the parties’ adult son became involved in the
farming operations, the son’s involvement was done in conjunction
with [Husband], not both parties.
Because of [Husband’s] lack of accounting regarding retirement
funds, insurance proceeds, settlement proceeds, and receipts from
timber sales, it is difficult to determine what proceeds were used to
pay marital debts, living expenses, or farming expenses. In
determining an appropriate and equitable division of assets and
liabilities, the Magistrate and this Court cannot rely upon
[Husband’s] accounting to [Wife’s] detriment.
This Court repeatedly advises jurors that issues are not to be
determined on the number of witnesses or exhibits, but upon the
quality of the evidence presented. Despite that, it must be noted
that in this matter [Wife] offered seventy-eight exhibits concerning
the parties’ finances; contrasted to [Husband’s] three. It must also
be noted that [Husband’s] testimony is replete with instances of
forgetfulness or confusion regarding what happened to receipts,
loan proceeds, withdrawals from retirement, etc.
{¶26} The trial court awarded a total of $959,729.31 in marital assets to Wife:
the marital residence, with a net value of $426,406; and various accounts and funds
worth $533,323. The trial court awarded or credited a total of $861,755.17 in marital
assets to Husband: the K-2000 property, with a net value of $217,969; Shady Hills
Farm, worth $55,820; proceeds from the sale of timber in an amount of $26,200;
judgments, settlements, and insurance claims worth $118,535; and various other assets
worth $443,231. Husband notes that most of the liquid assets awarded to him no longer
exist. However, Husband presented little or no explanation regarding what he did with
the liquid assets he had accumulated. This was noted by the trial court in its ruling on
the objections to the magistrate’s decision.
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{¶27} The court determined Husband should also be held solely responsible,
with the exception of the mortgage on the marital residence, for all of the marital debt,
which totaled over $461,000 plus the amount, if any, Husband owes his family.
Included in this debt was $332,881 in Parent Plus student loans for the parties’ children,
which the trial court classified as marital debt.
{¶28} The fact that there is an extreme disparity in awards, primarily due to the
sole allocation of the Parent Plus loans to Husband, does not automatically establish an
abuse of discretion by the trial court. The trial court based its unequal division of
property on factors it found to be “relevant and equitable,” pursuant to R.C.
3105.171(F)(10). Under the circumstances of this case, therefore, we find the trial court
did not abuse its discretion in its division of the marital estate.
{¶29} Husband’s assignments of error are without merit.
{¶30} Finally, Wife argues in her second assignment of error that the trial court
erred to her prejudice in failing to require the parties to refinance the existing mortgages
on the marital residence and the K-2000 property. We do not agree.
{¶31} R.C. 3105.171(F)(5) provides that the trial court is to consider the
“economic desirability of retaining intact an asset or an interest in an asset” when
making a division of marital property. In addition, “R.C. 3105.171(J) empowers a trial
court to order a spouse to refinance marital property allocated to the spouse to achieve
an equal (or equitable) division of the property.” Wood v. Wood, 10th Dist. Franklin No.
10AP-153, 2011-Ohio-679, ¶20, citing Baker, supra, at ¶38.
{¶32} In her decision, the magistrate recommended that the marital residence,
with a net value of $426,406, be awarded to Wife and that the K-2000 property, with a
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net value of $217,969, be awarded to Husband. At the time of litigation, both Husband
and Wife were signatories on the mortgages of each property. Therefore, the
magistrate further recommended that “[t]he parties should be responsible for all
mortgages and expenses related to the real estate awarded to each of them, and
should remove the other from the respective mortgages and refinance within 6 months.”
{¶33} In the divorce decree, the trial court stated that Wife “shall be solely
responsible for payment of the mortgage loan secured by” the marital residence and
“shall hold [Husband] harmless and indemnify him from any liability for said loan.”
Likewise, the trial court stated that Husband “shall be solely responsible for payment of
the mortgage loan secured by” the K-2000 property and “shall hold [Wife] harmless and
indemnify her from any liability for said loan.” However, the trial court did not order the
parties to refinance these loans and did not make any reference to the magistrate’s
recommendation in this regard.
{¶34} A decision as to whether the parties must refinance their joint mortgages
is within the trial court’s discretion. See, e.g., Beard v. Beard, 2d Dist. Greene No. 2012
CA 66, 2013-Ohio-3375, ¶16; Matics v. Matics, 5th Dist. Stark No. 1995CA00114, 1996
Ohio App. LEXIS 1259, *14 (Mar. 4, 1996). There is nothing in the record that
demonstrates the trial court’s decision was not based on a proper consideration of the
R.C. 3105.171(F) factors. We cannot hold, therefore, that the trial court abused its
discretion.
{¶35} Wife’s second assignment of error is without merit.
{¶36} For the foregoing reasons, the judgment of the Geauga County Court of
Common Pleas is affirmed.
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THOMAS R. WRIGHT, J., concurs,
COLLEEN MARY O’TOOLE, J., concurs in part and dissents in part, with a
Concurring/Dissenting Opinion.
____________________
COLLEEN MARY O’TOOLE, J., concurs in part and dissents in part, with a
Concurring/Dissenting Opinion.
{¶37} I agree that Husband’s assignments of error are not well-taken and that
Wife’s first assignment of error on cross-appeal is without merit. However, I believe
Wife’s second assignment of error on cross-appeal has merit. Therefore, I concur in
part and dissent in part.
{¶38} In her second assignment, Wife alleges the trial court erred in failing to
require the parties to refinance the mortgages each is required to pay.
{¶39} Since a trial court has broad discretion in dividing marital property, a
reviewing court will not substitute its judgment for the trial court’s unless the trial court
has abused its discretion. Bisker v. Bisker, 69 Ohio St.3d 608, 609 (1994). Regarding
this standard, we recall the term “abuse of discretion” is one of art, connoting judgment
exercised by a court which neither comports with reason, nor the record. State v.
Ferranto, 112 Ohio St. 667, 676-678 (1925). An abuse of discretion may be found when
the trial court “applies the wrong legal standard, misapplies the correct legal standard,
or relies on clearly erroneous findings of fact.” Thomas v. Cleveland, 176 Ohio App.3d
401, 2008-Ohio-1720, ¶15 (8th Dist.).
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{¶40} In the instant matter, the record establishes that K2000 was solely owned
by Husband. Husband purchased the 11497 Music Street property over time, through
the corporation and without Wife’s knowledge. Husband had taken two separate
mortgages on the property in 2003 and 2007 without Wife’s knowledge. In 2009, Wife,
believing she would receive a 50 percent interest in K2000, agreed to sign the mortgage
document. The property was refinanced and the mortgage debt was increased by
approximately $100,000. Wife and Husband signed personally. The parties stipulated
that the appraised value of the property, consisting of almost 52 acres, is $385,000 and
the current mortgage balance is $167,031. The property was designated as a marital
asset.
{¶41} The 11497 Music Street property, in the amount of $217,969, was
awarded to Husband, less the mortgage. The 11510 Music Street property across the
street, in the amount of $426,406, was awarded to Wife, less the mortgage. In her
decision, the magistrate recommended that “[t]he parties should be responsible for all
mortgages and expenses related to the real estate awarded to each of them, and
should remove the other from the respective mortgages and refinance within 6 months.”
{¶42} In the divorce decree, the trial court stated:
{¶43} “[Wife] shall be solely responsible for payment of the mortgage loan
secured by 11510 Music St., Newbury Township, Ohio, and [Wife] shall hold [Husband]
harmless and indemnify him from any liability for said loan.
{¶44} “[Husband] shall be solely responsible for payment of the mortgage loan
secured by 11497 Music St., Newbury Township, Ohio, and [Husband] shall hold [Wife]
harmless and indemnify her from any liability for said loan.”
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{¶45} However, the trial court, through inadvertence or purposely, made no
mention of the refinancing recommendation made by the magistrate and did not order
the parties to refinance. Wife claims this was error and an abuse of the trial court’s
discretion. Wife maintains that she will be “continuously exposed to Husband’s
economic failures” and that her “credit standing will remain in jeopardy and continued
litigation to enforce the save harmless provisions of the Judgment most likely will occur.”
Upon review, both Wife and Husband have the ability to refinance the mortgages each
is to pay. This writer agrees with Wife that the trial court erred in failing to order the
parties to refinance.
{¶46} R.C. 3105.171(F)(5) states: “In making a division of marital property and in
determining whether to make and the amount of any distributive award under this
section, the court shall consider * * * [t]he economic desirability of retaining intact an
asset or an interest in an asset[.]”
{¶47} “There is no bright line as to the number of months for refinancing that
would constitute an abuse of discretion. In reviewing the facts of appellate court divorce
opinions, it seems that it is common for trial courts to permit 6 months or 12 months to
refinance a home. Stites v. Stites, 2d Dist. No. 25595, 2013-Ohio-4950, ¶1 (6 months);
Sable v. Sable, 5th Dist. No. 2012CA00230, 2013-Ohio-2635, ¶22 (12 months); Sparks
v. Sparks, 12th Dist. No. CA2010-10-096, 2011-Ohio-5746, ¶2 (6 months); Shih v.
Byron, 9th Dist. No. 25319, 2011-Ohio-2766, ¶8 (6 months); Kumpus v. Kumpus, 5th
Dist. No. 2009CA00106, 2010-Ohio-3960, ¶5 (6 months); Woodland v. Woodland, 7th
Dist. No. 06BE9, 2007-Ohio-3503, ¶3 (12 months is not unreasonable time to require
refinancing to be accomplished). However, 48 months and 72 months have also been
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ordered. Hanifon v. Hanifon, 11th Dist. No. 2004-L-187, 2006-Ohio-332, ¶25 (72
months given the facts of the case was not unreasonable time to allow refinancing to
occur); Espenschied v. Espenschied, 5th Dist. No. 2002AP030021, 2002-Ohio-5119,
¶12 (48 months).” Ramsey v. Ramsey, 7th Dist. Jefferson No. 13 JE 17, 2014-Ohio-
1227, ¶27.
{¶48} It is desirable to bring finality to the parties’ marriage by dividing assets
once and for all. Courts “should attempt to disentangle the parties’ economic
partnership so as to create a conclusion and finality to their marriage.” Hoyt v. Hoyt, 53
Ohio St.3d 177, 179 (1990). “‘(W)hen circumstances permit, (trial courts) should strive
to resolve the issues between the parties so as to disassociate the parties from one
another or at least minimize their economic partnership.’ [Hoyt,] at 182. But ‘the trial
court must obtain a result which will preserve the asset so that each party can procure
the most benefit.’ Id. at 181.” Daniel v. Daniel, 139 Ohio St.3d 275, 2014-Ohio-1161,
¶13.
{¶49} In the case at bar, by awarding Husband K2000, it retained that asset,
including the real estate, intact. See R.C. 3105.171(F)(5). The debt was assigned to
Husband but there was no order to liquidate the asset. As such, Wife is left in the
position of being financially open and responsible for the mortgage, without having any
interest in the asset. The magistrate and trial court both noted Husband’s lack of
financial responsibility when dealing with marital assets and debt. This writer
determines the trial court’s failure to include and order the parties to refinance the
mortgages on the real estate awarded to them is especially prejudicial to Wife.
Requiring the parties to refinance is mutually beneficial as it furthers the goal of creating
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a conclusion and finality to their marriage. See Hoyt, supra, at 179; Daniel, supra, at
¶13.
{¶50} Upon consideration, this writer would reverse and remand so that the
divorce decree reflects and orders the parties to be responsible for all mortgages and
expenses related to the real estate awarded to each of them and that the parties shall
remove the other from the respective mortgages and refinance within at least 6 months.
{¶51} Accordingly, because I believe Wife’s second assignment of error on
cross-appeal has merit, I respectfully concur in part and dissent in part.
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