Willoughby v. Willoughby
2017 Ohio 8201
Ohio Ct. App.2017Background
- Elena Willoughby and John Willoughby divorced after John sold his dental practice to Dr. Steven E. Watts and Watts, Inc. for $75,000 shortly before Elena filed for divorce.
- The sale satisfied certain debts; Dr. Watts later had the combined practice appraised at $620,632 and sold it for $560,000 (building not included).
- Trial court found John committed financial misconduct by dissipating a marital asset and entered a judgment treating Dr. Watts as unjustly enriched, awarding the marital estate $255,488 (split equally between the spouses).
- This court vacated the judgment against Dr. Watts on appeal, holding unjust enrichment was not pled and that any equitable remedy for John’s misconduct should be directed at John, not a third party; remanded to consider remedies against John.
- On remand the trial court declined to impose a constructive trust on proceeds held by Dr. Watts and instead approved an agreed entry requiring John to pay $1,000/month to Elena until her $127,744 share (half of the marital value) was paid.
- Elena appealed, arguing the trial court erred by refusing to impose a constructive trust on the sale proceeds received by Dr. Watts; the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a constructive trust should be imposed on proceeds Dr. Watts received from sale of the dental practice | Willoughby: A constructive trust should be imposed on the sale proceeds because John’s sale was financial misconduct that unjustly enriched Dr. Watts | Dr. Watts / court below: Unjust enrichment against Dr. Watts was not a proper basis (not pled); the prior appellate decision foreclosed liability of Dr. Watts — remedy must be against John | Court: Denied constructive trust; law of the case and prior appellate ruling bar relief from Dr. Watts; remedy must be directed at John |
| Whether the proper equitable remedy for John’s financial misconduct is against John (distributive award/payments) rather than a third party (constructive trust) | Willoughby: Seeks constructive trust on proceeds from third party to make her whole | Appellees: Prior appellate decision requires relief against John; third party liability not established | Court: Affirmed that remedies are to be pursued against the offending spouse (John); approved agreed payment plan and declined to impose trust on Dr. Watts’ assets |
Key Cases Cited
- Nolan v. Nolan, 11 Ohio St.3d 1 (1984) (establishes law-of-the-case doctrine to preserve consistency and finality)
- Ferguson v. Owens, 9 Ohio St.3d 223 (1984) (constructive trust described as remedy to prevent retention of property where equity requires it)
- State ex rel. Potain v. Mathews, 59 Ohio St.2d 29 (1979) (discusses the need for finality and structure between superior and inferior courts)