C. SHELTON BAILEY v. TERESA C. MARRERO-BAILEY
CASE NO. 10 BE 16
STATE OF OHIO, BELMONT COUNTY IN THE COURT OF APPEALS SEVENTH DISTRICT
February 27, 2012
[Cite as Bailey v. Marrero-Bailey, 2012-Ohio-894.]
Hon. Cheryl L. Waite, Hon. Joseph J. Vukovich, Hon. Mary DeGenaro
Civil Appeal from the Court of Common Pleas of Belmont County, Ohio Case No. 08 DR 384. JUDGMENT: Affirmed.
JUDGMENT: Affirmed.
APPEARANCES:
For Plaintiff-Appellant: Atty. Jack J. Kigerl, P.O. Box 248, 157 East Main Street, St. Clairsville, Ohio 43950
For Defendant-Appellee: Atty. John A. Vavra, 132 West Main Street, P.O. Box 430, St. Clairsville, Ohio 43950
{¶1} Appellant C. Shelton Bailey appeals the judgment of divorce issued by the Belmont County Court of Common Pleas. Prior to the marriage, Appellant owned and operated a dairy farm which had been in his family for several generations. The division of the farm property is the subject of the instant appeal. The case was heard before a magistrate who decided that the farm was Appellant’s separate property. Appellee filed objections to the magistrate’s decision, but did not file any transcript or memorandum of law supporting the objections. The trial court disagreed with the magistrate and held that the farm had become marital property due to large amounts of money contributed to the farm by Appellee Teresa C. Marrero-Bailey and due to the large debt associated with the property.
{¶2} Appellant raises three assignments of error. First, Appellant contends that the trial court failed to make an independent assessment of the facts because Appellee did not file a transcript of the magistrate’s hearing. The record shows that the judge used a recording of the magistrate’s hearing instead of a transcript, and thus, was able to review all of the facts in this case. The second argument is that the trial court should have sustained Appellant’s motion to dismiss Appellee’s objections due to Appellee’s failure to follow various aspects of
Case History and Factual Background
{¶3} Appellant and Appellee were married in St. Clairsville, Ohio on June 21, 2004. Appellant filed a complaint for divorce on December 23, 2008. Appellant was sixty-two years old at the time of the divorce. No children were born of that marriage. The divorce hearing was held before a magistrate on September 17, 2009. It is uncontested that prior to the marriage, Appellant was the sole owner of a dairy farm which had been in his family for “a couple of hundred years.” (Tr., p. 13.) Appellant had operated the farm nearly all of his life. (Tr., p. 12.) At that time, the farm was subject to two mortgages through Wesbanco Bank. (Tr., p. 19.) After two years of marriage, the parties formed a limited liability company, Bailey Dairy Farm, LLC (“Farm LLC”), at the suggestion of Appellee. (Tr., p. 21.) Appellant conveyed four tracts of property, including the deed for the farm, to the Farm LLC on or about March 21, 2006. He testified that he never intended to make a gift of the property to Appellee. (Tr., p. 23.) Appellant was under the impression that the Farm LLC was formed in order to protect the farm in case something happened, or for liability purposes. (Tr., p. 20.) He also testified that the only reason Appellee was named
{¶4} The parties gave conflicting testimony about their finances and expenditures. They are in agreement that a third mortgage was granted to them through Farm Service Credit for $135,000.00, which reduced the equity of the farm. (Tr., p. 24.) Appellant testified that he was under the impression that the farm service loan was to be used as start-up money for a number of supplies and businesses that Appellee attempted, but never successfully started. A list of these enterprises include: an organic farm, a cheese house for the community, a bed and breakfast, and other miscellaneous interests. (Tr., p. 41.) Appellant stated that the organic farming venture negatively impacted his dairy business, as the cows deteriorated and were not producing milk due to the organic farming methods. (Tr., p. 40.) Additionally, he claimed that the cheese business never got off the ground. (Tr., p. 41.) Notably, Appellant gave testimony that Appellee initiated a number of remodeling efforts in order to improve the house and turn it into a viable bed and breakfast. (Tr., p. 42.) Unfortunately, due to a lack of funding, the repairs were never completed and the house is currently in a state of disarray. (Tr., p. 45.) Appellant’s sister also offered testimony and photographs regarding the state of the house, and she agreed that the value of the property has “[c]ompletely deteriorated” since Appellee began the improvements. (Tr., p. 129.)
{¶5} Appellant contends that he contributed a significant amount of his own money for Appellee’s business ventures, for various living and farming expenses, and for insurance and medical bills from Appellee’s pregnancy attempts. Appellant sold
{¶6} Appellee testified that immediately prior to the marriage, she was a realtor and that she sold real property that netted her $189,185.98 in proceeds. (Tr., p. 136.) She states that she brought that money into the marriage and used it for improvements around the farm and the residence, for medical expenses in an attempt to get pregnant, for a new car, and for other various living and operational expenses. As for the Farm LLC, Appellee testified that her business education led her to suggest to Appellant that the two form a limited liability corporation as a protection against potential lawsuits. (Tr., p. 144.) With regard to the debts incurred by Appellee while attempting to start up a number of businesses, she believes that there were no substantial losses and that any remodeling efforts improved the property. (Tr., p. 165.)
{¶7} Appellant and Appellee disagree as to how the money was spent on remodeling the home. Appellant argues that the money Appellee brought into the marriage was primarily spent on her own personal and miscellaneous costs. Appellant contends that the residence has completely deteriorated due to the numerous unfinished remodeling efforts, yet Appellee believes the efforts improved the property. Regardless of the conflicting testimony, it is clear that substantial debt
{¶8} The magistrate issued its decision on January 25, 2010. The magistrate determined “that the real estate equipment and fixtures known as the Bailey Dairy Farm L.L.C. are traceable as [Appellant’s] separate property and as such are awarded to [him].” (1/25/10 Magistrate’s Decision, p. 9.) The magistrate decided that neither party would be reimbursed for their contributions, and ordered Appellee to convey her 51% interest in the Farm LLC to Appellant.
{¶9} Appellee filed objections to the magistrate’s decision. Three out of the five objections related to the disputed real estate. Appellant filed a motion to dismiss the objections of Appellee because: (1) Appellee never requested a specific finding of fact or conclusions of law from the magistrate; (2) the objections filed were too brief and did not specify the nature of the alleged error; and (3) Appellee failed to file a memorandum of law in support of the objections even after being given a 14-day extension. Additionally, Appellant argued that Appellee never ordered a transcript of the proceedings to support the objections. Appellant’s motion to dismiss was overruled by the trial court.
{¶10} The trial court ruled on the objections on April 1, 2010. The judge did not adopt the magistrate’s decision, but rather, crafted an independent judgment that
{¶11} Appellant filed a timely appeal from that decision and submits three assignments of error. Appellee has not filed a brief in this appeal. Appellant’s first two assignments of error are related and will be treated together.
ASSIGNMENTS OF ERROR NOS. 1 AND 2
{¶12} “The Trial Court Erred By Failing To Make An Independent Review (de novo) Of The Facts Upon Which The Magistrate’s Decision Was Based.
{¶13} “The Trial Court Erred In Failing To Sustain The Plaintiff-Appellant’s Motion To Dismiss The Objections Of Defendant-Appellee Based Upon Appellee’s Failure To Comply With Civil Rule 53, As To The Specificity Of The Objections, Providing Any Supporting Brief Of Memorandum Addressing The Objections, and Failure To File A Transcript Within 30 Days Thereafter.”
{¶15}
{¶16} In this case, Appellee failed to order and file a transcript of the testimony offered at the divorce hearing. This could have been used as a reason for the trial court to overrule the objections. It would also have created a procedural bar in this appeal if Appellee had been the party attempting to allege error in the trial court proceedings. Appellee is not asserting any errors in this appeal, though. It is Appellant who filed this appeal and who must establish that the trial court committed reversible error. Our standard of review in cases involving the trial court‘s adoption,
{¶17} We cannot find any abuse of discretion in the record with respect to Appellee’s failure to file a hearing transcript. Even though the trial court did not have a transcript of the magistrate’s hearing, it did review a recording of the magistrate’s hearing when it looked at the record of the case. (4/1/10 J.E.) The Ohio Rules of Civil Procedure specifically contemplate that the trial judge may use something other than a hearing transcript to review the record of the hearing: “alternative technology or manner of reviewing the relevant evidence may be considered.”
{¶18} Appellant alleges that Appellee made other errors during the objections phase of the proceedings. Appellant contends that her objections were not specific enough, were not supported by any legal argument or memorandum of law, and were not supported by reference to any evidence in the record.
{¶19} The record reflects that the trial court undertook a thorough independent review of the magistrate‘s decision (including the recording of the magistrate‘s hearing) and corrected a number of aspects of that decision. A trial court always retains the right to independently review a magistrate‘s decision, regardless whether any objections are filed: “Whether or not objections are timely filed, a court may adopt or reject a magistrate‘s decision in whole or in part, with or without modification. A court may hear a previously-referred matter, take additional evidence, or return a matter to a magistrate.”
ASSIGNMENT OF ERROR NO. 3
{¶21} In Appellant’s third assignment of error he alleges that the trial court improperly applied the doctrine of transmutation when it determined that the 1.6 acre homestead tract as well as the farm real estate, equipment and fixtures were marital rather than separate property. The classification of property as marital or separate is one of the fundamental aspects of a divorce proceeding. “In dividing property in divorce proceedings, the trial court is required to classify assets as marital or nonmarital and then award each spouse his or her separate, nonmarital property.” Peck v. Peck (1994), 96 Ohio App.3d 731, 734, 645 N.E.2d 1300.
{¶22}
{¶23} “(6)(a) ‘Separate property’ means all real and personal property and any interest in real or personal property that is found by the court to be any of the following:
{¶24} “(i) An inheritance by one spouse by bequest, devise, or descent during the course of the marriage;
{¶25} “(ii) Any real or personal property or interest in real or personal property that was acquired by one spouse prior to the date of the marriage;
{27} “(iv) Any real or personal property or interest in real or personal property acquired by one spouse after a decree of legal separation issued under section 3105.17 of the Revised Code;
{28} “(v) Any real or personal property or interest in real or personal property that is excluded by a valid antenuptial agreement;
{29} “(vi) Compensation to a spouse for the spouse‘s personal injury, except for loss of marital earnings and compensation for expenses paid from marital assets;
{30} “(vii) Any gift of any real or personal property or of an interest in real or personal property that is made after the date of the marriage and that is proven by clear and convincing evidence to have been given to only one spouse.
{31} Generally, “* * * the holding of title to property by one spouse individually * * * does not determine whether the property is marital property or separate property.”
{32} Under prior law, property that was commingled between the married couple was considered to be transmuted to marital property. “Transmutation is [the
{¶33} The application of the transmutation principle to marital property changed somewhat in 1991 with the passage of
{¶34} It is not entirely clear that the trial court used the doctrine of transmutation in its judgment. The judgment simply concludes that the property was
CONCLUSION
{¶35} Appellant has failed to show any abuse of discretion in the trial court’s judgment. The court made an independent review of the magistrate’s decisions, which included a review of a recording of the magistrate’s hearing. Any errors in Appellee’s filing of objections to the magistrate’s decision had no bearing on the trial judge’s ability and duty to independently review the magistrate’s decision as provided by
Vukovich, J., concurs.
DeGenaro, J., concurs in part and dissents in part; see concurring in part and dissenting in part opinion.
{¶36} I write separately for two reasons. First, while I concur with my colleagues’ disposition of the procedural issues in this case, the interplay between the trial court‘s discretion and the mandates of
{¶37} This case reveals a glaring tension in
{¶38} A comparison of the facts to a recent case from the Third District, Tewalt v. Peacock, 3d Dist. No. 17–10–18, 2011-Ohio-1726, is instructive. In Tewalt, the Appellee filed a motion to correct a clerical error in the magistrate‘s decision, which was actually an attempt to challenge a substantive part of the decision. Id. at ¶ 9, 19. Although Appellee did not file a hearing transcript, the trial court obtained a DVD of the hearing. The trial court viewed the DVD in the presence of both parties’ counsel, and the Appellant did not object to the court‘s use of the DVD. The trial court also took live testimony from both parties. Id. at ¶ 10. The appellate court found that the motion to correct a clerical error was actually an objection to the magistrate‘s decision and analyzed whether the trial court erred in considering this objection despite Appellee‘s failure to file transcripts. Id. at ¶ 19-20.
{¶39} The Third District began its analysis by noting that
{¶40} Similarly here, the procedure the trial court followed in reviewing the objections to the magistrate‘s decision was contra to
{¶41} Furthermore, the use of alternative technology like an audio recording raises considerations about credibility determinations. I understand that the trial court must perform an independent review of the magistrate‘s decision and consider the credibility of the witnesses. I am mindful that trial judges are the elected judicial officers, and magistrates’ decisions are not final judgments until adopted by the trial court. Thus, a compromise was reached in crafting
{¶42} Accordingly, I agree with the majority‘s conclusion that the trial court had discretion to rule on the objections to the magistrate‘s decision despite Appellee‘s failure to follow the procedural requirements of
{¶43} Regarding the merits of the third assignment of error, the trial court‘s determination that the 1.6 acre homestead and the Bailey Dairy Farm, LLC were not traceable as separate property and therefore marital property was a very close issue; thus, I am not prepared to say that the trial court‘s finding is against the manifest weight of the evidence. As the majority correctly notes, Appellant bore the burden of proof because he sought to have these assets deemed his separate property; the conflicting testimony and lack of financial records from both parties rendered traceability difficult.
{¶44} However, the trial court abused its discretion in dividing the marital property.
{45}
{46} “(1) The duration of the marriage;
{47} “(2) The assets and liabilities of the spouses;
{48} “(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;
{49} “(4) The liquidity of the property to be distributed;
{50} “(5) The economic desirability of retaining intact an asset or an interest in an asset;
{51} “(6) The tax consequences of the property division upon the respective awards to be made to each spouse;
{52} “(7) The costs of sale, if it is necessary that an asset be sold to effectuate an equitable distribution of property;
{53} “(8) Any division or disbursement of property made in a separation agreement that was voluntarily entered into by the spouses;
{54} “(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;
{55} “(10) Any other factor that the court expressly finds to be relevant and equitable.”
{56} A review of the totality of circumstances in this case leads to the conclusion that an equal division of the marital property was inequitable, and thus, the trial court‘s division of the marital property was an abuse of discretion. Before the parties’ four-year marriage, the dairy farm had been in Appellant‘s family for generations. (Tr., p. 13.) At the time of the divorce, Appellant was 62 years old, and his life‘s occupation a dairy farmer on his family property. (Tr., p. 12.) The highest level of education he attained was a high school diploma and he had never worked
{57} The parties married after Appellee placed an advertisement in a farming publication seeking a husband. Appellee testified that she interviewed 60 men to determine whether they would “qualify” to be her husband and chose Appellant because he met most of her criteria. Her intention was to pool her assets and skills with those of Appellant and most importantly, to have a child. (Tr., p. 146.) Appellee had received two years of college education in business administration but did not obtain a degree or certification. (Tr., p. 182.) She also testified that she currently had no income but received monthly food stamps in the amount of $200. (Tr., p. 162-163.)
{58} The trial court‘s decision was unreasonable considering the unique facts of this case: the short length of the marriage; the fact that the property belonged to Appellant‘s family for generations; Appellant‘s willingness to assume all of the marital debt; and that Appellee was seeking assets and to have a child, not a marital union. Thus, the magistrate‘s decision properly divided the assets and debt equitably; the farm remained in Appellant‘s family, as it had for generations, and Appellant was also responsible for the large amount of debt incurred during the parties’ short marriage.
{59} Because the trial court should have ordered an equitable distribution of the dairy farm assets and debts by awarding them to Appellant, I must dissent in part from the majority‘s opinion and would reverse the trial court‘s division of the marital property and reinstate the magistrate‘s decision.