Haynes v. HaynesHaynes v. Haynes
JUDGMENT: AFFIRMED IN PART, REVERSED IN PART, REMANDED
Civil Appeal from the Cuyahoga County Court of Common Pleas Domestic Relations Division Case No. D-307588
RELEASED: October 8, 2009
ATTORNEY FOR APPELLANT
Phyllis Brooks
75 Public Square
Suite 600
Cleveland, Ohio 44113
ATTORNEYS FOR APPELLEE
Andrew J. Simon
Freedom Square II, Suite 380
6000 Freedom Square Drive
Independence, Ohio 44131
Karen J. Cameratta
11005 Pearl Road
Strongsville, Ohio 44146
N.B. This entry is an announcement of the court‘s decision. See
SEAN C. GALLAGHER, P.J.:
{¶ 2} The parties were married on August 27, 1983. Annette filed a complaint for divorce on November 22, 2005. Victor filed an answer and counterclaim for divorce. An agreed temporary support order was issued on June 22, 2006.
{¶ 3} Various motions and intermittent rulings were made during the course of the proceedings below. Following an extended period of hearing dates, a magistrate‘s decision on the divorce, with findings of fact and conclusions of law, was issued on April 23, 2008. Annette filed objections to the magistrate‘s decision. Thereafter, the trial court issued a final judgment entry on August 29, 2008, granting the parties’ divorce, overruling Annette‘s objections, and adopting the recommendations of the magistrate with modifications.
{¶ 4} Both parties have appealed the judgment of the trial court. Annette raises six assignments of error, and Victor raises three assignments of error for our review. We shall consider the assignments of error together
{¶ 5} For their first assignments of error, Annette and Victor each raise the following: “The trial court erred in the valuation of the license bureau.”
{¶ 6} Both parties challenge the trial court‘s valuation of the University Heights/South Euclid license bureau under their assigned errors.
{¶ 7} Since 1999, Annette has operated her own license bureau as a deputy registrar for the state of Ohio. Each party retained an expert to value the license bureau. At the time the business valuations were conducted, the license bureau was located in South Euclid. Each expert valued the business as of December 31, 2004.
{¶ 8} Annette‘s expert was Neal Barkett, a business broker who had conducted twenty different business evaluations, although none had involved a license bureau. As the court magistrate found in his decision: “Mr. Barkett‘s significant concern is the inability of a deputy registrar to transfer her license to a potential buyer. Plaintiff is not the owner of this business but operates this as a deputy registrar at the discretion of the State of Ohio. If a seller cannot provide the cash flow, the customer base, and the good will associated with an enterprise, then any premium above the net value of the tangible assets would be diminished or eliminated. Based on this ‘asset valuation’ method, Mr. Barkett valued the license bureau at $83,444.”
{¶ 10} The court magistrate recognized that Annette relocated the license bureau in December 2006,1 but the evidence presented was in the form of expert valuations that were done as of December 31, 2004. Ultimately, the magistrate found that “the inability to sell or transfer this enterprise makes [Victor‘s] valuation unrealistic. The value of the University Heights/South Euclid License Bureau as of December 31, 2004 is found to be $83,444.”
{¶ 11} Annette objected to this determination, arguing that her own expert‘s calculations were erroneous and that it was improper to use the financial information regarding the South Euclid license bureau to determine the value of the new location in University Heights. The trial court
{¶ 12} On appeal, Annette claims that it was error to use the experts’ valuations of the South Euclid license bureau to determine the value of the University Heights location; that because the license bureau cannot be transferred to a third party, the value of the license bureau should be limited to the value of the furniture and equipment; and that half of the interest in the license bureau could not be awarded to Victor.
{¶ 13} Victor argues in his cross-appeal that the weight of the evidence supports a finding that the license bureau has a value of $393,000 and that the excess earnings method provides a better valuation of the business.
{¶ 14} In a divorce proceeding, a trial court must divide the marital property of the parties equitably.
{¶ 15} As an initial matter, the magistrate recognized the parties stipulated that the license bureau could not be devised or transferred. However, the value of the business could be considered in making an equitable division of marital assets. The trial court‘s judgment provided that Annette was to retain her interest in the license bureau, but was required to pay Victor one-half of the value of the business in annual installments.
{¶ 16} The evidence presented at trial offers two different values for the license bureau. The trial court considered each valuation, the experts’ credentials, and the methods applied to value the license bureau. Although the license bureau was relocated during the course of the trial, the only evidence before the trial court pertaining to its value was the experts’ valuations for the business as of December 31, 2004. The trial court accepted the valuation of Annette‘s own expert. The court was entitled to accept Mr. Barkett‘s valuation as written and to reject Mr. Agin‘s valuation. We conclude that the trial court‘s determination regarding the value of the University Heights/South Euclid license bureau was supported by competent, credible evidence, and thus, the determination was not an abuse of discretion.
{¶ 18} Annette‘s second assignment of error provides as follows: “The trial court committed error in its inequitable division of the parties’ marital assets.”
{¶ 19} Victor‘s second assignment of error provides as follows: “The trial court erred in the division of property.”
{¶ 20}
{¶ 21} Annette argues that the trial court made an unequal and inequitable distribution of marital property and that the trial court did not take the marital debt and liabilities into consideration when it divided the marital assets. Victor argues that the trial court miscalculated his “equalization” payment.
{¶ 22} A review of the magistrate‘s decision reflects that the trial court considered the marital debt and liabilities of the parties. The magistrate
{¶ 23} A review of the trial court‘s judgment reflects that the Spatterdock Lane property was awarded to Annette in the first instance and that the equity was not divided between the parties. As a result, Annette‘s calculations regarding an unequal distribution are incorrect.
{¶ 24} The judgment reflects that “[Annette] is hereby awarded as division of property [Victor‘s] interest in the real estate located at 35386 Spatterdock Lane, Solon, Ohio.” The trial court offset this award with other assets and an “equalization” payment of $12,054.06. Victor states that, based on his calculations, the equalization amount should have been $17,063.28.
{¶ 25} The trial court further indicated that if Annette was unable to obtain financing, the property would be awarded to Victor and “he shall pay
{¶ 26} It also appears from the record that Victor was awarded half the value of the University Heights/South Euclid license bureau, as well as half of the interest in the checking account linked to the license bureau. The trial court should consider the issue of whether Victor was awarded twice from the same source upon remand.
{¶ 27} Because we find errors exist with respect to the distribution of marital property, we remand the matter to the trial court to perform a proper distribution. The trial court shall recalculate any necessary “equalization” payment for an equitable distribution upon remand.
{¶ 28} Annette‘s second assignment of error and Victor‘s second assignment of error are sustained in part.
{¶ 29} Annette‘s third and fourth assignments of error provide as follows:
{¶ 30} “The trial court erred in failing to consider [Victor‘s] financial misconduct in the division of property.”
{¶ 31} “The trial court erred in finding that [Annette] engaged in financial misconduct.”
{¶ 33} Annette argues that the trial court failed to attribute a dollar amount to Victor‘s financial misconduct and to account for all of his alleged financial misconduct. Annette also claims that the trial court erred in finding that she engaged in financial misconduct because she gambled.
{¶ 34} Victor argues that the trial court‘s failure to adopt the recommendation of the magistrate to award him a $25,000 distributive award without addressing the reasoning of the magistrate was arbitrary and an abuse of discretion.
{¶ 35}
{¶ 36} The trial court determined that both parties had engaged in financial misconduct during the course of their marriage. The evidence before the court reflected that both parties used funds from separate business entities to pay for personal expenses.
{¶ 37} Although Annette claimed that many of the checks written on her business accounts were for moving the business and other business purposes, the magistrate determined that she failed to produce any documents to substantiate her claim that the checks were business related. The magistrate detailed the checks and charges relating to the accounts and determined that “[Annette] cannot credibly state that the large amount withdrawn from her business account to fund her gambling was simply recreation.” The magistrate further found that “[f]rom June 2005 through June 2007, [Annette] spent more than $125,000 in charges and checks at Mountaineer Park, Seneca Niagara, San Manuel and drafts written directly to [herself]. [Annette] has engaged in a systematic and deliberate process to remove cash that would otherwise be considered marital.” The magistrate also recognized that Victor acknowledged gambling with Annette during the course of the marriage, but his testimony was that they gambled at much lower amounts and it was before “she got big time.”
{¶ 39} The magistrate found that there was a significant difference between the actions of the parties and that the effect of their financial misconduct was vastly different. The magistrate determined that “[Victor] should be compensated with a distributive award of marital property in the amount of $25,000. Had [Annette] allowed the more than $125,000 to remain in the marital accounts, both parties would have received at least $62,500. This award represents less than 40% of what [Victor] might have actually received. This award has been reduced after consideration given to the additional debt which [Victor] incurred during the marriage; that debt has been rolled into the mortgage on the Solon property which will be paid by [Annette].”
{¶ 41} It is unclear why the trial court disregarded the magistrate‘s recommendation and chose to make no distributive award. We recognize that Annette filed objections to the magistrate‘s decision and that she claims that there is further evidence in the record that Victor dissipated marital assets. We also recognize the discretion a trial court has in finding that a spouse has engaged in financial misconduct and, in turn, granting an appropriate and reasonable distributive award or greater share of the marital property. However, “the trial court must indicate the basis for its [decision] in sufficient detail to enable a reviewing court to determine that the award is fair, equitable and in accordance with the law.” Kaechele v. Kaechele (1988), 35 Ohio St.3d 93, 97, 518 N.E.2d 1197; see, also, Huener v. Huener (1996), 110 Ohio App.3d 322, 326, 674 N.E.2d 389. From the judgment entry before us, this court cannot review the distributive award.
{¶ 42} Accordingly, Annette‘s third and fourth assignments of error and Victor‘s third assignment of error are well taken to the extent that the trial
{¶ 43} Annette‘s fifth assignment of error provides as follows: “The trial court erred by awarding [Victor] spousal support without considering all factors.”
{¶ 44}
{¶ 45} Annette argues that in awarding spousal support, the trial court failed to consider Victor‘s earning ability, his financial misconduct, and his intentional underemployment. Annette also states that the court failed to consider the division of property in its determination of Victor‘s income, and that the court used the same money to value the business as it did to calculate Annette‘s income in calculating spousal support.
{¶ 46} The trial court ordered Annette to pay Victor the sum of $2,295 per month as spousal support. The magistrate‘s decision reflects that the trial court considered all of the relevant factors under
{¶ 47} The court considered that Victor could earn $1,950 per year in interest from the liquid assets awarded to him and that he earns $36,322 per year as a teacher. The court found Annette‘s annual income to be $155,220. Annette‘s income was based in part on her business income.
{¶ 48} Annette claims that the trial court “double dipped” by counting excess business income to value the interest in the business as well as to calculate her income for determining spousal support. However, the business valuation adopted by the court in this case was determined using an “asset valuation” method, rather than the “excess earning” method. Therefore, we are unpersuaded by her argument.2
{¶ 49} Nevertheless, because we are remanding the matter to the trial court with respect to the division of marital assets, the trial court must also ensure that the amount of spousal support remains equitable. Annette‘s fifth assignment of error is overruled.
{¶ 50} Annette‘s sixth assignment of error provides as follows: “The trial court erred in awarding appellee temporary spousal support.”
Judgment affirmed in part, reversed in part; case remanded.
It is ordered that appellant and appellee share costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
SEAN C. GALLAGHER, PRESIDING JUDGE
KENNETH A. ROCCO, J., and MARY J. BOYLE, J., CONCUR