McKay v. McKayMcKay v. McKay
O P I N I O N
Rendered on the 16th day of July, 2010.
BARRY H. WOLINETZ, Atty. Reg. No. 0019270 and KELLY M. GWIN, Atty. Reg. No. 0082470, 250 Civic Center Drive, Suite 100, Columbus, Ohio 43215 Attorneys for Plaintiff-Appellee
CHARLES D. LOWE, Atty. Reg. No. 0033209, 1500 Kettering Tower, Dayton, Ohio 45423 Attorney for Defendant-Appellant
FROELICH, J.
{¶ 1} John McKay appeals from a judgment of the Montgomery County Court of Common Pleas, Domestic Relations Division, which adopted a magistrate‘s decision that resolved several disputes related to payments owed under the parties’ 2001 decree of divorce. For the reasons that follow, the judgment of the trial court
I
{¶ 2} When the parties divorced in 2001, they entered into an agreement regarding the division of their assets and spousal support. The relevant provisions of the agreement include that each party held a Merrill Lynch account; the account of Kathleen McKay (n.k.a. Glass) was valued at approximately $603,000, and McKay‘s was valued at approximately $718,000. Pursuant to the agreement read into the record in July 2001, Glass‘s “account would transfer” to McKay. Glass agreed to pay McKay two lump-sum payments of spousal support: $70,000 on January 1, 2003, and $70,000 on January 1, 2004. Glass also agreed to pay McKay $2,100,000 “as and for the property settlement in addition to the other division of assets ***.” The $2,100,000 was to be paid as follows: $50,000 upon execution of the judgment entry; $500,000 on December 1, 2001; $550,000 as of December 1, 2002; $500,000 on December 1, 2003; and $500,000 on December 1, 2004.
{¶ 3} Although the Final Judgment and Decree of Divorce was filed on November 28, 2001, Glass did not receive a copy of the divorce decree until December 8, 2001. On December 27, 2001, she paid McKay the $500,000 that had been due on December 1, and she transferred the securities held in her Merrill Lynch account to McKay. At the time of the transfer, Glass‘s Merrill Lynch account was valued at $558,000. See McKay v. McKay, Montgomery App. No. 19848, 20238, 2005-Ohio-910, at ¶9-10 (”McKay I“).
{¶ 4} In early 2002, McKay filed in the trial court a motion to show cause
{¶ 5} Both parties filed objections to the magistrate‘s decision, and Glass filed a motion to vacate the decree. The trial court overruled the objections and the motion to vacate. McKay appealed from the trial court‘s judgment overruling his objections, and Glass appealed from the denial of her motion to vacate. The appeals were consolidated for our review (Montgomery App. Nos. 19848 and 20238,
{¶ 6} In McKay I, we reached several conclusions that are relevant to the current appeal. First, we observed that the divorce decree required Glass to transfer “the sum of $603,000 from her [Merrill Lynch] account;” “[i]t further appeared from the transcript of the settlement conference that the parties and the court intended that Glass would transfer the entire account to McKay.” When Glass transferred the entire account on December 28, 2001, it was valued at approximately $558,000. We held that the trial court did not abuse its discretion when it refused to find Glass in contempt, because she had a “good faith belief” that she was only required to transfer the securities. Id. at ¶23. (Glass did not specifically contest the trial court‘s order that she compensate McKay for the difference between the amount transferred and $603,000.)
{¶ 7} We also held that the trial court did not abuse its discretion in denying McKay‘s request for interest on the shortfall in the Merrill Lynch transfer. Because Glass had acted in good faith, “it was not clear that the trial court intended to reduce [the obligation to transfer the Merrill Lynch account] to a lump sum judgment,” and it did not specify a date for the transfer. Id. at ¶31. We therefore concluded that the trial court acted within its discretion in denying McKay‘s request for an award of interest on the amount that had not yet been paid. Id. at ¶30.
{¶ 8} Second, we concluded that the trial court‘s award of $2,100,000, to be paid by Glass to McKay over time, was intended as a distributive award, rather than a lump sum judgment. We commented that
{¶ 9} Shortly after our decision in McKay I, McKay requested a hearing in the trial court on several issues, including a request for a finding of contempt on two untimely spousal support payments of $70,000 each, Glass‘s failure to pay “the $603,000 cash sum” owed to McKay from her Merrill Lynch account, and a request by McKay for an award of attorney fees incurred in the collection of court-ordered payments from Glass. The magistrate held a hearing on October 20, 2006.
{¶ 10} At the hearing, the parties stipulated that the two $70,000 payments “were intended to be interest on the 2.1 million dollar property settlement,” although they were characterized as spousal support in the divorce decree. McKay stated that the first $70,000 payment, which had been due on January 1, 2003, was made two or three weeks late, and the second payment, which was due on January 1, 2004, was made in April 2005. McKay‘s motion did not seek interest on these sums, nor was this issue discussed at the hearing. The magistrate found Glass in contempt for failure to make the two $70,000 payments in accordance with the decree of divorce; he fined her $500 and allowed Glass to purge the contempt by “paying all remaining property payments within thirty days.”
{¶ 11} With respect to the $603,000 owed from the Merrill Lynch account, McKay claimed that he had not yet been paid the $45,333 difference between the value of the account when it was transferred to him and the $603,000 that Glass
{¶ 12} McKay also claimed that $104,500 of the property settlement remained unpaid. Glass maintained that, pursuant to an agreement with McKay, her lump sum payment in May 2005 had satisfied the terms of the parties’ property settlement. Again, the magistrate found no evidence of such an agreement; the
{¶ 13} The magistrate set the issue of attorney fees for further hearing.
{¶ 14} The parties filed objections to the magistrates’ decision, which the trial court overruled on April 3, 2008. McKay filed a notice of appeal, and Glass filed a notice of cross-appeal (Montgomery App. No. 22702). In October 2008, we dismissed the appeal for lack of a final appealable order, because the issue of attorney fees was unresolved.
{¶ 15} On September 29, 2009, the magistrate ordered that Glass pay $25,000 toward McKay‘s attorney fees incurred “to ensure that [McKay] collected that which he was entitled to under the parties’ judgment and decree of divorce.” Neither party filed objections to that decision. McKay filed a notice of appeal on October 22, 2009 (Montgomery App. No. 23702). Glass did not renew her cross-appeal.
{¶ 16} McKay raises two assignments of error on appeal.
II
{¶ 17} McKay‘s first assignment of error states:
{¶ 18} “THE TRIAL COURT ERRED AS A MATTER OF LAW AND ABUSED ITS DISCRETION IN DETERMINING THE MANNER BY WHICH KATHLEEN MAY SATISFY HER OBLIGATION TO PAY JOHN A SUM SUFFICIENT SO THAT HE
{¶ 19} McKay asserts that the trial court‘s order that Glass could pay him $45,333, plus interest from March 4, 2005, to satisfy her obligation with respect to the transfer of the Merrill Lynch account was inadequate. He claims that he should have received interest from the date of the decree in November 2001. He also contends that he should receive credit for the costs incurred in liquidating the account, because Glass transferred securities to him, rather than cash.
{¶ 20} In McKay I, we concluded that the trial court had not abused its discretion in refusing to award interest on the unpaid portion of the Merrill Lynch account since the time of the decree of divorce because there had been some “understandable confusion” between the terms of the settlement read into the record at the settlement conference and the terms of the divorce decree that was subsequently entered. In subsequent proceedings, the magistrate and the trial court recognized that, although this Court concluded that the trial court did not abuse its discretion in not awarding interest previously, res judicata “did not preclude the award of interest for any portions that remain[ed] unpaid after the time” of McKay I. And, in the appeal now before us, the trial court did award interest from the date of our prior opinion.
{¶ 21} A trial court is not obligated as a matter of law to award interest on those monetary obligations which arise out of property divisions upon divorce. Koegel v. Koegel (1982), 69 Ohio St.2d 355, syllabus. If
{¶ 22} McKay also contends that he should have received compensation for the cost of transferring the Merrill Lynch account from securities to cash because Glass was ordered to pay him a fixed sum of $603,000, not to transfer securities to him in that amount. In July 2007, McKay sold the assets transferred to him in December 2001 for $562,074.3 He claims that he paid a $8,235 brokerage commission and incurred a “taxable gain” of $3,321. In his calculations, he “credits” his taxable gain against the brokerage commission, to reduce the costs “associated with the sale of the securities to $4,914.” Thus, he claims that he was owed a total of $607,914 ($603,000 per the decree plus $4,914 in net costs of the sale), less the $562,074 in sale proceeds, for a total of $45,840 still owed. As noted above, the trial court found that it was unable to determine the costs associated with the sale of the securities.
{¶ 23} McKay presented statements and printouts at the hearing
{¶ 24} The trial court did not abuse its discretion in concluding that McKay presented insufficient information upon which to award costs associated with the proposed liquidation of the securities. The documentary evidence related to commission on the sale dated back to 2003, but the securities were not sold at that time. There is no evidence about what the commission would have been at the time of the hearing or how that commission would have been calculated. Further, the trial court reasonably concluded that Glass was not responsible for downward fluctuations in the price of the securities between the time they were transferred to McKay and the time of the sale, which resulted from McKay‘s “inactivity.” In sum, other than the $603,000 that Glass was ordered to pay in the divorce decree, the numbers used in McKay‘s calculation to establish the cost of the sale were insufficiently documented to support a monetary award. Thus, the trial court did not abuse its discretion in refusing to award costs and expenses associated with the sale.
{¶ 25} The first assignment of error is overruled.
III
{¶ 27} “THE TRIAL COURT ERRED AS A MATTER OF LAW IN FAILING TO DIRECT KATHLEEN TO PAY INTEREST ON COURT ORDERED AMOUNTS DUE AND OWING, BUT UNPAID OR PAID LATE.”
{¶ 28} McKay contends in his briefs and at oral argument that he was entitled to interest on the two $70,000 “spousal support” payments that were not timely made and on all of the late property settlement payments “from the time that each became due and continuing until each is paid in full.”
{¶ 29} As discussed above, the two $70,000 payments required by the divorce decree were characterized as spousal support in the decree, but at the October 2006 hearing, the parties stipulated that they “were intended to be interest on the 2.1 million dollar property settlement.” The first payment was made two or three weeks late,4 and the second payment was made fifteen months late. The magistrate fined Glass $500, with the provision that the fine could be “purged” if all remaining “property payments” were made within thirty days of its decision; he did not award or even address interest attributable to the lateness of these payments. In his objections to the magistrate‘s decision, McKay argued for the first time that he was entitled to interest due to the late payments, but the trial court adopted the magistrate‘s decision without specifically addressing this issue. McKay claims that
{¶ 30} As a preliminary matter, we reiterate that McKay did not request
{¶ 31} At oral argument, Glass argued, for the first time and in the alternative, that McKay had elected to address Glass‘s late payment of the $70,000 payments required by the divorce decree through a motion for contempt, rather than a request for interest. Glass suggested that the doctrine of election of remedies precluded McKay from seeking relief both through a motion for contempt and a request for interest. In response to this argument, we note that the doctrine of election of remedies is disfavored in Ohio; it is “harsh” and “technical” and does not reflect “the liberalizing flexibility effected by the rules of civil procedure.” Singer v. Scholz Homes, Inc. (1973), 36 Ohio App.2d 125, citing 18A Ohio Jurisprudence 2d 637, Election of Remedies, Section 7. Moreover, the doctrine is inapplicable where the available remedies are concurrent, or cumulative and consistent. Welch v. Welch, Lake App. No, 2006-L-35, 2006-Ohio-7013, at ¶13, citing Riad v. Riad (Oct. 9, 1986), Montgomery App. Nos. 9589 and 9572. “Where the remedies are neither inconsistent not repugnant, a party may pursue each separately until [he] receives satisfaction of a judgment from one of them.” Id., citing Land v. Berzin (1938), 26 Ohio Law Abs. 703. In our view, it is not inconsistent for a trial court to find a party in contempt and to award interest, if it chooses to do so and if such a remedy has been litigated.
{¶ 33} We discussed the issue of interest in McKay I, as follows:
{¶ 34} “Pursuant to
{¶ 35} As noted by the Tenth District in Meeks v. Meeks, Franklin App. No. 05AP-315, 2006-Ohio-642, ¶18, the “issue of interest on property divisions pursuant to a decree of divorce is somewhat unsettled.” Unfortunately, it is apparent from the briefs and oral argument that we have further “unsettled” the issue and/or counsel have read too much into our probably-overbroad language in two or three paragraphs of the seventy paragraph decision of McKay I.
{¶ 36} Specifically, our citation in Cronin to O‘Quinn for the proposition that a party is entitled to
{¶ 37} This does not change the result of the McKay I decision, where the trial court did not order interest on either the Merrill Lynch “deficiency” or the late partial payments on the $2.1 million property division. As we discussed above, a court always has certain discretion under
{¶ 38} Likewise, we conclude that the trial court herein did not abuse its discretion in not awarding interest on the untimely periodic payments which were ordered toward the property division award due in total on December 1, 2004, and which included two separate interest payments.
{¶ 39} The second assignment of error is overruled.
IV
{¶ 40} The judgment of the trial court will be affirmed.
FAIN, J., concurs.
GRADY, J., dissenting:
{¶ 41} I respectfully dissent from the majority‘s decision overruling the first assignment of error with respect to John McKay‘s contention that he is entitled to an award of interest pursuant to
{¶ 42}
{¶ 43} We have held that
{¶ 44} Subsequently, in Cronin v. Cronin, Greene App. Nos. 02CA110, 03CA75, 2005-Ohio-301, while we acknowledged our holding in Woloch, we held that a monetary property division order must also be reduced to a separate lump sum judgment in order for
{¶ 45} In Dunbar, the Supreme Court held: “Arrearages in child support which have not been reduced to a lump-sum judgment are not subject to the interest provisions of
{¶ 46} Two of the other decisions we cited in Cronin for the finding that a lump sum judgment is necessary in order for
{¶ 47} Our prior decision in McKay I followed Cronin and held that
{¶ 49} The majority relies on Koegel v. Koegel (1982), 69 Ohio St.2d 355, to hold that
{¶ 50} On review, the Supreme Court affirmed, finding that to require the court to affix a rate of interest “would impose an unnecessary restraint on a trial judge‘s flexibility to determine what is equitable in a special set of circumstances.” Koegel, p. 357. The Supreme Court further wrote:
{¶ 51} “Alternatively, appellant argues that he is entitled to an award of interest under
{¶ 52} The Supreme Court‘s having declined to decide in Koegel whether or not
{¶ 53} Denying John the interest to which he is entitled by reason of Kathleen‘s failure to pay the amounts she owes would be an unjust result. We should therefore not be bound by our holding in McKay I. Also, following McKay I would perpetuate the error in Cronin, which we should likewise reverse with respect to the lump-sum judgment requirement it imposed. As between Cronin and Woloch, which Cronin did not expressly overrule, we have issued different and inconsistent decisions that confuse the question. We should clarify our position for the bench and bar in this district.
Copies mailed to:
Barry H. Wolinetz
Kelly M. Gwin
Charles D. Lowe
Hon. Stephen A. Yarbrough, Visiting Judge