Cynthia Serra v. Jose Serra
No. 15AP-528
IN THE COURT OF APPEALS OF OHIO TENTH APPELLATE DISTRICT
March 10, 2016
2016-Ohio-950
(C.P.C. No. 12DR-0242) (REGULAR CALENDAR)
Rendered on March 10, 2016
On brief: Gregg R. Lewis and Sonya S. Marshall, for appellee. Argued: Gregg R. Lewis
On brief: Grossman Law Offices, Andrew S. Grossman, John H. Cousins IV, and Nadia Khan-Ajam, for appellant. Argued: Andrew S. Grossman
APPEAL from the Franklin County Court of Common Pleas, Division of Domestic Relations
LUPER SCHUSTER, J.
{1} Defendant-appellant, Jose Serra, appeals from a decree of divorce ordering Jose to pay child support, awarding attorney fees to plaintiff-appellee, Cynthia Serra, and allocating the federal income tax dependency exemptions for the parties’ three minor children to Cynthia. For the reasons that follow, we affirm.
I. Facts and Procedural History
{2} Jose is self-employed and owns Five Star Construction Services, LLC. Cynthia is a technology project manager for both Crystal Vision, LLC, and JPMorgan Chase, and she owns a cleaning company, Five Star Professional Cleaning Services, LLC. Jose and Cynthia were married on December 19, 2000 and have three minor children.
{4} The matter proceeded to trial in December 2014 on the contested issues of child and spousal support. The evidence at trial centered on Jose‘s income. Jose and Cynthia hired financial experts, and both of these experts testified at trial regarding their respective analysis of Jose‘s income. Cynthia‘s financial expert, Bryan Daulton, testified that Jose‘s income for 2013 was $513,949.72. Daulton determined Jose‘s income in an indirect manner by primarily analyzing Jose‘s documented expenses. In his income calculation, Daulton also included the purchase price of a Ferrari, which was not documented as one of Jose‘s expenses. Jose‘s financial expert, Alan Lewis, testified that Jose‘s income for 2013 was $191,780.72. Lewis started his income determination with Daulton‘s “catalog of personal expenses,” and adjusted that amount by excluding the Ferrari expense and including additional business expense deductions. (Income Summary - Cynthia Serra, 3.) For the year 2013, Jose reported on his IRS Form 1040 that his gross income was $40,410.
{5} In April 2015, the trial court filed the decree of divorce, which granted the parties a mutual divorce and resolved the pending issues. As pertinent here, the trial court determined Jose‘s income for the purpose of its child support analysis to be approximately $306,077.47, based on Lewis’ $191,780.72 figure, plus $68,496.75 for the Ferrari, $4,000.00 for taxes paid for the Ferrari, $10,000.00 for the estimated but unsubstantiated business vehicle expenses, and at least $31,800.00 for the Ford F-350 truck purchase price. The trial court ordered Jose to pay $4,716.80 per month, plus a processing charge, as child support for the parties’ three children. The trial court declined to award any spousal support. The trial court also awarded Cynthia $20,000.00 in attorney fees.
{6} Jose timely appeals.
{7} Jose assigns the following errors for our review:
[1.] The trial court erred, abused its discretion, and ruled against the manifest weight of the evidence by calculating appellant‘s gross income to include, inter alia, the purchase price of a Ferrari and a pickup truck for purposes of determining child support.
[2.] The trial court erred and abused its discretion by extrapolating appellant‘s income [sic] for purposes of child support and by failing to conduct the case-by-case analysis required by
R.C. 3119.04 .[3.] The trial court erred and abused its discretion in awarding attorney fees.
[4.] The trial court erred and abused its discretion by granting appellee the dependency tax exemption for their three minor children.
III. Discussion
A. First and Second Assignments of Error – Child Support
{8} Jose‘s first and second assignments of error challenge the trial court‘s award of child support. Child support orders are reviewed under an abuse of discretion standard. Morrow v. Becker, 138 Ohio St.3d 11, 2013-Ohio-4542, ¶ 9. An abuse of discretion occurs where a trial court‘s decision is unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983).
{9} “The underlying purpose of Ohio‘s child support legislation * * * is to meet the current needs of the minor child.” Harbour v. Ridgeway, 10th Dist. No. 04AP-350, 2005-Ohio-2643, ¶ 34; see Bates v. Bates, 10th Dist. No. 04AP-137, 2005-Ohio-3374, ¶ 21 (“We are mindful that the overriding concern in calculating child support is the best interest of the child for whom support is being awarded.“). The starting point for determining the proper amount of child support to be paid is parental income, defined as gross income for those employed to full capacity or gross income plus potential income for those not employed to full capacity. Morrow at ¶ 11;
{10} For purposes of child support, a parent‘s gross income is defined as “the total of all earned and unearned income from all sources during a calendar year, whether
1. First Assignment of Error – the Ferrari, Ford F-350, and $10,000 in Vehicle Expenses
{11} In his first assignment of error, Jose argues the trial court erred by including the purchase prices of a Ferrari and a Ford F-350, as well as $10,000 in vehicle expenses, in his gross income for the purpose of determining his child support obligation.
a. The Ferrari
{12} The trial court concluded that the Ferrari at issue was purchased for $68,496.75 (excluding taxes) with money Jose provided and that this vehicle was solely used by him. Based on this conclusion, the trial court attributed the purchase price of the Ferrari to Jose for the purpose of determining his income. Jose argues there is no competent, credible evidence in the record indicating that he purchased a Ferrari, and, thus, the trial court abused its discretion in including the purchase price of the Ferrari in his income. We disagree.
{13} We find the trial court reasonably concluded that Jose purchased the Ferrari for $68,496.75, even though the vehicle was titled in someone else‘s name. According to Jose, the Ferrari was purchased by Eberth Valdez, a self-employed painter who frequently works for Jose on construction projects. It is undisputed that Valdez was
{14} At trial, Valdez described his difficult financial circumstances due to his low income and his wife‘s student debt. He even acknowledged he does not have the means to afford a Ferrari. Valdez lives with his wife and three children in a government subsidized apartment with a rent payment of $650 per month. Despite his financial circumstances, Valdez testified that he purchased the Ferrari as an “investment” from HK Motors for $62,000 in cash in May 2013, and then sold it a few months later to “a guy named Speed * * * in Massachusetts” for $72,000. (Tr. Vol. II, 297, 306.) Valdez testified that he was able to purchase the Ferrari because he had saved some money from painting and had sold property in Venezuela. Valdez had no records of the money that came from Venezuela. The trial court reasonably chose not to believe this testimony.
{15} Instead, based on all the evidence presented, including Cynthia‘s testimony, the trial court believed Jose had purchased the Ferrari. Cynthia testified that in June 2013, Jose told her had he bought a Ferrari after he learned she recently purchased a Honda Odyssey. Jose does not deny telling Cynthia he had purchased a Ferrari. Instead, he challenges her testimony as “vague” and asserts that because she testified she did not believe him at the time, his statement was essentially false bravado. (Jose‘s Brief, 10.) The fact that Cynthia did not believe Jose‘s statement that he bought a Ferrari does not preclude the trial court from now concluding that Jose did purchase the Ferrari at issue. Other evidence also supported the trial court‘s finding, including evidence that Jose paid the tax on the Ferrari purchase, paid for the repairs to the Ferrari, and drove the Ferrari. Moreover, Jose generally had the means to purchase an expensive vehicle like a Ferrari, unlike the purported purchaser who was living in income-based housing. Based on this
{16} In his appellate brief, Jose challenges the inclusion of the Ferrari expense in his income on the sole basis that he allegedly did not purchase the vehicle. But, as demonstrated above, competent, credible evidence supported the trial court‘s conclusion that Jose purchased the Ferrari. For the first time, at oral argument, Jose argued that, even if he purchased the Ferrari, it was still error for the trial court to include the purchase price of the Ferrari in his income. An “issue raised during oral argument for the first time and not assigned as error in the appellate brief is, generally, untimely.” State v. Chambers, 10th Dist. No. 99AP-1308 (July 13, 2000). “Further, under App.R. 12(A), an appellate court is not required to consider issues not argued in the briefs.” Id. We will not address Jose‘s alternate argument presented for the first time on appeal at oral argument.
b. The Ford F-350 and $10,000 in Vehicle Expenses
{17} Jose argues the trial court erred in including, in his income, the purchase price of a Ford F-350 truck and $10,000 of what the court considered “unsubstantiated ‘business’ vehicle expenses.” Jose contends the trial court erroneously added these expenses to his income using logic contrary to his expert‘s methodology in determining his income. We disagree.
{18} As to the Ford F-350 and $10,000.00 in vehicle expenses, on appeal, Jose does not challenge the trial court‘s findings that these were not business expenses that should be excluded from his income. Instead, he argues the trial court‘s calculation was contrary to his expert‘s methodology. Because Jose‘s income was not readily apparent, both experts calculated income by totaling Jose‘s expenditures and deducting business expenses. Jose‘s expert concluded his income was $191,780.72, which did not include the cost of the Ford F-350 or the additional vehicle expenses because the expert found these to be business expenses. Based on its review of the evidence, the trial court disagreed that the $31,800.00 Jose spent on the Ford F-350 truck and the additional $10,000.00 in vehicle expenses were business expenses. The trial court, therefore, added Ford F-350‘s cost and the additional vehicle expenses to Jose‘s expert‘s income determination. Because
{19} For these reasons, Jose‘s first assignment of error is overruled.
2. Second Assignment of Error – R.C. 3119.04
{20} In his second assignment of error, Jose argues the trial court abused its discretion by failing to conduct the case-by-case analysis required under
{21} It is undisputed that the parties’ combined yearly gross income exceeds $150,000. Under this circumstance, the court must calculate the child support obligation on a case-by-case basis and must consider the needs and the standard of living of the children and of the parents. Guertin v. Guertin, 10th Dist. No. 06AP-1101, 2007-Ohio-2008, ¶ 4, citing
{22} In view of
{23} Here, the magistrate awarded $1,318.00 in temporary child support, which the trial court increased to $4,716.80 in the final divorce decree. Jose argues that the trial court did not engage in the analysis required pursuant to
{24} In Wolf-Sabatino, the trial court substantially increased the amount of child support ordered even though evidence demonstrated that the child enjoyed a comfortable lifestyle prior to the substantial increase. Id. at ¶ 16-17. In increasing the child support order, the trial court primarily relied on the child support calculation worksheet, without considering the needs and the standard of living of the child and the parties. Id. at ¶ 17. This court concluded the trial court had abused its discretion because, “[u]nder the specific circumstances of [that] case, * * * the trial court failed to demonstrate that the child support order was based on a case-by-case analysis of the needs and the lifestyle of the child and the parties.” Id. at ¶ 15.
{25} Jose argues the case at bar is similar to Wolf-Sabatino because evidence demonstrated that the parties’ children continued to live the lifestyle to which they were accustomed before the trial court increased the child support from $1,318.00, as provided in the magistrate‘s temporary order, to $4,716.80 in the final divorce decree. We disagree. Wolf-Sabatino is distinguishable because the trial court here engaged in the analysis required under
{26} Jose also argues the trial court improperly considered the likelihood of his continued financial success in the construction industry as part of its
{27} Contrary to Jose‘s argument, the likelihood of his continued financial success was pertinent to assessing his standard of living in relation to an increase in child support. Furthermore, although there was no testimony at trial directly addressing the status of the construction industry in Columbus, the evidence at trial demonstrated Jose‘s success in the construction business in Columbus, and no evidence suggested that this success would wane in the immediate future. Thus, we are unpersuaded that the statements of the trial court regarding Jose‘s positive business attributes and the Columbus construction climate demonstrate an abuse of discretion by the trial court as to its award of child support.
{28} Because the trial court engaged in the analysis required under
B. Third Assignment of Error – Attorney Fees
{29} Jose‘s third assignment of error alleges the trial court abused its discretion in awarding attorney fees. Jose argues the trial court‘s award of $20,000 in attorney fees was arbitrary, inequitable, and not supported by competent, credible evidence.
{30} Ohio adheres to the “American rule” in regard to the recovery of attorney fees: “a prevailing party in a civil action may not recover attorney fees as a part of the costs of litigation.” Wilborn v. Bank One Corp., 121 Ohio St.3d 546, 2009-Ohio-306, ¶ 7. An exception to this general rule is that attorney fees may be awarded to a prevailing party when a statute specifically authorizes it. Id. In an action for divorce,
{31} Here, the trial court determined Cynthia‘s attorney fees to be approximately $60,000 for this litigation, and it ordered Jose to pay $20,000 of those fees. Regarding its attorney fees award, the trial court noted that Jose‘s conduct had “led to the litigation being drawn-out,” emphasizing Jose‘s significant evasiveness in regard to his income. (Divorce Decree, 25.) Citing Feldmiller v. Feldmiller, 2d Dist. No. 24989, 2012-Ohio-4621, Jose argues the trial court arbitrarily ordered him to pay one-third of Cynthia‘s attorney fees without the record demonstrating a sufficient connection between the amount of fees awarded and Jose‘s misconduct. We disagree with Jose‘s contention that the attorney fees award was arbitrary.
{33} Because the trial court acted within its discretion when it awarded $20,000 in attorney fees to Cynthia, Jose‘s third assignment of error is overruled.
C. Fourth Assignment of Error – Dependency Exemption
{34} In his fourth assignment of error, Jose asserts the trial court abused its discretion in allocating the federal income tax dependency exemptions for the parties’ three minor children to Cynthia. Citing this court‘s decisions in Poling v. Poling, 10th Dist. No. 13AP-189, 2013-Ohio-5141 and Lopez v. Lopez, 10th Dist. No. 04AP-508, 2005-Ohio-1155, Jose argues the trial court arbitrarily allocated the exemptions to Cynthia without sufficiently considering the factors listed in
{35} Under federal tax law, a custodial parent generally may claim the dependency exemption. See
{36} Pursuant to
{37} Considering the framework for claiming the dependency exemption under federal law, there is a “presumption” in favor of the residential parent receiving the dependency exemption. Burns v. Burns, 12th Dist. No. CA2011-05-050, 2012-Ohio-2850, ¶ 27. Therefore, ” ‘the burden is on the nonresidential parent to produce competent and credible evidence to show that allocating the dependency exemption to the nonresidential parent would be in the best interests of the child.’ ” Id., quoting Meassick v. Meassick, 171 Ohio App.3d 492, 2006-Ohio-6245, ¶ 15 (7th Dist.). Further, that a nonresidential parent would have received a greater tax benefit than the residential parent does not require a trial court to allocate the dependency exemption to the nonresidential parent. Ornelas v. Ornelas, 12th Dist. No. CA2011-08-094, 2012-Ohio-4106, ¶ 55.
{38} We are unpersuaded by Jose‘s reliance on this court‘s decisions in Poling and Lopez because those cases are distinguishable. In Poling, physical custody of the children was “essentially equal,” and the trial court allocated the dependency exemptions for the children to one parent for even-numbered years and to the other parent for odd-numbered years. Id. at ¶ 36. Evidence was presented in that case indicating that one party‘s federal income tax rate would be higher than the other party‘s, suggesting maximum net tax savings would occur if the allocation was to the party with the higher
{39} Here, the trial court considered the phase out of the exemption for high income earners in its allocation determination.
{40} Because the trial court did not abuse its discretion in allocating the dependency exemptions to Cynthia, we overrule Jose‘s fourth assignment of error.
IV. Disposition
{41} Having overruled all four of Jose‘s assignments of error, we affirm the judgment of the Franklin County Court of Common Pleas, Division of Domestic Relations.
Judgment affirmed.
DORRIAN, P.J., concurs.
HORTON, J., concurs in part and dissents in part.
{42} While I concur with the majority‘s opinion with respect to assignments of error two, three, and four, I respectfully dissent with the majority‘s conclusion that the record contains competent, credible evidence that Jose, not Valdez, purchased the Ferrari. As a result, it was an error for the trial court to include the cost of the Ferrari towards Jose‘s income, although the majority states that Jose told Cynthia that he purchased the Ferrari. The trial court clearly articulates that Cynthia‘s assertion that Jose purchased the Ferrari is “a claim Jose denies.” (Divorce Decree, 6.) Valdez testified at trial that he purchased the Ferrari for an investment. While the trial court is fully within its bounds to disbelieve the witness, it cannot ignore clear legal evidence such as a title that proved Valdez owned the vehicle. The trial court seems to believe that just because one cannot afford such an expensive vehicle and keeps poor financial records that this somehow means there was insufficient evidence to establish Valdez purchased the Ferrari. The trial court‘s conclusions were unreasonable, arbitrary and therefore an abuse of discretion. Accordingly, I would sustain appellant‘s first assignment of error.