[Cite as Lanzilotta v. Lanzilotta, 2013-Ohio-4050.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
JENNIFER A. LANZILLOTTA, : APPEAL NOS. C-120796
C-120835
Plaintiff-Appellant/Cross- : TRIAL NO. DR-1000288
Appellee,
: O P I N I O N.
vs.
:
JEFFREY A. LANZILLOTTA,
:
Defendant-Appellee/Cross-
Appellant. :
Civil Appeal From: Hamilton County Court of Common Pleas, Domestic Relations
Division
Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause
Remanded
Date of Judgment Entry on Appeal: September 20, 2013
The Farrish Law Firm and Michaela M. Stagnaro, for Plaintiff-Appellant/Cross-
Appellee,
Donovan Law and Michael P. McCafferty, for Defendant-Appellee/Cross-Appellant.
Please note: this case has been removed from the accelerated calendar.
OHIO FIRST DISTRICT COURT OF APPEALS
SYLVIA S. HENDON, Presiding Judge.
{¶1} Jennifer Lanzillotta and Jeffrey Lanzillotta have both appealed from
the trial court’s judgment entry granting their decree of divorce. Because the trial
court failed to consider Jennifer’s overtime pay when determining her income for
purposes of calculating child and spousal support, and because the court failed to
consider the tax consequences of its property division award, we remand this cause
for the trial court’s reconsideration of these issues. The judgment entry and decree
of divorce issued by the trial court is otherwise affirmed.
Factual Background
{¶2} Jennifer and Jeffrey were married on July 6, 1996. The termination
date of their marriage was March 14, 2010. Three children were born of the
marriage. The parties agreed on most parenting issues and submitted a shared
parenting plan to the court, which was incorporated into its final entry and decree of
divorce. The parties also agreed on a myriad of property issues and submitted a joint
property stipulation. Various other property matters were tried before the court.
The trial court’s final entry resolved the property issues, granted the parties a decree
of divorce, and incorporated the parties’ shared parenting plan.
Jennifer’s Appeal
A. Property Distribution
{¶3} Jennifer argues in her first assignment of error that the trial court
failed to equitably divide the parties’ property. A trial court has broad discretion in
determining an equitable division of property in divorce proceedings, and will not be
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reversed absent an abuse of discretion. Kenning v. Gundrum, 1st Dist. Hamilton No.
C-060921, 2007-Ohio-4706, ¶ 5. An abuse of discretion “connotes more than an
error of law or of judgment; it implies an unreasonable, arbitrary or unconscionable
attitude on the part of the court.” Pembaur v. Leis, 1 Ohio St.3d 89, 91, 437 N.E.2d
1199 (1982).
{¶4} Jennifer first argues that the trial court incorrectly determined her
interest in the parties’ marital home. The parties had stipulated that Jeffrey was to
retain the home following the divorce, but had not agreed upon Jennifer’s equity
interest in the home. In addition to the first mortgage on the home, the parties had
obtained an equity line of credit. When determining Jennifer’s equity interest, the
trial court had subtracted both the first mortgage and the balance on the equity line
of credit from the home’s fair market value. The court then additionally subtracted
Jeffrey’s uncontested premarital interest in the home. The court divided the
resulting value in half to determine each party’s separate interest in the property.
The trial court further ordered that Jennifer and Jeffrey were each responsible for
half of the debt remaining on the equity line of credit. Jennifer argues that the trial
court ordered her to pay twice for the equity line debt because her value in the home
had already been reduced by the debt.
{¶5} We are not persuaded by Jennifer’s argument. The trial court correctly
determined the parties’ equity in the home by subtracting both the first mortgage
and the equity line debt from the home’s fair market value. And because the equity
line debt had been incurred on marital expenses, the trial court correctly ordered the
parties to equally share responsibility for this debt. Jennifer’s argument fails to
recognize that the trial court’s entry treats both parties equally with respect to the
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OHIO FIRST DISTRICT COURT OF APPEALS
equity line debt. Both parties’ equity in the home was decreased by this debt, and
both parties were ordered to shoulder the debt equally. We note that even if the trial
court had not subtracted the balance of the equity line debt from the home’s fair
market value when determining the parties’ equity interest, the overall equalization
payment between the parties would remain the same because each party’s equity
interest would have increased by the same amount.
{¶6} Jennifer next argues that the trial court erred in its valuation of her
engagement ring and by deeming the ring a marital asset. She contends that this
issue was not properly before the trial court for review because the parties had
submitted a property stipulation to the court that did not list the engagement ring as
a disputed item. Jeffrey argues that because the ring had been purchased in part
with funds from the equity line of credit, which the parties agreed was a disputed
issue, valuation and division of the ring was properly before the trial court for its
consideration. We are persuaded by Jeffrey’s argument and find that issues
concerning the engagement ring were properly before the trial court for review.
{¶7} Testimony provided at the property division hearing indicated that
Jennifer’s engagement ring had been either lost or stolen during the marriage.
Jeffrey testified that the parties had received approximately $2,700 in insurance
proceeds for the ring, and that they had paid an additional four to six thousand
dollars for Jennifer to obtain a new ring. He indicated that he was not in favor of
spending this additional money on the ring. Jeffrey further testified that the new
ring had been appraised for $9,500. The trial court allowed his testimony but
declined to admit the appraisal into evidence. Jennifer testified that she and Jeffrey
had been in agreement that she should “upsize” her ring after the original was lost.
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OHIO FIRST DISTRICT COURT OF APPEALS
She testified that, including the insurance proceeds, they paid a total of four to five
thousand dollars for the new ring. Jennifer indicated that the ring’s appraisal had
been inflated because the jeweler was a friend of the family.
{¶8} The trial court valued the ring at $9,500 and found it to be marital
property. No abuse of discretion occurred in the trial court’s valuation of the ring,
which was supported by testimony in the record. Nor did the trial court abuse its
discretion in considering the ring to be marital property. Generally, an engagement
ring is considered a gift and is the separate property of the party who received it.
Derrit v. Derrit, 163 Ohio App.3d 52, 2005-Ohio-4777, 836 N.E.2d 39, ¶ 48-49 (11th
Dist.). But in this case, the original engagement ring was lost or stolen, and the
parties replaced the ring by purchasing a new one with marital funds. The trial court
believed Jeffrey’s testimony that he had not desired to spend additional funds on the
new ring and that he had not intended it to be a gift to Jennifer.
{¶9} Jennifer argues that, at the very least, she is entitled to receive as her
separate property the $2,700 insurance proceeds received for the lost ring. The trial
court considered this argument and determined that the insurance proceeds were
likewise marital property because the insurance premiums had been paid with
marital funds. We agree with the trial court’s determination. See Burkhart v.
Burkhart, 2013-Ohio-157, 986 N.E.2d 45, ¶ 20-21 (10th Dist.), affirming a lower
court’s decision that “proceeds from an insurance policy for which the premiums
were paid from marital funds should be considered a marital asset.”
{¶10} Jennifer last argues that the trial court erred in calculating the parties’
equalization payment and in failing to consider the tax consequences associated with
that payment. The trial court ordered Jeffrey to pay Jennifer a property equalization
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OHIO FIRST DISTRICT COURT OF APPEALS
payment of $36,694 from his 401(K) account. Jennifer argues that this payment
should be increased based on her previous arguments concerning the equity line debt
and the engagement ring. Based on our determination that these prior arguments
were without merit, we hold that the trial court correctly determined the amount of
the equalization payment.
{¶11} Jennifer next argues that the trial court failed to consider the tax
consequences that she will incur when she withdraws the transferred funds as cash
from her own 401(K) account. She is correct. R.C. 3105.171(F) contains a list of
factors that the trial court shall consider when making a distributive award. One
factor to be considered is “the tax consequences of the property division upon the
respective awards to be made to each spouse.” R.C. 3105.171(F)(6). Because the
statute provides that the trial court “shall consider” the listed factors, trial courts are
mandated to consider each factor. See Thomas v. Thomas, 171 Ohio App.3d 272,
2007-Ohio-2016, 870 N.E.2d 263, ¶ 6 (1st Dist.); Williams v. Williams, 12th Dist.
Warren No. CA2012-08-074, 2013-Ohio-3318, ¶ 38. If the parties fail to present
evidence on any of the factors provided in R.C. 3105.171(F), the trial court bears the
burden of directing them to present such evidence. Here, the trial court erred in
failing to consider the tax consequences associated with the ordered equalization
payment.
{¶12} Jennifer’s first assignment of error is sustained in part and overruled
in part. On remand, the trial court must consider the tax consequences associated
with a potential equalization payment before awarding the payment.
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OHIO FIRST DISTRICT COURT OF APPEALS
B. Child-Support Deviation and Tax Exemptions
{¶13} In her second assignment of error, Jennifer argues that the trial court
erred in determining her child-support obligations and in allocating tax exemptions.
We review the trial court’s decision on both matters for an abuse of discretion.
France v. France, 1st Dist. Hamilton Nos. C-100468 and C-100489, 2011-Ohio-3025,
¶ 13; Cwik v. Cwik, 1st Dist. Hamilton No. C-090843, 2011-Ohio-463, ¶ 67.
{¶14} Jennifer first contends that the trial court erred in not awarding a
greater child-support deviation. An appropriate deviation cannot be determined
until the amount of child-support has been calculated. Because we are remanding
this cause for a determination of Jennifer’s child-support obligations utilizing an
income that includes her overtime pay (which we discuss and hold in response to
Jeffrey’s first assignment of error), we find that this argument is moot.
{¶15} Jennifer next argues that the trial court erred in allocating tax
exemptions. The magistrate had awarded Jennifer two children to claim for tax
exemption purposes each year until the parties’ oldest daughter became
emancipated. The trial court modified the magistrate’s award, specifically holding
that Jeffrey was entitled to claim two children for tax exemption purposes for the
year 2011. For each year following, the court held that the parties would alternate
claiming two children. Jennifer contends that the trial court’s modification was in
error because she will benefit more from the exemptions because she pays a majority
of the children’s expenses.
{¶16} R.C. 3119.82 concerns the designation of a parent to claim a federal tax
deduction. It provides that if the parents do not agree on which parent may claim the
children, the court, when determining which party to grant the deduction, “shall
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OHIO FIRST DISTRICT COURT OF APPEALS
consider * * * any net tax savings, the relative financial circumstances and needs of
the parents and children, the amount of time the children spend with each parent,
the eligibility of either or both parents for the federal earned income tax credit or
other state or federal tax credit, and any other relevant factor concerning the best
interest of the children.” R.C. 3119.82.
{¶17} In this case, both parents were designated as residential parents.
Although the oldest child resides solely with Jennifer, the younger children spend
their time equally between parents. Accordingly, no error occurred in the trial
court’s determination that the parties’ should alternate claiming two children. Nor
did the trial court abuse its discretion in granting Jeffrey two children to claim as tax
exemptions in the year 2011. Jennifer had claimed two children in the year 2010,
and the court equitably determined that Jeffrey should be entitled to claim two
children the following year. Jennifer’s second assignment of error is overruled.
Jeffrey’s Cross-Appeal
A. Calculation of Child Support and Spousal Support
{¶18} In his first assignment of error, Jeffrey argues that the trial court erred
in calculating Jennifer’s income for purposes of child support and allocation of
expenses.
{¶19} The magistrate determined that Jennifer’s income was $135,500.
Jeffrey objected to this amount, arguing that the magistrate had failed to include
Jennifer’s overtime pay when calculating her income. With respect to overtime,
Jennifer had testified that in the year 2011, the year in which she testified, she had
received a substantial amount of overtime pay to date. Jennifer further testified that
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OHIO FIRST DISTRICT COURT OF APPEALS
she did not expect there to be much overtime available in the future because her
employer had hired additional employees. When ruling on Jeffrey’s objection to the
calculation of Jennifer’s income, the trial court determined that the magistrate had
correctly found Jennifer’s income to be $135,500. In so concluding, the court cited
Jennifer’s testimony that the overtime was unlikely to occur in the future.
{¶20} R.C. 3119.01(C) defines the term gross income for purposes of
determining child support. It provides that gross income means “the total of all
earned and unearned income from all sources during a calendar year, whether or not
the income is taxable, and includes income from salaries, wages, overtime pay, and
bonuses.” See R.C. 3119.01(C)(7). This provision requires the trial court to consider
a party’s overtime pay when calculating the party’s income. But Jennifer contends
that the trial court properly calculated her income without including overtime pay
because the overtime pay was nonrecurring income pursuant to R.C. 3119.01(C)(8).
{¶21} R.C. 3119.01(C)(7) lists various types of income and benefits that
should not be included when calculating a party’s gross income, including
nonrecurring or unsustainable income. R.C. 3119.01(C)(7)(e). Nonrecurring income
is defined in R.C. 3119.01(C)(8) as “an income or cash flow item the parent receives
in any year or for any number of years not to exceed three years that the parent does
not expect to continue to receive on a regular basis.” Jennifer asserts that because
she is not likely to receive overtime pay in the future, it is nonrecurring income and
should not be included in a calculation of her gross income.
{¶22} We are not persuaded. R.C. 3119.05(D) provides how to determine the
actual amount of overtime earned by a parent when calculating that parent’s gross
income. It provides that the calculation should utilize the lesser of the following as
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OHIO FIRST DISTRICT COURT OF APPEALS
income from overtime pay: “[t]he yearly average of all overtime * * * received during
the three years immediately prior to the time when the person’s child support
obligation is being computed” or “[t]he total overtime * * * received during the year
immediately prior to the time when the person’s child support obligation is being
computed.” R.C. 3119.05(D)(1) and (2). The child support computation worksheet
tracks this language and provides for the inclusion of overtime pay as determined by
these methods. Both the statute and worksheet mandate that any overtime earned in
the three-year period prior to the calculation of child support be included in a party’s
gross income.
{¶23} Consequently, the trial court was required to include overtime pay
when calculating Jennifer’s gross income, and it abused its discretion in failing to do
so. On remand, the trial court must recalculate Jennifer’s child-support obligations
and include her overtime pay as part of her gross income. The trial court must also
determine the percentages that each parent is required to pay for the children’s
expenses utilizing an income for Jennifer that includes overtime pay. Jeffrey’s first
assignment of error is sustained.
{¶24} In his second assignment of error, Jeffrey argues that the trial court
erred by failing to include Jennifer’s overtime pay as part of her income when
determining spousal support. The trial court possesses broad discretion in
establishing an award of spousal support and will not be reversed absent an abuse of
discretion. Coors v. MacEachen, 1st Dist. Hamilton No. C-100013, 2010-Ohio-4470,
¶ 13.
{¶25} R.C. 3105.18 provides that a trial court may award spousal support
when it is “fair and reasonable,” and it provides various factors to be considered
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OHIO FIRST DISTRICT COURT OF APPEALS
when determining whether an award of spousal support should be granted. See R.C.
3105.18(C)(1). One factor that the trial court is mandated to consider with respect to
spousal support is “[t]he income of the parties, from all sources, including, but not
limited to, income derived from property divided, disbursed, or distributed under
section 3105.171 of the Revised Code.” R.C. 3105.18(C)(1)(a). Unlike the statute
applicable for the calculation of child support, R.C. 3105.18 does not specifically
require the trial court to consider overtime pay or bonuses when determining a
party’s income. But the statute does direct the court to consider the party’s income
“from all sources.” Here, the record is clear that Jennifer had earned a substantial
amount of overtime pay in the year 2011. And Jennifer provided no evidence other
than her testimony that the overtime was not likely to occur in the future. We hold
that, in light of these circumstances, equity required the trial court to include
Jennifer’s overtime pay when calculating her income for spousal support purposes,
and that the court abused its discretion by failing to do so. Jeffrey’s second
assignment of error is sustained.
B. Property Division of Debt
{¶26} In his third assignment of error, Jeffrey argues that the trial court
erred by failing to equitably divide the parties’ property. He specifically argues that
the trial court erred by ordering him to pay half of the parties’ credit card debt and
equity line debt, and half of the portion of Jennifer’s student loans that had been
used for marital expenses.
{¶27} With respect to the credit card and equity line debts, Jeffrey contends
that Jennifer should be required to pay two thirds of these debts because they had
increased during the time period that she had been in school. We are not persuaded.
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The credit card and equity line debts were marital debts. No abuse of discretion
occurred in the trial court’s determination that these marital debts should be split
equally.
{¶28} Jeffery next contends that Jennifer should be held solely responsible
for the portion of her student loans that had been spent on household expenses.
Again, we disagree. This portion of the loans had not been spent on Jennifer’s
education, but rather on marital expenses for the benefit of both parties. The trial
court did not abuse its discretion in ordering the parties to be held equally
responsible for this debt. See Lassiter v. Lassiter, 1st Dist. Hamilton No. C-010309,
2002-Ohio-3136, ¶ 22. Jeffrey’s third assignment of error is overruled.
Conclusion
{¶29} This cause is remanded for the trial court to recalculate child-support
and spousal-support obligations utilizing an income for Jennifer that includes
overtime pay. On remand, the trial court must also consider the potential tax
consequences of the ordered property equalization payment. The judgment of the
trial court is otherwise affirmed.
Judgment affirmed in part, reversed in part, and cause remanded.
CUNNINGHAM and FISCHER, JJ., concur.
Please note:
The court has recorded its own entry on the date of the release of this opinion.
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