[Cite as Walpole v. Walpole, 2013-Ohio-3529.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 99231
KATHLEEN WALPOLE
PLAINTIFF-APPELLANT/
CROSS-APPELLEE
vs.
THOMAS L. WALPOLE, III
DEFENDANT-APPELLEE/
CROSS-APPELLANT
JUDGMENT:
AFFIRMED IN PART AND REVERSED IN PART
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Domestic Relations Division
Case No. D-318177
BEFORE: E.T. Gallagher, J., Jones, P.J., and Kilbane, J.
RELEASED AND JOURNALIZED: August 15, 2013
ATTORNEYS FOR APPELLANT
Robert M. Fertel
Christopher R. Reynolds
Andrew A. Zashin
Zashin & Rich Co., L.P.A.
55 Public Square
4th Floor
Cleveland, OH 44113
ATTORNEY FOR APPELLEE
Adam J. Thurman
Schoonover, Rosenthal, Thurman, & Daray, L.L.C.
1001 Lakeside Avenue, Suite 1720
Cleveland, OH 44114
EILEEN T. GALLAGHER, J.:
{¶1} Plaintiff-appellant Kathleen M. Walpole (“Kathleen”) appeals a judgment
entry of divorce that awarded: (1) temporary spousal support, (2) denied her request for
pretrial attorney fees, and (3) divided the marital assets. Defendant-appellee Thomas L.
Walpole, III (“Thomas”) cross-appeals from the judgment entry of divorce and
challenges: (1) the spousal support award, (2) the award of attorney fees, and (3) the trial
court’s conclusion that certain assets were separate property. We find some merit to the
appeal, affirm in part, and reverse in part.
{¶2} Kathleen and Thomas were married on January 6, 1975, and had two
children, both of whom were emancipated at the time of trial. Throughout the divorce
proceedings, Thomas was employed by Novelis Corporation (“Novelis”) on an expatriate
assignment in Seoul, South Korea. Kathleen, who previously worked as a teacher, had
not worked for several years prior to the divorce.
{¶3} Kathleen filed the complaint for divorce on October 4, 2007, and a motion for
temporary spousal support on October 19, 2007. At trial, the parties disputed the actual
amount of compensation Thomas received from Novelis for purposes of calculating
spousal support and temporary spousal support. There are several components to
Thomas’s compensation package from Novelis, including a base salary, “expatriate
compensation,” a “location allowance,” a “goods and services adjustment,” and
“additional income taxes” (also referred to as “hypothetical” or “grossed up” tax) and
bonuses. The expatriate compensation and the location allowance were each calculated
as 10 percent of Thomas’s base salary. In 2007, Thomas’s base salary was $270,000 and
the addition of these components brought it up to $324,000. In 2008, his base salary was
$285,000 and the two 10 percent premiums brought it to $342,000. At the time of trial,
Thomas’s base salary had increased by 5 percent each year since 2005. Thomas also
received substantial bonuses and retirement benefits.
{¶4} The magistrate issued its order for support pendente lite, on April 23, 2008,
and ordered Thomas to pay Kathleen $15,000 per month, plus a two percent processing
fee, retroactive to October 19, 2007. Shortly thereafter, Thomas filed a request for an
oral hearing to modify the support pendente lite pursuant to Civ.R. 75(N) and the court
scheduled a hearing for August 28, 2008. However, pursuant to an agreed judgment
entry, the hearing was continued to the final trial.
{¶5} The first payment of spousal support was disbursed to Kathleen on May 30,
2008. At the time of trial, which took place over several days in November and
December 2008, Thomas had a temporary spousal support arrearage in the amount of
$103,621. The arrearage was the result of the retroactivity of the magistrate’s April 23,
2008 order.
{¶6} The magistrate who presided over the trial released her decision in September
2009. The trial court released its decision adopting most of the magistrate’s decision
while sustaining some objections on May 16, 2011. The magistrate found, and the court
agreed, that it was inequitable to require Thomas to pay the entire amount of the
temporary spousal support arrearage under the circumstances in this case. The court
explained that Kathleen removed $1,100,000 from the parties’ joint Fidelity Investments
account, and Thomas maintained the marital residence without any contribution from
Kathleen. The court determined that the commencement date for temporary supposal
support should be April 1, 2008, the month of the magistrate’s original order of support
pendente lite. Consequently, Thomas was ordered to pay a retroactive temporary support
arrearage from April 1, 2008, through June 1, 2008, in the amount of $30,000.
{¶7} With respect to permanent spousal support, the trial court adopted the
magistrate’s recommendation and ordered Thomas to pay Kathleen $14,000 per month for
a period of ten years. The court reserved jurisdiction to modify the amount of spousal
support within the ten-year term based on Thomas’s retirement “or any other change in
accordance with Ohio Revised Code Section 3105.18.”
{¶8} The court ordered that the marital residence be sold and the net proceeds
divided equally. The court also divided the parties’ automobiles, mint coin collection,
and frequent flier miles as of November 5, 2008, the date the marriage ended. The
parties stipulated during trial that the division of household goods and furnishings as it
existed at the time of trial represented an equal division of such items including a camera
in Thomas’s possession. Kathleen was awarded Thomas’s entire interest in the Novelis
Savings Plan (“401K”) in the amount of $887,359. Thomas was awarded his entire
interest in his Alcan Corporation Non-Qualified Deferred Compensation Plan, with a
value of $724,956. However, the court’s order requires Thomas to pay Kathleen five
equal annual installments of a predetermined amount. Thomas was awarded 50 percent
of Kathleen’s State Teacher Retirement System Pension Plan. The court further
awarded Kathleen 50 percent of Thomas’s Novelis Pension Plan and his Novelis
Supplemental Retirement Benefit Plan.
{¶9} Part of Thomas’s compensation package included payments under Novelis’s
Long Term Incentive Plan (“LTIP”). The magistrate’s decision limited Kathleen’s share
of the LTIP to one-half of any additional LTIP bonus (beyond $22,773 previously
released to Thomas) that was earned during any period prior to November 5, 2008. The
court sustained Kathleen’s objection to the award and ordered Thomas to provide
Kathleen an accounting of his receipt of any LTIP bonus received after the trial date, but
earned prior to the termination date of the marriage. The court found that Kathleen was
entitled to one-half of any portion of Thomas’s LTIP bonus (beyond that which had
already been received prior to trial) to the extent that LTIP funds were earned prior to the
termination of the marriage, net Thomas’s payable taxes on the funds.
{¶10} The trial court found that Thomas’s bonuses in 2008, including the
JB-Bonus-Pensionable in the amount of $129,938, the JP-Bonus-non-pensionable, in the
amount of $16,843, and the LTIP in the amount of $22,773, totaled $169,554. Pursuant
to an agreed judgment entry dated September 2, 2008, Thomas used these funds to pay
marital expenses and they were not subject to division.
{¶11} The magistrate determined that Thomas’s last installment of the Recognition
Award in the amount of $157,255, payable in 2009, is a marital asset subject to equal
division. Thomas objected to the value of the Recognition Award, arguing that it should
be adjusted by the stipulated marginal tax rate of 35 percent. The trial court sustained
the objection and adjusted the value down to $102,216.
{¶12} Prior to filing the complaint for divorce, the parties had four individual
retirement (“IRA”) accounts and an investment account with Fidelity. The parties’ joint
Fidelity investment account (“Fidelity Account 1935”) had a value of $1,936,484 on
October 1, 2007. The parties stipulated that on October 22, 2007, Kathleen withdrew
$1,100,000 from that account. She withdrew the entire cash balance of $535,727 and
obtained the remainder through a margin loan of $562,707 against the value of the stock
in the account.
{¶13} As of October 31, 2007, the total market value of the remainder of Fidelity
Account 1935 was $1,439,704. By the time of trial in November 2008, the value had
dropped to $890,929. The court adjusted this amount by the amount of the original
margin loan in the amount of $562,707, the interest accrued on it over the previous year
in the amount of $35,109, and Kathleen’s repayments of the margin loan in the amount of
$92,000. The trial court determined that Fidelity Account 1935 should not have been
divided until the time of trial “in order to fairly distribute the losses of the market between
the parties.” At the time of trial, the total value of Fidelity Account 1935, including the
$1,100,000 Kathleen previously removed, was $1,990,929. The trial court determined
that the actual value of the remainder of Fidelity Account 1935, minus Kathleen’s
$1,100,000 and the margin loan, was $400,573. The court awarded the remainder of
Fidelity Account 1935 to Thomas and awarded Kathleen the $1,100,000 she removed
from the account in 2007.
{¶14} The court also divided several bank accounts, savings bonds, a Fidelity
money market account, and the parties’ IRAs. The court found that certain accounts at
Solvay Bank and First Charter Bank were not marital property and therefore not subject to
division. Although Kathleen suggested that Thomas was hiding funds in offshore
accounts, the court found there was no compelling evidence proving that Thomas had any
other bank accounts or investment accounts.
{¶15} Both parties filed motions for attorney fees. The court denied Thomas’s
motion for attorney fees and awarded Kathleen attorney fees incurred during the trial, but
denied her request for any attorney fees incurred prior to trial.
{¶16} Kathleen filed a timely notice of appeal in August 2011. However, this
court remanded the appeal to the trial court for lack of a final, appealable order.
Following the trial court’s final resolution of all issues in the case, Kathleen filed a
second notice of appeal. In this appeal, she raises 21 assignments of error. Thomas
cross-appeals and raises five assignments of error. We address some of the assigned
errors together for the sake of economy.
Amount and Duration of Spousal Support
{¶17} In the first assignment of error, Kathleen argues the trial court abused its
discretion by improperly determining the amount and duration of spousal support. She
contends that despite the trial court’s intention to award support to maintain a lifestyle
comparable to the parties’ marital standard of living, it failed to account for a gross
disparity in the parties’ incomes. She also argues the court erroneously limited the
spousal support award to a period of ten years while retaining jurisdiction to modify the
amount of the award.
{¶18} In Thomas’s second assignment of error in the cross-appeal, he argues the
trial court abused its discretion by awarding Kathleen any temporary or permanent
spousal support. He contends that it was error to award spousal support because
Kathleen does not need the support.
{¶19} A trial court has broad discretion in determining whether an award of
spousal support is proper based on the facts and circumstances of each case. Kunkle v.
Kunkle, 51 Ohio St.3d 64, 67, 554 N.E.2d 83 (1990). Therefore, a spousal support award
should not be disturbed on appeal, absent an abuse of discretion. Id.
{¶20} When determining whether spousal support is appropriate and reasonable,
the trial court must consider the factors set forth in R.C. 3105.18(C)(1) as a whole, and
not consider any one factor in isolation. Kaletta v. Kaletta, 8th Dist. Cuyahoga No.
98821, 2013-Ohio-1667, ¶ 22, citing Kaechele v. Kaechele, 35 Ohio St.3d 93, 96, 518
N.E.2d 1197 (1988). The court need not expressly comment on each factor but must
indicate the basis for an award of spousal support in sufficient detail to enable a
reviewing court to determine that the award is fair, equitable, and in accordance with the
law. Id.
{¶21} The factors enumerated in R.C. 3105.18(C)(1) include consideration of: (1)
the parties’ income from all sources, including income derived from the property division
made by the court; (2) the relative earning abilities of the parties; (3) their ages and
physical, mental, and emotional conditions; (4) their retirement benefits; (5) the duration
of the marriage; (6) their standard of living during the marriage; (7) the relative extent of
education of the parties; (8) their relative assets and liabilities; (9) the contribution of
each party to the education, training, or earning ability of the other party; (10) tax
consequences of spousal support, and (11) the lost income production capacity of either
party that resulted from that party’s marital responsibilities. R.C. 3105.18(C)(1).
{¶22} Kathleen argues the trial court abused its discretion because the spousal
support award does not equalize the parties’ income. She also argues the ten-year term
of spousal support is too short in light of the length of the parties’ marriage. Thomas
contends the trial court should not have awarded any spousal support to Kathleen because
she failed to establish any “need” for support, regardless of any of the other factors.
Both parties ignore the fact that the court is required to consider all of the relevant factors
listed in R.C. 3105.18(C)(1) and that no single factor, by itself, is determinative. Kaletta
at ¶ 22.
{¶23} Although there is no prohibition against the equalization of incomes in
appropriate cases, income equalization is not a factor that must be considered under R.C.
3105.18(C)(1). And while a trial court may consider any factor it considers relevant, a
party’s “need” is also not one of the enumerated factors set forth in R.C. 3105.18, nor is it
the primary standard against which to evaluate the factors. McConnell v. McConnell, 8th
Dist. Cuyahoga No. 74974, 2000 Ohio App. LEXIS 347 (Feb. 3, 2000).1 The goal of
spousal support is to reach an equitable result. Kaletta at ¶ 22.
{¶24} In this case, the trial court separately addressed each of the factors set forth
in R.C. 3105.18(C)(1) in relation to the evidence presented at trial. The court found that
both Kathleen and Thomas were 54 years old at the time of trial and had been married for
33 years. During the marriage, the parties lived a comfortable upper middle class
lifestyle. Despite Kathleen’s statements that she suffers from debilitating osteoporosis
and liver disease, she presented no medical evidence to substantiate her claim. There
was no evidence that either party has any physical, mental, or emotional defects that
would prevent either of them from working full time.
{¶25} The court noted that Kathleen received the majority of the liquid assets from
the division of marital assets, including the $1,100,000 she removed from the Fidelity
Account 1935, out of which she used $160,000 to purchase a condominium and returned
$92,000 to pay margin calls. She maintained $550,000 in bank accounts. The parties’
respective retirement accounts, exclusive of the Fidelity IRAs, were divided equally
between the parties but would be unavailable until retirement.
In McConnell, this court explained that the “need” standard set forth in
1
Kunkle v. Kunkle, 51 Ohio St.3d 64, 68-69, 554 N.E.2d 83 (1990), was statutorily
replaced by an “appropriate and reasonable” standard delineated in R.C.
3105.18(C)(1), which suggests that “the need factor is not the only barometer” by
which a trial court should measure a spousal support award.
{¶26} The court also found that both parties are college graduates, and Thomas
obtained his MBA from Case Western Reserve University in 1995. Evidence showed
that Kathleen is capable of earning $33,200 as a school teacher and that Thomas’s base
salary in 2008 was $285,000 per year plus a 10 percent expatriate premium, 10 percent
location allowance, housing and other benefits, and bonus income. Although Kathleen
was unemployed at the time of trial, the court found she is capable of obtaining
employment as a school teacher.
{¶27} Kathleen asserts that Thomas’s income in 2008 was approximately
$825,474. As such, she argues her spousal support in the amount of $168,000 per year is
unequal and inequitable when compared to Thomas’s income. Indeed the court found
that as of October 31, 2008, Thomas was projected to earn $666,951, consisting of his
base salary ($285,000) plus 10 percent expatriate premium ($28,500), plus 10 percent
location allowance ($28,500), plus housing and other benefits ($155,397), and bonuses.
{¶28} However, the court also found that there is an inherent variability in
Thomas’s income because his bonuses, which have contributed substantially to his gross
income, are based on company performance. Thomas predicted a dramatic decrease in
future bonuses due to the economic downturn, which began in 2008. The court found
that such things as the uncertainties of the global economy, the temporary nature of
Thomas’s current assignment, and the possibility of retirement make Thomas’s projected
gross income unpredictable.
{¶29} As previously stated, an equitable and reasonable award does not require
income equalization nor is it limited solely to a spouse’s most basic needs. The court
awarded Kathleen spousal support in the amount of $14,000 per month for a period of ten
years. This figure is equivalent to $168,000 per year for ten years, or a total of
$1,680,000 over the ten-year term. She also received substantial assets and retirement
benefits. By the time spousal support payments stop, Kathleen will be eligible to
withdraw from her retirement accounts. These assets and income will allow Kathleen to
maintain the upper middle class lifestyle she enjoyed during the marriage. The trial
court’s decision is well supported by the record, and we find no abuse of discretion in the
court’s spousal support award.
{¶30} Accordingly, Kathleen’s first assignment of error and Thomas’s second
assignment of error in the cross-appeal are overruled.
Attorney Fees
{¶31} In the second assignment of error, Kathleen argues the trial court abused its
discretion when it denied her request for pretrial attorney fees. In her third assignment of
error, Kathleen argues the court failed to consider the reasonableness of her attorney fees
when it denied her request for pretrial attorney fees. In Thomas’s fourth
cross-assignment of error, he argues the court abused its discretion by awarding Kathleen
$8,000 in attorney fees and not awarding him attorney fees.
{¶32} Kathleen argues the award of attorney fees should have been greater, but the
trial court improperly punished her for withdrawing the $1,100,000 from Fidelity Account
1935. She contends the court failed to consider Thomas’s lack of cooperation during the
pretrial proceedings and asserts that the court would have awarded her pretrial attorney
fees if the court had considered the complexity of the issues involved in calculating
Thomas’s income. Thomas contends the award of spousal support to Kathleen is
unwarranted and inequitable.
{¶33} Pursuant to R.C. 3105.73(A), a divorce court “may award all or part of
reasonable attorney’s fees * * * to either party if the court finds the award equitable.”
When deciding whether to award attorney fees, the court must start with a presumption
that attorney fees are the responsibility of the party who retains the attorney. Gourash v.
Gourash, 8th Dist. Cuyahoga Nos. 71882 and 73971, 1999 Ohio App. LEXIS 4074 (Sept.
2, 1999), citing Farley v. Farley, 97 Ohio App.3d 351, 358, 646 N.E.2d 875 (8th
Dist.1994). In determining whether an award of fees is equitable, “the court may
consider the parties’ marital assets and income, any award of temporary spousal support,
the conduct of the parties, and any other relevant factors the court deems appropriate.”
Id.; R.C. 3105.73(A). An award of attorney fees under R.C. 3105.73 lies within the
sound discretion of the trial court and will not be reversed absent an abuse of that
discretion. Rand v. Rand, 18 Ohio St.3d 356, 359, 481 N.E.2d 609 (1985).
{¶34} Despite Kathleen’s statements to the contrary, the court never stated that her
attorney’s time was inflated or unreasonable. Indeed, the court acknowledged that
determining Thomas’s actual compensation involved complex issues. However, the
court found that Kathleen had substantial resources with which to pay her own attorney
fees.
{¶35} Moreover, significant attorney fees were incurred as a direct result of
Kathleen’s acts of “self-help” beyond the withdrawal of the $1,100,000 from Fidelity
Account 1935. Much of Thomas’s pretrial discovery consisted of efforts to find out what
Kathleen did with the $1,100,000. Thomas was forced to file two motions to compel
because Kathleen failed to appear for deposition and failed to produce requested
documents.
{¶36} To make matters worse, Thomas later discovered that Kathleen deposited a
large portion of the marital funds into an account in her sister’s name. The sister had
check-writing authority and used the account to pay for her own as well as Kathleen’s
expenses. In addition, Kathleen took a margin loan secured against the Fidelity account
when she withdrew $1,100,000 which accrued interest in the amount of $2,000 per
month. The trial court found that Kathleen’s actions created conflict, set the tone for the
proceedings, and contributed to the cost of her own attorney fees. Therefore, we find no
abuse of discretion in the court’s decision to limit her award of attorney fees to those fees
incurred during trial.
{¶37} Likewise, we find no abuse of discretion in the court’s decision to award
Kathleen $8,000 for attorney fees incurred during trial where her income from spousal
support was less than Thomas’s income.
{¶38} We also find no abuse of discretion in the court’s denial of Thomas’s motion
for attorney fees. Although Kathleen failed to comply with discovery, Thomas also
failed to cooperate with discovery, causing Kathleen to file a motion to compel and a
motion for sanctions and fees.
{¶39} Accordingly, we overrule Kathleen’s second and third assignments of error
and Thomas’s fourth assignment of error in the cross-appeal.
Retroactive Modification of Temporary Spousal Support
{¶40} In her fourth assignment of error, Kathleen argues the trial court abused its
discretion by retroactively modifying the temporary spousal support arrearage. She
contends the retroactive modification of temporary spousal support violated her right to
due process.
{¶41} The trial court cannot retroactively modify a temporary spousal support
award in a final divorce decree in the absence of a motion to modify the temporary
spousal support award. Lewis v. Lewis, 7th Dist. Jefferson Nos. 06 JE 49 and 07 JE 27,
2008-Ohio-3342, ¶ 72, citing Ostmann v. Ostmann, 168 Ohio App.3d 59,
2006-Ohio-3617, 858 N.E.2d 831, ¶ 41-45 (9th Dist.). This rule comports with due
process, which mandates that a party receive adequate notice that a court is considering
modification of support as well as opportunity to refute the other’s claims. Halliday v.
Halliday, 8th Dist. Cuyahoga No. 92748, 2009-Ohio-5380, ¶ 23. However, if a motion
to modify is filed, a trial court may retroactively modify a temporary spousal support
award in a final divorce decree to the date the motion was filed. Ostmann at ¶ 45, fn. 11.
{¶42} In this case, Thomas filed a motion for a hearing to challenge the
magistrate’s temporary spousal support order pursuant to Civ.R. 75(N)(2). Civ.R.
75(N)(2) states, in relevant part: “Upon request, in writing, after any temporary spousal
support * * * is journalized, the court shall grant the party so requesting an oral hearing
within twenty-eight days to modify the temporary order.” (Emphasis added.) Because
Thomas filed a motion to modify the temporary spousal support order and Kathleen had
notice and an opportunity to respond to his claims at trial, there was no due process
violation.
{¶43} The fourth assignment of error is overruled.
Lump Sum Payment of Arrearage
{¶44} In the fifth assignment of error, Kathleen argues the trial court erred in not
ordering Thomas’s temporary spousal support arrearage to be reduced to a lump sum
judgment. However, on page 31 of the judgment entry of divorce, the court orders that
Thomas “shall pay to Kathleen the sum of Thirty Thousand Dollars ($30,000) as and for
temporary spousal support arrearage.” The order does not provide for installment
payments. Thus, despite Kathleen’s statement to the contrary, the judgment entry of
divorce ordered Thomas to pay the spousal support arrearage in a lump sum.
{¶45} Therefore, we overrule the fifth assignment of error.
Thomas’s Gross Income
{¶46} In the sixth assignment of error, Kathleen argues the trial court abused its
discretion by failing to independently review the magistrate’s decision on the issue of
spousal support as required by Civ.R. 53(D)(4)(d). She contends the court failed to
properly consider Thomas’s income from all sources because there was no evidence
presented to the magistrate regarding the complex issue of Thomas’s total compensation.
In particular, she argues the court failed to include income from the goods and services
adjustment and the hypothetical tax in the total income calculation.
{¶47} Civ.R. 53(D)(4)(d) requires the trial judge to “undertake an independent
review as to the objected matters to ascertain that the magistrate has properly determined
the factual issues and appropriately applied the law.” On appeal, the reviewing court
“must presume that a trial court has performed an independent review of the magistrate’s
recommendations unless the appellant affirmatively demonstrates the contrary.” Cottrell
v. Cottrell, 12th Dist. Warren No. CA2012-10-105, 2013-Ohio-2397, ¶ 93, quoting Gilleo
v. Gilleo, 3d Dist. Mercer No. 10-10-07, 2010-Ohio-5191, ¶ 46. “A failure of the trial
court to conduct an independent review of the magistrate’s recommendations as required
by Civ.R. 53(D)(4)(d) is an abuse of discretion.” Barrientos v. Barrientos, 196 Ohio
App.3d 570, 2011-Ohio-5734, 964 N.E.2d 492, (3d Dist.),
¶ 5.
{¶48} When deciding an amount of spousal support, R.C. 3105.18(C)(1)(a)
requires that the court consider “[t]he income of the parties, from all sources * * *.” This
is commonly known as “gross income.” In contrast to the child support statute (R.C.
3119.01(C)(7)), R.C. 3105.18(C) does not define the term “gross income.” Therefore,
we apply its ordinary meaning. In re M.W., 133 Ohio St.3d 309, 2012-Ohio-4538, 978
N.E.2d 164, ¶ 17-18.
{¶49} Despite Kathleen’s statements to the contrary, both the magistrate’s decision
and the court’s judgment entry of divorce reflect that the court thoroughly evaluated all
potential components of Thomas’s compensation. The magistrate examined testimony
from both parties, Thomas’s expert witness, Andrew Finger (“Finger”), as well as
numerous exhibits, including Thomas’s W-2s for the past several years. Finger testified
that payments for the goods and services adjustment and the hypothetical tax are made to
employees on expatriate assignments to equalize the employee’s salary with its net worth
in the United States. Although the goods and services payment appears on the
employee’s W-2 as income, the payment is intended to compensate for the cost of goods
and services in the foreign country, which cost more than the same goods and services
cost at home. Finger explained that the purpose of this adjustment is to place the
employee in the same position as an employee with the same base salary who is working
in the U.S. so that he will be in “no better and no worse” a position as a result of working
overseas.
{¶50} The trial court accepted Finger’s testimony regarding the goods and services
adjustment and the hypothetical tax components of Thomas’s income. Based on this
evidence, the magistrate found, and the trial court agreed, that the goods and services
adjustment and the hypothetical tax do not qualify as income because these components
“only keep [Thomas] in the same position as if he worked in the United States.”
(Magistrate’s decision p. 26.) Therefore, because the trial court’s decision is supported
by competent, credible evidence, we find no abuse of discretion in the court’s calculation
of Thomas’s income.
{¶51} The sixth assignment of error is overruled.
Novelis Subpoena
{¶52} In the seventh assignment of error, Kathleen argues the trial court erred by
not compelling Novelis’s compliance with a trial subpoena and other discovery. She
contends she was denied judicial process by the failure of subpoenaed witnesses to appear
for trial.
{¶53} Civ.R. 45(C)(2)(b), which governs protection of persons subject to
subpoenas, provides:
Subject to division (D)(2) of this rule, a person commanded to produce
under divisions (A)(1)(b), (iii), (iv), (v), or (vi) of this rule may, within
fourteen days after service of the subpoena or before the time specified for
compliance if such time is less than fourteen days after service, serve upon
the party or attorney designated in the subpoena written objections to
production. If objection is made, the party serving the subpoena shall not be
entitled to production except pursuant to an order of the court by which the
subpoena was issued. If objection has been made, the party serving the
subpoena, upon notice to the person commanded to produce, may move at
any time for an order to compel the production. An order to compel
production shall protect any person who is not a party or an officer of a
party from significant expense resulting from the production commanded.
Thus, if a subpoenaed entity refuses to comply with the subpoena, that party must express
all written objections to the party serving the subpoena. The party that served the
subpoena must then file a motion to compel production with “the court by which the
subpoena was issued.” Cincinnati Bar Assn. v. Adjustment Serv. Corp., 89 Ohio St.3d
385, 388, 732 N.E.2d 362 (2000). A witness who fails to appear pursuant to a lawfully
issued subpoena, may be held in contempt as provided by Civ.R. 45(F) and R.C. 2317.21.
{¶54} In Sharwell v. Leonard, 8th Dist. Cuyahoga No. 62062, 1992 Ohio App.
LEXIS 666 (Feb. 13, 1992), this court held that a party’s failure to invoke the trial court’s
contempt powers thorough a motion to compel waives any error associated with the
failure of subpoenaed witnesses to appear for trial. Id., citing N. Coast Cookies, Inc. v.
Sweet Temptations, Inc., 16 Ohio App.3d 342, 476 N.E.2d 388 (8th Dist.1984).
{¶55} Kathleen issued a subpoena to Novelis on October 23, 2008, and requested
the head of human resources “or other individual able to testify as to compensation and
Benefits paid or due to Thomas L. Walpole” appear at trial on November 3, 2008. The
subpoena further requested numerous documents and provided Novelis less than seven
business days to comply. Novelis’s counsel sent a letter to Kathleen’s lawyer on October
31, 2008, objecting to the subpoena on grounds that it posed an undue burden.
Kathleen’s counsel never responded to the objection and never filed a motion to compel
Novelis’s appearance and thus waived any error associated with the failure of subpoenaed
witnesses to appear for trial.
{¶56} Therefore, Kathleen’s seventh assignment of error is overruled.
Imputed Income
{¶57} The court imputed $33,200 per year of income to Kathleen in the spousal
support calculation because there was evidence that Kathleen could earn that much if she
could secure employment. In her eighth assignment of error, Kathleen now contends that
the court should not have imputed this income to her because there was no evidence that
she would find employment and because both parties had planned to retire in their fifties.
{¶58} When awarding permanent spousal support, R.C. 3105.18(C)(1)(b) directs
the court to examine the relative earning ability of the parties, along with all of the other
factors set forth therein. A trial court’s examination of the relative earning ability of the
parties for purposes of spousal support is different from the inquiry employed when a
court considers imputation of income for child support. Collins v. Collins, 9th Dist.
Wayne No. 10CA0004, 2011-Ohio-2087, ¶ 18. Although the inquiries contain some
similarities with respect to the evidence the court may consider, the analysis is different.
{¶59} In child support cases, the court examines the earning capacity of a parent
who is voluntarily unemployed or underemployed, in order to impute a specific sum of
income to that parent that will be combined with other income to arrive at a figure that
will be used for the child support calculation. Id. When the court examines the relative
earning ability of the parties for purposes of spousal support, consideration of earning
capacity allows the court to juxtapose one spouse’s earning ability against the other
spouse’s earning ability.
{¶60} Unlike the child support statute, there is no language in R.C. 3105.18 that
directs the trial court to “impute” income. The goal is not to arrive at a specific figure to
“impute” to one of the spouses. Instead, the end result is to consider and weigh the
spouses’s relative earning abilities along with all the other factors set forth in R.C.
3105.18(C) in arriving at reasonable spousal support, both as to amount and term. Id. at ¶
19; see also Johnson v. Johnson, 9th Dist. Summit No. 24159, 2008-Ohio-4557, ¶ 18
(“[T]here is no underemployment provision in R.C. 3105.18”). As with other spousal
support determinations, determining the earning capacity of the parties and the amount of
income that should be imputed to him or her, if any, are factual determinations to be made
by the trial court based on the circumstances of each particular case. Id. at ¶ 67. The trial
court’s determination of these issues must not be disturbed absent an abuse of discretion.
Id.
{¶61} Evidence presented at trial supports the trial court’s decision to impute
income in the amount of $33,200 per year to Kathleen. Thomas’s vocational expert,
Barbara Burk, testified that based on Kathleen’s credentials as well as data from the U.S.
Bureau of Labor Statistics and other information specific to North Carolina, Kathleen had
the ability to earn between $33,200 and $47,300 teaching kindergarten or elementary
school in North Carolina. Kathleen admitted at trial that she would expect to earn
$30,000 per year as a teacher in North Carolina and failed to present any evidence that
she is physically unable to secure employment as a teacher.
{¶62} Kathleen also asserts that because the parties had planned during the
marriage to retire in their fifties, and Thomas has indicated he might retire at the age of
55, it is inequitable to require her to work. However, plans may change when the
circumstances require adjustment. The evidence at trial showed that Kathleen is
physically and mentally capable of working as a teacher. Therefore, we find no abuse of
discretion in the court’s decision to impute income to her in the amount of $33,200.
{¶63} The eighth assignment of error is overruled.
Mathematical Errors
{¶64} In her ninth assignment of error, Kathleen argues the trial court abused its
discretion in computing the net value of Fidelity Account 1935 awarded to Thomas. She
argues that the trial court incorrectly set the value at $400,573 rather than $400,753. In
her tenth assignment of error, Kathleen argues the trial court abused its discretion in
calculating the amount Kathleen owed to Thomas for the hypothetical tax. She contends
the amount to be credited to Thomas is $52,296, not $55,296.
{¶65} In both assignments of error, Kathleen asserts that these mathematical errors
should be corrected. Thomas effectively concedes these assigned error by failing to
respond to them.
{¶66} Therefore, the ninth and tenth assignments of error are sustained.
$50,000 Wired to Korean Exchange Bank
{¶67} In the eleventh assignment of error, Kathleen argues the magistrate erred by
not including the $50,000 Thomas wired to the Korean Exchange Bank when she divided
the marital property. She asserts that because the $50,000 was transferred from the
parties’ joint Fidelity Account 1935 in September 2007, it was marital property and
should have been equally divided.
{¶68} However, the trial court determined that Thomas used this money for living
expenses in South Korea. Thomas testified that because the South Korean won is highly
variable and wire transfers are expensive, it was his practice to transfer large amounts of
money at a time and when the money was depleted, he would make another large transfer.
There was evidence that Thomas had previously wired $50,000 to cover living expenses,
which corroborated his testimony. Having been used for expenses, it was within the
court’s discretion to omit the $50,000 from the marital property calculations. See
Mendiola v. Mendiola, 5th Dist. Stark Nos. 2010 CA 00135 and 2010 CA 00203,
2011-Ohio-1326, ¶ 15-16.
{¶69} Therefore, the eleventh assignment of error is overruled.
Bonus Money for Expenses
{¶70} In the twelfth assignment of error, Kathleen argues the trial court erred in
finding that bonus funds in the amount of $169,554 released to Thomas on September 2,
2008, are not marital property subject to division. She contends that because these funds
were earned during the marriage, they are marital property.
{¶71} However, the magistrate found and the trial court agreed that these funds
were, in fact, marital property, but that they were not subject to division because they
were released to Thomas to pay marital expenses pursuant to an Agreed Judgment Entry
dated September 2, 2008. (See R. 162.) Therefore, we find no abuse of discretion in
the court’s decision to exclude the bonus payments of $169,554 to Thomas from the
division of marital property.
{¶72} The twelfth assignment of error is overruled.
Unaccounted Funds
{¶73} In the thirteenth assignment of error, Kathleen argues the trial court erred by
failing to reimburse her for unaccounted funds. She contends that Thomas siphoned
$319,000 from their marital accounts during the period of time between March 2006 and
July 2007 and hid them in an undisclosed location.
{¶74} However, the magistrate’s decision contains a detailed description of the
flow of money Thomas withdrew from the parties’ marital accounts beginning with the
parties’ joint account in which Thomas’s paychecks were deposited before the divorce
was filed. From the evidence, the magistrate was able to trace the money to accounts in
different banks and only found $50,000 unaccounted for. (Magistrate’s decision p. 9.)
The court applied this amount against Thomas’s share of the marital assets. Therefore,
there was nothing to reimburse to Kathleen.
{¶75} Moreover, Kathleen subpoenaed 48 financial institutions in the United
States and abroad and failed to uncover any hidden accounts. The court heard the
evidence and determined that, with the exception of $50,000, all of the marital funds were
accounted for.
{¶76} Therefore, the thirteenth assignment of error is overruled.
Medical Benefits
{¶77} In the fourteenth assignment of error, Kathleen argues the trial court abused
its discretion in failing to divide Thomas’s medical benefits. Her argument suggests that
Novelis offered medical and dental benefits in retirement and that the trial court should
have divided those benefits as marital property. However, there is no evidence that
Thomas is entitled to any medical benefits upon retirement. Novelis’s payment of
Thomas’s health insurance premiums while he is an employee is not a marital asset
subject to division because it is an aspect of his compensation.
{¶78} Therefore, the fourteenth assignment of error is overruled.
Frequent Flier Miles
{¶79} In the fifteenth assignment of error, Kathleen argues the trial court erred by
not providing an alternative division method for frequent flier miles and points in the
event they are nontransferable. In Musser v. Musser, 10th Dist. Franklin No. 00AP-492,
2000 Ohio App. LEXIS 5059 (Nov. 2, 2000), the court determined a monetary value for
one spouse’s frequent flier miles and awarded it to the other spouse in the division of
marital property. However, in Musser the court had evidence upon which to assess the
frequent flier miles’ monetary value. In this case, Kathleen failed to provide any
evidence of the monetary value of Thomas’s frequent flier miles.
{¶80} Therefore, the fifteenth assignment of error is overruled.
Severance and Accrued Vacation Benefits
{¶81} In the sixteenth assignment of error, Kathleen argues the trial court abused
its discretion by failing to account for and divide Thomas’s severance and accrued unpaid
vacation benefits. In support of her argument, Kathleen relies on McKenzie v.
McKenzie, 2d Dist. Greene No. 2006-CA-34, 2006-Ohio-6841, in which the court divided
the husband’s severance pay. However, the husband in McKenzie was already receiving
the payments as part of an early retirement plan at the time of trial, and there was
evidence that he would continue to receive these benefits for the rest of his life.
Although Novelis’s SEC filings indicate that Thomas may be entitled to some form of
severance pay should he be terminated by Novelis without cause or involuntarily cease his
employment, these benefits do not vest, if at all, until some time in the future.
Therefore, Kathleen was not entitled to any portion of Thomas’s potential severance
package.
{¶82} The sixteenth assignment of error is overruled.
Support of Adult Children
{¶83} In the seventeenth assignment of error, Kathleen argues the trial court erred
as a matter of law by forcing her to either support her adult children or gift significant
marital assets to her children. She contends that Thomas’s transfer of marital funds to
the parties’ adult children should have counted against his share of the marital assets.
{¶84} After the complaint was filed but before trial, Thomas transferred money to
accounts for his children who continued to live in Solon while he was in South Korea and
their mother was in North Carolina. Thomas testified that he transferred a total of
$12,000 to his son, who was 18 years old and attending Cuyahoga Community College to
get his GED. He transferred $26,600 to his daughter, who left employment in New
York to live in Solon with her brother. The magistrate determined that given the ages of
the children and the circumstances of this case, “it was not unreasonable or unforeseeable
that the parties’ children would require some sort of support” in order to remain in the
family home in Solon. We agree.
{¶85} Although Kathleen was not obligated by law to support her adult children,
the money given to them is insignificant in comparison to the marital estate, and the
children were not yet self-supporting. Therefore, we find no abuse of discretion in the
magistrate’s conclusion that Kathleen is not entitled to be compensated for sums spent on
behalf of the children.
{¶86} The seventeenth assignment of error is overruled.
Missing and Unvalued Savings Bonds
{¶87} In the eighteenth assignment of error, Kathleen argues the trial court
erroneously failed to divide or otherwise account for missing and unvalued savings bonds
in Thomas’s name. However, the parties stipulated that Kathleen was in possession of
Series EE bonds belonging to the parties, and there is no evidence that any other savings
bonds exist. Therefore, the trial court properly allocated the value of these bonds in the
division of marital property. (Joint Ex. A at 17.)
{¶88} The eighteenth assignment of error is overruled.
Motion for New Trial
{¶89} In the nineteenth assignment of error, Kathleen argues the trial court abused
its discretion when it overruled her motion for a new trial. Kathleen contends she was
entitled to a new trial based on newly discovered evidence that established that Thomas’s
actual compensation was higher than that presented at trial.
{¶90} Civ.R. 59(A)(8) states that a new trial may be granted if the moving party
presents “[n]ewly discovered evidence, material for the party applying, which with
reasonable diligence he could not have discovered and produced at trial[.]” To prevail
on a motion for a new trial based on the ground of newly discovered evidence:
it must be shown that (1) the new evidence must be such as will probably
change the result if a new trial is granted, (2) it must have been discovered
since the trial, (3) it must be such as could not in the exercise of due
diligence have been discovered before the trial, (4) it must be material to the
issues, (5) it must not be merely cumulative to former evidence, and (6) it
must not merely impeach or contradict the former evidence.
Sheen v. Kubiac, 131 Ohio St. 52, 1 N.E.2d 943 (1936) paragraph three of the syllabus.
{¶91} We review a trial court’s judgment on a Civ.R. 59 motion for a new trial for
an abuse of discretion. Sarka v. Love, 8th Dist. Cuyahoga No. 85960,
2005-Ohio-6362, ¶ 18.
{¶92} Here, Kathleen submitted two documents in support of her motion for new
trial, which she argued established that Thomas’s income was greater than the amount
proved at trial. However, the documents submitted in support of the motion are
unauthenticated and the source of the documents is unknown.
{¶93} Moreover, the documents refer to Thomas’s employment at Novelis from
2008 though 2011. One of the documents refers to Thomas’s new position as Senior
Vice President, Global Manufacturing Excellence, and President, Novelis Asia effective
April 20, 2011. The other documents list a summary of Thomas’s compensation through
2010. The trial concluded in December 2008. Therefore, any information generated
after December 2008 should not be part of the trial record. Furthermore, some of the
information includes stock awards and bonus awards that the trial court had already
determined were not income for purposes of determining spousal support. Under these
circumstances, the court did not abuse its discretion when it denied Kathleen’s motion for
a new trial.
{¶94} The nineteenth assignment of error is overruled.
Supplemental Executive Retirement Savings Plan
{¶95} In the twentieth assignment of error, Kathleen argues the trial court erred by
accepting the parties’ stipulation that Thomas’s Novelis Supplemental Executive
Retirement Savings Plan (“SERP”) should be equally divided by Qualified Domestic
Relations Order (“QDRO”). She contends that because the SERP is non-qualified under
ERISA it is not subject to division, and the trial court should have made provisions for
either offsetting Kathleen’s interest in that plan or otherwise compensate her for her 50
percent share of Thomas’s SERP benefits.
{¶96} However, there is no evidence that SERP is a non-qualified plan.
Plaintiff’s exhibit No. 20, which describes executive compensation at Novelis, lists the
benefits of several Novelis executives including Thomas. Although this chart lists “the
accumulated benefits of our named executive officers under our defined benefit pension
plans (both qualified and non-qualified),” Thomas is listed as only having benefits
under the Novelis Pension Plan and SERP. There is no indication that SERP is a
non-qualified plan on this chart. Pursuant to the parties’ stipulation, the court equally
divided Thomas’s benefits under SERP. Therefore, we find no abuse of discretion with
respect to the court’s division of Thomas’s benefits under SERP.
{¶97} The twentieth assignment of error is overruled.
Camera and U.S. Mint Coin Collection
{¶98} In the twenty-first assignment of error, Kathleen argues the trial court
abused its discretion by failing to value and/or divide the parties’ U.S. Mint coin
collection and camera, which were in Thomas’s possession. She asserts that Thomas
testified that he removed the coin collection and the camera before departing for South
Korea. However, on review the transcript does not support this claim. Moreover, the
parties stipulated that Kathleen had possession of the coin collection and that the parties
agreed to divide the collection equally.
{¶99} With respect to the camera allegedly in Thomas’s possession, the parties
stipulated that the division of household goods and furnishings as it existed at the time of
trial represented an equal division of such items. Therefore, the trial court properly
accepted the parties’ stipulation as to the equitable division of household items including
the camera.
{¶100} The twenty-first assignment of error is overruled.
Termination Date
{¶101} In the first assignment of error in Thomas’s cross-appeal, Thomas argues
the trial court’s determination that the parties’ marriage terminated on the date of the final
hearing constitutes plain error. He also argues the court erroneously used multiple
valuation dates for the parties’ bank accounts. He contends the court should have found
the date of filing the complaint, October 4, 2007, the de facto date of termination of the
parties’ marriage.
{¶102} R.C. 3105.171(A)(2) provides that, except when the court determines that
it would be inequitable, the date of the final hearing is the date of termination of the
marriage. O’Brien v. O’Brien, 8th Dist. Cuyahoga No. 89615, 2008-Ohio-1098, ¶ 40.
Courts should be reluctant to use a de facto termination of marriage date unless the
evidence clearly and bilaterally shows that it is appropriate based on the totality of the
circumstances. Strauss v. Strauss, 8th Dist. Cuyahoga No. 95377, 2011-Ohio-3831, ¶
32. The trial court has broad discretion in choosing the appropriate marriage termination
date and this decision should not be disturbed on appeal absent an abuse of discretion.
Berish v. Berish, 69 Ohio St.2d 318, 321, 432 N.E.2d 183 (1982).
{¶103} In this case, the magistrate found no compelling reason to adopt Thomas’s
proposed de facto termination date and explained that “using the date of trial does not
preclude the use of a different date for valuing a particular asset if, to do otherwise, would
work an injustice.” Thus, the use of varying dates for valuation of particular assets was
intended to fairly distribute assets between the parties. Throughout the magistrate’s
decision, the magistrate explains her reasons for selecting a particular valuation date.
For example, the magistrate explained that it used the filing date as the date of valuing
Fidelity Account 1935 because Kathleen removed $1,100,000 from the account at that
time. Since the value was much greater at the time the complaint was filed than it was at
the time of trial, this particular valuation date weighed in Thomas’s favor.
{¶104} Therefore, because the termination date and the various dates of valuation
were clearly intended to achieve equity, we find no abuse of discretion.
{¶105} Thomas’s first assignment of error in the cross-appeal is overruled.
2
Spousal Support Arrearage
{¶106} In Thomas’s third cross-assignment of error, he argues the trial court
abused its discretion in finding a temporary spousal support arrearage. He argues that
because the spousal support arrearage was intended to compensate Kathleen for marital
expenses and Thomas paid the expenses, Kathleen received a double award of spousal
support.
{¶107} However, the magistrate’s decision indicates that she was aware of the
expenses Thomas was paying when she decided on the amount of temporary spousal
support. In fact, the magistrate determined that $169,554 in bonus money should not be
divided as a marital asset because it was released to Thomas for the payment of the
parties’ expenses. (Magistrate’s decision p. 11). Therefore, the magistrate clearly
intended for Thomas to pay the marital expenses as well as the temporary spousal support
arrearage. And since the court accounted for Thomas’s payment of marital expenses in
the division of marital property, we find no abuse of discretion.
Thomas’s second and fourth cross-assignments of error were previously addressed with
2
Kathleen’s assignments of error because they involved the same issues.
{¶108} Thomas’s third cross-assignment of error is overruled.
Separate Property
{¶109} In Thomas’s fifth cross-assignment of error, he argues the trial court erred
in finding that Kathleen’s bank accounts at Solvay and First Charter Banks were separate
property. He argues Kathleen failed to produce sufficient evidence supporting the
separate nature of these accounts.
{¶110} The trial court must determine what constitutes marital property and what
constitutes separate property, divide the marital property equitably between the parties,
and “disburse a spouse’s separate property to that spouse.” R.C. 3105.171(D). The party
seeking to establish an asset as his or her own separate property has the burden of proof,
by a preponderance of the evidence, to trace the asset to the separate property source.
Kehoe v. Kehoe, 8th Dist. Cuyahoga No. 97357, 2012-Ohio-3357, ¶ 11.
{¶111} At trial, there was evidence that Kathleen’s names were on an account at
Solvay Bank and on another account at First Charter Bank. However, the evidence
suggested, and the magistrate found, that these accounts belonged to Kathleen’s father.
Kathleen testified that her name was only on the accounts for her father’s convenience.
Based on this evidence, the court concluded that these accounts were neither marital nor
separate property. The magistrate did not disburse these accounts to Kathleen as
separate property. Given that the evidence presented at trial supported the finding that
the bank accounts at Solvay Bank and first Charter Bank were Kathleen’s father’s
accounts, we find no error in the magistrate’s conclusion that they were not marital
property subject to division.
{¶112} The fifth assignment of error of Thomas’s cross-appeal is overruled.
{¶113} The trial court’s judgment is affirmed in part and reversed in part. We
remand this case to the trial court to correct the mathematical errors set forth in
Kathleen’s ninth and tenth assignments of error.
It is ordered that appellant and appellee share the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to the domestic relations division 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.
EILEEN T. GALLAGHER, JUDGE
LARRY A. JONES, SR., P.J., and
MARY EILEEN KILBANE, J., CONCUR
Walpole v. Walpole
Combined Opinion