Happy family

Find a legal form in minutes

Browse US Legal Forms’ largest database of 85k state and industry-specific legal forms.

Ohio Divorce Questions

Author: LegalEase Solutions 

INTRODUCTION

You have asked us to research three points of Ohio law relating to a divorce proceeding:

(1) What is the appropriate date to be used to delineate the end of the marriage for purpose of division of property?  Should it be the date of trial, or some other date?

(2) Should fees earned by one spouse (but which have yet to be fully paid to that spouse) and contingent/unliquidated anticipated earnings from work begun during the marriage be included in property division and support calculations?

(3)  Does the original Magistrate in a divorce proceeding have jurisdiction to decide property and support issues?

The current issues call for the discussion of:

  1. Ohio state case law;
  2. Ohio Revised Code.

DISCUSSION

  1. DETERMINING APPROPRIATE END DATE OF MARRIAGE

The basic provisions for determining the end date of the marriage are outlined in O.R.C. Ann. 3105.171 (2005), which states the following:

“During the marriage” means whichever of the following is applicable:

(a) Except as provided in division (A)(2)(b) of this section, the period of time from the date of the marriage through the date of the final hearing in an action for divorce or in an action for legal separation;

(b) If the court determines that the use of either or both of the dates specified in division (A)(2)(a) of this section would be inequitable, the court may select dates that it considers equitable in determining marital property. If the court selects dates that it considers equitable in determining marital property, “during the marriage” means the period of time between those dates selected and specified by the court.

The Ohio Revised Code in Sec. 3105.171 (2) (a) renders a presumption that a marriage begins with the ceremonies and ends on the last date of hearing in a case instituted for divorce. However Sec. (b) of the same statute allows the court to use other dates appropriate for the beginning or end of the marriage based on equity if adequate evidence is adduced by both parties to that effect.

In McMaken v McMaken, 1999 Ohio App. LEXIS 554, the Ohio Court of Appeals stated that   ”When determining the duration of a marriage, the Supreme Court of Ohio has held that equity may require a court to recognize a de facto termination date for the marriage.”  Berish v Berish, 69 Ohio St. 2d 318, 321 (Ohio 1982).

Additionally, some Ohio appellate courts have held that should there be a de facto termination of a marriage, the decision “must be clear and bilateral, not unilateral” on behalf of the parties involved. Day v Day40 Ohio App. 3d 155, 158, 532 N.E.2d 201 (1988).

In Lv Longfellow v Longfellow, 1999 Ohio App. LEXIS 1535 (Ohio Ct. App. 1999), the appellant wife claimed that the trial court abused its discretion in selecting and applying a de facto marriage termination date rather than the final hearing date for property division purposes. In this case the trial court determined the de facto termination date to be the date when the couple started living and operating from separate residences, conducted separate business activities and operated independent bank accounts. There seemed to be no efforts at reconciliation and hence the trial court was justified in treating that date as the termination of marriage date for evaluation purposes.

In the widely cited Berish case, it was held thatIn order to do equity, a trial court must be permitted to utilize alternative valuation dates, such as the time of permanent separation or de facto termination of the marriage, where reasonable under the facts and circumstances presented in a particular case. In this fashion, the trial court will have the necessary flexibility to exercise its discretion in making truly equitable awards consistent with legitimate expectations of the parties.” Id. at 318.

In the same case the judge further opined that:

“Indeed, inequity would likely result if this court were to blindly equate the termination of a marriage to the dissolution of a business partnership, and accept the position that if marital assets can disappear before the entry of the final divorce decree, the trial court loses all jurisdiction to divide and determine the equities therein since said assets and liabilities must be in existence at the moment of distribution. If a trial court was rendered powerless to recognize and determine property rights in assets that do not exist at the time of the final decree, one party, from the time of separation to the time of the final decree, could withdraw all funds and,    unilaterally and with impunity, squander the fruits of the marital labor. Such a position would not only be antithetical to public policy, but also to prior case law.” Id. at 321.

This case justifies the right of the trial court to use its discretionary power for evaluating the marriage termination date based on specific circumstances of the case.  The trial court’s determination of a valuation date for distribution of marital assets, other than the actual date of divorce is within the discretion of the trial court and cannot be disturbed on appeal absent an abuse of discretion. The circumstances of a particular case may make a date prior to trial more equitable for the recognition, determination and valuation of marital assets.

While Sec.3105.171 gives a statutory presumption that the final hearing date is the date of valuation, trial courts are supposed to look into the date, intention and circumstances of a bilateral rather than a unilateral move to terminate the marriage before deciding on the valuation date.

However, in Rogers v Rogers, 1997 Ohio App. LEXIS 4033 (Ohio Ct. App. 1997), the decision of the trial court to decide a certain de facto marriage termination date for purposes of asset distribution was considered to be an abuse of its discretionary power. The Court of Appeals Ohio found that seeing the totality of circumstances and equitable considerations, the de facto separation had taken place well before the date prescribed by the trial court for the purpose of asset division.

In Frantz v Frantz, 1988 Ohio App. LEXIS 565 (Ohio Ct. App. 1988), the debate was on whether trial date chosen by the court for the division of the husband’s pension funds was appropriate and equitable .  On appeal, the husband claimed that the trial court committed error when it used the appraisal date for all of the tangible personal property but used the hearing date for the value of his pension fund.

The court explained that “the value of the tangible personal property had not increased between the time of the appraisal and the hearing date. But the pension fund had increased and would necessarily continue to increase. The marriage however was not terminated by the separation, but only by the later court decree and the pension fund remained a marital asset until that date.” Id.

There have been some additional cases decided in 2005 that touch upon the issue of a trial court’s discretion to decide the appropriate end date of the marriage for purposes of valuation and division.

The case of Seaburn v Seaburn, 2005 Ohio App. LEXIS 4722 reinforced the proposition that “during the marriage” generally means the period of time from the date of marriage through the date of final hearing in a divorce action.  O.R.C. 3105.171(A)(2)(b) further provides that if the court determines that use of that date would be inequitable, the court may select a different date for purposes of determining the division of marital property.

Further, in the case of Rendina v Rendina 2005 Ohio App. LEXIS 4772, the court agreed with the trial court that the use of the date of separation as the end date for “during the marriage” was equitable because the parties’ finances were effectively divided at that point, and appellant was properly removed from the home by court order.

  1. CONTINGENT FEES/UNLIQUIDATED FUTURE EARNINGS

The issues in the instant case are largely governed by the different subsections of

Ohio Revised Code Section 3105.171.

ORC Section 3105.171 (3) (a)     defines “marital property” and includes   

 

  • Except as otherwise provided in this section, all income and appreciation on separate property, due to the labor, monetary, or in-kind contribution of either or both of the spouses that occurred during the marriage;

In the instant case, the potential income accruing to the husband’s account at a

later time could fall into this category.

A “Distributive award” means any payment or payments, in real or personal

property, that are payable in a lump sum or over time, in fixed amounts, that are made from separate property or income, and that are not made from marital property and do not constitute payments of spousal support, as defined under §3105.18 of the Revised Code. (Subsection (A)(1)).

An equal division of marital property is called for in Subsection (C) subject to the ingredients contained in Subsection (E). The court may supplement or replace the divided marital property with a distributive award under certain circumstances. This may be effected if financial misconduct of a spouse is evident or if division of the marital property becomes impractical or burdensome.

Besides, if an equal division of marital property would be inequitable, then the court is empowered to divide the marital property in a fashion that the court considers to be equitable. In so doing, the court shall consider all relevant factors such as the duration of the marriage, assets and liabilities of the spouses, liquidity of the property to be distributed and other factors listed in Subsection (F) of this statute. (Subsection ( C)).

“Spousal support” means any payment or payments to be made to a spouse or former spouse, or to a third party for the benefit of a spouse or a former spouse, that is both for sustenance and for support of the spouse or former spouse.

“Spousal support” does not include any payment made to a spouse or former spouse, or to a third party for the benefit of a spouse or former spouse, that is made as part of a division or distribution of property or a distributive award under section 3105.171 [3105.17.1] of the Revised Code. (Section 3105.18 O.R.C.)

It is clear from the above definitions that marital property is the main subject matter of division by the trial court in the event of separation of a couple according to the valuation date set by the court.  Subsection (E) however enables the court to make distributive awards in lieu of or in addition to assets divided from marital property under certain circumstances, on case by case basis, as the court would consider equitable.

However there is an underlying presumption in Subsection (C) that the marital property would be divided equally unless the court thinks otherwise based on the evidence offered. But depending on the specifics of the case, the trial court can use its discretion to alter the content of the marital assets in question in relation to separate assets of one or both spouses.

In defining the exact scope of the marital assets in a case, it is important for the court to first pinpoint the exact date of beginning and termination of the marriage for the purpose of valuation of assets. Only those assets/properties real or otherwise which existed “during the marriage” shall be treated as subject matter of marital asset division. There is an underlying presumption that there has been substantial contribution by both parties to a marriage towards the marital assets accumulated during the marriage. These presumptions can be overlooked by the courts while deciding on the specifics of each case keeping in mind the valuation date and the exact identification of the marital property. The statutory guidelines given in Section 3105.171 shall be adopted by the trial court in such determination.

In the instant case the client seeks to lay claim on future income of spouse, even if the same is of contingent nature, arising from certain contractual agreements entered into during the marriage. While seeking division of contingent income it is important to know if such income, which would be forthcoming only upon fulfillment of certain contingencies could be treated as marital assets within the definition under Section 3105.171 for the purpose of asset division.

In Musser v Musser, 1995 Oklahoma 116 (1995), the court referred to the definition of a contingency fee contract as : “one that provides that a fee is to be paid to the attorney for his services only in case he wins, that is, a fee which is made to depend upon the success or failure to enforce a supposed right, and which fee is generally paid out of the recovery for the client.” Pocius v Halvorsen, 30 Ill. 2d 73, 195 N.E.2d 137, 139 (1964).

A compelling case in favor of the client in the instant case is Stageberg v Stageberg, 695 N.W.2d 609 (Minn. Ct. App. 2005), in which the court remarked:

“Whether property is marital or nonmarital is a legal question, but a reviewing court defers to the district court’s underlying findings of fact. Olsen v Olsen, 562 N.W.2d 797, 800 (Minn. 1997).  The extent to which a marital estate can include contingent fees for work in progress on the valuation date in a marital dissolution is a question of first impression for this court.” Stageberg, supra, at 614.

In that case, the question of vested and non vested pension rights of a spouse are discussed at length and analogy drawn between the contingent nature of the pension benefits and that of contingent income that could be potential subject matter of asset division during a marriage dissolution.

Reference has been made in Stageberg to  Janssen v Janssen, 331 N.W.2d 752 , 753 (Minn. 1983), in which  the court addressed  whether a non vested, unmatured pension [of one of the parties] is marital property which can be divided in a marital dissolution proceeding.

In doing so, the court recited the definition of marital property set out above, stated that the definition was “expansive,” and noted that “[a] vested pension refers to a pension right which is not subject to a condition of forfeiture if the employment relationship terminates before retirement” and that “[a] matured pension is one to which the employee has an unconditional right to immediate payment.” Id. at 753-55 (emphasis in original). In resolving the question, the court stated:

“Whether a nonvested pension right is marital property is substantially answered by our recent opinion in Christensen v Minneapolis Municipal Employees Retirement Board, 331 N.W.2d 740 (Minn. 1983), in which we held that a public employer’s promise of a pension to the appellant in that case was binding on  the public employer under the principles of promissory estoppel that had used a gratuity approach to public pension or retirement plans. Now, in consequence, the interest appellant holds becomes more than a mere expectancy–it becomes a chose in action, a contractual right: a property interest.”  Id. at 754 (emphasis omitted).

Thus, the crux of Janssen‘s holding that an unvested, unmatured pension can be property for dissolution purposes was that (a) the employed spouse had, during the marriage, entered a pension contract under which that spouse acquired certain rights, albeit contingent, to benefits; and (b) the contractual nature of the right to receive benefits under the pension meant that the employed spouse had more than a mere expectancy in pension benefits, and therefore that the contingent nature of the contractual right to receive benefits did not preclude the right from falling within the “expansive” definition of “marital property.” See Id. at 754-56 . Janssen also noted that “to award one party [the pension as nonmarital property] would ignore the presumption . . . that each spouse contributed to the acquisition of property while they lived together as husband and wife.” Id. at 756.

Subsequently, Minneapolis courts have applied a Janssen-like rationale to allow classification of other contingent interests as marital property.” See Salstrom v Salstrom, 404 N.W.2d 848, 850-51 (Minn. App. 1987) (incentive stock options); Marshall v Marshall, 350 N.W.2d 463, 466 (Minn. App. 1984) (deferred compensation); VanderLeest v VanderLeest, 352 N.W.2d 54, 57-58 (Minn. App. 1984) (disability annuity).

The Minnesota Court of Appeals in its final analysis stated:

 “We conclude that the portion of a contingent fee for work in progress on the valuation date that is attributable to work done before the valuation date is sufficiently analogous to unvested pensions and incentive stock options and therefore those fees may be treated as marital property for   dissolution purposes”  Stageberg, supra, at 615.

In the Stageberg case, supra, the Supreme Court of Minnesota confirmed the decision of the Court of Appeals by dismissing the appeal of the husband against the use of the contingent income as marital asset.

Likewise, the Supreme Court of Arkansas noted that “it is axiomatic that the right to perform a contract and to receive its profits, and the right to performance by the other party, are property rights entitling each party to the fulfillment of the contract by performance.” McDermott v McDermott, 336 Ark. 557, 986 S.W.2d 843, 847 (Ark. 1999). Because the Arkansas legislature expressly protected the rights of attorneys in their fee agreements by codifying an attorney’s lien statute, the Arkansas court held that contingency-fee agreements are enforceable contract rights, and those rights are property rights.

While the majority of jurisdictions considering this issue have arrived at the above conclusion  that contingent fees are marital property to the extent they were earned based on work done before a marriage is dissolved, some jurisdictions have ruled otherwise. See, e.g. Roberts v Roberts, 689 So. 2d 378, 381-82(Fla. Dist. Ct. App. 1977). 

In Roberts, the court held that contingency fees for cases pending at the time of distribution are not marital property because the “value of those cases is highly speculative until the occurrence of the contingency vesting the right to compensation under the contract”.  Id.

The court in Goldstein v Goldstein, 262 Ga. 136, 414 S.E.2d 474, 476 (Ga. 1992) refused to characterize contingent-fee agreement as marital assets because it is “nearly impossible” to gauge the amount of work necessary following the divorce to collect the fee.

From the above examples it is evident that Supreme Courts of Arkansas and Minnesota have accepted contingent income to be treated as marital asset for the purpose of asset division on termination of marriage while Supreme Courts of Georgia and Florida have disapproved of treating contingent income as marital asset, finding it too speculative for the purpose.

Perhaps the accuracy with which the contingent amounts can be estimated will be of significant influence in the determination of whether they will be considered marital property in a divorce proceeding.

III. JURISDICTION OF MAGISTRATE TO DIVIDE MARITAL PROPERTY

Ohio Civil Rule 53 (C) enables a Court of Record to appoint a magistrate and refer

a case or set of cases to him . The magistrate shall act in accordance with the Order of Reference that appointed him for a particular purpose. The rule gives wide powers to such Magistrate appointed by the Order of Reference. The magistrate may be appointed for the specific purpose of conducting a hearing, a jury by trial, making summons, making specific reports, take evidence,   etc. , for, some or all of the above.

In the instant case, the husband has raised objections that the magistrate acted beyond his powers and hence did not have jurisdiction to determine and adjudicate over marital assets of the parties.  In addition, the husband in this case has claimed that the magistrate passed orders without respecting the due process of law.  Due process of law has been explained as:

“A fundamental requirement of due process is the opportunity to be heard at a meaningful time and in a meaningful manner.” Armstrong v Manzo, 380 U.S. 545, 552 (U.S. 1965).

Notwithstanding this requirement,   Rule 53, Ohio Civil Rule , Subsection (E) reads as follows:

(E) (3) Objections.

(a) Time for filing.  A party may file written objections to a magistrate’s decision within fourteen days of the filing of the decision, regardless of whether the court has adopted the decision pursuant to Civ. R. 53(E)(4)(c).  If any party timely files objections, any other party may also file objections not later than ten days after the first objections are filed. If a party makes a request for findings of fact and conclusions of law under Civ. R. 52, the time for filing objections begins to run when the magistrate files a decision including findings of fact and conclusions of law.

(b) Form of objections.  Objections shall be specific and state with particularity the grounds of objection.

(c) If the parties stipulate in writing that the magistrate’s findings of fact shall be final, they may object only to errors of law in the magistrate’s decision.  Any objection to a finding of fact shall be supported by a transcript of all the evidence submitted to the magistrate relevant to that fact or an affidavit of that evidence if a transcript is not available…..”

Rule 53 (E) (3) (a) specifically spells out the time frame within which a party may file his written objections against an order of a magistrate’s decision. Even this right is waived by a party if he stipulates in writing that the magistrate’s findings of fact shall be final.  In that case he can only object to errors of law in the magistrate’s decision.

The husband in this case, cannot raise any objections with regard to the jurisdiction of the magistrate at the appellate stage having not pursued the opportunities he had under rule 53 (E) (3).

Perko v Perko, 2003 Ohio 1877 (Ohio Ct. App. 2003) is a compelling case addressing this legal issue. In this case the court stated that:

“A trial court may adopt a magistrate’s decision if no written objections are filed unless it determines there is an error of law or other defect on the fact of the decision. Civ.R. 53(E)(4). A de novo review of the magistrate’s decision by the trial court is needed only if an appropriate objection   is filed by a party.” Quick v Kwiatkowski, 2nd Dist. No. 18620, 2001 Ohio 1498, 2001 Ohio App. LEXIS 3437.

In Perko, supra, the husband argued on appeal that he was not given opportunity to file objections by the magistrate and that the trial court was in error on this count. But the appellate court concluded that the husband was supposed to file his objections within 14 days after the filing of the magistrate’s decisions and that he did not do so, and hence waived his right to raise objections on that count.

If in the instant case, the parties had consented to the magistrate adjudicating on their matter, and the magistrate passed his orders pursuant to the Order of reference, and if in fact the husband did not raise his objections within 14 days after the magistrate’s decision, then he has now waived his right to do so.

While a magistrate acts according to the Order of Reference that appointed him, he could have vast powers. Any objections to be raised by either party against the magistrate’s decisions ought to be done within the specific time frame of 14 days as prescribed by the statute. If he does not raise objections within that time period, he loses his right to do so.