Brown v. Brown, 2009 Ohio 4913 (Ohio App. 9/16/2009)

• Decision Date: 16 September 2009
• Docket Number: No. 2008 CA 0111.,2008 CA 0111.
• Citation: 2009 Ohio 4913
• Parties: James W. Brown, Plaintiff-Appellee, v. M. Susan Brown, Defendant-Appellant.
• Court: Ohio Court of Appeals

Page 1

2009 Ohio 4913

James W. Brown, Plaintiff-Appellee, v. M. Susan Brown, Defendant-Appellant.

No. 2008 CA 0111.

Court of Appeals of Ohio, Fifth District, Licking County.

Date of Judgment Entry: September 16, 2009.

Civil Appeal from Licking County Court of Common Pleas, Domestic Relations Division, Case No. 06DR01643.

Affirmed.

Steven T. Greene, 33 West Main Street, P.O. Box 4109, Newark, Ohio 43058-4190, for Plaintiff-Appellee.

J. Andrew Crawford, 36 North Second Street, P.O. Box 919, Newark, Ohio 43058-0919, for Defendant-Appellant.

Before: William B. Hoffman, P.J., John W. Wise, J., Julie A. Edwards, J.

OPINION

EDWARDS, J.

{¶1} Appellant, M. Susan Brown, appeals a divorce judgment of the Licking County Common Pleas Court Domestic Relations Division finding the appreciation in her separate commercial property to be marital property and ordering her to pay child support to appellee James W. Brown in the amount of $585.85 per month.

STATEMENT OF FACTS AND CASE

{¶2} In 1990, appellee began working for appellant at Avante, her gymnastics and dance school located at South 22^nd Street in Heath, Ohio. Appellee was responsible for the financial operations of the business and did routine maintenance or arranged for someone to perform maintenance on the building.

{¶3} Appellant's marriage to her former husband, Kenneth Yost, was dissolved on August 28, 1991. The dissolution decree awarded the building in which Avante was located to appellant, and the parties stipulated at that time to a value of $296,000.00. The building was appraised for $270,000.00 in January, 1991, in connection with the divorce proceedings. The balance due on the mortgage at that time was $216,258.00; however, the court accepted a payoff amount of $212,500.00 based on an agreement between appellant and Kenneth Yost.

{¶4} Appellant and appellee were married on September 6, 1991. One child, Kathryn Brown, was born on October 20, 1991. Throughout the marriage appellee continued to work at Avante full-time.

{¶5} The parties separated in January of 2004. Appellee filed a complaint on October 19, 2006, seeking a divorce on the basis of incompatibility and gross neglect of duty. The parties stipulated to several issues relating to the property division and to naming appellee as the residential parent of their daughter.

{¶6} The case proceeded to trial on March 3, 2008, on the issues of the division of the appreciation of the Avante property and child support.

{¶7} The court found that at the time the parties married in 1991, appellant had approximately $54,000.00 in non-marital equity in the Avante property. The court found that when appellee quit working in the business in August, 2004, the property had a fair market value of $400,000.00 and a mortgage payoff of $87,200.00. The court found equity in the property in the amount of $312,800.00. The court gave appellant credit for her $54,000.00 in equity which she had at the time of the marriage and $30,000.00 in non-marital funds which she used to reduce the mortgage during the marriage. The court therefore determined the amount of marital equity to be $228,800.00. The court further held that the real estate had been maintained through the joint efforts of the parties from 1991-2004 which kept the property from losing value and there should be no apportionment of value between active and passive appreciation. The court found the entire equity of $228,800.00 to be marital property.

{¶8} Based on the evidence presented by appellee concerning the amount of money received from Avante which the parties had available to spend during the marriage, the court found that appellee's income from Avante was $56,040.00. The court used this income figure in calculating child support.

{¶9} Appellant assigns seven errors:

{¶10} "I. THE TRIAL COURT ERRED WHEN IT FOUND THAT THERE SHOULD BE NO SEPARATE ALLOCATION OF VALUE OF THE APPRECIATION TO

THE NON-MARITAL EQUITY OF APPELLANT'S SEPARATE REAL PROPERTY AND THAT THERE SHOULD BE NO APPORTIONMENT OF VALUE BETWEEN ACTIVE AND PASSIVE APPRECIATION OF THAT PROPERTY.

{¶11} "II. THE TRIAL COURT ERRED WHEN IT FOUND THAT THE MARITAL EQUITY IN APPELLANT'S SEPARATE REAL PROPERTY WAS $228,800.

{¶12} "III. THE TRIAL COURT ERRED WHEN IT FOUND THE VALUE OF APPELLANT'S SEPARATE PROPERTY AS OF THE DATE OF THE MARRIAGE TO BE $270,000.

{¶13} "IV. THE TRIAL COURT ERRED WHEN IT FOUND THE MORTGAGE BALANCE ON THE APPELLANT'S SEPARATE PROPERTY AT THE BEGINNING OF MARRIAGE WAS $216,000 AND $87,200 AT THE END OF THE MARRIAGE.

{¶14} "V. THE TRIAL COURT ERRED WHEN IT ADMITTED OVER APPELLANT'S OBJECTIONS APPELLEE'S EXPERT APPRAISER'S TESTIMONY CONCERNING HIS LEGAL CONCLUSIONS REGARDING THE APPLICATION OF O.R.C. §3105.171(A)(3)(a)(iii) AND §3105.171(A)(6)(a)(iii).

{¶15} "VI. THE TRIAL COURT ERRED IN FAILING TO MAKE A FINDING THAT APPELLANT WAS UNDEREMPLOYED AND TO CONSIDER FACTORS SET FORTH IN O.R.C. §3119.01(C)(11) BEFORE IMPUTING INCOME TO APPELLANT FOR PURPOSES OF CHILD SUPPORT.

{¶16} "VII. THE TRIAL COURT ERRED IN CALCULATING CHILD SUPPORT BY IMPROPERLY IMPUTING INCOME TO APPELLANT AND FAILING TO IMPUTE INCOME TO APPELLEE FOR APPELLEE'S RENTAL PROPERTY."

I

{¶17} In her first assignment of error, appellant argues that the court erred in finding all of the appreciation on the property to be active appreciation and therefore marital property.

{¶18} Generally, our review of a trial court's division of marital property is governed by an abuse of discretion standard. Martin v. Martin (1985), 18 Ohio St.3d 292, 294, 480 N.E.2d 1112. In order to find an abuse of discretion, we must determine that the trial court's decision was unreasonable, arbitrary or unconscionable and not merely an error of law or judgment. Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219, 450 N.E.2d 1140. In reviewing a determination of whether the increase in value of a business was marital or separate property, the Ohio Supreme Court has held that if there is some competent, credible evidence to support the trial court's decision, there is no abuse of discretion. Middendorf v. Middendorf, 82 Ohio St.3d 397, 401, 696 N.E.2d 575, 1998-Ohio-403.

{¶19} R.C. 3105.171(A)(3)(a)(iii) defines marital property to include "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." However, passive income and appreciation acquired from separate property by one spouse during the marriage is separate property. R.C. 3105.171(A)(6)(a)(iii). "Passive income" is defined as income acquired other than as a result of labor, monetary or in-kind contribution by either spouse.

{¶20} The party seeking to have a particular asset classified as separate property has the burden of proof, by a preponderance of the evidence, to trace the asset to separate property. Peck v. Peck (1994), 96 Ohio App.3d 731, 734, 645 N.E.2d 1300. When either spouse makes a contribution, whether it is monetary, due to labor, or in-kind, that causes an increase in the value of separate property, the increase in the value is active appreciation and deemed marital property. Middendorf, 82 Ohio St.3d at 400. However, appreciation as a result of an increase in the fair market value of separate property due to its location or inflation is considered passive income. Munroe v. Munroe (1997), 119 Ohio App.3d 530, 536, 695 N.E.2d 1155.

{¶21} Appellant cites to several cases in support of her proposition that mere routine maintenance of the property is not the type of contribution that constitutes active rather than passive appreciation. See Cyrus v. Cyrus (November 29, 1995), Lorain App. No. 95CA006040, unreported (regular maintenance such as painting does not cause appreciation to convert from separate to marital property); Henley v. Henley, Wayne App. No. 05CA0053, 2006-Ohio-3336 (no evidence was presented to demonstrate that pole barn constructed on the property increased the value of the property); Meister v. Meister (October 12, 2000), Cuyahoga App. No. 77110, unreported (routine maintenance such as painting, replacing carpeting, and some carpentry work was not the type of labor that converts appreciation from separate to marital property); Neeley v. Neeley (August 28, 1998), Montgomery App. No. 16721, unreported (cleaning and repairs constitute ordinary maintenance that does not convert appreciation to marital property), Smith v. Smith, Franklin App. No. 07AP-717, 2008-Ohio-799 (no testimony was presented as to any time or financial resources the parties invested in the home after the marriage).

{¶22} Appellee relies on Bugos v. Bugos (October 15, 1999), Trumbull App. No. 98-T-0141 (record demonstrated that improvements were made, even though the record was devoid of evidence as to what improvements were done, and the appellant failed to prove by a preponderance of the evidence that the appreciation was separate property); Hyslop v. Hyslop, Wood App. No. WD-01-059, 2002-Ohio-4656 (some evidence supported the court's finding that appreciation was marital where appellee gave appellant money to re-carpet the house and provided labor such as cleaning and doing yard work for 13 years); Bizjack v. Bizjack, Lake App. No. 2004-L-083, 2005-Ohio-7047 (if there is no evidence of the amount of appreciation that is passive, the court should not speculate on the cause of appreciation and conclude without any evidence that some of the appreciation must be passive).

{¶23} Appellant had the burden of proving the appreciation was separate property and presented no evidence that the appreciation was passive. Appellee presented the testimony of Steve Layman, a real estate appraiser, who testified that the building was built for a special use, but is not a "special use" building as the term is defined in the industry. Tr. 21. He testified that the property has features which are special purpose features, such as the gymnastics pits and the dance floor, but...