Monica L. Webb v. Larry S. Webb
| Decision Date | 30 November 1998 |
| Docket Number | CA97-09-167,98-LW-5489 |
| Parties | MONICA L. WEBB, Plaintiff-Appellant, v. LARRY S. WEBB, Defendant-Appellee CASE |
| Court | United States Court of Appeals (Ohio) |
Fred Miller, 246 High Street, Hamilton, Ohio 45011, for plaintiffappellant
Morgenstern & Gates Co., L.P.A., Roger S. Gates, 300 High Street, Suite 604, Hamilton, Ohio 45011, for defendant-appellee
Plaintiff-appellant, Monica L. Webb ("Monica") appeals the judgment entry and decree of divorce of the Butler County Court of Common Pleas, Domestic Relations Division, in her divorce from defendant-appellee, Larry S Webb ("Larry"). The trial court determined that Monica is solely responsible for repaying her student loans and that she must also pay one half of the back taxes and penalties incurred during the marriage. We affirm.
Larry and Monica Webb were married on August 11, 1984, and they had one child, Hannah, who was born on April 21, 1988. Both were students at Miami University in Oxford, Ohio. Larry graduated in 1985, earning a bachelor's degree in architecture. Monica graduated in 1987. Larry's expenses were paid by his parents, while Monica's expenses were paid through the marriage.
After Larry graduated, he began a five-year internship with an architectural firm; he worked full-time, earning about $35,000 per year. Larry also operated an architectural side business which earned an additional $20,000 per year. Due to problems arising from his doing design work on the side without a license, Larry was required to repeat the five-year internship in 1990. He received his license as an architect 1995, and now works for an architectural firm earning $49,500 per year. His new position required that he abandon his side business.
After Monica graduated, she obtained a real estate license, and later, a paralegal degree, both of which were paid for through the marriage. Using these degrees and licenses, she earned from $5,000 to $12,000 per year. In 1992, she enrolled in law school in Kentucky and received her degree in 1996. She paid for her law degree with loans totaling $60,000. These loans were exclusively in Monica's name. Since graduating, Monica has engaged in a private law practice, and is expected to gross about $50,000 per year.
During the marriage, the Webbs incurred a substantial debt owed to the Internal Revenue Service ("IRS"). This tax debt resulted from the Webbs' failure to pay quarterly taxes on Larry's side business. At the time of the divorce, the tax debt was about $27,500, of which over $10,000 was penalties and interest. Most of this debt was incurred from 1992 through 1995, when Monica was handling the family finances. Beginning in 1991, Monica began filing separate tax returns, which meant that the family's overall tax obligations were increased by $8,155 for the years 1992 through 1995. In 1993, Monica opened a separate bank account for her personal use.
In February 1996, the couple separated. Within a few months, Monica obtained her law degree, and on July 17, 1996, she filed a complaint for divorce. The case was heard before the Butler County Court of Common Pleas, Domestic Relations Division, on April 16, 1997. The trial court issued a decision on May 6, 1997, and its final judgment entry and decree of divorce was filed on August 6, 1997. Monica timely appealed, raising two assignments of error.
In her first assignment of error, Monica argues that the student loans are a marital debt, and, as a result, some portion of the loan debt should have been awarded to Larry. In addition, she argues that equity would demand that Larry pay some of this debt because she delayed her higher education while he obtained his professional degree with her support. Larry responds that the loans are not a marital debt, and, even if they are considered a marital liability, he should not be burdened with any responsibility for repaying Monica's student loans.
When dividing the marital estate, a trial court possesses broad discretion to effect an equitable and fair division. Cherry v. Cherry (1981), 66 Ohio St.2d 348. Although its discretion is not unlimited, the trial court has authority to do what is necessary to reach an equitable result. Kunkle v. Kunkle (1990), 51 Ohio St.3d 64, 67. A reviewing court should measure the trial court's adherence to this principle, but it should not substitute its judgment for that of the trier of fact unless, considering the totality of the circumstances, it finds that the trial court abused its discretion. Kaechele v. Kaechele (1988), 35 Ohio St.3d 93, 94. "Abuse of discretion" connotes more than just an error of law or judgment; it implies that the court's attitude is "unreasonable, arbitrary or unconscionable." Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219.
R.C. 3105.171(C)(1) provides that an equal division of the marital property is the starting point for the distribution of the marital estate. Even so, the final division must only be equitable, not equal. Krisher v. Krisher (1992), 82 Ohio App.3d 159, 163. When making a division of the marital property, the trial court shall consider, among other things, the assets and liabilities of the parties. R.C. 3105.171(F)(2). R.C. 3105.171(C)(3) mandates that the trial court make an equitable division of the marital property before considering any award of spousal support. Whether the division of assets and liabilities is equitable depends upon more than whether the parties receive equal shares of the marital estate. The court may also look to other factors, such as the ages of the parties, the length of the marriage, the relative education of the parties, and whether one spouse contributed to and supported the other in pursuit of a higher education. Verplatse v. Verplatse (1984), 17 Ohio App.3d 99, 102.
An educational degree, such as a law degree, is not marital property subject to division. Stevens v. Stevens (1986), 23 Ohio St.3d 115, syllabus. Such a degree is personal to the spouse earning it and cannot easily be assigned a value. The degree and the future earning capacity arising from the degree, however, may be considered only when determining the amount and length of spousal support to be granted in a given case. Id. Ohio courts have yet to address whether student loans incurred by one spouse during the course of a marriage in pursuit of such degree are to be considered marital debt subject to equitable division pursuant to R.C. 3105.171.
Courts in seven states have addressed the issue, and all but one have determined that student loans incurred by one spouse during the marriage are a marital debt. The lone dissenting state is Kentucky. In Van Bussum v. Van Bussum (1987), 728 S.W.2d 538, the Court of Appeals of Kentucky held that loans incurred in pursuit of an educational debt are borne entirely by the spouse taking out the loans. The court reasoned that the party taking out the loans would reap the benefits of the loans by obtaining the degree. The court believed that the loans should be separate property because the degree is separate property. Id. at 539.
The remaining six state courts that have determined the status of educational loans incurred during a marriage have held that the loans are marital liabilities subject to equitable division. In re Marriage of Speirs (Colo.App.1998), 956 P.2d 622; In re Marriage of Roberts v. Roberts (Ind.App.1996), 670 N.E.2d 72; In re Marriage of Lopez (1992), 255 Mont. 238, 841 P.2d 1122; Forristall v. Forristall (Okla.App.1992), 831 P.2d 1017; In re Marriage of Tasker v. Tasker (Minn.App.1986), 395 N.W.2d 100; Bourdon v. Bourdon (1979), 119 N.H. 518, 403 A.2d 433.
Speirs, 956 P.2d 622, is both on point and the most comprehensive of the above decisions. In Speirs, the parties were divorced after the wife had obtained her law degree, and the trial court awarded the loan debt to the wife. The trial court found that the wife's student loans were a marital debt to be considered when making an equitable division of the marital estate. Both parties appealed. The husband argued that the wife was given greater resources to pay the debt, which resulted in his share of the marital estate being smaller. The wife argued that the husband should be partly responsible for the loans.
Speirs provides an in-depth discussion of why student loans should be considered marital debt. When a spouse pursues a higher education during the marriage, it represents a common goal of the parties to increase their economic...
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