Polacheck v. Polacheck

• Decision Date: 31 December 2013
• Docket Number: 26552.,Nos. 26551,s. 26551
• Citation: 5 N.E.3d 1088
• Parties: David Mark POLACHECK, Appellee v. Amy POLACHECK, Appellant.
• Court: Ohio Court of Appeals

5 N.E.3d 1088

David Mark POLACHECK, Appellee

v.Amy POLACHECK, Appellant.

Nos. 26551, 26552.

Court of Appeals of Ohio, Ninth District, Summit County.

Dec. 31, 2013.

Eric E. Skidmore, Attorney at Law, Akron, for Appellant.

Leslie Graske, Attorney at Law, Akron, for Appellee.

BELFANCE, Judge.

{¶ 1} Appellant, Amy Polacheck (“Wife”), appeals from her divorce decree in the Summit County Court of Common Pleas, Domestic Relations Division. The trial court incorporated the parties' agreement as to child and spousal support and the division of most of their property and debts but allocated sole responsibility to Wife for the student-loan debt incurred during the marriage. Because the trial court failed to identify and apply appropriate equitable considerations to support its allocation of this marital debt, this Court reverses that aspect of the judgment and remands the matter to the trial court.

I.

{¶ 2} Wife married David Polacheck (“Husband”) on December 28, 1996, and three children were born during their marriage. Husband, a business executive who earned an annual six-figure salary plus bonuses, provided the primary financial support for the family throughout the marriage while Wife took care of the household and the children. During the later years of the marriage, Wife attended nursing school and incurred approximately $40,000 in student-loan debt. Wife received her nursing degree shortly before the marriage ended and secured employment with an annual salary of $58,000.

{¶ 3} Husband moved out of the marital home during May 2010. Shortly afterward, Wife's boyfriend moved into the home with his two children, which created additional strain on the relationship between Husband and Wife. On May 17, 2011, Husband filed a complaint for divorce. During the next year, the trial court issued temporary orders pertaining to various issues including child support and spousal support for Wife. Wife had also alleged that the paternal grandfather posed a threat to the children, so a temporary order was issued that the children have no contact with him.

{¶ 4} Despite the strain between the parties, they were able to reach an agreement through mediation on most issues before the court, including child support, a shared parenting plan, and that Wife would receive spousal support of $1,000 per month for one year. The parties were unable to agree on the allocation of the student-loan debt as well as whether the children should be allowed to have contact with the paternal grandfather. The matter proceeded to a hearing on those contested issues only, but only the allocation of the student-loan debt is at issue on appeal. The parties did not dispute that Wife had taken out student loans during the marriage, such that they were marital debt, or that the outstanding balance on the loans was approximately $40,000. Their dispute at the hearing focused on whether some of the proceeds were used for family vacations in addition to Wife's schooling.

{¶ 5} The trial court allocated the student-loan debt solely to Wife, without any offset in the overall division of property and debts. Wife appeals from the final divorce decree and raises four assignments of error.

II.ASSIGNMENT OF ERROR I

THE TRIAL COURT ABUSED ITS DISCRETION AND ERRED AS A MATTER OF LAW IN THE ENTRY OF ITS FINDING [AND] ORDER DATED MAY 2, 2012 IN ALLOCATING RESPONSIBILITY FOR THE PAYMENT OF APPELLANT'S STUDENT LOANS INCURRED DURING THE MARRIAGE SOLELY TO APPELLANT.

{¶ 6} Wife's first assignment of error is that the trial court erred in allocating solely to her the student-loan debt incurred during the marriage. The parties agreed that the student-loan debt of approximately $40,000 was a marital debt but disputed how it should be allocated. Wife argued that it was equitable to allocate the debt equally between the parties, while Husband argued that the court should allocate sole responsibility for the student-loan debt to Wife. Although we do not reach the merits of what constitutes an equitable division of the debt under the circumstances of this case, we agree with Wife that the matter should be reversed and remanded to the trial court for further consideration of the equitable division of the debt.

{¶ 7} As with the division of marital property, the equitable division of marital debt is a matter subject to the exercise of the trial court's discretion. Accordingly, we review the trial court's decision for an abuse of discretion. An abuse of discretion implies that the court's attitude is unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983).

{¶ 8} The authority of a divorce court to order a division of a divorcing couple's property and debts, as well as to provide for ongoing financial sustenance, is derived from the statutory law. See Wolfe v. Wolfe, 46 Ohio St.2d 399, 414, 350 N.E.2d 413 (1976). While property division is specifically addressed in the Ohio Revised Code, marital debt is not. With respect to property division, R.C. 3105.171(C)(1) requires an equal division of marital property unless the trial court finds an equal division to be inequitable. In addition, the statute contains specific considerations in achieving the equitable division of marital property. SeeR.C. 3105.171(F). By contrast, the Ohio legislature has not specifically addressed the allocation of marital debt. As a result, some courts have equated marital debt with property and applied R.C. 3105.171(C)(1)'s presumption of equal division unless such would prove inequitable. See, e.g., Easterling v. Easterling, 2d Dist. Montgomery No. 18523, 2001 WL 369734, *5 (Apr. 13, 2001).

{¶ 9} In this case, it appears that the trial court's allocation of the student-loan debt was premised entirely on the presumption that Wife was the sole beneficiary of her degree and, as such, she should shoulder the entire marital debt. The issue presented in this case is what considerations should inform the trial court's exercise of its discretion when equitably dividing marital student-loan debt.

Statutory Background

{¶ 10} Prior to September 1974, the authority of the domestic relations court to divide the parties' property and finances upon divorce was extremely broad with few mandatory factors to guide the court's discretion. The court's authority to divide property and to award what is now called “spousal support” fell under the statutory provision for “alimony.” The trial court had authority to award alimony as it deemed “reasonable” with “due regard” to: “the property which came to either by their marriage[;] the earning capacity of either[;] and the value of real and personal estate of either[.]” Former R.C. 3105.18; Woodworth v. Woodworth, 8th Dist. Cuyahoga No. 35506, 1977 WL 201176, *2 (Feb. 3, 1977).

{¶ 11} In 1970, the American Law Institute published the Uniform Marriage and Divorce Act, with a stated purpose of making uniform divorce laws across the country. Uniform Marriage and Divorce Act, Section 103 (1970). Of relevance here, the Uniform Act set forth specific factors that a trial court must consider in its disposition of property upon divorce, as well as factors to be considered in awarding ongoing financial support to either spouse. A primary factor to be considered in the division of property was the “economic circumstances of each spouse at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for a reasonable period to the spouse having custody of any children.” Uniform Marriage and Divorce Act, Section 307 [Alternative B] (1970).

{¶ 12} During the 1970s, many states enacted property distribution statutes that adopted the Model Act's equitable factors to guide the trial court's discretion when distributing property between the spouses. See, e.g.,Iowa Code Ann. 598.21; Mahoney, The Equitable Distribution of Marital Debts, 79 UMKC L.Rev. 445, 445 (2010). Many states included the “economic circumstances” factor almost verbatim. See, e.g.,Ind.Code 31–15–7–5; 19–A Me.Rev.Stat.Ann., Section 953(1)(C); Colo.Rev.Stat.Ann., Title 19–A, 14–10–113(C).

{¶ 13} Effective September 23, 1974, the Ohio General Assembly amended R.C. 3105.18 to place specific constraints on the trial court's broad authority to award alimony. Eleven specific factors, similar to those set forth in the Model Act, were added to the statute, which was further amended to provide that the trial court “shall consider” each of the relevant factors before awarding alimony. Former R.C. 3105.18(B). Ohio did not adopt a separate provision pertaining to property division, but the distribution of property remained part of the alimony award. See, e.g., Cherry v. Cherry, 66 Ohio St.2d 348, 352, 421 N.E.2d 1293 (1981) (explaining that “alimony” was composed of two separate elements: “a division of the marital assets and liabilities” and “periodic payments for sustenance and support.”). Consequently, the 11 equitable factors pertaining to an award of “alimony” encompassed factors similar to those of the Uniform Marriage and Divorce Act pertaining to an award of support as well as for the disposition of property. See former R.C. 3105.18; Uniform Marriage and Divorce Act, Sections 307 and 308 [Alternative B] (1970).

{¶ 14} Because Ohio's alimony statute failed to address the practical realities of dividing certain types of property, such as retirement benefits, the Ohio Supreme Court fashioned additional guidelines that the trial court should consider. See, e.g., Hoyt v. Hoyt, 53 Ohio St.3d 177, 559 N.E.2d 1292 (1990), paragraphs one and two of the syllabus (recognizing that dividing retirement benefits involved many considerations that were not then addressed by the statute such as whether those benefits were vested, the desirability of keeping the asset intact, etc.).

{¶ 15} Shortly after Hoyt was decided, the Ohio General Assembly enacted a property division statute that specifically ...