COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 59029 PATRICIA A. MARTIN, : : Plaintiff-Appellant : : JOURNAL ENTRY vs. : and : OPINION EARL MARTIN, : : Defendant-Appellee : : : DATE OF ANNOUNCEMENT OF DECISION : DECEMBER 5, 1991 CHARACTER OF PROCEEDING : Civil appeal from : Common Pleas Court : Case No. D-190218 JUDGMENT : REVERSED AND REMANDED. DATE OF JOURNALIZATION : _______________________ APPEARANCES: For plaintiff-appellant: Joyce E. Barrett 800 Standard Building Cleveland, Ohio 44113 For defendant-appellee: William F. Snyder One Erieview Plaza Suite 1200 Cleveland, Ohio 44114 -2- NAHRA, P.J.: Appellant, Patricia A. Martin, appeals from the trial court's judgment granting her a divorce from appellee, Earl Martin. For the reasons we set forth below, we reverse and remand. The Martins were married in 1951. Neither brought substantial assets to the marriage. Appellant worked outside the home for about a year and a half until her first child was born. Appellant subsequently cared for the Martins' five children and their home, worked in various family businesses, and assisted her husband in his political career. In the 1960's the Martins bought a small store in Rocky River which they named Martin's Corner. Appellant worked in the store for about three years. Appellee had a succession of jobs in the early years of the marriage. In 1969 appellee ran for the office of Mayor of Rocky River and has been Mayor ever since. The Martins continued to operate Martin's Corner and formed the corporation Martin's Corner, Inc. in 1973. In 1975, their sons J. Kelly and Earl J. joined the business. Martin's Corner, Inc. obtained additional properties surrounding the original small store, demolished the buildings, and built a new larger building. Appellant, who had worked regularly in the small store, stopped working as her sons took over the operation of the larger store. -3- In 1984, appellee and appellant each sold 14 of their 17 shares in Martin's Corner, Inc. to their sons for approximately $8,000.00 per share. They each received promissory notes from both sons payable in the amount of $872.03 per month for a term of 25 years to each parent. In 1982 appellee and his sons formed a partnership known as Martex Land Company in order to develop an office complex in Rocky River. The partnership was involved in other development as well. In 1986, Martex and Martin's Corner, Inc. obtained a $1.575 million loan from Ameritrust. The loan was secured by property owned by Martex, Martin's Corner, Inc., and the residences owned by appellee, appellant, Kelly and Earl J. Martin. The parents, sons and their wives all personally guaranteed the loan as well. When funds became available to Martex in 1988 due to property sales, appellee sold his interest in Martex to his sons for $75,000.00. The Martex sale agreement also provided that Kelly and Earl J. Martin would indemnify appellee from liabilities of the partnership. Appellant, who was not a partner in Martex and therefore not a party to the Martex sale agreement, received no indemnification. On September 30, 1988, the same day that the Martex sale agreement was dated, appellee also entered into an employment contract with Martin's Corner, Inc. The contract provided that appellee would be paid $26,220.00 per year for 25 years or until his death to perform the duties for Martin's Corner that he had -4- been performing all along, plus other duties as agreed. The contract also provided that if Martin's Corner, Inc. were to liquidate its major assets before the end of the contract term, appellee "shall have the right to receive within 90 days of such liquidation up to one-third (1/3) of the net selling price of said asset or assets, which amount will be deducted from the end of the twenty-five (25) year compensation schedule set forth above". On September 29, 1988, the day before both the consulting agreement and the Martex sale agreement were dated, appellee moved out of the marital home. Appellant filed her complaint for divorce on November 7. The case went to trial on October 13, 1989. The issues contested at trial included the valuation of appellee's PERS retirement benefits; the valuation of appellee's consulting contract with Martin's Corner, Inc. and its inclusion as marital property; and the sale of appellee's interest in Martex Land Company. On November 16, the trial court filed its amended journal entry which granted the divorce, valued and divided the marital property, and awarded sustenance alimony and attorney fees. Appellant filed a motion for a new trial, which was denied, and subsequently brought this timely appeal. I. Appellant's second assignment of error reads as follows: THE TRIAL COURT ERRED IN NOT MAKING A FINDING AS TO THE PRESENT VALUE OF APPELLANT'S INTEREST IN THE PUBLIC EMPLOYEES RETIREMENT AND IN ITS "DIVISION" OF SAID ASSET TO APPELLANT. -5- Although pension benefits can be marital assets, case law has not provided a specific rule for their division. In Hoyt v. Hoyt (1990), 53 Ohio St. 3d 177, the Ohio Supreme Court stated as follows: This court is presented with an opportunity to develop guidelines for a trial court to follow when exercising its discretion in considering pension or retirement benefits in a divorce. The general rule is that pension or retirement benefits earned during the course of a marriage are marital assets and a factor to be considered not only in the division of property, but also in relationship to an award of alimony. However, general rules cannot provide for every contingency and no specific rule can apply in every case. The purpose of the guidelines is to provide a fair and equitable division of property and an award of alimony, if applicable, while simultaneously providing the employed spouse with an incentive to continue in the same employment and to enhance his or her retirement benefits. Accordingly, this court holds that when considering a fair and equitable distribution of pension or retirement benefits in a divorce, the trial court must apply its discretion based upon the circumstances of the case, the status of the parties, the nature, terms and conditions of the pension or retirement plan, and the reasonableness of the result; the trial court should attempt to preserve the pension or retirement asset in order that each party can procure the most benefit, and should attempt to disentangle the parties' economic partnership so as to create a conclusion and finality of their marriage. Id. at 178-79. The Legislature has recently dealt with the problem of the distribution of marital property. R.C. 3105.171 eff. 1-1-91. It cites several factors to be considered in making a division of marital property, including the liquidity of the property and the desirability of retaining an asset intact. It further provides for an equal division of marital property, but also provides that if an equal division would be inequitable the -6- court shall "divide it between the parties in the manner the court deems equitable". R.C. 3105.171(C)(1). Appellant's expert testified that the present value of the benefits was $166,868.00. He calculated the value according to appellee's entitlement to receive $1,217.75 per month upon his retirement; mortality tables; and a discount rate. Appellant's expert also testified that appellee would be entitled to receive only $43,532.00 if he elected to withdraw his contributions in a lump sum, or if he were to die in office. Appellee did not submit any expert evidence regarding the present value of the PERS benefits. The trial court found that appellee would be entitled to PERS retirement benefits in the future and that he had contributed $43,532.00 to the fund. It found that the benefits earned by appellee prior to November 1, 1989 were "marital assets and subject to division of property alimony". It ordered appellee to pay appellant 1/2 of the marital portion of his benefits "upon receipt" and provided a formula to be used to calculate the payments. Pursuant to R.C. Chapter 145, appellee can receive his PERS benefits in different ways. Depending on the circumstances, a beneficiary rather than appellee himself could receive the bulk of appellee's benefits after his death. In that case, appellee would not actually "receive" the benefits. According to the terms of the amended journal entry, appellant would therefore not be entitled to half of the marital portion of those benefits. -7- The trial court treated the pension benefits as marital property and attempted to divide them equitably. However, the defendant, because of death or his ability to designate beneficiaries of his pension, may never himself "receive" the pension benefits. Therefore, assigning one-half of what appellee receives to appellant is illusory as an equitable distribution. Accordingly, we reverse and remand to the trial court to re- evaluate all of the marital assets and to make an equitable distribution thereof. Assigning a present value to pension benefits is not always appropriate. See, e.g., Blair v. Blair (1983), 11 Ohio App. 3d 117, 119. In this case, however, the trial court should have assigned a present value, due to the illiquidity of the asset; the unavailability of a QDRO; the number of options appellee has with regard to receipt of the pension benefits; and the availability of other assets for distribution. Since the only evidence of present value is appellant's $166,868.00 figure, that amount must be assigned. However, because of the contingent and speculative nature of the ultimate benefits to be derived from the PERS pension, the presumption of equal division will not apply to that asset. In making its equitable distribution of the pension benefits together with the other marital assets, the trial court must consider the factors identified supra, and any other factors bearing on an equitable distribution. -8- II. Appellant's ninth assignment of error reads as follows: THE TRIAL COURT ERRED IN ITS FINDING THAT ONLY $100,000.00 OF THE UNREBUTTED $300,000.00 FAIR MARKET VALUE OF APPELLEE'S INTEREST IN THE MARTIN'S CORNER, INC. EMPLOYMENT CONTRACT REPRESENTED MARITAL PROPERTY. Appellant argues that the entire appraised value of the appellee's consulting contract with Martin's Corner, Inc. should have been considered to be a marital asset by the court, because the contract consisted of payment for past services, with the total amount guaranteed to be paid by the asset sale provision. Appellant's expert testified that the contract could be interpreted as a gift from the sons to their father, due to the family relationship, lack of specified duties, intent to compensate for past duties, and provision to pay appellee one- third (1/3) of the selling price of the corporation's assets, if sold prior to the end of the contract term. However, appellant's expert also testified that the contract could be interpreted in a number of ways. Appellee testified that the consulting contract was intended to cover future services. Appellee also testified that the contract was intended to compensate him for his work over the past twenty years, and to provide for his retirement. Both appellee and his son, Earl J., testified that they understood the asset sale provision of the contract to mean that, in the event of an asset sale, and without regard to the price paid, appellee would be paid no more than the balance due to him on the contract -9- (i.e., 25 times $26,220.00 minus amounts already paid). They also stated that appellee would not be paid if he did not perform the consulting services, and that appellee's estate would receive nothing upon his death. They testified that the services appellee performed under the contract included bookkeeping, check writing, obtaining refinancing, obtaining tenants, and some physical labor. The trial court found that the contract was not just a contract for future consulting services. It accepted appellant's $300,000.00 appraisal, but found that the total amount was not guaranteed to be paid. The court stated in its entry that it would consider two-thirds of the payments as "Compensation for services performed which will be subject to consideration for support alimony and the remaining one-third (1/3) shall be considered as a property right which will be subject to [appellant's] claims for division of property alimony." The evidence at trial indicated that the contract was intended as compensation for both past and future services. There was also evidence that the total amount of the contract was not guaranteed. The court did not abuse its discretion in assigning one-third (1/3) of the appraised value of the contract as marital property. Appellant's ninth assignment of error is without merit. -10- III. Appellant's fourth, fifth, and seventh assignments of error all relate to Martex Land Company and will be addressed together. They read as follows: THE TRIAL COURT ERRED IN FAILING TO SET ASIDE THE PURPORTED "SALE" OF APPELLEE'S INTEREST IN MARTEX LAND COMPANY. THE TRIAL COURT'S FINDING AS TO THE VALUE OF APPELLEE'S INTEREST IN MARTEX LAND COMPANY WAS AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE AND IS CONTRARY TO LAW. THE TRIAL COURT ERRED IN FAILING TO HOLD APPELLANT HARMLESS FROM ANY LIABILITY ON THE MARTEX LAND COMPANY AND MARTIN'S CORNER, INC. NOTE TO AMERITRUST IN THE SUM OF $1,575,000.00. The trial court made the following findings with regard to Martex Land Company in its amended journal entry: [Appellee] sold his one-third interest in a partnership known as Martex Land Company to his two (2) partners, his sons Earl J. Martin and J. Kelly Martin. [Appellant] contends that the [appellee's] interest in the Martex Land Company properties was worth more than the $75,000 contract sale price. Unfortunately, the appraisal used by the Plaintiff is founded on an incorrect interpretation of the Martex Land Company rent rolls. When the correct rent figures are inserted into the formulas used by the two appraisers, a figure close to that used by the parties to such buy-out will be arrived at. Based on such finding that Court finds no reason to set aside the Defendant's sale of his interest in Martex Land Company. As stated by the court, the evidence at trial indicated that appellant's appraisers used incorrect rental figures in their appraisals. Appellee testified that the $450,000.00 figure used for goodwill was also too high. Appellant and Earl J. Martin testified that Earl J. and J. Kelly Martin had run the -11- store since 1975, such that the store's goodwill was the product of the sons' efforts. Earl J. Martin also testified that he believed the $75,000.00 price paid to appellee was too high, and that it represented a compromise. Earl J. and appellee also testified that the methods used by appellant's appraisers were essentially correct and reasonable, and that the methods yield an appraisal close to $75,000.00 when the correct rental values are used. Based on the above evidence, the trial court reasonably concluded that appellee did not deliberately undersell his share of Martex Land Company. Appellant's fifth assignment of error is without merit. Appellant also claims that the Martex sale was not a sale, because appellee continued to hold himself out as a partner of Martex. While the evidence indicated that appellee conducted a number of transactions for Martex after the date of the Martex sale contract, there was also evidence that appellee was merely completing deals begun prior to the sale, and was performing duties for his sons pursuant to the consulting contract which comprehended Martex work also. Appellant's fourth assignment of error is without merit. Appellant also claims that she should have been indemnified from liability on the Ameritrust loan. When the loan was originally taken out by Martex and Martin's Corner, appellee, appellant, Earl J., and J. Kelly Martin and their wives all personally signed the loan and also used their residences as -12- security. When appellee sold his interest in Martex, the agreement included an indemnification clause "holding appellee harmless from all debts and liabilities of the old partnership". Since appellant was not a partner and therefore not a signatory to the sale agreement, she did not receive indemnification. Appellant testified that she believed she was a partner. However, there was also evidence that the Martex transactions were done with her knowledge, and often in her presence. Earl J. testified that his mother was not made a partner in Martex because he, his brother and appellee were the only ones doing the work for Martex, in contrast to Martin's Corner. He also testified that none of the wives were partners in Martex, and that Martex would never hold appellant liable on the loan. Martin's Corner, Inc., Martex Land Company and its principals, Kelly and Earl J. Martin, remain the primary obligors on the loan. If appellant were to receive indemnification from her sons, and if they were unable to satisfy their primary liability to Ameritrust at some future time, they would also be unable to indemnify appellant. Since appellant's exposure is no different with or without indemnification, the trial court did not err in not ordering appellant to be indemnified. Appellant's seventh assignment of error is without merit. IV. Appellant's first assignment of error reads as follows: THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION IN ITS AWARD OF PROPERTY DIVISION TO THE APPELLANT. -13- In Cherry v. Cherry (1981), 66 Ohio St. 2d 348, syllabus, the court held as follows: 1. There is no presumption, rebuttable or irrebuttable, that marital property be divided equally upon divorce; rather a potentially equal division should be the stating point of the trial court's analysis before it considers the factors listed in R.C. 3105.18 and all other relevant factors. (Wolfe v. Wolfe, 46 Ohio St. 2d 399, explained.) 2. A Court of Common Pleas has broad discretion to determine what property division is equitable in a divorce proceeding. The mere fact that a property division is unequal, does not, standing alone, amount to an abuse of discretion. Absent such an abuse, this court may not substitute its judgment for that of the trial court. See, e.g., Martin v. Martin (1985), 18 Ohio St. 3d 292, 295. Appellant correctly argues that the starting point of property division is an even division, after which the R.C. 3109.18 factors must be applied. However, appellant also incorrectly claims that she received substantially less than that. Appellant arrives at that conclusion by including assets the trial court did not, and assigning the wrong values to other included assets. Appellant includes $166,868.00 as a marital asset. This figure represents the present value of appellee's PERS benefits, according to appellant's expert. As we discussed in subsection I, supra, the trial court refused to assign a present value to the benefits and ordered appellee to pay appellant one-half of -14- the marital portion of the benefits when he actually receives them. Although the trial court's deposition was in error, appellant incorrectly concluded that the trial court awarded appellee $166,868.00 of marital assets. Appellant also includes $215,000.00 as the value of appellee's one-third interest in Martex Land Company. We addressed appellee's Martex interest in subsection III, supra. The trial court acted within its discretion in refusing to set aside the 1984 sale, and the appellant should not have included the $215,000.00. Appellant includes another $300,000.00 as the value of appellee's consulting contract with Martin's Corner, Inc. We discussed that asset in subsection II, supra, and concluded that the trial court properly included only one-third of that amount, or $100,000.00, as marital property. Appellant lists the value of furniture in the marital home at $3,500.00, instead of the $10,000.00 listed by the trial court. The evidence at trial indicated that the furniture, while used, furnished the entire home in a comfortable fashion. Appellee testified that it cost him $3,500.00 to partially furnish his smaller condominium. The trial court reasonably concluded that the furniture in the marital home should be valued at $10,000.00. Appellant lists a $2,500.00 National City Bank account "taken by [appellee] at the time of the divorce filing". The evidence at trial indicated that the $2,500.00 went to pay both -15- appellant's and appellee's living expenses at that time, including the mortgage on the marital home. The trial court did not err in excluding the account from the marital assets. When the correct values are used, the trial court's property division is as follows: Property awarded to appellant: Marital residence: $ 93,500.00 Furniture in marital residence: 10,000.00 One-half of Ameritrust bank account: 5,150.00 One-half of loan due from Martin's Corner, Inc./1\: 10,000.00 Appellant's note from J. Kelly Martin: 51,000.00 Appellant's note from Earl J. Martin: 32,000.00 Appellee's note from J. Kelly Martin: 51,000.00 Appellee's note from Earl J. Martin: 32,000.00 1984 station wagon: 6,250.00 TOTAL: $290,900.00 Property awarded to appellee: Gasser Boulevard home: $ 65,000.00 Furniture bought by appellee: 3,500.00 Appellee's tools and sporting equipment: 3,200.00 Appellee's half interest in dock and boat: 17,500.00 Appellee's 401(K) plan: 13,230.87 Cemetery plots: 500.00 1988 station wagon: 9,525.00 Appellee's three shares of Martin's Corner, Inc.: 36,960.00 Appellant's three shares of Martin's Corner, Inc.: 36,960.00 One-third of the $300,000 value of appellee's consulting contract: 100,000.00 TOTAL: $286,375.87 /1\ The court stated that it awarded the full amount of the $10,300 Ameritrust account and the $20,000 loan due from Martin's Corner, Inc. to appellant to assist her in paying her attorneys fees, instead of dividing them evenly. Accordingly, only half of those amounts is included as property division alimony. -16- According to these values, and not including the PERS benefits discussed supra, the court's division of marital assets was even and not inequitable. Appellant's first assignment of error is without merit. V. Appellant's sixth assignment of error reads as follows: THE TRIAL COURT ERRED IN FAILING TO AWARD ANY PORTION OF APPELLANT'S ATTORNEY FEES TO BE PAID BY APPELLEE AS ADDITIONAL ALIMONY. In Swanson v. Swanson (1976), 48 Ohio App. 2d 85, paragraphs one and two of the syllabus, the court stated that attorney fee awards are committed to the sound discretion of the trial court, and that where evidentiary conflicts would permit reasonable minds to reach different conclusions, the trial court's decision must be affirmed. It also stated that "[i]n making an award of attorney fees as alimony, consideration must be given to the reasonableness of the attorney fees and to the special criteria used in the granting of an alimony award". Id. at 90. Furthermore, "it is recognized that domestic relations cases tend to consume a considerable amount of time and that counsel must generally realize that he cannot always expect full compensation for the time so consumed" (citations omitted). Id. at 92. Appellant claims that no portion of the approximately $45,000.00 of attorney fees she sought was awarded by the trial court. However, the court's journal entry states as follows: -17- The Court further finds that the Plaintiff has requested an award of $44,764.73 for her attorney fees and expenses. Defendant has indicated that his attorney fees amounted to $9,181.68 prior to the commencement of trial. Clearly such fees will now exceed $20,000. Normally an equitable division of property would require that the parties equally divide the Ameritrust account and the $20,000 (plus interest) note from Martin's Corner, Inc. To assist Plaintiff in the payment of her attorney fees and expenses the Plaintiff shall be awarded the entire interest in such assets. See also subsection IV, supra. The Ameritrust account referred to by the court was valued at $10,300.00. According to the entry, one-half of the $10,300.00 and the $20,000.00, or $15,150.00, was awarded to appellant as attorney fees. Appellee's cross-examination of appellant's counsel and her expert adduced testimony from which reasonable minds could conclude that appellant's attorney fees were unreasonable. The testimony suggested that appellant obtained more appraisals than were necessary, and that her experts spent an excessive amount of time reviewing documents. The court also noted that appellant's attorney fees were more than twice as much as appellee's fees. Under these circumstances, the trial court's award of $15,150.00 for attorney fees did not constitute an abuse of discretion. Appellant's sixth assignment of error is without merit. VI. Appellant's third assignment of error reads as follows: -18- THE TRIAL COURT'S AWARD OF ALIMONY TO THE APPELLANT WAS AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE AND CONSTITUTED AN ABUSE OF DISCRETION. Judgments supported by some competent, credible evidence going to all the essential elements of the case will not be reversed by a reviewing court as being against the manifest weight of the evidence. Seasons Coal Co. v. Cleveland (1984), 10 Ohio St. 3d 77, quoting C.E. Morris Co. v. Foley Construction Co. (1978), 54 Ohio St. 2d 279. Abuse of discretion connotes an unreasonable, arbitrary or unconscionable attitude by the court, not merely an error of judgment. Blakemore v. Blakemore (1983), 5 Ohio St. 3d 217, 219. The trial court awarded sustenance alimony to appellant as follows: The Court further finds that the Plaintiff contends that she requires support alimony in the amount of $3,140 per month. After considering the factors set forth O.R.C. 3105.18 the court finds that a more reasonable figure for Plaintiff's support would be $2,500. To meet this need the Plaintiff must apply her income which is or should be available to her. To assist the Plaintiff in meeting her support needs the Defendant shall also contribute the sum of $900 per month. Said payments shall continue until further order of Court, or the death of either party, or the remarriage of the Plaintiff, whichever shall first occur. To insure payment of such support the Defendant shall designate the Plaintiff as irrevocable beneficiary of his term insurance policy with The Equitable. Appellant argues that this sustenance alimony award constitutes only 16% of appellant's income, and that her expenses were approximately $3,500.00 per month. -19- In the Kaechele case, see supra, paragraph one of the syllabus, the court held that "[i]n making a sustenance alimony award, the trial court must consider all the factors listed in R.C. 3105.18(B) and not base its determination upon any one of those factors taken in isolation". The court also stated that "[s]ustenance alimony is based on need". Id. at 95. The evidence at trial indicated that appellant lived modestly during the marriage. Appellant's testimony also indicated that her expenses were substantially less than $3,500.00 per month. She testified that she opened a bank account in January, 1989, and saved $2,200.00 by September. During that time, appellee paid the mortgage of $1,200.00 per month. Appellant received only $870.00 per month until June, and then received $2,070.00 per month. In addition to saving the $2,200.00, she repaid $2,640.00 borrowed from a friend, and paid approximately $3,000.00 to the Center for Holistic Energy Management and Applied Metaphysics. Therefore, the trial court did not abuse its discretion in finding that appellant's actual needs were closer to $2,500.00 and ordering appellee to pay $900.00 per month towards her support. Appellant's third assignment of error is without merit. VII. Appellant's eighth assignment of error reads as follows: THE TRIAL COURT ERRED IN OVERRULING APPELLANT'S MOTION FOR A NEW TRIAL. -20- Appellant claims in part that her motion for a new trial should have been granted because of the trial court's disposition of appellee's PERS benefits. We addressed the court's disposition of appellee's PERS benefits in subsection I, supra, finding that the trial court's disposition was in error. Therefore, the trial court should have granted appellant's motion. Instead of a new trial, we are remanding the case with instructions to the trial court to correct this error, see subsection I, supra. Appellant's eighth assignment of error is moot. Reversed and remanded. -21- This cause is reversed and remanded for proceedings consistent with this opinion. It is, therefore, considered that said appellant recover of said appellee her costs herein. It is ordered that a special mandate be sent to said court 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. FRANCIS E. SWEENEY, J., and PATTON, J., CONCUR. JOSEPH J. NAHRA PRESIDING JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate journalization, at which time it will become the judgment and order of the court and time period for review will begin to run. .