COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 59189 PATRICIA Z. MCNAMEE : : : PLAINTIFF-APPELLANT : JOURNAL ENTRY : v. : AND : BRIAN F. MCNAMEE : OPINION : : DEFENDANT-APPELLEE : DATE OF ANNOUNCEMENT OF DECISION: OCTOBER 24, 1991 CHARACTER OF PROCEEDING: Civil appeal from Domestic Relations Court, No. D-107961. JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellant: John F. Seelie, Esq. 800 Baker Building 1940 East Sixth Street Cleveland, OH 44114 For Defendant-Appellee: James R. Skirbunt, Esq. McDonald, Hopkins & Hardy 1010 Huntington Building Cleveland, OH 44115 -2- MATIA, P.J.: Plaintiff-appellant, Patricia Z. McNamee, appeals from a judgment of the Cuyahoga County Court of Common Pleas, Domestic Relations Division, which interpreted the language of a separation agreement that required the defendant-appellee, Brian McNamee, to reimburse the appellant for any tax liability associated with the receipt of alimony payments. The appellant's appeal is not well taken. I. THE FACTS A. THE DISSOLUTION OF MARRIAGE AND THE SEPARATION AGREEMENT On November 5, 1979, the appellant and the appellee filed a joint petition for dissolution of marriage with the Domestic Relations Division of the Cuyahoga County Court of Common Pleas. The petition for dissolution included a separation agreement as executed by the appellant and the appellee which provided for the payment of spousal alimony and child support, the division of marital assets and custody of the four minor children. In addition, the separation agreement provided that the appellee would reimburse the appellant with regard to the tax liability associated with the receipt of alimony and child support. B. APPELLEE REQUIRED TO REIMBURSE APPELLANT FOR TAX LIABILITY On December 10, 1979, the trial court granted the appellant's and the appellee's petition for dissolution of marriage and ordered that the appellant's and the appellee's marriage be dissolved. The trial court's judgment of dissolution also incorporated the separation agreement which provided that -3- the appellee reimburse the appellant for any tax liability associated with the receipt of alimony and child support. Following the dissolution of marriage, the appellee reimbursed the appellant for the tax liability associated with alimony and child support payments for the years of 1981, 1982, 1983 and 1984. The appellee, however, refused to reimburse the appellant for the claimed tax liability as determined by the appellant for the year of 1985. The appellant claimed a tax liability of $15,593 while the appellee independently determined that his reimbursement should only involve the amount of $8,145. C. APPELLANT FILES MOTION TO SHOW CAUSE BASED UPON APPELLEE'S FAILURE TO REIMBURSE TAX LIABILITY AND TRIAL COURT'S INTERPRETION OF SEPARATION AGREEMENT On September 16, 1986, the appellant filed a motion to show cause which was premised upon the failure of the appellee to reimburse the appellant for her tax liability as provided by the separation agreement. On December 27, 1989, the trial court denied the appellant's motion to show cause on the basis that the separation agreement was vague and required interpretation by the trial court. The trial court interpreted the separation agreement with regard to the appellee's requirement to reimburse the appellant for any tax liability associated with the receipt of alimony and child support and implemented a formula which involved a "percentage of alimony installment per year as against the Plaintiff's [appellant's] total adjusted gross income...." -4- D. THE APPELLANT'S TIMELY APPEAL Thereafter, the appellant timely brought the instant appeal from the judgment of the trial court which interpreted the separation agreement with regard to the method of calculating the amount of tax liability reimbursement owed by the appellee to the appellant. II. THE APPELLANT'S SOLE ASSIGNMENT OF ERROR The appellant's sole assignment of error is that: "THE COURT ERRED BY REWRITING THE SEPARATION AGREEMENT RATHER THAN ENFORCING THE CLEAR UNAMBIGUOUS TERMS THEREOF." A. ISSUE RAISED: TRIAL COURT ERRED IN INTERPRETING THE SEPARATION AGREEMENT WITH REGARD TO TAX LIABILTY CALCULATION The appellant, in her sole assignment of error, argues that the trial court erred as a result of interpreting the separation agreement with regard to the formula to be used to calculate the amount of tax liability that the appellee would reimburse to the appellant. Specifically, the appellant argues that the separation agreement was clear and unambiguous as to method of calculation to be used in determining the amount of tax liability reimbursement to the appellant. The appellant's sole assignment of error is not well taken. B. THE SEPARATION AGREEMENT AND THE APPELLEE'S TAX LIABILITY The separation agreement, entered into between the appellant and the appellee, provided as follows with regard to the appellee's reimbursement of the appellant as to her tax liability: -5- "III. SEPARATE MAINTENANCE AND SUPPORT FOR THE WIFE AND CHILDREN: "The Husband shall pay to the Wife for her separate maintenance and support and for the support of the children of the parties the sum of Two Thousand Dollars ($2,000.00) per month, commencing on January 1, 1980, and the first day of each month thereafter for a period of one hundred fifty-six (156) consecutive months, or until the Wife dies, remarries or cohabitates with an adult male for more than thirty (30) consecutive days, in which event the Husband's obligation to pay or furnish such support shall thereupon cease and terminate, except as is set forth hereinbelow. Furthermore, Husband agrees that the amount set forth hereinabove for separate maintenance and support of the Wife and children of the parties shall be adjusted as of January 1, 1981 and on January 1st of each year thereafter, by a percentage equal to the annual percentage change in the 'Consumer Price Index for Urban Wage Earners and Clerical Workers' in Cleveland, Ohio, as published by the United States Department of Labor, Bureau of Labor Statistics, North Central Region V. "In addition to the provisions set forth hereinabove for the maintenance and support of the Wife and the children of the parties, Husband agrees that on or about April 1, 1981 and in no event later than April 10, 1981, and on or about the same date for each and every year throughout the duration of this Agreement and for the year immediately following the termination of this Agreement, Husband will pay to Wife an amount equal to the amount of Wife's federal, state and local tax liability for the previous year, which liability arises from Husband's payment to Wife of the monthly payments set forth hereinabove. It is the express purpose and intent of this Agreement that Wife shall be indemnified and held harmless by Husband from any tax liability arising from the payment of maintenance and support by the Husband, except that Wife agrees that she shall be solely responsible for any tax liability incurred as a result of -6- Husband's payment for taxes in April of the year following the termination of this Agreement. "If the Husband dies before the Wife remarries, dies or cohabitates with an adult male for more than thirty (30) consecutive days, then the remaining unpaid balance of the monthly installments for the Wife's support during the period of time specified hereinabove and Husband's child support and child education obligations as set forth hereinbelow, shall be paid to the Wife either from the proceeds of an insurance policy issued on the Husband's life, or, by and from the Husband's estate. "*** "Wife agrees that she will pay and be solely responsible for any tax liability arising from income she earns, as distinguished from income attributable to Wife as a result of support payments set forth hereinabove. However, Wife shall be responsible for tax liability arising from her own employment as if said income was her only income, and Husband shall be responsible for all additional tax liability arising as a result of support payments as set forth herein. For example, if Wife earns Six Thousand Dollars ($6,000.00), she will be responsible for any tax liability arising from said Six Thousand Dollars ($6,000.00) income as if that was the only income she had earned for the year, and all additional tax liability arising as a result of the support payments made herein shall be the sole responsibility of the Husband." "VII. TAX EXEMPTIONS AND INDEMNIFICATIONS: "(A) The Husband expressly agrees, as has been previously set forth hereinabove, that he shall absolutely indemnify and hold Wife harmless from any federal, state or local tax liability arising from his payments to the Wife as set forth in Section III hereinabove. He further agrees, also as set forth hereinabove, that he will indemnify and hold Wife harmless from any federal, state or -7- local liability arising from payments made by Husband to Wife during the final year of this Agreement, as determined by expiration of the Agreement as provided herein or Wife's remarriage. ***" (Emphasis added.) C. THE TRIAL COURT'S JUDGMENT WITH REGARD TO APPELLANT'S TAX LIABILITY The trial court, however, found that the separation agreement was silent as to the method of calculation to be used to determine the amount of tax liability which the appellee would reimburse to the appellant and held in its judgment entry that: "The Father agrees that after April 10, 1981, and each year thereafter, he will pay to the Mother an amount equal to the amount of her federal, state, and local taxes liability for the previous year, which arise from her receipt of the alimony installments. "The Agreement recites: "It is the express purpose and intent of this Agreement that the Wife shall be indemnified and held harmless by the Husband from any tax liability arising from the payment of maintenance and support by the Husband, except that Wife agrees that she shall be solely responsible for any tax liability incurred as a result of Husband's payment for taxes in April of the year following the termination of this Agreement. "The parties complied with the Agreement, and reimbursement was made by the Father to the Mother the first several years. The Mother obtained employment with her city's fire department, and as her earnings rose, the amount of reimbursement increased. Each party provided the Court with their tax expert's conclusions and the procedures they utilized in arriving at their respective -8- conclusions. The conclusions of each party vary widely. "The Separation Agreement is silent as to what method should be used to calculate the amount of tax liability reimbursement to the Mother. *** "The Agreement calls for reimbursement but is silent as to how this should be calculated. Therefore, the Court modifies the Plaintiff's motion from a show cause to a motion to interpret the parties' intentions of their Separation Agreement herein. "The parties clearly intended that Plaintiff should be reimbursed any tax liability resulting from the receipt of alimony installments. The Agreement did not contemplate the effect of her being subsequently employed and earning wages. The intention of the parties is recited in the Agreement, to wit: 'That the Wife shall be indemnified and held harmless by Husband from any tax liability arising from payment of maintenance and support by the Husband.' "Both parties have submitted procedures which vary widely in calculating the amount of reimbursement, each reflecting an advantage over the other. Each party had different personal tax rights coming to them under the I.R.S. code. Neither party is willing to adjust or compromise. "The Court concludes that it is necessary to interpret the intentions of the parties in their executed Separation Agreement incorporated in the Decree of Dissolution. "The Court further concludes that the only fair way to interpret the Agreement is to apply the percentage of alimony installment per year as against the Plaintiff's total adjusted gross income from wages and all other sources; apply all of her deductions and exemptions, to arrive at her total federal and state tax liability. Then after the tax liabilities are calculated, the Plaintiff shall reimburse her that percent of -9- tax liability based on her total adjusted gross income. "Example: "Her total adjusted income is $100,000.00 "Her total alimony installments 50% 50,000.00 "Her total other income 50% 50,000.00 "Tax liability (for purpose of example) 15,000.00 "50% of adjusted gross income from alimony subject to reimbursement 7,500.00 "THEREFORE, IT IS ORDERED AND ADJUDGED that the Separation Agreement relating to tax liability reimbursement to Plaintiff is interpreted that the intent of the parties for reimbursement shall be calculated by applying the percentage of alimony contributed to arrive at the total adjusted gross income of Plaintiff which included her wages and other income. Then apply her personal deductions and exemptions. Compute her tax liability from all sources. The reimbursement shall be the percentage of alimony as against total adjusted gross income. Apply the same percentage against the total federal and state tax liability which shall be Defendant's share of reimbursement under the Separation Agreement. "IT IS FURTHER ORDERED that this formula shall be used effective the tax year January 1, 1985, reimbursement due April 10, 1986, and all subsequent years until the alimony installments are terminated." D. SEPARATION AGREEMENT IS AMBIGUOUS AS TO METHOD OF CALCULATING TAX LIABILITY A review of the separation agreement entered into between the appellant and the appellee clearly demonstrates that the -10- appellee was to reimburse the appellant for the tax liability associated with the receipt of alimony and child support. The separation agreement, as also determined by the trial court, is silent, however, with regard to the method to be used to determine the amount of reimbursement due from the appellee to the appellant and is thus ambiguous. E. TRIAL COURT'S ABILITY TO INTERPRET AN AMBIGUOUS SEPARATION AGREEMENT This court, with regard to the trial court interpretation of ambiguous language in a separation agreement, stated in Roller v. Roller (Oct. 5, 1989), Cuyahoga App. No. 55988, unreported, that: "A trial court has broad discretion in interpreting ambiguous language in a separation agreement by considering not only the intent of the parties but the equities involved. In re Dissolution of Marriage of Seers (1987), 42 Ohio App. 3d 155, 156. A reviewing court shall not disturb an interpretive decision by the trial court absent a showing of an abuse of discretion. Id. 'The term "abuse of discretion" connotes more than 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. In addition, a judgment which is supported by competent, credible evidence shall not be reversed as being contrary to the manifest weight of the evidence. C.E. Morris Co. v. Foley Construction Co. (1978), 54 Ohio St. 2d 279, syllabus." Roller v. Roller, supra, at 5. (Emphasis added.) F. TRIAL COURT'S INTERPRETATION OF SEPARATION AGREEMENT WAS NOT UNREASONABLE, ARBITRARY OR UNCONSCIONABLE Herein, the ambiguity of the separation agreement with regard to the method of calculating the amount of tax liability to be reimbursed to the appellant necessitated the trial court's -11- "interpretation" of the intent of the parties and the equities involved. In addition, this court cannot find that the trial court abused its discretion through the imposition of a tax liability calculation method which considered the percentage of the alimony and the child support received by the appellant in comparison to the outside income earned by the appellant. The trial court's judgment was not unreasonable, arbitrary, or unconscionable. Thus, the trial court did not err by interpreting the separation agreement as it related to the reimbursement of the appellant by the appellee with regard to tax liability. The appellant's sole assignment of error is not well taken. Judgment affirmed. -12- It is ordered that appellee recover of appellant his costs herein taxed. The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this court directing the Common Pleas 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. Exceptions. JOHN F. CORRIGAN, J. and HARPER, J., CONCUR. DAVID T. MATIA 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. .