COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 59615 JOHN RANDOLPH ERB : : Plaintiff-appellee : : JOURNAL ENTRY -vs- : AND : OPINION DONNA VICTORIA ERB : : Defendant-appellant : : DATE OF ANNOUNCEMENT OF DECISION: DECEMBER 19, 1991 CHARACTER OF PROCEEDING: Civil appeal from Court of Common Pleas Domestic Relations Division Case No. D-193402 JUDGMENT: Reversed and Remanded. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellee: For Defendant-Appellant: THOMAS J. ROCHE, ESQ. JAMES J. DYSON, ESQ. 340 Western Reserve Bldg. 29001 Cedar Road, Suite 655 1470 West Ninth Street Lyndhurst, Ohio 44124 Cleveland, Ohio 44113 - 1 - DYKE, J.: This case is before the court on appeal from the judgment of the Cuyahoga County Court of Common Pleas Domestic Relations Division granting both parties a divorce and determining custody, child support and the division of property. The parties to this action were married on February 22, 1979. One child was born on July 7, 1970. On April 26, 1988, John R. Erb, plaintiff-appellee, and Donna V. Erb, defendant-appellant, entered into a separation agreement. Appellee moved from the marital residence in July, 1988. On April 5, 1989 appellee filed a Complaint for Divorce in Cuyahoga County Common Pleas Court and requested that the court incorporate the separation agreement into its decree. On May 9, 1989, appellant answered and counterclaimed. Appellant also requested that the separation agreement be set aside on the grounds that it was procured through fraud and misrepresentation and alternatively that it was unjust, unfair, and inequitable. Appellant stated specifically that appellee had failed to disclose the value of his pension plan from the Cleveland Fire Department and she did not know its value at the time she entered into the separation agreement. The court conducted a hearing on appellant's subsequent motion to set the separation agreement aside. On February 13, 1990 the court rejected appellant's request to set aside the separation agreement, found the - 2 - separation agreement to be fair, just and equitable and incorporated the separation agreement into the decree of divorce. From this divorce decree appellant raises a single assignment of error. I THE TRIAL COURT ERRED TO THE PREJUDICE OF THE DEFENDANT-APPELLANT AND ABUSED ITS DISCRETION BY INCORPORATING THE SEPARATION AGREEMENT INTO THE DECREE OF DIVORCE WITHOUT FIRST OBTAINING EVIDENCE OF THE PRESENT VALUE OF THE PLAINTIFF-APPELLEE'S VESTED PENSION PLAN, AND ALLOWING DEFENDANT-APPELLANT AN EQUITABLE SHARE OF THE PLAN. Appellant argues two points. First, that the trial court abused its discretion in approving the award of appellee's pension to appellee where there was no evidence of the asset's present value, and second; that the trial court's failure to award her a share of the pension, in light of the entire division was an abuse of discretion. The record shows that the terms of the separation agreement provided that the marital home, the furnishings and personal property located therein would be the property of the appellant. Appellant would assume the responsibility for paying the mortgage balance of approximately $15,000, a home improvement loan of approximately $2,500 and the taxes and maintenance of the property. It also provided appellant would retain possession of a 1977 Cadillac automobile. The separation agreement granted custody of the couple's 17 year old child to appellant. Appellee - 3 - was to pay $100 per month as child support until the child reached age 18 and was to maintain medical insurance for her benefit. Appellee was to be responsible for one-third of his daughter's college education. The separation agreement referred to a pension, deferred compensation savings, accrued overtime hours, and sick time derived from appellee's job as a fireman with the Cleveland Fire Department, a position appellee held since 1967. By the separation agreement's terms, appellee was to retain all the assets associated with his job and in addition was to retain all the savings and checking accounts in his name, a 1977 Starcraft boat and motor, a 1979 Oldsmobile, tools and a table and four chairs./1\ /1\ Testimony at trial indicated the value of the assets and their distribution to be as follows: APPELLANT APPELLEE Market Value of Home: 1977 Starcraft Boat & Motor $55,000 (Stipulated Value) $1,500 Less Mortgage Balance: 1979 Oldsmobile: $1,000 $14,000 Less Balance of Home Tool, table & chairs: ($ * ) Improvement Loan: $2,500 Equals: $38,500 Pension Plan - Accumulated Contributions $37,358 Monthly Pension Payout After Retirement $1,500 to $1,700 per month Furniture: $3,000 Deferred Compensation: $17,000 - 4 - At the time of the divorce both parties were in their late forties and were employed. Appellant had been employed four years in her present position as a secretary earning an annual salary of approximately $29,000. Appellee was employed as a fireman and was earning an annual salary of approximately $25,000 with thousands of dollars available in overtime work. Appellant was not vested in any pension plan and would only become 100% vested in a pension if she worked approximately another 20 years. Appellee was fully vested in his pension and could retire at age 48 if he bought two years of time. Appellee, according to his testimony, would then receive approximately $1,500 to $1,700 per month. Appellee could also find other employment while he continued to receive his fireman's pension. The record of the hearing on appellant's motion to set aside the separation agreement shows that appellant and appellee, prior to entering into the agreement, discussed their assets and what they believed to be an equitable division of those assets. The record shows that appellant revealed to appellee the value of his assets associated with his job except for his pension account. It is uncontested that appellee informed appellant that he had a pension. Appellant states, however, that appellee led her to 1977 Cadillac: ($ * ) Overtime Hours: $17,900 Accumulated sick time: $ 8,000 (approximate) *No valuation sum in evidence. - 5 - believe that she would never be entitled to any of his pension and further that the equity in the home, which was to become hers, approximately equalled the value of the pension. The record shows that appellant sent her lawyer a copy of the separation agreement. Apparently, without investigating the pension's present value, appellant's lawyer told appellant to sign the separation agreement. Appellant did so and later found out through friends that she may in fact have been entitled to a share of appellee's pension. Appellant at that point requested the court, after the complaint was filed, to set-aside the separation agreement. Appellee argues that the separation agreement entered into by the parties in the absence of fraud, coercion and with the competent and independent professional advice of counsel is valid and binding and the court acted properly in adopting its terms into its decree. Appellee cites three cases in support of its proposition. Block v. Block (1956), 165 Ohio St. 365; Thiery v. Thiery (February 5, 1987), Cuyahoga County App. No. 52077, unreported and; DiPietro v. DiPietro (1983), 10 Ohio App. 3d 44. "The court in a proceeding for divorce or for alimony only is not bound by an existing separation agreement theretofore entered into between the parties, and if it finds that the provisions therein relating to alimony and division of property are unfair or that the agreement was procured by fraud and - 6 - coercion or without competent and independent professional advice and assistance *** it may set the agreement aside and make a different disposition. In a petition for dissolution of marriage, however, it has been held that the court has not power to reject the parties agreement and substitute its own judgment, on the basis of evidence, as it would have in a divorce case. ***" 47 O. Jurisprudence 3d (1983) 471, Family Law, Section 923. Further, if the provisions of the separation agreement have been found by the trial court to be fair, just and reasonable and are incorporated into the decree, the agreement is superseded by the decree and its terms are imposed not by contract but by decree. Wolfe v. Wolfe (1976), 46 Ohio St. 2d 399, paragraph four of the syllabus; Greiner v. Greiner (1979), 61 Ohio App. 2d 88, 95. Clearly, the trial court has the authority to set aside a separation agreement when it has been shown that the separation agreement was procured through fraud and coercion. Greiner, supra, at 95. The record in this instance does not reveal fraud, rather it reveals a wife's trusting naivete and unexplained advice by her counsel. Our inquiry therefore turns on whether the trial court's decree embodying the parties separation agreement was an unreasonable, arbitrary or unconscionable division of marital assets. See Blakemore v. Blakemore (1983), 5 Ohio St. 3d 217. - 7 - When a separation agreement is made and submitted to a court at the time of trial in a divorce action, the court can exercise one of several options. First, it can find that the separation agreement is fair, just and equitable and incorporate it by reference into the final decree. Secondly, the court can reject some of the terms of the separation agreement, make an independent ruling on those issues and incorporate the independent rulings and partial separation agreement into the decree. Thirdly, the court can reject the entire separation agreement and make its own findings regarding the issues set forth in the complaint. Greiner, supra; Borque v. Borque, 34 Ohio App. 3d 284; Welly v. Welly (1988), 55 Ohio App. 3d 111, at paragraph one of the syllabus. When dividing marital assets pursuant to a divorce action, the court is obliged by R.C. 3105.18(B) to consider "all relevant factors" among which is "(3) the retirement benefits of the parties." Even if considered, a reviewing court may modify or reverse a decision if there was no value assigned to the retirement benefit or if the value was nonexistent. See Moser v. Moser (1982), 5 Ohio App. 3d 193; Apanovitch v. Apanovitch (August 11, 1989), Geauga County, App. No. 88-G-1482, unreported at 4. Although the courts in Ohio are not in full agreement as to how pension plans should be valued one approach is to calculate the present value of the future benefits to which an employed - 8 - spouse is entitled through the use of expert testimony. Moser, supra; Smith v. Smith (February 15, 1989), Summit County App. No. 13678 unreported (trial court considered a vested pension plan when it divided assets of the parties, without first obtaining any evidence of pension plan's present value. Court of appeals reversed and remanded ordering that trial court on remand assign a present value in order that options available in dividing asset may be considered.) In Diefenthaler v. Diefenthaler (August 25, 1989), Ottawa County App. No. OT-88-44, unreported at 569, the court of appeals acknowleded no flat rules exist in valuing a pension. The court stated that under the facts of its case present value was the appropriate valuation of the pension account. Where an employee spouse's interest in a pension or retirement plan is fully vested and that spouse's retirement, or right to secure benefits is imminent, the appropriate valuation of that property right is the present value of the future benefits to be received. This method of valuation is much more realistic in these circumstances than using only the amount of the appellee's contributions. It would not be reasonable to assume, especially where there is no such evidence, that appellee might quit his job and cash in his retirement for the amount of the accumulated contributions when he is presently entitled to future benefits for exceeding that amount. (Emphasis added.) Id. at 569. We believe that in the instant case, as in Diefenthaler, the present value of the appellee's future pension benefits was the appropriate measure of value of appellee's pension. Appellee's testimony revealed that he was 47 years old, fully vested in his - 9 - pension and could retire at age 48 if he bought two years of time. Appellee also testified that he could retain other employment while receiving his pension benefits. We agree with appellant that under these circumstances it is realistic to value appellee's benefits at present value. The only evidence on the record before us is appellee's testimony that he would receive $1,500 to $1,700 per month for the rest of his life. Assuming appellee lived to age 72,/2\ his benefits would far exceed his contributions of $37,358. In the absence of a present value determination of appellees pension benefits in this instance it was not possible for the trial court to evaluate the fairness of the separation agreement. The trial court abused its discretion in failing to assign a present value to appellee's pension. Further, the trial court's failure to make a finding as to the present value of the pension does not allow this court to effectively review the propriety of the court's decision. The matter is remanded to the trial court to take evidence as to the present value of the pension and to determine in light of that value the division of marital assets. We do not agree with appellee's contention that the trial court must accept a separation agreement in the absence of fraud or misrepresentation. Block, supra; Thiery, supra, and DiPietro, supra, do not in our opinion stand for the proposition that only /2\ Appellee's life expectancy according to appellant. - 10 - when a party has proven the agreements invalidity, may a court reject its terms. We believe it is clear that a trial court has discretionary authority to accept, modify or reject the terms of a separation agreement after a court has reviewed the agreement to determine its fairness and reasonableness. Greiner, supra; Bourque, supra; Welly, supra. The inquiry then becomes in a divorce situation whether the trial court abused its discretion in its division of the parties assets. The assignment of error is well taken. The matter is remanded to the trial court for proceedings in furtherance of this opinion. - 11 - This cause is reversed and remanded to the lower court for further 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. DAVID T. MATIA, P.J. AND SPELLACY, J., CONCUR. JUDGE ANN DYKE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announce- ment of decision (see Rule 26). Ten (10) days from the date hereof, this document will be stamped to indicate journaliza- tion, at which time it will become the judgment and order of the court and time period for review will begin to run. .