COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 69622 MARY KATHLEEN ORLEY : : Plaintiff-appellee : : JOURNAL ENTRY -vs- : AND : OPINION MICHAEL L. ORLEY, ET AL. : : Defendants-appellants : : DATE OF ANNOUNCEMENT : OF DECISION : DEC. 12, 1996 CHARACTER OF PROCEEDING : Civil appeal from Court of Common Pleas : Case No. D-235204 JUDGMENT : Reversed and remanded. DATE OF JOURNALIZATION : APPEARANCES: FOR PLAINTIFF-APPELLEE: FOR DEFENDANTS-APPELLANTS: Joyce E. Barrett, Esq. Steven E. Wolkin, Esq. Janet R. Evangelista, Esq. 1040 Leader Building 800 Standard Building 526 Superior Avenue, NE 1370 Ontario Street Cleveland, Ohio 44114 Cleveland, Ohio 44113 Legal Counsel, Bob Evans Farms, Inc. 3776 S. High Street Columbus, Ohio 43207 Legal Counsel, CIGNA Individual Insurance Suite 124 Hartford, CT 06152 -2- Timothy Craig 7819 Broadview Road Seven Hills, Ohio 44131 Smith Barney, Legal Counsel 1111 Superior Avenue 1700 Eaton Center Cleveland, Ohio 44114 For Strongsville Savings Bank: David J. Pasz 15414 Pearl Road Strongsville, Ohio 44136 For Transamerica: Legal Counsel, Transamerica P.O. Box 2101 Los Angeles, California 90051-0101 For Transohio Savings Bank: Sharon L. Toerek, Esq. 23200 Chagrin Blvd. Suite 720 Three Commerce Park Square Cleveland, Ohio 44122 -3- HARPER, J.: Defendant-appellant, Michael Orley ("Mr. Orley"), appeals from the Cuyahoga County Court of Common Pleas order which awarded plaintiff-appellee, Mary Kathleen Orley ("Mrs. Orley"), spousal support and the valuation of Mr. Orley's partnership interest in Graystone Group, an Ohio General Partnership ("Graystone"). We reverse for the reasons set forth herein. I. Mr. and Mrs. Orley were married on November 21, 1971 and two children were born as issue of the marriage. At the time of the divorce, Mr. and Mrs. Orley were both forty-six years old. On August 8, 1994, Mrs. Orley filed a complaint for legal separation, child support, property division and other equitable relief, including a request for a temporary restraining order against Mr. Orley. She alleged gross neglect on the part of Mr. Orley. Subsequently, Mrs. Orley filed two identical amended complaints that added additional individuals and for entities she alleged to have possession or control of the assets of Mr. and Mrs. Orley. On October 25, 1994, Mr. Orley filed an answer and counterclaim for divorce. The trial date was set for August 1, 1995, and prior to trial, Mr. and Mrs. Orley entered into a stipulation. The stipulation related to all of the parties principal assets except for the value of the construction businesses ("Sunlight Construction, Inc." and -4- "Tony's Leisure Products, Inc.") and Mr. Orley's partnership interests. The following stipulation was thus admitted into evidence: OWNERSHIP FAIR MARKET VALUE (H) Stock in Sunlight Construction, To be determined by Inc. court (H) Stock in Tony's Leisure Products, To be determined by Inc. court (H) Interest in Graystone Group, To be determined by A Partnership court (W) Proceeds of sale of marital home at 8476 Timer Trail, Brecksville, Ohio 44141 - estimated $143,816 (J) Strongsville Savings Bank 180,000 10,000 shares (H) Strongsville Savings Bank 199,800 11,100 shares (H) IRA - Smith Barney 14,114 Account No. 224-34405-14 (J) Smith Barney 2,000 Account No.224-35426-16 (W) Annuity-Transamerica Life 7,565 Contract No. 007262047 (H) Annuity-Transamerica Life 7,565 Contract No. 007262046 (H) Life Insurance - Connecticut 33,000 General Life Insurance Company Policy No. 1991579 (J) Strongsville Savings 728,003 Certificate of deposit No. 01-07-001535 The trial court granted Mrs. Orley a divorce pursuant to her amended complaint for legal separation. Mrs. Orley was granted a -5- division of the marital property and spousal support. The trial court filed its findings of fact and conclusions of law. Mrs. Orley testified that during the course of her twenty- three years of marriage to Mr. Orley, she was primarily a wife and mother. Prior to the birth of her children, Mrs. Orley was employed and earned approximately five dollars per hour. In the latter part of her marriage, she was employed as a sales representative with a travel agency; she earned approximately $2,000 per year. Mrs. Orley stated that she enjoyed a nice standard of living while she was married to Mr. Orley, as Mr. Orley owned a successful real estate business and earned approximately $75,000 per year. In addition, Mr. Orley earned income from Tony's Leisure Products and Sunlight Construction. The Orley family went on vacation once a year; three to five times a year, Mr. and Mrs. Orley went on vacation as a result of the discounts she acquired as a sales representative with the travel agency. Mrs. Orley testified that she received approximately $5,000 per month allowance from Mr. Orley, from which she used to pay the $2,700 monthly mortgage note, household needs and personal necessities for herself and the children. When Mrs. Orley needed extra money, Mr. Orley provided it for her. Mrs. Orley stated that as a result of deteoriation of the marriage, she had to be hospitalized twice for depression. She also takes five medications per day to treat her condition. -6- Mrs. Orley testified that after Mr. Orley moved from the marital home, she found full-time employment as a customer service representative, earning approximately $16,000 per year. She sold the marital home and purchased a condominium that requires less maintenance. Mrs. Orley indicated that her expenses amounted to approximately $1,200 per month for the mortgage payment and ordinary living expenses. Her two children are now emancipated and attending college. Mr. George Zamecnik, a licensed real estate agent and certified public accountant, prepared taxes from 1991-1994 for Mr. Orley. He testified as to the valuation of Sunlight Property, Inc., Tony's Leisure Products, and Graystone Group. Mr. Zamecnik explained the methodology he utilized to determine valuation for Mr. Orleys's partnership interest in Graystone, a partnership which has as its main asset a commercial building in Seven Hills, Ohio. To determine valuation, he relied on tax returns for the partnership, information provided by the Graystone accountants, a view of the building together with the surrounding real estate, and a review of Mrs. Orley's expert witness. Mr. Zamencik assigned equal weight to each of these approaches: cost appraisal, reflecting the cost of reproducing the building ($785,000) with 1350 square feet remaining to be completed; income capitalization, based on the income stream indicating what the building could generate in the market place ($680,000); and the recent sale to "Ms. Stahl" of a 25 percent portion of Mr. Orley's 37.5 partnership interest including the building ($215,000). He averaged the three -7- methods and came up with an average value of $790,000. He subtracted the debt relating to a mortgage, $489,000, for which Mr. Orley was responsible for 50 percent. He then subtracted the additional cost to complete the building, an amount of $34,000. Mr. Orley is responsible for paying half of that amount. Zamencik subtracted these liabilities from Mr. Orley's share of the partnership interest or 37.5 percent. He then multiplied this percent of the ownership by the average value or ($790,000) and arrived at a value of $290,890. From this amount, Zamecnik subtracted the mortgage and the cost to complete the building and arrived at a net value of $18,000. Mr. Zamecnik acknowledged that Mr. Orley's sale of the partnership interest would be one way at arriving at the fair market value. However, he chose not to rely solely on the sale due to the circumstances. Mr. Agin, a certified public accountant and an attorney testified as Mrs. Orley's expert. He explained that the fair market value is the sale price of real property agreed upon between a willing buyer and willing seller. He opined that there are various methods to determine fair market value, including the market comparable approach which reflects an asset of similar property that was recently sold on the market. He also looked at the tax returns, outstanding loans, underlying assets and the purported sale of Mr. Orley's fractional interest in the partnership, to arrive at a fair market value of Mr. Orley's partnership interest in Graystone. Mr. Agin opined that the recent -8- sale of a percentage of that partnership is the best indication of the fair market value of the partnership. Mr. Agin stated that the fair market value of Mr. Orley's partnership interest in Graystone was $860,000. Mr. Orley's sale of his one quarter interest to Ms. Stahl amounted to $215,000. Mr. Agin then multiplied it by four to arrive at his figure of $860,000. Mr. Agin's figure of $860,000 as the fair market value of Mr. Orley's partnership interest took into account the ownership of the building, construction costs and current loan agreement. However, he was uncertain if the building was the only asset of Graystone. Mr. Agin did not include in his calculation the uncompleted portion of the building at the time of the sale since he did not know the value of the building based on a per square foot ratio. Finally, he confirmed that he was not present when Ms. Stahl and Mr. Orley arrived at the amount of $215,000 for the purchase price, nor did he know the underlying facts of the sale of the partneship interest. Mr. Orley testified that he had been in the real estate development business for approximately twenty-four years. In 1994 his salary was approximately $75,000 per year. In addition, he had earnings from his two solely owned businesses, Sunlight Construction in the sum of $300,000 and Tony's Leisure Products in the sum of $157,322. He averaged $30,000 in proceeds for the sale of each home he built. In the past six years, he built approximately 80 homes, yielding $400,000 in income. Mr. Orley stated that he paid tuition for both of his college-age children. -9- At the conclusion of trial, the trial court divided the marital property as follows: Mrs. Orley was awarded the proceeds from the sale of the marital home in the amount of $143,816; the 10,000 shares of Strongsville Bank, $180,000; the 11,000 shares of Strongsville Bank, $199,800.80; an IRA account at Smith Barney, $14,114.80; another account at Smith Barney, $2,000; a Transamerica Life Annuity account, $7,565; Mr. Orley's Transamerica Life Annuity, $7,565; a Connecticut General Life Insurance Policy, $33,000; Strongsville Savings Certificate Deposit, $728,003; a National City Bank checking account, $1,500; a Charter One Bank Account, $27,944; a certificate of deposit, $19,488; a checking account at Strongsville Savings Bank, $73.00; and the household furniture in the marital home, $10,000. Mr. Orley was awarded the shares of stock he held in Sunlight Construction $579,500; the stock holdings in Tony's Leisure Product, Inc., $453,348; the partnership interest in Graystone Group, $430,000; a 1989 Chapparel boat, $5,000; and funds paid on behalf of Michael Orley's mother, $60,000. In addition to the division of the marital property, the trial court awarded spousal support in the amount of $7,500 per month, plus 2% percent poundage, to be paid through the Cuyahoga Support Enforcement Agency (CSEA) until plaintiff's death or remarriage, subject to further order of Court. Mr. Orley appeals from the trial court's order of spousal support and valuation of his partnership interest and raises the following assignments of error for review: -10- I. THE TRIAL COURT ERRED IN AWARDING SPOUSAL SUPPORT TO APPELLEE. II. THE TRIAL COURT ERRED IN PLACING A VALUE OF FOUR HUNDRED THIRTY THOUSAND DOLLARS ($430,000) ON THE PARTNERSHIP INTEREST OF APPELLANT IN GRAYSTONE GROUP. In the first assignment of error, Mr. Orley attacks the trial court's award of spousal support. He contends the trial court's award is erroneous for three reasons: (1) the spousal award is not based on need; (2) the trial court failed to specify the factors listed in R.C. 3105.18 which it considered in reaching its decision to award the spousal support; (3) Mrs. Orley is self-supporting, thus she is not entitled to permanent spousal support; and (4) the spousal support is unwarranted and excessive. "In Ohio, terminating a marriage is often approached by the courts as a dissolution of a partnership and '[o]nly after a division of property is made, is the court statutorily authorized to consider whether an additional amount is needed for sustenance, and for what period will such necessity persist." Kunkle v. Kunkle (1990), 51 Ohio St.3d 64, 68, quoting Wolfe v. Wolfe (1976), 46 Ohio St.2d 399,414. (Emphasis in original). It is well established that a trial court has wide discretion in making awards of spousal support. Bolinger v. Bolinger (1990), 49 Ohio St.3d 120. However, a trial court's discretion is not unlimited, it is guided by R.C. 3105.18(C) which mandates that the court consider all relevant factors in that statute when making awards of spousal support. The court must evaluate evidence -11- germane to each applicable statutory factor, then weigh the need for support against the ability to pay. Layne v. Layne (1992), 83 Ohio App.3d 559. In making a spousal support award, the trial court must be guided by principles of equity. Cherry v. Cherry (1980), 66 Ohio St.2d 341. The spousal support award must be a reasonable amount. A reviewing court should measure the trial court's adherence to the test, but should not substitute its judgment for that of the trial court unless, considering the totality of the circumstances, it finds the court abused its discretion. Kaechle v. Kaechle (1988), 35 Ohio St.3d 93. 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 247. When a trial court makes an alimony award, it must set forth in the judgment, with sufficient details, the basis for the award so that a reviewing court can properly review the judgment to determine if the award is fair, equitable, and in accordance with the law. Kaechle, at 93. R.C. 3105.18 is not to be interpreted to require an alimony award to provide the partner with an equal standard of living or a standard of living equivalent to that established during the marriage. Kunkle, at 63. In essence, when a sustenance award is not limited to the payee's needs, the award has the effect of punishing the payer and rewarding the payee. Kunkle, at 64. Spousal support is to be based on need. A spouse is not entitled, -12- as a matter of law, to continue the luxurious life style lived during the marriage. Simoni v. Simoni (1995), 102 Ohio App.3d 628. 1 Concerning an award for spousal support, R.C. 3105.18 provides, in pertinent part: (B) In divorce and legal separation proceedings, upon the request of either party and after the court determines the division or disbursement of property under section 3105.171 [3105.17.1] of the Revised Code, the court of common pleas may award reasonable spousal support to either party. During the pendency of any divorce, or legal separation proceeding, the court may award reasonable temporary spousal support to either party. An award of spousal support may be allowed in real or personal property, or both, or by decreeing a sum of money, payable either in gross or by installments, from future income or otherwise, as the court considers equitable. Any award of spousal support made under this section shall terminate upon the death of either party, unless the order containing the award expressly provides otherwise. (C)(1) In determining whether spousal support is appropriate and reasonable, and in determining the nature, amount, and terms of payment, and duration of spousal support, which is payable either in gross or in installments, the court shall consider all of the following factors: (a) The income of the parties, from all sources including, but not limited to, income derived from property divided, disbursed, or distributed under section 3105.171 [3105.17.1] of the Revised Code. (b) The relative earning abilities of the parties; 1 The statutory standard for awarding spousal support, formerly based on need, was modified effective April 11, 1991, to the "appropriate and reasonable" standard. R.C. 3105.18(C)(1). -13- (c) The ages and the physical, mental, and emotional conditions of the parties; (d) The retirement benefits of the parties; (e) The duration of the marriage; (f) The extent to which it would be inappropriate for a party, because he will be custodian of a minor child of the marriage, to seek employment outside the home; (g) The standard of living of the parties established during the marriage; (h) The relative extent of education of the parties; (i) The relative assets and liabilities of the parties, including but not limited to any court-ordered pay- ments by the parties; (j) The contribution of each party to the education, training, or earning ability of the other party, including but not limited to, any party's contribution to the acquisition of a professional degree of the other party; (k) The time and expense necessary for the spouse who is seeking spousal support to acquire education, training, or job experience so that the spouse will be qualified to obtain appropriate employment, provided the education, training, or job experience, and employment is, in fact, sought; (l) The tax consequences, for each party, of an award of spousal support; (m) The lost income production capacity of either party that resulted from that party's marital responsibili- ties; (n) Any other factor that the court expressly finds to be relevant and equitable. In the instant case, the trial court awarded marital property in the amount of $1,374,808 to Mrs. Orley. Mr. Orley received $1,527,856 in marital property. The trial court, divided the -14- marital property, pursuant to R.C. 3105.171(C)(1) taking into consideration the fact that Mrs. Orley received the liquid assets, and Mr. Orley received the stock holdings in his construction and real estate businesses. Mrs. Orley was granted a permanent spousal support award in the amount of $7,500 per month. Our review of the record indicates that the trial court did not provide sufficient detail for the court to determine whether a permanent spousal support award in the amount of $7,500 per month was based on Mrs. Orley's need. Simoni, supra. The trial court, in its findings of fact, rated the length of the marriage, the age of the parties, the earning capacities of Mr. Orley, in addition to the standard of living. Her testimony established that her monthly expenses were considerably lower as a result of the divorce, i.e., she moved into a condominium, both of her children were emancipated and she was employed full-time. Thus, the trial court abused its discretion when it awarded Mrs. Orley permanent spousal support in the absence of evidence demonstrating Mrs. Orley's need. Simoni, supra. Accordingly, Mr. Orley's assignment of error is sustained. In the second assignment of error, Mr. Orley challenges the trial court's valuation of his partnership interest in Graystone. He argues that the valuation of his partnership interest by Mr. Agin, Mrs. Orley's expert witness, was simplistic, arbitrary and inappropriate. A trial court must have a rational evidentiary basis for assessing a value to a piece of real estate. Campettelli v. -15- Campettelli (1989), 65 Ohio App.3d 307. Comparable sales may be accepted as evidence of valuation in the absence of expert opinion. Ware v. Ware (Feb. 18, 1987), Cuyahoga App. No. 51745, unreported. It is not the task of an appellate court to require the adoption of any particular method of valuation, but to determine whether, in light of all the facts and circumstances before it, the trial court abused its discretion arriving at the determined value. Consequently, the trial court also has broad discretion to determine the value of property subject to division. Willis v. Willis (1986), 19 Ohio App. 3d 45. When determining the value of a property, a trial court may rely in whole or in part, on expert testimony. Phillips v. Phillips (Aug. 1, 1993), Butler App. CA92- 11-1213, unreported. Fair market value of real estate may be proved by expert or non-expert testimony and verification. In the case sub judice, two experts testified concerning the fair market valuation of Mr. Orley's partnership interest in Graystone. Mr. Agin, Mrs. Orley's expert witness, arrived at the fair market value of Mr. Orley's partnership interest based upon the sale of his quarter interest to a third party, Ms. Stahl. Mr. Agin then arrived at the valuation of the partnership interest by multiplying this amount by four. He confirmed, however, that: (1) he had not seen the building and the surrounding land; (2) he did not factor in the additional costs to complete the building and the obligations of the partnership to pay the outstanding mortgage; and (3) he was not aware of the underlying facts of the purchase. The following conversation took place between the trial court and -16- Mr. Agin regarding the valuation of Graystone based on the purchase price: THE COURT: You don't know how that figure was arrived at? THE WITNESS: That is correct, I was not present. THE COURT: What if she only paid $100,000 for that property, would that have changed your opinion? THE WITNESS: Of course. THE COURT: Of course? So, that this is an arbitrary or even capricious figure so far as a valuation is concerned, true? (Tr. 282). Finally, the Court indicates: Wouldn't a bona fide appraisal based upon the expertise of real estate appraiser be a better method to determine the valuation of this property rather than the arbitrary figure of $215,000.00 that somebody paid for some reason that we don't even know? True or not true? (Sic) (Tr. 283). Based upon this court's review of the facts in this case, we find that the trial court's determination of valuation was not based on credible evidence, and thus was an abuse of discretion. Here, Mr. Agin's valuation of Mr. Orley's partnership interest was indeed arbitrary given the underlying circumstances, i.e., Mr. Agin arrived at the valuation of Mr. Orley's partnership interest of Graystone by taking Mr. Orley's 25 percent ownership of the partnership and multiplying it by four. However, the facts of the case at bar demonstrate that Mr. Agin's methodology was flawed, because Mr. Orley owned 37.5 percent interest in Graystone and he sold one quarter of his 37.5 percent partnership interest to Ms. Stahl. Moreover, Mr. Orley's partnership interest was valued without consideration of the outstanding liabliites and obligations -17- of the partnership. Thus, the trial court erred when it adopted Mr. Agin's valuation of Graystone because it was not based upon competent evidence, as the valuation fails to accurately reflect the value of the partnership. Accordingly, Mr. Orley's assignment of error is sustained. This cause is reversed and remanded for further proceedings consistent with this opinion. -18- It is ordered that appellant recover of appellee 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 Cuyahoga County 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. JAMES M. PORTER, J., CONCUR; JOHN T. PATTON, J., CONCURS IN JUDGMENT ONLY. PRESIDING JUDGE SARA J. HARPER N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc. App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E), unless a motion for reconsideration with supporting brief, per App.R. 26(A) is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .