COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 73321 JUDITH H. FRAIBERG : JOURNAL ENTRY : AND Plaintiff-appellee : OPINION : -vs- : : ROBERT S. FRAIBERG, ET AL. : : Defendants-appellants: DATE OF ANNOUNCEMENT OF DECISION: DECEMBER 3, 1998 CHARACTER OF PROCEEDING: Civil appeal from the Court of Common Pleas Domestic Relations Division Case No. D-230590 JUDGMENT: Affirmed in part and reversed in part. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellee: MARSHALL J. WOLF, ESQ. WOLF & AKERS 1515 The East Ohio Building 1717 East Ninth Street Cleveland, Ohio 44114 For Defendants-Appellants: ROBERT S. FRAIBERG, ESQ. 824 Pelican Point Cove Boca Raton, Florida 33431 -ii- For Defendants-Appellants: NIKI Z. SCHWARTZ, ESQ. RICHARD L. STOPER, JR., ESQ. SUSAN L. GRAGEL, ESQ. GOLD, ROTATORI & SCHWARTZ 1500 Leader Building 526 Superior Avenue, N.E. Cleveland, Ohio 44114 -3- DYKE, P.J.: Appellant, Robert S. Fraiberg, appeals from the trial court's judgment entry for legal separation and property division. For the following reasons, we affirm in part and reverse in part. A hearing was held to determine whether the trial court had jurisdiction. The following evidence was heard: The parties were married in 1963. They lived in a home in Pepper Pike, Ohio since 1966. In 1991, the parties retired and moved to Boca Raton, Florida. The parties received a homestead exemption, which is available only to Florida residents. Appellee- Judith Fraiberg registered to vote in Florida, and voted in Florida in 1992. The parties filed Florida tax returns in 1992 and 1993. Judith applied for a Florida driver's license. On November 10 or 12, 1993, the parties returned to their home in Pepper Pike for a wedding and for the holidays. Appellant went back to Florida on December 4, 1993. Judith remained in the Pepper Pike. Judith testified that she intended to stay in her home in Cleveland at that point, but she was unsure if she would return to Florida as a visitor or a snowbird . On January 5, 1994, Judith filed for legal separation in the Cuyahoga County Common Pleas Court, Domestic Relations Division. Judith changed her mailing address to a mail drop in Mayfield Heights. She registered to vote in Ohio on November 5, 1994. Judith rented an apartment in Florida, and resided there from November 29, 1994 to March, 1995, to avoid the Ohio winter. Judith -4- testified that her domicile, the place she intended to always return, was in Pepper Pike. The trial court found that it had jurisdiction. Appellant sought a writ of prohibition in the Ohio Supreme Court, on the grounds that the trial court lacked personal jurisdiction over appellant. The writ of prohibition was denied. Fraiberg v. Fraiberg (1996), 76 Ohio St.3d 374. Upon remand, the court equally divided the parties' property, and awarded attorney fees to appellee. I. Appellant's first assignment of error states: THE LOWER COURT ERRED AS A MATTER OF LAW IN EXERCISING SUBJECT MATTER JURISDICTION OVER THE COMPLAINT WHERE THE UNCONTRADICTED EVIDENCE ESTABLISHED THAT PLAINTIFF WAS DOMICILED IN AND A RESIDENT OF FLORIDA. In an action for legal separation, the six month residency requirement applicable to divorce proceedings does not apply. R.C. 3105.03, Taylor v. Taylor (1992), 84 Ohio App.3d 445, Gieg v. Gieg (1984), 16 Ohio App.3d 51. For a separation action, the action must be brought in the proper county for commencement of actions pursuant to Civ. R. 3(B). See R.C. 3105.03, Taylor, supra. The plaintiff satisfies Civ. R. 3(B)(10) if she is a resident of the county at the time she commences her action. See Taylor, supra. A resident is one who possesses a domiciliary residence, accompanied by the intent to make a permanent home in Ohio. Saalfeld v. Saalfeld (1949), 86 Ohio App. 225. Such an intent is known only to the individual, and is subject to change from time to time. Coleman v. Coleman (1972), 32 Ohio St.2d 155. A statement -5- of the plaintiff's intent is accepted, unless the facts or circumstances establish otherwise. Id. Appellant contends the trial court's finding that appellee was a resident was against the manifest weight of the evidence. This court can only reverse if the trial court's finding was not supported by some competent, credible evidence. See C.E. Morris Co. v. Foley Construction Co. (1978), 54 Ohio St.2d 279, DiDomenico v. DiDomenico (May 9, 1991), Cuyahoga App. No. 58543, unreported. We find that there was some competent, credible evidence from which the trial court could find that on the day appellee filed the complaint for separation, she intended to permanently reside in Pepper Pike. Accordingly, this assignment of error is overruled. II. Appellant's second assignment of error states: THE LOWER COURT ERRED IN THE ADMISSION AND EXCLUSION OF EXPERT TESTIMONY: A) IN PERMITTING PLAINTIFF'S EXPERT TO TESTIFY DESPITE PLAINTIFF'S FAILURE TO COMPLY WITH COURT ORDERS REQUIRING THE DISCLOSURE OF EXPERTS AND EXPERT REPORTS AND B) IN EXCLUDING THE TESTIMONY OF DEFENDANTS' EXPERT ANN HAWKINS REGARDING THE TAX CONSEQUENCES OF THE SALE OF THE COCHRAN ROAD PROPERTY. In violation of court order, appellee-wife submitted an untimely report by her accounting expert, William Skaryd, one day before the January trial. Appellant did not know the identity of this expert until a week before trial. The night before the trial, Skaryd's deposition was taken by appellant. The court denied the appellant's motion to exclude the testimony, but stated that the appellee could be held in contempt. -6- The trial court has discretion in deciding which sanctions to impose for discovery abuse. Huffman v. Hair Surgeon, Inc. (1985), 19 Ohio St.3d 83, Cucciolillio v. East Ohio Gas Co. (1980), 4 Ohio App.3d 36. The sanction of excluding evidence should only be imposed when clearly necessary to enforce willful noncompliance or to prevent unfair surprise. Nickey v. Brown (1982), 7 Ohio App.3d 32. In fashioning an appropriate sanction, the trial court should weigh the conduct of the party offering the expert testimony along with the prejudice suffered by the opposing party. Savage v. Correlated Health Serv. (1992), 64 Ohio St.3d 42, 55. There was no evidence indicating that excluding evidence was necessary to enforce willful noncompliance. Appellant did not show that he was prejudiced by allowing the testimony of William Skaryd. The trial court did not abuse its discretion in permitting appellee's expert to testify. Part B of appellant's second assignment of error states that the court erred when it excluded the testimony of appellant's expert, Ann Hawkins, concerning the Cochran Road property. Appellant leased the property to New Century Metal with an option to purchase. Ann Hawkins, an attorney and C.P.A, represented New Century Metal in the lease negotiations. When she discovered that appellant was the lessor, she obtained a waiver from Century Metal and appellant. Another attorney in Hawkins' office took over the lease negotiations. Hawkins stated that Century Metal was her client from May, 1996 to the present. Hawkins represented Century -7- Metal when it purchased the property subsequent to the trial in this matter. As stated in her expert report, Hawkins would have testified that: If the property was sold, its value would be the purchase price of option to purchase, $14,250,000, less commissions and repairs appellant was responsible for under the purchase option. Hawkins also computed the amount of tax appellant would owe should the property be sold. The trial court excluded Hawkin's testimony because of her bias in favor of her client, Century Metal. Appellant asserts that exclusion of this testimony prejudiced him. The trial court awarded the Cochran Road property to appellant, and overvalued this property by failing to deduct the commissions, repairs and taxes. Thus, the court's division of property was not equal. As for the repairs and commissions, the trial court correctly excluded this evidence. Hawkins' testimony was not reliable due to her bias to her client, Century Metal. The testimony was excludable in a bench trial under Evid. R. 402, 403(A) and Evid. R. 616. It is also noted that Hawkins' testimony as to the Cochran Road property may violate ethical rules against conflicts of interest. See Royal Indemnity Co. v. J.C. Penney Co. (1986), 27 Ohio St.3d 31, 33-34. Century Metal had no interest in the taxes paid by appellant. The testimony concerning taxes was still not admissible because in order to arrive at the amount of taxable gain, Hawkins had to refer to amounts in the lease or purchase agreement. -8- Accordingly, this assignment of error is overruled. III. Appellant's third assignment of error states: THE LOWER COURT, IN VALUING THE COCHRAN ROAD PROPERTY, ERRED BY FAILING TO REDUCE THE VALUE OF THE PROPERTY BY CERTAIN ITEMS -- CURRENT MORTGAGES, REPAIRS, AND COMMISSIONS -- WHICH EXPERTS FOR BOTH PARTIES ADMITTED SHOULD HAVE BEEN DEDUCTED FROM THE FAIR MARKET VALUE OF THE PROPERTY. Appellant contends that the trial court erred in failing to deduct three items from the value assigned to the Cochran Road property. The court valued the Huntington Bank Commercial Loan at $450,000, the principal amount. Appellant argues the court should have also included $34,909.52 of interest. There was competent, credible evidence indicating that the interest accrued due to appellant's failure to make payments on the loan. The court could find that appellant was solely responsible for this accumulated interest. See Berish v. Berish (1982), 69 Ohio St.2d 318, See also R.C. 3105.171(E)(3). Appellant asserts that the trial court failed to deduct commissions. The purchase agreement is not clear as to the amount of commissions, and there was no other evidence as to the amount of commissions. Appellant failed in his burden to present such evidence. See Stetler v. Stetler (1982), 6 Ohio App.3d 29. Appellant asserts that the court failed to deduct the cost of repairs appellant made to the Cochran Road property. Appellant testified that he had to repair the roof and perform other repairs, for an estimated cost of $145,000. The appellant and Century Metal -9- were in dispute over what repairs were appellant's responsibility. Letters from Century Metal stated that repairs to the roof and other repairs were not made. The evidence was not clear as to the amount of repairs that were appellant's responsibility. Appellant failed in his burden to present this evidence. See Stetler, supra. Accordingly, this assignment of error is overruled. IV. Appellant's fourth assignment of error states: THE LOWER COURT ERRED IN FAILING TO CONSIDER THE TAX CONSEQUENCES ASSOCIATED WITH THE DIVISION OF PROPERTY UPON THE RESPECTIVE AWARDS MADE TO EACH PARTY AS REQUIRED BY R.C. SECTION 3105.171(F)(6). The trial court found that appellant had substantial tax savings, such as passive loss carry-overs, making the payment of any taxes by appellant unlikely. Appellee did not have any such tax savings. Therefore the court determined not to take taxes into account in determining the value of property. The court ordered that each party would be responsible for his or her own taxes. The court awarded each party one half of the Greentree and Forest City partnerships. The court required that appellant must report the distributions to appellee and appellant on appellant's tax returns. If these distributions are not covered by appellant's loss carry-forwards, carry-overs or suspended losses, then appellee shall pay 50% of the tax actually paid. The court shall consider the tax consequences of the property division upon the respective awards made to each spouse. R.C. 3105.171(F)(6). In this case the court considered the tax consequences, and found that due to appellant's loss carry-overs, -10- etc., the court would not consider the hypothetical payment of taxes. Additionally, the court found that certain of the taxes asserted by appellant's expert were speculative. The court need not consider speculative tax consequences. Day v. Day (1988), 40 Ohio App.3d 155, 159, James v. James (1995), 101 Ohio App.3d 668, 688. We will consider whether the court's findings were against the manifest weight of the evidence. Appellant's expert, Hawkins, testified that appellant had $564,783 in passive loss carry-overs, etc. On cross-examination, it was revealed that Hawkins had neglected another $216,122 in suspended losses, carry-overs and bad debt. Hawkins testified that appellant would have taxable income exceeding the carry-overs if he sold his interest in Greentree, Cochran Road, and A.P. Centerless; and recognized gain due to negative capital accounts in VMS partnership and Boulevard Partnership. There was no evidence appellant would sell his interest in Greentree. It was also speculative when, if ever, appellant would recognize income from the negative capital account of VMS Partnership and Boulevard Partnership. The sale of the Cochran Road property and the A.P. Centerless assets actually occurred. Hawkins was prohibited from testifying as to the taxable gain on the Cochran Road property. The court is not required to consider the taxes absent expert evidence concerning the amount of the tax. See Fergus v. Fergus (1997), 117 -11- Ohio App.3d 432. Appellant could have obtained another expert to present this testimony. Appellant realized a gain from the sale of A.P. Centerless assets of $82,090 in December, 1996. Hawkins' uncontroverted testimony was that this S-Corporation income was active, not passive, income. There was evidence from which the trial court could conclude that appellant had uncollectible business bad debts of $15,000 and $122,000 which could offset any type of income. While appellant's expert indicated the bad debts were not yet recognizable, the court found appellant's expert not credible. Even if the bad debts were applied to income in later years, the division of property was still equitable as appellee had no such tax benefits. The capital gain from A.P. was wiped out by a suspended loss. We conclude that there was some competent, credible evidence from which the trial court could conclude that appellant had a large amount of loss carry-overs, etc., available and that payment of taxes by appellant was speculative. The trial court did not err in refusing to consider the tax consequences. Appellant asserts that it is unfair that appellee was awarded part of his passive loss carry-overs to apply towards the Forest City and Greentree income. As we read the court's order, appellant only must apply the carry-overs to this income if he still has carry-overs available. The court did not prohibit appellant from using the passive losses to offset passive income other than Forest City and Greentree. -12- Accordingly, this assignment of error is overruled. V. Appellant's fifth assignment of error states: THE LOWER COURT ERRED IN THE EXTENT TO WHICH IT MADE A DISTRIBUTIVE AWARD TO PLAINTIFF PURSUANT TO R.C. 3105.171(E). The trial court imposed a restraining order on the parties' assets. The court appointed Scott Finerman, C.P.A., to monitor and disburse funds to both parties. Finerman made recommendations to the court concerning whether the payments he made were marital or should be paid for by one of the parties. Finerman recommended that $280,919.91 should be paid for by appellant. Accordingly, the trial court ordered that appellee should receive a distributive award of $140,460. The $280,919 which should be paid by appellant included: (1) $7,000 which appellant was ordered to pay to Cohen and Company and (2) $40,000 of marital funds given to appellant to pay marital bills, which appellant misappropriated. Finerman failed to consider that appellant paid $46,000 into the court for the $40,000 misappropriation and $6,000 for Cohen and Company. Finerman should have deducted $46,000 from the $280,919. Appellant contends the trial court erred in failing to reduce the distributive award by half of the money allegedly misappropriated by appellee. In January, 1994, shortly after filing her complaint for divorce, appellee liquidated certain unrestrained marital accounts held in her name in the amount of $30,321. She used $18,500 to pay retainers to her divorce -13- attorneys. The rest of the money was used for living expenses, as appellee did not have any cash. Appellee was not receiving any support payments, and funds were not released to her until March, 1994. If a spouse engages in financial misconduct, including dissipation of assets, the trial court may compensate the other spouse. R.C. 3105.171(E)(3). The trial court has discretion in deciding whether a spouse committed financial misconduct, subject to a review of whether its determination was against the manifest weight of the evidence. Babka v. Babka (1992), 83 Ohio App.3d 428, Swartz v. Swartz(1996), 110 Ohio App.3d 218. Financial misconduct implies wrongdoing. Hammond v. Brown (Sept. 14, 1995), Cuyahoga App. No. 67268, unreported. Wrongdoing occurs if the spouse personally profited or had the intent to deprive the other of marital assets. Id. Appellee personally profited by using marital funds to pay her attorney fees, which are her separate responsibility. See Farley v. Farley (1994), 97 Ohio App.3d 351. The trial court should have deducted half of the $18,500 from the distributive award. The trial court did not err in finding that appellee properly used the rest of the money, $11,821, to pay her personal expenses over two and one half months. In later periods, the trial court later allocated monthly living expenses of $8,500 for each party. Appellant was not required to account for his living expenses during this period. -14- In summary, the distributive award should be reduced to $108,209.50. Accordingly, this assignment of error is sustained in part and overruled in part. VI. Appellant's sixth assignment of error states: THE LOWER COURT ERRED IN ASSESSING THE PLAINTIFF'S ATTORNEY FEES AGAINST MR. FRAIBERG. Appellee's attorney, Marshall Wolf, averred that fees and expenses of $350,000 had been incurred in the action. $158,495.20 had already been paid to him out of marital assets. Appellee had to retain an attorney in Florida, because appellant filed for divorce in Florida while this case was pending. Appellee incurred $29,727 for the Florida attorney. Appellee filed a Motion to Show Cause and for Attorney Fees, alleging that appellant was still prosecuting the Florida case, in violation of court order. The parties entered into a partial settlement agreement, where appellant agreed to dismiss the Florida action. Appellee agreed to dismiss the Motion to Show Cause and any other motions which alleged that appellant was in contempt of court. The settlement agreement states: No further claim of, or citation for, contempt or for discovery sanctions against defendant Fraiberg shall be filed or considered . . . The agreement also states that appellee's motion for attorney fees for preparation of the motion to show cause shall be considered by the Court, as and with all other claims for attorneys fees. -15- The trial court found that appellee had the ability to pay her own attorney fees, having received over four million dollars in marital assets. The court further found that appellant engaged in misconduct resulting in appellee incurring attorney fees. Appellant was ordered to pay $300,000 of appellee's attorney fees. An award of attorney fees as spousal support can only be reversed if the trial court abused its discretion. Swanson v. Swanson (1976), 48 Ohio App.2d 85. When the court determines whether to award reasonable attorney fees to any party pursuant to this division, it shall determine whether either party will be prevented from fully litigating his rights and adequately protecting his interests if it does not award reasonable attorney fees. R.C. 3105.18(H). Attorney fees may only be awarded if it is shown that the payor spouse has a greater ability to pay. Farley v. Farley (1994), 97 Ohio App.3d 351, 355, citing Lee v. Lee (1983), 10 Ohio App.3d 113. Farley held that even if a spouse is otherwise entitled to attorney fees, a spouse cannot be awarded attorney fees incurred by his own delaying tactics. Farley and Lee did not address the issue of whether a spouse who can afford her own attorney fees should be entitled to the fees incurred due to the other spouse's delaying tactics. Additionally, Farley stated that: We must emphasize that there are other considerations that should be made by the trial court before awarding attorney fees as alimony . . . It would be an egregious miscarriage of justice to condone prolonged litigation tactics by one party by giving tacit approval to his or her belief that the other party will automatically bear the cost. Farley at 357. -16- It has been held that even if a spouse is financially able to pay attorney fees, the court may award attorney fees if the other spouse used delaying tactics to prolong the litigation. See Pournaras v. Pournaras (June 26, 1986), Cuyahoga App. No. 50782, unreported, Matyas v. Matyas (Jan. 17, 1985), Cuyahoga App. No. 48645, unreported. These cases were decided before R.C. 3105.18(H) was in effect. The cases are not contrary to R.C. 3105.18(H) because when attorney fees are incurred due to the delaying tactics of the other spouse, the spouse is prevented from adequately protecting her interests. See R.C. 3105.18(H). Attorney fees are awarded as spousal support, and in awarding such fees, the court must consider the factors of R.C. 3105.18(C). See Williams v. Williams (1996), 116 Ohio App.3d 320. R.C. 3105.18(C) provides that any other relevant factor may be considered in determining spousal support. The delaying tactics of the other spouse are a relevant factor. Also, while R.C. 3105.18(H) is in the code section dealing with spousal support, this section does not state that an award of attorney fees is necessarily spousal support. Attorney fees could be awarded to compensate a party for the financial misconduct of the other party under R.C. 3105.171(E). It may also be argued that attorney fees for misconduct should be obtained only through a contempt action or as sanctions for frivolous conduct under Civ. R. 11 or R.C. 2323.51. A party may use delaying tactics that amount to something short of contempt or -17- frivolous conduct. See Sateren v. Sateren (April 20, 1995), Franklin App. No. 94APF10-1561, unreported. In the settlement agreement, appellee waived her right to contempt actions against appellant. Appellee did not waive her right to obtain attorney fees under R.C. 3105.18(H). The trial court did not determine what attorney fees were a result of the delaying tactics of appellant. Additionally, the court did not take into account the fact that $158,495 of appellee's attorney's fees were paid by marital assets. The award of attorney fees must be reversed and remanded to the trial court for a proper determination. Accordingly, this assignment of error is sustained. VII. Appellant's seventh assignment of error states: THE LOWER COURT, IN RUBBER-STAMPING PLAINTIFF'S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW, FAILED TO ADDRESS SEVERAL ASSETS AND LIABILITIES TO THE DETRIMENT OF MR. FRAIBERG. The home in Pepper Pike was awarded to appellee, while the house in Florida was awarded to appellant. Each party was awarded the personal property in their possession. Appellee submitted a list of items that she wanted from the Florida home. The court ordered appellant to return these items to appellee. Appellant testified that certain of his personal items were still in the Pepper Pike home. He specifically testified that his clothes, coin collections, fur hats, a gun collection, a collection of antique pens and pencils and a suitcase full of family photographs were still in the Pepper Pike home. Appellee admitted -18- that some of these items were in the Pepper Pike home. Appellant's exhibit OOO listed items known to be at the Pepper Pike home but not shown on the appraisal. The court's final judgment entry never awarded appellant any of his personal items. The trial court acted arbitrarily and unreasonably in awarding personal items to appellee, but not to appellant. Appellant should receive the above list of items which appellant specifically testified were his personal property. Appellant also asserts that he paid certain marital expenses in March through August of 1996. While the writ of prohibition was pending, the lower court proceedings were stayed and Finerman was not paying the marital debts. Neither were the parties receiving their $8,500 distribution for monthly expenses from the marital estate. Appellant took out a loan from Keybank in the amount of $400,000, and used $104,083 of the proceeds to pay the expenses listed in Exhibit GGG. Some of these expenses were the personal expenses of appellant. When the case was returned to the trial court, Finerman made retroactive payments of the $8,500 for monthly personal expenses. While other expenses were marital, the trial court did not abuse its discretion in failing to give appellant credit for the expenses paid. Appellant did not turn over to Finerman the income he received from marital assets in 1996. Accordingly, this assignment of error is sustained in part and overruled in part. The judgment of the trial court is reversed in the following respects: (1) The trial court should reduce the distributive award -19- to appellee to $108,209.50. (2) The award of attorney fees to appellee of $300,000 is reversed and remanded for determination of the proper amount of attorney fees. (3) The trial court should order appellee to return the personal items of appellant, discussed above. Accordingly, the judgment of trial court is affirmed in part and reversed in part. -20- It is ordered that appellee and appellant split the 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, Domestic Relations Division 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. KARPINSKI, J., AND ROCCO, J., CONCUR. ANN DYKE PRESIDING JUDGE 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 .