COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 73434 CECILE S. MUEHRCKE : : Plaintiff-appellee : : JOURNAL ENTRY vs. : and : OPINION ROBERT C. MUEHRCKE : : Defendant-appellant : : DATE OF ANNOUNCEMENT OF DECISION : OCTOBER 22, 1998 CHARACTER OF PROCEEDING : Civil appeal from : Court of Common Pleas : Domestic Relations Division : Case No. D-148,673 JUDGMENT : AFFIRMED. DATE OF JOURNALIZATION : APPEARANCES: For plaintiff-appellee: MICHAEL T. HONOHAN Attorney at Law 600 Superior Avenue 1400 Bank One Center Cleveland, Ohio 44114 For defendant-appellant: JOHN V. HEUTSCHE Attorney at Law John V. Heutsche Co., L.P.A. 500 Courthouse Square 310 Lakeside Avenue, West Cleveland, Ohio 44113-1021 (Cont.) APPEARANCES (Continued): Guardian ad litem : MARGARET KAZDIN STANARD Attorney at Law Reid, Berry & Stanard 1300 Illuminating Building -2- 55 Public Square Cleveland, Ohio 44113 -3- KENNETH A. ROCCO, J.: This case is before the court on appeal from a decision by the Cuyahoga County Court of Common Pleas, Domestic Relations Division, awarding a post-judgment increase in the child support due from defendant-appellant Robert C. Muehrcke. Appellant argues the trial court erred by denying his motion for a mistrial and his motion to vacate an interim child support order issued by a judge not assigned to the case. Second, he asserts the court erred by making its final award retroactive to the date appellee filed her motion for increased child support. Finally, appellant contends the court miscalculated his income for purposes of determining his ability to pay child support. Appellee Cecile S. Muehrcke cross-appeals from the trial court's order requiring her to pay attorney's fees to appellant. Appellee argues the court erred because the attorney's fees were not due under the court's prior order. For the reasons that follow, this court finds no error in the trial court's orders and accordingly affirms its decisions. PROCEDURAL HISTORY The parties to this case were divorced on September 10, 1987 pursuant to a decree entered by Judge Timothy M. Flanagan based on -4- the parties' in-court settlement agreement, which the court approved and adopted. Among other things, the decree required appellant "to quit claim to the [appellee] all of his right, title and interest in and to the real estate located at 14270 South Park Boulevard, Shaker Heights, Cuyahoga County, Ohio." Further, *** [appellee] will assume all financial responsibility for the South Park Boulevard real estate including but not limited to Dr. Jobe and the obligation for any repairs or replacement required by the City of Shaker Heights, but she shall not be responsible for any civil and/or criminal penalties which may be imposed upon [appellant] by the Shaker Heights Municipal Court. [Appellee] will hold harmless [appellant] from any liability con- cerning the South Park Boulevard real estate EXCEPT any civil and/or criminal penalties which may be imposed upon [appellant] by the Shaker Heights Municipal Court. The parties had previously entered into a joint custody plan concerning their four children. In addition to provisions for, e.g., the custody, education, upbringing, medical care, and psychological counseling of the children, this plan provided for the division of certain child support expenses and provided that the court should determine additional child support issues. As part of the divorce decree, the court ordered appellant to pay appellee $75 per child per week, plus poundage. Several months later, on March 22, 1988, the court approved and adopted an amended joint custody plan. This plan included revised provisions regarding child support, so the court terminated its previous order requiring appellant to pay support to appellee. On April 23, 1992, appellee filed a motion to change the custody of the parties' children and to amend the joint custody -5- plan in accordance with the recommendation of the parties' mediator. Approximately one week later, on April 30, 1992, appellant filed his motion to "vacate" the "award" of the "arbitra- tor" on which appellee had based her motion for a change of custody.1 On June 1, 1992, appellant filed a motion to show cause and a motion for attorney's fees, asserting that appellee had failed to pay all costs and expenses associated with the South Park Boulevard property as required by the divorce decree. Appellant argued he had incurred some $5,000 in attorney's fees as a result of appellee's failure to comply with her obligations and requested that the court order her to reimburse him for this amount. On September 2, 1992, appellee filed a motion for interim and permanent child support. Appellant moved to "dismiss" this motion, asserting, inter alia, that the court could modify the terms of the joint custody plan under R.C. 3109.04(B)(2)(b) only if the parties agreed to the modification. Judge Flanagan referred all of these motions to Referee Maurice Schoby for hearing. After numerous continuances, on December 2, 1993, Judge Flanagan issued the following order: This matter came on for hearing on [appel- lee's] motion for interim Child Support #212422 before Referee Maurice Schoby. For good cause, during the pendency of this motion, the Court hereby orders [appellant] to 1On October 6, 1994, the court dismissed appellee's motion to change custody, based upon appellee's voluntary withdrawal of the motion. The court later denied appellant's motion to vacate. -6- pay [appellee] $3,000 per month as temporary child support for the minor children Alyssa, Jennifer and Kira plus 2% statutory fee through C.S.E.A. effective 12-1-93. On June 29, 1994, appellant moved to vacate this award and to declare a mistrial on the ground that Judge Flanagan was not the judge assigned to the case. Pursuant to Loc.R. 2(A) of the Court of Common Pleas of Cuyahoga County, Domestic Relations Division, the matter had been reassigned to Judge Anthony Russo. The motions to vacate and to declare a mistrial were denied by Judge Russo on July 19, 1994, and all pending motions were subsequently referred to Referee John Homolak. Referee Homolak conducted hearings on the parties' motions and filed a report and recommendation with the court on July 25, 1995. Appellant filed objections to the report in January 1996; appellee did not object, but she did oppose appellant's objections. On September 8, 1996, the court sustained appellant's objections in part, modified the referee's report, and approved the report as modified. Appellant then moved for a new trial, but his motion was denied on October 10, 1997. He timely filed his notice of appeal on October 30, 1997. Appellee timely filed her cross-appeal on November 10, 1997. LAW AND ANALYSIS A. First Assignment of Error. THE TRIAL COURT ERRED, AS A MATTER OF LAW, IN DENYING APPELLANT'S MOTION FOR MISTRIAL AND TO VACATE THE INTERIM CHILD SUPPORT ORDER AND -7- COMPOUNDED SUCH ERROR WHEN IT DENIED APPEL- LANT'S FIRST OBJECTION REGARDING THE ISSUANCE OF A POST-DECREE AWARD OF INTERIM CHILD SUPPORT. In the first assignment of error, appellant argues the court erred by awarding interim child support because (a) the court had no power to award interim child support in a post-judgment proceeding and (b) the judge who entered the order was not the judge assigned to the case, so his order was voidable. The interim award of child support was rendered moot by the court's final order of September 8, 1997, which awarded child support from September 2, 1992, the date appellee filed her motion for interim and permanent support. The final order took account of the amounts appellant paid pursuant to the interim order and gave him credit for these amounts in determining arrearages due. Therefore, the interim court order had no continuing effect on appellant, and the validity of the order is a moot question. See Knutty v. Wallace (1995), 100 Ohio App.3d 555, 559. Accordingly, the first assignment of error is overruled. B. Second Assignment of Error. THE TRIAL COURT ERRED, AS A MATTER OF LAW, IN AWARDING CHILD SUPPORT RETROACTIVE TO THE DATE OF THE FILING OF APPELLEE'S MOTION, SEPTEMBER 2, 1992, WHEN THE OHIO SUPREME COURT DID NOT RULE ON THE MARTIN CASE UNTIL APRIL 14, 1993. Second, appellant asserts the trial court erred by making its final order of support retroactive to September 2, 1992, the date appellee filed her motion for interim and permanent support. Appellant contends that until the Ohio Supreme Court's decision in -8- Martin v. Martin (1993), 66 Ohio St.3d 110, the parties' consent to any modification of a support agreement was required under R.C. 3109.04(B)(2)(b). Therefore, appellant argues, the order modifying the support award could only be effective from the date of the Martin decision, April 14, 1993. Contrary to appellant's argument, the Ohio Supreme Court's ruling in Martin did not work a change in Ohio law that applied only prospectively from the date of that decision; rather, the supreme court construed two statutes, R.C. 3109.04 and 3113.215, concluding that: Notwithstanding former R.C. 3109.04(B)(2)(b), a trial court may modify a child support obligation under a joint custody plan without the consent of both custodians pursuant to the ten percent variation exception set forth in former R.C. 3113.215(B)(4). Martin v. Martin (1993), 66 Ohio St.3d 110, syllabus. The court determined the two statutes were not irreconcilable but even if they were, the special provisions of R.C. 3113.215 (permitting court modification) would override the more general provisions of R.C. 3109.04 (requiring the custodian's consent). The court also noted that subsequent revisions to R.C. 3109.04, effective April 11, 1991, clarified the intent of the General Assembly by providing that *** [t]he child support obligations of the parents under a shared parenting order issued under this division shall be determined in accordance with section 3113.215 of the Revised Code. This provision was in effect when appellee filed her motion for increased child support. -9- The supreme court's decision in Martin resolved a conflict among the decisions of the courts of appeals; it did not reverse a prior supreme court ruling on the same issue. R.C. 3113.215, the statute which the supreme court found to permit modification of a joint custody order, existed well before appellee filed her motion for support. The court clearly had the power to order child support effective as of the date appellee filed her motion. See Meyer v. Meyer (1985), 17 Ohio St.3d 222. The second assignment of error is therefore overruled. C. Third Assignment of Error. THE TRIAL COURT ERRED, AS A MATTER OF LAW, WHEN FOR THE PURPOSE OF DETERMINING CHILD SUPPORT MONEY IT (a) INCLUDED IN APPELLANT'S INCOME, MONEY WHICH WAS A ONE TIME PAYMENT AND (b) BY EXCLUDING CERTAIN MONETARY LOSSES WHICH HE INCURRED WHICH WOULD HAVE LOWERED HIS INCOME SUBSTANTIALLY AND (c) FURTHER INCLUDED MONEY WHICH DID NOT BELONG TO THE APPELLANT. In his third assignment of error, appellant contends the trial court erroneously calculated his income in three respects, each of which is discussed below. Abuse of discretion is the proper standard of review in matters concerning child support. Booth v. Booth (1989), 44 Ohio St.3d 142, 144. An abuse of discretion implies that the court's attitude is unreasonable, arbitrary or unconscionable. Id. 1. Self-Generated Income. Appellant urges that the trial court misapplied the statutory definition of self-generated income in R.C. 3113.215(A)(3) when it included in his income a one-time consulting fee of $117,000, -10- which was paid to appellant by Robert C. Muehrcke, M.D., Inc., a closely held corporation of which he is the sole shareholder. In his report, Referee Homolak found: The Referee further finds that [appellant], as principal owner and director of Robert C. Muehrcke M.D., Inc., has the sole authority to determine levels of compensation for all employees, including himself, along with expenditures. In 1992, the corporation had gross receipts of $884,217.00 and deductions of $982,964.00, resulting in a loss of $95,042.00. This is the same year in which [appellant] received annual compensation of $363,000.00 plus an additional $117,000.00 consulting fee. As his accountant testified, the fee was paid in 1992 in anticipation of less favorable tax legislation the following year. This was purely a tax-planning device. This one-time payment should be averaged over three (3) years when calculating child sup- port. Although appellant listed this finding as one pertinent to his objections, he did not argue that the finding and related conclusion were in error. Not surprisingly, the trial court did not address the issue in its judgment. As noted above, Civ.R. 53(E)(3)(b) provides that a party may not assign as error on appeal the court's adoption of any finding of fact or conclusion of law unless the party has objected to that finding or conclusion. Accordingly, this court must reject this portion of the third assignment of error. 2. Losses. Appellant next asserts the trial court erred by excluding consideration of losses incurred by Swan Landscaping, Inc. and Valley Therapy. The referee determined: -11- The Referee further finds that [appellant's] use of the operating losses generated by Swan Landscaping Co., Inc. and Valley Therapy to offset his compensation from his medical practice is not permitted by the statute. When reviewing R.C. S3113.215(A)(3), self- generated income is gross receipts from joint ownership of a partnership or closely held corporation minus ordinary and necessary expenses incurred by the parent IN GENERATING THE GROSS RECEIPTS. Therefore, all of the income that was generated by Swan Landscaping & Valley Therapy could be offset by the ordi- nary and necessary expenses resulting from both companies [sic] efforts to produce income for themselves. Operating losses from a separate business enterprise can not be used to reduce income generated from an individ- ual's primary occupation. [Appellant] acknowl- edged that the landscaping business was an effort to diversify his income. Just as the statute, in calculating support, would not allow [appellant] to leave his orthopedic surgery practice to suddenly become a land- scaper, it does not provide for losses of one business to offset self-generated income in a non-related business. The question whether a loss from one business may be applied against income from a separate business for purposes of determining a parent's self-generated income under R.C. 3113.215(A)(3) and (4) appears to be one of first impression in this court. Apparently, the only other Ohio court to have addressed the issue is the Tenth District Court of Appeals in Bailey v. Bailey (Sep. 29, 1994), Franklin App. No. 93APF12-1694, unreported. The referee in Bailey did not permit the appellant to offset losses from rental property ownership against the net gains from the other forms of self-generated income. The appellate court concluded the more logical approach would be to arrive at an aggregate of self-generated income, permitting a full set-off of -12- losses (other than noncash depreciation type losses, which are excluded under 3113.215[A][4][b]) to arrive at a more accurate estimate of the resources actually available to the parent from which child support may be paid. A loss is not equivalent to an ordinary and necessary expense incurred in generating gross receipts. Ordinary and necessary expenses refer to actual cash items expended by the parent or the parent's business. R.C. 3113.215(A)(4)(a). They do not include depreciation expenses and other noncash items that are allowed as deductions on any federal tax return of the parent or the parent's business. R.C. 3113.215(A)(4)(b). Appellant has not pointed to anything in the record to show that the losses were actual, out-of-pocket expenditures which might possibly be subtracted from his self-generated income pursuant to R.C. 3113.215(A)(4). Even if they were actual expen- ditures, appellant did not show the expenses were ordinary and necessary. Cf. Kamm v. Kamm (1993), 67 Ohio St.3d 174, 176; Higgins v. Danvers (Nov. 6, 1997), Cuyahoga App. No. 71352, un- reported, at 9-10. Accordingly, the trial court did not abuse its discretion by refusing to deduct losses appellant incurred in the Valley Therapy and Swan Landscaping businesses. 3. Monies Paid to JAAK Corp. Finally, appellant argues the trial court erred by including in his income monies paid by Robert C. Muehrcke, M.D., Inc. to JAAK Corporation for billing and x-ray services. In its journal entry, the court concluded that JAAK was a corporation set up by appellant -13- for the dual purpose of providing a trust for the benefit of his minor children and also reducing his taxable income. The court concluded that the monies paid to JAAK were directly under [appellant's]control, [and were] available to him for his use and benefit. The court further determined the [appellant] has no legal obligation to pay said monies to JAAK Inc. and, hence, said monies should be attributable as income to the [appellant] for purposes of computing the [appellant's] child support obligation. Appellant apparently disputes the court's factual determina- tion that the payments were not for billing services but were sham payments which appellant could recover at any time. Above all, a reviewing court should be guided by a presumption that the findings of a trial court are correct ***. In re Jane Doe 1 (1991), 57 Ohio St.3d 135, 138. Appellant does not argue that the trial court's decision is not supported by competent, credible evidence. See Seasons Coal Co. v. Cleveland (1984), 10 Ohio St.3d 77, 80. Under these circumstances, this court will not substitute its judgment for the trial court's. The third assignment of error is overruled. D. Cross-Appeal. THE TRIAL COURT ERRED, AS A MATTER OF LAW, IN GRANTING DEFENDANT'S MOTION FOR ATTORNEY FEES ERRONEOUSLY ORDERING PLAINTIFF/CROSS-APPELLANT TO PAY THE SUM OF $8,200.00 IN LEGAL FEES ALLEGEDLY DUE UNDER A PRIOR AGREEMENT AND/OR COURT ORDER, BUT WHICH WERE NOT ENCOMPASSED WITHIN ANY AGREEMENT OF THE PARTIES OR PRIOR COURT ORDER. -14- Appellee contends the court erred by awarding attorney's fees against her because the court's prior orders did not require her to pay those fees. Appellee did not object to the referee's report and recommendation on this matter. Pursuant to Civ.R. 53(E)(3)(b), "[a] party shall not assign as error on appeal the court's adoption of any finding of fact or conclusion of law unless the party has objected to that finding or conclusion under this rule." Whatever the merits of her argument might be, appellee waived the argument by failing to object to the referee's report. Accordingly, the cross-appeal is overruled and the judgment of the common pleas court is affirmed. Judgment affirmed. -15- It is ordered that appellee recover of appellant her 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 Court of Common Pleas, Domestic Relations Division, 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 D. SWEENEY, J. and MICHAEL J. CORRIGAN, J. CONCUR PRESIDING JUDGE KENNETH A. ROCCO 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 .