Horvath v. Horvath

2010 Ohio 316

• Court: Ohio Court of Appeals
• Decided: February 1, 2010
• Docket: 14-09-22
• Status: Published

Opinion

[Cite as Horvath v. Horvath, 2010-Ohio-316.]

IN THE COURT OF APPEALS OF OHIO THIRD APPELLATE DISTRICT UNION COUNTY

SUZANNE HORVATH,

PLAINTIFF-APPELLANT, CROSS-APPELLEE, CASE NO. 14-09-22

v.

JEFFREY LOUIS HORVATH, OPINION DEFENDANT-APPELLEE, CROSS-APPELLANT.

Appeal from Union County Common Pleas Court Domestic Relations Division Trial Court No. 08-DR-0011

Judgment Affirmed

Date of Decision: February 1, 2010

APPEARANCES:

Douglas B. Dougherty for Appellee/Cross-Appellant

Lianne Sefcovic for Appellant/Cross-Appellee Case No. 14-09-22

SHAW, J.

{¶1} Plaintiff-Appellant/Cross-Appellee Suzanne Horvath (“Suzanne”)

appeals the June 5, 2009 Judgment Entry of the Union County Court of Common

Pleas, Domestic Relations Division, granting a divorce between Suzanne and

Defendant-Appellee/Cross-Appellant Jeffrey Louis Horvath (“Jeffrey”) specifying

the division of marital property and apportioning the marital debt between the

parties.

{¶2} Suzanne and Jeffrey married on July 4, 1998 in Columbus, Ohio.

The couple resided in Plain City, Ohio for the duration of their marriage. No

children were born from their union. On January 15, 2008, Suzanne filed a

complaint for divorce citing incompatibility as the grounds for the petition.

Jeffery filed a timely answer and the case proceeded to trial. The parties separated

on January 26, 2008.

{¶3} On February 15, 2008, Jeffrey filed a motion for temporary orders

requesting the court to order Suzanne to contribute to the mortgage payment on

the marital residence and other monthly expenses. During the course of their

almost ten-year marriage, the couple accumulated a significant amount of

indebtedness, including approximately $74,000 in credit card debt. On March 4,

2008, the court issued temporary orders taking effect on February 26, 2008, that

apportioned the mortgage payment according to each party’s contribution to the

household income. Suzanne was ordered to pay 39% of the $1,332 monthly

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mortgage payment and Jeffrey was ordered to pay the remaining 61%. Jeffrey

continued to live in the marital residence and was ordered to be responsible for the

monthly utility bills. Jeffery also expressed an interest in retaining the home after

the completion of the divorce. The court ordered him to bring a letter to the pre-

trial hearing from a financial institution demonstrating its approval to refinance the

house in his name.

{¶4} With regard to the monthly credit card payments, the court ordered

each party to pay the minimum monthly payments on the accounts held in their

respective names. In addition, the court also ordered Suzanne to pay 50% of

monthly payments owed on the two credit card accounts held jointly by the

parties. Suzanne’s monthly payment on these debts totaled $288. Despite the

court order, Suzanne failed to make her share of these payments. As a result,

Jeffrey continued to pay both parties’ portions of the debts.

{¶5} On July 8, 2008, the court stayed the divorce proceedings due to

Suzanne’s filing of a Chapter 7 Bankruptcy petition. In her voluntary petition for

bankruptcy, Suzanne listed Jeffrey as an unsecured creditor with a disputed non-

priority claim. Jeffrey did not enter an appearance during the bankruptcy

proceedings. Due to the automatic stay effectuated by the bankruptcy

proceedings, the divorce case remained on an inactive status until Suzanne’s

discharge in bankruptcy which was granted on September 30, 2008. As of that

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date, the divorce case again became active and was set to be heard by the

Magistrate.

{¶6} In preparation for trial, the parties submitted a list of joint

stipulations. The parties agreed to the disposition of certain marital and separately

owned property. However, they stipulated that the trial court would determine the

division and allocation of the following assets and liabilities: the marital residence,

the parties’ respective 401K savings plans and a loan taken against one of the

plans, Jeffrey’s pension, an existing loan on an all terrain vehicle (“ATV”), and

eight credit card accounts with a total balance of $35,572. Six of these accounts

were held in Jeffrey’s name and the remaining two accounts were jointly held.

Jeffery also filed a motion for contempt requesting the court to order Suzanne to

show cause for her failure to comply with the temporary orders which required her

to make payments on the mortgage and joint credit card accounts.

{¶7} The final hearing concluded on December 30, 2008, where the

contempt motion was also heard. The Magistrate issued a decision on January 5,

2009, granting Suzanne’s petition for divorce and dividing the marital property.

The decision also denied Jeffrey’s motion for contempt based on Suzanne’s

discharge in bankruptcy. Specifically, the Magistrate found that Suzanne’s

discharge in bankruptcy precluded the state court from allocating any of the

marital debt to Suzanne because Jeffrey was named as a creditor in Suzanne’s

bankruptcy petition and he took no action to seek protection in that proceeding.

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As a result, the Magistrate found that it was not only bound by the specific

bankruptcy discharge order but also, had no authority to apportion to Suzanne any

of the remaining marital debts not specifically addressed in the bankruptcy order,

or to enforce the state court’s temporary orders. The trial court subsequently

adopted the Magistrate’s decision.

{¶8} Jeffrey filed timely objections to the Magistrate’s decision citing,

among other things, the Magistrate’s failure to find Suzanne in contempt for not

complying with the court’s temporary orders and objecting to the Magistrate’s

division of the parties’ property and debt. In response, the trial court ordered each

party to submit their respective proposed findings of facts and conclusions of law.

{¶9} On May 13, 2009, the trial court sustained Jeffrey’s objections.

Specifically, the trial court held that because Suzanne submitted to the joint

stipulations—which directed the trial court to divide the marital debts held jointly

by the parties and/or held solely in Jeffrey’s name—she waived her right to assert

her bankruptcy as a defense. The court proceeded to divide the marital property

and allocated one half of the debt held in Jeffrey’s name to Suzanne which totaled

$13,554. However, the court held Jeffrey solely responsible for the two jointly

held credit card accounts. In addition, the court also found Suzanne in contempt

of the court’s temporary orders and held her responsible for $5,492.46, the amount

Jeffrey asserted that she failed to pay under that order. The court also awarded the

marital residence to Jeffrey.

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{¶10} On May 20, 2009, Jeffrey filed a motion for reconsideration

requesting the court to recalculate the division of the marital debt and assets.

Specifically, Jeffrey contended that the trial court should have equally divided the

jointly held credit card debt instead of assigning him sole responsibility for the

entire balance. With regard to the marital residence, the parties stipulated that the

house was valued at $145,000 and that it was encumbered with a $163,008

mortgage held jointly by the parties. Jeffrey claimed that the court should have

credited him with half the negative equity in the marital residence offsetting the

final amount the court ordered him to pay Suzanne.

{¶11} On June 5, 2009, the trial court denied Jeffrey’s motion for

reconsideration. As the grounds for denial, the court stated that the parties

stipulated to the value of the house and that because Jeffery was reimbursed

$5,492.46 for certain mortgage obligations related to the house, it would be

inequitable and unjust to equally divide these debts between the parties. The trial

court then entered the final divorce decree incorporating the property and debt

division listed above.

{¶12} Suzanne filed an appeal to this Court asserting one assignment of

error.

SUZANNE’S ASSIGNMENT OF ERROR

THE TRIAL COURT ERRED BY EQUALLY DIVIDING THE PARTIES’ MARITAL DEBT WHEN MS. HORVATH RECEIVED A DISCHARGE IN BANKRUPTCY FOR THE

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OUTSTANDING MARITAL DEBT OWED TO MR. HORVATH AND WHEN SHE DID NOT VALIDLY WAIVE HER BANKRUPTCY DISCHARGE RELATING TO THOSE DEBTS.

{¶13} Additionally, Jeffrey filed a cross-appeal asserting one assignment of

JEFFREY’S ASSIGNMENT OF ERROR

THE TRIAL COURT ERRED WHEN IT FAILED TO EQUITABLY DISTRIBUTE THE PARTIES’ PROPERTY AND DEBT.

{¶14} In her sole assignment of error, Suzanne maintains that the trial court

did not have the authority to apportion to her the marital debt held in Jeffrey’s

name. Specifically, Suzanne argues that her discharge in bankruptcy absolved her

of the responsibility to pay any of the marital debt accumulated over the ten-year

marriage. Initially, we note that the credit card debt titled in Suzanne’s name

alone is not in dispute. Each of these debts was listed in Suzanne’s bankruptcy

petition. However, the crux of the parties’ dispute arises from the trial court’s

allocation of half of the credit card debt held in Jeffrey’s name to Suzanne in the

divorce decree.

{¶15} The filing of Suzanne’s petition for bankruptcy initiated an

automatic stay in the divorce proceedings until the bankruptcy court resolved the

action for discharge. Once the trial court received notice that Suzanne’s petition

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had been ruled upon by the bankruptcy court, it could then proceed with the

divorce action. At trial for the divorce, Suzanne submitted her bankruptcy petition

as an exhibit. She listed Jeffrey as a creditor in the petition. In describing

Jeffrey’s claim she simply stated, “potential disputed claim of estranged spouse”

and listed the amount of the claim as “unknown.” Suzanne argues that the action

of listing Jeffrey as a potential creditor in her bankruptcy petition—regardless of

any claim actually materializing during the pendency of the bankruptcy or

thereafter—deprived the state trial court of jurisdiction to apportion any of the

marital debt to her in the subsequent divorce action.

{¶16} In other words, Suzanne asserts that when she filed for bankruptcy

and listed Jeffery as a possible creditor, any matter relating to the division of

marital debt that could have been raised by Jeffery in the divorce proceeding could

thereafter only be litigated in the bankruptcy proceedings and not in the state

domestic relations court—whether Jeffery actually raised a claim in the

bankruptcy or not. Based on this belief, Suzanne argues that once she achieved a

discharge in bankruptcy, the state trial court had no further authority to apportion

any remaining debts to her—whether these debts were specifically noted in her

bankruptcy petition and discharge or not.1 As a result, Suzanne argues that the

1 The record contains Suzanne’s Voluntary Petition for Bankruptcy which was introduced as an exhibit at the divorce trial and a general notice entitled “Discharge of Debtor” ordered by the Bankruptcy Court which was filed with the trial court. There is no evidence indicating the specific debts discharged.

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state trial court had no authority to hold her responsible for half of the debt in

Jeffery's name.

{¶17} Adopting Suzanne’s argument would effectively allow any party in a

pending state divorce case to file a bankruptcy petition listing one debt and

naming the spouse as a potential creditor and thereby permanently deprive the

state court of any further authority to apportion marital debt between the parties—

not only for those debts actually listed in the bankruptcy—but as to any debts that

could have been listed.

{¶18} We are not persuaded that Suzanne’s argument is consistent with

basic principles of concurrent jurisdiction between the state and federal judicial

systems in domestic relations matters. See Barnett v Barnett (1984), 9 Ohio St.3d

47, 49, 458 N.E.2d 834. Nor is Suzanne’s argument consistent with the “domestic

relations exception” to federal jurisdiction which recognizes that state courts have

exclusive jurisdiction in matters involving the issuance of a divorce, alimony, or

child support. See In Re: McMinis (Bkrtcy.N.D.Ohio 2008), No. 07-32411; see

also Ankenbrant v. Richards (1992), 504 U.S. 689, 704.

{¶19} In domestic relations matters, it has been established that state courts

have concurrent jurisdiction with the bankruptcy courts in determining the

allocation of specific obligations that arise from divorce actions. Barnett, supra.

In particular, other appellate districts have stated that the nature of concurrent

jurisdiction permits a state court to determine the dischargeability of a marital

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obligation despite the fact that the issue of dischargeability of that debt was not

raised in the bankruptcy. See Loveday v. Loveday, 7th Dist. No. 02 BA 13, 2003-

Ohio-1431 ¶18 (stating “that when [the] dischargeability of a marital debt is not

raised in bankruptcy court, then it is an issue which may be ruled on by a court

with concurrent jurisdiction after the discharge in bankruptcy.”); see also Markley

v. Markley, 9th Dist. No. 07CA0085, 2008-Ohio-3208 ¶20 (reiterating that the

concurrent jurisdiction allows a state court to rule on the issue of a marital debt

after a discharge in bankruptcy).

{¶20} In the case before us, the record does not convincingly support

Suzanne’s assertion that bankruptcy relieved her of any responsibility for the debts

held in Jeffrey’s name. In her bankruptcy petition, Suzanne listed all the credit

card accounts held in her name specifying the account numbers and the

outstanding balances. However, noticeably absent from the petition is any

mention of the two accounts held jointly by the parties and the six credit card

accounts held in Jeffrey’s name.

{¶21} At the divorce proceedings, the parties’ also submitted, as a joint

exhibit, a spreadsheet detailing each party’s assets and liabilities which were held

both separately and jointly. The joint exhibit provided in pertinent part.

Credit Cards Title Exhibit Estimated Distribution of Marital Held Value Property

Lazarus-Macy (5350) Joint Statement 1,251 To be decided by court Wells Fargo (1926) Joint Statement 7,213 To be decided by court American Express (1001) Wife Bankrupt 0

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Citi (6300) Wife Bankrupt 0 Care Credit (0846) Wife Bankrupt 0 FIA Card Ser M&T (6980) Wife Bankrupt 0 Discover (4127) Wife Bankrupt 0 GE Capitol (Anderson’s) Wife Bankrupt 0 (6745) Wife Bankrupt 0 Lazarus-Macy (5060) Wife Bankrupt 0 Lowe’s (9024) Wife Bankrupt 0 JC Penney (9929) Wife Bankrupt 0 Providian/Washington Mutual (8072) Wife Bankrupt 0 Sam’s Club Wife Bankrupt 0 Talbots (4155) Wife Bankrupt 0 Victoria Secrets (6573) Wife Bankrupt 0 US Bank (World Perks) (6801)

Capital One (7957) Husband Statement 4,977 To be decided by court Circuit City (Chase) (8646) Husband Statement 2,473 To be decided by court Discover (Closed)(7605) Husband Statement 2,170 To be decided by court Discover (7957)(8738)(6039) Husband Statement 5,119 To be decided by court *** Citi (0375) Husband Statement 7,642 To be decided by court Chase Universal (1089)(1615) Husband Statement 4,727 To be decided by court

{¶27} Based on this exhibit, the credit card accounts held in Suzanne’s

name were accounted for in bankruptcy, however, the credit card accounts held

jointly and in Jeffrey’s name appeared to be unaffected by the bankruptcy

discharge. The only evidence Suzanne offered at trial to the contrary regarding

these debts, was the opinion testimony of the attorney who represented her in the

bankruptcy proceedings. However, we do not find this testimony to be conclusive

in demonstrating whether Suzanne remained responsible for the debts held jointly

and in Jeffrey’s name after her discharge in bankruptcy.

{¶28} In addition to the exhibits previously mentioned, we note that the

parties submitted a list of joint stipulations specifically directing the trial court to

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allocate certain debts between the parties including the credit cards held jointly

and in Jeffrey’s name. The “Parties’ Joint Stipulations for Trial” signed by both

parties and their counsel states, in pertinent part:

10. The parties agree to the division of the assets and debts as outlined in the attached exhibit one with the noted exception that the court shall determine the division of the following assets and debts: * * * (marital residence), Honda 401K Savings Plan, Honda Pension, Cleveland Clinic 401K, GMAC Mortgage, Honda Loan on ATV, Lazarus-Macy [sic], Wells Fargo, Capital One, Circuit City, Discover, Citi, Chase Universal and Honda 401K loan.

Parties’ Joint Stipulation, at 2 (amounts of debts omitted). (Emphasis added). In

sum, based on the evidence submitted at the divorce proceedings, it appears that

both parties specifically acknowledged the authority of the trial court to allocate

these debts between them. Therefore, whether it constitutes a viable waiver or not,

Suzanne’s assertion on appeal that the trial court did not have jurisdiction to divide

these debts, at the very least, is completely inconsistent with her own stipulated

assessment of the trial court’s authority as expressed at the divorce proceedings.

{¶29} Therefore, based upon the foregoing principles of concurrent

jurisdiction shared by the trial court and the bankruptcy court in these matters—

which Suzanne appears to have expressly acknowledged in the joint exhibits

submitted to the trial court—we conclude that the trial court had the authority to

divide the marital debts in dispute. We reiterate that there is no issue raised in this

case as to the exclusive authority of the bankruptcy court with regard to the debts

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in Suzanne's name which were specifically listed in the bankruptcy petition.

However, Suzanne’s assignment of error is overruled.

{¶30} In asserting his sole assignment of error, Jeffrey argues that the trial

court failed to equitably distribute the parties’ property and debt. Specifically,

Jeffrey challenges the trial court’s allocation of the jointly held credit card

accounts as his sole responsibility and the valuation of the marital residence in the

final divorce decree. Revised Code Section 3105.171(C)(1) governs the division

of marital property and provides, in part:

[T]he division of marital property shall be equal. If an equal division of marital property would be inequitable, the court shall not divide the marital property equally but instead shall divide it between the spouses in the manner the court determines equitable.

Initially, we note that “[a]lthough an equal division is a starting point when

allocating marital property and debt, a decision need not be equal to be equitable.”

Shaffer v. Shaffer, 3d Dist. No. 11-04-22, 2005-Ohio-3884, ¶25, citing R.C.

3105.171(C)(1); Lust v. Lust, 3d Dist. No. 16-02-04, 2002-Ohio-3629, ¶25. Trial

courts generally have broad discretion in determining the equitable distribution of

property in divorce cases; and therefore, we review the overall appropriateness of

the trial court’s property distribution under and abuse of discretion standard.

Martin v. Martin, 3d Dist. No. 9-03-47, 2004-Ohio-807, ¶6, citing Lust, 2002-

Ohio-3629; Bisker v. Bisker (1994), 69 Ohio St.3d 608, 635 N.E.2d 308; Martin v.

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Martin (1985), 18 Ohio St.3d 292, 480 N.E.2d 1112. An abuse of discretion

implies that the trial court’s attitude was unreasonable, arbitrary, or

unconscionable. Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219, 450

N.E.2d 1140.

{¶31} At the final hearing, Jeffrey requested the court to hold Suzanne in

contempt for failing to comply with the court’s temporary orders. Jeffrey argued

that the amount of Suzanne’s obligation at the time of the final hearing totaled

$5,492.46. However, Jeffrey did not present any evidence regarding how he

calculated this amount. The court therefore presumed that this amount represented

Suzanne’s share of these obligations as of the time of the final hearing. The trial

court found Suzanne was obligated to pay Jeffrey for her share of these debts and

ordered Suzanne to reimburse Jeffrey. Therefore, $5,492.46 was deducted from

Suzanne’s share of the marital assets.

{¶32} In the divorce decree, the trial court ordered Jeffrey solely

responsible for the two credit card accounts which were held jointly in both parties

name. The total outstanding balance at the time of the final hearing was $8,464.

The trial court also awarded the marital residence to Jeffrey and noted that the

parties retained zero equity in the value of house. As part of the submitted joint

stipulation, the parties stated that the actual value of the marital residence was

$145,000 and that the parties jointly held a $163,008 mortgage on the property.

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Jeffrey maintains that the trial court should have attributed a negative equity of

$18,008 to the house instead of stating the house had zero equity.

{¶33} Our review of the record reveals that the temporary orders were

executed prior to Suzanne filing of her bankruptcy petition. In her petition,

Suzanne listed the marital residence as the only joint debt. Jeffrey continued to

reside in the marital home throughout the pendency of the divorce proceedings and

was ultimately awarded the house. In assigning responsibility for the joint credit

card accounts, the trial court found it “would be inequitable and unjust to assign

any portion of [these debts to Suzanne] since the award of $5492.46 was applied

to these debts during the pendency of this case.” (Divorce Decree, Conclusion of

Law N(c)). Given that the total balance remaining on the joint credit card

accounts was $8,464 and in light of the fact that Jeffrey retained the use and

enjoyment of the marital residence for the duration of the divorce proceedings, we

cannot find that the trial court abused its discretion. Jeffrey’s assignment of error

is therefore overruled.

{¶34} Based on the foregoing, the June, 5 2009 Judgment of the Union

County Court of Common Pleas, Domestic Relations Division, is affirmed.

WILLAMOWSKI, P.J. and PRESTON, J., concur.

/jlr

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