Janis v. Janis

2011 Ohio 3731

• Court: Ohio Court of Appeals
• Decided: July 29, 2011
• Docket: 23898
• Status: Published

Opinion

[Cite as Janis v. Janis, 2011-Ohio-3731.]

IN THE COURT OF APPEALS FOR MONTGOMERY COUNTY, OHIO

PATRICK JANIS :

Plaintiff-Appellant : C.A. CASE NO. 23898

v. : T.C. NO. 05DR1174

DEBORAH JANIS : (Civil appeal from Common Pleas Court, Domestic Relations) Defendant-Appellee :

:

..........

OPINION

Rendered on the 29th day of July , 2011.

JOSE M. LOPEZ, Atty. Reg. No. 0019580, 18 East Water Street, Troy, Ohio 45373 Attorney for Plaintiff-Appellant

CHRISTOPHER R. CONARD, Atty. Reg. No. 0039751 and SASHA ALEXA M. VanDeGRIFT, Atty. Reg. No. 0080800, 33 W. First Street, Suite 600, Dayton, Ohio 45402 Attorneys for Defendant-Appellee

FROELICH, J.

{¶ 1} Patrick Janis appeals from a Final Judgment and Decree of Divorce entered by

the Montgomery County Court of Common Pleas, Domestic Relations Division. He

challenges the trial court’s distribution of marital assets and debts, including its determination

of separate and marital assets, and its award of attorney fees to Deborah Janis. For the 2

following reasons, the judgment of the trial court will be affirmed in part, modified in part,

reversed in part, and remanded for further proceedings.

I

{¶ 2} The parties were married in 1986. Mrs. Janis received a substantial inheritance

from a neighbor, Joseph Updyke, in 1998. Mr. Janis filed for divorce in September 2005,

and the parties agreed to use September 30, 2005, as the de facto date of the end of the

marriage for the purpose of valuing assets. Mrs. Janis had one child before the marriage, and

one child was born during the marriage, both of whom were emancipated by the time of the

divorce. The contentious divorce proceedings extended over several years and two

multi-day hearings.

{¶ 3} During the divorce proceedings, much of the dispute over the division of assets

centered on the extent to which Mrs. Janis’s inheritance was traceable separate property that

should be returned to Mrs. Janis. The distribution of assets was also complicated by the fact

that, on the advice of an accountant, the Janises placed many of their assets into a “fortress

plan,” whereby they formed a C-corporation and two limited partnerships to hold and manage

their assets.

{¶ 4} During the divorce proceedings, the trial court repeatedly expressed its

frustration and displeasure with the perceived delay and gamesmanship in which Mr. Janis

and one of his attorneys engaged prior to and during the first hearing. (Mr. Janis is an

attorney himself.) Mr. Janis was represented by a different attorney at the second hearing.

{¶ 5} The Final Judgment and Decree of Divorce was entered on February 19, 2010.

The trial court’s resolution of the disputed issues can be summarized as follows. The trial 3

court awarded several hundred thousand dollars to Mrs. Janis as her separate property

traceable to her premarital assets and her inheritance, and it divided the assets that it found to

be marital assets fairly equally. Additionally, the trial court awarded Mrs. Janis $38,000 in

attorney fees; this award was motivated, at least in part, by the court’s frustration with Mr.

Janis’s and one of his attorneys’ conduct.

II

{¶ 6} A brief description of the parties’ assets, including the trial court’s disposition

of each asset, will be helpful to our discussion of the assignments of error.

The Marital Residences

{¶ 7} With respect to their marital residences, both parties testified to the following

facts. Mrs. Janis bought the house at 321 Hadley Road in Oakwood in the early 1980s. The

parties married in 1986, at which time the Hadley property was appraised at $73,000.

Numerous improvements were completed during the marriage, including the replacement of

the furnace and duct work, professional landscaping, upgraded electric, the addition of air

conditioning and an attic fan, and repainting and refinishing the floors of two bedrooms.

{¶ 8} The house was sold in 1989 for $100,000, and the parties purchased a house at

19 Ivanhoe Avenue, also in Oakwood, which was jointly titled. In order to effectuate this

purchase, Mrs. Janis took out a $39,000 “swing loan” on the Hadley property. When the

Hadley property sold, the Hadley mortgage and the swing loan were paid off, and the $39,000

appears to have become part of the money contributed toward the purchase of the Ivanhoe

property. In addition to paying off the swing loan and mortgage, the parties cleared

approximately $4,500, which was placed in a joint account. The parties lived in the home on 4

Ivanhoe until their separation.

{¶ 9} The parties disagreed as to whether the $39,000 swing loan was separate

property for which Mrs. Janis should be repaid upon the sale of the Ivanhoe house. They

also disagreed over the extent to which the appreciation on the Hadley property had been

attributable to the parties’ work on the home, which would make it marital property, or to

passive appreciation of the property, which would be treated as separate property (because the

house was Mrs. Janis’s separate property when the parties married).

{¶ 10} The trial court ordered the parties to sell their house on Ivanhoe. From the

anticipated proceeds of that sale, it awarded each party an amount equal to half of the

appreciation of the Hadley property between the date of their marriage and the date of sale of

that property ($100,000 - $73,000 = $27,000; $27,000/2 = $13,500 each). Additionally, the

court awarded Mrs. Janis $39,000 “as reimbursement for her contribution to the swing loan”

and ordered the return of all other funds used from the sale of Hadley to purchase Ivanhoe.1

In a separate section of the judgment dealing with the disposition of the Ivanhoe property, the

trial court stated that, after paying the costs associated with the sale of Ivanhoe, Mrs. Janis

“shall be reimbursed for the contribution she made from her pre-marital home ($39,000.00

swing loan) and her one-half of the increase in value of the Hadley real estate ($13,500.00)

for a total of $52,500.00, Thereafter, the net sale proceeds shall be divided equally between

the parties.”

Pennywise

{¶ 11} Pennywise was a C-corporation established as part of a “fortress plan,” which

1 There is no evidence in this record that other funds from the sale of Hadley were used to purchase Ivanhoe. 5

the Janises set up in 1998 to handle investments. Mr. Janis also referred to it as a “shell

corporation.” The fortress plan was established on the advice on an accountant, Douglas

Talmage, for tax and estate planning purposes. Pennywise was the general partner in two

limited partnerships, the Cavalier Manor Limited Partnership and the Manna Limited

Partnership, which will be discussed below. The shares of the Pennywise corporation were

held by Mr. and Mrs. Janis (33% each); their two sons (16½% each); and the Dayton

Foundation (one percent).

{¶ 12} The trial court awarded Pennywise to Mr. Janis, but it ordered him to

reimburse Mrs. Janis for half of the $5,106.44 that was in the corporate account at the end of

the marriage and to pay to Mrs. Janis half the $4,000 in loans he had taken from Pennywise

for the alleged payment of property taxes after the de facto end of the marriage. Cavalier

Manor

{¶ 13} Cavalier Manor is a limited partnership that the Janises formed in 1998 to own

and acquire real estate. Mr. and Mrs. Janis each held a 49.5% interest in Cavalier Manor,

and Pennywise held a one percent interest. Cavalier Manor’s primary asset was a four-unit

apartment building located at 440 Lonsdale Avenue in Oakwood.

{¶ 14} When the Lonsdale apartment building was purchased, the Janises could not

get a mortgage in the partnership’s name, so Mr. Janis obtained financing and the building

was titled in his name. According to Mr. Janis, the building was purchased, in part, with

$85,111 that Mrs. Janis “gifted” to him from her inheritance, as evidenced by a gift letter (Ex.

I-8) that was required by the bank, and with $15,000 from marital funds. He testified that

substantial additional funds were contributed over time from marital assets. The apartment 6

building on Lonsdale was appraised at $265,000 while the divorce was pending; the amount

of outstanding debt on the property was unclear.

{¶ 15} Mrs. Janis lived with one of her sons in one of the Lonsdale apartment units,

rent free, during the divorce proceedings, in lieu of receiving temporary spousal support.

Mr. Janis continued to manage and maintain the property while the divorce was pending. He

claimed that he and Pennywise made loans to Cavalier Manor during this period to cover

property taxes.

{¶ 16} After the parties separated, a prospective tenant with a physical impairment

filed a complaint against Cavalier Manor with the Ohio Civil Rights Commission, alleging

that Mr. Janis had refused to make requested modifications to one of the apartment units to

accommodate the impairment. This claim had been settled by the time of the final judgment

and decree of divorce, but Mrs. Janis sought reimbursement from Mr. Janis for her attorney

fees with respect to that claim.

{¶ 17} The court refused to treat the $85,111 contributed by Mrs. Janis to the

purchase of the Lonsdale property as her separate property, treating it instead as a gift. The

court ordered that the apartment building be sold and the proceeds divided equally between

the parties. After doing so, Mr. Janis was ordered to dissolve the partnership and provide a

full and final accounting. The court refused to award any attorney fees to Mrs. Janis that

were incurred in relation to the OCRC claim, and it refused to reimburse Mr. Janis for the

loans he claimed to have made to Cavalier Manor.

{¶ 18} Manna

{¶ 19} Manna is a limited partnership established by the Janises in 1998 to manage 7

investments. As with Cavalier Manor, the Janises initially owned 49.5% each and Pennywise

owned one percent. The Janises subsequently made gifts to their sons of small interests in

Manna, and one of the sons purchased an additional interest with an investment of $22,500.

At the time of the divorce, Mr. Janis and Mrs. Janis owned 45.3% each, the sons owned small

percentages, and Pennywise owned one percent.

{¶ 20} At the time of the divorce, Manna had accounts with Salomon Smith Barney,

Intrust, Key Investments, and other funds. Mrs. Janis presented testimony and documentary

evidence tracing a large portion of the funds in the Manna accounts to accounts that she had

originally opened in her name only and into which she had deposited money from the sale of

Updyke’s farm, house, and other assets. She asked the court to divide the Manna accounts

in proportion to the parties’ respective investments, rather than their ownership interests, to

reflect that a substantial portion came from her separate property.

{¶ 21} Mr. Janis testified that he believed the assets in the Manna accounts were

marital assets, although he acknowledged that some of the assets originally came from Mrs.

Janis’s inheritance. He claimed that Mrs. Janis had made a gift to him up to the amount of

his ownership interest and asked that the assets be distributed in accordance with the

ownership interests. He also claimed that some marital assets had been put in accounts

under Mrs. Janis’s name only for liability purposes.

{¶ 22} Relying on Mrs. Janis’s testimony and exhibits, the court found that the

investment in Manna attributable to marital property was $85,714. It distributed the Manna

assets as follows: 13% to be divided equally between the parties, representing the marital

share of the partnership; 3.89% and 8.23% to the parties’ two sons, James and Tyler, 8

respectively; and the remainder to Mrs. Janis as her separate property. This formula awarded

74.88% of Manna to Mrs. Janis as her separate property and 6.5% as her share of the marital

property. The trial court also gave Mrs. Janis the option to buy out Mr. Janis’s interest in

Manna in a specified manner.

{¶ 23} In addition to its disposition of the parties’ assets, the trial court awarded

$38,000 to Mrs. Janis for attorney fees.

{¶ 24} Mr. Janis appeals from the Final Judgment and Decree of Divorce, raising

seven assignments of error.

III

{¶ 25} As a preliminary matter, we will address a motion filed by Mrs. Janis, after the

briefs were filed in this appeal, to overrule Mr. Janis’s first and second assignments of error

as moot, because Mr. Janis had “unconditionally accepted payment for his portion” of the

assets at issue therein: the Manna and Ivanhoe assets.

{¶ 26} While the appeal was pending, Mr. Janis was issued and negotiated two checks

from Wells Fargo, drawn on the Manna accounts, in the amounts of $20,059.97 and

$2,378.88. Mrs. Janis contends that these funds “constitute the entire amount Patrick Janis

is due for the Manna assets pursuant to the divorce decree, save approximately $188.00 from

the final Manna account to be distributed.” Mr. Janis also received a check for $118,494.82

from Key Bank, representing his share of the proceeds from the sale of the Ivanhoe property;

he did not deposit this check.

{¶ 27} In her motion, Mrs. Janis contends that, “when a non-appealing party obtains

satisfaction of judgment, the issues raised in the appeal are rendered moot and must be 9

dismissed.” She claims that Mr. Janis’s acceptance of payment for the Manna and Ivanhoe

assets rendered his appeal of these awards moot. She relies on Blodgett v. Blodgett (1990),

49 Ohio St.3d 243, 245.

{¶ 28} In several cases, we have noted the unique circumstances in Blodgett, wherein

the wife accepted the full amount awarded to her in the trial court’s judgment and decree of

divorce and signed a satisfaction of judgment while an appeal was pending. See, e.g.,

Englewood v. Turner, 178 Ohio App.3d 179, 2008-Ohio-4637, ¶43; Chase Manhattan

Mtge. Corp. v. Locker, Montgomery App. No. 19904, 2003-Ohio-6665, ¶38. Those facts do

not exist in this case. Blodgett does not stand for the proposition that any payment toward

the satisfaction of a judgment while an appeal is pending renders moot the appeal or any

specific issue therein. Mrs. Janis has cited no authority for her suggestion that certain

aspects of an appeal can be rendered moot by the actions of the parties without an agreement

to that effect and without payment in full.

{¶ 29} Mrs. Janis’s argument that the judgment was substantially satisfied relies on

the fact that Mr. Janis failed to return a check that was written to him, although he did not

deposit or cash the check, because in doing so, he retained access to the funds. We are

unpersuaded by Mrs. Janis’s argument that substantial satisfaction of a judgment (rather than

full satisfaction) can render an appeal moot, or that tendered payment can constitute

satisfaction.

{¶ 30} Mrs. Janis’s Motion to Overrule Mr. Janis’s first and second assignments of

error as moot is overruled. We will address all of Mr. Janis’s arguments.

IV 10

Standard of Review

{¶ 31} When dividing married parties’ assets and liabilities upon divorce, a court

must first determine what is marital property and what is not. The trial court must classify

property as marital or separate, and must distribute separate property to the owner, where

appropriate. R.C. 3105.171(B) and (D). A trial court’s classification of property as marital

or separate must be supported by competent, credible evidence. Mays v. Mays, Miami App.

No. 2000-CA-54, 2001-Ohio-1450; Renz v. Renz, Clermont App. No. CA2010-05-034,

2011-Ohio-1634, ¶17.

{¶ 32} Classification of property is governed by R.C. 3105.171. R.C.

3105.171(A)(3)(a) provides, in pertinent part, that marital property includes:

{¶ 33} “(i) All real and personal property that currently is owned by either or both of

the spouses, including, but not limited to, the retirement benefits of the spouses, and that was

acquired by either or both of the spouses during the marriage;

{¶ 34} “(ii) All interest that either or both of the spouses currently has in any real or

personal property, including, but not limited to, the retirement benefits of the spouses, and

that was acquired by either or both of the spouses during the marriage;

{¶ 35} “(iii) Except as otherwise provided in this section, all income and appreciation

on separate property, due to the labor, monetary, or in-kind contribution of either or both of

the spouses that occurred during the marriage.”

{¶ 36} Under R.C. 3105.171(A)(6)(a), separate property is defined, in pertinent part,

as “all real and personal property and any interest in real or personal property that is found by

the court to be any of the following: 11

{¶ 37} “(i) An inheritance by one spouse by bequest, devise, or descent during the

course of the marriage;

{¶ 38} “(ii) Any real or personal property or interest in real or personal property that

was acquired by one spouse prior to the date of the marriage;

{¶ 39} “(iii) Passive income and appreciation acquired from separate property by one

spouse during the marriage.”

{¶ 40} “The commingling of separate property with other property of any type does

not destroy the identity of the separate property as separate property, except when the

separate property is not traceable.” R.C. 3105.171(A)(6)(b). “[T]he holding of title to

property by one spouse individually or by both spouses in a form of co-ownership does not

determine whether the property is marital or separate property. Instead, the couple’s total

circumstances are reviewed.” Nuding v. Nuding (Dec. 7, 1998), Mercer App. No. 10-97-13,

citing Mayer v. Mayer (1996), 110 Ohio App.3d 233, 236; R.C. 3105.171(H).

{¶ 41} The burden of proof that specific property is not marital but separate is upon

the proponent of the claim to prove by a preponderance of the evidence. Peck v. Peck

(1994), 96 Ohio App.3d 731, 734; Snyder v. Snyder, Clark App. No. 2002-CA-6,

2002-Ohio-2781. “Oral testimony as evidence, without corroboration, may or may not

satisfy the burden.” Maloney v. Maloney, 160 Ohio App.3d 209, 2005-Ohio-1368, ¶23,

citing Fisher v. Fisher, Montgomery App. No. 20398, 2004-Ohio-7255. “Because

traceability presents a question of fact, we must give deference to the trial court’s findings,

and the court’s decision on the matter will not be reversed as against the manifest weight of

the evidence when it is supported by competent credible evidence.” Id., citing C.E. Morris 12

Co v. Foley Constr. Co. (1978), 54 Ohio St.2d 279.

{¶ 42} “Once it is proven that specific property was the separate property of one of

the spouses at, or after, the time of the marriage, the burden shifts to the other spouse to

prove, by clear and convincing evidence, that the property, or some interest therein, has been

given to the other spouse.” Snyder, supra, citing Helton v. Helton (1996), 114 Ohio App.3d

683, 685.

{¶ 43} Then, in considering whether a trial court’s division of marital assets and

liabilities is fair and equitable, appellate courts review a trial court’s decision under an abuse

of discretion standard. Koegel v. Koegel (1982), 69 Ohio St.2d 355, 357; Mays, supra.

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. A trial court must

indicate the basis for its division of marital property in sufficient detail to enable a reviewing

court to determine whether the award is fair, equitable, and in accordance with the law.

Young v. Young, Clark App. Nos. 08CA59 and 08CA61, 2009-Ohio-3504, ¶6; R.C.

3105.171(G).

{¶ 44} We are mindful that marriage is not inherently a business arrangement, and an

equitable distribution, by definition, does not account for every financial jot and tittle of the

relationship.

V

{¶ 45} Mr. Janis’s first assignment of error states:

{¶ 46} “THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION WHEN IT

AWARDED 74.88% OF THE MANNA LP INVESTMENT ACCOUNTS TO 13

DEFENDANT, DEBORAH JANIS, AS HER SEPARATE PROPERTY.”

{¶ 47} Mr. Janis argues that the trial court erred in awarding Mrs. Janis 74.88% of the

Manna investment accounts as her separate property, because she did not trace her

contributions to separate property from her inheritance. He also claims that, because the

fortress agreement established a joint retirement plan, Mrs. Janis should be presumed to have

made an intervivos gift of all separate property that she contributed to Manna up to the

percentage of his ownership interest.2 In refuting Mrs. Janis’s claim that only $85,713.82

was marital property, Mr. Janis relies on the fact that there was no documented contribution

to Manna in the amount of $85,713.82. He also points out that the parties’ tax returns

reflected their ownership interests, not their respective contributions to the partnership, and

that Mrs. Janis “never questioned” these ownership percentages.

{¶ 48} As discussed above, ownership interests or percentages are not dispositive in

determining whether assets are separate or marital. The key issue is traceability. Thus, Mr.

Janis’s argument that the property must be marital property because Mrs. Janis never

challenged the percentages of ownership listed in the partnership agreement or on the tax

returns is not determinative.

{¶ 49} Mrs. Janis presented statements from and testified about numerous investment

accounts. For a Key Investments Inc. account, listed in Mrs. Janis’s name only, Mrs. Janis

provided a statement for the period January 30 - February 26, 1999. The amount reflected in

the account on the opening date of the statement was $85,713.82; during that month, $40,000

2 Although Mr. Janis characterizes Manna as a retirement plan, the accountant, Talmage, testified that he had no indication from the parties that their purpose was to plan for retirement, and he noted that there are better strategies for retirement planning than fortress plans. 14

was deposited into that account. Mrs. Janis testified that the funds originally in the account

were marital funds, but she deposited the $40,000 from her inheritance. A later statement

showed that, on August 27, 1999, this account held $131,466.78. Mrs. Janis also presented a

statement from McDonald Investments Inc. (also through Key Bank and reflecting the same

account number), in the name of the Manna Limited Partnership, which held $131,466.78 as

of August 27, 1999. Mrs. Janis testified that the funds originally located in the Key

Investment account were transferred to the McDonald account in Manna’s name. (See Ex.

J-11). The trial court apparently credited Mrs. Janis’s testimony in concluding that

$85,713.82 in marital property had been contributed to Manna.

{¶ 50} Mrs. Janis testified about several other accounts in her own name into which

she had initially deposited funds from her inheritance, but which she eventually transferred to

Manna accounts. (See Exhibits J-7 through J-14). For example, she presented and testified

about a statement from McDonald Investments (through Key Bank), showing an account with

a prior statement balance of $154,732.28 and a current balance of $0.00, dated February 29,

2000 (Ex. J-12). The account was titled in her name, payable on death to Mr. Janis. Mrs.

Janis testified that the funds in this account were transferred to another McDonald Investment

account, and she supported this testimony with Exhibit J-13, a McDonald account statement,

dated February 29, 2000 and titled to Manna Limited Partnership. Exhibit J-13 showed a

prior statement value of $0.00 and a current value of $163,576.58. According to Mrs. Janis,

these statements reflect the transfer of her inherited assets to Manna.

{¶ 51} Similarly, Mrs. Janis presented documentation and testified about a Smith

Barney account in her name which held $294,824.75 in November 1999 (Exhibit J-14), and a 15

letter of Authorization to Transfer Assets (Exhibit J-15), signed by Mrs. Janis, which

authorized the transfer of assets in the same Smith Barney account to Manna Limited

Partnership in November 1999. She presented her own testimony and documentation about

several other accounts into which substantial amounts had been deposited in her name from

her inheritance between August 1998 and February 2000. The documents showed that the

accounts were eventually emptied, and Mrs. Janis testified that the funds were transferred to

Manna. Mrs. Janis testified that no marital funds had been deposited into any of these

accounts, except for the $85,713.82 deposited into the Key Bank account, as described above.

{¶ 52} Mrs. Janis also presented Mr. Updyke’s will, which named Mrs. Janis as his

sole heir, and the Inventory and Appraisal of Mr. Updyke’s estate from the Montgomery

County Probate Court, which showed that the estate had total assets of $768,356.91.

{¶ 53} Mr. Janis testified that approximately $20,000 in marital assets was initially

invested in Manna. He acknowledged that Mrs. Janis had put funds into Manna that were

from her separate property, but he claimed that the parties had agreed “that they would be our

joint funds to the extent of our ownership interest” of 49.5%. Thus, he argued that, to the

extent that Mrs. Janis’s contribution exceeded her ownership share, she had made a gift of

those funds to him. He also argued that the parties’ joint gifts to their sons demonstrate that

the funds were marital funds, because he “could not gift something to his sons that he did not

own.”

{¶ 54} Mr. Janis also relied on the testimony of the parties’ accountant, Doug

Talmage, in support of his argument that the parties had intended to have equal interests in

the property contributed to the fortress plan. Talmage testified that the parties had expressed 16

to him their intention to have equal ownership interests in the fortress plan and that the

documents were drafted to reflect this request. He further testified that he did not discuss the

source of the money with Mrs. Janis and that she never indicated to him that she was

depositing more than half of the money for the investments. Talmage resisted efforts by Mr.

Janis’s attorney to characterize the payments into the account as “gifts;” he used the term

“investments.”

{¶ 55} Mr. Janis also relies on the limited partnership agreement and tax returns,

which included the parties’ respective ownership interests in Manna.3 Mrs. Janis points out,

however, that the limited partnership agreement also called for the maintenance of accounts

reflecting each limited partner’s capital contributions (Section 2.3.2) and for the repayment of

capital accounts (or a proportionate share of the capital accounts, if insufficient funds

remained to pay in full) upon liquidation or dissolution of the partnership (Section 9.3(f)).

{¶ 56} Based on the evidence presented, the trial court reasonably concluded that Mrs.

Janis had traced a substantial portion of the assets in Manna to her inheritance. She

substantiated the amount of her inheritance and provided documentation of the accounts into

which those funds were initially deposited. She testified and documented that those

accounts were closed or emptied after the Manna Limited Partnership Agreement was

executed, and she testified that the funds in those accounts were transferred to Manna. Mrs.

Janis provided documentation for some, but not all, of the deposits into the Manna accounts,

3 The parties do not dispute that each owned 49.5% when the limited partnership was formed, and the tax returns do reflect this fact. However, the document upon which they rely to substantiate this number – “Exhibit B,” an attachment to trial court Defendant’s Exhibit J, the Agreement of Limited Partnership of Manna Ltd.– is incomplete with respect to the percentages. 17

claiming that some bank records had been destroyed.

{¶ 57} Mr. Janis did not claim that funds has been deposited into Manna from any

other source, except for a relatively small contribution from marital assets. (Mrs. Janis

acknowledged a larger marital contribution.) His position was based on the ownership

percentages as evidence of donative intent and on his own testimony that Mrs. Janis intended

to make a gift to him up to the amount of his ownership percentage.

{¶ 58} As we discussed above, co-ownership does not, in itself, determine whether

property is marital or separate property. R.C. 3105.171(H); Nuding, supra. Moreover, the

trial court’s determination of traceability is a factual question to which we must show

deference unless it is against the manifest weight of the evidence. Maloney at ¶23. There

was competent, credible evidence from which the trial court could have concluded that only

$85,714 of the funds in Manna was marital property. That sum represented 13% of the total

capital contributions to Manna, as found by the trial court.4 Mr. Janis was awarded half of

that amount, or 6.5%. The trial court did not err in this calculation.

{¶ 59} We express no opinion as to whether Mrs. Janis and her sons were awarded the

appropriate percentages of ownership in Manna under the trial court’s calculations. The

only issue pertinent to this appeal is whether the court acted reasonably in awarding Mr. Janis

the percentage that it did.

{¶ 60} The first assignment of error is overruled.

VI

4 The trial court found that the following contributions had been made to Manna: $550,909 by Mrs. Janis from her separate property, $85,714 from marital assets; and $22,500 from the Janises’ son, Tyler. Thus, the total capital contribution was $659,123. The marital contribution of $85,714, as found by the trial court, was 13% of $659,123. 18

{¶ 61} Mr. Janis’s second assignment of error states:

{¶ 62} “THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION WHEN IT

AWARDED $52,000 OF THE VALUE OF THE MARITAL RESIDENCE TO

{¶ 63} Mr. Janis contends that the trial court erred in the amount it credited Mrs. Janis

for her contribution of separate property to the marital residence.

{¶ 64} With respect to the parties’ interests in the Hadley property, the trial court’s

final judgment and decree of divorce stated:

{¶ 65} “The Hadley Avenue property was the pre-marital home of [Mrs. Janis]. The

parties obtained a swing loan of $39,000.00 for the purchase of their home on Ivanhoe

Avenue.

{¶ 66} They used the equity in [Mrs. Janis’s] pre-marital home as security. The

value of this property on the date of marriage was $73,000.00. The value of the date of sale

was $100,000.00. During the time that the parties lived in the Hadley Avenue real estate,

they did some repairs and remodeling. Who did what and how much is the subject of debate

between the two. However, it is undeniable that [Mr. Janis] contributed some money and

time to these improvements. It is not possible to determine from the evidence exactly how

much was done or paid by the parties. Therefore, the increase in value of the property of

$27,000.00 is ORDERED divided equally. Further, [Mrs. Janis] is entitled to the first

$39,000.00 out of the proceeds of the sale of Ivanhoe *** as reimbursement for her

contribution to the swing loan. ***”

{¶ 67} In its order related to the sale of the Ivanhoe property, the trial court ordered 19

the house to be sold, noting that Mr. Janis’s “lack of cooperation [had] caused the delay in

the sale of the house.” “After the costs of the sale are paid, [Mrs. Janis] shall be reimbursed

for the contribution she made from her pre-marital home ($39,000 swing loan) and her

one-half of the increase value of the Hadley real estate ($13,500) for a total of $52,500.00.

Thereafter, the net sale proceeds shall be divided equally between the parties.”

{¶ 68} Both parties testified that they had made numerous improvements to the house

on Hadley after their marriage, but neither presented evidence that would have allowed the

trial court to place a monetary value – other than the total appreciation of the property – on

those improvements. Thus, the trial court acted reasonably in dividing the appreciation in

the Hadley house equally between the parties.5

{¶ 69} The trial court’s decision to credit Mrs. Janis for the full value of the swing

loan is less sound. It is undisputed that equity in the Hadley property was used as collateral

for the swing loan, which apparently served as a down payment on the new house. As we

discussed above, the Hadley house had appreciated $27,000 between the date of the marriage

and the date of the sale, so $27,000 of the total equity in the house was attributable to marital

property. Mrs. Janis did not present any evidence regarding how much she owed on the

house at the time of the marriage or at the time of the sale. Accordingly, there was no basis

on which the court could have concluded that Mrs. Janis had $39,000 in equity – over and

5 In her brief, Mrs. Janis suggests that the trial court divided the $27,000 of appreciation in the Hadley home between the date of the marriage and the date of the divorce so as to treat half of it as separate property and half as marital property. The judgment does not support this interpretation. The trial court ordered that the appreciation during the marriage be “divided equally.” In our view, this order meant that the appreciation was to be divided equally between the parties, not that half be treated as separate property and half be treated as marital property. In dividing the appreciation between the parties, the trial court treated all of the appreciation as marital property. 20

above the $27,000 in marital equity – that was attributable solely to her separate property.

{¶ 70} The trial court concluded that the total value of Hadley could not be treated as

separate property, because some of the appreciation in its value was due to marital efforts and

investment. Without evidence substantiating that Mrs. Janis had $39,000 in equity in

addition to the marital appreciation on the property, the court could not have reasonably

concluded that all of the equity used to obtain the swing loan was separate property. For that

reason, the trial court erred in concluding that all of the equity used for the swing loan was

separate property and in ordering that Mrs. Janis receive payment for this amount from the

proceeds of the Ivanhoe sale. It does appear, however, that at least $12,000 ($39,000 -

$27,000) of the swing loan was separate property.

{¶ 71} Mr. Janis also contends that the trial court erred to his detriment in its

calculation of how monies should be paid out upon the sale of the Ivanhoe property. Mr.

Janis argues that the trial court awarded Mrs. Janis her equity in the Hadley house twice and

did not award him his share of the equity at all. He contends that “[t]here was only

$39,000.00 in question,” but the court awarded $52,500 to Mrs. Janis, and then it divided the

remainder of the proceeds from Ivanhoe “without giving [him] his one half of the marital

portion [$13,500].”

{¶ 72} The trial court did err in awarding Mrs. Janis her equity in the proceeds from

the Ivanhoe home before the balance of the proceeds was divided and failing to do the same

for Mr. Janis. From the sale of Ivanhoe, Mrs. Janis should receive the amount of the swing

loan that can be traced to separate property ($12,000), plus $13,500 representing half of the

marital appreciation on Hadley, for a total of $25,500. Mr. Janis should receive $13,500 21

(half of the marital appreciation) as well. The remaining proceeds should be divided

equally.

{¶ 73} The second assignment of error is sustained.

VII

{¶ 74} Mr. Janis’s third assignment of error states:

{¶ 75} “THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION WHEN IT

AWARDED $38,000.00 TO DEFENDANT, DEBORAH JANIS, FOR HER ATTORNEY

FEES.”

{¶ 76} Mr. Janis argues that the trial court’s award of attorney fees was not warranted

and that it demonstrated the trial court’s bias against him. Mr. Janis does not challenge the

court’s authority to make such an award. Rather, he contends that the trial court’s award

was improper because it was based on unjustified animosity toward him and his attorney, Ms.

Crossman, at the first hearing.

{¶ 77} Although the trial court did not expressly rely on R.C. 3105.73(A), which

governs the award of attorney fees and litigation expenses in a domestic relations case, we

presume that the fees were awarded pursuant to this statute. R.C. 3105.73(A) provides: “[A]

court may award all or part of reasonable attorney’s fees and litigation expenses to either

party if the court finds the award equitable. In determining whether an award is equitable,

the court may consider the parties’ marital assets and income, any award of temporary

spousal support, the conduct of the parties, and any other relevant factors the court deems

appropriate.”

{¶ 78} We review of a trial court’s decision to award attorney fees under an abuse of 22

discretion standard. Kapadia v. Kapadia, Cuyahoga App. No. 94456, 2011-Ohio-2255. ¶93.

See, also, Howell v. Howell, 167 Ohio App.3d 431, 2006-Ohio-3038, ¶61. We may not

substitute our judgment for that of the trial court unless, when considering the totality of the

circumstances, we conclude that the trial court abused its discretion. Holcomb v. Holcomb

(1989), 44 Ohio St.3d 128, 131.

{¶ 79} Much of the parties’ disagreement over the appropriateness of an award of

attorney fees focuses on who was at fault in creating the need for a second hearing. Mr.

Janis contends that the second hearing was necessitated by the judge’s unreasonable, arbitrary

and biased decision at the close of the first hearing. He claims that the court recognized that

its first decision, which was issued from the bench at the end of the first hearing, was not

supported by the record and, for that reason, decided to take additional evidence. Mrs. Janis

contends that Mr. Janis created the need for the second hearing because he and his attorney

did not cooperate in providing documentation that was needed to resolve all of the issues at

the first hearing. She also points out that Mr. Janis requested the second hearing.

{¶ 80} At the end of the first hearing, the trial court expressed a desire to award

attorney fees, but it did not do so:

{¶ 81} “I really would like to award some attorneys’ fees. I just don’t think I can.

*** I would award her attorney’s fees. It’s been, you know, a fight from the beginning.

Ms. Crossman, you have exacerbated that fight, you’ve made it worse. On that basis I think

you and your client should be ordered to pay attorney’s fees but I don’t have enough evidence

to do it to be honest with you.”

{¶ 82} When Mr. Janis sought another hearing after he had retained different counsel, 23

the court commented on the “tortured history” of the case and its disappointment with Mr.

Janis’s previous counsel’s handling of the case. The court acknowledged that “I think that

disappointment in actuality or in appearance is going to come through in the record. I think

honestly she [Ms. Crossman] did not believe that that case was going to trial that day when it

did go to trial. *** My frustration will be obvious to the Court of Appeals and I don’t know

what they’ll do with it. There’s some likelihood they’ll reverse me.”

{¶ 83} The court proceeded to discuss the time that would be lost by the parties if the

matter were appealed, reversed, and remanded for further proceedings before this judge or

another judge. The court also cautioned the parties that he would “probably” award some

attorney fees to Mrs. Janis if another hearing were held, because “most of the cost of that

really was brought about by the other side.” The court then encouraged the parties to talk

with their lawyers about whether they wanted to “work this out,” to go to the court of

appeals, or to have a “new trial.” The parties agreed to have further proceedings in the trial

court, subject to certain conditions and limitations upon which they also agreed.

{¶ 84} At the second hearing, Mrs. Janis presented evidence about the amount and

reasonableness of her attorney fees. Mr. Janis does not challenge the reasonableness of the

fees. Based on Mrs. Janis’s attorneys’ billing records, a domestic relations attorney, Douglas

Gregg, testified that the fees incurred by Mrs. Janis in the case were reasonable, that the case

appeared to have been “extremely litigious,” that the fees amounted to $30,000 to $35,000

before the date of the second hearing, and that amount was in the “low” range of what might

be expected, considering the value of the assets in dispute.

{¶ 85} In its Final Judgment and Decree of Divorce, the court ordered Mr. Janis to 24

pay $38,000 to Mrs. Janis for her attorney fees. The judgment stated:

{¶ 86} “It is true in this case that both parties bear some fault for the tortured

procedural history of the case. However, the Court finds that much more of the blame falls

upon [Mr. Janis] than upon [Mrs. Janis]. [Mr. Janis] was not candid, forthcoming or

cooperative in the discovery process. But most importantly, it was [Mr. Janis’s] actions just

before and during the first trial that the Court finds repugnant. He and his previous counsel

are the direct and proximate cause of the failure of evidence at the first trial and the necessity

of the second trial. The request by [Mrs. Janis] for $38,000.00 in attorney fees is found well

taken and hereby granted. The Court finds that the award is equitable under the

circumstances of the case and the evidence establishes that the fees are reasonable and the

work required was necessary. The award, while it finds some justification on the basis of the

income of the parties, is more solidly founded on the conduct of [Mr. Janis] and his previous

counsel. [Mrs. Janis’s] request for attorney fees in the civil case6 is hereby denied.”

{¶ 87} Considering all of the circumstances of the case, the trial court abused its

discretion in ordering Mr. Janis to pay an amount that appears to have been intended to cover

all of Mrs. Janis’s attorney fees. It was not an abuse of discretion for the court to find that

Mr. Janis and Ms. Crossman caused unnecessary litigation and delay, but only a portion of

Mrs. Janis’s attorney fees were directly attributable to such conduct. Neither the expert

witness nor Mrs. Janis attempted to define the amount of her attorney fees that was

6 The trial court’s reference to “the civil case” means the case brought against Cavalier Manor by the Ohio Civil Rights Commission, based on alleged discrimination against a disabled person. Mrs. Janis did not trust Mr. Janis to protect her interests in these proceedings, so she hired her own attorney, in addition to the attorney employed on behalf of Mr. Janis and Cavalier Manor, to represent her interests in the case. Mrs. Janis paid approximately $8,000 in attorney fees in that case. 25

attributable to unwarranted conduct by Mr. Janis and his attorney. Moreover, Mrs. Janis left

the marriage with more assets than Mr. Janis. Although these assets are traceable to her

separate property, they are relevant to her ability to pay her own fees. Mrs. Janis testified

that she had used credit cards and cashed some certificates of deposit to pay her attorney fees,

but her testimony did not indicate that the fees had created a great hardship.

{¶ 88} The trial court reasonably concluded that Mr. Janis’s failure to produce

documents and to execute releases in a timely fashion led to the exclusion of many exhibits at

the first hearing, which led, at least in part, to the need for the second hearing. Moreover,

the trial court informed Mr. Janis before agreeing to conduct a second hearing that it would

be inclined to award attorney fees to Mrs. Janis if a second hearing were held. We do not

disagree with the trial court that some compensation for delay caused by Mr. Janis’s conduct

was appropriate. However, we cannot conclude that ordering him to pay all of Mrs. Janis’s

attorney fees was equitable under the circumstances.

{¶ 89} The third assignment of error is sustained.

VIII

{¶ 90} Mr. Janis’s fourth assignment of error states:

{¶ 91} “THE TRIAL COURT’S ENTIRE DECISION IS TAINTED BY BIAS AND

PREJUDICE.”

{¶ 92} Mr. Janis claims that the trial court’s treatment of the loans made to Cavalier

Manor demonstrated the court’s bias against him. Specifically, he points out that the trial

court questioned the credibility of his testimony about the loans to Cavalier Manor, yet

ordered him to repay them. 26

{¶ 93} Judicial bias has been described as a “hostile feeling or spirit of ill will or

undue friendship or favoritism toward one of the litigants or his attorney, with the formation

of a fixed anticipatory judgment on the part of the judge, as contradistinguished from an open

state of mind which will be governed by the law and the facts.” State ex rel. Pratt v.

Waygandt (1956), 164 Ohio St. 463, paragraph four of the syllabus.

{¶ 94} “A judge is presumed to follow the law and not to be biased, and the

appearance of bias or prejudice must be compelling to overcome these presumptions.” In re

Disqualification of George, 100 Ohio St.3d 1241, 2003-Ohio-5489, ¶5; Rejas Invests. v.

Natl. City Bank, Montgomery App. No. 21243, 2006-Ohio-5586, ¶98. Intermediate

appellate courts, such as this one, have no jurisdiction to disqualify a judge based on claims

of bias; such claims must be brought to the Chief Justice of the Ohio Supreme Court. See

Beer v. Griffith (1978), 54 Ohio St.2d 440, 441-442.

{¶ 95} If there were a concern during these lengthy proceedings that the judge was

exhibiting “bias and prejudice,” Mr. Janis should have raised the issue at the time and not

waited for the appeal. See, e.g., State v. VFW Post 431, Montgomery App. No. 19892,

2004-Ohio-3566, ¶69. Moreover, although the court explicitly stated its frustration, we find

no basis in this record of a “fixed anticipatory judgment on the part of the judge.”

{¶ 96} Mr. Janis’s argument that the court erred in its handling of the debt on Cavalier

Manor will be addressed under the sixth assignment of error.

{¶ 97} The fourth assignment of error is overruled.

IX

{¶ 98} Mr. Janis’s fifth assignment of error states: 27

{¶ 99} “THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION WHEN IT

FAILED TO CONSIDER MARITAL DEBTS IN THE DISTRIBUTION OF MARITAL

PROPERTY AND, IN ESSENCE, LEFT THE PLAINTIFF, PATRICK JANIS, TO PAY

THEM.”

{¶ 100} Mr. Janis contends that the trial court erred in failing to give him credit for

marital debt that he repaid – by making mortgage payments on the marital home – after the de

facto termination of the marriage. He claims that the trial court’s handling of the marital

debt was arbitrary and unreasonable because, if the house had been sold on September 30,

2005, it would have been encumbered by a mortgage and Mrs. Janis would have had to share

equally in the debt.

{¶ 101} Mr. Janis’s argument ignores the fact that he lived in the family home during

the parties’ separation, while Mrs. Janis lived in a relatively small apartment with their son.

In other words, Mr. Janis had the sole benefit of the home for several years, and Mrs. Janis

did not; her living arrangement was not comparable to his. For these reasons, the trial court

did not abuse its discretion in failing to require Mrs. Janis to contribute to the mortgage

payments made after the date of the end of marriage.

{¶ 102} The fifth assignment of error is overruled.

X

{¶ 103} The sixth assignment of error states:

{¶ 104} “THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION WHEN

IT DENIED PLAINTIFF HIS REQUEST FOR REIMBURSEMENT OF FUNDS LOANED

TO CAVALIER MANOR PARTNERSHIP.” 28

{¶ 105} Mr. Janis claims that the trial court abused its discretion when it refused to

reimburse him for money he loaned to Cavalier Manor in February 2008, July 2008, and

February 2009 to pay property taxes. According to Mr. Janis, Pennywise had also loaned

Cavalier Manor $4,000 to pay property taxes. (Mr. Janis managed Cavalier Manor and the

Lonsdale property while the divorce was pending.)

{¶ 106} The trial court’s decision with respect to the reimbursement of the loan must

be viewed in the context of all of its decisions with respect to the Lonsdale property and

Cavalier Manor.

{¶ 107} The trial court found that Mrs. Janis had contributed $85,111 from her

inheritance toward the purchase of the Lonsdale property. The loan was in Mr. Janis’s name

because Cavalier Manor could not obtain financing, so Mrs. Janis transferred the $85,111 to

Mr. Janis. The trial court found that, in doing so, Mrs. Janis signed a gift letter “required by

the lender to insure the superiority of its security position in the real estate,” and that the

lender “no doubt relied upon it.” The court concluded that the execution of the gift letter,

“taken together with all of her actions and lack of actions with regard to the asset” made it

improper for Mrs. Janis to claim that she was entitled to reimbursement for the contribution.

{¶ 108} The court also considered the loans which Mr. Janis claimed to have made to

Cavalier Manor while the divorce was pending. It found that much of Mr. Janis’s testimony

about the need for him and for Pennywise to make loans to cover Cavalier Manor taxes “was

not worthy of belief and *** unpersuasive.” Based on these conclusions, the court refused to

reimburse Mr. Janis for the alleged loans.

{¶ 109} Considering the trial court’s findings with respect to Mr. Janis’s credibility 29

and its refusal to credit Mrs. Janis for the separate property she contributed to acquire the

Lonsdale apartment building that was Cavalier Manor’s primary asset, the trial court did not

abuse its discretion in refusing to credit Mr. Janis for any property taxes he paid from his own

money.

{¶ 110} The loan from Pennywise will be discussed under the seventh assignment of

error.

{¶ 111} The sixth assignment of error is overruled.

XI

{¶ 112} The seventh assignment of error states:

{¶ 113} “THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION WHEN

IT ORDERED PLAINTIFF TO PAY $4,533.22 TO THE DEFENDANT, DEBORAH

JANIS, AS HER INTEREST IN PENNYWISE.”

{¶ 114} Mr. Janis claims that the amount awarded to Mrs. Janis from Pennywise was

disproportionate to her share of ownership and constituted an abuse of discretion.

{¶ 115} The trial court awarded Pennywise to Mr. Janis, but it ordered him to

reimburse Mrs. Janis for her share of the corporation’s assets. The trial court found that

Pennywise had $5,106.44 in assets at the end of the marriage and that Mr. Janis had loaned

$4,000 from Pennywise to Cavalier Manor while the divorce was pending. The court

ordered Mr. Janis to repay the $4,000 loan,7 bringing the Pennywise assets to $9,106.44, and

then awarded Mrs. Janis half of that amount, or $4,553.22. Mr. Janis contends that this

7 In her brief, Mrs. Janis acknowledges that Mr. Janis “did not receive the $4,000 loan from Pennywise himself,” but transferred the money to Cavalier Manor. However, she claims that such a transfer was necessitated by Mr. Janis’s mismanagement. 30

award was “not founded upon logic or reason” and that the $4,000 loan came from

Pennywise’s $5,106.44 in assets on hand at the end of the marriage.

{¶ 116} Mrs. Janis testified that she had contributed separate property to the limited

partnerships that were shareholders in Pennywise (Manna and Cavalier Manor), but it does

not appear that she contributed any separate property directly to Pennywise. Thus, we must

assume that the Pennywise assets are marital assets. It also does not appear that Pennywise

held substantial assets, although Mr. Janis testified that Pennywise collected management

fees from the limited partnerships.

{¶ 117} Mr. Janis contends that the trial court erred in awarding Mrs. Janis half of the

Pennywise assets because her ownership share was only 33%. We agree. When the parties

created Pennywise, they gave their sons and the Dayton Foundation interests totaling 34%,

and they each retained a 33% interest. Mrs. Janis made no claim that the money in

Pennywise was traceable to her separate property. In the absence of any evidence that some of

the assets were traceable to Mrs. Janis’s separate property, we see no basis for the trial court’s

decision to award her more than 33% of Pennywise. It appears that the trial court simply

overlooked the fact that the parties did not own 100% of the corporation.

{¶ 118} In support of the trial court’s award, Mrs. Janis contends in her brief that the

“trial court determined that Patrick Janis’s unreasonable actions weighed in favor of [Mrs.

Janis] receiving a greater portion of the value of Pennywise.” But the trial court’s judgment

does not contain any finding that Mr. Janis acted unreasonably in his management of

Pennywise or the limited partnerships.

{¶ 119} Mr. Janis also claims that the $4,000 loan from Pennywise to Cavalier Manor 31

came from the $5,106.44 in assets that Pennywise held at the end of the marriage. There is

no support for this assertion in the record, and the trial court implicitly rejected it. Mr.

Janis testified that Pennywise received management fees from the limited partnerships.

Because it is possible that the loan came from Pennywise’s income, the trial court did not

abuse its discretion in concluding that the 2007 loan to Cavalier Manor to pay property taxes

did not come from the assets on hand in September 2005.

{¶ 120} As her share of Pennywise, the trial court should have awarded Mrs. Janis

33% of $9,106.44 (the amount the trial court assigned to Pennywise’s assets), or $3.005.13.

{¶ 121} The seventh assignment of error is sustained.

XII

{¶ 122} The judgment of the trial court will be affirmed in part, modified in part,

GRADY, P.J. and FAIN, J., concur.

Copies mailed to:

Jose M. Lopez Christopher R. Conard Sasha Alexa VanDeGrift Hon. Denise L. Cross, Administrative Judge