Willoughby v. Willoughby

2014 Ohio 743
CourtOhio Court of Appeals
DecidedMarch 3, 2014
Docket2012-T-0095
StatusPublished
Cited by5 cases

This text of 2014 Ohio 743 (Willoughby v. Willoughby) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Willoughby v. Willoughby, 2014 Ohio 743 (Ohio Ct. App. 2014).

Opinion

[Cite as Willoughby v. Willoughby, 2014-Ohio-743.]

IN THE COURT OF APPEALS

ELEVENTH APPELLATE DISTRICT

TRUMBULL COUNTY, OHIO

ELENA A. WILLOUGHBY, : OPINION

Plaintiff-Appellee/Cross-Appellant, : CASE NO. 2012-T-0095 - vs - :

JOHN R. WILLOUGHBY, :

Defendant-Appellee, :

STEVEN ECHOLS WATTS, DDS, INC, : et al., : Third Party Defendants-Appellants/ Cross-Appellees, :

(STEVEN ECHOLS WATTS, DDS, INC., : ASSIGNEE FOR MARK BEATRICE, BANKRUPTCY TRUSTEE FOR : JOHN R. WILLOUGHBY, : Appellee/Cross-Appellant).

Civil Appeal from the Trumbull County Court of Common Pleas, Domestic Relations Division, Case No. 08 DR 425.

Judgment: Affirmed in part, vacated in part, and remanded.

Michael J. McGee, Harrington, Hoppe & Mitchell, Ltd., 108 Main Avenue, S.W., Suite 500, Warren, OH 44481 (For Plaintiff-Appellee/Cross-Appellant).

Nancy E. Yakubek, 524 North Park Avenue, Warren, OH 44481 (For Defendant- Appellee).

Ned C. Gold, Jr. and John D. Falgiani, Jr., Ford, Gold & Falgiani Law Group, 8872 East Market Street, Warren, OH 44484 (For Third Party Defendants-Appellants/Cross- Appellees and Appellee/Cross-Appellant). TIMOTHY P. CANNON, P.J.

{¶1} Appellants/cross-appellees, Steven E. Watts (“Dr. Watts”) and Steven

Echols Watts, DDS, Inc. (“Watts Inc.”) (jointly referred to as “appellants”), were joined as

parties to a divorce proceeding. They appeal the judgment of the Trumbull County

Court of Common Pleas, Domestic Relations Division, ordering Dr. Watts to pay

$255,488 to the “marital estate” of appellee/cross-appellant, Elena A. Willoughby

(“Elena”), and appellee, John R. Willoughby (“Dr. Willoughby”). Though Watts Inc. was

joined as a third-party defendant in the trial court and is a party to this appeal, the trial

court’s monetary judgment is against Dr. Watts only. The trial court’s finding was based

on the theory that Dr. Watts was unjustly enriched when Dr. Willoughby sold his dental

practice to appellants for less than fair market value.

{¶2} Elena cross-appeals the trial court’s partial award of her claimed attorney

fees.

{¶3} In addition, Mark Beatrice, Dr. Willoughby’s Chapter 7 Bankruptcy Trustee

(“Trustee”), intervened in the divorce proceeding. Trustee asserted the sale of the

dental practice was a preferential transfer and that there should be a credit to the

bankruptcy estate. Trustee cross-appeals the trial court’s division of the $255,488.

Subsequent to filing the cross-appeal, Watts Inc. and Trustee entered into an

agreement, which assigned to Watts Inc. all of Trustee’s rights to any distribution of the

judgment amount that may be obtained.

{¶4} Dr. Willoughby and Elena were married in 1972. In 1991, Dr. Willoughby

moved his dental practice into a building owned by Dr. Watts’ wife, Rebecca Watts, in

which Dr. Watts also practiced dentistry. Dr. Willoughby and Dr. Watts entered into an

2 office-sharing agreement drafted by Attorney Ned C. Gold, Jr. The agreement included

provisions for the common use of dental equipment, time-sharing arrangements, and a

monthly reconciliation of expenses for consumable dental equipment. Elena worked in

her husband’s office.

{¶5} Pursuant to a December 15, 2008 bill of sale, Dr. Willoughby sold his

dental practice to appellants for $75,000. The purchase price was satisfied by

appellants forgiving a debt of $49,550.68 owed by Dr. Willoughby and cash in the

amount of $25,449.32. The cash was to be paid by Dr. Willoughby to Rebecca Watts to

satisfy an outstanding loan. At the time of the sale, there were no outstanding

encumbrances or orders restricting this transfer.

{¶6} On December 17, 2008, Elena filed a complaint for divorce. On

December 22, 2008, one week after Dr. Willoughby sold his practice, the trial court

issued an order restraining both Dr. Willoughby and Elena from disposing of any marital

assets.

{¶7} In July 2009, Dr. Willoughby filed for Chapter 7 Bankruptcy. Thereafter,

the Willoughbys’ divorce proceedings were stayed. On November 5, 2009, the

bankruptcy court granted Elena’s motion for relief from the stay. The order indicates

that Trustee was “authorized and directed to abandon such interest he may have” in the

Willoughbys’ divorce proceedings.

{¶8} On March 24, 2010, Elena filed a supplemental complaint in the divorce

proceedings joining appellants as parties. The supplemental complaint alleges that

appellants were in possession of a marital asset, to wit: Dr. Willoughby’s dental practice,

which had been acquired through a fraudulent transfer in violation of R.C. 1336.01, et.

3 seq., and in violation of the common law rule against fraudulent transfers. There is no

allegation in the complaint that supports the theory of unjust enrichment as a cause of

action. Appellants filed an answer denying each and every averment in Elena’s

supplemental complaint.

{¶9} Elena also filed a third-party complaint against appellants in a case that

was pending against the Willoughbys in the General Division of the Trumbull County

Court of Common Pleas concerning a business debt. PNC Bank NA v. Willoughby,

Trumbull C.P. No. 2010 CV 00297 (Apr. 9, 2013). In that complaint, Elena made the

same allegations of fraudulent transfer as set forth in the divorce proceeding.

Appellants moved to consolidate the two actions, but the motion was denied.

Appellants appealed the denial, but we held that the denial was not a final, appealable

order and thus dismissed the appeal. Willoughby v. Willoughby, 11th Dist. Trumbull No.

2010-T-0114, 2011-Ohio-400.

{¶10} On January 18, 2011, appellants filed a motion seeking dismissal of

Elena’s claims against appellants in the divorce proceeding, asserting the fraudulent

transfer allegations were not “domestic relations” matters. The motion was denied.

{¶11} On July 27, 2011, Trustee filed a “complaint to avoid and recover voidable

transfers and for damages” in the United States Bankruptcy Court for the Northern

District of Ohio. Trustee alleged that the sale of Dr. Willoughby’s dental practice was an

avoidable preferential transfer; an avoidable fraudulent transfer; and appellants were

transferees within the scope of 11 U.S.C. § 550(a) from whom the wrongfully transferred

property, or the value thereof, could be recovered. Trustee filed a motion to intervene in

the Willoughbys’ divorce proceedings, which was granted.

4 {¶12} On March 23, 2012, appellants filed a motion to disqualify Elena’s

counsel—Michael McGee and the law firm of Harrington, Hoppe & Mitchell, Ltd.—

alleging a conflict of interest. Appellants argued that Attorney McGee’s former partner

had prepared the office-sharing agreement between Dr. Willoughby and Dr. Watts,

which was in issue in the divorce proceedings. Following a meeting between the court

and counsel, the motion was denied with no evidence placed on the record.

{¶13} In an April 26, 2012, motion to freeze assets, Elena alleged that appellants

had sold Dr. Watts’ dental practice for less than fair market value and that Dr. Watts

was moving out of the jurisdiction to hide the proceeds. There was evidence presented

that appellants sold the entire practice for $560,000. An appraisal conducted for the

benefit of appellants before the sale placed the practice’s value at $620,632. The

motion was denied.

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