Willoughby v. Willoughby

2017 Ohio 8201

• Court: Ohio Court of Appeals
• Decided: October 16, 2017
• Docket: 2016-T-0115
• Status: Published

Opinion

[Cite as Willoughby v. Willoughby, 2017-Ohio-8201.]

IN THE COURT OF APPEALS

ELEVENTH APPELLATE DISTRICT

TRUMBULL COUNTY, OHIO

ELENA A. WILLOUGHBY, : OPINION

Plaintiff-Appellant, : CASE NO. 2016-T-0115 - vs - :

JOHN R. WILLOUGHBY, :

Defendant-Appellee, :

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

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

Judgment: Affirmed.

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

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

Ned C. Gold, Jr., Ford, Gold, Kovoor & Simon, Ltd., 8872 East Market Street, Warren, OH 44484 (For Third Party Defendants-Appellees)

TIMOTHY P. CANNON, J.

{¶1} Appellant, Elena A. Willoughby, appeals from two judgment entries of the

Trumbull County Court of Common Pleas, Domestic Relations Division. The first, entered on December 29, 2015, contains factual findings related to appellant’s request

for a constructive trust following this court’s remand order of March 3, 2014. The

second is an Agreed Judgment Entry, dated November 10, 2016, between appellant

and her ex-husband, John R. Willoughby (“Dr. Willoughby”).1

{¶2} Appellant and Dr. Willoughby were married in 1972. In 1991, Dr.

Willoughby and Appellee Steven E. Watts (“Dr. Watts”), entered into an office sharing

agreement for their individual dental practices. Dr. Willoughby moved his practice into

the building owned by Dr. Watts’ wife, Rebecca Watts, in which Dr. Watts was already

practicing.

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

dental practice to Dr. Watts and Appellee Steven Echols Watts, DDS, Inc. (“Watts Inc.”).

The purchase price of $75,000.00 was satisfied by Dr. Watts forgiving a debt of

$49,550.68 owed by Dr. Willoughby and cash in the amount of $25,449.32, which was

to be paid to Rebecca Watts to satisfy an outstanding loan.

{¶4} On December 17, 2008, appellant filed a complaint for divorce. On

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

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

assets.

{¶5} On March 24, 2010, appellant filed a supplemental complaint joining Dr.

Watts and Watts Inc. as third party defendants. Appellant alleged they were in

possession of a marital asset (Dr. Willoughby’s dental practice), which was acquired

through a fraudulent transfer in violation of the common law and R.C. 1336.01 et seq.

1. Dr. Willoughby is listed as an appellee in the notice of appeal but has not filed an appellate brief, as the argument raised by appellant is solely against the remaining appellees, Dr. Watts and Watts Inc.

2 {¶6} Dr. Watts had the entire dental practice appraised, which now included Dr.

Willoughby’s old practice; the appraisal came in at $620,632.00. Dr. Watts

subsequently sold the practice for $560,000.00; the sale did not include the building

owned by Rebecca Watts.

{¶7} On April 26, 2012, appellant filed a motion to freeze assets, alleging Dr.

Watts sold the practice for less than fair market value and was moving out of the

jurisdiction to hide the proceeds. The trial court denied the motion.

{¶8} The trial court granted the Willoughbys a divorce on November 14, 2012.

The trial court found Dr. Willoughby had committed financial misconduct by wrongfully

dissipating a marital asset, his dental practice, with the intent to defeat appellant’s claim

to her share of the asset. The trial court also found Dr. Watts was unjustly enriched by

Dr. Willoughby’s financial misconduct, a basis for recovery that had not been alleged in

the complaint. The trial court did not find in favor of appellant with regard to her

allegation of a fraudulent transfer.

{¶9} The trial court held Dr. Watts had been unjustly enriched in the amount of

$255,488.00. It granted a judgment in this amount in favor of the “marital estate” to

create an equal distribution of $127,744.00 to both appellant and Dr. Willoughby. The

trial court reached this amount by subtracting the $75,000.00 sale price, which had

been used to pay marital debts, from the value of Dr. Willoughby’s practice, which, after

hearing testimony from two different appraisers, the trial court found was $330,488.00.

{¶10} Dr. Watts and Watts, Inc. filed a notice of appeal, and Elena cross-

appealed. A cross-appeal was also filed by Watts, Inc. as the Assignee of Dr.

Willoughby’s Chapter 7 Bankruptcy Trustee.

3 {¶11} This court vacated the trial court’s judgment against Dr. Watts.

Willoughby v. Willoughby, 11th Dist. Trumbull No. 2012-T-0095, 2014-Ohio-743, appeal

not accepted, 140 Ohio St.3d 1439, 2014-Ohio-4160. We held the trial court was not

permitted to issue a judgment based on a theory of unjust enrichment, as it had not

been raised in the pleadings. Id. at ¶32. Even if it had been pled, the fact that Dr.

Watts may have benefited from the contract with Dr. Willoughby, who was free to

dispose of his practice at the time of sale, did not equate to unjust enrichment. Id. at

¶29. The trial court further erred by placing the burden of Dr. Willoughby’s financial

misconduct on Dr. Watts rather than on Dr. Willoughby, who was the offending spouse.

Id. at ¶35.

{¶12} We remanded the matter “for consideration of a financial misconduct

remedy directed toward Dr. Willoughby as the trial court deems appropriate.” Id. at ¶36,

citing Brooks v. Brooks, 6th Dist. Fulton No. F-11-020, 2013-Ohio-405, ¶14-16 (holding

when unforeseen circumstances defeat a trial court’s equitable division of marital

assets, the trial court may make a distributive award in order to achieve equity if it

expressly retained jurisdiction to make further orders).

{¶13} On remand, appellant argued the trial court should order that a

constructive trust was created in the transfer of Dr. Willoughby’s dental practice to Dr.

Watts and should be imposed on the proceeds Dr. Watts received when he later sold

the practice. In a December 29, 2015 judgment entry, the trial court stated it did “not

agree with this argument and did not find that a constructive trust was an appropriate

remedy in the original order and is still of that opinion.” It held that, pursuant to this

4 court’s remand order, “the only remedy available is to determine what appropriate action

can be taken against the party guilty of the financial misconduct, Dr. John Willoughby.”

{¶14} The trial court held a hearing on November 10, 2016, to determine how

the amount of appellant’s one-half marital interest in the dental practice ($127,744.00)

would be satisfied. There is no transcript of this hearing in the record.

{¶15} That same date, November 10, 2016, the trial court approved an Agreed

Judgment Entry. With regard to appellant’s marital interest in the dental practice, the

entry stated: “John Willoughby shall pay $1,000 per month commencing November 1,

2016 to Elena Willoughby for property division. Said payments shall continue until the

property division and distribution ordered in this Court’s Judgment Entry dated

November 14, 2012 [i.e., $127,744.00] is paid in full. The Court shall retain jurisdiction

to modify the amount of the monthly payment for property division.” The agreed entry

was signed by the trial court, appellant and her counsel, and Dr. Willoughby and his

counsel.

{¶16} Appellant now appeals and raises one assignment of error:

{¶17} “The Trial Court erred when it failed to implement a constructive trust for

the dental practice marital asset that was inappropriately sold through the financial

misconduct of Defendant Willoughby to the unjust enrichment of Dr. Watts.”

{¶18} Appellant’s assignment of error is based on a false premise, to wit: that Dr.

Watts was unjustly enriched by Dr. Willoughby’s financial misconduct. This court, as

noted, previously held that Dr. Watts was not unjustly enriched and, further, that the

issue of unjust enrichment was not properly before the trial court for it to make such a

determination. Appellant alleged, but failed to prove, that Dr. Watts committed fraud.

5 This court held, under the facts of this case, that the only logical equitable remedy for

financial misconduct would be against the offending spouse, not against a third party

who was not liable under any theory of recovery. This court vacated the judgment

against Dr. Watts and instructed the trial court to consider a remedy against Dr.

Willoughby for his financial misconduct.

{¶19} Appellant has continued, nevertheless, to repeatedly argue that a

constructive trust should have been imposed on the dollar amount Dr. Watts received

when he sold the dental practice. “[A] constructive trust is an appropriate remedy

against unjust enrichment, and may ‘* * * be imposed where it is against the principles

of equity that the property be retained by a certain person even though the property was

acquired without fraud.’” Blanchard v. Fulton, 10th Dist. Franklin No. 91AP-1063, 1992

WL 48550, *3, quoting Ferguson v. Owens, 9 Ohio St.3d 223, 226 (1984).

{¶20} Appellant asserts this court did not rule out the possibility, on remand, of

the trial court imposing a constructive trust against the proceeds Dr. Watts received

from the sale of the dental practice. Quite to the contrary, however, based on the

pleadings and evidence appellant produced at the trial of this matter, this court

conclusively foreclosed the possibility of appellant obtaining any remedy from Dr. Watts

as a result of Dr. Willoughby’s financial misconduct.

{¶21} Appellant’s request for imposition of a constructive trust against Dr. Watts’

assets was therefore barred by the law of the case doctrine, and the trial court did not

err. See Nolan v. Nolan, 11 Ohio St.3d 1, 3 (1984) (citations omitted) (“the decision of a

reviewing court in a case remains the law of that case on the legal questions involved

for all subsequent proceedings in the case at both the trial and reviewing levels”).

6 “[T]he rule is necessary to ensure consistency of results in a case, to avoid endless

litigation by settling the issues, and to preserve the structure of superior and inferior

courts as designed by the Ohio Constitution.” Id., citing State ex rel. Potain v. Mathews,

59 Ohio St.2d 29, 32 (1979).

{¶22} Appellant’s continued assertion that this court should find Dr. Watts was

unjustly enriched is further barred by the doctrine of res judicata, as it was conclusively

determined in the previous appeal. See, e.g., State v. Davis, 2d Dist. Montgomery No.

19792, 2004-Ohio-2199, ¶5 (citations omitted).

{¶23} Appellant’s sole assignment of error is without merit.

{¶24} Appellees, in their responsive brief, have requested this court to order

sanctions in the form of attorney fees, expenses, and costs. Appellant requested the

same in her reply brief. The parties have not filed separate motions for such relief,

pursuant to App.R. 15(A) (“Unless another form is prescribed by these rules, an

application for an order or other relief shall be made by motion with proof of service on

all other parties.”). “‘A paragraph in a responsive brief is insufficient to raise the issue

before this court[.]’” In re Estate of Wilhelm, 7th Dist. Mahoning No. 02CA134, 2003 WL

21998611, *1 (Aug. 19, 2003), quoting Richards v. Beechmont Volvo, 127 Ohio App.3d

188, 192 (1st Dist.1998); see also Carrollton Exempted Vill. Sch. Dist. Bd. of Educ. v.

Ohio Assoc. of Pub. Sch. Emp., 7th Dist. Carroll No. 03 CA 795, 2004-Ohio-1385, ¶28;

Barbato v. Mercy Med. Ctr., 5th Dist. Stark No. 2005 CA 00044, 2005-Ohio-5219, ¶62;

Wohlabaugh v. Salem Comm. Corp., 8th Dist. Cuyahoga No. 84822, 2005-Ohio-1189,

¶18. Therefore, without separate motions to consider, we decline to address the issue

of sanctions.

7 {¶25} The judgment of the Trumbull County Court of Common Pleas, Domestic

Relations Division, is hereby affirmed.

CYNTHIA WESTCOTT RICE, P.J.,

DIANE V. GRENDELL, J.,

concur.