Civil Appeal From: Hamilton County Court of Common Pleas, Domestic Relations Division Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause, TRIAL NO. A-7302388
Barbara J. Howard Co., L.P.A., Barbara J. Howard and Thomas E. Meade, for Plaintiff/Third-Party Plaintiff-Appellant,
Taft, Stettinius & Hollister, LLP, and Aimee L. Keller, for Defendant-Appellee Rudolph Verderber, and Third-Party Defendants-Appellees Kathleen S. Verderber and Verderber Services, Inc.
(¶1} Plaintiff/third-party plaintiff-appellant Mary Jo Kell appeals from a decision of the Hamilton County Court of Common Pleas, Domestic Relations Division, overruling her motion asking the court to hold defendant-appellee Rudolph F. Verderber in contempt, overruling her Civ.R. 60(B) motion for relief from judgment and granting summary judgment in favor of Rudolph and third-party defendants-appellees Kathleen F. Verderber and Verderber Services, Inc. We find merit in one of Mary Jo's seven assignments of error. Therefore, we affirm the trial court's judgment in part and reverse it in part, and we remand the cause for further proceedings.
I. Facts and Procedure
(¶2} Mary Jo and Rudolph were divorced in 1973. The divorce decree incorporated the terms of a separation agreement. Paragraph 12 of the agreement provided that Rudolph would execute a will leaving "no less than 50% of his estate to the children of the parties."
(¶3} During the marriage, Rudolph had authored, with Mary Jo's assistance, a textbook entitled The Challenge of Effective Speaking ("Challenge"). Paragraph 9 of the separation agreement provided in pertinent part:
After the year 1972, Wife shall be entitled to one third of the royalties that shall accrue from "Challenge of Effective Speaking" and Husband shall have two thirds of the Royalties. It is understood by and between the parties on or before May 1st, of each year beginning with May 1st, 1974, Husband shall fully account to Wife for Royalties received for sales during the previous year. The above arrangement shall be applicable to Editions 1 and 2 of "Challenge of Effective Speaking" and to any subsequent editions.
(¶4} In 1979, Mary Jo filed a motion to show cause why Rudolph should not be held in contempt for failing to pay royalties as required by paragraph 9 of the separation agreement. A referee found Rudolph to be in contempt, and stated that he could purge the contempt by paying the royalties as required by paragraph 9. Rudolph filed objections to the referee's report.
(¶5} But the trial court never ruled on the objections. On January 29, 1981, the parties filed an entry of satisfaction. It stated: "Now comes the plaintiff, Mary Jo Kell, and says that the dispute between the parties has been satisfied and the Motion to Show Cause is hereby dismissed with prejudice[.]"
(¶6} The settlement agreement, which was never filed with the court, stated that in exchange for a $40, 000 lump-sum payment of child support from Rudolph, Mary Jo agreed "to dismiss with prejudice the pending court action against Rudolph F. Verderber for contempt of court, for failure to make payments under Section nine (9) of the Separation Agreement incorporated into the Decree of Divorce between the parties[.]" She further agreed to "release Rudolph F. Verderber from any obligation under said Section nine (9)." Finally, the agreement stated that "[s]ave and except as to the matters contained in this Agreement, each of the parties do hereby forever release the other from any and all claims, liabilities, causes of action, and all of the covenants, terms, conditions, obligations as set forth or arising out of in [sic] Section nine (9) of the aforesaid Separation Agreement."
(¶7} Thirty years later, on August 4, 2011, Mary Jo filed a motion for contempt, a motion for relief from judgment under Civ.R. 60(B), a motion for the imposition of a constructive trust, and a motion to add third-party defendants. In those motions, she alleged that Rudolph had failed to comply with the provisions of paragraphs 9 and 12 of the separation agreement.
(¶8} According to Mary Jo, after she had filed her 1979 contempt motion, Rudolph had told her that Challenge was no longer widely circulated and, therefore, no future distribution of royalties would be forthcoming. She did not discover until March 2011 that Rudolph had misrepresented that Challenge was no longer generating royalties. As a direct result of that misrepresentation, she had not pursued her rights, and Rudolph had been able to avoid accounting for and paying royalties. Instead, he had diverted Challenge royalties to a privately held corporation under his control, Verderber Services.
(¶9} Mary Jo also contended that Rudolph had failed to disclose the existence of a new book entitled "Communicate!, " which she contended was written, at least in part, during the marriage. She alleged that Communicate! was taken in large part from Challenge. She stated, "For intents and purposes, it was a 'subsequent edition' of Challenge as contemplated by the [separation] Agreement since the intent of the parties was to divide all marital property, including those items with a future income stream."
(¶10} Finally, Mary Jo contended that Rudolph had violated paragraph 12 of the separation agreement which required him to execute a will leaving at least 50 percent of his estate to the parties' children. She alleged that she had discovered that his estate plan had been changed and that his entire estate would flow into an irrevocable trust, and that the sole beneficiary of that trust was Rudolph's second wife Kathleen for the remainder of her life. After her death, the residue would pass to Rudolph's children, one-quarter each to his two sons with Mary Jo and one-half to his daughter with Kathleen. Mary Jo sought to file a third-party complaint against Kathleen and Verderber Services.
(¶11} Rudolph filed a motion to dismiss, arguing primarily that the 1981 settlement agreement precluded Mary Jo from seeking further royalties from the sale of Challenge, and that Communicate! had not been written during the marriage. The trial court overruled the motion to dismiss as it related to the issue of royalties under paragraph 9 of the separation agreement.
(¶12} But the court declined to decide Mary Jo's claim that Rudolph had violated paragraph 12 of the separation agreement because his will did not leave at least 50 percent of his estate to the parties' two children. It found that it did not have jurisdiction to hear the issue. Therefore, it granted Rudolph's motion to dismiss Mary Jo's claims under paragraph 12 of the separation agreement.
(¶13} Finally, the court stated that no dispute existed that the royalties at issue were assigned to Verderber Services and that Kathleen was the only acting officer of that company because of Rudolph's incapacity due to Alzheimer's Disease. Therefore, it granted Mary Jo's motion to join Verderber Services and Kathleen as third-party defendants.
(¶14} Subsequently, Mary Jo filed the third-party complaint against Verderber Services and Kathleen. All three defendants filed a motion for summary judgment on the remaining issues in Mary Jo's motion: (1) the claim for royalties in the motion for contempt, and (2) the motion for relief from judgment under Civ.R. 60(B). Mary Jo filed a motion for ...