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Shendel v. Graham

Court of Appeals of Ohio, Eleventh District, Lake

June 12, 2017

JULIE SHENDEL, Plaintiff-Appellant,
GARRY R. GRAHAM, II, Defendant-Appellee.

         Appeal from the Lake County Court of Common Pleas, Juvenile Division, Case No. 2014 CV 01832.

          Hans C. Kuenzi, Hans C. Kuenzi Co., LPA, (For Plaintiff-Appellant).

          Jon D. Axelrod, (For Defendant-Appellee).


          THOMAS R. WRIGHT, J.

         {¶1} Appellant, Julie Shendel, appeals the trial court's decision adopting the magistrate's decision following a hearing on several issues involving the parties' minor son.

         {¶2} Shendel and appellee, Gary R. Graham, II, were never married, but dated for a few years. They had one child. The parties lived together in Tennessee at the time of the child's birth in August 2010, but Garry moved to North Carolina the following spring when their child was an infant. Julie and the child continued to reside in Tennessee until she relocated to Lake County, Ohio to attend nursing school in 2012.

         {¶3} Prior to the hearing, the parties agreed that Julie would remain the custodial parent and that Garry would enjoy long distance visitation since he lives in Illinois.

         {¶4} The issues to be addressed at the hearing included Julie's request for child support retroactive to the child's birth and Garry's request that Julie share equally in the transportation costs associated with his long distance visitation. The magistrate also noted that tax exemption issues and health insurance obligations remained.

         {¶5} Appellant asserts eighteen assigned errors. Her first assigned error avers:

         {¶6} "The trial court erred in its allocation of transportation costs incurred by appellee to exercise visitation with the minor child."

         {¶7} Pursuant to R.C. 3109.12(B), a trial court is vested with discretion to make reasonable orders with respect to parental visitation issues. Appleby v. Appleby, 24 Ohio St.3d 39, 41, 492 N.E.2d 831 (1986). In exercising this discretion, the court is required to consider the best interest of the child and the sixteen factors in division (D) of section 3109.051 of the Revised Code. R.C. 3109.12; Harbottle v. Harbottle, 9th Dist. Summit No. 20897, 2002-Ohio-4859, ¶93.

         {¶8} We review a trial court's visitation decisions for an abuse of discretion.

         {¶9} "'[T]he term "abuse of discretion" is one of art, connoting judgment exercised by a court, which does not comport with reason or the record.' State v. Underwood, 11th Dist. No. 2008-L-113, 2009-Ohio-2089, 2009 WL 1177050, ¶ 30, citing State v. Ferranto, 112 Ohio St. 667, 676-678, 148 N.E. 362 (1925). * * * [A]n abuse of discretion is the trial court's 'failure to exercise sound, reasonable, and legal decision-making.' State v. Beechler, 2d Dist. No. 09-CA-54, 2010-Ohio-1900, 2010 WL 1731784, ¶ 62, quoting Black's Law Dictionary (8 Ed.Rev.2004) 11. When an appellate court is reviewing a pure issue of law, 'the mere fact that the reviewing court would decide the issue differently is enough to find error (of course, not all errors are reversible. Some are harmless; others are not preserved for appellate review). By contrast, where the issue on review has been confined to the discretion of the trial court, the mere fact that the reviewing court would have reached a different result is not enough, without more, to find error.' Id. at ¶ 67." Ivancic v. Enos, 11th Dist. Lake No. 2011-L-050, 2012-Ohio-3639, 978 N.E.2d 927, ¶70.

         {¶10} The trial court's order on this issue states: "Ms. Shendell shall bear 25% of the travel expenses. Mr. Graham shall pay all travel expenses and shall receive a deviation on past and future support. The yearly deviation for travel expenses is $735.00."

         {¶11} Julie contends the trial court erred in imposing 25 percent of Garry's costs associated with visitation because Garry was the parent who initially moved away from the child, and as such, he should bear the costs associated with long distance visitation. Contrary to Julie's argument, however, which parent initially moved away from the child is not determinative.

         {¶12} Further, Garry remains responsible for 75 percent of his visitation costs, and he testified in detail about the cost of each visit that includes an 11-hour drive each way from Quincy, Illinois to Eastlake, Ohio, and a one-night stay at a hotel when the child is with him on his return trip to Illinois. Julie fails to direct our attention to anything evidencing that the trial court's imposition of part of the costs associated with Garry's visitation constitutes an abuse of discretion. Her first assignment of error lacks merit.

         {¶13} Julie's second through thirteenth assigned errors challenge the trial court's calculation and determination of Garry's support obligation and arrearage.

         {¶14} Our standard of review for child support determinations is abuse of discretion. Booth v. Booth, 44 Ohio St.3d 142, 541 N.E.2d 1028 (1989); Beiers v. Phillips, 5th Licking Dist. No. 08CA0127, 2009-Ohio-3278, ¶15. "However, 'challenges to factual determinations upon which the child support order is based are reviewed using the 'some competent credible evidence' standard.'" (Citations omitted.) Massey v. Lambert, 7th Dist. Columbiana No. 09-CO-29, 2011-Ohio-1341, ¶48.

         {¶15} Julie's second assigned error claims:

         {¶16} "The trial court erred in its calculation of appellee's child support obligations for 2011 and each year thereafter by giving consideration to his alleged business expenses."

         {¶17} Julie argues the trial court erred as a matter of law by finding that Garry's business expense deductions reduced his income for child support purposes in 2011 and every year thereafter because Garry did not provide any evidence establishing his business deductions were of the type permitted as reducing a parent's income for child support purposes or that the expenses were actually incurred in the year claimed.

         {¶18} A parent's gross income for child support calculations includes self-generated income. R.C. 3119.01. R.C. 3119.01(C)(13) provides in part that "'self-generated income' means gross receipts received by a parent from self-employment, proprietorship of a business, joint ownership of a partnership or closely held corporation, and rents minus ordinary and necessary expenses incurred by the parent in generating the gross receipts

         {¶19} Further "ordinary and necessary" expenses "means actual cash items expended by the parent or the parent's business and includes depreciation expenses of business equipment as shown on the books of a business entity." R.C. 3119.01(C)(9)(a). However, R.C. 3119.01(C)(9)(b) specifically excludes "depreciation expenses and other noncash items that are allowed as deductions on any federal tax return of the parent or the parent's business" as ordinary and necessary expenses that reduce a parent's gross receipts for child support purposes. Hale v. Hale, 11th Dist. Lake Nos. 2005-L-101 & 2005-L-114, 2006-Ohio-5164, ¶22-23; In re Sullivan, Ohio App.3d 458, 2006-Ohio-3206, 855 N.E.2d 554, ¶21 (11th Dist.).

         {¶20} The exclusion of depreciation expenses and noncash deductions "is designed to ensure that a parent's gross income is not reduced by any sum that was not actually expended in the year used for computing child support." Baus v. Baus, 72 Ohio App.3d 781, 784, 596 N.E.2d 509 (9th Dist.1991).

         {¶21} We have twice before considered comparable cases addressing this issue. In Hale, the obligor father claimed the trial court erred because it failed to reduce his gross income earned from rental income based on his business expenses. In In re Sullivan, 167 Ohio App.3d 458, 2006-Ohio-3206, 855 N.E.2d 554 ¶21 (11th Dist.), the obligor argued that the trial court erred by including more than $20, 000 in depreciation expenses in his income for child support purposes. We found no error in either.

         {¶22} Further, we held in Sullivan that "it is not the duty of the trial court to ferret out those expenses that qualify as ordinary and necessary. Rather, it is the duty of the obligor to assert that certain items are exempt from inclusion as gross income pursuant to this exception." And because no evidence was presented establishing the basis for the claimed deductions in Sullivan, we found no abuse of discretion in the trial court's decision not to reduce the obligor's income based on the claimed deductions. Id. at ¶25-27; Wittbrot v. Wittbrot, 2d Dist. Clark No. 2002 CA 19, 2002-Ohio-6075, at ¶44 (ruling that a trial court did not abuse its discretion in refusing to allow deduction for depreciation where there was no evidence of business expenses other than obligor's bald assertion as to the amount of the expenses.); Janecek v. Marshall, 11th Dist. Lake No. 2010-L-059, 2011-Ohio-2994, ¶19.

         {¶23} In Foster v. Foster, 150 Ohio App.3d 298, 2002-Ohio-6390, 780 N.E.2d 1041, the Twelfth District Court of Appeals held that "absent evidence that the depreciation deduction represents actual cash expenses incurred in the year that the deduction was taken, R.C. 3119.01(C)(9) mandates that the depreciation deduction be included in the parent's gross income for that year." Id. at ¶23; Cunningham v. Cunningham, 3d Dist. Paulding No. 11-13-08, 2014-Ohio-1684, ¶24-25 (finding that depreciation expenses carried forward from a previous year are not cash expenses for that year for child support purposes.)

         {¶24} Pursuant to Foster, and our holdings in Hale and Sullivan, Julie avers that the trial court abused its discretion by reducing Garry's self-generated income based on any of his reasonable and necessary business expenses because he carried the burden of proof. We agree that Garry, as the obligor, had to come forward with some evidence that he actually paid for the expense in the year it was claimed and that the expense was necessary and ordinary. He provided none.

         {¶25} Garry submitted his tax returns to establish his income for the years in issue, i.e. 2011 through 2015. He did not, however, provide any corresponding testimony or evidence as to his alleged necessary and ordinary business expenses that he paid that were listed on his returns as associated with his self-generated income during any years in question.

         {¶26} While the magistrate expressly agreed that Garry's income should not be reduced by his depreciation expenses, it nevertheless allowed Garry's other business expenses identified on his returns to reduce his income without any evidence that the same were ordinary, necessary, or were actual cash expenditures made in the year claimed. Thus, the trial court erred to the extent that it reduced Garry's income based on any of his business expenses since he failed to satisfy his burden of proof. Accordingly, Julie's second assigned error has merit.

         {¶27} Appellant's third assigned error claims:

         {¶28} "The trial court erred in its calculations of appellee's child support obligation for 2011 and child support arrearage for the year by misstating his gross income."

         {¶29} Julie's argument here is twofold. First, she claims the court should have included Garry's $32, 930 in income received from the liquidation of his retirement benefit as income. And, assuming we disagree with her first argument, Julie also claims the court's calculation of Garry's 2011 income nevertheless was still understated by $4, 000.

         {¶30} Julie relies on R.C. 3119.01(C)(7) in claiming that Gary's withdrawal should have been included in his 2011 income since "gross income" includes "the total of all earned and unearned income from all sources during a calendar year * * *, and includes income from salaries, wages, overtime pay, and bonuses * * *; pensions; interest; trust income; annuities * * *."

         {¶31} Gary testified that he had $32, 930 in pension and annuity income in 2011. He withdrew the money to pay off his farm debt.

         {¶32} R.C. 3119.01(C)(7) also provides in part:

         {¶33} "'Gross income' does not include * * *:

         {¶34} "* * *

         {¶35} "(e) Nonrecurring or unsustainable income or cash flow ...

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