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Kobal v. Kobal

Court of Appeals of Ohio, Eighth District, Cuyahoga

May 3, 2018


          Civil Appeal from the Cuyahoga County Court of Common Pleas Domestic Relations Division Case No. DR-15-360082

          APPELLANT John E. Kobal, pro se

          ATTORNEY FOR APPELLEE Darren W. DeHaven Law Office of Darren DeHaven

          BEFORE: Kilbane, P.J., S. Gallagher, J., Laster Mays, J.



         {¶1} Defendant-appellant, John E. Kobal ("John"), brings this pro se appeal challenging the trial court's order adopting the magistrate's decision regarding divorce proceedings instituted by plaintiff-appellee, Kathleen M. Kobal ("Kathleen"). For the reasons set forth below, we affirm.

         {¶2} John and Kathleen were married in November 1976. Two sons were born of their marriage, both of whom were emancipated at the time of the divorce proceedings. In December 2015, Kathleen filed a complaint for divorce. In December 2016, a contested trial was held before a magistrate judge.[1]

         {¶3} The following was adduced at trial. Six years before the Kobals were married, John purchased a home on Velma Avenue in Parma, Ohio ("the Velma Avenue home" or "the home"). The Kobals lived in the home together after they were married. In October 1993, John transferred his sole interest in the home to Kathleen by quitclaim deed. At trial, John explained that he transferred the property to Kathleen to insulate the property from attachment by his business creditors.

         {¶4} In the late 1990s, the marriage began to deteriorate and Kathleen began to handle her own finances. Kathleen explained that John controlled all the finances early in their marriage, and he "was very guarded with his finances and his business" throughout the marriage. Kathleen testified that she lived modestly during the marriage, and that the family was often in debt.

         {¶5} At one point during the marriage, Kathleen realized that over $100, 000 had "disappeared" from a joint savings account the couple opened for the purpose of saving to purchase a larger home. When Kathleen asked John about the withdrawal, he had no explanation "other than [the money] was going to be used and we were going to get the house." Kathleen also realized that John had numerous bank accounts and investments that she had not been aware of early in their marriage. Kathleen later became aware that John had loaned money to numerous individuals. She presented loan agreements as well as cognovit and promissory notes that reflected that John had made various loans to a number of individuals and entities in amounts ranging from $10, 000 to $64, 000.

         {¶6} John acknowledged that a few of these individuals still owed him money. The magistrate questioned John as to where the returns on his loans and investments went. John did not directly answer the question, but instead claimed that Kathleen spent "150 to 300 thousand dollars over the course of the marriage on clothes and gifts for other people."

         {¶7} In 2001, Kathleen filed for divorce, but later voluntarily dismissed her complaint. John purchased his own home in 2004.

         {¶8} In October 2006, John was arrested for criminal charges involving a minor. That same month, he executed a general power of attorney, naming Kathleen his attorney-in-fact. The three-page-long power of attorney provided Kathleen with various powers over John's estate and affairs. Notably, the document permitted Kathleen "[t]o make gifts to members of my family and to charitable organizations within discretion of my attorney-in-fact notwithstanding the fact that my attorney-in-fact may be making gifts to [herself]" The power of attorney also permitted Kathleen to "bargain, sell and convey in fee simple by deed * * * the whole or any part of any lands, tenements or hereditaments owned by me, or any interest therein[.]"

         {¶9} In November 2006, John, along with two of his business partners, helped Kathleen set up KMK Consulting, L.L.C. ("KMK Consulting"). John purported to help Kathleen set up KMK Consulting to allow her to pursue her dream of owning and operating a catering business. Kathleen also testified that John expressed concern to her about his potential civil liability related to the criminal charges he faced. She explained that he used KMK Consulting as a vehicle "to protect the family from financial ruin." Kathleen further explained that John used KMK Consulting to channel his own personal investments, explaining "John had agreements with [his business partners]. [John] had invested money and out of those accounts, KMK Consulting and KMK Title, John was going to reap interest. Didn't happen." Two months after KMK Consulting was established, Kathleen, on behalf of the entity, entered into an investment agreement with Brian A. Cole and Associates ("Cole and Associates"), an eponymous entity owned by one of John's business partners. Kathleen introduced a letter from John to their son in which John explained in part "KMK Consulting was created to replace my involvement in the investments with [Cole]." Kathleen testified that she had no real involvement in the investment agreement with Cole and Associates, but that "John set [the investment] up with [Cole.]" She explained that she attempted to collect from Cole on behalf of KMK Consulting without success.

         {¶10} Additionally, before John was incarcerated in April 2007, he transferred a number of his interests to KMK Consulting, including an Edwards Jones investment account and an RBC Wealth management account.

         {¶11} John testified that his mother left him money when she died in 2002, which he invested in the account with Edward Jones. He estimated that at the time he was incarcerated in April 2007, the account was worth approximately $160, 000. At the time of trial, the account had a value of $165, 795.90. At trial, John initially claimed to have no memory of transferring the money, claiming "[Kathleen] moved the money from my [Edward Jones] account into KMK Consulting." On cross-examination, Kathleen's counsel presented John with a receipt of the transfer authorization with his signature. John then admitted to authorizing the transfer, explaining that he transferred the account to KMK Consulting to insulate this asset from attachment in any potential civil action related to the criminal charges he faced. John further testified that he and Kathleen had "a verbal understanding that [the funds were] not to be touched, " because it was his "inheritance money." He admitted there was no written agreement providing Kathleen could not use or retain the funds. John further admitted he had transferred the Edward Jones and RBC Wealth Management accounts to KMK Consulting to protect these assets.

         {¶12} In July 2010, Kathleen was diagnosed with stage 4 non-Hodgkin lymphoma and transferred her interest in the Velma Avenue home to her and John's two sons by quitclaim deed. At the time of trial, Kathleen lived in the home with the parties' youngest son.

         {¶13} In January 2017, the magistrate issued a decision. The magistrate determined the Velma Avenue home was not subject to a division of property because Kathleen had transferred it to the parties' sons. The magistrate further determined that three separate bank accounts in Kathleen's name were marital property and ordered Kathleen to pay John half the funds on deposit in these accounts. The magistrate also found John was entitled to one-half of the marital portion of Kathleen's benefits through the Ohio Public Employees Retirement System.

         {¶14} The magistrate determined the Edward Jones and RBC Wealth Management accounts were Kathleen's separate property by virtue of her ownership of KMK Consulting. The trial court ordered that John would retain any claims that Kathleen or KMK Consulting may have against Cole or any other entities or individuals with whom John had invested money.

         {¶15} In May 2017, the trial court adopted the magistrate's decision without modification over John's objection, granting Kathleen a divorce and ordering a division of marital property.

         {¶16} It is from this order that John now appeals, raising the following four ...

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