Collins v. Collins , 2015 Ohio 3315 ( 2015 )

[Cite as Collins v. Collins, 2015-Ohio-3315.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
JUDGES:
STEPHEN COLLINS : Hon. W. Scott Gwin, P.J.
: Hon. Patricia A. Delaney, J.
Plaintiff-Appellant : Hon. Craig R. Baldwin, J.
:
-vs- :
: Case No. 2014CA00194
ARNETTE COLLINS :
:
Defendant-Appellee : OPINION
CHARACTER OF PROCEEDING: Civil appeal from the Stark County Court of
Common Pleas, Domestic Relations
Division, Case No. 2013DR01385
JUDGMENT: Reversed and Remanded
DATE OF JUDGMENT ENTRY: August 17, 2015
APPEARANCES:
For Plaintiff-Appellant For Defendant-Appellee
PAUL VINCENT WENDY ROCKENFELDER
LAURA MILLS 5502 Market Avenue N., Ste. B
MAXWELL HILTNER Canton, OH 44721
101 Central Plaza South
300 Chase Tower
Canton, OH 44702
Stark County, Case No. 2014CA00194 2
Gwin, P.J.
{¶1} Appellant appeals the October 3, 2014 judgment entry and decree of
divorce of the Stark County Court of Common Pleas, Domestic Relations Division.
Facts & Procedural History
{¶2} Appellant Stephen Collins and appellee Arnette Collins were married on
July 26, 1980. On December 30, 2013, appellant filed a complaint for divorce. Appellee
filed an answer and counterclaim on January 29, 2014. In August of 2014, the parties
agreed and settled all issues except the division of their pensions. The trial court held a
hearing on the pension issues on August 20, 2014.
{¶3} Appellee is currently retired and is in payout status with the Ohio Public
Employees Retirement System ("OPERS"). During the marriage, appellant worked as a
firefighter for the City of Massillon. He is a participant in the Ohio Police and Fire
Pension Fund ("OPF"), but is not in payout status. In OPF, a Deferred Retirement
Option Plan ("DROP") is available. Appellant is a participant in the DROP program.
Members who are eligible to retire can enter the DROP program by delaying retirement
and continuing to work. After the effective date of the DROP, treated as the date of the
member's retirement, additional benefits which would have been retirement benefits
accumulate and the account earns interest into DROP.
{¶4} A report by Pension Evaluators, introduced at the hearing, states that, due
to the inflexible nature of a Division of Property Order ("DOPO") that does not allow
courts to adequately divide the marital portion of the DROP account. If the DROP is
"included," appellee would receive not only her marital share of the pension and
interest, but would also receive a share of the contributions made after the marriage. If
Stark County, Case No. 2014CA00194 3
the DROP is "excluded," appellee does not receive any portion of benefits paid out of
the DROP account and loses up to eight years of property interest in pension payments
and interest. "Including" the DROP penalizes appellant by sharing portions of the
contributions made after the marriage and "excluding" deprives appellee of a clearly
marital portion of the pension and interest. The report also details problems with
assigning appellee a dollar amount to divide the DROP funds due to the fact that
appellant's actual retirement date is undetermined. If appellant terminates the DROP
program on July 31, 2014, appellee would receive $85,601.47 from the DROP account,
but if appellant stays in the program until his maximum DROP date of June 19, 2019,
appellee would be entitled to $236,613.61. While the pension report concluded that the
trial court could select one of these numbers, the report recommended, for equitable
division of the retirement accounts, for the trial court to retain jurisdiction and determine
the valuation when appellant retires.
{¶5} In an August 28, 2014 judgment entry, the trial court determine that
appellee's OPERS pension is to be divided upon appellant's retirement and appellant
will receive 36% of the marital portion of that pension unless the court modifies the
number to account for a windfall appellee might receive from the division of the DROP
account. The trial court also stated that appellant's OPF pension will be divided with
appellee receiving 50% of the marital portion of the pension when appellant retires,
unless the trial court modifies the property division if appellee receives a windfall from
the DROP account distribution. The trial court found that valuation of the DROP
account cannot occur until appellant actually retires, pursuant to which appellee is to
receive 50% of the marital portion of the DROP account. The trial court retained
Stark County, Case No. 2014CA00194 4
jurisdiction to modify all DOPO orders to reflect the trial court's intent that those
accounts be divided with each party receiving one-half of the marital portion only.
Finally, the trial court ordered that appellee "is to be made beneficiary of Husband's
DROP account. He is not to change that designation without prior authorization of the
Court." On October 3, 2014, the trial court entered its divorce decree, incorporating the
findings of fact and decision from the August 28, 2014 judgment entry.
{¶6} Appellant appeals the October 3, 2014 judgment entry and assigns the
following as error:
{¶7} "I. THE TRIAL COURT ERRED TO THE PREJUDICE OF PLAINTIFF-
APPELLANT STEPHEN COLLINS ("APPELLANT") AND ABUSED ITS DISCRETION
WHEN IT ORDERED APPELLANT TO NAME DEFENDANT-APPELLEE ARNETTE
COLLINS ("APPELLEE") AS A BENEFICIARY OF APPELLANT'S DEFERRED
RETIREMENT OPTION PLAN ("DROP")."
I.
{¶8} An appellate court reviews the overall appropriateness of the trial court's
property division in divorce proceedings under an abuse of discretion standard. Cherry
v. Cherry, 66 Ohio St. 2d 348, 421 N.E.2d 1293 (1981). In order to find an abuse of
discretion, we must determine the trial court's decision was unreasonable, arbitrary, or
unconscionable and not merely an error of law or judgment. Blakemore v. Blakemore, 5
Ohio St. 3d 217, 450 N.E.2d 1140 (1983).
{¶9} In order to make an equitable division of property, the trial court should
first determine the value of the marital assets. Rollins v. Rollins, 5th Dist. Delaware No.
14 CAF 04 0018, 2014-Ohio-5441. Specifically, "when considering a fair and equitable
Stark County, Case No. 2014CA00194 5
distribution of pension or retirement benefits in a divorce, the trial court must apply its
discretion based upon the circumstances of the case, the status of the parties, the
nature, terms and conditions of the pension or retirement plan, and the reasonableness
of the result." Hoyt v. Hoyt, 53 Ohio St. 3d 177, 559 N.E.2d 1292 (1990). R.C.
3105.171(C)(1) further states,
except as provided in this division * * * the division of marital
property shall be equal. If an equal division of marital property would be
inequitable, the court shall not divide the marital property equally but
instead shall divide it between the spouses in the manner the court
determines equitable. In making a division of marital property, the court
shall consider all relevant factors, including those set forth in division (F) of
this section.
{¶10} The fair and equitable division of pension or retirement benefits in a
divorce matter in Ohio is left to the trial court's discretion. Hoyt v. Hoyt, 53 Ohio St. 3d
177, 559 N.E.2d 1292 (1990). Pension or retirement benefits earned during the
marriage are marital assets and a factor to be considered in the just division of property.
Id. However, pension and retirement benefits earned before marriage or after the
divorce are not marital assets. Meeker v. Skeels, 6th Dist. Lucas No. L-09-1190, 2010-
Ohio-3525.
{¶11} In this case, both parties agree that, with regard to the first several
provisions attending to the DROP and OPERS accounts (36% of the marital portion of
OPERS to appellant and 50% of the marital portion of the DROP to appellee and the
reservation of jurisdiction to prevent a windfall to appellee of DROP account funds), the
Stark County, Case No. 2014CA00194 6
trial court engaged in an equitable division of property. Appellant argues that by adding
appellee as a beneficiary of the DROP account without a cap or a specific allotment of
her amount, the trial court necessarily renders the division of property inequitable
because appellee receives above and beyond her share of the DROP account in the
event of appellant's death. We agree.
{¶12} During the participation in DROP, the employee's individual DROP
account accumulates the following amounts: (1) the monthly OPF benefits that the
employee would be eligible to receive if he had actually retired on the date of election,
plus an annual cost of living; (2) a percentage of the employee's regular salary
contributions to OPF for the first three years of participation and the entire amount of the
employee's salary contributions during years four through eight; and (3) interest on the
foregoing amounts. Meeker v. Skeels, 6th Dist. Lucas No. L-09-1190, 2010-Ohio-3525.
If there is money remaining in the DROP account at the time of a member's death, the
surviving spouse, if any receives the full balance. However, if there is no surviving
spouse, the DROP benefits are payable to designated beneficiaries, if the employee
has so designated. Member's Guide to DROP. https://www.op-f.org/Files/MGdrop.pdf
{¶13} Unlike a standard pension that matures after a divorce, the post-divorce
DROP is continuously funded by both marital and non-marital contributions. Meeker v.
Skeels, 6th Dist. Lucas No. L-09-1190, 2010-Ohio-3525. Even after the divorce, the
DROP account is funded, in part, by marital property in the form of OPF benefits that
appellant already earned during the course of his marriage to appellee. Id. However,
these OPF benefits are not the only source of funds in the DROP account, as the
account is also simultaneously funded with contributions from appellant's current salary.
Stark County, Case No. 2014CA00194 7
These post-divorce salary contributions from appellant's current salary are appellant's
separate property and not subject to division. See id.
{¶14} In this case, neither party discussed or argued the DROP beneficiary
issue before the trial court at the August 20th hearing. However, the trial court, in its
judgment entry, required appellant to designate appellee as the sole beneficiary on his
DROP account. With regards to securing a property division, it is within the trial court's
discretion to order a spouse maintain a life insurance policy for the other spouse's
benefit. Forchione v. Forchione, 5th Dist. Stark No. 2012CA00085, 2013-Ohio-1761;
Zaccardelli v. Zaccardelli, 9th Dist. Summit No. 26262, 2013-Ohio-1878. In this case,
the DROP account is analogous to a life insurance policy since they both have a
procedure for designating and changing beneficiaries and thus the trial court is within its
discretion to require appellant to designate appellant as one of the beneficiaries on the
DROP account to secure a property division. See LeBlanc v. Wells Fargo Advisors,
L.L.C., 134 Ohio St. 3d 250, 2012-Ohio-5458, 981 N.E.2d 839.
{¶15} However, we find the requirement that appellate designate appellee as the
sole beneficiary on his DROP account renders what is otherwise an equitable property
division inequitable because, by making appellee the sole beneficiary of the entire
accumulated funds in the DROP account, it apportions to appellee the amounts earned
during the marriage, but also appellant's separate property in the form of appellant's
contributions from his salary post-divorce. This causes a windfall to appellee. There is
no indication from the record that there cannot be multiple beneficiaries on appellant's
DROP account. While appellee may be entitled to be the beneficiary on the DROP
account for her awarded share (50%) of the marital asset or portion of the DROP funds
Stark County, Case No. 2014CA00194 8
(i.e., that portion of the DROP account that is attributable to the OPF benefits earned
during the course of the marriage), plus interest, she is not entitled to a percentage or to
be the beneficiary of those contributions from appellant's current employment which are
being paid into DROP.
{¶16} Based upon the foregoing, we find the trial court erred when it required
appellant to make appellee the sole beneficiary on the entire DROP account, which
included post-divorce salary contributions that are not subject to division. Appellant's
assignment of error is sustained. The October 3, 2014 judgment entry of the Stark
County Common Pleas Court, Domestic Relations Division, is reversed and we remand
the matter to the trial court for further proceedings in accordance with the law and this
opinion.
By Gwin, P.J.,
Delaney, J., and
Baldwin, J., concur