[Cite as Baughman v. Baughman , 2021-Ohio-2019.]

STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF SUMMIT )

CHRISTINE A. BAUGHMAN Appellant

v. JOSHUA R. BAUGHMAN Appellee C.A. No. 29870

APPEAL FROM JUDGMENT ENTERED IN THE COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO CASE No. DR-2018-05-1364

DECISION AND JOURNAL ENTRY Dated: June 16, 2021

HENSAL, Presiding Judge. {¶1} Christine Baughman appeals a judgment entry of the Summit Count y Court of Common Pleas, Domestic Relations Division. For the following r easons, this Court reverses.

I. {¶2} The Baughmans married in 2006 and have not had any children tog ether. At the time of the marriage, Husband was a highly valued employee of a tire company, but he did not own any stock or have an ownership interest in the company. In 2011, the tire company was purchased by another company. Although Husband continued to wo rk for the new company, he received five million dollars in exchange for signing a five-ye ar non-compete agreement, which would begin to run upon his conclu sion of employment with the n ew company. Husband’s employment at the new company ended in October 2012. The parti es used some of the five million dollars to buy businesses, to buy and flip houses, and to live off during periods in which Husband was unemployed.2

{¶3} In May 2018, Wife filed a complaint for divorce and Husband sub sequently counterclaimed for divorce. The p arties entered into a separat ion agreement on every issue except for disposition of the remainder of the five million dollars. That issue was tried before a magistrate over three separate days in 2019. In February 2020, the magist rate found that the amount was paid to Husband in exchange for his signing of the non-compete agree ment, rejecting Husband’s argument that it was deferred bonus compensation from the origi nal tire company. The magistrate nevertheless found that, because the payment arose from a non-c ompete agreement, it was Husband’s separate property and awarded the remaining amount en tirely to him. Wife objected to the magistrate’s decision, but t he trial court overruled her ob jection and adopted the magistrate’s decision. Wife has appeale d, assigning two errors.

II.

ASSIGNMENT OF ERROR I

THE TRIAL COURT ERRED IN FINDING COMPENSATION PAID TO HUSBAND DURING THE MARRIAGE PURSUANT TO A NON-COMPETE AGREEMENT WAS A NON-MARITAL ASSET. {¶4} In her first assignment of error, Wife argues that the trial co urt incorrectly found that the non-compete payment was Husband’s separate property. “We review a property division in a divorce proceeding to determine whether the trial court ab used its discretion.” Stepp v. Stepp , 9th Dist. Medina No. 03CA0052-M, 2004-Ohio-1617, ¶ 10. The cha racterization of property as marital or separate, however, is a question of fact that we rev iew under a manifest weight of the

evidence standard. Ostmann v. Ostmann , 168 Ohio App.3d 59, 2006-Ohio-3617, ¶ 9 (9th Dist.). If the parties contest whether an asset is marital or separate property, the asset is presumed to be marital property unless it is proven otherwise. C.S. v. M.S. , 9th Dist. Summit No. 29070, 2019-3

Ohio-1876, ¶ 16. The party seeking to have the asset declared separate property has the burden of proving that the asset is separate property. Id

. {¶5} Revised Code Section 3105.171 govern s the division of marital a nd separate property. Under Section 3105.171(A )(3)(a)(i), marital property includes “[a]ll real and personal property that currently is ow ned by either or both of the spous es, including, but not limited to, the retirement benefits of the spouses, and that was acquired by ei ther or both of the spouses during the marriage[.]” Husband acknowledges that he received the fiv e-million-dollar payment in April 2011, which was during the marriage. He also acknowledges that he departed the new company 18 months after signing the non-co mpete agreement, which was Oc tober 2012. Under the terms of the agreement, Husband agreed not to compete for five years after he left the company. Accordingly, the agreement concluded in October 2017. Wife did not file for divorce until May

2018. {¶6} Although the definition of marita l property is broad, it “does not include any separate property.” R.C. 3105.171(A)(3)(b). Under Section 310 5.171(A)(6)(a), “[s]eparate property” means “[a]n inheritance by one spouse * * * during th e course of the marriage; * * * [a]ny real or personal property * * * that was acquired by one spouse prior to the date of the marriage; * * * [and] [p]assive income and appreciation acquire d from separate property by one spouse during the marriage[.]” I t also includes “[a]ny real or personal property or interest in real or personal property acquired by one spouse after a decree of l egal separation[,]” “[a]ny real or personal property or interest in real or personal property that is excluded by a valid antenuptial agreement[,]” “[c]ompensation to a spouse for the spouse’s per sonal injury,” and “[a]ny gift of any real or personal property * * * made after the date of the marriage and that is proven by clear4

and convincing evidence to have been given to only one spouse.” The compensation Husband received for signing the non-comp ete agreement does not fall in to any of those categories. {¶7} The trial court did not analyze Section 3105.171 in determiningwhether the noncompete payment was marital or separate property. Instead, it determined that any proceeds of a non-compete agreement are separate property under this Court’s decision in Blodgett v. Blodgett , 9th Dist. Summit No. 13547, 1988 WL 110926 (Oct. 19, 1988). In Blodgett , the parties married

in 1975 and around the same time Mr. B lodgett purchased a compa ny. At some point prior to the parties’ separation in 1986, Mr. Blodgett sold the company for several million dollars. Three payments were at issue in the case: (1) the initial sale payme nt, (2) an incentive payment to Mr. Blodgett if the net worth of the company increased by a certain amount by August 31, 1989, and (3) a future payment to Mr. Bl odgett if he did not compete with the purchaser. This Court determined that the initial payment and incentive payment were both marital assets. Id . at * 2. It

determined that the future non-co mpete payment was Mr. Blodgett ’s separate property, however, because it was “solely to prevent [him] from exercising his bus iness acumen in competition against [purchaser].” Id . This Court noted that there was evidence that, absent the agr eement, Mr. Blodgett could start a new company that could supplant the purchaser and that the non-compete payment was worthwhile to the buyer to protect its investment. Id

. {¶8} There are substantive differences between Blodgett and this case. First, Blodgett predates Section 3105.171 and its d efinitions of marital and se parate property. There are no similar

definitions discussed in Blodgett . Second, the non-compete payment had not been made by the time of the parties’ divorce in Blodgett and remained conditional on Husband’s continued adherence to the non-compete ag reement. In this case, Husband received the payment in 2011 and had fully completed the non-compete agreement by the time of th e parties’ divorce. Blodgett ,5

therefore, is legally and factuall y distinguishable from this c ase. This case is also distinguishable from the other cases cited by the trial court and Husband, each of which rely on Blodgett

. Banchefsky v. Banchefsky , 10th Dist. Franklin No. 09AP-1011, 2010-Ohio-4267, ¶ 5 (expla ining that party signed non-compete agreement after petition for divo rce was filed and that agreement would not conclude until five years after the divorce); Brown v. Brown , 10th Dist. Franklin No. 93AP-634, 1993 WL 498150, *8 (Dec. 2, 1993) (explaining that th e nature of the non-compete agreement at issue was of future income because it was calculat ed by taking husband’s base pay and multiplying it by the number of years he would be prohibite d from competing); Hoeft v. Hoeft , 74 Ohio App.3d 809, 811-815 (6th Dist.1991) (explaining that no n-compete agreement was

entered into while divorce ac tion was pending and that the asso ciated payment, which was payable in monthly installments, was husband’s future earnings). {¶9} Husband argues that part of the five-million-dollar payment qua lifies as his separate property because it was actually paid to him as a bonus for his years of outstanding service to the original tire company. According to Husband, because he began working for that company before the marriage, at least part of the bonus constitutes his separa te property under Section 3105.171(A)(6)(a)(ii) because it is property he acquired before the date of the marriage. The trial court, however, rejected this argument and found that the entir e sum was paid by the new company in exchange for Husband’s agreement not to compete with it for five years after he leaves the

company. {¶10} Blodgett did not hold that every sum received in exchange for a non-comp etition agreement is a party’s separate property. It has also been sup planted by the definitions of marital and separate property now found in Section 3105.171. Upon revi ew of the record, we conclude that the trial court incorrectly determined that the remaining balance of the five million dollars that6

Husband received in exchange for entering a non-compete agreeme nt is his separate property. The payment does not meet any of the definitions of separate proper ty under Section 3105.171(A)(6)(a). Wife’s first a ssignment of error is sustain ed.

ASSIGNMENT OF ERROR II

THE TRIAL COURT ERRED IN ACCEPTING THE PARTIES’ SEPARATION AGREEMENT AS TO SPOUSAL SUPPORT BEFORE COMPLETING ITS PROPERTY DIVISION AND IN FAILING TO REVISE THE SPOUSAL SUPPORT ORDER AFTER ITS PROPERTY DIVISION DECISION WHICH ALLOCATED HUSBAND TWO MILLION DOLLARS IN SEPARATE PROPERTY. {¶11} In her second assignment of error, Wife argues that the trial c ourt should have revisited the spousal support award after finding that the paym ent Husband received for signing the non-compete agreement was his separate property. Consideri ng the resolution of Wife’s first assignment of error, we concl ude that this issue is moot. See App.R. 12(A)(1)(c).

III. {¶12} Wife’s first assignment of erro r is sustained. Her second ass ignment of error is moot. The judgment of the Summit County Court of Common Pleas, Domestic Relations Division is reversed, and this matter is r emanded for proceedings consis tent with this decision. Judgment reversed, and cause remanded.

There were reasonable grounds for this appeal. We order that a special mandate issue out of this Court, direc ting the Court of Common Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy of this journal entry shall constitute the mandate, pursuant to App.R. 27.7

Immediately upon the filing hereof , this document shall consti tute the journal entry of judgment, and it shall be file s tamped by the Clerk of the Cour t of Appeals at which time the period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is instructed to mail a notice of entry of this judgment to the parties and to m ake a notation of the mailing in the docket, pursuant to App.R. 30. Costs taxed to Appellee.

JENNIFER HENSAL FOR THE COURT

CALLAHAN, J. SUTTON, J. CONCUR.

APPEARANCES: CORINNE HOOVER SIX, Attorney at Law, for Appellant. RANDAL LOWRY and ADAM MORRIS, Attorneys at Law, for Appellee.