Court Opinion

ID: 2701382
Source: CourtListenerOpinion
Date Created: 2014-08-04 19:32:41.678794+00
Date Added: 2024-06-11T12:53:45.470628
License: Public Domain

[Cite as In re Estate of Pizzoferrato, 190 Ohio App.3d 123, 2010-Ohio-4848.]

                            STATE OF OHIO, JEFFERSON COUNTY
                                IN THE COURT OF APPEALS
                                    SEVENTH DISTRICT

IN RE ESTATE OF PIZZOFERRATO.                      )       CASE NO. 08 JE 38
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                                                   )       OPINION
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CHARACTER OF PROCEEDINGS:                                  Civil Appeal from the Court of Common
                                                           Pleas, Probate Division, of Jefferson
                                                           County, Ohio
                                                           Case No. 2008 ES 026

JUDGMENT:                                                  Final Account Exception Judgment –
                                                           Reversed and Remanded.

                                                           Concealment Judgment –
                                                           Affirmed and Modified in Part.

APPEARANCES:

Gary M. Stern, for appellee and cross-appellant.

Bruzzese & Calabria and Michael J. Calabria; and Rokisky & Associates and Jeffrey J.
Rokisky, for appellant and cross-appellee.

JUDGES:
Hon. Cheryl L. Waite
Hon. Gene Donofrio
Hon. Mary DeGenaro
                                                           Dated: September 27, 2010
                                                                                          -2-

       WAITE, Judge.

       {¶ 1} Appellant, Joseph Pizzoferrato, appeals the decision of the Jefferson

County Court of Common Pleas, Probate Division, that overruled his exception to the

final account filed by appellee Frank Berardi, executor of the estate of Delores

Pizzoferrato.   Berardi filed a cross-appeal challenging the trial court’s ruling on a

concealment complaint filed against appellant. For the following reasons, we reverse

the decision of the trial court as to appellant’s claims and enter judgment in his favor

accordingly. We sustain the trial court’s decision as to the concealment action in part

but reverse and modify in part.

       {¶ 2} Berardi is the devisee of some of the decedent’s real property. Appellant,

who is the decedent’s brother, is the residuary beneficiary under the will. Appellant

argues that the probate court improperly allowed Berardi, in his role as executor, to

exonerate the mortgage lien that was associated with the property devised to Berardi in

the will. In this matter, appellant claims that Berardi transferred to himself estate assets

that should have gone to appellant through the estate. Appellant contends that the trial

court should have applied R.C. 2113.52(B), which provides that the right of exoneration

does not exist unless it is clearly included in the will with respect to the specific lien to

be exonerated. We disagree with appellant’s application of R.C. 2113.52(B), but based

on the record, we determine that Berardi is required to reimburse the estate for the

amount of the lien. For this reason, we sustain appellant’s assignment of error and hold

that Berardi is required to deposit $71,572.78 in the decedent’s estate for proper

distribution.
                                                                                       -3-

       {¶ 3} While we find no error in the reasonableness of the award of $1,650 in the

cross-appeal of this matter, the record reflects that the trial court failed to impose a

mandatory 10 percent penalty. The trial court’s judgment is thus reversed and modified

solely to assess an additional penalty of $165 against appellant. The remainder of the

trial court’s judgment is affirmed.

                                      History of the Case

       {¶ 4} Delores Pizzoferrato died on January 11, 2008, and her will was admitted

to probate in the Jefferson County Court of Common Pleas, Probate Division. Berardi

was named as executor in the will. The will directed that all the decedent’s debts be

paid as soon as practicable from the estate assets. Item III of the will contained a

specific devise and bequest to Berardi of real estate owned by the decedent “adjacent

to Route 43 in Wintersville,” along with all structures, improvements, personal property,

accounts receivable, and any other tangible or intangible assets connected with any

business enterprise being operated on the property. The decedent had operated a

restaurant and recycling center at this location, and Berardi worked there. The will left

the residuary estate, both real and personal, to appellant, the decedent’s brother. At the

time the decedent died, appellant was living with her in her home.

       {¶ 5} The probate court approved Berardi’s appointment as executor. Berardi

filed an inventory and appraisal of the estate on March 11, 2008. The total estate

assets were listed at $560,398.11, with the real property valued at $465,000.

Miscellaneous household goods and personal effects were valued at $1,000.             The

inventory listed three separate parcels of real property, including two parcels at 820 and
                                                                                      -4-

840 Canton Road in Wintersville, valued at $140,000 and $75,000. Canton Road is

another name for Route 43 in Wintersville, and there is no dispute that the two

properties on Canton Road were devised to Berardi. The probate court approved the

inventory and appraisal on April 8, 2008.

      {¶ 6} Berardi filed the final and distributive account on August 8, 2008. In the

list of disbursements, Berardi included the payment in full of the remaining debt arising

from two promissory notes to Huntington Bank in the amounts of $27,614.30 and

$43,958.48, together totaling $71,572.78. These notes were secured by an open-end

mortgage on the property at 840 Canton Road.

      {¶ 7} Appellant filed an exception to the account on September 12, 2008. He

argued that Berardi’s payment of $71,572.78 to Huntington Bank constituted an illegal

exoneration of the mortgage in violation of R.C. 2113.52(B).

      {¶ 8} On September 16, 2008, Berardi filed a concealment complaint against

appellant, alleging that he had concealed, embezzled, or conveyed away estate assets

from the decedent’s residence after her death. He asked for judgment in favor of the

estate for the value of the personal property together with a 10 percent penalty, along

with all costs of the proceedings including reasonable attorney fees. Berardi attached a

list of the decedent’s household goods that he alleged appellant took, along with their

approximate values. For purposes of the concealment action, he listed the retail value

of the goods at $21,170.00. To explain the discrepancy between the value of the goods

in the inventory as filed by Berardi and the value listed in the concealment action,

Berardi claimed that he initially did not intend to challenge the removal of the property
                                                                                         -5-

and instead, listed the value in the inventory at $1,000. He changed his mind after

appellant filed objections to his accounting of the estate.

       {¶ 9} The exception to the account and the concealment action were both heard

on October 28, 2008.      Appellant admitted that he took all the personal household

property from the decedent’s home after her death. He could not give a value for the

property. He said that he gave away most of the items, although it was established that

he sold a lawn tractor for $1,000 and a television for $650. Both parties agreed that the

sale price of those two items established their value.

       {¶ 10} Berardi testified that the original retail value of the decedent's household

property was $21,170 and that the market value of the goods at the time of her death

was $7,000. He did not explain how he arrived at this figure and admitted that he had

no training as an appraiser.

       {¶ 11} On October 30, 2008, the probate court issued two judgment entries. In

the first entry, the judge overruled appellant's exception to the final account. The court

concluded, “[T]he account conforms to the directives set forth in the Will and complies

with Ohio law.”

       {¶ 12} The second entry granted judgment in favor of Berardi on the concealment

action in the amount of $1,650. The court did not order prejudgment interest, attorney

fees, or a 10 percent penalty, but did assess $45.50 in court costs against appellant.

       {¶ 13} On November 25, 2008, appellant filed a notice of appeal from the

judgment entry overruling his exceptions to the final account. On December 1, 2008,
                                                                                           -6-

Berardi filed a notice of cross-appeal, challenging the decision rendered in the

concealment action.

         {¶ 14} Appellant and Berardi each raise one assignment of error.               As a

preliminary matter, it must be noted that Berardi should have filed a separate appeal in

this matter and not a notice of cross-appeal. His claims do not fall within the purview of

a true cross-appeal, since he is appealing an issue arising from a judgment entry wholly

separate and distinct from the entry referred to in appellant's notice of appeal.

         {¶ 15} Procedurally, a cross-appeal is appropriate when a party seeks to defend

an order or appeal taken by another party, but also desires some change to that

judgment or order. App.R. 3(C)(1). However, because Berardi filed his notice of cross-

appeal within the time allowed to file a direct appeal, as set forth in App.R. 4(A), we will

exercise our discretion to accept the matter for review and address his assignment of

error.

                        Assignment of Error of Joseph Pizzoferrato

         {¶ 16} “The Common Pleas Court of Jefferson County, Ohio, Probate Division

committed plain error when it failed to apply Ohio Revised Code 2113.52(B) to the case

at hand. Despite the statutory law, the Probate Court held to exonerate Frank Berardi

from mortgage lien obligations secured by real property of the probate estate of Delores

Pizzoferrato which had been devised to Frank Berardi, and thus made said mortgage

liens the obligation of the residuary estate of Delores Pizzoferrato, all in violation of Ohio

Revised Code 2113.52(B).”
                                                                                           -7-

       {¶ 17} Appellant contends that the trial court improperly allowed the decedent's

estate to exonerate the mortgage lien on the property that was devised to Berardi,

ignoring the language of R.C. 2113.52(B), which states:

       {¶ 18} “If real estate devised in a will is subject to a mortgage lien that exists on

the date of the testator's death, the person taking the real estate under the devise has

no right of exoneration for the mortgage lien, regardless of a general direction in the will

to pay the testator's debts, unless the will specifically provides a right of exoneration that

extends to that lien.”

       {¶ 19} Appellant argues that the real property devised to Berardi was burdened

with a mortgage lien and Berardi was required to accept the debt with the property. He

claims that Berardi, as executor, should not have paid the debt associated with the

mortgage because he was prohibited from doing so pursuant to R.C. 2113.52(B).

       {¶ 20} Because this appeal challenges the probate court's interpretation and

application of statutory law, we apply a de novo standard of review. Riedel v. Consol.

Rail Corp., 125 Ohio St.3d 358, 2010-Ohio-1926, 928 N.E.2d 448, ¶6.                 Although

appellant's assignment of error refers to a “plain error” standard, the plain-error standard

of review does not apply here. Appellant appears to argue that the trial court plainly

ignored the applicable statute and asks this court to correct the error and apply R.C.

2113.52(B).

       {¶ 21} Berardi, in response, argues that R.C. 2113.52(B) does not apply. He

claims that the loans he paid as executor were more in the nature of personal loans,

rather than mortgage loans, because they were also secured by an assignment of rents.
                                                                                        -8-

Berardi contends that a debt that is secured by both a mortgage lien and a

nonmortgage lien should not fall under the purview of R.C. 2113.52(B) and that the

probate estate was permitted to satisfy the debt with estate funds.

       {¶ 22} Neither appellant nor Berardi is correct in this case. R.C. 2113.52(B) is

not the primary law governing the outcome of this matter. R.C. 2113.52(B) involves the

right of exoneration, which is defined in Black's Law Dictionary (6th Ed.1990) as “The

removal of a burden, charge, responsibility or duty. Right to be reimbursed by reason of

having paid that which another should be compelled to pay * * *.” There is no indication

in the record of this case that Berardi, acting as devisee of the decedent's real property,

sought to be reimbursed for paying the debts associated with the liens on the devised

property or that he asked to have the estate remove those liens. Instead, Berardi, as

executor of the estate, paid Huntington Bank's claims as part of the normal course of

administering the decedent's estate. Huntington Bank requested that two promissory

notes be paid by the estate, and the payoff notices for the two loans are part of the

record. Payment appears to be proper because the promissory notes each contain

“death or insolvency” and acceleration clauses, entitling Huntington Bank to collect the

balance of the loans upon Delores Pizzoferrato's death. When an executor pays the

claims made against a decedent's estate, this act is not referred to as an exoneration. It

may be variously referred to as discharging the debts of the estate, allowing the claims

against the estate, or simply as paying the decedent's creditors, but it is not an

exoneration, as that act is defined.
                                                                                        -9-

      {¶ 23} Appellant claims that Berardi exonerated the mortgage lien in the final

accounting, but this is not a correct characterization of the act. The final account simply

notes that the estate paid, along with all the other claims against it, the two promissory

notes issued by Huntington Bank. Although this payment may have had some of the

same effects as an exoneration of the mortgage lien, the process used was not that of a

devisee seeking reimbursement for a payment he made, which is to say, exerting a right

of exoneration. In this instance, Berardi, as executor, properly paid Huntington Bank for

the balance of two business loans made to the decedent.

      {¶ 24} It is our view that the correct statute to apply in this case is R.C.

2107.54(C), which states:

      {¶ 25} “A devisee of real estate that is subject to a mortgage lien that exists on

the date of the testator's death, who does not have a right of exoneration that extends to

that lien because of the operation of division (B) of section 2113.52 of the Revised

Code, has a duty to contribute under this section to devisees and legatees who are

burdened if the claim secured by the lien is presented and allowed pursuant to Chapter

2117. of the Revised Code.”

      {¶ 26} R.C. 2107.54(C) presumes that a claim secured by a lien on the

decedent's real property may be presented to the estate and the claim may be allowed

and paid by the estate under R.C. 2117. See, e.g., In re Estate of Mahan, 11th Dist.

No. 2005-T-0062, 2006-Ohio-4821. If the claim is allowed and paid by the estate, and if

the devisee has no right of exoneration by the operation of R.C. 2113.52(B), then a duty

arises in the devisee to contribute to any other devisees and legatees who may be
                                                                                             -10-

burdened by the payment of the claim. In this particular case, the residuary beneficiary

was clearly burdened by the payment of the claim. Hence, the duty of contribution

should have been invoked.

       {¶ 27} Appellant filed an exception to the final accounting raising the right of

exoneration under R.C. 2113.52(B), but failed to address the preliminary matter as to

whether it was proper for the estate to pay the claims presented by Huntington Bank. It

is understandable that the trial court overruled the exception, because the appropriate

law was not invoked and appellant was arguing that the estate should not have paid

Huntington Bank. However, due to the nature of the mortgage liens, the estate owed

Huntington Bank full payment. The question that remains is what further steps were

necessary before the devisee could take his property under the will. Because the next

step in the analysis does involve in some way the statute raised in appellant's exception

to the final account, and in the interest of substantial justice, we address whether

Berardi, as devisee, had a duty to contribute to the probate estate after the debts

secured by a mortgage lien had been properly paid by the estate.

       {¶ 28} In this case, it is undisputed that the will provided no specific right of

exoneration extending to the mortgage lien in question. R.C. 2113.52(B) allows for a

right of exoneration only if there is a specific provision in the will that grants a right of

exoneration extending to the specific mortgage lien at issue. A general direction in the

will to pay the testator's debts does not suffice. Item III of the decedent's will states:

       {¶ 29} “I give, devise and bequeath the real estate that I own adjacent to Route

43 in Wintersville, Jefferson County, Ohio, together with all structures, improvements
                                                                                        -11-

and personal property situated thereon, and including any accounts receivable or other

assets, tangible or intangible, connected with any business enterprise being operated

thereon, to FRANK BERARDI, if he survives me.”

       {¶ 30} This general clause does not provide a specific right of exoneration for the

mortgage lien on the property adjacent to Route 43 in Wintersville. Therefore, R.C.

2107.54(C) requires the devisee to contribute to the estate the amount the estate paid

to satisfy the claims secured by the mortgage lien.

       {¶ 31} Berardi attempts to contravene the effects of R.C. 2107.54(C) and

2113.52(B) by characterizing the underlying debts on the property as personal or

business loans rather than mortgage loans. He relies primarily on the existence of an

assignment of rents, which he describes as an interest in personal property rather than

an interest in real property.      He contends that the two promissory notes were

encumbered by personal assets of the decedent's restaurant business, and thus, were

personal loans and not simply real estate loans. It is not quite clear what Berardi is

attempting to achieve by this characterization, but in any case, he is incorrect. The

assignment of rents also included the assignment of the underlying leases and the

income derived from those leases.         Thus, the assignment of rents involved both

personal property (the rents themselves) and real property (the leases). Whether an

assignment of rents refers to an interest in real or personal property, though, is largely

irrelevant. R.C. 2113.52(B) provides no exception with respect to the nature of the debt

that supports a mortgage. If real property is devised in a will and there is a mortgage

attached to the property, then without a specific statement allowing it, there is no right of
                                                                                          -12-

exoneration, without regard to the manner in which the mortgage came into existence or

the nature of the debt associated with the mortgage.

       {¶ 32} The record reveals that there was a mortgage lien associated with the

devised property, the residuary beneficiary was burdened by the payment of the two

promissory notes by the estate, and that Berardi, as devisee, is required to contribute

the amount of those payments back to the estate since he accepted the devised real

estate.   Therefore, we sustain appellant's assignment of error.            The trial court’s

determination on this matter is reversed, and we hold that Berardi is required to

reimburse the estate in the amount of $71,572.78.

                            Frank Berardi's Assignment of Error

       {¶ 33} “It was against the manifest weight of the evidence and an abuse of

discretion for the trial court to fail to order Joseph Pizzoferrato to either return the estate

assets or pay the value of estate assets that he took from decedent's home after her

death, and refuse to assess the 10 per cent penalty mandated by statute.”

       {¶ 34} In Berardi's assignment of error, he refers to the concealment action he

filed. Concealment actions are governed by R.C. 2109.52, which states:

       {¶ 35} “When passing on a complaint made under section 2109.50 of the

Revised Code, the probate court shall determine * * * whether the person accused is

guilty of having concealed, embezzled, conveyed away, or been in the possession of

moneys, chattels, or choses in action of the trust estate. If such person is found guilty,

the probate court shall assess the amount of damages to be recovered or the court may

order the return of the specific thing concealed or embezzled or may order restitution in
                                                                                         -13-

kind. * * * In all cases, except when the person found guilty is the fiduciary, the probate

court shall forthwith render judgment in favor of the fiduciary or if there is no fiduciary in

this state, the probate court shall render judgment in favor of the state, against the

person found guilty, for the amount of the moneys or the value of the chattels or choses

in action concealed, embezzled, conveyed away, or held in possession, together with

ten per cent penalty and all costs of such proceedings or complaint; except that such

judgment shall be reduced to the extent of the value of any thing specifically restored or

returned in kind as provided in this section.”

       {¶ 36} Berardi argues that it was an abuse of discretion for the court to award

damages only for the two items that appellant admitted he sold from the estate, since he

also admitted that he took several other items. Berardi also argues that the probate

court should have assessed a mandatory penalty of 10 percent, as stated in R.C.

2109.52.

       {¶ 37} With respect to the first subissue, a reviewing court uses an abuse-of-

discretion standard when reviewing a trial court's decision relative to an assessment of

damages. Roberts v. United States Fid. & Guar. Co. (1996), 75 Ohio St.3d 630, 634,

665 N.E.2d 664. “Abuse of discretion” means more than an error of law; rather, it

implies that the court's attitude is unreasonable, arbitrary, or unconscionable.

Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219, 5 OBR 481, 450 N.E.2d 1140.

       {¶ 38} The probate court did not abuse its discretion in determining the damage

award. Although Berardi testified that he considered the market value of the decedent's

household property to be $7,000, he gave no basis for arriving at that figure, and the
                                                                                      -14-

probate court relied instead on the specific dollar amounts given by appellant as the

sale prices of a lawn tractor and a television. In rejecting Berardi's valuation, the trial

court made a credibility determination.         We generally defer to the credibility

determinations of the trier of fact, which in this case was the probate judge. Seasons

Coal Co., Inc. v. Cleveland (1984), 10 Ohio St.3d 77, 80, 10 OBR 408, 461 N.E.2d

1273.    Berardi admitted that he had none of the decedent's household property

appraised and that there was no basis for his own valuation of the market value of this

property at the time of decedent's death. His credibility also came into question when

he testified that he filed the concealment action only in retaliation for appellant's

decision to file an exception to the final account. Because the trial court had a basis for

valuing damages at $1,650, and there is nothing in the record that would have us

question the credibility determination made at trial, we find no abuse of discretion in the

trial court's award of damages.

        {¶ 39} Turning to the issue of the 10 percent penalty, Berardi's argument is well

taken. Upon a finding of damages in a concealment action, R.C. 2109.52 mandates

that a 10 percent penalty be assessed.          Again, this penalty is mandatory, not

discretionary. See, e.g., In re Estate of Tewksbury, 4th Dist. No. 05CA741, 2005-Ohio-

7107, ¶13; Sugar v. Sugar (Mar. 29, 1999), 7th Dist. No. 96CO4, 1999 WL 182513, at

*4-5. Therefore, the probate court's failure to order the 10 percent penalty in this case

was contrary to law. Accordingly, Berardi’s assignment of error is sustained in part, and

we modify the judgment in the concealment action to add a 10 percent assessment in

addition to the underlying award of damages.
                                                                                      -15-

                                       Conclusion

      {¶ 40} Appellant's assignment of error is meritorious on other grounds.           As

executor, Berardi properly paid the remaining debt on two promissory notes issued to

the decedent. As devisee, he was then required to contribute the amount of those

payments back to the decedent's estate based on the operation of R.C. 2107.54(C) and

2113.52(B). The judgment of the probate court on the exception to the final account is

reversed, and the cause is remanded with the direction to Berardi to deposit $71,572.78

into the probate estate for proper distribution. In addition, the trial court's judgment in

the concealment action is affirmed with respect to the damages award of $1,650, but

the judgment is reversed to the extent that it must be modified to add the statutorily

mandated penalty of 10 percent in the amount of $165, for a total judgment against

appellant in the sum of $1,815.

                                                                   Judgment accordingly.

      DONOFRIO and DEGENARO, JJ., concur.