Court Opinion

ID: 2698509
Source: CourtListenerOpinion
Date Created: 2014-08-04 17:51:22.079209+00
Date Added: 2024-06-11T12:51:03.895943
License: Public Domain

[Cite as Shalash v. Shalash, 2013-Ohio-5064.]

                                       COURT OF APPEALS
                                   DELAWARE COUNTY, OHIO
                                   FIFTH APPELLATE DISTRICT

IMAN SHALASH                                    :   JUDGES:
                                                :
   Plaintiff-Appellee                           :   Hon. William B. Hoffman, P.J.
                                                :   Hon. John W. Wise, J.
-vs-                                            :   Hon. Patricia A. Delaney, J.
                                                :
HATEM SHALASH, ET AL.                           :   Case No. 12 CAF 11 0079
                                                :
   Defendants-Appellees                         :
                                                :
and                                             :
                                                :
SATSHA EXPRESS, INC. AND                        :
FATHEIH SHALASH                                 :
                                                :
   Defendants-Appellants                        :   OPINION

CHARACTER OF PROCEEDING:                            Appeal from the Delaware County Court
                                                    of Common Pleas, Domestic Relations
                                                    Division, Case No. 10 DR A 03 0140

JUDGMENT:                                           REVERSED AND REMANDED

DATE OF JUDGMENT ENTRY:                             November 7, 2013

APPEARANCES:

For Plaintiff-Appellee:                             For Defendants-Appellants:

ROBERT C. PETTY                                     RONALD B. NOGA
270 Bradenton Ave.                                  1010 Old Henderson Road, Suite 1
Dublin, OH 43017                                    Columbus, OH 43220
Delaware County, Case No. 12 CAF 11 0079                                             2

Delaney, J.

      {¶1} Defendants-Appellants Satsha Express, Inc. and Fatheih Shalash appeal

the May 1, 2012 and October 18, 2012 judgment entries of the Delaware County Court

of Common Pleas, Domestic Relations Division.

                       FACTS AND PROCEDURAL HISTORY

      {¶2} On March 16, 2010, Plaintiff-Appellee Iman Shalash filed a complaint for

divorce against her husband, Defendant Hatem Shalash. Wife also served a restraining

order upon Husband restraining him from selling, encumbering, disposing, or in any

manner secreting assets of the marriage.

      {¶3} Wife named 1925 Express Business, Inc., a corporation owned by

Husband, as a defendant in the complaint. In 2007, the corporation purchased the

Express Drive Thru located in Columbus, Ohio for approximately $200,000. On March

23, 2010, Husband executed a purchase agreement to sell 1925 Express Business, Inc.

for approximately $55,000 to Husband’s mother, Defendant-Appellant Fatheih Shalash

(“Mother”). Mother formed a corporation named Satsha Express, Inc. At the time of the

sale, 1925 Express Business, Inc. had significant sales tax assessments.

      {¶4}    On October 8, 2011, Wife filed an amended complaint and named

Defendant-Appellant Satsha Express, Inc. as a defendant.

      {¶5} The trial court held a trial on the complaint for divorce in November 2011.

Husband’s counsel withdrew from the action and the proceedings were stayed.

      {¶6} On May 1, 2012, the trial court sua sponte ordered it was necessary for

Mother to be joined as a defendant in the action. The May 1, 2012 judgment entry

states that based on testimony and evidence garnered during the resolution of pre-trial
Delaware County, Case No. 12 CAF 11 0079                                                   3

motions, the trial court determined the sale of the 1925 Express Business, Inc. was a

sham transaction to eliminate a marital asset. The trial court stated that in order to

properly consider 1925 Express Business, Inc. as a marital asset, the transaction

between Husband and his Mother must be vacated.

       {¶7} Trial resumed on June 4, 2012. Mother and Husband testified as to the

transaction to sell 1925 Express Business, Inc.

       {¶8} On June 11, 2012, the trial court issued a judgment entry finding the

business transaction between Husband and his Mother to purchase 1925 Express

Business, Inc. was a sham transaction. The trial court found the business now known

as Satsha Express was a marital asset of Husband and Wife. The trial court ordered

Mother to hold the business in a constructive trust for the parties.

       {¶9} The decree of divorce was filed on October 18, 2012. The trial court

found Husband engaged in financial misconduct. The trial court made a distributive

award and assigned all marital debt to Husband. Husband did not appeal the October

18, 2012 decree of divorce.

       {¶10} In a separate judgment entry issued on October 18, 2012, the trial court

found Husband’s transaction to sell 1925 Express Business, Inc. to Mother was a sham

transaction. Effective November 1, 2012, Mother was ordered to transfer the business

entity known as Satsha Express, Inc. to Wife. The transfer included all equipment,

fixtures, inventory, and rights to existing liquor permits, but not any debts or liabilities.

Wife was solely responsible for running the business, but the trial court granted

Husband 30% of the net profits of which the sales tax assessments were to be paid.
Delaware County, Case No. 12 CAF 11 0079                                                 4

       {¶11} Mother and Satsha Express now appeal the May 1, 2012 and October 18,

2012 judgment entries.

                              ASSIGNMENTS OF ERROR

       {¶12} Mother and Satsha Express raise three Assignments of Error:

       {¶13} “I. THE DOMESTIC RELATIONS COURT’S ORDER INVALIDATING THE

SALE OF THE BUSINESS 1925 EXPRESS, INC. TO SATSHA EXPRESS, INC. WAS

OUTSIDE OF THE SUBJECT MATTER JURISDICTION OF THE DIVISION OF

DOMESTIC RELATIONS AS IT DETERMINES A COLLATERAL CLAIM AND THE

RIGHTS OF A THIRD PARTY.

       {¶14} “II. THE TRIAL COURT ERRED IN DETERMINING THE TRANSFER OF

BUSINESS ASSETS FROM 1925 EXPRESS, INC. TO SATSHA EXPRESS, INC. WAS

A SHAM TRANSACTION.

       {¶15} “III. THE TRIAL COURT LACKED JURISDICTION TO ORDER A

TRANSFER OF LIQUOR PERMITS FROM SATSHA EXPRESS, INC. TO THE

APPELLEE AS THAT AUTHORITY LIES SOLELY WITH THE COURT OF COMMON

PLEAS OF FRANKLIN COUNTY.”

                                       ANALYSIS

                                         I. and II.

       {¶16} We consider the first and second Assignments of Error of Mother and

Satsha Express together because the resolution of the Assignments of Error requires an

interrelated analysis. In the first Assignment of Error, Mother and Satsha Express argue

the trial court went beyond its subject matter jurisdiction when it vacated the transaction

to sell 1925 Express Business, Inc. to Mother. Mother and Satsha Express argue in the
Delaware County, Case No. 12 CAF 11 0079                                                  5

second Assignment of Error the trial court abused its discretion in finding the sale of

1925 Express Business, Inc. to Mother was a sham transaction.

       {¶17} In this case, the trial court determined the evidence demonstrated 1925

Express Business, Inc. was a marital asset. The trial court then found the sale of the

business by Husband to Mother was a sham transaction and ordered Mother to return

the business to Wife. Mother and Satsha Express argue the trial court exceeded its

jurisdiction as a court of domestic relations in making any determination as to Mother

and Satsha Express. We agree, in part.

                          Husband’s and Wife’s Marital Property

       {¶18} R.C. 3105.011 provides:

       The court of common pleas including divisions of courts of domestic

       relations, has full equitable powers and jurisdiction appropriate to the

       determination of all domestic relations matters.      This section is not a

       determination by the general assembly that such equitable powers and

       jurisdiction do not exist with respect to any such matter.

       {¶19} The Eighth District Court of Appeals held, in relevant part, that R.C.

3105.011, “limits the jurisdiction of the domestic relations [court] to the determination of

domestic relations matters. Any collateral claims must be brought in a separate action

in the appropriate court or division when the claim involves the determination of the

rights of a third-party.” Lisboa v. Karner, 167 Ohio App. 3d 359, 2006-Ohio-3024, 855
N.E.2d 136 (8th Dist.).

       {¶20} The Eleventh District Court of Appeals, relying upon Lisboa, held in

Mitchell v. Mitchell, 11th Dist. Portage No. 2007-P-0023, 2008-Ohio-833, ¶ 63:
Delaware County, Case No. 12 CAF 11 0079                                                   6

      Although the term “domestic relations matter” is not specifically defined in

      any of the relevant statutes, Tanagho [v. Tanagho, 10 Dist. Franklin No.

      92AP-1190, 1993 WL 50950 (Feb. 23, 1993)], upon which the court in

      Lisboa relied, held that the determination of “whether [a] property is a * * *

      marital asset” [is] “within the jurisdiction of the domestic relations court,”

      despite the fact that a third party also was claiming an interest in the

      property.   1993 Ohio App. LEXIS 1201, at *7, 2003 WL 50950.                  Put

      another way, the issues of determining whether or not an asset should be

      included in the marital estate, “and if it [is] a marital asset, its valuation for

      purposes of property distribution” are primarily domestic relations matters,

      whereas a separate action to quiet title in property filed in the domestic

      relations court by a third party would not be.         Id. at *6 -*7 (emphasis

      added).

      {¶21} R.C. 3105.171(B) requires the trial court to determine what constitutes

marital property and what constitutes separate property. Accordingly, we find the trial

court had jurisdiction to determine what assets comprised the marital estate because

that determination is primarily a domestic relations matter. The trial court correctly

determined 1925 Express Business, Inc. was a marital asset. The next issue, however,

is whether the trial court exceeded its jurisdiction when it awarded the marital asset

1925 Express Business, Inc. to Wife because of Husband’s financial misconduct.

                             Husband’s Financial Misconduct

      {¶22} As stated above, the trial court found the evidence demonstrated 1925

Express Business, Inc. was a marital asset. The trial court next found the sale of the
Delaware County, Case No. 12 CAF 11 0079                                                 7

business by Husband to Mother was a sham transaction and ordered Mother to return

the business to Wife.

       {¶23} R.C. 3105.171(E)(4) provides:

       If a spouse has engaged in financial misconduct, including, but not limited

       to, the dissipation, destruction, concealment, or fraudulent disposition of

       assets, the court may compensate the offended spouse with a distributive

       award or with a greater award of marital property.

       {¶24} Financial misconduct occurs when one spouse engages in some type of

knowing wrongdoing, by which the spouse either profits or intentionally interferes with

the other spouse's property rights. Sears v. Sears, 5th Dist. Knox No. 12-CA-09, 2012-

Ohio-5968, ¶ 55 citing Taub v. Taub, 10th Dist. Franklin No. 08AP–750, 2009–Ohio–

2762, ¶ 33; Heller v. Heller, 10th Dist. Franklin No. 07AP–871, 2008–Ohio–3296, ¶ 27;

Hamad v. Hamad, 10th Dist. Franklin No. 06AP–516, 2007–Ohio–2239, ¶ 62. To find

financial misconduct, a court must look to the reasons behind the questioned activity or

the results of the activity and determine whether the wrongdoer profited from the activity

or intentionally dissipated, destroyed, concealed, or fraudulently disposed of the other

spouse's assets. Thomas v. Thomas, 2012-Ohio-2893, 974 Ohio App. 3d 679, ¶ 63 (5th

Dist.). The decision regarding whether to compensate a party for the financial

misconduct of the opposing party is discretionary with the trial court. Thomas, at ¶ 62

citing Leister v. Leister, 5th Dist. Delaware No. 97CA–F–07027, 1998 WL 751457 (Oct.

23, 1985). Therefore, a trial court's decision on this issue will not be reversed on appeal

absent a showing of an abuse of discretion. Blakemore v. Blakemore, 5 Ohio St. 3d
217, 450 N.E.2d 1140 (1983).
Delaware County, Case No. 12 CAF 11 0079                                                   8

       {¶25} It is the burden of the moving party to prove financial misconduct of the

other spouse. Kilpatrick v. Kilpatrick, 5th Dist. Delaware No. 10 CAF 09 0080, 2011-

Ohio-443, ¶ 30.     The trial court has discretion in determining whether a spouse

committed financial misconduct, subject to a review of whether the determination is

against the manifest weight of the evidence. Boggs v. Boggs, 5th Dist. Delaware No. 07

CAF 02, 2008–Ohio–1411 at ¶ 73.

       {¶26} In the June 11, 2012, May 1, 2012, and October 18, 2012 judgment

entries, the trial court found the sale of 1925 Express Business, Inc. to Mother was a

sham transaction because Husband attempted to deprive Wife of an equitable share of

a marital asset in violation of the trial court’s restraining order. (Decree of Divorce, Oct.

18, 2012). Such is a finding of financial misconduct pursuant to R.C. 3105.171(E)(4)

because the statute defines financial misconduct as “the dissipation, destruction,

concealment, or fraudulent disposition of assets.”

       {¶27} Husband has not appealed the trial court’s finding that he engaged in

financial misconduct as to the sale of 1925 Express Business, Inc. In their second

Assignment of Error, Mother and Satsha Express argue the sale of 1925 Express

Business, Inc. was not financial misconduct on the part of Husband. Upon our review of

the record, we find the trial court’s decision Husband engaged in financial misconduct

as to the disposition of 1925 Express Business, Inc. was supported by the manifest

weight of the evidence. The evidence in this case supports the trial court’s conclusion

Husband sold the business to his Mother after Wife filed her complaint for divorce and in

contravention of a restraining order, thereby intentionally interfering with Wife’s property

rights in the business. The second Assignment of Error is overruled.
Delaware County, Case No. 12 CAF 11 0079                                                     9

       {¶28} After the trial court made the determination 1925 Express Business, Inc.

was a marital asset and found that Husband’s sale of 1925 Express Business, Inc. was

financial misconduct, the trial court ordered the transaction vacated and for Mother to

return the marital asset to Wife. In Albaugh v. Albaugh, 10th Dist. Franklin No. 81AP-

637, 1982 WL 4296 (July 22, 1982), husband transferred seven shares of stock to his

children in order to eliminate those shares from being considered as marital property by

the trial court. Id. at *3. The court held the trial court should treat for purposes of

dividing the marital property the seven shares as being owned by the husband. Id. Of

note is that the court did not order the stocks be transferred back to the marital estate.

       {¶29} Under R.C. 3105.171(E)(4), the trial court has two remedies to

compensate a spouse for the other spouse’s financial misconduct: (1) a distributive

award or (2) a greater award of marital property. 1925 Express Business, Inc. was a

marital asset through which Husband engaged in financial misconduct in disposing of

that asset via sale to his Mother.      Pursuant to the guidance of Albaugh and the

limitations of R.C. 3105.171(E)(4), we find the trial court, in compensating Wife for

Husband’s financial misconduct, should have considered the value of 1925 Express

Business, Inc. as part of the marital estate, rather than vacating the sale of the business

and granting Wife the ownership of the business. Ordering the transfer of the business

from Mother to Wife was an inappropriate extension of the trial court’s authority in this

case because the court had alternative remedies to utilize, such as the application of

the financial misconduct statute. The trial court could award Wife a distributive award or

a greater award of marital property from the total marital estate.

       {¶30} The first Assignment of Error is overruled in part and sustained in part.
Delaware County, Case No. 12 CAF 11 0079                                                    10

                                              III.

       {¶31} Mother and Satsha Express argue in their third Assignment of Error the

trial court erred in ordering the parties to transfer their rights in the liquor permit to 1925

Express Business, Inc. to Wife. We agree.

       {¶32} The Tenth District Court of Appeals, in Bahta v. Eqube, 10th Dist. No.

12AP-690, 2013-Ohio-1253, recently held:

       According to well-settled Ohio law, liquor permits are mere licenses and

       create no contract or property right. Salem v. Liquor Control Comm., 34
Ohio St. 2d 244, 245, 298 N.E.2d 138 (1973); Soloman v. Liquor Control

       Comm., 4 Ohio St. 2d 31, 36, 212 N.E.2d 595 (1965); Abraham v.

       Fioramonte, 158 Ohio St. 213, 226–27, 107 N.E.2d 321 (1952); Banc of

       Am. Strategic Solutions, Inc. v. Cooker Restaurant Corp., 10th Dist. No.

       05AP–1126, 2006–Ohio–4567, ¶ 9; De lfratte v. Ohio State Liquor Control

       Comm., 10th Dist. No. 03AP–848, 2004–Ohio–1143, ¶ 14; Continental

       Sawmill Ltd. Partnership v. Italian Oven L.L.C., 10th Dist. No. 00AP–204

       (Sept. 29, 2000). A “license” is a personal and temporary privilege, not a

       natural right, which the license holder enjoys only so long as he or she

       complies with the conditions and restrictions governing its continuance.

       Salem at 245, 298 N.E.2d 138. Because liquor permits are only licenses

       and state regulation prohibits the free transfer of such permits, courts will

       not enforce the transfer of a liquor permit outside the statutory scheme.

       Banc of Am. Strategic Solutions, Inc. at ¶ 9, quoting Continental Sawmill

       Ltd. Partnership.
Delaware County, Case No. 12 CAF 11 0079                                                  11

Id. at ¶ 9.

        {¶33} The third Assignment of Error is sustained.

                                      CONCLUSION

        {¶34} For the reasons stated above:

              (1) the first Assignment of Error is overruled in part and sustained in part;

              (2) the second Assignment of Error is overruled; and

              (3) the third Assignment of Error is sustained.

        {¶35} The judgment of the Delaware County Court of Common Pleas, Domestic

Relations Division is reversed and the matter remanded to the trial court for further

proceedings consistent with this opinion and law.

By: Delaney, J., and

Hoffman, P.J. concur.

Wise, J., dissents.

                                         HON. PATRICIA A. DELANEY

                                         HON. WILLIAM B. HOFFMAN

                                         HON. JOHN W. WISE
Delaware County, Case No. 12 CAF 11 0079                                                  12

Wise, J., dissenting

       {¶36} I respectfully dissent from the majority decision regarding the First

Assignment of Error in this matter. I first note R.C. 3105.171(B) states in pertinent part:

“*** For purposes of this section, the court has jurisdiction over all property, excluding

the social security benefits of a spouse other than as set forth in division (F)(9) of this

section, in which one or both spouses have an interest.” I recognize that a domestic

relations court may be, in some cases, jurisdictionally restrained from affecting the

rights of third parties in resolving issues of property division; however, I find this is not

such a situation.

       {¶37} In the present case, both Defendant Hatem Shalash and 1925 Express

Business, Inc. received actual notice of the divorce complaint and temporary restraining

order on March 19, 2010, several days before the corporation was transferred by

purchase agreement to Satsha Express, Inc. The corporation was thus an asset over

which the trial court had established jurisdiction, and the transfer thereof was in patent

disregard of the court’s restraining order. I therefore conclude the decision reached by

the trial court to effectively vacate the transfer was jurisdictionally valid and was within

the bounds of the court’s discretion to effectuate property division, even if the court

could have chosen an alternative remedy.

                                                  ________________________________
                                                  HON. JOHN W. WISE