[Cite as In re Orecchio, 2010-Ohio-2849.]


                           STATE OF OHIO, JEFFERSON COUNTY

                                  IN THE COURT OF APPEALS

                                        SEVENTH DISTRICT


IN THE MATTER OF:                             )
MARCO ANTONIO ORECCHIO,                       )
A MINOR CHILD,                                )
                                              )      CASE NO.     09 JE 37
MARK ORECCHIO,                                )
                                              )
        PLAINTIFF-APPELLANT,                  )
                                              )
        - VS. -                               )      OPINION
                                              )
MARCI COLANTONI,                              )
                                              )
        DEFENDANT-APPELLEE.                   )


CHARACTER OF PROCEEDINGS:                         Civil Appeal from Common Pleas Court,
                                                  Juvenile Division, Case No. 07PA157.


JUDGMENT:                                         Reversed and Remanded.


APPEARANCES:
For Plaintiff-Appellant:                          Attorney Adrian Hershey
                                                  4110 Sunset Boulevard
                                                  Steubenville, Ohio 43952

For Defendant-Appellee:                           Attorney Peter Olivito
                                                  606-612 Sinclair Building
                                                  Steubenville, Ohio 43952


JUDGES:
Hon. Joseph J. Vukovich
Hon. Gene Donofrio
Hon. Mary DeGenaro

                                                  Dated: June 21, 2010
VUKOVICH, P.J.


       ¶{1}   Plaintiff-appellant Mark Orecchio appeals the decision of the Jefferson
County Juvenile Court overruling his objection to the Child Support Findings and
setting Mark’s child support obligation at $978.46 per month, plus the 2% processing
fee. Mark finds fault with that computation because when the Jefferson County Child
Support Enforcement Agency (JCCSEA) computed his gross income, it included the
principal on his mortgage payments for his rental properties. He contends that this
amount should not have been included because it is an ordinary and necessary
expense, which by statute is permitted to be excluded. Thus, the issue in this case is
whether the juvenile court abused its discretion in not excluding the mortgage principal
as an ordinary and necessary expense. For the reasons expressed below, we find
that Mark’s argument has merit and thus, we reverse and remand the matter to the
trial court for further proceedings.
       ¶{2}   Although defendant-appellee Marci Colantoni did not file a cross-appeal
in this case, she also seeks to have the trial court’s judgment changed. Following the
trial court’s decision regarding Mark’s child support obligation, the court ordered that
the support obligation “shall be effective July 16, 2009.” 11/05/09 J.E. She contends
that that decision is incorrect because it should be retroactive to the date that she filed
the motion to modify, April 10, 2008. Since Marci did not comply with App.R. 3(C) for
filing a cross-appeal, this issue is waived and is not addressed.
                                 STATEMENT OF FACTS
       ¶{3}   Mark and Marci have one minor child born on July 12, 2007.              In a
judgment entry dated January 14, 2008, the parties agreed to, among other things,
Mark’s child support obligation. Per agreement, Mark would pay $650 per month, plus
a 2% processing fee for child support, which represented a $918.68 upward deviation
per year. 01/14/08 J.E.
       ¶{4}   After acquiring representation, Marci filed a Motion to Modify on April 10,
2008. That motion, in addition to asking for other modifications, asked the court to
refer the issue of child support to “the appropriate agency for computation.”
       ¶{5}   The parties eventually agreed to have JCCSEA investigate the
respective earnings of the parties so that the child support obligation could be properly
determined. 10/09/08 J.E.
         ¶{6}     On December 5, 2008, JCCSEA reported its findings to the juvenile
court.      It found that Mark was self-employed and that his gross income was
$105,652.28. It then found that he should be paying $1,006.14 per month, plus a 2%
processing charge for child support when health insurance is provided or $1,072.13
per month, plus a 2% processing charge when health insurance is not provided.
         ¶{7}     Mark filed objections to JCCSEA’s findings. He explained that he owns
three businesses. The first is Cafe Primo, which gets the majority of its income from
gambling machines.         The second business is rental properties in Weirton, West
Virginia.       The third business is rental properties at the County Club Villas in
Steubenville, Ohio.       He contended that in computing his gross income, JCCSEA
deducted the interest on his mortgage payments for his rental properties, but did not
deduct the principal. He argues that it was incorrect for JCCSEA to fail to deduct his
entire mortgage payments for the rental properties because they are ordinary and
necessary expenses. Mark explained that by deducting the entire mortgage payments
for the rental properties his gross income is $18,451.60, not $105,652.28.       Marci
responded to the objections and argued that JCCSEA’s computation was correct.
         ¶{8}     On May 22, 2009, the Magistrate for the Juvenile Court issued its
decision on child support. It disagreed with Mark’s arguments and concluded that
JCCSEA’s computation of child support was correct.
         ¶{9}     Both Marci and Mark filed objections to the Magistrate’s Order.    In
Marci’s objections, among other points, she argued that the order did not contain the
appropriate date of April 10, 2008 for the commencement of the modified child support
order. 06/03/09 Objections. In his objections, Mark once again argued that the entire
mortgage payment is an ordinary and necessary expense for his rental business and
should have been deducted from his gross income. 06/12/09 Objections. Later, Mark
filed a supplemental memorandum in support of his position. 07/24/09 Motion.
         ¶{10} On October 29, 2009, the Juvenile Court issued an order overruling both
parties’ objections and setting the child support obligation in conformity with the
magistrate’s order:
         ¶{11} “The Court * * * sets the father’s child support at $1,006.14 per month,
plus 2% processing charge, for current child support when private health insurance is
being provided in accordance with the support order.
       ¶{12} “When private health insurance is not being provided in accordance with
the support order, the father’s child support shall be set at $978.46 per month, plus 2%
processing charge and $93.67 per month, plus 2% processing charge for cash medical
support, for a total monthly obligation of $1,072.13, plus 2% processing.” 10/29/09
J.E.
       ¶{13} On November 5, 2009, the court issued an order that the support
obligation is retroactively effective July 16, 2009. Mark filed a timely appeal from the
October 29, 2009 decision. Marci did not appeal the trial court’s order.
                               ASSIGNMENT OF ERROR
       ¶{14} “IT    WAS     ERROR       FOR     THE     COURT       TO    ACCEPT       THE
COMPUTATIONS          OF     THE      JEFFERSON        COUNTY        CHILD      SUPPORT
ENFORCEMENT AGENCY SINCE THE CHILD SUPPORT ENFORCEMENT
AGENCY DID NOT ALLOW THE APPELLANT TO DEDUCT THE PORTION OF HIS
MONTHLY MORTGAGE PAYMENTS FOR HIS RENTAL PROPERTIES WHICH WAS
APPLIED TOWARDS PRINCIPLE [SIC] AND ONLY PERMITTED THE APPELLANT
TO DEDUCT THE AMOUNT OF THE PAYMENT THAT REPRESENTED INTEREST.”
       ¶{15} As aforementioned, the trial court found that only the interest portion of
Mark’s mortgage payments for his rental property was an ordinary and necessary
expense that should be deducted from his gross income. Mark finds fault with that
determination arguing that the entire mortgage payment, principal and interest, for the
rental properties constitute an ordinary and necessary expense.
       ¶{16} The determination as to whether a child support obligor's expenditures
fall within the definition of “ordinary and necessary” is within the sound discretion of the
trier of fact. Tonti v. Tonti, 10th Dist. Nos. 03AP-494, 03AP-728, 2004-Ohio-2529,
¶53.   Consequently, we will not reverse the trial court’s decision unless it is
unreasonable, arbitrary or unconscionable. Blakemore v. Blakemore (1983), 5 Ohio
St.3d 217, 219.
       ¶{17} In determining the child support obligation, courts use the appropriate
statutory worksheet which includes the parties’ gross incomes.
       ¶{18} “Gross income” means, except as excluded in division (C)(7) of this
section, the total of all earned and unearned income from all sources during a calendar
year * * *. R.C. 3119.01(C)(7).
        ¶{19} It is undisputed that Mark owns his own business and thus, his gross
income is derived from “self-generated income.” The child support statute specifically
defines what is “self-generated income:
        ¶{20} “’Self-generated income’ means gross receipts received by a parent from
self-employment, proprietorship of a business, joint ownership of a partnership or
closely held corporation, and rents minus ordinary and necessary expenses incurred
by the parent in generating the gross receipts.                  ‘Self-generated income’ includes
expense reimbursements or in-kind payments received by a parent from self-
employment, the operation of a business, or rents, including company cars, free
housing, reimbursed meals, and other benefits, if the reimbursements are significant
and reduce personal living expenses.” R.C. 3119.01(C)(13).
        ¶{21} The term “ordinary and necessary expenses incurred in generating gross
receipts” as used in the above definition also has it own definition:
        ¶{22} “‘Ordinary and necessary expenses incurred in generating gross
receipts’ means actual cash items expended by the parent or the parent's business
and includes depreciation expenses of business equipment as shown on the books of
a business entity.
        ¶{23} “(b) Except as specifically included in ‘ordinary and necessary expenses
incurred in generating gross receipts’ by division (C)(9)(a) of this section, ‘ordinary and
necessary expenses incurred in generating gross receipts’ does not include
depreciation expenses and other noncash items that are allowed as deductions on any
federal tax return of the parent or the parent's business.” R.C. 3119.01(C)(9).
        ¶{24} It is Mark’s contention that the mortgage payments, both principal and
interest, for his rental properties constitutes ordinary and necessary expenses as is
defined above.
        ¶{25} In determining whether the trial court abused its discretion, the analysis
will begin with the seminal case from the Ohio Supreme Court on whether a self-
employed parent’s purchase of a capital asset constitutes an ordinary and necessary
expense - Kamm v. Kamm (1993), 67 Ohio St.3d 174.1 In Kamm, the specific question

        1
        It is noted that the statute defining “gross income,” “self-generated income,” and “ordinary and
necessary expenses” has been repealed. However, very similar definitions were enacted in R.C.
3119.01. Thus, for our purposes, the analysis is still applicable since the definitions in all respects are
the same.
was whether a self-employed farmer’s acquisition of a new tractor was an ordinary and
necessary expense that should be deducted from the parent’s gross income for
purposes of child support. Id. The Court concluded that it should be deducted. Id. at
176. It then qualified that holding by explaining that while the purchase of a new
tractor by a farmer out of actual cash flow would be an ordinary and necessary
expense, the purchase of a new computer system by the farmer, while arguably
helpful in the management of the farm, would probably not be an ordinary and
necessary expense. Id. at 177.
       ¶{26} Following that decision, the Third Appellate District was asked to
determine whether a truck driver’s purchase of a new truck by a loan was an ordinary
and necessary expense and was it acquired by an actual cash expenditure. Woods v.
Woods (1994), 95 Ohio App.3d 222. The court found that the purchase of a truck by a
self-employed truck driver was unquestionably an ordinary and necessary expense. Id.
at 225. On the issue of whether it was acquired by an actual cash expenditure, the
court noted that cash is not defined in the statute. Id. However, it noted that Black’s
Law Dictionary defines cash as money or the equivalent, which included negotiable
checks. Id. Thus, considering that definition, the court concluded that “monthly loan
payments would be considered ‘actual cash expenditures’ towards the purchase of the
rig.” Id.2
       ¶{27} Following that decision the Tenth Appellate District decided a case
remarkably similar to the one currently before this court. Helfrich v. Helfrich (Sept. 17,
1996), 10th Dist. No. 95APF12-1599. In Helfrich, the appellate court was reviewing
the trial court’s decision to deduct only the interest portion of the mortgage payments
for a rental property from the parent’s gross income as an ordinary and necessary
expense. In reversing the trial court’s decision, the appellate court explained that the
entire mortgage payment should be deducted:
       ¶{28} “To the extent that the mortgages on appellant's rental properties were
incurred in acquiring the rental properties, both the principal and the interest portions
of the payments on the mortgages are ordinary and necessary expenses incurred in
generating gross rental receipts for appellant. See Woods, supra. (Self-employed
       2
          As with Kamm, the statutes used to determine Woods have been repealed, but those
definitions have been enacted in the current version of R.C. 3119.01. Just as the statute in Woods did
not define cash, the current version of R.C. 3119.01 also does not define cash. Thus, the Woods
holding is still applicable.
truck driver's total monthly loan payments on truck held to be ordinary and necessary
expenses incurred in generating gross income.)         Further, both the principal and
interest portion of appellant's mortgage payments are ‘actual cash’ expenditures. Id.
at 225.   Thus, appellant's acquisition mortgage payments constitute ‘ordinary and
necessary expenses incurred by the parent in generating the gross receipts’ in their
entirety, and the trial court erred in refusing to deduct the principal portion of such
payments from appellant's ‘gross income.’” Id.
      ¶{29} However, because there was an issue as to whether some of the
mortgages were equity or acquisition mortgages, the court remanded the matter for
the trial court to determine the purpose of the equity mortgages and to determine
whether those mortgages were ordinary and necessary expenses.
      ¶{30} Thus, on the basis of the above cases, especially Helfrich, there is
support for the conclusion that the trial court abused its discretion.       The entire
mortgage payment for rental property is an ordinary and necessary expense and it is a
cash expenditure.
      ¶{31} That said, Marci makes a potentially viable argument that the trial court
did not abuse its discretion because Mark was merely acquiring additional properties
to lower his income; he did not need them to produce income. As the Supreme Court
noted in Kamm, there is a concern that the obligor will accumulate assets for the sole
purpose of lowering his gross income to the point that he/she has no income so that
there is no or a lower child support obligation. However, the Court noted that if that is
the case, it would support grounds for deviation under the child support guidelines:
      ¶{32} “As pointed out during oral argument, a parent could theoretically show
no income for child-support calculations for the entire number of years such parent
might be liable for the same. Recognizing this potential for inequitable results, we hold
that allowance of a deduction for acquisition of a capital asset by a self-employed,
child-support obligor against such obligor's gross receipts may be grounds for
deviation from the child-support guidelines pursuant to R.C. 3113.215, providing the
‘best interest of the child’ is considered. Marker v. Grimm (1992), 65 Ohio St.3d 139,
601 N.E.2d 496, approved and followed.” Kamm, 67 Ohio St.3d at 177.
      ¶{33} The problem with Marci’s argument is that there is nothing in the record
that clearly supports her contention that Mark has acquired more rental properties for
the purpose of lowering his income so that he has a lower child support obligation.
Likewise, there is nothing in the record that shows what he previously owned and what
he has recently acquired. Furthermore, Kamm and Helfrich are clear that the starting
point is that acquisition mortgage payments are deducted from the gross income. It
was Marci’s obligation, not Mark’s, to request a deviation based on the allegation that
Mark purchased the new rental property to deplete his income so that his child support
obligation is lower. Marci did not request a deviation from the self-generated income
amount and, as such, we cannot conclude that the trial court’s ruling was based upon
such a request. Hence, her argument does not provide a basis for affirming the trial
court’s decision.
       ¶{34} Consequently, considering all the above, the child support obligation is
reversed and the cause is remanded to the trial court for recomputation of Mark’s self-
generated income, which is his gross receipts minus ordinary and necessary
expenses. At that point, Marci may request a deviation based on her allegation that
Mark purchased new rental property for the purpose of depleting his income.
       ¶{35} Prior to concluding, it is noted that at the end of Marci’s brief she argues
that the trial court abused its discretion by arbitrarily ruling that the commencement
date for the payment of the modified child support obligation was to be July 16, 2009.
She contends that the modification should be retroactively effective from April 10,
2008, the date she filed the motion to modify.
       ¶{36} We decline to address this argument because Marci did not file a cross-
appeal as is required by App.R. 3(C). This appellate rule requires a cross-appeal
when “a person who intends to defend a judgment or order against an appeal taken by
an appellant and who also seeks to change the judgment or order.” App.R. 3(C)(1)
(Emphasis added). However, a cross-appeal is not required when an appellee intends
to defend the judgment on grounds other than those relied on by the trial court but
does not seek to change the judgment. App.R. 3(C)(2). If a cross-appeal is required,
a notice of cross-appeal must be filed within the time allowed by App.R. 4. App.R.
3(C)(1).
       ¶{37} Marci is clearly seeking to change the court’s order; she is seeking to
change the date the modification of child support became effective. Thus, she was
required to file a cross-appeal, which she did not. The Fourth Appellate District, when
dealing with an appellee’s request to modify the date the child support modification
became effective, found that the issue was waived because appellee did not file a
cross-appeal as is required by App.R. 3(C). Jones v. Brister, 4th Dist. No. 00CA44,
2001-Ohio-2540.
       ¶{38} Consequently, on the basis of that decision and the clear language of
App.R. 3(C), Marci has waived her argument and we will not entertain it.
                                     CONCLUSION
       ¶{39} For the reasons expressed above, we find merit with Mark’s assignment
of error. The child support obligation is reversed and the cause is remanded to the
trial court for further proceedings. On remand, the trial court is instructed to recompute
Mark’s self-generated income.      Marci’s argument regarding the retroactive starting
date of the child support obligation is waived for failing to comply with App.R. 3(C).

Donofrio, J., concurs.
DeGenaro, J., concurs.
