[Cite as Duczman v. Sorin, 2018-Ohio-3442.]


                                   IN THE COURT OF APPEALS

                                ELEVENTH APPELLATE DISTRICT

                                          LAKE COUNTY, OHIO


 JOSEPH DUCZMAN,                                    :         OPINION

                   Plaintiff-Appellant,             :
                                                              CASE NO. 2017-L-126
         - vs -                                     :

 MARIA SORIN,                                       :

                   Defendant-Appellee.              :


 Civil Appeal from the Lake County Court of Common Pleas, Juvenile Division.
 Case No. 2014 PR 00507.

 Judgment: Affirmed in part and reversed in part; remanded.


 James W. Reardon, Carrabine & Reardon Co., L.P.A., 7445 Center Street, Mentor, OH
 44060 (For Plaintiff-Appellant).

 Jon D. Axelrod and Rochelle M. Hellier, Axelrod Law Office, 36615 Vine Street, Suite
 102, Willoughby, OH 44094 (For Defendant-Appellee).



TIMOTHY P. CANNON, J.

                         {¶1}   Appellant, Joseph Duczman, appeals from the September 13,

                  2017 judgment entry of the Lake County Court of Common Pleas, Juvenile

                  Division. Appellant takes issue with the trial court’s child support order. For

                  the following reasons, the trial court’s judgment is affirmed in part and

                  reversed in part, and the matter is remanded.
      {¶2}    Appellant and Maria Sorin, appellee herein, are the biological

parents of two minor children: A.D. (d.o.b. 09-17-2011) and S.D. (d.o.b. 07-

27-2013). On March 13, 2014, appellant filed a complaint in which he

requested parenting time with the children and asked the court to order child

support. Appellee filed an answer and counterclaim. She requested the

complaint be dismissed and sought sole custody of the children; she further

requested that she be named temporary and permanent residential parent

and legal custodian of the children and that she be awarded temporary and

permanent child support.

      {¶3}    A trial to the magistrate was held on May 2, 2016.           A

magistrate’s decision was issued on May 27, 2016.           Regarding child

support, the magistrate recommended appellant pay the sum of $619.33

per month when private health insurance is being provided for the minor

children. To calculate the child support, the magistrate utilized appellant’s

2014 salary of $36,953.00, which was from his business, a martial arts

school he owned since 2014. The magistrate’s decision explained that the

evidence established appellant’s business made an additional profit of

$28,466.00.    However, the magistrate did not include that amount in

appellant’s gross income for purposes of calculating support, stating “the

evidence was unrefuted that Father utilized that money to advance the

business, i.e. paying on his business loan and health insurance premium.”

The magistrate stated, “Father testified that the profit is used to pay the




                              2
business loan, contribute to a retirement account and purchase health

insurance for himself.”

        {¶4}   Appellee filed objections to the magistrate’s May 27, 2016

decision. Appellee argued the trial court’s failure to include the business

profits as gross income was contrary to law. Appellant filed a response,

arguing appellee’s objections should be overruled because she failed to file

a transcript of the trial to the magistrate.

        {¶5}   On July 15, 2016, the trial court overruled appellee’s

objections solely on the basis that she did not file a transcript.

        {¶6}   On July 18, 2016, the trial court adopted the magistrate’s

decision in full. Appellee did not appeal that decision.

        {¶7}   On November 29, 2016, appellee filed a “Motion to Modify

Allocation of Parental Rights and Responsibilities” due to a change in

circumstances. In her attached affidavit, appellee averred, “it would be in

the child’s best interest if child support were modified to accurately reflect

the parties’ income as there has been a change.”

        {¶8}   A trial to the magistrate was held on May 31, 2017. Appellant

and appellee both testified. The following documents were entered into

evidence: appellant’s 2015 and 2016 income tax returns; the 2015 and 2016

tax returns for appellant’s business, Ohio Karate, LLC (“Ohio Karate”);

appellee’s 2016 tax return; and appellee’s pay stubs for March and April

2017.




                                 3
                    {¶9}   On June 7, 2017, appellee submitted a closing statement

             brief, arguing appellant’s income had been understated and improperly

             calculated in the first child support order. Appellee maintained appellant’s

             income “includes the wages he pays himself via regular payroll and his

             business income, which should be included in his total income calculation.”

             (Emphasis sic.) Appellant also filed a closing statement brief. He argued

             his income remained substantially similar to what it was at the time of the

             original order and that res judicata applied to the issue.

                    {¶10} A magistrate’s decision was filed on June 27, 2017.

             Regarding child support, the magistrate recommended appellee’s “Motion

             to Modify Allocation of Parental Rights and Responsibilities” was well taken.

             Appellant filed objections to the magistrate’s decision on July 10, 2017. He

             filed a transcript on August 14, 2017, and supplemental objections on

             August 30, 2017.      On September 13, 2017, the trial court overruled

             appellant’s objections and adopted the magistrate’s decision in full.

                    {¶11} Appellant noticed a timely appeal. On appeal he asserts two

             assignments of error:

             [1.] The Juvenile Court Magistrate and Trial Court abused its
             discretion and committed prejudicial error by increasing Plaintiff-
             Appellant’s child support obligation where there was virtually no
             change in the parties’ incomes, testimony or evidence from the child
             support determination made only months before Defendant-
             Appellee’s Motion to Modify.

             [2.] Res judicata applies in this case where the exact same issue was
             previously decided on the exact same evidence.

We address appellant’s assignments of error out of order.




                                            4
       {¶12} In his second assignment of error, appellant argues appellee’s

request to modify the child support obligation was barred by res judicata

because at the time of the first order the trial court determined appellant’s

business profits would not be included in his gross income, and appellee

failed to file a direct appeal from that order. Appellant maintains there was

subsequently no change in the parties’ circumstances and incomes, and

there was no new evidence presented at the second hearing.

       {¶13} The application of res judicata is a question of law and,

therefore, is reviewed de novo. McGowan v. McDowell, 11th Dist. Portage

No. 2008-P-0112, 2009-Ohio-5891, ¶18, citing Zamos v. Zamos, 11th Dist.

Portage No. 2008-P-0021, 2009-Ohio-1321, ¶14.

       {¶14} Under the doctrine of res judicata, “a valid, final judgment

rendered upon the merits bars all subsequent actions based upon any claim

arising out of the transaction or occurrence that was the subject matter of

the previous action.” Grava v. Parkman Twp., 73 Ohio St.3d 379, 382

(1995). Res judicata prevents “relitigation of issues already decided by a

court or matters that should have been brought as part of a previous action.”

Lasko v. General Motors Corp., 11th Dist. Trumbull No. 2002-T-0143, 2003-

Ohio-4103, ¶16.

       {¶15} “The application of the principles of res judicata * * * is not

mandatory in every case.” Smith v. Ohio Edison Co., 11th Dist. Trumbull

No. 2014-T-0093, 2015-Ohio-4540, ¶9 (citations omitted). “‘The doctrine

may be said to adhere in legal systems as a rule of justice. Hence, the




                              5
position has been taken that the doctrine of res judicata is to be applied in

particular situations as fairness and justice require, and that it is not to be

applied so rigidly as to defeat the ends of justice or so as to work an

injustice.’” Id., quoting Davis v. Wal-Mart Stores, Inc., 93 Ohio St.3d 488,

491 (2001) (emphasis sic). Regarding child support, because domestic

relations courts have continuing jurisdiction over child support matters, “res

judicata should be applied with the ‘strictest of caution in order to prevent a

chilling effect on Ohio’s legal mechanisms for periodic adjustments to child-

support orders.’” McNabb v. McNabb, 12th Dist. Warren Nos. CA2012-06-

056 & CA2012-06-057, 2013-Ohio-2158, ¶22, quoting Kiehborth v.

Kiehborth, 169 Ohio App.3d 308, 2006-Ohio-5529, ¶15 (5th Dist.).

       {¶16} The trial court declined to apply the principles of res judicata

to the present case.     The court had continuing jurisdiction under R.C.

3119.79(A) to modify the child support order at the request of one of the

parties. The trial court determined there was a change in circumstances,

and it modified the order accordingly.       The record reflects the same

magistrate presided over both hearings in this case. Although in the original

decision the magistrate determined appellant provided “unrefuted” evidence

the business profits were used to “advance the business,” the June 27, 2017

magistrate’s decision acknowledges: “It is likely that the Hearing Officer

incorrectly excluded business profits from Father’s support obligation in its

2016 calculation and subsequent support order. Compounding that error

by turning a blind eye to it for the sake of saving face is not in the best




                               6
interests of the minor children.” Based on the specific facts of this case,

and because the trial court had continuing jurisdiction to modify the child

support order, we find no error in the trial court’s decision not to apply the

principles of res judicata in order to preserve justice for the minor children

involved.

       {¶17} The dissent maintains this court has found res judicata

applicable in similar cases involving child support. The cases the dissent

references did not involve a situation wherein the magistrate explicitly

acknowledged and addressed an error in the original order of child support.

We recognize the correct procedure to address this error would have been

for appellee to file a direct appeal from the trial court’s July 18, 2016

judgment, and we acknowledge appellee did not follow that procedure.

Under normal circumstances appellee’s arguments would have been barred

by the doctrine of res judicata. However, this case presents exceptional

circumstances and we find no error in the trial court’s determination that

failure to address the error was not in the best interest of the minor children

involved.

       {¶18} Appellant’s second assignment of error is without merit.

       {¶19} Under his first assignment of error, appellant argues the trial

court abused its discretion when it increased his child support obligation

because there was no substantial change in either party’s income from the

time of the original order.




                               7
       {¶20} In the second calculation, the court included the business

profits as part of appellant’s gross income, whereas the first time it did not.

The magistrate, after hearing further testimony regarding the business

profits, determined it was error not to include it in the calculation. Because

appellee did not appeal the first order, the question becomes whether the

trial court can essentially reconsider its prior order due to a self-described

error in exclusion of the business profits.

       {¶21} A trial court’s decision regarding child support will not be

reversed by a reviewing court unless it is shown that the trial court abused

its discretion. Pauly v. Pauly, 80 Ohio St.3d 386, 390 (1997), citing Booth

v. Booth, 44 Ohio St.3d 142, 144 (1989). An abuse of discretion is the trial

court’s “‘failure to exercise sound, reasonable, and legal decision-making.’”

State v. Beechler, 2d Dist. Clark No. 09-CA-54, 2010-Ohio-1900, ¶62,

quoting Black’s Law Dictionary 11 (8th Ed.2004).

       {¶22} R.C. 3119.79 governs modifications of an existing child

support order. Pursuant to R.C. 3119.79(A):

If an obligor or obligee under a child support order requests that the
court modify the amount of support required to be paid pursuant to
the child support order, the court shall recalculate the amount of
support that would be required to be paid under the child support
order in accordance with the schedule and the applicable worksheet
through the line establishing the actual annual obligation. If that
amount as recalculated is more than ten per cent greater than or
more than ten per cent less than the amount of child support required
to be paid pursuant to the existing child support order, the deviation
from the recalculated amount that would be required to be paid under
the schedule and the applicable worksheet shall be considered by
the court as a change of circumstance substantial enough to require
a modification of the child support amount.




                               8
                    {¶23} R.C. 3119.79(C) further provides, in pertinent part:

             If the court determines that the amount of child support required to
             be paid under the child support order should be changed due to a
             substantial change of circumstances that was not contemplated at
             the time of the issuance of the original child support order * * *, the
             court shall modify the amount of child support required to be paid
             under the child support order to comply with the schedule and the
             applicable worksheet through the line establishing the actual annual
             obligation[.]

“The ten percent difference applies to the change in the amount of child support, not to

the change in circumstances of the parents.” DePalmo v. DePalmo, 78 Ohio St.3d 535,

540 (1997) (emphasis sic). “The statute considered in DePalmo was R.C. 3113.215,

specifically, R.C. 3113.215(B)(4). Although this subsection has be re-codified as R.C.

3119.79, there has been no change in the statutory requirements. Hence, the court’s

observations in DePalmo still apply.” See Schilling v. Ball, 11th Dist. Lake No. 2016-L-

072, 2017-Ohio-5511, ¶17, citing DePalmo, supra, at 539-540 and Mossing-Landers v.

Landers, 2d Dist. Montgomery No. 27031, 2016-Ohio-7625, ¶48.

                    {¶24} The 2016 tax return for Ohio Karate reflects the business’s

             income was $28,446.00, after deductions. Appellant’s tax return, which

             includes the business profits and his salary from the business, reflects

             appellant’s total income of $64,607.00, and an adjusted gross income of

             $60,628.00, which is the amount the magistrate used to calculate the child

             support modification.    Appellant’s original child support obligation was

             $619.33. After appellee filed for modification of the child support order, the

             recalculated amount was $907.39, reflected in the child support worksheet.

             The difference between the original amount and the recalculated amount is

             $288.06. The magistrate determined because the difference exceeds ten


                                            9
percent of the original obligation, the court should modify appellant’s child

support obligation.

       {¶25} Appellant argues the trial court was not permitted to modify

the order because there has, in fact, been no “change in circumstances” as

the statute requires. He contends the recalculated amount was inflated

because the magistrate improperly included appellant’s business profits as

gross income to calculate the support modification even though he provided

“unrefuted evidence” at the first hearing that the business profits were used

to make payments towards the business loan, to contribute to his retirement

account, to purchase health insurance, and “to generally operate the

business.”     Appellant contends these expenses were “ordinary and

necessary” and incurred to help generate gross receipts for the business,

and, pursuant to R.C. 3119.01(C)(9)(a) and R.C. 3119.01(C)(13), they

should be excluded from his gross income for purposes of calculating child

support.

       {¶26} R.C. 3119.01(C)(7) defines “gross income” as “the total of all

earned and unearned income from all sources during a calendar year,

whether or not the income is taxable[.]” Gross income includes salaries and

wages, in addition to self-generated income.          Id.   However, R.C.

3119.01(C)(7) further provides, in pertinent part: “‘Gross income’ does not

include any of the following: * * * (d) Amounts paid for mandatory deductions

from wages such as union dues but not taxes, social security, or retirement

in lieu of social security[.]”




                                 10
       {¶27} “‘Self-generated income’ means gross receipts received by a

parent from self-employment, proprietorship of a business, * * * and rents

minus ordinary and necessary expenses incurred by the parent in

generating the gross receipts.’” R.C. 3119.01(C)(13). Further, “‘[o]rdinary

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.” R.C. 3119.01(C)(9)(a).

       {¶28} Pursuant to R.C. 3119.05(A), the trial court is required to verify

each parents’ “current and past income and personal earnings * * * by

electronic means or with suitable documents, including, but not limited to,

paystubs, employer statements, receipts and expense vouchers related to

self-generated income, tax returns, and all supporting documentation and

schedules for the tax returns.” “A party claiming a business expense has

the burden of providing suitable documentation to establish the expense. A

trial court is not required to blindly accept all of the expenses an appellant

claims to have deducted in his tax returns as ordinary and necessary

expenses incurred in generating gross receipts.” Ockunzzi v. Ockunzzi, 8th

Dist. Cuyahoga No. 86785, 2006-Ohio-5741, ¶53 (citation omitted).

       {¶29} Regarding      the      appellant’s   business   expenses,    the

magistrate’s decision states:

The evidence was sparse, at best, regarding Father’s claim that the
business profits are ordinary and necessary business expenses that
should be deducted from Father’s income. Father made a vague,




                                11
generalized statement, without any specific figures or supporting
documentation that the profit was used for business expenses.

       {¶30} We note that the trial court did, in fact, allow for deduction of

health insurance expenses. This is reflected on appellant’s 2016 personal

tax return. We hold under the facts and circumstances of this case, it was

not error for the magistrate and trial court to consider whether inclusion of

the remaining business profits was appropriate when addressing the motion

to modify.

       {¶31} We find, however, that the trial court failed to afford appellant

due process when it modified the child support obligation without notifying

appellant it intended to reconsider the error in the magistrate’s original

decision.    The magistrate’s June 27, 2017 decision was based on

substantially similar evidence to its May 27, 2016 decision. In the earlier

decision, the magistrate found appellant had provided “unrefuted” evidence

that supported exclusion of the remaining business profits from appellant’s

gross income. Based on the first decision, appellant justifiably had no

reason to believe he needed to present additional or different evidence

establishing why those profits should be excluded.

       {¶32} We reverse and remand for the trial court to hold a new

hearing on appellee’s “Motion to Modify Allocation of Parental Rights and

Responsibilities,” only as it pertains to a modification of the child support

obligation. The trial court is to afford appellant the opportunity to introduce

evidence why the business profits should not be considered as gross

income for purposes of calculating child support.



                               12
                    {¶33} Appellant’s first assignment of error has merit to the extent

             discussed above.

                    {¶34} For the foregoing reasons, the judgment of the Lake County

             Court of Common Pleas, Juvenile Division, is affirmed in part and reversed

             in part, and this matter is remanded for additional proceedings consistent

             with this opinion.



COLLEEN MARY O’TOOLE, J., concurs,

DIANE V. GRENDELL, J., concurs in part and dissents in part, with a Dissenting Opinion.


                                  ____________________


DIANE V. GRENDELL, J., concurs in part and dissents in part, with a Dissenting Opinion.

                    {¶35} While I concur with the majority’s determination that the trial

             court’s judgment should be reversed, the reversal should be as to the

             entirety of the judgment and no remand for a new hearing should be

             ordered. Rather, since the Motion to Modify the appellant’s child support

             obligation was barred by res judicata, the lower court’s judgment should be

             reversed and vacated and the initial support order should continue. The

             appellee failed to challenge the alleged error in the support award through

             appropriate proceedings, and, thus, the merits of her Motion were

             improperly considered.

                    {¶36} In the present matter, the lower court entered an award of

             child support following a consideration of appellant, Joseph Duczman’s,




                                           13
personal and business income. A trial was held as to this issue, where both

parties presented evidence and argument. The court ultimately concluded

that the business profits were not part of Duczman’s income for the

purposes of determining child support. Appellee, Maria Sorin, failed to

challenge the support order through a direct appeal. Instead, she chose to

wait four months before filing a Motion to Modify in the trial court. The

parties then contested the exact issue that had already been litigated:

whether Duczman’s business profits were part of his personal income for

child support purposes.

       {¶37} Generally, courts apply the well-established principle that “[a]

valid, final judgment rendered upon the merits bars all subsequent actions

based upon any claim arising out of the transaction or occurrence that was

the subject matter of the previous action.” Grava v. Parkman Twp., 73 Ohio

St.3d 379, 653 N.E.2d 226 (1995), syllabus; Kalia v. Kalia, 151 Ohio App.3d

145, 2002-Ohio-7160, 783 N.E.2d 623, ¶ 32 (11th Dist.) (res judicata

“precludes relitigation of the same issue when there is mutuality of the

parties and when a final decision has been rendered on the merits”). This

principle applies in the present case, where there is no question that a final

judgment on the merits was rendered by the trial court prior to the filing of

the Motion to Modify.

       {¶38} The majority holds that the court did not err in proceeding to

consideration of the merits since courts can decline to apply the doctrine of

res judicata in child support matters when “fairness and justice require.”




                              14
However, this court has found the doctrine of res judicata to be applicable

in similar matters involving child support. In one instance, where a party

moved to modify child support “on the same basis” as a prior request for

modification and “present[ed] no new evidence on how the circumstances

were different,” this court found the matter barred by res judicata. Kean v.

Kean, 11th Dist. Trumbull No. 2005-T-0079, 2006-Ohio-3222, ¶ 12, citing

Petralia v. Petralia, 11th Dist. Lake No. 2002-L-047, 2003-Ohio-3867, ¶ 14-

15.

       {¶39} Similarly, in Nolan v. Nolan, 11th Dist. Geauga No. 2009-G-

2885, 2010-Ohio-1447, this court found that although the appellant argued

an improper amount of income had been previously utilized to calculate

child support, the motion to vacate was barred by operation of res judicata,

since the same issue had already been disputed. Id. at ¶ 39-41. While the

majority claims that these cases are distinguishable since the magistrate in

the present matter “explicitly acknowledged and addressed an error in the

original order of child support,” in Petralia and Nolan, the recognition that

res judicata applied precluded consideration of whether the court’s prior

ruling may have been made in error. It was irrelevant, then, whether the

child support claims may have had merit. Further, the majority’s conclusion

that the best interest of the child should prohibit application of the doctrine

of res judicata is not a concern that is unique to the present matter, as best

interest concerns apply in all child support matters. Nonetheless, this court

still properly chose to apply the doctrine of res judicata in the foregoing




                               15
cases, a precedent which must be followed by this court.

       {¶40} Consistency by an appellate court is a linchpin to justice and

fairness.   By failing to apply this precedent, the majority once again

demonstrates a dangerous lack of consistency. See Filby v. Filby, 11th Dist.

Geauga No. 2017-G-0142, 2018-Ohio-907, ¶ 11 (Grendell, J., concurring in

judgment    only)   (emphasizing     the   majority’s   inconsistency   in     its

interpretation and application of the clearly defined term “shall”).

       {¶41} Given the foregoing law and the facts of this case, fairness

and justice require the application of the doctrine of res judicata to preclude

relitigation of an issue that was already determined. This provides finality,

conserves the valuable time and resources of the courts and the parties,

and prevents parties from improperly seeking a proverbial second bite at

the apple. See Monroe v. Forum Health, 11th Dist. Trumbull No. 2014-T-

0015, 2014-Ohio-3974, ¶ 56 (noting the necessity of finality in litigation).

       {¶42} To the extent that it is argued that an error made by the lower

court necessitated abandonment of the well-established principles of res

judicata, it must be emphasized that other remedies are available to

address errors by the trial court. Sorin failed to avail herself of these

options, such as filing a direct appeal which would have provided a timely

opportunity to rectify any error without requiring an additional evidentiary

hearing. This is the purpose of the appellate court.




                               16
       {¶43} For the foregoing reasons, I dissent in part from the majority’s

opinion and would vacate the trial court’s decision since principles of res

judicata precluded a ruling in favor of Sorin on the Motion to Modify.




                              17
