June 4, 2014
Child Support & OSU Football Tickets

by Justice Paul E. Pfeifer

Can company benefits – such as a company car – be included as income for the purposes of calculating child support if the benefits don’t come from self-employment? That was the question at the center of a case that we reviewed here – at the Supreme Court of Ohio.

The case involved Jeffrey Morrow and Sherri P. Becker, the parents of two minor children. Jeffrey and Sherri were no strangers to courtrooms. Through the years they have contested a number of issues in court, including visitation, child support, restraining orders, and contempt.

On this occasion, Morrow was ordered, on March 1, 2006, to pay child support of $2,198.05 per month plus a 2 percent processing fee. Two and a half years later, Morrow filed a motion to modify his child-support payment. After a hearing, a magistrate concluded, based on various modifications, that Morrow would owe child support of $2,085.42 per month.

But there was a catch. Ohio law says that a change of circumstance sufficient to require modification is established when the recalculated amount of child support differs from the existing amount by more than 10 percent. In Morrow’s case, the magistrate stated that because the difference in the new amount was less than 10 percent, a change of circumstance had not occurred and Morrow’s child-support obligation would not be reduced.

Morrow filed an appeal, arguing – among other things – that the trial court erred when it included certain employer-paid benefits in his gross income for purposes of calculating his child-support obligation. But the court of appeals affirmed the trial court’s decision, determining that the value of a car, car insurance, cellular phone and phone service that Morrow’s employer had provided should be included in his gross income.

The court of appeals concluded that because Morrow would have otherwise had to pay for those items with his own funds, “the trial court did not abuse its discretion by including the value of these benefits as part of Morrow’s gross income.”

But the court of appeals determined that it was error to include in Morrow’s gross income the full value of employer-provided Ohio State University football tickets, because the full value of the tickets did not accrue to Morrow. It concluded, however, that the error was harmless.

After the court of appeals’ decision, the case came before us. When we review matters involving child support, we use an abuse-of-discretion standard. Under that standard, a lower court decision will not be reversed for mere error, but only when the court’s decision is unreasonable, arbitrary, or unconscionable.

The amount of a parent’s child-support obligation is calculated by using a child-support computation worksheet. The starting point is parental income: either gross income (for those employed to full capacity) or gross income plus potential income (for those not employed to full capacity).

As the trial court noted, the legal definition of “gross income” is expansive. “Gross income” is defined as “the total of all earned and unearned income from all sources during a calendar year.” That includes many examples of items that constitute gross income, such as commissions and dividends.

The law also includes items that are specifically excluded from “gross income,” such as means-tested government assistance and nonrecurring income. None of the employer-paid benefits at issue in Morrow’s case are listed in the examples of included and excluded items.

But Morrow argued that items such as company cars are to be considered part of gross income only if the recipient is self-employed, a proprietor of a business, or a joint owner of a partnership. He based his argument on the law that defines “gross income” as including “self-generated income.”

“Self-generated income” is defined as including “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.”

Morrow argued that because the only reference in the law to company cars and other in-kind items is in the context of “self-employment,” the Ohio legislature meant to exclude such items from gross income when they are received outside that context.

But we found nothing in the way the law was written to support that conclusion. Admittedly, there is a section of the law which states that “self-generated income” includes company cars. But that is a far stretch from stating that company cars cannot be part of gross income unless they are from self-generated income.

The record in this case indicates that Morrow did not have a car, car insurance, or phone, other than the ones provided to him by his employer. Based on that understanding, the trial court – after reviewing case law – concluded that “it was reasonable to include the value of these benefits” in Morrow’s gross income.

We agreed. If his employer did not provide a car, Morrow would have had to purchase or lease one on his own, using his own funds. Accordingly, it is sensible to conclude that the provision of a car is no different from the provision of funds to buy or lease a car. Either way, the person receiving the benefit effectively has a higher income.

The football tickets, however, are different. Morrow did not receive the full benefit of the tickets’ value because they were not given to him primarily for his own use. Instead, they were meant as perks for him to pass on to employees or as gifts for business associates.

Even so, we were unable to conclude that the trial court’s decision to include the value of the tickets as part of his gross income was unreasonable, arbitrary, or unconscionable. The value of the tickets constitutes only about 1 percent of the gross income that the trial court calculated.

Accordingly, like the court of appeals, we were persuaded that if including the tickets in gross income was error, that error was harmless. Therefore, by a six-to-one vote, we affirmed the judgment of the court of appeals.

EDITOR'S NOTE: The case referred to is Morrow v. Becker, 138 Ohio St.3d 11, 2013-Ohio-4542. Case Nos. 2012-1674 and 2012-1898. Decided October 16, 2013. Majority opinion written by Justice Paul E. Pfeifer.