Dividing a Country Club Membership Years After Purchase

Hardy v. Hardy
2010-Ohio-561
Twelfth District Court of Appeals
Montgomery County
-Division of Property

Appellant Nancy Hardy appeals from the DR Court after the DR Court ordered appellee to reimburse Nancy $1,500 for her marital interest in the Dayton Racquet Club membership and $1,500 for her marital interest in the Moraine Country Club membership. The amount awarded represents one-half the marital funds used to acquire the memberships at the time of purchase, many years ago.

Nancy argues on appeal that the award by the DR Court fails to consider the present value of the memberships and further contends that she “can think of no reason why these ‘valuable’ assets should be treated any differently than other assets that typically appreciate in value, such as a marital residence.”

The Court of Appeals reversed the DR Court’s ruling as it found the compensation ordered to Nancy for the amounts that were paid for the memberships unjust.

From the Opinion:

{¶ 9} R.C. 3105.171(A)(2) requires the domestic relations court, when it orders a division of marital property that R.C.3105.171 requires, to adopt a value for that property in the amount
of its value as of the date of the final hearing in the action, unless the court selects a different date on a finding that it would be more equitable. In the present case, the court did not expressly find that the dates when the two club memberships were purchased would be a more equitable date for their valuation. Instead, the court relied on our holding in Maloney adopting that date, as we said it should.

{¶ 10} We are aware of no holding, other than our holding in Maloney, which addresses the value to be assigned to club memberships of this kind. Further, Maloney did not explain the
basis for the valuation it ordered. The present appeal presents an opportunity to revisit the issue.
{¶ 11} The two club memberships at issue are marital property, being assets that were acquired during the marriage and purchased with marital funds. The domestic relations court is required by R.C. 3105.171(C)(1) to divide marital property equally. However, and unlike a marital residence, a club membership is an intangible asset. Furthermore, being non-transferrable, these two memberships are illiquid assets that lack any fair market value. Lawrence will not gain a benefit he does not now enjoy by retaining the memberships. Nancy will, however, relinquish a benefit she formerly enjoyed because she will no longer be a member of the
two clubs.

{¶ 12} In dividing marital property, the domestic relations court is charged by R.C. 3105.171(F)(5) to consider “[t]he economic desirability of retaining intact an asset or interest in an asset.” An award of the memberships to one of the parties to the divorce action, in this case Lawrence, preserves intact the memberships that would otherwise lapse. The issue is the amount of compensation for her loss that Nancy should be awarded.

{¶ 13} R.C. 3105.171(E)(1) states: “The court may make a distributive award to facilitate, effectuate, or supplement a division of marital property.” R.C. 3105.171(A)(1) defines a distributive award to mean “any payment or payments, in real or personal property, that are payable in a lump sum or over time, in fixed amounts, that are made from separate property or income, and that are not made from marital property and do not constitute payments of spousal support, as defined in section 3105.18 of the Revised Code.”

{¶ 14} The goal of any property division the court orders is equity. R.C. 3105.171(B). The nature and character of these club memberships favor determining their monetary value as marital property for purposes of division as of the date they were acquired, not at their current cost. Therefore, the domestic relations court did not abuse its discretion when the court valued and divided the memberships as it did, awarding Nancy $1,500 for each. However, where it is impractical or burdensome to reach an equitable division comprised of marital property alone, the court may also make an R.C. 3105.171(E)(1) distributive award to supplement the
marital property division the court orders.