Legal Briefs Featured

10:02am EDT July 22, 2002

According to the Ohio Supreme Court, when a business increases in value as the result of the company owner's own labor, the appreciation in value is a marital asset. Therefore, upon divorce, the spouse of the company owner is entitled to half of the appreciated value.

This is true even when an individual has owned the company before the marriage; in that case, however, it may be only the appreciation, not the company value just prior to the marriage, to which the spouse can make a claim.

Middendorf v. Middendorf, decided this summer, overturned prior cases which required the nonowning spouse to contribute substantial efforts to the business in order to lay claim to any appreciation in value. In making its ruling, the Supreme Court cited a change in the statutory definition of marital property, which now includes appreciation on separate property due to the labor, monetary contribution, or in-kind contribution of either or both of the spouses during the marriage.

Passive appreciation, such as increased value due to market fluctuations or other outside influences, remains a separate, nonmarital asset.

Property owners beware

For years, under Ohio law, property owners were generally not liable for injuries occurring on their property to the employees of independent contractors.

The general rule was modified in 1983, when the Ohio Supreme Court ruled that a property owner or occupant who hires an independent contractor, and who actively participates in the job performed by the contractor, can be held responsible for the injury or death of the contractor's employee, if the hiring party fails to eliminate a hazard which could have been eliminated using ordinary care.

Some members of the defense bar feel that the ruling in Sopkovich v. Ohio Edison Co. may have nearly eliminated the requirement for active participation by defining that term very broadly.

In Sopkovich, a painter was electrocuted while working adjacent to a live power line, which the defendant had failed to turn off. The defendant did not participate in the painting work, nor did it supervise or control the painting work or the workers. The court justified this expansion of liability by stating that "active participation giving rise to a duty of care may be found to exist where a property owner ... retains control over a critical variable in the workplace."

Has the Court, therefore, declared open season on property owners? Not necessarily. Sopkovich involved electrical power, something that is inherently dangerous, and which could be controlled only by the property owner. Moreover, whether the power was turned on or off could not be easily ascertained by the contractor or its employees. Nevertheless, defense lawyers are concerned that Sopkovich can be used to find that property owners are in control of any critical variables merely by owning the property.

Rosemary A. Macedonio, Macedo-nio & Toerek P.L.L., a Cleveland business law firm.