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03/30/94 MARRIAGE SUZANNE ISAACS

March 30, 1994

IN RE THE MARRIAGE OF: SUZANNE ISAACS, PETITIONER-APPELLEE, AND GEORGE U. ISAACS, RESPONDENT-APPELLANT.


Appeal from the Circuit Court of Cook County. Honorable Richard B. Berland, Judge Presiding.

As Corrected July 18, 1994. Petition for Leave to Appeal Denied October 6, 1994.

Tully, Rizzi, Cerda

The opinion of the court was delivered by: Tully

PRESIDING JUSTICE TULLY delivered the opinion of the court:

Petitioner, Suzanne Isaacs (hereinafter Suzanne), and respondent, George U. Isaacs (hereinafter George), were married in 1967 and divorced in 1990. It is from the judgment entered on September 12, 1990, dissolving the marriage and dividing the marital estate that George now appeals to this court. Jurisdiction is vested in this court pursuant to Supreme Court Rule 301 (134 Ill. 2d R. 301).

For the reasons which follow, we affirm in part and reverse in part and remand.

FACTUAL BACKGROUND

These are the facts. Suzanne and George were married on March 27, 1967, in New Orleans, Louisiana. On October 31, 1988, Suzanne filed a praecipe. On October 6, 1989, Suzanne filed a petition for dissolution. In her petition, Suzanne requested a dissolution of the parties' marriage, that George be barred from maintenance and attorney fees and that Suzanne be awarded an equitable share of the parties' marital property and George's non-marital property. On April 5, 1990, George filed his response to the petition. In his response, George requested that Suzanne be barred from maintenance and attorney fees, that George be awarded an equitable share of the parties' marital property and all of his separate property, and that the trial court compensate him for Suzanne's alleged diminution and dissipation of the value of marital assets.

On April 12, 1990, Suzanne filed a supplement to her petition for dissolution of marriage, augmenting her prayer for relief to include attorney fees. George then moved to strike the supplement, and on May 16, 1990, such motion was granted.

On April 20, 1990, George filed a collateral action in the chancery division of the circuit court against Suzanne and the Society for Visual Education, Inc. (hereinafter SVE), a closely held corporation, which sought the imposition of a constructive trust over the shares of SVE stock held by Suzanne, as well as damages for Suzanne's alleged breach of fiduciary duties owed to George by her in various capacities. (Isaacs v. Society for Visual Education, Inc. (Cir. Ct. Cook Co.), No. 90-CH-3879.) On May 11, 1990, Suzanne filed an emergency motion for consolidation of the chancery matter into the domestic relations matter. Following the submission of memoranda and argument before the chancery court on May 15, 1990, Suzanne's motion for consolidation was denied.

On June 8, 1990, George filed his response to Suzanne's request for bill of particulars in which he set forth the basis of his claim that Suzanne dissipated the value of marital assets. George alleged that Suzanne caused SVE to enter into an Employee Stock Ownership Plan (hereinafter ESOP), a stock ownership plan and an employee agreement, knowing that the effect of this would be to reduce the value of the stock. Additionally, George alleged that the creation of the ESOP and its purpose was to create a secure employment position for Suzanne and, thus, the dissipation of the value of the SVE shares inured to the benefit of Suzanne and to the detriment of George. All of these actions, the response alleged, occurred while the marriage was undergoing an irreconcilable breakdown and constituted a dissipation of the marital estate.

At trial, the principal factual issues presented were the valuation of Suzanne's interest in SVE, a marital asset, Suzanne's alleged dissipation of her interest in SVE and George's alleged dissipation of marital assets based on rental of an apartment upon departing the marital residence.

Regarding the value of her interest in SVE, Suzanne submitted three valuations performed by Price Waterhouse, an accounting firm, and supported by the testimony of her expert, Bruce Den Uyl. The first valuation, which was supervised by Den Uyl, was commissioned by SVE to determine the fair market value of SVE as of March 31, 1988, and set the acquisition price of approximately 77.51% of SVE's common stock for an Employee Stock Ownership Trust (ESOT). The March 31, 1988, report set the price of SVE shares at $205.59 per share. Other than Suzanne, who held 7,820 shares, and Sherry Reynolds, an SVE officer who held 500 shares, all SVE shareholders sold their positions in the firm to the ESOP. Prior to the sale, any entity purchasing a majority of SVE's stock was required to offer to purchase the shares of all other shareholders at the same terms.

Concurrent with the sale of stock to the ESOP, Suzanne entered into a stock option agreement, an employment agreement and a ...


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