Appeal from the Circuit Court Cook County. The Honorable Richard Kelly Judge Presiding.
Released for Publication February 28, 1997.
The Honorable Justice Leavitt delivered the opinion of the court. Zwick, P.j., and McNAMARA, J., concur.
The opinion of the court was delivered by: Leavitt
JUSTICE LEAVITT delivered the opinion of the court:
The petitioner, Mary Ann Yelton, obtained a divorce from the respondent, David Holtzman, after twelve years of marriage. At the time the trial judge entered the order of dissolution, he was unaware that David had Alzheimer's disease. As a result, he distributed the marital assets in accordance with a stipulated "marital settlement agreement" (the Agreement) entered into by the parties. Subsequently, a guardian was appointed for David. Pursuant to the Guardian's petition pursuant to section 2-1401 of the Code of Civil Procedure (735 ILCS 5/2-1401), a different judge declared the Agreement void. The judge then held a trial, after which he redistributed the couple's property. Mary Ann now appeals from the judgment redistributing the property.
The relevant facts are as follows. In April 1991, a neurologist informed Mary Ann, David, and Susan Holtzman, David's daughter from a previous marriage, that David was in the beginning stages of Alzheimer's dementia. In May 1991, a psychiatrist confirmed that David suffered from Alzheimer's disease and depression. Shortly after receiving the diagnosis, Mary Ann retained an attorney, to draft the Agreement, which Mary Ann and David signed on June 27, 1991. Mary Ann did not inform the attorney that David had Alzheimer's disease.
The Agreement provided that Mary Ann would retain a home located in LaGrange, Illinois, as well as all household accessories and a 1984 Buick station wagon. She received two checking accounts containing $6,000; three certificates of deposit with a total value of $168,970.83; and Individual Retirement Accounts valued at $13,000. The Agreement also awarded her all of the common stock in two companies she operated: Carrier Audit, Inc. and Accu-Rate Traffic, Inc. These entities earned combined profits of $36,995 in 1990. The Agreement provided that David retain furniture from a Chicago residence; a 1989 Buick Regal; and the Proprietorship of Morgan Metal, a company that he operated, but which was no longer profitable. Both parties waived maintenance.
On July 16, 1991, Mary Ann filed for a divorce pursuant to the Marriage and Dissolution of Marriage Act (the Act). Ill. Rev. Stat. 1991 ch. 40, par. 1-101 et seq. (now 750 ILCS 5/101 et seq.) On July 31, 1991, the judge entered an order of dissolution on the ground of irreconcilable differences pursuant to section 401(a)2 of the Act. 750 ILCS 5/401(a)2. Mary Ann was the only witness to testify at the hearing on the petition. Neither David nor counsel representing his interests attended the hearing. Rather, Mary Ann's attorney presented a stipulation signed by both parties stating that the case was uncontested. The judge also relied on Mary Ann's testimony that she and David had been living apart for two years and that the marriage was irretrievably broken. The order of dissolution incorporated the Agreement and its distribution of marital assets. David and Mary Ann did not advise family members of their divorce until November 1991.
On August 18, 1992, a probate judge appointed Susan Holtzman (the Guardian) as David's legal guardian. Subsequently, the Guardian learned of the circumstances surrounding the divorce. On September 22, 1992, she filed a section 2-1401 petition seeking to vacate the judgment incorporating the Agreement.
On November 16, 1993, after a hearing, the judge granted the petition and declared the Agreement void. The judge found that Mary Ann's testimony at the dissolution hearing had been misleading and that she intentionally omitted important information. Her testimony that the parties were separated longer than two years gave the impression David was living independently and was capable of properly managing his affairs. The judge indicated that Mary Ann had misled the court about David's financial and physical condition. Additionally, Mary Ann's testimony that the marriage irretrievably broken was misleading because the parties maintained a relationship and that, subsequent to the separation, David was living in Mary Ann's residence on a full time basis.
Furthermore, the judge found misleading Mary Ann's statements that David had signed the Agreement freely and voluntarily. The court found that when David signed the Agreement, he lacked the capacity to understand the consequences of the property division and waiver of maintenance. The judge noted that Mary Ann had a fiduciary relationship to David. David trusted her and was dependent on her at the time they signed the Agreement. Mary Ann initiated the Agreement, and the judge found that she exerted undue influence in obtaining David's signature. The judge concluded that the secrecy of the divorce proceeding was the result of Mary Ann's planning and was to her benefit.
The judge also entered findings regarding the Agreement's distribution of marital assets. He concluded that two savings accounts Mary Ann had listed as nonmarital assets were, in fact, marital assets. He also found that there had been a commingling of assets with funds being transferred from David to Mary Ann and vice versa. Given David's illness, the judge determined that Mary Ann had greater income prospects than David when they executed the Agreement. David's business had little or no value, and he was in the process of liquidating it when he signed the Agreement. He had no income except for social security and a small monthly annuity payment. Furthermore, the fact that the Agreement awarded Mary Ann most of the marital assets, combined with David's waiver of maintenance, exacerbated David's financial disadvantage.
Based on these findings, the judge concluded that the judge presiding at the initial dissolution hearing had been unaware of the "true facts." The judge also found that the Guardian's petition to vacate the Agreement was necessitated by Mary Ann's wrongful conduct. Therefore, he ruled that the Agreement was unconscionable and vacated it. He did not, however, vacate the order of dissolution because he believed that at the time of the dissolution proceeding, David was capable of understanding the non-financial nature of the divorce.
The judge scheduled a new hearing to determine the redistribution of marital property. The Guardian filed a response to Mary Ann's original petition for dissolution and added a claim for maintenance. Mary Ann did not file a reply. Extensive discovery followed. On July 18, 1994, trial commenced. Mary Ann attempted to establish that David had dissipated the marital estate. She presented witnesses who testified that David had a history of gambling losses and that he overbilled customers to cover those losses. Mary Ann contended that David's assets would have been more than $200,000 ...