Appeal from the Circuit Court of Du Page County. No. 83--D--302. Honorable Mark W. Dwyer, Judge, Presiding.
The Honorable Justice Bowman delivered the opinion of the court. Geiger, P.j., and Thomas, J., concur.
The opinion of the court was delivered by: Bowman
The Honorable Justice BOWMAN delivered the opinion of the court:
Petitioner and counterrespondent, Daniel Wenc, and respondent and counterpetitioner, Elizabeth Wenc, n/k/a Elizabeth Fleming, married in 1961 and divorced in 1983. After petitioner retired, respondent sued to determine her share of his pension benefits. Petitioner appeals the ruling on respondent's suit, asserting that the trial court erred in interpreting the settlement agreement incorporated into the divorce judgment. We reverse the judgment and remand for further proceedings. We hold that (1) the trial court erred in applying In re Marriage of Hunt, 78 Ill. App. 3d 653, 34 Ill. Dec. 55, 397 N.E.2d 511 (1979) without fully considering the language of the settlement agreement; and (2) the agreement is ambiguous, necessitating an evidentiary hearing for a proper determination of the parties' intent.
At the time of the divorce, petitioner was 43 years old and respondent was 45. Since August 1, 1961, petitioner taught school full time, contributing to the Teachers' Retirement System of the State of Illinois (Retirement System) (see 40 ILCS 5/16--101 et seq. (West 1994)). Paragraph 5 of the settlement agreement stated, as pertinent here:
"DANIEL's represented adjusted contribution to the Teacher Retirement Fund is *** $27,000. In addition thereto, DANIEL's estimated pension, assuming a retirement age of 55, is in the approximate sum of $677.00 per month, with an additional annuity of $1,212.00 per month. ELIZABETH shall be entitled to receive 30% of all of DANIEL'S vested, non-vested and/or accrued pension/retirement benefits accumulated as of the date hereof [i.e., the date of the dissolution] at such time in the future when and if said benefits are paid to DANIEL. All benefits accrued or accumulated by DANIEL hereafter shall be his sole and exclusive property."
At the end of the 1993-94 school year, petitioner retired. In June 1994, about two months before his fifty-fourth birthday, he started drawing his Retirement System pension. In April 1995, respondent brought this action, asking the court to hold petitioner in contempt of his obligation under paragraph 5 of the agreement. As pertinent here, respondent alleged that, since June 8, 1994, petitioner received $4,135.49 monthly in gross pension benefits but tendered respondent only $363.60 monthly, far short of her 30% share.
Petitioner replied that his monthly payments followed the plain language of paragraph 5 by giving respondent 30% of the monthly benefit he had earned as of the dissolution. Petitioner relied in part on a letter from a legal assistant to the Teachers' Retirement System. The letter stated that, based on petitioner's years of creditable service and average salary from August 1, 1961, through November 30, 1983, and assuming he started drawing benefits on August 15, 1995 (when he turned 55), he would receive $709.93 monthly. Petitioner maintained that paragraph 5 entitled respondent to 30% of this sum, with adjustments for the temporarily lower benefit levels resulting from petitioner's early retirement. According to petitioner, his monthly payments to respondent were good-faith efforts to adhere to the settlement.
The matter proceeded to a hearing. Respondent called Vito Loisi, a certified public accountant, who opined that petitioner's method of calculating respondent's share of his monthly pension did not embody the 1983 settlement agreement. Loisi described two alternative methods he used to arrive at a proper allocation.
The first method was based on In re Marriage of Hunt, 78 Ill. App. 3d 653, 34 Ill. Dec. 55, 397 N.E.2d 511 (1979), where the appellate court explained that a court should calculate the marital portion of a monthly pension benefit by dividing the total years of credited service during the marriage by the total years of credited service and multiplying this fraction by the monthly benefit. Hunt, 78 Ill. App. 3d at 663; see also In re Marriage of Alshouse, 255 Ill. App. 3d 960, 962-63, 194 Ill. Dec. 394, 627 N.E.2d 731 (1994). Assuming (as is not in dispute) that petitioner had 21 years of credited service during the marriage and 32 years total credited service, Loisi applied the Hunt algorithm to petitioner's gross monthly benefit of $4,135.49. Adjusting for the contribution that enabled petitioner to retire early, Loisi found that, for the first 24 months, the marital portion was $2,073.58 monthly (21/32 of the net monthly benefit after the contribution) and respondent's 30% share was thus $622.07 monthly. After the first two years, respondent would receive $814.17 monthly--30% of the marital 21/32 of the gross benefit.
Loisi suggested alternatively that the $709 sum could be adjusted for growth based on earnings or inflation taking place between the divorce and the payout. Using a "conservative" annual growth rate of 6%, Loisi calculated respondent's share of the monthly benefit at $431.84 for the first 24 months and $623.94 thereafter. Under either method, respondent's share would increase, along with petitioner's payment, after his sixty-first birthday.
Loisi preferred using the Hunt-based method to determine the marital part of the pension benefits, as the years of service before the dissolution helped to increase the benefits that accrued afterward. According to Loisi, petitioner's calculation was unacceptable because it took the projected benefit amount as of the dissolution date and "froze" that amount as of that earlier date. Loisi agreed with the Retirement System's letter to petitioner that, if petitioner stopped working the day of the dissolution, he would later receive $709.93 monthly. However, Loisi noted that petitioner did not adjust for the growth of this sum between 1983 and petitioner's retirement much later.
The trial court refused to find petitioner in contempt (a holding not at issue here) but otherwise sided with respondent. The court applied the Hunt formula, explaining that the language of paragraph 5 showed that the parties drafted it with Hunt in mind. Thus, they did not intend that respondent's share of the benefit be "frozen" as of the date of the divorce. Under Hunt, respondent was entitled to $814.17 of the $4,135.49 monthly benefit; for the first 24 months, this share would be $622.07, the same proportion of the lower initial benefit. The court denied petitioner's motion to reconsider. He appeals.
Petitioner argues that the trial court awarded respondent an excessive share of his pension benefit. He asserts that, under the plain language of paragraph 5, respondent was entitled only to what he had been paying her--30% of what he would have received each month had he stopped working as of the dissolution judgment in November 1983. According to petitioner, the ...