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In re Blunda

November 25, 1998

IN RE MARRIAGE OF SANDRA A. BLUNDA, PETITIONER-APPELLANT AND CROSS-APPELLEE, AND FRANK S. BLUNDA, RESPONDENT-APPELLEE AND CROSS-APPELLANT.


The opinion of the court was delivered by: Justice Thomas

IN THE APPELLATE COURT OF ILLINOIS SECOND DISTRICT

Appeal from the Circuit Court of Du Page County.

Honorable Jane Hird Mitton, Judge, Presiding.

The petitioner, Sandra A. Blunda, appeals from the judgment of dissolution of her marriage to the respondent, Frank S. Blunda, challenging the trial court's distribution of marital assets along with its findings that the petitioner dissipated marital assets and that her execution of a personal guarantee transmuted a portion of a non-marital business into marital property. The respondent cross-appeals.

A substantial amount of evidence and testimony was presented in the trial court. However, only those facts necessary to an understanding of this court's decision will be set forth, and many of the relevant facts will be discussed in the analysis of the issues to which they are pertinent.

The record shows that the parties were married on August 26, 1966, and the marriage was dissolved on December 13, 1996. Two children were born during the course of the marriage, and they were both emancipated and over the age of 18 at the time of trial. Both parties were 54 years of age and in good health at the time of dissolution. Frank was employed by AT&T and earned approximately $63,000 per year. Sandra was employed by Universal Heating Supplies, Inc. (Universal Heating), and earned approximately $75,000 per year.

In March 1992, Sandra received 4,200 shares of Universal Heating stock from her father, Dean Ciampi, who had been the sole shareholder in the company. At the same time, Dean Ciampi gifted 4,200 shares each to Sandra's brothers, William Ciampi and Richard Ciampi. Dean Ciampi retained 1,400 shares. In April 1992, the family decided that Universal Heating should purchase William Ciampi's 4,200 shares. To accomplish this, Universal Heating borrowed $140,000 from West Suburban Bank. The commercial promissory note executed in connection with the transaction identified the borrower as Universal Heating. The document was signed by Dean Ciampi, President, and Sandra. Sandra also signed in her capacity as treasurer a check drawn on the account of Universal Heating for $148,547 made payable to William Ciampi. In exchange for this check, William surrendered his 4,200 shares of stock to the corporation. The stock was then retired. On the same date that the commercial promissory note was signed, Sandra executed a "Commercial Continuing Guarantee" as part of the loan transaction. Prior to his death in July 1992, Dean Ciampi retired his 1,400 shares of stock to the corporation. The $140,000 loan taken out by Universal Heating with the West Suburban Bank was repaid by the company.

The trial court classified and distributed the parties' property as follows:

Classified Marital Value Awarded To Marital residence 321 Cedar, Wood Dale, Il $325,000 Sandra Personal property $15,000 Sandra Forgiveness of obligation to reimburse marital estate for dissipation Respondent's exhibit 29 $2,000 Sandra Forgiveness of obligation to reimburse marital estate for dissipation Respondent's exhibit 30 $5,000 Sandra Forgiveness of obligation reimburse marital estate for dissipation Respondent's exhibit 31 $2,000 Sandra Forgiveness of obligation to reimburse marital estate for dissipation Respondent's exhibit 32 $3,000 Sandra Forgiveness of obligation to reimburse marital estate for dissipation (fake loan) $7,000 Sandra Forgiveness of obligation to reimburse marital estate for dissipation (payment of Dean Ciampi estate taxes) $13,000 Sandra Joint Prudential account with daughter $5,982 Sandra Joint Prudential account with other daughter $5,982 Sandra $11,123 withdrawn from West Suburban Bank $11,123 Sandra $10,003 withdrawn from American National Bank $10,003 Sandra $35,000 transferred to Rick Ciampi (Respondent's exhibits 33 through 36) $35,000 Sandra West Suburban Bancorp stock $45,568 Sandra Household bank accounts $40,561 Sandra Prudential life insurance $5,600 Sandra Prudential IRA account $29,600 Sandra 1993 Oldsmobile $14,850 Sandra Property at 29 W. 512 North Ave. West Chicago, IL $150,000 Frank Property at 32 S. Wisconsin Addison, IL $49,000 Frank Indebtedness of Michael Aburoza $13,000 Frank 405 shares of AT&T stock $21,800 Frank 144 shares of AT&T stock $7,776 Frank Marital portion of AT&T Employee pension plan $72,162 Frank AT&T long term savings (net of loan to be paid) $44,438 Frank 136 shares of Ameritech Stock $7,776 Frank Smith-Barney IRA $18,360 Frank Forgiveness of obligation to reimburse marital estate for dissipation (repairs to sister's home) $3,100 Frank Forgiveness of obligation to reimburse marital estate for dissipation (bonds and certificates of deposit) $33,000 Frank 1988 Chevrolet $3,025 Frank 1989 Buick (less $9,500 paid to Sandra) $0 Frank Classified Non-marital Value Awarded to One-half interest in Universal Heating $810,000 Sandra Inheritance from father $302,353 Sandra Account with Dean Ciampi $41,695.85 Sandra Non-marital portion of AT&T employee pension fund $16,800 Frank

In addition to the above-mentioned distribution of property, the trial court ordered the following:

"K. Sandra shall reimburse Frank the sum of $87,450.66, equaling one-half of the amount of $174,901.32. This last amount represents the extension of marital credit via Sandra's personal guarantee to obtain loans on behalf of Universal Heating Supplies, Inc. This reimbursement is covered by and provided for in paragraph L. below. L. *** In order to effectuate the final division of property herein, Sandra shall pay to Frank the sum of $100,000.00 within 45 days of the entry of this judgment."

On appeal, Sandra first argues that the trial court erred in ordering her to reimburse Frank $87,450.66 and in essence finding that a portion of her non-marital business became marital property. She argues that the court erred in awarding one-half of that portion to Frank. She maintains that the mere incurring of personal liability on the guarantee was not sufficient to transmute the property into marital property. In response, Frank argues that the trial court properly found a portion of the stock to be marital property. He maintains that the practical effect of the purchase of William's shares was to increase Sandra's ownership in the company by over 12%. He claims that Sandra placed marital assets at risk to accomplish the purchase; therefore, he continues, the trial court correctly reasoned that Sandra's increased interest in the company should be valued at the loan amount and classified as marital.

All the property of the parties to a marriage belongs to one of three estates, the estate of the husband, the estate of the wife, or the marital estate. In re Marriage of Werries, 247 Ill. App. 3d 639, 641-42 (1993). In order to distribute property upon dissolution of marriage, a trial court must first classify that property as either marital or non-marital. In re Marriage of Hegge, 285 Ill. App. 3d 138, 140 (1996). A trial court's classification of property will not be disturbed unless it is contrary to the manifest weight of the evidence. In re Marriage of Perlmutter, 225 Ill. App. 3d 362, 365 (1992).

Section 503 of the Illinois Marriage and Dissolution of Marriage Act (the Act) (750 ILCS 5/503 (West 1996)) governs the determination of whether property is to be classified as marital or non-marital. Section 503(a) of the Act provides in part:

" '[M]arital property' means all property acquired by either spouse subsequent to the marriage, except the following, which is known as 'non-marital property':(1) property acquired by gift, legacy or descent;

(2) property acquired in exchange for property acquired before the marriage or in exchange for property ...


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