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Smithberg v. Illinois Municipal Retirement Fund

August 10, 2000

DELORES SMITHBERG, APPELLANT, V. THE ILLINOIS
MUNICIPAL RETIREMENT FUND ET AL., APPELLEES.



The opinion of the court was delivered by: Chief Justice Harrison

Agenda 17-March 2000.

The ultimate issue to be resolved in this case concerns entitlement to the Illinois Municipal Retirement Fund (IMRF) death benefit of James Smithberg. Following James' death, competing claims were filed with the IMRF for James' death benefit: one by James' first wife, Nancy Smithberg; another by his second wife, Delores Smithberg, to whom he was married at the time of his death. Upon receiving notice from the IMRF that it would not pay the death benefit "without an agreement between the claimants or direction from a court," Delores filed a complaint against the IMRF seeking a declaratory judgment that she is the rightful beneficiary. The IMRF answered and interpleaded the death benefit between Delores and Nancy. Nancy answered and filed a counter-complaint for declaratory judgment, seeking to establish her right to the death benefit. On cross-motions for summary judgment, the trial court ruled that Delores is the rightful beneficiary of the death benefit. Nancy's notice of appeal was timely filed on December 9, 1998.

On appeal, applying equitable principles, the appellate court reversed and remanded with directions that summary judgment be entered in favor of Nancy. 306 Ill. App. 3d 1139. We granted Delores' leave to appeal (177 Ill. 2d R. 315) and now affirm the judgment of the appellate court. The following facts are relevant to our disposition.

On August 1, 1996, a judgment of dissolution of marriage was entered in the circuit court of Cook County dissolving the 33-year marriage of James and Nancy Smithberg. Through their marital settlement agreement, which was approved by the court and incorporated in the judgment for dissolution, James and Nancy sought to "settle between themselves *** issues relating to their respective rights of property *** whether now or later owned or possessed by either of them." They acknowledged they had "freely and voluntarily entered into [the] agreement, free of any duress or coercion and with full knowledge of each and every provision contained in [the] agreement, and the consequences thereof." As part of the agreement, and in exchange for her waiver of any right or claim to other retirement benefits belonging to James, it was agreed that Nancy would be "listed as the recipient of any benefits payable upon the death of" James from the IMRF, and that he would "not designate any other survivors, or allocate any survivorship benefits, to anyone other than" Nancy.

Subsequently, on a date not disclosed in the record, James remarried and, contrary to the express terms of the judgment and marital settlement agreement, designated his second wife, Delores, as the recipient of his IMRF death benefit. Upon learning of James' action, Nancy filed an emergency petition for rule to show cause why James should not be held in contempt for his willful violation of the judgment of dissolution. The petition was designated an "emergency" petition, because James was believed to be "seriously ill" at the time. Affidavits and exhibits subsequently presented in this case show that hearing on the petition was postponed and continued by agreement on February 19, 1998, due to certain representations made on, and perhaps before, February 18, 1998, by James' attorney, Raymond Meader. It appears from a letter of that date that Meader led Nancy's attorney, David Jaffe, to believe that James had agreed to do that which he was obligated to do pursuant to his original agreement and the judgment of dissolution: unconditionally designate Nancy as the beneficiary of his IMRF death benefits. In his letter, Meader indicated that he would ask James to sign the IMRF form naming Nancy as primary beneficiary and would then "forward to the Village of Romeoville [James' employer] for forwarding to IMRF."

On February 20, 1998, Meader obtained James' signature on the form, but was purportedly instructed by James "to make sure everything was resolved with regard to the Petition for Rule before finalizing the matter." Meador also claimed that James wanted to consider other benefit options before filing the designation with the IMRF, although it is not clear how, if at all, the designation of a beneficiary for death benefits would impact the availability of other benefits or why James believed he could choose not to file the beneficiary designation.

According to Meador's affidavit, he received a telephone call from attorney Jaffe on February 21, 1998, and on that date advised Jaffe that the form had been signed, but still needed to be completed. Pursuant to Jaffe's request, Meador faxed Jaffe a copy of the form, which bore James' signature and named Nancy as his beneficiary. Meador claimed he told Jaffe that he "needed a complete resolution of th[e] matter" including the issue of "attorney's fees and costs" claimed in Nancy's petition for rule to show cause. Meador's affidavit does not, however, specifically state that he informed Jaffe the form would not be sent to the IMRF until Nancy agreed to relinquish her claim for attorney fees and costs.

When Meador visited the offices of the City of Romeoville on February 24, 1998, he handed the designation of beneficiary form to Doris Mann, the village employee who handled IMRF matters, and told her not to process the document with the IMRF until he instructed her to do so.

James died in the early morning of February 25, 1998. The affidavit of Doris Mann indicates that, having received no further instruction, she remained in possession of the designation of beneficiary form until March of 1998, when the IMRF contacted her and requested it.

When the IMRF refused to pay the death benefit to Delores barring an agreement between the competing claimants or "direction from a court," Delores sought a resolution of the matter in the circuit court. By interpleading the death benefit and requesting relief as the circuit court deemed "equitable," the IMRF itself implicitly acknowledged the authority of the circuit court to order the benefit paid directly to either claimant and agreed to pay the benefit to either party. The IMRF invoked in the process the panoply of judicial powers traditionally at a court's disposal and set the stage for redress of James' blatant wrongdoing as set forth in Nancy's pleadings and evinced in Delores' own affidavits. As will appear hereafter, there was no statutory or procedural impediment to a just result.

With that observation, we turn to our analysis and resolution of this case. Although the ultimate issue here concerns entitlement to James Smithberg's IMRF death benefit, the facts and arguments raise a broader, more troubling matter, specifically, a challenge to the power of a court in this context to enforce by equitable means a judgment based upon the incorporated terms of a marital settlement agreement effecting an agreed distribution of marital assets.

Clearly, James was obligated by the express terms of his agreement with Nancy to name her and no other as the beneficiary of his IMRF death benefit. The marital settlement agreement, which was incorporated in the court's judgment of dissolution, acknowledged that James had "freely and voluntarily entered into [the] agreement, free of any duress or coercion and with full knowledge of each and every provision contained in [the] agreement, and the consequences thereof." James agreed to name Nancy as the beneficiary of his IMRF death benefit in exchange for her waiver of any right or claim to certain other retirement benefits belonging to James, benefits, we might add, in which Nancy clearly would have had an interest in view of the parties' 33-year marriage.

It appears that James, at some point subsequent to the judgment of dissolution, designated Delores as the beneficiary of his death benefit. James' action was nothing less than an attempt to deprive Nancy of her vested substantive rights under the parties' marital settlement agreement and it constituted a clear violation of the court's judgment of dissolution. In response, Nancy filed an emergency petition for rule to show cause. Had the cause proceeded in the circuit court, James undoubtedly would have faced a finding of contempt of court; he would have been ordered to reinstate Nancy as the beneficiary of his death benefit; and he would have been required to pay Nancy's reasonable attorney fees pursuant to section 508(b) of the Illinois Marriage and Dissolution of Marriage Act. See 750 ILCS 5/508(b) (West 1998); In re Marriage of Scott, 286 Ill. App. 3d 1056, 1059 (1996).

James avoided that result only by means of an agreement to postpone the hearing on Nancy's petition. The resulting continuance was apparently achieved by either the representations, or misrepresentations, of his attorney to the effect that James would forthwith comply with the terms of his marital settlement agreement and the judgment of dissolution. However, after he had obtained the continuance of the hearing, James seems to have violated the latter agreement as well. Instead of unconditionally placing the form designating Nancy as beneficiary with the Village of Romeoville for forwarding to the IMRF, James' attorney, contrary to representations he made in a letter dated February 18, 1998, advised Doris Mann not to send the form on to the IMRF until instructed to do so upon the pretext that James wished to inquire about other IMRF benefits. Obviously, having obtained his continuance, James either wished to use the form as further leverage against Nancy's meritorious claim for attorney fees and costs or, realizing that his demise was imminent, he wanted to deprive Nancy of the death benefit altogether. Since there is no indication in the record that James' estate has sufficient funds to ...


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