Appeal from the Circuit Court of Du Page County. No. 80--D--157 Honorable John T. Elsner, Judge, Presiding.
The opinion of the court was delivered by: Justice Byrne
Respondent, Paul Michael Thomas, appeals from the circuit court's decisions to (1) exclude certain documentary evidence of his 1984 income as a sanction for failing to personally appear at the evidentiary hearing; (2) award petitioner, Lynn Rose Thomas, $317,753.72 in past-due support and $75,000 in attorney fees and costs; and (3) allow Lynn to recover the arrearage via qualified domestic relations orders (QDROs).
We conclude that the trial court calculated the arrearage incorrectly because the court abused its discretion in excluding the contested evidence. However, the court did not abuse its discretion in awarding the attorney fees and costs. We further determine as a matter of law that the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. §1001 et seq. (2000)) permits the entry of QDROs to transfer the value of pension and retirement accounts to satisfy a support arrearage. However, such an assignment is limited to the value of the accounts at the time of the marriage dissolution. Because it is unclear whether the QDROs in this case were so limited, we reverse them and remand the cause for the entry of new QDROs. Accordingly, we affirm the judgment in part, reverse it in part, and remand the cause for further proceedings consistent with this opinion.
Because the parties are familiar with the extensive background of the case, we set forth only those facts relevant to the appeal. On May 13, 1981, the trial court entered an order dissolving the parties' 13-year marriage. At the time of the dissolution, Paul was 35 years old, Lynn was 31 years old, and the parties' only child, Andrew, was 9 years old.
The settlement agreement established Paul's initial family support obligation at $800 per month. The agreement further provided that, after 36 months, the support obligation would change to $650 per month or 35% of Paul's net income, whichever was greater. Thereafter, Paul's support obligation would be reduced by $200 per month upon Andrew's emancipation or upon Lynn's remarriage.
On February 5, 1999, the trial court entered an order finding a change in circumstances that warranted a modification of the original dissolution order. The court (1) increased the amount of Lynn's maintenance to $3,062 per month; (2) found that Paul had wilfully underpaid his maintenance obligation from 1989 through 1998 in the amount of $227,223.32; (3) ordered Paul to pay Lynn the arrearage plus statutory interest; (4) ordered Paul to give Lynn 2,424 shares of Citigroup stock and all dividends received on those shares plus interest; (5) ordered Paul to reimburse Lynn $23,000 plus interest for Andrew's education expenses; and (6) found Paul in contempt of court. On September 17, 1999, the trial court preliminarily enjoined Paul from withdrawing, transferring, or assigning any of his assets, including pension and retirement funds, to insure his payment of the arrearage. Paul appealed, arguing that the findings and orders were against the manifest weight of the evidence and an abuse of discretion. In re Marriage of Thomas, Nos. 2--99--0396 & 2--99--1085 cons. (2000) (unpublished order under Supreme Court Rule 23).
On March 29, 2000, we (1) reversed the trial court's order setting the support arrearage and ordering Paul to transfer the stock; (2) found that we lacked jurisdiction to review the contempt finding because it was not final; (3) affirmed the portions of the judgment increasing the monthly maintenance obligation to $3,062 and requiring Paul to reimburse Lynn for Andrew's educational expenses; and (4) reversed the order enjoining Paul from accessing his assets. Thomas, slip order at 41-42.
In reversing the arrearage finding, we emphasized that the trial court had incorrectly calculated Paul's support obligation from June 1984 until Andrew's emancipation in September 1989. In June 1984, which was 36 months after the entry of the dissolution judgment, Paul's monthly support obligation was to be the greater of $650 or 35% of his net income. It was impossible to calculate Paul's modified support obligation because the parties did not introduce evidence of Paul's net income in June 1984. Under the agreement, "net income" consisted of gross income minus all federal and state taxes. Thomas, slip order at 24. We directed the trial court to recalculate the obligation and any possible arrearage "based upon a comparison between 35% of Paul's net income in June 1984 and the $650 payment amount, and by making the necessary modifications following Andrew's emancipation." Thomas, slip order at 22-23. We stated that, "[o]n remand, the parties shall have an opportunity to introduce evidence of Paul's net income as of June 1984." Thomas, slip order at 24. We also directed the court to recalculate the number of shares of Citigroup stock to which Lynn was entitled. Thomas, slip order at 28. The stock is not at issue in this appeal.
On remand to the circuit court, it soon became apparent that the parties lacked documentary evidence of Paul's net income in June 1984. Paul's counsel told the trial court that neither the Internal Revenue Service (IRS) nor the Illinois Department of Revenue could provide copies of Paul's 1984 income tax return because those agencies do not retain such documentation that is more than 10 years old. Pursuant to Supreme Court Rule 237(b) (166 Ill. 2d R. 237(b)), Lynn filed a notice for Paul to appear and produce his 1984 tax returns. Paul had moved to South Carolina before the February 1999 proceedings concluded, and, although he was represented by local counsel, he did not personally appear in court at any time thereafter.
At a hearing on July 19, 2001, Paul's counsel filed an affidavit in which Paul stated that the 1984 tax returns had not been in his possession or under his control since January 1995. The trial judge expressed displeasure with Paul's absence and stated that he would consider imposing an "appropriate sanction."
On July 26, 2001, the next court date, Paul's counsel argued that his client's presence was unnecessary because he lacked personal knowledge of the June 1984 net income, which was the only evidentiary issue to be decided. Paul executed consent forms to authorize the release of information from the IRS and the Illinois Department of Revenue regarding the 1984 income. The judge remarked at the close of the hearing that "until [Paul] obeys the lawful orders of the court [to appear], we are stuck in trial without our first witness."
On November 13, 2001, Lynn's counsel told the court that an IRS agent informed him that Paul's complete 1984 return was unavailable. However, the agency would send a transcript of limited information reporting Paul's adjusted gross income, taxable income, taxes paid, and refund for 1984. Paul's counsel offered to stipulate to the IRS transcript once it arrived, but the court expressed concern that the transcript would merely report Paul's adjusted gross income rather than his total gross income. Paul later submitted a request to the Social Security Administration (SSA) for the release of his income and benefits records from 1984. The trial judge later expressed frustration with the delay and ruled that "[Paul] will appear and give truthful testimony, or we shall apply the teaching of [In re Marriage of Marks, 96 Ill. App. 3d 360, 362 (1981) (citing the rule that a party who refuses to obey the mandate of the trial court and who has been adjudged in contempt for such refusal may not defend an action when the contempt hinders or embarrasses the due course of procedure in the cause)]."
On December 6, 2001, the next scheduled hearing date, the judge ruled that, because Paul had failed to appear, the court would use evidence of Paul's net income in 1989 for determining whether 35% of that year's monthly net income was more or less than $650. The court used the 1989 evidence because it most recently followed 1984 and had been admitted and subjected to cross-examination at the 1999 trial. The court believed that, under Marks, Paul's failure to comply with the notice to appear precluded him from challenging the court's procedure for determining his 1984 income.
The transcript of the January 16, 2002, hearing indicates that Paul's counsel offered a copy of the IRS transcript, and that the trial court excluded it from evidence because Paul was not present to testify that the transcript reflected all of his employment in 1984. We have not found the IRS transcript in the appellate record. However, the appellate record contains an abstract certified by the SSA stating that Paul's 1984 income was $37,800 and that "there are no other earnings recorded under this social security number for the period(s) requested." The trial court also refused to use the SSA abstract to calculate Paul's obligation.
Following argument, the court entered a judgment of $317,753.72 for Lynn, which represented Paul's total arrearage as of January 5, 2002. The amount included (1) $175,487.22 in past-due maintenance from June 1984 through January 31, 1999; (2) $105,639 in past-due maintenance from February 5, 1999, through January 5, 2002; and (3) $36,627.50 for Andrew's education reimbursement, including interest. The court granted Lynn leave to file proposed QDROs attaching Paul's pension and retirement accounts for the purpose of ...