Appeal from the Circuit Court of Lake County. No. 00-D-1841 Honorable Gary G. Neddenriep, Judge, Presiding.
The opinion of the court was delivered by: Justice Gilleran Johnson
The respondent, Jodi Ann Schneider, appeals from the March 4, 2002, order of the circuit court of Lake County dissolving her marriage to the petitioner, Earl M. Schneider. On appeal, Jodi argues that the trial court erred in (1) failing to require Earl to maintain a life insurance policy naming his children as the irrevocable beneficiaries; (2) valuing Earl's dental practice; and (3) failing to award her attorney fees. We affirm in part and reverse in part.
The parties were married on August 25, 1985. Three children were born to the marriage: Ashley, born August 4, 1986; Justin, born February 14, 1989; and Jordan, born December 31, 1991. Earl filed a petition for dissolution of marriage on September 15, 2000. On this date, both he and Jodi were 40 years old. Earl was self-employed as a dentist and Jodi was employed part-time as a certified public accountant (CPA). The parties' marriage was dissolved on March 4, 2002, after 16 years of marriage. The parties agreed that Jodi would have sole care and custody of their three children.
The trial court conducted a hearing on the petition for dissolution between September 13, 2001, and October 18, 2001. At this time, Jodi and the parties' three children resided in the marital residence and Earl resided in an apartment. On September 17, 2001, the parties reached a partial settlement agreement. In this agreement, Earl's gross annual income was stipulated to be $325,000, with a net income of $195,000. Based on this income, child support was to be paid as follows: $5,400 per month until Ashley attained majority or graduated high school; $4,062.50 thereafter until Justin attained majority or graduated high school; and $3,250 per month thereafter until Jordan attained majority or graduated high school. Earl and Jodi both waived maintenance, although Jodi reserved the right to seek a disproportionate share of the assets.
Although the parties reached a partial settlement, they continued to present the trial court with the issues that remained in dispute. Among the issues submitted for trial court determination were (1) the valuation of Earl's dental practice; (2) requests from both parties for contribution to attorney fees; and (3) the allocation of marital property.
At trial, Jodi testified that she graduated college in 1981 and began working as a staff accountant for $15,200 per year. She worked full-time until August 1986, when she had the parties' first child. Although Earl fought her attempts to go back to work, she and Earl compromised, and she went back to work part-time. She worked about 20 hours per week until the parties' second child was born in February 1989. After that, she stopped working at Earl's request.
Beginning in August 1986, Jodi worked at Earl's dental office and did all of the accounting, bookkeeping, billing, and receivables. She worked at the dental office through the summer of 2000. She learned the computer systems in the business and every office function at the front desk. She explained that she learned these tasks because Earl wanted her to be able to take over in the event someone quit.
In September 1998, when the parties' youngest child went to first grade, Jodi went back to work as an accountant for the same firm and worked about 15 to 20 hours per week. She testified that Earl again put pressure on her to quit working. Consequently, she gave up all her clients, except for three. She worked for one client five hours every three months, the second client 20 hours per year, and the third client one hour every month. The rest of her time she devoted to taking care of the parties' three children. Jodi finally testified that, had she continued to work full-time, she could have become a manager and partner.
Earl agreed to stipulate to Jodi's homemaker rights pursuant to section 503 of the Illinois Marriage and Dissolution of Marriage Act (the Act) (750 ILCS 5/503 (West 2000)). Earl testified that the dental practice was purchased during the parties' marriage with marital monies in 1987 from a Dr. Taub. The total purchase price was $550,000. Dr. Taub continued to work in the practice for 2½ years. Additionally, Earl testified that there was a covenant not to compete between Dr. Taub and himself that limited Dr. Taub's ability to open a dental practice within a five-mile radius. Earl testified that the gross income of the dental practice was about $800,000 per year. He did not lose any of Dr. Taub's patients when he purchased the practice.
Both parties presented evidence regarding the valuation of Earl's dental practice. Stephen Mareta testified on behalf of Earl as to the value of the dental practice. Mareta is a CPA with a master's degree in taxation and a bachelor's degree in accounting. Mareta has, on several occasions, served as an expert to determine the existence and value of goodwill in professional practices. Mareta concluded that the fair market value of Earl's dental practice was $346,300. Mareta attributed $35,000 to fixed assets and $311,300 to goodwill. He attributed all of that goodwill to personal goodwill and none to enterprise goodwill. The $35,000 in fixed assets included property and equipment but excluded cash on hand, accounts receivable, cash surrender value of life insurance, and loans due from officers.
Bruce Richman testified as an expert witness on behalf of Jodi. Richman has spent 20 years in public accounting and his areas of concentration include litigation and business valuation. Richman is a CPA with masters' degrees in taxation and accounting and a bachelor's degree in business. Richman estimated the fair market value of Earl's dental practice at $481,000. The value of the tangible assets, which included cash, accounts receivable, furniture and equipment, cash surrender value of insurance, and inventory, totaled $144,413. The remainder of the value of the dental practice, $336,587, was attributed to intangible assets, such as goodwill.
On January 23, 2002, the trial court entered its findings and decision. The trial court valued Earl's dental practice at $38,330; $8,000 in inventory and $30,330 in furniture and equipment. The trial court excluded accounts receivable, cash on hand, cash surrender value of life insurance, and loans due from officers. Furthermore, the trial court found that no enterprise goodwill was proven. Consequently, the trial court determined that any goodwill that existed in Earl's dental practice was personal goodwill. However, the trial court held that, pursuant to case law, personal goodwill should not be included in determining the fair market value of Earl's dental practice.
Furthermore, the trial court considered the factors in section 503 of the Act (750 ILCS 5/503 (West 2000)), and the allocation of marital property and debt, and determined that each party would be responsible for his or her own attorney fees. The trial court also allocated the marital assets. The trial court considered the factors in section 503(d) of the Act. The trial court determined that the factors weighing heavily in favor of a disproportionate allocation were (4), the duration of the marriage; (11), the reasonable opportunity of each spouse for future acquisition of capital assets and income; and (10), whether the apportionment was in lieu of or in addition to maintenance. 750 ILCS 5/503(d)(4), (d)(10), (d)(11) ...