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In Re Marriage of Rebecca Hluska v. Mike Hluska

December 9, 2011


Appeal from the Circuit Court of Cook County. and No. 05 D6 30760 Honorable Timothy P. Murphy, Judge Presiding.

PRESIDING JUSTICE ROBERT E. GORDON delivered the judgment of the court, with opinion.

Justices Garcia and Lampkin concurred in the judgment.


¶ 1 Respondent Mike Hluska*fn1 , age 57, appeals certain provisions in a judgment for dissolution of his marriage to petitioner, Rebecca Hluska, age 54. On appeal, respondent claims that the trial court erred in: (1) apportioning marital assets, awarding maintenance, and awarding attorney fees to Rebecca without first valuing certain marital and non-marital assets; (2) reserving allocation of Rebecca's credit card obligations; and (3) classifying his ownership interests in two corporations as marital assets. For the reasons set forth below, we affirm.


¶ 3 On July 6, 2005, Rebecca filed a petition for dissolution of marriage alleging that she and Mike were married on June 4, 1983, in Cook County, Illinois. The parties had two children from their marriage who were emancipated and attending local colleges at the time of the dissolution. No issues are raised in Rebecca's petition for dissolution, or Mike's appellate brief, concerning child support, custody, visitation or contributions toward college expenses.

¶ 4 In her petition, Rebecca alleges that she and Mike had been living separately since 2001 and that irreconcilable differences have caused an irretrievable breakdown of the marriage. She petitioned for the entry of a judgment dissolving the parties' marriage, asking the trial court to award her maintenance and attorney fees, to assign to her the non-marital property that belonged to her, and to award her a fair and equitable proportion of the martial property.

¶ 5 A. Procedural History

¶ 6 On September 19, 2005, Rebecca propounded written discovery requests to Mike and subpoenaed Mike's employer, Hluska Enterprises, Inc. (Hluska), for financial information, including the value of Mike's ownership interest in Hluska and any other ownership interests of which Hluska was aware. The discovery requests are not included in the record on appeal.

¶ 7 On August 18, 2006, Rebecca filed a petition for temporary maintenance, alleging she was terminated from her employment as a marketing representative and is in need of support. On October 19, 2006, the trial court ordered Mike to pay $500 per month to Rebecca. Although no petition requesting an increase to Rebecca's temporary maintenance amount is included in the record on appeal, on December 6, 2006, the trial court increased the temporary maintenance payments to $750 per month in an order setting the matter for trial on March 19, 2007.

¶ 8 On January 24, 2007, Rebecca filed a motion to compel discovery, claiming that she served Mike with written discovery requests on September 20, 2005, but that Mike failed to respond to those requests. On February 6, 2007, the trial court ordered Mike to comply with the written discovery requests within 21 days.

¶ 9 On February 28, 2007, Rebecca filed a motion to continue the scheduled trial set for March 19, 2007, because Mike had not responded to the written discovery and his employer, Hluska, had not responded to a subpoena. The trial court continued the trial to December 10, 2007.

¶ 10 On March 23, 2007, Rebecca filed a motion for discovery sanctions. On April 5, 2007, before the trial court ruled on Rebecca's motion, Mike answered Rebecca's written interrogatories. In his answers, Mike stated that, since 2000, he has been employed as a manager with Hluska and its sister corporation, Good Times Gifts, Gags and Fireworks, Inc. (Good Times). Hluska, a subchapter S corporation, and Good Times, a subchapter C corporation, are both incorporated in the State of Indiana. Hluska operates seasonal attractions, which includes a "haunted house" called "Reaper's Realm." Hluska also operates a year-round retail fireworks store in Indiana. Good Times appears to sell fireworks in Indiana, although the record is not clear concerning its business operations. Mike stated that his net income is $1,000 per week and his employment is divided between the two companies "depending upon the time of the year." Mike further stated that he held an interest in both corporations, but did not state the percentage amount of that interest.

¶ 11 In September 2007, Hluska and Good Times filed a "Joint Motion to Quash Subpoenas Duces Tecum." The exact date as to when the joint motion was filed is not clear because a copy is not included in the record on appeal. However, a copy of Hluska and Good Times' joint reply is included in the record, which was filed on December 6, 2007. In the joint reply, the corporations argue: (1) that, as Indiana corporations, which conduct no business in Illinois, they cannot be compelled to comply with Rebecca's subpoenas; and (2) that Mike's ownership interests in Hluska and Good Times were acquired by gift and, thus, should be considered non-marital property.

¶ 12 Attached to the joint motion was an affidavit from Mike's brother, John Hluska, who is president of Hluska and Good Times. John stated that in 1992, he "voluntarily and gratuitously transferred a portion of [his] equity interest in Hluska (representing 7.5% of the total shares of the company) to Mike, with the intent that such transfer be made absolutely and irrevocable as a gift to him." He also stated that in 1995, their mother, Katheryn, transferred a portion of her interest in Hluska to Mike as a gift. John stated that Mike then held an 11.75% "minority interest" in Hluska. John further stated that in 1995, Good Times was incorporated as a sister corporation to Hluska and that all the initial costs and expenses "were paid for and contributed by Hluska and that Mike received an equal share in the corporation representing 25% of the total shares."

¶ 13 On October 31, 2007, Rebecca filed her second motion to continue a scheduled trial date. The trial court granted the motion and set a status hearing date for December 13, 2007.

¶ 14 On November 27, 2007, Rebecca filed a motion to extend time for discovery, which the trial court granted "until further order from the court." After negotiations and a hearing before the trial court, the corporations entered into a "Stipulation and Order" with Rebecca, which provided that the corporations would produce certain documents, including "all documents in their possession pertaining to monetary and non-monetary benefits awarded to [Mike]" and "all papers of incorporation" of Hluska and Good Times, and Rebecca would withdraw her subpoenas of the corporations without prejudice.

¶ 15 On June 15, 2008, Mike filed a Rule 13.3.1 financial disclosure statement (Cook Co. Cir. Ct. R. 13.3.1 (eff. Jan. 1, 2003)), in which he reported his gross monthly income as $6,933.00. He reported that he paid real estate taxes on his current residence in the amount of $266.67. He also reported credit card debt of $5,500 and reported a loan from Hluska in the amount of $7,000, of which $2,000 he listed as payment that he made for Rebecca's attorney fees. He further reported an interest in a pension plan with Laborers Local Union 41, but did not indicate an amount for that interest.

¶ 16 On September 15, 2008, Rebecca filed a Rule 13.3.1 financial disclosure statement (Cook Co. Cir. Ct. R. 13.3.1 (eff. Jan. 1, 2003)), in which she reported that she was unemployed, and received monthly rental income from a residence which she has owned prior to her marriage to Mike. The amount of total income she reported from the rental property is $800, "less real estate taxes" and "fire insurance," for a net monthly income of $302. She also reported monthly miscellaneous expenses of $949, which included $804 for the mortgage payment on the marital home. Rebecca reported credit card debts of $33,750.83, which she listed as payment for "living expenses" and $10,759.59 for "miscellaneous expenses" for a total debt of $44,510.42. She also reported loans from family members totaling $36,760, of which she listed $27,760 as payment for "travel, family events" and $9,000 for payment for her attorney fees. Rebecca further reported a Roth IRA with a value of $8,736 and a 401(k) retirement savings account with a value of $34,737.

¶ 17 B. Trial Testimony

¶ 18 On September 16, 2008, a trial was held and there is no trial transcript in the record. Instead, the record contains a bystander's report, certified by the trial court on October 19, 2010, pursuant to Illinois Supreme Court Rule 323(c). Ill. S. Ct. R. 323(c) (eff. Dec. 13, 2005). Besides testifying on her own behalf, four other witnesses were called in Rebecca's case in chief:

(1) Mike; (2) Mike's brother, John; (3) Rebecca's mother, Lida; and (4) Rebecca's brother, Corey.

¶ 19 Mike testified that, since the parties' separation in 2001, he has been residing in a home owned by his sister, Kathy, located in Hammond, Indiana. He testified that he has no written lease or agreement for the purchase of the property. He testified that, instead of paying rent, he orally agreed with Kathy to pay real estate taxes on the home and make improvements to the property. He also stated that he had no agreement with Kathy as to how long he could remain in the home.

¶ 20 Mike testified that, after the parties separated in 2001, he contributed $500 per week to Rebecca to assist with the mortgage payment of $668 per month on the marital home and to provide child support. He testified that after their daughters went to college, Mike reduced his contribution amount to $350 per week to assist in the mortgage payment only. He testified that he stopped his weekly contributions after Rebecca filed her petition for dissolution.

¶ 21 Mike testified that, from 1981 to 1984, he owned a pavement seal coating company called Master Seal. Mike testified that Rebecca "performed numerous and continuous work" for Master Seal. He testified that Master Seal was sold in 1984 and that his share of the sale proceeds were deposited into a joint bank account with Rebecca. He testified that the money in the account was used as a down payment for the parties' marital home.

¶ 22 Mike testified that he was also employed as a laborer and later a maintenance foreman with a company called Narco, but did not testify when he started work for that company. He testified that while he was employed at Narco he also worked part time with Hluska. He testified that his employment was terminated with Narco "5 to 6 years ago," which would have been approximately the year 2003. He testified that after his employment was terminated at Narco, he began working full-time with Hluska, "approximately 8 years," which would have been approximately the year 2001. However, as will be shown, Mike's testimony as to the dates he began working at Hluska conflicts with Rebecca's and John's testimony and tax documents received into evidence, which show that Mike worked for Hluska starting in the 1990s.

¶ 23 Mike testified that his pay, like the pay of his brother and sisters, was a "take home of $1,000 per week." He testified that at the end of the year, the corporation's accountant would create W-2s for the four of them that would result in a net pay of $1,000 per week. He also testified that, if corporate taxes had an tax obligations, the corporation would pay them and any refunds were deposited into the company's business account. He also testified that he had the use of a pickup truck owned by the corporation.

¶ 24 Mike testified that Rebecca had worked part-time for Hluska and received a paycheck from the company. He testified that Rebecca "did very little for Hluska" and that she may have occasionally volunteered her time in "getting affidavits for fireworks sales, and possibly as a ticket taker, but neither was for very long."

¶ 25 Mike testified that he does not recall receiving any stock certificate or other documentation of his stock ownership. However, he also testified that "[h]e received stock from the account and profit sharing." Mike testified that he was "unsure" of the percentage of his ownership interests in each of the corporations. He testified that he believed the percentage of his ownership interests was approximately 15% in Hluska and 20% in Good Times.

¶ 26 Mike testified that he never received any distributions or dividends from Hluska or Good Times and that he only receives his "W-2 wages." However, a copy of the parties' 1993 joint income tax return was then offered and received into evidence which reported that Mike received a distribution from Hluska that year. As a result, Mike acknowledged that he had received a distriburtion from Hluska in 1993. The 1993 joint income tax return reported that Mike owned

7.5% of Hluska's stock and that he received a distribution in the amount of $18,358.30.

¶ 27 The following documents were offered and received into evidence: a copy of Mike's Rule

13.3.1 financial disclosure statement and Mike's W-2 tax forms from Good Times and Hluska for the years 2003, 2004, 2005, and 2007. In 2003, Mike's combined wages totaled $83,400; in 2004, he earned $83,200; in 2005, he earned $81,600. Mike testified that he did not know why his 2007 W-2 tax forms reported his combined wages as $84,800, because he receives only $1,000 per week.

ΒΆ 28 Rebecca testified that she currently resides in the marital home, located on Ridgewood Avenue in Lansing, Illinois. Rebecca testified that she and Mike purchased the marital home in 1998 for $61,000 and financed the balance of the sale price through a mortgage from a bank. She also testified ...

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