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In Re Marriage of Patricia C. Mclauchlan

March 13, 2012

IN RE MARRIAGE OF PATRICIA C. MCLAUCHLAN,
PETITIONER-APPELLEE, AND DAVID C. MCLAUCHLAN,
RESPONDENT-APPELLANT.



Appeal from the Circuit Court of Cook County, County Department, Domestic Relations Division. No. 99 D 5397 The Honorable Pamela E. Loza, Judge Presiding.

The opinion of the court was delivered by: Justice Harris

JUSTICE HARRIS delivered the judgment of the court, with opinion. Presiding Justice Quinn and Justice Connors concurred in the judgment and opinion.

OPINION

¶ 1 Appellant David C. McLauchlan (David) appeals the order of the circuit court modifying his maintenance payments to appellee, Patricia C. McLauchlan (Patricia), pursuant to a marital settlement agreement signed by the parties. On appeal, David contends that (1) the trial court abused its discretion by failing to terminate maintenance given his employment situation; and (2) the trial court erred when it included withdrawals from his retirement accounts as income in calculating maintenance and arrearages. For the following reasons, we affirm in part, reverse in part, and remand for further proceedings.

¶ 2 JURISDICTION

¶ 3 The trial court issued an order on April 14, 2010, but continued the case to address contempt and attorney fees issues. The trial court entered a final order in the instant case on June 14, 2010, and David filed his notice of appeal on July 13, 2010. Accordingly, this court has jurisdiction pursuant to Illinois Supreme Court Rules 301 and 303 governing appeals from final judgments entered below. Ill. S. Ct. R. 301 (eff. Feb. 1, 1994); R. 303 (eff. May 30, 2008).

¶ 4 BACKGROUND

¶ 5 The parties had been married more than 30 years when the trial court entered a judgment for dissolution of marriage on July 27, 2001. At the time, they had three children, two of which were over the age of 18. One adult child, Carolyn, is disabled and resides at Misericordia. The marital settlement agreement, which was incorporated into and made part of the judgment for dissolution, provided in part as follows:

"Commencing January 1, 2001, Husband shall pay to Wife as and for maintenance, formerly known as alimony, the sum of Fourteen Thousand Dollars ($14,000) per month, payable in two installments the 1st and day 15th of each month ('Maintenance'). After six years (72 months) from the effective date entry of Judgment for Dissolution of marriage, either party may petition a Court of competent jurisdiction and, subject to the remaining provisions of this paragraph, and annotations set forth below, Husband shall have the right to petition a Court of competent jurisdiction *** to modify Maintenance. The Maintenance will only be modified upon written agreement of the parties, and/or order of Court, and will continue until modified by a Court of competent jurisdiction. Maintenance may only be modified by Husband upon a showing *** of a material and substantial change/reduction in Husband's gross income level. Maintenance may only be modified by Wife upon a showing by Wife of a material and substantial change/increase in Husband's gross income level (after the 72 month period). The parties agree that Wife may earn up to, and including, fifty thousand dollars per year in employment income, in addition to income she may have on her investments, without her income level constituting a change in circumstances which could give rise to a modification of Maintenance."

The marital settlement agreement also included a property settlement in which the parties distributed rights in various retirement accounts and pensions. Patricia received half of David's then-existing retirement assets, which she invested. She also received their vacation home in Key West, Florida, and a portion of the proceeds from the sale of the marital home in Park Ridge, Illinois. Regarding the retirement plans, the settlement agreement provided that "[e]ach party shall execute any and all documents necessaryto waive any and all interests, or partial interest(s) in and to the retirement plan(s) the other party is receiving pursuant to terms of the Agreement." (Emphasis added.)

¶ 6 On November 26, 2007, David filed a petition to terminate maintenance or, in the alternative, to modify maintenance and for other relief. Patricia filed a petition for rule to show cause and other relief on January 8, 2008, and a motion for summary judgment alleging that David failed to show a substantial reduction in gross income in order to modify maintenance. David filed a response to Patricia's motion and a cross-motion for summary judgment. Hearing on the petitions and motion trial began on December 16, 2009, before Judge Jordan Kaplan. An agreed order for reassignment to a new judge was entered on January 11, 2010, and the case was assigned to Judge Pamela Loza.

From the time he filed his petition on November 26, 2007, to the trial court's ruling on April 14, 2010, David paid $14,000 a month in maintenance in 2007, and $31,500 in 2008.

¶ 7 At hearing, David testified that upon his graduation from law school in 1972, he became an associate attorney with the law firm of Lord Bissell & Brook. His law firm income for the five years before the divorce, before any reductions for individual retirement account (IRA), 401K, and profit sharing or pension payments, averaged $540,318. The average was $504,064 for the three years before the divorce, and David earned $474,388 in 2000, the last full year before the divorce.

¶ 8 After the dissolution of his marriage, his post-divorce income was comparable for the next five years, averaging over $550,000. He remarried and purchased a town house with a balance due of $924,922 on the mortgage. In 2006 David's income dropped dramatically when he earned only $371,746. In 2007, his firm merged with a Texas firm and became Locke, Lord, Bissell & Liddell and David's yearly income dropped to $250,000. These substantial drops in David's earned income forced him to borrow money from his deceased father's estate and withdraw large amounts from his 401K and retirement accounts in order to continue to pay $14,000 per month in maintenance to Patricia and meet his obligations. In 2007 he had a gross income of $361,226, including taxable income of $129,000 resulting from the early withdrawals from his retirement accounts. The 401K and retirement account withdrawals had the practical effect of increasing David's taxable income for the year, but in reality they represented the depletion of his retirement savings earned in prior years when maintenance payments were paid to Patricia. His 2008 tax return shows a gross income of $284,848, including taxable withdrawals of $116,477.

¶ 9 At the end of 2008, David was forced to resign from the firm. Nick DiGiovanni, a partner and member of the executive committee at Locke, Lord, Bissell & Liddell, testified that the committee decided to terminate David due to his dwindling business, but the parties negotiated a process whereby David would instead resign at the end of 2008. After his resignation, David began his solo practice, the Mc Lauchlan Law Group LLC. In 2009, David lost approximately $162,000 trying to establish his practice. As of March 23, 2010, David had unbilled fees of approximately $5,000.

¶ 10 In order to meet expenses, David withdrew $695,000 from his Locke Lord pension retirement account and $36,000 from his 401k Fidelity account in 2009. As of March 20, 2010, he had withdrawn approximately $75,000 from his Charles Schwab retirement account. At that time, David had approximately $180,000 in his Schwab account and $37,000 in his Fidelity account. David also had about $5,000 to $6,000 in his personal checking account, $5,000 in a nonretirement Schwab account and $3,000 in his law firm account. David's total loan and mortgage debt is over $1.5 million, and he estimated that at the current rate he would exhaust his remaining assets in about three to four months.

¶ 11 At the time David filed his petition, all of the parties' children had reached the age of majority. Carolyn still resides at Misericordia, to which David contributes approximately $3,000 per year. He also pays $200 to $400 per month in expenses for Carolyn.

¶ 12 Patricia testified that although she is a college graduate with a degree in Hospitality Management, she did not work outside the home during the marriage. In 2010, after searching two years for employment, she secured a part-time job as a cashier/receptionist at $9.50 per hour. She has also taken classes to learn Microsoft Office and accounting. In 2008, after David began making partial maintenance payments, Patricia cut back on her monthly expenses, from $10,000 per month to between $7,500 and $8,000 per month. During this time, she paid for these expenses out of savings, retirement account withdrawals, and a home equity line of credit. Patricia began liquidating her assets and accruing debt. She stated that she has approximately $100,000 in a savings account and $600,000 in a retirement account. Starting in 2009, she has received about $2,000 per month from her investment account. She testified that she no longer lives the lifestyle she was accustomed to during her marriage.

ΒΆ 13 The trial court determined that David had experienced a substantial change in circumstances meriting a modification of maintenance to 20% of his gross income, retroactive to 2008, from all sources. Furthermore, the clear and unambiguous terms of the marital settlement agreement contemplated that money withdrawn from David's retirement accounts should be included as David's income. The trial court did not terminate maintenance, observing instead that "[r]espondent has no impairment in his present or future earning capacity and he has the ability to earn significantly greater future income than Patricia. Based on David's ability to pay and Patricia's lack of education, job experience, age and ability to earn substantial income ***, the length of the parties' ...


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