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In Re Marriage of Daniel Romano

March 21, 2012

IN RE MARRIAGE OF DANIEL ROMANO,
PETITIONER-APPELLEE AND CROSS-APPELLANT, AND
CYNTHIA ROMANO, RESPONDENT-APPELLANT AND
CROSS-APPELLEE.



Appeal from the Circuit Court of Du Page County. No. 06-D-1161 Honorable Rodney W. Equi, Judge, Presiding.

JUSTICE HUDSON delivered the judgment of the court, with opinion.

Presiding Justice Jorgensen and Justice Schostok concurred in the judgment and opinion.

OPINION

¶ 1 Respondent, Cynthia Romano, appeals from the judgment of the circuit court of Du Page County dissolving her marriage to petitioner, Daniel Romano. Daniel has cross-appealed from the same judgment. Cynthia argues: (1) the trial court misclassified assets used to fund three trusts established by Daniel; (2) the trial court erred in classifying as non-marital Daniel's interests in two limited liability companies; (3) the trial court failed to consider $6,429,000 in "missing funds" in its judgment; (4) the trial court's ruling with respect to dissipation is against the manifest weight of the evidence; and (5) the trial court erred in rejecting her claim that the transfer of certain assets into the trusts established by Daniel, as well as the subsequent transfer of the assets out of the trusts, constituted a fraud on Cynthia's marital rights. Daniel contends: (1) the trial court's division of marital assets was inequitable; (2) the trial court improperly substituted a maintenance award for a child-support award; (3) the trial court's maintenance award was improper; and (4) the trial court erred by failing to account for the predistribution of marital assets to Cynthia for attorney fees. We affirm in part, vacate in part, and remand.

¶ 2 I. BACKGROUND

¶ 3 A substantial amount of evidence was presented to the trial court in this contentious dissolution action. Accordingly, we initially set forth only information sufficient to frame the issues raised by the parties in their appeals. Additional relevant facts will be presented in the analysis of the issues to which they pertain.

¶ 4 Daniel and Cynthia were married on June 12, 1987. Daniel filed a petition for dissolution of marriage on May 23, 2006.*fn1 Cynthia filed a counterpetition for dissolution of marriage on June 26, 2006. On October 16, 2007, Cynthia filed a "Notice of Claim of Dissipations." A trial in the matter commenced on September 18, 2008, at which the following was adduced.

¶ 5 Daniel is the oldest of seven children born to Donald J. Romano, Sr. (Buddy), and Florence Marie Romano. During the trial, one of the principal areas of contention involved Daniel's interests in the following companies: (1) Romano Brothers Beverage Company (RBBC); (2) Paramount Distributing Company (Paramount); (3) Central Wholesale Company (Central); (4) Mueller Distributing Company (Mueller); (5) M&D Investments, LLC (M&D); and (6) Power Distributing, LLC (Power). Other members of the Romano family also held interests in these companies. Complicating the ownership structure of the companies was the fact that, beginning in 2001, the Romano family began to implement an estate plan that ultimately involved transferring the family's interests in these entities into and out of various trusts. To this end, Daniel established three irrevocable grantor trusts on October 29, 2001. Daniel's trusts were denominated as follows: (1) the Daniel M. Romano Gift Trust (DMR Gift Trust); (2) the Daniel M. Romano MP Annuity Trust (MP Trust); and (3) the Daniel M. Romano SP Annuity Trust (SP Trust) (collectively, the DMR trusts). Buddy was the trustee of all three DMR trusts.

¶ 6 During the majority of the marriage, Daniel worked at RBBC, a family-owned liquor-distribution company. The predecessor to RBBC, Morand Brothers Beverage Company, was originally owned in part by Daniel's grandfather and later was fully acquired by Daniel's uncle, Michael J. Romano II (Michael II), and Buddy. Between 1989 and 2000, Daniel acquired 59 shares of RBBC stock from Buddy and 12 shares of RBBC stock from his siblings.

¶ 7 Between September 1987 and May 1994, Paramount, Mueller, and Central (collectively, the Affiliates) were acquired. Immediately following the acquisitions, Daniel held a 50% interest in each Affiliate. The remaining 50% interest in each Affiliate was held by Michael II's oldest son, Michael J. Romano III (Michael III).

¶ 8 Just prior to Michael II's death in 1998, he and Buddy formed M&D, a holding company for a 50% share of the profits of Olinger, a liquor-distribution company located in Indiana.*fn2 Michael III eventually came to own 50% of the shares of M&D, while Buddy owned the other half.

Subsequently, Buddy transferred his entire interest in M&D to his four sons (Daniel, Michael D. Romano (Michael D.), Donald J. Romano, Jr. (DJ), and Victor Romano (Victor)) in equal shares. Thus, following the transfer, Daniel, Michael D., DJ, and Victor each owned a 12.5% interest in M&D, while Michael III owned the remaining 50%.

¶ 9 In 2000, Buddy and Michael III formed Power, a distributor of Red Bull energy drink. Michael III owned 50% of the shares of Power, and Buddy owned the other 50%. In 2000, Buddy transferred his entire interest in Power to his four sons in equal shares. Thus, following the transfer, Daniel, Michael D., DJ, and Victor each held a 12.5% interest in Power, while Michael III retained 50%.

¶ 10 Buddy testified that in or about 2001, Michael III expressed a desire to leave the family businesses and sell his interests therein. Although Buddy originally opposed any divestiture, he eventually agreed to sell RBBC and the Affiliates contingent upon three conditions. First, Buddy wanted to more fairly distribute among his seven children any cash proceeds generated from the sale of the businesses. Second, Buddy wanted to equalize among the children ownership of any business interests that remained in the family's possession. Third, Buddy wanted to fund the college expenses of his 31 grandchildren. Buddy hired attorney Michael Hartz to create an estate plan that would be consistent with these goals and would protect from taxation the proceeds of any sale of the family businesses. Buddy also hired Thomas Fee, a financial advisor, to assist in implementing and administering the estate plan devised by Hartz. Members of the Romano family met with Hartz and Fee in the fall of 2001. At that time, Hartz advised that Daniel be the "catalyst" of the plan to redistribute wealth among the other family members, because Daniel owned a disproportionate share of the family businesses. As noted above, implementation of the estate plan involved Daniel establishing the DMR trusts.

¶ 11 In October 2001, after the DMR trusts were established, Daniel sold his 71 shares of RBBC stock to the DMR Gift Trust and in exchange received a promissory note from the trust, with interest, for approximately $4.2 million. In addition, Daniel sold his 50% interest in Paramount to the SP Trust and his 50% interests in Central and Mueller to the MP Trust. According to Hartz, the MP Trust and the SP Trust were established as grantor-retained annuity trusts (GRATs). As a result, in exchange for the transfer of his interests in the Affiliates to them, Daniel received a commitment from both the MP Trust and the SP Trust to make annuity payments on the first and second anniversaries of the trusts. Hartz explained that the value of each annuity "is equal to the value of the assets [that are] conveyed into the trust at the time that the trust is initially funded" plus interest. Hartz also created various trusts, including "gift trusts" and GRATs, for Buddy, Michael D., and DJ. Further, Buddy, Michael D., and DJ transferred their business interests to their trusts at the same time as Daniel, and they received similar commitments from their trusts in exchange.

¶ 12 In July 2002, Southern Wine and Spirits, Inc. (SWSI), a liquor-distribution company located in Miami, Florida, purchased the assets of RBBC and the Affiliates for a cash price of $151,012,000. As a result of holdbacks, the Romanos did not receive the entire purchase price. Daniel testified that the breakdown of the purchase price was: $84,075,356 for RBBC; $16,811,298 for Central; $17,636,090 for Mueller; and $26,681,360 for Paramount. Relevant here, the DMR Gift Trust's share of the proceeds of the sale of its interest in RBBC was $6,867,683. Following SWSI's purchase of RBBC and the Affiliates, Daniel began working for SWSI pursuant to a 10-year employment contract. Daniel's base salary at SWSI was $550,000. In addition, Daniel was entitled to an incentive bonus of up to $350,000 per year, which was dependent upon the company's budget, and a discretionary bonus not to exceed $100,000.

¶ 13 Also in July 2002, Michael III's interests in M&D and Power were redeemed. The redemption price was $10 million, of which $8.5 million was attributable to M&D and $1.5 million was attributable to Power. Hartz testified that the funding source for the redemption was RBBC. He explained that the owners of RBBC at the time of the redemption were the DMR Gift Trust and gift trusts established by Buddy, Michael D., and DJ. Thus, when RBBC was sold to SWSI, the Romanos decided to use funds from the sale to redeem Michael III's interests in M&D and Power. Therefore, in July 2002, Michael III received cash in exchange for the value of his shares in the companies, and redemption agreements dated July 2002 were executed.

¶ 14 Meanwhile, in October 2002, Daniel, Michael D., and DJ sold their 12.5% interests in M&D and Power to their respective gift trusts. Victor retained his interest individually. The gift trusts executed contribution agreements dated October 1, 2002, to allocate financial responsibility for the $10 million redemption of Michael III's shares in July 2002, which had been accomplished using their collective funds from the RBBC sale proceeds. The contribution agreements show that, although the gift trusts of Buddy, Michael D., and DJ each contributed from its share of the RBBC sale proceeds to the redemption of Michael III's shares, the DMR Gift Trust contributed a disproportionately higher amount. Fee explained that the DMR Gift Trust's contribution was higher because it would be the eventual instrument used to transfer a one-seventh interest to each of Buddy's three daughters: Patricia Barry (Tricia), Christine Klauer (Chrissy), and Florence Daly (Lulu).

¶ 15 The contribution agreements reflect that Buddy's gift trust contributed $2.857 million to the redemption of Michael III's interests in M&D and Power, for a one-seventh interest in the companies. Because the gift trusts established by Michael D. and DJ each already owned an interest of 12.5% in M&D and Power, they each had to contribute only an additional $357,000 to obtain a one-seventh interest in the companies. Similarly, Victor already owned an interest of 12.5% in both M&D and Power, so he had to contribute only an additional $357,000 to obtain a one-seventh interest in the companies. The DMR Gift Trust acquired the remaining three-sevenths interest in the companies. Since the DMR Gift Trust already owned an interest of 12.5% in M&D and Power, it contributed an additional $6,072,000 to reach its three-sevenths interest in the companies.

¶ 16 Hartz testified that as of October 2002 the DMR Gift Trust still owed Daniel approximately $4.2 million pursuant to the 2001 promissory note it executed when Daniel transferred his shares of RBBC to the DMR Gift Trust. However, the DMR Gift Trust's contribution to the redemption had rendered it cash poor, and it had no way to meet its repayment obligation to Daniel. Accordingly, also in October 2002, the DMR Gift Trust borrowed $6,072,000 from the MP Trust and pledged its three-sevenths interest in M&D and Power as security for the loan. In November 2002, with a portion of the borrowed funds, the DMR Gift Trust repaid Daniel on the 2001 promissory note.

¶ 17 Meanwhile, in 2003, pursuant to the 2001 estate plan, Fee instructed Daniel to personally fund accounts established pursuant to section 529 of the Internal Revenue Code for the benefit of Daniel's children and the children of all of Daniel's siblings. To this end, on September 16, 2003, Daniel contributed $416,000 for Victor's children and $543,000 for his own children. Further, on September 18, 2003, Daniel contributed a total of $432,000 for Tricia's children, $440,000 for Lulu's children, and $280,000 for Chrissy's children. Finally, on August 27, 2004, Daniel contributed $504,000 for Michael D.'s children. Fee testified that the money to fund these accounts came from Daniel's individual brokerage accounts, which are discussed below.

¶ 18 In 2004, after the GRAT annuity periods had ended, the process of equalizing the ownership of the remaining Romano family businesses, M&D and Power, began. To this end, the shares of M&D and Power held by the DMR Gift Trust were transferred to the MP Trust and the SP Trust. Specifically, the DMR Gift Trust sold a 34.248% interest in M&D and Power to the MP Trust for $8,013,299.20. In exchange, the MP Trust executed a promissory note for $1,810,844.01 to the DMR Gift Trust. The remainder of the sales price was satisfied by cancellation of the October 2002 promissory note for $6,072,000 from the DMR Gift Trust to the MP Trust. In addition, the DMR Gift Trust sold an 8.562% interest in M&D and Power to the SP Trust for $2,003,324.80. The SP Trust executed a promissory note to the DMR Gift Trust for the entire sales price.

¶ 19 Immediately thereafter, the shares of M&D and Power held by the MP and SP Trusts were transferred to discretionary trusts established for Tricia, Chrissy, and Lulu. Following these transfers, the following trusts each held about a one-seventh interest in both M&D and Power: Buddy's gift trust, Michael D.'s gift trust, DJ's gift trust, Tricia's discretionary trust, Chrissy's discretionary trust, and Lulu's discretionary trust. In addition, Victor owned about a one-seventh interest individually. Moreover, Daniel personally retained an ownership interest of 0.05% in both M&D and Power, as well as a beneficial interest for about a one-seventh ownership in the companies as a beneficiary of Buddy's gift trust.

¶ 20 In July 2004, pursuant to the 2001 estate plan, Buddy, as trustee of both the MP Trust and the SP Trust, instructed Fee to distribute from those trusts $2 million to each of the discretionary trusts established for Tricia, Chrissy, and Lulu, as well as a discretionary trust established for Victor.

¶ 21 As noted above, after the sale of RBBC and the Affiliates to SWSI, the DMR trusts repaid Daniel pursuant to the note and annuity agreements executed when Daniel initially funded those trusts in 2001. Fee established several individual brokerage accounts for Daniel and deposited the payments from the DMR trusts into these accounts. In total, between $15 million and $16 million was deposited into Daniel's individual brokerage accounts from the DMR trusts. According to Fee, no deposits were made to the individual brokerage accounts except in connection with the SWSI sale. Fee testified that Daniel used $9 million of these funds to pay taxes owed by the DMR trusts. Fee further testified that, from August 2002 through January 2007, the remaining $6 million from Daniel's individual brokerage accounts was expended to pay family expenses.

¶ 22 Evidence was also presented at trial regarding other assets acquired during the marriage. In 2003, Daniel purchased $5 million in life insurance for the benefit of Cynthia and the parties' descendants. At Daniel's request, Hartz drafted an irrevocable grantor trust designed to own the life insurance (the DMR Family Trust). Hartz testified that under the terms of the DMR Family Trust, the proceeds of the life insurance policy were payable to Cynthia and the parties' descendants as the sole beneficiaries of the trust.

¶ 23 In 1998, the parties purchased property at 704 Deer Trail Lane, Oak Brook, Illinois, which they utilized as the marital residence. The parties and their children lived in the marital residence until Daniel moved out on April 26, 2006. After Daniel moved, Cynthia, the parties' four emancipated children, and the parties' one minor child continued to reside in the marital residence.

¶ 24 In August 2003, Daniel purchased a residence located at 115 Indian Trail, Oak Brook, Illinois (Indian Trail residence). Daniel testified that he intended the purchase to be an investment for Cynthia and the parties' children. The purchase price of the property was $1.1 million. Daniel testified that he originally intended to obtain a loan to purchase the Indian Trail residence. However, when he approached Cynthia about signing a mortgage on the home to secure the loan, she refused, claiming that Daniel was attempting to cheat her. Accordingly, Daniel asked Fee for funds to purchase the Indian Trail residence. Thereafter, Fee arranged a loan to Daniel from the SP Trust for the purchase of the property. Fee testified that this loan was repaid with interest. Daniel testified that, after the home was purchased, improvements totaling more than $1 million were made to it. According to Daniel, the money for the improvements "came from [his] accounts, from Tom Fee." The parties sold the Indian Trail residence to Cynthia's parents in 2005 for $350,000 and netted $322,899.57 at closing. Cynthia acknowledged that she deposited $300,000 of the net proceeds into a joint bank account, but she was unable to recall what happened to the remainder of the proceeds.

¶ 25 On May 12, 2004, the parties closed on the purchase of property at 706 Deer Trail Lane, Oak Brook, Illinois (706 Deer Trail residence), which is adjacent to the parties' marital residence. The purchase price of the property was $1.35 million. According to Daniel, he asked Fee for the money to purchase the 706 Deer Trail residence. To this end, Fee arranged a loan from the SP Trust, and a mortgage in favor of the SP Trust was executed, pursuant to which Daniel was required to repay the loan amount with interest. Daniel indicated that the mortgage was never recorded. Further, Daniel acknowledged that between May 12, 2004, and September 18, 2008 (the date of his testimony), he had not made a single monthly payment on the mortgage. Fee recounted that he had retained counsel to collect on the loan.

¶ 26 When Daniel moved out of the marital residence in April 2006, he relocated to his parents' residence at 1040 Lake Shore Drive, Unit 37D, in Chicago. In August 2007, Daniel moved out of his parents' residence and rented unit 35D in the same building. In 2006 one of Buddy's trusts purchased unit 35D for $1.65 million. Daniel and his mother were the trustees of the trust that purchased unit 35D. Daniel's rent for unit 35D was $7,500 per month, but Daniel testified that he never had the financial ability to pay it.

¶ 27 In his written closing argument, Daniel asserted that the following property was marital: (1) the marital residence, with a stipulated value of $3 million (marital residence); (2) the 706 Deer Trail residence, with a stipulated value of $1.37 million;*fn3 (3) the furnishings located at the marital residence; (4) the parties' automobiles; (5) Daniel's 401(k) account; (6) Daniel's A.G. Edwards individual retirement account (IRA); and (7) a loan receivable from Cynthia's brother, Michael Pope, for funds he borrowed from Daniel in 2005. Daniel argued that he had a non-marital claim in the following assets: (1) his 0.05% interests in M&D and Power; (2) the de minimis assets of his individual brokerage accounts; and (3) his interest in an investment fund known as "Pabrai." In addition, Daniel argued that the assets held in the DMR trusts constituted third-party property and therefore were not subject to allocation by the court.

¶ 28 In her written closing argument, Cynthia claimed that the value of the marital estate exceeded $45 million. Included in her calculation of the marital estate were claims of dissipation against Daniel totaling $20,088,623, which consisted of: (1) the transfers of M&D and Power from the MP Trust and the SP Trust to Tricia, Lulu, and Chrissy; (2) the transfer of $8 million from the MP Trust and the SP Trust to the discretionary trusts of Victor, Tricia, Lulu, and Chrissy; and (3) the contribution of $2,072,000 to the college savings accounts for the children of Daniel's siblings. In support of her dissipation claims, Cynthia contended that the "genesis" of the irreconcilable breakdown of the parties' marriage occurred in March 2000, when she began treatment for breast cancer. Cynthia also asserted in her closing that by the end of 2003 "she had no hope to save her marriage."

¶ 29 The trial court issued a letter opinion with its findings on October 12, 2009. A judgment of dissolution was entered on November 17, 2009. In its letter ruling, the trial court initially noted that credibility was "a particularly significant factor in the court's decision." The court found that "[Daniel's] interests in the Romano companies was [sic] [Daniel's] non-marital property, and that the transfers of the proceeds from the sale of the companies were in fact pursuant to a plan for the distribution of wealth generated by the sale of the Romano companies." The court then held that even if the funds from the sale of the family businesses were marital, Cynthia's dissipation claim would fail because Cynthia's claim that the marriage was undergoing an irreconcilable breakdown in 2000 or 2003 was not credible.

¶ 30 The court also held that the condominium where Daniel was living after he moved out of the marital residence was a gift from Daniel's parents. Therefore, the court classified the condominium as Daniel's non-marital property. In the alternative, the court found that Daniel was solely responsible for debt owed to his parents, i.e., back rent for the time Daniel was living in the condominium. Further, the court classified as non-marital Daniel's 0.05% ownership interests in M&D and Power.

¶ 31 With respect to the classification and allocation of the remaining property, the court determined that the DMR Gift Trust and the MP Trust were neither marital property nor Daniel's non-marital property. However, the court held that the SP Trust was marital property, which it allocated to Daniel. In so holding, the court found that Daniel "exercised and has the ability to exercise sufficient control over the *** SP Trust." The court noted that to purchase the 706 Deer Trail residence Daniel took from the SP Trust a $1.3 million mortgage, which was never recorded, and that Daniel never made a payment on that mortgage. The court concluded that, to the extent the lien was valid, it was owed to the SP Trust. However, because the court allocated the SP Trust to Daniel, it found that Daniel either was entitled to the mortgage proceeds or he could forgive the debt. The court further explained that the division of marital property would not change if it had classified the SP Trust as non-marital property. Although the court assigned to Daniel the liability of the mortgage, the court awarded the property itself to Cynthia.

¶ 32 Ultimately, the trial court allocated the following marital assets to Daniel: (1) 50% of the assets in Daniel's A.G. Edwards IRA, valued at $382,380; (2) 100% of the assets held by the SP Trust, valued at $503,656; (3) 50% of the assets in Daniel's SWSI 401(k), valued at $58,840.50; (4) an automobile valued at $17,826; (5) 100% of an insurance note, valued at $360,000, receivable between Daniel and the DMR Gift Trust; (6) $66,000 held in a bank account at Harris Bank; (7) 100% of the funds held in any bank account titled solely in Daniel's name (unvalued); (8) 40% of the cash value of any whole-life insurance policies (unvalued); and (9) personal property in Daniel's possession or under Daniel's control (unvalued).

¶ 33 The court allocated the following marital assets to Cynthia: (1) the marital residence, valued at $3 million, subject to a home equity line of credit (HELOC) with an outstanding principal balance of $534,000; (2) the 706 Deer Trail residence, valued at $1.37 million; (3) 100% of the note receivable from Cynthia's brother, valued at $250,000; (4) 50% of the assets in Daniel's A.G. Edwards IRA, valued at $382,380; (5) 50% of the assets in Daniel's SWSI 401(k), valued at $58,840.50; (6) 100% of the funds held in any bank account titled solely in Cynthia's name (unvalued); (7) three vehicles valued at $175,701; (8) 60% of the cash value of any whole-life insurance policies (unvalued); and (9) personal property in Cynthia's possession or under Cynthia's control (unvalued).

¶ 34 With respect to the issue of support, the court noted that, although five children were born to the parties during the marriage, only one (Alexander) remained a minor when the court issued its judgment of dissolution, and Alexander resided with Cynthia under a joint custody agreement. The court fixed child support at $6,000 per month, which it calculated as 20% of Daniel's net income at SWSI. In addition, the court awarded Cynthia periodic modifiable maintenance in the amount of $6,000 per month, subject to termination on statutory grounds. The court also ordered Daniel to pay additional child support of 20% of his net income over his base salary and additional maintenance of 20% of his net income over his base salary. Finally, with respect to attorney fees, the court held that in light of the "grossly disparate division of assets in Cynthia's favor and the payments already authorized by the Court," each party shall be solely responsible for any and all attorney fees and costs and expert fees incurred by them.

¶ 35 Subsequently, the parties filed cross-motions for "clarification" of the judgment of dissolution. In response, the trial court issued a letter opinion dated December 12, 2009. Among other issues, the court addressed Daniel's claim that it failed to account for the predistribution of marital assets to Cynthia for attorney fees. The court ruled that, even after consideration of the predistribution, "the balance of the asset distribution remained within the range of the reasonable." The court also updated the values of certain assets and liabilities, including the HELOC. In addition, the court sua sponte reconsidered its awards of maintenance and child support. In doing so, the court set Cynthia's periodic maintenance at $15,000 per month and child support at zero dollars per month. In accordance with the December 12, 2009, letter opinion, an addendum to the judgment of dissolution was filed on January 15, 2010. Both parties have appealed.

¶ 36 II. ANALYSIS

¶ 37 A. Cynthia's Arguments

¶ 38 1. Classification of Property

¶ 39 The first two issues Cynthia raises on appeal involve the trial court's classification of certain assets. First, Cynthia contends that the "assets used to fund [the DMR trusts]," which she classifies as "[Daniel's] share of the proceeds from the sale of the assets of RBBC, Paramount, Central and Mueller to SWSI," should have been classified as marital property. Second, she asserts that the trial court's finding that M&D and Power were Daniel's non-marital property is against the manifest weight of the evidence because marital funds were used to purchase these two entities. We address each contention in turn.

¶ 40 a. DMR Trusts

¶ 41 Cynthia first challenges the classification of "the assets used to fund" the DMR trusts. Cynthia divides her argument into two parts. Initially, she argues that "the proceeds from [Daniel's] share of the sale of RBBC's assets [to SWSI] are marital property." In particular, citing to In re Marriage of Sanfratello, 393 Ill. App. 3d 641 (2009), Cynthia reasons that Daniel's interest in RBBC should be considered marital property because "[Daniel's] employment at RBBC supplied [Daniel] the means to provide for his family during the parties' 25 year marriage." Second, Cynthia argues that "the proceeds from the sale of [Daniel's] share of the assets of Paramount, Central, and Mueller are marital property." In support of the latter claim, Cynthia contends that the evidence establishes that Daniel's "personal funds" were used to acquire the Affiliates.

¶ 42 Although Cynthia frames these issues as a challenge to the trial court's classification of "the proceeds" from the sale of Daniel's share of the assets of RBBC and the Affiliates to SWSI, her arguments actually center on whether either of the underlying assets, i.e., RBBC and the Affiliates themselves, were properly classified by the trial court. Therefore, we focus our analysis on the classification of RBBC and the Affiliates. Prior to doing so, however, we set forth some general principles applicable to the classification of assets and briefly review the trial court's findings with respect to RBBC and the Affiliates.

¶ 43 i. General Principles

¶ 44 Before a court may distribute property upon the dissolution of a marriage, the court must first classify the property as either marital or non-marital. In re Marriage of Henke, 313 Ill. App. 3d 159, 166 (2000). A court's classification of property will not be disturbed on appeal unless it is against the manifest weight of the evidence. In re Marriage of Hluska, 2011 IL App (1st) 092636, ¶ 76; Henke, 313 Ill. App. 3d at 166. A decision is against the manifest weight of the evidence only when an opposite conclusion is clearly apparent or when the court's findings appear to be unreasonable, arbitrary, or not based upon the evidence. In re Marriage of Ricketts, 329 Ill. App. 3d 173, 181-82 (2002).

¶ 45 Under the Illinois Marriage and Dissolution of Marriage Act (Act) (750 ILCS 5/101 et seq. (West 2008)), there is a rebuttable presumption that all property acquired by either spouse after the marriage and before a judgment of dissolution of marriage is marital property regardless of how title to the property is held. 750 ILCS 503(b)(1) (West 2008); In re Marriage of Schmitt, 391 Ill. App. 3d 1010, 1017 (2009). This presumption of marital property can be overcome by clear and convincing evidence that the property was acquired by one of the methods listed in section 503(a) of the Act (750 ILCS 5/503(a) (West 2008)). In re Marriage of Didier, 318 Ill. App. 3d 253, 258 (2000). Among the methods listed in section 503(a) are the following:

"(1) property acquired by gift, legacy or descent;

(2) property acquired *** in exchange for property acquired by gift, ...


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