Court of Appeals of Illinois, First District, Sixth Division
In re MARRIAGE OF YVONNE FOSTER, Petitioner-Appellant and Cross-Appellee, and JAMES FOSTER, Respondent-Appellee and Cross-Appellant
As Corrected October 22, 2014.
Appeal from the Circuit Court of Cook County. No. 09 D2 30269. Honorable Jeanne M. Reynolds, Judge Presiding.
In the dissolution of the marriage of a couple with no children and who enjoyed the benefits of various professional endeavors and the management of respondent husband's substantial inheritances, the trial court's determination that the stock account primarily funded by those nonmarital inheritances was marital property was reversed on appeal in view of the clear evidence that the funds in the account came from respondent's inheritances, and based on that error, the allocation of the other marital assets and the awards of maintenance and attorney fees were reversed and remanded for reconsideration, but the determination that respondent did not dissipate marital assets and the consideration of his nonmarital income with respect to maintenance were affirmed.
For APPELLANT: Joel Ostrow, Bannockburn, Illinois.
For APPELLEE: Maureen A. Mitchel Law Offices, Maureen A. Mitchel, Chicago, Illinois.
JUSTICE REYES delivered the judgment of the court, with opinion. Presiding Justice Rochford and Justice Lampkin concurred in the judgment and opinion.
[¶1] Petitioner, Yvonne Foster (Yvonne), appeals from the entry of the judgment of dissolution of her marriage to respondent and cross-appellant, James Foster (James). On appeal, Yvonne contends that: (1) the trial court failed to award her a greater share of the marital estate as provided in the judgment of dissolution; (2) the trial court's determination that James did not dissipate marital assets was against the manifest weight of the evidence; (3) the trial court abused its discretion in awarding her only 30% of James's income from all sources in permanent maintenance; and (4) the trial court abused its discretion in awarding her only $25,000 towards contribution of her attorney fees.
[¶2] James cross-appeals, contending that: (1) the trial court erred in determining his Scottrade account was marital property; and (2) the trial court abused its discretion by awarding Yvonne 30% of his nonmarital income towards maintenance.
[¶3] For the reasons that follow, we reverse the trial court's ruling that the Scottrade account is marital property. We affirm the trial court's determination that James's did not dissipate marital assets and also conclude the trial court did not err in awarding Yvonne a percentage of James's nonmarital income as maintenance. We remand the matter for reconsideration of the distribution of the assets, as well as for new determinations regarding
maintenance and attorney fees based on the trial court's error in the determination of the value of the Scottrade account and our determination that the Scottrade account was nonmarital.
[¶4] I. BACKGROUND
[¶5] James and Yvonne were married on December 21, 1975. At the time of the entry of the judgment of dissolution, September 28, 2012, James was a 62-year-old software specialist, earning approximately $58,000 annually, and Yvonne was 63 years of age and was unemployed. The parties had no children. Throughout the proceedings James resided in the marital home located in Glenview, Illinois. In July of 2009, Yvonne commenced residing in an apartment located in Chicago, Illinois.
[¶6] A. Pretrial Proceedings
[¶7] On May 8, 2009, Yvonne filed a petition for dissolution of marriage in the circuit court of Cook County. On September 8, 2009, Yvonne filed a petition for temporary maintenance. On September 24, 2009, the trial court ordered James to pay temporary maintenance to Yvonne in the amount of $200 each week pending hearing on the petition. On October 28, 2009, after a hearing on the matter, James was ordered to pay $1,800 a month in temporary maintenance beginning November 1, 2009, to Yvonne.
[¶8] On January 21, 2011, Yvonne filed a motion to modify her support order, asserting James had failed to disclose two bank accounts and, therefore, had sufficient funds to support her request for increased temporary maintenance to the amount of $4,570 per month. In support of her claim, Yvonne submitted an affidavit in which she averred her current living expenses were $4,570 each month. On May 20, 2011, the trial court ordered James to pay Yvonne $4,570 per month in temporary support retroactive to January 21, 2011, the date of her initial request. The trial court did not set forth a basis for granting Yvonne's request.
[¶9] On June 30, 2011, Yvonne filed a petition for contribution towards interim attorney fees. On August 18, 2011, the trial court granted her request, ordering James to contribute $12,000 toward Yvonne's attorney fees. The matter was then set for trial for the court to determine the distribution of marital assets and whether Yvonne would be awarded maintenance.
[¶10] B. Trial
[¶11] Trial was held on February 21-22, March 13-14, and April 2, 2012. The majority of the testimony at trial related to James'ss nonmarital income, his current bank accounts, and the parties' lifestyle between 1994 and 2003. Prior to the commencement of trial, the parties stipulated the value of the marital residence was $222,599.00 with an outstanding mortgage balance of $44,506.53, resulting in a net equity of $177,993.47. The parties further stipulated the following assets were marital: Yvonne's Harris Bank account; the parties' Charles Schwab One account No. 6275 (the Schwab investment account); Yvonne's Schwab individual retirement account (IRA); the parties' Charles Schwab rollover IRA account No. 6286; James's Teacher Retirement System pension;
James's Illinois Municipal Retirement Fund (IMRF) pension; James's New Trier Retirement Incentive Plan; James's 2006 Jeep Grand Cherokee; Yvonne's 1996 BMW; and James's 1991 Jeep. The parties also stipulated to James's nonmarital property as follows: an undivided one-third interest in certain real property located in Lipscomb County, Texas, along with three active oil and gas lease interests with a stipulated value of $1,030,979; an undivided one-third interest in certain real property located in Harper County, Oklahoma with a stipulated value of $54,000; an undivided one-third interest in 100 acres of real property located in Prosser, Washington. Lastly, the parties stipulated to the authenticity of all financial account statements admitted as exhibits.
[¶12] 1. The Parties' Employment History
[¶13] James testified that in 1975 when the parties were first married, he was employed as a teacher at Washburn Junior High School. Subsequent to his employment at Washburn, he was employed by Huguley Systems Corporation from 1978 through 1981. Thereafter, he was employed by Baxter Travonal Laboratories earning $40,000 annually. From July of 1987 until December of 1994, James was employed by Abbott Laboratories making $70,000 annually. In 1994 James began a company, Applied Technology, which focused on technical writing for the sport aviation community. In 2003, James terminated his business and gained employment as a substitute teacher for New Trier Township High School (New Trier) earning $10 per hour. In 2006, James became a full-time employee at New Trier earning under $30,000 annually. As of trial, James was employed by New Trier as a software specialist earning $58,000 annually.
[¶14] Yvonne testified when she married James in 1975 she was employed as a substitute teacher. Thereafter, she held various office positions until 1994 when she graduated with a masters of arts in guidance and counseling. In 1994 Yvonne opened her own office and was a counselor for one year until she decided it " wasn't a good fit" for her, and closed the business with James's approval. Thereafter, she assisted James with his work for Applied Technology by reading and editing his work product. Throughout the majority of the marriage, Yvonne was a homemaker.
[¶15] 2. James's Inheritance
[¶16] James testified that in the early 1990s he received an inheritance from his father's cousin, Beatrice Bonk, which included a one-third interest in three properties. James further testified at that time he also inherited $200,000 in cash from the Beatrice Bonk estate, which he deposited in the couple's Schwab investment account.
[¶17] In the early 1990's James also received $30,000 from Linn Energy, a company which was testing the property he inherited for natural gas. Thereafter, the amount of income he received from Linn Energy " rapidly dropped off." Through the time of trial, James continued to receive checks from Linn Energy, which were directly deposited in his Chase checking account. James also received insubstantial payments from
PVR Midstream, LLC,
a company involved in pipeline production.
[¶18] James further testified he first began receiving funds from the Chalker oil well leases on the inherited property in December of 2010, when he received $18,914. From December of 2010 through trial, James had been receiving monthly checks from Chalker in varying amounts. In 2011, James earned over $400,000 from Chalker.
[¶19] In addition to the inheritance from his father's cousin, James also testified he received a quarterly payment from his mother's trust. The amount varied; however, the most recent payment received at the time of the trial was " over 2 but less than $3,000." When James opened the Chase checking account in August 2009 all of his nonmarital inheritance income was deposited into that account.
[¶20] 3. The Parties' Schwab Investment Accounts
[¶21] James testified that with $100,000 of the inheritance he received in the early 1990s he opened the Charles Schwab One account No. 6275 (the Schwab investment account). Six months later, he deposited another $100,000 into the Schwab investment account. James testified the Schwab investment account was a margin account, which is " an investment account where you hold stocks, and it could be bonds[ or] securities. And then you could write checks against it. It's sort of like a line of credit *** which is secured by your security holdings, and the amount of credit you have is based on the amount of securities in the account." One could repay a margin loan by depositing cash into the account or selling the securities contained in the account. James testified he and Yvonne had access to the Schwab investment account through a Visa card as well as by writing checks and that the parties used the Schwab investment account to fund their lifestyle. As of August 31, 2000, the Schwab investment account had $1,105,392.91 in assets with a margin loan of $442,933.22, making the total account value $682,459.69. James further testified that the stock market declined in the latter part of 2000, and as a result, Schwab sold off some of the securities in the Schwab investment account to rebalance the margin loan. As of February 28, 2002, the Schwab investment account had a total value of $118,198.69. James further testified that as of July 1, 2009, he and Yvonne exhausted all of those assets but $1,635.04, as they had been utilized to fund the couples' lifestyle.
[¶22] In 1995, James opened a joint Charles Schwab individual retirement account (the Schwab IRA) funded with $70,000 from his 401(k) retirement plan from Abbott Laboratories. On October 31, 2000, the account value was $594,442.11. The stock market subsequently declined and on October 31, 2001, the account value was $245,928.84. The parties had not withdrawn any money from the Schwab IRA prior to that date. By the end of 2003, James testified he and Yvonne withdrew funds from the Schwab IRA " because the Schwab One account [the Schwab investment account] was basically empty." The couple used the funds from the Schwab IRA to subsidize their living expenses.
[¶23] 4. The Parties' Lifestyle from 1994-2003
[¶24] Yvonne testified between 1994 and 2003 the couple frequented restaurants approximately four times a week. They also maintained an " opulent lifestyle, especially when it came to traveling." Yvonne averred during their marriage the parties traveled to Wyoming 20 times, London 10 times, Hawaii 4 times, Paris 3 times, and Luxembourg and Belgium " a few times." On one trip to Hawaii, the couple stayed
for an entire month because James wanted to upgrade his pilot's license.
[¶25] Yvonne further testified that between 1994 and 2003, she and James spent on average $21,378 per month and that she shopped at upscale department stores such as Saks Fifth Avenue and Nordstrom. This monthly amount included monthly expenses of $683 to repair the parties' vehicles; $200 for gas; $1,000 for clothing; $750 for grooming; $2,000 for social obligations and entertainment; and $7,500 for vacations. Yvonne based these figures on receipts and her memory and by researching costs for hotels and travel on the Internet. Yvonne, however, did not provide any receipts at trial.
[¶26] In addition, Yvonne testified the couple was " obsessed" with the stock market during this period. The couple watched television programs and read articles and magazines regarding the stock market. Yvonne testified that during this time the couple used the Schwab investment account to pay the bills associated with running the household. She further stated she was unaware that their investments had undergone a dramatic decline as of 2003, but did know they had decreased in value.
[¶27] James testified the parties spent " far less" than $21,736 a month between 1994 and 2003. James further testified around 2000, the couple took seven vacations in a 12-month period. James testified the parties traveled to Europe three times, to Hawaii twice, and to Wyoming five times. The trial court admitted James's Exhibit 72, the 1998 American Express credit card yearly summary, into evidence. The credit card summary indicated the parties incurred $16,386 in one year for airlines, car rental, and lodging. The American Express statement further indicated the couple spent $8,363 in one year dining out at restaurants.
[¶28] 5. The Parties' Lifestyle from 2004-09
[¶29] Yvonne testified the frequency of the couples' vacations declined between 2004 and 2009. Yvonne indicated the couple went on three vacations during this time period: one to Ireland; one to Germany; and one to Cabo San Lucas. Yvonne further testified the number of occasions they dined outside the home decreased as well. Yvonne testified that in the six months before she vacated the marital residence, she and James dined outside the home three times a week and were " going to a lot of movies." Yvonne further testified that when she vacated the marital residence, she was not spending $1,000 each month on clothing, $7,500 each month on vacations, $750 each month on grooming, and $2,120 on automobile related expenses.
[¶30] James testified that although the parties went on vacations during this period, they were " extremely stressed financially" and he was earning less money at that time than he earns currently. James further testified he had not filed his and Yvonne's tax returns from 2007 to the present. James, however, testified that at the time of the trial he was in the process of paying his back taxes. Admitted into evidence by James was a monthly expenditures and account balance spreadsheet for the period of January 2006 to June 2009, which demonstrated the couple's average monthly expenses were $6,251.85.
[¶31] 6. James's Current Bank and Investment Accounts
[¶32] James testified in August of 2009 he opened the Chase checking account No. 0198 (Chase checking account) in his name alone after the parties had separated. Income checks he received from New Trier and other jobs were directly deposited into the account. James received nonmarital
income payments from Linn Energy, PVR Midstream, and his mother's trust, which were deposited into the Chase checking account beginning August 31, 2009. At the time the Chase checking account was first opened, he deposited checks from Linn Energy approximately once, and sometimes twice, a month ranging from $52.50 to $686. James was also receiving quarterly payments from his mother's trust ranging from $799 to $1,400 which were also deposited into the Chase checking account. As of January 27, 2012, the account had a balance of $9,384.09.
[¶33] On September 4, 2009, James opened a Scottrade account in his name only with $75 from his Chase checking account. James funded the Scottrade account by transferring funds from his Chase checking account to the Scottrade account. James testified " the money [contained in the Scottrade account] represented predominantly inherited funds." These transfers became more frequent in December of 2010, when he began receiving funds from Chalker. From the inception of the Scottrade account until December 21, 2010, eight transfers were made from the Chase checking account to the Scottrade account in the total amount of $7,675.
[¶34] Then, on December 22, 2010, James received a deposit from Chalker in the amount of $18,914. On December 28, 2010, $2,500 was transferred from the Chase checking account to the Scottrade account. On December 29, 2010, $2,200 was similarly transferred. On January 11, 2011, $3,600 was transferred from the Chase checking account to the Scottrade account. On February 7, 2011, James deposited a $14,708 check from Chalker into his Chase checking account. The following day, February 8, 2011, James transferred $4,000 to the Scottrade account. On February 28, 2011, James again deposited $40,124.78 from Chalker into his Chase checking account and on March 1, 2011, James transferred $4,500 to the Scottrade account. Subsequently, James also made two transfers of $2,000 and $1,500 to the Scottrade account on March 14, 2011. On April 4, 2011, James deposited $60,984.72 from Chalker into his Chase checking account, then on April 4, April 8, April 14, and April 27, James transferred $6,000, $8,000, $6,000, and $3,000, respectively, into his Scottrade Account. On May 2, 2011, James deposited $39,192.21 from Chalker into his Chase checking account. On May 3, May 4, May 5, and May 9, James transferred $8,000, $1,200, $20,000, and $13,000 into the Scottrade account. The pattern that James would receive large amounts of approximately $40,000 from Chalker and would then transfer large sums of money into the Scottrade account within days of receiving the money continued through December of 2011. James testified it was never his intention that the funds received from his inheritance would be distributed to Yvonne.
[¶35] In February of 2010, James opened a First Bank and Trust checking account No. 5732 in his name alone. As of November 15, 2011, the account contained $403.97.
[¶36] On February 23, 2012, James opened an additional Chase checking account No. 4428 in his name alone and deposited only what he viewed to be his nonmarital income into this account. James testified as of March 21, 2012, there was $97,299 in the account. He had, however, executed a check in the amount of $80,000 from that account to the IRS for payment of back taxes, but the check had not yet cleared the account.
[¶37] 7. James's Expenditures Since the Filing of the Petition for Dissolution
[¶38] James's testimony established that between the end of 2010 and the date of
trial (when he began receiving greater amounts of inheritance income) he spent in excess of $150,000 on his own personal expenses, furniture, automobiles, travel and other activities, including upwards of $50,000 on gambling. James testified he used his nonmarital income to fund these expenses.
[¶39] C. Yvonne's Petition for Contribution to Attorney Fees
[¶40] On March 14, 2012, Yvonne filed a petition for contribution to attorney fees pursuant to section 503(j) of the Illinois Marriage and Dissolution of Marriage Act (the Act) (750 ILCS 5/503(j) (West 2012)) in which she asserted she incurred attorney fees and costs associated with litigating the dissolution action in the amount of $83,000 as of March 1, 2012, and currently owes her attorneys $45,000. Yvonne further asserted James had a greater ability to pay her attorney fees, as he earned an income that exceeds that of Yvonne, as she was currently unemployed. ...