In re MARRIAGE OF KATHLEEN LISZKA, Petitioner-Appellee, and MICHAEL LISZKA, Respondent-Appellant.
from the Circuit Court of the 12th Judicial Circuit, Will
County, Illinois. Circuit No. 12-D-225 The Honorable Victoria
M. Kennison, Judge, Presiding.
JUSTICE LYTTON delivered the judgment of the court, with
opinion. Justice Wright concurred in the judgment and
1 Petitioner Kathleen Liszka filed a dissolution of marriage
action against respondent Michael Liszka. Prior to trial, the
court barred Michael's expert from testifying as to the
value of a corporation owned by the parties, ISP Painting
Inc. (ISP), as a discovery sanction. In its judgment for
dissolution, the court divided the marital estate equally
between the parties, awarding ISP and the marital home to
Kathleen and requiring her to pay Michael $673, 785. The
court denied Michael's request for maintenance, imputed
monthly income of $17, 500 to him for child support purposes,
and imposed a trust for child support payments. After ruling
on the parties' motions for reconsideration, the trial
court reduced the amount Kathleen was to pay Michael to $84,
2 Michael appeals, arguing that the trial court erred in (1)
barring his expert from testifying as to the value of ISP,
(2) denying his motion to continue the trial, (3) imputing
income to him, (4) valuing ISP, (5) not dividing ISP's
2013 retained earnings, (6) assigning no value to another
business owned by the parties, (7) failing to treat
Kathleen's attorney fees as advances from the marital
estate, (8) valuing the marital home, (9) refusing to reopen
the proofs to allow the introduction of ISP's 2013 tax
returns, (10) denying him rehabilitative maintenance, and
(11) establishing a trust for his child support payments. We
reverse those parts of the trial court's order that bar
Michael's expert from testifying and that impute monthly
income of $17, 500 to him and remand for further proceedings.
We affirm the trial court's decision in all other
4 Michael and Kathleen Liszka were married in 1993 and had
three children together during their marriage. In 2002,
Michael and Kathleen started a corporation together, ISP
Painting, Inc. Kathleen owned 51% of ISP, and Michael owned
49%. They both served in various roles at ISP throughout
their marriage. In 2011, Michael was the chief financial
officer (CFO), and Kathleen was president of ISP.
5 In 2011, Michael and Kathleen entered into a collaborative
divorce process. As part of that process, they hired
Christiana Zouzias, a certified public accountant, to value
ISP. In 2012, the collaborative process broke down, and
Kathleen filed a petition for dissolution of marriage. She
sought sole custody of the parties' children, who were
14, 12, and 10 years old at the time. In June 2012, Kathleen
placed Michael on administrative leave from ISP but continued
to pay him an annual salary of approximately $210, 000. Both
parties filed motions alleging dissipation of assets by the
6 In April 2013, the trial court set the trial for custody
and property matters to take place on October 21, 2013. In
April 2013, Kathleen sent Michael financial documents related
to ISP. On May 20, 2013, Michael filed a motion to compel
production of unredacted documents, arguing that the
documents Kathleen sent him contained redacted data that
interfered with his ability to determine the value of ISP.
The trial court entered an order requiring Kathleen to
provide the documents in unredacted form subject to a
7 On August 12, 2013, Kathleen disclosed her trial witnesses,
including Zouzias as her valuation expert. On August 14,
2013, Kathleen sent Michael some unredacted financial
records. Soon thereafter, Michael disclosed Mary Lynn Hoffer
as his ISP valuation expert but did not provide any of her
conclusions or opinions and indicated that her report would
"be available prior to trial." On that same date,
Michael filed another motion to compel the production of
unredacted documents, asserting that Kathleen failed to send
him certain balance sheets, financial statements, and general
ledgers for ISP. On August 29, 2013, Kathleen sent Michael
unredacted copies of the financial statements and ledgers he
requested. On September 26, 2013, Kathleen sent Michael the
2012-13 balance sheets for ISP.
8 On October 17, 2013, Michael provided Hoffer's report
to Kathleen. Kathleen filed a motion to bar Hoffer's
report and testimony because Michael did not provide her
report or disclose her opinions by the discovery deadline.
The trial court granted Kathleen's motion.
9 On October 21, 2013, Michael filed a "motion to
continue property/financial portion of trial due to discovery
abuses by petitioner." At the hearing on the motion,
Kathleen's attorney, Paul Starkman, testified that he
provided redacted financial records to Michael in October
2012 and April 2013, including profit and loss statements and
general ledgers. He testified that he redacted only the names
of ISP's customers, which he considered confidential. On
August 28, Starkman provided Michael with unredacted
financial information, including general ledgers for 2011 and
2012, profit and loss statements, and some balance sheets. On
September 26, 2013, Starkman provided Michael with the
unredacted balance sheets for 2012 and 2013.
10 Phil McLawhorn, the accounting manager of ISP, testified
that in August 2013, he provided financial documents to
Michael, including a balance sheet and a profit and loss
statement. On August 28, 2013, he provided Michael with
general ledgers for 2011 and 2013. On September 26, 2013,
McLawhorn provided Michael with the balance sheet for 2012,
as well as the updated balance sheet for 2013. The trial
court denied Michael's motion to continue.
11 Right before trial, the parties settled their custody
dispute, leaving only property issues to be decided by the
court. At trial, Michael testified that he is a healthy
44-year-old. He has a college degree with a major in
financing. Before starting ISP, Michael started a local
painting company, Illinois State Painters, in 1987. At ISP,
Michael served as human resources manager, marketing
director, finance director, president, chief executive
officer (CEO), and CFO.
12 In addition to ISP, Michael and Kathleen owned several
other businesses, including Coreman Technologies. Coreman
Technologies operates an extranet system that is used by ISP
and two other customers. The extranet system was developed
and paid for by ISP. ISP created Coreman to market the
extranet to other companies. Coreman has no employees.
Coreman does not file taxes. Coreman's earnings are
included in ISP's earnings for tax purposes.
Coreman's earnings were $1320 in 2010, $21, 718 in 2011,
$4695 in 2012, and $3205 in 2013. Michael estimated that
Coreman's value was $500, 000 based on its "possible
future." Kathleen testified that she did not know the
value of Coreman. She testified that Coreman's only
assets are its name and its ability to use and sell extranet
software. Coreman does not have any copyrights, patents, or
trademarks for its software. Louis Miller, ISP's Director
of Financing, testified that Coreman does not have a bank
account separate from ISP's. According to Miller, Coreman
is not separate from ISP.
13 At trial, Zouzias testified that the value of ISP was $1,
116, 000 as of December 31, 2011. At Michael's request,
Zouzias looked at ISP's 2012-13 financial information but
did not perform a complete analysis for those years. The
2012-13 information confirmed Zouzias's belief that her
2011 valuation was correct. She did not have an opinion
regarding the value of ISP as of 2012 or 2013 because she did
not perform a complete business valuation for those years.
Michael testified that ISP's value was $4, 037, 817 in
2012 and $5, 047, 902 in 2013 based on financial information
from the first half of the year. He testified that he was
offered $2, 000, 000 for ISP in 2005 or 2006 and that it has
substantially grown in value since then.
14 Both parties provided evidence regarding the value of the
marital home. Kathleen presented a copy of an appraisal,
performed on August 5, 2011, stating that the home had a
value of $565, 000. Kathleen testified that she believed the
fair market value of the home was $420, 000. Michael
presented an appraisal of the home performed on March 12,
2012, indicating that the value of the home was $615, 000.
Michael testified that he believed the value of the home at
the time of trial was $691, 000.
15 Michael alleged that Kathleen dissipated marital assets,
in part, by paying excessive attorney fees. Peggy Tracy, a
forensic accountant hired by Michael, testified that Kathleen
spent $228, 400 more in attorney fees than Michael. Kathleen
disputed Tracy's testimony and testified that she spent
only $78, 982 more than Michael in attorney fees.
16 The trial ended on January 24, 2014, at which time the
court gave an oral ruling that grounds existed for
dissolution of the parties' marriage. The court reserved
the issue of child support for six months.
17 In March 2014, Michael filed a "motion to reopen
proofs as to ISP, Inc. valuation and allocation of retained
earnings." Attached thereto was ISP's 2013 tax
return. The trial court denied the motion.
18 On April 16, 2014, the trial court entered its written
judgment for dissolution of marriage. The court found that
the value of the marital home was $577, 000 based on
Kathleen's 2011 appraisal and improvements in the market.
Kathleen was awarded the marital home and ordered to pay
Michael for his share. The court accepted Zouzias's
business valuation of ISP, finding that the date of her
valuation "is still reasonably close enough toward the
time of trial that it is an acceptable amount." The
court awarded ISP to Kathleen and ordered her to pay Michael
$558, 000 for his interest. The court rejected Michael's
valuation of ISP, finding it "was fraught with
errors." The court awarded Coreman Technologies to
Kathleen and ordered her to pay Michael $250, 000 for his
interest in it.
19 The court denied both parties' claims of dissipation.
The court found that Kathleen's attorney fees were more
than Michael's "but, because of the situation that
we have here and how this started as a collaborative effort
and with no requirement that there be an equalization as to
attorneys' fees, the Court is not going to equalize the
20 The court denied Michael's request for maintenance
after reviewing the applicable statutory factors. The court
explained: "Both parties are walking away now with
significant assets, some in property and some in cash. Both
parties have significant earning capacity and they are both
21 The court divided the marital estate equally between the
parties, awarding Michael two Hawaii timeshares, personal
property, bank accounts, retirement accounts, and two
vehicles. In order to accomplish the 50/50 split, Kathleen
was required to pay Michael $673, 785.
22 On the same day the court entered its judgment, Kathleen
terminated Michael from ISP. Michael then filed a petition
for equitable maintenance, and Kathleen responded with a
motion for a directed finding that Michael was not entitled
to maintenance. At a hearing on his petition, Michael
testified that he had expenses totaling $17, 500 per month,
including over $10, 000 in living expenses and $7000 in
attorney fees. He had been withdrawing money from his 401(k)
accounts to support himself since his termination from ISP.
The trial court granted Kathleen's motion and denied
Michael's petition for maintenance.
23 In June 2014, Kathleen filed a petition to set child
support. Michael responded to the petition by denying that he
is "well able and capable of contributing to the support
of the minor children." Kathleen also filed a petition
for imposition of a trust, pursuant to section 503(g) of the
Illinois Marriage and Dissolution of Marriage Act (Act) (750
ILCS 5/503(g) (West 2012)), for the benefit of the children.
The trial court held a hearing on the petitions. At the
hearing, Michael testified that since he was terminated from
ISP in April 2014, he has been "trying to start [his]
own company." His new company was incorporated in
October 2014, and, according to his business plan, he will be
paying himself an annual salary of $40, 000, plus bonuses. He
asked the trial court to set child support based on that
24 In December 2014, the trial court issued its oral ruling
on Kathleen's petitions, finding that Michael is
"voluntarily unemployed" and "unwilling to pay
the necessary support for his children." The trial court
imputed income to Michael in the amount of "$17, 500 per
month which is the amount that he was living off of and
using." The trial court also granted Kathleen's
request for imposition of a section 503(g) trust.
25 In February 2015, the trial court entered a written order
requiring Michael to pay $3765 in child support per month
based on his imputed monthly income of $17, 500. The order
granted Kathleen's request for a 503(g) trust, finding
that Michael "has not acted in good faith, that he has
in fact been trying to avoid meeting his obligations to fully
support the children as necessary." The court ordered
that $200, 000 of the amount Kathleen owed Michael be placed
in the trust.
26 Both parties filed motions to reconsider the judgment for
dissolution. The court denied Michael's motion but
partially granted Kathleen's motion, reassigning three
bank accounts to ISP instead of the parties and ruling that
Coreman had no value because it is part of ISP and its value,
if any, was included in ISP's value. The court also
determined that it "double counted" certain assets
and accounts. After the court's modifications, the total
value of the marital estate decreased by $1, 179, 553, and
the amount Kathleen was required to pay Michael decreased
from $673, 785 to $84, 007.50.
28 I. ISP's Valuation
29 A. Barring Michael's Expert and Refusing to Continue
30 Supreme Court Rule 213(f)(3) requires a party to disclose,
for each controlled expert witness, "(i) the subject
matter on which the witness will testify; (ii) the
conclusions and opinions of the witness and the bases
therefor; (iii) the qualifications of the witness; and (iv)
any reports prepared by the witness about the case."
Ill. S.Ct. R. 213(f)(3) (eff. Jan. 1, 2007). Information
required by Rule 213 must normally be disclosed no later than
60 days before trial. Gee v. Treece, 365 Ill.App.3d
1029, 1036 (2006).
31 Supreme Court Rule 219(c) authorizes the trial court to
prescribe sanctions, including barring witnesses from
testifying, when a party fails to comply with discovery
deadlines. Ill. S.Ct. R. 219(c)(iv) (eff. July 1, 2002);
Nedzvekas v. Fung, 374 Ill.App.3d 618, 620 (2007).
The imposition of sanctions is within the discretion of the
trial court and will not be disturbed absent a clear abuse of
discretion. Fung, 374 Ill.App.3d at 620-21.
32 In determining whether the trial court abused its
discretion in fashioning a sanction, the reviewing court
should consider (1) the surprise to the adverse party, (2)
the prejudicial effect of the witness's testimony, (3)
the nature of the testimony, (4) the diligence of the adverse
party, (5) the timeliness of the objection, and (6) the good
faith of the party seeking to offer the testimony.
Id. at 621. No single factor is determinative, and
each case must be considered based on its unique facts.
33 Disqualification of an expert is not the only sanction
available when a party violates Illinois Supreme Court Rule
213. Marshall v. Osborn, 213 Ill.App.3d 134, 141
(1991). In fact, barring a witness's testimony is a
drastic sanction and should be exercised with caution.
McGovern v. Kaneshiro, 337 Ill.App.3d 24, 37 (2003).
In some circumstances, allowing the offended party the
opportunity to depose the expert may be an appropriate
response to a party's failure to timely disclose.
Marshall, 213 Ill.App.3d at 141.
34 Where a party has acted in good faith and has not engaged
in abusive discovery practices, it is an abuse of discretion
for the trial court to bar expert testimony that is not
timely disclosed. See Vallejo v. Mercado, 220
Ill.App.3d 1, 10 (1991). The proper remedy is to continue the
trial date and revise the discovery schedule. Id.
35 Here, the record shows that Michael disclosed Hoffer as a
controlled expert witness more than 60 days before trial but
failed to disclose her opinions and report until just 4 days
before trial. However, this late disclosure was not caused by
Michael's bad faith or abusive discovery practices.
Rather, the late disclosure was the result of Kathleen's
failure to provide Michael and his expert with necessary
36 In early 2013, Michael sought ISP's financial
documents from Kathleen. While Kathleen provided some
documents to Michael in April 2013, many of them were
redacted, requiring Michael to file a motion to compel
Kathleen to provide unredacted documents. Kathleen provided
unredacted documents to Michael in August 2013 but failed to
send him 2012 balance sheets, financial statements for part
of the year, or general ledgers for any years, causing
Michael to file another motion to compel. On August 29, 2013,
Kathleen sent Michael the financial statements and ledgers he
requested. However, it was not until September 26, 2013, less
than 30 days before trial, that Kathleen finally provided
Michael with IPS's 2012 and 2013 balance sheets. Three
weeks later, Michael provided Hoffer's report to
37 Under these circumstances, the trial court abused its
discretion in barring Hoffer's testimony. The record
establishes that Michael, and by extension Hoffer, did not
receive all of the relevant financial information necessary
to reach a conclusion regarding ISP's value until
September 26, 2013, less than a month before trial and more
than a month after the August 22, 2013 discovery deadline.
Because it was Kathleen's lack of diligence that caused
Hoffer's report to be untimely, Michael should not have
been penalized. The proper remedy would have been for the
trial court to ...