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In re Marriage of Goesel

Supreme Court of Illinois

November 30, 2017

In re MARRIAGE OF CHRISTINE GOESEL, Appellant, and ANDREW GOESEL (Laura A. Holwell, Appellee).

          JUSTICE THOMAS delivered the judgment of the court, with opinion. Chief Justice Karmeier and Justices Freeman, Kilbride, Garman, Burke, and Theis concurred in the judgment and opinion.



         ¶ 1 At issue is whether fees that have already been earned by an attorney in a dissolution of marriage proceeding are considered "available funds, " such that they may be disgorged under section 501(c-1)(3) of the Illinois Marriage and Dissolution of Marriage Act (Act) (750 ILCS 5/501(c-1)(3) (West 2014)). We hold that earned fees are not subject to disgorgement.

         ¶ 2 BACKGROUND

         ¶ 3 The facts of this case are set forth fully in the appellate court's opinion. 2017 IL App (3d) 150101, ¶¶ 3-10. We set forth here only those facts necessary to an understanding of the specific question of law that we decide today. On January 18, 2013, petitioner, Christine Goesel, filed a petition for dissolution of marriage from respondent, Andrew Goesel. Christine was originally represented by Goldstine, Skrodzki, Russian, Nemec and Hoff, Ltd. (Goldstine), and Andrew was represented by Janice Boback of Anderson & Boback, LLC. On October 10, 2013, contemnor Laura Holwell filed her appearance as Andrew's counsel, and the trial court granted Boback leave to withdraw. Before withdrawing, Boback had moved to disqualify Goldstine. The disqualification motion alleged that Goldstine had improperly ordered Christine to provide it with Andrew's mail that arrived at the marital home and that Goldstine had opened and viewed the mail. The trial court ultimately disqualified Goldstine, and Holwell billed Andrew $37, 094.49 for her work on the disqualification matter.

         ¶ 4 On March 10, 2014, the Law Offices of Edward R. Jaquays (Jaquays) appeared on behalf of Christine, and on June 6, 2014, Howard LeVine of LeVine, Wittenberg, Shugan, and Schatz, Ltd., appeared on behalf of Andrew. On June 12, 2014, Christine filed a petition for interim attorney fees, which she amended on June 20, 2014. In the amended petition, Christine stated that she had paid Jaquays an initial retainer of $5000 and had an outstanding balance with him of $27, 142.60. She argued that she lacked sufficient funds to pay any additional fees beyond the retainer, and she requested that the court, pursuant to the "leveling of the playing field" rules of the Act, order Andrew to pay her fees. Alternatively, if the court determined that Andrew lacked the ability to pay her attorney fees, Christine requested that the court order disgorgement of the necessary amount from the money that Andrew had already paid to Holwell. Andrew also filed a petition for prospective attorney fees, contending that, although he was employed, he did not have sufficient funds to pay his attorney fees. On June 20, 2014, Holwell moved to withdraw as Andrew's counsel. The court granted the motion but retained jurisdiction over Holwell pending resolution of the disgorgement issue.

         ¶ 5 At the hearing on the petition for interim attorney fees, the parties stipulated to the attorneys' rates and that the work performed by the attorneys was reasonable and necessary. Copies of invoices entered into evidence at the hearing showed that all of the money Holwell had received was for work already performed. Andrew still owed $17, 500.38 to Holwell and $26, 000 to LeVine. Additionally, Holwell testified that she was holding $13, 000 that Andrew had previously paid to Boback and that Boback had then paid to Holwell, as there was a dispute as to who owned the money.

         ¶ 6 On September 29, 2014, the court entered an order finding that both parties lacked an ability to pay reasonable attorney fees. The court found that the total attorney fees paid by Andrew were $100, 022.27, with $66, 382.28 going to Holwell, $10, 000 to LeVine, and $23, 639.99 to Boback. Christine had paid her attorneys $18, 117.04, with $5000 going to Jaquays and $13, 117.04 going to Goldstine. The court thus found that $118, 139.31 had been paid to date, and to "level the playing field, " each party should have $59, 069.65 for attorney fees. In order to achieve parity, the court found that it was necessary to order Holwell to disgorge $40, 952.61. Accordingly, the court ordered Holwell to tender $40, 952.61 in fees to Jaquays with 14 days.

         ¶ 7 After more than 14 days had passed and Holwell had not turned over the funds, Christine moved to have Holwell held in indirect civil contempt. Holwell requested to be held in friendly contempt of court so that she could appeal pursuant to Illinois Supreme Court Rule 304(b)(5) (eff. Feb. 26, 2010). On December 18, 2014, the court entered an order finding Holwell in friendly contempt of court. Christine later filed a motion to clarify the court's contempt finding. Christine pointed out that, pursuant to Rule 304(b)(5), only contempt orders that impose a penalty are immediately appealable. Accordingly, Christine asked the court to impose a monetary or other penalty on Holwell. At the hearing on Christine's motion, Holwell explained to the court that she was not willfully disobeying its order but that she did not have $40, 000 to turn over. The court subsequently vacated its December 18, 2014, finding of friendly contempt, held Holwell in indirect civil contempt, charged her with a $10 per day penalty for each day that she did not pay the disgorgement, and sentenced her to an indeterminate amount of time in the Will County adult detention facility, not to exceed 179 days. The court stayed Holwell's sentence for 30 days to give her time to file an appeal. The court stated that Holwell could purge herself of the contempt order by paying $40, 952.61 to Jaquays by January 21, 2015. At a hearing on January 21, 2015, Holwell reiterated to the court that she did not have the money but explained that she was making arrangements to borrow it. The court reaffirmed its contempt finding and penalty, and Holwell appealed to the Appellate Court, Third District.

         ¶ 8 Holwell raised several issues on appeal. Holwell argued that the trial court erred in (1) ordering disgorgement without making a specific finding that Christine lacked the ability to pay, (2) finding that the disgorgement order was a judgment because disgorgement orders are temporary advances against the marital estate, and (3) holding Holwell in indirect civil contempt without notice and a hearing and without inquiring into Holwell's ability to pay. After the Appellate Court, First District, issued its opinion in In re Marriage of Altman, 2016 IL App (1st) 143076, which held that earned fees are not subject to disgorgement, Holwell filed a supplemental brief arguing that the court's disgorgement order was in error because the entirety of the $40, 952.61 ordered disgorged was for fees that had already been earned.

         ¶ 9 The appellate court reversed the disgorgement order. The court first held that, contrary to Holwell's claim, the trial court had made a specific finding that neither party had the ability to pay attorney fees. 2017 IL App (3d) 150101, ¶ 15. The court then reviewed the evidence from the hearing on attorney fees and concluded that the court had not abused its discretion in determining that neither party had the ability to pay. Id. ¶¶ 18-21. The court agreed with Holwell, however, that the court had erred in ordering disgorgement of fees that were paid to Holwell for services already rendered. The court determined that the relevant question is what the word "available" means in section 501(c-1)(3), when it states that trial courts may "enter an order that allocates available funds for each party's counsel, including retainers or interim payments, or both, previously paid" (750 ILCS 5/501(c-1)(3) (West 2014)). 2017 IL App (3d) 150101, ¶ 25. The court noted that there was a split in the appellate court on this issue. Id. ¶ 31. In In re Marriage of Squire, 2015 IL App (2d) 150271, the Second District held that retainers or interim payments may be disgorged whether or not they had been earned by the attorney. According to the Second District, "available" in section 501(c-1)(3) simply means that the funds "exist somewhere." Id. ¶ 22. The First District rejected this view in Altman, 2016 IL App (1st) 143076. According to the First District, "available" should be construed to mean those funds that have not yet been earned. Id. ¶ 36. In the case before us, the Third District determined that Altman expressed the correct interpretation of section 501(c-1)(3). 2017 IL App (3d) 150101, ¶ 31. Accordingly, since the parties had stipulated that Holwell's fees were reasonable and necessary, and there was no question that the fees that the court ordered disgorged had all been earned by Holwell, the appellate court held that the trial court's disgorgement order must be reversed. Id. ¶ 34. Because it held the disgorgement order invalid, the court reversed the contempt finding against Holwell. Id. ¶ 36.

         ¶ 10 This court allowed Christine's petition for leave to appeal. Ill. S.Ct. R. 315 (eff. Mar. 15, 2016). This court also allowed the Illinois State Bar Association and the Illinois Chapter of the American Academy of Matrimonial Lawyers to file a joint brief amici curiae in support of Holwell.

         ¶ 11 ANALYSIS

         ¶ 12 Christine raises two issues on appeal. First, Christine argues that the appellate court erred in holding that earned fees are not available for disgorgement under the Act. Second, Christine contends that the appellate court erred in vacating the contempt finding against Holwell. According to Christine, Holwell was not engaging in a good-faith attempt to appeal the trial court's contempt finding. The second issue was not raised in Christine's petition for leave to appeal and is thus forfeited. See Crossroads Ford Truck ...

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