In re Marriage of Baumgartner ( 2008 )

SECOND DIVISION
Date Filed: June 30, 2008
No. 1-06-2866
In re MARRIAGE OF ) Appeal from the
SUSAN LYNN BAUMGARTNER, ) Circuit Court of
)
Petitioner-Appellant, ) Cook County.
)
and ) No. 1997 D 019363
)
CRAIG BAUMGARTNER, ) Honorable
) Grace G. Dickler,
Respondent-Appellee. ) Judge Presiding.
JUSTICE HALL delivered the opinion of the court:
The petitioner, Susan Lynn Baumgartner, now known as Susan
Lynn Ginensky (Susan), filed a petition seeking to hold her
former husband, respondent Craig Baumgartner (Craig), in indirect
civil contempt for failure to comply with an order for child
support. The circuit court of Cook County ordered Craig to pay
additional amounts of child support but refused to enter a
contempt finding and sanctioned Susan for a discovery violation.
Susan appeals, raising the following issues: (1) whether the
parties' settlement of Craig's 2001 child support obligation was
enforceable; (2) whether the proceeds from mortgage loans and the
proceeds from the sale of residential property are income for
determining child support; (3) whether Craig's nonreimbursed
business expenses are deductible in determining his net income
for child support purposes; (4) whether the circuit court erred
in requiring Susan to prove that Craig's unexplained bank
deposits were income for child support purposes; (5) whether the
circuit court erred when it refused to hold Craig in indirect
civil contempt of court; and (6) whether Susan's conduct in
No. 1-06-2866
subpoenaing Craig's attorneys for deposition was sanctionable.
Procedural History
The parties' marriage was dissolved in 1998. Pursuant to
the judgment for dissolution of marriage, the parties had joint
custody of their only child, Maxwell Taylor Baumgartner (Max).
However, Max was to reside with Craig.
On April 19, 2001, an agreed order was entered modifying the
judgment for dissolution of marriage (the agreed order). The
agreed order provided that Max was to reside with Susan and set
forth Craig's child support obligation as follows:
"Effective January 1, 2001 Craig shall pay $762 per
month to Susan as child support which is 20% of his
estimated net income. At this time, it is not known whether
Craig's monthly net income will exceed $3,809 due to
overtime, bonuses, or raises. Accordingly, on an annual
basis, within 30 days after Craig receives his W-2 statement
from his employer at year end, he will: (i) provide a copy
of his W-2 to Susan along with a copy of his Year-end pay
stub, and (ii) recompute his net income in light of any
additional income and/or deductions in excess of the amount
upon which this order is based; and (iii) if the amount of
child support paid during the prior year was less than 20%
of Craig's actual net income from,1 he will pay Susan the
1
There appears to be missing text in the order.
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difference between the amount paid and the recomputed 20%
figure so that the total amount will equal 20% of Craig's
net income, as defined by 750 ILCS 5/505. In addition,
Craig will provide Susan with copies of his income tax
returns on an annual basis within 14 days after filing the
returns."
On June 3, 2005, Susan filed a petition seeking to have
Craig held in indirect civil contempt for failure to comply with
the agreed order. Susan alleged that Craig had paid only the
minimum child support amount for the years 2001 through 2004, and
had refused to pay the excess amounts due under the re-
computation formula in the agreed order. Susan further alleged
that Craig had failed to provide her with proof of his income as
required by the agreed order. Susan sought attorney fees and
costs.
On June 29, 2005, pursuant to section 2-619 of the Code of
Civil Procedure (the Code) (735 ILCS 5/2-619 (West 2004)) Craig
filed a motion to strike and dismiss the allegations relating to
the claimed arrearage for 2001. Relying on the doctrine of
equitable estoppel, Craig alleged that Susan and he had entered
into a settlement agreement resolving the amount of child support
due for 2001. Attached to the motion was a copy of a letter from
Susan's attorney to Craig's attorney containing the terms of the
settlement agreement, a facsimile confirmation from Craig's
attorney accepting the settlement offer and a copy of the Craig's
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cancelled check demonstrating payment of the settlement amount.
In her response to the motion, Susan argued that
extrajudicial modifications of support obligations were not
enforceable. She further argued that Craig could not rely on
equitable estoppel because he had not relied to his detriment on
the agreement and that there was no consideration for the
settlement agreement. On August 17, 2005, the circuit court
granted Craig's motion to dismiss the claim for child support for
2001 and set the case for trial on the remaining allegations of
the petition.
On October 6, 2005, Craig filed a motion for partial summary
judgment on Susan's claims that 20% of the proceeds of a
residential mortgage loan Craig obtained and 20% of the proceeds
from the sale of Craig's homestead property should have been paid
to her as child support for Max.2 Susan responded that summary
judgment was not appropriate as there existed questions of fact
as to what happened to the proceeds from the sale of his
residence. She further argued that there was no authority under
section 505 of the Illinois Marriage and Dissolution of Marriage
Act (the Act) (750 ILCS 5/505 (West 2004)) to exclude proceeds
from residential property transactions or loan proceeds from
2
The homestead property referred to was a residence Craig
acquired when he lived in California, sometime after the
dissolution of the parties' marriage.
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income for purposes of determining child support. Following a
hearing, the circuit court granted the motion for partial summary
judgment.
On December 21, 2005, Susan's attorney issued a subpoena for
deposition to Craig's wife, Jeanine Baumgartner. Susan's
attorney also issued subpoenas for deposition and document
production to Craig's attorneys, Julie Campbell and Robert
Ramirez, Jr.
On December 29, 2005, Craig filed a motion to quash the
deposition subpoenas and for sanctions. In his motion, Craig
alleged that the subpoenas issued to his attorneys sought
discovery of material protected by the attorney-client privilege
and were issued to harass, annoy and disqualify the attorneys
from representing him. Craig sought sanctions pursuant to
Supreme Court Rule 137 (155 Ill. 2d R. 137) and Supreme Court
Rule 219(d) (210 Ill. 2d R 219(d)).
On January 18, 2006, Susan filed her response to the motion
to quash. Susan maintained that the subpoena for deposition to
Ms. Campbell was based on Ms. Campbell's association with Craig's
consulting business and not their attorney-client relationship.
Susan further maintained that Craig had waived the attorney-
client privilege with respect to Mr. Ramirez when he asserted the
affirmative defense that he relied on Mr. Ramirez's advice in
this case. On January 24, 2006, the circuit court entered an
order denying the motion to quash as to Jeanine Baumgartner but
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No. 1-06-2866
granting the motion as to Ms. Campbell and Mr. Ramirez.
On January 26, 2006, a hearing was held on Susan's petition
to hold Craig in contempt. Susan's attorney questioned Craig
about deposits made to joint accounts. After Craig answered
numerous times that he did not recall the source of the deposit,
his attorney objected on relevancy grounds. The circuit court
sustained the relevancy objection on the grounds that there was
no proof that the deposits were Craig's or that the deposits were
from income over and above what he had already disclosed as
income. Under questioning by his own attorney, Craig explained
that in 2002, some of the deposits could have come from his
NeoPharm paychecks. He further explained that the deposits could
have been made by his present wife, Jeanine, from her income or
accounts.
On direct examination by his attorney, Craig testified as to
business expenses he had used to arrive at his net income to
determine his child support obligation. Susan's attorney
stipulated to the evidence of the deductions but not to the
propriety of the deductions. The case was continued for
decision.
Prior to the court's ruling on the petition, Craig offered
the sum of $2,554.48 to Susan to settle the 2005 child support
amount, in exchange for a complete release of his 2005 child
support obligation. On March 6, 2006, Susan filed a petition for
indirect contempt of court against Craig for his failure to pay
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the child support he owed for 2005.
On March 14, 2006, the circuit court entered its order as to
the petition for indirect civil contempt for the years 2002, 2003
and 2004. The court ruled as follows: (1) Craig's failure to pay
the balance of child support due for those years was not
contemptuous; (2) Craig was permitted to deduct his business
expenses, medicare tax, social security payments, actual federal,
state and local taxes paid and his health insurance premiums from
his gross income to determine his net income for child support
purposes; (3) Craig owed $1,664.95 for 2002, $5,035.42 for 2003
and $4,500 for 2004 child support; (4) no interest was due for
those amounts pursuant to section 505 of the Act (750 ILCS 5/505
(West 2006)); and (5) Susan's request for attorney fees was
denied but leave was granted to the parties to file for
contribution. Craig was ordered to pay the above sums to Susan;
his petition for sanctions remained pending.
The court also ruled on Susan's petition on Craig's 2005
child support obligation. The court found that Craig's failure
to pay the balance due for 2005 was not contemptuous, and he was
permitted to take the aforementioned deductions from his gross
income to arrive at his net income for child support. The court
calculated the balance of his support obligation for 2005 to be
$3,526.06. The court denied Susan attorney fees but again
granted leave to file for contribution.
On June 8, 2006, the circuit court heard argument on Craig's
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motion for sanctions. The court denied Rule 137 and Rule 219(d)
sanctions but awarded sanctions for the issuance of the subpoenas
to Craig's attorneys, stating as follows:
"But I really feel that issuing those subpoenas to
opposing counsel went beyond what was appropriate in this
case. It went beyond advocacy, I believe. I believe that
it was for the purpose of either causing a disqualification
of attorneys or for the purpose of harassment of those
attorneys, and that I cannot countenance."3
On September 8, 2006, the circuit court ordered Susan to pay
$7,579.50 in attorney fees to Craig. On September 25, 2006,
Susan filed her notice of appeal.
A N A L Y S I S
I. Dismissal of Claim for 2001 Child Support
A. Standard of Review
The circuit court granted Craig's section 2-619 motion and
dismissed Susan's claim for unpaid child support for the year
2001. The court reviews de novo an appeal from a section 2-619
dismissal. In re Marriage of Morreale, 351 Ill. App. 3d 238,
240, 813 N.E.2d 313 (2004).
3
According to the court's written order, sanctions were
denied as to Supreme Court Rule 213(b) (Official Reports Advance
Sheet No. 26 (December 20, 2006), Rule 213(b), eff. January 1,
2007) but granted as to Rule 219(d).
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B. Discussion
1. Enforceability of 2001 Judgment Modification Order
Both parties submit that the agreed order violates the Act,
albeit for different reasons. Susan contends that the circuit
court erred in entering the agreed order because the order
allowed Craig, rather than the court, to determine the amount of
child support he was to pay. Craig contends that the agreed
order violates section 505(a)(5) of the Act because the circuit
court was able to express the child support amount in a dollar
figure. We disagree with the parties.
Prior to the entry of the agreed order in this case, section
505(a)(5) required that the support amount be stated in dollar
amounts. 750 ILCS 5/505(a)(5) (West 1998). In In re Marriage of
Mitchell, 181 Ill. 2d 169, 682 N.E.2d 281 (1998), the supreme
court held that a child support order stated as a percentage
rather than a dollar amount was not permitted under section
505(a)(5). However, the court concluded that the order was
voidable, not void, as the circuit court had jurisdiction of the
parties and the subject matter though its decision was erroneous.
As a voidable order, it was not subject to collateral attack.
The parties had not appealed from the support order but were
before the court on a petition for modification. Noting that the
parties had the opportunity to fully litigate the question when
the support order was entered as well as the opportunity to
bargain for and benefit from the terms of the settlement
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No. 1-06-2866
agreement, the court concluded that the trial court's order was
not subject to a collateral attack. Mitchell, 181 Ill. 2d at
177.
In the present case, both Susan and Craig agreed to the
entry of the modification order; neither party appealed the
agreed order. Therefore, the order may not now be attacked
collaterally by the parties.
Moreover, subsequent to Mitchell, the legislature amended
section 505 (a)(5), which now provides as follows:
"If the net income cannot be determined because of
default or any other reason, the court shall order support
in an amount considered reasonable in the particular case.
The final order in all cases shall state the support level
in dollar amounts. However, if the court finds that the
child support amount cannot be expressed exclusively as a
dollar amount because all or a portion of the payor's net
income is uncertain as to source, time of payment, or
amount, the court may order a percentage amount of support
in addition to a specific dollar amount and enter such other
orders as may be necessary to determine and enforce, on a
timely basis, the applicable support ordered." 750 ILCS
5/505(a)(5) (West 2000).
In this case, the agreed order stated that "Craig's net
monthly income *** will be approximately $3,809." The agreed
order provided further in pertinent part as follows:
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"Effective January 1, 2001, Craig shall pay $762 per
month to Susan as child support which is 20% of his
estimated net income. At this time it is not known whether
Craig's monthly net income will exceed $3,809 due to
overtime, bonuses, or raises."
The above language indicates that there was some uncertainty
about the exact amount of Craig's monthly income from which to
determine his child support obligation. As a result and with the
parties' agreement, the circuit court modified the support order
to provide a specific dollar amount of support based on the known
figure and further provided that Craig would pay 20% of any
additional income not accounted for by the stated dollar amount.
Under section 505(a)(5), the court had the authority to enter the
order providing for a percentage of Craig's income as child
support.
The cases Susan relies on do not support her position that
the agreed order is unenforceable. Contrary to Susan's argument,
in In re Marriage of Blaisdell, 142 Ill. App. 3d 1034, 492 N.E.2d
622 (1986), the court held that the "[d]etermination of child
support involves no inherent judicial powers." Blaisdell, 142
Ill. App. 3d at 1043. In In re Marriage of Takata, 304 Ill. App.
3d 85, 709 N.E.2d 715 (1999), the court did state that
determining a spouse's net income for setting child support is
part of the judicial function. Takata, 304 Ill. App. 3d at 92.
However, the issue in Takata was whether a mathematical error in
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a judge's calculation of net income could be corrected via a nunc
pro tunc order. Because it was not a clerical error but a
judicial one, it was outside the power of a nunc pro tunc order.
Tataka, 304 Ill. App. 3d at 93.
Susan cites In re Marriage of Stribling, 219 Ill. App. 3d
105, 579 N.E.2d 6 (1991) wherein the court stated, "'[c]ourts
have no power to delegate any of their duties unless clearly
authorized by law.'" Stribling, 219 Ill. App. 3d at 109, quoting
Smallwood v. Soutter, 5 Ill. App. 2d 303, 309, 125 N.E.2d 679.
Noting that the legislature had vested the responsibility of
establishing and modifying visitation schedules in the courts,
the court held that the trial court could not leave the
determination of whether a father should have visitation with his
daughter to the discretion of the Department of Children and
Family Services. Stribling, 219 Ill. App. 3d at 109. In
contrast, section 505(a)(5) grants the circuit court the
authority to use percentages and to enter orders relating to the
determination of child support.
We conclude that the agreed order was valid under the
authority granted to the circuit court under section 505(a)(5)
of the Act to enter the orders necessary to determine and enforce
the child support ordered.
2. Enforceability of Parties' Private Agreement
Susan contends that the parties' agreement as to the 2001
child support obligation is unenforceable because only the court
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has the authority to modify child support. "The modification of
a child support obligation is a judicial function, administered
exclusively by the court as a matter of discretion." Blisset v.
Blisset, 123 Ill. 2d 161, 167, 526 N.E.2d 125 (1988). In
Blisset, the supreme court held that in order to create an
enforceable modification agreement, parents must petition the
court and satisfy the court that their agreement is in the best
interests of the child. Blisset, 123 Ill. 2d at 168. In
Blisset, the court held an agreement to waive child support in
exchange for a waiver of visitation rights was not enforceable
because the parties did not seek court approval of their
agreement. See Blisset, 123 Ill. 2d at 168; see also In re
Marriage of Smith, 347 Ill. App. 3d 395, 400-01, 806 N.E.2d 727(2004) (even if mother told the father that if he continued to
purchase things for the children, he need not pay child support,
such an "agreement" was not enforceable absent court approval).
In the present case, the agreed order contemplated that
after Craig provided the required financial information, the
parties would come to an agreement regarding the additional
amount of child support that was due. Therefore, the parties
were acting under the direction of the circuit court's order when
they entered into an agreement as to the 2001 child support
obligation and, as such, had the circuit court's approval to
enter into such an agreement.
Moreover, we agree with the circuit court that the parties'
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agreement was not a modification of the child support order. The
August 19, 2002, letter from Susan's attorney to Craig's attorney
refers to the settlement as a "support adjustment" in accordance
with the agreed order. The agreement did not change Craig's
obligation to pay 20% of his net income to Susan for child
support. Therefore, unlike Blisset or Smith, the parties'
agreement as to the additional support amount due for 2001 did
not require court approval as it was not a modification of
Craig's support obligation.
As the parties' agreement was not a modification of Craig's
child support obligation, we need not reach Susan's alternative
arguments.
II. Loan Proceeds and Property Sale Proceeds
A. Standard of Review
The de novo standard of review is applicable to a circuit
court's grant of summary judgment. Prowell v. Loretto Hospital,
339 Ill. App. 3d 817, 822, 791 N.E.2d 1261 (2003). The court
also applies de novo review to the construction of a statute.
R&B Kapital Development, LLC v. North Shore Community Bank &
Trust Co., 358 Ill. App. 3d 912, 916, 832 N.E.2d 246 (2005).
B. Discussion
In child support cases where the statutory guidelines apply,
a court determines the minimum amount of support based on the
applicable guideline percentage of the parent's "net income."
750 ILCS 5/505(a)(1) (West 2004). Section 505(a)(3) defines "net
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income" as follows:
"'Net income' is defined as the total of all income
from all sources, minus the following deductions:
(a) Federal income tax (properly calculated
withholding or estimated payments);
(b) State income tax (properly calculated
withholding or estimated payments);
(c) Social Security (FICA payments);
(d) Mandatory retirement contributions required by
law or as a condition of employment;
(e) Union dues;
(f) Dependent and individual
health/hospitalization insurance premiums;
(g) Prior obligations of support or maintenance
actually paid pursuant to a court order;
(h) Expenditures for repayment of debts that
represent reasonable and necessary expenses for the
production of income, medical expenditures necessary to
preserve life or health, reasonable expenditures for
the benefit of the child and the other parent,
exclusive of gifts. The court shall reduce net income
in determining the minimum amount of support to be
ordered only for the period that such payments are due
and shall enter an order containing provisions for its
self-executing modification upon termination of such
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payment period." 750 ILCS 5/505(a)(3) (West 2004).
Courts should construe a statute in a way that avoids absurd,
unreasonable, unjust or inconvenient results. In re Mary Ann P.,
202 Ill. 2d 393, 406, 781 N.E.2d 237 (2002).
1. Mortgage Loan Proceeds
Susan maintains that the mortgage loan Craig took out to
purchase his present residence should be included in his net
income for child support purposes. Susan relies on this court's
decision in In re Marriage of Rogers, 345 Ill. App. 3d 77, 802
N.E.2d 1247 (2003) (Rogers I), aff'd, 213 Ill. 2d 129, 820 N.E.2d
356 (2004) (Rogers II).
In Rogers I, the father argued that gifts and loans from his
parents were not income. After determining that the gifts were
income, this court rejected the father's argument that because
proceeds of loans to him from his parents were not income for
federal tax purposes, they are not income for determining child
support. This court held that section 505, not the tax code,
defined income for child support purposes. In the absence of any
authority that loan proceeds were excluded from net income, they,
along with the gifts, were to be included in calculating child
support payments. Rogers I, 345 Ill. App. 3d at 80-81.
The supreme court granted leave to appeal and affirmed the
appellate court. Rogers II, 213 Ill. 2d 129. Noting that
section 505 did not separately define "income," the court relied
on its plain and ordinary meaning as follows:
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"As the word itself suggests, 'income' is simply
'something that comes in as an increment or addition ***: a
gain or recurrent benefit that is usu[ually] measured in
money ***: the value of goods and services received by an
individual in a given period of time.' [Citation.] It has
likewise been defined as '[t]he money or other form of
payment that one receives, usu[ually] periodically, from
employment, business, investments, royalties, gifts, and the
like.'" Rogers II, 213 Ill. 2d at 136-37, quoting Webster's
Third New International Dictionary 1143 (1986); and Black's
Law Dictionary 778 (8th ed. 2004).
After agreeing that gifts were to be included in net income, the
court observed as follows:
"This leaves only the matter of the annual 'loans'
given to the father by his parents. For purposes of
determining a parent's net income, section 505 of the Act
authorizes the deduction of amounts expended in repayment of
certain types of debts. There is no corresponding provision
authorizing the exclusion of loan proceeds. Accordingly,
the appellate court reasoned that under the language of the
Act, the circuit court acted correctly when it included the
money the father's parents loaned him when it calculated his
support obligations. [Citation.]
Although the father challenges the appellate court's
construction of the statute, we have no occasion in this
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case to address whether and under what circumstances loan
proceeds are properly regarded as an element of income for
child support purposes. The reason for that is that the
sums at issue are loans in name only." Rogers II, 213 Ill.
2d at 139-40.
The father had never been required to repay the "loans" received
from his parents. Therefore, the court concluded that they
should be treated like the gifts to him from his parents and his
income from his teaching job and upheld the appellate court's
determination that they should be considered in determining the
father's net income under section 505(a)(3). Rogers II, 213
Ill. 2d at 140.
Subsequently, in In re Marriage of Tegeler, 365 Ill. App. 3d
448, 848 N.E.2d 173 (2006), the Second District Appellate Court
disagreed with the determination in Rogers I that loan proceeds
were to be considered income under section 505(a)(3). One of the
issues in Tegeler was whether a line of credit was a resource for
child support purposes. After noting that Rogers II did not
reach the issue of whether loans would qualify as income under
section 505(a)(3), the court stated as follows:
"We believe that, in general, loans should not be
considered income. We note that the Black's Law Dictionary
definition of 'income' quoted by the supreme court in Rogers
II, cited earlier in our opinion, specifically includes
gifts as income but does not mention loans. [Citation.]
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More significantly, loans typically should not be counted as
income because they usually do not directly increase an
individual's wealth." (Emphasis in original.) Tegeler,
365 Ill. 3d at 458.
Although the father received as much as $600,000 in annual
loans for the running of his farm, neither the loans nor the
repayment were considered in his income calculations. The court
agreed, explaining as follows:
"A contrary interpretation that includes loans as
income would often created unjust or absurd results. ***
Should a parent who takes out tens of thousands of dollars
in student loans for graduate school be credited with an
equal amount of 'income' for those years? Should a parent
who borrows hundreds of thousands of dollars for a mortgage
to buy a house be considered to have that much additional
'income' that year? In the mortgage example, even the
comparatively small monthly mortgage payments could not be
deducted from the inflated income, for a home mortgage is
not an expense that produces income [citation] nor does it
fall within any other enumerated deduction." Tegeler, 365
Ill. App, 3d at 458.
See 750 ILCS 5/505(a)(3)(h) (West 2004). While recognizing that
there may be a situation in which it would be appropriate to
consider loans as income under section 505(a)(3), the court
concluded that the trial court did not err in not including the
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No. 1-06-2866
father's loans in its income calculation. Tegeler, 365 Ill. App.
3d at 459; but see Cox v. Cox, 580 N.E.2d 344 (Ind. App. 1991)
(father's $300,000 line of credit which he used for personal
expenses as well as his farming operation afforded him great
economic flexibility and was properly considered in determining
his financial condition).
In the absence of case law involving mortgage loans, the
parties rely on the analysis in student loan cases. In
Gilbertson v. Graff, 477 N.W.2d 771 (Minn. App. 1991), the
reviewing court found that the excess proceeds from a student
loan, used for living expenses, were properly included in the
father's income for child support purposes. The court relied on
the state statute defining income as any form of periodic payment
to an individual. Gilbertson, 477 N.W.2d at 774; Minn. Stat.
Ann. §518.54 subd. 6 (West 2006); see In re Marriage of Syverson,
281 Mont. 1, 12, 931 P.2d 691, 698 (1997) (that portion of a Pell
Grant, which did not require repayment, for personal use
constituted income). Still another court has held that the
grants and tuition reimbursements from employers, not to exceed
the amount of the tuition, were not income for child support
purposes because they did not reduce a parent's living expenses.
In re Marriage of Mellott, 32 Kan. App. 2d 1031, 1033-34, 93 P.3d
1219, 1221-22 (2004).
Craig relies on In re Marriage of Thibadeau, 150 Wis. 2d
109, 441 N.W.2d 281 (Wis. App. 1989). In that case, the
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No. 1-06-2866
reviewing court held that the trial court's inclusion of the
mother's Pell Grant and loans in her income was error. The
Wisconsin statute defined "gross income" as any income from what
ever source, unless excluded by law, and the mother's educational
grants were excluded by federal law. The court also determined
that the loans were not "gross income" because under the Internal
Revenue Code, money borrowed by a tax payer was not income in the
year received. Thibadeau, 150 Wis. 2d at 120, 441 N.W.2d at
284; see also Milligan v. Addison, 582 So.2d 769 (Fla. App.
1991), overruled on other grounds, Overbey v. Overbey, 698 So. 2d
811, 815 (Fla. 1997) (educational loans are not income because
such monies represent debts which must be repaid); Schaerrer v.
Westman Commission Co., 769 P.2d 1058 (Colo. 1989) (student loans
not subject to garnishment for preexisting debts because state
garnishment laws were inconsistent with the Federal Guaranteed
Student Loan Program).
The problem with the above cases is that they rely on
statutory definitions peculiar to that state and/or federal tax
law. As previously stated, the Act does not define income, and
as this court held in Rogers I, section 505, not the tax code,
defines income for determination of child support. Rogers I, 345
Ill. App. 3d at 80. Nonetheless, the analysis in In re Marriage
of Rocha, 68 Cal. App. 4th 514, 80 Cal. Rptr. 2d 376 (1998), is
somewhat helpful.
In Rocha, for purposes of determining child support, the
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statute defined "annual gross income" as "income from whatever
source derived," except child support payments actually received,
and public aid, and included but was not limited to the
following:
"(1) Income such as commissions, salaries, royalties, wages,
bonuses, rents, dividends, pensions, interest, trust income,
annuities, workers' compensation benefits, unemployment
insurance benefits, disability insurance benefits, social
security benefits, and spousal support actually received
from a person not a party to the proceeding to establish
child support order under this article. (2) Income from the
proprietorship of a business, such as gross receipts from
the business reduced by expenditures required for the
operation of the business. (3) In the discretion of the
court, employee benefits or self-employment benefits, taking
into consideration the benefit to the employee, any
corresponding reduction in living expenses, and other
relevant facts." Rocha, 68 Cal. App. 4th at 516, 80 Cal.
Rptr. 2d at 377.
The trial court concluded that the failure of the above list to
mention loans as a source of income did not exclude them. The
reviewing court disagreed.
The court observed that sources of income listed in the
statute and its prior case law all represented a source of income
where there was no expectation of repayment or reimbursement.
22
No. 1-06-2866
After discussing the decisions in several of the cases set forth
above, the court determined that the better approach "is to
simply recognize that a student loan is not income. It does not
expressly qualify under the guidelines set forth in [the
California statute], nor do such loans share similar features
with those specifically enumerated items designated to qualify as
income. We therefore conclude that the trial court erred in
considering the difference in student loan funds used for living
expenses as income." Rocha, 68 Cal. App. 4th at 517-18, 80 Cal.
Rptr. 2d at 378.
Unlike the statute in Rocha, the Act does not set forth what
is considered income; rather, it sets forth only those items that
can be deducted from it. Therefore, there is no list from which
this court may compare loans to see whether they share similar
features with those considered to be income. Nonetheless, a
determining factor in many of the above cases is whether
repayment of the money received was required. Where repayment
was required, the loan was not considered income. While in
Rogers II the supreme court upheld the appellate court's
determination that the "loans" in that case were income, it did
so on the basis that loans were "loans in name only." Rogers II,
213 Ill. 2d at 140. In other words, no repayment was required or
even intended when those loans were made.
We do not hold that loan proceeds may never constitute
income. However, a residential mortgage loan, made by a bona
23
No. 1-06-2866
fide lender, does not constitute income. Such loans do not meet
the definition of "income" as set forth in Rogers II as they do
not share similar features with the examples set forth in the
definition cited therein.
2. Sale Proceeds
In the circuit court, Susan argued that a question of fact
existed as to whether Craig utilized the proceeds from the sale
of his California residence in the purchase of his new residence
in Illinois. The circuit court determined that no issue of fact
existed. On appeal, Susan has abandoned her argument that a
question of fact exists barring summary judgment. Instead, she
contends that, regardless of how he actually used the proceeds,
the proceeds from the sale of Craig's residence should be
considered income for the purpose of determining net income for
child support.
Susan's argument on appeal suggests a broader question than
is actually before us. The circuit court's grant of summary
judgment was based on Craig's affidavit in which he averred that
the proceeds from the sale of his California residence were used
to purchase his new residence in Illinois.4 Our review is
limited to determining whether proceeds from the sale of
residential property that are used to purchase a new residence
4
Craig's affidavit also stated that the proceeds were
initially placed in a trust for his daughter.
24
No. 1-06-2866
are income for child support purposes.
"For the purposes of determining statutory child support
obligations, the General Assembly has adopted an expansive
definition of what constitutes 'net income.' 'Net income' is
defined broadly to encompass 'the total of all income from all
sources'" minus the deductions set forth in section 505(a)(3).
Rogers II, 213 Ill. 2d at 136, quoting 750 ILCS 5/505(a)(3) (West
2002). Susan points out that section 505(a)(3) does not exclude
residential real estate sale proceeds in determining net income.
The parties cite no Illinois cases deciding this precise
issue. However, Susan maintains that in In re Marriage of
Garelick, 168 Ill. App. 3d 321, 522 N.E.2d 738 (1988), the court
determined that a capital gain realized from the husband's
business with his new wife was subject to his maintenance
obligation to his former wife. Garelick does not so hold. In
that case, the court rejected the husband's argument that there
was no evidence that he would have future income from the
business in light of the capital gain he realized and which he
used as a down payment on his current residence. Garelick, 168
Ill. App. 3d at 327.
Craig's reliance on In re Marriage of Steinberg, 302 Ill.
App. 3d 845, 853, 706 N.E.2d 895 (1998), is equally misplaced.
In that case, the father argued that the proceeds from the sale
of the marital residence should not have been included in
calculating his income. The reviewing court noted that the trial
25
No. 1-06-2866
court had agreed with the father on that point. As whether the
sales proceeds were income for child support was not an issue in
that case, Steinberg is of no assistance in this case.
As noted in our discussion of loan proceeds as income, the
Act does not define "income." We therefore turn again to the
definition set forth by the supreme court in Rogers II. Under
that definition, income is viewed as a gain or recurrent benefit,
measured in money and as money from employment, business,
investments, royalties, gifts and the like. See Rogers II, 213
Ill. 2d at 136. Courts have included as income under the Act a
lump-sum worker's compensation award, a military allowance, an
employee's deferred compensation and the proceeds from a
firefighter's pension. See In re Marriage of Lindman, 356 Ill.
App. 3d 462, 466, 824 N.E.2d 1219 (2005) (collected cases). In
Lindman, the appellate court held that the father's individual
retirement account disbursements were income for the purpose of
calculating net income under section 505 of the Act (750 ILCS
5/505 (West 2002)).
In Department of Public Aid ex rel. Jennings v. White, 286
Ill. App. 3d 213, 675 N.E.2d 985 (1997), the appellate court held
that a father's Federal Employers' Liability Act settlement was
income for child support purposes.5 In reaching its decision,
5
Because the father in Jennings failed to provide
information regarding the breakdown of the award, the appellate
26
No. 1-06-2866
the court noted that the legislature's inclusive language "'all
income from all sources,'" was to be broadly applied, and thus
"income" had been construed to included various items such as: a
tax refund attributable to maintenance payments made to a former
spouse; income from investments and bonuses from a closely held
corporation; and nonrecurring income. See Jennings, 286 Ill.
App. 3d at 217-18 (collected cases).
While maintaining that this court need not look past the
unambiguous language of section 505(a)(3), Susan notes that other
jurisdictions include capital gains in their statutory
definitions of income for child support purposes. See Moore v.
Moore, No. E2005-02369-SC-R11-CV, ___ S.W.3d ___ (Tenn. 2007)
(even a one-time capital gain was income under the child support
guidelines which specifically included capital gains in the
definition of gross income); see also Sharpe v. Perkins, 284 Ga.
App. 376, 644 S.E.2d 178 (2007) (rejecting father's claim that
nonrecurring capital gains from the sale of property should not
be included in his income, relying on the statute which excluded
only public assistance from income determination and on the
internal revenue code's definition of gross income).
In Borowsky v. Borowsky, 273 Mich. App. 666, 733 N.W.2d 71court upheld the trial court's determination that the entire
award, after deduction of expenses, was subject to his child
support obligation. Jennings, 286 Ill. App. 3d at 218-19.
27
No. 1-06-2866
(2007), the reviewing court noted that the Michigan Child Support
Formula (MCSF) did not directly address gains from the sale of
property. However, the MCSF did provide that "income" included
an amount of money that is due to an individual as a debt of
another individual or other entity. The court concluded that
because gains from the sale of property fall within the broad
definition of income as provided in the MCSF and were not
specifically excluded from treatment as income, unlike
inheritances and one-time gifts, gains from the sale of property
must be included as income for purposes of calculating child
support, regardless of how the funds were actually used.
Borowsky, 273 Mich. App. at 680, 733 N.W.2d at 78.
Relevant to the present case, in a footnote, the Borowsky
court acknowledged as follows:
"We are cognizant that one-time sales of real property
can create a distorted impression of a party's income for
purposes of calculating child support. However, we note
that, where such distortion renders application of the
formula unjust or inappropriate, it is within the trial
court's discretion to deviate from the formula and exclude
such amounts from treatment as income on that basis.
[Citation.]" Borowsky, 273 Mich. App. at 681 n.8, 733
N.W.2d at 80 n.8.
Borowsky involved the capital gain realized from rental
property. Our research reveals only one case specifically
28
No. 1-06-2866
addressing whether the proceeds from the sale of a residence are
income for purposes of child support. In Eldridge v. Eldridge,
137 S.W.3d 1 (Tenn. App. 2002), the wife argued that the capital
gains associated with the sale of the parties' residence should
be included when the court determined the husband's income for
child support purposes. The Tennessee court agreed. Initially,
the court noted that capital gains were included in the
definition of gross income under the Tennessee statute. The
court further noted a previous decision in which it held that a
one time capital gain should be included in the determination of
the obligor's income. See Smith v. Smith, No. 01A-01-9705-CH-
00216 (Tenn. App. October 29, 1997). The court distinguished
another decision in which it excluded a capital gain from gross
income on the basis that the capital gain was included in the
marital estate. See Hall v. Hall, 03A01-9701-GS-00030 (Tenn.
App. 1997 July 21, 1997).6 As there was no evidence that the
$340,000 capital gain was included in the marital estate, the
appellate court directed the trial court to consider the $340,000
capital gain when it determined the husband's income for child
support purposes. Eldridge, 137 S.W.3d at 22.
The above cases deal with the capital gains realized from
the sale of real estate. However, Susan is seeking to include
the entire proceeds from the sale of Craig's California residence
6
Hall was abrogated in Moore.
29
No. 1-06-2866
as income for child support purposes. Under section 505(a)(3)
and the definition of income cited in Rogers II, we are
constrained to agree with Susan that the proceeds from the sale
of property such as a residence would qualify as income.
Nonetheless, we do not agree that the circuit court erred in
refusing to include the proceeds in its determination of net
income. As a practical matter, it stands to reason that to a
certain extent the sale proceeds represent a return on payments
made by Craig out of income already accounted for in the
determination of his child support obligation. Moreover, we find
In re Marriage of Harmon, 210 Ill. App. 3d 92, 586 N.E.2d 948(1991), overruled on other grounds, Rogers II, 213 Ill. 2d at 139
instructive.7
In Harmon, the court noted that passive income from bonds or
securities could be considered when determining net income.
Harmon, 210 Ill. App. 3d at 95. However, "when the unrefuted
testimony is that the party does not actually receive the income
from such passive sources, regardless of whether it is reported
for Federal income tax purposes, it is not error for the trial
court to refuse to consider the additional reported amounts when
calculating net income." Harmon, 210 Ill. App. 3d at 95-96.8 In
7
Rogers II overruled Harmon on the issue of whether gifts
could be considered income for purposes of child support.
8
We note that the courts in In re
30
No. 1-06-2866
Ivanyi v. Granoff, 171 Ill. App. 3d 411, 526 N.E.2d 189 (1988),
while the father was required to report interest, dividends and
capital gains on his federal income tax, the court held that they
Marriage of Colangelo, 355 Ill. App. 3d
383, 822 N.E.2d 571 (2005), and In re
Marriage of Klomps, 286 Ill. App. 3d
710, 676 N.E.2d 686 (1997), refused to
follow Harmon, finding that the fact
that the source of income was awarded
as a marital asset did not prevent its
inclusion as income for child support
purposes. See Colangelo, 355 Ill. App.
3d at 390-92 (stock distribution);
Klomps, 286 Ill. App. 3d at 715(military pension). That is not an issue in this
case.
31
No. 1-06-2866
should not be considered in determining net income since he did
not receive this income, either actually or constructively.
Ivanyi, 171 Ill. App. 3d at 421.
A similar situation occurs where a parent sells his or her
residence and uses the proceeds to purchase a new residence. The
sale proceeds are not actually available to the parent to spend
as income. While it could be argued that they are
"constructively" available, such an interpretation would be
detrimental not only to the parent obligated for support but the
child or children for whom support is being paid. In the present
case, Craig sold his California residence when he lost his job
and had relocate to Illinois for employment. As the circuit
court observed, treating as income the sale proceeds from one
residence which are needed to finance the purchase of another
residence would serve to discourage the parent paying child
support from relocating in order to obtain employment necessary
to continue his or her child support obligation.
We cannot say that the proceeds from the sale of residential
property can never be considered income for child support
purposes. Here, however, the sale of Craig's California
residence was necessitated by his employment situation, and the
proceeds were utilized to purchase his residence in Illinois
where he had obtained employment. Under these circumstances, the
circuit court did not err in excluding the proceeds from the sale
of Craig's California from his income for child support purposes.
32
No. 1-06-2866
III. Deductibility of Nonreimbursed Business Expenses
Susan contends that the circuit court erred in determining
that Craig's nonreimbursed business expenses were deductible
pursuant to section 505(a)(3)(h) of the Act (750 ILCS
5/505(a)(3)(h) (West 2004). Craig maintains that Susan may not
raise this issue on appeal because she stipulated to his offer of
proof as to the amount of each business expense, the date and
purpose of each expense, the amount paid and how it was paid, and
the proof of the payments. However, the record is clear that the
stipulation was to the list of business expenses, and Susan
reserved the right to argue their propriety as deductions.
A. Standard of Review
This court applies de novo review to the construction of a
statute. R&B Kapital, 358 Ill. App. 3d at 916.
B. Discussion
Section 505(a)(3(h) provides as follows:
"Expenditures for repayment of debts that represent
reasonable and necessary expenses for the production of
income, medical expenditures necessary to preserve life or
health, reasonable expenditures for the benefit of the child
and the other parent, exclusive of gifts. The court shall
reduce net income in determining the minimum amount of
support to be ordered only for the period that such payments
are due and shall enter an order containing provisions for
its self-executing modification upon termination of such
33
No. 1-06-2866
payment period." 750 ILCS 5/505(a)(3)(h) (West 2004).
In Rimkus v. Rimkus, 199 Ill. App. 3d 903, 557 N.E.2d 638 (1990),
this court held that nonreimbursed business expenses were
expenditures for the repayment of debt and thus deductible under
section 505(a)(3)(h) as long as they were "'reasonable and
necessary'" for the production of income. Rimkus, 199 Ill. App.
3d at 910, quoting Ill. Rev. Stat. 1987, ch. 40, par.
505(a)(3)(h).
1. Reasonable and Necessary
Susan argues that Craig failed to prove that the expenses
were reasonable and necessary for the production of income
because his business consistently lost money. In Gay v. Dunlap,
279 Ill. App. 3d 140, 664 N.E.2d 88 (1996), the court determined
whether an expense was "reasonable" by looking at "the
relationship between the amount of the expense and the amount by
which income is in good faith expected to increase as a result."
Gay, 279 Ill. App. 3d at 149. Susan points out that the
nonreimbursed business expenses claimed by Craig exceeded his
income for the same time period and, therefore, they cannot be
said to be reasonable.
Susan cites no authority for the proposition that the fact a
business had more expenses than income is, in and of itself,
evidence that the expenses were not reasonable or necessary. As
the court in Gay noted, "[t]his definition [of 'reasonable']
implies the same expense could be reasonable in one context and
34
No. 1-06-2866
not in another." Gay, 279 Ill. App. 3d at 149. While it was
not unreasonable for the father to rent a car for his business
purposes, the court remanded the case for hearing on whether
leasing a Mercedes brand vehicle was a reasonable and necessary
expense. Gay, 279 Ill. App. 3d at 149.
In Tegeler, the mother argued that the father's testimony
that his expenses were reasonable and necessary was insufficient
in the absence of any receipts substantiating such expenses. The
court rejected the argument pointing out that the father's tax
returns showed itemized totals of expenses and his farm account
books showed very detailed lists of expenditures complete with
dates, check numbers, payees, descriptions of items and amounts.
The court concluded that such evidence constituted a prima facie
showing that such expenses were legitimate, which the mother
failed to rebut. Tegeler, 365 Ill. App. 3d at 456.
Likewise, in the present case, Craig's nonreimbursed
business expenses, as stipulated to by Susan, constituted a prima
facie showing that the expenses were legitimate. While Susan did
not stipulate to their reasonableness, her argument, based solely
on the lack of profit, does not rebut the reasonableness of the
expenses.
2. Repayment of Debt
Susan maintains that Craig's nonreimbursed business expenses
are not deductible under section 505(a)(3)(h) because they were
not for the repayment of debt and urges us to overrule Rimkus.
35
No. 1-06-2866
Susan argues that Rimkus ignored the language in section
505(a)(3)(h) that, to be deductible, the expenses must be for the
repayment of debt. She points out that in Gay, the Fourth
District Appellate Court disagreed with Rimkus and held that day-
to-day business expenses were not deductible for the purpose of
determining net income for child support.
In Gay, the court explained that, to adopt the Rimkus
reasoning, would require the court to ignore the language "for
repayment of debts." The court further noted that under the
Rimkus interpretation, the language requiring the court to order
the amount of support reduced only for the period wherein the
debt was being repaid would make no sense. Gay, 279 Ill. App. 3d
at 147; see Einstein v. Nijim, 358 Ill. App. 3d 263, 831 N.E.2d
50 (4th Dist. 2005) (agreeing with Gay that the repayment
language applies to all three types of deductions under section
505(a)(3)(h) and upholding denial of deductions for ongoing
medical expenses); see also In re Marriage of Ackerley, 333 Ill.
App. 3d 382, 775 N.E.2d 1045 (2d Dist. 2002) (mandatory loans
from father's bonuses did not represent repayment of debt as they
represented sums the father would receive at a later date).
We note that Rimkus relied on In re Marriage of Dwan, 108
Ill. App. 3d 808, 439 N.E.2d (1982), for its conclusion that
nonreimbursed business expenses were deductible to determine net
income. Rimkus, 199 Ill. App. 3d at 909. However, Dwan was
decided under the 1979 version of section 505, which did not
36
No. 1-06-2866
provide a definition of net income. Gay, 279 Ill. App. 3d at
146. Moreover in Dwan, the temporary court order defined net
income as income less taxes and business expenses. Rimkus, 199
Ill. App. 3d at 909. In the present case, the agreed order
provides that the statutory definition of net income controls.
Nonetheless, we disagree with Susan and the court in Gay
that Rimkus was wrongly decided. Subsection (a)(3)(h) does not
limit "debt" to a one-time-only business expense. "Debt" is
defined as "[l]iability on a claim; a specific sum of money due
by agreement or otherwise." Black's Law Dictionary 410 (7th ed.
1999). Gay does not explain why repaying debts incurred for day-
to-day business expenses is any different from paying a one-time
business expense, except that such an interpretation conflicts
with the requirement of a repayment plan. Gay, 279 Ill. App. 3d
at 147.
Our courts have allowed business expenses to be deducted when
arriving at net income where the expenses were subject to a
strict repayment plan. In In re Marriage of Davis, 287 Ill. App.
3d 846, 679 N.E.2d 110 (5th Dist. 1997), the court determined
that the father's purchase of a dental practice and building
partnership interest was a reasonable and necessary expense for
the production of income. The court further held that the father
was entitled to deduct whatever the straight-line appreciation
expense would have been since his payments were subject to a
specific repayment schedule. Davis, 287 Ill. App. 3d 846; see
37
No. 1-06-2866
Posey v. Tate, 275 Ill. App. 3d 822, 827, 656 N.E.2d 222 (1st
Dist. 1995) (straight-line depreciation expense deduction proper
where it was for a reasonable and necessary business expense and
it was subject to a specified repayment schedule as contemplated
by section 505(a)(3)(h).
On the other hand, in the absence of a repayment schedule,
courts have disallowed the deduction for expenses. In In re
Marriage of Partney, 212 Ill. App. 3d 586, 571 N.E.2d 266 (5th
Dist. 1991), the reviewing court disallowed deductions under
section 505(a)(3)(h) for real estate investment losses because
they were not shown to be reasonable or necessary for the
production of income and because, as such, the losses could not
be presented in a specified repayment schedule. Partney, 212
Ill. App. 3d at 593. In In re Marriage of Lefler, 185 Ill. App.
3d 677, 542 N.E.2d 1 (1st Dist. 1988), the reviewing court
refused to allow the father a deduction for his business
indebtedness arising out of an Internal Revenue Service lien in
the absence of evidence as to the amount and a specific repayment
schedule. Lefler, 185 Ill. App. 3d at 684-85.
Under subsection (a)(3)(h), the debt repayment may reduce
net income only for the period the payments are due, and the
modification must be self-executing. The agreed order in this
case provides that each year Craig's income will be reviewed to
determine whether his support obligation should increase or
decrease. This determination will be made on the basis of his
38
No. 1-06-2866
income tax returns, which will reflect his nonreimbursed business
expenses. Thus, each year Craig's income will be reduced only by
those nonreimbursed business expenses incurred for that year.
Thus, the agreed order complies with subsection (a)(3)(h) in that
Craig's nonreimbursed business expenses will be deductible only
in the year he repays them and is self-executing. But see
Partney, 212 Ill. App. 3d at 592-93 (amount of net loss on
investment properties was an end-of-the-year accounting which
corresponded only to that particular year and did not evidence a
repayment plan).
We conclude that Craig's nonreimbursed business expenses are
deductible under section 505(a)(3)(h) of the Act.
IV. Unexplained Bank Deposits
A. Standard of Review
This court reviews a trial court's evidentiary rulings under
an abuse of discretion standard. Chapman v. Hubbard Woods
Motors, Inc., 351 Ill. App. 3d 99, 105, 812 N.E.2d 389 (2004). A
trial court will be said to have abused its discretion only if it
acts arbitrarily without the employment of conscientious
judgment, exceeds the bounds of reason and ignores recognized
principles of law or if no reasonable person would take the
position adopted by the court. Schmitz v. Binette, 368 Ill. App.
3d 447, 452, 857 N.E.2d 846 (2006).
. B. Discussion
Susan contends that the circuit court erred when it
39
No. 1-06-2866
sustained Craig's objection to her questions regarding deposits
to his bank accounts. She maintains that the court erroneously
placed on her the burden of proving that Craig's unexplained
deposits into his bank accounts were income for child support.
Susan argues that as all income is presumptively income for child
support purposes, it was Craig's burden to prove that the
deposits were not income for child support purposes. Susan
relies on Rogers I wherein the court required the father to prove
that the gifts and loans were not income. Rogers I, 345 Ill.
App. 3d at 79-81. She also relies on In re Marriage of Jorczak,
315 Ill. App. 3d 954, 957, 735 N.E.2d 182 (2000) (payment is an
affirmative defense to a child support arrearage claim; therefore
the burden of proof is on the one claiming the defense of
payment).
More on point is Tegeler. There the mother claimed that the
father's personal checking account was another source for
computing child support. The father testified that he never
wrote checks from his farm accounts to his personal account.
While he did deposit money from the sale of grain and cattle into
his personal account, he recorded the sales' proceeds in his farm
account books. The court found that the father "partially
explained the source of funding for his checking account.
However, to the extent that [the father's] personal spending
exceeded his 'net income' *** we agree that the source of such
money is unexplained and should be considered [extra income.]"
40
No. 1-06-2866
(Emphasis in original.) Tegeler, 365 Ill. App. 3d at 461.
In the present case, the trial court sustained the relevancy
objection on the grounds that there was no proof that the
deposits were Craig's or that the deposits were from income over
and above what he had already disclosed as income. Under
questioning by his own attorney, Craig explained that in 2002,
some of the deposits could have come from his NeoPharm paychecks.
He further explained that the deposits could have been made by
his present wife, Jeanine, from her income or accounts.
As was the case in Tegeler, Craig provided an explanation of
where the deposits he could not specifically recall may have
come. Moreover, unlike the father in Tegeler, there was no
evidence that Craig's personal spending exceeded his net income.
Compare Tegeler, 365 Ill. App. 3d at 460 (the father spent an
average of $72,000 when his net income was between $50,000 and
$70,000).
We conclude that the circuit court's sustaining of the
relevancy objection was not error.
V. Contempt
A. Standard of Review
A trial court's contempt finding is reviewed under the abuse
of discretion standard. Steinberg, 302 Ill. App. 3d at 853.
B. Discussion
Susan contends that the circuit court abused its discretion
41
No. 1-06-2866
when it failed to hold Craig in contempt for failure to pay child
support. She points to Craig's admission that he owed additional
child support for the years 2003 and 2004.9
"'The power to enforce an order to pay money through
contempt is limited to cases of willful [and contumacious]
refusal to obey the court's order.'" Steinberg, 302 Ill. App. 3d
at 853, quoting In re Marriage of Logston, 103 Ill. 2d 266, 285,
469 N.E.2d 167 (1984). "The failure to pay child support under a
court order or judgment is prima facie evidence of indirect,
civil contempt." Steinberg, 302 Ill. App. 3d at 853. Where the
evidence establishes that the payor-parent has failed to make
support payments, the burden is on the payor-parent to show that
the noncompliance was not willful. Steinberg, 302 Ill. App. 3d
at 853. Whether the excuse given for noncompliance is valid is a
question of fact for the court. Steinberg, 302 Ill. App. 3d at
853.
Craig responds that he was in compliance with the monthly
court-ordered support amount of $762. He further responds that
the parties' dispute as to the additional support due for each
year resulted from the vagueness of the circuit court's order
9
Craig testified that he overpaid $1,679.72 child support
for 2002; for 2003, he paid $9,144 and owed an additional
3,392.60; and for 2004, he paid $9,144 and owed an additional
$1,896.23.
42
No. 1-06-2866
regarding the calculation of the additional amount.
"'To support a finding of contempt, the order must be 'so
specific and clear as to be susceptible of only one
interpretation.'" Steinberg, 302 Ill. App. 3d at 853, quoting
O'Leary v. Allphin, 64 Ill. 2d 500, 514, 356 N.E.2d 551 (1976).
"'It must not only be capable of reasonable interpretation, but
that interpretation must be to the exclusion of other reasonable
interpretations; it must be unambiguous.'" Steinberg, 302 Ill.
App. 3d at 853, quoting O'Grady v. Cook County Sheriff's Merit
Board, 204 Ill. App. 3d 258, 262, 561 N.E.2d 1226 (1990).
In Steinberg, the father appealed contempt findings based on
his failure to pay child support and the failure to disclose his
tax returns. The order for child support included a provision
whereby, in the event the father's income increased or decreased,
he agreed to modify his payments to insure that they were never
less (or more) than 20% of his net annual income. In order to
determine if a modification was required, the parties were to
exchange federal income tax forms, W-2s and 1099s. The father
argued that the modification terms of the order were too vague to
put him on notice that his actions could constitute contempt of
court. He further argued that he believed the agreement was
unenforceable because the support level was not stated in a
dollar amount, as required by the version of the Act applicable
in the case.
The reviewing court rejected the vagueness argument, finding
43
No. 1-06-2866
that "though calculating child support under the agreement
requires some effort each year, the terms of the agreement set
out a clear formula" and therefore were sufficient to put the
father on notice about the conduct that would violate the order.
Steinberg, 302 Ill. App. 3d at 853. As to the father's argument
that he had not acted willfully or in bad faith, the court stated
as follows:
"[The father] notes that he regularly paid child
support and twice raised the amount. He stresses that he
believed the agreement was unenforceable. But the issue
here is not whether the respondent acted with good
intentions in paying what he thought was appropriate
support. The issue is whether he made a good-faith effort
to comply with the formula set out in the dissolution
agreement. [The father] believes he was justified in
ignoring the order because he thought the child support
provisions were void. As the trial court noted, [the
father] offered no evidence to show that he tried to comply
with the order. Though [the father] argues that the child
support directions were too confusing to understand, his
testimony reveals the opposite. If he concluded that the
order was contrary to appellate opinions, he must have had a
clear notion of what the order meant. The trial court did
not err in finding that [the father's] failure to comply was
willful." Steinberg, 302 Ill. App. 3d at 853-54.
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No. 1-06-2866
In this case, there was some dispute of what constituted
income and what were allowable deductions. Prior to the filing
of the contempt petition, Craig maintained in letters to Susan
that he had either overpaid his support obligation or fulfilled
his obligation for the additional support. Craig even hired an
attorney to assist him in the calculations for 2002 and 2003.
Nonetheless, at trial, Craig acknowledged and the circuit court
found that he owed the additional support.
A trial court will be said to have abused its discretion
only if it acts arbitrarily without the employment of
conscientious judgment, exceeds the bounds of reason and ignores
recognized principles of law, or if no reasonable person would
take the position adopted by the court. Schmitz, 368 Ill. App.
3d at 452. Even though Craig ultimately conceded that he owed
additional support, his conduct prior to the filing of the
petition did not indicate that he willfully disregarded the
requirements of the support order.
We conclude that the circuit court's refusal to find Craig
in indirect civil contempt was not an abuse of discretion.
VI. Discovery Sanction
A. Standard of Review
This court reviews a decision to impose or not impose
sanctions under the abuse of discretion standard. Chabowski v.
Vacation Village Ass'n, 291 Ill. App. 3d 525, 528, 690 N.E.2d 115(1997). The circuit court is in the best position to determine
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No. 1-06-2866
how court rules and rules of procedure should be applied in the
cases before it, and thus, its decisions are entitled to
considerable deference upon review. In re Estate of Smith, 201
Ill. App. 3d 1005, 1009, 559 N.E.2d 571 (1990). The predicate to
such deference is that the court make an informed and reasoned
decision. Smith, 201 Ill. App. 3d at 1009.
B. Discussion
Susan contends that the circuit court abused its discretion
when it sanctioned her for subpoenaing Craig's attorneys. She
maintains that she was entitled to depose Mr. Ramirez because
Craig raised the issue of Mr. Ramirez's advice in his affirmative
defense, and thus waived any attorney-client privilege. As to
Ms. Campbell, Susan asserts she sought Ms. Campbell's deposition
because her name appeared on the letterhead of Craig's company.
In response, Craig maintains that Susan was required to seek the
least intrusive discovery means to obtain the information she
sought.10
Supreme Court Rule 219 (d) provides that "[i]f a party
wilfully obtains or attempts to obtain information by an improper
discovery method, wilfully obtains or attempts to obtain
10
Although the circuit court orally denied Rule 219(d)
sanctions, both parties are proceeding on the theory that the
sanctions for subpoenaing the attorneys were imposed under Rule
219(d).
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No. 1-06-2866
information to which that party is not entitled, or otherwise
abuses these discovery rules, the court may enter any order
provided for in paragraph (c) of this rule." 210 Ill. 2d R.
219(d). Under paragraph (c), the court may order the offending
party to pay the other party's expenses incurred as a result of
the misconduct, including a reasonable attorney fee and a
monetary penalty. 210 Ill. 2d R. 219(c).
In Kilpatrick v. First Church of the Nazarene, 182 Ill. App.
3d 461, 538 N.E.2d 136 (1989), the plaintiff required one of the
defendant's attorneys to testify as part of an offer of proof.
After determining that the questioning did not and was not likely
to elicit new and relevant facts, the trial court concluded that
requiring the defendant's attorney to testify was a tactic to
exert pressure on opposing counsel during trial and constituted
unjustified harassment and awarded sanctions.
In upholding the award of sanctions, the reviewing court
acknowledged the difficulties of having counsel testify. The
court quoted from the case of Shelton v. American Motors Corp.,
805 F.2d 1323 (8th Cir. 1986), as follows:
"'Taking the deposition of opposing counsel not only
disrupts the adversarial system and lowers the standards of
the profession, but it also adds to the already burdensome
time and costs of litigation. *** Finally, the practice of
deposing opposing counsel detracts from the quality of
client representation. Counsel should be free to devote his
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No. 1-06-2866
or her time and efforts to preparing the client's case
without fear of being interrogated by his or her opponent.
Moreover, the "chilling effect" that such practice will have
on the truthful communications from the client to the
attorney is obvious.
* * *
*** The harassing practice of deposing opposing
counsel (unless that counsel's testimony is crucial and
unique) appears to be an adversary trial tactic that does
nothing for the administration of justice but rather
prolongs and increases the cost of litigation, demeans the
profession, and constitutes an abuse of the discovery
process." Kilpatrick, 182 Ill. App. 3d at 470, quoting
Shelton, 805 F.2d at 1327-30.
Like the present case, Shelton concerned the taking of the
opposing counsel's deposition. Refusing to hold that opposing
counsel was absolutely immune from being deposed and recognizing
that circumstances may arise in which the court should order the
taking of opposing counsel's deposition, the Shelton court limited
those circumstances to "where the party seeking to take the
deposition has shown that (1) no other means exist to obtain the
information than to depose opposing counsel [citation]; (2) the
information sought is relevant and nonprivileged; and (3) the
information is crucial to the preparation of the case." Shelton,
805 F.2d at 1327; see also J. Kinsler, J. Grenig & L. Nale, 10 Ill.
48No. 1-06-2866
Practice, Civil Discovery §1.38 (2000), citing Jones v. Board of
Police Commissioners of Kansas City, 176 F.R.D. 625 (W.D. Mo. 1997)
(applying the Shelton factors to deny a motion to compel opposing
counsel's deposition).11
In this case, Mr. Ramirez was to be deposed and was ordered
to produce the following: "all documents or tangible things
evidencing the advice sought and disclosures made to you by
Respondent, CRAIG BAUMGARTNER, concerning his child support
obligation during the years 2002, 2003, and 2004; including but not
limited to, your appointment calendars, log books, evidence of
research you conducted, or any records, reports, or forms he
provided you in your possession and control."
To begin with, the subpoena to Mr. Ramirez was overbroad in
its scope. Susan sought to disprove Craig's affirmative defense
11
We note that the Seventh Circuit has not considered
whether to adopt the rule set forth in Shelton. Taylor Machine
Works, Inc. v. Pioneer Distribution, Inc., No. 06-1126, slip
order at ___ (C.D. Ill. June 19, 2006). However, the Shelton
rule has been addressed in a number of District Courts within the
Seventh Circuit, with mixed results. See Taylor, slip order at
___. Nonetheless, this court is not bound to follow decisions by
federal courts other than the United States Supreme Court.
Behrens v. Harrah's Illinois Corp., 366 Ill. App. 3d 1154, 852
N.E.2d 553 (2006).
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No. 1-06-2866
that he relied on Mr. Ramirez's calculations for 2002 and 2003.
However, in his affirmative defense, Craig asserted that he did not
hire an attorney to assist him with the 2004 calculations. In
addition, the letters from Mr. Ramirez to Susan regarding the 2002
and 2003 child support figures contained the information he
utilized in arriving at those figures.
Susan requested Ms. Campbell's deposition and document
production based on the fact that Ms. Campbell's name appeared on
the facsimile cover sheet from Craig's sole proprietorship. Ms.
Campbell was required to produce the following: "all documents or
tangible things evidencing your employment or association with
Craig Baumgartner, d/b/a Baumgartner Consulting, during the years
2002, 2003, and 2004; including, but not limited to, federal tax
forms 1040, W-2, and 1099, paycheck stubs, reimbursement check
stubs, employment contracts, expense reports, appointment
calendars, client lists, or literature in your possession or
control."
If all Susan was seeking was to establish the role Ms.
Campbell had in Craig's business, the subpoena and document request
were similarly overbroad in their scope. Rather than depose Ms.
Campbell, Susan could have taken Craig's deposition or submitted
written interrogatories to Craig or Ms. Campbell to determine the
extent of Ms. Campbell's involvement in his company. Moreover,
there was no indication that Ms. Campbell's involvement in Craig's
company had any bearing on the issue of child support in this case.
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No. 1-06-2866
Applying the "Shelton Rule" to the facts in this case, Susan
failed to prove that information she sought via the depositions of
opposing counsel could not be obtained from other sources or was
crucial to the case. Nonetheless, Susan maintains that sanctioning
her was inappropriate because it punished her rather than
accomplishing discovery, relying on Wegman v. Pratt, 219 Ill. App.
3d 883, 891-92, 579 N.E.2d 1035 (1991) ("An order of sanctions that
is just within the meaning of Rule 219 is one that provides both
for discovery and for trial on the merits").
In Wegman, the trial judge sanctioned the plaintiff for
subpoenaing him (the trial judge) to testify by dismissing count I
of the complaint. On review, the court discussed the type of
sanctions that a court could impose under Rule 219(c) and noted
that "[i]n determining which sanction to impose, the trial court
must seek to accomplish discovery rather than to inflict
punishment; because dismissal is a severe sanction, it should be
invoked only in those cases where the actions of the party show a
deliberate, contumacious, or unwarranted disregard of the court's
authority. [Citation.] The entry of a dismissal under Rule 219(c)
should be employed as a last resort in order to enforce the rules
of discovery and should be set aside when a trial on the merits may
be had without hardship or prejudice." Wegman, 219 Ill. App. 3d at
891.
Applying the above analysis to the case before it, the
reviewing court recognized that using the legal process to
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No. 1-06-2866
accomplish some improper ulterior purpose was "an abuse of process
of the court" and that the discovery rules permitted sanctions to
be imposed on parties who abused or disregarded discovery rules.
The court concluded, however, that the subpoenaing of the trial
judge was not intended to accomplish an improper ulterior motive,
and therefore, dismissal of count I of the complaint was an
inappropriate sanction. Nonetheless, the court recognized that the
trial court had the authority in the appropriate case to dismiss an
action as a sanction. Wegman, 219 Ill. App. 3d at 891.
Unlike the plaintiff in Wegman, Susan's conduct in subpoenaing
Craig's attorneys was sanctionable. The subpoenas and document
production requests were over broad in light of the reasons Susan
posited for their issuance. Susan persisted in demanding the
depositions even after her attorney was advised by opposing counsel
that the depositions were an improper discovery tactic and warned
that sanctions would be sought if he failed to rescind the
subpoenas. Susan could have sought a ruling by the circuit court
as to the propriety of issuing subpoenas to opposing counsel in
this case but failed to do so. The court specifically found that
subpoenaing Craig's attorneys was done with the purpose of seeking
their disqualification or harassment. The court did not dismiss
Susan's petition but imposed a lesser sanction of paying the
attorney fees incurred for challenging the subpoenas. Such a
sanction did not deprive Susan of a trial on the merits or of
properly obtainable discovery and is specifically provided for in
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No. 1-06-2866
Rule 219(c) when instances of misconduct have occurred.
Finally, Susan argues that the circuit court failed to comply
with Rule 219(c) in that it did not specify its reasons and the
basis of any sanction imposed in the judgment order or in a
separate written order. As Craig notes, the court's written
judgment order referenced the court's oral findings. Moreover, the
basis for the imposition of the sanction was clear from the record.
We find no basis to reverse on that ground. See Chabowski, 291
Ill. App. 3d at 528, (court's failure to set forth grounds for Rule
219(c) sanctions not per se reversible error).
We conclude that the circuit court did not abuse its
discretion in imposing sanctions for Susan's conduct in
subpoenaing Craig's attorneys.
For all of the foregoing reasons, the judgment of the circuit
court is affirmed.
Affirmed.
SOUTH and KARNEZIS, JJ., concur.
53