In re Marriage of Podolsky , 2022 IL App (5th) 210195-U ( 2022 )

2022 IL App (5th) 210195-UNOTICE
NOTICE
Decision filed 04/29/22. The
This order was filed under
text of this decision may be NO. 5-21-0195
Supreme Court Rule 23 and is
changed or corrected prior to
not precedent except in the
the filing of a Petition for IN THE limited circumstances allowed
Rehearing or the disposition of
under Rule 23(e)(1).
the same.
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
______________________________________________________________________________
In re MARRIAGE OF ) Appeal from the
) Circuit Court of
RITA PODOLSKY, ) Wayne County.
)
Petitioner-Appellee, )
)
and ) No. 15-D-73
)
MICHAEL D. PODOLSKY, ) Honorable
) Michael J. Molt,
Respondent-Appellant. ) Judge, presiding.
______________________________________________________________________________
JUSTICE WHARTON delivered the judgment of the court.
Presiding Justice Boie and Justice Welch concurred in the judgment.
ORDER
¶1 Held: Where the parties included terms in their marital settlement agreement
reserving the right to pursue remedies pursuant to section 502 of the Illinois
Marriage and Dissolution of Marriage Act (750 ILCS 5/502 (West 2016)) if
the parties could not agree to a written modification agreement, the trial court’s
orders granting Rita Podolsky’s motion to dismiss Michael D. Podolsky’s motion
to modify maintenance and denying Michael D. Podolsky’s motion to reconsider
were in error. We reverse the trial court’s orders and remand the case for a hearing
to determine if Michael D. Podolsky established that there had been a substantial
change of circumstances warranting modification of the maintenance award.
¶2 The respondent, Michael D. Podolsky, appeals from the trial court’s August 17, 2020, order
granting Rita Podolsky’s motion to dismiss his motion seeking a maintenance modification, and
from the June 11, 2021, order denying his motion to reconsider. At issue on appeal is whether the
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parties agreed to the possibility of statutory modification of the maintenance provision contained
within the November 18, 2016, marital settlement agreement (MSA). We reverse and remand.
¶3 I. BACKGROUND
¶4 Rita and Michael were married in 1981. On November 18, 2016, the trial court entered its
judgment of dissolution of marriage that incorporated a MSA. Rita’s attorney prepared the MSA.
At the time of the divorce, settlement, and the filing of his motion to modify, Michael was in the
business of oil production. The MSA required Michael to pay Rita $10,000 per month in permanent
maintenance subject to termination for the statutory bases—if either party died, if Rita remarried,
or if Rita cohabitated with another individual on a continuing conjugal basis. See 750 ILCS
5/510(c) (West 2016). Michael was required to secure the maintenance award with life insurance
policies. In the event that Michael predeceased Rita, she maintained the right to make a claim
against Michael’s estate for the difference of the life insurance proceeds (then valued at $202,698)
and $500,000.
¶5 On April 30, 2020, Michael filed a motion for modification of maintenance, alleging that
due to the Covid pandemic and other stated reasons, the oil business was in crisis in that it was
costing him more to produce a barrel of crude oil than the amount he could receive to sell a barrel
of crude oil. He alleged that his income had substantially decreased because of this production cost
versus sales price issue. Additionally, his oil investment dividends were significantly less, and due
to Covid restrictions and a glut of Middle Eastern oil on the market, his income stream had been
adversely impacted.
¶6 Thereafter, on June 12, 2020, Rita filed a rule to show cause petition because Michael had
not been making full and timely maintenance payments to her. The court entered a show cause
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order on June 17, 2020, requiring Michael to show cause why he should not be held in indirect
civil contempt for failing to pay Rita the court-ordered maintenance.
¶7 On June 17, 2020, Rita filed a motion to dismiss Michael’s petition seeking a maintenance
modification. She stated that the MSA was incorporated into the dissolution judgment and argued
that section 502 of the Illinois Marriage and Dissolution of Marriage Act (Act) provided that the
parties’ MSA took precedence over the statutory provisions that would otherwise allow
maintenance to be modified. At issue was section 10.6(D) of the MSA which provides:
“Except as otherwise provided for in Section 502 of the [Act], the parties may only
amend or modify this Agreement by a written Agreement dated and signed by them. No
oral Agreement shall be effective to in any manner modify or waive any terms or conditions
of this Agreement.”
Rita argued that the MSA only authorized modification to the maintenance award when the parties
agreed to the modification in writing.
¶8 In its August 17, 2020, order denying Michael’s motion to modify, the court found that
section 10.6(D) of the MSA only allowed modification by written agreement of the parties, stating
that the court believed that section “clearly manifest[ed] the parties’ intent that maintenance be
non-modifiable.” The court did not discuss statutory modification or otherwise reference section
502 of the Act in its ruling. While noting that the terms of the MSA must be given their plain and
ordinary meaning (In re Marriage of Michaelson, 359 Ill. App. 3d 706, 714 (2005)), the court
stated again that the MSA, by its terms, was nonmodifiable unless the parties agreed to a written
modification: “[T]he Podolsky MSA clearly indicates that the entire agreement itself is not
modifiable unless by written agreement signed by both parties, and RITA has not signed any
request for an agreement for modification.” The court cited In re Marriage of Schweitzer as
controlling (In re Marriage of Schweitzer, 289 Ill. App. 3d 425 (1997)), stating that when the
parties agree that maintenance is nonmodifiable except in certain situations, as the parties clearly
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did in section 10.6(D) of their MSA, modification in the manner sought by Michael was not
allowed. In paragraph 9 of the court’s order, the court indicated that it did not, and would not,
“address the issue of ‘substantial change in circumstances’ because the language of the Podolsky
MSA and the existing case law dictates that the maintenance is non-modifiable.”
¶9 On February 8, 2021, the trial court entered an order dismissing Rita’s rule to show cause
petition with prejudice. The court noted that so long as Rita’s petition remained pending, Michael
was precluded from appealing the court’s order denying his motion to modify maintenance. In that
order, the court stated that the parties agreed that as of that date, there was no outstanding unpaid
maintenance.
¶ 10 On February 23, 2021, Michael filed a motion for reconsideration of the trial court’s
August 17, 2020, order granting Rita’s motion to dismiss his motion to modify maintenance.
Michael attached two affidavits of attorneys who represented him when the MSA was negotiated
and agreed to by the parties. Both attorneys stated that there were no settlement discussions that
the MSA would be nonmodifiable. Furthermore, the two attorneys stated that when the MSA was
presented and “proved up” to the trial court, neither party testified that the maintenance provision
was nonmodifiable. In his motion, Michael argued that the inclusion of the citation to section 502
of the Act was purposeful and intended to allow for statutory modification of the MSA.
¶ 11 On June 11, 2021, the trial court entered its order denying Michael’s motion to reconsider.
The trial court based its holding on the authority cited in its earlier order granting Rita’s motion to
dismiss.
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¶ 12 II. ANALYSIS
¶ 13 Michael argues that the trial court erred in denying his motion to modify because the
express language of the MSA indicated that the parties contemplated the possibility of seeking a
modification if there was a substantial change of circumstances. We agree.
¶ 14 Our review of the issues raised in this appeal is de novo because the trial court’s order
granting Rita’s motion to dismiss was based on section 2-619 of the Code of Civil Procedure (735
ILCS 5/2-619 (West 2018)), because we are being asked to interpret the provisions of the MSA—
a contractual document, and because we must engage in statutory construction regarding section
502 of the Act. Oswald v. Hamer, 2018 IL 122203, ¶ 9; Blum v. Koster, 235 Ill. 2d 21, 33 (2009);
Doyle v. Holy Cross Hospital, 186 Ill. 2d 104, 109-10 (1999); In re Marriage of Doermer, 2011
IL App (1st) 101567, ¶ 16. In reviewing the terms of an MSA, we construe the agreement similarly
to a contract, and therefore, must ascertain the parties’ intent from the language of the agreement.
See Blum, 235 Ill. 2d at 33.
¶ 15 We turn to the precise language at issue in the MSA and in the Act. The provision at issue
in the parties’ MSA expressly references section 502 of the Act, stating that modification is only
allowed if the parties agree in writing “[e]xcept as otherwise provided for in Section 502 of the
[Act].”
¶ 16 We begin with a definition of the word “except”—a key word the parties used in the MSA
section at issue. The primary and applicable definition for “except,” is “with the exclusion or
exception of.” Webster’s Ninth New Collegiate Dictionary 432 (1988).
¶ 17 Section 10.6(D) of the MSA generally cited to section 502 of the Act without reference to
a specific subsection. Therefore, we next turn to the subsections of section 502 to determine which,
if any, subsections are relevant to the prefatory clause of section 10.6(D) that contains the “except”
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language. Subsection 502(a) provides that “parties may enter into an agreement containing
provisions for *** maintenance.” 750 ILCS 5/502(a) (West 2016). Based on the language of
subsection 502(a), we conclude that subsection 502(a) was not the subsection intended for the
“except” clause qualification of the MSA. Subsection 502(b) provides that “[t]he terms of the
agreement *** are binding upon the court unless it finds, after considering the economic
circumstances of the parties and any other relevant evidence produced by the parties, on their own
motion or on request of the court, that the agreement is unconscionable.” Id. § 502(b). We conclude
that subsection 502(b) was not the subsection intended by the “except” clause qualification.
Subsection 502(c) provides that “[i]f the court finds the agreement unconscionable, it may request
the parties to submit a revised agreement or upon hearing, may make orders for the disposition of
property, maintenance, child support and other matters.” Id. § 502(c). We conclude that subsection
502(c) was not the subsection intended by the “except” clause qualification. Subsection 502(d)
provides that “[u]nless the agreement provides to the contrary, its terms shall be set forth in the
judgment, and the parties shall be ordered to perform under such terms, or if the agreement
provides that its terms shall not be set forth in the judgment, the judgment shall identify the
agreement and state that the court has approved its terms.” Id. § 502(d). We conclude that
subsection 502(d) was not the subsection intended by the “except” clause qualification. Subsection
502(e) provides that “[t]erms of the agreement set forth in the judgment are enforceable by all
remedies available for enforcement of a judgment, including contempt, and are enforceable as
contract terms.” Id. § 502(e). We conclude that subsection 502(e) was not the subsection intended
by the “except” clause qualification. Finally, subsection 502(f) of the Act provides that “[t]he
parties may provide that maintenance is non-modifiable in amount, duration, or both. If the parties
do not provide that maintenance is non-modifiable in amount, duration, or both, then those terms
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are modifiable upon a substantial change of circumstances.” Id. § 502(f). Having reviewed section
502 in its entirety, along with the definition of the word “except” used by the parties in the MSA,
we conclude that subsection 502(f) is the intended subsection of the prefatory “except” clause.
¶ 18 The trial court’s decision was informed by In re Marriage of Schweitzer, a case cited by
Michael and Rita. We agree that the court’s holding in Marriage of Schweitzer has bearing on
aspects of this case. However, we find that a recent Illinois Supreme Court case, In re Marriage
of Dynako, 2021 IL 126835, although factionally distinguishable, is also relevant in analyzing the
intent of the wording of section 10.6(D) of the MSA in this case.
¶ 19 In Marriage of Schweitzer, the couple divorced after a lengthy marriage, and as part of the
dissolution process, they entered into an MSA, which was incorporated into the judgment of
dissolution. In re Marriage of Schweitzer, 289 Ill. App. 3d at 426. Pursuant to the MSA, the
husband agreed to pay monthly maintenance to his ex-wife that would only terminate on the death
of either party. Id. Elsewhere in the MSA, a provision provided that the agreement “ ‘shall not be
modifiable.’ ” Id. at 427. About six years after the parties divorced, the husband filed a petition to
modify the judgment alleging that there had been a material change in circumstances—that he had
a $20,000 decrease in annual income because he would no longer be raising and selling hogs, and
because his ex-wife was planning to sell certain properties that would provide her with additional
income. Id. The trial court concluded that the MSA was nonmodifiable by its express terms. Id.
The appellate court agreed and affirmed. Id.
¶ 20 In Marriage of Schweitzer, the husband argued that if the parties had intended to prohibit
modification of the maintenance agreement, the express prohibition would have been within the
maintenance section of the agreement, and not in a more general section of the agreement. Id. The
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appellate court rejected the husband’s argument, stating that the agreement unambiguously
provided that the agreement in its entirety was nonmodifiable. Id. at 429.
¶ 21 The appellate court noted that section 502(f) of the Act provided that the agreement may
preclude modification if the terms at issue did not involve child support, custody, or visitation. Id.
at 427 (citing Ill. Rev. Stat. 1989, ch. 40, ¶ 502(f)). The appellate court also noted that section
510(c) of the Act stated that the party seeking to modify the maintenance agreement needed to
establish “ ‘a substantial change in circumstances.’ ” Id. at 427-28 (quoting Ill. Rev. Stat. 1989,
ch. 40, ¶ 510(a)). However, the court then stated:
“It is clear that parties may agree that maintenance shall not be modified or
terminated except upon certain specified conditions. When the parties so agree,
maintenance may be modified or terminated only under the circumstances specified in the
agreement. The purpose of allowing parties to agree in advance to the circumstances under
which maintenance may be modified or terminated is to permit them to plan for the future
by eliminating concerns based upon subsequent motions to increase or decrease their
obligations. [Citation.] The intent of the parties to preclude or limit modification of
maintenance must be clearly manifested in their agreement. [Citation.]” Id. at 428.
¶ 22 In this case, the trial court found that the Marriage of Schweitzer quote in paragraph 21 of
this order supported its conclusion that the MSA was only modifiable by the written agreement of
both parties. The trial court’s focus on the Marriage of Schweitzer language—“[w]hen the parties
so agree, maintenance may be modified or terminated only under the circumstances specified in
the agreement”—resulted in the court’s characterization that this MSA was “nonmodifiable.”
However, the language used by the parties in the Marriage of Schweitzer agreement is clearly
distinguishable from the language Michael and Rita used in their MSA. We find the trial court’s
reliance on Marriage of Schweitzer as authority that this MSA was nonmodifiable is misplaced.
¶ 23 Michael and Rita included the clause, “[e]xcept as otherwise provided for in Section 502
of the [Act],” as the preface to section 10.6(D) of the MSA. We acknowledge that elsewhere in
section 10.6(D) of the MSA, Michael and Rita agreed that the terms of the agreement could only
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be modified with a written agreement—not with a verbal agreement. However, Michael and Rita
did not state that the agreement was nonmodifiable as the parties expressly did in Marriage of
Schweitzer. Moreover, Michael and Rita did not state that their MSA could only be modified by
their written agreement. As the court stated in Marriage of Schweitzer, if the parties “agree that
maintenance shall not be modified,” maintenance can only be modified “under the circumstances
specified in the agreement.” Id. Michael and Rita foresaw the possibility where they could not
agree to a modification in writing. If Michael and Rita could not agree to a modification, the MSA
provided that either party could seek a statutory modification pursuant to section 502 of the Act.
¶ 24 Whether the trial court omitted consideration of the prefatory phrase in section 10.6(D) of
the MSA is not clear from the court’s orders. The court’s order included no reference to the
“except” clause of that section and only focused on the other half of the provision. However, the
two clauses of the MSA provision, agreed to by Michael and Rita, cannot be considered
independently. See In re Marriage of Michaelson, 359 Ill. App. 3d at 711 (finding that two clauses
of the agreement had to be construed together).
¶ 25 More recently, in In re Marriage of Dynako, 2021 IL 126835, the Illinois Supreme Court
analyzed a maintenance provision of an MSA that stated that an eight-year maintenance payments
schedule was “ ‘nonmodifiable pursuant to Section 502(f) of the [Act].’ ” (Emphasis omitted.) Id.
¶ 4. The supreme court stated that although the MSA did not include the precise words used by
our legislature in section 502(f) of the Act—that the agreement was nonmodifiable in amount,
duration, or both—the reference to section 502(f) “demonstrated the intent of the parties to make
the obligation nonmodifiable.” Id. ¶ 20 (citing In re Marriage of Dynako, 2020 IL App (1st)
192116, ¶ 30). Therefore, “[i]f a party to the dissolution does not agree that maintenance is
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nonmodifiable, either in whole or in part, then maintenance may be modified upon a showing of a
substantial change of circumstances.” Id. ¶ 19.
¶ 26 Michael and Rita, in agreeing to the terms of their MSA, did not state that the agreement
is nonmodifiable, as the parties did in Marriage of Dynako. Instead, Michael and Rita agreed that
any modification had to be in a written form. They also agreed that the terms of this modification
agreement were subject to the provisions of section 502 of the Act. Turning to section 502(f), that
section provides that “[i]f the parties do not provide that maintenance is non-modifiable in amount,
duration, or both, then those terms are modifiable upon a substantial change of circumstances.”
750 ILCS 5/502(f) (West 2016). In this case, Michael and Rita did not exclude the possibility of
modification and chose to specifically reference section 502 of the Act in their agreement. We find
that the court’s analysis in Marriage of Dynako is helpful, albeit that the case is factually
distinguishable. When the parties expressly cite to section 502 in their MSA, that citation is
purposeful and should be considered. In Marriage of Dynako, the court found that the section 502
citation, coupled with the inclusion of the nonmodifiable term in the MSA, were utilized to exclude
modification despite the existence of a substantial change of circumstances. In re Marriage of
Dynako, 2021 IL 126835, ¶ 20. Here, Michael and Rita agreed that they could make a written
agreement to modify the MSA. They alternatively cited section 502 of the Act if they were unable
to agree to the modification in writing. We conclude that in the absence of a written agreement to
modify maintenance, section 502(f), as applied to the facts of this case, allows modification if there
has been a substantial change in circumstances. Id. In reaching the settlement that culminated in
the MSA’s execution, the parties contemplated the possibility that either party could experience a
substantial change of circumstances warranting a change in modification.
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¶ 27 Michael’s involvement in the oil production and sales business was known by the parties
at the time that they decided to dissolve their marriage and when they agreed to the maintenance
terms of the MSA. The oil market has historically experienced increases and decreases in
production costs and sales prices. This volatility is explained as follows by the United States
Energy Information Administration:
“Both crude oil and petroleum product prices can be affected by events that have
the potential to disrupt the flow of oil and products to market, including geopolitical and
weather-related developments. These types of events may lead to actual disruptions or
create uncertainty about future supply or demand, which can lead to higher volatility in
prices. The volatility of oil prices is inherently tied to the low responsiveness or
‘inelasticity’ of both supply and demand to price changes in the short run. Both oil
production capacity and the equipment that use petroleum products as their main source of
energy are relatively fixed in the near-term. It takes years to develop new supply sources
or vary production, and it is very hard for consumers to switch to other fuels or increase
fuel efficiency in the near-term when prices rise. Under such conditions, a large price
change can be necessary to re-balance physical supply and demand following a shock to
the system.
Much of the world’s crude oil is located in regions that have been prone historically
to political upheaval or have had their oil production disrupted due to political events.
Several major oil price shocks have occurred at the same time as supply disruptions
triggered by political events, most notably the Arab Oil Embargo in 1973-74, the Iranian
revolution and Iran-Iraq war in the late 1970s and early 1980s, and Persian Gulf War in
1990. More recently, disruptions to supply (or curbs on potential development of resources)
from political events have been seen in Nigeria, Venezuela, Iraq, Iran, and Libya.”
During oral arguments on appeal, Rita’s attorney stated that the volatility of the oil production
business was the foundation for the nonmodifiable nature of the MSA. We find that Rita’s
argument is incorrect, as she too ignores the express language of the MSA—written by Rita’s
attorney—that allows statutory modification where appropriate.
¶ 28 Although a global pandemic may not have been contemplated by Michael and Rita when
they entered into the MSA, the overall volatility of the industry was apparent when the parties
agreed to the permanent award of maintenance. As we have concluded that the parties agreed that
the terms of the MSA were subject to section 502 of the Act, both parties retain the right to seek
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modification of the terms of the permanent maintenance award subject to the requirement that he
or she must establish a substantial change of circumstances. 750 ILCS 5/502(f) (West 2016).
Accordingly, we conclude that the trial court’s conclusion that the MSA could not be modified
other than by the written agreement of the parties was incorrect. As the trial court stated that it did
not consider Michael’s claim that he had experienced a substantial change in circumstances
warranting a downward modification of the maintenance award, we remand the case to the trial
court to hold this hearing and consider the merits of Michael’s motion.
¶ 29 III. CONCLUSION
¶ 30 For the reasons stated in this order, we reverse the Wayne County circuit court’s judgments
and remand the case back to the trial court for a determination of the merits of Michael’s motion
to modify.
¶ 31 Reversed and remanded.
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