In re Marriage of Phalen ( 2023 )

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except
in the limited circumstances allowed under Rule 23(e)(1).
2023 IL App (3d) 220296-UOrder filed September 26, 2023
____________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
2023
In re MARRIAGE OF ) Appeal from the Circuit Court
) of the 13th Judicial Circuit,
STEVE PHALEN, ) La Salle County, Illinois,
)
Petitioner-Appellant, )
) Appeal No. 3-22-0296
and ) Circuit No. 19-D-26
)
HOLLY L. PHALEN, ) Honorable
) Michelle A. Vescogni,
Respondent-Appellee. ) Judge, Presiding.
____________________________________________________________________________
JUSTICE ALBRECHT delivered the judgment of the court.
Justices BRENNAN and DAVENPORT concurred in the judgment.
____________________________________________________________________________
ORDER
¶1 Held: The circuit court’s classification of the parties’ disputed assets as marital property
was not against the manifest weight of the evidence, and its award of certain
marital assets to respondent was not an abuse of discretion.
¶2 Petitioner, Steve Phalen, filed for dissolution of his marriage to respondent, Holly L.
Phalen, in 2019. Following a bench trial, the circuit court requested the parties submit position
papers and a stipulation regarding their disputed assets. In 2022, the court entered a judgment
dissolving the parties’ marriage and apportioning their marital property. On appeal, Steve argues
the court erred in its division by misclassifying certain assets as marital and awarding Holly the
parties’ fifth wheel camper. We affirm the judgment of the circuit court.
¶3 I. BACKGROUND
¶4 Steve and Holly married on January 1, 2010, in Los Angeles County, California. The
marriage lasted for nine years before Steve petitioned for dissolution on January 18, 2019. The
parties separated in September 2018, and there were no children born of the marriage. Holly’s
children from a prior relationship resided with the parties throughout their marriage. During and
subsequent to the marriage, Steve worked at Phalen Steel Construction Company, a company
that his family owned throughout the early years of the parties’ marriage and later sold prior to
dissolution. Holly worked in the human resources department at Walmart.
¶5 The case proceeded to a bench trial on November 23, 2020. The lion’s share of testimony
presented centered around the parties’ differing opinions on the appropriate characterization and
division of their assets. Central to this dispute, Steve testified that he kept several separate
financial accounts, including an escrow maintained by his attorney and a checking account into
which he deposited residual checks from an ownership interest in a company that predated his
marriage. The escrow account his attorney maintained was comprised of the proceeds from the
sale of Phalen Steel Construction Company, in which he held part ownership interest by gift. He
owned two boats, one of which was a Crestliner fishing boat that he purchased with funds from
the escrow account in 2018. As with all disputed assets purchased from his escrow account,
Steve identified the Crestliner boat as nonmarital. He also testified that he purchased a Jayco
travel trailer with $28,000 from the escrow account in July 2020.
¶6 Steve testified that the parties owned four dogs: two territorial male chows and a male
and female German shepherd. The parties purchased the shepherds together from a shelter in
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Texas, and named the male Herc and the female Storm. Steve’s testimony indicated the
shepherds were born from the same litter. Holly testified that all four dogs were mutually owned.
¶7 The parties also purchased a fifth wheel camper together. To do so, Holly testified that
the parties ventured to Ohio, picked out the camper together, and made the downpayment with
funds from a mutually owned account. The parties used the camper for approximately one year
before Steve paid off the outstanding balance on the vehicle in one lump sum payment. When the
court asked how much it cost to pay off the fifth wheel camper, Steve responded that he believed
the balance of the loan was “probably [$]79,000 or $74,000.” When the court noted that a check
for that amount was not introduced into the record, Steve replied “[n]o, it would not be in that
amount,” further adding that his process of paying for assets from his escrow included using his
escrow checks to get cashier’s checks in specific amounts to then pay for items.
¶8 Once the parties separated, Holly and her daughter continued to live in a home located in
Mendota, Illinois, a residence that Steve purchased before the marriage. Steve, meanwhile,
relocated to a home in Streator, Illinois, which he purchased with funds he withdrew from his
escrow account in June 2020.
¶9 After the trial’s conclusion, the court ordered the parties to prepare and submit position
papers. Holly’s position paper argued that the parties’ four dogs, Streator home, Crestliner boat,
and Jayco trailer were purchased during the marriage and should be characterized as marital
property. Steve’s position paper conversely stated the Crestliner boat was purchased from his
escrow account and was therefore nonmarital. He asserted the fifth wheel trailer was nonmarital
on the same grounds. He also advocated for an award of the male German shepherd. Steve’s
position paper did not address the Jayco trailer or the Streator home; Holly’s position paper did
not address the fifth wheel camper.
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¶ 10 Pursuant to the court’s request, on April 13, 2021, the parties filed a stipulation regarding
the fifth wheel camper that confirmed the parties placed a $1000 downpayment on the camper,
Steve made monthly payments on it from a personal account, and the camper was exclusively
titled to Steve.
¶ 11 On February 8, 2022, the court entered a judgment of dissolution of marriage with
opinion and order dissolving the marriage of the parties. The court expressed frustration at the
parties’ position papers because many of the assets listed by the respective parties did not
overlap, resulting in some of the parties’ assets going unaccounted for. Nonetheless, with due
consideration to the statutory factors outlined in section 503 of the Illinois Marriage and
Dissolution of Marriage Act (Act) (750 ILCS 5/503(a), (d) (West 2022)), the court “did its very
best in attempting to identify and classify marital and non-marital assets and in fashioning an
equitable division of property, given the little evidence the Court received as to classification and
valuation.” Relevant to this appeal, the court classified the parties’ fifth wheel camper, Jayco
trailer, Crestliner boat, and Streator home as marital property.
¶ 12 Among other marital vehicles, the court awarded Steve the Crestliner boat. It also
awarded him the Streator home. The court awarded Holly the Jayco trailer and fifth wheel
camper, among other marital vehicles and vehicle accessories. Before awarding the fifth wheel
camper, the court requested supplemental information via a stipulation of further evidence as it
felt the trial and record produced insufficient evidence to support Steve’s argument that the
camper was nonmarital property. Based upon the stipulation of the parties, the court found that
Steve failed to overcome the presumption that the trailer was marital property. Finally, the court
divided the dogs equally among the parties, awarding Steve the two chows and Holly the two
German shepherds.
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¶ 13 Steve filed a motion to reconsider the court’s order on March 8, 2022, wherein he argued
that the equitable division of the parties’ dogs should have resulted in his award of Herc. He also
argued that certain assets characterized by the order as marital property were, in fact, nonmarital
property because they were purchased through his escrow account. Specifically, he argued the
Jayco trailer and fifth wheel camper fell into this category.
¶ 14 However, at argument on June 23, 2022, the court and Steve’s counsel had the following
colloquy with respect to the Jayco trailer:
“THE COURT: *** you just argued regarding the Jayco trailer, and it’s in
your motion to reconsider so is it now your position that you agree with the
Court’s award regarding the Jayco trailer?
MR. LANNON [(Steve’s Attorney)]: That is correct, Your Honor. We’re
only asking that the Court appreciate the fact that it is a nonmarital asset but it’s
awarded to her.
***
THE COURT: All right. So just to be clear just so the record is clear. With
respect to the Jayco trailer you agree with the manner in which the Court awarded
it but you disagree with the classification that I found it was marital?
MR. LANNON: That’s correct, Your Honor.”
¶ 15 On June 24, 2022, the court issued a written order denying the motion to reconsider.
Steve timely appealed this ruling.
¶ 16 II. ANALYSIS
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¶ 17 On appeal, Steve first argues that the court mischaracterized the Crestliner boat and
Streator home as marital property resulting in the malapportionment of the court’s overall marital
property division. Second, he asserts that the court used the incorrect statutory standard in
awarding the parties’ male German shepherd to Holly. Third, he contends that the court erred in
both characterizing the Jayco trailer and fifth wheel camper as marital property and awarding
those assets to Holly. Holly offers that the majority of these issues are waived based on Steve’s
failure to raise them in the lower court. Before reaching the merits of Steve’s appellate
arguments, we address the threshold waiver issue.
¶ 18 A. Waiver
¶ 19 Holly asserts that Steve waived the following issues based on his failure to timely object
and include such issues within his motion to reconsider: (1) her award of Herc, the parties’ male
German shepherd, (2) the classification of the Crestliner boat as a marital asset, and (3) the
classification of the Streator home as a marital asset. We agree.
¶ 20 Similarly, Holly argues that Steve has waived the issue of the court’s characterization of
the fifth wheel camper and Jayco trailer as marital property. We are persuaded that Steve’s trial
counsel waived his argument regarding the Jayco trailer award. We do not believe, however, that
Steve’s sought award of the fifth wheel camper as an “equitable division of assets” in his motion
to reconsider—utilizing relief language that is exclusively reserved for the division of marital
assets—waives his argument that the camper itself was mischaracterized by the circuit court as a
marital asset.
¶ 21 It is axiomatic that an issue not presented to or considered by the circuit court cannot be
raised for the first time on review. Allstate Property & Casualty Insurance Co. v. Trujillo, 2014
IL App (1st) 123419, ¶ 17. Typically, an issue is waived on appeal unless a timely objection is
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made at trial and is specifically raised in a written posttrial motion. In re Gibson-Terry & Terry,
325 Ill. App. 3d 317, 324 (2001).
¶ 22 1. Crestliner Boat and Streator Home
¶ 23 Steve does not dispute that the Crestliner boat and Streator home were properly awarded
to him but suggests that their mischaracterization as marital property created an imbalance in the
court’s division of marital assets. However, Steve’s failure to include this contention within his
motion to reconsider or argue its merits otherwise before the circuit court are fatal and this issue
is waived.
¶ 24 2. Herc
¶ 25 Next, Steve argues the court erred in using an equitable division standard and not
considering the well-being of the parties’ male German shepherd, Herc, as is now required under
Section 503(n) of the Act when it awarded Holly both Herc and Storm. See 750 ILCS 5/503(n)
(West 2022) (mandating the court consider the well-being of a companion animal when
allocating ownership during dissolution if it finds the companion animal is a marital asset).
Steve’s attack on the court’s use of an equitable division standard holds no merit. Foremost, the
motion to reconsider advances that the division of the shepherds was inequitable and a “fair and
equitable division *** would be to award one [shepherd] to each party.” In short, Steve sought a
different application of the standard he now attacks on appeal. More importantly, Steve failed to
mention Herc’s well-being at any point leading up to his appeal, instead placing his own interest
in the dog as paramount. His trial counsel’s distillation of his argument is indicative of this point,
stating at the hearing on the motion to reconsider that “we feel that Herc was [Steve’s] and ought
to be awarded to him.” As such, he has waived this issue.
¶ 26 3. Jayco Trailer
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¶ 27 In requesting reconsideration of the Jayco trailer award, Steve’s trial counsel conceded
there was no issue with the court awarding it to Holly, but invited the court to take notice that it
is a nonmarital asset. Taken arguendo, his trial counsel’s request is inconsistent with the law of
property division required by section 503 of the Act. 750 ILCS 5/503(d) (“the court shall assign
each spouse's nonmarital property to that spouse” (emphasis added)). Stated differently, had the
court found that the Jayco trailer is Steve’s nonmarital asset, it would have been statutorily
bound to award him the asset. On appeal, Steve contends that his trial counsel mistakenly
conflated the Jayco trailer with another of the parties’ disputed vehicles that the court classified
as marital property. This argument, however, is not supported by the record. Such a contention is
all the more suspect when his trial counsel reiterated his concession upon the court’s request at
the hearing on Steve’s motion to reconsider. Therefore, Steve has also waived this issue.
¶ 28 B. Classification of Fifth Wheel Camper as Marital Property
¶ 29 The sole controversy appropriately preserved for appeal concerns the characterization and
award of the parties’ fifth wheel camper.
¶ 30 As a general rule, in a marriage dissolution action, we do not reverse a circuit court's
classification of property as marital or nonmarital unless the classification was against the
manifest weight of the evidence. See In re Marriage of Heroy, 385 Ill. App. 3d 640, 669 (2008);
In re Marriage of Joynt, 375 Ill. App. 3d 817, 819 (2007). “A decision is against the manifest
weight of the evidence when the opposite conclusion is clearly evident or where it is
unreasonable, arbitrary, and not based on the evidence.” Berger v. Berger, 357 Ill. App. 3d 651,
660 (2005).
¶ 31 Section 503(b)(1) of the Act creates a rebuttable presumption that, for purposes of
property distribution during dissolution, all property acquired after the marriage and before
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dissolution is presumed to be marital property. In re Marriage of Didier, 318 Ill. App. 3d 253,
258 (2000); 750 ILCS 5/503(b)(1) (West 2022). This presumption may be rebutted by showing
through clear and convincing evidence that property was acquired through a method listed in
section 503(a) of the Act. In re Marriage of Hagshenas, 234 Ill. App. 3d 178, 186 (1992). One
such method is to show that the property obtained after marriage was “acquired in exchange for
property acquired by gift.” Id.; 750 ILCS 5/503(a)(1) (West 2022).
¶ 32 A party fails to overcome the presumption that an asset is marital if he or she cannot trace
the entire purchase price of the asset to a nonmarital source. See In re Marriage of Hegge, 285
Ill. App. 3d 138, 143 (1996). This applies even to property titled in only one party’s name—a
fact which bears little relevance to the classification of property as marital or nonmarital. Id.; 750
ILCS 5/503(b)(1) (West 2022).
¶ 33 Here, Steve testified that “[w]e bought [the fifth wheel camper] new,” and it was
purchased during the marriage. He nonetheless argued it was a nonmarital asset. Due to this
incongruence, the court requested the parties submit a stipulation in an effort to discern whether
the asset was marital or nonmarital. The stipulation revealed that the vehicle was obtained from a
$1000 downpayment from the parties’ joint account, Steve made monthly payments on the
vehicle from his own account, he was the sole title owner of the vehicle, and on March 16, 2017,
he paid off the remaining cash value of the vehicle. Holly testified that the parties picked out the
camper together and used it for a year before Steve received his portion of the proceeds from the
sale of Phalen Steel Construction Company, which he then used to pay off the remaining balance
on the camper.
¶ 34 Based on the foregoing, we cannot say that the court erred in finding that Steve failed to
demonstrate by clear and convincing evidence that the fifth wheel camper was nonmarital
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property. The parties stipulated that the downpayment on the camper was from a joint account.
Further, we know of no case that supports the position that marital property may become
nonmarital through one of the joint owners’ unilateral financial contributions. Cf. In re Marriage
of Leon, 80 Ill. App. 3d 383, 385 (1980) (finding husband failed to overcome the presumption
that the parties’ home purchased during their marriage was marital property, despite initial
downpayment coming from nonmarital funds, where subsequent mortgage payments were from
joint accounts). Nor does Steve’s position find support from the addition of section 503(a)(6.5)
of the Act because the camper was not “acquired by a spouse by the sole use of non-marital
property ***[.]” 750 ILCS 5/503(a)(6.5) (West 2022). In sum, the court’s classification of the
fifth wheel camper as marital property was not against the manifest weight of the evidence.
¶ 35 C. Holly’s Award of the Fifth Wheel Camper
¶ 36 Steve also argues that regardless of the court’s classification of the fifth wheel camper,
the court erred in awarding the asset to Holly. “We will not disturb a trial court's division of
marital assets unless it has clearly abused its discretion.” In re Marriage of Thornley, 361 Ill.
App. 3d 1067, 1071 (2005). A circuit court abuses its discretion when no reasonable person
would take the view adopted by the court. See In re Marriage of Nelson, 297 Ill. App. 3d 651,
658 (1998). In issuing its dissolution order, the court noted the opacity presented in the record as
to the value and nature of the parties’ assets. Following the stipulation of the parties, it found the
fifth wheel camper was marital, and in the exercise of its judgment and in consideration of other
asset division pursuant to section 503(d), the court awarded Holly the camper. 750 ILCS
5/503(d) (West 2022). Steve was apportioned his nonmarital property, which includes his
nonmarital home, various investments, and an insurance policy. The court found that Steve’s
income exceeded Holly’s. The court explicitly referenced its consideration of the marital and
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nonmarital assets awarded to both parties in awarding the camper to Holly. The equitable
division of property does not require mathematical equality, and based on its findings, we hold
the court did not abuse its discretion in awarding Holly the fifth wheel camper. See Joynt, 375
Ill. App. 3d at 821.
¶ 37 Last, Steve argues in the alternative that he should be reimbursed for his nonmarital
contribution to paying off the fifth wheel camper pursuant to section 503(c)(2)(A) of the Act,
which provides:
“When one estate of property makes a contribution to another estate of
property, the contributing estate shall be reimbursed from the estate receiving the
contribution notwithstanding any transmutation. No such reimbursement shall be
made with respect to a contribution that is not traceable by clear and convincing
evidence or that was a gift. The court may provide for reimbursement out of the
marital property to be divided or by imposing a lien against the non-marital
property that received the contribution.” 750 ILCS 5/503(c)(2)(A) (West 2022).
¶ 38 Under this subsection, reimbursement, if any, goes to an estate and not a spouse. See,
e.g., In re Marriage of Steinberg, 299 Ill. App. 3d 603, 610 (1998). A circuit court’s failure to
reimburse the marital estate is reviewed under an abuse of discretion standard. See id.¶ 39 Steve directs our attention to a check found within the record that was made out to him
from his escrow account, which he purports was used to pay off the remaining balance on the
fifth wheel camper. As the circuit court aptly pointed out at trial, there is no apparent connection
between the checks introduced into the record and Steve’s testimony as to the amount he
contributed via a lump sum payment to the camper. In short, the court did not abuse its discretion
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in finding that Steve failed to meet his burden of producing clear and convincing evidence which
traced his contribution to the asset. Accordingly, no reimbursement is warranted.
¶ 40 III. CONCLUSION
¶ 41 The judgment of the circuit court of La Salle County is affirmed.
¶ 42 Affirmed.
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