2021 IL App (2d) 190917-U Nos. 2-19-0917 & 2-20-0066 cons. Order filed August 3, 2021

NOTICE: This order was filed under Supreme Court Rule 23(b) and is not precedent except in the limited circumstances allowed under Rule 23(e)(1). ______________________________________________________________________________

IN THE APPELLATE COURT OF ILLINOIS

SECOND DISTRICT ______________________________________________________________________________

In re MARRIAGE OF MAURA J. ) Appeal from the Circuit Court O’MALLEY, ) of Kane County. ) Petitioner-Appellee, ) ) and ) No. 18-D-242 ) JOSEPH B. O’MALLEY, ) Honorable ) Joseph M. Grady and William J. Parkhurst, Respondent-Appellant. ) Judges, Presiding. ______________________________________________________________________________

JUSTICE HUDSON delivered the judgment of the court. Justices Birkett and Brennan concurred in the judgment.

ORDER

¶1 Held: (1) Trial court did not err in using expatriate allowance and related tax-protection amounts to determine husband’s available income for purposes of setting spousal support; (2) trial court erred in including value of restricted stock units awarded to wife as part of equitable distribution of marital assets to determine husband’s available income for purposes of setting spousal support; (3) award of monthly maintenance to wife in the amount of $15,000 per month did not constitute an abuse of discretion; (4) trial court did not err in finding that husband failed to prove by clear and convincing evidence amount of gain attributable to husband’s non-marital retirement assets; (5) trial court did not abuse its discretion in ordering husband to contribute to wife’s attorney fees pursuant to section 503(j) of the Illinois Marriage and Dissolution of Marriage Act; but (6) trial court abused its discretion in ordering husband to contribute to wife’s attorney fees pursuant to section 508(b) of the Illinois Marriage and Dissolution of Marriage Act.

2021 IL App (2d) 190917-U

¶2 Respondent, Joseph B. O’Malley, appeals from an order of the circuit court of Kane County dissolving his marriage to petitioner, Maura J. O’Malley. On appeal, respondent raises three

principal contentions. First, he argues that the trial court erred in calculating his income for purposes of setting spousal support. Second, he argues that the trial court erred in failing to attribute gain to his non-marital retirement assets. Third, he argues that the trial court erred in ordering him to pay attorney fees incurred by petitioner. For the reasons set forth below, we affirm in part and reverse in part.

¶3 I. BACKGROUND

¶4 The parties were married on September 2, 1988. Four children were born to the parties

during the marriage. On February 26, 2018, petitioner filed a verified petition for dissolution of marriage. On August 29, 2018, respondent filed a counter-petition for dissolution of marriage. On

March 20, 2019, the parties entered into an Agreed Allocation Judgment and Parenting Plan for D.O., the only child who was a minor at the time of the dissolution proceedings. The remaining issues were tried over several dates between March 19 and April 3, 2019, with the parties being the only witnesses to testify.

¶5 At the time of trial, petitioner resided in Kane County while respondent lived in Geneva, Switzerland. Petitioner was 55 years of age and respondent was 56 years of age. Both parties testified they were then in good health, although respondent had surgery in 2018 to remove a cancerous tumor from his thigh. Petitioner recounted that she had left high school early and worked full time in retail. Petitioner received a GED in 1985. Petitioner then worked as an office administrator for a national temporary health company, becoming branch manager before she left that employment in 1991. Thereafter, petitioner worked for two years at a local temporary health firm before the parties decided she would stay home to raise their children. The highest annual

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2021 IL App (2d) 190917-U income petitioner made at either workplace was about $30,000. Between 1993 and 1998, petitioner

worked as a part-time salesperson at Gap Kids. Petitioner also took a certification class for Montessori teacher training, which led to a position as an assistant to the director at a Montessori school. At that time, two of the parties’ children attended the school, and petitioner received compensation in the form of a tuition discount. After the parties’ third child was born, they decided petitioner would discontinue her employment at Gap Kids, although she remained with the school

to help with tuition. Petitioner continued to work at the school when the parties’ youngest child, D.O., was born in December 2001. Thereafter, petitioner devoted her time to volunteering for different organizations, including the children’s schools and an animal shelter, and caring for the children and the marital home.

¶6 Respondent started working at age 15, and, during high school, began working at Jewel

Food Stores. Respondent remained employed at Jewel on a part-time basis from 1979 to 1991.

During that employment, respondent contributed to the company’s retirement plan every year.

Early in 1984, respondent also took a part-time teller position at Dunham Bank while continuing to work part-time at Jewel. When respondent graduated from college in December 1984, he continued his employment at both Jewel and Dunham Bank. Thereafter, Dunham Bank was

acquired by First Financial Services, which was thereafter acquired in succession by First Chicago, First Chicago NBD, Bank One, and, ultimately, JP Morgan Chase. Respondent continued to work at the bank during these transitions, and he contributed to his retirement plan every year he was there. By the time he left Bank One in 1999, he had risen to the position of first vice president.

Respondent then worked a short stint at The Northern Trust, followed by a position with La Salle

Bank, where he stayed from June 1999 to March 2008. In 2008, he moved to JP Morgan Chase, where he was employed at the time of trial.

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2021 IL App (2d) 190917-U

¶7 In the summer of 2013, respondent talked about a possible position with JP Morgan Chase in Geneva, Switzerland, and, according to petitioner, “it sounded exciting to the family.” Petitioner and the children “encourage[ed] [respondent] to look into it.” Petitioner testified that she was

“absolutely” in favor of the relocation as it presented an “exciting opportunity” for the children to be “exposed to different cultures and nationalities, [and] to travel.” Although the offered position was “indefinite,” the parties sold their house and made the international move in 2014.

¶8 Since then, respondent has been on foreign assignment. He works for JP Morgan Chase

U.S. in Switzerland and is considered to be “on loan” from JP Morgan Chase U.S. to JP Morgan

Switzerland, which is a separate legal entity. Respondent is paid by JP Morgan Chase U.S., which remains his “official employer.” Respondent does not have a written employment agreement with either JP Morgan Chase U.S. or JP Morgan Switzerland. Respondent testified that the lack of a written employment agreement is not unusual. Upon his assignment in Switzerland, respondent assumed his current title of “managing director—senior credit officer.” In this position, respondent is responsible for the credit and loan portfolio of JP Morgan Switzerland, which is valued at approximately $14 billion. This involves approving and declining requests of credit, monitoring that credit, and collecting on credit that has defaulted. He also reports directly to the audit committee and the board of directors, and he sits on the management committee.

¶9 Respondent testified that when he took the position in Switzerland, he was offered a

“relocation package”—commonly known as an “expat allowance”—which included family

relocation expenses, a housing allowance, an education allowance for the children, allowance for language courses, and family airfare to travel between the U.S. and Switzerland for holidays.

Respondent testified that some of these line-item allowances were recurring, while others were incurred only once. Respondent received this package of benefits as part of his compensation and, 190920

2021 IL App (2d) 190917-U early in his foreign assignment, the expat allowance exceeded $200,000 annually, with respondent

being taxed on these benefits as income. To ensure respondent was protected from a tax standpoint, his employer provided respondent additional compensation to cover the tax liability on these benefits, thereby effectively paying his annual taxes on the expat allowance.

¶ 10 Respondent testified regarding his 2018 annual compensation summary, which showed his earnings for 2018, the year-end that was closest to the trial. Respondent indicated that his “total

compensation” for 2018, excluding the expat allowance, was $429,499, which was comprised of two components: (1) $302,999 in salary and (2) $126,500 in a discretionary “annual incentive award.” Respondent elaborated that the salary component was the sum of respondent’s “home base

salary,” i.e., his gross annual base salary of 275,000 Swiss Francs, and a “FAP differential,” i.e., an additional 20,000 Swiss Francs he received due to his foreign assignment, totaling 295,000

Swiss Francs, or roughly $303,000. Respondent further explained that the “annual incentive award” was broken down into a cash portion ($82,225) and a restricted stock unit (RSU) portion

($44,275). Respondent testified that his expat allowance is not included in his “total compensation,” but is accounted for separately, as reflected in a February 28, 2019, monthly

“Expatriate Pay Detail Report.” The “earning” section of the Expatriate Pay Detail Report includes three entries, with the first two entries—respondent’s “home base salary” and “FAP differential”— equaling the roughly $303,000 in U.S. Dollars shown as his “salary” on the 2018 annual compensation summary. The third entry is respondent’s expat allowance, which is listed as

“Transition allow—Host based.”

¶ 11 The February 28, 2019, Expatriate Pay Detail Report—the most current evidence of respondent’s monthly compensation at the time of the trial—showed that respondent’s monthly expat allowance was 6325.42 Swiss Francs, which equaled $6395.83. Respondent testified that his

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2021 IL App (2d) 190917-U monthly expat allowance decreases over time and that, over a course of five years abroad, the expat allowance will be phased-out and will fully terminate in February 2020. The “U.S. Year to Date” total for the expat allowance as of February 2019 was $19,589.48. Although this is more than what it should be for two months at $6395 per month, respondent explained the monthly amount had just decreased in February 2019, as was the standard for the prior three years. Each year between

2017 and 2019, the package was reduced by 33% effective with the February payroll. Thus, the February 2019 year-to-date sum included the January expat allowance in a higher amount plus the newly-reduced February amount. As noted, the expat allowance included a tax-protection amount to cover the income taxes due on that allowance, and all are reported as part of respondent’s W-2 wages. Respondent testified that although the expat allowance and the related taxes are included as wages on his W-2 statement, he does not actually receive this money in-hand.

¶ 12 In addition to the monthly “earnings” listed in the February 2019 Expatriate Pay Detail

Report, respondent also has the potential to be awarded an annual incentive award. As noted above, respondent’s 2018 annual compensation summary showed that his 2018 award, which was paid in 2019, totaled $126,500, with 65% paid in cash ($82,225) and 35% comprised of a grant of RSUs

($44,275). Although respondent has received an incentive award every year he has been in Switzerland, the award is “completely discretionary” and in some prior years no incentive award was given.

¶ 13 Respondent explained that when he is granted an award of RSUs, he cannot immediately sell that stock for cash. Instead, the RSUs are earned out over three years in an established vesting

cycle if respondent remains employed with the firm. This means that the first year after the grant, he receives nothing. After the second year, he receives 50% of the award upon its vesting. At the end of the third year, the remaining 50% of the award vests. The RSUs are taxable as ordinary

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2021 IL App (2d) 190917-U

income at the time they are received, and the value at that time may be greater or less than the value at the time of the grant.

¶ 14 Respondent testified that the parties’ 2015 U.S. income tax return showed total income of $677,493. The parties’ U.S. tax for 2015 was $63,223. Respondent was also assessed $147,959 in Swiss taxes, which both he and JP Morgan U.S. pay. Respondent pays the Swiss taxes monthly on his base pay, cash bonus, and vested RSUs, and JP Morgan U.S. pays taxes on the expat allowance.

¶ 15 The “tax protection” respondent received from JP Morgan U.S. in 2015 in the form of a

gross-up for the taxes incurred on his expat allowance was explained in a letter dated April 5, 2016, that he received from his accountants, KPMG, which prepares his annual tax filings for both the U.S. and Switzerland. The letter provides a detailed breakdown of the numerous line-item expenses that are covered by the expat allowance, and shows that respondent’s total expat allowance for 2015 was $204,004. The letter also shows that respondent’s 2015 wages—including the “tax protected items,” i.e., the expat allowance—totaled $659,483. Upon dividing respondent’s

2015 wages of $659,483 into two categories of “taxpayer responsibility” and “JP Morgan Chase responsibility” (the latter being the expat allowance), the letter reflects that JP Morgan U.S. owed respondent $46,832 for taxes attributable to the $204,004 of his expat allowance. The letter further explains this “tax reimbursement amount” represents “additional taxable income [to respondent] which is reportable in 2016.”

¶ 16 Respondent testified that the parties’ 2016 U.S. tax return largely tracked that of 2015, except it showed increased compensation because the value of the RSUs that vested in 2016 had

significantly increased due to a market upturn between the time they were awarded in 2013 and thereafter vested in 2016.

¶ 17 In 2017, the parties U.S. tax return included a foreign tax credit statement showing

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2021 IL App (2d) 190917-U

$218,081 paid in Swiss taxes and provided an overview of all foreign taxes paid from 2014 through

2017. The 2017 “tax protection” letter issued by KPMG dated April 6, 2018, showed that for 2017, respondent’s expat allowance was $229,658 and that of his total $745,537 in W-2 wages, JP

Morgan U.S. owed respondent $60,250 that was attributable to taxes due on the expat allowance and would appear as taxable income in 2018. Respondent testified that by the time of trial, many of the listed categories that made up the 2017 expat allowance of $229,658 had been phased out and reduced into a monthly payment of approximately $6395, or $76,740 annually.

¶ 18 Respondent acknowledged that his W-2 statements from 2015 to 2018 reflected that his income had been consistently rising during the period he worked in Switzerland, with his Medicare wages increasing from $683,482 in 2015 to $791,808 in 2018. Respondent testified, however, that although his reported income increased, his guaranteed salary did not. Moreover, he testified that

he did not receive all the money that was reported because of deductions for income tax, Medicare, Social Security, insurance, and other items.

¶ 19 Respondent prepared a balance sheet dated March 18, 2019, reflecting the parties’ assets

and liabilities. Respondent testified that he has no pension benefits from JP Morgan Switzerland because he is not employed by that entity. However, as reflected on the balance sheet, the parties have several retirement accounts, two of which respondent claimed were partly non-marital because he had been contributing funds to them prior to the parties’ 1988 marriage: (1) a JP

Morgan Chase 401(k) with a balance of approximately $1.4 million and (2) a JP Morgan Chase individual retirement account (IRA) with a balance of approximately $636,000.

¶ 20 In support of his non-marital claim, respondent introduced his individual tax returns from

1985 through 1988 to illustrate his pattern of pre-marital retirement contributions. The 1985, 1986, and 1987 returns showed contributions of $1000, $2000, and $300, respectively, that were never

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2021 IL App (2d) 190917-U withdrawn and which respondent stated were part of the JP Morgan Chase IRA. Respondent’s W-

2 statements from Jewel accompanied his 1987 return and showed his participation in Jewel’s pension and deferred compensation plans. Respondent never took any distributions from the Jewel accounts, and he stated they rolled over into the JP Morgan Chase IRA. Respondent’s 1987 tax return also included W-2 statements from First Chicago, confirming he participated in its pension and deferred compensation plans as well. Respondent never received distributions from the First

Chicago plans. The First Chicago deferred compensation plan was the predecessor to the current

JP Morgan Chase 401(k) plan, and the First Chicago pension plan is now part of the JP Morgan

Chase pension plan. In 1988, respondent continued to work for Jewel and First Chicago, making these same types of contributions and not withdrawing anything from the plans. Respondent never withdrew any money from his retirement accounts and reinvested earnings. Respondent always contributed to retirement plans when they were available, and he oversaw the management of his retirement assets both before and during the marriage.

¶ 21 Respondent testified that when a retirement account earns dividends and interest, the account “increases in value using the time value of money theory.” Over petitioner’s objection, respondent performed a calculation to determine the current value of his pre-marital contributions to the JP Morgan Chase 401(k) and IRA accounts by analyzing the rate of return for the S&P 500 over the 30-year term of the parties’ marriage. Considering reinvested dividends, the return rate

was 10.295%. Respondent then applied this 10.295% rate of return to his estimated $20,000 of pre-marital contributions and the reinvestment of the dividends over the course of the 30-year

marriage to conclude his pre-marital contribution was now worth $389,000, and that this was the amount of non-marital funds contained in the JP Morgan Chase 401(k) and IRA accounts.

Petitioner confirmed that when she met respondent she knew he was a “saver” and that respondent

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2021 IL App (2d) 190917-U continued to be a “saver” during the marriage.

¶ 22 As to the marital standard of living, respondent testified that during the marriage, the parties purchased luxury vehicles, but most were used and several years old when acquired. He also testified that the standard and cost of living was significantly higher in Switzerland, including for housing, food, and insurance. For instance, he paid $7400 per month in rent in Switzerland.

Petitioner testified that when the parties lived in West Chicago prior to moving to Switzerland, they had a “high” standard of living. Petitioner testified that respondent frequently bought her jewelry during the marriage, including sapphire earrings, diamond earrings, and an Omega watch.

Petitioner also stated the parties “lived well but frugally” during their marriage and that she and respondent lived the lifestyle of “savers.” Moreover, the family traveled extensively both before and after moving to Switzerland, including trips to Colorado, Florida, California, Aruba, Puerto

Rico, Costa Rica, Mexico, England, France, Greece, Italy, Ireland, Spain, and Thailand.

¶ 23 In October 2017, respondent told petitioner he was having an affair. Respondent admitted

at trial that in 2016, he became romantically involved with another woman, Noema Morales. In March 2017, respondent loaned Morales $170,000, without petitioner’s knowledge or prior consent. After respondent’s relationship with Morales ended, he met a second woman, Katazryna

Podogorna, in March 2017. Respondent subsequently hired an attorney to sue Morales for repayment of the loan. Respondent has incurred more than $15,000 in legal fees associated with

the lawsuit against Morales. As of the date of trial, Morales had paid back roughly $18,000 of the loan. Respondent remained romantically involved with Podogorna at the time of trial. In December

2017, respondent gave Podogorna charge privileges on one of his credit cards.

¶ 24 After petitioner learned of respondent’s affairs, she flew back to Illinois in February 2018 and filed for divorce. Although petitioner returned to Switzerland so D.O. could finish her school

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2021 IL App (2d) 190917-U

year there, she ultimately moved back to Illinois on July 17, 2018. Petitioner started to look for work in January 2019. At the time of her deposition in February 2019, she had completed job

applications at Costco and Delnor Hospital. After her deposition, she applied to a few more places, including grocery stores and an animal shelter. She had no interviews and did not utilize any counseling service to search for jobs.

¶ 25 Petitioner submitted two financial affidavits. The first was dated June 11, 2018. It estimated

petitioner’s monthly expenditures at nearly $18,000 based on expenses incurred in Switzerland, where she was living at the time. Petitioner acknowledged that the cost of living in Switzerland is higher and that the listed expenditures included an entry of $7500 for rent in Switzerland, as well as higher expenses for utilities such as gas, electric, and water. Petitioner stated that the first affidavit contained several “errors,” including: (1) listing all four children as living with her when only the two youngest did; (2) listing expenses for maid service in Switzerland which she did not have in Illinois; (3) claiming $2758 in tuition for D.O.’s private school in Switzerland when D.O. attended public school in Illinois; and (4) listing a $533 monthly combined expense for school trips, tutoring, and extracurricular costs in Switzerland that D.O. did not incur in Illinois.

¶ 26 By the time petitioner completed her second affidavit dated February 18, 2019, she had lived in Illinois for more than six months, and was paying $2800 per month in rent. However, she stated that the second affidavit included many of the same figures reflecting Switzerland expenses used in her prior affidavit because she “was saving time.” In addition to showing an incorrect address, the second affidavit, which listed $14,378 in monthly expenses, repeated several

“mistakes” petitioner had acknowledged in her first affidavit, including that all four children lived with her and listing Switzerland tuition and other school-related expenses totaling more than $3200 per month that were not incurred on behalf of D.O. in Illinois.

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2021 IL App (2d) 190917-U

¶ 27 During trial, petitioner submitted, over respondent’s objection, an undated document titled

“Maura’s Living Expenses” that claimed $13,400 in monthly expenses. Petitioner testified the document was “probably” prepared within four weeks prior to trial. Petitioner testified she regularly paid expenses for her three adult children and she had used receipts and bills from July

2018 onward to prepare this exhibit, although those underlying documents were not produced.

¶ 28 The parties also filed dissipation claims against each other. Respondent alleged petitioner dissipated $148,035 based upon her use of credit cards and “excessive spending” that was “outside the norm of [the marital] standard of living.” With respect to the $648,633 dissipation claim petitioner alleged against him, respondent admitted he had dissipated $163,372 related to payments

made to his current girlfriend. Respondent denied the remainder of petitioner’s allegations, asserting she had incorrectly included many non-dissipation items. In turn, petitioner acknowledged that her $648,633 dissipation claim against respondent was not signed by her. She

also testified to numerous “mistakes” in claiming items as dissipation, including family vacations, balance transfers between marital accounts, physician charges she incurred for surgery, and cash

withdrawals made by respondent. Petitioner confirmed she could have been “more vigilant” in preparing her claim, and it would have been less without the “mistakes,” although she did not know by how much.

¶ 29 After the trial concluded, but before closing arguments, respondent filed on April 17, 2019, a petition for contribution to attorney fees and costs and for sanctions pursuant to sections 501, 503, and 508 of the Illinois Marriage and Dissolution of Marriage Act (Act) (750 ILCS 5/501, 503, 508 (West 2018)) and Illinois Supreme Court Rule 137 (eff. Jan. ^[1], 2018). Respondent alleged petitioner had engaged in “unreasonable litigiousness” and “a pattern of conduct that unnecessarily increased the cost of litigation” including: (1) petitioner’s confirmation at trial that her dissipation

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2021 IL App (2d) 190917-U claim was “inflated,” prepared with “limited to no investigation” and that she could have been

“ ‘more vigilant’ in reviewing the transactions,” many of which were her personal expenses and those of the family; (2) her “recklessly prepared financial affidavits” that included “grossly inflated expenses that were no longer being incurred or were over estimated [sic],” resulting in her being

“impeached several times while on the stand with her deposition testimony” due to “a number of mistakes and errors”; and (3) petitioner’s “repeated failures to abide by Illinois Supreme Court discovery rules as evidenced by her trial testimony.”

¶ 30 On April 18, 2019, petitioner filed a motion for leave to file her own petition for fees and costs pursuant to section 503(j) of the Act (750 ILCS 5/503(j) (West 2018)). Petitioner asserted that she had incurred attorney fees and costs in excess of $120,000, of which $53,648 remained

unpaid. Petitioner requested that respondent contribute $53,648 to her unpaid attorney fees and costs, “plus an additional sum of at least $15,000” to “prepare the proposed Judgment for Dissolution of Marriage with findings, respond and defend against [respondent’s] Petition for Contribution to Attorney’s Fees and Costs and for Sanctions, and prepare and conduct the closing

argument.” Over respondent’s objection, the court granted petitioner leave to file her motion. In his May 1, 2019, response, respondent argued that petitioner’s fee request should be denied because any increased fees were in large part due to her own “unreasonable litigiousness, improper dissipation claim and grossly inflated financial affidavits.”

¶ 31 On May 3, 2019, the parties’ attorneys presented closing arguments in open court. Relevant

here, petitioner asked that she be awarded 50% of the net marital estate and $15,000 per month in maintenance based upon respondent’s W-2 wages of “$800,000 per year.” Petitioner also requested that the marital estate be reimbursed in the amount of $384,000 for funds respondent

“admittedly spent on his mistresses” and that respondent’s dissipation claim against her be denied

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2021 IL App (2d) 190917-U in its entirety. Respondent countered that his “true income” was not reflected by the wages listed

on his W-2 statement, but instead consisted of his base pay, cash bonus, and the “potential” RSUs, which in 2018 totaled $424,499 before taxes. Upon applying a 35% tax rate, the $15,000 monthly maintenance requested by petitioner was 64% of respondent’s net income. Based upon respondent’s base income and imputing $35,000 to petitioner as her annual income, respondent

proposed a guidelines calculation of tax-free support of $4850 per month plus 25% of his bonus, if and when received. Respondent also proposed, inter alia: (1) a 50-50 allocation of a net marital estate he valued at about $2.9 million; (2) the court find that his $20,000 pre-marital retirement account contributions grew to more than $389,000 over the 30-year course of the marriage; (3) petitioner be denied contribution to her attorney fees in light of the 50-50 division of the marital estate and because she caused an escalation of all fees due to her “litigious actions;” and (4) based upon petitioner’s litigiousness, an award of attorney fees to him pursuant to section 508(b) of the Act.

¶ 32 The trial court entered a handwritten judgment of dissolution on June 10, 2019. Relevant to the instant appeal, the court determined that petitioner will be unable to support herself without assistance from respondent. After considering the statutory factors, the court found that maintenance was appropriate. The court then determined that respondent’s gross income for 2018 was $791,808, based upon the income reported on his W-2 statement, and that there was “no reason to expect that the Respondent’s annual gross income will be substantially reduced in the future.”

Noting that the maintenance amount guidelines set forth in section 504 of the Act (750 ILCS 5/504

(West 2018)) did not apply because respondent’s gross income for 2018 exceeded $500,000 and after imputing an annual income of $15,000 to petitioner, the court ordered respondent to pay petitioner $15,000 per month in “indefinite” maintenance.

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2021 IL App (2d) 190917-U

¶ 33 As to respondent’s $20,000 contribution of pre-marital retirement funds to the JP Morgan

Chase 401(k) and IRA accounts and the growth of these funds over the 30-year marriage, the court found that “[n]o evidence was presented of how the $20,000 was invested or how much it grew

from year to year” and opined that “[i]t may have been completely lost during the recession of approximately 2007 to 2012.” The court further observed that during the marriage, marital funds

were continually contributed to the retirement accounts, “thereby arguably transmuting the $20,000 to marital funds.” Moreover, the court reasoned that respondent’s “estimate of the current value of his non-marital contribution is, as an estimate with no other clear and convincing evidence, speculative.” Accordingly, the court awarded respondent $20,000 from the retirement accounts as his “sole and exclusive property.”

¶ 34 Next, the court noted petitioner’s contention that respondent had “earned or been granted

1174 RSU shares as of March 7, 2019,” and that the parties “appear to agree” that these shares had a value of $121,767.28 as of that date. The court awarded petitioner “one half the value of any shares (RSUs) granted as of the date of the divorce if and when they vest.” The court denied respondent’s claim of dissipation by petitioner. However, it found that respondent dissipated marital assets totaling $384,208.76, including the $163,372.76 admitted in respondent’s response to petitioner’s dissipation claim and the loan of $170,000 to Morales. The court awarded petitioner

$192,104.38, half of the amount dissipated. The court divided the principal financial assets equally between the parties. Finally, the court held that “[a]ny outstanding attorney fees shall be paid by each party to their respective attorneys,” but ordered respondent to “contribute an additional

$12,500 toward [petitioner’s] attorney’s fees.”

¶ 35 On July 10, 2019, respondent filed a motion to reconsider the dissolution judgment, alleging several errors. Among other things, respondent asserted that the court overstated the - 15 -

2021 IL App (2d) 190917-U amount he had available for spousal support by erroneously finding his income was $791,808

based on his 2018 W-2 statement and failing to “take into account the unrebutted testimony and evidence regarding [respondent’s] actual cash flow and income at present and going forward.”

Respondent contended that his income falls into four “buckets”: (1) salary; (2) cash bonus; (3)

RSUs that vest in a given year; and (4) the expat allowance and related benefits. Respondent argued that the evidence showed: (1) his only guaranteed compensation was his annual salary of $302,999;

(2) although his expat allowance and its related tax-payment true-up was reflected in his reported

W-2 wages, it did not translate into cash flow to fund support payments, and, in any event, the expat allowance had sharply declined from past amounts and would fully terminate in February

2020; and (3) his annual incentive award—consisting of the cash and RSU components—was discretionary, the value of the RSU component is undetermined until the time of vesting years later, and the Court had erroneously double counted the unvested RSUs by equally allocating them between the parties as property and then also including them as income by considering

respondent’s full W-2 wages (which included the value of the vested RSUs) for support. Therefore, respondent requested the court reconsider its income ruling and find his income for purposes of spousal support consisted only of his base pay of $302,999 plus one-third of his variable cash incentive award if, as, and when received (as 50% of the RSUs had already been awarded to petitioner as property in the judgment). This would result in respondent paying petitioner $5133 per month in maintenance, plus 1/3 of the net of any cash award he received at the time of receipt.

With respect to respondent’s pre-marital retirement funds, although he was awarded $20,00 of the approximately $2 million in retirement assets as his non-marital property, respondent asserted the court erred by attributing no gain or appreciation to those funds. As the parties were married for more than 30 years, respondent argued that “it defies logic and the stock market that no

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2021 IL App (2d) 190917-U appreciation or gain would have occurred to those pre-marital retirement assets.” Therefore, based on the “unrebutted” evidence submitted at trial, respondent requested that the court reconsider its ruling and value his non-marital retirement funds at $389,000.

¶ 36 On July 19, 2019, respondent filed a motion to supplement his motion to reconsider the dissolution judgment, requesting that he be granted leave to supplement his motion to reconsider with information regarding his income that was not available at the time of trial. Respondent

recounted that as of June 30, 2018, his year-to-date gross income from all employment sources, i.e., the four “buckets” discussed in his reconsideration motion, was $575,623, as reflected on his

June 30, 2018, paystub that was attached to the motion to supplement. One year later, respondent’s year-to-date gross income from these same sources was $429,643, a decline of more than

$145,000, as shown in the June 30, 2019, paystub attached to the motion to supplement.

Respondent argued that comparing these two exhibits confirmed that a substantial portion of this decline was caused by a $63,236 reduction in his RSU payments and a $75,087 reduction in his expat allowance.

¶ 37 On July 23, 2019, the parties returned to court and respondent’s motion to supplement his

motion to reconsider was granted. Over respondent’s objection, the court that day also granted in part an emergency request for injunctive relief filed by petitioner and enjoined both parties from

making withdrawals from a joint JP Morgan account, except for required payments per the dissolution judgment, until the court resolved the motion to reconsider.

¶ 38 On July 31, 2019, petitioner filed a second emergency request for injunctive relief, claiming that respondent unilaterally depleted the marital estate without notifying her or obtaining leave of the court. Among other things, petitioner alleged that respondent: (1) transferred $61,000 to his individual account in violation of the July 23, 2019, order; (2) sold 1500 shares of stock

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2021 IL App (2d) 190917-U netting more than $174,000, which he used to pay down an equity line; and (3) surrendered three life insurance policies with a cash value of $91,000, which the judgment of dissolution had allocated equally to the parties to pay attorney fees and costs. That same day, the trial court granted petitioner’s second emergency request for injunctive relief and enjoined respondent from withdrawing or otherwise disposing of “any and all financial accounts of any nature” and directed

JP Morgan Chase to remove respondent’s access to certain accounts.

¶ 39 On August 7, 2019, petitioner filed a petition for attorney fees and costs pursuant to section

508(b) of the Act (750 ILCS 5/508(b) (West 2018)). The bases for petitioner’s request were twofold. First, petitioner alleged that respondent had “fail[ed] to comply with a court order without compelling cause or justification” by unilaterally surrendering the three life insurance policies that

had been earmarked by the court in the dissolution judgment to pay attorney fees. Second, petitioner alleged that respondent “needlessly, and intentionally, increase[d] [her] litigation costs” where (1) he filed a motion for reconsideration of the dissolution judgment and (2) the trial court granted two post-judgment emergency restraining orders against respondent. Petitioner further alleged that after respondent received notice of the second emergency order, he harassed her over

the telephone, calling her and her attorneys “stupid,” telling her that she was “wasting money” and “extend[ing] the case,” and threatening to “continue to appeal until there was no money left.”

Petitioner asserted that since entry of the dissolution judgment, she had incurred $12,426 in attorney fees. She requested that respondent pay that amount plus an additional $12,500 “to defend against [respondent’s] Motion for Reconsideration and further protect her interests against

[respondent’s] calculated actions.”

¶ 40 In his response to petitioner’s petition for attorney fees and costs, respondent admitted he surrendered the three insurance policies, but stated that he did so in May 2019, prior to the entry

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2021 IL App (2d) 190917-U of the dissolution judgment on June 10, 2019. Respondent also admitted that he filed a motion to reconsider the dissolution judgment and that the court had granted two post-judgment emergency restraining orders against him. Further, respondent alleged that on or about July 19, 2019, his attorneys reached out to petitioner’s counsel to explore settlement in an expedited mediation.

Respondent alleged that instead of responding, petitioner filed her first request for injunctive relief the following day. Respondent therefore concluded that it was petitioner who caused the fees to unnecessarily increase.

¶ 41 The trial court heard oral arguments on respondent’s reconsideration motion on August 23, 2019. On September 23, 2019, the court entered a handwritten order that granted in part and denied in part respondent’s motion to reconsider. The court granted respondent relief on several claims not at issue in this appeal, but rejected respondent’s arguments as to the claims that are at issue here. In denying respondent’s request to reconsider its income finding, the court held: (1) calculating maintenance only on respondent’s base salary “would require the parties to at least

annually determine how much of the Respondent’s bonuses and [RSUs] should be paid to the Petitioner * * * and would almost certainly set the parties up for protracted and frequent post- decree litigation”; (2) although respondent’s expat allowance has been decreasing for several

years, he earns more income and therefore the expiration of the expat allowance was “not certain to negatively affect” respondent’s income based on his past income history; (3) because respondent has historically received cash bonuses and RSUs, there is no reason why he would not receive them in the future; and (4) because respondent had a history of “saving,” he could budget for his monthly maintenance payments despite receiving his bonuses and RSUs only once per year.

Accordingly, the court concluded that the maintenance award to petitioner of $15,000 per month

“appears to be reasonable for the Respondent’s income and will be significantly less than one-half

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2021 IL App (2d) 190917-U of the Respondent’s income.” Next, the court held that if the award of 50% of the RSUs as property to petitioner while also using their value to determine respondent’s available income for support was “a double hit” to him, “it appears to be similar to a disproportionate division of the marital estate and will only be a double hit for the first three years of the Respondent’s maintenance

obligation.” Finally, in rejecting respondent’s claim as to the non-marital retirement accounts, the court acknowledged that respondent had $20,000 of non-marital retirement funds which he “co-

mingled with marital funds in the parties’ retirement accounts.” The court therefore held that the increase attributable to respondent’s $20,000 of non-marital funds over the course of the marriage

as calculated by respondent was “at best speculative and has not been shown by clear and convincing evidence.” As such, the court affirmed its award of $20,000 to respondent.

¶ 42 Also on September 23, 2019, the trial court conducted a hearing on petitioner’s section

508(b) petition. During the hearing, petitioner stated that she was seeking a fee award “for what

we would generically describe as bad conduct,” in that, while the case was under advisement, respondent had surrendered the life insurance policies. Petitioner further stated that because of respondent’s conduct, she was “required * * * to file a petition for a temporary restraining order”

that she later “needed to supplement” because respondent “was actively removing funds from the parties’ trust account.” Petitioner also alleged that it had been 60 days since she has received any maintenance from respondent. As a result, petitioner requested nearly $25,000 in attorney fees.

¶ 43 Respondent countered that an award of attorney fees is appropriate under section 508(b) only if a party fails to comply with an order of the court without compelling cause or justification or if a party “needlessly intentionally increased the cost of litigation.” Respondent argued that neither prong applied here. In support, he noted that he surrendered the life insurance policies a month before the entry of the dissolution judgment. Therefore, there was no court order prohibiting

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2021 IL App (2d) 190917-U

him from doing anything with the policies at the time they were surrendered. With respect to the injunctions, respondent stated that the first injunction stemmed from a misreading of a bank

statement where petitioner mistakenly thought funds were removed from an account but, instead, it was simply changed to a money market account rather than being held in stock. The second injunction was obtained on an ex parte basis without hearing. Respondent therefore posited that

the amount of fees requested was “extraordinarily high” for a “limited amount of work.” Finally, respondent argued that petitioner had “built into” her fee request a “component” that was related to work performed in answering respondent’s motion to reconsider. Respondent argued that because the court granted several items of the relief requested in the motion to reconsider, that relief in itself “substantiate[d] a form of merit for that underlying petition” and would not support the imposition of attorney fees under section 508(b). In reply, petitioner admitted that respondent

“was not under an order of court after the trial not to cash in life insurance.” She argued, however, that it was “just commonsense” and the prudent thing to do if respondent needed money would have been to file a motion with the court. As to the motion to reconsider, petitioner asserted that the filing was “essentially baseless,” but she needed time to prepare a response.

¶ 44 In ruling on the section 508(b) petition, the trial court did not believe the motion to reconsider was a basis for petitioner’s fee request. Further, the court agreed with respondent’s

attorney that the motion to reconsider was “not improper,” adding that “by the very nature of the circumstances of this case probably it was necessary.” The court then stated, “I think at this point from everything I heard is a basis for a request for fees [sic].” The court also discussed the proceeds from the life insurance policies, stating that it did not know if the insurance money was still available, but had it been available it “would have * * * taken care of” the fees assessed by petitioner’s attorney. Ultimately, the court ordered respondent to pay petitioner’s counsel $24,746

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2021 IL App (2d) 190917-U

in attorney fees pursuant to section 508(b) of the Act. Regarding respondent’s argument that the fees requested was “extraordinarily high” for a “limited amount of work,” the court stated that

“every court appearance requires at least several hours of work” and this case involved “responding to a lot of financial aspects * * * on a continuing basis.” Thereafter, respondent asked the court to order petitioner’s counsel to identify the time spent “related to [the] injunctive motions if that’s what the award of fees is based on.” The trial court denied respondent’s request. The court

subsequently entered a written order requiring respondent to pay petitioner’s counsel $24,746 in attorney fees “[f]or the reasons set forth on the record.”

¶ 45 On September 30, 2019, petitioner filed a motion to adjust the judgment for dissolution of marriage and for other relief. Specifically, petitioner requested an order (1) releasing the assets awarded to her instanter while also continuing to restrict respondent’s use of the remaining assets until a full accounting to determine any monies he had improperly taken and (2) requiring

respondent to turn over detailed statements from 2019 to date regarding all accounts in his name, individually or jointly, and all accounts referenced in the judgment of dissolution. On October 11, 2019, respondent filed a motion to terminate or release injunction.

¶ 46 On October 23, 2019, respondent filed his notice of appeal in docket No. 2-19-0917, appealing the June 10, 2019, final judgment of dissolution of marriage, the September 23, 2019, partial grant and partial denial of respondent’s motion to reconsider, and the ruling granting petitioner’s petition for attorney fees and costs, also entered on September 23, 2019. On December

23, 2019, the trial court entered an order terminating the injunction and ruling on the motion to adjust dissolution judgment. On January 22, 2020, respondent filed his notice of appeal in docket

No. 2-20-0066, appealing the rulings on petitioner’s motion to adjust dissolution judgment and respondent’s motion to terminate/release injunction entered on December 23, 2019, as well as

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2021 IL App (2d) 190917-U again appealing the three orders specified in his appeal in docket No. 2-19-0917. This court consolidated respondent’s two pending appeals by order entered February 6, 2020.

¶ 47 II. ANALYSIS

¶ 48 On appeal, respondent raises three principal contentions. First, he argues that the trial court

erred in calculating his income for purposes of setting spousal support. Second, he argues that the trial court erred in failing to attribute gain to his non-marital retirement assets. Third, he argues that the trial court erred in ordering him to pay attorney fees incurred by petitioner. We address each contention in turn.

¶ 49 A. Maintenance

¶ 50 Respondent first argues that the trial court erred in determining his available income for purposes of setting spousal support. Respondent advances two subarguments in support of his assignment of error. First, respondent asserts that the trial court erred in finding that his entire 2018

W-2 earnings of $791,808 were available for the payment of maintenance and that there was “no reason to expect that [his] annual gross income will be substantially reduced in the future” despite

“uncontradicted evidence” that his expat allowance was a limited benefit that would terminate in February 2020. Second, respondent argues that the trial court erroneously double counted the RSUs both as property that was equally divided between the parties and as part of respondent’s income stream for payment of maintenance. Respondent further contends that, based on this overstated income, the trial court abused its discretion in awarding petitioner indefinite maintenance in the amount of $15,000 per month. Finally, respondent contends that the trial court refused to revisit its findings and remedy these errors in response to his motion to reconsider despite his submission of additional new evidence to support his claims.

¶ 51 Petitioner counters that the trial court correctly determined respondent’s income for the - 23 -

2021 IL App (2d) 190917-U

purpose of calculating maintenance. According to petitioner, the Act broadly defines income for the purpose of calculating maintenance to include “[a]ll income from all sources,” and this includes non-guaranteed income such as bonuses, incentive compensation, and respondent’s expat

allowance. Petitioner further maintains that the trial court did not err by including the value of the RSUs that were allocated as property to the parties as income for purposes of support because there is authority to support the trial court’s decision. Petitioner also responds that the trial court acted within its discretion when it set respondent’s monthly maintenance obligation at $15,000 because the evidence and the relevant statutory factors support such a finding. Finally, petitioner argues that the trial court’s order denying respondent’s motion to reconsider was not improper because the motion simply reiterated the same arguments respondent made at trial.

¶ 52 1. Respondent’s Income: Expat Allowance

¶ 53 Respondent initially argues that the trial court overstated the amount of his income

available for spousal support by including his entire W-2 wage amount. According to respondent, the income reflected on his W-2 statement does not reflect “the actual cash flow” available to him to pay support. Specifically, respondent asserts that the expat allowance and related tax-protection amounts were not received by him “in-hand,” were being phased out, and were to terminate

entirely in February 2020. Thus, respondent reasons, it was against the manifest weight of the evidence for the trial court to include these sources when calculating his income for purposes of setting spousal support and also to find that there was “no reason to expect that Respondent’s annual gross income will be substantially reduced in the future.” Petitioner disagrees, arguing that

there is ample evidence to support the trial court’s inclusion of “non-guaranteed income” for purposes of calculating the obligor’s available income for support.

¶ 54 Whether an item constitutes income for purposes of calculating maintenance is a question

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2021 IL App (2d) 190917-U of law subject to de novo review. In re Marriage of Ruvola, 2017 IL App (2d) 160737, ¶ 18. We are unpersuaded by respondent’s claim that the trial court erred in including the expat allowance and related tax-protection amounts when calculating his income for purposes of setting spousal support. First, respondent’s claim that it was improper for the trial court to consider the expat allowance and related tax-protected amounts in setting spousal support because the funds were not

received by him “in-hand” ignores the legislature’s broad and expansive definition of income for purposes of the Act. In re Marriage of Rogers, 213 Ill. 2d 129, 136 (2004). “Net income,” as referred to in the maintenance statute, is defined in the child support section of the Act. 750 ILCS

5/504(b-3.5) (West 2018) (referring to section 505 of the Act (750 ILCS 5/505 (West 2018))). “Net income” is calculated by taking a party’s “gross income” and subtracting certain deductions. 750

ILCS 5/505(a)(3)(B) (West 2018). In turn, “gross income” is defined broadly as “the total of all income from all sources.” 750 ILCS 5/505(a)(3)(A) (West 2018); see also 750 ILCS 5/504(b-3)

(West 2018). The Act does not define “income,” but in Rogers, the supreme court stated that income is “ ‘something that comes in as an increment or addition * * *: a gain or recurrent benefit that is usu[ally] measured in money * * *: the value of goods and services received by an individual in a given period of time.’ ” Rogers, 213 Ill. 2d at 136-37 (quoting Webster’s Third New

International Dictionary 1143 (1986)). Additionally, income has been defined as “ ‘[t]he money

or other form of payment that one receives, usu[ally] periodically, from employment, business, investments, royalties, gifts and the like.’ ” Rogers, 213 Ill. 2d at 137 (quoting Black’s Law

Dictionary 778 (8th ed. 2004)). As such, income has been found to include a one-time, lump-sum workers’ compensation settlement (In re Marriage of Mayfield, 2013 IL 114655, ¶ 25), a one-time conversion of funds from a traditional IRA to a Roth IRA (In re Marriage of Pratt, 2014 IL App

(1st) 130465, ¶ 25), contributions to a party’s “pro forma” capital account based on the annual

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2021 IL App (2d) 190917-U performance of the employer (In re Marriage of Winne, 239 Ill. App. 3d 273, 285 (1992)), funds from the payment of personal expenses by the obligor’s employer (In re Marriage of Olson, 223

Ill. App. 3d 636, 652 (1992)), and gifts from the obligor’s parents (Rogers, 213 Ill. 2d at 137;

Ruvola, 2017 IL App (2d) 160737, ¶ 19).

¶ 55 In this case, the expat allowance and related tax-protection items constituted periodic benefits respondent received from his employer. In this regard, respondent testified that the expat allowance consisted of recurring and one-time line-item allowances for expenses such as

relocation, housing, education, language courses, and travel. As such, they constituted income for the purposes of setting spousal support.

¶ 56 Despite the expansive definition of income, respondent asserts that the expat allowance and related tax-protection amounts do not constitute income, explaining that “[a]s a practical matter, it stands to reason that where funds are not actually available to spend as income, they

should not be included as a basis upon which to calculate support.” Contrary to respondent’s claim, however, the expat allowance and tax-protection amounts were available to spend. As noted above, the record establishes that the expat allowance was spent on family relocation expenses, housing, education, language courses, and travel expenses. Indeed, respondent concedes in his brief that the funds were spent, noting that his employer used the funds to pay tuition amounts directly to his children’s schools and the taxes to cover the expat allowance. Respondent cites no authority that

the expat allowance and related tax-protection amounts should not be considered income for the purpose of setting spousal support because they were earmarked for a particular purpose and paid directly by his employer.

¶ 57 Respondent points out that prior decisions have determined that reinvested proceeds from a reverse stock split, proceeds from the sale of a residential property, and withdrawals from a self-

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2021 IL App (2d) 190917-U funded IRA are not considered income for purposes of support. The cases respondent cites are not analogous to the situation before us. For instance, in In re Marriage of Anderson, 405 Ill. App. 3d

1129, 1136 (2010), the court held that proceeds from a reverse stock split did not constitute income

for calculating the husband’s support obligation because the sale of the stock was involuntary, the stock was classified as non-marital property, cash proceeds took the place of the former shares of stock, and the cash proceeds were used to purchase another investment. Anderson, 405 Ill. App.

3d at 1136. The present case does not involve reinvested proceeds from the forced sale of non- marital property. In In re Marriage of Baumgartner, 384 Ill. App. 3d 39, 56-57 (2008), the court

held that where the husband sold his residence and purchased a new home, the sale proceeds of the old residence did not constitute income for purposes of calculating a support obligation. The present case does not involve the sale of a former residence followed by the purchase of a new residence. Finally, in In re Marriage of O’Daniel, 382 Ill. App. 3d 845, 850 (2008), the court held that where a party withdraws money placed into an IRA, “he does not gain anything as the money was already his” and it therefore “is not a gain and not income.” Respondent’s reliance on

O’Daniel is misplaced as this case does not involve the withdrawal of an IRA contribution. ^[1] Thus, the cases cited by respondent do not compel a finding that the trial court erred in categorizing the expat allowance and related tax-protection amounts as income for the purposes of setting his maintenance obligation.

¶ 58 Additionally, the fact that the expat allowance was being phased out and would terminate