Jul 29, 2013

Predicting the Court’s Decisions

The longer I practice and live through changes in the law, the more I see how hard it is for clients and former clients to predict how the Courts will treat issues that come up after divorce. While some of the effects of changes in law cannot be avoided – like changes in child support guidelines – others can be avoided or mitigated with proactive planning, clearly articulated intentions, and careful drafting. Three cases illustrate the point from different perspectives.In the first case, the parties’ divorce decree, like many where the divorce is final before kids start college, said that the parties were to pay for college but that the decision about who paid what amounts was reserved. After the first child graduated college, while the second child was in college and before the youngest was about to start college, the mother requested that the Court allocate the children’s college expenses between the parties. The Illinois Supreme Court held that in divorce judgments where payments for college is reserved, the petition to allocate the expenses has to be filed before the petitioning parent incurs any expenses. Nothing in the statute or the case law that existed before the first child went to court could have prepared the mother for this outcome. The lesson here is that where any responsibility is uncertain, it is better to get a decision before taking action.The second situation dealt with interpreting a Marital Settlement Agreement’s maintenance provision for the wife. When the couple divorced, the husband’s income fluctuated. The parties agreed that the wife was to receive a monthly spousal support payment (maintenance) and “16 percent of the gross additional income” the husband received. Their decree defined “additional income” as all “bonuses, stock grants and awards, exercisable stock options and the like…” (please note there is no comma after “stock options”). After the couple divorced, the husband received severance pay of $1,672,685. The wife argued that she was entitled to 16 percent of the severance because it was “additional income” under their agreement. Instead, she got a tough lesson on the use of the comma. The wife argued that the term “and the like” in the parties’ agreement was a broad umbrella that permitted the court to give her a piece of the husband’s severance. The husband argued that severance was not part of the definition of “additional income” because the parties could have, but did not, explicitly include it in the definition. He also argued that there was no comma after “stock options” in the phrase “stock options and the like” so that “and the like” applied just to “exercisable stock options,” which are not similar to his severance pay. The court sided with him. The lesson: proofread carefully and be clear on intent—this case turned on the absence of a comma.Third is a case that illustrates the philosophy that if you don’t ask, the answer is always no. In some instances, particularly given the recent economic downturn, cases are settling with support levels different than the marital lifestyle because the paying spouse does not have the same income and cash flows he or she did before. In In Re Marriage of DiGiovanni, the trial court reasoned that because the support provisions in the parties’ Marital Settlement Agreement were silent about how the support compared to the spouse’s marital lifestyle, the Court could presume the amount was sufficient to pay for the lifestyle. During the post-decree trial, the wife tried to show she could not afford her marital lifestyle after the divorce on the agreed upon support. In the end, the wife’s evidence of lifestyle before the divorce was not relevant. Courts are only supposed to let the parties present evidence going back to the latest court order so that they are not re-litigating things previously decided. The Court reasoned that both parties had lawyers when they made their marital settlement agreement; both parties said they entered into the agreement freely and voluntarily; and when the wife agreed to accept $20,000 per month for unallocated maintenance and support for herself and her minor children, the Court could infer that both parties and their attorneys considered all of the statutory factors (including lifestyle) to reach this agreement. If the wife had documented the differences of opinion she and her husband had about the cost of her lifestyle, she might have found herself in a different position. Even though that might only have postponed an argument about marital lifestyle, at least she would have preserved her ability to make that argument.What are the lessons here?1.) Waiting to get advice could cost you something dear;2.) Be clear in how agreements are written; and3.) Be clear about anything that is the basis of making an agreement.

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