In re Marriage of Altman
2016 IL App (1st) 143076
Ill. App. Ct.2016Background
- Heather Altman filed for dissolution and an order of protection; proceedings were consolidated and highly contentious involving custody, support, and discovery disputes.
- Both parties had counsel; respondent Jeffrey Block paid significant legal fees to his attorneys, later represented by Steven Gerage who was ordered to disgorge fees and was held in contempt for noncompliance.
- Altman claimed inability to pay and sought interim attorney fees under 750 ILCS 5/501(c-1); she had a nonmarital 403(b) retirement account (~$100,000) she had not accessed for litigation.
- Trial court found both parties lacked access to sufficient assets or income and allocated $33,284 of $35,000 marital funds to pay counsel and ordered Gerage to disgorge $16,000 of previously paid fees.
- Gerage appealed the contempt order, arguing (1) the retirement account made Altman able to pay, (2) earned fees already paid to attorneys are not “available funds” for disgorgement, and (3) the court failed to allocate $1,716 remaining in escrow.
Issues
| Issue | Altman (Petitioner) Argument | Gerage (Respondent) Argument | Held |
|---|---|---|---|
| Whether a spouse can be required to use a nonmarital retirement account to pay interim attorney fees | Altman argued she lacked access to funds and should not be required to invade retirement savings | Gerage argued Altman’s 403(b) is an available asset that negates her claim of lacking access to assets | Court held a nonmarital retirement account that the spouse has not accessed and is statutorily exempt cannot be ordered invaded for interim fees; Altman lacked access |
| Whether fees already paid to a lawyer for past services are “available funds” under §501(c-1)(3) | Altman (and trial court) treated previously paid funds held by counsel as allocable to achieve parity | Gerage argued earned fees are no longer available property of the client and cannot be disgorged after being earned and spent | Court held earned fees already paid to counsel for past services are not “available funds” subject to disgorgement and reversed the disgorgement and contempt order |
| Scope of disgorgement: whether disgorgement can reach former counsel or only current counsel | Implicitly: funds paid on behalf of a spouse may be subject to allocation regardless of source | Gerage argued extending disgorgement to former counsel is absurd and unworkable | Court declined to extend disgorgement to earned fees across prior counsel; noted absurd consequences of forcing withdrawn counsel to refund earned fees and remanded allocation of remaining escrowed $1,716 |
| Procedural issue: contempt for failing to comply with disgorgement order | Altman sought enforcement of interim fee order by contempt | Gerage argued contempt improper because order exceeded statute by requiring disgorgement of earned fees | Court reversed contempt because the underlying disgorgement (as to earned fees) was improper |
Key Cases Cited
- First Capitol Mortgage Corp. v. Talandis Construction Corp., 63 Ill. 2d 128 (addresses consideration of appeals without appellee brief)
- Jakubik v. Jakubik, 208 Ill. App. 3d 119 (retirement plans exempt from judgment and not available for attorney-fee judgments)
- Dowling v. Chicago Options Associates, Inc., 226 Ill. 2d 277 (discusses characterization of advance payment retainers under professional conduct rules)
- In re Marriage of Earlywine, 2013 IL 114779 (Illinois Supreme Court: retainers/advance payments in dissolution actions subject to §501(c-1) disgorgement rules)