In re Marriage of Faber
58 N.E.3d 52
Ill. App. Ct.2016Background
- Mark and Carole Faber divorced after a marriage from 1999 to 2013; they had substantial marital and nonmarital assets and stipulated to many valuations pretrial.
- Trial court awarded 55% of marital property to Carole (45% to Mark) as property in lieu of maintenance and denied Carole’s request for contribution toward attorney fees.
- Disputed assets at issue on appeal: appreciation in Mark’s pre-marital Fidelity 401(k) (rolled into an IRA), growth in an ESOP, phantom stock issued by Chicago Metallic Products (CMP), and subordinated notes and loans tied to CMP.
- Mark failed to produce full account statements and supporting records in discovery; Carole’s expert (Mareta) testified he could not allocate premarital vs. marital growth without those records and treated increases as marital.
- Trial court denied Mark’s late motion to admit missing 401(k) statements and, relying on the record and expert testimony, treated the increases in the 401(k), ESOP, and phantom stock as marital and split subordinated notes per the parties’ stipulated percentages after subtracting advances.
Issues
| Issue | Mark's Argument | Carole's Argument | Held |
|---|---|---|---|
| Classification of 401(k) appreciation and burden of proof | 401(k) was premarital; under 750 ILCS 5/503(a)(7) increases remain nonmarital and burden was on Carole to prove marital portion | Mark failed to produce required documents; expert could not trace premarital earnings, so appreciation should be treated as marital | Court deemed increases above $93,020 marital due to Mark’s failure to produce statements; any burden error favored Mark and did not warrant relief |
| ESOP increase allocation | 29.45% of ESOP was nonmarital and that proportion of proceeds must be nonmarital | Stipulation gave premarital value; growth mainly from "other investments" acquired during marriage and Mark failed to provide records to trace nonmarital portion | Court ruled increases above $17,053 marital; Mareta’s testimony supported this and Mark failed to prove nonmarital traceability |
| Phantom stock classification | Phantom stock issued to restore pre-2004 equity and thus traceable to nonmarital holdings | Phantom stock plan expressly a deferred-compensation incentive, issued during marriage, subject to vesting — not traceable to premarital stock | Court found plan purpose and operation showed deferred compensation; phantom stock was 100% marital; credibility findings reasonable |
| Subordinated notes and $680,720 advances/loans | Advances (marital debt) should be offset entirely against marital portion; leave nonmarital share untouched | Documents, prior statements, and payout schedule treated advances as offsets against entirety of notes | Court found advances were applied against total payout; reduced the total notes before splitting per agreed percentages; factual finding not against manifest weight |
| Cross-appeal: attorney-fee contribution | Carole: Mark is substantially better off; trial court should have ordered Mark to contribute to her $150,000 fees | Court: considered financial positions and litigation conduct; both had large awards and each litigated vigorously | Court did not abuse discretion in denying contribution; parties to bear their own fees |
Key Cases Cited
- Redelman v. K.A. Steel Chemicals, Inc., 377 Ill. App. 3d 971 (2007) (trial courts have wide discretion over discovery and may impose sanctions for discovery noncompliance)