In re MARRIAGE OF CLYDE W. SHORES, Petitioner-Appellant, and JANE SHORES, Respondent-Appellee.
No. 2-13-0151
Appellate Court of Illinois, Second District
May 16, 2014
2014 IL App (2d) 130151
(Note: This syllabus constitutes no part of the opinion of the court but has been prepared by the Reporter of Decisions for the convenience of the reader.)
In an appeal challenging an award of child support based on a bonus plaintiff earned through his employment and two reimbursement payments he received from his employer, the appellate court reversed the increase based on the bonus, since the bonus was speculative income that was earned during the obligation period but was not paid until after the support period had ended and, therefore, was not income for purposes of the support period at issue; however, the reimbursement payments were not speculative, both were earned during the obligation period, and even though one of the payments was received after the obligation period ended, both were income for purposes of the obligation period.
Decision Under Review: Appeal from the Circuit Court of Kane County, No. 07-D-540; the Hon. Katherine M. Moran, Judge, presiding.
Judgment: Affirmed in part and reversed in part; cause remanded.
Counsel on Appeal:
Thomas G. Kenny, of Kenny & Kenny, of Wheaton, for appellant.
Richard C. Slocum and Thomas E. St. Jules, both of Dreyer, Foote, Streit, Furgason & Slocum, P.A., of Aurora, for appellee.
OPINION
¶ 1 Petitioner, Clyde W. Shores, appeals the trial court‘s award of an increase in child support, arguing that the trial court erred by including three items as income under
¶ 2 I. BACKGROUND
¶ 3 This is an appeal from an order modifying child support, following a postjudgment, domestic relations proceeding. The proceeding followed the dissolution-of-marriage judgment originally entered on July 19, 1999, between petitioner and respondent, Jane Shores, in California and enrolled in the Kane County circuit court on May 17, 2007.
¶ 4 The parties were married on August 9, 1986, and they had two children during their marriage, Katherine born March 8, 1989, and Emily born July 13, 1992. After their marriage dissolution, the parties shared joint custody of the children, with respondent having primary residential custody. The judgment provided that petitioner would pay respondent child support of $2,900 per month (allocated as $1,088 for Katherine and $1,812 for Emily) until each child married, died, was emancipated, reached 18 years of age and was not a full-time high school student residing with respondent, or reached 19 years of age, or upon further order of the court, whichever occurred first.
¶ 5 On October 18, 2007, respondent filed a petition to increase child support and a petition for contribution to college expenses for Katherine. Thereafter, on October 24, 2009, petitioner filed a petition for contribution to college expenses for Emily. On August 31, 2009, petitioner filed a petition for modification of child support, alleging that he lost his job and was unable to pay child support.
¶ 6 The two petitions for contribution to college expenses were resolved on July 8, 2010, by an agreed order. The agreed order provided that each party would pay for half of each child‘s college expenses.
¶ 8 On March 3, 2011, the trial court entered an order setting the amount of child support petitioner owed from 2007, 2008, and 2009 (total: $30,721.65). The March 3 order also continued to April 26, 2011, the matter of 2010 support due, although the matter was not heard until September 4, 2013. In the interim, petitioner filed a motion on July 17, 2011, for termination of his obligation to Katherine, which the trial court granted on July 28, 2011, except for claims for contribution to expenses incurred prior to the child‘s emancipation.
¶ 9 On July 28, 2011, petitioner filed a motion to reconsider the February 2011 order. Petitioner argued that income he received after Emily‘s emancipation was not subject to child support, and he urged the court to reconsider that portion of its February 2011 order. The court eventually denied the motion for reconsideration on January 31, 2013.
¶ 10 At a September 12, 2011, hearing, the following documents were admitted: petitioner‘s 2010 jointly filed tax return for himself and his current wife; his letter of employment with Baxter Healthcare Corporation (Baxter) as vice president of global marketing, dated October 16, 2009, and confirming his eligibility to participate in the company‘s “Management Incentive Compensation Program” (MICP); his 2010 form W-2; his wife‘s form W-2; his wage/paycheck statement from Baxter, dated July 9, 2010; his March 18, 2011, wage statement from Baxter that included a $100,931.04 MICP bonus; a copy of the Baxter MICP policy; and copies of his 2009-10 and 2010-11 annual compensation review summaries from Baxter. Also, attached as an exhibit to respondent‘s request to admit was a summary of relocation expenses reimbursed to petitioner from November 19, 2009, through September 14, 2010, which provided a breakdown of $14,487.62 paid to petitioner after Emily‘s emancipation.
¶ 11 Petitioner testified to the following at the September 12, 2011, hearing, which was continued to June 11, 2012. He began working for Baxter on October 26, 2009, and he participated in the MICP offered by Baxter. He received a pro rata share of the MICP bonus in 2010 for his partial year of employment in 2009, and he was a full-year participant in 2010. When asked if he received an MICP bonus in 2011 for his work in 2010, he answered, “I received a[n] MICP bonus” in March 2011. His compensation in 2010 was $350,406.54, according to his 2010 W-2, and his wife‘s was $247,339 for the same year. He testified as to his Baxter pay stub for July 9, 2010–the last paycheck he received prior to Emily‘s emancipation–verifying that he received $10,984.62 for that pay period. He testified that he received a raise in March, although he was unable to confirm the exact amount.
¶ 12 Petitioner testified to his MICP bonuses received in 2010 and 2011, in amounts of $21,093.33 in 2010 for the 2009 performance year (a pro rata share of what he would have earned had he been employed for all of 2009), and $100,931.04 in March 2011 for the 2010
¶ 13 Petitioner further testified that he received a relocation reimbursement in the amount of $14,487.62 after Emily‘s emancipation. Petitioner further acknowledged a $20,355.21 reimbursement on his July 9, 2010, pay stub. He had resided in St. Charles, Illinois, prior to accepting employment with Baxter, which had its offices 60 miles away from his St. Charles home, in October 2009. In November 2009, petitioner purchased a second home in Lake Forest, only eight or nine miles from the Baxter offices, because he felt that a daily commute of 120 to 130 miles was not sustainable. He testified that the reimbursements were for duplicate housing expenses that he incurred as a result of maintaining his home in Lake Forest. The reimbursements were for the actual expenses of his Lake Forest home (mortgage, interest, taxes, etc.), and he continued to make similar payments on his St. Charles home. He testified that he repaid both the $14,487.62 and the $20,355.21 reimbursements to Baxter in May 2011 after he voluntarily terminated his employment with Baxter, pursuant to his employment agreement. He ended his employment with Baxter to take a different position in California with an annual salary around $330,000. He chose to own two homes simultaneously while working for Baxter because of the promise of reimbursement for duplicate housing costs.
¶ 14 Counsel for petitioner and respondent made closing arguments on July 2, 2012. The trial court confirmed that the sole issue before it was the amount of child support due for January 1, 2010, to July 13, 2010, which was the date Emily was emancipated (i.e., turned 18 and had graduated from high school). Respondent argued that the relocation reimbursement received by petitioner prior to July 13 in 2010–the payment of $20,355.21–was income for purposes of child support. Furthermore, respondent argued that the $14,487.62 relocation reimbursement, which petitioner received after Emily‘s emancipation but for expenses incurred prior to emancipation, should likewise be included in the child support calculation. With regard to the MICP bonus, respondent argued that the $100,931.04 bonus that petitioner received in March 2011 was for his work performance in 2010 and that therefore a prorated portion of that bonus should be included in calculating the 2010 child support. Respondent argued that 52.88% of that bonus should be subject to child support (basing the percentage on the proportion of time in 2010 before Emily was emancipated). The total balance respondent claimed for 2010 child support, based on the MICP bonus, reimbursements, and other income, was $21,329.61.
¶ 15 Petitioner argued that the MICP bonus received after Emily‘s emancipation was not subject to child support, because his continued employment after the child‘s emancipation was necessary to receive the bonus. Furthermore, petitioner argued that he repaid all of the reimbursements after he left his employment with Baxter (pursuant to his employment contract) and that therefore they should be excluded from his income for purposes of child support. He argued that, even if he had not repaid the reimbursements, the reimbursements were not income, because they did not increase his wealth-they were repayments for out-of-pocket business expenses.
“Basically, the MICP bonus is based on the employee‘s performance as well as Baxter‘s. *** The MICP program provides [that] bonus/awards will be paid out as soon as possible following the end of the performance year for which they correspond. Common sense dictates that the bonus [petitioner] received on March 18, 2011, was for the 2010 performance year.”
Accordingly, the trial court found that the 2011 bonus should be included in petitioner‘s 2010 child support income. Regarding the relocation expense reimbursements that petitioner paid back in full after voluntarily terminating his employment with Baxter, the trial court did not find that they were income for purposes of child support.
¶ 17 Taking into account both the child support that petitioner had already paid and the child support that he owed on additional income from January 1 through July 12, 2010, the trial court ordered petitioner to pay an additional $13,770.49 in child support for 2010.
¶ 18 Both petitioner and respondent filed respective motions for reconsideration; petitioner argued, in pertinent part, that income received after July 12, 2010 (e.g., the 2011 MICP bonus), should not be income for child support, and respondent argued, in pertinent part, that the trial court erred by not including relocation expense reimbursements in its calculation of petitioner‘s income from January 1 through July 12, 2010.
¶ 19 The trial court resolved the parties’ motions to reconsider in its January 31, 2013, opinion and order. First, addressing respondent‘s motion, the trial court clarified that it did not include the $20,355.21 relocation reimbursement in petitioner‘s 2010 income because, although that payment was listed on petitioner‘s July 9, 2010, wage statement, it was not included in petitioner‘s year-to-date total earnings on that same wage statement. The $14,487.62 relocation reimbursement was likewise excluded from income for the relevant time period because there was no corresponding wage statement to show when the payment was made. However, the court‘s review of petitioner‘s testimony showed that he admitted that both reimbursements received were for expenses incurred prior to July 13, 2010, and it was not refuted that he received the $20,355.21 reimbursement prior to July 13, 2010. Moreover, the court held that petitioner “being required to re-pay these sums to Baxter when he left the company *** is not dispositive to the issue of whether these payments are income and should be included when calculating [his] net income.” The court reasoned that these payments of $20,355.21 and $14,487.62 “effectively increased his income” for January 1, 2010 through July 12, 2010. Therefore, the court found that it erred in not including those amounts in the determination of child support and granted respondent‘s motion in that respect.
¶ 20 Turning to petitioner‘s motion to reconsider, petitioner argued that income received after July 12, 2010, including the MICP bonus received in 2011 and the relocation reimbursements of $20,355.21 and $14,487.62, should not be included in calculating his income for January 1 through July 12, 2010. The trial court found that bonuses earned and reimbursements for expenses incurred prior to July 13, 2010, were to be included in petitioner‘s 2010 child support income. The trial court reasoned that “the receipt of the bonus and the relocation payments
¶ 21 Petitioner timely appealed.
¶ 22 II. ANALYSIS
¶ 23 A. Standard of Review
¶ 24 Petitioner argues that the issues before the court involve interpretations of statutes, namely sections 505(a)(3) and 510(d) of the Act (
¶ 25 Here, we are faced with issues of statutory construction, particularly, of what constitutes income under
¶ 26 B. Characterization of the MICP Bonus
¶ 27 The first issue we examine is whether the trial court properly included a pro rata share of petitioner‘s MICP bonus, received in March 2011, as
¶ 28 Petitioner argues as follows. Net income under
¶ 29 Respondent rejoins that in Illinois what is taxable income under the Internal Revenue Code (IRC) does not govern the determination of
In petitioner‘s reply brief, he argues that
¶ 30 On appeal, the Wendt court framed the issue as whether a nonvested, discretionary bonus issued after the judgment for dissolution of marriage was a marital asset, and it found the issue to be one of first impression in Illinois. Id. ¶ 16. The court noted that the husband‘s employment was at will and that thus he had no right to receive the bonus by virtue of any employment contract. Id. ¶ 17. His employer‘s policy was that all bonuses were discretionary and based on myriad factors, including an employee‘s individual performance. Id. ¶ 18. Moreover, his 2012 bonus, if any, would be governed by the 2013 employee incentive program, or whatever incentive program was in effect in 2013. Id. ¶ 19. Therefore, the court found that the husband did not have a contractual right to the bonus at issue and that, without a vested right to the bonus, it was not marital property. Id. ¶ 20. Moreover, the Wendt court distinguished Lewis, one of the cases respondent relies on, because the husband in Lewis had an employment contract, whereas the husband in Wendt had no vested contractual right to the bonus he received in 2013. Wendt, 2013 IL App (1st) 123261, ¶¶ 26-27. The 2013 bonus was speculative until it actually vested, and thus the trial court did not err in finding that the bonus was nonmarital property. Id. ¶ 31.
¶ 31 Petitioner argues that, like the bonus in Wendt, the bonus here was too speculative to be considered income for child support. He had no vested right to the bonus at the time of the child‘s emancipation in 2010.
¶ 33 As with
¶ 34 The Wendt court further distinguished the bonus from stock bonuses more generally, which were addressed by this court in In re Marriage of Peters, 326 Ill. App. 3d 364 (2001). Wendt, 2013 IL App (1st) 123261, ¶¶ 28-30. Peters addressed the issue of whether a contingent stock bonus, earned in part during the marriage, was marital property subject to division. Peters, 326 Ill. App. 3d at 367. Although Illinois had not addressed stock bonuses earned in part during marriage, the legislature had addressed pensions earned in part during marriage in
¶ 36 The case here is similar to Wendt, and we find Wendt‘s reasoning with regard to marital assets applicable to a determination of
¶ 37 C. Characterization of Relocation Reimbursements
¶ 38 Turning to the relocation reimbursements, the trial court found that both the $20,355.21 sum (received before the child‘s emancipation) and the $14,487.62 sum (received after the child‘s emancipation) were
¶ 39 We disagree with petitioner that the reimbursements were not income. We have already disagreed with the trial court‘s analysis of the MICP bonus, and we therefore proceed, consistent with that analysis, to address whether repayment of the reimbursements excludes the reimbursements from characterization as
¶ 40 Petitioner‘s reliance on Worrall is misplaced. Worrall involved per diem allowances for travel, not reimbursements for relocation expenses. The per diem allowances were for a truck driver to use for meals and lodging while on the road in performance of his truck-driving duties; here, the relocation reimbursements were not for expenses incurred while working but for expenses incurred by petitioner maintaining a second residence. Nonetheless, petitioner argues that, because the reimbursements were repaid, there was no economic gain-an argument that the benefit fell outside the large breadth of the
¶ 41 In any event,
¶ 42 Unfortunately for petitioner, he has not explicitly broached an argument that
¶ 43 In his reply brief, petitioner makes a different argument that is likewise forfeited. He argues that the circumstances of his voluntary termination of employment, which necessitated his repayment of the reimbursements, should have been a consideration in ruling on respondent‘s petition to increase child support. This argument is not an interpretation of
¶ 44 As petitioner forfeited both his arguments that the trial court erred by including the $20,355.21 reimbursement in its calculation of net income, we affirm on that point. See People v. Hillier, 237 Ill. 2d 539, 540-41 (2010) (holding that defendant forfeited his arguments, precluding review, and thus leading court to affirm).
¶ 45 Petitioner makes an additional argument for why the $14,487.62 reimbursement should not be considered income. He argues that he received it after the Emily‘s emancipation and that therefore the reimbursement was more akin to the MICP bonus. The expenses giving rise to the right to reimbursement indisputably occurred within the obligation period. Unlike with the MICP bonus, however, we do not know the relevant terms of Baxter‘s agreement to reimburse petitioner. Petitioner does not cite any language that would show that the reimbursement, like the MICP bonus, was speculative until a time after the Emily‘s emancipation; he cites only the section that imposed his obligation to repay the reimbursements if he voluntarily left his employment. Ambiguities in the record are resolved against the appellant (Corral v. Mervis Industries, Inc., 217 Ill. 2d 144, 155 (2005)), and therefore we assume that all events giving rise to the right to the reimbursement occurred prior to the child‘s emancipation. Because the reimbursement was income that accrued prior to emancipation and was not speculative like the MICP bonus, the trial court did not err in including the $14,487.62 reimbursement in its child support calculation despite petitioner‘s not receiving it until after emancipation.
¶ 46 III. CONCLUSION
¶ 47 Analogizing marital assets to child support income, we find that the trial court erred by including petitioner‘s MICP bonus, because, although it was earned for performance in 2010, the bonus was speculative until received in 2011. Speculative income, such as income at the discretion of an employer, is income for purposes of child support not when it is earned but instead when it is received, if received at all. However, the trial court did not err by including the two disputed reimbursement payments as income, because both accrued within the obligation period, and although one reimbursement was received after the support period ended, the reimbursement was not speculative. Accordingly, the Kane County circuit court‘s order granting respondent‘s petition to increase child support is reversed with respect to the MICP bonus and is affirmed with respect to the reimbursements. The cause is remanded.
¶ 48 Affirmed in part and reversed in part; cause remanded.