Modifying, Clarifying, and Enforcing Property Awards

by Wes Cowell; updated 2 January 2016 -- suggest a correction

 

Illinois divorce law gives court power to enforce property awards and property settlement agreements.  Sometimes financial awards earn interest…sometimes not.  Need advice?  Call, leave your info, or schedulescheduleschedule a consult.

 

Modification of Property Awards:  Within 30 days of entry of judgment, either party may seek to modify the property award, vacate the judgment, or ask for a re-hearing and a reconsideration of the property award under 735 ILCS 5/2-1203 or may appeal the judgment.  After 30 days the property division becomes final.  It may not be modified absent a showing of fraud, coercion, mutual mistake, concealment, etc. The law says:

 

The provisions as to property disposition may not be revoked or modified, unless the court finds the existence of conditions that justify the reopening of a judgment under the laws of this State.

750 ILCS 5/510(b)

 

Judgments may be set aside where they are unconscionable, where both parties misunderstood the value of assets , and even on the unilateral mistake of one of the parties.  If you need to modify your property division, contact our office immediately – time is of the essence.  There are very strict deadlines within which to make your argument.

 

No Modification -- "Clarification" or Enforcement Okay:  Judgments and agreements sometimes are less-than-artfully drafted resulting in confusing or seemingly contradictory awards. Thirty days after entry of judgment, however, the court loses jurisdiction to modify terms.  Modification of property awards is prohibited; "clarification" is not.  Motions to clarify ambiguous terms of the judgment escape the prohibition against modification.  Likewise, the court always retains jurisdiction to enforce its judgment.  So, when a client doesn't like the terms of the property division but more than 30 days has lapsed since the entry of the judgment, lawyers abandon hope of modifying the property terms and instead fight to "clarify" or artfully "enforce" them.

 

"Modification" Defined:  Waggoner v. Waggoner, 78 Ill. 2d 50, 34 Ill.Dec. 330, 398 N.E. 2d 5 (Ill. 1979):  Mary and John Waggoner divorced in February, 1977.  They signed a property settlement agreement that said Mary would "retain the residence of the parties, the motor vehicle and the furnishings, subject to the indebtedness on said items . . . ."  What Mary didn't know was that, during the divorce, John had signed a promissory note to his own parents and they recorded a lien against the home.  Mary admitted that she and John had borrowed $5,000 from his parents to buy the home, but she had refused to sign a note at the time and she didn't know that John had done so. Mary was back in court by May (more than 30 days after entry of the judgment) complaining that she had tried to sell the home but the sale fell through because of the lien -- the first mortgage -- and that lien wasn't part of the deal.  There was also a second mortgage for an additional $5,000 that Mary had apparently forgotten.  It had been incurred years earlier to buy a fishing cabin for John -- in the divorce he got the cabin and Mary got the debt.

 

Mary filed a "motion for enforcement and finding of contempt" asking that John be forced to clean up the liens. The trial court ruled that the MSA said "subject to the indebtedness on said items" and it denied her request.

 

Mary filed a "motion to clarify and in the alternative to amend and in the alternative to modify" the decree.  She wanted to "clarify" or "amend" the MSA to say that she'd pay the first mortgage, but John should have to pay the second mortgage (used to buy his fishing cabin).  If the court wouldn't clarify or amend the MSA, Mary asked that the Judgment be modified to increase her child support award by $125 / month to offset the payments she'd have to make to John's parents on the second mortgage.  Mary lost, again.

 

Mary appealed, lost (66 Ill.App.3d 901, 23 Ill.Dec. 28, 383 N.E.2d 795.), and appealed to the Supremes, who said:

 

The first issue we consider is whether the trial court possessed subject matter jurisdiction even to entertain the motions herein. The final decree of a court of record in every civil case is a conclusive adjudication after the passage of 30 days from the date of its rendition.  However, a court in a divorce proceeding retains jurisdiction for the purpose of enforcing its decrees.  Further, the jurisdiction invoked in the divorce proceeding will extend to a contempt proceeding as the appropriate procedure to enforce the provisions of the divorce decree. [Mary] by her motion seeks to compel [John] to remove the judgment lien and the second-mortgage lien from the chain of title. The decree did not provide that the defendant was to perform these acts. Thus, [Mary] does not seek to enforce the terms of the decree, but instead to engraft new obligations onto the decree. The effect would alter the substance of the decree. A contempt proceeding may not be used for that purpose. Therefore, the trial court was without jurisdiction to entertain the plaintiff's motion to hold the defendant in contempt.

 Waggoner v. Waggoner, 78 Ill. 2d 50, 34 Ill.Dec. 330, 398 N.E. 2d 5 (Ill. 1979) (emphasis added).

 

So, that's the rule:  if an order to enforce or clarify a judgment or MSA "engrafts new obligations onto the decree . . . [if] the effect . . . alter[s] the substance of the decree," its neither an enforcement nor a clarification -- it's a modification . . . and those are prohibited.

 

Finding of Modification, "Clarification" Failed:  In re:  Marriage of Kekstadt, 85 Ill.App.3d 952, 41 Ill.Dec. 248, 407 N.E.2d 406 (1st Dist., 1980):  Harold and Gisela Kekstadt divorced in 1978, agreeing that the home was to be appraised and that Gisela could "buy out [Harold's] one-half interest at the appraised price within 60 days; if [Gisela] cannot acquire financing the respondent's one-half interest shall remain a lien on the property with interest running at 9% per annum until the respondent's interest is purchased."  The home appraised for $60,000.  Gisela couldn't secure the financing to buy out Harold, so she sold the property for the best offer she could get:  $48,000.  The net proceeds amounted to $25,495.91.  Gisela felt that Harold should receive half of that amount; Harold felt his share should be based on the $60,000 appraised value . . . just like the MSA said.

 

Gisela argued that the MSA was ambiguous and petitioned the court to "clarify" the terms of the MSA.  Harold maintained that the MSA was clear and unambiguous and that what Gisela was really trying to modify  the MSA after 30 days.  The trial court allowed the "clarification." Harold appealed.  The appellate court agreed with Harold and reversed the trial court, holding the trial court's action to be a modification, and ruling that the court lacked subject matter jurisdiction to modify the MSA more than 30 days after entry.

 

The Best Read -- Finding of Modification, "Enforcement" Failed:  In re:  Marriage of Arkin, 108 Ill.App.3d 103, 63 Ill.Dec. 815, 438 N.E.2d 957 (2 Dist., 1982).  This case stands for the proposition that if there is no ambiguity in the terms of the judgment or MSA, there is no need for clarification and, therefore, there can be no modification.  It is a FANTASTIC read -- it is chock full of the authority by which courts review, construe, and interpret judgments and MSAs and how they determine "ambiguousness" that will allow clarification.  If you face a property enforcement / modification issue, this case is a must-read.

 

Patricia and Arthur Arkin divorced in October, 1977.  They agreed that Patricia could live in the home until September, 1984 or her remarriage, if sooner.  She had to pay the mortgage, insurance, and taxes on the property "until she terminate[d] possession of said real estate."  

 

The fight boiled down to a single word in the MSA -- "prorations" -- and how to apply it to the post-judgment facts.  Patricia carefully crafted her pleadings to sound in the nature of both a "clarification" and also enforcement of the MSA.  The trial court initially found the contested terms of the MSA to be ambiguous and held a hearing.  After the hearing, the court concluded the MSA was not ambiguous and ruled on its interpretation of it.  It largely followed Arthur's interpretation and prorated a lot of funds.

 

Patricia appealed.  The appellate court said the MSA was not ambiguous; it was clear and unambiguous.  Therefore, the trial court's rulings about "prorations" worked a result different from the parties' original intent and that meant it had modified the MSA.  The trial court's ruling was reversed.   

 

Modification by Agreement:  The parties may agree to modify a property award after judgment.   

 

Agreement After 30 Days Revests Court With Jurisdiction to Modify:  In re:  Marriage of Taylor, 191 Ill.App.3d 648, 138 Ill.Dec. 876, 548 N.E.2d 106 (5 Dist., 1989):  Mary and Paul Taylor divorced in May, 1979.  Paul was awarded half the equity in the home, to be paid whenever Mary got around to selling it, and Mary was awarded 40% of Paul's pension and maintenance of $500 / month.  In January, 1981, they agreed orally that Paul would stop paying maintenance and keep his pension and, in exchange, Mary could keep all the equity in the home.  Paul stopped paying maintenance and Mary sold the home and kept all the proceeds.  In April, 1987 -- six years after the oral agreement -- Paul retired.  He received his pension checks and realized that Mary was receiving the 40% allocated in the 1979 Judgment but which she waived in the 1981 oral agreement.

 

Paul filed a motion to modify the terms of the judgment based on the oral agreement.  Mary countered that the court couldn't modify the property award eight years after its entry and, even if it could, waiving her interest in Paul's pension wasn't part of the oral agreement.  The judge disagreed and Paul's request was granted.  Mary appealed.

 

The appellate court said:

 

"[w]here the parties, subsequent to the entry of a decree, attempt to compromise their differences, the court may adopt the agreement of the parties and modify the decree to conform thereto, as it thinks fit." We hold that the parties' valid agreement to modify vests the trial court with the authority to modify the dissolution decree to conform to the agreement reached between the parties. By giving effect to the agreement between the parties, we also give effect to the law's interest in encouraging settlements as a means of promoting judicial economy. (See McCracken Contracting Company v. R.L. DePrizio & Associates, Inc., 122 Ill.App.3d 680, 683, 78 Ill.Dec. 563, 566, 462 N.E.2d 682, 685 (1st Dist., 1984) ("[a]s an effective means of promoting judicial economy, settlements are generally encouraged and favored by the courts * * *.")) Were we to hold otherwise, litigants to dissolutions would be discouraged from entering into settlements since the sense of finality that a settlement provides would be lost.

 

        Finally, we cannot ignore the fact that, although the parties' formal method of agreement admittedly lacked the drafting skills that a competent attorney could have provided, both petitioner and respondent freely entered into this agreement and each relied upon it for over six years. Subsequent to the agreement, respondent discontinued paying his monthly maintenance to petitioner, and petitioner sold the marital residence for $65,000, retaining $48,000 from the sale after payment of the mortgage. In our opinion, it would have been grossly inequitable if the trial court had not modified the dissolution decree to conform to the agreement reached between the parties.

In re:  Marriage of Taylor, 191 Ill.App.3d 648, 138 Ill.Dec. 876, 548 N.E.2d 106 (5 Dist., 1989), quoting  Ewert v. Ewert, 41 Ill.App.2d 161, 166, 190 N.E.2d 147, 149 (1st Dist., 1963).

 

Agreement after 30 Days Modifies Property Division to "Maintenance":  In re:  Marriage of Steele, 195 Ill.App.3d 348, 142 Ill.Dec. 31, 552 N.E.2d 381 (Ill. App. 4 Dist., 1990):  Diana and Martin Steele divorced in April, 1988.  After the divorce, Diana continued to live in the marital residence -- a home she and Martin had been renting from Martin's parents.  Martin agreed, in the Marital Settlement Agreement, to continue paying the $50 / month rent for the house until Diana remarried, cohabited, or their child turned 18.  A little over a year later Martin's parents raised the rent from $50 to $250 -- an increase Diana could not afford.  Diana went back to court to ask that the judgment be modified to have Martin pay her $50 / month to apply to her rent, even if she moved.  Martin initially objected and asked the court to dismiss Diana's request.  The judge, however, denied that motion and made some comments about what he thought of the situation and Martin's parent's actions.  Having heard the judge's comments, Martin agreed to modify the MSA according to Diana's request and they called the $50 / month payment "maintenance."

 

Martin appealed claiming he had been coerced by the trial judge's heart-to-heart.  The appellate court said that wasn't good enough and allowed the agreement to stand:  Diana's $50 / month property award became maintenance. 

 

Interest:  Interest is mandatory on late child support and maintenance payments -- not so when it comes to late payments that are part of the property allocation, however.  Here's how that works:

 

It used to be that the award of interest on past-due child support and maintenance payments was left to the discretion of the judge.  In the case of Finley vs. Finley, 81 Ill.2d 317, 410 N.E.2d 12, 43 Ill.Dec. 12 (Ill., 1980), Ethel and Bill Finley divorced, Ms. Finley was awarded custody of their four children, and Bill was ordered to pay child support.  As each child emancipated, Bill reduced his support payments without bothering to go to court for a court-approved reduction.  Eventually, Ethel got upset and went to court to recover the shortfall.  Bill lost, of course.  On the issue of whether he had to pay interest on the arrearage, the Illinois Supreme Court said this:  

 

This court has held that a divorce proceeding partakes so much of the nature of a chancery proceeding that it must be governed to a great extent by the rules that are applicable thereto.  In a chancery proceeding, the allowance of interest lies within the sound discretion of the trial judge and is allowed where warranted by equitable considerations and is disallowed if such an award would not comport with justice and equity. . . .  "In a proper case, equitable considerations permit a court of equity to allow or disallow interest as the equities of the case may demand."  We therefore conclude that the allowance of interest on past-due periodic support payments is not mandatory as contended by the plaintiff, but lies within the sound discretion of the trial judge, whose determination will not be set aside absent an abuse of that discretion.

Finley vs. Finley, 81 Ill.2d 317, 410 N.E.2d 12, 43 Ill.Dec. 12 (Ill., 1980) (citations omitted)

 

Since Finley, Illinois laws have changed to make interest mandatory on past-due child support (since 1 January 2006, see, 750 ILCS 5/505(b)) and maintenance (750 ILCS 5/504(b-5)).  Those amendments override the Supreme Court's pronouncement in Finley.   The amendments, however, apply only to the areas or child support and maintenance; they do not apply to payments that are part of the property division.  When it comes to payments that are part of the property allocation, Finley is still good law and the allowance or disallowance of interest rests with the discretion of the trial judge.

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