FIFTH DI VISI ON November 25, 2009 No. 1-08-3541

In re MARRI

AGE OF: ) Appeal from the DAN IEL W. LUND AHL, ) Circuit Court of ) Cook County Petitioner-Appellant, ) ) and ) No. 06 D3 30268 ) SUSAN LUNDAHL , ) The Honorable n/k/a Susan Hopper, ) Sam uel Bet ar, III, ) Judge Presi ding. Respondent-Appellee. )

JUSTICE FIT ZGERAL D SMITH deliver

ed the opi nion of the

court: This a ction was f or dis solut

ion of marr iag e. Th e tri al court g

ranted th e par

ties, Dani el W. Lundahl (L

undahl) and Susan Hopper (Hopper), a dissolution of their marria ge and awarded Hopper 100% of her nonmarital assets and 100% of the ma rital assets, while awarding L undahl 100% of his nonmarital assets. Thereafter, both parties filed motions to rec onsider, and the trial court subsequently re classified the retained earnings of L undahl’s company f

rom nonmarital property to marital pr

operty. L undahl filed a motion to reconsider, which was denied. L undahl now appeals arguing that (1) the trial court’s original classification of his retained e arning as nonmarital property was correct, (2) the amount of retained e arnings found was incorrect, and ( 3) the trial court er red in aw arding attorne y f ees to Ho pper. F or the fo llowing r easons, we affir

m in part and remand for further proc eedings in accordance w ith this Opinion. I. BACKGROUND Lundahl and Hopper met in ea rly 2004 and wer

e married on July 3, 2004. At the time ofNo. 1-08-3541

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their marriage, L

undahl owned two businesses: APS Corporation USA and American I nternet Services Network Corporation (AI S). Lundahl was the sole shareholde r of each corporation, and each corporation was taxed as a subchapter S corporation for federal income tax purposes. The parties were married for appr oximately two y

ears. During the marriage, APS Corporation USA re ported no income for the calendar y ears of 2004 and 2005, and it conducted no business in those years. AIS, on the other ha nd, produced income, which was reported on L undahl and Hopper’s joint income tax return for the calendar year of 2004 in the amount of $139,688. On Lundahl’s individual income tax return for the calendar y

ear of 2005, AIS produc ed $260,754. Lundahl was paid a salar

y by AIS in the amount of $52,047 in 2004, $50,962 in 2005, and approximately $50,000 in 2006. I n addition, Lundahl took disbursements from AI S’s earnings and assets in the amount of $147,000 in 2004, $218,500 in 2005, and $411,500 in 2006. All of Lundahl’s salary

and disbursements were deposited into the parties’ joint checking account, or were used to pay the parties’ taxes. During the part ies’ mar riage , Hopper

began working outside th e marita

l home in Au

gust of 2005. For three months of the marriage , she deposited $1,000 each month from her employment income into the parties’ joint che cking account. Other than that, she maintained he r own bank a

ccount, i nto which she depo sited her

own wag es. L

undahl did

not have a

ccess to such account. Lundahl filed his petition for dissolution of marriage in March of 2006. Hopper filed a counterpetition for dissolution of marriage on July 18, 2006. Prior to trial, Lundahl was gra ntedNo. 1-08-3541

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exclusive possession of the marital residence, which was his nonmarital property . Hopper was provided $4,000 per month for temporary maintenance from August 2006 through the da te of the trial court’s memorandum opinion and judgment for dissolution of marriage on April 24, 2007. In its memorandum opinion and judgment for dissolution of marriage, the trial court found that the testimony of Hopper was neither credible nor reasonable , but that testimony of Lundahl was both credible and r easonable. The trial court classified the parties’ assets and awarded Hopper 100% of the marital asse ts, and 100% of her nonmarital assets. The trial court awarded Lunda

hl 100% of his nonmarital assets, which included his retained earning s from AIS. In its reasoning, the trial c ourt noted that the statue which governs marital property (750 IL CS 5/503(a

) (West 200 6)), sta

tes in per tinent pa rt, “‘ma rital pro perty ’ means a

ll proper ty acquire d by

either sp ouse.” T

he trial c ourt foun

d that this d

efinition focused on which s

pouse, if any receiv ed the re

tained e arning s. The tri al court noted tha t in the inst

ant case , neither

party acquire d the ret

ained ea rnings b ecause

the ear nings we re the pr operty of AI S and wer

e locate d in AIS’ s corpor

ate acc ount. Be cause the partie s agre ed that AI S was L undahl’s nonmarita

l asset, the trial court found that the retained earning s constituted nonmarital property. Thereafter, bo th partie s filed mot ions to re consider

the trial court’s decision . Prior to ruling on the parties’ posttrial motions, the Third District of the I llinois Appellate Court issued a relevant case, titled In re Marriage of Joynt , 375 Ill. App. 3d 817 (2007). The trial court requested that the parties brief the issue of classifica tion of retained earnings in light of Joynt

. On December 10, 2007, the trial court issued its judgment order reclassify

ing the retained earnin gs from AIS as ma rital prope rty. The t rial c ourt d eterm ined t hat th e retai ned ear ningsNo. 1-08-3541

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amounted to $730,000. Hopper was awarded $305,900, which re presented 40% of the marital estate. In its reasoning , the trial court applied Joynt and foun d that bec ause L

undahl wa s the sole shareholder, officer, and direc tor of AIS, and because

he had sole discretion over how much of the retained earnings should be distributed to him, the retained ea rnings were marital property

. The tria l court fu rther re lied on the

fact tha t AIS was a succ essful e

ntity solely through his efforts, his expertise, and his marketing abilities. Hopper’s attorney , Michael Kalcheim, filed his petition for interim fees and costs on February 6, 2008. After hearing arg uments from both parties and after reviewing billing invoices, the trial court awarded Kalcheim $14,500 for fees and costs. Lundahl now a ppeals. II. AN ALYS IS On appeal, Lundahl ar

gues that (1) the trial court’s origina l decision classifying

AIS’s retai ned ear nings as his nonm arita l prop erty was co rrect, (2) th e amou nt of r etain ed earn ings found by the trial cour

t was incorrect, and (3) the trial court er red when it awarded Hopper attorney fe es. A. Cl assif

icati on of a Subch apter S Corpo ratio n’s Re taine d Earn ings Lundahl’s first contention on appeal is that the trial c ourt erred in finding that the retained earning s of AI S constitute d marital propert y. L undahl re lies on se ction 503 o f the Illinois Marriage and Dis solution of Marriage Act (the Act) ( 750 ILCS 5/5 03 (West 20 06)) to su pport his position and urges this court not to follow the recent decision of Joynt . Hopper, on the other hand, maintains that according to Joynt , retained earnings of a subcha pter S corporation constitute income, and because such income was attributable to L undahl’s personal efforts, suchNo. 1-08-3541

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earning s were ma

rital pro perty . We beg in by

looking a t the statu te, which states in p ertinen

t part: “(a) F or purpos es of this Act, ‘mar ital prope rty ’ means a

ll proper ty acquired by

either spouse subsequent to the marriage, except the f ollowing, which is known a s ‘non-ma

rital pro perty ’: * * * (6) prop erty

acquire d before

the marr iage; (7) the increase in value of property acquired by

a method listed in paragraphs (1) through ( 6) of this subsection, irrespective of whether the increase results from a c ontribution of marital property, non-ma

rital property, the pe

rsonal effort of a spouse, or otherwis e, subjec

t to the rig

ht of reim burseme nt provide d in subsection (c) of this Section; and (8) income from pr

operty acquire d by

a method l isted in paragraphs (1) throug

h (7) of this subsection if the income is not attributable to the personal effort of a spouse.

* * * (c) Commingled marital and non-marital property shall be treated in the following manner, unless otherwise a greed by t he spouse s:

*** (2) *** when a spouse contributes personal effort to nonmarital property, the

contributing estate shall be reimbursed fromNo. 1-08-3541

6 the estate receiving the contribution notwithstanding any transmutation. *** Personal effort of a spouse shall be deemed a contribution by the marital estate.” 750 IL CS 5/503 (West 2006). In the trial court, Hopper a rgued that section 503(a)(8) applied in this case because the retained earnings constituted income, and that bec ause such income was attributable to L undahl’s personal efforts, that income must therefore be c lassified as marital property . The trial court found tha t Hopper misconstr

ued sect ion 503. I

t noted tha

t if the re tained e arning s belong ed to AIS, they would be Lundahl’s nonmarital proper ty via his stock ownership in AI S. On the other hand, if t he reta ined ear nings be longed

to Lun dahl personally, they

would be marital pr

operty subject to division. The trial court reiterated that marital property means all property

acquired by either spouse, and then noted that here, neither spouse re ceived the retained earning s. Accordingly , the trial court found that the retained earning s were the property of AIS and located in AIS’s corporate ac count and were therefore L undahl’s nonmarital property

. Additionally, the court found that Hoppe r had completely ig

nored sections 503(a)(7) and 503(c)(2) of the Act, which provide for the possible reimbursement to the marital estate for a spouse’s personal efforts that increase the va lue and retained earnings of prope rty. The trial cour

t noted tha t Hopper ’s arg

ument wou

ld rende r section s 503(a) (7) and 5 03(c)( 2) meani ngless because she defined AI S’s retained earnings as marital proper ty simply because Lundahl’s personal efforts increased the value of the retained earnings. The tria l court stated, “[i]f this were the correct definition of marital property , ‘reimbursement’ of the marital estate under 503(a )(7) and 503(c)(2) would be unnecessary in every c ase and there would be no need for the inc lusionNo. 1-08-3541

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of 503(a )(7) an d 503(c) (2) in the

503 statut

e.” The trial cou rt found t hat lookin

g at the Act as a whole, a nd recog nizing the common ru

le of law that it is no t appropr

iate to construe a

statute in such a way

as to render some of its parts meaningless, AI S’s retained earnings constituted Lundahl’s nonmarital property

. After the parties filed motions to reconsider, the Joynt case was issued by

the Third District of the Illinois Appellate Court. I n Joynt , the husband, Michael, owned 41 shares of stock in Mississippi Value Stihl, Inc. (MVS). Joynt , 375 I ll. App. 3d at 818. MV S was a cl osely held business designated as a subchapter S corpora tion. Michael served as the company ’s president and owned 33% of the corporate stock. Joynt , 375 Ill. App. 3d at 818. The retained e arnings of MVS in 2004 were $3,750,929 and were held by MVS for “future operating expenses.” Joynt , 375 Ill. App. 3d at 818. MVS did not pay dividends to its stockholders from the retained earnings account. However, if the company so c hose, it could pay re

tained earnings dividends through liquidations of the business or a declaration of the corpor ate board of directors. Joynt , 375 I ll. App. 3d

at 818. Mic

hael wa s unable t

o recei ve a ret ained ea rnings d ividend in

dividually unless an equal dividend was paid to and agree d upon by a majority of the shareholders. Michael’s 33% ownership in the corporation entitled him to one-third of the reta ined earnings. Joynt , 375 Ill. App. 3d at 818. The trial court found that in this case, the retained earnings were nonmarita

l proper ty, but noted t

hat “‘th is is not to su

gges t that unde

r no circ umstance s would retained earnings of a nomarital inter est in a subchapter S corporation be classified as marital.’” Joynt , 375 I ll. App. 3d

at 818. On

appeal, Michael ’s wife c ontended that the tr

ial cour t erred in failing to classify

Michael’s interest in the retained earning s as marital property

.No. 1-08-3541

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The Th ird Di stri ct not ed tha t oth er jur isdi ction s have general ly held t hat ret ained earnin gs are nonmarital based on the evaluation of two primary factors: “(1) the nature and extent of the stock hold

ings, i.e. , is a majority fo the stock held by a single shareholder spouse with the power to distributed the retained earnings; and (2) to what extend are retained earnings considered in the value of the corporation.” Joynt , 375 Ill. App. 3d at 819. The court, rely ing in part on Metz v. Keener , 215 Wis. 2d 6 26, 573 N. W.2d 865 (1 997), note d that “when a shar eholder spouse ha s a majority of stock or otherw ise has a substantial influence over the decision to retain the net earnings or to disburse them in the form of cash dividends, cour ts have held that retained earnings are marital proper ty.” Joynt , 375 Ill. App. 3d at 820. The Joynt court sta ted that in Metz , the court found that retained earnings f und of a corporation inherited by the wife was income separate from the corporation and c ould be included in the marital estate because the wife had “‘f ull ownership and po ssession o f all the c orporat e share s and that

she [was] the sole managing force be

hind the corporation.’” Joynt , 375 Ill . App. 3d at 8 20, qu otin g Metz , 215 Wis. 2d at 634, 573 N.W.2d at 869. The Joynt court therefore concluded that “if the sha reholder spouse controls the corporate distribution, the retained earning s are marital property .” Joynt , 375 Ill. App. 3d at 820. Based in part on such propositions, the Joynt court found that M VS’s r etain ed earn ings were nonmarital because the company ’s stock was held in three unequal shares by three individua ls; Michae l possesse d only a minority

percen tage of those sha res and was not a controlli ng shar eholder ; and as one of thre e board members, he could n ot have un

ilatera lly declared or withheld dividends. Joynt , 375 Ill. App. 3d at 820.No. 1-08-3541

9

The wife in Joynt , however, went on to argue that the re tained earnings should be classifi ed as a ma

rital ass et beca

use they were no t corpor

ate asse ts but rather income availa ble to the shareholder. The court found that the retaine d earnings were part of the c orporate assets and were held by

the corporation to pay

expenses. The court noted that although the undistributed earnings were taxed to Michael and his wife a s their “income” on their individual income tax returns, MVS paid the tax through ye ar-end designated pay ments made to Michael. Finally , the court concl uded, “[b] ecause Micha el was unabl e to au thori ze a pa yment of t he reta ined e arnin gs as a dividend without shareholder approval and beca use the earnings were a c orporate asset, we hold that the retained earnings account of the corporation is a nonmarital asset.” Joynt , 375 I ll. App. 3d at 821. Based upon the above law set out in Joynt , the trial court in the case at bar reclassifie d AIS’s retained ea

rnings as marital property . The court noted that while the Joynt decision was “not directly applica

ble to this case, as the facts herein differ f rom the facts presented in Joynt ,” because Lunda hl was a so le share

holder, s ole offic er, and s ole dire ctor of A IS; ha d sole discretion over how much of the retained ear nings should be distributed to him; and that the corpora tion was a

success ful entity

“solely through his efforts, and h

is expertis e, and his marketing abilities,” the retained earning s of AIS constituted marital property

. Lundahl now appeals arg uing that the Joynt

court’s reliance on other jurisdictions was misplaced, and that the trial court’s original ruling, whe reupon it relied on the Act rather than Joynt , was correct. We first note that a trial court’s classification of property will not be disturbed on appealNo. 1-08-3541

10

unless it is contrary to the manife st weight of the evidence. In re Marriage of Jelineck , 244 I ll. App. 3d 496, 503 (1993). The disposition of property is governed by

section 503 of the Act. Jelineck , 244 Ill. App. 3d at 503. Lundahl argue s that the Act, combined with Illinois case law pre cedent, reveals that AI S’s retained earnings should have bee n classified as nonmarital property . Lundahl first points to a string of cases which holds that a business property interest owned by one

spouse prior to the parties’ marriage is nonmarital proper ty and retains its nonmarital cla ssification despite a significant increase in its value attributable to personal e fforts of a spouse; and that if the husband ma

kes a re asonable

salary during t he marr iage, t he marita l estate i s not entitl ed to reimbursement. See In re Marriage of Kennedy , 94 Ill. App. 3d 537 (1981) (music stores owned by h usband pr ior to mar riage were his nonmarita

l proper ty a nd incre ase in va

lue of tho se nonmarita

l business es was a

lso his nonmarital pr

operty ); In re Marriage of Kamp , 199 Ill. App. 3d 1080 (1990) (finding that the Act leaves no doubt but that a business proper ty interest owned by one spouse prior to the pa rties’ marriage is nonmarital property and retains its nonmarital classifi cation de spite a sig nifican t increa se in its va

lue durin g marr iage) ; In re Marriage of Land field , 209 I ll. App. 3d

678 (1991 ) (a busi

ness prop erty

interest owned by

one spous e prior to the parties’ marriage is nonmarital and r etains its nonmarital classification despite a significant increase in its value during marriag e, and if a contributing spouse’s salary is found to be reasonable for the efforts contributed, the noma rital business need not reimburse the marital estate because the contributing spouse’s sala ry during marriage is marital property and thus the marital e state ha s alrea

dy b een comp ensated

); In re Marriage of Perlmutter , 225 Ill. App. 3d 362No. 1-08-3541

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(1992) (if husband’s salary is found to be a reasonable compensation for his effor ts, the nonmarital business need not reimburse the marital estate because husband’s salary

during marriage is marit

al prope rty ); In re Marriage of Steinberg , 299 Ill. App. 3d 603 (1998) (marital estate not entitled to reimbursement from the accounts rece ivable of a nonmarital corporation because the annua

l income r

eceive d by

the husba

nd during the course of the

marriage adequately compensated the marital estate). Lundahl argue s, based on the above-cited cases and sec tion 503(a)(7) of the Act (750 IL CS 5/503(a)(7) (West 2006)), that because AI S was acquired before his marriag e to Hopper, despite its increase in value due to his personal efforts, the re tained earnings of the corporation remained nonmarital as part of AI S’s property. Hoppe r argues, however, re lying on Joynt , that the retained earnings constituted L undahl’s income. She further notes, rely ing on section 503(a) (8) of th e Act ra

ther tha n section 503(a)( 7), that in

come fr om previo

usly acquire d proper

ty becomes marital if it is a result of a spouse’s personal effor ts. 750 ILCS 5/503(a) (8) (West 2006). Thus, Hopper maintains that because AI S’s retained earnings were a ttributable to Lundahl’s personal efforts, the retained ear nings were marital. We agre e with Hopper. As the Third District noted in Joynt , other states have generally held that retained earnings are nonmarital by evaluating two primary

factors: “(1) the nature and extent of the stock holdings, i.e. , is a major

ity o f the stoc

k held by a single shareho lder spou se with the power to distribute the retained earnings; and (2) to what e xtent are retained earnings considere d in the value of the corporation.” Joynt , 375 Ill. App. 3d at 819. Contrary to the parties’ interpretation of the case, we do not believe that the Joynt court has set forth a “two-part” test. Rather, theNo. 1-08-3541

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Third District acknowledged that these wer e two primary f

actors that other jurisdictions relied upon. Some jurisdictions, as Lundahl noted, relied on only one of those two factors. Nonetheless, we will evaluate both factors in light of the fa cts of the case at bar. In Joynt , the court found that MVS’s retained earnings we re nonmarital because the

co mp an y’s st oc k w as he ld in un eq ua l s ha re s b y th re e i nd iv id ua ls ; M ic ha el po ss es se d o nl y a minority percenta

ge of those shares and was not a c ontrolling shareholder, and as only one of three board members, he could not have unilatera lly declare d or withheld dividends. Joynt , 375 Ill. App. 3d at 820. Contrarily in this case, Lundahl wholly owned AIS, was the sole share holder of AI S, and cou

ld have un

ilatera lly d eclare d or withhe ld dividen ds. I n fact, L undahl un ilatera lly took disbur

sements f rom AI S’s reta

ined ear nings in t he amount

of $147,0 00 in 2004, $218,000 i n 2005, and $411,500 in 2006 without requiring approval from any one else. Accordingly, we find that the retained earnings were not in fact an asset of the corporation but, rather, c onstituted Lundahl’s income. The Joynt court fo und that the retained earn ings of M VS, the sub chapter

S corpora

tion in question, were a corporate asset, and thus nonmar ital. The court based this decision on the fact that t he reta ined e arnin gs were h eld by the corpo ratio n to p ay expens es and the fac t that altho ugh the reta ined ear nings we re taxed to

the husba

nd and wif

e as “inc ome” on their indivi dual income tax return, MVS paid the tax through yea r-end designed pay

ments made to Michael. Joynt , 375 Ill. App. 3d at 821. Contrarily in the case at bar, the retained ear nings of AIS were

not held by the corp oration to

pay expenses. They

were no t used to pa

y di vidends, n

or were they used in

connec tion with the corpor ation. Ad ditionally , they were ta xed to L undahl who paid the

incomeNo. 1-08-3541

13

tax on the earnings. Accordingly , we find that the retained earnings c onstituted Lundahl’s income, rather than an asset of AI S. See Ramon v. Ramon , 963 A.2d 128, 133 (Del. 2008), quot ing J.D.P. v. F.J.H. , 399 A.2d 207, 216 n.1 (Del. 1979) (retained earning s are “‘corporate net income which would be available for distribution as dividends, for pay ment of wages, salaries and bonus, and other proper corporate purpose s’”; they ar e active earnings ge

nerated and retained during t he marr iage that add to t

he value of a pre marital a sset, in c ontrast to the passi ve incre ase in value of premarital earnings which is protec ted by the statute). We therefore find that section 503(a)(8) of the Act applies. Section 503(a)(8) states that income f rom prope

rty acquire d prior to

marriage is nonma

rital pro perty if it is not a

ttributab le to the pers onal eff

ort of a s pouse. Se e 750 I

LCS 5/5 03(a)( 8) (West 20 06). L undahl wa s the sole

owner a nd share holder of AIS, a nd thus the

income of

AIS du ring the marriage was att

ributable to Lundahl, making such income mar ital property. Ac cordingly , pursuant to both Joynt and the statute, t he reta ined ear nings of AIS w ere pro

perly classifi ed as mar

ital prope rty by t he trial c ourt. B. Amo unt o f Reta ined E arnin gs Lundahl’s next contention on appeal is that the trial court’s valua tion of the retained earnings in the amount of $730,000 was aga inst the manifest weight of the evidence and the trial court’s award to Hopper of 40 % of that amount wa s an abuse of discretion. Section 50 3(d) of t

he Act sta tes that the court shall divide marital property

in “just proportions.” 750 IL CS 5/503(d) (West 2006). The first step, therefore, is to establish the value of such assets. In re Marriage of Grunsten , 304 Ill. App. 3d 12, 17 (1999). Once a tr ial court has classified property

as either marital or nonmarital, that decision will not be disturbed on appealNo. 1-08-3541

14

unless it is contrary to the manife st weight of the evidence. In re Marriage of Jelinek , 244 I ll. App. 3d 496, 503 (1993). The manifest weight of the evidenc e standard is used when assigning value to an asset after classification beca use valuation of marital assets is generally a factual determination. In re Marriage of Hubbs , 363 Ill. App. 3d 696, 700 (2006). Both parties c ite In re Marriage of Cutler , 334 Ill. App. 3d 731 (2002), in support of their positions. In Cutler , the husba

nd David was the onl

y sharehold

er and pr incipal o f a close ly held corporation. Cutler , 334 Ill. App. 3d at 736. The ag ency wa s a “captive agency ” - which means it could not sell insurance other than that of its principal, Geico. Cutler , 334 Ill. App. 3d at 736. The experts who testified at trial applied two different methods of valuation and ar rived at divergent values for the ag ency. The wife’s expert used the market approach method and f ound the agency

value to be $270,000. David’s expert used the asset approach method and f ound the agency value to be $32,000. The trial court, however, rejec ted both opinions and found the value to be $243,000 based on a capitalized returns method - a form of the income approach method. Cutler , 334 Ill. App. 3d at 736. The only reference in the recor

d to such amount was a passing statement made by the w

ife’s expert when he indicated that after deter mining the value was $270,000 based on the market approach, he applied the c apitalized returns analysis under which he found the value to be $243,000. Cutler , 334 Ill. App. 3d at 736. On appeal, the Cutler court fo un d t ha t t he tr ia l c ou rt ’s re li an ce on a s in gl e c ur so ry r ef er en ce to th e v al ue of

th e a ge nc y, absent any e

videntiary basis for the

determination, was against the manifest weig ht of the evidence. Cutler , 334 Ill. App. 3d at 737. In the case at ba

r, no expert testimony was offe red as to the value of the retained ear nings.No. 1-08-3541

15

In its first memorandum opinion, issued April 24, 2007, the trial court found that AI S had approximately $900,000 in retained ea rnings. After the parties both filed motions to reconsider the trial court’s judgment on other grounds, the Joynt case was issued. On September 24, 2007, Hopper filed a supplemental brief in ref erence to the applicability of In re Joy

nt . In the last parag

raph of such brief Hopper stated that the “a mount of retained earnings in dispute is approximately $730,000.” She did not indicate from where she got such number. In his re ply brief, L

undahl denied that the retained earnings we re $730,000. Rather, he noted that the only evidence in the record relating to retained earnings was the corporate federal income tax returns for the years 2004 a

nd 2005, which reflected that the retained earnings as of Dec ember 31, 2005, were $493,130. Thereafter, on October 16, 2007, L undahl filed a motion to reopen proofs. In his motion, Lundahl claimed that at the time of trial, the 2006 cor porate tax returns were not available, but that they were c urrently availab le. L

undahl sta

ted that if the trial court wa s going

to reverse itself and find the retained earnings to be mar ital, it needed to have evidence of the amount of reta ined earnings. The trial court denied L undahl’s motion. On November 19, 2007, Lundahl filed a motion to clarify the rec ord, in which he stated that the trial court needed to accurately value the retained earnings and of fered two different ways for the

court to do so. The first option was for the trial court to use the Fidelity account records that were admitted at trial. L undahl claims that such records reveal that the net prof its of AIS, for the duration of the mar riage, amounted to $913,620.25. L undahl further claims that $685,000 was distributed to the marital estate during that time, leaving $228,620.25 to beNo. 1-08-3541

16

classified as retained earnings. The second option Lundahl proposed in his motion to clarify the record was for the trial court to use the 2006 cor porate tax returns, which he requested to be admitted into evidence. Lundahl claimed that suc h tax return would show that the amount of the retained earnings was $338,046 as of D ecember 31, 2006. On December 10, 2007, the trial court entere d its final judgment order. In f inding that the retained earnings were

income, the curt noted that it must redistribute the marital estate. I t noted that “[a]t the time of trial, based on the evidence presented by both sides, the Court found that there were in excess of $900,000 in retained income and e arnings. The Court will use the figure argued in [Hopper’s] brief that the correc ted amount of income and retained earning s was $730,000.” Lundahl now arg

ues that such figure was ag ainst the manifest weight of the evidence because no evidence was prese nted to support the figure of $730,000. We agre e. As in Cutler , we fi nd th at th e t ri al co ur t’ s r el ia nc e o n a si ng le cu rs or y re fe re nc e t o t he va lu e o f t he ag en cy, absent any e

videntiary basis for the

determination, was against the manifest weig ht of the evidence. See Cutler , 334 Ill. App. 3d at 737. Moreover, Hoppe r points to no evidence in her brief to support the figure of $730,000. Accor dingly, we

remand this cause to the trial court for a specific finding of the amount of retained e arnings. Lundahl also argue s that Hopper’s award of 40% of the marital esta te was an abuse of the trial court’s discretion. In its origina l judgment, the trial court awarded Hopper 100% of the marital estate, which consisted of various monies from bank acc ounts, a tax refund, and furniture. Upon t he tri al cou rt’s s econd and fi nal ju dgment , the t rial c ourt r eclass ified the ret ained earnin gsNo. 1-08-3541

17

as marita l proper ty a nd then converted

Hopper’ s award

from 100%

of the ma

rital pro perty to 40%, stating, “[a]fter careful review of the factors set forth in Section 750 IL CS 5/503(d) of the [Act], the Co

urt awar ds [Hopper

] forty percen t (40%) o f the mar

ital esta te and awards [L

undahl] sixty percent (60%) of the marital estate.” Because we remand for a specific valuation of the retained earnings, which made up the ma jority of the marital estate , we remand for reconsi deration of the di stribution of the ma

rital est ate as we ll. C. Attorney Fe es Lundahl’s final arg

ument on appeal is that the trial court’s award of Hopper ’s attorney fees was an abuse of discretion. Specifica lly, L undahl contends that the trial court should have held an evidentiary

hearing on Hopper’s fee pe tition because he had raised numerous supported objections against a fee awar d showing that Hopper’s attorney filed incorrect and irrelevant pleadings. Hopper responds that L undahl did not object to the attorney f ees and that the trial court did not abuse its discretion when it awarded Hopper attorne y fees. We a

gree with Hopper. A court’s decision to award fees in a par ticular case “rests in the sound discretion of the trial cou rt, and exercise thereof w ill not be in

terfer ed with un

less such discreti on is clea

rly abused.” Gasperini v. Gaspirini , 57 Ill. App. 3d 578, 582 (1978). The amount of fe es to be allowed in a divorce proceeding de pends on the consideration of the relative financial abilities of the parties, the nature of the controversy , the question at issue, the significance or importance of the subject matter, the degree of r esponsibility involved, the standing or skill of the person employed, and the time a nd labor involved. Gasperini , 57 Ill. App. 3d at 582. “The allowanc e should be only in such amount as will compensate f or the services rendered, and must be fa ir andNo. 1-08-3541

18

just to all parties concerned; namely , the attorney to be c ompensated, the client, and the person required to make the pay

ment.” Gasperini , 57 I ll. App. 3d at 582. “F

urthermore, it sho

uld appear that the work being compensa ted for was reasonably

required and necessary

for the proper performance of the lega

l services in the case. Gasperini , 57 Ill. App. 3d at 582. In this case, Hopper filed he r petition for interim attorneys f ees and costs incurred and for prospective attorney

fees and costs, pursuant to 750 IL CS 5/501(c)(1) (West 2006), which states in pertine nt part tha

t “[e]xcept f

or good cause shown, a pr

oceedin g for ( or rela

ting to)interim attorney’s f

ees and costs shall be nonevidentiary , summary in nature, a nd expeditious.” The Act further states that in assessing an interim award, the c ourt shall consider all relevant factors as presented, that appear reasonable and necessary , including: the income of each party , the needs of each pa rty , the rea

list earn ing cap acity

of each party, any

impairme

nt to pres ent ear

ning ca pacity of either party , the standard of living established during the marr iage, the degree

of complexity of the issues, each party ’s access to relevant information, the amount of pay ments made or reasonably

expected to be made to the attorney for the other party , and any other factor that the court finds to be just and equitable. See 750 IL CS 5/501(c)(1) (West 2006). Lundahl then filed his response, citing several objections including that the rates char ged by H opper’s

counsel were in excess of r easonab le and nor

mal rate s, and tha

t Hopper failed to attach any

supporting documentation reflecting the amount of a ttorney fee s and costs. On April 11, 2008, a hearing was held. Hopper ’s attorney noted tha t in an interim fee petition hearing, it was unnecessary to attach his billing invoices because the hearing is summary in nature. However, he did bring his invoices to court a nd the trial court took time to reviewNo. 1-08-3541

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them. The trial court then asked Hopper’s attorney several questions concerning the invoices a nd then stated, “All right. Any body else have

anything to say

before I rule

on the petition for interim fees?” Lundahl’s attorney responded, “No, Judge.” The trial court then stated that it had heard the argument of counsel a nd had read the various briefs and invoices. The tria l court further stated that it had considered the factors se t forth in sections 501 and 508 of the Act, and found that Hopper did not have the ability to pay and that L

undahl did have the ability to pay

. The trial court found that the time expended and the hourly rates charged by

Hopper’s attorney were reasonable and nece ssary. The tria l court awarded Hopper $14,500 in attorney fees. Based on caref

ul revie w of the r ecord, we find tha

t the tria l court did

not abuse

its discretion in awarding Hopper attorney fees. The amount of fees were based on the consideration of the factors set forth in the statute, and the work be ing compensated for was reasonably

required and necessary

for the proper performance of legal services in this case. See Gaspirini , 57 I ll. App. 3d at 582. Ac cordingly, we find that the tri al court did not abu se its discretion in awarding Hopper attorney fees in the amount of $14,500. III. CONCL

USION For the foregoing r

easons, we affirm in part the judgment of the c ircuit court of Cook County and rema nd for a f inding of the spec ific amou

nt of reta ined ear nings, a s well as a reconsideration of the distribution of the marital estate based on such finding

. Affirme d in part; c ause re manded f or further proc eeding s in accordance with this Opinion. TOOMIN, P.J., and HOWSE, J., concur.No. 1-08-3541

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