When Is the Property Valued? The Law of the Great Recession

Our preview of the September term of the Illinois Supreme Court continues with In re Marriage of Mathis [pdf].

Often in divorce proceedings there is a need to bifurcate: to enter a judgment of dissolution before the property settlement. But on the other hand, after the dissolution -- the literal divorce -- has been entered, often the parties' sense of urgency dims.

So if a significant period passes between the dissolution and the hearing on property matters, when is the property valued? For divorces which were pending when the Great Recession hit, this question can make a significant difference.

That's the issue presented in Mathis. The husband filed for divorce in November 2000. Judgment of dissolution was entered four months later. After several delays, the trial court commenced hearing on the property issues in April 2004. After several further continuances, in February 2006 the trial court finally set a valuation date, but then nothing further happened until May 2010. After yet more delays, the trial court set a new valuation date of December 31, 2010 -- nearly ten years after the judgment of dissolution. On husband's motion, the trial court certified a question for interlocutory appeal: when there is a lengthy delay between dissolution and the hearing on ancillary issues, is the appropriate valuation date the date of dissolution or a date close to the hearing on the property issues?

The statute isn't much help. According to Section 503(f) of the Illinois Marriage and Dissolution of Marriage Act, 750 ILCS 5/503(f), in a bifurcated dissolution period, the valuation date is "the date of trial or some other date as close to the date of trial as is practicable."

On appeal, the former husband argued that the Court's interpretation produced a windfall to the former spouse by allowing him or her to capture the fruits of the other party's postdissolution efforts. But the Appellate Court noted that when a party's efforts increased the value of the property, those efforts would be taken into account; when the party ignored the property, the party's failure to maintain would count against them too. Understandably given the recent history of property values, the Court was most concerned with the effect of a decline, pointing out that if the Court distributed property based on earlier, higher values, it was essentially distributing assets which no longer exist, resulting in an unenforceable order.

Justice Thomas R. Appleton specially concurred with the result. Although Justice Appleton agreed with the majority's result and reasoning, he worried that the Court's decision might cause some trial courts to refuse to enter a quick "grounds only" dissolution judgment, even where the circumstances of the parties clearly required it.

Mathis will be argued at the 9:00 am session of the Court on Tuesday, September 18, 2012. Join us back here tomorrow for a preview of the argument in Toftoy v. Rosenwinkel.

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