In re Marriage of Abrell

SUPREME COURT CASES

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State: Illinois

Docket No: 107755 Rel

Case Date: 02/04/2010

Preview:Docket No. 107755.

IN THE SUPREME COURT OF THE STATE OF ILLINOIS

In re MARRIAGE OF MARY JACQUELINE ABRELL, Appellant, and JOHN GEORGE ABRELL, Appellee. Opinion filed February 4, 2010.

JUSTICE THOMAS delivered the judgment of the court, with opinion. Chief Justice Fitzgerald and Justices Freeman and Karmeier concurred in the judgment and opinion. Justice Garman dissented, with opinion, joined by Justices Kilbride and Burke.

OPINION At issue in this case is whether unused vacation days and sick days are marital property subject to distribution in an action for dissolution of marriage. The circuit court of Sangamon County held that those days were marital property. The appellate court affirmed in part and reversed in part. 386 Ill. App. 3d 718. We now affirm the appellate court's decision.

BACKGROUND John Abrell and Mary Jacqueline (Jacquie) Abrell were married on June 2, 1984. John and Jacquie had one child, John Matthew (Matthew) Abrell, born on August 26, 1986. On March 10, 2003, Jacquie filed a petition for dissolution of marriage. Trial of the outstanding issues in the dissolution action began in August 2004. Jacquie testified at trial that she was 59 years old. She had a high school education and was a graduate of beauty school. When Jacquie and John got married, Jacquie was working as an executive secretary at the Springfield recreation department, earning approximately $14,000 a year. Jacquie left this job in April 1987, approximately nine months after Matthew was born. For the rest of the marriage, Jacquie did not have a full-time job, although she held intermittent part-time jobs. John, who was 54 years old at the time of trial, testified that he began working as an attorney for the Illinois Department of Public Health in August 1984, where he continued to work. At the time of trial, John earned approximately $72,000 a year, and had accrued 115 sick days and 42 vacation days through his employment. John testified that he had surgery for prostate cancer on January 22, 2004, and had used quite a few of his sick days in connection with that surgery. Jacquie testified at trial that her only income came from child support and her temporary maintenance payments. Jacquie's monthly expenses were $2,925.86, which included a mortgage payment of $610 a month, and an anticipated payment of $407 a month for insurance under COBRA that she expected to pay once the dissolution was final. Jacquie testified that she had applied for a significant number of jobs, but could not find one. Jacquie said that she had health problems, including bursitis in the knees and hips, high blood pressure, osteoporosis, histoplasmosis, anxiety, depression, mitral valve prolapse, psoriasis, asthma, and emphysema. She also had undergone an operation on her feet in April 2004. The trial court issued a memorandum opinion on February 1, 2005. Child support was set in an agreed amount, to terminate on May 31, 2005, when Matthew, who was 18 years old, graduated from high school. Maintenance in the amount of $1,000 a month was -2-

ordered, effective January 1, 2005, until June 1, 2005, at which time it would increase to $1,500 a month. The trial court found that this was an appropriate case for permanent maintenance, subject to review upon the request of either party. The trial court stated that although it did not find Jacquie to be unemployable, it did find that her age, education, and health were factors that might limit the employment options available to her. The trial court also awarded John 45 sick days without those days being subject to division as marital property, but held that the remainder of the sick days and vacation days were marital property and that their value was part of the marital estate. The vacation days were valued at $12,225.40, and the 69 remaining sick days were valued at $9,585.48, for a total of $21,819.88. This amount was incorporated into the marital property distribution and was given to John in the judgment of dissolution. The judgment for dissolution was entered on March 29, 2005. On April 27, 2005, John filed a motion for reconsideration alleging that Jacquie had obtained employment at Horace Mann Insurance Company between the date that the trial court issued its memorandum opinion and the date judgment was entered. John asked the trial court to reconsider its decision concerning maintenance and to lower his maintenance payments. John also argued that there was no precedent in Illinois supporting a finding that accumulated sick and vacation days were marital property subject to distribution in a dissolution of marriage proceeding. In the alternative, John argued that the trial court should have considered the income tax implication of the award of vacation and sick days. In addition, John argued that the trial court overvalued the number of days available to him because there were limits on the number of days he could be compensated for at the time of retirement, and because some days were accumulated prior to the marriage. The trial court issued its supplemental memorandum opinion on June 28, 2005. The trial court noted that the authorities were divided on the issue of vacation and sick days. The trial court held that: "There is no doubt in the Court's mind that the sick and vacation days accumulated during the marriage are marital property. One of the problems with the reserved jurisdiction approach is that John could use all of the vacation days before retirement and owe Jacquie nothing. The sick days would be -3-

subject to more scrutiny but he could use them all up in small increments without much trouble. If John were to get sick he would most likely spend some of the money from that portion of the marital estate awarded him. The Court does not place much credence on the future necessary use of sick days because the Court is dealing with the present in its division of assets. They are definitely an asset at present although subject to some contingencies." The trial court then held that the sick days and vacation days should be valued using John's present pay scale, and that the value should be reduced by the amount of taxes applicable to those days. A hearing on the issue of maintenance was held on February 27, 2006. Jacquie testified that she started a job at Horace Mann on February 14, 2005. Jacquie left that job on September 23, 2005, to take a job at Southern Illinois University School of Medicine. Jacquie's starting salary at Southern Illinois University was $16,608 per year. At this job, Jacquie received vacation benefits, earned "comp" time, and became a part of the State University Retirement System. In addition, Jacquie had life insurance for herself and Matthew, and paid $116 a month for medical and dental insurance for herself and Matthew. The trial court denied John's motion for reconsideration as it pertained to maintenance, noting that Jacquie obtained her employment after the proofs had closed at trial. However, the trial court allowed the parties to proceed as though John's motion was a motion to modify maintenance. On February 27, 2006, the trial court entered an order finding that Jacquie's employment constituted a substantial change in circumstances, and allowed John's motion for modification. The trial court reduced the amount of permanent maintenance to $1,250 per month, effective March 1, 2006. On August 21, 2006, the trial court entered an order stating that the marital portion of the sick days was $9,724.75, and the marital portion of the vacation days was $12,225.40, for a total of $21,950.15. Taking into account the appropriate state and federal tax rates, the net value of the sick days was $7,001.82, and the net value of the vacation days was $8,802.29, for a total net value of $15,804.11. Jacquie was awarded marital property totaling $68,959.38, and John was awarded marital property totaling -4-

$65,124.85. John's portion of the marital estate included an award of $15,804.11 for his vacation and sick days. John filed an appeal, arguing that the trial court erred in failing to make the reduction in maintenance retroactive to the date of the judgment, and erred in failing to reduce the maintenance award further. John also argued that the trial court erred in considering John's accumulated sick and vacation days to be marital property. The appellate court affirmed the trial court's ruling with regard to maintenance. 386 Ill. App. 3d 718. That issue is not before this court. However, the appellate court, with one justice specially concurring in part and dissenting in part, reversed the trial court's finding that the accumulated vacation and sick days were marital property. The appellate court held that the trial court erred in treating those days as marital property, assigning a value to them, and including them in the marital estate. 386 Ill. App. 3d at 731. The appellate court therefore reversed the trial court's property distribution and remanded so that the trial court could, without the need for further evidence, make an appropriate adjustment in the distribution of property. 386 Ill. App. 3d at 734. Justice Myerscough dissented in part, stating that although she concurred with the majority with regard to the maintenance issue, she believed that the trial court's finding that the sick and vacation days were marital property was not erroneous, and that the trial court's distribution of that marital property was not against the manifest weight of the evidence. 386 Ill. App. 3d at 734-35 (Myerscough, J., specially concurring in part and dissenting in part). We subsequently allowed Jacquie's petition for leave to appeal. 210 Ill. 2d R. 315(a). ANALYSIS The issue of whether accumulated vacation and sick days are marital or nonmarital property is an issue of first impression in this court. The parties agree that this issue presents an issue of law, as the facts are not in dispute, and the credibility of witnesses is not an issue. Therefore, our review is de novo. In re Marriage of Crook, 211 Ill. 2d 437, 442 (2004). On appeal, Jacquie argues that the appellate court erred in finding that John's accrued vacation and sick days were not marital property -5-

subject to distribution. Jacquie claims that those days are property under both traditional definitions of property and under the Illinois Marriage and Dissolution of Marriage Act (the Act) (750 ILCS 5/101 et seq. (West 2004)). Jacquie also argues that the appellate court's decision reverses 20 years of practice in this state of treating accrued vacation and sick days as marital property. We first address Jacquie's claim that the appellate court's decision reverses 20 years of practice of treating accrued vacation and sick days as marital property. In support of this claim, Jacquie points to the appellate court's decision in In re Marriage of Zummo, 167 Ill. App. 3d 566 (1988). In Zummo, the appellate court set forth the details of the trial court's judgment of dissolution of marriage. In the judgment of dissolution, the husband was given "all the value of [his] sick days." Zummo, 167 Ill. App. 3d at 571. The husband had accrued 90 sick days, and would be compensated for each day at a rate of fivetwelfths of his hourly rate if he retired or left his employment. Zummo, 167 Ill. App. 3d at 571. Although the appellate court in Zummo noted that the husband had been awarded the value of his sick days in the judgment of dissolution, the issue of whether those days were marital property was not raised or considered on appeal. Jacquie acknowledges that Zummo did not address the issue of whether the husband's sick days were marital property, but claims that the reference to the award of sick days in the opinion has led to a 20-year practice in the courts of treating those days as marital property. As John observes, however, Jacquie offers no support for this claim. The parties agree that the instant case is the first case in Illinois to address this issue. Accordingly, there is no merit to Jacquie's claim that the appellate court's decision in this case reverses a 20-year practice in the courts of treating accrued vacation and sick days as marital property subject to distribution. We next consider whether the appellate court properly found that the accrued sick and vacation days in this case were not property, but rather were a substitute for wages when, and if, the employee is unable to perform his duties. As indicated, Jacquie argues that those days are property under both the dictionary definition of property and under the Act. -6-

Black's Law Dictionary defines "property" as: "1. The right to possess, use, and enjoy a determinate thing (either a tract of land or a chattel); the right of ownership ***. 2. Any external thing over which the rights of possession, use, and enjoyment are exercised ***." Black's Law Dictionary 1335-36 (9th ed. 2009). Section 503(a) of the Act defines "marital property" as "all property acquired by either spouse subsequent to the marriage," except for certain enumerated exceptions. 750 ILCS 5/503(a) (West 2004). Jacquie argues that the accrued vacation and sick days in this case were property because John had the right to use those days, and the days had value, as evinced by the fact that the trial court was able to put a value on those days. Further, those days are marital property because they were acquired by John during the marriage. Moreover, those days do not fit within any of the enumerated exceptions to marital property set forth in section 503(a). Jacquie therefore contends that the appellate court improperly held that the accrued days were not property but were nonmarital alternative wages. As the appellate court noted, other jurisdictions are split on the issue of whether vacation and sick days are marital property. Those courts have held that: (1) accrued vacation and sick days are marital property subject to division at the time of dissolution; (2) accrued vacation and sick days are marital property but are subject to distribution when received, not at the time of dissolution; and (3) accrued vacation and sick days are not marital property. The first published decision to address the issue found that a husband's unused personal leave was a marital asset for purposes of the trial court's division of property in a dissolution action. Schober v. Schober, 692 P.2d 267 (Alaska 1984). The Alaska Supreme Court found that the husband's right to the unused leave was similar to pension or retirement benefits, and was another form of deferred compensation. Schober, 692 P.2d at 268. The Schober court held that the husband's "interest in his unused leave was `not an expectancy but a chose in action, a form of property.' " Schober, 692 P.2d at 268, quoting In re Marriage of Brown, 15 Cal. 3d 838, 845, 544 P.2d 561, 565, 126 Cal. Rptr. 633, 637 (1976). The Schober court therefore held that: -7-

"As Mr. Schober's leave was earned, there was a decision to use it or leave it to be used for the mutual benefit of the parties later in their marriage. We think it clear that the unused leave was, therefore, a marital asset, which should have been considered by the trial court in its division of the Schober's property." Schober, 692 P.2d at 268. This position was adopted by other courts following the Schober decision. For example, the Michigan Court of Appeals held that banked leave days, for which the husband could be compensated upon retirement, were a marital asset. Lesko v. Lesko, 184 Mich. App. 395, 457 N.W.2d 695 (1990), overruled on other grounds by Booth v. Booth, 194 Mich. App. 284, 486 N.W.2d 116 (1992). The Lesko court reasoned that: "On the one hand, plaintiff may become ill and not retain his sick days until retirement. On the other hand, he has accumulated these sick days and vacation days during the marriage, he has a right to the use or pay for these days and they are capable of being assigned a value. In balancing all of the factors, we find that such banked leave days are a divisible marital asset. However, the tax consequences should be taken into consideration in making the determination of value." Lesko, 184 Mich. App. at 402, 457 N.W.2d at 699. In addition, the Washington Court of Appeals and the Florida District Court of Appeals have held that accumulated vacation and/or sick pay is marital property. See In re Marriage of Williams, 84 Wash. App. 263, 927 P.2d 679 (1996) (trial court did not err in including husband's vested vacation and sick leave pay in the community's assets, finding vacation pay is a form of deferred earning and sick leave is a vested and matured benefit); King v. King, 719 So. 2d 920 (Fla. App. 1998) (trial court erred in failing to award wife any portion of husband's accumulated sick leave in final dissolution judgment); see also In re Marriage of Nuss, 65 Wash. App. 334, 828 P.2d 627 (1992) (wife's Financial Security Plan, which allowed her to bank unused sick leave and receive the dollar value of any unused benefits upon death or retirement, was properly characterized as an asset for distribution in dissolution of marriage action).

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Similarly, where a party received payment for accumulated sick and/or vacation days following separation but prior to dissolution, courts have held that the payment for those days is marital property. See Brotman v. Brotman, 528 So. 2d 550 (Fla. App. 1988) (where husband had received severance pay and "earned vacation" pay upon termination of employment, after separation but prior to dissolution, court held that severance pay and "earned vacation" pay were marital assets and should have been considered in distribution of marital property); Ryan v. Ryan, 261 N.J. Super. 689, 619 A.2d 692 (1992) (court held that husband's receipt of payment for unused accumulated vacation days at time of separation was marital property because large percentage of those days were accrued during the marriage and were the result of the marital enterprise). As noted, other jurisdictions have found that accumulated vacation and sick pay is marital property, but have held that the asset is subject to distribution at the time the pay is received, not at the time of dissolution. Thus, in Grund v. Grund, 151 Misc. 2d 852, 573 N.Y.S.2d 840 (1991), the Supreme Court, Suffolk County, New York, held that the husband's "SCATT" benefits, which included unused sick time and unused vacation time, were a marital asset. However, the court declined to award the wife a lump-sum distributive award relating to those benefits, noting that the husband could suffer a catastrophic illness and use up all accumulated sick and vacation time, or the husband's employer could eliminate the SCATT benefits prior to the husband's retirement. Grund, 151 Misc. 2d at 857, 573 N.Y.S.2d at 844. Therefore, the court awarded the wife onefourth of the husband's unused sick, vacation and personal leave pay acquired during the parties' marriage, up until the commencement of the dissolution action, but made the award contingent, so that the wife would receive nothing if no benefits remained at the time the husband retired. Grund, 151 Misc. 2d at 857, 573 N.Y.S.2d at 844. Similarly, in Arnold v. Arnold, 2003

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