In re Radakovic
| Decision Date | 26 August 2013 |
| Citation | 2013 IL App (1st) 122597 |
| Parties | In re MARRIAGE OF LANA RADAKOVIC, Petitioner-Appellee, and DUSAN RADAKOVIC, Respondent-Appellant. |
| Court | United States Appellate Court of Illinois |
NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).
Appeal from the Circuit
Court of Cook County.
¶ 1 Held: The circuit court did not abuse its discretion in awarding maintenance in gross to the wife; erred in finding that the husband dissipated marital assets but did not err in finding the non-marital estate was not entitled to reimbursement for its contributions to the value of marital property; did not abuse its discretion in dividing the marital estate; and did not err when it incorporated an agreed order, which enjoined the husband from selling or otherwise encumbering his corporation without notifying the wife, into the judgment of dissolution.
¶ 2 The respondent, Dusan Radakovic, appeals from the circuit court's order dissolving his marriage with the petitioner, Lana Radakovic, and resolving their property distribution and maintenance issues. On appeal, the respondent argues that the circuit court erred by: (1) awardingthe petitioner maintenance in gross of $100,000; (2) finding that he dissipated marital assets and denying reimbursement to the non-marital estate for funds it contributed to the marital estate; (3) awarding the petitioner 60% of the marital property; and (4) incorporating a previous agreed order, which enjoined him from selling his corporation without notice to the petitioner, into the dissolution order. For the reasons that follow, we affirm in part and vacate in part.
¶ 3 The parties married on May 13, 1992. At the time of the marriage, the respondent had custody of his 4 year-old twin sons from a previous marriage. The parties had one child, Olga, born on March 1, 1989. They purchased the marital residence in South Barrington in 1999 and have resided there since.
¶ 4 On March 12, 2008, the petitioner filed a petition for dissolution of her marriage to the respondent. On June 3, 2009, the petitioner filed a petition for a temporary and permanent injunction that sought to enjoin the respondent from selling, transferring, or otherwise encumbering a South Elgin property, which she alleged was valued at $1,200,000 and owned by a marital business, Sigma Investments, LLC (Sigma). The petitioner alleged that the respondent had plans to close the business and sell its property.
¶ 5 On July 22, 2009, an agreed order was entered, stating in relevant part:
"That the [respondent], his agents, partnerships and corporations shall not mortgage, sell[,] transfer or otherwise encumber or dispose of his corporations, partnerships or real property until such time as he gives the Petitioner 30 days written notice of his intention to do so."
¶ 6 On November 6, 2009, the petitioner filed a petition seeking to hold the respondent inindirect civil contempt, alleging that he had renegotiated the mortgage on the South Elgin property, increasing the mortgage from $306,543 to $776,397 as of November 2, 2009. The respondent denied that he took out a new mortgage on the property. Rather, he explained that the additional $550,000 was for new construction at the property that was completed prior to the court's July 22, 2009, order. The petitioner later withdrew this petition and filed a notice of intent to claim dissipation for the respondent's conduct.
¶ 7 The matter proceeded to trial in March 2011. The respondent, who was 75 years old at the time of the dissolution, testified that he emigrated to the United States from Yugoslavia in 1969. He completed the U.S. equivalent to some technical school while living in Yugoslavia, but he did not have a college degree. In 1978, he started Field Systems Machinery (FSM), a machinery repair business, and he was its sole owner. The company repaired machinery for power plants, steel mills, refineries and other similar businesses. The respondent built FSM from the ground up, garnering customers, preparing quotes, designing and coordinating projects, and performing the labor on the machinery. The respondent started Sigma in 1994 with the intent to purchase the South Elgin property in its name to house FSM's operations. He had a 99% interest in Sigma while the petitioner had a 1% interest. The total purchase price of the South Elgin property was $725,000, which was paid through a combination of funds furnished by the respondent, along with $150,000 paid by FSM and a $560,000 mortgage in Sigma's name. In 2006, construction began to build a 5,000 square foot addition to the South Elgin property. According to the respondent, FSM paid for the nearly $500,000 in construction costs.
¶ 8 The respondent then testified to several loan transactions that subsequently occurredinvolving Sigma. Loan number 7651 showed that Sigma borrowed $350,000 from Itasca Bank on July 17, 2006, and that the loan would mature on January 17, 2014. The respondent testified that FSM made the monthly payments on this loan from 2006 through November 2009. The loan balance of $225,231.29 was paid off on November 3, 2009, with proceeds from another loan identified as loan number 7652. Loan number 7652 showed that Sigma borrowed $776,656 from Itasca Bank on November 3, 2009, and that the loan would mature on November 3, 2029. The remainder of the proceeds from loan 7652 paid off loan number 7650, which was a $550,000 loan that FSM took out from Itasca Bank on July 17, 2009. The FSM loan was used as a line of credit, and funds from the loan were deposited in FSM's bank accounts. The respondent admitted that he "probably" received a copy of the July 22, 2009, court order barring further mortgages and that he did not notify the petitioner of his intention to refinance and consolidate these loans. The respondent testified that FSM paid $483,972 for the addition to be constructed on the South Elgin property.
¶ 9 Regarding his income, the respondent testified that he earned roughly $ 130,000 per year from FSM and collected approximately $25,000 annually in social security income, but he admitted that he withdrew funds in addition to his monthly income from FSM for certain family expenses. The respondent testified that, after expenses including paying the mortgage and expenses for the marital residence, his net monthly income was approximately $2,300.
¶ 10 The petitioner, who was 50 years old at the time of the dissolution, testified that she had been employed at Siemens as a compliance administrator since 2007, earning approximately $47,000 per year. Prior to her position at Siemens, she worked for FSM for 15 years, performing administrative work. During the first few years working at FSM, she did not take a salary. She had a four-yearcollege degree in French and literature from a college in Yugoslavia, and she worked as a translator for about a year after graduation while living in Yugoslavia.
¶ 11 The petitioner testified that she raised the three children throughout the marriage. During the marriage, the family would go on vacations once per year. The petitioner testified that the couple's monthly expenses prior to the dissolution totaled nearly $12,000 and that her income was insufficient to maintain the lifestyle established during the marriage. She testified that she needed $7,000 per month to supplement her gross monthly income of $3,900 in order to maintain the lifestyle. This level of support would allow her to pay the mortgage on the marital residence if the respondent paid off the $100,000 home equity line of credit, which the petitioner had used for family expenses. She testified that, if she was not awarded sufficient support, she would have to move to a small condominium. The petitioner testified that, during the marriage, the respondent often withdrew funds from FSM in addition to his monthly salary to pay for family expenses, including gas, vehicles, and the children's college tuition.
¶ 12 The petitioner's forensic accounting and valuation expert, Jeffrey Brend, testified that he valued FSM as of November 30, 2009, at $641,000. Brend explained that FSM's booking of the building costs at the Sigma property was improper and lowered FSM's net income and retained earnings. Accordingly, Brend stated that the building costs should have been accounted for by Sigma. Brend further testified that Sigma should have been collecting approximately $120,000 in rental income. He explained that the advantage to carrying the Sigma expenses on FSM's books was that it lowered FSM's tax liability and retained earnings. Brend also explained that, in his calculations, he considered FSM a machinery business, not a service business, and he used a 5%goodwill factor. Brend explained that the classification and goodwill factors were the major differences between his value and the value that respondent's expert calculated. The respondent's expert had used a 50% goodwill factor and classified FSM as a service business. Brend did not report a value for Sigma.
¶ 13 In reviewing the loan transactions involving FSM and Sigma, Brend explained that, in 2009, Sigma had roughly $225,000 outstanding on its original $350,000 mortgage and FSM had a $550,000 loan; both loans were paid off with proceeds from Sigma's $776,000 loan. Brend testified that FSM's loan proceeds were deposited into its business account and used both for its operation expenses and for the construction costs for the South Elgin property. He further testified that the increase in the Sigma loan decreased the equity in the Sigma property.
¶ 14 The respondent's accounting expert, H. Edward Morris, testified that he valued FSM at $226,000. Morris factored in the building...
To continue reading
Request your trial