Jan 22, 2014

Dissolved But Not Done: Bifurcated Judgments

“Client A” met with her attorneys for the first time less than one year before she passed away. She had a chronic illness and her doctors gave her just months to live. Stress exacerbated her condition. She claimed her husband was abusive. She sought help getting a divorce so that she could minimize her stress at the end stages of her life and so that she could distribute her estate as she saw fit. Her husband refused her request for a divorce. Knowing that the typical contested divorce is not resolved in the amount of time her doctors expected her to live, her attorneys petitioned the Court on an emergency basis and obtained a bifurcated judgment for dissolution of marriage.

Typically, a divorce is resolved under a single judgment for dissolution of marriage. Conversely, a bifurcated judgment dissolves the parties’ marriage but reserves other issues, such as property division, child support, maintenance, or custody (“bifurcated judgment”).

This article addresses the standard for obtaining a bifurcated judgment, recent cases that expand when bifurcation has been deemed appropriate, the date of asset valuation used in bifurcation cases, and considerations for practitioners faced with bifurcation issues.

The Effect of Bifurcation

Entry of a bifurcated judgment has a dramatic impact on one’s legal rights because it terminates the rights and privileges one enjoys as a married individual.

For example, a bifurcated judgment terminates one’s right to renounce the will of a deceased spouse and take the “surviving spouse’s share” of their estate. In “Client A’s” case above, the client was divorced before she passed away and the remaining issues, including property division, were resolved between her estate and the husband through the divorce court. Since she was divorced at the time of her passing, she was able to distribute her estate according to her wishes and her former spouse had no claim against the assets her estate was awarded by the divorce court.

Further, marital property stops accumulating upon entry of a bifurcated judgment. This provides a monetary incentive for some parties to seek bifurcation. For example, if a wife expects to receive a large employment bonus, she would benefit from entry of a bifurcated judgment prior to receiving it because the bonus would then be considered her non-marital property. If she received the bonus while the parties were still married, it would be marital property and subject to division by the Court.

Bifurcation also terminates one’s right to be insured on their spouse’s health insurance plan and the ability to file a joint income tax return. Once the bifurcated judgment is entered, a party is also free to remarry, potentially introducing other complications.

“Appropriate circumstances” for Bifurcation: The Illinois Supreme Court in Cohn

Under Section 401(b) of the Illinois Marriage and Dissolution of Marriage Act, a court may enter a bifurcated judgment when “appropriate circumstances” exist. Given that nebulous statutory threshold, case law defines which circumstances are “appropriate” for entry of bifurcated judgment. The Illinois Supreme Court, in the seminal case In re Marriage of Cohn, provided a non-exhaustive list of appropriate circumstances warranting bifurcation, which include:

“[w]here the court does not have in personam jurisdiction over the respondent; where a party is unable to pay child support or maintenance if so ordered; where the court has set aside an adequate fund for child support pursuant to section 503(d) of the [Illinois Marriage and Dissolution of Marriage] Act; or where the parties’ child or children do not reside with either parent.”

In the Bogan case, the Illinois Supreme Court held that bifurcation is appropriate not only in the circumstances enumerated in Cohn, but also circumstances “of the same caliber.”

Following Cohn, Courts have expanded which circumstances are “of the same caliber” as those in Cohn. The following are a few examples:

i. In re the Marriage of Kenik: Where the Wife was pregnant with her fiancé’s child, bifurcation was in the best interests of the unborn child. The Wife was eager to remarry and her fiancé would provide insurance and care for the child. Further, there was a “relative absence” of complications and entanglements arising from bifurcation because the marital property was readily identifiable and easily divided, the parties had ceased filing joint tax returns several years prior, further acquisition of marital property was improbable, and it was unlikely that there would be complications from the “intervening death” of either spouse because they were in good health.

ii. In re the Marriage of Blount: Bifurcation granted where the Wife was elderly and very ill, and the Court determined that bifurcation would benefit her emotional status.

iii. Copeland v. McLean: The Wife was terminally ill and the majority of property was held in joint tenancy; the Wife wished to be divorced so she might dispose of her portion of the marital assets according to her wishes. (Holding limited to the facts of the case).

iv. In re Marriage of Schweihs: The Husband had no income or assets from which to pay child support and the Wife had difficulty obtaining child support from him.

Recent Expansion of the Cohn standard: Wade and Tomlins and Glenn

Recently, Courts have further expanded the scope of “appropriate circumstances” to include those where minor children would benefit from bifurcation. In Wade, the Appellate Court upheld the trial court’s order granting basketball player Dwyane Wade’s petition for bifurcation. The Court found that the bifurcation was necessary to protect the best interests of the children, who were negatively impacted by the divorce. (The children’s representative also supported bifurcation for that reason.) The Court also found that bifurcation may be warranted to overcome certain delays caused by one party.

In Tomlins and Glenn, the Court found that bifurcation was warranted because the parties’ intense conflict was negatively impacting the children (for example, the children witnessed at least one physical altercation between the parties).

Both Wade and Tomlins and Glenn appear to open the door to more litigants requesting bifurcated judgments. While many of the earlier cases require a showing of circumstances not commonly seen in dissolution proceedings (i.e. a terminally ill litigant), in most cases it would not be difficult for a party to show that a minor child is negatively impacted by contentious or protracted divorce cases.

Valuation Date: The Illinois Supreme Court in Mathis

An important consideration in cases involving bifurcated judgments is that assets are valued as of the date bifurcated judgment is entered. The Illinois Supreme Court recently addressed this issue in In re Marriage of Mathis, and held that even when there is a significant period of time between the entry of a bifurcated judgment and resolution of the property issues, the Court must value assets as of the date of the bifurcated judgment. (In Mathis, approximately seven years had passed between the entry of bifurcated judgment and the appeal.)

The Mathis case illustrates one way bifurcation can significantly impact the outcome of a case. For example, if the husband owned a share of stock worth $10 on the date of bifurcated judgment that increased to $100 when the Court divided property years later, the Court would value the stock at $10. Thus, when a bifurcated judgment is entered, the parties must attempt to expeditiously resolve the remaining issues to limit complications and potentially inequitable results.

Additional considerations for practitioners

i. Grounds and the Petition for Dissolution of Marriage:

When pursuing a bifurcated divorce, the practitioner should plead “fault grounds,” such as mental cruelty or adultery, if applicable. Typically, practitioners plead “irreconcilable differences” at the onset of a case to avoid setting an adversarial tone. But under irreconcilable differences, the parties must be separated for two years prior to divorce. If both parties agree to waive the two year period, they must be separated for six months prior to divorce.

There is no required waiting period if a party seeks dissolution on “fault grounds.” Accordingly, fault grounds should be plead to prevent the opposition from delaying entry of judgment.

In practice, litigants often do not provide many facts supporting fault grounds plead in Petitions for Dissolution of Marriage. However, failing to plead specific facts leaves the Petition for Dissolution of Marriage susceptible to a motion to strike from the opposing party that would cause delay. To prevent such an attack, it is important to include specific facts in the complaint supporting the grounds plead.

ii. No evidentiary hearing required

As discussed above, a bifurcated judgment can have a significant impact on the outcome of a case. Accordingly, a litigant opposing bifurcation would likely want the petitioner to present evidence supporting their contention that “appropriate circumstances” to bifurcate exist, and would want the opportunity to cross-examine witnesses. For example, if a party alleges that bifurcation is necessary to benefit his or her mental health, the opposing party may want the opportunity to cross-examine the party or the party’s health care providers relative to that issue.

But Section 401(b) does not require the Court to take evidence. In Tomlins and Glenn, the Third District found that an evidentiary hearing is not required for a Court to grant a Motion for Bifurcated Judgment. Similarly, in In re Marriage of Schweihs, the First District found that the trial court did not err when it ordered bifurcation based on pleadings and affidavits without requiring oral testimony.

iii. Appeal and standard of review

Although underlying issues in a case are not separately appealable under the Illinois Supreme Court’s decision in In re Marriage of Leopando, a party may appeal the bifurcation itself.

The trial court is given broad discretion in determining bifurcation is appropriate. On appeal, the reviewing court must find that the trial court abused its discretion to overturn the lower court’s Order.

Conclusion

Parties may have powerful incentives, monetary or otherwise, to seek a bifurcated judgment for dissolution of marriage. Although traditionally disfavored, in recent years, courts have expanded what constitutes “appropriate circumstances” to enter a bifurcated judgment.

Trial courts have broad discretion in awarding a bifurcated divorce and will only be reversed upon a finding of abuse of discretion. All of this creates an environment where we can expect to see an increase in the number of petitions for bifurcation filed. In a special concurrence to the Appellate Court’s decision in the Mathis case, Justice Appleton warned that the Court’s decision “may serve to create a new level of gamesmanship” in divorce cases. Although the decision was reversed by the Supreme Court, the potential for heightened gamesmanship remains. Only time will tell if petitions for bifurcated judgments become a more popular litigation strategy in dissolution cases.

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