In re Marriage of Hundley

2019 IL App (4th) 180380

125 N.E.3d 509

429 Ill.Dec. 803

IN RE MARRIAGE OF Sally Kay HUNDLEY, Petitioner, Third-Party Plaintiff-Appellant, and Cross-Appellee,

and

John J. Hundley, Respondent

(Buckhart Sand & Gravel Company, Inc., Third-Party Defendant-Appellee and Cross-Appellant).

NO. 4-18-0380

Appellate Court of Illinois, Fourth District.

FILED April 2, 2019

Edward T. Graham Jr., of Meyer, Austin, Romano & Graham, of Taylorville, for appellant.

Andrew J. Martone and Ashlie Keener Kuehn, of Hesse Martone, P.C., of Springfield, for appellee.

JUSTICE STEIGMANN delivered the judgment of the court, with opinion.

¶ 1 In November 2015, the trial court entered a judgment of dissolution of marriage, ordering respondent, John J. Hundley, to pay $ 370 per month in maintenance to petitioner, Sally Kay Hundley, upon the sale of their farmland in Rochester, Illinois. Although an auction was held that same month, the sale of the farmland was not finalized until September 2016. Meanwhile, in December 2015, Sally served an income withholding notice (withholding notice) pursuant to section 20 of the Income Withholding for Support Act (Act) ( 750 ILCS 28/20 (West 2014) ) on John's employer and third-party defendant, Buckhart Sand & Gravel Company, Inc. (Buckhart). Buckhart began withholding income from John's paychecks but did not pay those withholdings to the Illinois State Disbursement Unit (SDU).

¶ 2 In May 2016, Sally filed a third-party complaint that alleged Buckhart knowingly failed to comply with the Act by not making payments pursuant to the withholding notice. In June 2016, Buckhart filed a motion to dismiss pursuant to section 2-619 of the Code of Civil Procedure ( 735 ILCS 5/2-619 (West 2014) ), arguing that the withholding notice failed to include all of the information required by section 20(c) of the Act. In September 2016, the trial court granted Buckhart's motion to dismiss, finding that because the sale of the farmland had yet to occur, the withholding notice was invalid and did not require Buckhart's compliance.

¶ 3 Sally appealed the trial court's order, and this court reversed, concluding Buckhart was a payor subject to the Act. In re Marriage of Hundley , 2017 IL App (4th) 160720-U, ¶ 19, 2017 WL 2240851. Because a payor's obligations under the Act are mandatory, we further concluded Buckhart could not challenge the validity of the underlying order for support. Id.

¶ 4 On remand, Buckhart continued to argue that the withholding notice was invalid. Buckhart also contended any violation of the Act was not committed knowingly and asserted several affirmative defenses. In January 2018, the trial court conducted a bench trial. In February 2018, the court issued a written order, finding that the initial failure to pay over withheld amounts pursuant to the withholding notice was an innocent mistake, but the violation became "knowing" when Buckhart failed to correct the mistake until May 2016. See 750 ILCS 28/35(a) (West 2014). The court then assessed a statutory penalty in the amount of $ 112,000.

¶ 5 Both Buckhart and Sally filed posttrial motions. Buckhart claimed the Act authorized a penalty only for knowing violations. Sally contended that the trial court miscalculated the date Buckhart paid the SDU. In May 2018, the trial court modified its judgment and reduced the penalty to $ 53,400. The court agreed with Buckhart that section 35(a) applied only to knowing violations and found that Buckhart knowingly violated the Act after receiving a nonreceipt notice pursuant to section 45(j) in February 2016. See id. § 45(j).

¶ 6 Sally appeals, arguing the trial court erred by calculating the penalty beginning in February 2016 instead of January 2016. She contends the penalty provision in section 35(a) unambiguously requires a penalty beginning on the date any withholding under the initial withholding notice is not paid to the SDU. Buckhart cross-appeals, arguing the trial court erred by (1) concluding the withholding notice was valid because it failed to contain all the information required by section 20(c) and (2) denying its affirmative defenses. Buckhart also claims the trial court's finding of a knowing violation was against the manifest weight of the evidence. We conclude that the trial court correctly interpreted the Act and its findings were not against the manifest weight of the evidence. Accordingly, we affirm the trial court's judgment.

¶ 7 I. BACKGROUND

¶ 8 A. The Dissolution of Marriage Proceedings

¶ 9 In April 2015, Sally filed a petition in Sangamon County for dissolution of marriage from John. At that time, John worked for Buckhart as a heavy equipment operator. In August 2015, Sally and John submitted a marital settlement agreement to the trial court pursuant to the Illinois Marriage and Dissolution of Marriage Act ( 750 ILCS 5/502 (West 2014) ), in which John agreed to pay Sally maintenance on the following condition:

"On and after the first day of the month next following the sale of the parties' farm real estate located at rural Rochester, Illinois, and the distribution of the proceeds of the sale thereof as otherwise set forth herein, husband shall pay to wife the sum of $ 370.00 each month."

The agreement further provided that the farm real estate "shall be sold with reserve at public auction."

¶ 10 In November 2015, the trial court entered a judgment of dissolution of marriage that incorporated the marital settlement agreement. Later that month, the farm real estate sold at public auction for a price significantly less than the parties anticipated. Additionally, the sale was not finalized as planned under the judgment of dissolution of marriage. The sale was eventually finalized in September 2016.

¶ 11 B. The Third-Party Complaint

¶ 12 In May 2016, Sally filed a third-party complaint against Buckhart, alleging it knowingly failed to comply with a withholding notice in violation of section 35(a) of the Act. 750 ILCS 28/35(a) (West 2014). Sally alleged that in December 2015, she sent Buckhart an income withholding notice by certified mail that instructed it to withhold $ 370 per month from John's pay beginning on January 1, 2016. However, Sally did not receive any payments. Pursuant to section 45(j) of the Act, she sent Buckhart a nonreceipt notice by certified mail informing Buckhart of the lack of payment and requesting an explanation or payment in compliance with the statute within 14 days. Id. § 45(j). The complaint asserted that Buckhart failed to respond or pay over the necessary funds and therefore claimed Sally was entitled to a statutory penalty of $ 100 per day for each payment Buckhart missed. See id. § 35(a).

¶ 13 In June 2016, Buckhart filed a motion to dismiss pursuant to section 2-619 of the Code of Civil Procedure, arguing that the withholding notice failed to include all the information required by section 20(c) of the Act. Specifically, Buckhart maintained that the withholding notice failed to state the "amount required for current support under the order for support" (id. § 20(c)(2) ) because, pursuant to the marital settlement agreement, John was not required to pay support until the sale of the farm real estate, which had not yet occurred. Buckhart further contended that the withholding notice was invalid because (1) a copy of the underlying order for support was not attached, (2) the notice did not include a "remittance ID," and (3) the notice did not identify from where the underlying order for support came. Alternatively, Buckhart asserted that it had been withholding the amounts required since January 2016 but due to a computing error had not paid them over to the SDU. Accordingly, any violation was the product of an honest mistake and was not done "knowingly" as required by section 35 of the Act. Id. § 35(a).

¶ 14 In September 2016, the trial court granted Buckhart's motion to dismiss. In its written order, the court found that because the underlying order for support did not require John to pay maintenance until the farm real estate had been sold and the proceeds disbursed, John was not an "obligor" under the Act. See id. § 15(e) (" ‘Obligor’ means the individual who owes a duty to make payments under an order for support."). Because John was not an obligor, Buckhart could not be a "payor" and was not required to comply with the Act. See id. § 15(g) (" ‘Payor’ means any payor of income to an obligor.").

¶ 15 C. The First Appeal

¶ 16 Sally appealed the trial court's dismissal of her third-party complaint, arguing that Buckhart was a payor and had no ability to challenge the terms of the underlying order under the Act. Buckhart responded that the withholding notice was invalid, relying on Schultz v. Performance Lighting, Inc. , 2013 IL 115738, 376 Ill.Dec. 448, 999 N.E.2d 331 (holding that the failure to include in a withholding notice the information required by section 20(c) renders the notice invalid). Buckhart reiterated the arguments raised in its motion to dismiss—namely, that the withholding notice (1) was not regular on its face because a copy of the underlying order for support was not attached, (2) was missing information, and (3) inaccurately stated that support was due on January 1, 2016, contrary to the order for support that required the farm real estate to be sold as a condition precedent to John's maintenance obligation.

¶ 17 This court agreed with Sally, reversed the trial court's judgment, and remanded the case for further proceedings. We distinguished Schultz because (1) the third party in that case alleged the withholding notice was invalid and defective on its face, "not that the underlying order of support itself was invalid," and (2) the Act "does not require an underlying order of support to be attached to a withholding [notice]." Hundley , 2017 IL App (4th) 160720-U, ¶¶ 15, 16. Additionally, we noted that the Act is mandatory and "does not allow a third-party respondent served with a valid withholding [notice] to contest the validity of an underlying order of support."...