In re Marriage of Watkins , 95 N.E.3d 1184 ( 2017 )

2017 IL App (3d) 160645
Opinion filed December 14, 2017
_____________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
2017
In re MARRIAGE OF ) Appeal from the Circuit Court
) of the 10th Judicial Circuit,
ADAM WATKINS, ) Marshall County, Illinois.
)
Petitioner-Appellant, ) Appeal No. 3-16-0645
) Circuit No. 12-D-23
and )
)
STACY WATKINS, ) Honorable
) Michael P. McCuskey,
Respondent-Appellee. ) Judge, presiding.
_____________________________________________________________________________
JUSTICE CARTER delivered the judgment of the court, with opinion.
Justices McDade and O’Brien concurred in the judgment and opinion.
_____________________________________________________________________________
OPINION
¶1 This is appeal arises from the trial court’s interpretation of an agreed order entered by the
trial court on November 25, 2015, concerning which party—the petitioner, Adam Watkins, or the
respondent, Stacy Watkins—had the right to claim the parties’ two children as tax exemptions
for the 2015 tax year on tax returns that were filed in 2016. The agreed order modified a previous
order that had allowed Stacy to claim the children on her tax returns on a yearly basis. On appeal,
Adam requests that this court reverse the trial court’s finding that the agreed order allowing him
the right to claim the children as tax exemptions did not apply until the 2016 tax year (for tax
returns filed in 2017). We reverse the trial court’s finding and remand for any further proceeding
necessary as a result of our opinion.
¶2 FACTS
¶3 On June 19, 2004, the parties were married. At that time, they had a three-year-old son,
who had been born on November 5, 2001. Their second son was born on April 18, 2005. After
eight years of marriage, on July 6, 2012, Adam filed a petition for dissolution of marriage. On
November 14, 2012, a final judgment of dissolution of marriage was entered in this case, which
incorporated, by reference, a “Final Order on Custody and Child Related Issues and Joint
Parenting Agreement” and indicated that the “[s]aid Final Order on Custody and Child Related
Issues and Joint Parenting Agreement is a final order on said issues.”
¶4 According to the “Final Order on Custody and Child Related Issues,” entered by the trial
court on November 14, 2012, the parties were granted shared joint legal custody of the children,
with Stacy designated as the residential parent and Adam ordered to pay $950 per month in child
support. The order specifically indicated, “Stacy shall be allowed to claim both minor children as
tax exemptions in the filing of her state and federal income tax returns on a yearly basis.”
¶5 On March 6, 2015, Adam filed a verified petition for temporary relief. The petition
indicated that the parties’ child custody order of November 14, 2012, allowed Stacy to claim the
dependent tax exemption for the parties’ two minor children on her tax returns on a yearly basis
and requested that the trial court “address the issue of the tax exemption[s] before the parties
file[d] their 2014 income tax returns.” Adam requested that “each party be allowed to claim one
(1) child as a dependent on their income tax returns annually.” With the filing of his verified
2
petition for temporary relief, Adam filed a notice of hearing and proof that his petition had been
served upon Stacy on February 16, 2015.
¶6 On March 6, 2015, Stacy filed a petition to modify child support and a response to
Adam’s petition for temporary relief. In her response to Adam’s petition, Stacy argued as
follows:
“This [trial] court is without authority to retroactively change the allocation of the
dependency exemptions for 2014 in response to [Adam’s] petition for Temporary
Relief which has been filed on or about February 17, 2015. Instead, this court
would have authority, pursuant to this Petition, to address the income tax
dependency exemption issue for calendar year 2015 and thereafter.” (Emphasis
added.)
¶7 At a hearing on September 28, 2015, at which the parties entered an agreed order as to
parenting time, Adam’s attorney indicated that the parties had not reached an agreement as to the
modification of child support. Adam’s attorney indicated that Stacy’s earnings plus her receiving
$1000 per month in child support from Adam meant that Adam’s net pay, after child support,
was getting close to Stacy’s net pay, with Adam never having had a single tax deduction for the
children. Adam’s attorney indicated that Adam was requesting both tax deductions for the
children.
¶8 The trial court clarified, “[n]ow we are talking about the tax exemption for two kids for
2015 that are going to be filed no later than April 15 of 2016.” Stacy’s counsel responded,
“[c]orrect.” Stacy’s counsel explained that the parties had initially agreed in their negotiations for
modification of child support to each claim one child and then alternate when there was only one
applicable child to claim as part of the “total agreement,” but then “that last part fell apart.”
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Stacy’s counsel indicated that Stacy was willing to divide the exemptions equally, but Adam’s
position was that because Stacy claimed the children for the past three years he should be able to
do the same for the next three years.
¶9 With interjections from the attorneys at times, which are not included here, the trial court
indicated:
“Well, I think it is real simple. And that is that his child support should be
based on 28 percent of his average annual income. And that’s looking back
obviously, or you can do it in April of each year after you have got the tax return
so that you can either come in on a modification, it would be nicer to have an
agreement, that you’re going to adjust it annually in April after the tax return, 28
percent. If he’s paying 28 percent at this level of $1,000 a month or more, I think
he’s entitled to the two tax exemptions.
***
And that’s the way I would rule if you were in front of me at a contested
hearing in April of 2016. I would be adjusting the child support at that time based
on his 2015 income and consider it a substantial change because we are talking
about bonuses. *** Who knows what that is going to be in the future.
***
Well, I’m talking about if he came in for a modification. I don’t have
authority to change anything in the past because there [are] no pleadings in front
of me. But I’m telling you how I would rule if there were pleadings in front of me
based on the fact that he is paying approximately $12,000 or more in child
support of which he doesn’t get to deduct it.
4
*** I think if he is paying current, which this Court doesn’t see a lot of
currency, 28 percent including bonuses that the total ends up $1,000 or more a
month, he’s entitled to both exemptions.
***
I would like to see the two of you work on that order. I’m going to be here
next year. So that’s what I would be doing if you were back here in April. It
would be a lot nicer just to save them the money of coming back to court.
***
*** So hopefully you can work on that and we will see you with an
agreed-upon order. Otherwise you have got a good idea of what I will do on
another day.”
¶ 10 On November 25, 2015, the trial court entered the parties’ “Agreed Final Order on
Modification of Child Support,” which indicated that “[t]his cause comes on for hearing on entry
of this Agreed Order.” 1 The order indicated that the final order on custody and child related
issues had been entered on November 14, 2012, and there had since been a substantial change in
circumstances. The order indicated that Adam’s new child support obligation would be $1032.76
per month, with the obligation “abated” during June and July (because Adam would have
primary physical custody of the children during the summer months commencing in 2016).
¶ 11 Additionally, the agreed order of November 25, 2015, indicated as follows:
“The November 14, 2012 Order granted the tax exemption to the
Respondent [Stacy] each year. The Petitioner’s [Adam’s] petition for temporary
1
It does not appear from the record on appeal that any proceedings were recorded or transcribed
from when the agreed order was entered on November 25, 2015. The docket entry for that date merely
indicates “Agreed Final Order On Modification Of Child Support” with no identification of the court
reporter, whereas other docket entries include the court reporter’s initials.
5
relief (regarding the tax exemption) is hereby granted. [Adam] shall claim the
children annually on his income tax returns. [Stacy] shall cooperate to execute
any necessary documentation, if required by a respective tax authority, including
but not limited to IRS Form 8332.”
¶ 12 On February 16, 2016, Adam filed a verified petition for rule to show cause, arguing that
Stacy acted contrary to the court’s order of November 25, 2015, by refusing to allow Adam to
claim the parties’ children and instead claiming the children on her own income tax returns.
Adam indicated that he learned that Stacy had claimed the children on her 2015 tax return when
his electronically filed 2015 tax return was rejected due to Stacy already claiming the children on
her 2015 tax return. Adam further indicated that as a result of Stacy’s violation of the order
entered on November 25, 2015, he was required to submit a paper tax return and pay additional
expenses for submitting the original tax return, and that he was informed that he may also be
precluded from claiming the children as exemptions on his future tax returns. Adam motioned
the trial court to enter an order finding Stacy in contempt of court and finding the contempt
purged by Stacy executing IRS form 8332 and any other respective form to allow him to claim
the children, Stacy filing an amended 2015 tax return wherein she did not claim the children, and
Stacy reimbursing Adam for any expenses or penalties incurred as a result of Stacy unilaterally
claiming the children on her returns. Adam also filed a “motion to freeze tax refund,” requesting
the court enter an order to freeze Stacy’s 2015 tax refund in the trust account of Adam’s attorney
within 48 hours of her receipt of the refund monies.
¶ 13 On February 16, 2016, the trial court entered an order for Stacy to show cause, finding
that from Adam’s verified petition it appeared that Stacy had willfully and deliberately failed to
comply with the prior order of the court by refusing to allow Adam to claim the children on his
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tax returns and instead claiming both children on her own income tax returns, contrary to the
court’s order from November 25, 2015. The trial court ordered Stacy to appear on April 13,
2016, to show cause, if any, why she should not be punished for civil contempt for refusing to
comply with the court’s order and why all remedies sought by Adam in his petition should not be
granted. The trial court also ordered that Stacy “shall not spend any tax monies received and
shall tender all tax return monies to [Adam’s attorney] within 24 business hours of receipt.”
¶ 14 In response, on April 11, 2016, Stacy filed a petition for relief from the order of
November 25, 2015, or, in the alternative, for the court to amend its order of November 25,
2015, nunc pro tunc, to conform to the intent of the parties. Stacy alleged that the order was
entered as the result of a mutual mistake of fact, mutual scriveners’ error, or both, necessitating
that the order be vacated or amended nunc pro tunc. Stacy claimed the order failed to include
language that the order was to be applied prospective only, instead of suggesting that the
dependency exemptions were to be retroactive to January 1, 2015.
¶ 15 Also on April 11, 2016, in a motion to vacate the order for her to show cause, Stacy
acknowledged that the order of November 25, 2015, was silent as to the effective date of, and as
to the retroactivity for, Adam claiming the children as dependents. She argued that Adam
claiming the children on his tax returns was intended to be prospective for the tax year 2016, to
be filed in 2017, and beyond.
¶ 16 On July 18, 2016, a hearing took place on matters pending before the court. The trial
court indicated that the court reporter was not available that morning so the court was unable to
7
review the hearing transcript from November 25, 2015, to determine “exactly what was said,
which would have been helpful.” 2
¶ 17 Stacy’s new attorney, Scott Shore, who had not been part of the parties’ prior
negotiations, provided a “pretrial transcript of September 28 and the order of November 25.”
Shore argued that the trial court would not have intended the order allowing Adam to claim the
children on his tax returns to be retroactive, “but rather the [court] would adjust it as of the
following April, April 2016.” The trial court indicated “that’s exactly what I thought I might
have said” but without the court reporter there that morning he had no way to go back and see.
The trial court reviewed the transcripts provided by Stacy’s attorney.
¶ 18 Adam’s attorney indicated that she and Stacy’s previous attorney had engaged in
extensive negotiations with the parties, during which the figures and agreements were
“hammered out.” Stacy’s new attorney, Shore, argued there was no indication in the order that
the order was to be applied retroactively, so the order should not be retroactively applied.
¶ 19 The trial court found that the order did not mean for Adam to claim the tax exemptions
for the 2015 tax year. The trial court indicated:
“So if there is an error here, it’s not putting a clear message on what year
[Adam] would be entitled to. But he was entitled to the future, and the future is
2016, filed in 2017. I mean, that’s the intent. That’s what the language—
But then the two attorneys wrote ‘annually,’ making [Adam’s attorney]
and [Adam] think that goes back in time. But it doesn’t. So nobody’s actually
2
It does not appear from the record on appeal that any proceedings were recorded or transcribed
from when the agreed order was entered on November 25, 2015. The docket entry for that date merely
indicates “Agreed Final Order On Modification Of Child Support” with no identification of the court
reporter, whereas other docket entries include the court reporter’s initials.
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done anything wrong here. He gets—right now as we’re speaking, he gets 2016,
filed next year.
***
And the intent is his is in the future, not to relate back because if it was, it
should have said that Adam Watkins is allowed to claim the children on the 2015
tax return to be filed in 2016. But it didn’t say that.
So [Stacy] continued on her order [from 2012]. And so when she filed in
January ’16, she was actually filing from January 1, ’15, which is a long time
before the November 25 order, for the income of January 1, ’15, through
December of 2015. ***
So the petition for rule to show cause cannot succeed based on the intent
of the Court. And the language that’s here certainly didn’t say he gets to claim the
2015 income when he files in ’16 and the exemption of the children.”
¶ 20 Adam’s attorney indicated that, through the negotiation discussions with the parties, it
was understood that the parties intended for Adam to claim the children on his next-filed tax
return, starting from the time of the court order in November 2015, and forward. To show that
Stacy, too, understood the intent of the parties was for Adam to claim the children on his tax
returns to be filed in 2016 (for the tax year of 2015), Adam’s attorney proffered a text message
Stacy had sent to Adam, in which Stacy indicated that, despite the court order, she was going to
claim the children on her tax return because Adam owed her $119, she did not care what they
had agreed, and she was going to take the tax exemption anyway. The proffered text message
was not entered as an exhibit into evidence.
¶ 21 The trial court stated:
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“Whatever they clearly understood, the lawyers did a bad job of asking me
to sign something that didn’t follow exactly what the Court said. And I’m not
responsible for two lawyers handing me a piece of paper saying, ‘Sign it. This is
our agreement,’ after the Court’s already said what he’s going to do, and now
you’re telling me, ‘Well, we really didn’t intend that.’ That’s not what the Court
can go back now and change.
What the Court wants to see is what did the Court intend? *** Lot’s of
people talk in front of their lawyers, but it’s when you hand something to a judge
after the judge has spoken, that’s what becomes final.
And if you want to go to the appellate court, fine. I think there’s a good
record now. There wasn’t a good record until we found out what the Court said,
which is what Mr. Shore has put forward.”
¶ 22 Adam’s attorney noted that the transcript of the pretrial hearing on September 28, 2015,
indicated that the trial judge had said, “ ‘we’re talking about the tax exemption for the two kids
for 2015 that are going to be filed no later than April 15 of 2016.’ ” The trial court indicated,
“Right. But that’s before the order came in.” The trial court found that based on the 2012 order,
Stacy had been entitled to claim both children and “when January 1, 2015, arrived, she was
entitled to take the tax exemption for 2015.” The trial court indicated that the agreed order
should have said, “the 2015 tax exemption which she was allowed, Stacy, on November 14,
2012, is now changed and amended, and she no longer can take the 2015 tax return that she was
entitled to all year until September or November.”
¶ 23 The trial court also found that the order of November 25, 2015, was not clear that it was
amending the order of 2012. The trial court indicated:
10
“Nothing says that was amended. Nothing says that what she was
standing here in court in September or November she was entitled to was taken
away from her.
*** It said nothing about modifying November 14, 2012. It didn’t say that.
So it’s in the future, futuro. Nothing saying we go back and take away what she
had already in November ’12 and she had all year.”
¶ 24 The trial court entered an order (1) vacating its prior order for Stacy to show cause, (2)
denying Adam’s motion to freeze Stacy’s tax refund, (3) finding Adam’s right to claim the
parties’ children as dependents was “prospective applying to 2016 taxes payable 2017 and years
thereafter,” and (4) denying Stacy’s petition for relief from the order of November 25, 2015,
finding that the calculations shown of record supported the entry of the child support amount.
¶ 25 Adam filed a motion for the trial court to reconsider its finding that Adam’s right to claim
the children did not begin until his tax returns were filed in 2017 (for the 2016 tax year). The trial
court denied Adam’s motion to reconsider. Adam appealed.
¶ 26 ANALYSIS
¶ 27 On appeal, Adam argues that the trial court erred by finding that the agreed order of
November 25, 2015, did not allow him to claim the parties’ two children as tax exemptions for
the 2015 tax year on tax returns filed in 2016, even though the parties had intended for the
agreed order to allow Adam to do so. Stacy argues that the trial court did not err in its
interpretation of the order of November 25, 2015, because the effect of the court order, “as duly
intended by the court,” was to allow Stacy to continue to claim the children for the 2015 tax year.
¶ 28 An agreed order adopted by the court is not an adjudication of the parties’ rights but,
rather, a record of their private, contractual agreement and must be construed to give effect to the
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parties’ intent, which is determined from the language of the order when there is no ambiguity in
its terms. Commonwealth Edison Co. v. Elston Avenue Properties, LLC, 2017 IL App (1st)
153228, ¶ 13. An agreed order must be interpreted in its entirety, considering all facts and
circumstances surrounding its execution, as well as all pleadings and motions from which it
stems. Draper & Kramer, Inc. v. King, 2014 IL App (1st) 132073, ¶ 27.
¶ 29 At the time of the parties’ “agreed final ordered,” which was entered on November 25,
2015, section 502(a) of the Illinois Marriage and Dissolution of Marriage Act provided that in
order to promote amicable settlement of disputes, parties to a dissolution of marriage case may
enter into an agreement for the disposition of their property, maintenance, and “support, custody
and visitation of their children.” 750 ILCS 5/502(a) (West 2014). However, the court is not
bound by agreements providing for the support, custody, and visitation of children and can reject
terms in agreements that involve children. 750 ILCS 5/502(b) (West 2014); Blisset v. Blisset, 123
Ill. 2d 161, 167 (1988). But where the terms of an agreement are, in fact, set forth in the court’s
judgment, the parties “shall be ordered to perform under such terms” (750 ILCS 5/502(d) (West
2014)) and the terms of an agreement set forth in the judgment “are enforceable as contract
terms” (750 ILCS 5/502(e) (West 2014)).
¶ 30 The modification of a child support obligation is a judicial function, administered by the
court as a matter of discretion. Blisset, 123 Ill. 2d at 167-68. Private agreements to modify child
support without court approval are unenforceable. Id. Parents may create an enforceable
agreement for the modification of child support by petitioning the court for support modification
and establishing that their agreement is in the best interests of the children. Id. at 168.
¶ 31 The allocation of the tax exemption is an element of child support, subject to the trial
court’s discretion. In re Marriage of Fowler, 197 Ill. App. 3d 95, 100 (1989). It is within the
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authority of the trial court to allocate the dependency tax exemption to a noncustodial spouse and
to order the custodial parent to sign a declaration for Internal Revenue Service (IRS) purposes
that he or she will not claim the exemption. In re Marriage of Rogliano, 198 Ill. App. 3d 404,
415 (1990).
¶ 32 A joint parenting agreement is a contract between the parties and, as such, the primary
objective is to give effect to the intent of the parties, which is to be determined only by the
language of the agreement, absent any ambiguity. In re Marriage of Coulter, 2012 IL 113474,
¶ 19. While the issue of whether the trial court’s modification of child support was erroneous is
generally reviewed for an abuse of discretion, a review of a trial court’s interpretation and effect
of the parties’ agreement presents a question of law, which we review de novo. Id.; In re
Marriage of Razzano, 2012 IL App (3d) 110608, ¶ 13. Additionally, we review the trial court’s
ruling on a motion to reconsider that is based on its application of existing law de novo; whereas,
we review a ruling on a motion to reconsider based on newly discovered evidence or changes in
the law for an abuse of discretion. In re Tyreke H., 2017 IL App (1st) 170406, ¶ 109.
¶ 33 In this case, on November 14, 2012, the parties entered an agreed order to modify the
child support that had been set in their agreed “Final Order on Custody and Child Related
Issues,” which had been incorporated into the court’s judgment for the dissolution of their
marriage. The entry of the agreed order on November 25, 2015, resulted from Adam’s pending
petition for temporary relief, in which he requested relief from the order of November 14, 2012,
so that he could claim a dependency tax exemption, and also from Stacy’s pending petition to
modify child support. The agreed order of November 25, 2015, indicated that it had been entered
after the court heard the arguments of the parties. The record shows the parties had previously
advised the trial court of their positions regarding the allocation of the child tax exemptions,
13
through their pleadings and in open court on September 28, 2015. (There is no indication of a
recording of the court proceedings from when the parties’ agreed order was entered by the court
on November 25, 2015.)
¶ 34 We find no ambiguity in the terms of the “Agreed Final Order on Modification of Child
Support” that was entered by the trial court on November 25, 2015. The order indicated that the
parties agreed there was a prior order entered on November 14, 2012, which allowed Stacy to
claim the dependency tax exemptions each year and, now, Adam’s petition for temporary relief
was being granted so that Adam “shall claim the children annually on his income tax returns.”
Thus, the title and language of the agreed order was clear that it pertained to the modification of
child support, specifically the modification of the child support order that had been entered on
November 14, 2012, and that the modification included a modification of the right to claim the
dependency tax exemptions. The order did not indicate that Adam was allotted the tax
exemptions in reference to any particular tax year, but instead referenced him claiming the
dependency tax exemptions “on his income tax return” annually.
¶ 35 In considering all the facts and circumstances surrounding the execution of the agreed
order of November 25, 2015, we note that Adam’s petition for temporary relief, which was
granted by the agreed order, was filed in March 2015 and requested that the child tax exemption
be addressed “before the parties file their 2014 income tax returns.” The petition was pending
when the issue of the child tax exemptions was discussed in open court on September 28, 2015
(at which time the parties had presumably already filed their 2014 tax returns). In response to
Adam’s petition, Stacy indicated that Adam’s petition would be applicable to “the income tax
dependency exemption issue for calendar year 2015 and thereafter.” At the hearing on September
28, 2015, prior to the trial court subsequently entering the agreed order on November 25, 2015,
14
the trial court clarified that Adam was requesting “the tax exemption for two kids for 2015 that
are going to be filed no later than April 15 of 2016.” Stacy’s counsel confirmed that the parties
were referring to tax exemptions for the year 2015 to be filed by April 2016, further explaining
that since Stacy had claimed the children for the past three years (i.e., tax years 2012, 2013, and
2014), Adam was requesting that he be able to do the same (i.e., tax years 2015, 2016, and
2017). We further note that Stacy claimed the children as tax exemptions pursuant to the order
entered November 14, 2012, which used substantially similar language to the agreed order in
question in providing that Stacy was allowed “to claim both minor children as tax exemptions
*** on a yearly basis,” after which Stacy presumably claimed the children on her next-filed tax
return in 2013 for the tax year 2012.
¶ 36 Therefore, from our review of the record, we conclude that the parties intended for the
agreed order, entered on November 25, 2015, to allow Adam to claim the tax exemptions for the
children for the 2015 tax year on his 2016 tax returns. Consequently, the trial court erred in
finding that Adam’s right to claim the parties’ children as dependents did not, in fact, encompass
the 2015 tax year. Accordingly, we reverse the trial court’s finding on this issue entered on July
18, 2016, and we reverse the trial court’s denial of Adam’s motion to reconsider entered on
September 28, 2016. We remand for any further proceedings necessary as a result of this opinion
and suggest that, on remand, language be added to the order to indicate that Stacy’s obligation to
provide the IRS declaration to Adam each year is contingent upon her receiving child support
payments from him. See Rogliano, 198 Ill. App. 3d at 415 (citing In re Marriage of Einhorn, 178
Ill. App. 3d 212, 224-225 (1988) (it is within the trial court’s discretion to allocate the tax
dependency exemption by ordering the custodial parent to sign a declaration that he or she will
not claim the exemption; such an order “must provide that the execution of the declaration is
15
contingent upon the custodial parent’s receipt of child support payments” if the noncustodial
parent is ordered to make such payments).
¶ 37 We need not address Stacy’s argument that the trial court’s order declining to find her in
contempt of court was proper because the issue is not before this court on appeal. We,
consequently, grant Adam’s motion to strike Stacy’s argument related to the trial court’s decision
to decline finding Stacy in contempt of court.
¶ 38 CONCLUSION
¶ 39 The judgment of the circuit court of Marshall County is reversed, and we remand for the
consideration of the above-noted language to be added to the modification of child support order
entered on November 25, 2015, and for any further proceedings that are necessary as a result of
this opinion.
¶ 40 Reversed and remanded with directions.
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