In re Marriage of Harnack , 2021 IL App (1st) 210014-U ( 2021 )

2021 IL App (1st) 210014-UTHIRD DIVISION
December 22, 2021
No. 1-21-0014
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the
limited circumstances allowed under Rule 23(e)(1).
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
______________________________________________________________________________
In re MARRIAGE OF ) Appeal from the
) Circuit Court
PAMELA HARNACK, ) Cook County.
)
Petitioner-Appellee, )
) No. 08 D 02844
and )
)
STEVE FANADY, ) Honorable
) David E. Haracz,
Respondent-Appellant. ) Judge Presiding
PRESIDING JUSTICE McBRIDE delivered the judgment of the court.
Presiding Justice Gordon and Justice Ellis concurred in the judgment.
ORDER
¶1 Held: Affirming the trial court’s order requiring former spouse to turn over assets
awarded to other spouse in the dissolution judgment, or the value thereof, over
claims that the order improperly engrafted new obligations into the judgment, or
that it was barred by the doctrines of res judicata, law-of-the-case, in pari delicto,
and unclean hands.
¶2 This is the latest of several appellate proceedings involving certain shares of Chicago Board
Options Exchange, Inc. (CBOE) stock that was owned by appellant, Steve Fanady, during his
marriage to appellee, Pamela Harnack. A common theme to all these cases is Fanady’s various
No. 1-21-0014
efforts to avoid obligations to his former wife, as well as to his business partners. Those efforts
include forging a court document, secreting assets into international accounts and to otherwise
undisclosed locations, and refusing to appear in court or comply with court orders. The extensive
proceedings have been discussed at length in other appeals, in particular, In re Marriage of
Harnack and Fanady, 2014 IL App (1st) 121424 (Harnack I) and In re Marriage of Harnack and
Fanady, 2019 IL App (1st) 170813-U (Harnack II). We will repeat the facts of those cases only
insofar as they are relevant to the instant appeal.
¶3 The record shows that Harnack and Fanady were married in October 2003, and Harnack
initiated a dissolution action against Fanady in March 2008. Fanady initially participated in the
proceedings, but later stopped participating, and a default judgment was entered against him on
November 1, 2010.
¶4 In February 2011, a separate breach of partnership action was initiated by a business
partner, Jerome Israelov, against Fanady. As a general matter, Israelov alleged that he and Fanady
had entered into a partnership to purchase a membership or “seat” in the CBOE, which was
subsequently converted into shares of CBOE stock. In January 2011, Fanady improperly withdrew
40,000 shares of the CBOE stock from the partnership without compensating Israelov for his
portion.
¶5 A dissolution of the marriagewas entered thereafter on August 3, 2011, after an evidentiary
hearing. Harnack testified at that hearing, and Fanady, again, failed to appear. In the judgment
order, the court found that Fanady was worth approximately $7.3 million as of March 2010, while
Harnack had minimal income, was unable to support herself, and recently had been diagnosed with
an autoimmune disorder. The court found that the parties had acquired various marital property
during the marriage, including the equivalent of 320,000 shares of CBOE stock, 280,000 of which
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were 100% owned by Fanady. The court determined that the CBOE stock owned in Fanady’s name
“and/or” several specified LLCs and partnerships, including “Alpha” and “Fanmare,” was “marital
property acquired subsequent to the date of marriage and as a result thereof *** Harnack [wa]s
awarded 140,000 shares of said [CBOE] stocks.” The court noted, however, that Israelov’s action
remained pending, and ordered 40,000 shares of CBOE stock to be held in an escrow account
pending resolution of Israelov’s claim. The court instructed “CBOE, BNY Mellon Bank, and
Fidelity Investments” to transfer 120,000 shares of CBOE stock to Harnack within 10 days of the
judgment. “The balance” of the CBOE shares was awarded to Fanady.
¶6 In October 2011, in another separate action, CBOE Holdings filed an interpleader
complaint against all parties claiming a portion of that stock, including Harnack, Israelov, and
another of Fanady’s business partners, Michelle Marme. CBOE Holdings asserted that only
120,000 shares remained in that account, and due to the conflicting claims, it was in doubt as to
who had the legal right to receive the shares. The interpleader action was consolidated with the
dissolution action and breach of partnership action in January 2012.
¶7 Thereafter, in April 2012, Fanady filed a motion to set aside the judgment for dissolution
of marriage pursuant to section 2-1301 of the Code of Civil Procedure (Code) (735 ILCS 5/2-1301
(West 2010)), or in the alternative, under section 2-1401 of the Code (735 ILCS 5/2-1401 (West
2010)). The trial court denied Fanady’s motion in May 2012, finding that section 2-1301 did not
apply, and that Fanady failed to show due diligence as required by section 2-1401. Fanady
appealed.
¶8 In Harnack I, this court affirmed the denial of Fanady’s motion to vacate. We initially
explained the background of the case, in that three cases had been consolidated, specifically the
dissolution case, Israelov’s lawsuit, and the interpleader action. We noted, however, that the
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consolidation did not merge the cases into a single suit, change the rights of the parties to each
suit, or make the parties in one suit parties in the other suit. Harnack, 2019 IL App (1st) 170813-
U, ¶ 42 (citing Shannon, 59 Ill. App. 3d at 577).
¶9 In analyzing Fanady’s appellate claim under section 2-1301, we noted that the record
“show[ed] a lack of diligence by Fanady as a result of his complete refusal to
participate in the dissolution proceedings for more than 15 months, his attempts to
evade service of process and his refusal to comply with the court’s orders regarding
payment of maintenance and with its restraining orders and injunctions barring him
from transfer of any assets held by him or his enterprises. It shows his attempts to
evade the jurisdiction of the court and to defraud this court and the Florida court by
obtaining a dissolution of marriage judgment under false pretenses in Florida and
by moving the action to federal court through Alpha’s action. It shows his forgery
of a dissolution judgment in order to obtain a religious divorce and his attempts to
hide marital assets by selling one presumptively marital CBOE seat and hiding the
money received in Switzerland and by transferring 120,000 presumptively marital
shares from the Alpha and Fanmare accounts. To paraphrase the court in Mann,
324 Ill. App. 3d at 379, Fanady was the architect of his own predicament, and his
complaint now that he was denied substantial justice will not be heard by this court.
It would not be reasonable to vacate the judgment and force Harnack to
proceed to trial on her petition for dissolution of marriage a second time where any
alleged errors in the judgment or inequalities in the distribution of assets are solely
due to Fanady’s failure to participate in the dissolution proceedings. Any errors or
injustices in the judgment for dissolution of marriage of which Fanady now
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No. 1-21-0014
complains would not have occurred absent his abandonment of the litigation.
Fanady chose not to participate in the litigation. He must now live with the
consequences of that decision.” In re Marriage of Harnack, 2014 IL App (1st)
121424, ¶¶ 46-47.
¶ 10 This court further explained that a petitioner seeking to vacate a judgment under section 2-
1401 must show “ ‘(1) the existence of a meritorious defense or claim; (2) due diligence in
presenting this defense or claim to the circuit court in the original action; and (3) due diligence in
filing the section 2–1401 petition for relief.’ ” Id., quoting Smith v. Airoom, Inc., 114 Ill. 2d 209,
220–21 (1986). We rejected Fanady’s argument that he showed a meritorious defense based on his
claim that the judgment overstated the marital estate by including stock held by Fanady with
partners, causing the court to award a disproportionate share of stock to Harnack. We noted that
Fanady lacked standing to assert the interests of his partners, and that he failed to present any
evidence that Harnack had been awarded a disproportionate share to support his 2-1401 petition.
¶ 11 Additionally, even if Fanady had shown a meritorious defense, we concluded that his claim
would still fail based on his failure to show, or even allege, due diligence, or any extraordinary
circumstances that would allow the court to excuse his lack of diligence.
“He presents no evidence to show that Harnack used court processes to gain an
unconscionable advantage or that her conduct suggests fraud or fundamental
unfairness. He presents no evidence to show that, as a result of circumstances
outside the record and beyond his control, i.e., through no fault or negligence on
his part, the existence of a valid defense was not made known to the trial court and
that he had a reasonable excuse for failing to take such action within the applicable
time limits. Essentially, his only assertion is that the judgment for dissolution of
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No. 1-21-0014
marriage is ‘uneven and unfair’ and based on a ‘fundamental misunderstanding or
misrepresentation’ regarding the amount of CBOE Holdings stock he owned. On
the record before us, it is clear that any errors or one-sidedness in the judgment are
solely due to Fanady’s own conduct, the result of his refusal to participate in the
dissolution proceedings.
The court based the judgment for dissolution of marriage on Harnack’s
evidence regarding the length of the marriage, the assets acquired by the parties
during the marriage, Harnack’s limited earning capacity, Fanady’s vastly greater
earning capacity, Harnack’s recently diagnosed illness and Fanady’s failure to
comply with the court’s order awarding Harnack maintenance and the resultant
arrearage, all of which are factors to be considered in determining the allocation of
marital assets under section 504 of the Illinois Marriage and Dissolution of
Marriage Act. Rather than participate in the action and present his own evidence to
the court to rebut Harnack’s evidence, Fanady chose instead to make underhanded
efforts to prevent Harnack from getting her appropriate share of the marital assets
and to avoid the trial court’s jurisdiction. His behavior in this case has been so
egregious, so contemptuous of the law and the court, that he cannot now complain
that substantial justice requires that the judgment for dissolution of marriage be set
aside.” In re Marriage of Harnack, 2014 IL App (1st) 121424, ¶¶ 61-62.
¶ 12 In so holding, however, this court noted that the parties disagreed “regarding the source of
the 40,000 shares that the court ordered transferred to escrow,” and that CBOE Holdings “pointed
out that they cannot comply with the judgment for dissolution of marriage as entered because they
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[were] in possession of only 120,000 shares.” Accordingly, this court “remand[ed] for clarification
of this transfer provision.” Id. ¶ 66. This court explicitly
“caution[ed] that, by this remand, we are not vacating the judgment for dissolution
of marriage and are not inviting further litigation regarding Fanady’s attempts to
vacate the judgment. We hold here that, for the reasons set forth above, Fanady is
not entitled to relief under either section 2–1301 or section 2–1401. Our remand is
for the sole purpose of clarifying the trial court’s intent with regard to the 40,000
CBOE Holdings shares to be transferred to escrow.” Harnack, 2014 IL App (1st)
121424, ¶ 67.
¶ 13 Fanady filed a petition for leave to appeal to the supreme court in January 2015, which the
supreme court denied on September 30, 2015. Following the denial, the appellate court mandate
was issued on November 12, 2015.
¶ 14 Meanwhile, in March 2015, Harnack filed a motion to modify previously entered
injunction orders of the trial court. Harnack acknowledged Fanady’s pending petition for leave to
appeal, but asserted that because no stay had been entered, she was entitled to enforce the judgment
of dissolution. Specifically, Harnack requested the trial court to direct CBOE Holdings to distribute
80,000 shares of CBOE stock to her as provided in the judgment, or alternatively 6,159 shares to
satisfy her maintenance award. She reasoned that the appellate court remand only related to 40,000
shares held in escrow, and she was entitled to the remaining 80,000 shares. Israelov and Marme
objected to Harnack’s motion, noting that they also had claims for the remaining shares.
¶ 15 In May 2015, the trial court denied Harnack’s motion, finding that “the third party issues
have to get resolved before any release of any of these shares is ordered.” The court further
explained, “it would be *** detrimental to these third parties if these shares were released, and
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they have rights and due process rights which, apparently, since I wasn’t the trial court which,
apparently, have not been addressed before this, I’m reluctant to release shares to Ms. Harnack.”
¶ 16 Harnack filed the second appeal in this matter pursuant to Supreme Court Rule 307(a) (eff.
Feb. 26, 2010), which allows for interlocutory appeals from orders “granting, modifying, refusing,
dissolving, or refusing to dissolve or modify an injunction.” However, this court concluded that
the circuit court lacked jurisdiction to consider Harnack’s motion, since the mandate had not yet
issued in the prior appeal. Harnack, 2016 IL App (1st) 151874-U, ¶ 22. We thus vacated the circuit
court’s order in a Rule 23 order filed March 31, 2016 (id.), and the proceedings continued in the
trial court.
¶ 17 After extensive briefing regarding the proper distribution of the CBOE shares, the circuit
court held a three-day trial on April 4, 5, and 6, 2017, during which the court heard testimony from
Harnack, Fanady, Israelov, Marme, and Harnack’s former counsel.
¶ 18 On July 11, 2017, the trial court entered an order, noting that the issue before the court was
“the ownership of 120,000 shares of CBOE Holdings Inc. stock and the associated dividends” held
by CBOE Holdings, which had subsequently changed its name to “Computershare.” The court
noted that there had
“been great delay and upheaval caused mostly by the many machinations of Steve
Fanady in his attempt to deceive his ex-wife and his former business partners. It
was Mr. Fanady’s antics that created the chaos in the pre-decree divorce case. It
was Mr. Fanady who fabricated a judgment and forged a judge’s stamp. It was Mr.
Fanady who transferred an additional 120,000 shares of stock to locations which he
now refuses to disclose.”
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¶ 19 The trial court then made substantial factual findings based on the trial evidence. In sum,
the evidence showed that Fanady transferred shares of CBOE stock that were property of the
partnership with Israelov to a personal account in Switzerland. While he was transferring the
shares, he was purposely misleading Israelov, and later, ignoring Israelov’s repeated
communications. The court concluded that Israelov was “an innocent victim of Mr. Fanady's
underhanded actions” and that he “should receive promptly 40,000 shares currently being held by
Computershare.”
¶ 20 The court also considered Marme’s claim to 80,000 CBOE shares. The court rejected
Harnack’s argument that Marme’s claim should be barred because “Marme colluded with Fanady
to deprive her of her portion of the marital estate,” finding those allegations were not sufficiently
proven. Accordingly, the court awarded Marme the 80,000 shares of CBOE stock she sought.
¶ 21 In awarding the remaining 120,000 shares to Israelov and Marme, the court noted that
Harnack’s arguments were compelling as an equitable matter, but they failed legally. Fanady—
and by extension, Harnack—had no claim to the remaining 120,000 shares, because Fanady had
already transferred and received the shares to which he was entitled from the partnerships. The
court found that Harnack “should not benefit from her husband’s bad acts” or “from her own
misunderstanding or misrepresentation as to the number of shares of CBOE Holdings which were
in the marital estate,” and she was required “to chase Mr. Fanady for her just share of the marital
estate.”
¶ 22 Accordingly, and as clarified in a July 28, 2017, order, the court ordered Computershare to
immediately transfer 40,000 shares of CBOE stock and associated dividends to Israelov, and
80,000 shares of CBOE stock and associated dividends to Marme. Harnack’s motion for
reconsideration of that order was denied. The court further found as to both orders “pursuant to
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Illinois Supreme Court Rule 304(a)” that there was “no just cause for delay of enforcement or
appeal of the Court’s July 11, 2017, order, as clarified on July 28, 2017.” Harnack filed a timely
notice of appeal from that order on September 20, 2017, and thereafter, an amended notice of
appeal on September 21, 2017.
¶ 23 On appeal in Harnack II, this court noted that Harnack’s appeal was comprised of claims
against Fanady arising from the dismissal or denial of certain petitions for a rule to show cause, as
well other claims against Israelov and Marme arising from the award of CBOE shares to those
parties. As to Harnack’s claims against Fanady, this court lacked jurisdiction to consider them
because her appeal was not from a final order. Harnack had a pending attorney fee petition that
had not been ruled on, and the trial court did not find that there was no just reason for delay of
enforcement or appeal under Illinois Supreme Court Rule 304(a).
¶ 24 This court then went on to consider Harnack’s claims against Israelov and Marme, for
which the circuit court had made a Rule 304(a) finding, and over which this court had jurisdiction.
This court affirmed the circuit court’s order, concluding that the trial court’s factual findings,
including that Harnack “caused the trial court to enter the judgment for dissolution of marriage
based on an inflated assessment of the marital estate,” were not against the manifest weight of the
evidence. Among other things, this court rejected Harnack’s arguments that Israelov had violated
the Uniform Partnership Act by restricting her rights to the remaining shares, and that Marme had
colluded with Fanady to deprive Harnack of her portion of the marital estate. This court also
rejected Harnack’s argument that Marme’s claims were barred by res judicata and collateral
estoppel as a result of the judgment for dissolution, noting that Marme was not a party to the
dissolution proceedings.
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¶ 25 The case then continued in the circuit court. On December 9, 2019, Harnack filed a Petition
to enforce the judgment for dissolution of marriage. Harnack explained that the judgment, which
had been affirmed by the appellate court, required Fanady to transfer 120,000 shares of CBOE
stock to Harnack. Harnack stated that Fanady had “delayed the enforcement of the [judgment for
dissolution of marriage] by filing frivolous and fraudulent legal actions against” her and requested
that the trial court “end [Fanady]’s delay tactics and enforce” the judgment. Harnack further
requested, “in the event [Fanady] is no longer possessed of said shares,” that he be required to “pay
[Harnack] the value of said shares in an appropriate amount along with any interest, dividends, or
other monetary benefits collected by [Fanady] while he was in possession of said stock.”
¶ 26 On April 27, 2020, Fanady filed a motion to dismiss Harnack’s petition for enforcement.
Fanady argued that it was “impossible to award” Harnack the relief she sought because the shares
she was awarded in the judgment “no longer exist[ ]” and because those shares were determined
to “belong[ ] to others.” Fanady further argued that the “law of the case” doctrine and “collateral
estoppel” barred Harnack from “relitigating” the ownership of the CBOE stock that was awarded
to Israelov and Marme. Fanady additionally maintained that the court could not grant Harnack’s
alternative request that he pay the value of the CBOE shares if those shares were no longer
available, because doing so would be “improperly engrafting an additional obligation into” the
judgment.
¶ 27 Harnack responded to Fanady’s motion to dismiss on May 20, 2020. Harnack argued that
Fanady failed to assert any proper basis for dismissal. Harnack pointed out that the interpleader
action was a separate action, which did not extinguish or otherwise adjudicate Fanady’s obligations
to Harnack under the prior dissolution judgment. Instead, the issue in the interpleader action “was
who had a legal right to certain specific shares that were being held by the interpleader in that
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cause.” That action did not bar Harnack’s claims. Instead, Harnack had “a right to enforce”
Fanady’s obligations under the judgment, and it was Fanady who could not “continue to litigate
the legitimacy of those claims.” Harnack further asserted that the judgment awarded her 120,000
shares of CBOE stock, and provided a way for Harnack to receive what she was awarded, but the
provisions were “separate and the former does not depend on the latter.” Harnack claimed that she
was “not seeking to modify the dissolution judgment, only enforce it,” which the court had
“indefinite jurisdiction” to do.
¶ 28 On June 19, 2020, the court held a hearing on Fanady’s motion to dismiss. After hearing
argument from both parties regarding the judgment, the court stated,
“I’ve read the judgment in detail countless times, and I’ve lived with this case for
years, as have most of you. I don’t read the judgment—first, in Paragraph 10 of the
Findings section of the judgment, it clearly delineates that there are 320,000 shares
of CBOE stock, and then later in Paragraphs 12 and 13 and 19, those 320,000
shares, as I read the judgment, are distributed. I don’t find that there are specific
shares that are awarded to Ms. Harnack versus Mr. Fanady. As [counsel for
Harnack] said, there aren’t individually numbered shares that were delineated or
set forth in the judgment. I don’t think we need to complicate the issue here. There
were 320,000 shares. 120,000 of those shares were to be transferred to Ms.
Harnack.”
¶ 29 The court then concluded that there were “sufficient elements pled in the *** petition [to
enforce]” and denied Fanady’s motion to dismiss. Fanady’s motion to reconsider that order was
denied on September 3, 2020.
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¶ 30 On July 17, 2020, Fanady answered Harnack’s petition for enforcement. Among other
things, Fanady continued to argue that the judgment awarded her certain stock, but that it had since
been “determined that stock belongs to others.” Fanady also repeated his argument that Harnack
was “ask[ing] the court for alternative relief, not awarded to her” in the judgment, by requesting a
monetary amount if the shares were no longer available. Fanady further alleged several
“affirmative defenses,” including the “law of the case” doctrine, res judicata, and unclean hands.
¶ 31 On October 20, 2020, counsel for Fanady filed a motion to withdraw from his
representation citing irreconcilable differences. That motion was granted on November 4, 2020.
Thereafter, Fanady represented himself in the circuit court proceedings.
¶ 32 On November 11, 2020, Fanady, pro se, filed a motion for summary judgment. Fanady set
out various portions of this court’s 2019 decision, and argued that Harnack was not entitled to the
relief she sought because Harnack “knowingly deceiv[ed] the trial court as to the size of the marital
estate.” Fanady asserted that “enforcement of the judgment granting her 120,000 shares of CBOE
stock” would “violate the established law as stated in the doctrine of *** unclean hands.”
¶ 33 On November 30, 2020, Harnack responded to Fanady’s motion for summary judgment,
contending that the motion was virtually identical to his 2014 Section 2-1401 motion in which he
argued that the judgment for dissolution of marriage was “ ‘uneven and unfair’ and based on a
‘fundamental misunderstanding or misrepresentation’ regarding the amount of CBOE Holdings
stock he owned.” That motion was denied, and the denial was affirmed on appeal in Harnack I. In
re Marriage of Harnack and Fanady, 2014 IL App (1st) 121424. Harnack argued that Fanady’s
arguments “that the Judgment cannot be enforced because it is not fair are res judicata barred ***.
An enforceable Judgment is the law of the case and [Fanady] cannot continue to relitigate this
theory.”
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¶ 34 On December 10, 2020, the court held a hearing on Fanady’s motion for summary
judgment and Harnack’s petition to enforce. The hearing was conducted over Zoom, and Fanady
appeared using only audio, insisting that he did not have a working camera. The court instructed
Fanady throughout the proceedings to stop using the mute function on his audio. Additionally,
several times throughout the hearing, both the court and counsel for Harnack commented that they
were able to hear another voice with Fanady, coaching him as to his answers, and the court
observed that he was “certainly talking to somebody.” Fanady denied that anyone else was present.
¶ 35 Initially, the court denied Fanady’s summary judgment motion, specifically finding that it
had “no basis in law or fact.” Proceeding to Harnack’s petition to enforce, Harnack testified briefly
to confirm that she had never received the CBOE stock that she was awarded in the judgment.
Fanady, who continued to represent himself, also testified. The bulk of his direct testimony
included reading from court documents, and attempting to enter those documents into evidence.
The court denied Fanady’s requests to enter those documents into evidence, repeatedly explaining
that it was improper testimony, that the court could take judicial notice of the court file, and that
Fanady was entitled to argue from those documents in his closing argument. Fanady, however,
continued to read at length from the documents, insisting that the court “c[ould]n’t tell [him] how
to make [his] record” and that he was “putting on [his] case as [he] s[aw] fit.”
¶ 36 After hearing argument from the parties, the court granted Harnack’s petition to enforce,
and ordered Fanady to transfer to Harnack 120,000 shares of CBOE Holdings, or the equivalent
thereof, by December 18, 2020. The court entered a written order the next day, December 11,
2020, memorializing the above, and specifically ordering Fanady to transfer to Harnack “120,000
shares of CBOE Holdings and any other monetary benefits accruing to said shares including but
not limited to interest and dividends from the date of the divorce judgment,” or, if he no longer
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possessed those shares, to “pay [Harnack] the value of said shares along with any interest,
dividends, or other monetary benefits collected by [Fanady]” on or before December 18, 2020.
¶ 37 On December 17, 2020, Harnack requested the court enter a Rule 304(a) finding as to the
December 11, 2020, written order.
¶ 38 Fanady failed to comply with the December 11, 2020, order by the December 18, 2020,
deadline. On December 30, Harnack filed a petition for a rule to show cause for his failure to do
so.
¶ 39 On January 6, 2021, the court entered an order granting Harnack’s motion for a Rule 304(a)
finding, explicitly finding as to the December 11, 2020, order that there was “no just reason for
delaying either enforcement or appeal or both.” The court set a hearing date on Harnack’s petition
for a rule to show cause, and granted Fanady time to file a response.
¶ 40 On January 8, 2021, Fanady filed a notice of appeal of the December 11, 2020, order.
¶ 41 In this court, Fanady, pro se, argues that the trial court erred in denying his motions for
summary judgment and to dismiss, and ordering him to turn over 120,000 CBOE shares, or the
value thereof, to Harnack.
¶ 42 Before analyzing Fanady’s specific arguments on appeal, we address two fundamental
fallacies upon which many of his appellate arguments are based. First, Fanady contends that the
dissolution judgment did not award Harnack 120,000 CBOE shares generally from the parties’
marital estate, but a very specific set of 120,000 shares that has since been awarded to Israelov and
Marme. Fanady contends that, because Harnack was only entitled to those specific 120,000 shares,
it is Harnack who must bear the full consequences of those shares being awarded to Israelov and
Marme.
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¶ 43 As the circuit court explained, the judgment awarded Harnack 120,000 shares of CBOE
stock. It did not specify that she only was awarded certain stock, specifically identifying it by stock
numbers or otherwise. Recital 10(B) of the 2011 judgment finds that the parties acquired “[t]he
equivalent of 320,000 (Three Hundred Twenty Thousand) shares of Chicago Board of Options
Exchange (CBOE) stock,” which was marital property, with Fanady being the 100% owner of at
least 280,000 of those shares. Recital 12 provides that the CBOE shares owned in Fanady’s name,
or the name of several of his partnerships, was marital property, and Harnack was awarded 140,000
shares of “said Chicago Board of Options Exchange stocks.” Separately, the court ordered 40,000
shares escrowed pending the resolution of Israelov’s claim.
¶ 44 To effectuate the court’s award, particularly since Fanady had already secreted away much
of the proceeds from the CBOE stock to Switzerland or otherwise undisclosed locations, the court
ordered Harnack to receive the shares that she was awarded from an account that appeared to be
accessible, instructing CBOE, BNY Mellon Bank, and Fidelity to transfer 120,000 shares to
Harnack. Fanady was awarded the balance of the stock, and the two Swiss bank accounts where
the proceeds appeared to have been transferred.
¶ 45 However, as became clear in later proceedings, Fanady had also been deceiving his
business partners, and improperly transferring shares out of the partnerships. As a result, those
business partners had claims to the shares contained in the account which initially appeared to be
available to effectuate the court’s award to Harnack. Fanady cannot escape his obligations to
Harnack by swindling his business partners, ensuring that the assets awarded to Harnack under the
judgment are unavailable.
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¶ 46 A second assumption that underlies most of Fanady’s appellate arguments is that in
Harnack II, this court effectively abandoned Harnack I, vindicating Fanady and his arguments that
the dissolution judgment was unfair. Fanady is incorrect.
¶ 47 Specifically, Fanady blames Harnack for “caus[ing] the court to enter an order” that was
“irretrievably flawed,” that “overstat[ed] the number of shares in the marital estate,” and that
“attempted to transfer to herself millions of dollars of stock she knew belonged to others.” Fanady
maintains that in the judgment, the circuit court awarded Harnack 120,000 CBOE shares, intending
to split the CBOE shares “50/50,” when in reality, there were only 120,000 shares in the entire
marital estate. Fanady argues that by granting Harnack 120,000 shares of CBOE stock, the circuit
court “gave Harnack a profit of 60,000 shares of CBOE stock worth millions of dollars which she
‘earned’ by knowingly deceiving the trial court that heard the default prove up as to the size of the
marital estate.”
¶ 48 This court has explained on multiple occasions that the consolidation of the dissolution
proceeding, Israelov’s lawsuit, and the interpleader action “did not merge the *** causes into a
single suit, change the rights of the parties to each suit or make the parties in one suit parties in the
other suit.” In re Marriage of Harnack & Fanady, 2014 IL App (1st) 121424, ¶ 42.
¶ 49 The portion of the Harnack II ruling upon which Fanady relies is relative to Harnack and
Fanady’s former partners, addressing who was entitled to the 120,000 shares of stock held by
CBOE Holdings and its stock transfer agent. This court’s order in Harnack II as to the interpleader
action does not affect the judgment between Harnack and Fanady in the dissolution action, which
was affirmed in 2014. Fanady’s attempts to relitigate the judgment, and his continued arguments
that it was unfair or based on an overstated marital estate, are not persuasive. Those arguments
were considered and rejected more than seven years ago, in Harnack I. Our 2014 opinion in
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Harnack I was not an invitation for Fanady to make a second attempt to obtain evidence that was
previously lacking, or to otherwise support his attempt to vacate or invalidate the judgment for
dissolution. See In re Marriage of Harnack & Fanady, 2014 IL App (1st) 121424, ¶ 67 (“[W]e are
not vacating the judgment for dissolution of marriage and are not inviting further litigation
regarding Fanady’s attempts to vacate the judgment.”).
¶ 50 As this court made explicitly clear in Harnack I:
“any alleged errors in the judgment or inequalities in the distribution of assets are
solely due to Fanady’s failure to participate in the dissolution proceedings. Any
errors or injustices in the judgment for dissolution of marriage of which Fanady
now complains would not have occurred absent his abandonment of the litigation.
Fanady chose not to participate in the litigation. He must now live with the
consequences of that decision.” Id., ¶ 47.
¶ 51 Turning to Fanady’s appellate arguments, Fanady first asserts that the circuit court erred
by “engraft[ing] new provisions” into the judgment and by ordering him to “take actions he was
not required to do” by the judgment. Fanady defines this as a “jurisdictional issue,” contending
that the circuit court “lacked jurisdiction to modify or engraft new provisions to the judgment.”
¶ 52 In support of his engraftment argument, Fanady relies primarily on In re Marriage of
Benson, 2015 IL App (4th) 140682, but that case provides no support for his position. In Benson,
the dissolution judgment required the former husband, a firefighter, to pay his ex-wife a portion of
his “retirement plan.” Id. ¶ 5. Nine years later, the former husband was injured on the job and
obtained a disability pension. He refused to give his former wife a portion of those benefits,
claiming they were disability, not “retirement” benefits. Following an evidentiary hearing, the trial
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court found that the former husband’s disability benefits were in the nature of a disability pension
and, as a result, the former wife was entitled to a portion of those benefits.
¶ 53 On appeal, the appellate court set out the rule that a court may not engraft new obligations
into, or modify, a dissolution judgment. However, it rejected the former husband’s argument that
the trial court was doing so, concluding that the court “was not creating a new property right ***
but rather enforcing a preexisting right under the [original dissolution] judgment.” The court noted
that the husband was old enough to obtain a retirement pension, and “[w]hile [the husband's]
payments are considered disability benefits, they are essentially retirement benefits. [The
husband’s] disability benefits do not serve as income replacement, but as a substitute for his
retirement pension.” It thus concluded that the former wife was entitled to a share of his benefit
payments. Similarly here, the trial court’s order does not engraft new obligations into, or modify,
the dissolution judgment, but rather enforces a preexisting right under the original judgment.
¶ 54 Fanady next argues that the doctrines of law-of-the-case and res judicata prevent Harnack
from obtaining the relief she is seeking, because this court “ruled that Harnack had no claim of
ownership to the 120,000 shares of CBOE stock held by” CBOE, BNY Mellon Bank and Fidelity,
in the interpleader action.
¶ 55 The law-of-the-case doctrine limits relitigation of a previously decided issue in the same
case. Village of Ringwood v. Foster, 2013 IL App (2d) 111221, ¶ 33 (citing Krautsack v. Anderson,
223 Ill. 2d 541, 552 (2006)). As explained above, although the actions were consolidated, the
interpleader action is not “the same case” as the dissolution action, and accordingly, the law-of-
the-case doctrine does not apply.
¶ 56 The doctrine of res judicata provides that a final judgment rendered by a court of competent
jurisdiction on the merits is conclusive as to the rights of the parties and their privies, and, as to
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them, constitutes an absolute bar to a subsequent action involving the same claim, demand or cause
of action. Res judicata applies when all three of the following elements exist: “(1) there was a final
judgment on the merits rendered by a court of competent jurisdiction, (2) there is an identity of
cause of action, and (3) there is an identity of parties or their privies.” Nowak v. St. Rita High
School, 197 Ill. 2d 381, 390 (2001).
¶ 57 As this court explained above, Fanady’s arguments on this point are based on false
premises—that Harnack is only entitled to the specific 120,000 shares awarded to Israelov and
Marme, and that Harnack II somehow invalidated the dissolution judgment that was affirmed in
Harnack I. Having rejected both of those conclusions above, we also conclude that there is no
identity of the cause of action, and that res judicata does not bar Harnack from enforcing the
dissolution judgment.
¶ 58 Fanady next argues that the court erred in refusing to “apply the doctrines of In Pari Delicto
and Unclean Hands” to bar Harnack’s claim. Fanady generally equates the two doctrines, claiming
they both prevent Harnack from profiting for her knowing misrepresentation as to the number of
shares of CBOE stock in the marital estate. We note, however, that these two doctrines are distinct,
but neither provides support for Fanady’s attempts to avoid his obligations under the dissolution
judgment.
¶ 59 First, in pari delicto is a principle applied where a person seeks enforcement of a contract
which is void because it is illegal or against public policy. Malatesta v. Leichter, 186 Ill. App. 3d
602, 616 (1989), citing O'Hara v. Ahlgren, Blumenfeld & Kempster (1987), 158 Ill. App. 3d 562,
565; Leoris v. Dicks (1986), 150 Ill. App. 3d 350, 354. This doctrine has no applicability here,
where Harnack is seeking enforcement of the judgment for dissolution, and not a void contract.
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¶ 60 Fanady’s invocation of the doctrine of “unclean hands” fares no better. That doctrine is
grounded in the principle that “he who seeks equity must do equity,” and a party should not be
allowed to profit from its own wrongdoing. In re Estate of Opalinska, 2015 IL App (1st) 143407,
¶ 32; Gambino v. Boulevard Mortgage Corp., 398 Ill. App. 3d 21, 60 (2009). The application of
the doctrine is left to the sound discretion of the trial court, and this court will not disturb the trial
court’s determination on appeal absent an abuse of that discretion. Long, 196 Ill. App. 3d at 219,
citing Fair Automotive Repair, Inc. v. Car-X Service Systems, Inc., 128 Ill. App. 3d 763, 768
(1984). An abuse of discretion occurs when a ruling is arbitrary or unreasonable and no reasonable
person would reach the same conclusion. McGill v. Garza, 378 Ill. App. 3d 73, 75 (2007).
¶ 61 The fact that Harnack is not seeking equitable relief, but rather the enforcement of legal
rights under the dissolution judgment, is fatal to Fanady’s argument. “[T]he unclean hands doctrine
bars only equitable remedies and does not affect legal rights.” Zahl v. Krupa, 365 Ill. App. 3d 653,
658 (2006) (citing American National Bank & Trust Co. of Chicago v. Levy, 83 Ill. App. 3d 933,
936 (1980); 30A C.J.S. Equity § 111, at 324 (1992) (doctrine of unclean hands “does not deny
legal rights”) (emphasis added). Accordingly, we find no abuse of discretion in the trial court’s
refusal to apply the doctrine to Harnack, where the doctrine has no applicability here.
¶ 62 Finally, Fanady asserts that the trial court improperly excluded certain exhibits during the
December 10, 2020, hearing. Fanady does not provide any explanation regarding why those
exhibits were admissible, instead complaining only of the manner in which the trial court excluded
the exhibits, claiming that the “tenor of the proceedings *** convey[ed] an atmosphere of
arrogance, superiority, and disdain” for him as a pro se litigant, and that the trial court did not
display “the type of patient judicial demeanor” that was required. Fanady has failed to set forth
any cogent argument or legal support as to why the exhibits should have been admitted into
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evidence. See Holzrichter v. Yorath, 2013 IL App (1st) 110287, ¶ 80 (“This court is not a
depository in which the burden of argument and research may be dumped.”). A reviewing court is
entitled to have the issues on appeal clearly defined with pertinent authorities cited and a cohesive
legal argument presented. In re Marriage of Solano, 2019 IL App (2d) 180011, ¶ 70. “The failure
to elaborate on an argument, cite persuasive authority, or present a well-reasoned theory *** results
in forfeiture of the argument.” Trilisky v. City of Chicago, 2019 IL App (1st) 182189, ¶ 54.
Accordingly, we find that Fanady has forfeited review of the exclusion of his proffered exhibits.
Forfeiture aside, the court informed Fanady that, while it was denying his requests to enter court
documents into evidence, the court was nonetheless able to take judicial notice of those documents.
Accordingly, the exhibits that Fanady sought to admit were actually considered by the court.
¶ 63 To the extent that Fanady’s argument on this issue can be read to allege any improper
behavior or bias on the part of the circuit court, we would reject that claim as well. “A trial judge
is presumed to be impartial, and the burden of overcoming this presumption rests on the party
making the charge of prejudice.” Eychaner v. Gross, 202 Ill. 2d 228, 280 (2002). The party
challenging a judge’s impartiality must present specific “evidence of prejudicial trial conduct and
evidence of the judge’s personal bias.” Id. Fanady’s vague allegations do not meet this standard.
To the contrary, our review of the proceedings reveals that the trial court was exceptionally patient
with Fanady and his repeated disregard of the court’s instructions.
¶ 64 For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.
¶ 65 Affirmed.
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