In re Marriage of Harnack, 2014 IL App (1st) 121424

In re Marriage of Harnack, 2014 IL App (1st) 121424 (Ill. App. Ct. Nov. 21, 2014)

1) Case citation and parties
- In re Marriage of Pamela Harnack, Petitioner‑Appellee, and Steve Fanady, Respondent‑Appellant; consolidated with Jerome Israelov v. Fanady/Alpha/ISRFAN and interpleader by CBOE Holdings, Inc./Computershare. First Dist., Fifth Div., Dkt. No. 1‑12‑1424.

2) Key legal issues
- Whether a default dissolution judgment should be set aside under: (a) § 2‑1301(e) (relief from default judgment where judgment imposes a penalty or forfeiture), and (b) § 2‑1401 (collateral attack seeking vacation of judgment), when the respondent failed to meaningfully participate and assets (CBOE stock formerly representing exchange seats) were transferred/claimed by third parties.
- Whether the trial court’s asset division and escrow directions were feasible given competing third‑party claims and actual shares remaining.

3) Holding/outcome
- Appellate court affirmed denial of Fanady’s § 2‑1301(e) motion and § 2‑1401 petition. It denied Fanady’s motion to strike portions of appellee’s brief. The court remanded for clarification about which shares and what quantity were to be transferred/escrowed to implement the judgment given competing claims and interpleader facts.

4) Significant legal reasoning
- § 2‑1301(e): Relief from default requires a showing that the judgment imposes a penalty or forfeiture and that the defaulting party’s conduct is not the sole cause of the unfairness. Here Fanady failed to show the decree created a penalty/hardship independent of his own failure to appear/participate. His repeated counsel withdrawals/nonappearance undermined equitable relief.
- § 2‑1401: Collateral relief also failed because Fanady did not present a meritorious defense or show due diligence/new facts entitling him to vacatur. The court emphasized accountability for parties who abandon litigation and the high bar for overturning final default judgments.
- Asset division/escrow: Because CBOE/Custodian interpleaded showing only 120,000 shares remained (Fanady had earlier withdrawn others), the appellate court remanded to clarify which specific shares would fund the award and the 40,000‑share escrow for Israelov’s claim.

5) Practice implications
- Avoid defaults: counsel and clients must promptly preserve appearances; default judgments are difficult to unwind absent clear, non‑self‑inflicted hardship.
- Trace unique assets: when dividing non‑fungible or converted assets (exchange seats → stock) ensure accurate, current accounting and sequencing (interpleader/resolution of third‑party claims) before entry of final orders.
- Draft judgments with specificity: explicitly identify the source, account, and quantity of securities to be transferred or escrowed to avoid impossible decrees and subsequent remand.
- Use TROs/interpleader early: seek immediate injunctive relief and interpleader when third‑party claims threaten marital assets; but confirm asset inventories before relying on preliminary figures.