In re Marriage of Rozdolsky, 2024 IL App (2d) 220423-U

In re Marriage of Rozdolsky, 2024 IL App (2d) 220423‑U

1) Case citation and parties
- In re Marriage of Rozdolsky, No. 2‑22‑0423 (Ill. App. Ct., 2d Dist., Feb. 15, 2024).
- Petitioner‑Appellee: Lori Rozdolsky. Respondent‑Appellant: Terry Rozdolsky.

2) Key legal issues
- Valuation of marital business (Harbortown, Inc.) and allocation of personal goodwill.
- Buyout terms (installment schedule and interest rate) for spouse awarded other marital assets.
- Award and assignment of commercial real estate (Ballard property) and related lease.
- Division of marital estate and maintenance (temporary/permanent).
- Classification of retirement account as marital property.
- Award of attorneys’ and experts’ fees based on discovery/nonproduction.
- Allocation errors: tax refund treatment and incorrect asset valuation.

3) Holding / outcome
- Appellate court: affirm in part, vacate in part, and remand with directions.
- Affirmed: valuation methodology/result largely upheld (business value set at $42,447,096 after personal goodwill adjustment), award of Ballard warehouse to wife, overall estate division, one‑year maintenance award ($45,000/mo), classification of a retirement account as marital property, and award of $1.1M toward wife’s attorney/expert fees.
- Reversed/vacated or remanded: trial court’s post‑judgment revision of original buyout terms (interest rate change), allocation of a 2019 tax refund that had been applied to 2020 liability, and the set value of one asset awarded to husband (remand to correct).

4) Significant legal reasoning
- Valuation: Trial court weighed competing expert reports (wife’s expert ≈ $60.7M; husband’s expert ≈ $20.16M), found both had flaws, and picked a middle ground supported by the record ($49.044M pre‑goodwill; reduced to $42.447M after personal goodwill adjustment). Appellate court applied the manifest‑weight standard and refused to disturb the court’s credibility calls and reasoned selection within the experts’ ranges.
- Expert critique: Court faulted husband’s expert for overreliance on 2020 pandemic data, conservative growth assumptions, misapplied risk inputs, and unsupported goodwill allocation. Wife’s expert was preferred but partially adjusted for industry maturity, normalization, debt treatment, and personal goodwill.
- Fee award: Trial court found husband’s obstruction/nonproduction of corporate records materially increased litigation costs—justifying an award of attorneys’ and expert fees to equalize access and deter discovery gamesmanship.
- Procedural / remedial errors: Appellate court corrected discrete accounting/allocative errors (tax refund applied to later liability; improper modification of buyout terms).

5) Practice implications (concise)
- Valuation battles: trial courts may pick a mid‑range value; rigorous foundation for normalization, risk inputs, and goodwill allocation is essential. Address pandemic years carefully.
- Discovery: failure to produce corporate records can trigger substantial fee shifting; preserve and document discovery efforts.
- Drafting awards: be explicit about installment terms and interest in the judgment; avoid oral or ambiguous post‑judgment modifications.
- Tax items and asset ledgers: ensure refund/tax‑year allocations are traceable and current before judgment to avoid remand.
- Real estate/lease transfers: clarify assignment mechanics (produce original lease), practical landlord expenses vs. gross rent when calculating maintenance or income streams.