I am often asked if a settlement amount from a personal injury, workmen’s compensation, or criminal case is non-marital or marital property. The case of In Re The Marriage of Rivera, 2016 IL App (1st) 160552, September 30, 2016, Cook Co., 4th Div, shows us just how non-black-and-white that question can be.
Husband had been convicted in 1993 for murder. He has been in jail since 1992 and released in January, 2012 when his conviction was vacated. While Husband was incarcerated, he and Wife got married on October 31, 2000. After his release from prison in 2012, Husband filed a petition for dissolution of marriage from Wife in 2014. In March 2015, Husband settled his lawsuit for $20 million, of which Husband will receive approximately $11.36 million.
Husband’s motion asserted that the entire settlement for his lawsuit “was based on the torts in his Complaint that arose out of his wrongful incarceration and conviction which were derived from conduct that occurred in 1992.” Husband asserted that the lawsuit “was the result of conduct which led to his wrongful conviction prior to the marriage.”
Wife argued the lawsuit did not become property until the conviction was reversed after the parties were married; and the lawsuit is marital property because the lawsuit accrued during the marriage. Wife also argued that the defamation claim in the lawsuit was based on statements made during the marriage and, therefore, Husband “cannot properly claim the defamation count is anything but marital property.”
Husband’s criminal attorney stated that the defamation claim had no impact on or value in the overall settlement of $20 million, and was never even discussed in the settlement negotiations. Wife stated that this was nothing more than the attorney’s opinion as to how the settlement agreements should be construed. Wife asserts there are no facts to support the conclusion the defamation claim had no impact on the amount of the settlement. The court ruled that the attorney’s affidavits were made based on the personal knowledge of the attorney and do not set forth legal conclusions or opinions without stating supporting facts. Therefore, the Court allowed the attorney to testify at trial about his involvement in the case and the negotiations which led to settlement.
The Court found that there were no prior cases that presented the exact factual situation present here, but that this case could be compared to cases that address characterization of traditional personal injury claims as marital or nonmarital property. The court stated that, in personal injury cases, the claim remains non-marital, regardless of whether the lawsuit is brought or the settlement is paid during the marriage.”
Nonetheless, the court later noted that the “differentiation between the simultaneous timing of cause of action and injury in most tort cases, and,[petitioner’s] inability to assert his cause of action simultaneously with his injury, is what causes this to be an issue of first impression for this Court.” In other words, the conviction had not been overturned until after the marriage, although the conviction occurred prior to the marriage. The trial Court ruled that the entire amount of money was non-marital and, therefore, was not to be divided as marital property.
Wife appealed. She argued that the property was marital: 1) Husband’s cause of action did not exist and therefore did not accrue until his conviction was reversed during the marriage. 2) A cause of action that accrues during a marriage is marital property. 3) Prior to the conviction being vacated, the cause of action was not a present property interest but a mere expectancy, and it was not property at all for purposes of the Dissolution Act. Husband argues that the characterization of the cause of action for purposes of a distribution of marital property is controlled “by the date of the actual injury giving rise to the civil rights claim.”
The Court reviewed the language of a malicious prosecution case and stated that, similarly, the cause of action for damages attributable to an unconstitutional conviction or sentence does not accrue until the conviction or sentence has been invalidated.”
The Appellate Court stated that it did not find any support from other cases for Husband’s argument that the time of the “injury” determines the character of a cause of action as marital or nonmarital property for purposes of a dissolution proceeding. Instead, the authorities support Wife’s position that a cause of action is marital property if the cause of action accrues during the marriage. Generally, a cause of action accrues when facts exist which allow a person to maintain an action against another.
Husband argued that for purposes of characterizing the lawsuit as marital or nonmarital property the focus should be on “the essence of a wrongful conviction claim” which is “the wrongful conduct itself, not the procedural technicality of when the wronged party can sue ***.” The Court considered many cases, including one that stated that insurance coverage is triggered at the time of termination of the underlying prosecution because “coverage is not triggered until there is a complete tort and *** the tort of malicious prosecution does not exist until the person prosecuted has been exonerated of wrongdoing. In another case, that Court stated that because injury results upon the commencement of a malicious prosecution, it is the commencement of the prosecution that triggers coverage under the policy.
In this case, the Court reasoned that it is the start of the malicious prosecution due to the wrongful imprisonment that results in the settlement proceeds. Rather than look to the date of the wrongful conduct causing injury to Husband, we must look to the date of the completed tort of malicious prosecution to characterize the lawsuit as marital property or nonmarital property.
The Court concluded that Husband did not have a property interest in his lawsuit (or stated differently no lawsuit existed) until the appellate court vacated his conviction in 2011. If there was no lawsuit, or property, in 1992 and 1993, there are no grounds for finding the lawsuit is nonmarital property. Because the lawsuit accrued in 2011, during the marriage, it is marital property subject to distribution pursuant to the factors set forth in section 503 of the Dissolution Act.
Share This Story, Choose Your Platform!