By Christopher S. Carroll and William Knee

Following are summaries of selected opinions recently issued by the Illinois Supreme Court.

In re ADOPTION OF L.T.M. Docket Nos. 95746, 97947 consolidated (Opinion filed January 21, 2005).

Introduction: In this Franklin County Case, John appealed from the trial court’s finding that he was an unfit parent under the Adoption Act. Based on the finding, John’s parental rights were terminated and a judgment of adoption was entered. The Supreme Court granted John’s leave to appeal, and stayed the adoption pending appeal.

Facts: John and Ellen, who were never married, had two children, D.M. and L.T.M. L.T.M. is their second child. John and Ellen never lived together after L.T.M. was born. L.T.M. had always lived with Ellen. The record reflected that John had been convicted of armed violence, unlawful use of weapons and aggravated unlawful restraint in connection with his entering D.M.’s school, brandishing a gun and removing D.M. to Washington State. John has been incarcerated since 1995, with expected release in 2010. John waived any arguments regarding the "best interests" portion of the court’s ruling, but objected to the finding of unfitness. The appellate court denied John’s motion for a free record on appeal and later dismissed his appeal for want of prosecution as John failed to file the record on appeal. The Court held that the finding of unfitness was not against the manifest weight of the evidence. In addition, the Court made important rulings on the question of the right to a free record on appeal, and whether a statutory scheme providing for appointment of counsel for indigent parents facing termination of parental rights under the Juvenile Court Act, but not under the Adoption Act, violates the equal protection clause of the Fourteenth Amendment to the U.S. Constitution.

Issue 1: Was the court’s finding of unfitness against the manifest weight of the evidence?

Holding 1: No, the court reviewed the record and upheld the finding of the trial court that John was unfit, despite John’s argument that he made reasonable efforts to see the child.

Rationale 1: The burden of proving grounds for termination is on the party seeking termination. However, the court is free to disregard testimony it finds not to be credible. In this case, the trial court did not believe John’s testimony, and the remaining evidence presented by Ellen was sufficient to sustain the finding of unfitness for failure to maintain interest and involvement with the child.

Issue 2: Did the appellate Court err in dismissing John’s appeal for failure to file the record, where John was indigent?

Holding 2: Yes. The federal constitution requires that where an appeal of the termination of parental rights is allowed as a matter of right, the state may not deny a party a sufficient record to permit appellate review.

Rationale 2: John’s un-contradicted affidavit showed he was indigent. A court cannot deny an indigent Defendant a free record where an appeal as of right is provided.

Issue 3: Does the statutory scheme that provides free counsel to indigents facing termination of parental rights in proceedings under the Juvenile Court Act, but not under the Adoption Act, violate equal protection?

Holding 3: Yes. A person facing termination of parental rights under the Juvenile Court Act and a person facing termination of parental rights under the Adoption Act are similarly situated.

Rationale 3: The passing of a statutory scheme is state action. While the state has an interest in limiting the expenditure of attorney’s fees, that interest is not compelling. Thus, a state may not flatly deny appointed counsel to an indigent party facing termination under the Adoption Act, while the same party would have the right to counsel under the Juvenile Court Act.

In re MARRIAGE OF SCHNEIDER Docket No. 97430 (Opinion filed January 21, 2005)

Introduction: This Lake County divorce case deals with the division of marital property, and specifically personal good will, as it relates to the valuation of a professional practice in property division.

Facts: Earl and Jodi were married in 1985 and had three children. At divorce, the parties contested the valuation of Earl’s dental practice and the allocation of marital property. Earl’s Valuation expert testified that the fair market value of the dental practice was $346,300. Of this value, $311,300 was attributed to personal goodwill and $35,000 to fixed assets. The fixed assets included property and equipment, but did not include cash on hand, accounts receivable, cash surrender value of life insurance, or loans due from officers. The expert’s opinion was that the accounts receivable were merely a reflection of future income.

Jodi’s expert opined that the fair market value of the dental practice was $481,000, attributing $144,413 to tangible assets, including accounts receivable, furniture and equipment, cash surrender value of insurance, and inventory. The remaining value of $336,587 was attributed to intangible assets, not including personal goodwill. The intangible assets were described by the expert as including dental records, the leasehold interest, a trained work force, intellectual property, trade names and enterprise goodwill.

The circuit court valued Earl’s dental practice at $38,300, including $8,000 in inventory and $30,330 in furniture and equipment. The circuit court did not include accounts receivable, cash on hand; cash surrender value of life insurance, or loans due from officers in the valuation, accepting Earl’s argument that including those items in the valuation would result in a double counting of those assets. Additionally the circuit court found that any goodwill that existed in the practice was personal goodwill that should not be included in determining the fair market value of the dental practice. Jodi’s expert witness did not establish the existence of any enterprise goodwill in the practice.

Holdings: The appellate found that the trial court had erred in excluding personal goodwill from the valuation of Earl’s dental practice. Additionally, it found that accounts receivable are business assets and should have been included in the valuation of the dental practice. Likewise, the circuit court should have included the cash on-hand, cash surrender value of insurance policies and loans due from officers in determining the fair market value.

The Court held that accounts receivable, cash on hand, cash surrender value of life insurance, and loans due from officers are all appropriately considered in valuing a professional practice and therefore affirmed the appellate court’s remand to the trial court for reconsideration of value.

The court also held that because the personal goodwill in Earl’s dental practice was considered by the circuit court in assessing the criteria in section 503(d) and in deciding to award Jodi a disproportionate share of the marital assets, any further consideration of that goodwill in valuing Earl’s dental practice would amount to an impermissible double counting. Thus, the appellate court erred in holding that personal goodwill should have been included in the valuation of Earl’s dental practice.

The court’s ruling included a good discussion of two important cases in this area: In re Marriage of Zells, 143 Ill. 2d 251 (1991), and In re Marriage of Talty, 166 Ill. 2d 232 (1995).

In re AUSTIN W., a Minor (Timothy D. Berkley, guardian ad litem, Appellee, v. The Illinois Department of Children and Family Services, Appellant (Rosemary Fontaine, Appellant)). Docket Nos. 97531, 97580 consolidated. (Opinion filed January 21, 2005).

Facts: DCFS and Fontaine (foster parent) appealed the circuit court’s decision to modify a dispositional order changing custody and guardianship from DCFS to minor child’s grandparent. The appellate court affirmed the lower court’s order.

After placement of the minor with child’s grandparents (the Wards), a hotline report of abuse was "indicated" against the Wards. The Wards filed an administrative appeal. The ALJ ruled that a preponderance of the evidence supported the indicated finding by DCFS of skull fracture, bone fracture, and substantial risk of physical injury. DCFS notified all interested parties that the decision of the ALJ had been adopted as the final administrative decision of the Department. The Wards then sought judicial review.

After the ALJ issued her recommendation, but before the Director of DCFS adopted the recommendation as the final decision of the Department, GAL Berkley, petitioned to modify the January 12, 2000, dispositional order which placed Austin in the custody and guardianship of DCFS. Berkley asked that the Wards receive custody and guardianship of Austin and be allowed to adopt Austin "without delay."

Hearing on Berkley’s motion was taking place when the Director adopted the ALJ’s recommendation. The circuit court of Madison County was made aware of DCFS’s final determination on the abuse report. Nevertheless, on May 30, 2002, the court granted Berkley’s motion, terminated DCFS’s guardianship of Austin, and placed him in the custody and guardianship of the Wards.

DCFS and Fontaine appealed the Circuit Court’s decision. The Madison County circuit court order modifying the January 12, 2000, dispositional order as to Austin’s guardianship was stayed by the appellate court pending appeal.

The circuit court of Will County issued affirmed the ALJ’s decision, ruling that the ALJ’s factual findings were not against the manifest weight of the evidence and that the ALJ’s legal and administrative rulings were not clearly erroneous. The Wards did not appeal this ruling.

On October 17, 2003, the Fifth District appellate court concluded, without citation to authority, that the circuit court’s finding that it was in Austin’s best interests to transfer guardianship was not against the manifest weight of the evidence. DCFS and Fontaine were granted leave to appeal to this court.

Issue 1: Whether, in all cases, a change in circumstances must be proven as a predicate to the best- interests determination whenever modification of a prior dispositional order regarding custody is sought pursuant to section 2-28(4) of the Juvenile Court Act;

Holding 1: No. A change in circumstances is not required to be proven. The child’s best interest is the sole determination and a court is not required to determine that DCFS has failed to fulfill its statutory duties.

Rationale 1: As a practical matter, a petition to modify the custodial arrangement of a ward of the court will rarely be brought unless a change in circumstances has occurred which the petitioner believes will affect the "best-interests" inquiry. This does not mean, however, that a finding that circumstances have changed is a necessary prerequisite to the court’s modification of the dispositional order. The best interests of the child it the only standard the court is bound by.

Issue 2: Whether the circuit court’s decision to remove Austin from the custody and guardianship of DCFS and to place him in the custody and guardianship of the Wards was against the manifest weight of the evidence.

Holding 2: Yes. The Circuit Court’s ruling was against the manifest weight of the evidence.

Rationale 2: It was incumbent upon the GAL to show, and the trial court to find, by a preponderance of the evidence that placing Austin in the custody and guardianship of his grandparents was in Austin’s best interests. The best-interests determination is then reviewed under the "manifest weight of the evidence" standard. Key to the determination is that the Madison County circuit court erred when, in reaching its best-interests determination, it relied almost exclusively upon its own findings that the Wards did not abuse Austin — a finding which it had no authority to make.

The Madison County circuit court clearly erred when it reassessed the credibility of the witnesses who appeared before the ALJ and substituted its own determination regarding the indicated report against the Wards for that of the ALJ. The circuit court committed serious errors when ruling on the motion to change custody. The court, without authority, rejected an administrative finding that the Wards abused Austin after conducting a de novo review of the matter. The circuit court failed to give due consideration to matters important to the best-interests determination.