Business owners have the worst divorces. A business owner’s income will be challenged because, after, the business owner pays themselves. The value of the business must be determined by outside experts without an actual sale (business owners always want to keep their business). Furthermore, a business owner’s spouse knows the strengths and weaknesses of the business and can actively sabotage their spouse’s business during the tumult of a divorce.
When a spouse does actions or inactions that actively harm a business, the business owning spouse can file additional claims beyond the Petition For Dissolution of Marriage, effectively suing the spouse for the damages that spouse is causing to the business. This strategy can be very effective in a family law court where additional claims are almost never pled.
Tortious Interference With A Prospective Economic Advantage
The tort of “tortious interference with a prospective economic advantage” is a tool a business owner can use to recover damages from another person, even a spouse, who ruins some kind of economic opportunity.
“It is generally recognized by the Illinois courts, however, that to prevail on a claim for tortious interference with a prospective economic advantage, a plaintiff must prove: (1) his reasonable expectation of entering into a valid business relationship; (2) the defendant’s knowledge of the plaintiff’s expectancy; (3) purposeful interference by the defendant that prevents the plaintiff’s legitimate expectancy from ripening into a valid business relationship; and (4) damages to the plaintiff resulting from such interference.” Fellhauer v. City of Geneva, 142 Ill. 2d 495, 511 (Ill. 1991)
This tort is far easier to prove against a business owner’s spouse because any negative action by that spouse cannot be inferred to have some reasonable purpose (a defense a competitor could enjoy).
“In Illinois, a claim for tortious interference with a prospective economic expectancy must [have]…intentional and malicious interference with the expectancy without just cause.” Disher v. Fulgoni, 161 Ill. App. 3d 1, 24 (Ill. App. Ct. 1987)
An “allegation [must have] ‘intentional and malicious interference’ necessary to establish a prima facie case of tortious interference with prospective economic advantage.” Small v. Sussman, 306 Ill. App. 3d 639, 648-49 (Ill. App. Ct. 1999)
“[I]f [a defendant’s] conduct is directed solely to the satisfaction of his spite or ill will and not at all to the advancement of his competitive interests over the person harmed, his interference is held to be improper.” TOTAL STAFFING SOLUTIONS v. Staffing, Inc., 227 NE 3d 14 – Ill: Appellate Court, 1st Dist., 6th Div. 2023 (quoting Restatement (Second) of Torts § 768, cmt. g (1979))
What other motivation could a spouse have for hurting their spouse’s business besides spite? Presumably the spouse would be entitled to income from the business or a portion of the value of the business. Sadly, business owners love their businesses. Angry spouses know that and will actively hurt their soon-to-be-ex-spouse either by disparaging them publicly, withholding capital, or revealing trade secrets.
The hard part is proving and valuing the economic prospect. Most business deals are not certain until the ink on the contract is dry.
Past business dealings will not be sufficient proof of an economic prospect.
“Simply offering proof of a past customer relationship is not sufficient to prove a “reasonable expectation” of a future business relationship.” Intervisual Communications, Inc. v. Volkert, 975 F. Supp. 1092, 1103 (N.D. Ill. 1997)(applying Illinois law)
Negotiations about the economic prospect, however, will be deemed sufficient.
“The parties were in the preliminary stages of negotiations, and the record supports an inference that plaintiff had a reasonable expectation that the relationship would continue.” Clarage v. Kuzma, 795 N.E.2d 348, 357 (Ill. App. Ct. 2003)
A separate claim of tortious interference with a prospective economic advantage is certainly intimidating but there are other ways to get a spouse to back off your business within your divorce.
Injunctive Relief To Protect Your Business In An Illinois Divorce
You can request that your spouse cease and desist with the bad behavior via a temporary restraining order or a preliminary injunction.
“Either party may move for…a temporary restraining order or preliminary injunction, accompanied by affidavit showing a factual basis for any of the following relief:” 750 ILCS 5/501(a)(2)
You can even request this behavior cease on an immediate basis by asking for a temporary restraining order (TRO).
“A TRO is an emergency remedy,” (Bradford v. Wynstone Property Owners’ Ass’n, 355 Ill. App. 3d 736, 739 (2005))
Temporary restraining orders are issued “to preserve the status quo until the court can conduct a hearing to determine whether it should grant a preliminary injunction” American Federation of State, County, and Municipal Employees, Council 31 v. Ryan, 332 Ill. App. 3d 965, 966 (2002)
Within 10 days of the TRO being issued, a preliminary injunction must be heard in a more fully developed hearing.
Preliminary injunctions “restrain[] any person from transferring, encumbering, concealing or otherwise disposing of any property except in the usual course of business or for the necessities of life, and, if so restrained, requiring him to notify the moving party and his attorney of any proposed extraordinary expenditures made after the order is issued” 750 ILCS 5/501(a)(2)(i)
Any behavior that is actively harming a business will likely be forbidden by a court that has heard all of the facts.
“Generally, a party seeking a preliminary injunction must demonstrate that it: (1) has a clearly ascertainable right that needs protection; (2) will suffer irreparable harm without the protection; (3) has no adequate remedy at law; and (4) is likely to succeed on the merits.” In re Marriage of Centioli, 781 NE 2d 611 – Ill: Appellate Court, 1st Dist., 4th Div. 2002
Even when you are eventually divorced, your ex-spouse could still be up to mischief that could affect your business. A permanent injunction can be included in the final Judgment for Dissolution of Marriage or Marital Settlement Agreement.
A permanent injunction is an order “of unlimited duration [that] alters the status quo,’ meaning that it adjudicates rights between the interested parties.” Skolnick v. Altheimer & Gray, 191 Ill. 2d 214, 222 (2000)
Usually, by the time your spouse has done something to harm your business it’s too late to stop them. You can still pursue damages under the Illinois Marriage and Dissolution of Marriage Act via a dissipation claim.
Dissipation of Assets Claims To Offset Damage To Your Business In An Illinois Divorce
Division of assets in an Illinois divorce considers whether either spouse ‘dissipated’ any of those assets.
An Illinois divorce court “shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors, including:
…
the dissipation by each party of the marital property” 750 ILCS 5/503(d)(2)
Any action that hurts the business could be considered a dissipation.
“The concept of dissipation is premised upon waste,” specifically the “diminution in the marital estate’s value due to a spouse’s actions.” In re Marriage of Brown, 2015 IL App (5th) 140062, ¶ 67
Claiming dissipation requires very strict notice.
“[A] notice of intent to claim dissipation shall be given no later than 60 days before trial or 30 days after discovery closes, whichever is later;
(ii) the notice of intent to claim dissipation shall contain, at a minimum, a date or period of time during which the marriage began undergoing an irretrievable breakdown, an identification of the property dissipated, and a date or period of time during which the dissipation occurred;
(iii) a certificate or service of the notice of intent to claim dissipation shall be filed with the clerk of the court and be served pursuant to applicable rules;
(iv) no dissipation shall be deemed to have occurred prior to 3 years after the party claiming dissipation knew or should have known of the dissipation, but in no event prior to 5 years before the filing of the petition for dissolution of marriage” 750 ILCS 5/503(d)(2)
This strict dissipation notice is required because the party alleging dissipation must only make a prima facie showing of the dissipating activity.
“The party alleging dissipation must first make a prima facie showing that dissipation has occurred.” In re Marriage of Hamilton, 128 NE 3d 1237 – Ill: Appellate Court, 5th Dist. 2019
Prima facie means “sufficient to establish a fact or raise a presumption unless disproved or rebutted.” Black’s Law Dictionary (11th ed. 2019)
A mere description of the dissipating activity will be enough to establish a prima facie showing that dissipation has occurred.
Then the dissipator must explain how their actions did not materially harm the marital asset.
“Once [a prima facie] showing has been made, however, the burden shifts to the party charged with dissipation to show with clear and specific evidence [of how their actions were not disspation].” In re Marriage of Hamilton, 128 NE 3d 1237 – Ill: Appellate Court, 5th Dist. 2019
This will be a tall order for someone who engaged in sabotage (even if subtle or via inaction).
One defense to a dissipation of assets claim based on business sabotage is that the business is not marital. If so, the saboteur would still expect to see their
An Illinois divorce court “shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors, including:
…
each party’s contribution to the acquisition, preservation, or increase or decrease in value of the marital or non-marital property” 750 ILCS 5/503(d)(1) (emphasis mine)
A business doesn’t work unless all the parts of the business are working. A spouse’s active sabotage or willful withholding of resources that enable the business to work must be stopped immediately.
To learn more about how to preserve your business despite your spouse’s actions, contact my Chicago, Illinois family law firm to speak with an experienced Illinois divorce attorney.
