Thursday, October 27, 2011

Illinois College Expenses: Child who is Third-Party Beneficiary of Marital Settlement Agreement can Sue for Breach of Contract

Last month the Illinois Supreme Court ruled that a Petition to Allocate College Expenses is a modification request which only applies to expenses accruing post-filing. (IRMO Petersen, 2011 IL 110984) This month the First District held that the bar to retroactive awards does not apply to the third party beneficiary of a Marital Settlement Agreement suing for breach of contract.

The Spircoffs entered a Marital Settlement Agreement (MSA) on January 28, 1988 in which the parties agreed that each “shall contribute” to their child’s college expenses. The MSA became part of the divorce judgment. In 2009, after he finished his college education, the Spircoffs’ son filed a breach of contract action as a third party beneficiary of the MSA. The court agreed that the son was a third party beneficiary and had standing to enforce the MSA.

The court then distinguished the Spircoff situation from Petersen because in Spircoff i) the issue of college expenses was not expressly reserved, and ii) “the obligations of the parties for educational expenses was clearly and affirmatively stated” in the MSA. The lack of an expense allocation or allocation methodology in the MSA – for example, by dollar amount or percentage – did not bother the court. It reasoned that because college expenses are in the nature of child support they are always modifiable and the trial court retained jurisdiction to “make specific allocations” to resolve any dispute that later developed between the parties.

The court also said Petersen was “inapplicable” because Spircoff was not an action to modify a support obligation: it was a breach of contract action by a third party beneficiary.

See IRMO Spircoff, 2011 IL App (1st) 1103189

Submitted by
Brian D. Moore

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