2017 IL App (1st) 153095
Ill. App. Ct.2017Background
- In 2006 the Harvey Police Pension Fund sued the City of Harvey under the Illinois Pension Code for failing to levy and remit required pension taxes; the parties settled in February 2008.
- Settlement required the City to pay $551,079.83 in past-collected but unremitted property taxes (paid in monthly installments) and $6,404.21 in attorney fees, and to ‘‘annually levy a tax’’ for the pension beginning with fiscal year 2006–07, with levies determined by an enrolled actuary; the dismissal order and settlement said the court would retain jurisdiction to enforce the agreement until the A(1) sum (and attorney fees) were repaid.
- The Pension Fund moved to compel in 2010, alleging continued nonpayment; the court ordered an accounting and denied the City’s attempt to limit enforcement to only the A(1) back-tax provision.
- The parties jointly retained Foster & Foster to calculate the levies the City should have made for 2006–07 through 2013–14; the actuarial report (the Franken Report) provided year-by-year levies that were noncumulative.
- The trial court entered judgment for the Pension Fund for $7,334,181.88 (including $7,033,648 for missed annual levies under A(8)) and awarded attorney fees; the City appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the circuit court had jurisdiction to enforce provisions beyond A(1) | Pension Fund: court retained jurisdiction to enforce the settlement until A(1) (and fees) paid, so it could enforce other terms too | City: settlement’s retention clause limited court power to enforcement only of A(1) | Court: retained jurisdiction to enforce the entire settlement until A(1) and fees satisfied; enforcement of A(8) permitted |
| Whether A(8) levies could be enforced despite §3-125 methodology | Pension Fund: parties agreed by contract to use actuary determinations and remit levies annually per A(3)/A(8) | City: statutory scheme (§3-125) means only the most recent actuarial valuation governs, so only 2013–14 amount is owed | Court: enforcement governed by parties’ contract; City agreed to annual levies as calculated by an actuary, so each year’s missed levies are recoverable |
| Whether Franken Report’s noncumulative year-by-year levies could be aggregated | Pension Fund: Franken’s report calculated what should have been levied each year; sums are noncumulative, so damages add across years | City: the most recent valuation subsumes prior underfunding, so liability limited to last year | Court: Franken affidavit showed levies were noncumulative; City accepted those calculations in court; damages properly totaled across years |
| Whether attorney fees award exceeded court’s jurisdiction | Pension Fund: fees were part of A(1) and the court could enforce payment per the settlement | City: court lacked jurisdiction to award fees if it could not enforce beyond A(1) | Court: because it had jurisdiction to enforce the settlement, awarding contractual attorney fees was proper |
Key Cases Cited
- In re Estate of Ahern, 359 Ill. App. 3d 805 (jurisdiction to enforce settlement agreements reviewed de novo)
- In re Estate of Gebis, 186 Ill. 2d 188 (definition of subject-matter jurisdiction)
- Director of Insurance v. A&A Midwest Rebuilders, Inc., 383 Ill. App. 3d 721 (trial court may retain jurisdiction to enforce settlement; termination after condition satisfied)
- Rose v. Mavrakis, 343 Ill. App. 3d 1086 (settlement agreements are contracts; contract rules apply)
- Fidelity Nat’l Title Ins. Co. of N.Y. v. Westhaven Props. P’ship, 386 Ill. App. 3d 201 (contract language is given effect as written)
- M.H. Detrick Co. v. Century Indemnity Co., 299 Ill. App. 3d 620 (policy favoring enforcement of settlements)
- Law Offices of Colleen M. McLaughlin v. First Star Fin. Corp., 2011 IL App (1st) 101849 (contract interpretation: plain meaning controls unless ambiguous)