2014 IL 116362

IN THE

SUPREME COURT

OF

THE STATE OF ILLINOIS

(Docket No. 116362) 

MORTON S. GOLDFINE et al., Appellees, v. BARACK, FERRAZZANO, 

KIRSCHBAUM & PERLMAN et al., Appellants. 

Opinion filed October 2, 2014.

JUSTICE KILBRIDE delivered the judgment of the court, with opinion. 

Chief Justice Garman and Justices Freeman, Thomas, Karmeier, Burke, and Theis 

concurred in the judgment and opinion.

 OPINION

¶ 1 At issue in this appeal is the application of the civil remedies provisions of section 

13(A) of the Illinois Securities Law of 1953 (Illinois Securities Law) (815 ILCS 5/1 et 

seq. (West 2010)) in calculating damages in a legal malpractice action.

¶ 2 Plaintiffs, Morton and Adrienne Goldfine, brought a legal malpractice action 

against defendant law firm, Barack, Ferrazzano, Kirschbaum & Perlman, and several 

of the firm’s partners, to recover damages as a result of defendants’ failure to preserve 

their Illinois Securities Law cause of action against an investment firm.

¶ 3 The circuit court of Cook County ruled in plaintiffs’ favor and awarded damages 

for plaintiffs’ Illinois Securities Law claim losses. The appellate court affirmed the trial 

court’s findings in favor of plaintiffs. However, the appellate court determined that the 

trial court failed to apply the correct mathematical formula to calculate plaintiffs’ 

Illinois Securities Law claim damages. The appellate court also determined the trial 
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court’s attorney fee award was based on its incorrect damage calculation. Accordingly, 

the appellate court reversed the trial court’s award of damages and attorney fees and 

remanded the case to the trial court for a recalculation of damages and attorney fees.

2013 IL App (1st) 111779. 

¶ 4 We allowed defendants’ petition for leave to appeal. Ill. S. Ct. R. 315 (eff. July 1, 

2013). We now affirm in part and reverse in part and remand to the trial court. 

¶ 5 BACKGROUND

¶ 6 Plaintiffs’ malpractice claim against defendants is predicated on an underlying 

cause of action against Shearson Lehman Brothers Holding, Inc. (Shearson), and other 

individuals and firms (Shearson defendants) for violations of the Illinois Securities 

Law. That cause of action arose from plaintiffs’ purchases of First Capital Holdings 

(FCH) stock through Shearson’s broker, Michael Steinberg, who was the office 

manager of Shearson’s Peoria, Illinois, office, and a close personal friend of the 

plaintiffs. Plaintiffs purchased FCH stock between 1987 and 1990. 

¶ 7 FCH filed for bankruptcy in 1991, and plaintiffs’ FCH stock became worthless. 

That same year, plaintiffs retained defendant law firm to represent them in claims 

arising from their purchases of the FCH stock. When plaintiffs retained defendant law 

firm, they had a viable claim against the Shearson defendants for rescission under the 

Illinois Securities Law. Defendants, however, failed to preserve plaintiffs’ cause of 

action under the Illinois Securities Law by failing to serve the required rescission 

notice.

¶ 8 In 1992, plaintiffs hired new counsel to pursue their claims against the Shearson 

defendants. Plaintiffs’ complaint included their Illinois Securities Law claim, but that 

claim was dismissed by the circuit court as time-barred.

¶ 9 In 1994, plaintiffs filed a malpractice action against the defendant law firm and 

several of its partners to recover damages plaintiffs would have recovered under the 

Illinois Securities Law if defendants had properly preserved plaintiffs’ claim. In 1996, 

plaintiffs moved to transfer the malpractice action to the circuit court’s commercial 

calendar. Defendants agreed not to oppose the transfer only if plaintiffs agreed to 

stipulate that the trial of plaintiffs’ malpractice claim would take place only after all 

claims in the underlying Steinberg case were tried or otherwise resolved. Accordingly, 
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a stipulated order was entered delaying the malpractice trial until resolution of the 

underlying Steinberg case.

¶ 10 In 1999, plaintiffs’ remaining claims in the underlying Steinberg case were 

dismissed by the circuit court. The appellate court affirmed the dismissal of the Illinois 

Securities Law claim as untimely, but reversed and remanded to the trial court 

plaintiffs’ claims against the Shearson defendants for common law fraud and violation 

of the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud 

Act) (815 ILCS 505/1 et seq. (West 2004)). Goldfine v. Steinberg, No. 1-00-1004 

(2004) (unpublished order under Supreme Court Rule 23). In 2007, plaintiffs settled 

those claims for $3.2 million. 

¶ 11 After reaching settlement in the underlying Steinberg case, the legal malpractice 

case proceeded to a bench trial that lasted over eight weeks. On July 12, 2010, the trial 

court found that defendant law firm breached its duties to plaintiffs by failing to 

preserve plaintiffs’ Illinois Securities Law claim and that the loss of that claim was 

caused by defendant law firm’s negligent conduct. The trial court ruled that plaintiffs’ 

damages would be calculated according to the following formula: plaintiffs’ $3.2 

million settlement would be deducted from the total they paid for their 11 stock 

purchases, and then 10% interest would be calculated on the remaining amount based 

on the various dates of the stock purchases. The trial court ordered the parties to 

calculate the exact amount to enter in a judgment order, ordered plaintiffs to prepare the 

judgment order, and gave plaintiffs leave to file a petition for attorney fees. 

¶ 12 On May 24, 2011, the trial court entered its judgment, adopting the securities 

purchase price and interest calculation proposed by defendants. Specifically, the trial 

court took the sum of $4,506,602.05, representing the total of plaintiffs’ 11 stock 

purchases in 1988, 1989, and 1990, and deducted the 2007 Steinberg settlement of $3.2 

million. Because the stocks were purchased on 11 different dates, the trial court applied 

a “proportionate reduction of $3,200,000.00 (71.00693%)” to each purchase to obtain a 

“net” purchase price for each of the 11 stock purchases. The total sum of those net 

purchase prices was $1,306,602.29. Using the net purchase price for each of the 11 

purchases and the corresponding date of sale for each purchase, the trial court then 

calculated a 10% annual interest award, through May 24, 2011, of $2,785,149.19, for a 

total award of $4,091,752.19. The trial court also awarded plaintiffs attorney fees of 

40% of the total award, or $1,636,700.80, and $207,167.28 in costs and expenses. The 

trial court entered a judgment totaling $5,935,610.10. 
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¶ 13 Plaintiffs appealed, arguing that the trial court failed to calculate their statutory 

damages according to the mathematical formula in section 13(A) of the Illinois 

Securities Law. Plaintiffs also argued that the trial court erred in failing to award 

reasonable attorney fees, expenses and costs.

¶ 14 Defendants cross-appealed, arguing that the award of interest, attorney fees and 

costs should be reversed because the fee-shifting and interest provisions of section 

13(A) of the Illinois Securities Law are punitive and coercive and, thus, fall within the 

category of damages barred by statute in legal malpractice actions. Defendants also 

argued that the trial court erred in finding that plaintiffs proved their underlying Illinois 

Securities Law claim.

¶ 15 The appellate court affirmed the circuit court’s findings that plaintiffs proved their 

underlying Illinois Securities Law claim and legal malpractice action. The appellate 

court also affirmed the circuit court’s award of plaintiffs’ costs and expenses. The 

appellate court, however, determined that the circuit court failed to apply the correct 

mathematical formula to calculate plaintiffs’ damages under the Illinois Securities 

Law. Specifically, the appellate court held there was no basis for the trial court to 

deduct the $3.2 million settlement from the purchase prices before calculating interest. 

Additionally, the appellate court held that the trial court’s attorney fees award was 

incorrect based on a percentage of its erroneous damage calculation. Accordingly, the 

appellate court reversed the circuit court’s award of damages and attorney fees and 

remanded the case to the trial court to recalculate plaintiffs’ damages, to determine a 

reasonable amount of attorney fees based on the correct calculation of damages, and to 

award plaintiffs attorney fees and costs incident to the appeal. 

¶ 16 We allowed defendants’ petition for leave to appeal. Ill. S. Ct. R. 315 (eff. July 1, 

2013). We allowed the Chicago Bar Association and the Illinois State Bar Association 

to file a joint amicus brief. We also allowed the Illinois Secretary of State, Securities 

Department, and the Illinois Trial Lawyers’ Association to file amicus briefs. Ill. S. Ct. 

R. 345 (eff. Sept. 20, 2010). 

¶ 17 ANALYSIS

¶ 18 This case turns on the proper calculation of plaintiffs’ damages in a legal 

malpractice action. Specifically, the issue is whether the lower courts erroneously 

compensated plaintiffs for the civil remedies they would have recovered in their 
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underlying Illinois Securities Law claim but for defendants’ legal malpractice. Those 

presumed damages included plaintiffs’ loss of investment, plus statutory interest on 

their lost investments, attorney fees, and costs. 

¶ 19 Defendants argue that the Illinois Securities Law does not authorize imposing those 

damages on negligent lawyers and that its civil remedies apply only to those who 

actually violate the Illinois Securities Law. Defendants further contend that the civil 

remedies provided by section 13(A) of the Illinois Securities Law constitute punitive 

damages and are, thus, barred in legal malpractice actions. If this court determines that 

the civil remedies of section 13(A) of the Illinois Securities Law are applicable to 

calculate plaintiffs’ total damages in this legal malpractice action, both parties dispute 

the lower courts’ calculation of damages. We first address whether the lower courts 

properly applied the civil remedies provisions of section 13(A) of the Illinois Securities 

Law to calculate plaintiffs’ damages in this legal malpractice case.

¶ 20 The applicability of the civil remedies provisions of section 13(A) of the Illinois 

Securities Law (815 ILCS 5/13(A) (West 2010)) in calculating damages in a legal 

malpractice action is the focus of this appeal. We review de novo this question of law. 

See Kankakee County Board of Review v. Property Tax Appeal Board, 226 Ill. 2d 36, 

51 (2007). This appeal also presents a question of statutory interpretation, subject to de 

novo review. People v. Davison, 233 Ill. 2d 30, 40 (2009). 

¶ 21 This court’s primary objective in interpreting a statute is to ascertain and give effect 

to the intent of the legislature. Solon v. Midwest Medical Records Ass’n, 236 Ill. 2d 

433, 440 (2010). The most reliable indication of the legislature’s intent is the language 

of the statute, given its plain and ordinary meaning. Solon, 236 Ill. 2d at 440. “[W]hen 

the language of the statute is clear, it must be applied as written without resort to aids or 

tools of interpretation.” DeLuna v. Burciaga, 223 Ill. 2d 49, 59 (2006). We begin by 

reviewing the relevant provisions of the Illinois Securities Law.

¶ 22 Section 13 of the Illinois Securities Law provides for private and other civil 

remedies. Section 13(A) provides the civil remedies relevant to this appeal: 

 “§ 13. Private and other civil remedies; securities. 

A. Every sale of a security made in violation of the provisions of this Act 

shall be voidable at the election of the purchaser exercised as provided in 

subsection B of this Section; and the issuer, controlling person, underwriter, 

dealer or other person by or on behalf of whom said sale was made, and each 
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underwriter, dealer or salesperson who shall have participated or aided in any 

way in making the sale, and in case the issuer, controlling person, underwriter 

or dealer is a corporation or unincorporated association or organization, each of 

its officers and directors (or persons performing similar functions) who shall 

have participated or aided in making the sale, shall be jointly and severally 

liable to the purchaser as follows: 

(1) for the full amount paid, together with interest from the date of 

payment for the securities sold at the rate of the interest or dividend 

stipulated in the securities sold (or if no rate is stipulated, then at the rate of 

10% per annum) less any income or other amounts received by the 

purchaser on the securities, upon offer to tender to the seller or tender into 

court of the securities sold or, where the securities were not received, of any 

contract made in respect of the sale; or 

(2) if the purchaser no longer owns the securities, for the amounts set 

forth in clause (1) of this subsection A less any amounts received by the 

purchaser for or on account of the disposition of the securities. 

If the purchaser shall prevail in any action brought to enforce any of the 

remedies provided in this subsection, the court shall assess costs together with 

the reasonable fees and expenses of the purchaser’s attorney against the 

defendant. Any provision of this subsection A to the contrary notwithstanding, 

the civil remedies provided in this subsection A shall not be available against 

any person by reason of the failure to file with the Secretary of State, or on 

account of the content of, any report of sale provided for in subsection G or P of 

Section 4, paragraph (2) of subsection D of Sections 5 and 6, or paragraph (2) of 

subsection F of Section 7 of this Act.” 815 ILCS 5/13(A) (West 2010). 

¶ 23 Defendants’ claim that section 13(A) civil remedies were not intended to be applied 

to negligent attorneys in a legal malpractice action because the Illinois Securities Law 

makes no provision for awarding such damages against negligent lawyers. Rather, 

defendants submit that section 13(A) civil remedies are applicable only to those who 

violate the Illinois Securities Law. Accordingly, defendants contend it was error for the 

lower courts to compensate plaintiffs for losses the plaintiffs would have recovered 

under section 13(A) in the underlying Steinberg case.

¶ 24 Illinois law on malpractice damages is well-established:
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 “In order to recover damages in a legal malpractice action in Illinois, a 

plaintiff must establish what the result would have been in the underlying 

action which was improperly litigated by the plaintiff’s former attorney. See, 

e.g., Nika v. Danz, 199 Ill. App. 3d 296, 308 (1990) (malpractice plaintiff must 

litigate a ‘ “suit within a suit” ’ or ‘ “trial-within-a-trial” ’), quoting 2 R. Mallen 

& J. Smith, Legal Malpractice § 27.7, at 641 (3d ed. 1989). The basis of the 

legal malpractice claim is that the plaintiff would have been compensated for an 

injury caused by a third party, absent negligence on the part of the plaintiff’s 

attorney. Nika, 199 Ill. App. 3d at 308; Glass v. Pitler, 276 Ill. App. 3d 344, 349 

(1995). The injuries resulting from legal malpractice are not personal injuries 

but, instead, are pecuniary injuries to intangible property interests. Glass, 276 

Ill. App. 3d at 349, citing Gruse v. Belline, 138 Ill. App. 3d 689 (1985). The 

plaintiff must affirmatively prove that he suffered actual damages as a result of 

the attorney’s malpractice (Glass, 276 Ill. App. 3d at 349), and a plaintiff who 

obtains recovery in a malpractice suit can be ‘in no better position by bringing 

suit against the attorney than if the underlying action against the third-party 

tortfeasor had been successfully prosecuted’ (Bloome v. Wiseman, Shaikewitz, 

McGivern, Wahl, Flavin & Hesi, P.C., 279 Ill. App. 3d 469, 478 (1996)). Thus, 

a plaintiff’s damages in a malpractice suit are limited to the actual amount the 

plaintiff would have recovered had he been successful in the underlying case.” 

(Emphasis added.) Eastman v. Messner, 188 Ill. 2d 404, 411-12 (1999). 

¶ 25 While it is true that the Illinois Securities Law makes no specific provision for 

imposing damages on negligent lawyers, we point out that defendants’ argument is 

premised on the misconception that the civil remedies provided under section 13(A) of 

the Illinois Securities Law are being applied directly to them. The damage award in this 

legal malpractice action compensates the plaintiffs for the actual amount the plaintiffs 

would have recovered had they been successful in the Illinois Securities Law claim in 

the underlying Steinberg case. Contrary to defendants’ assertion, the Illinois Securities 

Law is not being applied directly to defendants. Rather, section 13(A) of the Illinois 

Securities Law simply establishes plaintiffs’ actual damages resulting from 

defendants’ legal malpractice.

¶ 26 It is undisputed that defendants were found negligent for failing to preserve 

plaintiffs’ cause of action under the Illinois Securities Law. It is also undisputed that, as 

a result of defendants’ failure to preserve plaintiffs’ cause of action, plaintiffs were 

prevented from collecting civil remedies under section 13(A) of the Illinois Securities 

Law in the underlying Steinberg case. Plaintiffs suffered substantial losses that were 
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directly and proximately caused by defendants’ negligence and constitute actual 

damages suffered by plaintiffs as a result of defendants’ legal malpractice. Defendants 

do not dispute that plaintiffs would have recovered the civil remedies under section 

13(A) had defendants not breached their duty and failed to preserve plaintiffs’ Illinois 

Securities Law claim. As a result, defendants are liable to plaintiffs for those losses that 

were directly caused by defendants’ legal negligence and constitute actual damages 

suffered by plaintiffs as a result of defendants’ legal malpractice. See Eastman, 188 Ill. 

2d at 411-12. Simply put, the civil remedies provided under section 13(A) of the 

Illinois Securities Law are merely the mechanism used to compute plaintiffs’ actual 

losses caused by defendants’ legal malpractice.

¶ 27 Defendants also assert they should not be held liable for plaintiffs’ lost interest 

under section 13(A) because it puts attorneys in the untenable position of having to 

wait helplessly on the sidelines as interest accumulates while the underlying case is

being resolved. We note that it was defendants who insisted that plaintiffs agree to stay 

the legal malpractice action pending resolution of the Steinberg case. While plaintiffs’ 

damages arguably could not be fully ascertained until the underlying Steinberg case 

was resolved, nothing prohibited defendants from attempting to settle the legal 

malpractice action with plaintiffs, particularly given the known risk of the extent of 

damages in this case based on plaintiffs’ significant investment loss. This court’s 

“responsibilities as a court of review do not extend to protecting a party from its own 

failed trial strategy” (Giese v. Phoenix Co. of Chicago, Inc., 159 Ill. 2d 507, 514-15 

(1994)). Nevertheless, defendants argue that compensation for plaintiffs’ lost section 

13(A) civil remedies constitute punitive damages that are barred in legal malpractice 

actions by section 2-1115 of the Code of Civil Procedure (Code) (735 ILCS 5/2-1115 

(West 2010)). Section 2-1115 of the Code provides: 

 “Punitive damages not recoverable in healing art and legal malpractice 

cases. In all cases, whether in tort, contract or otherwise, in which the plaintiff 

seeks damages by reason of legal, medical, hospital, or other healing art 

malpractice, no punitive, exemplary, vindictive or aggravated damages shall be 

allowed.” 735 ILCS 5/2-1115 (West 2010). 

¶ 28 Whether the civil remedy provisions of section 13(A) of the Illinois Securities Law 

constitute punitive damages barred under section 2-1115 involves an issue of law that 

we review de novo. Kankakee County Board of Review, 226 Ill. 2d at 51. This court has 

determined that a statute is a “penalty” if it is “in the nature of punishment for the 

nonperformance of an act or for the performance of an unlawful act.” Hoffmann v. 
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Clark, 69 Ill. 2d 402, 429 (1977); see also M.H. Vestal Co. v. Robertson, 277 Ill. 425, 

428-29 (1917). Moreover, a penal statute requires the transgressor to pay a penalty 

without regard to proof of any actual monetary injury sustained. See Babcock v. 

Harrsch, 310 Ill. 413, 417 (1923). 

¶ 29 Defendants argue that the civil remedies provisions of section 13(A) are coercive 

and punitive in nature because those remedies, as applied in a legal malpractice action, 

neither punish the actual wrongdoers nor compel compliance with securities laws. 

Defendants argue that the damages in this case are punitive, primarily because of the 

potential size of the damage award on remand. Defendants cite to Foreman v. 

Holsman, 10 Ill. 2d 551, 553-54 (1957), in support of their argument that section 13(A) 

civil remedies constitute punitive damages.

¶ 30 Foreman does not support defendants’ argument that section 13(A) civil remedies 

constitute punitive damages. While Foreman stated that the civil remedies provision of 

the Illinois Securities Law “is intended to afford an additional punishment for an 

offending party,” (Foreman, 10 Ill. 2d at 553-54) this court did not discuss the interest 

provision at issue in this case, nor did this court specifically examine whether section 

13(A) civil remedies constitute punitive damages or were intended to be remedial. In 

fact, this court has never before squarely addressed the issue of whether section 13(A) 

civil remedies constitute punitive damages. Similarly, none of the appellate court cases 

cited by defendants (Jacobs v. James, 215 Ill. App. 3d 499 (1991); Condux v. Neldon, 

83 Ill. App. 3d 575 (1980); Bain v. Financial Security Life Insurance Co., 53 Ill. App. 

3d 702 (1977); Gowdy v. Richter, 20 Ill. App. 3d 514 (1974)) support defendants’ 

contention because none of those cases examined or held that section 13(A) civil 

remedies constitute punitive damages. We therefore examine whether the civil 

remedies of section 13(A) of the Illinois Securities Law constitute punitive or remedial 

damages as an issue of first impression before this court. 

¶ 31 The law on analyzing whether statutory provisions are punitive or remedial is 

well-established. This court summarized Illinois law with respect to this issue in Landis 

v. Marc Realty, L.L.C., 235 Ill. 2d 1 (2009): 

“[A] statutory penalty must: (1) impose automatic liability for a violation of its 

terms; (2) set forth a predetermined amount of damages; and (3) impose 

damages without regard to the actual damages suffered by the plaintiff.” 

Landis, 235 Ill. 2d at 13 (citing McDonald’s Corp. v. Levine, 108 Ill. App. 3d 

732, 738 (1982), citing Hoffmann, 69 Ill. 2d at 429). 
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¶ 32 A remedial statute, on the other hand, imposes liability for actual damages suffered 

by the plaintiff as a result of a violation of the statute. Landis, 235 Ill. 2d at 13. Liability 

under a remedial statute “ ‘is contingent upon damage being proven by the plaintiff.’ ” 

Landis, 235 Ill. 2d at 13 (quoting McDonald’s Corp. v. Levine, 108 Ill. App. 3d at 738, 

citing Vestal, 277 Ill. at 429-30). 

¶ 33 Section 13(A) civil remedies include interest on the securities, attorney fees and 

costs. None of those remedies are imposed as a predetermined amount without regard 

to the actual damages suffered by the plaintiff. Rather, each of the section 13(A) civil 

remedies is a component of remedial damages intended to compensate plaintiffs who 

prove actual damages resulting from a violation of the Illinois Securities Law. The 

Illinois Securities Law contains no express provision for recovery of “punitive 

damages.” It is clear that the purpose of private civil remedies provided by the Illinois 

Securities Law is to compensate plaintiffs for their actual monetary losses. Section 

13(A) provides for return of the full amount paid for the securities, together with 

interest “at the rate of the interest or dividend stipulated in the securities sold (or if no 

rate is stipulated, then at the rate of 10% per annum).” The plain language of section 

13(A) indicates the rate is intended to be compensatory, not punitive. The controlling 

rate is the amount stated in the securities. Thus, the statute compensates the investor for 

the return on investment stated in the purchased securities. If no rate is stipulated, the 

default rate is 10%. The plain language of the statute indicates intent to compensate 

investors for their lost return and to make the investor whole. Accordingly, we hold that 

section 13(A) remedies do not constitute punitive damages prohibited by section 

2-1115 of the Code. 

¶ 34 Defendants also rely on this court’s ruling in Tri-G, Inc. v. Burke, Bosselman & 

Weaver, 222 Ill. 2d 218 (2006), in arguing that section 13(A) civil remedies cannot be 

imposed on negligent lawyers. In Tri-G, the plaintiff brought a legal malpractice action 

against a law firm for failing to prosecute its lawsuit against a bank. The underlying 

lawsuit against the bank alleged breach of contract, common law fraud, and violation of 

the Consumer Fraud Act. The lawsuit was dismissed with prejudice after plaintiff’s 

counsel was not prepared to proceed when the case was called for trial. Plaintiff was 

awarded compensatory and lost punitive damages against the law firm in the legal 

malpractice action. This court held that lost punitive damages are not recoverable in a 

subsequent legal malpractice action under section 2-1115 of the Code. Tri-G, 222 Ill. 

2d at 267-68. We have already determined, however, that section 13(A) civil remedies 

are not punitive damages prohibited by section 2-1115 of the Code. Accordingly, 

Tri-G’s holding concerning punitive damages is inapplicable. 
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¶ 35 Defendants also argue that section 13(A)’s civil remedy of statutory interest is 

prohibited under Tri-G. In Tri-G, this court rejected the plaintiff’s claim for 

postjudgment interest under section 2-1303 of the Code (735 ILCS 5/2-1303 (West 

2002)) recoverable on a “hypothetical” judgment in the underlying case absent the 

legal malpractice. Tri-G, 222 Ill. 2d at 258. This court recognized in Tri-G that the right 

to interest in an action at law: 

“ ‘does not emanate from the controversy, or from the judgment, or from 

anything of a judicial nature. *** The recovery of interest in this State, not 

contracted for, finds its only authority in the statute. It is purely statutory.’ ” 

Tri-G, 222 Ill. 2d at 256 (quoting Blakeslee’s Storage Warehouses, Inc. v. City 

of Chicago, 369 Ill. 480, 483 (1938)).

¶ 36 We acknowledged that an exception to this rule exists in equity, but since a legal 

malpractice action is an action at law, the exception is inapplicable. Tri-G, 222 Ill. 2d at 

257-58. Accordingly, in Tri-G, this court agreed with the appellate court’s holding that 

section 2-1303 postjudgment interest applies only to judgments recovered, and not to 

judgments that should have been recovered. Tri-G, 222 Ill. 2d at 256. We also 

determined that prejudgment interest is not available in legal malpractice cases. Tri-G, 

222 Ill. 2d at 258. 

¶ 37 Tri-G is distinguishable on this point. This appeal does not involve interest on a 

hypothetical judgment. Section 13(A) does not involve prejudgment or postjudgment 

interest. Section 13(A) interest is not based on the amount of judgment. Rather, section 

13(A) interest is calculated based on the amount of the plaintiff’s investment in 

securities. The interest is a component of the remedial relief that plaintiffs would have 

recovered under the Illinois Securities Law if defendants had not negligently failed to 

preserve plaintiffs’ claim. Defendants do not dispute that plaintiffs would have 

recovered section 13(A) interest in the underlying cause of action. 

¶ 38 Alternatively, defendants argue that this court should reverse the appellate court 

opinion because it ordered a grossly excessive award that is speculative and violates 

Eastman, 188 Ill. 2d 404, as well as state and federal due process guarantees. 

Defendants claim that the appellate court opinion violates Eastman because it awarded 

plaintiffs interest until final judgment in the malpractice case. In fact, defendants argue 

that plaintiffs should be barred from recovering any statutory interest because they 

failed to prove when they reasonably would have recovered on the underlying Illinois 

Securities Law claim.
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¶ 39 We agree with defendants that awarding statutory interest through the final date of 

judgment in the malpractice action violates Eastman because it awards plaintiffs 

damages beyond the date they would have recovered interest in the underlying action. 

See Eastman, 188 Ill. 2d at 412 (“a plaintiff’s damages in a malpractice suit are limited 

to the actual amount the plaintiff would have recovered had he been successful in the 

underlying case”). However, nothing in Eastman precludes plaintiffs from recovering 

the statutory interest they would have recovered in the underlying Steinberg action. 

¶ 40 We reject defendants’ argument that plaintiffs should be barred from recovering 

any statutory interest because they failed to prove a date when they reasonably would 

have recovered on the underlying Illinois Securities Law claim. Defendants cite to 

Tri-G, 222 Ill. 2d at 254-55, to support their argument that a plaintiff is required to 

prove the date they would have recovered in the underlying action absent attorney 

malpractice. In Tri-G, the plaintiff sought prejudgment interest from the date the 

third-party tortfeasor committed the acts in the underlying case to the approximate date 

a verdict would have been entered against the third-party tortfeasor but for the 

attorney’s negligence. In Tri-G, this court did not examine or find that the plaintiff 

proved, or was required to prove, a hypothetical date when the plaintiff would have 

recovered in the underlying cause of action. In other words, Tri-G does not support 

defendant’s argument. Defendants cite to no authority holding that plaintiffs in a legal 

malpractice action must prove a hypothetical date when they reasonably would have 

recovered damages in an underlying cause of action that was barred due to the 

attorney’s negligence.

¶ 41 Defendants also argue that the appellate court opinion violates Eastman because it 

awarded interest on the $3.2 million plaintiffs recovered that did not constitute 

malpractice damages. We reject this argument. It is clear that plaintiffs would have 

received statutory interest on the entire amount they paid for the securities in the 

underlying Steinberg cause of action if defendants had preserved their Illinois 

Securities Law cause of action. Those losses constitute actual damages and do not, 

therefore, violate Eastman. 

¶ 42 Defendants argue that if this court determines that awarding interest on the entire 

investment did not violate Eastman, awarding interest after June 21, 2007, the date the 

plaintiffs settled all claims in the Steinberg action, was erroneous. Defendants claim 

that any recovery of interest after June 21, 2007, exceeds what plaintiffs would have 

recovered in the underlying suit, and therefore violates Eastman. We agree with 

defendants on this point. As we have already held, awarding statutory interest through 
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the final date of judgment in the malpractice action violates Eastman because it awards 

plaintiffs damages beyond the date they would have recovered interest in the 

underlying Steinberg action. We reiterate, however, that nothing in Eastman precludes 

plaintiffs from recovering the statutory interest they would have recovered in the 

underlying Steinberg action. We will address this issue in greater detail in our analysis 

of the proper calculation of section 13(A) damages. 

¶ 43 Defendants next contend that awarding statutory interest plus attorney fees is 

grossly excessive and violates the United States and Illinois Constitutions’ prohibitions 

against grossly excessive penalties in violation of due process of law. U.S. Const., 

amend. XIV, § 1; Ill. Const. 1970, art. I, § 2. Defendants claim the Illinois Securities 

Law is unconstitutional as applied here. According to defendants, awarding statutory 

interest plus attorney fees in this case transforms an actual minimal loss into grossly 

excessive damages on lawyers “who were merely negligent.” 

¶ 44 “The Due Process Clause of the Fourteenth Amendment prohibits a State from 

imposing a ‘grossly excessive’ punishment on a tortfeasor.” (Internal quotation marks 

omitted.) BMW of North America, Inc. v. Gore, 517 U.S. 559, 562 (1996). In BMW of 

North America, the United States Supreme Court set three guideposts for determining 

whether the punishment a State imposes on a tortfeasor under State law violates the 

U.S. Constitution: (1) the degree of reprehensibility of the defendant’s misconduct; (2) 

the disparity between the actual or potential harm suffered by the plaintiff and the 

punitive damages award; and (3) the difference between the punitive damages awarded 

and the civil penalties authorized or imposed in comparable cases. BMW of North 

America, 517 U.S. at 574-75. 

¶ 45 In International Union of Operating Engineers, Local 150 v. Lowe Excavating Co., 

225 Ill. 2d 456, 466-67 (2006), this court held that due process “prohibits the 

imposition of grossly excessive or arbitrary punishments on a tortfeasor.” This court 

adopted the Supreme Court’s framework in BMW of North America, recognizing that 

“ ‘the most important indicium of the reasonableness of a punitive damages award is 

the degree of reprehensibility of the defendant’s conduct.’ ” International Union of 

Operating Engineers, 225 Ill. 2d at 470 (quoting BMW of North America, 517 U.S. at 

575). 

¶ 46 Defendants’ argument wrongly assumes the award of statutory interest under 

section 13(A) amounts to punitive damages. We have already rejected this argument. 

Defendants, however, argue that nothing in either the State or Federal Due Process 
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Clauses limits their reach to punitive damages. Defendants focus on the amount of a 

total potential award of both interest plus attorney fees in this case. Defendants argue 

this would amount to an excessive judgment. We disagree. The amount of statutory 

interest simply constitutes plaintiffs’ actual damages incurred on their loss of 

investment income on $4.5 million as a result of defendants’ negligence. The appellate 

court already determined the trial court must reconsider the attorney fee award on 

remand, and that amount has yet to be determined. We do not know what the trial court 

will determine is a reasonable attorney fee on remand, and that issue is beyond the 

scope of this appeal. However, as we address below, both lower courts erred in 

calculating the plaintiffs’ statutory interest damages. The result is neither grossly 

excessive, nor will a proper calculation of damages result in a windfall recovery to 

plaintiffs. Rather, a proper calculation of damages simply compensates plaintiffs for 

the damages they would have recovered from the third-party tortfeasor in the 

underlying action but for defendants’ negligence in failing to preserve plaintiffs’ cause 

of action. 

¶ 47 Accordingly, we hold that the lower courts did not err as a matter of law in using the 

civil remedy provisions of section 13(A) of the Illinois Securities Law to measure 

plaintiffs’ damages in this legal malpractice action. We do, however, disagree with the 

lower courts’ calculation of plaintiffs’ damages. We now address the proper 

application of section 13(A) in calculating plaintiffs’ damages in this legal malpractice 

action.

¶ 48 The proper interpretation and application of the Illinois Securities Law is a question 

of law and, thus, we review the application of section 13(A) in measuring plaintiffs’ 

damages de novo. Woods v. Cole, 181 Ill. 2d 512, 516 (1998). Again, the primary 

objective in interpreting a statute is to ascertain and give effect to the intent of the 

legislature, and the most reliable indication of legislative intent is the language of the 

statute, given its plain and ordinary meaning. Solon, 236 Ill. 2d at 440. “[W]hen the 

language of the statute is clear, it must be applied as written without resort to aids or 

tools of interpretation.” DeLuna, 223 Ill. 2d at 59. 

¶ 49 Sections 13(A)(1) and (2) of the Illinois Securities Law provide the statutory 

damages as follows:

 “(1) for the full amount paid, together with interest from the date of 

payment for the securities sold at the rate of the interest or dividend stipulated 

in the securities sold (or if no rate is stipulated, then at the rate of 10% per 
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annum) less any income or other amounts received by the purchaser on the 

securities, upon offer to tender to the seller or tender into court of the securities 

sold or, where the securities were not received, of any contract made in respect 

of the sale; or 

(2) if the purchaser no longer owns the securities, for the amounts set forth 

in clause (1) of this subsection A less any amounts received by the purchaser for 

or on account of the disposition of the securities.” 815 ILCS 5/13(A)(1), (2) 

(West 2010). 

¶ 50 Section 13(A) provides a straightforward method for calculating plaintiffs’ 

damages for defendants’ failure to preserve their Illinois Securities Law claim. 

Plaintiffs would have recovered “the full amount paid, together with interest from the 

date of payment for the securities sold,” less “any amount received.” We find that the 

statute unambiguously requires the calculation of interest prior to deducting any 

amounts received by the purchaser of the securities. Accordingly, we affirm the 

appellate court’s determination that the trial court erroneously applied a proportionate 

reduction of the plaintiffs’ $3.2 million Steinberg settlement to each of the 11 securities 

purchases prior to calculating interest. The interest must be calculated by the trial court 

prior to deducting the $3.2 million settlement.

¶ 51 Defendants claim that plaintiffs should not be awarded interest on the $3.2 million 

settlement. However, defendants fail to recognize that plaintiffs lost the interest on 

their total securities investment when defendants failed to preserve their Illinois 

Securities Law claim. Any calculation of interest must include compensation for 

plaintiffs’ loss of interest on their entire $4.5 million investment. 

¶ 52 The statute requires interest calculated “from the date of payment” for the 

securities. Under a plain reading of the statute, the trial court is required to calculate 

interest on each of the 11 securities from the date of purchase. The parties dispute 

whether the statutory interest should be calculated to the 2007 settlement date of the 

underlying Steinberg action, or to the 2011 date of the final judgment in the legal 

malpractice action. Plaintiffs further submit that interest should be calculated to the 

date of payment of the judgment. Under plaintiffs’ argument, interest presently 

continues to accumulate, some seven years beyond the date of the Steinberg settlement. 

Understandably, defendants conclude that awarding interest to the date of payment of 

the judgment would result in extraordinary legal malpractice damages. Defendants as 

well as the Chicago Bar Association and the Illinois State Bar Association as amici
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present serious and compelling arguments of the consequences of imposing 

extraordinary liability on attorneys as well as the practical ramifications on the 

practicing bar. Given the disposition in this case, the plaintiffs’ ultimate recovery will 

compensate plaintiffs for the loss of their investment due to defendants’ negligence in 

failing to preserve plaintiffs’ Illinois Securities Law claim. 

¶ 53 The appellate court determined that the trial court correctly calculated interest 

through the 2011 final judgment date in the legal malpractice action. As we have 

already indicated, calculating interest to the date of the final judgment in the legal 

malpractice action violates Eastman, 188 Ill. 2d 404. We hold that the interest should 

have been calculated to the date of the 2007 settlement of the Steinberg action. The 

measure of damages in the legal malpractice action is the amount the plaintiffs would 

have recovered in the underlying Steinberg action for their Illinois Securities Law 

claim. The entire Steinberg action was concluded in 2007. Plaintiffs could not have 

recovered interest on their Illinois Securities Law claim in the Steinberg action after the 

2007 settlement date. By calculating interest to 2011, the lower courts misapplied 

section 13(A). 

¶ 54 Accordingly, on remand, the trial court must recalculate the interest on each of the 

securities to the date of the 2007 Steinberg settlement. The recalculation of interest 

should then be added to the full amount paid for all of the securities. Section 13(A)(2) 

then requires a deduction for any amount received by the purchaser on account of the 

disposition of the securities when the purchaser no longer owns the securities. 

Therefore, the trial court must deduct the plaintiffs’ $3.2 million settlement after 

recalculating the interest.

¶ 55 Plaintiffs requested cross-relief, arguing that the entire $3.2 million settlement 

should not be deducted from their damage award because they actually received only 

$1,657,000 of that settlement and they expended $1,543,000 in costs and attorney fees 

to obtain the $3.2 million settlement. In the underlying Steinberg cause of action, the 

plaintiffs and the Shearson defendants entered into a settlement agreement after 

plaintiffs’ Illinois Securities Law claim was dismissed with prejudice as time-barred. 

That dismissal was affirmed on appeal. Plaintiffs’ settlement in the underlying 

Steinberg action was not structured into an award of damages plus attorney fees and 

costs. Rather, plaintiffs’ settlement represented their agreement to settle all disputes 

and claims that could have been asserted. Plaintiffs agreed to a joint motion to obtain a 

dismissal with prejudice of the underlying lawsuit, with the parties “to bear their own 

costs and attorneys’ fees.” Plaintiffs’ expenditures for attorney fees and costs were 
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simply their cost of litigation pursuing their common law fraud and Consumer Fraud 

Act claims. Accordingly, under section 13(A), the entire $3.2 million settlement 

constitutes “other amounts received by the purchaser on the securities.” Section 13(A) 

makes no provision for the deduction of attorney fees or costs from those “other 

amounts received.” Thus, we reject plaintiff’s argument that the entire $3.2 million 

should not be deducted from their damage award.

¶ 56 The appellate court in this case also held that the trial court’s attorney fees award 

was based on a percentage of its incorrect damage calculation. The trial court awarded 

plaintiffs $1,636,700.80 in attorney fees, calculated by applying a 40% contingency fee 

to its erroneous Illinois Securities Law damage award calculation of $4,091,752.19. 

The appellate court noted that the trial court could base an attorney fee award on either 

a fair percentage of recovery, or the value of the time expended by counsel. The 

appellate court stated that it “would not assume that the trial court, which considered 

the connection between the fees sought and the amount of the award, would have 

awarded plaintiffs a 40% contingent fee of a much larger Illinois Securities Law 

damage award based on plaintiffs’ purchase price, plus 10% interest, less the $3.2 

million settlement.” Accordingly, the appellate court reversed the attorney fee award 

and remanded the case to the trial court to determine reasonable attorney fees based on 

the correct amount of plaintiffs’ Illinois Securities Law damages. The parties do not 

contest this part of the appellate court’s judgment. Thus, the award of attorney fees in 

this case is not at issue and not addressed in this opinion. 

¶ 57 In sum, we hold that the lower courts failed to apply the correct mathematical 

formula to calculate plaintiffs’ statutory interest award for damages under section 

13(A) of the Illinois Securities Law. Accordingly, we remand this cause to the circuit 

court to calculate plaintiffs’ statutory interest damages on the full amount paid for each 

security from the date of purchase to the 2007 date of settlement in the Steinberg

action, and then to deduct the plaintiffs’ $3.2 million recovery in the Steinberg action.

The issue of attorney fees and costs are left for the trial court to resolve on remand. 

¶ 58 CONCLUSION

¶ 59 For the foregoing reasons, we affirm the appellate court’s judgment in part and 

reverse in part, and remand for further proceedings consistent with this opinion. 
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¶ 60 Affirmed in part and reversed in part. 

¶ 61 Cause remanded with directions.