Court Opinion

ID: 3146411
Source: CourtListenerOpinion
Date Created: 2015-10-22 18:15:47.595445+00
Date Added: 2024-06-11T11:55:12.358176
License: Public Domain

FOURTH DIVISION
                                                                     FEBRUARY 16, 2006

No. 1-04-1250

DAVID J. SHIELDS,                                            )       Appeal from the
                                                             )       Circuit Court of
       Plaintiff-Appellee,                                   )       Cook County.
                                                             )
v.                                                           )
                                                             )
THE STATE EMPLOYEES RETIREMENT                               )
SYSTEM OF ILLINOIS, MARK GALLAGHER,                          )
Chairman, THE JUDGES RETIREMENT                              )
SYSTEM OF ILLINOIS, RUDY J. KINK, JR.,                       )
Manager, JUSTICE MICHAEL BILANDIC,                           )
Trustee, JUSTICE THOMAS HOFFMAN,                             )
Trustee, JUSTICE S. LOUIS RATHJE, Trustee,                   )
JUDGE DONALD O'CONNELL, Trustee,                             )
MARVIN O. NOVEN, Trustee, THE BOARD                          )
OF TRUSTEES OF THE JUDGES RETIREMENT )
SYSTEM, and JAMES E. RYAN, Attorney General )
of Illinois,                                                 )       Honorable
                                                             )       Deborah M. Dooling,
       Defendants-Appellants.                                )       Judge Presiding.

       JUSTICE CAMPBELL delivered the opinion of the court:

       Defendants, the State Employees Retirement System of Illinois, its chairman, the Judges

Retirement System of Illinois (the System), its manager, and its board of trustees (the Board),

appeal from an order of the circuit court of Cook County determining that interest must be paid

to plaintiff, David J. Shields, on a pension contribution refund determined by the Illinois

Supreme Court to have been improperly withheld. On appeal, the Board contends that the circuit

court is barred from ordering a state agency to pay postjudgment interest. For the following

reasons, we reverse the order of the circuit court.
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BACKGROUND

       In November 1990, plaintiff, former circuit court judge David J. Shields, then presiding

judge of the chancery division of the circuit court of Cook County, applied for retirement

benefits from the Judges Retirement System of Illinois, indicating that his service as a judge

would terminate on December 3, 1990. At the time of his notice of retirement, Shields had

contributed a total of $113,222.04, out of his own funds into the System. Shields began

receiving retirement benefits approximating $5,100 per month effective December 13, 1990.

       On December 19, 1990, Shields was indicted on seven counts of conspiracy, including

charges of extortion, attempted extortion, and knowingly making false statements of material

fact to the Federal Bureau of Investigation during the period August 1988 through November

1989. Shields was convicted on all counts of the indictment, and on March 2, 1992, he was

sentenced to 37 months in prison plus 3 years of supervised release and was fined $6,000.

Shields' conviction was upheld on appeal. United States v. Shields, 999 F.2d 1090 (7th Cir.

1993). The district court denied Shields' motion for a new trial and that determination was also

upheld on appeal. United States v. Shields, No. 94 1388 (7th Cir. June 28, 1994).

       Following Shields' conviction, Rudy Kink, manager of the System, informed Shields that

his benefits would be terminated effective March 2, 1992. Shields sought a refund of all of the

contributions he made into the System over the years, totaling $113,222.04. The Board held

that Shields was entitled to a refund of $37,873.27, representing his contributions less

$75,348.77, benefits paid to him prior to the termination of his benefits. On administrative

review, the circuit court, Judge Lester Foreman presiding, reversed the decision of the Board and

ordered the System to refund the remainder of Shields' contributions in the amount of

$75,348.77, specifically holding:

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                       " ' Though it has not been brought to my attention as of this

               time, I find that he is not entitled to any interest, and the reason he

               is not entitled to interest is because I think that the way the statute

               should be interpreted without his ever having made a demand for

               the interest, I think it would be inappropriate for him to receive it

               under these circumstances.' " Shields v. Judges' Retirement

               System of Illinois, 329 Ill. App. 3d 27, 31, 768 N.E.2d 26 (2001)

               (Shields I).

The System and the Board appealed, and this court reversed the order of the circuit court.

Shields I, 329 Ill. App. 3d 27.

       On Shields' appeal, the Illinois Supreme Court reversed the appellate court, finding that

Shields was entitled to a full refund of his contributions. (Shields v. Judges' Retirement System

of Illinois, 204 Ill. 2d 488, 791 N.E.2d 516 (2003) (Shields II). The supreme court did not

address the issue of interest, but noted that the Board did not originally award interest "since

section 18-1298) [of the Pension Code (40 ILCS 5/18-1298) (West 1992))] specifically provides

that refunds should be computed 'without interest.' " Shields II, 204 Ill. 2d at 491.

       On August 27, 2003, the Board issued Shields a check in the amount of $60,813,

representing the amount ordered to be refunded, less federal withholding tax, in compliance

with the decision of our supreme court.

       On August 11, 2003, Shields filed a petition to reinstate his case in the circuit court and

enforce his original judgment, seeking interest on $75,348.77, the amount that the circuit court

ordered the System to refund to him on November 17, 2000, at the rate or 9% per annum. The

Board filed a motion to dismiss the petition pursuant to section 2-619 of the Code of Civil

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Procedure (735 ILCS 5/2-619 (West 2002)). The trial court specifically found that the Judges

Retirement System of Illinois is a government entity under the definition of 2-1303 of the Code

of Civil Procedure (735 ILCS 5/2-1303 (West 2002)) and determined that Shields was entitled to

interest at the rate of 6% per annum from the time of the judgment entered by Judge Foreman on

November 17, 2000, until the date that interest is paid. The trial court subsequently denied the

System's motion to reconsider. The defendants' timely appeal followed.

OPINION

       The matter before this court is whether Shields is entitled to 6% interest on the judgment

awarded to him on November 17, 2000. On appeal from an order entered pursuant to section 2-

619 of the Code of Civil Procedure, our review is de novo. Van Meter v. Darien Park District,

207 Ill. 2d 359, 368, 799 N.E.2d 273, 278 (2003).

       Whether Shields is allowed to collect 6% interest on the judgment regarding his

contribution toward his pension initially depends on whether the System is a governmental entity

under section 2-1303 of the Code of Civil Procedure. Section 2-1303 of the Code of Civil

Procedure provides in pertinent part:

                      "Interest on judgment. Judgments recovered in any court

               shall draw interest at the rate of 9% per annum from the date of the

               judgment until satisfied or 6% per annum when the judgment

               debtor is a unit of local government, as defined in Section 1 of

               Article VII of the Constitution, a school district, a community

               college district, or any other governmental entity." (Emphasis

               added). 735 ILCS 5/2-1303 (West 2002).

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Defendants contend that the trial court erred in determining that the System is a governmental

entity for the purposes of section 2-1303. Defendants argue that the System is, in fact, a creature

of the State, and that the State of Illinois is immune from a suit for postjudgment interest filed

under section 2-1303 under the doctrine of sovereign immunity. In a footnote, defendants note

that the proper forum for claims against the State is the Court of Claims (see 705 ILCS 505/1

(West 2002)), and that if the legislature intends to waive the State's immunity, it must do so by

specific authorization: general legislative enactments do not impair the rights of the sovereign

unless an intent to make the State liable is expressed in the statute. City of Springfield v.

Allphin, 82 Ill. 2d 571, 576, 413 N.E.2d 394 (1980); Department of Revenue v. Appellate Court,

67 Ill. 2d 392, 396, 367 N.E.2d 1302 (1977).

       Defendants argue that the language "any other governmental entity" in section 2-1303

has been held to apply only to units of local government, not to arms of the State. The Judges

Retirement System is created in section 18-101 of the Illinois Pension Code as follows:

                       "A retirement system is created to be known as the 'Judges

               Retirement System of Illinois'. It shall be a trust separate and

               distinct from all other entities, maintained for the purpose of

               securing the payment of annuities and benefits as prescribed

               herein." 40 ILCS 5/18-101 (West 2002).

Defendants assert that the above enabling statute does not support the classification of the

System as a governmental entity under section 2-1303. In support, defendants cite Williams v.

Illinois State Scholarship Comm'n, 139 Ill. 2d 24, 563 N.E.2d 465 (1990), and In re Special

Education of Walker, 131 Ill. 2d 300, 546 N.E.2d 520 (1989). In Walker, a petitioner sought

interest on an unpaid judgment entered by the Illinois State Board of Education (ISBE). Our

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supreme court held the ISBE did not qualify as a governmental entity, explaining that the

"language in section 2-1303 is not a sufficiently clear expression by the legislature to constitute a

waiver of the State's immunity," (Walker, 131 Ill. 2d at 304), and declined to award interest. In

Williams, our supreme court reversed an award of interest against the Illinois State Scholarship

Commission. Relying on Walker, the court stated: "the State cannot be held accountable for

interest in situations where a judgment is entered against government entities that do not qualify

as a unit of local government under section 2-1303." Williams, 139 Ill. 2d at 73-74.

       Shields' response to defendants' argument that the System is not a governmental entity

pursuant to section 2-1303 is multifaceted. Shields initially argues that article XIII, section 5, of

the Illinois Constitution protects pensions. Ill. Const. 1970, art. XIII, ' 5 ("Membership in any

pension or retirement system of the State, any unit of local government or school district, or any

agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of

which shall not be diminished or impaired"). He argues, without more, that he is entitled to

interest pursuant to the Constitution. Shields continues that the System remains liable for

interest under section 2-1303 because Judge Foreman's judgment concerns contribution funds as

distinguished from pension funds. Shields explains that his contributions held by the System

were monies he contributed that were held separate from the State general revenue fund, and, as

a result, the System becomes a "governmental entity," exempt from sovereign immunity.

       Shields argues that the determining factor of whether sovereign immunity applies is

whether state general funds can be reached to satisfy a judgment. In support, Shields cites

Gocheff v. State Community College of East St. Louis, 69 Ill. App. 3d 178, 386 N.E.2d 1141

(1979), as a case in contrast to his case. There, this court held that a state community college

was not immune from a personal injury lawsuit, where the employee of the college was fatally

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injured while driving a vehicle owned by the college. This court reasoned that state funds would

not be reachable to satisfy any judgment rendered against the college and that the state board,

acting as temporary community college board for the college, possessed a sufficient degree of

administrative autonomy to make it amenable to suit. Gocheff, 69 Ill. App. 3d at 181-82.

Shields argues that his case is distinguishable from Gocheff, as "[t]here is no way Trust assets

will be touched and no way the States' [sic] general fund be invaded."

       Defendants reply that Shields misunderstands the holding of Gocheff. Defendants cite

Jones v. Jones-Blythe Construction Co., 150 Ill. App. 3d 53, 501 N.E.2d 364 (1986), appeal

denied, 114 Ill. 2d 546, 508 N.E.2d 729 (1987). There, the plaintiff filed a personal injury action

against the Teachers' Retirement System as a result of a slip and fall on the premises occupied by

the system. The trial court granted the system's motion to dismiss, and this court affirmed,

holding that the Teachers' Retirement System is a division of the State within the meaning of the

statute granting the Court of Claims exclusive jurisdiction over tort claims against the State.

In making its determination, this court relied on section 16-162 of the Pension Code, which

provided as follows:

                       "Payment of the required State contributions and of all

               pensions, annuities, retirement allowances, death benefits, refunds

               and other benefits granted under or assumed by this retirement

               system, and all expenses in connection with the administration and

               operation thereof, are obligations of the State." Ill. Rev. Stat.

               1983, ch. 108 2, par. 16-162 (now 40 ILCS 5/16-1588) (2002)).

This court found that "[a]ny judgment in favor of plaintiff could be considered an expense in

connection with the administration and operation of the System and satisfied out of the general

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funds of the State," and should be brought in the Court of Claims. Jones, 150 Ill. App. 3d at 55.

The court further distinguished Gocheff:

                 "In Gocheff, the court found that the general funds of the State

                 would not be reachable to satisfy a judgment rendered in the case.

                 * * * [W]e do not believe that the System enjoys the degree of

                 autonomy asserted by plaintiff. The System and its board are

                 created by statute and the powers and duties of the board are

                 controlled by statute." Jones, 150 Ill. App. 3d at 54.

The statutory provision applicable to the present case is strikingly similar to the provision

applicable in Jones:

                        "The payment of (1) the required State contributions,

                 (2) all benefits granted under this system and (3) all expenses in

                 connection with the administration and operation thereof are the

                 obligations of the Sate to the extent specified in this Article."

                 40 ILCS 5/18-132 (West 2002).

By analogy, state general funds could be reached to satisfy a judgment against the Judges

Retirement System. 1 By further way of analogy, the term "local public entity," which is similar

to "governmental entity," is defined in the Local Governmental and Governmental Employees

Tort Immunity Act as follows:

       1
           See also People ex rel. Manning v. Nickerson, 184 Ill. 2d 245, 702 N.E.2d 1278 (1998)

(sovereign immunity applied to protect state funds from being reached to satisfy a judgment

against the Illinois Department of Conservation).

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                       "'Local public entity' includes a county, township,

               municipality, municipal corporation, school district, school board,

               educational service region, regional board of school trustees,

               community college district, community college board, forest

               preserve district, park district, fire protection district, sanitary

               district, museum district, emergency telephone system board, and

               all other local governmental bodies. 'Local public entity' also

               includes library systems and any intergovernmental agency or

               similar entity formed pursuant to the Constitution of the State of

               Illinois or the Intergovernmental Cooperation Act as well as any

               not-for-profit corporation organized for the purpose of conducting

               public business. It does not include the State or any office, officer,

               department, division, bureau, board, commission, university or

               similar agency of the State." 745 ILCS 10/1-206 (West 2002).

Thus, we find that the System is a creature of state government and that section 2-1303 does not

require the System to remit interest on a judgment entered against it.

       Whether interest is payable then depends on whether the statute provides for interest. It

is well settled that interest is not recoverable absent a statute or agreement providing for it. City

of Springfield v. Allphin, 82 Ill. 2d 571, 576, 413 N.E.2d 394 (1980); Lakefront Realty Corp. v.

Lorenz, 19 Ill. 2d 415, 423, 167 N.E.2d 236 (1960); People ex rel. Barrett v. Farmers State

Bank, 371 Ill. 222, 224, 20 N.E.2d 502 (1938). Interest statutes, like statutes imposing costs, are

in derogation of the common law and must be strictly construed. Nothing is to be read into them

by intendment or implication. Allphin, 82 Ill. 2d at 577, citing Summers v. Summers, 40 Ill. 2d

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338, 342, 239 N.E.2d 795 (1968). Interest is a creature of statute and cannot be recovered except

where a statute authorizes it. Fowler v. Harts, 149 Ill. 592, 597, 36 N.E. 996 (1894).

       As recognized by our courts in both Shields I and Shields II, section 18-129 of the

Pension Code, entitled "Refund of Contributions; repayment," provides in each subsection that

benefits be provided "without interest" regardless of whether payments are being made to a

participant, an annuitant, a surviving spouse, or other survivor. See 40 ILCS 5/18-129 (West

2002); Shields II, 204 Ill. 2d at 491.

       Shields argues that "the Trustees are not acting as a sovereign but as any employer that

provides a pension" and that "[m]anaging a pension creates a fiduciary obligation to the

contributors." Shields continues that the Judges Retirement System is not a creature of the State

but is tantamount to "any employer."

       While it is undisputed that public employee pensions are a matter of contractual right

(Stillo v. State Retirement Systems, 305 Ill. App. 3d 1003 (1999)), Shields provides no authority

for either his argument that the System is not an arm of the State or that interest must be paid on

a judgment involving a state pension contribution where the enabling statute specifically

provides that interest not be paid. Shields does cite to authority wherein prejudgment or

postjudgment interest was paid in situations regarding various units of local government, which

are not exempt from the interest statute: Martino v. Police Pension Board of the City of Des

Plaines, 331 Ill. App. 3d 975 (2002); Eddings v. Board of Education of the City of Chicago, 305
Ill. App. 3d 584 (1999); and Calabrese v. Chicago Park District, 294 Ill. App. 3d 1055 (1998).

All of these cases are easily distinguished as none of them involve the State.

       The recently decided case Barry v. Retirement Board of the Firemen's Annuity & Benefit

Fund of Chicago, 357 Ill. App. 3d 749, 828 N.E.2d 1238 (2005), appeal denied, 216 Ill. 2d 680

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(2005), is similarly distinguishable from the present case. In awarding both prejudgment and

postjudgment interest on the claim of a widow of a Chicago firefighter, this court engaged in an

analysis to determine whether the firemen's board was a "public body" or a "municipality,"

ultimately holding that the firemen's board was not a "governmental entity" exempt from interest

statutes. The analysis engaged in by the Barry court is not proper here, where the action is

against the State and immunity applies. Ellis v. Board of Governors of State Colleges &

Universities, 102 Ill. 2d 387, 406 N.E.2d 202 (1984).

        We conclude that the trial court erred in determining that the Judges Retirement System

is a governmental entity pursuant to section 2-1303 of the Code of Civil Procedure subject to

payment of 6% interest on Shield's contribution refund. We therefore reverse the judgment of

the trial court.

        Reversed.

        QUINN, P.J., concurs.

        MURPHY, J., dissents.

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