Court Opinion

ID: 9391646
Source: CourtListenerOpinion
Date Created: 2023-05-02 20:05:01.928721+00
Date Added: 2024-06-11T17:18:43.163172
License: Public Domain

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except
             in the limited circumstances allowed under Rule 23(e)(1).

                                             2023 IL App (3d) 220203-U

                                   Order filed May 2, 2023
      ____________________________________________________________________________

                                                        IN THE

                                       APPELLATE COURT OF ILLINOIS

                                                  THIRD DISTRICT

                                                          2023

      LAYKO PROPERTIES,                      )     Appeal from the Circuit Court
                                             )     of the 18th Judicial Circuit,
            Plaintiff-Appellant,             )     Du Page County, Illinois,
                                             )
            v.                               )
                                             )     Appeal No. 3-22-0203
                                             )     Circuit Nos. 14-L-80 and 18-MR-750
      M-OK DISTRIBUTION, INC., M-OK          )
      FREIGHT LINES CORP., TERRANCE          )
      O’KEEFE, and PHILLIP MICELI,           )     Honorable
                                             )     Robert W. Rohm,
            Defendants-Appellees. 1          )     Judge, Presiding.
      ____________________________________________________________________________

            JUSTICE PETERSON delivered the judgment of the court.
            Presiding Justice Holdridge and Justice Brennan concurred in the judgment.
      ____________________________________________________________________________

                                                      ORDER

¶1           Held: The court did not abuse its discretion by entering an order of full satisfaction and
                   release of judgment.

             1
               We recognize that M-OK Freight Lines Corp., Phillip Miceli, and Terrance O’Keefe were not
     defendants in the underlying litigation, but were brought in as third parties by way of citations to discover
     assets. However, in case No. 18-MR-0750, the court granted summary judgment on Layko’s claims to
     pierce the corporate veil against Miceli and O’Keefe and for successor liability against M-OK Freight.
     Further, the parties generally refer to M-OK Distribution, M-OK Freight, Miceli, and O’Keefe as
     defendants, collectively, although appellant’s brief noted that M-OK Freight, Miceli, and O’Keefe were
     never defendants in this matter. As such, due to the circumstances of the case and the treatment by the
     parties, we likewise refer collectively to the M-OK entities, Miceli and O’Keefe, as defendants.
¶2          Plaintiff, Layko Properties (Layko), appeals the Du Page County circuit court’s order

     finding that the judgment it obtained had been fully satisfied. Layko argues that because it was

     entitled to postjudgment contractual interest, attorney fees, expenses, and costs under the terms

     of the lease, the payment of the judgment amount, along with statutory postjudgment interest was

     insufficient to satisfy the judgment. We affirm.

¶3                                           I. BACKGROUND

¶4          Layko entered into a lease agreement with defendant M-OK Distribution, Inc. The lease

     was executed by Terrance O’Keefe and Phillip Miceli on behalf of M-OK Distribution. Section

     501 of the lease provided that any installment of rent not timely paid “shall bear interest at the

     rate of percent (12%) per annum, compounded monthly, from the date when the same is due

     hereunder until the same shall be paid.” Section 1601 of the lease provided that:

                    “Lessee further agrees to pay all costs and expenses, including reasonable

                    attorney’s fees, which may be incurred by or imposed on Lessor in enforcing this

                    Lease or in any litigation to which Lessor may be made a party and if paid by

                    lessor, shall be so much additional rent due on the next rent date after such

                    payment together with interest at twelve percent (12%) per annum, compounded

                    monthly, from the date of payment.”

¶5          In 2014, Layko filed a verified complaint against M-OK Distribution setting forth a claim

     for breach of contract premised upon M-OK Distribution’s alleged default under the lease. The

     complaint alleged that section 501 of the lease provided for payment of 12% interest on the

     unpaid rent from the time the rent was due until it was paid. It further alleged that section 2001(i)

     of the lease provided that M-OK Distribution was responsible for attorney fees incurred by

     Layko in connection with the lawsuit. Layko requested damages in an amount in excess of

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     $132,000 for rent and expenses, interest on the unpaid rent, and attorney fees and costs of

     litigation.

¶6           M-OK Distribution failed to answer the complaint and Layko moved for a default

     judgment. The court granted the motion and set the matter for a hearing to prove up damages.

     Layko filed an affidavit providing that the amounts due to it were $138,711.13 in unpaid rent,

     late charges, interest, and costs related to the property, $2,337.50 in attorney fees, and $365 in

     court costs. The court entered judgment against M-OK Distribution for a total of $144,913.60,

     which was comprised of $142,211.13 for damages, $2,337.50 for attorney fees, and $365 for

     court costs. 2 The judgment order appears to have been submitted by Layko’s counsel. It does not

     provide for postjudgment interest or otherwise indicate that any further interest will be incurred

     at the contractual rate. The judgment order likewise does not provide for or otherwise indicate

     additional attorney fees are part of the judgment.

¶7           Layko filed citations to discover assets against Miceli and O’Keefe in 2016 and against

     M-OK Freight in 2018. The citation against Miceli and O’Keefe indicated that the balance due

     was $144,913.60 plus interest. The citation against M-OK Freight indicated that the balance due

     was $144,813.603 plus interest, costs, and fees. Also in 2018, Layko filed a complaint against M-

     OK Freight, Miceli, and O’Keefe (case No. 18-MR-750). It sought to pierce the corporate veil

     against Miceli and O’Keefe and hold them liable for the judgment entered against M-OK

     Distribution, as well as attorney fees and pre- and postjudgment interest. Layko further sought

             2
               We note that the sum of the numbers listed for damages, attorney fees, and court costs is
     $144,913.63 rather than $144,913.60; however, we state the total judgment as $144,913.60 because that is
     what the judgment order indicates is the total award.
             3
               Although this number appears incorrect, it is listed as it was on the citation.

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     successor liability against M-OK Freight to hold it liable for the judgment it obtained against M-

     OK Distribution, as well as pre- and postjudgment interest and the costs of the action.

¶8           In January 2021, the court entered an order providing that Layko had a valid judgment

     against M-OK Distribution in the amount of $144,913.60 and was entitled to recover that

     amount, plus interest, accrued at the statutory rate. It further found that M-OK Freight was a

     successor to M-OK Distribution and thus, liable for the judgment and interest. The order also

     provided for Layko to file a petition for fees and costs.

¶9           Also in January 2021, Layko filed an application for fees and costs, seeking an order

     awarding it a total of $685,533, comprised of: (1) the judgment amount of $144,913;

     (2) postjudgment interest of $119,845, which was calculated at 9% annual interest;

     (3) postjudgment attorney fees of $241,822; (4) contractual interest at 12% on unpaid attorney

     fees and costs in the amount of $28,231; (5) postjudgment accounting fees and costs in the

     amount of $132,825; and (6) contractual interest at 12% on unpaid accounting fees and costs in

     the amount of $16,718. 4 Layko argued that it was entitled to the fees and costs based upon

     section 1601 of the lease, which provided for M-OK Distribution and now its successor, M-OK

     Freight, to indemnify it for “all costs in any litigation to which Layko may be made a party.” M-

     OK Freight opposed the motion, arguing that the contract merged into the judgment and that

     section 1601 did not provide for fees and costs incurred postjudgment because those costs and

     fees were not incurred in enforcing the lease but rather in enforcing the judgment. Layko

     responded that section 1601 not only provided for fees and costs in enforcing the lease but also

     when Layko may be made a party to litigation. Layko argued that there was no requirement that

             4
             We note the listed numbers do not add up to the total listed but we recite the numbers as stated in
     Layko’s application.
                                                         4
       it be an involuntary party to the litigation as may be the case if the provision limited recovery to

       situations where Layko was named as a defendant.

¶ 10          At a hearing on the application, the court noted that it did not believe section 1601 was

       broad enough to allow the fees and costs but ordered additional briefing. Following the

       additional briefing and another hearing, in May 2021, the court held that section 1601 of the

       lease was applicable. In doing so, and relying on Steiner Electric Co. v. Maniscalco, 2016 IL

       App (1st) 132023, the court found that the merger doctrine was inapplicable. The court then

       determined that the postjudgment collection and supplementary proceedings were not considered

       when enforcing the lease. Additionally, it determined that the language of 1601 was not

       ambiguous. The court further held that the language “may be made a party” was not limited to

       situations where Layko was made a defendant and that Layko was made a party to the

       supplemental proceedings, such that the provision was broad enough to cover the collection

       proceedings. The court noted that it had gone back and forth and that its inclination was to find

       that the provision did not apply. In light of that, the court noted that it was not going to make the

       order final and appealable. M-OK Freight noted its intention to file a motion to reconsider.

¶ 11          On June 18, 2021, an order was entered in the related matter granting summary judgment

       to Layko on its claims to pierce the corporate veil against Miceli and O’Keefe and for successor

       liability against M-OK Freight. Later in June 2021, M-OK Freight filed its motion to reconsider

       the court’s May 2021 ruling that section 1601 was applicable and in the related matter. Layko

       filed a motion to consolidate that case with the instant case. In August 2021, the motion to

       reconsider was denied and the motion to consolidate was granted.

¶ 12          In November 2021, following comments by the court that it was not confident in its

       decision allowing attorney fees under section 1601 of the lease, M-OK Freight again moved the

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       court to reconsider that decision. Although the court essentially denied that motion in December

       2021, it granted leave for M-OK Freight to file a motion directed at whether section 1601 was

       ambiguous.

¶ 13          On February 14, 2022, M-OK Freight, Miceli, and O’Keefe filed a motion in the

       consolidated case to authorize tender and acceptance of funds in full satisfaction of Layko’s

       judgment. The motion sought to tender the sum of the judgment, along with statutory interest to

       Layko or for deposit with the court in full satisfaction of the judgment but without prejudice to

       the remaining claims for attorney fees, costs, and sanctions. At a hearing, Layko objected. Layko

       argued that the calculation of interest was in dispute because it believed that contractual interest

       would apply. The court stated that the payment of the judgment with statutory interest satisfied

       the judgment. The court denied the motion but stated that if the judgment was paid, it would stop

       the statutory interest and the court would enter a satisfaction of judgment. The court confirmed

       with Layko that it did not dispute that the calculation of the judgment with statutory interest—

       $246,750.14—was accurate. The full satisfaction and release of judgment was entered on

       February 18, 2022. Layko filed a motion to reconsider the entry of the full satisfaction and

       release of judgment. The motion argued that the satisfaction failed to include that it was without

       prejudice to Layko’s claims for attorney fees, costs, and sanctions and it also assumed that the

       interest calculation was based on the statutory rate instead of the contractual rate. In March 2022,

       M-OK Freight filed a motion to reconsider the decision allowing attorney fees under section

       1601, focusing on whether that provision was ambiguous.

¶ 14          Following a hearing, the court held that section 1601 was ambiguous and therefore,

       unenforceable. The court vacated its May 25, 2021, order and determined that Layko was not

       entitled to postjudgment fees and costs under section 1601 in the instant matter and was not

                                                         6
       entitled to fees and costs under section 1601 in the related matter. At the hearing, the court also

       addressed Layko’s motion for reconsideration regarding satisfaction of the judgment. The court

       believed the rate of interest issue was still outstanding. The court noted that if Layko believed

       12% interest should apply, it should have been in the judgment. Defense counsel noted that the

       issue with 12% interest was in relation to its application to attorney fees and expenses and not

       the unpaid rent. The court believed it was 12% on the outstanding judgment and defense counsel

       again noted it was in regard to attorney fees. Layko did not note any disagreement with defense

       counsel. The court requested the pertinent provision and Layko’s counsel directed the court to

       page two of its response to the motion to reconsider an award of fees under section 1601, which

       quoted section 1601 providing for 12% interest on attorney fees and costs. The court denied

       Layko’s motion for reconsideration. Layko appeals.

¶ 15                                              II. ANALYSIS

¶ 16             Layko argues that the court erred by entering satisfaction of judgment because the lease

       did not merge into the judgment and it provided for contractual interest at 12% rather than

       statutory interest. Layko further argues that the court erred in entering satisfaction of judgment

       because it was entitled to postjudgment attorney fees, costs, and expenses under section 1601 of

       the lease.

¶ 17             “A reviewing court should reverse a trial court’s decision regarding a release of judgment

       only where the trial court abused its discretion.” Otto Baum Co. v. Süd Family Ltd. Partnership,

       2020 IL App (3d) 190054, ¶ 21. “Once a judgment is paid in full by one or more defendants, the

       defendants are statutorily entitled to receive a release of the judgment.” Id. The interpretation of

       a contract is reviewed de novo. Dowling v. Chicago Options Associates, Inc., 226 Ill. 2d 277, 285

       (2007).

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¶ 18           Here, the judgment did not provide for interest at any specified rate. Thus, on its face,

       payment of the judgment, along with interest at the statutory rate, satisfied the judgment as

       written.

¶ 19           Turning to Layko’s argument regarding the application of statutory interest, although

       Layko includes section 501 of the lease in its statement of facts—which provides for 12%

       interest on late rent—and makes a passing reference to that section in its argument, it largely

       argues for 12% interest under section 1601 of the lease. However, section 1601 provides for 12%

       interest on expenses, costs and attorney fees from the date Layko paid any such expenses, costs,

       and attorney fees. Therefore, section 1601 does not entitle Layko to interest at 12% on its entire

       judgment, as it appears to argue.

¶ 20           Layko also appears to argue for 12% interest under section 501 based on its position that

       the lease did not merge into the judgment. Layko supports its position with the court’s statement

       that the merger doctrine did not apply, which the court made during the hearing where it initially

       found section 1601 applicable. However, when taken into context, the court’s statement

       regarding merger was in relation to section 1601, rather than the contract as a whole, because

       only the applicability of section 1601 was being argued during the hearing. We conclude that the

       lease, including section 501, generally merged into the judgment once the judgment became

       final. 5 See A.L. Dougherty Real Estate Management. Co., LLC v. Su Chin Tsai, 2017 IL App

       (1st) 161949, ¶ 29. (“Under the merger doctrine, once the underlying judgment became final, the

       lease entirely merged into the judgment, and no further action at law or equity could be

       maintained on the lease.”); Mason v. Eakle, 1 Ill. 83, 83 (1824) (determining that the statutory

               5
                 We recognize that “Illinois courts have held the merger rule does not apply to ancillary attorney
       fees.” Steiner Electric Co. v. Maniscalco, 2016 IL App (1st) 132023, ¶ 90.
                                                            8
       rate of interest applied once judgment was rendered, even though the higher contractual interest

       rate applied to the principal up to the time judgment was rendered and explaining that “[w]hen a

       judgment is obtained upon a contract, that contract ceases to be, and is merged in the judgment,

       and the judgment is operated upon, and controlled, not by the contract, but by the statute”); BAC

       Home Loans Servicing, LP v. Popa, 2015 IL App (1st) 142053, ¶¶ 35-36 (concluding the

       statutory interest rate applied from the date of judgment and stating “Illinois courts have long

       held that, upon the entry of a foreclosure judgment, the mortgage merges into the judgment and

       eliminates the contract, and therefore the judgment is controlled by statute, not the contract”). As

       the judgment does not provide for the contractual rate of interest, the statutory rate applied post-

       judgment. See e.g., Centerpoint Energy Services, Inc. v. Halim, 743 F.3d 503, 507-08 (2014)

       (noting that, in applying Illinois law, the trial court found that the contract merged into the

       judgment and as the judgment made no provision for contractual interest, it could not award

       contractual interest).

¶ 21           In regard to attorney fees, section 1601 of the lease provides for Layko to recover

       attorney fees, costs, and expenses in certain situations. “Illinois follows the ‘American Rule,’

       which provides that absent statutory authority or a contractual agreement, each party must bear

       its own attorney fees and costs.” Housing Authority of Champaign County v. Lyles, 395 Ill. App.

       3d 1036, 1038 (2009). Contract provisions allowing for recovery of attorney fees must be strictly

       construed. Helland v. Helland, 214 Ill. App. 3d 275, 277 (1991). “Illinois courts consistently

       refuse to broaden contractual provisions for attorney fees beyond the precise language used in

       the contract.” Seglin v. Old Orchard Hospital, 192 Ill. App. 3d 176, 181 (1989). The words used

       in a lease “should be give their plain and generally accepted meaning.” Housing Authority of

       Champaign County, 395 Ill. App. 3d at 1039. Where the terms of a lease are unambiguous they

                                                         9
       must be enforced as written. Id. The court “will not *** ‘torture ordinary words until they

       confess to ambiguity.’ ” Hobbs v. Hartford Insurance Co. of the Midwest, 214 Ill. 2d 11, 31

       (2005).

¶ 22             Here, Layko argues that the language of section 1601 that provides for Layko to recover

       attorney fees, costs and expenses incurred in enforcing the lease allows for it to recover the

       attorney fees, costs, and expenses it incurred postjudgment while seeking to collect on the

       judgment. We disagree. Construing that provision strictly and giving the terms their plain

       meaning, as we must, it only entitles Layko to recover attorney fees, costs, and expenses incurred

       in enforcing the lease, not in collecting on the judgment. Once the judgment was final, Layko

       was no longer enforcing the lease but instead was seeking to collect on its judgment. The cases

       Layko relies upon are distinguishable based upon the contractual language at issue, which

       expressly allowed for attorney fees incurred in collecting amounts owed. For example, in

       Centerpoint, 743 F.3d at 508, the contractual language at issue—which the court determined was

       broad enough to allow for postjudgment fees incurred in collecting a judgment, including those

       incurred in an action for fraud and successor liability—stated that Centerpoint could recover all

       costs, expenses, and attorney fees incurred by it “to collect amounts due and owing.” That

       language expressly allowed for the recovery of fees incurred for collection efforts, unlike the

       language here, which limits recovery to expenses incurred in enforcing the lease and does not

       mention collection. Additionally, the contract language in Steiner Electric Co. v. Maniscalo,

       2016 IL App (1st) 132023, ¶ 88, likewise expressly included collection efforts, as the pertinent

       language in that matter allowed for recovery of “all reasonable costs of collection, including

       attorney fees.” Based on the foregoing, we conclude Layko was not entitled to the recovery of

                                                        10
       postjudgment attorney fees, costs, and expenses under the “enforcing the lease” clause in section

       1601.

¶ 23           Section 1601 also allows Layko to recover attorney fees, costs, and expenses incurred “in

       any litigation to which [it] may be made a party.” Layko argues that it was made a party to the

       underlying litigation because of defendants’ actions. A plain reading of the language “may be

       made a party” indicates, due to its passive tone, that it contemplates that someone else made

       Layko a party, or, in other words, brought Layko into the litigation as a party, rather than Layko

       itself initiating the litigation. Therefore, because Layko itself initiated the litigation, its attempts

       to recover its attorney fees, costs, and expenses under that provision are unavailing.

¶ 24           In sum, the judgment, on its face, was satisfied with the payment of the judgment

       amount, along with statutory interest. Additionally, section 501 of the lease merged into the

       judgment and Layko was not entitled to contractual interest on the entire judgment or attorney

       fees, costs, and expenses under section 1601. Based on the foregoing, we conclude that the court

       did not abuse its discretion by entering full satisfaction and release of judgment based upon

       defendants’ payment of the underlying judgment, along with statutory interest.

¶ 25                                             III. CONCLUSION

¶ 26           The judgment of the circuit court of Du Page County is affirmed.

¶ 27           Affirmed.

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