Appeal from the Circuit Court of Cook County. NO. 87 CH 9106. The Honorable Dorothy Kirie Kinnaird, Judge Presiding.
Released for Publication March 13, 1997.
The Honorable Justice Hourihane delivered the opinion of the court. McNULTY, P.j., And Gordon, J., concur.
The opinion of the court was delivered by: Hourihane
The Honorable Justice HOURIHANE delivered the opinion of the court:
This case involves the issuance by Commonwealth Edison (Edison) of 340,000 shares of 15% preferred stock and the redemption of that stock by Edison on February 1, 1987. Plaintiffs, certain institutional investors, challenged the redemption on several theories, and filed suit in the chancery court seeking recision (count I), injunctive relief (count II), declaratory relief (count III), damages for breach of contract (count IV) and fiduciary duty (count V), and damages or injunctive relief for violation of the Illinois Consumer Fraud Act (count VI).
The trial court granted Edison's motion to dismiss the complaint, pursuant to section 2-615 of the Code of Civil Procedure. 735 ILCS 5/2-615 (West 1994). On appeal, we reversed the dismissal of counts I through V finding that, at a minimum, an ambiguity exists in the redemption provisions of the parties' agreement which precluded conclusive determination of their intent solely from the documents. We also affirmed dismissal of count VI, holding that the Consumer Fraud Act did not apply to this transaction. Continental Assurance Co. v. Commonwealth Edison Co., 194 Ill. App. 3d 1085, 551 N.E.2d 1054, 141 Ill. Dec. 711 (1990).
On remand, Edison moved for summary judgment which was granted as to plaintiffs' claims for recision, injunctive relief, and breach of fiduciary duty. Following a bench trial on the two remaining counts for declaratory relief and for breach of contract, the trial court found that Edison had breached the parties' agreement and awarded $5,749,147.52 in damages. This amount includes $2,774,452.52 as an equitable award of prejudgment interest.
On appeal, Edison asserts that the trial court's damages determination is not supported by the evidence, and that the trial court lacked the authority to make an equitable award of prejudgment interest.
We affirm in part and reverse in part, and remand for further proceedings.
We first consider Edison's argument that the trial court's determination of damages is not supported by the evidence. It is well settled that the determination of damages by a trial court sitting without a jury will not be disturbed on review unless contrary to the manifest weight of the evidence. Schatz v. Abbott Laboratories, Inc., 51 Ill. 2d 143, 149, 281 N.E.2d 323 (1972); Moniuszko v. Moniuszko, 238 Ill. App. 3d 523, 531, 606 N.E.2d 468, 179 Ill. Dec. 636 (1992); In re Estate of Chaitlen, 179 Ill. App. 3d 287, 292, 534 N.E.2d 482, 128 Ill. Dec. 300 (1989). The law does not require absolute certainty as to the amount of the damages. Rather, there need only be an adequate basis in the record for the court's determination. Schatz, 51 Ill. 2d at 147-48; Moniuszko, 238 Ill. App. 3d at 531; Chaitlen, 179 Ill. App. 3d at 292.
The record reveals that in 1982, in conjunction with the financing and construction of several nuclear power plants, Edison issued 340,000 shares of 15% preferred stock ("preference stock") to certain institutional investors, plaintiffs here. The stock was issued pursuant to a Purchase Agreement and Resolution of Edison's Board of Directors.
Holders of the preference stock were entitled to annual dividends of 15%, which was commensurate with the then prevailing interest rates. The stock was also subject to a 5-year noncall provision, as well as certain indemnity rights of the shareholders and redemption rights of Edison. The trial court specifically found that plaintiffs' decision to buy the stock was dependent on the assumption that, for federal income tax purposes, the dividends would be eligible for the "dividend received deduction" (DRD) provided for under Section 243(a)(1) of the Internal Revenue Code of 1954. 26 U.S.C. § 243(a)(1). Under the DRD, 85% of the dividends would be tax-free, resulting in an after-tax yield of 13.965%. If, during the 5-year noncall period, the holders of the stock lost the favorable tax treatment under the DRD, the shareholders could seek indemnity from Edison and Edison, in turn, had the right to redeem the stock at par. Edison could also redeem the stock at any time after the fifth year for any reason upon payment of a 6.67% premium. Finally, the agreements provided for a "sinking fund" redemption under which Edison was required to redeem 20% of the issuance on each of the sixth ...