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Shapo v. Estate of Duncavage

May 10, 2001

IN RE THE LIQUIDATION OF PINE TOP INSURANCE COMPANY,
NATHANIEL S. SHAPO, DIRECTOR OF INSURANCE OF THE STATE OF ILLINOIS, AS LIQUIDATOR OF PINE TOP INSURANCE COMPANY, RESPONDENT-APPELLEE,
v.
ESTATE OF MARYBETH DUNCAVAGE, DECEASED, PETITIONER-APPELLANT.



The opinion of the court was delivered by: Justice Hoffman

Not Released For Publication

IN RE THE LIQUIDATION OF PINE TOP INSURANCE COMPANY,
NATHANIEL S. SHAPO, DIRECTOR OF INSURANCE OF THE STATE OF ILLINOIS, AS LIQUIDATOR OF PINE TOP INSURANCE COMPANY, RESPONDENT-APPELLEE,
v.
ESTATE OF MARYBETH DUNCAVAGE, DECEASED, PETITIONER-APPELLANT.

The opinion of the court was delivered by: Justice Hoffman

Appeal from the Circuit Court of Cook County.

Honorable Robert V. Boharic Judge Presiding.

 The Estate of Mary Beth Duncavage (Estate) appeals from a circuit court order denying its petition for post-allowance interest on its claim against Pine Top Insurance Company (Pine Top) in the instant liquidation proceedings. For the reasons which follow, we affirm.

In June 1984, the Estate filed a multi-count complaint against the owner of an apartment building in which Mary Beth Duncavage was criminally assaulted and killed. The building owner was covered under an excess liability umbrella insurance policy issued by Pine Top. During the pendency of that suit, the Director of Insurance of the State of Illinois (Director) *fn1 instituted the instant liquidation proceeding against Pine Top pursuant to Article XIII of the Illinois Insurance Code (Ill. Rev. Stat. 1981, ch. 73, pars. 799-833, now 215 ILCS 5/187-221 (West 1998)). On January 16, 1987, the circuit court entered an order finding Pine Top to be insolvent, appointing the Director as liquidator, and setting January 17, 1988, as a bar date for filing proofs of claim.

Section 209(6) of the Insurance Code provides that, when a liquidation order has been entered against an insurance company, any person who has a cause of action against an insured of that company under a policy issued by the company shall have the right to file a claim in the liquidation proceedings. Ill. Rev. Stat. 1981, ch. 73, par. 821, now 215 ILCS 5/209(6) (West 1998). On October 26, 1987, the Estate filed a proof of claim for $2 million, the liability limit of the policy involved, with the Director. Thereafter, the Illinois Insurance Guaranty Fund paid the Estate $150,000 on its claim in accordance with the provisions of the Illinois Insurance Guaranty Fund Act (Ill. Rev. Stat. 1987, ch. 73, par. 1065.82 et seq., now 215 ILCS 5/532 et seq. (West 1998)). On January 15, 1993, the circuit court approved the Estate's claim in the sum of $1.85 million, which represented the $2 million claim less the $150,000 payment from the Guaranty Fund. The Director appealed the circuit court's order allowing the claim, and this court affirmed. In re the Liquidation of Pine Top Insurance Co., 266 Ill. App. 3d 99, 639 N.E.2d 168 (1994).

At the time that the Estate's claim was allowed, it was categorized as a priority level (c) claim under section 205(1) of the Illinois Insurance Code (Insurance Code). 215 ILCS 5/205(1)(c) (West 1992). Section 205(1) has since been amended such that the claims formerly designated as priority level (c) have been redesignated as priority level (d). 215 ILCS 5/205(1)(d) (West 1998). The parties agree that the amendment accomplishing this change is not relevant to these proceedings and have, throughout their briefs, referred to the claims falling within this designation as priority level (d) claims. We will do the same.

On April 3, 1995, the Director appeared before the trial court on his application for an order authorizing him to pay a 50% first dividend on all claims which had then been allowed at priority level (d). On April 5, 1995, the trial court entered a written order authorizing the Director to make the requested dividend payments. The order stated, in part: "The payment of a dividend on an allowed claim will constitute a release by the payee of fifty percent (50%) of Pine Top's obligations on the allowed claim." Pursuant to the trial court's order, on May 12, 1995, the Director paid the Estate $925,000, or one half of the principal amount of its $1.85 million claim against Pine Top.

The next event relevant to this appeal took place on October 13, 1999, when the Director filed an application for an order authorizing him to pay a second 50% dividend on the allowed priority level (d) claims as to which a first dividend payment had been made and to pay a 100% dividend with respect to any claims that might be allowed in the future at priority level (d). The Director's application contained proposed terms of the second dividend payment, one of which was that said payment would "constitute a full and final settlement of Pine Top's obligations on the underlying claim." On October 27, 1999, the Director appeared before the trial court on its application. The Estate appeared and requested leave to file written objections to the application. The trial court granted leave, and the Estate filed its written objections the following day. It did not object to the payment of the second dividend but did object to such payment being deemed a "final" payment as to its priority level (d) claim. The Estate asserted that it was entitled to interest on its claim, pursuant to section 2-1303 of the Code of Civil Procedure (735 ILCS 5/2-1303 (West 1998)), from the date the claim was allowed to the date the claim was paid. Such interest, the Estate argued, must be paid at the same priority level as the claim itself; namely, priority level (d).

On November 16, 1999, the trial court entered an order stating that it would treat the Estate's written objections as a petition for the payment of interest on its allowed claim and setting a briefing schedule on that petition. On the same date, the trial court entered a second order requiring the Director to pay, on or before January 15, 2000, the remaining dividend payments on allowed priority level (d) claims. That order stated, in part, that such payment would "constitute full and final satisfaction of Pine Top's obligations with respect to the allowed amount of the claim" but would not determine the claimants' rights, if any, to interest accruing on their claims after the date of liquidation.

On December 15, 1999, the Estate filed a petition for revival of judgment with respect to the $1.85 million claim allowed on January 15, 1993. In its petition, the Estate acknowledged that the Director had paid $925,000 of the principal judgment amount on May 12, 1995, but asserted that there remained due "the sum of $371,317.81 in interest from January 16, 1993[,] to May 12, 1995, plus $925,000 in principal, with interest on $925,000 at the rate of 9% per annum from May 13, 1995."

On January 3, 2000, the Estate received a check for $925,000, representing the second half of the $1.85 million principal amount of its allowed claim, from the Director. Thereafter, it filed an amended petition for revival of judgment, acknowledging receipt of the second principal payment. In the amended petition, the Estate asserted that there remained due on the judgment "the sum of $371,317.81 in post-judgment interest from January 16, 1993[,] to May 12, 1995, plus ...


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