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Kramer v. Mt. Carmel Shelter Care Facility

May 30, 2001

RON KRAMER AND JAMES REICHERT, AS SHAREHOLDERS OF MT. CARMEL SHELTER CARE FACILITY, INC., ON BEHALF OF ALL OTHER SIMILARLY SITUATED SHAREHOLDERS OF MT. CARMEL SHELTER CARE FACILITY, INC., PLAINTIFFS-APPELLEES,
v.
MT. CARMEL SHELTER CARE FACILITY, INC., KIRBY MADDEN, AND MADDEN FINANCIAL SERVICES, INC., AND JAMES MORRIS, DEFENDANTS, AND JERRY A. ROSS AND DOROTHY W. ROSS, DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Williamson County. No. 90-CH-68 Honorable Ronald R. Eckiss, Judge, presiding.

The opinion of the court was delivered by: Justice Goldenhersh

This is the second time this cause has been before us. The instant case started as a dispute between minority and majority shareholders in a nursing home. Don Kramer and James Reichert (plaintiffs) are minority shareholders in Mt. Carmel Shelter Care Facility, Inc. (Mt. Carmel), a nursing home incorporated under the laws of Delaware. Jerry A. Ross and Dorothy W. Ross (defendants) are majority shareholders in Mt. Carmel. Kirby Madden and Madden Financial Services, Inc., who manage Mt. Carmel, were also defendants, but they take no part in this appeal.

Originally, plaintiffs brought suit on behalf of the shareholders of Mt. Carmel and for the benefit of Mt. Carmel, alleging a breach of fiduciary duty and a conspiracy to breach fiduciary duty through mismanagement of the corporation. Plaintiffs claimed that Jerry Ross paid both himself and his wife excessive officers' salaries and directors' fees with respect to Mt. Carmel from March 1979 through the date the original complaint was filed. Plaintiffs also claimed that Kirby Madden accepted a position as a director of Mt. Carmel and entered into a management contract in order to personally enrich not only himself but also Jerry Ross.

The facts adduced at the first trial need not be set out again in this appeal. It is enough to say that after a bench trial, the trial court found that defendants had drawn excessive salaries and directors' fees, and the court ordered defendants to repay the corporation all salaries and directors' fees paid to them from May 24, 1985, to March 26, 1996, totaling $477,361.66, in addition to prejudgment interest calculated at $190,298.73. The original judgment order was entered on March 26, 1996. A supplemental judgment order was entered by the trial court on August 28, 1996, in which defendants were ordered to pay plaintiffs' attorney fees totaling $149,880, punitive damages in the amount of $335,000, and costs in the amount of $313, for a total judgment of $1,152,853.39. Defendants appealed, and plaintiffs cross-appealed.

In the first appeal, defendants argued, inter alia, that the trial court erred in ordering Jerry Ross to forfeit his entire salary. We agreed, and in an unpublished order pursuant to Supreme Court Rule 23 (166 Ill. 2d R. 23), we reversed that part of the judgment ordering a forfeiture of Jerry Ross's salary paid since May 24, 1985. Kramer v. Mt. Carmel Shelter Care Facility, Inc., No. 5-96-0665 (May 12, 1998). We found that Jerry Ross's salary was reasonable compensation in light of his experience and the work he performed. We also reversed the amount of prejudgment interest awarded, and we remanded for the trial court to recalculate the amount of prejudgment interest owed, taking into account the fact that Jerry Ross's salary was not to be considered in the calculation. The remainder of the trial court's judgment was affirmed.

On remand, defendants argued that postjudgment interest ran from the date of the new judgment on remand, while plaintiffs argued that postjudgment interest ran from the dates of the original judgment, March 26, 1996, and August 28, 1996. The trial court agreed with plaintiffs and ruled that postjudgment interest on the affirmed portions of the judgment was unaffected by our Rule 23 order and that interest continued to accrue from the dates of the original judgment. On January 27, 1999, the trial court entered a supplemental judgment order that recalculated plaintiffs' award of prejudgment interest at $62,161.09. Defendants now appeal.

The issue we are asked to address is whether the trial court erred in allowing plaintiffs to recover postjudgment interest from the dates of the original judgment. Defendants contend that a judgment is indivisible and that when it is necessary to enter a new or a modified judgment on remand, postjudgment interest runs from the date of the judgment on remand. In their brief, defendants also alleged that postjudgment interest should not have accrued during the pendency of the first appeal since plaintiffs cross-appealed and sought to increase the amount of the judgment; however, in their reply brief, defendants acknowledge that plaintiffs' cross-appeal does not bar the accrual of postjudgment interest during the appeal (see Pinkstaff v. Pennsylvania R.R. Co., 31 Ill. 2d 518, 202 N.E.2d 512 (1964)), and they withdraw that argument. However, defendants insist that the rule is that if a judgment is modified or reversed in part on appeal and the cause is remanded for a recalculation of the judgment, postjudgment interest on the amount does not begin to run until the date of the entry of the final judgment on remand. We disagree.

Section 2-1303 of the Code of Civil Procedure (the Code) provides in pertinent part as follows:

"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 ***. When judgment is entered upon any award, report[,] or verdict, interest shall be computed at the above rate, from the time when made or rendered to the time of entering judgment upon the same, and included in the judgment. Interest shall be computed and charged only on the unsatisfied portion of the judgment as it exists from time to time. The judgment debtor may[,] by tender of payment of the judgment, costs[,] and interest accrued to the date of tender, stop the further accrual of interest on such judgment notwithstanding the prosecution of an appeal[] or other steps to reverse, vacate[,] or modify the judgment." 735 ILCS 5/2-1303 (West 1996).

It is well-accepted that filing an appeal does not toll the accrual of statutory interest. Pinkstaff v. Pennsylvania R.R. Co., 31 Ill. 2d 518, 202 N.E.2d 512 (1964). However, the question in the instant case is whether our determination in the first case to reverse that portion of the trial court's judgment which ordered a forfeiture of Jerry Ross's salary and to remand for a recalculation of prejudgment interest prohibits the accrual of statutory interest. Because all judgment amounts upon which postjudgment interest accrued remained definite and certain upon remand, we find that interest continued to accrue.

As litigation becomes more complex and prolonged, delineating the specific date from which to measure the accrual of interest on a judgment that has been partially or totally set aside or modified on appeal becomes more problematic. Each case must be determined on its own unique facts. In order to arrive at a specific date from which to measure the accrual of interest, it is necessary to scrutinize the events leading up to the appeal. See Thatch v. Missouri Pacific R.R. Co., 69 Ill. App. 3d 48, 51-52, 386 N.E.2d 1180, 1181-82 (1979). An award of interest on a money judgment requires that the amount of money owed is certain and that the judgment debtor enjoyed the improper use of the money during the period for which interest is to be awarded. Robinson v. Robinson, 140 Ill. App. 3d 610, 611, 488 N.E.2d 1349, 1351 (1986).

Here, it is important to note that the first appeal culminated in most of the judgment being affirmed. The forfeiture of Dorothy Ross's salary, the forfeiture of directors' fees paid to Dorothy and Jerry Ross since May 24, 1985, the award of attorney fees and costs, and the award of punitive damages were all affirmed. Only that portion of the judgment ordering the forfeiture of Jerry Ross's salary paid since May 24, 1985, was reversed, along with a corresponding recalculation of prejudgment interest. Despite this court's reversal and remand, we believe that the judgment amounts upon which postjudgment interest accrued remained definite and certain. Defendants' argument that they did not know the specific amount to tender to stop the accrual of postjudgment interest until after the supplemental judgment order upon remand is unconvincing. Defendants could have tendered full payment of the judgment, interests, and costs to stop the further accrual of interest following this court's prior decision. The calculations were relatively easy to make. The judgment was merely reduced by the amount of Jerry Ross's salary, which we found to be reasonable, and a corresponding amount of prejudgment interest.

Policy considerations underlying the accrual of postjudgment interest support our conclusion. The rationale behind section 2-1303 of the Code is to make the judgment creditor whole by requiring the judgment debtor to give up the use of the money, thereby allowing the judgment creditor to use the funds to earn interest if he chooses to do so while the matter is pending. Halloran v. Dickerson, 287 Ill. App. 3d 857, 865, 679 N.E.2d 774, 780 (1997). It is simply not fair to allow the judgment debtor to continue to use the money that is rightfully the plaintiffs'. In the instant case, defendants had wrongfully taken nearly $500,000 in salaries and fees and had the use and the benefit of the misappropriated funds for nearly 10 years. Jerry Ross's conduct was found to be malicious and vindictive. The extent of defendants' liability was settled, and our remand was nothing more than a simple recalculation. Under these circumstances, we find that the trial court did not err in allowing plaintiffs to recover postjudgment interest from the dates of the original judgment.

Defendants cite several cases in support of their proposition that interest failed to accrue until after the judgment on remand, including, inter alia, Rosenbaum v. Rosenbaum, 94 Ill. App. 3d 352, 418 N.E.2d 939 (1981), Presbyterian Distribution Service v. Chicago National Bank, 36 Ill. App. 2d 1, 183 N.E.2d 525 (1962), and Thatch v. Missouri Pacific R.R. Co., ...


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