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The Department of Transportation of The State of Illinois v. Greatbanc Trust Co.

Court of Appeals of Illinois, First District, Second Division

November 12, 2019

THE DEPARTMENT OF TRANSPORTATION OF THE STATE OF ILLINOIS, for and on behalf of the People of the State of Illinois, Plaintiff-Appellant,
v.
GREATBANC TRUST COMPANY (formerly known as First National Bank in Chicago Heights), as trustee under Trust Agreement dated October 8, 1973, and known as Trust Number 996; THE BENEFICIARY OR BENEFICIARIES of a Trust Agreement dated October 8, 1973 and known as trust number 996, with GreatBanc Trust Company (formerly known as First National Bank in Chicago Heights) as trustee, whose names are unknown and are designated Unknown Owners; GREATBANC TRUST COMPANY (formerly known as First National Bank in Chicago Heights), as trustee under a Trust Agreement dated December 4, 1970, and known as trust number 1447; THE BENEFICIARY OR BENEFICIARIES of a trust agreement, dated December 4, 1970, and known as trust number 1447, with GreatBanc Trust Company (formerly known as First National Bank in Chicago Heights) as trustee, whose names are unknown and are designated Unknown Owners; PETER KATTOS; MARQUETTE BANK a/k/a MARQUETTE; and UNKNOWN OWNERS, Defendants, (Neal & Leroy, LLC, Appellees. THE DEPARTMENT OF TRANSPORTATION OF THE STATE OF ILLINOIS, for and on behalf of the People of the State of Illinois, Plaintiff-Cross-Appellant,
v.
GREATBANC TRUST COMPANY (formerly known as First National Bank in Chicago Heights), as trustee under Trust Agreement dated October 8, 1973, and known as Trust Number 996; THE BENEFICIARY OR BENEFICIARIES of a Trust Agreement dated October 8, 1973 and known as trust number 996, with GreatBanc Trust Company (formerly known as First National Bank in Chicago Heights) as trustee, whose names are unknown and are designated Unknown Owners; GREATBANC TRUST COMPANY (formerly known as First National Bank in Chicago Heights), as trustee under a Trust Agreement dated December 4, 1970, and known as trust number 1447; THE BENEFICIARY OR BENEFICIARIES of a trust agreement, dated December 4, 1970, and known as trust number 1447, with GreatBanc Trust Company (formerly known as First National Bank in Chicago Heights) as trustee, whose names are unknown and are designated Unknown Owners; PETER KATTOS; MARQUETTE BANK a/k/a MARQUETTE; and UNKNOWN OWNERS, Defendants, Peter Kattos, Defendant-Appellant and Cross-appellee.

          Appeal from the Circuit Court of Cook County No. 06 L 050813 The Honorable Alexander P. White and Thomas More Donnelly, Judges Presiding.

          Attorneys for Appellant: Kwame Raoul, Attorney General, of Chicago (Jane Elinor Notz, Solicitor General, and Amanda Ripp, Special Assistant Attorney General, of Walker Wilcox Matousek, LLP, of counsel), for appellant Department of Transportation.

          Attorneys for Appellees: Carl A. Gigante and Rebecca Kaiser Fournier, of Figliulo & Silverman, PC, of Chicago, for appellee Peter Kattos. Langdon D. Neal and Nicole Castillo, of Neal & Leroy, LLC, of Chicago, for appellee Neal & Leroy, LLC.

          JUSTICE PUCINSKI delivered the judgment of the court, with opinion. Presiding Justice Fitzgerald Smith and Justice Coghlan concurred in the judgment and opinion.

          OPINION

          PUCINSKI, JUSTICE

         ¶ 1 In the consolidated appeals from this eminent domain matter, the parties' disputes center around a series of orders entered by the trial court on the withdrawal and subsequent refund of preliminary compensation funds deposited by plaintiff, the Illinois Department of Transportation (IDOT), pursuant to section 20-5-15 of the Eminent Domain Act (Act) (735 ILCS 30/20-5-15 (West 2006)). In appeal No. 1-17-1393, IDOT argues that the trial court erred in (1) permitting Neal & Leroy, LLC (N&L), defendant Peter Kattos's former counsel, to withdraw preliminary compensation funds; (2) not requiring N&L to participate in the refund of excess preliminary compensation funds; and (3) not permitting IDOT to conduct discovery or file a written response to N&L's petition to vacate. In appeal No. 1-18-2310, Kattos argues that the trial court erred in awarding IDOT prejudgment interest on the preliminary compensation refund prior to a determination of the precise amounts owed by each of the refunding parties. In its cross-appeal in No. 1-18-2310, IDOT argues that the trial court incorrectly held that a pending appeal deprived it of jurisdiction to determine who was responsible for refunding the portion of preliminary compensation funds received by N&L. For the reasons that follow, we affirm in appeal No. 1-17-1393 and dismiss appeal No. 1-18-2310, including IDOT's cross-appeal.

         ¶ 2 I. BACKGROUND

         ¶ 3 In August 2006, IDOT filed a complaint to condemn a portion of real property located at the intersection of U.S. Route 6 and U.S. Route 45 in Orland Park, in which the named defendants had either an ownership or beneficial interest (subject property), for use in a road improvement project. The record is not clear on the precise relationship of the named defendants to the subject property. Although not specifically stated anywhere, it appears, based on information gathered in the record and from statements in the parties' appellate briefs, that the two trusts for which Greatbanc Trust Company (Greatbanc) is the trustee were the record owners of the two parcels that comprised the subject property. The beneficiary of those trusts were Ashton Drive, LLC (Ashton), and Petey's Two Real Estate, LLC (Petey's), both owned by Kattos but neither named as defendants.

         ¶ 4 In September 2006, pursuant to quick-take proceedings[1] instituted by IDOT, the trial court set the preliminary just compensation for the subject property at $3, 202, 000, which IDOT deposited with the Cook County Treasurer the following month. Thereafter, in January 2007, Kattos, Greatbanc, Ashton, and Petey's filed a verified petition to withdraw the preliminary compensation (petition to withdraw). In their petition to withdraw, Kattos, Greatbanc, Ashton, and Petey's sought to withdraw the full amount of the deposited preliminary compensation. In support, they represented that they and defendant Marquette Bank (Marquette), who held a mortgage on a portion of the subject property, were the only parties who had any interest in the subject property and that, should the trial court later determine that a refund of any portion of the withdrawn preliminary compensation is necessary, they would be responsible for refunding any amount exceeding the determination of just compensation. They asked that the trial court enter an order directing the disbursement of the preliminary compensation funds according to a letter of direction, which would include disbursement to Marquette to pay off the mortgage, payment to N&L for attorney's fees and costs, and payments to Ashton and Petey's.

         ¶ 5 In response, IDOT did not object to the actual withdrawal of the preliminary compensation funds, but instead objected to the withdrawal of the preliminary compensation funds in the absence of an order specifying the identities of all of the fund recipients and the precise amounts they were to receive. IDOT also argued that the withdrawal order needed to specify that the withdrawal of the funds was conditioned on the refund of any excess funds following the determination of just compensation and that some preliminary compensation funds should be held back to ensure the demolition of a building on the subject property. In addition, IDOT questioned in a footnote of its written response whether N&L was an "interested party" under the Act. IDOT argued that if N&L was an "interested party," then it was also subject to the refund provisions of the Act. IDOT did not, however, argue that N&L was precluded from receiving any of the funds because it was not an "interested party."

         ¶ 6 Following a hearing on the matter, the trial court granted the petition to withdraw the funds. Without specifying precise amounts, the trial court directed that the county treasurer disburse the preliminary compensation funds to a number of entities, including Marquette to pay off the outstanding mortgage on the subject property and N&L for attorney's fees and costs, pursuant to a letter of direction to follow. The order also stated that any withdrawing party would be required to refund any amount that exceeded the final just compensation determination.

         ¶ 7 On April 27, 2017, the trial court entered a final judgment order, setting the final just, compensation for the subject property at $1, 520, 000. In that order, the trial court also directed that within 30 days, Marquette, N&L, Ashton, and Petey's refund their pro rata share of $1, 582, 000, the amount the withdrawn preliminary compensation funds exceeded the final just compensation.[2]

         ¶ 8 Shortly thereafter, N&L, which no longer represented Kattos, Ashton, or Petey's, filed a petition for leave to file a limited appearance for the purpose of contesting the trial court's jurisdiction over N&L. The trial court granted N&L leave to file its limited appearance, after which N&L filed a petition to vacate the final judgment order as void with respect to N&L (petition to vacate). In the petition to vacate, N&L argued that the final judgment order was void as to N&L because the trial court lacked jurisdiction over N&L, since N&L was not a party to the case and did not receive proper notice of the entry of the judgment. N&L also argued that no motion had been filed asking for judgment against N&L and that the trial court entered the final judgment order prior to the date originally set for its entry.

         ¶ 9 On May 17, 2017, the trial court held a hearing on the petition to vacate. During that hearing, counsel for Kattos indicated that he intended to file a notice of appeal from the April 27, 2017, final judgment order. N&L expressed concern that the filing of Kattos's notice of appeal would divest the trial court of jurisdiction to review the issue of whether the final judgment order was void as to N&L and suggested that granting the petition to vacate would preserve Kattos's right to appeal without causing prejudice to any of the parties. IDOT objected to the notion that it was necessary to vacate the final judgment order as to N&L in order to allow Kattos to proceed with his appeal. IDOT also requested the opportunity to respond to N&L's petition to vacate before the trial court ruled on it.

         ¶ 10 Concerned that Kattos's right to appeal might be jeopardized, the trial court agreed to vacate the final judgment order as to N&L so as to allow Kattos's appeal to proceed. The trial court reasoned that this would preserve Kattos's right to appeal, would not jeopardize N&L's or IDOT's position on the issue of whether N&L should participate in the refund of excess preliminary compensation funds, and would allow the appellate court to provide guidance on how the trial court should proceed. Later in the hearing, the trial court stated that it was also granting the petition to vacate on the basis that N&L was not a party to the action. The trial court denied IDOT's request to file a response, stating that it found N&L to not be a party to the case, and thus, a written response from IDOT was unnecessary. The written order granting N&L's petition to vacate was entered on May 17, 2017, and stated that N&L's petition to vacate was granted over IDOT's objection on the basis that N&L was not a party to the proceedings. Accordingly, the final judgment order was vacated as to N&L.

         ¶ 11 Thereafter, IDOT instituted appeal No. 1-17-1393. IDOT's notice of appeal indicated that IDOT was appealing from the final judgment order of April 27, 2017, and the order of May 17, 2017, granting N&L's petition to vacate the final judgment order as to N&L and denying IDOT leave to file a response to the petition to vacate.

         ¶ 12 In June 2017, IDOT filed a motion for entry of judgment against Marquette and against Ashton and Petey's as beneficiaries of the Greatbanc trusts. IDOT alleged that Marquette, Ashton, and Petey's had failed to refund their pro rata share of the excess preliminary compensation funds, and thus, IDOT, pursuant to section 20-5-35 of the Act (735 ILCS 30/20-5-35 (West 2016)), was entitled to a judgment against them in the amounts of their respective pro rata shares of the excess preliminary compensation funds, plus interest. In its response, Marquette argued that it should not be subject to participating in the refund of the excess preliminary compensation because Kattos, Ashton, Petey's, and Greatbanc sought the withdrawal of the preliminary compensation funds, not Marquette, and because Marquette was only paid preliminary compensation funds at the direction of Kattos, Ashton, Petey's, and Greatbanc.

         ¶ 13 In October 2017, following a hearing on the matter, the trial court entered an order granting IDOT's motion for judgment. Because Marquette was listed on the withdrawal order and received preliminary compensation funds, the trial court concluded that it was subject to participating in the refund of the excess preliminary compensation funds. Accordingly, the trial court held that IDOT was entitled to judgment against Marquette, Ashton, and Petey's in amounts proportionate to the amounts they each received in preliminary compensation funds. The trial court continued the matter for an evidentiary hearing to determine the precise amounts of the judgments to be entered.

         ¶ 14 Prior to the evidentiary hearing, the parties submitted briefs regarding the appropriate amount of the judgments and the application of interest. Kattos argued that the trial court was divested of jurisdiction to make a determination of responsibility for refunding the preliminary compensation funds received by N&L because of IDOT's pending appeal from the final judgment order and the order granting N&L's petition to vacate. Kattos also argued that interest on the refund amounts had not yet started to accrue and that Ashton and Petey's could not jointly and severally be liable for the refund amounts. Finally, Kattos argued that Marquette was entitled to the funds it received and that Ashton and Petey's should be responsible for the refund portion attributable to the funds received by Marquette.

         ¶ 15 Marquette argued that it should not be required to refund any of the preliminary compensation funds it received, because it had a lien on the subject property that took priority over the owners' interest in the subject property and it did not receive any funds in excess of what it was owed on the mortgage. According to Marquette, if it was required to refund its portion of the preliminary compensation funds, it would be left in the position of being owed money on the subject property without having a mortgage to secure the lien. Marquette also noted that Ashton and Petey's agreed, at the time of withdrawal, to be responsible for any refund of excess funds. We note that Kattos also agreed to be responsible for any refund of excess funds, along with Greatbanc, which was the trustee at the time.

         ¶ 16 On September 26, 2018, the trial court entered two orders. In the first order, the trial court found that the amount of just compensation due to Marquette was $319, 054.26. Because the amount of preliminary compensation funds that Marquette received did not exceed $319, 054.26, the trial court concluded that Marquette did not have to participate in the refund of excess funds to IDOT. In the second order entered that day, the trial court held that interest began accruing on the excess preliminary compensation funds upon the entry of the final judgment order on April 27, 2017, and that Ashton and ...


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