Bd. of Trs. of Harvey Firefighters’ Pension Fund v. City of Harvey

• Decision Date: 04 August 2017
• Docket Number: No. 1-15-3074,1-15-3074
• Citation: 2017 IL App (1st) 153074,96 N.E.3d 1
• Parties: BOARD OF TRUSTEES OF The CITY OF HARVEY FIREFIGHTERS' PENSION FUND, Plaintiff–Appellee/Cross–Appellant, v. The CITY OF HARVEY, Defendant–Appellant/Cross–Appellee.
• Court: United States Appellate Court of Illinois

2017 IL App (1st) 153074
96 N.E.3d 1

BOARD OF TRUSTEES OF The CITY OF HARVEY FIREFIGHTERS' PENSION FUND, Plaintiff–Appellee/Cross–Appellant,
v.
The CITY OF HARVEY, Defendant–Appellant/Cross–Appellee.

No. 1-15-3074

Appellate Court of Illinois, First District, Fifth Division.

August 4, 2017
Rehearing denied January 1, 2018

Mark D. Roth, of Roth Fioretti, LLC, of Chicago, for appellant.

Jeffrey A. Goodloe, of Puchalski Goodloe Marzullo, LLP, of Northbrook, for appellee.

OPINION

PRESIDING JUSTICE GORDON delivered the judgment of the court, with opinion.

96 N.E.3d 5

¶ 1 Defendant City of Harvey (Harvey) is a municipality with a population of approximately 25,000 residents, located south of the city of Chicago. Plaintiff, the Board of Trustees of the City of Harvey Firefighters' Pension Fund (Pension Board), is an administrative body created pursuant to section 4–121 of the Illinois Pension Code (Code) ( 40 ILCS 5/4–121 (West 2014) ) to oversee and manage the City of Harvey Firefighters' Pension Fund (Pension Fund). 40 ILCS 5/4–120 to 4–129 (West 2014). The Pension Board filed suit, alleging that Harvey has underfunded the Pension Fund and breached a 1996 settlement agreement in which Harvey agreed to make certain contributions to the Pension Fund. The Pension Board sought a declaratory judgment, a writ of mandamus , injunctive relief, and an order compelling enforcement of the 1966 settlement agreement. After both parties filed motions for summary judgment, the trial court granted the Pension Board's motion for a declaratory judgment, injunctive relief, and enforcement of the 1996 settlement agreement and denied summary judgment for a writ of mandamus . The trial court found that Harvey violated the pension statute but was not on the verge of default or imminent bankruptcy. The trial court denied Harvey's motion for summary judgment. Pursuant to this ruling, the trial court assessed damages against Harvey for $15,071,089.15. The injunction that was issued required Harvey to approve a line-item property tax levy specifically for the Pension Fund, which would be sufficient to meet the annual actuarial requirements set forth in the Code. Harvey filed a notice of appeal, and the Pension Board filed a notice of cross-appeal.

¶ 2 The parties argue on appeal about (1) whether the trial court correctly determined that Harvey breached the 1996 settlement agreement; (2) whether the trial court correctly calculated the damages; (3) whether the trial court correctly rejected Harvey's affirmative defenses of separation of powers and laches ; (4) whether the trial court erred in making a finding of violations of the Code and requiring certain monies to be paid into the Pension Fund, without first finding that Harvey was on the verge of default or imminent bankruptcy; and (5) whether the trial court erred in finding that Harvey is not on the verge of default or imminent bankruptcy.

¶ 3 BACKGROUND

¶ 4 I. THE 1993 COMPLAINT AND 1996 SETTLEMENT AGREEMENT

¶ 5 On February 17, 1993, the Pension Board filed a complaint for mandamus , declaratory judgment and accounting, alleging that Harvey had failed to adequately fund the Pension Fund between 1988 and 1994 and claiming that not all of the taxes levied and collected were deposited into the Pension Fund as required by the Code. 40 ILCS 5/4–120 to 4–129 (West 2014).

¶ 6 On August 22, 1996, the parties entered into a settlement agreement that required Harvey to "repay the amount due and owing to the [Pension Fund] *** which is approximately $912,652.00 over a five (5) year period including [Harvey's] annual tax levy an amount in addition to the amount of levy requirements minus the allocation of personal property replacement taxes, recommended by the Illinois Department of Insurance."

¶ 7 Further, Harvey agreed that, "in the future," it would "ensure property taxes levied or personal property replacement

96 N.E.3d 6

taxes received on behalf of the [Pension Fund], which are assessed, collected and remitted to the City of Harvey by the Cook County Treasurer's Office, shall be paid to the [Pension Fund] within 30 days of receipt by [Harvey] and not used by [Harvey] for other corporate purposes." In addition, the parties agreed that the trial court retained jurisdiction over the matter to enforce the settlement agreement, providing: "The Court hereby expressly retains jurisdiction of this matter for the purposes of enforcing all of the terms and provisions of this Agreed Settlement Order."

¶ 8 II. 2010 COMPLAINT

¶ 9 On December 17, 2010, 15 years after the execution of the settlement agreement, the Pension Board filed a complaint stemming from Harvey's alleged violations of section 4–118 of the Code ( 40 ILCS 5/4–118 (West 2010) ), commencing in the fiscal year 2005 and continuing through fiscal year 2010. All of the evidence in this case concerned facts that ended with the fiscal year 2014.

¶ 10 The Pension Board filed an amended complaint on September 29, 2011, which added individual defendants Eric Kellogg, the mayor of Harvey; Maggie Britton, the Harvey comptroller in 2010; and Charles Givines, Joseph Whittington, Daryle Crudup, Michael Bowens, Donald Nesbit, and Keith Price, members of Harvey's city council.

¶ 11 On November 18, 2011, Harvey moved to strike the individual defendants from the Pension Board's first amended complaint. Following the filing of this motion, the Pension Board filed a second amended complaint on June 25, 2012, which asserted a count for breach of fiduciary duty against the individual defendants. On July 25, 2012, Harvey filed a combined section 2–615 and 2–619 motion to dismiss the second amended complaint with prejudice or, alternatively, a section 2–615 motion to strike the individual defendants from the second amended complaint. 735 ILCS 5/2–615(a), 2–619(a)(9) (West 2010).

¶ 12 On October 24, 2012, while Harvey's motions were pending, the Pension Board filed an emergency motion to compel Harvey to levy a tax in order to fund in "an amount at least equal to the amount determined by an actuary for 2011 in the amount of $1,558,762.00." On October 26, 2012, Harvey filed a motion to strike the Pension Board's emergency motion, arguing that the emergency motion sought the same remedy that the Pension Board seeks in its second amended complaint. On October 29, 2012, the trial court denied the Pension Board's emergency motion.

¶ 13 On November 5, 2012, the Pension Board filed its third amended complaint, adding claims for mandamus and injunctive relief.

¶ 14 III. PLAINTIFF'S FOURTH AMENDED COMPLAINT

¶ 15 On December 14, 2012, the Pension Board filed its fourth amended complaint, which is the subject complaint in this appeal. Its four counts seek (1) a declaratory judgment that Harvey must annually levy a tax to contribute to the Pension Fund and pay money damages, (2) a writ of mandamus compelling Harvey to levy an annual tax for the Pension Fund or otherwise annually contribute to the Pension Fund an amount that fulfills the annual actuarial requirement, (3) injunctive relief ordering Harvey to levy an annual tax for the Pension Fund or otherwise annually contribute to the Pension Fund an amount that meets the annual actuarial requirement and to pay money damages, and (4) an order that finds that Harvey breached the 1996 settlement agreement and an order

96 N.E.3d 7

compelling enforcement of that agreement.

¶ 16 On January 15, 2013, Harvey filed a combined section 2–615 and 2–619 motion to dismiss the Pension Board's fourth amended complaint. 735 ILCS 5/2–615(a), 2–619(a)(9), 2–619.1 (West 2012). Harvey's motion addressed each count of the Pension Boards' fourth amended complaint as follows.

¶ 17 First, Harvey argues that an action for declaratory judgment is inappropriate because declaratory judgment is a vehicle used to address a "controversy one step sooner than normal after a dispute has arisen, but before steps are taken which would give rise to a claim for damages or other relief." Harvey also argues that declaratory judgment would be inadequate because it cannot alter actions that the parties have already taken. Second, Harvey argues that a writ of mandamus cannot force a legislative body to perform a discretionary act; therefore, a writ is unable to "compel [Harvey] to make municipal pension fund contributions that meet the annual actuarial requirement[.]" Third, Harvey argues that the Pension Fund had not sustained any damages that could not be adequately remedied with money damages; therefore, injunctive relief is an inapplicable remedy. Finally, Harvey argues that the trial court has no jurisdiction to enforce the 1996 settlement agreement because the agreement explicitly agreed that the original court in the 1993 action retained jurisdiction to enforce the agreement. That original court in 1993 was Calendar 12 of the Chancery Division in the circuit court of Cook County.¹

¶ 18 In addition to its section 2–615 arguments, Harvey also moved to dismiss pursuant to section 2–619(a)(9), claiming that the suit was barred by governmental immunity. 735 ILCS 5/2–615(a), 2–619(a)(9) (West 2010). Harvey argues that the Pension Board's claims must fail because "(a) [Harvey] is not liable for its council members' negligence...