Shields v. State Employees Retirement Sys.

• Citation: 844 N.E.2d 438
• Decision Date: 16 February 2006
• Docket Number: No. 1-04-1250.,1-04-1250.
• Parties: David J. SHIELDS, Plaintiff-Appellee, v. The STATE EMPLOYEES RETIREMENT SYSTEM OF ILLINOIS, Mark Gallagher, Chairman, The Judges Retirement System of Illinois, Rudy J. Kink, Jr., Manager, Justice Michael Bilandic, Trustee, Justice Thomas Hoffman, Trustee, Justice S. Louis Rathje, Trustee, Judge Donald O'Connell, Trustee, Marvin O. Noven, Trustee, The Board of Trustees of the Judges Retirement System, and James E. Ryan, Attorney General of Illinois, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

Page 438

844 N.E.2d 438

David J. SHIELDS, Plaintiff-Appellee, v. The STATE EMPLOYEES RETIREMENT SYSTEM OF ILLINOIS, Mark Gallagher, Chairman, The Judges Retirement System of Illinois, Rudy J. Kink, Jr., Manager, Justice Michael Bilandic, Trustee, Justice Thomas Hoffman, Trustee, Justice S. Louis Rathje, Trustee, Judge Donald O'Connell, Trustee, Marvin O. Noven, Trustee, The Board of Trustees of the Judges Retirement System, and James E. Ryan, Attorney General of Illinois, Defendants-Appellants.

No. 1-04-1250.

Appellate Court of Illinois, First District, Fourth Division.

February 16, 2006.

Lisa Madigan, Attorney General, Gary Feinerman, Solicitor General (Jan E Hughes, Assistant Attorney General, of counsel), for Appellant.

Collins & Bargione, Chicago (George B. Collins, Adrian Vuchovich and James J. Lessmeister, of counsel), for Appellee.

Justice CAMPBELL delivered the opinion of the court:

Defendants, the State Employees Retirement System of Illinois, its chairman, the Judges Retirement System of Illinois (the System), its manager, and its board of trustees (the Board), appeal from an order of the circuit court of Cook County determining that interest must be paid to plaintiff, David J. Shields, on a pension contribution refund determined by the Illinois Supreme Court to have been improperly withheld. On appeal, the Board contends that the circuit court is barred from ordering a state agency to pay postjudgment interest. For the following reasons, we reverse the order of the circuit court.

BACKGROUND

In November 1990, plaintiff, former circuit court judge David J. Shields, then presiding judge of the chancery division of the circuit court of Cook County, applied for retirement benefits from the Judges Retirement System of Illinois, indicating that his service as a judge would terminate on December 3, 1990. At the time of his notice of retirement, Shields had contributed a total of $113,222.04, out of his own funds into the System. Shields began receiving retirement benefits approximating $5,100 per month effective December 13, 1990.

On December 19, 1990, Shields was indicted on seven counts of conspiracy, including charges of extortion, attempted extortion, and knowingly making false statements of material fact to the Federal Bureau of Investigation during the period August 1988 through November 1989. Shields was convicted on all counts of the indictment, and on March 2, 1992, he was sentenced to 37 months in prison plus 3 years of supervised release and was fined $6,000. Shields' conviction was upheld on appeal. United States v. Shields, 999 F.2d 1090 (7th Cir.1993). The district court denied Shields' motion for a new trial and that determination was also upheld on appeal. United States v. Shields, No. 94 1388, 1994 WL 287394 (7th Cir. June 28, 1994).

Following Shields' conviction, Rudy Kink, manager of the System, informed Shields that his benefits would be terminated effective March 2, 1992. Shields sought a refund of all of the contributions he made into the System over the years, totaling $113,222.04. The Board held that Shields was entitled to a refund of $37,873.27, representing his contributions less $75,348.77, benefits paid to him prior to the termination of his benefits. On administrative review, the circuit court, Judge Lester Foreman presiding, reversed the decision of the Board and ordered the System to refund the remainder of Shields' contributions in the amount of $75,348.77, specifically holding:

"`Though it has not been brought to my attention as of this time, I find that he is not entitled to any interest, and the reason he is not entitled to interest is because I think that the way the statute should be interpreted without his ever having made a demand for the interest, I think it would be inappropriate for him to receive it under these circumstances.'" Shields v. Judges' Retirement System of Illinois, 329 Ill.App.3d 27, 31, 263 Ill.Dec. 266, 768 N.E.2d 26 (2001) (Shields I).

The System and the Board appealed, and this court reversed the order of the circuit court. Shields I, 329 Ill.App.3d 27, 263 Ill.Dec. 266, 768 N.E.2d 26.

On Shields' appeal, the Illinois Supreme Court reversed the appellate court, finding that Shields was entitled to a full refund of his contributions. Shields v. Judges' Retirement System of Illinois, 204 Ill.2d 488, 274 Ill.Dec. 424, 791 N.E.2d 516 (2003) (Shields II). The supreme court did not address the issue of interest, but noted that the Board did not originally award interest "since section 18-129©) [of the Pension Code (40 ILCS 5/18-129©) (West 1992)] specifically provides that refunds should be computed `without interest.'" Shields II, 204 Ill.2d at 491, 274 Ill.Dec. 424, 791 N.E.2d 516.

On August 27, 2003, the Board issued Shields a check in the amount of $60,813, representing the amount ordered to be refunded, less federal withholding tax, in compliance with the decision of our supreme court.

On August 11, 2003, Shields filed a petition to reinstate his case in the circuit court and enforce his original judgment, seeking interest on $75,348.77, the amount that the circuit court ordered the System to refund to him on November 17, 2000, at the rate or 9% per annum. The Board filed a motion to dismiss the petition pursuant to section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2002)). The trial court specifically found that the Judges Retirement System of Illinois is a government entity under the definition of 2-1303 of the Code of Civil Procedure (735 ILCS 5/2-1303 (West 2002)) and determined that Shields was entitled to interest at the rate of 6% per annum from the time of the judgment entered by Judge Foreman on November 17, 2000, until the date that interest is paid. The trial court subsequently denied the System's motion to reconsider. The defendants' timely appeal followed.

OPINION

The matter before this court is whether Shields is entitled to 6% interest on the judgment awarded to him on November 17, 2000. On appeal from an order entered pursuant to section 2-619 of the Code of Civil Procedure, our review is de novo. Van Meter v. Darien Park District, 207 Ill.2d 359, 368, 278 Ill.Dec. 555, 799 N.E.2d 273, 278 (2003).

Whether Shields is allowed to collect 6% interest on the judgment regarding his contribution toward his pension initially depends on whether the System is a governmental entity under section 2-1303 of the Code of Civil Procedure. Section 2-1303 of the Code of Civil Procedure provides in pertinent part:

"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 or 6% per annum when the judgment debtor is a unit of local government, as defined in Section 1 of Article VII of the Constitution, a school district, a community college district, or any other governmental entity." (Emphasis added). 735 ILCS 5/2-1303 (West 2002).

Defendants contend that the trial court erred in determining that the System is a governmental entity for the purposes of section 2-1303. Defendants argue that the System is, in fact, a creature of the State, and that the State of Illinois is immune from a suit for postjudgment interest filed under section 2-1303 under the doctrine of sovereign immunity. In a footnote, defendants note that the proper forum for claims against the State is the Court of Claims (see 705 ILCS 505/1 (West 2002)), and that if the legislature intends to waive the State's immunity, it must do so by specific authorization: general legislative enactments do not impair the rights of the sovereign unless an intent to make the State liable is expressed in the statute. City of Springfield v. Allphin, 82 Ill.2d 571, 576, 45 Ill.Dec. 916, 413 N.E.2d 394 (1980); Department of Revenue v. Appellate Court, 67 Ill.2d 392, 396, 10 Ill.Dec. 536, 367 N.E.2d 1302 (1977).

Defendants argue that the language "any other governmental entity" in section 2-1303 has been held to apply only to units of local government, not to arms of the State. The Judges Retirement System is created in section 18-101 of the Illinois Pension Code as follows:

"A retirement system is created to be known as the `Judges Retirement System of Illinois'. It shall be a trust separate and distinct from all other entities, maintained for the purpose of securing the payment of annuities and benefits as prescribed herein." 40 ILCS 5/18-101 (West 2002).

Defendants assert that the above enabling statute does not support the classification of the System as a governmental entity under section 2-1303. In support, defendants cite Williams v. Illinois State Scholarship Comm'n, 139 Ill.2d 24, 150 Ill.Dec. 578, 563 N.E.2d 465 (1990), and In re Special Education of Walker, 131 Ill.2d 300, 137 Ill.Dec. 575, 546 N.E.2d 520 (1989). In Walker, a petitioner sought interest on an unpaid judgment entered by the Illinois State Board of Education (ISBE). Our supreme court held the ISBE did not qualify as a governmental entity, explaining that the "language in section 2-1303 is not a sufficiently clear expression by the legislature to constitute a waiver of the State's immunity," (Walker, 131 Ill.2d at 304, 137 Ill.Dec. 575, 546 N.E.2d 520), and declined to award interest. In Williams, our supreme court reversed an award of interest against the Illinois State Scholarship Commission. Relying on Walker, the court stated: "the State cannot be held accountable for interest in situations where a judgment is entered against government entities that do not qualify as a unit of local government under section 2-1303." Williams, 139 Ill.2d at 73-74, 150 Ill.Dec. 578, 563 N.E.2d 465.

Shields' response to defendants' argument that the System is not a governmental entity pursuant to section 2-1303 is multifaceted. Shields initially argues that article XIII, section 5, of the Illinois Constitution protects pensions. Ill. Const. 1970, art. XIII, § 5 ("Membership in any pension or retirement system of...