4220 Kildare, LLC v. Regent Ins. Co.

2022 IL App (1st) 210803

216 N.E.3d 1134

466 Ill.Dec. 301

4220 KILDARE, LLC, Plaintiff-Appellant,

v.REGENT INSURANCE COMPANY, Defendant-Appellee.

No. 1-21-0803

Appellate Court of Illinois, First District, THIRD DIVISION.

Filed August 31, 2022

Ronald A. Stearney Jr., of Law Offices of Ronald A. Stearney, LLC, of Chicago, for appellant.

Robert Ostojic, of Leahy, Eisenberg & Fraenkel, Ltd., of Chicago, for appellee.

JUSTICE McBRIDE delivered the judgment of the court, with opinion.

¶ 1 Plaintiff, 4220 Kildare, LLC (Kildare), was the owner of a refrigerated warehouse building in Chicago. Kildare made a claim on the all risk insurance policy provided by Kildare's insurer, defendant, Regent Insurance Company (Regent), after sustaining damage to the concrete floor of the building. Regent denied the claim, asserting that the damage was excluded under the policy's "earth movement" exclusion. The case proceeded to a jury trial, at which evidence was presented showing that a door to one of the freezer rooms was left open over a long weekend and, as a result, several inches of frost and ice covered the ceiling and refrigeration coils. Kildare hired a refrigeration contractor to remove the ice, and during the removal process, dripping water penetrated cracks in the floor, saturated the insulation underneath, and subsequently caused heaving of the concrete floor. There was also evidence presented at trial that, even if the floor had not heaved, it was necessary for the damaged and saturated insulation to be replaced, which could not be accomplished without demolishing the floor.

¶ 2 The jury found that the earth movement exclusion did not apply and returned a verdict in favor of Kildare for $544,366. The trial court entered judgment on the jury verdict the same day—June 7, 2018—but subsequently granted Regent's motions for judgment notwithstanding the verdict and for a directed verdict and vacated the jury verdict, concluding that the exclusion barred coverage. In a prior appeal, this court reversed the trial court's judgment, concluding that the evidence presented, when considered in the light most favorable to Kildare, supported a conclusion that damage to the insulation was a separate and covered loss prior to the later floor heaving. 4220 Kildare, LLC v. Regent Insurance Co. , 2020 IL App (1st) 181840, ¶ 39, 446 Ill.Dec. 852, 171 N.E.3d 957. Because the damage to Kildare's floor was vested and compensable prior to any later loss that could have been excluded, we remanded the matter with directions to reinstate the jury verdict and to consider Kildare's motion for prejudgment interest, which the parties agreed was denied by the circuit court in light of its decision to grant a directed verdict in favor of Regent. Id. ¶¶ 48 -51.

¶ 3 This appeal concerns the subsequent proceedings on remand. Specifically, the record shows that following the prior appeal, Kildare filed a "Renewed Amended Motion for Pre-Judgment Interest and Post-Judgment Interest." Kildare explained that the Interest Act permits an award of prejudgment interest at the rate of 5% per year "for all moneys after they become due on *** [an] instrument of writing" ( 815 ILCS 205/2 (West 2018) ), which it maintained included an insurance policy. Kildare asserted that prejudgment interest should run from Regent's denial of coverage on August 14, 2009, until the June 7, 2018, jury verdict and contended that "the total balance due with pre-judgment interest as of the date of the judgment would be $837,907.80." Kildare additionally argued that, pursuant to section 2-1303 of the Code of Civil Procedure ( 735 ILCS 5/2-1303 (West 2020) ), it was entitled to 9% postjudgment interest from the date of the jury verdict, and that "[t]he base rate with prejudgment interest is $837,907.80 which at 9% would accrue to $1,088,135.56 as of June 8, 2018."

¶ 4 On June 3, 2021, Regent filed a "Brief in Opposition" to Kildare's request for prejudgment and postjudgment interest. Regarding prejudgment interest, Regent argued that Kildare "waived any argument for pre-judgment interest" because Kildare did not give the trial court the "opportunity to rule on [its] request for pre-judgment interest" prior to the earlier appeal. Regent also alleged that prejudgment interest was not appropriate "because the sum due is not liquidated." Regent argued that "even [Kildare] was not certain of the amount" of damages, noting that Kildare claimed different amounts in its two "Proof of Loss" statements and, then later, at trial. Regent also pointed to the "disparity in the amounts sought by [Kildare] and the amount actually granted to [Kildare] by the jury," which showed that the " ‘sum due’ was not certain and, thus, pre-judgment interest [wa]s inappropriate." Finally, Regent argued that the terms of the parties’ contract—the insurance policy—stated that Regent's obligation to pay accrued only after an agreement by the parties or an award.

¶ 5 As to postjudgment interest, Regent asserted that the trial court vacated the jury verdict and entered judgment in favor of Regent. Although that judgment was reversed on appeal, Regent asserted that postjudgment interest could not begin to accrue until the judgment was entered in favor of Kildare following the appeal, which had not yet occurred. Accordingly, Regent argued that postjudgment interest was "inappropriate."

¶ 6 The parties appeared before the trial court on June 24, 2021. The trial court expressed some confusion about the status of the case, noting that it was unaware that the judgment had been reversed. Counsel for the parties confirmed that the judgment was reversed and the case was remanded for reinstatement of the jury verdict and for consideration of Kildare's prejudgment interest motion. Counsel for Kildare also explained that the parties disputed when postjudgment interest began to accrue. Kildare's position was that interest "start[ed] running from the date of the original jury verdict," while Regent contended that no postjudgment interest applied where the jury verdict had been set aside. The court explained that it "agree[d]" with Regent that no postjudgment interest accrued until the trial court reinstated the jury verdict following the appeal and denied Kildare's request for postjudgment interest.

¶ 7 Turning to the question of prejudgment interest, Regent argued that the damages were not liquidated and, accordingly, no prejudgment interest applied. Counsel for Kildare acknowledged that "the question of damages was hotly contested," but argued, nonetheless, that the sum was "easily computable." The court questioned counsel for Kildare, asking "[a]nd you computed it one way and the jury computed it another, right?" Counsel for Kildare responded that the "jury verdict was reduced by the amount of damages attributable to the earth movement" but that Regent "did not put on any testimony or evidence to contradict what [Kildare] set forth were the damages." Counsel for Regent argued the fact that the jury's award was different than what Kildare requested was a strong indication that the sum due was not easily determined. Counsel for Regent further noted that Kildare never alleged "bad faith, vexatious delay, or anything like that" and that, based on the "entirety of the case, prejudgment interest is not appropriate here."

¶ 8 After hearing the above arguments of the parties, the court denied the motion for prejudgment interest. That same day, June 24, 2021, the court entered a written order reinstating the jury verdict of June 7, 2018, "as of today's date," and denying Kildare's motions for prejudgment and postjudgment interest.

¶ 9 Kildare filed a timely notice of appeal on July 9, 2021. In this court, Kildare contends that the trial court erred in determining that it was not entitled to prejudgment and postjudgment interest. We will first consider the trial court's denial of prejudgment interest.

¶ 10 Kildare contends that pursuant to section 2 of the Interest Act ( 815 ILCS 205/2 (West 2020) ), Regent owes prejudgment interest at the rate of 5% per year since the date of Regent's denial of Kildare's claim on August 14, 2009, and that the court erroneously denied prejudgment interest based on an incorrect understanding that "prejudgment interest should be denied because the jury came back with an award different than the highest sum demanded." Regent responds that the trial court's denial of prejudgment interest was correct because the amount due was not clear and easily computable as of 2009.¹

¶ 11 An award of prejudgment interest is appropriate where it is "authorized by statute, agreement of the parties[,] or warranted by equitable considerations." Tully v. McLean , 409 Ill. App. 3d 659, 684-85, 350 Ill.Dec. 434, 948 N.E.2d 714 (2011). Here, Kildare requested prejudgment interest pursuant to section 2 of the Interest Act ( 815 ILCS 205/2 (West 2020) ). That section provides, in relevant part, that, "Creditors shall be allowed to receive at the rate of five (5) per centum per annum for all moneys after they become due on any *** instrument of writing; *** and on money withheld by an unreasonable and vexatious delay of payment."

¶ 12 Initially, the parties dispute the proper standard of review. Regent contends that we should review the circuit court's decision to award prejudgment interest for an abuse of discretion. See United States Fidelity & Guaranty Co. v. Alliance Syndicate, Inc. , 286 Ill. App. 3d 417, 420, 221 Ill.Dec. 757, 676 N.E.2d 278 (1997) ("The decision whether to award prejudgment interest is within the circuit court's sound discretion, subject to reversal only upon abuse of discretion."). Kildare acknowledges that the abuse of discretion standard is "typical[ly]" used to review awards or denials of prejudgment interest, but contends that a de novo standard should apply here because the appeal concerns the application of law to undisputed facts. See Chandra v. Chandra , 2016 IL App (1st) 143858, ¶ 46, 403 Ill.Dec. 132, 53 N.E.3d...