Illinois Appellate Court Holds That an Arbitration Agreement with No Provision for Interest is Not an Actual Adjudication for Post-Judgment Interest

The issue before the Illinois Appellate Court was whether the parties’ high-low agreement was a settlement agreement and if so, whether interest pursuant to Section 2-1303 of the Illinois Code of Civil Procedure accrues on an award that is predetermined by that high-low agreement. Mark Pinske thought he was entitled to 9% post-judgment interest on $100,000 of the $194,000 arbitration award he received against Lawrence White.

The arbitration award was made under a hybrid mediation/arbitration contract that also contained a high-low agreement. Pinske and White’s automobile insurer, Allstate Property & Casualty Insurance Co. agreed that Allstate would pay at least $50,000, but no more than $100,000 for injuries, that Pinske suffered in an automobile crash with White. The agreement asked a retired Cook County judge to mediate and that if the mediation effort failed, then to arbitrate the dispute for a binding result.

When Pinske sued for judgment on the award, he relied on Section 2-1303 of the Illinois Code of Civil Procedure. That section starts by saying “judgments recovered in any court shall draw interest at the rate of 9% per annum until satisfied.” The section also provides that “when judgment is entered upon any award, . . . 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.”

Allstate attacked Pinske’s complaint by a motion under Section 2-619 of the code. The motion relied on an affidavit from an Allstate claims supervisor.

On appeal from an order that dismissed the lawsuit, Pinske started with a new argument: that Allstate’s Section 2-619 motion was improper because the affidavit controverted some of the complaint’s allegations.

The appellate court ruled that Pinske had forfeited the new argument and even if he hadn’t, the affidavit was allowed.

In 1993, the Illinois Supreme Court ruled that post-judgment interest only accrues under Section 2-1303 when there was “an actual adjudication as distinct from the parties’ stipulation or settlement agreement.” Illinois State Toll Highway Authority v. Heritage Standard Bank, 157 Ill.2d 282.

Applying this precedent, the Illinois Appellate Court concluded “that the high-low agreement the parties entered into was a settlement agreement and that the $100,000 award was predetermined by the parties’ agreement and was not determined after an actual adjudication. Because the $100,000 was not awarded after an actual adjudication, Allstate was not required to pay Pinske interest pursuant to Section 2-1303 of the Code.”

As a matter of fact, the award entered by the arbitrator was $194,231, which was beyond the maximum award of the high-low limit. The $100,000 award was not the amount awarded by the retired judge or arbitrator; instead, the parties’ high-low agreement predetermined the $100,000 would be the maximum award. Therefore, the appeals panel found that the high-low agreement the parties entered into was a settlement agreement. In addition, the Illinois Appellate Court pointed out that other state courts have held that high-low agreements are settlement agreements — not adjudications. Interest accrues on judgments entered on awards after an actual adjudication, but does not accrue on awards that are predetermined by high-low agreements. Therefore, because Pinske’s award was predetermined by the parties’ high-low agreement, Pinske was not entitled to 9% interest or any interest on the $100,000 award.

Pinske v. Allstate Property & Casualty Insurance Co., 2015 IL App (1st) 150537 (Oct. 27, 2015).

Kreisman Law Offices has been handling catastrophic injury cases, truck accident cases, nursing home abuse cases, car accident cases, bicycle accident cases, pedestrian accident cases and motorcycle accident cases for individuals and families who have been injured or killed by the negligence of another for more than 38 years, in and around Chicago, Cook County and its surrounding areas including, Prospect Heights, Schaumburg, Schiller Park, Calumet City, Evanston, Naperville, Deerfield, Schiller Park, Vernon Hills, Orland Park, Dundee, Niles, Elmhurst, Rolling Meadows, University Park, Lemont and Highwood, Ill.

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