Illinois Appellate Court Reverses Finding That Arbitrator’s Award Accrues Interest on the Award from the Date it was Entered

In an uninsured motorist case, Holly Shakelford sued Allstate Fire & Casualty Insurance Co. for 9 percent interest on a $16,000 arbitration award. She was seeking the 9% statutory interest provided by Section 2-1303 of the Illinois Code of Civil Procedure.

A more accurate term for Section 2-1303 is the “Judgment Interest Statute,” the Supreme Court explained in Illinois State Toll Highway Authority v. Heritage Standard Bank, 157 Ill.2d 282 (1993). The law provides for 9% interest on arbitration awards, jury verdicts and reports from special masters – as part of the judgment entered on the award, verdict or report – running back to the date of the initial decision. In addition to providing 9% interest on judgments, Section 2-1303 also provides for prejudgment interest on awards, verdicts and reports.

This case was complicated because Shakelford’s claim was that the arbitrator ruled $16,000 was the “gross award,” subject to setoffs and liens “to be resolved by the parties and their attorneys.” The second issue or twist to the case was that Shakelford sued without first applying for confirmation of the award under the Uniform Arbitration Act.

After she sued, Allstate tendered a check for $14,000 and moved to dismiss, arguing that she had no right to prejudgment interest because (1) the net award had not been finalized and (2) she failed to request confirmation of the award.

Shakelford countered with an amended complaint and asked for confirmation plus interest. However, the trial judge tossed out the amended pleading and Shakelford took this appeal.

Reversing the trial judge, the Illinois Appellate Court based its decision by rejecting the court’s opinion in Owens v. Stokoe, 170 Ill.App.3d 179 (1988), and concluded that “the arbitrator’s reference to setoffs does not make the award so indefinite that it cannot accrue interest under Section 2-1303.”

On the issue of interest on awards, “the case law reveals a fair measure of confusion.” Illinois State Toll Highway Authority v. Heritage Standard Bank, 157 Ill.2d 282 (1993). Courts have sometimes reverted to Section 2-1303 as “the post-judgment interest provision” of the Code. Carswell v. Rosewell, 150 Ill.App.3d 168 (1986).

“To avoid possible confusion over terminology, we [Supreme Court] have adopted in this opinion the term ‘judgment interest statute’ to generally refer to section 2-1303. This provision provides for interest to accrue on awards, reports, and verdicts as well as judgments. Interest that accrues on reports, awards, and verdicts may be viewed as a form of ‘prejudgment’ interest to distinguish it from the interest that accrues on the judgment itself (‘post-judgment’ interest).” 157 Ill.2d at 296 n.1

The court in Ryan v. Kontrick, 304 Ill.App.3d 852 (1999), refer to a plaintiff’s request for interest on an arbitrator’s award as one for post-award/prejudgment interest,” and held that Section 2-1303 set the appropriate interest rate for the period from the date of entry of the award to the date of the judgment confirming the award.

In general, an award of interest on a money judgment requires that the amount of money owed is certain and that the judgment debtor enjoyed improper use of the money during the period for which interest is to be awarded. Owens v. Stokoe, 170 Ill.App.3d 179 (1988).

In conclusion, the appeals panel held that the arbitrator’s reference to set-offs does not make the award so indefinite that it cannot accrue interest under Section 1303. In accord with the weight of authority, the court found that interest accrued only on the amount of the award minus the appropriate set-offs from the date of the award until Allstate paid Shakelford $14,000. After the date of that payment, interest can continue to accrue only on any balance remaining unpaid. If the court enters a judgment confirming the arbitrator’s award, the court should include in the judgment the appropriate interest under Section 2-1303 and take into account the amount Allstate already paid Shakelford when setting the amount of the judgment.

Shakelford v. Allstate Fire & Casualty Insurance Co., 2017 IL App (1^st) 162607 (Sept. 29, 2017).

Kreisman Law Offices has been handling insurance dispute cases, catastrophic injury lawsuits and medical negligence cases for individuals and families who have been injured, harmed or killed by the negligence of another for more than 40 years, in and around Chicago, Cook County and its surrounding areas, including Vernon Hills, Arlington Heights, Orland Park, Riverside, Park Forest, Park Ridge, Mundelein, Chicago (Rogers Park, Lincoln Square, Lakeview, South Loop, West Town, UIC, Little Italy, Wrigleyville, Chinatown), Homewood, Highwood and Lansing, Ill.