Levy v. Markal Sales Corp., No. 1-98-0442
1st District, February 02, 2000
THIRD DIVISION
| KENNETH W. LEVY, Plaintiff-Appellee, v. MARKAL SALES CORPORATION, et al., Defendants-Appellees. | Appeal from the Circuit Court of Cook County. Honorable Lester D. Foreman, Judge Presiding. |
JUSTICE CERDA delivered the opinion of the court.
The circuit court pursuant to Supreme Court Rule 308 certified the following question of law for an interlocutory appeal:
"Whether the four-year statute of limitations period provided by section 10(a) of Illinois' Uniform Fraudulent Transfer Act, 740 ILCS 160/10(a), runs from the date of the alleged fraudulent transfer or from the date of a subsequent judgment obtained by the creditor."
On March 26, 1998, this court, exercising its discretion, declined to consider the circuit court's Rule 308 order. However, on October 6, 1998, the Illinois supreme court issued a supervisory order vacating our March 26 ruling and directing us to address the question certified by the circuit court. In compliance with the supreme court's mandate, and pursuant to Rule 308, we allowed the instant appeal.
In October 1982, plaintiff, Kenneth Levy, filed suit on behalf of Markal Sales Corporation (Markal) and individually as one of its shareholders against several defendants, including two of Markal's corporate directors, Victor Gust Jr. and Robert Bakal. In pertinent part, Levy alleged that Victor and Bakal breached their fiduciary duties to Markal by failing to present a business opportunity to the company before pursuing it on their own through a new business venture, and by also using Markal assets for the benefit of the new business' operations.
In December 1986, during the pendency of Levy's case, Victor transferred, by quitclaim deed, his one-half interest in his family residence located in Park Ridge, Illinois, to his wife, Diana Gust. Prior to the transfer, Victor and Diana held the property as joint tenants. As a result of the transfer, Diana became the property's sole owner. Victor's transfer was formally recorded with the Cook County Recorder of Deeds on January 16, 1987.
After a lengthy bench trial, the circuit court found that Victor and Bakal breached their fiduciary duties to Markal and Levy, and on October 17, 1991, it issued judgment against them. On March 6, 1992, the court ordered Victor and Bakal, jointly and severally, to pay Levy $5,614,523.37 in actual damages and $3,000,000 in punitive damages, for a total damages award of $8,614,523.17. The court later reduced the actual damages to $1,952,249.48, for a total damages award of $4,952,249.48.(1)
On March 9, 1992, Levy commenced supplemental proceedings under section 2-1402 of the Code of Civil Procedure (735 ILCS 5/2-1402 (West 1996)) to execute on the judgment by, in part, filing a citation to discover assets against Victor. On May 26, 1994, Levy filed a motion seeking a turnover of certain assets held by Victor. In count four of his motion, Levy asserted for the first time that the December 1986 transfer of Victor's interest in the Park Ridge property to Diana constituted a fraudulent transfer. In pertinent part, Levy alleged that Victor's transfer was made with the actual "intent to hinder, delay and defraud" him in violation of section 5(a)(1) of the Illinois Uniform Fraudulent Transfer Act (Act) (740 ILCS 160/5(a)(1) (West 1996)).
Initially, we consider Levy's contention that we may go beyond the scope of the question certified to consider whether the Act can be applied retroactively under the circumstances of this case. Notably, the transfer at issue occurred some three years before the Act's effective date of January 1, 1990. Review of an appeal under Rule 308 is strictly limited to the question identified by the circuit court's order, and will not be expanded on appeal to encompass other matters that could have been included but were not. Sassali v. DeFauw, 297 Ill. App. 3d 50, 51, 696 N.E.2d 1217, 1218 (1998); McCarthy v. LaSalle National Bank & Trust Company, 230 Ill. App. 3d 628, 631, 595 N.E.2d 149, 151 (1992). The issue of whether the Act could be retroactively applied was extensively addressed by the parties throughout the proceedings before the circuit court. The court rejected a claim by Levy that the Act could not be given retroactive effect, and it explicitly declined to certify this issue for our review, explaining that its order would only address the question of when the applicable limitation period commences under the Act. Indeed, the certified question reflected in the court's order speaks solely of this matter. The issue of retroactivity, despite its apparent relevancy, will therefore not be addressed on this appeal.
As noted, the question certified for our review concerns when the four-year statute of limitations contained in section 10(a) begins to run for purposes of an action brought under the Act by a tort claimant challenging a transfer of property by a defendant-debtor. In particular, we must determine whether the four-year limitation period commences to run on the date of the transfer challenged, or instead on the date the creditor's claim is reduced to judgment.
In 1989, our General Assembly adopted the Uniform Fraudulent Transfer Act of 1984 (Uniform Act), which as noted became effective on January 1, 1990. Our state's act repealed the provisions contained in the statute of frauds that addressed fraudulent conveyances (Ill. Rev. Stat. 1987, ch. 59,