Brahos v. Chickerneo, 2014 IL App (2d) 130543-U, examines Illinois money damages rules, the extent of a guarantor’s liability and satisfaction-of-judgment requirements against the backdrop of a business dispute involving a failed car dealership.
The plaintiff got a multi-million dollar fraud judgment against multiple defendants that stemmed from a failed car dealership business venture. In post-judgment proceedings, the dealership was sold and the sale proceeds satisfied plaintiff’s judgment against all defendants except for one. That remaining defendant then moved to dismiss the citation proceedings and for satisfaction of the remaining judgment balance – about $600K. The trial court agreed and ordered the judgment satisfied. The plaintiff appealed.
Held: Reversed. The $600,000 still owed the plaintiff on the money judgment was not satisfied by the bank releasing the investor guarantors from liability under the various dealership loans.
Rules/Reasoning:
Reversing the trial court and finding that the plaintiff still could purse defendant for the balance of the money judgment, the Court applied several salient guaranty and release/satisfaction-of-judgment rules:
– Generally, the discharge of the principal obligation discharges the guarantor’s obligation;
– Code Section 12-183 (735 ILCS 5/12-183) requires a judgment creditor to sign a release and satisfaction of judgment so that the debtor can record that release with the Court that entered the judgment
– the party seeking the release of a judgment bears the burden of proving that a judgment entered against him was released;
– a release is a contract and is governed by contract law;
– the contracting parties intention is determined by the plain language of the contract;
– it is only where a contract is ambiguous (reasonably susceptible to two opposing meanings) that evidence is allowed in to explain what the contracting parties intended;
– typically, a money judgment can only be satisfied by paying the judgment unless the parties agree otherwise.
(¶¶ 32-35).
The Second District sided with the plaintiff and found that his money judgment shouldn’t have been deemed satisfied by the trial court. The plaintiff never agreed to release his money judgment against the defendant and there was no evidence that plaintiff agreed to accept a “noncash benefit”- namely, the release from his guarantor liability to the bank.
The Court also pointed to the promissory note that required defendant to pay the judgment’s remaining $600K to the plaintiff. The bank’s release of the dealership investors from their loan and guaranty liabilities didn’t affect the defendant’s note liability.
In addition, the dealership lender’s release of the various investors (including plaintiff) from their bank obligations didn’t mention plaintiff’s damage award against the remaining defendant. (¶ 35).
The defendant’s double recovery argument – that the plaintiff got a windfall having his guaranty liability to the bank released while getting paid $600K from the defendant – was also rejected.
The Court found there was no double recovery because plaintiff was not getting paid twice for the same injury and the bank was not a “joint tortfeasor” with the defendant. Instead, the bank was a third-party creditor. ¶ 37.
Take-aways:
– A release of judgment will be construed as written and not expanded beyond its clear terms;
– A creditor isn’t required to release a money judgment unless that creditor is paid or the parties agree otherwise.