BOARD OF TRUSTEES OF The CITY OF HARVEY FIREFIGHTERS' PENSION FUND, Plaintiff-Appellee/Cross-Appellant, v. The CITY OF HARVEY, Defendant-Appellant/Cross-Appellee., 96 N.E.3d 1

PRESIDING JUSTICE GORDON delivered the judgment of the court, with opinion. ¶ 1 Defendant City of Harvey (Harvey) is a municipality with a population of approximately 25,000 residents, located south of the city of Chicago. Plaintiff, the Board of Trustees of the City of Harvey Firefighters' Pension Fund (Pension Board), is an administrative body created pursuant to

section 4-121 of the Illinois Pension Code (Code) ( 40 ILCS 5/4-121 (West 2014) ) to oversee and manage the City of Harvey Firefighters' Pension Fund (Pension Fund). 40 ILCS 5/4-120 to 4-129 (West 2014). The Pension Board filed suit, alleging that Harvey has underfunded the Pension Fund and breached a 1996 settlement agreement in which Harvey agreed to make certain contributions to the Pension Fund. The Pension Board sought a declaratory judgment, a writ of mandamus , injunctive relief, and an order compelling enforcement of the 1966 settlement agreement. After both parties filed motions for

summary judgment, the trial court granted the Pension Board's motion for a declaratory judgment, injunctive relief, and enforcement of the 1996 settlement agreement and denied

summary judgment for a writ of mandamus . The trial court found that Harvey violated the pension statute but was not on the verge of default or imminent bankruptcy. The trial court denied Harvey's motion for

summary judgment. Pursuant to this ruling, the trial court assessed damages against Harvey for $15,071,089.15. The injunction that was issued required Harvey to approve a line-item property tax levy specifically for the Pension Fund, which would be sufficient to meet the annual actuarial requirements set forth in the Code.

Harvey filed a notice of appeal, and the Pension Board filed a notice of cross-appeal. ¶ 2 The parties argue on appeal about (1) whether the trial court correctly determined that Harvey breached the 1996 settlement agreement; (2) whether the trial court correctly calculated the damages; (3) whether the trial court correctly rejected Harvey's affirmative defenses of separation of powers and laches ; (4) whether the trial court erred in making a finding of violations of the Code and requiring certain monies to be paid into the Pension Fund, without first finding that Harvey was on the verge of default or imminent bankruptcy; and (5) whether the trial court erred in finding that Harvey is not on the verge of default or imminent bankruptcy. ¶ 3 BACKGROUND ¶ 4 I.

THE 1993 COMPLAINT AND 1996 SETTLEMENT AGREEMENT ¶ 5 On February 17, 1993, the Pension Board filed a complaint for mandamus , declaratory judgment and accounting, alleging that Harvey had failed to adequately fund the Pension Fund between 1988 and 1994 and claiming that not all of the taxes levied and collected were deposited into the Pension Fund as required by the Code. 40 ILCS 5/4-120 to 4-129 (West 2014). ¶ 6 On August 22, 1996, the parties entered into a settlement agreement that required Harvey to "repay the amount due and owing to the [Pension Fund] *** which is approximately $912,652.00 over a five (5) year period including [Harvey's] annual tax levy an amount in addition to the amount of levy requirements minus the allocation of personal property replacement taxes, recommended by the Illinois Department of Insurance." ¶ 7 Further, Harvey agreed that, "in the future," it would "ensure property taxes levied or personal property replacement taxes received on behalf of the [Pension Fund], which are assessed, collected and remitted to the City of Harvey by the Cook County Treasurer's Office, shall be paid to the [Pension Fund] within 30 days of receipt by [Harvey] and not used by [Harvey] for other corporate purposes." In addition, the parties agreed that the trial court retained jurisdiction over the matter to enforce the settlement agreement, providing: "The Court hereby expressly retains jurisdiction of this matter for the purposes of enforcing all of the terms and provisions of this Agreed Settlement Order." ¶ 8 II. 2010 COMPLAINT ¶ 9 On December 17, 2010, 15 years after the execution of the settlement agreement, the Pension Board filed a complaint stemming from Harvey's alleged violations of

section 4-118 of the Code ( 40 ILCS 5/4-118 (West 2010) ), commencing in the fiscal year 2005 and continuing through fiscal year 2010.

All of the evidence in this case concerned facts that ended with the fiscal year 2014. ¶ 10 The Pension Board filed an amended complaint on September 29, 2011, which added individual defendants Eric Kellogg, the mayor of Harvey; Maggie Britton, the Harvey comptroller in 2010; and Charles Givines, Joseph Whittington, Daryle Crudup, Michael Bowens, Donald Nesbit, and Keith Price, members of Harvey's city council. ¶ 11 On November 18, 2011, Harvey moved to strike the individual defendants from the Pension Board's first amended complaint.

Following the filing of this motion, the Pension Board filed a second amended complaint on June 25, 2012, which asserted a count for breach of fiduciary duty against the individual defendants. On July 25, 2012, Harvey filed a combined

section 2-615 and 2-619 motion to dismiss the second amended complaint with prejudice or, alternatively, a

section 2-615 motion to strike the individual defendants from the second amended complaint. 735 ILCS 5/2-615(a), 2-619(a)(9) (West 2010). ¶ 12 On October 24, 2012, while Harvey's motions were pending, the Pension Board filed an emergency motion to compel Harvey to levy a tax in order to fund in "an amount at least equal to the amount determined by an actuary for 2011 in the amount of $1,558,762.00." On October 26, 2012, Harvey filed a motion to strike the Pension Board's emergency motion, arguing that the emergency motion sought the same remedy that the Pension Board seeks in its second amended complaint.

On October 29, 2012, the trial court denied the Pension Board's emergency motion. ¶ 13 On November 5, 2012, the Pension Board filed its third amended complaint, adding claims for mandamus and injunctive relief. ¶ 14 III. PLAINTIFF'S FOURTH AMENDED COMPLAINT ¶ 15 On December 14, 2012, the Pension Board filed its fourth amended complaint, which is the subject complaint in this appeal.

Its four counts seek (1) a declaratory judgment that Harvey must annually levy a tax to contribute to the Pension Fund and pay money damages, (2) a writ of mandamus compelling Harvey to levy an annual tax for the Pension Fund or otherwise annually contribute to the Pension Fund an amount that fulfills the annual actuarial requirement, (3) injunctive relief ordering Harvey to levy an annual tax for the Pension Fund or otherwise annually contribute to the Pension Fund an amount that meets the annual actuarial requirement and to pay money damages, and (4) an order that finds that Harvey breached the 1996 settlement agreement and an order compelling enforcement of that agreement. ¶ 16 On January 15, 2013, Harvey filed a combined

section 2-615 and 2-619 motion to dismiss the Pension Board's fourth amended complaint. 735 ILCS 5/2-615(a), 2-619(a)(9), 2-619.1 (West 2012).

Harvey's motion addressed each count of the Pension Boards' fourth amended complaint as follows. ¶ 17 First, Harvey argues that an action for declaratory judgment is inappropriate because declaratory judgment is a vehicle used to address a "controversy one step sooner than normal after a dispute has arisen, but before steps are taken which would give rise to a claim for damages or other relief." Harvey also argues that declaratory judgment would be inadequate because it cannot alter actions that the parties have already taken.

Second, Harvey argues that a writ of mandamus cannot force a legislative body to perform a discretionary act; therefore, a writ is unable to "compel [Harvey] to make municipal pension fund contributions that meet the annual actuarial requirement[.]" Third, Harvey argues that the Pension Fund had not sustained any damages that could not be adequately remedied with money damages; therefore, injunctive relief is an inapplicable remedy.

Finally, Harvey argues that the trial court has no jurisdiction to enforce the 1996 settlement agreement because the agreement explicitly agreed that the original court in the 1993 action retained jurisdiction to enforce the agreement. That original court in 1993 was Calendar 12 of the Chancery Division in the circuit court of Cook County. ¶ 18 In addition to its

section 2-615 arguments, Harvey also moved to dismiss pursuant to

section 2-619(a)(9), claiming that the suit was barred by governmental immunity. 735 ILCS 5/2-615(a), 2-619(a)(9) (West 2010).

Harvey argues that the Pension Board's claims must fail because "(a) [Harvey] is not liable for its council members' negligence in performing governmental functions; and (b) [Harvey] is not liable under the Local Governmental and Governmental Employees Tort Immunity Act. [Tort Immunity Act] [ 745 ILCS 10/8-101(a) (West 2010).]" ¶ 19 The trial court heard argument on May 24, 2013, and denied Harvey's motion to dismiss count I, for declaratory judgment; count II, for a writ of mandamus ; and count III, for injunctive relief.

However, the trial court granted Harvey's motion to dismiss count IV, for breach of the 1996 settlement agreement, due to lack of jurisdiction, and cited in support the provision of the settlement agreement allowing only the 1996 court to maintain jurisdiction over enforcement of the agreement. However, after granting the motion to dismiss count IV, the trial court allowed the Pension Board leave to re-plead before the original trial court that had approved the 1996 settlement agreement (hereinafter, the 1996 court) and that matter was transferred to the 1996 court. ¶ 20 IV.

MOTIONS TO COMPEL ENFORCEMENT AND CONSOLIDATE ¶ 21 On December 11, 2013, the trial court consolidated this case with the earlier case and transferred the motion to compel enforcement of the 1996 settlement agreement to Calendar 12. ¶ 22 Following consolidation, both parties filed motions for

summary judgment on October 14, 2014, with the Calendar 6 Court, which are the subject of this appeal. 735 ILCS 5/2-1005 (West 2012). ¶ 23 V. PENSION BOARD'S MOTION FOR

SUMMARY JUDGMENT ¶ 24 The motions for

summary judgment are described in depth with year-by-year financial detail, which is necessary to understand the magnitude of the funding problem. In the Pension Board's motion for

summary judgment, the Pension Board argues that Harvey must be required to adequately contribute to the Pension Fund because the Pension Fund is on the verge of default or imminent bankruptcy and will become insolvent without judicial intervention. ¶ 25 A. OVERVIEW ¶ 26 To support its claims, the Pension Board attached to its motion for

summary judgment 16 exhibits, including the complete transcripts of the discovery depositions of the following individuals:

(1) Gloria Morningstar, the Harvey City Treasurer;

(2) Maggie Britton, a CPA for Alli Financial and a Harvey City Assistant Comptroller;

(3) Joseph Letke, a CPA and the Harvey City Comptroller;

(4) Sandor Goldstein, an actuary;

(5) Calene Zabinski, the Pension Fund's auditor;

(6) Jamie Wilkey, a CPA with Lauterbach & Amen;

(7) James Ritchie, the Pension Fund's CPA;

(8) Todd Schroeder; the Pension Fund's actuary;

(9) Jon Willhite, the Pension Fund's financial consultant;

(10) Daniel Mumpher, the Director of the Local Government Division for the State Comptroller; and

(11) Scott Brandt, an Illinois Department of Insurance representative. ¶ 27 In addition, the Pension Board attached, as exhibits, the Illinois Department of Insurance notice of noncompliance issued to Harvey, dated February 20, 2013, and the Securities and Exchange Commission complaint filed against Harvey and Joseph Letke on June 24, 2014. ¶ 28 B. MISMANAGEMENT CLAIM ¶ 29 In its motion for

summary judgment, the Pension Board argues that the Pension Fund contributions are being mismanaged and underfunded by Harvey and the Pension Fund is being underfunded. In support of this assertion, the Pension Board presented financial information regarding the Pension Fund from fiscal year 2005 through fiscal year 2014. First, the Pension Board presented the annual actuarial requirement as calculated by three different actuaries.

Section 4-118 of the Code explains what an annual actuarial requirement is: "[T]he annual actuarial requirements of the pension fund are equal to (1) the normal cost of the pension fund, or 17.5% of the salaries and wages to be paid to firefighters for the year involved, whichever is greater, plus (2) an annual amount sufficient to bring the total assets of the pension fund up to 90% of the total actuarial liabilities of the pension fund by the end of municipal fiscal year 2040, as annually updated and determined by an enrolled actuary ***." 40 ILCS 5/4-118(a) (West 2012). ¶ 30 In its motion, the Pension Board presented the calculations of three separate actuaries concerning the annual actuarial requirements: Tim Sharpe; Todd Schroeder; and Scott Brandt, who represents the Illinois Department of Insurance.

Second, the Pension Board attached the deposition transcript of Maggie Britton, who is the Harvey comptroller, and who testified about the monies that Harvey appropriated for the Pension Fund and how the appropriation ordinance was determined. Further, the Pension Board attached Britton's deposition exhibits, which set forth the amount appropriated by way of the ordinance and the amount sought through a tax levy. Lastly, the Pension Board attached the depositions of Jamie Wilkey, a CPA, and Calene Zabinski, the Pension Fund auditor.

Through these depositions and exhibits, the Pension Board established the amount that Harvey actually contributed to the Pension Fund for each fiscal year. ¶ 31 The Pension Board presented various exhibits to provide the financial information for fiscal years 2005 through 2014: Year Annual Actuarial Levied for Pension Paid to Pension Requirement Fund Fund 2005 $876,692 (Brandt) $0 $9,885 $880,632 (Sharpe) 2006 $980,024 (Brandt) $0 $38,304 $945,580 (Sharpe) 2007 $1,060,727 (Brandt) $480,632 $615,407 $1,061,219 (Sharpe) 2008 $1,140,932 (Brandt) $1,061,219 $771,471 $1,077,837 (Sharpe) 2009 $1,294,791 (Brandt) $1,061,219 $18,181 2010 $1,574,792 (Brandt) $350,000 $5,143 2011 $1,611,369 (Brandt) $0 $0 $1,558,762 (Sharpe) 2012 $1,611,369 $0 $0 $1,558,762 2013 $1,531,760 (Schroeder) $0 $0 2014 $2,070,500 (Schroeder) $600,000 $600,000 ¶ 32 In the motion for

summary judgment, the Pension Board cited information provided in the deposition of Sandor Goldstein, an actuary, who was retained by Harvey to calculate how much money Harvey owed the Pension Fund. Goldstein testified that he calculated the contribution deficiency using the difference between the annual actuarial valuations and the actual amount Harvey contributed to the Pension Fund between fiscal year 2005 and fiscal year 2013. Goldstein opined that the total contribution deficiency up to the end of 2013 was $8,077,602.

Additionally, he calculated that the accumulated contribution deficiency, which is the loss of revenue to the Pension Fund because Harvey did not properly contribute to the Pension Fund, to be $10,009,403.

Basically, Goldstein calculated that Harvey "deprived the Pension Fund of $8 million in actual contributions and another $2 million in actual investment gains on those contributions." Lastly, the Pension Board cited the deposition of Todd Schroeder, who calculated that the Pension Fund should have approximately $34 million in assets as of 2014 rather than the $11,180,962 in assets that the Pension Fund actually had. As a result, the Pension Fund was deficient at the end of 2013 by approximately $23 million. ¶ 33 C. ON THE VERGE OF DEFAULT OR IMMINENT BANKRUPTCY ¶ 34 In its motion for

summary judgment, the Pension Board argues that the Pension Fund is on the verge of default or imminent bankruptcy. The following deposition testimonies provided the evidence to determine whether the Pension Fund is on the verge of default or imminent bankruptcy. ¶ 35

(1) Gloria Morningstar ¶ 36 The deposition of Gloria Morningstar, Harvey's treasurer, was attached to the motion for

summary judgment. Morningstar testified that, as treasurer for Harvey, she oversees its fiscal monies, revenue, and disbursements and is responsible for preparing the annual financial report submitted to the Illinois Comptroller's Office, as required by statute.

She testified that she had not completed the annual financial reports since the fiscal year of 2008 because she never received the 2008 audit, which Harvey is yet to complete and which is necessary to complete the report. ¶ 37 Morningstar testified that Harvey budgeted $458,400 in 2005 for retirement and pension funds, but Harvey contributed only $9,885, while the employees contributed $204,149 to the Pension Fund.

However, the Pension Fund paid out $1,398,003 in benefits for that year. ¶ 38 Morningstar testified that Harvey's total revenue for fiscal year 2006 was $20,446,917, and that it contributed $38,304 to the Pension Fund, while the employees contributed $245,146, and the Pension Fund paid $1,439,262 out in benefits. ¶ 39 For fiscal year 2007, Morningstar testified that Harvey collected $19,328,100 in revenue and contributed $565,407 to the Pension Fund, while employees contributed $245,555. However, the Pension Fund paid out $1,582,325 in benefits.

Morningstar explained that Harvey's tax levy ordinance for fiscal year 2007 showed that Harvey had budgeted $1,180,632 for the Pension Fund, but Morningstar was unable to explain why the amount budgeted for the Pension Fund at the beginning of the year was greater than the amount budgeted in the fiscal year end audit. ¶ 40 For fiscal year 2008, Morningstar testified that Harvey collected $19,585,131 in total revenue and that the audit report showed that the annual required contribution to the Pension Fund was $1,077,837.

However, the actual contribution made by Harvey was only $468,365. ¶ 41 Morningstar testified that Harvey does have a statutory requirement to contribute to the Pension Fund and that Harvey has not contributed as required by statute since 2005. At the time of her deposition on February 28, 2014, Morningstar testified that Harvey had not made any contributions to the Pension Fund since 2009. ¶ 42

(2) Maggie Britton ¶ 43 Maggie Britton, a certified public accountant for Alli Financial and one of two comptrollers for Harvey, provided deposition testimony that, as comptroller, her duties include financial management, preparation of the annual budget, internal audits, and tracking expenditures and revenue. Britton testified that she performs the day-to-day comptroller duties, while Joseph Letke is the official comptroller for Harvey, which means that she assists in the preparation of the annual financial reports, which are submitted to the Illinois Comptroller's Office.

Britton testified that Harvey has not been completing the required audits, so they are unable to complete the annual financial reports. Britton testified that Harvey had not undergone an audit for fiscal years 2010, 2011, 2012, or 2013. ¶ 44 Britton next testified regarding personal property replacement taxes, which are taxes disbursed by the State of Illinois to the municipalities eight times per year. Britton testified that a portion of the personal property replacement taxes is statutorily required to be contributed to the Pension Fund.

Britton testified that Harvey received $805,674 in personal property replacement taxes for 2007; $888,081 for 2008; $778,539 for 2009; $649,436.17 2010; and $797,445.69 for 2011. However, Harvey had not contributed any personal property replacement taxes to the Pension Fund during these years.

Additionally, Britton testified that Harvey did not levy any money for either the fire or police pension funds for 2005 through 2010. ¶ 45 Britton testified that Harvey appropriated $300,000 in 2005, $300,000 in 2006, $1,180,632 in 2007, $197,000 in 2008, $1,161,219 in 2009, $1,161,219 in 2010, $0 in 2011, $480,000 in 2011, $450,000 in 2013, and $1,781,542 in 2014 for the Pension Fund. ¶ 46 Britton testified that she knows there is a statute that requires contributions to be transmitted to the Pension Fund every year and that Harvey should fund the Pension Fund, based on the most recent actuarial calculations that provide the required amount of funding.

Specifically, Britton testified that "based on the rate of return for investments and employee contributions, the [Pension Fund] could be facing a shortfall in [fewer than 10 years]." ¶ 47

(3) Joseph Letke ¶ 48 During his deposition, Joseph Letke, the official comptroller for Harvey starting in 2003, invoked his Fifth Amendment privilege against self-incrimination 178 times and refused to answer questions regarding (1) fraudulent and misleading bond offerings, (2) a developer who collected bond proceedings from Harvey then fled to India, (3) the accusation that Letke collected fees from both Harvey and the developer, who fled to India, (4) why each Harvey alderman had an $80,000 unmonitored expense account, (5) why Harvey paid an alderman's son $325 an hour for snow removal, and (6) why Harvey paid the mayor's son $88,000 to develop a social media website. ¶ 49 Additionally, the Pension Board attached to its motion for

summary judgment a complaint filed by the Securities and Exchange Commission (SEC) against both Harvey and Letke. The complaint alleges: "[a] scheme by [Harvey] and Joseph T. Letke to misuse proceeds raised from investors in municipal bonds issued by Harvey.

From 2008 to present, Harvey and its Comptroller, Letke, have engaged in a scheme to divert bond proceeds for improper purposes, including undisclosed payments to Letke." Further, the complaint alleges that Harvey and Letke offered fraudulent bond offerings for $6 million in 2008, $3 million in 2009, and $3 million in 2010. ¶ 50 The complaint alleges that these bond offerings were to provide funding for a "Holiday Inn Hotel in Harvey" and: "Thus, it was important to bond investors that money raised from the bond offerings, consistent with the stated purpose, was actually used to fund the hotel development, since the amount of funds to repay the bonds derived from tax revenues would be materially affected by the funding and progress of the Hotel Redevelopment Project." However, unknown to the bond investors and contrary to the representations made by Harvey and Letke, "Harvey officials improperly diverted at least $1.7 million of bond proceeds from these offerings into the general operation accounts of Harvey to pay [Harvey's] operation costs, including payroll.

Letke *** also received approximately $269,000 in undisclosed payments derived from bond proceeds[.]" ¶ 51 Due to these alleged misappropriations and misrepresentations, the SEC sought (1) money damages against Letke, (2) a temporary restraining order prohibiting Harvey from offering or selling its own municipal securities, (3) a permanent injunction prohibiting Harvey from selling municipal securities for five years, unless an independent consultant reviews and approves of its municipal security disclose policies and procedures, and (4) a permanent injunction prohibiting Letke from participating in any capacity in a municipal securities offering. ¶ 52

(4) Jon Willhite ¶ 53 Jon Willhite, the Pension Fund's financial consultant since the 1980's, testified in his deposition regarding a calculation table showing his calculations for lost revenue between fiscal years 2005 and 2013. This table is a calculation for lost revenue based on the recommended tax levy as opposed to the collected tax levy.

The table appears as follows: Fiscal Required Contribution Investment Shortfall Lost Revenue Cumulative Year Contribution Received Return 2005 $880,632 $9,885 4.18% $870,747 $888,963.37 $888,963 2006 $945,580 $38,304 7.80% $907,276 $942,661.93 $1,900,969 2007 $1,061,219 $615,407 10.17% $445,812 $468,476.94 $2,562,735 2008 $1,140,932 $771,471 3.06% $369,461 $375,115.17 $3,016,289 2009 $1,294,791 $18,181 -12.06% $1,276,610 $1,199,637.40 $3,852,195 2010 $1,574,792 $5,134 18.15% $1,569,658 $1,712,113.49 $6,263,527 2011 $1,611,369 $0 9.65% $1,611,369 $1,689,086.91 $8,556,806 2012 $1,611,369 $0 -2.05% $1,611,369 $1,594,812.58 $9,975,780 2013 $1,531,760 $0 7.07% $1,531,760 $1,585,940.72 $12,267,438 ¶ 54 Willhite testified that he created this document to show the data that he examined in calculating the cumulative loss in revenue to the Pension Fund.

Based on his calculations, Harvey's lack of contributions to the Pension Fund has resulted in a cumulative lost revenue of $12,267,438 from 2005 to 2013. Willhite testified that the cumulative total is the total lost revenue plus the investment returns. ¶ 55 Willhite was asked, based on his experience as the Pension Fund's financial consultant, whether the Pension Fund is on the verge of default or imminent bankruptcy. Willhite responded by testifying: "we took on the plan in 2009 *** and the assets were at 17 million and some change.

We've had a positive annual rate of return in the 7s, I believe, over that time frame compounding. I would have to go back and get the actual number, but it's been a fairly decent return. And [the Pension Fund has] gone from over 17 million to approximately $11.1 million as of the close two days ago.

So that would tell me that if you were to take the monthly-or the monthly outflows of over 300,000 a month going out and continue to expand upon that and just take that annual number of $1.2 million and divide that by the 11 million, yeah there's going to be a time when there's no money left in that plan; and it's shorter than the life expectancy of the retirees." ¶ 56 Willhite further opined: "[a]t their current condition and the rate of money that's going out they will reach a time when there will be no money left in the [Pension Fund] as we know it today." Willhite further opined that if the tax levy is not reinstated, then the Pension Fund is going to be in "dire, dire problems." Willhite continued his opinion by stating that the Pension Fund is being forced to sell assets to pay the beneficiaries.

Willhite testified that of all the pension funds he works with, Harvey's Pension Fund is the worst funded. ¶ 57 Willhite opined that the Pension Fund would be insolvent in seven to nine years. He based this opinion on the fact that, in 2009, the Pension Fund had over $17 million in assets; however, it lost over $7 million in assets since that year without adequate contributions from Harvey. Even more concerning to Willhite is that the Pension Fund has had a 9.75 percent return over that same time frame, which, normally, would indicate a positive increase in monies in the fund.

However, that was not the case in Harvey because of inadequate contributions by Harvey. ¶ 58

(5) Sandor Goldstein ¶ 59 Sandor Goldstein is an actuary who was hired by Harvey to review the calculations by Jon Willhite, the actuary for the Pension Fund. Goldstein testified as follows at his deposition. ¶ 60 In reviewing the pertinent documentation, Goldstein opined that Willhite's calculations were deficient as to the total loss revenue for the Pension Fund due to the lack of contributions from Harvey.

Goldstein testified: "Well, it was deficient because he basically just went to each year's actuarial valuation and considered the annual requirement for that year versus the employer contribution for that year and added it all up over the full period from 2005 to 2013, and that doesn't take into account that if there's-if [Harvey] had actually made those contributions in the early years, then those contributions would have had some investment earnings and would have added to the assets, and therefore the contributions in the later years would have been less, so in a way, when we look at the deficiency in contributions in one year, we've already taken it into account, but if we-and that affects the required contribution in the future year, and if you don't make that contribution, the required contribution in the future year will be less also; so you're counting the effect of these deficiencies in contributions twice, first in the year when it's not made and then also in the later years where you're contributing more, so I feel that once you've recorded a deficiency in contributions you need to add it into the assets to calculate future year deficiencies." ¶ 61 Goldstein testified that, in his calculations for accumulated contribution deficiency, he would assume that Harvey had actually contributed the annual actuarial requirement and that the Pension Fund had the money invested at a particular rate of return for each fiscal year.

Based on this method of calculation, Goldstein provided the following chart, which lays out all of his calculations: Fiscal Year Adjusted Employer Contribution Rate of Accumulated Annual Contribution Deficiency Return Contribution Actuarial Deficiency Requirements 2005 876,692 9,885 866,807 4.3381% 885,608 2006 857,500 38,304 819,196 8.0961 1,809,666 2007 990,302 615,407 374,895 10.4075% 2,392,410 2008 1,042,696 771,471 271,225 3.1250% 2,742,636 2009 1,179,421 18,181 1,161,240 -12.6001% 3,485,142 2010 1,423,897 5,143 1,418,754 19.2365% 5,710,775 2011 1,190,734 0 1,190,734 10.1914% 7,544,193 2012 864,407 0 864,407 -2.1699% 8,235,520 2013 1,110,344 0 1,110,344 7.5482% 10,009,403 Total 9,535,993 1,458,391 8,077,602 ¶ 62 Based on his accumulated contribution deficiency calculations, Goldstein opined that if Harvey had been contributing pursuant to the requirements of the Code, that the Pension Fund would have an additional $10,009,403 in assets, for a total of approximately $22 million on May 1, 2012. ¶ 63

(6) Calene Zabinski ¶ 64 Calene Zabinski, a CPA who works as a finance director and treasurer for various towns and municipalities across the state, was hired to perform the year-end audit of the Pension Fund for 2008 through 2013. As a result of conducting these audits, Zabinski testified regarding the assets, annual actuarial requirement calculations, and the percentage of the annual actuarial requirement Harvey had contributed. Additionally, Zabinski used that information to establish the Pension Fund's net change in assets and the percent it was funded.

Year Annual Harvey % of AAR Net Change % Funded Actuarial Contribution Harvey in Assets (+/-) Requirement contributed (AAR) 2008 $1,077,837 $771,471 71.58% -$185,866 59.16% 2009 $1,294,791 $18,181 1.4% -$3,619,875 50.79% 2010 $1,574,792 $5,143 0.33% +$955,176 38.28% 2011 $1,611,369 $0 0.0% -$156,474 40.46% 2012 N/A $0 0.0% -$1,860,149 N/A 2013 $2,036,497 $0 0.0% -$704,363 34.68% ¶ 65 Zabinski testified that, although it is rare for a municipality to have a fully funded pension fund, she is concerned regarding the continued underfunding of the Pension Fund in Harvey.

She testified that "the continued underfunding, coupled with that increase in the rate of pay higher than the actuarial assumption, eventually will get to the point where [Harvey] is going to have to pay for the pensioners." In other words, the underfunding will cause the dissipation of the Pension Fund's assets which will result in the fund having no assets, thereby requiring Harvey itself to pay the pension benefits. ¶ 66

(7) Jamie Wilkey ¶ 67 Jamie Wilkey, an accountant with Lauterbach & Amen, an accounting firm that specializes in the accounting of government entities, testified that his firm was hired to perform an audit of the Pension Fund for fiscal years 2005, 2006, and 2007.

She testified that there were 113 plan members in the Harvey firefighter's pension fund as of 2004, with 49 active plan members and 64 retirees and beneficiaries. ¶ 68 Wilkey testified that the Pension Fund had $16,699,170 in assets as of April 30, 2005, that Harvey contributed $9,885 to the Pension Fund for that same year, and that the Pension Fund paid out $1,398,003 in benefits for that year.

Harvey was required to contribute 12.2% of the Personal Property Replacement Tax (PPRT), but did not do so. ¶ 69 Based on the 2005 annual audit report, Wilkey testified that the Pension Fund, as of fiscal year 2005, was 63.87% funded.

She testified that the category entitled "annual pension cost" is the number "that reflects the annual required contribution adjusted for the interest on the outstanding net pension obligation as well as adjusted for the actuary's calculation of retiring the unfunded portion of the liability as well." For fiscal year 2005, Wilkey testified that the annual pension costs were $823,021 and that Harvey's contribution of $9,885 to the Pension Fund accounted for only 1.20% of the annual pension cost for 2005.

There were 47 active plan members and 71 retirees and beneficiaries drawing off the Harvey firefighter's pension fund as of April 30, 2005. ¶ 70 Wilkey testified that the Pension Fund had $16,782,216 in assets as of April 30, 2006, and paid out $1,585,940 in benefits and refunds, while Harvey contributed only $38,304. Using these numbers, Wilkey opined that the Pension Fund was 59.31% funded. Although Harvey contributed $38,304 to the Pension Fund, the contribution accounted for only 3.91% of the annual required contribution.

As of April 30, 2006, there were 50 active plan members and 66 retirees and beneficiaries; the percent funded of the firefighters' pension fund was 57.82 percent for the 2006 year. ¶ 71 Wilkey testified that the Pension Fund had $17,715,906 in assets as of April 30, 2007. For this same year, Harvey contributed $615,407 to the Pension Fund, and the Pension Fund paid out $1,582,325 in benefits and refunds. Additionally, the Pension Fund was 57.8% funded, and Harvey contributed 58.02% of the annual pension costs.

Further, after examining the annual financial report for fiscal year 2009, she testified that the net pension obligation for Harvey was $4,539,179, and Harvey contributed only $18,181. ¶ 72 Wilkey testified that personal property replacement taxes are revenue transmitted to cities within Illinois, which then contribute 12.2% of these taxes to the cities' pension funds. Wilkey opined that Harvey would owe the Pension Fund $125,773.33 in personal property replacement taxes as of the time of her deposition on February 28, 2014. ¶ 73

(8) James Ritchie ¶ 74 James Ritchie, a CPA and client manager for Lauterbach & Amen, who worked directly with the Pension Fund, testified to the Pension Fund's financial condition and was concerned for its financial viability. He testified: "With statutorily required increases in benefits being paid out as well as the expenses and then the lack of municipal funding that is coming in, it looks that the assets are slowly being depleted to pay out benefits as required by statute.

Without municipal funding I would say, in an estimation, the [Pension Fund] will begin to have difficulty paying out benefits by the end of this decade." ¶ 75 Ritchie testified that the lack of cash assets or investments that are available for the payment of benefits, combined with the increases in the cost of living, is going to create problems in paying out benefits.

Ritchie testified that, in his opinion, the Pension Fund is on the verge of going insolvent and "has approximately five years before that's a very real possibility, of being completely insolvent." ¶ 76 Based on his review of the fund's statement of net position ending December 31, 2013, Ritchie testified that Harvey has collected $469,637.06 on behalf of the Pension Fund, but has not remitted any of it into the Pension Fund.

Ritchie reviewed financial statements from April 30, 2007, through April 30, 2013, and calculated the total amount of money that Harvey had failed to contribute to the Pension Fund between fiscal years 2005 and 2013 as approximately $10,190,000. However, Ritchie did not account for the loss of investment opportunity in his calculations. ¶ 77

(9) Todd Schroeder ¶ 78 Todd Schroeder, an actuary with Lauterbach & Amen, was hired to conduct the actuarial valuation for the Pension Fund for 2012 and 2013. Lauterbach & Amen then assigned this task to Schroeder, who testified about what a contribution of zero dollars would do to a pension fund: "Contribution of zero dollars would increase the unfunded liability of a pension fund.

If you look at the current-the prior year recommended contribution, whatever that dollar figure was, versus a contribution of zero, that difference is what's called unexpected unfunded accrued liability that comes in in the next year.

So that unexpected unfunded liability adds to whatever unfunded liability already existed from last year to this year that we already knew was there." Schroeder further explained that a municipality that continues to make no contribution to a pension fund would result in an increase of the annual required contribution going forward. ¶ 79 Schroeder explained why municipalities should contribute the annual actuarial requirement every year: "The idea behind contributing the annual actuarial requirement each year is that you can-to some extent you can manage the increase in cost over time.

So if you set up, for example, an actuarial requirement that's going to increase at four-and-a-half or five percent per year, then you have some predictability as to those contributions if those contributions are being made over time.

If those contributions are not made, then you have much more volatility and you see more rapid increases in the contribution calculations and annual actuarial requirements over time." Putting these ideas together, Schroeder, when asked whether Harvey's failure to contribute at least the minimum annual actuarial requirement to the Pension Fund was concerning to him, testified: "Yes. *** One thing that jumps out is that right now the cash flow out greatly exceeds the cash flow that's coming in. The benefit payments that are being paid out of the [Pension Fund] are close to 20 percent of the [Pension Fund's] assets.

So the dollars that are coming in from employees and investment income is not enough to offset that, so we're seeing a declining asset base each year." ¶ 80

(10) Daniel Mumpher ¶ 81 Daniel Mumpher, the Director of Local Government in the Illinois Comptroller's Office, testified that he is in charge of managing the reporting process of local governments throughout the State of Illinois. This includes the intake of annual financial reports, annual audits, and tax increment reports.

Mumpher testified that municipalities in Illinois are required to submit annual financial reports to his office within six months of the end of their respective fiscal years. ¶ 82 Mumpher testified that Harvey filed its annual financial report for 2005 on July 31, 2006, its annual financial report for 2006 on July 6, 2007, its annual financial report for 2007 on April 8, 2008, and its annual financial report for 2008 on November 15, 2011. He further testified that Harvey's annual financial reports for 2009, 2010, 2011, and 2012 were all filed on November 1, 2013.

However, Mumpher testified that he had not received an annual financial report from Harvey for the year 2013 or after. ¶ 83 Additionally, Mumpher testified that, while he had received an annual audit for fiscal year 2009, he did not receive it until December 16, 2013. However, Harvey has not filed an annual audit for fiscal years 2010, 2011, 2012, or 2013. Mumpher testified that he is concerned that Harvey has either not timely filed or has not filed at all the annual financial reports and annual audits for several years.

Both these reports are statutorily required; however, Harvey has not timely filed for multiple years. Mumpher testified that Harvey is one of approximately 20 municipalities that are multiple years behind on these reports. ¶ 84 Due to Harvey's lack of filing, Mumpher testified that his office had issued several requests for Harvey to file these reports with his office. As a result of the continued delinquency of these reports, Mumpher's office has issued multiple fines against Harvey.

He testified that he is unsure of the exact amount, but the total is more than $10,000 at this point. ¶ 85 Mumpher testified that Harvey reported that it paid $1,513,003 to the Pension Fund during fiscal year 2005, $1,580,608 during fiscal year 2006, $0 in fiscal year 2007, $1,761,830 during fiscal year 2009, $0 during fiscal year 2010, $0 during fiscal year 2011, and $1,761,830 during fiscal year 2012. ¶ 86

(11) Scott Brandt ¶ 87 Scott Brandt, an actuary with the Illinois Department of Insurance, testified that he is familiar with

Article 4 of the Code, which establishes firefighter's pension funds for municipalities based on their population. Brandt testified that the Code: "dictates a methodology in which the actuary is to use [when determining pension contributions]. It dictates the time frame under which the unfunded is to be paid off and the method in which that unfunded is to be calculated. It dictates that the assets are to be smoothed over a five-year period.

It dictates that the unfunded-or the fund only needs to be funded to a 90 percent level by the end of period dictated under the statute which is in 2040." ¶ 88 Brandt then examined actuarial valuation reports produced by the Department of Insurance for the Pension Fund for the fiscal years 2004 through 2010. The preparation of these reports involves examining the documents submitted to his office by the Pension Fund. Then, his department sends the report through an "electronic check" that ensures the information is fairly accurate.

This program then "computes the liability, the actual liabilities, compares the two, comes up with a shortfall if that is the case." The shortfall is then amortized over a period to ensure it is paid off. Brandt further testified that his department used a funding method called "entry age normal cost" for the earlier actuarial valuation reports.

However, the Code changed the calculation method to projected unit credit, which "projects the liabilities in a different method." ¶ 89 Examining an actuarial experience study from September 26, 2012, Brandt testified that the Department of Insurance commissioned this report to determine the effects of the change in

Article 4 of the Code in 2011. This study was used to determine how the actuarial assumptions needed to be reviewed and changed to be in line with the new law. The report provided the Department of Insurance updated assumptions to use when conducting its valuations. ¶ 90 Next, Brandt examined a biannual public pension report for the State of Illinois for years 2011 through 2013. Examining this report, Brandt testified that Illinois public pensions were 54.3% funded in 2011. However, the pension funds were only 49% funded in 2013 when the report was published. ¶ 91 VI. HARVEY'S MOTION FOR

SUMMARY JUDGMENT ¶ 92 In its motion for

summary judgment, Harvey argued that the Pension Fund is not on the verge of default or imminent bankruptcy and therefore, Harvey is not liable to the Pension Board. In addition, Harvey argued that the Pension Board's action is barred by laches and separation of powers and that the Pension Board lacks the authority to sustain this lawsuit. Additionally, Harvey argued that, even if the foregoing is incorrect, the Pension Board's claims for damages are still wholly unreasonable. ¶ 93 A.

THE VERGE OF DEFAULT OR IMMINENT BANKRUPTCY ¶ 94 Harvey argued that the Pension Fund is not on the verge of default or imminent bankruptcy. In support, it attached the deposition transcript of Calene Zabinski, "who performs annual audits for around 20 Illinois police and firefighters' pension funds, and who has knowledge of the state of other police and firefighters' pensions[.]" Zabinski testified that, in her experience, only in rare instances are pension funds fully funded. ¶ 95 B. REASONABLENESS OF DAMAGES ¶ 96

(1) THE MOST RECENT ACTUARIAL VALUATION ¶ 97 Harvey argues that, under the Code, municipalities are required only to levy "a sum sufficient to meet the annual actuarial requirements of the pension fund." 40 ILCS 5/4-118(a) (West 2014). To achieve this goal, the Code provides a two-step process: (

a) funding the normal cost of the pension fund and (

b) providing the annual amount required to bring the total assets of the pension fund up to 90% by fiscal year 2040. 40 ILCS 5/4-118(a) (West 2014).

Based on this, Harvey argued that the second portion of that formula, "an annual amount sufficient to bring the total assets of the pension fund up to 90% of the total actuarial liabilities *** by the end of [the] municipal fiscal year 2040," takes into account underfunding of the pension fund and changes based on the contributions of previous years. 40 ILCS 5/4-118(a) (West 2014). ¶ 98 To support this argument, Harvey attached the discovery deposition transcript of Todd Schroeder, the Pension Fund's actuary. Schroeder testified that actuarial valuations would be different based on funding from prior years.

Therefore, the underfunding of previous years is taken into account when determining each year's actuarial valuation. For this reason, Harvey argued that the Code "only asks municipalities to contribute the recommended amount from the most recent actuarial valuation, not the sum of prior actuarial valuations." ¶ 99 Additionally, Harvey attached the discovery deposition transcript of Scott Brandt, a representative of the Illinois Department of Insurance. Harvey cited the following exchange: "Q.

Does the Public Pension Division have a position on whether a municipality that did not fund its Firefighters' Pension Fund in the fiscal year April 13, 2013, does it have a position on whether that municipality would owe the recommended contribution for the fiscal year ending April 30th, 2014, or whether it would owe that recommended contribution plus the prior recommended contribution? A. The Public Pension Division's position would be that the municipality would only need to fund the amount computed under a 2014 actuarial valuation. Q. Why is that the Public Pension Division's position? A.

Actuarially speaking, the 2013 nonfunded amount is taken into consideration when calculating the 2014 liabilities and unfunded amounts." Harvey argued that, based on this

interpretation of

Article 4, even if the Pension Board had a claim against Harvey for underfunding, Harvey was liable only for the most recent actuarial valuation, not all prior valuations combined. ¶ 100

(2) RECOVERY FOR 2009, 2010, OR 2012 ¶ 101 Harvey argued that the Code requires an enrolled actuary to calculate the annual actuarial valuation every year; therefore, because an enrolled actuary did not perform a valuation for years 2009, 2010, and 2012, the Pension Board cannot recover for those years. In its motion for

summary judgment, Harvey included the following table: Fiscal Year Actuary 1 Actuarial Actuary Actuarial Source(

s) Requirement 2 Requirement 2005 Scott $876,692 Tim $880,632 Pension Fund Brandt Sharpe Valuation 2005 2006 Scott $980,024 Tim $945,580 Pension Fund Brandt Sharpe Valuation 2006 2007 Scott $1,060,727 Tim $1,061,219 Pension Fund Brandt Sharpe Valuation 2007 2008 Scott $1,140,932 Tim $1,077,837 Pension Fund Brandt Sharpe Valuation 2008 2009 Scott $1,294,791 None Pension Fund Brandt Valuation 2009 2010 Scott $1,574,792 None Pension Fund Brandt Valuation 2010 2011 Scott $1,611,369 Tim $1,558,762 Pension Fund Brandt Sharpe Valuation 2011 2012 None None 2013 Biannual Pension Report 2013 Todd $1,531,760 None Pension Fund Schroeder Valuation 2013 ¶ 102 Harvey argued that, in 2009 and 2010, only Brandt performed the actuarial valuation.

However, according to Brandt's deposition testimony and a copy of a list compiled by the Internal Revenue Service of Active Enrolled Actuaries, Brandt is not an enrolled actuary. Harvey argued that no annual actuarial valuation was performed by an enrolled actuary for 2009 and 2010 as required by the Code, so therefore it cannot be liable for any damages during these years. Additionally, no annual actuarial valuations took place during 2012.

Therefore Harvey argues that it cannot be liable for damages during 2012 either. ¶ 103 In support of its motion, Harvey attached the deposition transcript of Jon Willhite, the Pension Fund's financial consultant, who testified that the amount of damages should be $12,267,438, based on his calculations. Harvey also attached the deposition transcript of Sandor Goldstein, an actuary, who testified that Willhite's calculations were deficient. Harvey argued that, based on Goldstein's calculations, the maximum amount of damages should be $10,009,403. ¶ 104 C.

PENSION BOARD'S MOTION TO COMPEL ENFORCEMENT OF THE SETTLEMENT AGREEMENT ¶ 105 The parties disagreed as to whether Harvey violated the following clause of the 1996 settlement agreement: "that in the future, any property taxes levied or personal property replacement taxes received on behalf of the [Pension Fund], which are assessed, collected and remitted to [Harvey] by the Cook County Treasurer's Office, shall be paid to the [Pension Fund] within 30 days of receipt by [Harvey], and not used by [Harvey] for any other corporate purposes as required by [the Code]." ¶ 106 Harvey argues that it did not fail to remit levied funds to the Pension Fund because it never collected the money levied for the funds.

Harvey presented the following tables to support this argument: Fiscal Year Total General Total Pension Total Actually Shortfall Levy Fund Levy Collected 2005 $6,837,195 $0 - - 2006 $6,837,195 $0 - - 2007 $6,832,504 $480,632 $5,907,424 $925,080 2008 $7,952,086 $1,061,219 $5,208,438 $2,743,648 2009 $7,952,086 $1,061,219 $7,551,900 $400,186 2010 $8,759,841 $350,000 $7,834,933 $924,908 2011 $9,633,132 $0 - - 2012 $9,975,330 $0 - - 2013 $10,771,419 $0 - - Fiscal Year Revenues Expenditures Deficit 2007 $30,260,000 $36,740,000 $5,360,000 2008 $31,540,000 $35,890,000 $4,350,000 2009 $34,849,798 $54,829,361 $19,979,563 2010 $33,218,986 $6,157,595 $6,157,595 Totals $129,868,784 $166,835,942 $36,967,158 Fiscal Year Personal Property Replacement Taxes Received 2005 $391,736 2006 $501,237 2007 $805,674 2008 $888,081 2009 $778,539 2010 $646,436 2011 $797,446 2012 $703,326 2013 $744,405 2014 $780,142 ¶ 107 Based on this information, Harvey argued that between 2007 and 2010, the years the Pension Board claims Harvey failed to remit the funds to the Pension Fund, "Harvey specifically levied $2,953,070 to be paid to the Pension Fund as part of its general corporate levy. [Citation.] However, during this same period, Harvey experienced a shortfall in its collections and collected $4,993,822 less than it had levied." For this reason, Harvey argued that it never collected the funds intended for the Pension Fund and, therefore, Harvey could not remit funds to the Pension Fund that it did not receive. ¶ 108 VII.

RESPONSE TO THE MOTIONS FOR

SUMMARY JUDGMENT ¶ 109 Following the filing of both parties' motions for

summary judgment, the trial court ordered both parties to submit their responses and replies, which they did. Then, on March 18, 2015, Harvey moved to supplement its motion for

summary judgment in order to attach two settlement agreements, which Harvey felt impacted its financial status. Those settlement agreements were from two cases involving Harvey: City of Chicago v. City of Harvey , No. 12 CH 44855 and SEC v. City of Harvey , No. 14-cv-7744. On April 14, 2015, the Pension Board also sought to supplement its motion for

summary judgment with five additional exhibits, including (

A) the actuarial valuation of the Pension Fund as of May 1, 2014, (

B) the Pension Fund's UBS Asset Allocation Review as of March 4, 2015, (

C) correspondence between the Illinois Municipal Retirement Fund and the Illinois Department of Insurance dated March 17, 2015, (

D) an April 3, 2015, Cook County Circuit Court Judgment Order assessing damages for the Harvey Police Pension Fund against Harvey in the amount of $7,334,181.88, and (

E) Harvey's mayor's campaign brochure entitled "Re-Elect-A Lifetime of Commitment" in which he states that Harvey is in better financial shape than it has ever been and that all outstanding litigation has been settled. ¶ 110 In support of this motion, the Pension Board argued that the Pension Fund's net present assets have decreased since the last valuation: "As of March 4, 2015, the Pension Fund had only $10,936,532.72 in assets.

According to the most recent actuarial valuation, the Pension Fund was only 27.18 percent funded as of May 1, 2014, and the Pension Fund's unfunded accrued liability has increased to nearly $30 million." Additionally, the Pension Board attached correspondence between the Illinois Municipal Retirement Fund and the Illinois Department of Insurance regarding the change in the Code which allows a form of 'enforcement provision' relied on by Harvey in its motion for

summary judgment. Specifically, this letter shows that the State Comptroller is refusing to comply with the statutory provision; therefore, the Pension Board argued that "the enforcement provision in

Article 4 is currently useless and it does not save the Pension Fund from default or bankruptcy." ¶ 111 The trial court granted both motions to supplement. Then, on June 5, 2015, the Pension Board filed an emergency motion to supplement, in which it sought to attach: (1) the Illinois Supreme Court decision of In re Pension Reform Litigation , 2015 IL 118585, 392 Ill.Dec. 1, 32 N.E.3d 1 ( Heaton ), and

(2) House Bill 3484 and Senate Amendment #1. ¶ 112 On June 9, 2015, the trial court granted the emergency motion to supplement. ¶ 113 VIII. TRIAL COURT'S ORDER ¶ 114 On June 25, 2015, the trial court granted the Pension Board's motion for

summary judgment as to count I for declaratory judgment and count III for injunctive relief and also granted the Pension Board's motion to compel enforcement of the settlement agreement. However, the court denied count II for a writ of mandamus . ¶ 115 A. HARVEY'S PRELIMINARY DEFENSES ¶ 116 First, the trial court determined that the Pension Board had authority to bring the claim and that laches , the statute of limitations, or separation of powers doctrine did not bar this claim.

The court found that the Pension Board is an administrative body, which is a "separate and independent entity from the municipality in which it serves." Therefore, the Pension Board is not a branch of the Harvey government, and therefore, it can maintain a suit against Harvey. ¶ 117 1.

LACHES AND STATUTE OF LIMITATIONS ¶ 118 Harvey had argued that the Pension Board's suit was barred by either laches or the statute of limitations because the Pension Board waited to "bring suit for more than five years after first learning of the behavior of which it complains." Harvey argued that the Tort Immunity Act, which has a one-year statute of limitations, applies in this case. 745 ILCS 10/8-101(a) (West 2014). However, the trial court found that the Tort Immunity Act applies only to civil tort actions, and was, therefore, not applicable in this case.

Rather, the trial court determined that the statute of limitations was five years in accordance with

section 13-205 of the Code of Civil Procedure. 735 ILCS 5/13-205 (West 2014).

The trial court explained: "Due to the interplay between the actuarial valuation, fiscal year, tax levy and Pension Code, the Board could not have known of Harvey's failure to properly levy or contribute to the Fund for fiscal year 2005 until February 6, 2006. [Citations Omitted.] Thus, the board properly brought suit within the applicable five year statute of limitations." ¶ 119 The trial court found that to succeed on a claim of laches , "Harvey must show that it was misled or prejudiced by such delay, or pursued 'a course different from that which [it] would otherwise have taken. [Citation.]' " The trial court found that Harvey was not unknowingly accruing liability.

Rather, Harvey was knowingly accruing liability, failed to utilize any formula to determine its contributions to the fund, and failed to fulfill its duty according to the Code. Additionally, the trial court cited to the fact that, even after the suit was filed in 2010, Harvey continued its course of failure to contribute to the Fund. Therefore Harvey was not unknowingly accruing liability. ¶ 120 2. SEPARATION OF POWERS ¶ 121 The trial court partially agreed with Harvey's argument regarding separation of powers.

The trial court acknowledged that the judiciary branch has always been cautious when venturing into the world of taxation. However, the trial court found that, when a municipality abuses its discretion in the enforcement of statutory provisions, the judiciary will step in to enforce the law. Accordingly, the trial court denied the Pension Board's claim for a writ of mandamus . On all other counts, the court denied the affirmative defense of separation of powers. ¶ 122 B.

CONSTITUTIONAL, CONTRACTUAL, AND STATUTORY RIGHT TO FUNDING ¶ 123 In reaching its finding, the trial court drew distinctions among (1) a constitutional right to funding, (2) a contractual right to funding, and (3) a statutory right to funding. The trial court found that

article XIII,

section 5 of the Illinois Constitution was the basis for both (1) a constitutional and (2) a contractual right to funding: "Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship , the benefits of which shall not be diminished or impaired ." (Emphasis added.) Ill. Const. 1970, art. XIII, § 5. The trial court found that the Pension Fund must prove that it is on the verge of default or imminent bankruptcy to maintain an underfunding claim based on a constitutional violation under

section 5. Ill. Const. 1970, art. XIII, § 5. ¶ 124 However, the trial court found that to determine whether a contractual right to funding exists requires an additional step, in which a pension fund must prove that it has "vested contractual rights to *** funding levels." People ex rel. Sklodowski v. State , 182 Ill. 2d 220, 231, 230 Ill.Dec. 884, 695 N.E.2d 374 (1998). This level of proof requires "citing specific language in the [Code] that demonstrates a legislative intent to establish a contractual right to funding." Board of Trustees of the Riverdale Police Pension Fund v.

Village of Riverdale , 2014 IL App (1st) 130416, ¶ 38, 383 Ill.Dec. 499, 14 N.E.3d 1110. ¶ 125 While the trial court found that both (1) a constitutional and (2) a contractual right were based on the constitution, the trial court found that (3) a statutory right was derived directly from the Code itself. The trial court specified that, even if a statute does not create vested rights, the statute can still create a legal obligation that a party must follow. ¶ 126 1.

CONSTITUTIONAL RIGHT TO FUNDING ¶ 127 The trial court focused on whether pension funds, in general, have a constitutional right to funding, and found, based on Riverdale , 2014 IL App (1st) 130416, 383 Ill.Dec. 499, 14 N.E.3d 1110, and Sklodowski , 182 Ill. 2d 220, 230 Ill.Dec. 884, 695 N.E.2d 374, that they do not have that right. Rather, the trial court found that pensioners have a right to receive benefits from a pension fund once their interest vests.

As a result, the trial court found that a fund cannot demand funding unless the fund is "on the verge of default or imminent bankruptcy *** such that pension benefits were being impaired." (Internal quotation marks omitted.) Riverdale , 2014 IL App (1st) 130416, 383 Ill.Dec. 499, 14 N.E.3d 1110.

However, the trial court observed that "by the time that a pension fund is on the verge of default, the deficiency in the pension payments is certain to be quite large and the likelihood of the public employer's ability to pay is certain to be quite small." ¶ 128 The trial court then attempted to determine whether this Pension Fund was or was not on the verge of default or imminent bankruptcy but, in the end, the trial court left that decision for a higher court to determine because "[n]o court in this State ha[d] yet" made this ruling: "In this case, [Harvey] is undoubtedly in a state of near crisis.

The parties have produced ample discovery and deposition testimony describing the deficient payments by Harvey over the years. If Harvey continues to underfund and often contribute zero or minimal dollars to the Fund, it will most certainly be at risk of denying benefits within the next five to ten years. However, throughout Illinois, municipalities, police and firefighters' pension funds are underfunded. *** Harvey points out that many other municipal pension funds are severely underfunded.

For example, as of fiscal year 2012, the Chicago Firefighters' Pension was 24.4% funded, the Downstate Fire Pension was 55.5% funded, and the Village of Stone Park's Police Pension was 7% funded. No court in this State has yet equated these funding deficiencies with a constitutional violation.

Thus, this Court concludes that the severe underfunding of the Fund in this case does not equate with the 'verge of default or imminent bankruptcy' necessary to find a constitutional violation." ¶ 129 In addition, the trial court observed (1) that Joseph Letke is no longer Harvey's comptroller, (2) that the Harvey Police Pension Fund was recently awarded a $7 million judgment against Harvey for underfunding, and (3) that the Code now includes a provision that allows the Pension Board to bring an action to collect a portion of the deficiency directly from the state. 40 ILCS 5/4-118(b-5) (West 2014).

Taking these things together, the trial court found that, although Harvey's finances were "in sorry shape," this evidence did not rise to the level necessary to "meet this draconian 'verge of default or imminent bankruptcy' standard." ¶ 130 2.

CONTRACTUAL RIGHT TO FUNDING ¶ 131 The trial court found that the "Code itself does not create any contractual right to a certain level of funding." In reaching this finding, the trial court determined that it would presume that the law did not intend to create a contractual right, so that a plaintiff has the burden of proving specific language within the Code, which establishes the legislature's intent to create a contractual right.

Based on this presumption, the trial court found that the Pension Board did not fulfill the high burden necessary to prove it had a contractual right to funding based on the Code. ¶ 132 3. STATUTORY RIGHT TO FUNDING ¶ 133 The trial court found that the Code did provide an enforceable statutory right to funding. In reaching this conclusion, the trial court drew a line between the state and the individual municipalities.

Citing Sklodowski , the trial court examined a situation where the state legislature amended the funding requirements for an employee pension plan, as it is legally allowed to do. 182 Ill. 2d at 231, 230 Ill.Dec. 884, 695 N.E.2d 374.

The trial court explained that "[a]lthough one might wish the legislature would acknowledge when it enacts legislation replacing previous statutory funding requirements, absent some contractual right or constitutional prohibition, the legislature retains the power to change such statutory policies by amendment." ¶ 134 In contrast to the State legislature, the trial court found that a municipality does not have the authority to amend or ignore a state statute. A city is required to levy "a tax at a rate which will produce a sum sufficient to satisfy the annual requirements of the *** pension fund." People ex rel.

Sweet v. Central Illinois Public Service Co. , 48 Ill. 2d 145, 156-57, 268 N.E.2d 404 (1971). The trial court found that the state legislature did not intend to remove all discretion from the municipality in setting the levy every year. However, the state legislature intended for the municipality to set that levy in accordance with the Code. In sum, the trial court concluded: "while the statutory formula set forth in

section 4-118(

a) leaves Harvey some discretion and the Illinois legislature retains the power to alter such a formula through legislative action, Harvey must comply with the [Code] in effect for any given year.

There can be no dispute that Harvey has completely failed to do this and that the discretion afforded [Harvey] has been completely abused." The trial court found that Harvey had not followed the statutory formula and provided "absolutely no justification or formula to support the amount of its levy or its contribution for any fiscal year at issue in this case." For these reasons, the trial court found that Harvey violated the Pension Fund's statutory right as provided in the Code. ¶ 135 Based on the violation of the Pension Fund's statutory rights, the trial court granted the Pension Board's request for declaratory judgment and injunctive relief.

However, the trial court denied its request for a writ of mandamus . In calculating damages, the trial court determined "that, if Harvey had actually funded the full amount in any fiscal year, the actuarial requirement in the following year would be lower because the unfunded liability would be lower." The trial court assessed damages of $10,009,403 against Harvey. ¶ 136 C.

MOTION TO COMPEL ENFORCEMENT OF THE SETTLEMENT AGREEMENT ¶ 137 With respect to the settlement agreement, the trial court first examined Harvey's affirmative defenses, which included claims that the settlement agreement is void and that the Pension Board waived its right to sue for enforcement of the settlement agreement. As to whether the agreement is void, the trial court found that the settlement agreement was simply a mirror of Harvey's statutory obligations pursuant to the Code.

Therefore, because there is no illegal or unlawful purpose contained within it, the Pension Board has "every right to enforce, enjoin or enter into an agreement on behalf of the [Pension] Fund to compel Harvey's compliance with the law." ¶ 138 Next, Harvey argued that the Pension Board waived its right to enforce the settlement agreement, in that the Pension Board "lulled" Harvey into a false sense that the Pension Board would not be enforcing strict compliance with the settlement agreement.

The trial court determined that, because Harvey's finances "were in complete disarray for much of the period at issue," that the Pension Board could not have known how much Harvey owed it because Harvey did not even know how much it was collecting in property taxes each year.

Further, the trial court found that, "[g]iven the chaotic state of Harvey's finances, the [Pension] Board's failure to take action prior to filing this lawsuit in 2010 comes nowhere close to an intentional relinquishment of a known right." ¶ 139 The trial court then examined Harvey's argument that, because it collected less than it levied in property taxes, it was justified in not contributing the money to the Pension Fund. Harvey argues that it levied $2,953,070 for the Pension Fund, but that it collected $4,993,822 less than its total levy.

As such, the trial court had to determine whether Harvey was allowed, under the Code, to attribute the entirety of this deficiency to a single levy, namely the Pension Fund. The trial court found that, "under the Settlement Agreement, Harvey is entitled to attribute a proportionate amount of the deficiency in its collections to the Pension Fund.

It is required now to pay in damages the specific amounts levied for the Pension Fund in fiscal years 2008, 2009 and 2010, less the percentage of that amount that represents the deficiency in collections of taxes for that fiscal year and also less any amount already contributed." ¶ 140 Additionally, the trial court found that the settlement agreement required that a percentage of the personal property replacement taxes that Harvey collected should have been contributed to the Pension Fund.

Therefore, Harvey owed the Pension Fund 12.2% of all the personal property replacement taxes that Harvey received during the relevant years. Therefore, the trial court found that Harvey owed the Pension Fund $809,892 in unpaid personal property replacement taxes. ¶ 141 D. TRIAL COURT'S DAMAGE FINDING ¶ 142 The trial court entered a judgment against Harvey for $10,009,403 in damages, plus $809,892 in unremitted personal property replacement taxes, plus an amount to be decided for unlevied taxes for the Pension Fund for the fiscal years of 2008, 2009, and 2010.

Additionally, the trial court granted declaratory judgment and injunctive relief. The court set a date to determine the exact terms of the damages and to discuss the language that would control the injunction. ¶ 143 IX. MOTIONS TO CALCULATE DAMAGES AND DETERMINE INJUNCTION LANGUAGE ¶ 144 Due to the complexity of the case, the trial court allowed each party to prepare a motion regarding the total costs of the suit and the language of the injunction.

The Pension Board filed a motion seeking an additional award of costs for $12,526.46, plus five-percent pre-judgment interest and six-percent postjudgment interest on the total damages. On August 17, 2015, Harvey filed its response to the motion. ¶ 145 On September 22, 2015, the trial court issued its final damages order. The trial court found that the Pension Board was not entitled to pre-judgment interest in accordance with

section 2 of the Interest Act ( 815 ILCS 205/2 (West 2014) ). However, the trial court did find that the Pension Board "is entitled to judgment against [Harvey] in the amount of $11,561,117.00 plus six percent (6%) postjudgment interest" in accordance with

section 2-1303 of the Code of Civil Procedure. 735 ILCS 5/2-1303 (West 2014). Additionally, the trial court found that the Pension Board was entitled to an additional $2,694,000 "plus six percent postjudgment interest as a lesser included amount of the $1,561,117.00 in damages due to the Pension Board on its statutory claim and will only become relevant if the award of damages on the statutory claim is disturbed on appeal." See 735 ILCS 5/2-1303 (West 2014).

Further, the trial court found that the Pension Board was entitled to $809,892 plus six percent postjudgment interest for unremitted personal property replacement taxes. See 735 ILCS 5/2-1303 (West 2014). ¶ 146 Also on September 22, 2015, the trial court issued its final injunctive order. This injunction required Harvey to "fully comply with the funding formula set forth in [

section 4-118(

a) of the Code], as that provision may be amended from time to time." Additionally, the injunction requires that, starting with the May 1, 2015 fiscal year, and every fiscal year thereafter, Harvey shall "annually approve a line-item property tax levy specifically for the [Pension Fund] as part of its annual property tax levy ordinance that must be approved and submitted to the Cook County Clerk's Office on or before the last Tuesday in December of each year." Further, that line-item property tax for the Pension Fund "shall equal a sum sufficient to meet the 'annual actuarial requirements' " as provided for in the Code. ¶ 147 The trial court specifically found that the line-item property tax levy for the Pension Fund must be listed on the annual property tax levy ordinance to ensure that the Cook County Clerk's Office remits the funds directly to the Pension Fund rather than to Harvey's general fund.

If, however, the funds are remitted to Harvey's general fund, Harvey shall remit those funds to the Pension Fund within fourteen days of receipt. ¶ 148 Additionally, on January 11, 2016, the trial court, during its final hearing on the case made the following statements: "I will say for the record, for what it's worth-I'll say two things for the record.

One is I think this case is just tragic on both sides and sort of a microcosm of what's going on with the pensions throughout the state and, you know, sort of an on steroids [sic] kind of way in terms of the inability of the municipality to meet the requirements that-to meet its promises. And I completely believe you, counsel, that it's not like you're spending money on frivolous things, you know. And I-so I just think it's tragic.

And I do think that, perhaps, and I don't know, I mean, I'm glad you got this stuff in the record and hopefully the appellate court can consider it because may[be] this is the case in which the standard for *** [on the verge of bankruptcy or imminent default] is met because everything that you predicted was going to happen has, unsurprisingly, in fact, happened. And, you know, the reality of these people ever getting paid under their pension is certainly at issue. However, I think there was an obligation to make the funding even before then.

So let's see what the appellate court has to say both about the stay and about the merits, but I am not going to grant the stay because I just don't think I have jurisdiction." ¶ 149 X.

THE APPEAL ¶ 150 On October 22, 2015, Harvey filed a notice of appeal, seeking (1) partial reversal of the May 24, 2013, order, (2) partial reversal of the August 23, 2013 order, (3) partial reversal of the June 25, 2015, order and opinion, (4) reversal of the September 22, 2015, corrected injunctive order, (5) reversal of the September 22, 2015, corrected damages order, and (6) reversal of all other orders entered in the case and which resulted in the prior orders.

In response, on October 30, 2015, the Pension Board filed a notice of cross-appeal seeking (1) partial reversal of the August 23, 2013, order denying the Pension Board's motion to strike affirmative defenses I and II, (2) partial reversal of the June 25, 2015, order and opinion denying count II for a writ of mandamus and finding that the Pension Fund is not on the verge of default or imminent bankruptcy, and (3) other relief the court deems necessary. ¶ 151 This appeal followed. ¶ 152 ANALYSIS ¶ 153 Both parties have presented multiple issues for this court's determination on appeal.

The issues raised on appeal include (1) whether the trial court's determination that the Pension Fund is not on the verge of default or imminent bankruptcy was correct, (2) whether the trial court correctly determined that Harvey violated the Pension Fund's statutory rights, (3) whether the trial court correctly determined that Harvey breached the 1996 settlement agreement, (4) whether the trial court correctly calculated the damages, and (5) whether the trial court correctly rejected Harvey's affirmative defenses of separation of powers and laches . ¶ 154 For the following reasons, we affirm in part and reverse in part the trial court's findings.

We affirm the trial court's findings on issues (2), (3), (4), and (5) in finding that Harvey violated the Pension Fund's statutory rights, that Harvey did violate the 1996 settlement agreement; that the trial court's calculation of damages is correct, and that Harvey's affirmative defenses were correctly rejected. However, we reverse the trial court's finding that the Pension Fund is not on the verge of default due to the blatant disregard for financial responsibility shown by Harvey towards the pension fund. ¶ 155 This court's findings in this regard are discussed below. ¶ 156 I.

THE PENSION FUND IS ON THE VERGE OF DEFAULT OR IMMINENT BANKRUPTCY ¶ 157 The trial court specifically asked the appellate court to set the standard for what qualifies as on the verge of default or imminent bankruptcy. There is very little case law or

interpretation as to what, exactly, the framers of the Illinois Constitution intended when they used this phrase. ¶ 158 To understand the meaning of 'on the verge of default or imminent bankruptcy,' a historical review of the Illinois Constitutional Convention is necessary. First, pension benefits are protected by

article XIII,

section 5 of the Illinois Constitution. This

section provides: "Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired." Ill. Const. 1970, art. XIII, § 5. ¶ 159 In reviewing the record of the proceedings of the Sixth Illinois Constitutional Convention, Delegate Kinney, who sponsored

section 5, stated that the terms "enforceable" and "impaired" should be interpreted as follows: "To establish the record as to intent, I should just like to briefly say that the word 'enforceable' is meant to provide that the rights so established shall be subject to judicial proceedings and can be enforced through court action.

The word 'impaired' is meant to imply and to intend that if a pension fund would be on the verge of default or imminent bankruptcy , a group action could be taken to show that these rights should be preserved." (Emphasis added.) 4 Record of Proceedings, Sixth Illinois Constitutional Convention 2926 (hereinafter, Record of Proceedings).

Additionally, Delegate Kinney defined the word "diminished": "Benefits not being diminished really refers to this situation: If a police officer accepted employment under a provision where he was entitled to retire at two-thirds of his salary after twenty years of service, that could not subsequently be changed to say he was entitled to only one-third of his salary after thirty years of service, or perhaps entitled to nothing.

That is the thrust of the word 'diminished.' It was not intended to require 100 percent funding or 50 percent or 30 percent funding or get into any of those problems, aside from the very slim area where a court might judicially determine that imminent bankruptcy would really be impairment." 4 Record of Proceedings 2929. ¶ 160 A. ILLINOIS SUPREME COURT CASES ¶ 161

(1) People ex rel. Illinois Federation of Teachers v. Lindberg , 1975 ¶ 162 A few years after the new constitution was ratified, our Illinois Supreme Court considered a case involving multiple class action lawsuits by members of several teachers' pension funds (Teachers). People ex rel. Illinois Federation of Teachers v. Lindberg , 60 Ill. 2d 266, 268, 326 N.E.2d 749 (1975). The Teachers sought declaratory relief claiming that an appropriation reduction by the governor of three pension funds that the Illinois General Assembly had appropriated monies for was unconstitutional.

Lindberg , 60 Ill. 2d at 268, 326 N.E.2d 749. The Governor had reduced the total appropriation amount from $330,215,000 to $143,190,000. Lindberg , 60 Ill. 2d at 269, 326 N.E.2d 749. ¶ 163 The Teachers argued that

section 5 of the Constitution "create[d] a contractual relationship between the State and participants in the pension systems which the Governor may not infringe by use of his power to reduce or veto appropriations." Lindberg , 60 Ill. 2d at 271, 326 N.E.2d 749. In examining the debates of the constitutional convention, the supreme court determined that the framers did not intend to "require a specific level of pension appropriations during a fiscal period." Lindberg , 60 Ill. 2d at 272, 326 N.E.2d 749.

Specifically regarding whether the Teachers had a contractual right to the initially appropriated monies, the supreme court found: " '[i]t has long been settled that compulsory participation in a statutory pension plan confers no vested rights, thus permitting amendment, change or repeal as the legislature sees fit.' " Lindberg , 60 Ill. 2d at 273, 326 N.E.2d 749 (quoting Bergin v. Board of Trustees of the Teachers' Retirement System , 31 Ill. 2d 566, 574, 202 N.E.2d 489 (1964) ).

For this reason, the supreme court determined that the Teachers possessed no contractual right by statute to challenge appropriation reductions, and have only contractual rights to their pension under the facts of that case. Lindberg , 60 Ill. 2d at 275, 326 N.E.2d 749. ¶ 164

(2) McNamee v. State , 1996 ¶ 165 Twenty years later, in McNamee v. State , 173

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