December 2025 IICLE FLASHPOINTS

For more information, see §6.2 of Mazyar M. Hedayat, Ch. 6, Advising Business Debtors: Alternatives to Bankruptcy, BUSINESS BANKRUPTCY PRACTICE (IICLE®, 2026)

The role of legal counsel in guiding a financially distressed business through nonbankruptcy alternatives is both critical and complex. Business clients often arrive at this juncture under immense pressure — from creditors, lenders, stakeholders, and even family members — to resolve urgent financial crises. Emotions can run high, and decisions must often be made under duress, increasing the risk of missteps.

In such scenarios, counsel must carefully delineate their responsibilities. It is not the attorney’s role to make operational decisions — such as which divisions to shut down, which projects to abandon, or how to revise the company’s marketing or pricing strategies. These are fundamentally business judgments. However, the attorney plays a vital role in helping the client identify and evaluate the legal strategies and restructuring options available to support and achieve the client’s broader business objectives.

To do this effectively, the attorney must first identify who the client is — a critical step when the business is closely held or when ownership and management are not the same. Counsel must then assess how the client’s interests align with, or diverge from, those of other key constituencies, including creditors, shareholders, suppliers, and employees.

Credibility and competence are essential. The attorney must gain the trust of ownership and management in order to ask the difficult but necessary questions that test the client’s assumptions, challenge unrealistic expectations, and provide a sober assessment of legal risk. Counsel must not be afraid to probe deeply or to disrupt internal narratives that may be clouded by wishful thinking or denial.

In the case of closely held businesses, owners are often reluctant to acknowledge the severity of the situation. They may be emotionally and financially invested, and resistant to ceding control or admitting failure. While it is not the attorney’s job to force existential decisions, effective representation requires ensuring that ownership or management seriously confront the following threshold questions when considering reorganization or other nonbankruptcy paths:

a. Have all of the underlying problems giving rise to the financial difficulty been identified?

b. Can the company’s problems be fixed?

c. Does ownership or management have the will to fix the problems and complete the process?

d. What will it cost to complete the process?

e. Does the company have the resources to solve the problems in terms of capital and personnel?

f. Does the company have the time necessary to fix its problems?

g. Is ownership willing to invest capital to salvage the company and on what terms?

h. Will key suppliers and customers cooperate in the process?

i. Will key employees stay the course or jump ship?

j. Will major lenders and other creditors cooperate in the process?

k. Do current economic conditions and trends make a reorganization feasible?

These questions cannot be asked or answered in a vacuum. Rather, they must be considered in the context of many factors, including the following:

a. the nature and severity of the company’s financial difficulties;

b. the length of time that the company has been experiencing financial problems;

c. the company’s current relationship with its creditors, suppliers, lenders, and employees;

d. the nature and seasonality of the client’s business;

e. current and projected general economic conditions;

f. the company’s capital structure;

g. the number of creditors and the amount of various types of debt the company has;

h. what, if any, tax benefits can be preserved or obtained (e.g., the retention and use of loss carrybacks and carryforwards);

i. current ownership’s willingness and ability to inject capital;

j. the availability of outside investors to inject capital;

k. the apparent willingness, if any, of major individual creditors or general creditor classes either to compromise their claims or to extend payment terms on a consensual basis; and

l. ownership’s or management’s mental toughness and willingness to go through the reorganization process, which can be adversarial, expensive, uncertain of outcome, and frustrating.

The answers to these hard questions may be strongly influenced by the alternative strategies that the attorney presents for the client’s consideration and the cost, benefits, and risks each strategy entails.

It should be clear that a client’s initial response to everyday financial distress may have a significant impact on its future viability. For example, in response to cash shortages, the client may decide to slow down payments to vendors in an attempt to catch up, essentially using trade creditors to finance the company’s short-term operations. While these tactics may succeed at getting the distressed company back on track, these quick fixes often have a snowball effect on the business. Vendors who are not being promptly paid may shorten terms on future sales or switch to cash-on-delivery payments, thereby further stressing operations. Collection calls may intensify, credit may be cut off, and lawsuits may be filed. As a result, cash becomes tighter, and what was the company’s minor problem is now much more significant.

An attorney should also advise a company’s directors about how their typical fiduciary duties may shift upon a company’s insolvency. Specifically, directors’ fiduciary duties may extend to creditors as a group rather than individual creditors. This principle is supported by the Delaware Supreme Court’s decision in North American Catholic Educational Programming Foundation, Inc. v. Gheewalla, 930 A.2d 92 (Del. 2007), which held that creditors of an insolvent corporation have standing to bring derivative claims on behalf of the corporation but cannot pursue direct claims for breach of fiduciary duties against directors. See also Caulfield v. Packer Group, Inc., 2016 IL App (1st) 151558, 56 N.E.3d 509, 404 Ill.Dec. 525.

Illinois courts have similarly recognized that directors and officers owe fiduciary duties to creditors upon insolvency. For instance, in Technic Engineering, Ltd. v. Basic Envirotech, Inc., 53 F.Supp.2d 1007 (N.D.Ill. 1999), the court noted that once a corporation becomes insolvent, its assets are deemed to be held in trust for the benefit of creditors, and directors occupy a fiduciary relationship toward them. Additionally, Prime Leasing v. Kendig, 332 Ill.App.3d 300, 773 N.E.2d 84, 265 Ill.Dec. 722 (1st Dist. 2002), clarified that fiduciary duties in insolvency run to creditors as a group and not to individual creditors, aligning with the derivative nature of such claims.

The Bankruptcy Court for the Northern District of Illinois explicitly adopted the reasoning in Gheewalla, supra, concluding that the Illinois Supreme Court would likely agree that individual creditors cannot directly sue directors for breach of fiduciary duty. The court emphasized that allowing such direct claims could create conflicts of interest and undermine directors’ ability to negotiate effectively during insolvency. See Soverino v. Netzel (In re Netzel), 442 B.R. 896 (Bankr. N.D.Ill. 2011).

Similarly, in RMB Fasteners, Ltd. v. Heads & Threads International, No. 11 CV 02071, 2012 WL 401490 (N.D.Ill. Feb. 7, 2012), the court noted that the Illinois Supreme Court has not directly addressed this issue but predicted, based on Gheewalla and related Illinois precedent, that individual creditors lack standing to bring direct fiduciary-duty claims. The court highlighted that Illinois courts often look to Delaware law for guidance on corporate law issues, further reinforcing the applicability of Gheewalla’s principles in Illinois.

Additionally, Illinois appellate courts have aligned with this reasoning. In Caulfield, supra, the court reiterated that creditors of insolvent corporations could bring derivative claims but not direct claims for breach of fiduciary duty, citing Gheewalla as persuasive authority. The court emphasized that fiduciary duties owed by directors extend to creditors only in the context of derivative claims, not direct actions.

If the insolvent client is a limited liability company (LLC), however, even derivative claims by creditors may be barred. In CML V, LLC v. Bax, 28 A.3d 1037 (Del. 2011), the creditor of an LLC brought several derivative claims against the LLC’s present and former managers for breaching the duties of care and loyalty and acting in bad faith. The vice chancellor dismissed the claims for lack of standing, and the Supreme Court of Delaware affirmed. The court based its ruling on the definition of “proper plaintiff” in the Delaware Limited Liability Company Act, which provides that “a proper derivative action plaintiff ‘must be a member or an assignee of a limited liability company interest.’ ” [Emphasis omitted.] 28 A.3d at 1041, quoting Del. Code Ann. tit. 6, §18-1002. Because the statute was unambiguous, “[o]nly LLC members or assignees of LLC interests have derivative standing to sue on behalf of an LLC — creditors do not.” 28 A.3d at 1043.

Although Bax plainly bars derivative claims by creditors against Delaware LLCs, it is less clear whether the holding applies to Illinois LLCs. The definition of “proper plaintiff” in the Illinois Limited Liability Company Act (LLCA), 805 ILCS 180/1-1, et seq., is slightly different than its Delaware counterpart:

No action shall be brought in the right of a limited liability company by a member or transferee who is a substituted member, unless (i) the plaintiff was a member or is a transferee who was a substituted member at the time of the transaction of which the person complains or (ii) the person’s status as a member or a transferee who is a substituted member had devolved upon him or her by operation of law or under the terms of the operating agreement from a person who was a member or a transferee who was a substituted member at the time of the transaction. 805 ILCS 180/40-5.

Thus, the LLCA imposes certain conditions on the ability of members or “transferees” to bring derivative claims. Unlike the Delaware statute, however, the LLCA’s definition of “proper plaintiff” never states that a derivative action plaintiff “must” be a member or transferee. Thus, it seems plausible that a court could distinguish Bax and hold that a creditor of an Illinois LLC has standing to bring a derivative, insolvency-based breach-of-fiduciary-duty claim against the LLC’s management. There are no reported Illinois authorities on this issue.

Mazyar M. Hedayat, M. Hedayat & Associates, P.C. Bolingbrook

Mazyar M. Hedayat is the owner of M. Hedayat & Associates, P.C., in Bolingbrook, where he focuses on commercial litigation, probate, foreclosure, and real estate law. He is the Secretary of the Illinois State Bar Association’s Special Committee on AI and a Featured Attorney and Chair of the Will County Bar Association’s Practice Management Committee. Hedayat received his BA from the University of Michigan, Honors College, his MBA from the University of Michigan Ross School of Business, and his JD from DePaul University College of Law, where he received the American Jurisprudence Award.

In People v. Hughes, 2025 IL App (4th) 240514, the Fourth District Appellate Court affirmed the trial court’s removal of a disruptive defendant from the courtroom during a jury trial and the trial court’s refusal to appoint standby counsel during the trial.

In Hughes, the defendant was charged with aggravated battery and proceeded pro-se at arraignment. During the arraignment, the trial court admonished the defendant about proceeding pro se under Supreme Court Rule 401(a) and People v. Ward, 208 Ill.App.3d 1073, 567 N.E.2d 642, 153 Ill.Dec. 684 (4th Dist. 1991), which recommended that courts advise pro se defendants that they would not receive special consideration or receive extra preparation or library time. The trial court also mentioned that standby counsel would not be appointed. 2025 IL App (4th) 240514 at ¶¶1, 15 – 16.

During the trial, the defendant repeatedly interrupted the prosecutor and trial court despite being admonished about the behavior. The trial court removed the defendant during the state’s direct examination of a witness and removed the defendant again during the defendant’s direct examination of a witness. 2025 IL App (4th) 240514 at ¶¶65, 91.

The jury convicted the defendant of aggravated battery and the defendant appealed. The defendant argued on appeal that the court erred by not appointing standby counsel after the defendant waived the right to be present at the defendant’s own trial because of misconduct. 2025 IL App (4th) 240514 at ¶¶98,103.

The appellate court stated that although a defendant has a constitutional right to be present during all critical stages of a trial, this right is not absolute. The U.S. Supreme Court stated in Illinois v. Allen, 397 U.S. 337, 25 L.Ed.2d 353, 90 S.Ct. 1057 (1970) that a defendant may waive the right to be present because of misconduct. 2025 IL App (4th) 240514 at ¶109.

The appellate court explained that the trial court repeatedly admonished the defendant about the defendant’s behavior and that the defendant was on notice that the defendant would be removed from the courtroom during the trial. 2025 IL App (4th) 240514 at ¶¶132, 136. The appellate court recommended that trial courts clearly admonish disruptive defendants that their misconduct would be giving up their right to be present in the courtroom and that the trial would proceed in their absence. 2025 IL App (4th) 240514 at ¶141.

The Hughes court also noted its disagreement with the First District’s holding in People v. Turner, 2024 IL App (1st) 211648, 258 N.E.3d 927, 482 Ill.Dec. 918, which held that defendants must be specifically warned that their removal from a courtroom would leave their counsel table empty without anyone to represent the defendant. The Turner court reversed their defendant’s convictions because the defendant was not specifically given that warning. 2025 IL App (4th) 240514 at ¶122, citing People v. Turner, 2024 IL App (1st) 211648, ¶66, 258 N.E.3d 927, 482 Ill.Dec. 918.

The Hughes court also criticized the Turner court for recommending that the trial court appoint standby counsel in its case. The Hughes Court emphasized that disruptive defendants should not be rewarded for their misconduct (i.e. appointing standby counsel). 2025 IL App (4th) 240514 at ¶146.

The Hughes court questioned what role standby counsel would have and what would standby counsel be expected to do? The court noted that standby counsel’s role has uncertainties, although traditionally they would give procedural advice or answer any legal questions. In the present case, standby counsel would not have had the defendant even in the courtroom and, therefore, would be acting as the defendant’s counsel. 2025 IL App (4th) 240514 at ¶¶149 – 150.

The appellate court also questioned how any attorney could appear for the first time during trial without the defendant who was barred because of misconduct. The standby counsel would need a continuance, although in the present case the defendant objected to any delays to the trial. 2025 IL App (4th) 240514 at ¶152.

The appellate court emphasized that no trial courts had ever been reversed for failing to appoint standby counsel until the Turner decision and emphasized its disagreement with that decision. 2025 IL App (4th) 240514 at ¶154.

For more information about criminal law, see CRIMINAL RECORDS: EXPUNGEMENT AND OTHER RELIEF (IICLE^®, 2024). Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

Matthew R. Leisten, Ogle County State’s Attorney’s Office, Oregon, IL

Matthew R. Leisten serves as the First Assistant State’s Attorney for the Ogle County State’s Attorney’s Office in Oregon, Illinois. In his role, he provides essential updates on caselaw relevant to search warrants, focusing on issues such as good faith, staleness, and the impact of modern technology on legal procedures. His experience includes handling complex warrants involving advanced technologies like geofences and Triggerfish. Additionally, Leisten contributes to legal education through publications and presentations, ensuring that attorneys stay informed about current legal trends and practices.

Elimination of Mandatory IDHR Factfinding Conferences

Effective January 1, 2026, the Illinois Department of Human Rights will no longer be mandated to conduct a factfinding conference when investigating charges of discrimination filed under the Illinois Human Rights Act, 775 ILCS 5/1-101, et seq. P.A. 104-425, signed into law by Governor Pritzker on August 15, 2025, amended the Act’s requirements related to IDHR factfinding conferences and, in the process, significantly changed the investigatory process that Illinois practitioners have grown accustomed to when providing representation in matters before the IDHR.

Prior to January 1, 2026, the Act required that, as part of the IDHR’s investigatory process, a factfinding conference be conducted for each charge that was filed. 775 ILCS 5/7A-102(C)(4). The factfinding conference, led by an IDHR investigator, is an opportunity for complainants and respondents to provide testimony to the IDHR about the charge allegations and affords each party the right to respond. In addition, the factfinding conference has often been utilized as a manner by which to assess whether settlement of a charge is a realistic possibility.

As of January 1, 2026, the IDHR may, in its discretion, elect to conduct a factfinding conference when investigating a charge filed under the Act. However, if both the complainant and the respondent submit written requests for a factfinding conference within 90 days of the charge being filed, the IDHR is required to conduct a factfinding conference unless the IDHR has issued its report prior to receiving the requests. Requests for a factfinding conference are required to include the party’s written agreement to grant the Department a 120-day extension, if requested by the Department, to issue its investigation report. If a factfinding conference is scheduled, a party’s failure to attend without good cause will still result in dismissal or default. These procedural changes apply to any charges that are pending or filed on or after January 1, 2026.

Civil Penalties to “Vindicate the Public Interest”

P.A. 104-425 also amended 775 ILCS 5/8A-104(K) to create a new category of penalty that may be imposed against those found to have committed a civil rights violation. Specifically, a civil penalty may be imposed for each violation of the Act in order to “vindicate the public interest,” with amounts dependent on an entity’s prior violations of the Act:

• For those respondents not previously found to have committed a civil rights violation under the Act, the penalty is not to exceed $16,000.

• For respondents found to have committed one other civil rights violation under the Act during the five-year period prior to the filing of the charge, the penalty is not to exceed $42,500.

• Finally, for those respondents found to have committed two or more civil rights violations under the Act during the seven-year period prior to the filing of the charge, the penalty is not to exceed $70,000. Id.

Notable is that if the acts constituting the civil rights violation are committed by the “same natural person” who has been previously found to have committed civil rights violations under the Act, these civil penalties (up to $70,000) may be imposed without regard to the period of time when the subsequent violations occurred. 775 ILCS 5/8A-104(K)(3).

Takeaways

Parties litigating matters before the IDHR will now need to closely consider whether requesting the IDHR conduct a factfinding conference is strategically beneficial to their interests. While no longer mandatory, it is currently uncertain as to when the IDHR will exercise its statutory discretion to conduct a factfinding conference when not requested by the parties. Finally, Illinois employers will need to continue to be cognizant of the ever-increasing financial penalties that can be assessed against those found to have violated the Act,

For more information about employment and labor law, see LABOR AND EMPLOYMENT ISSUES IN TRANSACTIONS, BUSINESS RESTRUCTURING, AND WORKFORCE REDUCTIONS (IICLE^®, 2026). Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

Thomas C. Garretson, Robbins Schwartz, Chicago

Thomas C. Garretson is a partner at Robbins Schwartz in Chicago, focusing on labor and employment law. He counsels public and private sector employers on workplace issues, including investigations, disciplinary actions, and collective bargaining. Tom previously worked as a labor relations attorney for the Cook County Health System and with the U.S. Equal Employment Opportunity Commission. He holds a J.D. from Chicago-Kent College of Law and a B.A. with honors from Michigan State University. Tom is admitted to practice in Illinois and is a member of the Chicago Bar Association.

One of the main benefits of a revocable trust is to avoid multiple probate administrations when clients have out-of-state assets. The key to realizing this benefit is to ensure that the property is actually transferred into the trust. Clients often balk at the cost and expense of engaging out-of-state counsel to handle a property that the client believes does not have a lot of value, e.g., a family cabin in Wisconsin or undeveloped land in Arizona.

If the value of the property is under a certain statutory threshold, other states allow for real estate to transfer without probate administration. See map above where we have found states with some alternative methods of transferring real estate valued under a certain statutory threshold. Here are a few examples:

• Arizona: allows transfer real estate valued under $300,000 via affidavit six months after death (Ariz.Rev.Stat. §14-3971).

• Arkansas: allows real estate under $100,000 to be transferred by affidavit (Ark. Code Ann. §28-41-101).

• Wisconsin: allows real estate under $50,000 to be transferred by filing a transfer by affidavit with the register of deeds in the county where the property is located (Wis.Stat.Ann. §867.03).

In addition, we recommend the following best practices when considering the above.

1. Consult out-of-state attorneys to confirm that the above procedures would work for a client’s assets.

2. Confirm in writing with the client that you are not transferring the real estate into the trust.

3. Advise in writing that laws may change and that it is important for the client to check with counsel on a regular basis (we recommend every five years on a healthy basis).

We find that clients are often relieved when we point to these options. At the same time, a careful practitioner will check in with local counsel and confirm in writing the course of action taken with the client.

For more information about estate planning and probate, see ESTATE PLANNING FORMS AND COMMENTARY: IRREVOCABLE LIFE INSURANCE TRUSTS (IICLE^®, 2025). Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

Alfred S. Lee, MacDonald, Lee & Senechalle, Ltd., Hoffman Estates

Alfred S. Lee is an attorney at MacDonald, Lee & Senechalle, Ltd., where he focuses on estate planning and administration and asset protection. He is a member of the American Bar Association, the Estate Planning Committee of the Kingdom Advisors, and the Christian Legal Society. He received his B.A. from Dartmouth College, where he was a Presidential Scholar, and his J.D. from the University of Notre Dame.

Taylor Perry, MacDonald, Lee & Senechalle, Ltd., Hoffman Estates

Taylor Perry is a third-year law student at the University of Illinois Chicago School of Law. She graduated magna cum laude from Lewis University with a B.A. in Philosophy of Law, where she received the Senior Departmental Award. Taylor serves on the University of Illinois Chicago School of Law’s Professionalism Student Advisory Board (PSAB) and is passionate about legal research and writing, with a primary focus on civil litigation matters. After graduation, Taylor aims to build a career in civil litigation, leveraging rigorous research and writing to advocate effectively for clients.

Hannah Werner, MacDonald, Lee & Senechalle, Ltd., Hoffman Estates

Hannah Werner is an attorney practicing estate planning, trust administration, and probate law. Hannah is a proud alumna of Chicago-Kent College of Law (Juris Doctor) and Auburn University (Bachelor of Arts in Psychology, Bachelor of Arts in Public Relations). She also serves on the Chicago Bar Association’s Young Lawyers Section blog @TheBar Co-Editor in Chief and a Mentor in the Diversity Scholarship Foundation’s First-Generation-Law-Student Mentorship Program. Hannah is a member of the Chicago Bar Association, Illinois State Bar Association, and Lake County Estate Planning Council. 

1. Illinois Supreme Court holds provision in marital settlement agreement requiring husband to pay wife 50 percent of marital portion of federal veterans’ disability payments was not preempted by federal law. The parties in In re Marriage of Tronsrue, 2025 IL 130596, were divorced in 1992, and in 2019 the husband filed a petition to terminate disability payments to the wife, arguing that such a provision in the marital settlement agreement (MSA) was void under federal law. The wife filed a motion to dismiss, which was granted by the trial court, upheld by the appellate court, and affirmed by the Illinois Supreme Court. The anti-assignment provisions of the federal Veterans Benefits Act of 2003, Pub.L. No. 108-183, 117 Stat. 2651, did not preempt state court enforcement of a MSA wherein the husband voluntarily agreed to pay the wife a portion of the husband’s benefits. The supreme court reaffirmed that subject-matter and personal jurisdiction existed at the time of judgment, thereby making the judgment not void. The court also held that res judicata barred the husband’s collateral attack nearly 30 years after the judgment.

2. Illinois Supreme Court declines to recognize cause of action for tortious interference with parent-child relationship. After the mother of two children in Hulsh v. Hulsh, 2025 IL 130931, successfully regained custody of the children under the Hague Convention and the International Child Abduction Remedies Act, Pub.L. 100-300, 102 Stat. 437, the mother filed a state court action in Cook County against the former mother-in-law and brother-in-law alleging tortious interference with the mother’s custodial rights, wherein the mother sought to recover expenses incurred in the federal district court. The mother’s complaint detailed both the mother-in-law and brother-in-law’s alleged involvement in the aiding and abetting of the kidnapping of the children. The trial court dismissed those claims. The appellate court affirmed since Illinois does not recognize tortious interference with a parent’s custodial rights as a tort. The Illinois Supreme Court also affirmed, restating that the Illinois legislature is the proper venue for Illinois to create such cause of action.

3. Discovery limited in postjudgment modification proceeding when husband admitted having the ability to pay any reasonable child support ordered. In a postjudgment child support modification proceeding filed by the wife in In re Marriage of Knight, 2024 IL App (1st) 230629, 256 N.E.3d 1158, 482 Ill.Dec. 194, the trial court denied the wife’s discovery request for documents relating to the husband’s substantial nonmarital trust assets because the husband admitted to being able to pay any reasonable amount the trial court ordered. The appellate court classified the admission by the husband and the husband’s counsel at the evidentiary hearing as a judicial admission, but it noted that such a judicial admission did not prohibit the husband from arguing the underlying merits that the requested increase in support was not warranted.

4. Trial court’s denial of postjudgment request for upward modification of child support reversed. The wife in In re Marriage of Knight, supra, sought to increase a $10,000 per month child support award to $25,000 per month on the basis that, since the entry of judgment, the husband’s income and net worth had substantially increased and the husband and the children were enjoying a substantially increased standard of living compared to the standard of living the wife could provide the children. The trial court denied the modification on the basis that (1) the wife failed to demonstrate a substantial change of circumstances uncontemplated by the MSA; and (2) the wife failed to establish an increase in the children’s needs which warranted an increase in child support. The appellate court reversed. At the time of the modification hearing, the husband’s most recent annual incomes were between 25 percent and 127 percent higher than the contemplated earnings set out in the MSA. The appellate court concluded, therefore, that the parties had not contemplated such a substantial increase in the husband’s income. The appellate court found the trial court also erred by concluding that the wife had failed to establish that there had been an increase in the children’s needs, and the trial court should have considered the standard of living the children would have enjoyed had the marriage not been dissolved. There was no dispute that the husband’s substantial increase in income and enhanced lifestyle resulted in a disparity between the standard of living the children enjoyed between the two households.

5. Denial of postjudgment petition for fees and petition for fees related to appeal reversed. Two years after a judgment was entered in In re Marriage of Hyman, 2024 IL App (2d) 230352, 261 N.E.3d 723, 483 Ill.Dec. 726, the wife filed a petition for allocation of undisclosed marital assets that resulted in the wife receiving $130,196 due to the husband failing to disclose certain stock options, and the wife prevailed when the husband appealed. Back in the trial court, the wife filed two petitions for fees, one in the amount of $56,755 related to the underlying postjudgment action, and one in the amount of $24,833 related to the wife’s successful defense of the husband’s appeal. The trial court denied both fee petitions but granted the wife a sum total of $10,000 because the husband had failed to comply with the judgment without compelling cause or justification. The trial court believed $10,000 was a reasonable amount based in part on conversations it had with other family law attorneys. The appellate court reversed on the basis that, when a trial court reduces the amount requested in a fee petition, the court’s ruling should include the reasons justifying a particular reduction, and conversations with lawyers who did not testify before the court are not proper evidence. The appellate court also held that the trial court erred when it did not award 9 percent statutory interest pursuant to §2-1303 of the Code of Civil Procedure, 735 ILCS 5/1-101, et seq.

6. Beneficial interest designation on retirement account trumped MSA and ex-wife was entitled to retirement account proceeds upon ex-husband’s death. The appellate court in Mowen v. Kelly, 2025 IL App (4th) 240906, reversed the trial court’s order granting summary judgment in favor of a decedent ex-husband’s father, who sought to invalidate the ex-wife’s expectancy interest with respect to the ex-husband’s retirement accounts. The ex-husband had designated the ex-wife as the primary beneficiary and the father as the secondary beneficiary before the divorce and never changed the beneficiary designations after the divorce. The language of the MSA awarded the ex-husband’s retirement accounts to the ex-husband as the ex-husband’s sole and separate property but was silent as to the ex-wife’s expectancy or beneficial interest in such accounts. Being awarded property in a judgment of dissolution of marriage means gaining the ability to control who will be the new owner after one dies. The appellate court distinguished the case at bar from Hebert v. Cunningham, 2018 IL App (1st) 172135, 129 N.E.3d 539, 432 Ill.Dec. 321, which dealt with a MSA containing specific language “waiv[ing . . .all property rights and claims which he or she now has or may hereafter have.” 2025 IL App (4th) 240906 at ¶20, quoting Hebert, supra, 2018 IL App (1st) 172135 at ¶46. [Emphasis in original.] Mowen underscores the importance of executing revised beneficiary designations post-divorce or including language in the MSA establishing that both parties waive any property rights and claims either party has at the time of the divorce or that may arise thereafter.

7. Nonmarital character of accounts upheld due to motion in liminebeing granted. In a dissolution of marriage action in In re Marriage of Xinos and Marino, 2025 IL App (1st) 232326, the husband failed to identify or produce documentation in discovery supporting the husband’s claim that various financial accounts were nonmarital property. As a result, the trial court granted the wife’s motion in liminepursuant to Illinois Supreme Court Rule 219(c) filed on the eve of trial barring the husband from introducing evidence of the accounts’ nonmarital character. The appellate court affirmed, noting that the husband failed to supplement discovery responses prior to the discovery cutoff deadlines and failed to make an offer of proof regarding the accounts’ origins or tracing of funds at trial. When a motion in limineis granted, an offer of proof is critical to save for review the argument that the exclusion of the evidence was in error. 2025 IL App (1st) 232326 at ¶25.

8. Postjudgment child support arrearage affirmed when parties did not memorialize alleged oral agreement to modify support in court order. In a postjudgment action in In re Marriage of Spangler and DeFauw, 2025 IL App (2d) 240303, the wife filed a petition for rule to show cause against the husband for failure to pay child support. The trial court found the husband in indirect civil contempt with an arrearage of $78,885 and ordered the husband to pay the wife’s attorneys’ fees. The husband appealed and the appellate court affirmed. At issue was language in the parties’ parenting agreement providing that the husband would pay $700 per month, which was 28 percent of the husband’s net income, and that the husband was required to provide the wife with the husband’s income information on an annual basis and pay additional child support if the income increased. Although the husband made agreed-on increases to the monthly payments over the years, the husband failed to provide required documentation and underpaid based on actual earnings. At trial, the husband claimed to have understood that the child support provision only required additional child support and income documentation in the event the husband found a second job. The trial court rejected the husband’s arguments, which it considered “self-serving and unreasonable,” and found the language in the agreement unambiguous. 2025 IL App (2d) 240303 at ¶12. On appeal, the appellate court held that the parties could not orally modify their agreement because the modification of a child support obligation is a judicial function administered exclusively by court order. The court also rejected the husband’s claims that equitable estoppel barred enforcement, noting that the husband’s failure to tender the required income information led the wife to accept a lesser amount of child support than that to which she was entitled.

9. Attorney disqualification upheld. In a particularly contentious postjudgment case, the trial court in In re Marriage of Hipes and Lozano, 2025 IL App (1st) 240601, disqualified the husband’s attorney under Rules 3.7 and 1.7 of the Illinois Rules of Professional Conduct of 2010. The attorney was also the husband’s mother and a fact witness during a prejudgment hearing. The evidence reflected that the mother had also filed a notice of appeal challenging the court’s findings restricting the husband’s parenting time at the time of the entry of judgment, consulted with the husband’s prior attorneys, and guaranteed payment of fees to the husband’s prior counsel. The appellate court affirmed the disqualification based on Rule 3.7, which provides that an attorney shall not act as an advocate at a trial in which the attorney is likely to be a necessary witness. The court noted that at the time the motion to disqualify was heard, the attorney was not just likely to be a witness but had already been a witness, and disqualification on that basis alone was proper. The court’s opinion also discussed Rule 1.7, which provides that an attorney shall not represent a client if there is a significant risk that the attorney’s personal interests will materially limit representation of the client.

10. Section 508(b) fees upheld as sanctions, but Section 508(a) and child representative fees reversed for lack of ability to pay. The issue of attorneys’ fees was also significant in In re Marriage of Hipes and Lozano, supra. The husband appealed the attorneys’ fees issued against the husband and the husband’s counsel under §508(b) of the Illinois Marriage and Dissolution of Marriage Act, 750 ILCS 5/101, et seq., which were affirmed due to the husband’s counsel’s improper continued involvement after disqualification. Further, although contempt findings were entered, they were purged and deemed moot on appeal. As to §508(a) fees and §506(b) fees (child representative), the appellate court affirmed the fee awards to the extent payable from existing assets such as Interest on Lawyer Trust Accounts (IOLTA) funds, tax refunds, and retirement account distributions, but reversed the balance of the awards, holding that the husband lacked the ability to pay given the husband’s modest $40,811 annual income versus obligations exceeding 100 percent of that amount. In its ruling, the appellate court acknowledged that the resolution was “not ideal” for the wife’s attorney or the child representative, who received only approximately 41 percent of their awarded fees, but it ultimately concluded that ordering the husband to pay the remainder of the fees would improperly undermine the husband’s financial stability. 2025 IL App (1st) 240601 at ¶85.

For more information about family law, see ADOPTION LAW (IICLE^®, 2024). Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

Michelle A. Lawless, Law Office of Michelle A. Lawless LLC, Chicago

Michelle A. Lawless, founder of The Law Office of Michelle A. Lawless LLC, has over 20 years of experience in family law. After a distinguished career at a prestigious litigation firm, she started her own practice to offer a more compassionate and resolution-focused approach. Michelle specializes in collaborative law, mediation, and attorney-assisted mediation, helping clients navigate family disputes with minimal conflict. She is recognized for her thought leadership, extensive financial experience, and dedication to creating better outcomes for families.

In McDonald v. Board of Trustees of Village of Maywood, 2025 IL App (1st) 231616, the Illinois Appellate Court for the First District affirmed the decision of the circuit court, upholding the Village of Maywood’s Board of Police and Fire Commissioners’ termination of a police officer “for cause” following his arrest for domestic battery, even though the officer was found not guilty of the underlying charges. Relying on principles of administrative deference, the appellate court found that there was sufficient evidence in the record independent of the criminal charges to support the officer’s termination.

In 2021, Village of Maywood police officer Darrell McDonald was arrested and charged with domestic battery. 2025 IL App (1st) 231616 at ¶1. Following the arrest, the village’s police chief filed charges of termination against McDonald. Id. In lieu of arbitration, McDonald elected to have a hearing before the Village’s Board of Police and Fire Commissioners. Id.

The 2021 arrest was not McDonald’s only infraction while employed with the village’s police department. 2025 IL App (1st) 231616 at ¶7. In 2014, McDonald had been terminated following an incident related to an off-duty domestic battery but was ultimately reinstated. Id. In 2017, McDonald received a 3-day suspension for insubordination. Id. In 2019, McDonald was suspended for a total of 16 days pursuant to two separate settlement agreements. Id. In 2020, McDonald received a 20-day suspension following an off-duty arrest for driving under the influence. Id. He was placed on 12 months’ probation, which he was still subject to at the time of his 2021 arrest for domestic battery. See 2025 IL App (1st) 231616 at ¶¶9,12.

At the hearing before the board, the police chief requested summary termination based on McDonald’s violation of the terms of the 2020 settlement agreement and McDonald’s probationary status. 2025 IL App (1st) 231616 at ¶12. Following a five-day bifurcated hearing, the board ruled that there was sufficient cause to warrant McDonald’s immediate termination. 2025 IL App (1st) 231616 at ¶97.

In McDonald’s complaint for administrative review, he alleged that the board lacked jurisdiction and legal authority over his termination. 2025 IL App (1st) 231616 at ¶101. He also asserted that the board’s decision was against the manifest weight of the evidence, was arbitrary and capricious, and legally erroneous. Id. The circuit court affirmed the board’s decision, and McDonald appealed. 2025 IL App (1st) 231616 at ¶102.

Jurisdictional Challenge

McDonald’s jurisdictional challenge was based on his claim that the board was divested of jurisdiction over his termination because the board did not strictly follow certain procedures set forth in the governing collective-bargaining agreement. 2025 IL App (1st) 231616 at ¶115. McDonald further asserted that the collective bargaining agreement’s procedures superseded any statutory processes. 2025 IL App (1st) 231616 at ¶115. In response, the village argued that the board’s jurisdiction was derived from state statute, which could not be abrogated by a collective-bargaining agreement. 2025 IL App (1st) 231616 at ¶116. Rather, the village noted that any procedural challenges related to the collective-bargaining agreement should be adjudicated through the grievance procedure. Id.

Upon review of the matter, the appellate court determined that McDonald was confounding the legal principle of subject-matter jurisdiction with contractual adherence to a collective-bargaining agreement. 2025 IL App (1st) 231616 at ¶118. Quoting §10-2.1-17 of the Illinois Municipal Code (65 ILCS 5/10-2.1-17), the appellate court established that “the Board is empowered to preside over disciplinary actions for removal or discharge” and that such hearings “are to be provided as set forth in statute, unless the employer and union representing the individual ‘have negotiated an alternate or supplemental form of due process.’ ” 2025 IL App (1st) 231616 at ¶120.

The appellate court identified that the statute provides a 30-day timeframe for the board to commence the hearing. 2025 IL App (1st) 231616 at ¶120. Accordingly, the appellate court determined that the only way that the board’s jurisdiction could be divested would be if it failed to commence the hearing within the statute’s 30-day timeframe. 2025 IL App (1st) 231616 at ¶121. The appellate court disagreed with McDonald’s assertion that failing to abide by the collective-bargaining agreement’s procedural requirements would strip the board of jurisdiction over the matter. 2025 IL App (1st) 231616 at ¶123. The appellate court noted that a collective-bargaining agreement “could not trump the Board’s ability to investigate and adjudicate potential misconduct” and determined that the Board retained jurisdiction under state statute, notwithstanding any deviations from the contractual provisions of the collective bargaining agreement. 2025 IL App (1st) 231616 at ¶124, quoting Scatchell v. Board of Fire and Police Commissioners for Village of Melrose Park, 2022 IL App (1st) 201361, ¶103, 213 N.E.3d 446, 464 Ill.Dec. 409.

Impartiality of Hearing

McDonald also alleged that the board was unfairly biased against him, as demonstrated by a single communication between his counsel and the hearing officer during the standard of proof ruling whereby the hearing officer’s finding regarding the applicability of the clear and convincing standard was interpreted as the hearing officer’s finding that the standard had been satisfied. 2025 IL App (1st) 231616 at ¶129. The appellate court relied on the principle that “[a]t minimum, a ‘fair hearing before an administrative agency includes the opportunity to be heard, the right to cross-examine adverse witnesses, and impartiality in ruling upon the evidence.’” 2025 IL App (1st) 231616 at ¶130, quoting Abrahamson v. Illinois Department of Professional Regulation, 153 Ill.2d 76, 606 N.E.2d 1111, 1120, 180 Ill.Dec. 34 (1992). Upon an examination of the record, the appellate court did not find any evidence of partiality during the hearing before the board and found the contention that the hearing officer’s misstatement could be characterized as such to be “meritless.” 2025 IL App (1st) 231616 at ¶132.

Burden of Proof

McDonald’s third challenge pertained to the Board’s application of the preponderance of the evidence standard, arguing that the clear and convincing standard should have been used uniformly for all charges against him. 2025 IL App (1st) 231616 at ¶135. Relying on Wilkey vs. Illinois Racing Board, 65 Ill.App.3d 534, 381 N.E.2d 1380, 21 Ill.Dec. 695 (1st Dist. 1978), McDonald noted that although a civil proceeding, the underlying charges against him giving rise to the action were criminal in nature and therefore a heightened burden of proof was required. Id. The village refuted McDonald’s contention, noting that the preponderance of evidence standard was appropriate for the noncriminal charges, which were premised on McDonald’s unprofessional conduct and violation of department policy, not the criminal charges. 2025 IL App (1st) 231616 at ¶136. The village further noted that it invoked a more stringent burden of proof standard to one of the charges that was required and therefore committed no error. Id.

The appellate court agreed with the village and noted that McDonald’s citation to Wilkey was inapplicable, as the subsequent Illinois Supreme Court case Board of Education of City of Chicago v. State Board of Education, 113 Ill.2d 173, 497 N.E.2d 984, 100 Ill.Dec. 715 (1986), was the superseding authority for establishing burdens of proof in administrative review cases. 2025 IL App (1st) 231616 at ¶138. It further noted that the preponderance of the evidence standard was “sufficient to protect a police officer’s position, even when criminal conduct is alleged” and “given that the Board applied the higher clear and convincing evidence standard to the violation of laws charge . . . any error in the Board’s burden of proof determination in this case was harmless.” 2025 IL App (1st) 231616 at ¶140.

Cause vs. Just Cause

McDonald asserted that the board also erred by applying a “cause” standard to his termination proceeding rather than a “just cause” standard, as referenced in the collective-bargaining agreement. 2025 IL App (1st) 231616 at ¶142. The village challenged McDonald’s interpretation, noting the collective-bargaining agreement required that “cause” be found, and that the language of the collective-bargaining agreement expressly incorporated the Illinois Municipal Code’s standard of “for cause.” Id. The appellate court noted that even though the parties had used “cause” and “just cause” interchangeably throughout the proceedings, the “just cause” provisions in the collective-bargaining agreement were only applicable to proceedings before an arbitrator, not proceedings before the board. 2025 IL App (1st) 231616 at ¶143. As there was no dispute that McDonald had elected to proceed with a hearing before the Board, the “cause” standard was proper. Id.

Against Manifest Weight of Evidence

McDonald also argued that the board’s findings were against the manifest weight of the evidence because they relied exclusively on inadmissible hearsay. 2025 IL App (1st) 231616 at ¶147. The village contended that the evidence utilized was admissible and that there was sufficient evidence of guilt, both through the recordings that were admitted and on another officer’s independent observations at the scene. 2025 IL App (1st) 231616 at ¶148. The village further noted that Administrative Review Law permits the reversal of an agency’s decision on evidence only if there was material error that affected the rights of the parties and caused a substantial injustice. The appellate court did not opine on the admissibility of the evidence but agreed with the village in that “technical errors in administrative proceedings . . . are insufficient to reverse a decision ‘unless it appears to the [appellate] court that such error or failure materially affected the rights of any party and resulted in a substantial injustice.’ ” 2025 IL App (1st) 231616 at ¶151, quoting 735 ILCS 5/3-111(b). In addition, the appellate court did not believe that the finding of guilt was against the manifest weight of the evidence, as the board’s findings were supported in the record and based on express departmental rules of conduct. 2025 IL App (1st) 231616 at ¶152.

Cause for Termination

McDonald’s final challenge was that the record did not support his termination under any “cause” standard, regardless of whether the standard was “for cause” or “just cause”. 2025 IL App (1st) 231616 at ¶157. In addition, McDonald contended that his arrest was an illegal basis for adverse employment action under the Illinois Human Rights Act (775 ILCS 5/2-103(A)). Id. The village refuted McDonald’s claims, explaining that the arrest was not the sole basis for McDonald’s termination, rather that McDonald had a long-standing history of discipline and had repeatedly demonstrated his inability to exercise sound judgment during his tenure as a police officer with the village. 2025 IL App (1st) 231616 at ¶158.

Evaluating McDonald’s claim, the appellate court noted that, although “[d]eterminations of cause for discharge are not prima facie correct and are subject to judicial review . . . ‘[a]n administrative tribunal’s finding of cause for discharge commands respect, and it is to be overturned only if it is arbitrary and unreasonable or unrelated to the requirements of service.’ ” 2025 IL App (1st) 231616 at ¶159, quoting McCleary v. Board of Fire & Police Commission of City of Woodstock, 251 Ill.App.3d 988, 622 N.E.2d 1257, 1265, 190 Ill.Dec. 940 (2d Dist. 1993). Citing Valio v. Board of Fire and Police Commissioners of Itasca, 311 Ill. App. 3d 321, 330-41 (2000), the appellate court further affirmed that“the decision to terminate is given substantial deference as the Board, not the reviewing court, stands in the best position to determine the effect of an officer’s conduct on the department.” 2025 IL App (1st) 231616 at ¶15. Looking beyond the criminal charges and to McDonald’s demonstrated lack of trustworthiness, reliability, good judgment, and integrity, the appellate court found that the board’s determination was appropriate and not against the manifest weight of the evidence.

For more information about government law, see SUNSHINE LAWS (IICLE^®, 2024). Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

Laura M. Julien, Mickey, Wilson, Weiler, Renzi, Lenert & Julien, P.C., Sugar Grove

Laura M. Julien is a partner with Mickey, Wilson, Weiler, Renzi, Lenert & Julien, P.C. in Sugar Grove, Illinois, where she concentrates her practice in municipal law, school law, corporate law, and real estate matters. She is a member of the Illinois State Bar Association, Kane County Bar Association, State Bar of Wisconsin, National Council of School Attorneys, Illinois Local Government Lawyers Association, and Illinois Council of School Attorneys. She is also a recurrent presenter with the National Business Institute. Julien earned her undergraduate, with honors, from the University of Wisconsin and her J.D. degree from the University of Notre Dame Law School.

Under the Illinois Code of Civil Procedure, 735 ILCS 5/1-101, et seq., a judgment is unenforceable for 7 years after entry unless properly revived. 735 ILCS 5/12-108(a); 735 ILCS 5/2-1602(a). Real estate practitioners often deal with the question of a judgment’s enforceability, such as when examining a title or reviewing a title commitment to determine how to address any judgments of record. BMO Harris N.A. v. Sklarov, 2025 IL App (3d) 240704-U, a recent case from the Third District, provides a general overview of Illinois law concerning the revival of judgments — here, in the context of a mortgage foreclosure deficiency judgment.

Facts

On September 16, 2014, BMO Harris N.A. (BMO Harris) obtained a deficiency judgment (Judgment) for $3,548,234.66 against Vladimir Sklarov (Sklarov) and his now ex-wife, Sharon Sklarov (Sharon), jointly and severally. 2025 IL App (3d) 240704-U at ¶4. A few years later, Sharon entered into a settlement agreement with BMO Harris and the First Bank of Highland Park. 2025 IL App (3d) 240704-U ¶¶5 – 6. The settlement resolved loans separate and apart from the Judgment, but in exchange for payment on different debts, BMO Harris agreed to release the Judgment with respect to Sharon only. Id. The settlement agreement also expressly stated that the release of the Judgment did not extend to Sklarov and that BMO Harris retained the right to enforce the Judgment against him. Id. Shortly thereafter, a formal release of the Judgment against Sharon was filed with the foreclosure court. Id.

In the intervening years, BMO Harris sold, transferred, and assigned its interest in the Judgment against Sklarov to SMS Financial CH, LLC (SMS Financial). 2025 IL App (3d) 240704-U at ¶7. On September 17, 2024, pursuant to §2-1602 of the Illinois Code of Civil Procedure, SMS Financial moved the trial court to revive the Judgment against Sklarov. 2025 IL App (3d) 240704-U at ¶8. Sklarov objected, arguing that the Judgment had been released through BMO Harris’ prior settlement with Sharon, the Judgment had been satisfied in full, and SMS Financial did not have clean hands in pursuing the matter, as its sworn filings incorrectly stated that no payments had been made on the Judgment. Id. The trial court agreed with SMS Financial, and Sklarov filed a timely appeal. Id.

Appellate Court

The appellate court, in its de novo review of the lower court’s ruling, affirmed the trial court’s decision allowing SMS Financial to revive the Judgment. 2025 IL App (3d) 240704-U at ¶19. In doing so, the appellate court noted that a “judgment may be revived in three different scenarios: (1) in its seventh year when it is still active; (2) if it has been revived previously, it may be revived again in the seventh year after it was last revived; and (3) it may be revived 20 years after its entry should it become dormant.” 2025 IL App (3d) 240704-U at ¶11. The appellate court further noted that there are only two permissible defenses to a §2-1602 revival request, which must be evident on the face of the record: either the judgment does not exist or there is proof that the judgment previously was satisfied or discharged. Id., citing Department of Public Aid ex rel. McGinnis v. McGinnis, 268 Ill.App.3d 123, 643 N.E.2d 281, 285, 205 Ill.Dec. 330 (1994).

Here, the appellate court first found that the plain and unambiguous language of BMO Harris’ settlement agreement with Sharon expressly released her only and expressly preserved the lender’s right to fully enforce the Judgment against Sklarov. 2025 IL App (3d) 240704-U at ¶¶12 – 13. The appellate court rejected Sklarov’s reliance on the common law rule that “the release of one co-obligor releases all obligors” by quoting Porter v. Ford Motor Co., 96 Ill.2d 190, 449 N.E.2d 827, 830, 70 Ill.Dec. 480 (1983), in which the Illinois Supreme Court “modified this rule to hold that an ‘unconditional release of one co-obligor releases all unless a contrary intent appears from the face of the instrument.’ ” [Emphasis added by BMO Harris court.] 2025 IL App (3d) 240704-U at ¶13, quoting Porter, supra. Because the settlement agreement and release of Sharon contained conditions and also made it clear that BMO Harris retained the right to pursue Sklarov for the Judgment, he was not released as a co-obligator. 2025 IL App (3d) 240704-U at ¶13.

Second, the appellate court rejected Sklarov’s contention that because the release of Sharon referenced a release of the entire September 16, 2014, Judgment amount, the Judgment should be deemed satisfied in full. 2025 IL App (3d) 240704-U at ¶¶14 – 15. Because Sklarov was essentially arguing form over substance, the appellate court found that it was clear that the release’s reference to the date and amount of the Judgment were merely included to identify the judgment from which Sharon was being release and that there was no evidence in the settlement agreement or the release that the Judgment was deemed fully satisfied or released. Id. To the contrary, the express language of these documents indicated that the Judgment, as it related to Sklarov, was not being released.

Finally, the appellate court rejected Sklarov’s unclean hands argument, noting that whether SMS Financial acknowledged any prior payments on the Judgment in its revival petition was not a defense to that petition. 2025 IL App (3d) 240704-U at ¶16, citing McGinnis, supra, 643 N.E.2d at 285 – 286. Rather, such a defense should be raised in any supplemental proceedings regarding the enforcement of the Judgment against Sklarov. 2025 IL App (3d) 240704-U at ¶16.

For more information about real estate law, see MORTGAGE FORECLOSURE: CORRESPONDING ISSUES (IICLE^®, 2024). Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

Genevieve M. Daniels, Genevieve M. Daniels, P.C.

Genevieve M. Daniels, a versatile litigator and transactional attorney, specializes in commercial, employment, and real estate law. She offers comprehensive legal services, including real estate transactions, employment law compliance, and dispute resolution. Genevieve's unique experience allows her to provide clients with strategic insights and effective advocacy. She is also an active presenter, arts supporter, and passionate about Persian cooking and adventure travel.

A recent unpublished Rule 23 order from the Illinois Appellate Court, Workers’ Compensation Commission Division, in City of Zion Police Department v. Illinois Workers’ Compensation Commission, 2025 IL App (2d) 240758WC-U, underscores the significant preclusive effect that police and fire pension board decisions can have on subsequent workers’ compensation claims. The appellate court held that a prior determination by the Zion Police Pension Board — that an officer’s right-wrist condition did not arise from an act of duty — collaterally estopped the officer from relitigating causation before the Illinois Workers’ Compensation Commission. The judgment of the Commission was reversed, and the circuit court’s decision applying estoppel was affirmed.

Although issued under Supreme Court Rule 23, the case offers a clear application of estoppel principles in the context of police-officer disability pensions and later claims under the Workers’ Compensation Act, 820 ILCS 305/1, et seq.

Factual Background

James Labonne, a detective with the Zion Police Department, alleged that he injured both wrists performing “burpee” exercises during a mandatory firearms training event on May 8, 2015. He did not immediately report an injury, continued working full duty for several weeks, and later sought medical treatment.

Labonne submitted a duty-disability pension application in March 2016. Following an evidentiary hearing, the Zion Police Pension Board issued a written decision on June 18, 2018. It denied line-of-duty disability benefits under §3-114.1 of the Illinois Pension Code, 40 ILCS 5/1-101, et seq., but awarded non-duty disability benefits under §3-114.2. The board found that Labonne’s right-wrist condition was not caused by the May 8, 2015, training activity. Labonne did not seek administrative review, and the decision became final.

Separately, in October 2017, Labonne filed an application for adjustment of claim under the Workers’ Compensation Act, again alleging a compensable May 8, 2015, wrist injury.

A workers’ compensation arbitration hearing took place in September 2022. The employer argued that the pension board’s 2018 decision collaterally estopped Labonne from relitigating causation, accident, and credibility.

The arbitrator rejected the estoppel argument, reasoning that the Pension Code’s “act of duty” standard differed from the Workers’ Compensation Act’s “arising out of and in the course of employment” test. Finding the claim compensable, the arbitrator awarded benefits.

In January 2024, a unanimous Commission affirmed and adopted the arbitrator’s findings, modifying only the medical expense award. The Commission agreed that estoppel did not apply.

On administrative review, the circuit court of Lake County reversed the Commission. The court concluded that:

• the pension board’s decision constituted a final judgment on the merits;
• the issues of accident and causation were identical; and
• Labonne had a full and fair opportunity to litigate before the board.

It therefore found the workers’ compensation claim barred by collateral estoppel. Labonne appealed to the appellate court.

The primary issue before the appellate court was whether the pension board’s finding that the injury did not occur during an act of duty precluded relitigation of causation under the Workers’ Compensation Act. The question was reviewed de novo.

1. Identity of Issues

The court emphasized that Illinois precedent has long equated the Pension Code’s “line-of-duty” disability standard with the Workers’ Compensation Act’s “arising out of and in the course of employment” requirement. Prior decisions involving firefighters were held “equally applicable” to police-officer pensions.

The pension board necessarily decided that Labonne’s wrist condition did not result from the alleged May 8, 2015, training event. It discredited his testimony, cited delayed reporting, lack of immediate treatment, continued full-duty work, and contemporaneous records suggesting no functional impairment. That determination directly overlapped with the causation issue before the Commission.

2. Necessity of the Determination

Causation was central to the pension board’s denial of duty-related benefits and thus was “necessarily determined,” satisfying an essential estoppel requirement.

3. Same Party

Labonne was a party in both proceedings. The employer and pension board did not need to be in privity for estoppel to apply, because estoppel ran against the claimant.

4. Full and Fair Opportunity to Litigate

The record showed that Labonne was represented, testified, submitted evidence, and participated in a full evidentiary hearing before the pension board.

5. Final Judgment

Labonne did not appeal the pension decision, rendering it final.

Having found each element satisfied, the court held that the Commission erred in declining to apply collateral estoppel. Because the prior adjudication foreclosed the element of causation, the workers’ compensation claim failed as a matter of law.

Takeaways for Practioners

Pension Board Proceedings Carry Significant Preclusive Weight. Police and fire pension decisions denying duty-related disability may bar later workers’ compensation claims involving the same injury, even though the statutory schemes differ. Counsel should evaluate collateral estoppel immediately when dual claims are pending.

Identity of Issues Is Broadly Construed. The court reinforced that “line of duty” findings under the Pension Code are effectively equivalent to “arising out of and in the course of employment” under the Workers’ Compensation Act. Distinctions in terminology do not prevent estoppel.

Claimant Participation Matters. The court emphasized the officer’s full participation and opportunity to contest the pension board proceeding. When the claimant actively litigates causation at the pension stage, estoppel becomes highly likely.

Failure to Seek Administrative Review Can Be Dispositive. When a claimant does not challenge an adverse pension decision, that unreviewed finding becomes final and may foreclose compensation benefits entirely.

Defense Counsel Should Coordinate Strategy Across Forums. Agencies are not required to be in privity when estoppel is asserted against the claimant. Nonetheless, employers should anticipate that evidence and testimony developed in pension hearings may bind the claimant in subsequent Commission proceedings.

For more information about workers’ compensation, see WORKERS’ COMPENSATION PRACTICE (IICLE^®, 2023). Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

Jigar S. Desai

Jigar S. Desai is a Partner with Rusin Law Ltd, where he concentrates his practice in workers’ compensation and employment law. Recognized for his outstanding contributions to the legal field, Desai has been named a Rising Star by Super Lawyers from 2016 to 2018 and a Law Bulletin Emerging Lawyer from 2016 to 2019. He is a member of the Board of Directors at Rusin Law Ltd, and a member of the Chicago and Illinois Bar Associations. Desai received his B.A. from the University of Iowa and his J.D. from Chicago-Kent College of Law. While at Chicago-Kent, he was honored on the Dean’s Honor List for five out of six semesters and received the Honorable Edmund W. Burke Award for Excellence in Forensic Oratory as a Senior Associate of the Moot Court Honor Society.