Beth-El All Nations Church v. City of Chicago

• Decision Date: 14 May 2007
• Docket Number: No. 06-2082.,06-2082.
• Parties: BETH-EL ALL NATIONS CHURCH and Bishop Edgar Jackson, Plaintiffs-Appellees, v. CITY OF CHICAGO, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

486 F.3d 286

BETH-EL ALL NATIONS CHURCH and Bishop Edgar Jackson, Plaintiffs-Appellees, v. CITY OF CHICAGO, Defendant-Appellant.

No. 06-2082.

United States Court of Appeals, Seventh Circuit.

Argued February 7, 2007.

Decided May 14, 2007.

Rehearing Denied June 7, 2007.

Andy R. Norman (argued), Mauck & Baker, Chicago, IL, for Plaintiffs-Appellees.

Sara K. Hornstra (argued), Myriam Z. Kasper, Office of the Corporation Counsel, Appeals Division, Chicago, IL, for Defendant-Appellant.

Before FLAUM, ROVNER, and EVANS, Circuit Judges.

EVANS, Circuit Judge.

An employee of the City of Chicago mistakenly addressed a notice to Beth-El All Nations Church at 1534 East 63rd Street, instead of Beth-El's true address, 1534 West 63rd Street. The notice was pretty important: it advised the Church of its right to redeem title to the 63rd Street property after the parcel was sold for delinquent taxes. Despite the misaddressed notice, the City acquired a tax deed to the 63rd Street property in 1998. Finally, after Beth-El's failed attempts to challenge the tax deed through state postjudgment proceedings, the City sought to oust Beth-El from the property in 2006. On the very day in March 2006 when the City came to take the property, Beth-El turned to federal court and filed a complaint claiming violations of the Fourth Amendment. It also sought a temporary restraining order, which the district court granted after an ex parte hearing. The Church then amended its complaint to state a procedural due-process claim and moved for a preliminary injunction. The City opposed the injunction, claiming that the district court lacked subject-matter jurisdiction over the suit under the Rooker-Feldman doctrine; according to the City, the Church had already litigated the property dispute in state court. See D.C. Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983); Rooker v. Fid. Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923). After an evidentiary hearing, the district court granted the preliminary injunction, reasoning that Rooker-Feldman was inapplicable because the Church never had an opportunity to challenge the City's acquisition of the tax deed in state court. The City now appeals.

Beth-El, an African-American church in the Chicago neighborhood of Englewood, took title to the 63rd Street property in 1976. Beth-El rehabilitated the property and began operating there in 1984. The Church was not, however, deemed to be tax-exempt during the period from 1986 to 1995, and so real estate taxes, totaling over $100,000, were assessed by Cook County against the property. Because of the delinquent taxes, the property was sold at a "scavenger sale," a sale authorized by Illinois law for properties that have been tax delinquent for more than two years, if annual forfeiture sales have not satisfied the delinquency. See 35 ILL. COMP. STAT. 200/21-145, 200/21-260 (2000); see also People v. Meyers, 158 Ill.2d 46, 196 Ill.Dec. 646, 630 N.E.2d 811, 819 (1994) (noting primary purpose of scavenger sales is to return tax-delinquent property to the tax rolls). Under the rules governing these sales, Cook County itself could acquire the property if no private purchaser bid the full amount of the unpaid taxes. See 35 ILL. COMP. STAT. 200/21-260(g). Apparently no purchaser bid the full amount of the taxes here because Cook County acquired a certificate of purchase to Beth-El's property on August 7, 1997, which was confirmed by the Circuit Court of Cook County about a month later.

Cook County did not own the property yet, though. The certificate of purchase gave it the right to, among other things, assign the certificate of purchase "to any party, including taxing districts." See 35 ILL. COMP. STAT. 200/21-90. The City of Chicago happens to be a "taxing district," so Cook County assigned the certificate of purchase to it as part of the City's "Tax Reactivation Program," which, as its name suggests, attempts to reintroduce chronically tax-delinquent property to the tax rolls.

With the certificate in hand, the City's next step was to obtain a tax deed by filing a petition in the circuit court, which the City did in January 1998. But before a tax deed issues, the owner whose taxes are delinquent is entitled to notice of the right to redeem the property by paying the full amount of taxes and penalties. See 35 ILL. COMP. STAT. 200/21-260(f); Meyers, 196 Ill. Dec. 646, 630 N.E.2d at 819. And this is where the mistake happened: when the City addressed the notice, required by § 22-10 of the Illinois Property Tax Code, see 35 ILL. COMP. STAT. 200/22-10, it used the wrong address. The City was relying on a document from the Chicago Title Insurance Company, which was also apparently incorrect. At the City's request, Chicago Title performed a tract index search on property described by the City by pin number. The search revealed that the last recorded conveyance of the property was to "Beythel Outcast Church" (a name Beth-El All Nations Church formerly used), and referred to the address as "1534 E. 63rd St. Chicago, Illinois."

There were two other notices that the Tax Code requires, one under § 22-5, and one under § 22-15. See 35 ILL. COMP. STAT. 200/22-5, 200/22-15. The former requires the purchaser, within four months and 15 days following a tax sale, to deliver to the county clerk a notice of the tax sale addressed to the party in whose name taxes were last assessed. See 35 ILL. COMP. STAT. 200/22-5. Section 22-15 requires a purchaser to publish notice of the tax sale in the newspaper. The City complied with the former section by delivering to the county clerk a notice that, this time, was properly address to Beth-El at 1534 W. 63rd Street. The City also published notice of the sale and redemption period — with the correct address on West 63rd Street — in the Chicago Daily Law Bulletin.

After the City filed its petition for a tax deed, and the redemption period expired, the City filed an "Application for an Order Directing the County Clerk to Issue a Tax Deed." The application recites that the required notices — under §§ 22-5, 22-10, and 22-15 — had been served, and the City's counsel represented orally to the circuit court that all required notices had been served. Based on these representations, on July 7, 1998, the circuit court ordered the county clerk to issue the City a tax deed (the "tax-deed judgment"). The county clerk issued the City's tax deed that day, and the City recorded it seven months later.

The next thing we know for sure is that five years after taking title to the property the City filed an application in the Circuit Court of Cook County seeking actual possession of the property. Nine days later Beth-El, through counsel, moved to vacate the tax-deed judgment by filing a petition under § 2-1401 of the Illinois Code of Civil Procedure, 735 ILL. COMP. STAT. 5/2-1401. The petition alleged, among other things, that the City fraudulently concealed the 1998 proceedings by sending the § 22-10 notice of the right of redemption to Beth-El at the wrong address. As for the notice required by § 22-5, counsel for the Church told the circuit court that he had "no argument there" and conceded that someone walked the correctly addressed notice to the county clerk's office. But still the Church claimed that under § 22-45(3) of the Tax Code, 35 ILL. COMP. STAT. 200/22-45, the judgment awarding the City a tax deed should be set aside because "the tax deed had been procured by fraud or deception." Attached to the petition was an affidavit from Bishop Edgar Jackson, a pastor at Beth-El since 1995, who attested that the Church has never been located at 1534 East 63rd Street, and that he was always under the impression that the Church was tax exempt.

The City moved to dismiss Beth-El's petition under § 2-619.1, 735 ILL. COMP. STAT. 5/2-619.1, arguing that the petition was filed outside § 2-1401's two-year statute of limitations. See § 2-1401(c). Moreover, argued the City, what Beth-El alleged did not amount to fraudulent concealment. At the outset of the hearing on the cross-motions, Beth-El's counsel stated that he would like to "reserve, if possible" an argument that taxes should never have been assessed against the Church because it was tax exempt. He then stated: "I'm not asking this Court to hold this case up because that can be brought at any time. That would make it absolutely void because there would be no jurisdiction." But then, puzzlingly, counsel focused on his argument that the tax deed was void because the tax sale had been fraudulently concealed. (Counsel undoubtedly meant that he wanted to "preserve" the issue of tax exemption, rather than reserve it — but he never actually made the argument in order to preserve it.)

The circuit court ultimately held that the City's mistake in addressing the § 22-10 notice did not amount to fraudulent concealment of the tax sale. Thus, the court continued, Beth-El provided nothing to circumvent the two-year statute of limitations for actions under § 2-1401, and the motion to dismiss had to be granted. The court denied a petition for rehearing. The Appellate Court of Illinois affirmed, City of Chi. v. Beth-El All Nations Church of God in Christ, No. 1-04-0364 (Ill.App.Ct. Mar. 31, 2005) (unpublished order), and the Supreme Court of Illinois denied leave to appeal, City of Chi. v. Beth-El All Nations Church of God in Christ, 216 Ill.2d 687, 298 Ill.Dec. 377, 839 N.E.2d 1024 (2005) (unpublished order).

Once the mandate issued, the City renewed its application for possession of the property, which was pending during the § 2-1401 proceedings. The circuit court held a hearing on the application in early January 2006, at which Beth-El agreed to an order granting possession to the City, provided that the order be stayed until February 28, 2006. On March 1, 2006, when a City employee came to put new locks on the property pursuant to the agreement transferring possession, he was...