Carle Found. v. Cunningham Twp.

Decision Date05 January 2016
Docket NumberNos. 4–14–0795,4–14–0845.,s. 4–14–0795
PartiesThe CARLE FOUNDATION, an Illinois Not–for–Profit Corporation, Plaintiff–Appellee, v. CUNNINGHAM TOWNSHIP ; Dan Stebbins, in His Official Capacity as Cunningham Township Assessor; and City of Urbana, Defendants–Appellants, and The Champaign County Board of Review; Elizabeth Burgener–Patton ; Mark Whitsitt; Joseph Meents; Daniel J. Welch; and the County of Champaign, Separate Appellants, and The Department of Revenue; Brian Hamer, in His Official Capacity as Director of the Department of Revenue; and Dianne Hays, Defendants. The Carle Foundation, an Illinois Not–for–Profit Corporation, Plaintiff–Appellee, v. The Department of Revenue and Brian Hamer, Its Director, Defendants–Appellants, and The Champaign County Board of Review; Mark Whitsitt, Laura Sandefur, and Elizabeth Burgener–Patton, as Members of The Champaign County Board of Review; Joseph Meents, Champaign County Supervisor of Assessments; Cunningham Township ; Dan Stebbins, Cunningham Township Assessor; Daniel J. Welch, Champaign County Treasurer ; the City of Urbana; Urbana School District 116; and the Urbana Park District, Defendants.
CourtUnited States Appellate Court of Illinois

Frederic M. Grosser (argued), Champaign, for appellants Cunningham Township, Dan Stebbins, and City of Urbana.

Lisa Madigan, Attorney General, Chicago (Carolyn E. Shapiro, Solicitor General, and Carl J. Elitz (argued), Assistant Attorney General, of counsel), for appellants Department of Revenue and Brian Hamer.

Julia Rosenbaum Rietz, State's Attorney, Champaign (Joel D. Fletcher (argued), Assistant State's Attorney, of counsel), for other appellants.

Steven F. Pflaum (argued), of Neal Gerber & Eisenberg LLP and Amy G. Doehring and Lisa Haidostian, both of McDermott Will & Emery LLP, Chicago, and William J. Brinkmann, of Thomas Mamer & Haughey, LLP, Champaign, for appellee.

John M. Izzo, Kimberly M. Jannotta, and Eugene C. Edwards, all of Hauser Izzo, LLC, Flossmoor, for amicus curiae.



delivered the judgment of the court, with opinion.

¶ 1 Plaintiff, The Carle Foundation, brought this action to establish that four of its properties were exempt from real estate taxation. The trial court granted a partial summary judgment that section 15–86 of the Property Tax Code (Code) (35 ILCS 200/15–86 (West 2014)

) governed that question. Defendants, the state and local taxing authorities, appeal pursuant to Illinois Supreme Court Rule 304(a) (eff. Feb. 26, 2010).

¶ 2 We conclude that because section 15–86

is unconstitutional, it is inapplicable to the question of whether the four parcels are exempt from taxation. Therefore, we reverse the trial court's judgment, and we remand this case for further proceedings.

¶ 4 A. The Four Parcels

¶ 5 Plaintiff owns four parcels of land in Urbana: 611 West Park Street, 503 North Coler Avenue, 607 North Orchard Street, and 809 West Park Street. Plaintiff's affiliate, Carle Foundation Hospital, operates a hospital on two of these parcels. On the third parcel is a day care center, which serves the families of plaintiff's employees (among others). On the fourth parcel is a power plant, which services these parcels.

¶ 6 B. The Reclassification of the Parcels from Exempt to Nonexempt

¶ 7 Before 2004, the four parcels were not taxed. They were considered to be exempt under section 15–65(a) of the Code (35 ILCS 200/15–65(a)

(West 2002)), because of charitable use.

¶ 8 For 2004, however, the Cunningham township assessor began assessing the four parcels at their full value, as nonexempt. She continued doing so through 2011.

¶ 9 C. Plaintiff Applies for the Restoration of the Exemptions For the Years 2004 and 2005

¶ 10 Plaintiff filed applications with the county board of review, asking the board to exempt the four parcels from taxation for the years 2004 and 2005. The board forwarded these applications to the Department of Revenue (Department), along with a recommendation of denial.

¶ 11 On February 23, 2007, the Department denied plaintiff's applications for 2004 and 2005, whereupon plaintiff requested an administrative hearing.

¶ 12 D. Our Intervening Decision in Carle Foundation v. Department of Revenue

¶ 13 On December 13, 2007, plaintiff filed an action in the circuit court against the Department and various local governmental entities, seeking a declaratory judgment that, under section 15–65

, the four parcels were exempt from taxation for the years 2004 to 2007. (Eventually, plaintiff filed an exemption application with the board for 2008 as well.)

¶ 14 On March 3, 2009, the circuit court certified some questions for interlocutory appeal (see Ill. S.Ct. R. 308(a)

(eff. Feb. 1, 1994)), requesting guidance on the meaning of the statutory phrase court proceedings to establish an exemption,” in section 23–25(e) of the Code (35 ILCS 200/23–25(e) (West 2008)).

¶ 15 On October 29, 2009, we held that, in cases in which the Department or a court of review had acted favorably on a comparable exemption claim for any other year, section 23–25(e)

had effectively revived the traditional suit in equity to establish an exemption. Carle Foundation v. Illinois Department of Revenue, 396 Ill.App.3d 329, 341, 335 Ill.Dec. 72, 917 N.E.2d 1136 (2009). We further held that a taxpayer had to elect its remedy instead of simultaneously pursuing both a judicial action under section 23–25(e) and an application before the Department. Id. at 342, 335 Ill.Dec. 72, 917 N.E.2d 1136. Because no court, however, had ever before interpreted section 23–25(e), we allowed plaintiff, on remand, to elect one of those rem

edies Id. at 343, 335 Ill.Dec. 72, 917 N.E.2d 1136


¶ 16 E. Plaintiff Withdraws Its Applications for 2004 and 2005 and Enters into an Anti–Preclusion Agreement with the Department

¶ 17 On August 18, 2010, when the applications for 2004 and 2005 were about to go to an administrative hearing, plaintiff informed the administrative law judge that it was withdrawing its applications for 2004 and 2005. Accordingly, the administrative hearing was canceled.

¶ 18 Despite plaintiff's expressed desire to withdraw the applications for 2004 and 2005, the Department went ahead and issued plaintiff formal letters denying these applications.

¶ 19 Plaintiff never requested a rehearing.

¶ 20 F. Plaintiff Files Applications for 2006 to 2008 and Later Withdraws Those Applications, Too

¶ 21 As we said, plaintiff likewise filed, with the county board, applications to exempt the four parcels for the years 2006, 2007, and 2008. The board likewise recommended the denial of those applications and forwarded them to the Department for decision.

¶ 22 In March 2012, plaintiff informed the Department it was withdrawing its applications for 2006 to 2008. As of that time, the Department had not yet made an initial decision on those applications.

¶ 23 On March 29, 2012, despite plaintiff's notification of withdrawal, the Department issued formal denials of the applications for 2006 to 2008. Plaintiff never requested an administrative hearing.

¶ 24 G. Plaintiff Filed No Applications for 2009 to 2011

¶ 25 Plaintiff filed with the board no application to exempt the four parcels from taxation for 2009, 2010, and 2011.

¶ 26 H. The Fourth Amended Complaint

¶ 27 Plaintiff claims, in its fourth amended complaint, that the four parcels should be exempt from real estate taxes during the assessment years 2004 to 2011 on the ground of charitable use.

¶ 28 The fourth amended complaint has 35 counts. If we were to organize them by the legal theories they advance, these counts would fall into four categories.

¶ 29 The first category would consist of a single count, count I. In this count, plaintiff alleges that preexisting exemptions of the four parcels never were validly discontinued. Sometime before 2004, the Department or its predecessor agency determined the four parcels to be exempt, and, in plaintiff's view, the local taxing officials lacked the statutory authority to override the Department's determination and end the exemptions.

¶ 30 The second category would consist of counts III through XXXIV (we have not forgotten about count II; we will come to it in a moment). In those counts, plaintiff alleges that if, contrary to plaintiff's position in count I, the local taxing authorities had authority to return the four parcels to the tax rolls and “thereby force [plaintiff] to establish anew its entitlement to an exemption on those properties, de novo consideration of the exemption issue [would lead] to the conclusion that [plaintiff] has satisfied the legal criteria for an exemption for each of the parcels and tax years in question,” 2004 to 2011. Those “legal criteria,” according to counts III through XXXIV, are to be found in the recently enacted section 15–86

(35 ILCS 200/15–86 (West 2014) ), added to the Code by Public Act 97–688 (Pub. Act 97–688, § 5–55 (eff. June 14, 2012)); or, alternatively, if section 15–86 is inapplicable, the “legal criteria” are to be found in an older provision of the Code, section 15–65 (35 ILCS 200/15–65 (West 2014) ).

¶ 31 The third category would consist of count II, which seeks a declaratory judgment “that Section 15–86

applies to any determination of [plaintiff's] entitlement to exemptions for the Four Parcels for tax assessment years 2004 through 2011.”

¶ 32 The fourth and final category would consist of count XXXV, in which plaintiff alleges the breach of a settlement agreement from 2002. Allegedly, under this settlement agreement, plaintiff paid $775,000 to various local taxing bodies, including Cunningham Township and the City of Urbana, and, in return, the local taxing bodies promised to “refrain from taking any action to challenge [plaintiff's] entitlement to charitable exemptions with respect to certain properties owned by [plaintiff], including the Four Parcels involved in this litigation.” Plaintiff accuses Cunningham Township and City of Urbana of breaking that promise.

¶ 33 I. Summary Judgment in Plaintiff's Favor on Count II of...

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4 cases
  • Oswald v. Hamer
    • United States
    • United States Appellate Court of Illinois
    • December 22, 2016
    ...48 We acknowledge that plaintiff relied on the Fourth District's recent decision in Carle Foundation v. Cunningham Township , 2016 IL App (4th) 140795, 399 Ill.Dec. 183, 45 N.E.3d 1173, appeal allowed , 401 Ill.Dec. 656, 50 N.E.3d 1138 (2016), for support. In that case, the Fourth District ......
  • Carle Found. v. Cunningham Twp.
    • United States
    • Illinois Supreme Court
    • March 23, 2017
    ...15–86 facially violates article IX, section 6, of the Illinois Constitution ( Ill. Const. 1970, art. IX, § 6 ). 2016 IL App (4th) 140795, 399 Ill.Dec. 183, 45 N.E.3d 1173. Both plaintiff and the State defendants filed petitions for leave to appeal ( Ill. S. Ct. R. 315 (eff. Jan. 1, 2015)), ......
  • Northshore Univ. Healthsystem v. Ill. Dep't of Revenue
    • United States
    • United States Appellate Court of Illinois
    • March 28, 2017
    ...15-86 of the Property Tax Code (35 ILCS 200/15-86 (West 2014) ) was held unconstitutional in The Carle Foundation v. Cunningham Township, 2016 IL App (4th) 140795, 399 Ill.Dec. 183, 45 N.E.3d 1173. However, on March 23, 2017, our supreme court vacated the appellate court's judgment due to a......
  • Cunningham Twp. v. Hamer
    • United States
    • United States Appellate Court of Illinois
    • August 2, 2019 tax exemptions because section15-86 of the Property Tax Code had been held unconstitutional in Carle Foundation v. Cunningham Township, 2016 IL App (4th) 140795, 45 N.E.3d 1173. In February 2016, the Department of Revenue and Presence filed a joint motion to stay the briefing sched......

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