Carle Found. v. Dep't of Revenue

• Docket Number: S. 4-20-0121,4-20-0135,4-20-0142,4-20-0386,4-20-0387,4-20-0388
• Decision Date: 04 August 2023
• Citation: 227 N.E.3d 664
• Parties: The CARLE FOUNDATION, an Illinois Not-For-Profit Corporation, Plaintiff-Appellee and Cross-Appellant, v. The DEPARTMENT OF REVENUE; Brian Hamer, in His Official Capacity as Director or Revenue; The Champaign County Board of Review; Diane Hays, Elizabeth Burgener-Patton, and Mark Whitsett, in Their Official Capacity as Members of the Champaign County Board of Review; Stan Jenkins, in His Official Capacity as Champaign County Supervisor of Assessments; Cunningham Township; Dan Stebbins, in His Official Capacity as Cunningham Township Assessor; Daniel J. Welch, in His Official Capacity as Champaign County Treasurer; and The City of Urbana, Defendants-Appellants and Cross-Appellees, (Champaign County, Intervenor-Appellant and Cross-Appellee).
• Court: United States Appellate Court of Illinois

227 N.E.3d 664

2023 IL App (4th) 200121

The CARLE FOUNDATION, an Illinois Not-For-Profit Corporation, Plaintiff-Appellee and Cross-Appellant,

v.The DEPARTMENT OF REVENUE; Brian Hamer, in His Official Capacity as Director or Revenue; The Champaign County Board of Review; Diane Hays, Elizabeth Burgener-Patton, and Mark Whitsett, in Their Official Capacity as Members of the Champaign County Board of Review; Stan Jenkins, in His Official Capacity as ChampaignCounty Supervisor of Assessments; Cunningham Township; Dan Stebbins, in His Official Capacity as Cunningham TownshipAssessor; Daniel J. Welch, in His Official Capacity as ChampaignCounty Treasurer; and The City of Urbana, Defendants-Appellants and Cross-Appellees,

(Champaign County, Intervenor-Appellant and Cross-Appellee).

NOS. 4-20-0121, 4-20-0135, 4-20-0142, 4-20-0386, 4-20-0387, 4-20-0388 cons.

Appellate Court of Illinois, Fourth District.

Filed August 4, 2023

Appeal from the Circuit Court of Champaign County, No. 08L202, Honorable Randall B. Rosenbaum, Judge Presiding.

Kwame Raoul, Attorney General, of Chicago (Jane Elinor Notz, Solicitor General, and Caleb Rush, Assistant Attorney General, of counsel), for appellantsDepartment of Revenue and David Harris.

Frederic M. Grosser, of Champaign, for appellants Cunningham Township, Wayne T. Williams Jr., and City of Urbana.

Joel Fletcher, State’s Attorney, of Urbana, for other appellants.

Steven F. Pflaum and Collette A. Woghiren, of Neal, Gerber & Eisenberg LLP, and Amy G. Doehring and Catherine A. Miller, of Akerman LLP, both of Chicago, for appellee.

Karen Harris, of Illinois Health and Hospital Association, of Naperville, and April E. Schweitzer, Thomas M. Fahey, Floyd D. Perkins, and Seth A. Horvath, of Nixon Peabody LLP, of Chicago, for amicus curiaeIllinois Health and Hospital Association.

OPINION

JUSTICE DOHERTYdelivered the judgment of the court, with opinion.

¶ 1 In its simplest sense, this case concerns a taxpayer’s attempt to recover charitable use property tax exemptions, which it previously held but lost.Plaintiff, the Carle Foundation, brought this action to establish that four of its properties were exempt from real estate taxation for the years 2004 through 2011.The trial court found in favor of plaintiff and awarded exemptions (some partial and some full) for the years 2005 through 2011, but it denied plaintiff’s exemption for the 2004 tax year.It further dented plaintiff’s claim for breach of contract and its request for prejudgment interest.The court entered a final judgment on its prior December 4, 2018, order, entering summary judgment for defendants on count I, which claimed that various defendants had no authority to levy assessments on the four parcels in 2004.

¶ 2 The following defendants appeal the award of exemptions for 2005 through 2011: the Department of Revenue(Department); David Harris, in his official capacity as Director of Revenue; the Champaign County Board of Review; Elizabeth Burgener-Patton, Robert Zebe, and Paul Sailor, in their official capacity as members of the Champaign County Board of Review; Paula Bates, in her official capacity as Champaign County Supervisor of Assessments; Cassandra Johnson, in her official capacity as Champaign County Treasurer; Cunningham Township; Wayne, T. Williams Jr., in his official capacity as Cunningham Township Assessor; the City Of Urbana; and intervenorChampaign County(collectively, defendants).We note that numerous officeholders have changed over since the filing of plaintiff’s fourth amended complaint in 2014.David Harris succeeded Brian Hamer as Director of Revenue, Robert Zebe and Paul Sailor succeeded Dianne Hays and Mark Whitsett as Champaign County Board of Review members, Paula Bates succeeded Stan Jenkins as the Champaign County Supervisor of Assessments, Cassandra Johnson succeeded Daniel J. Welch as Champaign County Treasurer, and Wayne T. Williams Jr. succeeded Dan Stebbins as Cunningham Township Assessor.

¶ 3Plaintiff cross-appeals the trial court’s denial of exemptions for 2004, the entry of summary judgment on its claim of unauthorized termination of exemptions (count I), and the denial of prejudgment interest.

¶ 4 For the reasons set forth below, we affirm in part, reverse in part, and remand the cause for further proceedings.

¶ 5 I. BACKGROUND

¶ 6 A. The Four Parcels

¶ 7Plaintiff seeks tax exemptions for four parcels of land in Urbana: 611 West Park Street (the main hospital, operated by plaintiff’s affiliate, Carle Foundation Hospital); 607 North Orchard Street (the north tower); 809 West Park Street (the Caring Place childcare facility, which serves families of plaintiff’s employees, among others); and 503 North Coler Ave- nue (the power plant, which serves the other parcels).

¶ 8 B. Reclassification of the Parcels from Exempt to Nonexempt

¶ 9 Prior to 2004, the four parcels were considered exempt from taxation under section 15-65(a) of the Property Tax Code(35 ILCS 200/15-65(a)(West 2002)) because of their charitable use.In 2004, however, the Cunningham Township assessor began assessing the four parcels at their full value (i.e., as nonexempt), which she continued doing through 2011.

¶ 10 C. Plaintiff’s Application for Restoration of the Exemptions

¶ 11Plaintiff filed applications with the county board of review asking it to exempt the four parcels from taxation for, the years 2004 and 2005.The board forwarded these applications to the Department along with a recommendation of denial.In February 2007, the Department denied the applications for 2004 and 2005, and plaintiff requested an administrative hearing.

¶ 12 In 2010, plaintiff withdrew its applications for 2004 and 2005, and an administrative hearing scheduled for that August was canceled.Despite plaintiff’s request to withdraw the applications for 2004 and 2005, the Department issued formal letters denying these applications.Plaintiff did not request a rehearing.

¶ 13Plaintiff subsequently filed applications with the county board to exempt the four parcels for the years 2006, 2007, and 2008.The county board recommended denial of those applications and forwarded them to the Department for a decision.

¶ 14 In March 2012, plaintiff withdrew its applications for 2006 to 2008 before the Department had made an initial decision on them.Later that month and despite plaintiff’s notification of withdrawal, the Department issued formal denials of the applications for 2006 through 2008.Plaintiff did not request an administrative hearing.

¶ 15 No applications to exempt the, four parcels from taxation were filed for 2009 through 2011.In 2012, the four parcels were determined to be exempt from taxation on a partial basis.The exemption awarded for the 2012 tax assessment year was issued under section 15-86(c) of the Property Tax Code(35 ILCS 200/15-86(c)(West 2012)) following plaintiff’s filing of section 15-5 applications.Seeid.§ 15-5.As explained below, section 15-86 was enacted in 2012 and replaced section 15-65(as to hospitals, seeking charitable exemptions), which had been the basis for charitable tax exemptions for all taxpayers, including hospitals, prior to 2004. Pub. Act 97-688 (eff. June 14, 2012)(adding 35 ILCS 200/15-86).

¶ 16 D. Plaintiff’s Lawsuit

¶ 17 In December 2007, plaintiff filed an action in the circuit court of Cook County against the Department and various local governmental entities pursuant to section 23-25(e) seeking a declaratory judgment that, under section 15-65(35 ILCS 200/15-65(West 2006)), the four parcels were exempt from taxation for the years 2004 through 2007 based on "comparable grounds" to those leading to allowance of the exemption in prior years; plaintiff also sought a refund of any taxes paid.The case was transferred to the circuit court of Champaign County in September 2008.

¶ 18 E. Our Decision in Carle I

¶ 19 In March 2009, following the circuit court’s denial of defendants’ motion to dismiss plaintiff’s complaint, the circuit court certified a series of questions for interlocutory appeal (seeIll.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).In an opinion filed in October 2009, this court held that, in cases where 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. Department of Revenue, 396 Ill. App. 3d 329, 340, 335 Ill.Dec. 72, 917 N.E.2d 1136(2009)(Carle I).This court further held that a taxpayer must 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.However, because no court had ever before interpreted section 23-25(e), we allowed plaintiff, on remand, to elect one of those remedies.Id. at 343, 335 Ill.Dec. 72, 917 N.E.2d 1136.¶ 20 F. Subsequent Amended Complaints

¶ 21Plaintiff elected the judicial route, filing a first amended complaint in May 2010 that added a claim that Cunningham Township’s assessor was not authorized to revoke the exemptions, an unjust enrichment claim, and a claim asserting that defendants Cunningham Township and the City of Urbana breached an agreement settling the dispute between them.Plaintiff alleged it had paid $775,000 to various local taxing bodies under the settlement agreement; 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 further added claims for tax exemptions for the years 2008 and 2009.

¶ 22 A second amended complaint was filed in August of that same year, which plaintiff said was "for the primary...