Krozel v. Court of Claims

• Decision Date: 24 April 2017
• Docket Number: No. 1-16-2068,1-16-2068
• Citation: 77 N.E.3d 1165,2017 IL App (1st) 162068
• Parties: Lainie KROZEL, Plaintiff-Appellant, v. The COURT OF CLAIMS; the State of Illinois; and Connie Beard, in Her Official Capacity as Director of Revenue, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

2017 IL App (1st) 162068

77 N.E.3d 1165

Lainie KROZEL, Plaintiff-Appellant,

v.The COURT OF CLAIMS; the State of Illinois; and Connie Beard, in Her Official Capacity as Director of Revenue, Defendants-Appellees.

No. 1-16-2068

Appellate Court of Illinois, First District, FIRST DIVISION.

April 24, 2017

Rehearing denied June 9, 2017

Nixon Peabody LLP, of Chicago (Floyd D. Perkins, of counsel), for appellant.

Lisa Madigan, Attorney General, of Chicago (David L. Franklin, Solicitor General, and Frank H. Bieszczat, Assistant Attorney General, of counsel), for appellees.

OPINION

JUSTICE HARRIS delivered the judgment of the court, with opinion.

¶ 1 Plaintiff, Lainie Krozel, appeals the order of the circuit court granting defendants' motion to dismiss her complaint for writ of certiorari , which sought review of the Court of Claims' dismissal of her indemnity claim. On appeal, plaintiff contends her complaint should be reinstated because (1) the Court of Claims erroneously applied the two-year general statute of limitations contained in section 22(h) of the Court of Claims Act (705 ILCS 505/22(h) (West 2014)) instead of the five-year statute of limitations in section 22(a) for claims arising out of a contract (705 ILCS 505/22(a) (West 2014)); and (2) her due process rights were violated where the Court of Claims did not consider her complaint on the merits. For the following reasons, we affirm.

¶ 2 JURISDICTION

¶ 3 The trial court dismissed plaintiff's complaint on May 17, 2016. Plaintiff filed a motion to reconsider and vacate, which the trial court denied on June 23, 2016. Plaintiff filed her notice of appeal on July 21, 2016. Accordingly, this court has jurisdiction pursuant to Illinois Supreme Court Rule 301 (eff. Feb. 1, 1994) and Rule 303 (eff. May 30, 2008) governing appeals from final judgments entered below.

¶ 4 BACKGROUND

¶ 5 The following facts are relevant to this appeal. On December 12, 2008, the office of the Executive Inspector General (EIG) filed a complaint with the Illinois Executive Ethics Commission (EEC) alleging that plaintiff, the acting chief of staff for the Illinois Department of Revenue, violated the State Officials and Employees Ethics Act (5 ILCS 430/1-1 et seq. (West 2014)). Plaintiff sought legal representation from the Attorney General pursuant to section 2 of the State Employee Indemnification Act (Indemnification Act) (5 ILCS 350/2 (West 2014) ). The Attorney General, however, represented EIG in the matter and denied plaintiff's request. Plaintiff therefore retained private counsel to represent her. Plaintiff continued to request representation by the Attorney General's office, and she argued for dismissal of the charge against her. Motions were filed and discovery conducted in preparation for trial on June 29, 2010. However, on the eve of trial, the Attorney General's office voluntarily dismissed the complaint against plaintiff. Plaintiff subsequently sought indemnification for her attorney fees under section 2(b) of the Indemnification Act (5 ILCS 350/2 (West 2014) ). In April 2011, the Illinois Department of Revenue notified plaintiff it would not indemnify her for her attorney fees and costs.

¶ 6 On March 5, 2014, plaintiff filed a claim with the Court of Claims to recover her costs and attorney fees under section 2(b). The State filed a motion to dismiss pursuant to section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 2014) ), arguing that section 22(h) of the Court of Claims Act requires plaintiff to file her claim within two years after its accrual. The State alleged that plaintiff's claim accrued "either when the EEC matter was voluntarily dismissed by the EIG on June 29, 2010, ending [her] need for legal representation, or at the very latest, when her subsequent request for attorneys' fees was denied, in April 2011." The State argued that since plaintiff filed her claim on March 5, 2014, it is barred by the limitations period set forth in section 22(h) and "must be dismissed in its entirety." The State also argued that plaintiff's claim should be dismissed under section 2-615 of the Code for failure to state a claim under the Indemnification Act.

¶ 7 Plaintiff filed a response to the State's motion to dismiss, in which she argued that the proper limitations period for filing her claim is found in section 22(a) of the Court of Claims Act for claims "arising out of a contract." 705 ILCS 505/22(a) (West 2014). Such claims "must be filed within 5 years after it first accrues" rather than the two years under section 22(h) for "[a]ll other claims." 705 ILCS 505/22(a), (h) (West 2014). Plaintiff argued that section 22(a) applies because she "seeks reimbursement for her attorneys' fees, costs, and expenses under the terms and conditions of her employment contract with the State, as those terms and conditions are set out in the Indemnification Act." Plaintiff argued that the State "was required to pay reasonable court costs, litigation expenses, and attorneys' fees pursuant to the Indemnification Act" where the Attorney General could not represent her due to a conflict of interest. In response, the State argued that the two-year limitations period applied because plaintiff was seeking payment pursuant to a statute (the Indemnification Act) rather than asserting a contract claim.

¶ 8 After the Court of Claims heard argument from both parties on the issue, it dismissed plaintiff's claim in its entirety. The Court of Claims acknowledged that the appropriate statute of limitations for claims arising under the Indemnification Act is an issue of "first impression." It noted that the Indemnification Act encompasses statutory duties "distinct from other theories of liability." Therefore, it concluded that plaintiff's "potential right to reimbursement pursuant to the Indemnification Act is independent from the underlying contract with the State of Illinois." It applied the two-year limitations period because plaintiff's right to recovery arose from a statute rather than a contract, and since plaintiff did not file her claim within two years of April 2011, when her reimbursement request was denied, her claim was untimely.

¶ 9 Plaintiff filed a petition for rehearing in which she again alleged that her claim arose out of a contract and therefore the five-year limitations period of section 22(a) applied. Plaintiff argued that her right to indemnification under the Indemnification Act arose from her employment and service; therefore, it was a matter arising out of contract. The State filed a response, and plaintiff replied, reiterating her argument that her claim is a contract claim. The Court of Claims denied the petition and upheld its previous order dismissing plaintiff's complaint as untimely. In the order, the Court of Claims disagreed that "the Indemni[fication] Act must be construed as a contractual term of [plaintiff's] employment with the State." It found that "[t]he law is clear. Statutes are presumed not to create contractual rights unless there is clear and explicit intent to do so by the legislature. The Indemni[fication] Act does not demonstrate a clear and explicit intent by the legislature to create a vested contractual right." The Court of Claims found "unconvincing" plaintiff's argument that the word "agreement" in the latter part of section 2(a) of the Indemnification Act (5 ILCS 350/2(a) (West 2014)) shows legislative intent to create a contractual right. Rather, plaintiff's argument "discounts the context in which the word ‘agreement’ is used and isolates it from the proper context," and the mere use of the word "does not explicitly create a contract, covenant, or vested right that obligates the State, its agents, or the Attorney General to appear on behalf of the employee and defend the action." It affirmed the dismissal of plaintiff's claim as untimely.

¶ 10 Plaintiff filed a complaint for writ of certiorari , seeking review and reversal of the Court of Claims' decision. In her complaint, plaintiff alleged that the Court of Claims failed to apply the five-year statute of limitations on her contract claim and by failing to follow the law, the decision "denied her both constitutional due process and equal protection." Plaintiff also argued that she "had no opportunity to be heard in a meaningful manner based on the Court's unlawful failure to follow the law." Defendants moved to dismiss the complaint pursuant to section 2-619.1 of the Code (735 ILCS 5/2-619.1 (West 2014) ), arguing that the trial court lacked jurisdiction to review the correctness of the Court of Claims' determination and that plaintiff was not denied due process where she received a meaningful opportunity to be heard before the Court of Claims.

¶ 11 The trial court granted defendants' motion to dismiss and found the following cases controlling: Klopfer v. Court of Claims , 286 Ill. App. 3d 499, 221 Ill.Dec. 876, 676 N.E.2d 679 (1997), Reyes v. Court of Claims , 299 Ill. App. 3d 1097, 234 Ill.Dec. 58, 702 N.E.2d 224 (1998), and Hyde Park Medical Laboratory, Inc. v. Court of Claims , 259 Ill. App. 3d 889, 198 Ill.Dec. 248, 632 N.E.2d 307 (1994). Plaintiff filed a motion to reconsider which the trial court denied. Plaintiff filed this timely appeal.

¶ 12 ANALYSIS

¶ 13 On appeal, plaintiff contends that the Court of Claims erroneously applied the two-year statute of limitations to dismiss her indemnification claim against defendants. She argues that the Court of Claims' improper dismissal denied her the right to be heard on the merits of her claim and since she alleged this violation of her due process rights, the trial court erred in dismissing her complaint for writ of certiorari . Defendants filed a combined motion to dismiss under section 2-619.1 of the Code (735 ILCS 5/2-619.1 (West 2014) ). In reviewing a dismissal pursuant to both sections 2-615 and 2-619 of the Code (735 ILCS 5/2-615, 2-619 (West 2014)), "we accept all well-pleaded facts in the complaint as true and draw all reasonable inferences...