Millennium Park Joint Venture v. Houlihan

• Decision Date: 29 June 2009
• Docket Number: No. 1-07-3141.,1-07-3141.
• Citation: 911 N.E.2d 517
• Parties: MILLENNIUM PARK JOINT VENTURE, LLC, Plaintiff-Appellee, v. James M. HOULIHAN, Cook County Assessor, Maria Pappas, Cook County Treasurer and The County of Cook, a Body Politic and Corporate, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

911 N.E.2d 517

MILLENNIUM PARK JOINT VENTURE, LLC, Plaintiff-Appellee, v. James M. HOULIHAN, Cook County Assessor, Maria Pappas, Cook County Treasurer and The County of Cook, a Body Politic and Corporate, Defendants-Appellants.

No. 1-07-3141.

Appellate Court of Illinois, First District, First Division.

June 29, 2009.

Justice HALL delivered the opinion of the court:

The plaintiff, Millennium Park Joint Venture, LLC, brought a declaratory judgment action against the defendants, James Houlihan, Cook County assessor, Maria Pappas, Cook County treasurer, and the County of Cook, seeking a declaration that a real property tax assessment against the plaintiff's contractual interest in property located in Millennium Park was unauthorized and unlawful. The plaintiff also sought a declaration that taxation of the plaintiff's interest would violate section 4 of article IX of the Illinois Constitution of 1970 (Ill. Const.1970, art. IX, § 4). Finally, the plaintiff sought to enjoin the imposition and collection of any property tax on the plaintiff's interest.

The circuit court denied the defendants' motion to dismiss for lack of subject matter jurisdiction. On cross-motions for summary judgment, the circuit court ruled for the plaintiff and declared the plaintiff's interest a nontaxable license. The defendants appeal from the denial of their motion to dismiss, the grant of summary judgment to the plaintiff and the denial of their motion for summary judgment.

On appeal, the defendants raise the following issues: whether the circuit court had subject matter jurisdiction to rule on the plaintiff's challenge to a real property tax assessment and whether the circuit court's determination that the concession permit agreement was a license was correct as a matter of law.

I. BACKGROUND

The pertinent facts are taken from the pleadings, affidavits and exhibits contained in the record on appeal.

A. The Concession Permit Agreement

On February 11, 2003, the plaintiff entered into a "Concession Permit Agreement" (the Agreement) with the Chicago Park District (the Park District) whereby the plaintiff was permitted to use certain portions of Millennium Park. The first portion, referred to as "the premises" consisted of a sit-down restaurant known as the "Park Grill," a gourmet bakery/café and ice cream parlor, a seasonal retail store and "certain storage areas to be located in the Tunnel." The second portion was designated as the "concession area." In that area, the plaintiff would operate a seasonal mobile concession business, subject to the approval of the Park District.

The Agreement was for a 20-year period and provided the plaintiff with the option of extending the term for two additional periods of five years each. The plaintiff was required to pay a minimum fee of $275,000 per year in monthly installments and to pay a percentage fee based on the years of the Agreement and the amount of sales. The Agreement further provided for the abatement of the annual fee until the earliest of certain specified events. Included in the Agreement were diagrams of Millennium Park showing the locations of the spaces to be utilized by the plaintiff.

Under the terms of the Agreement, the plaintiff was not permitted to "give, sell, license, assign, sublet, permit, subcontract, sub-concession or otherwise transfer its interest" in the Agreement without the prior written consent of the Park District. Such consent was at the discretion of the Park District but, after five years, the Park District was not to "unreasonably" withhold its consent. Subject to certain conditions, the plaintiff was allowed to enter into license agreements for up to 50% of the concession carts in the concession area. The Agreement provided a disclaimer to the effect that the plaintiff was an independent contractor and that there was no principal/agent, partnership or joint venture relationship between the parties to the agreement.

The Agreement set forth numerous requirements for the plaintiff's operations in Millennium Park. The Agreement set forth the minimum times and dates of operation and the permitted uses of the various areas. However, the Park District was not required to keep Millennium Park open for any minimum amount of hours. The plaintiff was required to adequately staff the facilities with well-trained personnel for efficient first-class service and to provide adequate stock. The plaintiff agreed that "the foregoing obligations go to the essence of the parties' agreement hereunder."

Other requirements under the Agreement included the Park District's approval of all signs used by the plaintiff and any name change. The Park District required that certain "Key Men" or "Alternate Key Men" operate the plaintiff to insure the quality of the plaintiff's operation in Millennium Park. Under the terms of the Agreement, the plaintiff was subject to the Park District's requirements as to employee uniforms, cleanliness, pest control, signage, repair and maintenance, ice and snow removal and food safety rules. The plaintiff was also required to carry certain minimum amounts of insurance.

Finally, the plaintiff was required to furnish the Park District with statements of its monthly gross sales for the calculation of the percentage fee. The Park District was also permitted to review the plaintiff's financial records in order to determine gross sales.

B. The Complaint for Declaratory Judgment

On August 5, 2005, the plaintiff filed its complaint for declaratory judgment. The complaint contained the following pertinent allegations. The plaintiff and the Park District had entered into the Agreement under which the plaintiff was permitted to operate certain businesses in Millennium Park. The terms of the Agreement did not grant the plaintiff full enjoyment and exclusive possession of the areas in which it conducted its businesses. The Agreement did not use the term "lease" in or to describe the agreement, and it did not provide for the payment of rent or grant the plaintiff a leasehold interest. The Agreement also contained a number of provisions through which the Park District maintained control over the property and the plaintiff's operation of its businesses. Any disputes between the parties were to be decided by the general superintendent of the Park District. The Park District's remedies under the Agreement were different from those in a lease; the Park District could terminate the Agreement immediately upon the occurrence of any one of several specified occurrences. However, the Agreement did not contain any forcible entry and detainer provisions or other landlord-tenant remedies or tenant protections.

The complaint further alleged that, during February 2005, certain newspaper articles appeared, suggesting that the plaintiff was being given special treatment, such as not being required to pay real estate taxes. On March 16, 2005, the assessor issued a "`New Proposed Assessment 2004'" in the amount of $502,550. While the notice referred to "a proposed increase in valuation," there had never before been any assessed valuation to increase. The assessment became final in April 2005. Based on the assessment, the plaintiff believed that the treasurer would impose a tax. Many businesses operating on Park District property under similar agreements were not assessed and/or taxed by the county.

In count I of the complaint, the plaintiff sought a declaration that it had a nontaxable license or concession, rather than a lease of the Park District's property, and, therefore, the imposition of a tax on the plaintiff's interest was unauthorized by law and unlawful. In count II, the plaintiff sought a declaration that a tax on the plaintiff's interest violated the property tax uniformity clause of the Illinois Constitution of 1970 because the plaintiff was subject to treatment that differed from the treatment of other businesses similarly situated. In count III, the plaintiff sought to enjoin the assessor from assessing its interest and the treasurer from imposing or collecting any property tax from the year 2004 and onward.

On May 10, 2006, the circuit court dismissed Cook County as a defendant. The court also granted the defendants' motion to dismiss count II in its entirety and count III to the extent that count III was based on the constitutional challenge alleged in count II. The court refused to dismiss the suit on the grounds that it lacked subject matter jurisdiction.

C. Cross-Motions for Summary Judgment

On August 16, 2006, the defendants filed a motion for summary judgment. The defendants maintained that the Agreement entered into by the plaintiff and the Park District was a taxable lease. The defendants argued that the Agreement contained all the requirements of a lease — length of time, payments to be made and the permitted area. Since the Agreement contained all the elements of a lease, the defendants maintained that it could not be a license. As the Agreement was not ambiguous, the defendants asserted that they were entitled to a judgment as a matter of law that the tax was proper as a tax on a leasehold of otherwise exempt property.

In a November 15, 2006, agreed order, the defendants stipulated that "(a) it is the responsibility of the tax-exempt entity that enters into a contract that it believes creates a taxable leasehold interest under 35 ILCS 200/9-195 to notify the Assessor and provide the Assessor with a copy of such contract; and (b) the Assessor did not receive any such notice from the Chicago Park District (or anyone else) regarding the Millennium Park Concession Permit Agreement between the Plaintiff and the Park District, nor did the Assessor receive a copy thereof until it requested a copy from the Park District in February 2005."

On March 22, 2007, the plaintiff filed its motion for summary judgment. Initially, the plaintiff pointed out that there was a question as to whether the Park District had the authority to enter into leases under...