New Holy Temple Missionary Baptist Church v. Discount Inn, Inc.

SUPREME COURT CASES

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State: Illinois

Court: 1st District Appellate

Docket No: 1-05-3010 Rel

Case Date: 02/09/2007

Preview:SIXTH DIVISION February 9, 2007

No. 1-05-3010 NEW HOLY TEMPLE MISSIONARY BAPTIST ) Appeal from the CHURCH, an Illinois Not-For-Profit Corporation, ) Circuit Court of ) Cook County, Petitioner-Appellant, ) ) v. ) No. 04 COTD 1708 ) DISCOUNT INN, INC.; MARIA PAPPAS, ) Honorable County Treasurer and County ) Marsha D. Hayes, Collector of Cook County; DAVID ORR, County ) Presiding. Clerk of Cook County; JAMES M. HOULIHAN, ) Assessor of Cook County, ) ) Respondents-Appellees. ) PRESIDING JUSTICE FITZGERALD SMITH delivered the opinion of the court: New Holy Temple Missionary Baptist Church (the church) appeals the judgment of the circuit court granting respondent Discount Inn, Inc.'s motion to dismiss the church's motion to vacate the circuit court's order granting the respondent's petition for a tax deed for the church's parking lot. Appellees Maria Pappas, David Orr and James Houlihan (taxing officials) were granted leave to become appellants pursuant to Supreme Court Rule 366. 155 Ill. 2d R. 366. We reverse and grant the church's petition to vacate the circuit court's granting of the tax deed to Discount Inn. The church is a religious organization with a church and parking lot located on South Pulaski in Chicago. The church property consists of two parcels of land, 16-22-407-040-0000, upon which the church building is located; and parcel 16-22-407-041-0000, upon which the subject property, a parking lot, is located. Discount Inn (through an assignment) purchased the

No. 1-05-3010 parking lot at a forfeiture tax sale for the delinquent 2001 (1999 second installment and 2000) general real estate taxes and was issued a tax deed in January 2005 to the church's parking lot. From 1986 through 1998, the parking lot had been listed on the Cook County tax assessment rolls as 100% exempt from taxation. From 1999 through 2003, both parcels, the church and the parking lot, were listed on the Cook County tax assessment rolls; the parcels were no longer exempt. Upon discovering this, the church obtained counsel to correct the assessment rolls to reflect tax exemption. In 2003 the church filed with the Cook County Board of Review seeking to exempt both parcels. The board recommended exemption. On August 28, 2003, the subject property, the parking lot, was sold at a forfeiture sale of delinquent taxes for the general taxes. The second installment of 1999 and both installments of the year 2000 were included in the forfeiture buy. The sale of the church parcel was subsequently vacated. But the church did not seek a vacation of the sale of the parking lot taxes. The sale of the taxes for the parking lot was assigned to appellee Discount Inn. In December 2004 the church filed certificate-of-error applications with the Cook County assessor seeking to correct the tax record to reflect that both parcels were exempt for the years 2000 through 2002. The Cook County assessor approved those applications. In September 2004, the Illinois Department of Revenue issued a decision exempting both parcels from taxation for 2003 and subsequent tax years. The church then filed an injunction suit seeking an exemption for both parcels for the tax years prior to the year 2000. That action remains pending as of this appeal.

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No. 1-05-3010 In May 2004 the owner of the taxes filed a notice of tax sale. During the notice-serving period the record owner of the subject property was New Holy Temple M.B. Church, a dissolved Illinois not-for-profit corporation and predecessor of the church. Benny Smothers as agent, director and officer of the predecessor church, the predecessor church, and Marie Smothers, an officer and director of the predecessor church, were all served in a timely manner. A legal notice was published in the Chicago Daily Law Bulletin as well. The period of redemption for the parking lot parcel expired on September 20, 2004. In October 2004 the owner of the taxes filed an application for an order directing the county clerk to issue a tax deed and application with the circuit court. After a prove-up, the circuit court issued an order directing the County Clerk to issue a tax deed to Discount Inn for the parking lot. On March 23, 2005, the church filed a petition under section 2-1401 of the Code of Civil Procedure (735 ILCS 5/2-1401 (West 2004)) seeking to vacate the circuit court's order. Discount Inn filed a motion to dismiss. The circuit court granted Discount Inn's motion to dismiss the church's 2-1401 section petition to vacate. This timely appeal followed. On appeal, the church argues that the circuit court erred by granting Discount Inn's motion to dismiss, finding that the church lacked standing. A section 2-615 motion to dismiss (735 ILCS 5/2-615 (West 2002)) challenges the legal sufficiency of a complaint based on defects apparent on its face. Marshall v. Burger King Corp., 222 Ill. 2d 422, 429 (2006). In reviewing the sufficiency of a complaint, we accept as true all well-pleaded facts and all reasonable inferences that may be drawn from those facts and we

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No. 1-05-3010 construe the allegations in the complaint in the light most favorable to the plaintiff. Marshall, 222 Ill. 2d at 429. A cause of action should not be dismissed pursuant to section 2-615 unless it is clearly apparent that no set of facts can be proved that would entitle the plaintiff to recovery. Canel v. Topinka, 212 Ill. 2d 311, 318 (2004). We review an order granting or denying a section 2-615 motion de novo. Marshall, 222 Ill. 2d at 429. "The doctrine of standing requires that a party have a real interest in the action brought and its outcome." Bridgestone/Firestone, Inc. v. Aldridge, 179 Ill. 2d 141, 147 (1997). In this case the church clearly had a genuine interest in the outcome of its section 2-1401 petition to vacate the tax deed judgment. It previously owned the church parking lot and the granting of the tax deed essentially transferred ownership from the church to Discount Inn. It used both the church and the parking lot at the time it filed its petition to vacate. Therefore, the church had standing. Discount Inn contends that the church did not have standing because it did not have the capacity to sue as a result of the fact that it was no longer a corporation during the tax years at issue and its five years to sue under section 12.80 of the Business Corporation Act of 1983 (805 ILCS 5/12.80 (West 2004)) had expired when it filed its motion to vacate. Discount Inn explains that the owner of record at the time of the notice serving period was the church's predecessor, New Holy Temple M.B. Church, a dissolved Illinois not-for-profit corporation. In order to have standing, a plaintiff needs only a real interest in the action and the capacity to sue. York Woods Community Ass'n. v. O'Brien, 353 Ill. App. 3d 293, 297-98 (2004). Both of these requirements were met. First, the church used the parking lot continuously

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No. 1-05-3010 and up until it filed its petition to vacate the judgment. Second, Discount Inn ignores the fact that the church was reinstated under a new name and thus was considered "as if it has not been dissolved." 805 ILCS 105/112.45(d) (West 2004). Even if the church had not registered under a new name, it was an unincorporated association and had the ability to bring a lawsuit in its name. See 735 ILCS 5/2-209.1 (West 2002); York Woods Community Ass'n., 353 Ill. App. 3d at 29798 . Therefore, Discount Inn's argument fails. Next, the church and the taxing officials argue that the circuit court erred by finding that the church was not diligent in bringing its motion to vacate. The church also argues that it was diligent in presenting a meritorious defense. Discount Inn contends that the church was not diligent because it was served with notice of the tax deed proceeding in May 2004 and "failed to redeem from the tax sale and did not appear in court to attempt to prevent the issuance of the tax deed." To prevail on a motion to vacate the movant must establish that it: (1) was diligent in presenting its section 2-1401 petition; (2) was diligent in presenting its defense; and (3) had a meritorious defense. 735 ILCS 5/2-1401 (West 2004); Smith v. Airoom Inc., 114 Ill. 2d 209, 220-21 (1986). Whether a section 2-1401 petition should be granted lies within the sound discretion of the circuit court, depending upon the facts and equities presented. Smith, 114 Ill. 2d at 221. A reviewing court will not disturb the judgment of the circuit court unless the circuit court abused its discretion. Smith, 114 Ill. 2d at 221. "In addressing the element of diligence, courts are primarily concerned with determining whether a party has willfully disregarded the process of the court or is so indifferent to it that he is chargeable with culpable negligence." Klein

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No. 1-05-3010 v. Steel City National Bank, 212 Ill. App. 3d 629, 638 (1991). Further, "the trial court may relax or excuse the exercise of diligence when necessary to provide relief from an unfair, unjust, or unconscionable judgment." Kulikowski v. Larson, 305 Ill. App. 3d 110, 114 (1999). In this case, the church presented uncontested evidence that the church's pastor reasonably believed that the church parking lot parcel and the church parcel were both 100% exempt from taxation for 1999 through 2003 when, in fact the parcels were included on the tax rolls as taxable property. Upon discovering that the parcels were on the rolls, the church obtained counsel to correct the assessment records to reflect the exemption. All proper documentation was filed with the Cook County Board of Review which recommended that both parcels be exempted for the tax year 2003 and subsequent years. The church then filed certificates of error applications for the three years prior to the year 2003. The applications were approved. This process was begun 15 months before the issuance of the tax deed order. Thus, the church was in the process of clearing up the tax errors when the tax deed was issued. The fact that the church did not file its section 2-1401 petition to vacate until 2

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