Carle Foundation v. Illinois Department of Revenue

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State: Illinois

Court: 4th District Appellate

Docket No: 4-09-0195 Rel

Case Date: 10/29/2009

Preview:Filed 10/29/09

NO. 4-09-0195 IN THE APPELLATE COURT OF ILLINOIS FOURTH DISTRICT

THE CARLE FOUNDATION, an Illinois Not-forProfit Corporation, Plaintiff-Appellee, v. THE ILLINOIS DEPARTMENT OF REVENUE; and BRIAN HAMER, in His Official Capacity as Director of the Illinois Department of Revenue, Defendants-Appellants, and THE CHAMPAIGN COUNTY BOARD OF REVIEW; STAN JENKINS, DAN STEBBINS, and LAURA SANDEFUR, in Their Official Capacity as Members of the Champaign County Board of Review; THE CHAMPAIGN COUNTY ASSESSMENT OFFICE; JOE MEENTS, in His Official Capacity as Champaign County Interim Supervisor of Assessments; JOANNE M. CHESTER, in Her Official Capacity as Cunningham Township Assessor; and DANIEL J. WELCH, in His Official Capacity as Champaign County Treasurer, Defendants.

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Appeal from Circuit Court of Champaign County No. 08L202

Honorable Richard P. Klaus, Judge Presiding.

JUSTICE APPLETON delivered the opinion of the court: Plaintiff, the Carle Foundation (Foundation), filed a complaint requesting a judicial declaration pursuant to section 23-25(e) of the Property Tax Code (Code) (35 ILCS 200/23-25(e) (West 2006)) that four parcels of land it used in connection with the operation of its hospital in Urbana were exempt from property taxes for the years 2004 through 2007. Defendant, the Illinois Department of Revenue (Department), filed a

motion to dismiss the complaint for failure to state a cause of action, and the circuit court denied the motion. The circuit court, however, certified two questions for interlocutory review pursuant to Supreme Court Rule 308(a) (155 Ill. 2d R. 308(a)), and we granted the Department's application for leave to appeal. The first question concerns the proper interpretation of section 23-25(e) (35 ILCS 200/23-25(e) (West 2006))--a provision of the Code no reported decision seems to have ever interpreted--and the second question concerns the applicability of the common-law doctrine of election of remedies. In this opinion, we answer both questions (except for some parts of the first question, to avoid deciding an issue that is moot or giving an opinion that is merely academic), and we remand this case for further proceedings. I. BACKGROUND In December 2007, the Foundation filed a complaint invoking section 2325(e) of the Code (35 ILCS 200/23-25(e) (West 2006)). According to the Foundation, this statutory provision allowed the Foundation to come directly to the circuit court and request the restoration of exemptions for the four parcels for the years 2004 through 2007. The Foundation alleged it was using these parcels as an acute-care licensed hospital and the Department previously exempted them from taxation on the ground of their charitable use. On June 28, 2004, however, the assessor of Cunningham Township, Joanne Chester, notified the Foundation that the four parcels henceforth would be on the tax rolls. The Foundation alleged it then applied to the county board of review for

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an exemption of the four parcels for 2004 and 2005 but the board denied the applications and in February 2007, the Department upheld the denials. See 35 ILCS 200/16-70 (West 2006). (The Foundation did not seek administrative relief from assessments of the parcels for the year 2006 or 2007.) The Foundation further alleged that pursuant to section 8-35(b) (35 ILCS 200/8-35(b) (West 2006)), it had applied for an administrative hearing before the Department with respect to the denial of exemptions for 2004 and 2005. The Foundation believed, however, that the litigation it had initiated by its complaint in this case would render those administrative proceedings moot. The Foundation stated it would seek to stay the administrative proceedings pending the outcome of this litigation. The Foundation acknowledged that, normally, a party must contest the denial of an exemption by first exhausting administrative remedies and only then seeking judicial review pursuant to section 8-40 of the Code (35 ILCS 200/8-40 (West 2006)). The Foundation maintained, however, that section 23-25(e) (35 ILCS 200/2325(e) (West 2006)) carved out an exception to the requirement of exhaustion of administrative remedies, allowing a party to come directly to court if (1) a property owner previously obtained a decision by the Department or a court that the property was exempt from taxation, (2) local or state officials purported to revoke that exemption for another tax assessment year, and (3) the taxpayer's present grounds for seeking an exemption were comparable to those for which an exemption previously was granted. The Foundation sought a judicial declaration that the four parcels were, as before, exempt from taxation for the years 2004 through 2007 on the ground of

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charitable use. The Foundation also sought an injunction requiring the interim supervisor of assessments, Joe Meents, to issue certificates of error to that effect (see 35 ILCS 200/14-25 (West 2006)) and requiring the county treasurer, Daniel J. Welch, to refund the taxes the Foundation had paid on those parcels for 2004 through 2007. In its motion for dismissal pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2006)), the Department argued that section 2325(e) (35 ILCS 200/23-25(e) (West 2006)) did not create a private right of action and that the Foundation's complaint--which really, the Department argued, was a tax objection complaint pursuant to section 23-10 (35 ILCS 200/23-10 (West 2006))--was untimely because section 23-10 required that such complaints seeking to establish an exemption be brought "within 75 days after the first penalty date of the final installment of taxes for the year in question." In a reply memorandum, the Department further argued that the Foundation's complaint conflicted with the doctrine of election of remedies, for the complaint alleged that the Foundation had petitioned for an administrative hearing with the Department over its denial of an exemption for the tax years 2004 and 2005, and the administrative remedy, once chosen, was exclusive with respect to those years. The circuit court denied the Department's motion to dismiss the complaint as legally insufficient. On March 3, 2009, however, the court certified the following questions pursuant to Rule 308: "Question No. 1 Does the term 'court proceedings to establish an

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exemption[,]' in [section] 23-25(e) of the *** Code [(35 ILCS 200/23-25(e) (West 2006)),] refer to any or all of the following: (a) a cause of action, not otherwise specifically provided for by the *** Code, to establish a tax exemption for a specific assessment year for property determined to have been exempt, on comparable grounds, for a prior or subsequent year; (b) proceedings following the filing of a tax objection complaint pursuant to [section] 23-10 of the *** Code [(35 ILCS 200/23-10 (West 2006))] in order to preserve defenses to the entry of judgment against properties in the delinquent list under [section] 21-175 of the *** Code [(35 ILCS 200/21-175 (West 2006))]; (c) proceedings to delay payment of property taxes during the pendency of administrative proceedings to contest a party's eligibility for a property tax exemption; or (d) some other category of proceedings? Question No. 2

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If the term 'court proceedings to establish an exemption[,]' in [section] 23-25(e) of the *** Code [(35 ILCS 200/23-25(e) (West 2006)),] includes a cause of action not otherwise specifically provided for by the *** Code, as set forth in [q]uestion [No.] 1(a), may a party seek relief through such proceedings for a given tax year once it has sought a hearing in the Department *** pursuant to [section] 8-35 of the *** Code [(35 ILCS 200/8-35 (West 2006))] for the same year?" On April 9, 2009, we granted the Department's application for leave to appeal. II. ANALYSIS A. Certified Question No. 1 (1) Certified Question No. 1(a) Certified question No. 1(a) is as follows: "Does the term 'court proceedings to establish an exemption[,]' in [section] 23-25(e) of the *** Code [(35 ILCS 200/23-25(e) (West 2006)),] refer to *** a cause of action, not otherwise specifically provided for by the *** Code, to establish a tax exemption for a specific assessment year for property determined to have been exempt, on comparable grounds, for a prior or subsequent year[?]" This question requires us to interpret both subsection (a) and subsection (e) of section 23-25 of the Code (35 ILCS 200/23-25(a), (e) (West 2006)), for, as we

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shall see, subsection (e) refers to subsection (a). Of course, we interpret statutes de novo. In re Marriage of Waller, 339 Ill. App. 3d 743, 747, 791 N.E.2d 674, 678 (2003). These two subsections, (a) and (e), abound with citations to other sections of the Code, so we will take the subsections one at a time. Subsection (a) provides as follows: "

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