Trilisky v. City of Chicago
143 N.E.3d 925
Ill. App. Ct.2019Background
- Plaintiff Nina Trilisky purchased real property from Fannie Mae in 2014, paid Chicago’s real property transfer tax, and sued for refund/declatory relief as class representative.
- After an initial federal-preemption theory was foreclosed by Seventh Circuit decisions, Trilisky amended to allege the transfer tax exemption for transfers “by or from any governmental body” (Chicago Mun. Code §3-33-060(B)) applies because the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac into conservatorship and ‘‘succeeded to all rights, titles, powers, and privileges’’ of the enterprises.
- The City moved to dismiss under section 2-615 (and raised exhaustion), arguing the enterprises are not “governmental bodies” under the Municipal Code and that Trilisky failed to exhaust administrative remedies.
- The circuit court dismissed Trilisky’s amended complaint on the ground the enterprises are not governmental bodies (it found exhaustion was not a bar).
- On appeal the court affirmed: it held the transfer-tax exemption for transfers by/from a “governmental body” does not encompass Fannie Mae or Freddie Mac (the conservatorship did not convert them into governmental bodies).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether transfers "acquired by or from any governmental body" (Chicago Mun. Code §3-33-060(B)) include Fannie Mae/Freddie Mac | Enterprises became governmental bodies when FHFA, a federal agency, placed them in conservatorship and succeeded to their rights | The Municipal Code exemption applies only to "governmental bodies" as that term is used in the ordinance; enterprises are private corporations/federal instrumentalities, not governmental bodies | Held: Enterprises are not "governmental bodies" and thus transfers from them are not exempt |
| Whether Trilisky was required to exhaust administrative remedies before suing | Not required because she challenged the tax as unauthorized by law and the dispute is purely legal (statutory interpretation) | City raised exhaustion but court could consider exceptions | Held: Exhaustion not required here (exceptions apply), but dismissal proper on merits |
| Whether FHFA conservatorship converted enterprises into government actors or instrumentalities covered by the exemption | Conservatorship and statutory succession of rights transformed the enterprises into governmental bodies/federal instrumentalities | Conservatorship placed FHFA in enterprises’ shoes; FHFA in conservatorship assumed enterprises’ private attributes (did not make enterprises governmental) | Held: Conservatorship did not convert enterprises into governmental bodies; FHFA assumed enterprises’ rights but did not alter enterprises’ private corporate status |
| Whether city should be bound by DuPage County memorandum or Illinois Admin. Code definitions to treat enterprises as governmental bodies | DuPage Recorder and Administrative Code definitions support treating enterprises as governmental bodies for transfer-tax exemption | Municipal Code’s plain language controls; city omitted Administrative Code definition and has interpreted the transfer-tax exemption to exclude enterprises | Held: City ordinance language controls; DuPage memorandum and Admin. Code definitions do not change interpretation; city’s informational bulletin and Municipal Code indicate enterprises are excluded |
Key Cases Cited
- Federal Nat'l Mortgage Ass'n v. City of Chicago, 874 F.3d 959 (7th Cir. 2017) (addressed federal-preemption challenge to Chicago transfer tax assessed in transactions involving the enterprises)
- DeKalb County v. Federal Housing Finance Agency, 741 F.3d 795 (7th Cir. 2013) (addressed enterprises’ challenge to Illinois transfer tax and related immunity arguments)
- Herron v. Fannie Mae, 861 F.3d 160 (D.C. Cir. 2017) (conservatorship analysis: FHFA in conservatorship ‘‘stepped into the enterprises’ shoes’’ and did not render the enterprises governmental actors)
- Lombard Public Facilities Corp. v. Dep't of Revenue, 378 Ill. App. 3d 921 (2008) (framework for determining whether an entity is a "governmental body" for tax-exemption purposes)
- Hubble v. Bi‑State Dev. Agency of the Ill.-Mo. Metro. Dist., 238 Ill. 2d 262 (2010) (description of circumstances where a statutory entity was treated as a public body created to perform governmental functions)