DANIEL CUEVAS, Plaintiff-Appellant, v. JOSEPH BERRIOS, in His Official Capacity as Assessor of Cook County; and THE DEPARTMENT OF ERRONEOUS HOMESTEAD EXEMPTION ADMINISTRATIVE HEARINGS, Defendants-Appellees.—DANIEL CUEVAS, Plaintiff-Appellee, v. JOSEPH BERRIOS, in His Official Capacity as Assessor of Cook County; MARIA PAPPAS, in Her Official Capacity as Treasurer of Cook County; DENNIS MICHAEL FLEMING, in His Official Capacity as Administrative Law Judge; and THE DEPARTMENT OF ERRONEOUS HOMESTEAD EXEMPTION ADMINISTRATIVE HEARINGS, Defendants-Appellants.
Docket Nos. 1-15-1318, 1-16-0602 cons.
Appellate Court of Illinois, First District, Sixth Division
March 31, 2017
2017 IL App (1st) 151318
JUSTICE DELORT
Appeal from the Circuit Court of Cook County Nos. 15-CH-2321, 15-CH-169; the Hon. Mary Lane Mikva, and the Hon. Peter Flynn, Judges, presiding. Judgment: Affirmed.
Counsel on Appeal: Marshal P. Morris, of Marshal P. Morris, LLC, and Larry D. Drury, of Larry D. Drury, Ltd., both of Chicago, for appellant.
Anita M. Alvarez, State‘s Attorney, of Chicago (Donald J. Pechous, Benjamin R. Bilton, Margarett Zilligen, Assistant State‘s Attorneys, of counsel), for appellees.
OPINION
¶ 1 Illinois law allows property owners to claim a partial exemption, commonly known as the “homestead exemption,” from real estate taxes for their primary residence. Plaintiff Daniel Cuevas claimed homestead exemptions on 11 different properties which he owned in Cook County. Only one of those properties was his principal residence. The county assessor, defendant Joseph Berrios, convened an administrative hearing to determine the relevant facts regarding Cuevas‘s exemptions and the amount he might owe due to any improper exemptions. The Department of Erroneous Homestead Exemption Administrative Hearings (DEHE) determined that Cuevas improperly took exemptions on 10 of the 11 properties and that he owed $91,984.85 for back taxes, penalties, and interest for tax years 2007 to 2012.
¶ 2 Cuevas filed two lawsuits challenging this action. In case No. 15 CH 2321 (the class action case), the circuit court upheld the legality of the administrative hearing process and the underlying statute against a host of challenges asserted by Cuevas. Cuevas also filed an administrative review case, No. 15 CH 169. In that case, the circuit court reversed the DEHE‘s determination that Cuevas was responsible for back taxes for the 2007 tax year. We affirm the circuit court‘s judgments in both cases.
¶ 3 BACKGROUND
¶ 4 In 2013, the General Assembly adopted section 9-275 of the Property Tax
¶ 5 Section 9-275(l) also required the assessor to establish an “amnesty period,” running from July 16, 2013, to December 31, 2013.
¶ 6 Since its original enactment in 2013, section 9-275 has been amended five times. See
¶ 7 If the owner does not request a hearing or does not prevail at the hearing, the assessor may record a lien against the property in the above-described amounts.
¶ 8 On or about May 27, 2014, the assessor sent Cuevas notices of intent to record a tax lien on 11 different properties. Cuevas requested a hearing pursuant to section 9-275(f). On December 4, 2014, after a hearing, the DEHE hearing officer issued a written order finding that Cuevas took improper exemptions on the 10 properties at which he did not reside and found him liable under section 9-275. This order resulted in an aggregate amount due of $91,984.85, including taxes, penalties, and interest.
¶ 9 On January 6, 2015, Cuevas filed a timely petition for administrative review of that decision (case No. 15 CH 169). As amended, the administrative review complaint alleged that the DEHE‘s decision was erroneous because, among other reasons, the new lien and collection system could not apply to taxes which became delinquent before the July 16, 2013, effective date of
¶ 10 On February 10, 2015, Cuevas filed a second lawsuit (case No. 15 CH 2321) which he framed as a class action to also include similarly affected taxpayers. As amended, the complaint asserted numerous claims against section 9-275. These included, among other things: violation of state and federal constitutional guarantees of uniform taxation, equal protection, and due process; vagueness; ambiguity; and arbitrariness. Like the administrative review lawsuit, it also challenged the law‘s retroactive effect, noting that the tax years in question—2006-2012—all pre-dated the 2013 effective date of the law. The two lawsuits were assigned to different judges and were never consolidated or reassigned in the circuit court.
¶ 11 Although the class action case was filed after the administrative review case, it proceeded to final judgment first. In the class action case, the defendants filed a combined motion to dismiss the complaint pursuant to section 2-619.1 of the Code of Civil Procedure (Code) (
¶ 12 The court denied the section 2-619 portion of the motion, essentially finding that Cuevas could bring his constitutional claims independently of the still-pending administrative review case. However, on April 14, 2015, the court dismissed the class action complaint with prejudice pursuant to section 2-615 of the Code, rejected the constitutional claims, and found that section 9-275‘s retroactive effect was proper.
¶ 13 The defendants also moved to dismiss the administrative review case, arguing in part that the case was duplicative of the class action case which was still pending before a different judge. On September 29, 2015, the court presiding over the administrative review case granted that portion of the motion, which had the effect of eliminating all of Cuevas‘s claims except one: whether section 9-275 allowed the defendants to reach back to collect delinquent taxes for 2007, an issue never addressed in the class action case. On October 20, 2015, the court memorialized the partial dismissal in a written order and set a briefing schedule on the sole issue of the 2007 tax delinquency.
¶ 14 On January 25, 2016, the court in the administrative review case held that prosecutions for erroneous homestead exemptions could only begin in 2014, and
¶ 15 ANALYSIS
¶ 16 We begin with the appeal from the dismissal of the class action complaint. The circuit court dismissed the amended class action complaint pursuant to section 2-615 of the Code (
¶ 17 Cuevas first contends that section 9-275 does not apply at all to tax years before 2013. He contends that the temporal reach of section 9-275, as properly construed, allows the assessor to pursue only those delinquent taxes that accrued after the July 16, 2013, effective date of the section. In the alternative, Cuevas claims that even if the section could be read to allow collection of pre-2013 taxes, such an interpretation would violate property owners’ right to due process of law under the fourteenth amendment to the United States Constitution because it imposes penalties on taxes which became delinquent before section 9-275 became effective. In short, this argument suggests that the law has an unconstitutionally retroactive effect.
¶ 18 Another panel of this court recently addressed a challenge to section 9-275 raising both of these claims. In Mulry v. Berrios, 2017 IL App (1st) 152563, a taxpayer asserted that section 9-275 had an impermissibly retroactive effect because the tax years in question, 2010 through 2012, pre-dated the 2013 effective date of the law.
¶ 19 Relying on the plain language of section 9-275(f), which states that the law applies to exemptions taken erroneously in “any of the three collection years immediately prior to the current collection year” (
¶ 21 The Mulry court was also faced with a constitutional challenge virtually identical to the one Cuevas presents here. The taxpayer in Mulry also claimed that imposing interest, penalties, and a lien for taxes which had already been imposed before section 9-275 became effective was unconstitutional. The Mulry court rejected this theory, finding that applying the law to delinquencies for prior tax years was neither unconstitutional nor otherwise impermissible. The court strongly relied on Hayashi in its analysis. The Hayashi court stated that “a statute which creates new requirements to be imposed in the present or future, and not in the past, does not have a retroactive effect on the parties.” Hayashi, 2014 IL 116023, ¶ 26. Accordingly, the Mulry court found, “The Cook County assessor‘s ‘Notice of Erroneous Homestead Exemptions’ for tax years 2010, 2011, and 2012 affected only Mulry‘s present and future eligibility to continue to retain erroneous exemptions from her property tax bill. [Section 9-275‘s] impact on her has been solely prospective and not impermissibly retroactive.” Mulry, 2017 IL App (1st) 152563, ¶ 14.
¶ 22 We agree with the Mulry court that section 9-275‘s application to Cuevas‘s tax obligations is not impermissibly retroactive. Cuevas was never entitled to take simultaneous homestead exemptions on multiple properties. See id. (noting that the homestead exemption rules have been in place since 1851). Section 9-275 only created a new collection mechanism regarding taxes due to the county which Cuevas illegally withheld in prior years. These funds were properly due and owed to Cook County all along.
¶ 23 We recognize that the facts presented in Mulry are slightly different from those here. The taxpayer in Mulry was in the “first group” of taxpayers who took improper homestead exemptions in a smaller number of years and were thus not subject to the additional 50% penalty imposed on the more frequently delinquent taxpayers, such as Cuevas in the “second group“. See
¶ 24 Cuevas‘s next argument is that section 9-275 violates the revenue article of the Illinois Constitution of 1970.
¶ 25 Our supreme court has explained that section 4 of the revenue article merely requires equality of taxation within each individual tax district. Kankakee County Board of Review v. Property Tax Appeal Board, 131 Ill. 2d 1, 20 (1989). If a uniformity claim does not allege a disparate valuation or rate of taxation for similar properties within individual taxing districts, it must be dismissed. Rodgers v. Whitley, 282 Ill. App. 3d 741, 751 (1996).
¶ 26 Applying these principles to Cuevas‘s appeal, we find that his uniformity challenge fails. Simply put, nothing in section 4 addresses penalties for delinquent taxes or mechanisms to collect them. Section 9-275 does not impose any tax whatsoever. It merely establishes a new mechanism to collect delinquent taxes.
¶ 27 In the context of his revenue article claim, Cuevas offers the additional argument (albeit in cursory fashion) that section 9-275(g) violates the right of Illinois taxpayers to the equal protection of the law by creating different tax systems for different counties. True, section 9-275 in general only applies to counties with over 3 million inhabitants, a classification which has the operative effect of including Cook County and excluding all 101 of Illinois‘s other counties from the statute‘s reach. Despite that fact, Cuevas‘s equal protection challenges fails for several reasons. First, section 9-275(g), which he specifically cites in his brief, is not the main operative provision in the overall system established in section 9-275. Section 9-275(g) merely exempts persons who have inherited property from certain relatives from penalties that would have been otherwise imposed for taking an improper homestead exemption.
¶ 28 Forfeiture aside, Cuevas‘s challenge to the statute‘s creation of a more aggressive collection mechanism for delinquent taxes in Cook County than in other counties fails on the merits. “A legislative classification based upon population will be sustained ‘where founded on a rational difference of situation or condition
¶ 29 Cuevas next contends, again without citing any authority, that section 9-275 is invalid because the funds it generates unjustly enriches “the Cook County Assessor‘s Office.” Forfeiture aside, this argument is without merit. “To state a cause of action based on a theory of unjust enrichment, a plaintiff must allege that the defendant has unjustly retained a benefit to the plaintiff‘s detriment, and that defendant‘s retention of the benefit violates the fundamental principles of justice, equity, and good conscience.” HPI Health Care Services, Inc. v. Mount Vernon Hospital, Inc., 131 Ill. 2d 145, 160 (1989). None of these elements apply here. The assessor does not hold any penalties and interest generated under section 9-275 personally but rather in his official capacity for the benefit of the county itself and local taxing bodies. The county and taxing bodies were entitled to the delinquent taxes all along. Cuevas‘s failure to pay these taxes on time required these governments to look to other resources to make up lost revenues. The penalties and interest imposed by section 9-275 help make those governments whole for losses they sustained waiting for Cuevas to pay his delinquent taxes.
¶ 30 We have limited our analysis to the arguments Cuevas included in his appellant‘s brief. In his reply brief, he presents several new arguments, but they have been forfeited.
¶ 31 In the administrative review case, the circuit court reversed the hearing officer‘s finding that Cuevas was liable for taxes, penalties, and interest for the 2007 tax year. The court found that because the assessor served Cuevas with a notice of intent to lien in 2014, the six-year period specified in section 9-275(c) with respect to delinquent taxpayers included only the years 2008 through 2013, and excluded 2007, that year being seven years before the service of the notice.
¶ 32 Section 9-275(e) provides that all final administrative decisions of DEHE are subject to judicial review pursuant to the Administrative Review Law (
¶ 33 The issue presented is one of statutory construction. When construing a statute, our goal is to “ascertain and give effect to the intent of the legislature,” which begins with the language of the statute, “the best indicator of legislative intent.” Kean v. Wal-Mart Stores, Inc., 235 Ill. 2d 351, 361 (2009). If the language is clear and unambiguous, we may not depart from the plain language and meaning of the statute by reading into it exceptions, limitations or conditions that the legislature did not express, nor by rendering any word or phrase superfluous or meaningless. Kraft, Inc. v. Edgar, 138 Ill. 2d 178, 189 (1990). Although courts will generally defer to an agency‘s interpretation of the statutes it administers, that interpretation is not binding and will be rejected if it is erroneous. Shields v. Judges’ Retirement System of Illinois, 204 Ill. 2d 488, 492 (2003). The construction of a statute presents a question of law that we review de novo. Hayashi, 2014 IL 116023, ¶ 16.
¶ 34 As noted above, section 9-275 has been amended five times since its original enactment in 2013. Because the parties’ arguments center, in part, on distinctions between some of the six different versions of the statute, we must set forth the statute‘s evolution in some detail.
¶ 35 The entire system of collecting delinquent taxes from Cook County taxpayers with erroneous homestead exemptions at issue in this case was originally enacted as part of
¶ 36 On January 1, 2015, after the DEHE hearing officer had ruled on Cuevas‘s case but before Cuevas filed his administrative review action,
¶ 37 Under section 9-275(c) as it existed at the time of Cuevas‘s hearing, the assessor‘s lien and collection authority extended to the “6 assessment years immediately prior to the assessment year in which the notice of intent to record at [sic] tax lien is
¶ 38 Applying this definition to the statute at issue, the “6 assessment years immediately prior” to 2014 are 2008, 2009, 2010, 2011, 2012, and 2013. Accordingly, the DEHE erred when it found that the assessor could use the collection system in section 9-275 to collect delinquent taxes for 2007.
¶ 39 The defendants present a variety of arguments to avoid this result. None of them are convincing. First, they note that property taxes are paid in arrears, so that taxes on the ownership of property during calendar year 2013 are actually paid in 2014. See
¶ 40 We also reject the defendants’ argument that the amnesty period established in section 9-275(l) demonstrates that the lien may reach back to 2007. They contend that, because the amnesty period addresses delinquencies for tax years “prior to the 2013 tax year,” its scope includes tax year 2012, whose taxes are payable in 2013. Under this theory, the first-prior year becomes 2012, and the sixth-prior year is thus 2007. Again, we cannot agree. As noted above, the statute creates two classes of taxpayers and establishes a distinct process and set of remedies applicable to each class. The amnesty program explicitly excludes taxpayers like Cuevas who claimed more than three improper homestead exemptions and thus only applies to the first class of taxpayers.
¶ 41 The defendants’ final argument regarding the statute‘s reach back to 2007 also fails. They note that in
¶ 42 For these reasons, we find that the DEHE erred when it found that the assessor could collect taxes resulting from an erroneous homestead exemption for the 2007 tax year pursuant to section 9-275. We therefore affirm the circuit court‘s order which reversed the DEHE.
¶ 43 CONCLUSION
¶ 44 We affirm the circuit court‘s order in appeal No. 1-15-1318 dismissing Cuevas‘s challenges to section 9-275. We also affirm the circuit court‘s order in appeal No. 1-16-1602 reversing the DEHE‘s decision regarding Cuevas‘s delinquent taxes for the 2007 tax year.
¶ 45 Affirmed.