Divided Illinois Supreme Court Holds No Property Disputes Between Ex-Domestic Partners

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In Blumenthal v. Brewer, the Illinois Supreme Court was asked to overrule its thirty-seven year old decision in Hewitt v. Hewitt and hold that Illinois would join the vast majority of states in recognizing a cause of action for equitable division of property between unmarried domestic partners. Last Thursday, a divided court declined that invitation, holding that recognizing such quasi-contract claims would be inconsistent with Illinois’ ban on common-law marriages. Our detailed summary of the underlying facts and lower court rulings in Blumenthal is here.

Blumenthal began in 2010 when the plaintiff filed her complaint seeking partition of the residence she had shared with her long-time domestic partner, the defendant. The defendant filed a counterclaim, expressly alleging that the parties’ relationship had been “identical in every essential way to that of a married couple.” The counterclaim sought (1) imposition of a constructive trust on the residence; (2) division of the residence; (3) a constructive trust over the annual net earnings from the plaintiff’s medical practice, or in the alternative, restitution of funds used from the defendant’s account in connection with the purchase of the practice; and (4) apportionment of the residence’s value taking into account amounts spent by defendant to maintain it. The Circuit Court dismissed the counterclaim as barred by Hewitt. The Appellate Court reversed, holding that Hewitt was obsolete, given the enormous changes in Illinois’ legal attitude towards nonmarital cohabitation since 1979.

In an opinion by Justice Karmeier, the Supreme Court reversed. The Court began by pointing out that most of the defendant’s counterclaim arguments suffered from two fatal procedural flaws. The ruling dismissing the counterclaim had been appealed pursuant to Rule 304, following the trial court’s certification (for anyone who isn’t an Illinois lawyer – Illinois Supreme Court Rule 304 is more or less analogous to a Federal 1292(b) interlocutory appeal by permission). The problem was, the majority pointed out, that a Rule 304 certification doesn’t make the order appealable if it wasn’t a severable part of the overall controversy. But here, the Court found, the counterclaim was just a different approach to the same thing the main case was about – partition of the couple’s property.  As such, certification or no, there was no way to make the counterclaim order appealable. And procedural problem number two, according to the majority – the Appellate Court had no authority to, in essence, overrule Hewitt. Ordinarily, the majority wrote, it would merely vacate the Appellate Court and remand. But here, the proceedings on the principal claim had gone all the way to their finish, and the judgment was now final (neither party having appealed). So most of the counterclaim was moot anyway.

Count 3 of the counterclaim, which sought a constructive trust or restitution in connection with the medical practice, was separate from the underlying property dispute, however. Nevertheless, the constructive trust claim had to fail, according to the majority. The defendant couldn’t be the beneficiary of a constructive trust over the medical practice, since the Medical Corporation Act and the Medical Practice Act of 1987 barred non-doctors from having any “ownership, management, or control” of a medical corporation.

But that left the restitution remedy, and at last, the majority squarely faced Hewitt. After reviewing the legal background to Hewitt, the majority declined to overrule the decision. The Court noted that the General Assembly has enacted, repealed and amended a great many family-related statutes in the years since Hewitt – the same legal developments which had persuaded the Appellate Court that Hewitt was obsolete – but had left the foundation of that decision (the ban on common-law marriage) in place. Based on that, the majority found no evidence that the public policy which Hewitt was based upon had changed at all. On the contrary, according to the majority, the “current legislative and judicial trend is to uphold the institution of marriage,” citing the U.S. Supreme Court’s decision in Obergefell v. Hodges striking down bans on same-sex marriages. So until the legislature intervened and changed the public policy barring common-law marriages, the majority found Hewitt was still good law and the restitution claim, since it rested on the parties’ relationship, had to fail.

Justice Theis wrote a separate opinion concurring in part and dissenting in part, joined by Justice Burke. The dissenters had no quarrel with the decision holding that most of the underlying judgment was not appealable, or with the holding that the medical corporation statutes barred the constructive trust claim. But the dissenters would have overruled Hewitt. According to the dissenters, the majority had characterized Hewitt as being a straightforward affirmation of the public policy against common law marriage, but “[i]n fact, Hewitt did much more.” Hewitt “etched into the Illinois Reports the arcane view that domestic partners who choose to cohabit, but not marry, are engaged in ‘illicit’ or ‘meretricious’ behavior at odds with foundational values of ‘our family-based society'” – a statement which the dissenters labelled “sweeping and near-defamatory.”

According to the dissenters, virtually all of the legal support for Hewitt has disappeared. Illinois’ criminal prohibition against cohabitation was repealed in 1990. The Hewitt court had cited to Illinois’ rejection of no-fault divorce, but Illinois adopted no-fault divorce only a few years later, in 1984. The section of the First Restatement of Contracts quoted in Hewitt which defined contracts between people in intimate relationships as illegal was deleted by the Second Restatement, published in 1981. Forty of fifty states have bans on common-law marriage similar to Illinois’ statute, but courts in the “vast majority” of those states nevertheless recognize property claims between former domestic partners – without “reviv[ing] the doctrine of common-law marriage in jurisdictions that have abolished it. . . Illinois is a clear outlier on this issue.” The dissenters declared that “Hewitt must be overruled because it is outmoded and out of touch with contemporary experience and opinions on cohabitation.”

Although the majority had interpreted the legislature’s action in making a host of changes to domestic relations law while leaving the ban on common-law marriage untouched as supporting retention of Hewitt, the dissenters disagreed. After all, while the legislature was “well equipped to declare public policy on domestic relations,” the courts had been making equitable divisions of joint assets between family members for more than a century and a half. And even leaving all that aside, the dissenters concluded, the defendant wasn’t seeking “marriage-like benefits” or “rights” in the counterclaim – she was simply seeking to pursue a common-law property claim that any other party would have routinely been permitted.

Image courtesy of Flickr by Marc Hatot (no changes).

Anti-SLAPP Protection Extends To City Council Vote Under Allegations of Conflict of Interest in California

6753527391_18659ea573_o  In a 5-2 decision, the California Supreme Court reversed the appellate court and held that the votes of city officials in favor of a public contract were a protected activity under an anti-SLAPP motion, despite allegations that they each had an improper conflict of interest.  City of Montebello v. Vasquez, S219052.  Through outside counsel, the City sued three former council members, and a former administrator, for the violation of Government Code § 1090 by voting on a waste hauling contract in which they each had a financial interest.  The City sought to void the contract and disgorge campaign contributions from the company which was awarded the contract.  After the contract was voided in a separate action, these defendants brought an anti-SLAPP motion under C.C.P. § 425.16, arguing that the remainder of the lawsuit was merely political retribution for exercising their constitutional right of free speech by participating in a public hearing.

First, a unanimous Supreme Court resolved a conflict in the appellate courts and rejecting the City’s attempt to invoke the public enforcement exemption to an anti-SLAPP motion. C.C.P. § 425.16(d).  The Court confirmed that this exemption only applies to a suit brought in the name of the people by a public official acting as a public prosecutor, not an outside law firm in the name of the city.  The Court also held that the illegality exemption only applied when the actions were illegal as a matter of law, and here there were unresolved factual disputes over the alleged actions. C.C.P. § 425.16(h).  When no exemption applies, the defendant must show that the subject actions were made in furtherance of the defendant’s constitutional right of petition or free speech in connection with a public issue.  Once that showing is made, the plaintiff must substantiate a legally sufficient claim.

The Court split 5-2 over the issue of protected conduct, with the majority finding that votes by city officials in favor of the contract were protected activity under the anti-SLAPP law.  The majority found that the councilmembers’ votes, as well as statements made in the course of their hearing deliberations, qualify as “any written or oral statement or writing made before a legislative . . . proceeding…” C.C.P. § 425.16(e)(1).   In this regard, the Supreme Court reversed the Court of Appeal, which followed federal precedent that such a vote was not an individual expression of the official, and therefore not protected.  However, the majority rejected applying a constitutional analysis to each anti-SLAPP motion and instead focused on the broad statutory language.  Thus, the anti-SLAPP protections were not limited to actual First Amendment expressions, but also extended to acts “in furtherance of the person’s right of petition or free speech,” and this was a broader protection than constitutionally provided. C.C.P. § 425.16(b)(1) and (e)(1).  The dissenters (Justices Liu and Kruger) would have affirmed the Court of Appeal’s conclusion that this was not protected conduct.  The Court remanded for further proceedings, including plaintiff’s showing of a legally sufficient claim.

Image courtesy of Flicker by Daniel X. O’Neil

Illinois Supreme Court Clarifies the Constitutional Law of the Takings Clause in O’Hare Flooding Case

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Earlier this month, the Illinois Supreme Court clarified Illinois constitutional law on compensable takings with its unanimous decision by Chief Justice Garman, reversing in Hampton v. Metropolitan Water Reclamation District of Greater Chicago. Our detailed summary of the underlying facts and lower court decision in Hampton is here.

The plaintiffs in Hampton own property in Cook County, Illinois, within the region for which the defendant is responsible for stormwater management. Plaintiffs allege that in response to a heavy rain in July 2010, the defendant closed various locks and floodgates, diverting excess stormwater runoff away from the neighborhood of O’Hare Airport in a way that caused flooding on their property. Plaintiffs alleged a violation of the Takings Clause, claiming that their homes, personal belongings, basements and other private property were destroyed or damaged.

The Circuit Court dismissed a claim under the Metropolitan Water Reclamation District Act, but declined to dismiss the plaintiffs’ Takings Clause claim. The Circuit Court then certified the question to the Appellate Court of whether the United States Supreme Court’s decision in Arkansas Game and Fish Commission v. United States had overruled the Illinois Supreme Court’s earlier decision in People ex rel. Pratt v. Rosenfield that a temporary flooding could not be a taking as a matter of law. The Appellate Court held that Arkansas Game and Fish had indeed overruled Pratt.

The Supreme Court unanimously reversed. The Court began by pointing out that the certified question made no sense. Arkansas Game and Fish Commission was a decision of the United States Supreme Court under the Federal constitution. Pratt was a decision of the Illinois Supreme Court under the state constitution. By definition, Arkansas Game and Fish Commission could not have “overruled” Pratt. Nevertheless, the Court opted to consider the issues.

Illinois maintains a limited lockstep approach to interpreting the state constitution. Therefore, although Arkansas Game and Fish Commission couldn’t “overrule” Pratt, that didn’t mean it was irrelevant to the issues. However, the two cases weren’t actually in conflict, the Court concluded; Arkansas Game and Fish Commission didn’t establish an across-the-board rule that a temporary flooding was not a taking, and Pratt didn’t either. Both courts held that the facts of a particular case determined whether the property owner’s use and enjoyment of the property had been sufficiently diminished or destroyed to constitute a taking.

The Court noted that it had defined a taking as a physical invasion of private property or the radical interference with a property owner’s use and enjoyment of the property. A taking also occurs when real estate is invaded by “superinduced additions of water . . . so as to effectually destroy or impair its usefulness.” Several factors set forth by the United States Supreme Court were relevant to the issue under Illinois law: the time and duration of the flooding, whether the invasion of the property was intentional or whether it was a foreseeable result of an authorized government action, and the character of the land and the owner’s reasonable investment-backed expectations regarding the land’s use.

The Court concluded that the complaint was not sufficient to allege a taking under the post-Arkansas Game and Fish Commission standards. The plaintiffs hadn’t alleged whether the defendant knew or intended that the diversion of stormwaters would cause flooding, nor had they alleged exactly how they had been deprived of the use of their homes.

Plaintiffs asserted in the alternative that the Illinois takings clause extended beyond the Federal clause by providing a remedy for owners whose property is merely damaged by government action. To state a claim under this aspect of the takings clause, plaintiffs are required to allege a direct physical disturbance of a right (either public or private) which an owner enjoys in connection with his property. The right must give the property an additional value and be disturbed in a way that inflicts a special damage with respect to the property in excess of that sustained by the public generally. Because the lower courts had not considered whether the plaintiffs might have stated a claim for damage to property short of constituting a taking, the Court remanded for consideration of that issue.

Justice Burke specially concurred. She concluded that because the United States Supreme Court cannot overrule a decision of the Illinois Supreme Court on state constitutional law, the Circuit Court erred in certifying the question, and the Appellate Court should accordingly have dismissed the appeal. Nevertheless, since the case was pending before the Court, judicial economy dictated that the Court decide the issue. Justice Burke concluded that Arkansas Game and Fish Commission could not be reconciled with Pratt, and the Court should accordingly overrule Pratt pursuant to the limited lockstep doctrine.

Image courtesy of Flickr by Howard Lake (no changes).

Florida Supreme Court to Decide Whether Four-Year or One-Year Statute of Limitation Applies to a Prisoner’s Negligence Action

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The Florida Supreme Court will review the First District’s decision in Green v. Cottrell, 172 So. 3d 1009 (Fla. 1st DCA 2015), which certified the following question of great public importance:

Which statute of limitations, whether one- or four-year, should be applied to actions brought by a prisoner relating to the conditions of his confinement?

See No. SC15-1805.

The Florida Statutes that are in dispute are sections 768.28(14) and 95.011(5)(g). Section 768.28(14) provides a four-year statute of limitations for “[e]very claim against the state or one of its agencies or subdivisions for damages for negligent or wrongful act.” On the other hand, section 95.011(5)(g) imposes a one-year limitation period to “an action brought by or on behalf of a prisoner . . . relating to the conditions of the prisoner’s confinement.”

This case arises from injuries suffered by Eric Green, an inmate at the Santa Rosa County Jail, on June 22, 2008. After being beaten by two inmates, Green sought immediate medical attention and filed a county grievance against four correctional officers, alleging their negligence enabled the attack. Eight days later, Green was transferred to a state prison. On June 22, 2012, he filed a complaint regarding the Santa Rosa incident.

Green argued that his transfer from the county jail to a state correctional institution terminated his county grievance, leaving him with no administrative remedy to rectify the correctional officers’ negligence. Green also alleged that his complaint filed four years later was not barred because it fell within the four-year statute of limitations period outlined in section 768.28(14). According to Green, section 95.11(5)(g) was not applicable to his case because it was “less specific as to suits based on negligent or wrongful acts or omissions.”

After a trial, the circuit court held that Green failed to exhaust his administrative remedies because he never followed-up nor “appeal[ed] any lack of answer or negative decision” after filing the grievance. The circuit court also concluded that the one-year limitations period found in section 95.011(5)(g) controlled the state law claims stemming from the conditions of Green’s confinement.

Green appealed to the First District. The First District affirmed the circuit court’s decision and held that Green’s situation was governed by the one-year limitations period in section 95.11(5)(g). According to the court, section 768.28(14) was not applicable in Green’s case because any “claim against the state or one of its agencies or subdivisions for damages for negligent or wrongful act” was too broad. Further, it was undisputed that Green met “the statutory definition of a prisoner” and his state negligence claims against the correctional officers were related to the conditions of his confinement. Thus, the First District concluded that section 95.11(5)(g) was applied correctly since it was only intended for “actions brought by or on behalf of prisoners regarding their confinement.”

Oral Argument is scheduled for August 30, 2016. This article will be updated once the Florida Supreme Court decides the case.

Image courtesy of Flickr by pgbailey (no changes)

California Adopts Sophisticated Intermediary Doctrine

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In Webb v Special Electric Company, Inc., the Supreme Court unanimously adopted the sophisticated intermediary doctrine in California, and then split 5-2 on how it should be applied. Webb was injured by exposure to products containing asbestos and sued the raw asbestos supplier – raising the question of what duty the raw material supplier had to warn the end user of a finished product. As with any seller of a product, a raw material supplier has a duty to warn about product risks that are known or knowable in light of available medical and scientific knowledge.  But, by what means can the supplier discharge its duty?  

The Supreme Court discussed the sophisticated intermediary doctrine in this context as an intersection between the sophisticated user defense (when the end user is already aware of the risk, or should be), the component parts doctrine (a component manufacturer is only potentially liable for the risk created by its component in the finished product), and the bulk supplier doctrine (noting circumstances in which a bulk supplier has no duty of care regarding the finished product). Furthering the policy goals of these doctrines, the Supreme Court adopted the sophisticated intermediary doctrine, as described by the Restatement Third of Torts, Products Liability, as an affirmative defense. 

“Under this rule, a supplier may discharge its duty to warn end users about known or knowable risks in the use of its product if it: (1) provides adequate warnings to the product’s immediate purchaser, or sells to a sophisticated purchaser that it knows is aware or should be aware of the specific danger, and (2) reasonably relies on the purchaser to convey appropriate warnings to downstream users who will encounter the product.”  These will all typically be questions of fact on which the supplier will have the burden of proof.

The court split 5-2 on the first prong, with the dissenters (the Chief Justice and Justice Chin) concluding that the raw material supplier should be required to show that it provided actual warnings or that the intermediate buyer is actually aware of the dangers.  The dissenters were concerned that the rule as expressed created a loophole which could result in no actual warnings, but just the “reasonable belief” that they would be provided by someone else. In discussing the second element, the Supreme Court cited the Restatement regarding three factors for consideration of reasonable reliance: (1) the gravity of the risks posed by the product, (2) the likelihood that the intermediary will convey the information to the ultimate user, and (3) the feasibility and effectiveness of giving a warning directly to the user.  Noting that there is little functional difference between a failure to warn claim in strict liability or in negligence, the Supreme Court confirmed that the sophisticated intermediary doctrine applies to both. 

In this case, the Supreme Court found that record simply did not support the sophisticated intermediary doctrine, and that the defendant failed to argue this issue to the jury, or request jury instructions or a verdict form that addressed this issue.  Thus, the unanimous Court affirmed the jury verdict for plaintiff.

Image courtesy of Flickr by daryl_mitchell

Illinois Supreme Court Appears Likely to Strike Down 6-Person Jury Statute

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During the May term, the Illinois Supreme Court heard oral argument in Kakos v. Bauer, a constitutional challenge to Public Act 98-1132, the 2015 statute mandating six-person juries in civil cases in Illinois. Based upon the pattern of questioning, it appears fairly likely that the Court is inclined to affirm the judgment and strike down the statute. The opinion of the Cook County Circuit Court holding that the 6-person jury statute is facially unconstitutional is here.

Before Public Act 98-1132 went into effect, 735 ILCS 5/2-1105(b) stated that claims involving $50,000 or less in controversy may be tried to a jury unless either party demanded a 12-person jury. The Act amended the statute to abolish the opt-out by which parties could insist on a full 12-person jury. At the same time, daily juror fees were significantly increased.

In Kakos, the defendants moved for leave to file a 12-person jury demand, and in the alternative for an order holding that Section 2-1105(b) was facially unconstitutional. The defendants argued that the abolition of 12-person juries violated Article I, Section 13 of the Illinois Constitution, which protects the right to a jury trial. The trial court agreed with the defendants. In a 27-page opinion, the Court held that twelve jurors was a substantive part of the jury trial right, beyond the Legislature’s authority to change. Even if that weren’t so, the Court further held, the statute also fell on separation of powers grounds, since the state Constitution vests the power to regulate the conduct of trials exclusively in the state Supreme Court. The appeal went directly to the Supreme Court as a matter of right.

Counsel for the plaintiff began the oral argument at the Supreme Court. Counsel explained that there were two issues in the case: first, was section 2-1105 constitutional, and second, even if there wasn’t a 12-person jury right, could the General Assembly (as opposed to the Supreme Court) make the change? Counsel noted that Section 13 of Article I doesn’t specify a number of jurors. The defendants argued that the number twelve was sacrosanct, but counsel insisted that a six person jury serves exactly the same purpose as having a dozen jurors. The issue, counsel argued, is whether the citizen is being protected, and the answer with six jurors is still yes. Justice Karmeier asked whether the General Assembly could reduce the jury to three, or two, or even one juror. Counsel said it was up to the General Assembly to determine what number still amounted to a jury of one’s peers. Justice Burke commented that the plain language of Section 13 protects the jury right as “heretofore enjoyed,” and asked what that means. Counsel responded that at the time the 1970 constitution was adopted, the court had already determined that a jury of six was okay. Justice Burke asked whether any of the 1970 constitutional convention debates supported smaller juries, and counsel said no, the language was carried over from an earlier version of the constitution. Counsel noted that when the 1870 constitution was approved, it was widely accepted that a jury was twelve men. During the 1920 constitutional convention, there was some discussion of whether women had the ability or the right to sit on a jury. Ultimately, the General Assembly opened juries to both genders by statute, and in 1937, the Supreme Court okayed that statute. Whatever the Convention thought in 1970, counsel argued, doesn’t mean that the General Assembly doesn’t have the authority to tweak the interpretation of the jury trial right. Justice Theis commented that the Court has reaffirmed over and over the notion that a trial by jury is twelve people. Isn’t that principle deeply embedded in the Court’s jurisprudence? Counsel answered that the Court had never decided expressly whether six jurors were eonough. Counsel noted that some dicta over the years has suggested that only the basic purpose of the jury must remain the same – details can evolve. The Chief Justice asked where the Court had purportedly approved a six-person jury – in Rule 285? Counsel said yes, and noted that Rule 285 was already in place at the time of the 1970 constitutional convention. There’s now fifty years of precedent for six people sitting in civil cases. Chief Justice Garman pointed out that under Rule 285, the only way one can get to six jurors is if both sides agree, but counsel suggested that in a sense, that misses the point; the Court has put its imprimatur on a six person jury, which serves the same purpose as twelve. Justice Karmeier said that counsel was talking about the purpose of the jury, but wasn’t the issue what the constitution meant? Counsel agreed that the issue was construing the constitution. Chief Justice Garman asked whether there was any evidence that the constitutional convention delegates in 1970 believed that the legislature could reduce the size of a jury. Counsel responded that it wasn’t clear, and the text doesn’t say. He concluded by briefly turning to the second issue, noting that the Court has held before that the General Assembly has the power to pass laws affecting the operation of the judicial system.

Counsel for the defendants followed, arguing that numerous decisions have confirmed that a jury must be twelve. Every court which has ever looked at the possibility of smaller juries (without an opt-out) has held that they are not permitted. Justice Theis noted that at the constitutional convention, an amendment was offered which engaged these specific issues – what happened? Counsel answered that ultimately, the bottom line at the convention was that juries had to be twelve. Public policy and other states’ decisions upholding six person juries are irrelevant, counsel argued – the Illinois constitution has always had the same operative language, and every case that has ever considered the matter has found twelve to be essential. Counsel also suggested that the new statute can’t be squared with Rule 285’s provision for a default of six in small claims absent objection, and where a statute and Supreme Court Rule conflict, the rule trumps the statute. Counsel argued that the plaintiffs were citing federal constitutional decisions, but the Court has held that Federal law is irrelevant with respect to this provision, since the Illinois jury trial right is broader in scope than the federal right. Counsel agreed that the legislature has made changes over the years on the procedural side, such as the timing of a jury trial demand, but the number of the jury is a substantive component of the right. Counsel argued that public policy discussions were irrelevant too – it didn’t matter whether a six person jury might arguably serve the same purpose. Counsel concluded with the separation of powers issue, noting that the legislature is limited to passing statutes on judicial procedure which either complement the authority of the Supreme Court or have only a peripheral impact on court administration. The primary authority to regulate judicial proceedings is exclusively vested in the Supreme Court. The 6-person jury statute, according to counsel, is not one which complements the Court’s authority.

Counsel for the plaintiffs concluded by again arguing that the Supreme Court has never had to decide whether six person juries are permissible. Juries of six have been allowed since 1964 through Rule 285. The question for the Court is whether the six person jury fulfills the purpose of juries. The point is to protect the citizens against the improper use of government power. The legislature has concluded that six is enough to serve that purpose. According to counsel, although the legislature can’t impair the essentials of the jury trial right, it has the power to legislate about the issue. Counsel noted that the predecessor statute amended by Public Act 98-1132 had differed from Rule 285 – the Rule provided for optional six-person juries in cases involving $10,000 or less, but the previous statute set that threshold at $50,000. Counsel denied that Supreme Court rules automatically trumped statutes, and suggested that Rule 285 could be interpreted in a way as to be consistent with the six-person jury statute.

We expect Kakos to be decided in three to four months.

Image courtesy of Flickr by Steve Cornelius (no changes).

Illinois Supreme Court Debates Whether the Discovery Rule Applies to Wrongful Death

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The discovery rule provides that under certain circumstances, the statute of limitations is tolled until the plaintiff knows not only of his or her injury, but knows or reasonably should know that the injury was likely negligently caused. Does the discovery rule apply to wrongful death claims? The Illinois Supreme Court debated that issue last month, hearing oral argument in Moon v. Rhode. Our detailed summary of the underlying facts and lower court rulings in Moon is here.

In 2009, plaintiff’s ninety-year old decedent was admitted to the hospital for surgery. She died nine days after the operation. The following month, the court appointed the plaintiff executor of the decedent’s estate.

Eight months later, the plaintiff executed a HIPAA authorization to get the decedent’s medical records. Fourteen months after that, the plaintiff asked a medical consulting firm to review the materials. In May 2011 – almost two years after the decedent’s death – the plaintiff received a written report from the consultants concluding that the decedent’s surgeon and primary care doctor had been negligent.

The plaintiff sued the defendant doctors in May 2011. In February 2013, the plaintiff sent the decedent’s radiographs to another consultant for review. The second consultant concluded that the negligence of the defendant’s radiologist in reviewing the radiographs had led to her death. A few weeks later, the plaintiff filed a wrongful death claim against the radiologist. The defendants moved to dismiss the claims under the statute of limitations, the Circuit Court granted the motion, and the Appellate Court affirmed.

Counsel for the executor began the Supreme Court argument. He explained that the Appellate Court had held that the statute of limitations begins to run regardless of whether the plaintiff had reason to know that the injury was caused by a wrongful act – the statute begins when the plaintiff becomes aware of the decedent’s death. According to counsel, the defendants had argued before the Appellate Court that there was no basis on the facts to apply the discovery rule to extend the statute – the first time anyone had suggested the notion that the discovery rule doesn’t apply at all to wrongful death claims was when the Appellate Court’s opinion was issued. Counsel argued that the Wrongful Death Act contains a limitations provision, but the Limitations Act actually controls. Justice Thomas asked what the Court should do with the language of the Wrongful Death Act, which says that every action must be commenced within two years of death. Counsel responded that there is “rich precedent” saying that the Limitations Act, as both the more specific and later-passed Act, controls over the Wrongful Death Act. Justice Thomas pointed out that legislation was recently considered in the legislature which would have expressly provided a discovery rule for wrongful death cases – why would the legislature have done that if the discovery rule already applied? Counsel pointed out that the proposal did not pass, and unpassed legislation is of de minimis value in deciding the meaning of stattues. Justice Burke asked whether the time which passed between the plaintiff receiving the records and contacting the medical records reviewing firm was significant. Counsel responded that when the person knew enough to trigger the statute of limitations was generally a question of fact. The Chief Justice asked whether the trial court had concluded that the discovery rule didn’t apply. Counsel answered that the trial court had accepted the defendant’s claim that the plaintiff knew enough at the time of death to bring the action. The court focused on the plaintiff’s deposition testimony, in answer to a question about the impact of his mother’s death, that “I wish she had gotten better treatment.” But that’s not a reasonable suspicion of negligence, counsel argued. Justice Thomas asked how long a plaintiff could wait before consulting an expert to investigate, and counsel said there was no bright line. Justice Thomas asked whether a relative could suddenly decide four years after the decedent died that there was something wrong with the decedent’s care, and the relative has tolled the statute for four years? Counsel answered that reasonable basis is a question of fact for the jury. The plaintiff was working on the initial complaint, and he acquired knowledge suggesting further wrongful conduct. Justice Thomas asked about the timeline. Counsel answered that the decedent died in May 2009, plaintiff requested records in February 2010, and he contacted the medical consultants in April 2011. Justice Thomas asked what was the operative date of discovery, and counsel answered that nobody has fixed one. The dissenter at the Appellate Court argued that the statute began running in May 2011. Justice Thomas asked whether counsel was asking the Court for a bright line rule as to how long the plaintiffs have to investigate potential wrongdoing. Counsel answered that the case had ended on a motion to dismiss, and the trial court never fixed a time – it just said this was too long. Justice Theis noted that the courts have looked at the word injury in the Limitations Act and construed it as meaning “event plus wrongful causation.” Was the plaintiff asking the Court to read the Wrongful Death Act’s use of the word “death” in a similar way – and wasn’t that reading into the statute language that wasn’t there? Counsel answered that the word “death” in the Limitations Act should be interpreted exactly the same way “injury” has been. Justice Karmeier asked why the Wrongful Death Act wasn’t the more specific enactment, and counsel answered that the cases have held that the Limitations Act controls.

Counsel for the defendant doctors argued next, saying that the legislature had provided 730 days to investigate a potential wrongful death claim, and that was ample time here. There was no argument that the statutory language was ambiguous. The Supreme Court’s own precedent establishes that “death” in statutory terms is different from “injury.” Counsel argued that the Wrongful Death Act and the Limitations Act can be read harmoniously. Counsel noted Justice Thomas’ comment about the legislature’s consideration of a bill expressly incorporating the discovery rule, and suggested that that proves the legislature knows how to amend the statute when it wants to. Justice Thomas asked whether there was any mechanism that would toll the statute when there was an indication after death suggesting a wrongful act. Counsel pointed out that claims can be brought more than two years out in cases of fraudulent concealment or equitable estoppel. Justice Theis noted that the cases interpreting non-fatal injuries have explained that it can sometimes take some time to realize that a physical harm was negligently caused. So why shouldn’t the word “death” be interpreted the same way? Counsel pointed out that wrongful death actions are in derogation of the common law, so the statute must be strictly construed. But more generally, in ordinary malpractice cases, sometimes negligence has a delayed manifestation. Death is different because the injury is obvious. Justice Theis noted that the theory that “injury” incorporates “wrongful cause” has been the law for thirty years – does the fact that the legislature has never amended the statute to expressly exclude the discovery rule matter? Counsel answered no, since this was the Court’s first time interpreting the statute. Justice Kilbride asked whether there would have been any way to bring the case without the medical report. Counsel said yes, plaintiff could file and seek an extension. That illustrated the problem with the view of the Appellate Court dissenter that the discovery occurs when the medical report is received. Counsel noted that the decedent has been hospitalized with abdominal problems. Her adult children were all involved in addressing the worsening complications after the surgery. All of those facts, taken together, had triggered the statute by pointing to the conclusion that there was knowledge no later than February 2010.

Counsel for the plaintiff concluded by saying that the plaintiff has never advocated a bright line rule, nor that the statute doesn’t begin until there’s knowledge of negligence. The issue is when there was a reasonable suggestion of it. Counsel suggested that if the Court did not read “causation” into the statutory term “death,” the Court was on its way to undoing several earlier cases – that would put in jeopardy all discovery rule cases in Illinois. Chief Justice Garman asked whether there is a danger that the Court would be effectively saying that the statute was two years for all medical malpractice cases except wrongful death. Counsel responded that that was a question for another day. That tension would exist, but the medical malpractice statute of limitations, rather than the wrongful death statute, governs here. Counsel concluded by disputing the defendant’s view that death alone is sufficient to put a plaintiff on inquiry notice, arguing that the courts have applied the discovery rule.

We expect Moon to be decided in three to four months.

Image courtesy of Flickr by M01229 (no changes).

Illinois Supreme Court Debates Whether Occupational Disease Disability Pension Triggers Health Insurance Benefit

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Section 10 of the Public Safety Employee Benefits Act provides that when a covered employee sustains a “catastrophic injury” under certain enumerated circumstances, the employee is entitled to have his or her health insurance premiums, as well as those of his or her partner and/or dependent children, paid by the employer.  During the May term, the Illinois Supreme Court heard oral argument in Bremer v. City of Rockford, which poses the question of whether the health insurance benefit set forth in Section 10 of the PSEBA is triggered by an occupational disease disability pension.  Our detailed summary of the underlying facts and lower court holdings in Bremer is here.

Plaintiff started working for the city as a firefighter in 1976.  In May 2004, he filed an application with the Pension Board seeking an occupational disease disability pension pursuant to Section 4-110.1 of the Pension Code (40 ILCS 5/4-110.1), arguing that he suffered from cardiomyopathy as a result of chemicals and toxins he inhaled at the scenes of various fires.  The Board granted the pension.

A year later, the City informed the plaintiff that it intended to stop paying his health insurance premiums.  The plaintiff applied for health insurance benefits under PSEBA Section 10, but the City denied his claim.  The plaintiff sued, seeking a declaratory judgment that he had suffered a catastrophic injury within the meaning of the statute.  The parties filed cross-motions for summary judgment, and the trial court granted the plaintiff’s motion on the merits.  Subsequently, the court granted the City’s motion for summary judgment on the plaintiff’s second count, which sought an award of attorneys’ fees under the Wage Actions Act.  A divided panel of the Appellate Court affirmed the plaintiff’s position that he had suffered a “catastrophic injury,” but remanded for further consideration of whether he satisfied the additional circumstances necessary to trigger the health insurance benefits.  The Court affirmed the City’s position that the plaintiff was not entitled to an award of attorneys’ fees under the Wage Actions Act.

Counsel for the firefighter began the argument at the Supreme Court, arguing that the trial court and the Appellate Court had correctly determined that the plaintiff’s award of an occupational disease pension automatically constituted a “catastrophic injury” under the Act.  The Appellate Court had erred however, counsel argued, in reversing summary judgment and finding a genuine issue regarding whether the plaintiff’s injury had resulted from responding to what he reasonably believed to be an emergency.  Counsel also stated that he would address the attorneys’ fees issue – an important issue to persons in the firefighter’s position, who were disabled and often in difficult economic circumstances.  Justice Freeman stated that in Krohe v. City of Bloomington, the Supreme Court had construed the statute based upon the debates.  So was it for the Court or the legislature to expand the definition of catastrophic injury?  Counsel answered that Krohe hadn’t expanded the definition.  Krohe interpreted the language of the statute, but hadn’t considered disability arising from occupational disease.  Justice Thomas noted that there are three kinds of pensions under the statute – occupational disease, line of duty, and non-line.  The first two are incurred as a result of performing duties – shouldn’t they be treated the same?  Counsel answered yes, that the occupational disease standard and the line of duty pension were similar.  Justice Thomas asked whether counsel saw Krohe applying.  Counsel responded that catastrophic injury is one that arises in the line of duty, so his theory was consistent with Krohe.  The problem was that the Krohe court didn’t consider the occupational disease pension.  Chief Justice Garman asked counsel to explain how Nowak v. City of Country Club Hills applied.  Counsel responded that according to Nowak, the Section 10 health insurance benefit is a post-termination benefit, because there is no entitlement to benefits under disability is determined.  But Nowak didn’t involve the question of whether the Wage Act applied, and PSEBA benefits are wages under the Wage Act.  Justice Theis asked counsel whether he was arguing that the benefits were deferred compensation.  Counsel answered that there is a vested right of payment for life if the employee is catastrophically injured while employed full time.  That right accrued when he was injured.  Justice Theis asked whether a vested right is the same thing as a wage, and counsel said yes.  Section 10 of PSEBA made the health insurance benefit part of the employee’s compensation package.  The question, counsel argued, was when the right accrues – and here, the plaintiff’s right to the benefit accrued when he was disabled as a full-time employee.  Counsel concluded by briefly addressing the pension issue itself, arguing that the plaintiff had given uncontroverted testimony that he was exposed to chemicals and toxins at fire scenes, every one of which qualified as an emergency.  The Appellate Court, however, had held that an emergency couldn’t be proven categorically.

Counsel for the city followed, and argued that it was absurd on its face, in the wake of the Act and Krohe, that the health insurance benefit applied to occupational disease disabilities.  Catastrophic injury is synonymous with a line of duty disability under the Pension Code.  But the plaintiff, counsel argued, had an occupational disease disability under Section 4-110.1 of the statute, not a catastrophic injury.  The two statutes have very different causation standards.  Counsel argued that there was no way to affirm the finding of catastrophic injury below without expanding Krohe and rewriting the legislative history.  Justice Thomas suggested that both line of duty and occupational disease pensions arose from performing the duties of the job.  Counsel answered that it was a different standard – a line-of-duty pension arises from specific acts, while an occupational disease pension arises from general service as a firefighter.  Justice Thomas asked for a practical reason to separate out a line-of-duty pension and an occupational disease pension arising from job duties.  Counsel said that it’s simply a different section of PSEBA.  It’s up to the legislature to define what is covered by the benefit, and if the legislature had intended Section 10 to apply to occupational disease pensions, it would have said so.  Moreover, the plaintiff had to prove one of the four circumstances, not just a catastrophic injury.  The plaintiff claimed two: that he was injured responding to emergencies, and while investigating crimes.  The Chief Justice asked whether an evidentiary hearing was necessary for that issue.  Counsel answered that there was no evidence that the firefighter was injured through responding to emergencies – only speculative medical opinion.  Counsel suggested that he didn’t know what the plaintiff could possibly produce in an evidentiary hearing that would demonstrate causation.

Counsel for the plaintiff concluded, once again arguing that Krohe looked at line of duty pensions, and nothing more.   Chief Justice Garman asked whether, if the Court accepted the plaintiff’s view, any occupational disease pension would automatically trigger Section 10.  Counsel answered no, the benefit would be available only if the plaintiff showed that the disease arose from service as a firefighter.  The Chief Justice asked if counsel was suggesting that the fact that plaintiff had a serious injury was what mattered, rather than the circumstances in which the injury was sustained.  Counsel answered that a serious injury disabling the plaintiff qualified as a catastrophic injury, and the circumstances made it an emergency.  Chief Justice Garman asked whether that meant that every firefighter with an occupational disease would qualify under Section 10.  Counsel said yes, arguing that there was no need for medical causation testimony linking the disease to causation when the plaintiff’s own testimony is clear and uncontroverted.  Defendant had never put the issue of causation in question, plaintiff argued.  Justice Thomas asked whether, as things currently stood, the case was going back for fact finding on causation.  Counsel answered yes, but the evidence from the plaintiff’s own testimony was that all his fires were emergencies.  The Appellate Court, counsel argued, had entirely ignored the plaintiff’s affidavit on the emergency issue.

We expect Bremer to be decided in three to four months.

Image courtesy of Flickr by RL GNZLZ (no changes).

Illinois Supreme Court Debates Interaction Between Workers Comp Act and Contribution Act

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During the May term, the Illinois Supreme Court heard oral argument in Bayer v. Panduit Corp., an appeal from Division 1 of the First District which poses several questions about the interaction of the Workers’ Compensation Act and the Contribution Act.  Our detailed report on the facts and lower court decisions in Bayer is here.

The defendant in Bayer is an electrical components manufacturer in De Kalb.  In 2007, defendant decided to expand its warehouse, acting as its own general contractor.  The defendant signed contracts with an iron works company for the structural steel.  The iron works contractor subcontracted with the plaintiff’s employer to upload and erect the structure.

The plaintiff was seriously injured working at the site.  He filed a workers compensation claim against his employer.  He subsequently filed suit against the defendant for negligence, later adding the iron works company as an additional defendant.  The defendant filed a third-party claim against the plaintiff’s employer, alleging that it had failed to ensure the safety of its employees and seeking a judgment in contribution.

The plaintiff and his former employer filed a motion for good faith settlement under Section 2 of the Contribution Act (740 ILCS 100/2).  Section 2 provides that when a party settles a claim in good faith against one tortfeasor, the good faith finding discharges that tortfeasor from any liability in contribution.  The motion was granted.  Two weeks later, the plaintiff settled with the iron works company, leaving only the defendant – the property owner – to go to trial.  Trial resulted in judgment for the plaintiff for $64 million.

The defendant property owner filed a posttrial motion challenging the dismissal of the contribution claim on the grounds that the settlement had not been in good faith.  The plaintiff filed a motion for an award of attorneys’ fees and costs against his former employer pursuant to the Workers Compensation Act.  The defendant’s motion was denied; the plaintiff’s motion was granted as to fees relating to future workers compensation payments, but denied as to costs.

Both the defendant and the plaintiff’s former employer appealed.

The defendant filed a posttrial motion alleging that the court had erred in dismissing the contribution claim against the plaintiff’s employer because the settlement was not in good faith. Following a hearing, the trial court denied the defendant’s motion. Concurrently, the plaintiff filed a motion for attorneys’ fees and costs against his employer pursuant to the Workers Compensation Act. That motion was granted as to fees relating to future workers’ compensation payments, but denied as to costs.

Both the defendant and the plaintiff’s employer filed notices of appeal.  The Appellate Court affirmed the finding of good faith settlement and the consequent dismissal of the contribution claim.  The court reversed in part with respect to attorneys’ fees, holding that the employer was not liable for fees in connection with future medical benefits suspended under the Workers Compensation Act as a result of tort settlements.

Counsel for the plaintiff began the Supreme Court argument.  He explained that the plaintiff’s former employer did not challenge its liability for attorneys’ fees in connection with savings on future losses, but did challenge the fees award with respect to medical expenses.  Chief Justice Garman asked whether the issue was one of statutory interpretation.  Counsel responded that it was, and that the first two paragraphs of the applicable section were at play.  Justice Burke asked if future medicals were included in the parties’ settlement, weren’t attorney fees included?  Counsel answered that there were attorneys’ fees paid, but Section (b) of the statute requires a mandatory contribution to the one-third attorney fee – a pro rata division between the plaintiff, the injured party and the employer.  Counsel explained that the plaintiff’s employer did not challenge the attorneys’ fees award with respect to lost wages.  The Chief Justice asked whether the plain language of the statute supported the plaintiff’s position, or was the statute ambiguous.  Counsel answered that the first paragraph of the statute established what the reimbursements were.  Justice Thomas asked what plaintiff’s position was on whether his position amounted to a double recovery.  Counsel answered that the trial court had specifically ordered that there should be no duplicate fees.  Justice Thomas asked whether any overlapping fees would be returned to the defendant, and counsel said yes.  The argument the employer was making, counsel argued, was not consistent with the statute.  The cases say that the parties settle, and workers compensation payments are suspended, and future payments to the employer are relieved.  As the payments become due, the employer is relieved and savings are realized.

Counsel for the employer argued next.  He began by arguing that the issue was entirely one of statutory interpretation.  The issue before the Court involved statutory interpretation – it was not a common fund issue.  Justice Theis suggested that Section 8(a) of the Act seemed to define compensation as requiring the employer to provide all medical expenses and subsequent expenses incurred – did that include future medical expenses?  Counsel said yes.  Justice Theis commented that the key word the defendant appeared to be concerned with was “reimbursement” versus “compensation.”  Counsel agreed.  Justice Theis noted that the statute says that compensation includes future medical expenses – now the defendant was saying that reimbursement is distinct from compensation.  Counsel answered that this wasn’t a reimbursement; the expenses had already been paid.  Medical expenses required ongoing administration and constant disputes.  Counsel argued that there had been an incredible overpayment already – the defendant has already paid almost $28 million, including a $500,000 deductible on both sides.  Now the Appellate Court is suggesting that the defendant pay on suspended medical benefits.  Counsel concluded by arguing that the plaintiff was seeking a double recovery, and it was clearly contrary to the statute.

Counsel for the plaintiff concluded with rebuttal.  Justice Thmoas asked about weekly future medical expenses – did the one-third already paid in attorneys’ fees require judicial monitoring?  And if not, did this amount to a lawyer paying a fee to a nonlawyer?  Counsel responded that there was nothing barring the fee.  Chief Justice Garman asked whether there was an issue regarding the amount of monitoring that would be necessary because the medical expenses are indefinite in duration.  Counsel responded that there was no indication that monitoring would be necessary here – even if an issue developed down the road, that doesn’t mean that the defendant could rewrite the statute.  Justice Thomas concluded by pointing out that the defendant had a theory as to why this issue hadn’t arisen before – did the plaintiffs have an alternative theory?  Counsel answered that the case involved a significant verdict, and there was accordingly quite a bit of money at stake.  This case was the first time the matter had ever been contested by defense counsel.

We expect Bayer to be decided in three to four months.

Image courtesy of Flickr by Suga (no changes).

Illinois Supreme Court Agrees to Decide Constitutional Challenge to Property Tax Exemption Statute

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According to Article IX, Section 6 of the Illinois Constitution, the legislature may exempt from property taxes only the “property of the State, units of local government and school districts and property used exclusively for agricultural and horticultural societies, and for school, religious, cemetery and charitable purposes.”  According to Section 15-86 of the Property Tax Code, a hospital may qualify for a charitable exemption by providing services or activities worth as much or more than the hospital’s estimated property tax bill for that year.  Is Section 15-86 facially unconstitutional?  That’s the question the Illinois Supreme Court agreed to answer in the closing days of the May term, allowing a petition for leave to appeal in The Carle Foundation v. Cunningham Township.

Carle Foundation arises from four parcels in Urbana, Illinois.  An affiliate of the plaintiff operates a hospital on two of the parcels, the third contains a day care center, and the fourth contains a power plant which serves the other three parcels.  Until 2004, the four parcels were considered exempt under the charitable use exception.  But between 2004 and 2011, the township assessor assessed the four parcels at their full value.

In late 2007, ten months after its application for a charitable exemption was denied, the plaintiff filed suit, seeking a declaratory judgment that the four parcels were exempt from taxation pursuant to section 15-65 of the Property Tax Code.  Ultimately, after one trip to the Appellate Court, the plaintiff withdrew its applications for exemptions for 2004 and 2005.  Later, it filed applications for exemptions for the years 2006 and 2008, but it ultimately withdrew those applications too.  The plaintiff made no attempt to have the parcels exempted for the years 2009-2011.

The plaintiff’s Fourth Amended Complaint contains 35 separate counts.  The Appellate Court divided them into four categories: (1) the earlier exemptions were never validly discontinued; (2) the parcels were exempt under the recently enacted Section 15-86; (3) a request for declaratory judgment that Section 15-86 applied retroactively to the tax years 2004 through 2011; and (4) for alleged breach of a settlement agreement.  The trial court granted plaintiff summary judgment on its claim that the parcels were exempt pursuant to Section 15-86, entering a Rule 304(a) finding to purportedly authorize an interlocutory appeal.  Three separate groups appealed: the Department of Revenue; the township, city and township assessor; and various county officials.

The Fourth District reversed the Circuit Court.  The court began by considering its own jurisdiction.  The Circuit Court had entered a Rule 304(a) finding, but “that is not enough.”  There had to be an actual final judgment on a separate claim, or the Rule 304 language accomplished nothing.  The Court ultimately concluded that by entering summary judgment granting declaratory relief under Count II, the court below had entered a final judgment in a matter which was sufficient separable from the rest of the case.

The Court then turned to the question of whether Section 15-86 could apply to a proceeding under Section 23-25(e) of the Code.  Section 15-86 plainly related by its plain language to an administrative procedure for determining exemptions, while Section 23-25(e) was supposed to be a judicial alternative to an administrative determination.  The Court ultimately concluded that Section 15-86 did apply to the declaratory judgment action, at least indirectly, in the sense that plaintiffs could argue that they had been arbitrarily denied an exemption under Section 15-86 when one had been administratively granted to similarly situated years or parcels.  The Court then reviewed the question of whether the legislature plainly intended for Section 15-86 to apply retroactively, and concluded that it did.

All that led the Court to the central question: could Section 15-86 be squared with Article IX, Section 6?  The Court began by noting that although the constitution limited exemptions to property used “exclusively” for charitable purposes, the courts had consistently held that the word “exclusively” shouldn’t be taken too literally; as long as a non-charitable use was de minimis over the course of a year, it didn’t imperil the property’s exemption.

But even with that qualification, were “services worth more than the foregone property tax bill” sufficient to qualify as “exclusive” charitable use under the Constitution?  The traditional test for a facial constitutional challenge involves the court determining whether there is any hypothetical set of circumstances in which the statute could be validly applied – that’s why so few facial challenges ever succeed.  The Fourth District suggested at some length that the “no set of circumstances test” was vague, difficult to apply, and that it wasn’t entirely clear that even the United States Supreme Court truly adhered to it anymore, citing Washington State Grange v. Washington State Republican Party.  Nevertheless, the Court concluded that Section 15-86 was facially unconstitutional because it mandated charitable exemptions pursuant to a criterion that couldn’t be reconciled with the criterion in Article IX, Section 6.

We expect Carle Foundation to be decided this winter.

Image courtesy of Flickr by Adrian Clark (no changes).

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