Illinois Supreme Court Agrees to Decide Whether Third Party Buyer is Liable for Delinquent Assessments to Mortgagee’s Subsidiary


According to Section 9(g)(4) of the Illinois Condominium Property Act, any purchaser of a condominium unit who acquires a property either at a foreclosure sale or by post-foreclosure purchase from the mortgagee must pay the last six months’ worth of delinquent assessments on the unit. 765 ILCS 605/9(g)(4).

So where the wholly-owned subsidiary of the original mortgagee buys the property at the foreclosure sale and subsequently sells to a third party, is that subsidiary a “mortgagee” under the statute, triggering the duty to pay back assessments? That’s the question which the Illinois Supreme Court agreed to decide in the final days of the January term, allowing a petition for leave to appeal in Wing Street of Arlington Heights Condominium Association v. Kiss the Chef Holdings, LLC, a decision from Divison Three of the First District.

Wing Street began in 2010, when the condominium association filed an action to recover past-due assessments. The following year, the bank filed an action to foreclose the mortgage on the property. At the foreclosure sale, a wholly-owned subsidiary of the bank bought the property. The subsidiary paid the current assessments on the unit from January 2012 until it was sold on March 29, 2013. Neither the subsidiary nor the third-party buyer requested or obtained a paid assessment letter from the condominium association before the sale.

Nine months after the property was sold, the condo association sued the third party buyer, alleging under the Condominium Property Act that because the subsidiary was a “mortgagee” within the meaning of Section 9(g)(4), the new owner had an obligation to pay six months’ worth of back assessments. The trial court originally found for the subsidiary after a bench trial, but subsequently granted reconsideration and concluded that the subsidiary wasn’t a “mortgagee” for purposes of the statute after all.

The Appellate Court unanimously reversed. Citing the Supreme Court’s decision in 1010 Lake Shore Association v. Deutsche Bank National Trust Company, the Court concluded that the legislature’s intent in enacting Section 9(g)(4) was to provide that condo associations would at least be able to recover a portion of the prior owner’s unpaid assessments when the unit is sold. The Appellate Court concluded that the subsidiary was a “mortgagee” within the meaning of the Condominium Property Act, citing to the Illinois Mortgage Foreclosure Law. Because the third-party buyer failed to pay the past six months of unpaid assessments upon its purchase of the property, a lien for that amount arose, which the subsidiary was free to foreclose via a direct action against the buyer.

We expect Wing Street to be decided by next winter.

Image courtesy of Flickr by John Picken Photo (no changes).

Illinois Supreme Court Holds City Not Required to Arbitrate Termination of Police Officer

iy7405 police station signThe Illinois Supreme Court has long held that when parties enter into a broad arbitration agreement but it’s unclear whether the specific subject of a dispute is covered, the question of arbitrability is initially decided by the arbitrator, not a court.  But that rule is subject to a big caveat: the right to arbitrate can be waived where the party voluntarily participates in proceedings inconsistent with arbitration.  In the closing days of the January term, the Court unanimously held that a police officer had waived any right he might otherwise have had to arbitrate his termination, affirming the Appellate Court in Village of Bartonville v. LopezOur detailed report on the underlying facts and lower court holdings in Village of Bartonville is here.

The defendant in Village of Bartonville was a police officer for the plaintiff from 2012 through 2014.  At all relevant times, there was a collective bargaining agreement in place between the defendant labor union and the Village which provided for a grievance procedure.  In a separate article, the CBA addressed discipline, providing that discipline should be progressive and corrective, and that no officer could be disciplined without just cause.

The village police chief signed a complaint for termination against the defendant officer in August 2014, accusing him of violating certain procedures and field training directives during and after a traffic stop.  The complaint was filed with the board of fire and police commissioners.  Counsel for the Board agreed with counsel for the officer (who also represented the union) that a hearing on the complaint would be set for October 3.

Just prior to the hearing, the officer filed a declaratory judgment action in Circuit Court, seeking a judgment that the Board had lost jurisdiction over the complaint by failing to have a complaint within thirty days of filing.  A few months later, the court granted summary judgment to the defendants in that action, holding that the delay in the hearing had been at the officer’s request, and the Appellate Court affirmed.

At the outset of the October 3 hearing, counsel for the officer stated that the officer was participating in the hearing without waiving his challenge to jurisdiction or his right to grieve any suspension or termination that might be imposed.  During the hearing, defense counsel cross-examined witnesses and made a closing argument (during which once again counsel stated that he was not waiving the challenge to jurisdiction or the right to file a grievance).   At the conclusion of the hearing, the Board discharged the officer.  The officer did not seek review of that decision pursuant to the Administrative Review Law.

Instead, the officer filed a grievance over his termination.  The plaintiff responded by filing a declaratory judgment action of their own, seeking a judgment that the termination was not an arbitrable matter.  The defendants argued that the officer was attempting to get improper collateral review of the Board’s administrative decision firing him.  The court ultimately granted plaintiff’s motion for summary judgment, holding that there was no provision in the parties’ CBA consigning discipline and termination to the grievance arbitration procedure.  The Appellate Court reversed, applying the rule above – since the contract was unclear about whether arbitration of discipline was intended, the decision on arbitrability should be made in the first instance by an arbitrator.

In an opinion by Justice Thomas, the Supreme Court unanimously reversed.  On appeal, the defendants argued that the only question was whether the CBA expressly excluded discipline and termination from arbitration.  If it did not, pursuant to long-standing precedent, the question of arbitrability was turned over to an arbitrator.

The problem with that view, the Supreme Court found, was the officer’s substantive participation in the Board hearing.  The Court noted that during the hearing, although counsel had purported to reserve the right to file a grievance, the officer never challenged the Board’s jurisdiction on the grounds that the matter was subject to grievance arbitration (the officer’s jurisdictional challenge went solely to the delay in the hearing), nor did he ask the Board to stay the proceedings pending his filing of a grievance, or ask a court to enjoin the Board from proceeding.

The defendants argued that the Municipal Code authorized them to pursue both the hearing and arbitration in tandem.  But that could not be, the Court held; that would imply that an arbitrator could potentially overrule the Board, or even a court, in the parallel proceedings.  Since the defendants had permitted the Board’s decision to become final without an appeal, that decision now barred any resort to the grievance procedure by res judicata, given that the Board’s proceedings (in which the officer testified, and his counsel presented evidence, cross-examined witnesses and made a closing argument) were judicial in nature.

Holding that by fully participating in the hearing and allowing the Board’s decision to become final the officer had acted in a manner inconsistent with any right he might have had to arbitrate, the Court reversed the Appellate Court.

Image courtesy of Flickr by Mark Goebel (no changes).

Illinois Supreme Court Backs School Board in Open Meetings Act Dispute With Attorney General

4601492261_599b55ef54_zAt a closed session of the school board, six of the seven members sign a separation agreement with the outgoing school superintendent, but don’t date it.  Several weeks later, the Board holds a public meeting.  The agenda posted on the website states that the Board will approve “a resolution regarding the separation agreement and release” between the superintendent and the Board.  Visitors to the site could follow links to the proposed resolution and to the separation agreement itself, which contained the dated signature of the superintendent and the undated signatures of the board members.

Has the Board violated the Open Meetings Act by taking “final” action in a non-public session?  In late January, the Supreme Court unanimously held that the answer was “no” in an opinion by Justice Garman in The Board of Education of Springfield School District No. 186 v. The Attorney General of Illinois.  Our detailed summary of the underlying facts and lower court holdings is here.

Board of Education began in late 2012, when the Board and the former superintendent reached agreement on terms of separation.  Following the closed meeting at which the agreement was signed, a request was filed with the Public Access Counselor in the Attorney General’s office for a determination of whether the Board had violated the Public Meetings Act.

While that request was pending, the Board’s public meeting took place.  During that meeting, the Board president called the agenda item, the Board discussed the matter, and then approved the agreement by a six to one vote.  Two weeks later, the Attorney General issued a binding opinion finding that the Board had violated the Open Meetings Act four times, including by signing the agreement in the February closed meeting, and by failing during the public meeting to “adequately inform the public of the nature of the matter under consideration or the business being conducted.”  The Board sought administrative review, and the Circuit Court reversed the Attorney General’s conclusion that “final action” in terms of the Act had taken place at the February meeting.  The court remanded the matter back to the Attorney General, who issued a second binding opinion finding that the Board’s posting of the agreement on its website was not a “public recital during an open meeting” sufficient to satisfy the Act.  The Circuit Court again reversed the Attorney General, finding that the posting of the agenda had adequately informed the public, and the Appellate Court affirmed.

The Court agreed with the Attorney General that the Act requires two separate actions from a public entity – the posting of the agenda and a “public recital” of the nature of the action being taken.  However, the “recital” didn’t mean that the public entity was required to explain to any members of the public who were present precisely what was being done and why.  Rather, all that was needed is for the entity to disclose “the essence of the matter under consideration, its character, or its identity.”  The public entity was free to voluntarily disclose in its “recital” the key terms of the agreement, but was not required to do so.  The Court held that because the board president described “the general nature of the matter under consideration” and “specific detail sufficient to identify the particular transaction,” nothing more was required.

The Court then turned its attention to the issue of the February closed meeting.  The Court noted that nothing in the statute barred taking a preliminary vote during a closed meeting.  The fact that the members signed the agreement in the closed meeting was “immaterial,” since until there was a public vote, there by definition could be no final action.

Image courtesy of Flickr by Leo-Seta (no changes).

Florida Supreme Court Rejects Daubert, But Daubert Lives to Fight Another Day

On February 16, 2017, the Florida Supreme Court declined to adopt the Daubert standard for the admissibility of expert evidence into the Florida Evidence Code to the extent it is procedural in nature.  See In re Amends. to the Fla. Evid. Code, No. SC16-181, 2017 WL 633770 (Fla. Feb. 16, 2017).  To read the full opinion, please go here.  The decision was supported by the plaintiffs’ bar, who believed that the Frye “general acceptance” standard worked and argued that the more complicated Daubert standard would burden the state courts and negatively impact most clients by requiring courts to hold costly mini-trials to determine whether to admit an expert’s testimony.  The Court did not find that the Daubert standard is procedural or that it is unconstitutional.  It left that fight for another day when it is presented with “a proper case or controversy.”

Frye & Daubert

Effective July 1, 2013, the Florida Legislature adopted the Daubert standard for the admissibility of expert evidence, replacing the Frye standard.  See Ch. 2013-107, Laws of Fla. §§ 1, 2 (amending sections 90.702 and 90.704 of the Florida Statutes).  The Frye standard, which was adopted in Florida in 1952, admits expert testimony if the expert’s testimony is based on a scientific principle or discovery that is “sufficiently established to have gained general acceptance in the particular field in which it belongs.”  The Frye standard only applies to expert testimony that involves “new or novel scientific evidence,” and does not apply to “pure opinion” or an expert’s reasoning or conclusion.  For example, if an expert uses scientific literature as a tool in helping form an opinion, then the court can and will scrutinize that opinion under Frye, but if the expert chooses to give an expert opinion without any basis in scientific literature at all, then his opinion is not subjected to the Frye test and is likely admissible.  See Kenneth W. Waterway & Robert C. Weill, A Plea for Legislative Reform:  The Adoption of Daubert to Ensure the Reliability of Exert Evidence in Florida Courts, 36 Nova L. Rev. 1, 11 (2011).

The Daubert standard, which has been applied by federal courts since 1993, applies to all expert testimony and admits expert testimony when it is both reliable and relevant.  See § 90.702, Fla. Stat. (admitting expert testimony when it is “based upon sufficient facts or data,” “the product of reliable principles and methods,” and the expert “has applied the principles and methods reliably to the facts of the case”).

The Majority Opinion

In its opinion, the Florida Supreme Court declined to adopt the Daubert amendment into the Florida Evidence Code to the extent it is procedural, citing “grave constitutional concerns”  such as undermining the right to a jury trial and denying access to the courts.  The procedural – substantive distinction is grounded on a separation-of-powers issue:  the Florida Constitution grants to the Court the exclusive power to create rules of court procedure; this exclusive power does not extend to rules of procedure that are substantive, which are the province of the Florida legislature.

The Court did not find that the amendment was procedural or substantive and did not conclude that the amendment was unconstitutional.   Because a rules case is not the proper forum for addressing the constitutionality of a statute or proposed rule, the Court deferred these issues until it is has a “proper case or controversy” before it.

The Dissenting Opinion

Justice Polston dissented in which Justice Canady concurred.  Highlighting that 36 states have rejected Frye in favor of Daubert, Justice Polston asked and answered two questions:  “Has the entire federal court system for the last 23 years as well as 36 states denied parties’ right to a jury trial and access to courts?  Do only Florida and a few other states have a constitutionally sound standard for the admissibility of expert testimony?  Of course not.”  He also noted that he knew of no reported decisions that have held that the Daubert standard violates the constitutional guarantees of a jury trial and access to the courts.  To the contrary, he cited cases holding that the Daubert standard does not violate the constitution.  In the end, he found the majority’s “grave constitutional concerns” over the Daubert standard to be unfounded and thought that the Court should adopt the Daubert standard.

What Now?

The Court’s opinion leaves the door open as to whether the Daubert amendment is procedural or substantive and also whether it is unconstitutional.  Until a case reaches the supreme court that tees up these issues, Florida attorneys will battle these issues in the trial courts.  Because Florida courts have not established a bright-line test to resolve the procedural-substantive question, the law is a morass of conflicting definitions and principles.   For example, at times the Florida Supreme Court even has held that a provision can be both “substantive” and “procedural.”  Because of the uncertainty in the law, every case may not be a battleground for these issues; attorneys likely will raise these issues when it makes sense from legal, strategic and cost perspectives.  The following flow chart demonstrates the interaction of these issues:



Of course, inherent in some of these issues are additional issues.  For example, the Daubert amendment became effective on July 1, 2013.  Parties also may choose to litigate whether the amendment applies retroactively to causes of action that accrued before the effective date.

As for pending cases in the trial courts, parties who have had their experts’ opinions stricken under the Daubert standard, may now try to seek reconsideration of that ruling arguing that the Frye standard should apply.  As for cases pending on appeal where there is an issue involving the exclusion of an expert’s opinion based on Daubert, the appellate courts may remand the issue back to the trial court in light of this material change in the law.

Illinois Supreme Court Strikes Down Chicago Tax as Applied to Out-of-City Car Rentals

1189995100_c09609e7a5The City of Chicago levies a tax on the lease or rental of personal property within the City or the privilege of using personal property leased elsewhere in the City. In 2011, the City’s director of the department of revenue issued Ruling 11, which provided that the City Department of Revenue would hold suburban car rental agencies within three miles of the city limits responsible for paying the tax with respect to many of their customers. On January 20, the Supreme Court unanimously held in Hertz Corporation v. City of Chicago that Ruling 11 was unconstitutional under the home rule provision of the Illinois Constitution.

Chicago’s personal property lease transaction tax ordinance provides that the lease or rental of the property is deemed to take place at the location where the lessee takes possession of the property. Property rented outside of the City is exempt from the tax if it is primarily used – more than 50% – outside the City. Ruling 11 provides that absent written proof to the contrary, the Department would assume that any Chicago resident (as proven by their driver’s license) renting a vehicle at a suburban location would be using the vehicle 50% or more inside the City. As for non-Chicago residents, Ruling 11 suggested the inclusion of a check-box on the rental form by which the renter would disclose whether or not he or she planned to use the vehicle more than 50% inside the City. If the box was checked “yes,” the tax would apply.

The plaintiffs filed separate suits against the City challenging Rule 11 on various federal and state constitutional grounds. The Circuit Court granted the plaintiffs’ motion for summary judgment, holding that Ruling 11 was an improper attempt to project the taxing power of the City extraterritorially.  The Appellate Court reversed, holding that Ruling 11 was taxing use inside the City, not rentals outside the City, and therefore wasn’t being applied extraterritorially even with respect to rentals occurring in the suburban locations.

In an opinion by Justice Garman, the Supreme Court unanimously reversed the Appellate Court. The Court began with the home rule provision of the Illinois Constitution, Article VII, Section 6(a). The Court has previously held under Section 6(a) that home rule units may not extend their home rule powers beyond their geographic borders unless specifically authorized to do so by the General Assembly. The plaintiffs argued that Ruling 11 operated extraterritorially in two ways: (1) it taxed rental transactions occurring beyond City borders; and (2) it taxed the entire value of the rental based on a trigger of only 50% use inside the City.

The Court pointed out that the City was relying on a number of due process cases to defend the tax ordinance, but cited no authority equating due process with the city’s home rule authority. The question in Hertz was not whether the customers’ due process rights had been violated; it was whether the City had exceeded its home rule authority by requiring the plaintiffs to collect the tax from certain of its customers. The City relied on cases where the tax was levied on sales of tangible personal property within the boundaries of the taxing jurisdiction. According to the Court, the City was trying to expand these cases, arguing that the City could reach conclusions outside of the City simply because the plaintiffs were doing business inside the City.

The lessee’s statement that he or she planned to use the vehicle inside Chicago wasn’t enough, the Court found. “A statement of one’s intent is evidence only of present intent, not of actual use.” At the time of the transaction, “the use of the leased vehicle has not taken place and may never take place within Chicago’s borders.” The City was trying to tax the use of rental vehicles in Chicago, but was in fact taxing the stated intent to use the vehicles inside the City at some future time. “Absent an actual connection to Chicago, the City’s tax under Ruling 11 amounts to a tax on transactions that take place wholly outside Chicago’s borders,” according to the Court, and the tax therefore violated the home rule article of the constitution.

Image courtesy of Flickr by Jonathan Brodsky (no changes).

Illinois Supreme Court Approves Referendum Adopting Term Limits for Village President

43951116_c896528a9b(1)In the vast majority of cases, the Illinois Supreme Court is in complete control of what cases wind up on its docket – parties file a petition for leave to appeal, and the Court allows it or doesn’t in the exercise of its “sound judicial discretion.”

But there’s one instance in which, curiously enough, the Court’s docket is in control of the intermediate Appellate Courts. If an Appellate Court decides to grant a “certificate of importance” under Rule 316, then appeal lies to the Supreme Court “as a matter of right” pursuant to the Illinois Constitution. All that’s required is for the Appellate Court to certify that the matter is of “such importance that the case should be decided” by the highest court in the state.

On December 30, the Supreme Court filed its opinion in Johnson v. Ames, a case relating to a voter referendum which appeared on the ballot in November 2016 seeking to impose term limits on the President of the Village of Broadview. Shortly after the referendum petition was filed, an objection was filed. The Village Electoral Board voted to invalidate the referendum as vague and ambiguous, finding that it was unclear whether the term limits would apply retroactively – in other words, whether an official who was already on his or her second term would be barred from running again, or whether it merely limited terms after the effective date. The referendum sponsor sought judicial review in the Circuit Court. The trial court reversed, finding that the referendum was not ambiguous, and the Appellate Court affirmed. The objector filed a petition for leave to appeal with the Supreme Court, which was denied by the Supreme Court on November 8. Six days after the PLA was denied, the Appellate Court filed a certificate of importance asking the Supreme Court to decide whether the referendum was vague. Three days later, the Supreme Court summarily affirmed the Appellate Court, promising an opinion at a later date.

The Court began by pointing out that the certificate of importance was a legal nullity, since the Appellate Court filed it after the objector had already filed a PLA in the Supreme Court, divesting the Appellate Court of jurisdiction. Nonetheless, the Supreme Court chose to exercise its supervisory authority and explain its affirmance.

The Supreme Court explained that the plain language of the referendum provided that term limits would apply to anyone who sought election in April 2017 or after who has “been previously elected” to that office for two terms. When read in its entirety, the language used was sufficiently clear to understand what the voters would be voting on, even without an express statement of the referendum’s temporal reach. Although the objector “suggests alternative variations that he asserts are clearer, a valid referendum need not be presented in optimal form,” according to the Court. “We hold that the referendum at issue in this case meets that basic standard.”

Justice Thomas added a short special concurrence. He noted that Rule 316 certificates of importance are one of the relatively few vehicles for getting a case on the Court’s docket without its agreement. But Johnson didn’t require the Court to construe the constitution or a statute, to resolve an urgent conflict between the districts of the Appellate Court, or “to correct any errant exercise of judicial power.” Rather, “it requires this court only to read and interpret a local ballot initiative that was drafted locally, applies locally, and almost certainly will never appear again in the same form on any ballot anywhere.” That, Justice Thomas argued, was “the very opposite of ‘a question of such importance that the case should be decided by the Supreme Court.'” Justice Thomas closed by urging the Appellate Courts to exercise their Rule 316 power “with the restraint, sobriety, and cautious discretion it deserves.”

Image courtesy of Flickr by Amanda Wood (no changes).

Illinois Supreme Court Holds Occupational Disease Pension Does Not Trigger Health Insurance Benefits


In 2003, the Illinois Supreme Court held that anyone who qualified for a line-of-duty pension under section 4-110 of the Illinois Pension Code qualified as having a “catastrophic injury” within the meaning of Section 10(a) of the Public Safety Employee Benefits Act, thus triggering a right to have their health insurance premiums paid.  But does an injury sufficient to trigger an occupational disease disability pension under section 4-110.1 of the Pension Code also trigger Section 10(a) as a “catastrophic injury”?  In an opinion by Justice Thomas, the Illinois Supreme Court held in Bremer v. City of Rockford that the answer was “no.”  Our detailed report on the underlying facts and lower court rulings in Bremer is here.  Our report on the oral argument is here.

Bremer began in 2004, when the plaintiff, who had served as a firefighter for the City of Rockford for twenty-eight years, was granted an occupational disease pension by the City of Rockford Firefighters’ Pension Board.  The Board found that the plaintiff was suffering from cardiomyopathy as a result of his work as a firefighter.  The City paid health insurance premiums for the plaintiff and his wife until 2008, as required by city ordinance.  When the City informed the plaintiff that it would be stopping the benefits, he applied for continuing health insurance benefits under Section 10.  The Board held that he had not suffered a catastrophic injury, and therefore denied his application.

Plaintiff filed a two-count complaint, seeking a declaratory judgment on the meaning of the term “catastrophic injury” in Section 10, as well as an award of attorney fees and costs under the Wage Actions Act.  The Circuit Court granted plaintiff’s motion for summary judgment on Count 1, ordering the plaintiff’s health insurance benefits be reinstated, but granted the defendant summary judgment on Count 2, holding that plaintiff’s benefits did not constitute wages within the meaning of the Wage Actions Act.  The court granted plaintiff leave to add a third count to his complaint seeking reimbursement for health insurance premiums the plaintiff had paid, as well as certain medical expenses incurred during the period when plaintiff’s health insurance was not in effect.  The Court dismissed the claim for reimbursement of premiums, but did enter judgment for plaintiff on a small portion of the medical expenses.

The Appellate Court reversed with respect to Count 1, holding that although the plaintiff’s injury arguably satisfied the requirement of “catastrophic injury,” there was a triable dispute of fact as to the second prong of the test: whether plaintiff had been injured responding to what he reasonably believed to be an emergency.  The Court affirmed dismissal of the claim under the Wage Actions Act, and held that the plaintiff’s claim for unpaid premiums and medical expenses was not yet ripe for adjudication.  Justice McLaren dissented.

The Supreme Court affirmed in part and vacated in part.  The Court began its analysis with the central issue: did a firefighter who qualified for an occupational disease pension per se satisfy the Section 10 test of having a “catastrophic injury”?  Reviewing the Court’s previous decisions involving Section 10, the Court noted that it had defined “catastrophic injury” by reference to the legislative history and debates as an injury resulting in an award of a line-of-duty pension.  Plaintiff argued that the requirements for an occupational disease pension were “essentially the same” as those for a line-of-duty pension, but the majority found that that was simply not so.  A line-of-duty pension results when a condition or injury results from an identifiable act or acts of duty, without any limitation requiring a minimum time in service.  On the other hand, the occupational disease pension requires that the officer have been employed in his or her job for a minimum number of years.  Given that the General Assembly has set forth different eligibility requirements for the two pensions, it cannot be that an occupational disease pension automatically triggers the Section 10(a) benefit as a catastrophic injury.  Since the plaintiff had conceded that there were no factual disputes involved in his primary claim for health premium benefits, the Court affirmed the Appellate Court and entered judgment for the defendant on that claim.  Because plaintiff’s claims under the Wage Actions Act and his third claim for unpaid premiums and medical expenses were contingent on his prevailing on the basic claim under Section 10, the Court affirmed the Appellate Court on the Wage Actions Act count, and entered summary judgment for the defendant on the remaining count.

Justice Kilbride dissented in part, arguing that although the mere awarding of an occupational disease pension did not by definition satisfy the “catastrophic injury” test, that didn’t mean that plaintiff couldn’t have proven that he also would have qualified for a line-of-duty pension.  Justice Kilbride thus concluded that all three claims should have been remanded to the trial court for further proceedings.

Image courtesy of Flickr by Jack Snell (no changes).

Illinois Supreme Court Clarifies Scope of Negligent Infliction of Emotional Distress Without Physical Impact


Courts in most jurisdictions have been cautious about the parameters of any possible cause of action for negligent infliction of emotional distress where the plaintiff has pled no physical impact.  The Illinois Supreme Court clarified the scope of that claim in one of its last decisions of 2016, affirming the Appellate Court in Schweihs v. Chase Home Finance, LLC.

Schweihs began in 1997, when the plaintiff executed a note secured by a mortgage on her home.  The mortgage contained a provision granting the mortgage lender the right, in the event of default, to enter the property to make repairs.

Plaintiff defaulted in 2007, and the lender sought and received a judgment of foreclosure.  Pursuant to the redemption period, the plaintiff had the right to possession of the home for three months after the date of the judgment.

A month after the judgment – but still within the redemption period – the vendor used by the mortgage lender to provide property inspections and preservation services received a report that the property was vacant.  The vendor placed an “initial secure” order with its contractor, which sometimes involves changing the locks on the home and turning off the utilities.  The contractor tried to execute the order five days later.  The contractor’s employees were instructed to begin by determining whether the house was occupied, and to do nothing if it was.

The employees later testified that they looked over the property, observing that the grass was uncut and the trees were overgrown.  One knocked on the front door, but received no answer.  He checked the meters and concluded that both gas and water had been shut off.  The employees spoke with a neighbor, who said the house was not occupied, although a woman would come and go on occasion, and there were no lights on in the house at night.  The employees once again knocked on the door, receiving no response.  At this point, the employees had spent 45 minutes merely trying to determine if the house was occupied.  The employees entered the back yard through a latched gate and saw boxes piled on top of each other and garbage and debris on the floor inside the house.  They reported all this to the contractor, which instructed them to proceed with the “initial secure” order.

One of the employees removed the lock to the back door and entered the home, stepping over boxes and debris.  Once inside the home, one of the employees was confronted by a woman, who ordered him out of the house.  The employee explained that he was from the mortgage company, and asked the woman to speak with him further at the front door.  He exited the house, walked to the front and knocked on the front door, but received no answer.  The two employees then did nothing further, waiting for the arrival of the police.  The plaintiff later testified that she had heard knocking when she was in the basement, but had been on the phone and did not respond.  She saw the men from a second-floor window shortly after, but thought they may have been potential buyers looking at the house, and decided to continue packing.

The plaintiff filed suit, alleging trespass, private nuisance, intentional infliction of emotional distress and negligence.  The court granted defendants’ motions for summary judgment with respect to claims for private nuisance and intentional infliction of emotional distress.  The court also granted the plaintiff leave to amend her negligence claim to allege negligent infliction of emotional distress.  The court then dismissed the negligent infliction claim, and entered a Rule 304(a) finding that there was “no just reason for delaying” an appeal.  The Appellate Court affirmed (with one dissenter), holding that since the plaintiff was a “direct victim” in terms of the case law, she could not state a claim for negligent infliction of emotional distress without evidence of physical impact.

In an opinion by Justice Freeman, the Supreme Court unanimously affirmed the Appellate Court.  The plaintiff argued that the Supreme Court had eliminated the requirement for a direct victim to plead and prove physical impact in order to state a claim for negligent infliction of emotional distress in Corgan v. Muehling. The court conceded that certain language in Pasquale v. Speed Products Engineering appeared to read Corgan that way, but the plaintiff in Corgan had indeed pled contemporaneous physical impact, making the language plaintiff was relying upon dictum.  “[A] careful reading” of the Court’s precedents demonstrated that Illinois has not, in fact, eliminated the requirement that a direct victim of the defendant’s conduct must plead and prove contemporaneous physical impact in order to state a claim for negligent infliction of emotional distress.  Since plaintiff failed to plead any physical impact, she failed to state a claim for negligent infliction.

The Court then turned to plaintiff’s claim for intentional infliction of emotional distress.  The plaintiff argued that the trial court should not have dismissed the claim because it was a triable issue of fact for the jury whether the defendants’ conduct was extreme and outrageous.  Based upon the employees’ attempt to investigate the status of the house before entering, and the plaintiff’s ignoring the knocking on her door, the Court concluded that the conduct was not extreme or outrageous as a matter of law.

Justice Garman filed a special concurrence, noting that while the impact rule continued to apply to any attempt to allege negligent infliction of emotional distress, that rule did not limit plaintiffs who sought to recover emotional distress damages for other recognized torts.

Image courtesy of Flickr by Taber Andrew Bain (no changes).

Illinois Supreme Court Overturns Dismissal of Tenured High School Teacher

7178800793_d4f2a9e75bIn early December, a unanimous Illinois Supreme Court held that a Board of Education’s decision to terminate a tenured high school teacher’s employment was “arbitrary, unreasonable, and unrelated to the requirements of service,” affirming an earlier order that she be reinstated with back pay and benefits. The Court affirmed a decision from the Fifth District in Beggs v. Board of Education of Murphysboro Community Unit School District No. 186. Our report on the underlying facts and lower court decisions in Beggs is here.

The plaintiff in Beggs began her employment at the high school as a full-time math teacher during the 1993-94 school year. Beginning in 2011, her mother’s health began to deteriorate, resulting in frequent hospitalizations. School administrators were aware of the plaintiff’s mother’s health issues. Nevertheless, they became increasingly concerned about the plaintiff’s late arrivals, failure to submit lesson plans on some occasions when she was absent, and the generally slow progress of her first hour geometry class. The Principal issued a “Letter of Concern” in late January 2012, noting plaintiff’s propensity to arrive late for work and the issues with lesson plans. She allegedly arrived late the next two days after receiving the letter. After further late arrivals, she was suspended with pay from February 10 to February 21, 2012. The Superintendant wrote the school board a letter requesting that they authorize the issuance of a notice of remedial warning. The Board did so, as well as converting her earlier suspension into one without pay. Plaintiff was given a leave of absence from February 27 to March 14, 2012, but her alleged absences continued into March after her return to work. On April 30, 2012, the Board adopted a resolution authorizing her dismissal.

Plaintiff timely requested a hearing before an impartial hearing officer. Following a full evidentiary hearing with several witnesses testifying, the hearing officer recommended that the plaintiff be reinstated with no loss of seniority and full back pay and benefits.   The Board reviewed the hearing officer’s findings of fact and recommendation, made supplemental findings, and in July 2013, made a final decision to dismiss the plaintiff notwithstanding the hearing officer’s decision.

The plaintiff filed a complaint seeking administrative review. The circuit court held that the Board had given inadequate deference to the hearing officer’s decision, and that the Board’s finding were arbitrary, unreasonable and unrelated to service. The circuit court ordered the plaintiff’s reinstatement, and the Fifth District affirmed.

In an opinion by Justice Thomas, the Supreme Court unanimously affirmed the Appellate Court. The Court began by addressing the Board’s argument that the plaintiff had failed to properly invoke the court’s jurisdiction via administrative review because she incorrectly identified the Board’s president and mailed the complaint and summons to the previous address of the Board. The Court noted that the Act specifically bars the dismissal of an action for failure to correctly name a Board president when the Board itself is properly named. Given that the Board received the papers within the thirty-five day statutory limit, the Court held that the Board had not been prejudiced by the error.

The Court then turned to the issue of the proper standard of review. The plaintiff argued that the Appellate Court had properly given deference to the hearing officer’s decision, but the Board argued that its own decision was the one entitled to deference for purposes of appellate review. The Court concluded that the Board’s view was correct. Although this “does not mean that the hearing officer does not pay a strong role in the process,” administrative review as of the Board’s decision, not the hearing officer’s.

Nevertheless, the Court concluded that the Board’s supplemental factual findings were against the manifest weight of the evidence. The Board had pointed to the plaintiff’s late arrival of March 20, but the Court noted that her lateness had been excused by the superintendant. The Board relied in part on issues with transmission of lesson plans on two days in March, but the Court found that the plans had been received at school by 8:30 a.m. both days. The Court did not find the Board’s third principal finding to be against the manifest weight of the evidence, but noted that the Board’s conclusion “appears troubling when considered in the context of other undisputed evidence.” Given that the two of the Board’s three principal findings were against the weight of the evidence and the third appeared to be an “understandable and minor breach,” the Court held that the Board’s decision to dismiss the plaintiff was clearly erroneous.

Image courtesy of Flickr by Denise Krebs (no changes).

Illinois Supreme Court Affirms Constitutionality of Cook County Inspector General’s Office

7389270480_1883240c99In 2007, the Cook County Board of Commissioners created the Office of the Inspector General. The Board tasked the IG with investigating corruption, fraud, waste and mismanagement, including by “separately elected County officials,” and instructed all county departments, employees and elected officials to cooperate in the IG’s investigations. The IG is empowered to conduct sworn interviews of county officials and may issue subpoenas for documents. Does the Ordinance run afoul of the state constitution by improperly stripping the County Assessor of some of his power? In early December, the Illinois Supreme Court unanimously held that the answer was “no,” affirming the Appellate Court in Blanchard v. Berrios.

The IG began an investigation in 2015 into the circumstances surrounding the grant of two homeowners’ exemptions to an employee of the County Assessor’s office. The IG sent the Assessor a request for documents. The Assessor refused to turn over the material, advising the IG to try a Freedom of Information Act request.

Instead, the IG sent the Assessor a subpoena, demanding the same documents plus the employee’s personnel file. The Assessor objected to the subpoena, arguing that the IG lacked the authority to issue subpoenas to elected county officials. The IG sued the Assessor, seeking an order compelling his compliance. On cross motions for summary judgment, the trial court upheld the constitutionality of the IG’s office, and the Appellate Court affirmed. In an opinion by Justice Freeman, the Supreme Court affirmed.

According to the Illinois Constitution, every county must elect a “sheriff, county clerk and treasurer,” and “may elect or appoint” a “coroner, recorder, assessor [and] auditor.” The Constitution provides that offices “other than sheriff, county clerk, treasurer, coroner, recorder, assessor and auditor may be eliminated and the terms of office and manner of selected changed by county ordinance.” According to the Counties Code, “No county board may alter the duties, powers and functions of county officers that are specifically imposed by law,” but the board “may alter any other duties, powers or functions or impose additional duties, powers and functions.” 55 ILCS 5/5-1087.

The Assessor’s theory before the Supreme Court was that by requiring the Assessor’s cooperation with the IG investigation, the ordinance didn’t merely impose additional duties; it deprived him of the power to supervise the operations of his office without interference from or regulation by the IG. The Court rejected the Assessor’s argument.

First, the Court noted that the Assessor hadn’t cited any statute or constitutional provision giving him the authority to operate and supervise his office free from oversight or control. The Assessor cited People ex rel. Walsh v. Board of Commissioners, arguing that he had a common law power to supervise his office, but the Court noted that Section 4(d) of the Constitution, giving county boards the authority to modify common law powers, had been expressly adopted to overturn the holding in Walsh.

The Assessor argued that the ordinance exceeded the County’s home rule authority. The constitutional grant of home rule authority is intended to convey the broadest possible authority on local governments; a subject is off limits only where “the state has a vital interest and a traditionally exclusive role.” The Court found that the IG ordinance was aimed at detecting corruption, fraud, waste and mismanagement, and that that goal fell well within the scope of traditional police power granted to home rule units. The Assessor argued that the regulation of exemptions for real estate taxation was a matter of statewide concern, but the Court once again found that that wasn’t what the IG ordinance was about – the ordinance was aimed at detecting problems in all county offices.

Finally, the Assessor argued that because his office is elected, it is “separate” from Cook County for purposes of the limitations on home rule authority. Not so, the Court found; the Assessor clearly wasn’t part of the State or any of its agencies. The office wasn’t part of the school district. It must therefore be part of the Cook County government. Nor did cases limiting home rule units’ authority to project their power extraterritorially limit the IG’s authority.

Image courtesy of Flickr by John Pastor (no changes).