In Xochi, LLC v. City of Galena, 2022 IL App (4th) 220340, the Illinois Appellate Court’s Fourth District (“Fourth District”) found the Illinois Local Government and Governmental Employees Tort Immunity Act (“Act”) to “shield” Galena from liability for failure to complete and submit a required form to operate a recreational cannabis dispensary.

Xochi entered a non-binding commercial lease agreement to lease a commercial building it owned located in Galena, dependent upon the other party obtaining approval for operating an adult-use cannabis dispensary from the State of Illinois and Galena. The entity applied for and received a special use zoning permit from Galena in February 2020. Galena granted the same special use zoning permit to Fotis Investments, LLC (“Fotis”), which owned a building less than 1500 feet from Xochi’s building. Illinois law and Galena’s zoning code prohibited cannabis dispensaries from being within 1500 feet of another. The first of either Xochi or Fotis locations to be operational would be Galena’s lone cannabis dispensary. Because Illinois suspended its cannabis license lottery due to COVID-19, the entity failed to obtain the required license from Illinois and terminated the agreement.

In June 2020, Xochi entered a lease agreement with another entity (“Verilife”), where Xochi would lease its Galena building to Verilife to operate a recreational cannabis dispensary. The parties’ lease was subject to cancellation if Verilife failed to obtain the required approval from Illinois and Galena to operate a cannabis dispensary. Verilife already possessed a cannabis license; the only requirement was for Galena to complete and submit specific certification documents to the State.

Verilife formally requested Galena to complete the City’s required portion of a zoning certification form to the State, certifying that the Xochi building complied with Galena’s zoning code regarding cannabis dispensaries because the Xochi building had already obtained its special use permit in February 2020. Galena failed to complete the form because it suspended applications and hearings on all new special use requests for cannabis sales locations until Illinois resumed its cannabis license lottery. The State resumed the lottery and Galena lifted its stay. By then, the time for Verilife to obtain all required approval passed ,and Verilife terminated  agreement and entered a lease with Fotis, operating a dispensary from the Fotis’ commercial location less than 1500 feet from Xochi’s commercial building.

Xochi filed a negligence complaint against Galena – specifically, that Galena deprived Xochi of any pecuniary benefits under the Xochi-Verilife lease agreement by Galena’s failure to complete the required zoning compliance form. Galena moved to dismiss, asserting that: 1) section 2-104 of the Act shielded Galena from liability; and 2) Xochi failed to plead a claim for negligence under Illinois law. The trial court granted Galena’s motion to dismiss, holding that the Act precluded any potential finding of negligence, and even if the Act did not apply, that Xochi failed to plead a proper claim for negligence. Xochi appealed.

On appeal, the Fourth District found that section 2-104 precluded any potential negligence liability and did not discuss the merits of Xochi’s complaint. Relying on case law and a plain reading of section 2-104, the court found that Galena’s, and any of its employees’, failure to complete and submit the required form fell within the Act’s protections. Specifically, the Act provides immunity for “any injury involving the governmental entity’s ‘failure or refusal’ to provide ‘approval or similar authorization.’”  Even reading section 2-104 and “authorization” in a light most favorable to Xochi, Galena’s failure to complete and submit the required compliance document was held to be among the activities either expressly immunized or impliedly immunized.

The court affirmed the trial court’s determination that section 2-104 of the Act shielded Galena from any potential liability for negligence and the granting of Galena’s motion to dismiss.  

In Reynolds v. Village of Creve Coeur, 2022 IL App (3d) 210260, the Illinois Appellate Court’s Third District (“Third District”) affirmed an ordinance permitting the Village to require annual registration fees of residential rental units and authorized Village to physically inspect those units.

Village enacted ordinance no. 634 (“No. 634”) requiring an annual registration fee of $5.00 for residential rental units within the Village, including mobile homes. Years later, Village amended No. 634 (“No. 634A”) by raising the annual registration fee to $25.00, per year, per unit, and permitted Village to inspect those units for compliance with Village’s building, utility, and nuisance codes, as well as other ordinances and regulations.

An owner of mobile homes and a mobile park located in the Village (“Owner”), paid No. 634A’s registration fee under protest and filed a complaint against Village alleging three counts. First, Owner argued that Village lacked authority to enact No. 634A. Second, Owner asserted that federal law preempted No. 634A. Third, Owner contended that No. 634A’s registration fee constituted an impermissible “tax.”  All three of Owner’s counts were dismissed; Owner appealed only the federal preemption issue.

On appeal, Owner argued that the National Manufactured Housing Construction and Safety Standards Act of 1974 (“Act”) and related federal regulations by the U.S. Department of Housing and Urban Development (“HUD”) preempted No. 634A. The Third District first looked to the Act’s preemption provision, which restricts state and local units of government from adopting construction and safety standards on mobile homes differing from those regulations adopted by HUD. The court held that the Act did not preempt No. 634A because the registration fee did not impose a “construction or safety standard.”  Rather, No. 634A was found to merely require Owner to register his unit(s) with the Village.

The court next looked to whether Owner’s challenge presented the court with an actual controversy. Courts cannot pass judgment on abstract or theoretical legal issues or render judicial opinions that are advisory or non-binding on the parties; there must be a “actual controversy,” or a legitimate dispute involving the parties’ immediate and definite rights. Here, the court held that any challenge by Owner to the ordinance’s inspection provisions were not “ripe” because Owner failed to allege that Village attempted to inspect his mobile home(s) or enforce any ordinance violation(s) against him.

The court finalized its opinion by rejecting Owner’s argument that No. 634A was “unconstitutionally vague” on the grounds that Owner waived this issue when failing to raise the issue at trial.

In Channon v. Westward Management, Inc., 2022 IL 128040, the Illinois Supreme Court held that Section 22.1 of the Illinois Condominium Property Act (“Act”) (765 ILCS 605/22.1) does not provide an implied cause of action to individual condominium unit sellers for “unreasonable charges” imposed by condominium associations and/or their agents relating to production and copying of documents required to be disclosed under the Act.

The Channons wanted to sell their condominium unit. Under the Act, the Channons were required to obtain specific disclosure documents from their condominium association (“Association”), or its agent, prior to selling their unit upon a potential buyer’s request. The Channons entered a standard sales contract with a prospective buyer who requested those disclosures. Such was provided to the Channons by Association’s agent, Westward Management, Inc. (“Westward”) for $245.00.

The Channons filed a class action lawsuit against Westward, alleging: (i) Westward’s violated Section 22.1 by charging $245.00 – an “unreasonable fee”  – ; and (ii) that Westward’s conduct violated the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq.). Westward’s motion to dismiss was denied. Westward filed a certified question of law to the Illinois Appellate Court’s First District (“First District”), as to whether Section 22.1(c) of the Act conferred sellers of condominium units a private cause of action for “unreasonable fees” imposed relating to the furnishing and copying of such required documents.

Section 22.1(a) of the Act, in part, provides that “[i]n the event of any resale of a condominium unit by a unit owner . . . such owner shall obtain from the Board of Managers and shall make available for inspection to the prospective purchaser” an exhaustive list of disclosure documents. Section 22.1(b) requires a condominium association’s principal officer to deliver the requested disclosure documents in writing and no later than thirty days after receiving the request. Section 22.1(c) allows the condominium association to charge a “reasonable fee” for “direct out-of-pocket” expenses arising from providing and copying the requested documents.

Illinois applies the bright-line, four factor Metzger test to determine whether a statute has an implied cause of action, or one not specifically provided by statute. Under Metzger, a court must find that: (i) plaintiffs are members of the class the statute is designed to protect; (ii) the statute is designed to protect the plaintiffs from suffering the kind of injury incurred; (iii) the statute’s purpose is consistent with creating a private cause of action; and (iv) it is necessary to imply a private cause of action to provide plaintiff with adequate remedy for the violation alleged.

Relying on Metzger, the First District found that Section 22.1(c) did imply a private cause of action, because: (i) the Channons were members of a class that Section 22.1 was intended to benefit; (ii) the Channons incurred the precise type of injury Section 22.1 was designed to prevent; (iii) implying a private cause of action within Section 22.1(c) was consistent with Section 22.1’s legislative intent because a “ceiling” on such fees “protects sellers”; and (iv) if the court failed to imply a cause of action, Section 22.1(c) would be ineffective for lack of an enforcement mechanism. The First District further found that Westward could be liable under the Act, under an agency theory, because Association contracted with Westward for furnishing the Association’s mandatory duties under Section 22.1. Westward appealed to the Illinois Supreme Court.

Reviewing the question of law de novo, or without deference to the lower courts’ respective rulings as to questions of law, the Court reemphasized that when construing a statute, an Illinois court’s primary objective is to determine and effect the statute’s underlying legislative intent, which is best achieved by applying the statute’s clear and plain language, as a whole. Further, Illinois courts only imply a private cause of action when evidenced by a clear need to effectuate a statue’s purpose.

Relying on Metzger, the Court found that Section 22.1(c) does not impose an implied private cause of action, because Section 22.1 is not intended to benefit sellers but rather potential purchasers. The Court noted that Section 22.1 contains three parts. Section 22.1(a) mandates condominium unit owners selling their properties to obtain and disclose specific information pertaining to the property and condominium association to a requesting potential purchaser. Section 22.1(b) effectuates 22.1(a) in mandating the applicable association to provide such disclosures within thirty (30) days. Section 22.1(c) establishes a “reasonable” fee that may be imposed by associations that reflects the “direct out-of-pocket” expenses incurred by the association in furnishing such disclosures.

The Court held that Section 22.1(a) expressly imposes a duty upon condominium sellers to disclose specific documents and information to potential purchasers. The Court found that this mandate was clearly intended to protect potential purchasers when making their purchasing decisions, for those potential purchaser’s “sole benefit.”  Section 22.1(b) was found by the Court to be insufficient to establish a cause of action, as the plain language provides a time limit in which such disclosures must be furnished to the seller, without providing sellers a “benefit.”  Section 22.1(c)’s “reasonable fee” mandate was insufficient to imply a private cause of action, as the plain language was intended to “primarily benefit” prospective buyers, by ensuring the disclosure information is provided to buyers.

The judgment of the First District was vacated, with the case remanded to the circuit court for further proceedings consistent with the opinion.

In In re Application of the [Cook] County Treasurer, 2022 IL App (1st) 200604, the Illinois Appellate Court’s First District (“First District”) affirmed the granting of petitioner’s (“Wheeler”) petitions for sale in error pertaining to two properties because the assessor incorrectly assessed the properties.

Wheeler purchased two properties at issue at a tax sale conducted by the Cook County Collector (“Collector”). Years later, Wheeler filed two petitions for sales in error under the Illinois Property Tax Code (“Code”), alleging that the properties purchased were incorrectly described by the Cook County Assessor’s (“Assessor”) records. Specifically, Assessor’s records displayed one property of not having a garage when it did, while the other property was displayed as having a garage where it did not. Wheeler submitted a document maintained and published by Assessor listing several different property characteristics used by Assessor to assess residential properties; one being whether the property had a garage.

A claimant seeking a sale in error to undo a tax sale must allege one enumerated reason provided by the Code. Section 21-310(a)(5) provides for a “sale in error” based on an assessor’s “error,” other than an error of judgment pertaining to the value of any property. The Code further provides that upon declaration of a “sale in error,” the county collector must refund the amount paid to the buyer.

At the parties hearing, the trial court ruled in favor of Wheeler, finding that the two tax sales were sales in error. The court explained that to be a “sale in error,” the alleged error must “implicate the tax sale process or have a rational relationship to the buyer’s investment.”  Because the process that ends in the tax sale begins with Assessor’s assessment of the property to be sold, and because property characteristics directly affected Assessor’s assessment, any alleged error pertaining to those property characteristics implicated the tax sale process. Collector appealed.

On appeal, Collector presented four arguments. Collector first argued that the mistakes relating to Assessor’s property characteristics were insufficient to warrant relief because Assessor maintained records on the characteristics of taxable properties solely for assessment purposes; any errors failed to affect tax sales of such properties. Second, because the Code fails to impose a duty onto Assessor to collect or maintain the records to sell delinquent taxes, errors within Assessor records failed to affect the properties’ tax sales. Third, because Wheeler failed to offer evidence that Assessor’s mistakes had any effect on the amount of taxes purchased, any mistake did not affect the tax sales. Fourth, finding for Wheeler would lead to “absurd results” by “nullif[ing] tax sales on irrational grounds.”  Collector did not dispute that Assessor incorrectly identified whether the properties had garages. Wheeler asserted that Collector’s appeal was moot, or impossible for the court to grant relief to Collector because Collector paid Wheeler refunds and cancelled the tax sale certificates, pursuant to the trial court’s order.

The First District quickly resolved Wheeler’s moot argument, finding Collector’s appeal not to be moot because under Illinois law, if a party does not accept an adverse judgment the cause is not moot even if no restitution could follow because a court’s erroneous judgment constitutes an injury per se. Even if moot, the court found that the public interest exception applied, allowing the court to resolve the merits of Collector’s appeal.

The First District reviewed the case de novo, or without deference to the trial court’s ruling, because whether Assessor’s mistake warranted a sale in error was a matter of statutory interpretation. Looking to the Code, the court noted that the sale in error statute’s purpose is to “relieve tax buyers ‘from the effect of caveat emptor purchases,’” and encourage economic activity. The First District’s review of applicable case law found only one published case relating to whether an assessor’s mistake warranted a sale in error. In that case, the court held that an assessor’s mistake relating to a property’s listed street address on a website maintained by the same assessor failed to warrant a sale in error, because the Code does not require assessors to maintain websites with legal property descriptions for tax sale purposes. Further, to be a “sale in error,” the alleged mistake must either implicate the tax sale process or have a rational relationship to the buyer’s investment.

In contrast to the decision in that case, the First District in this case found that Assessor’s mistakes in identifying whether the challenged properties had garages both implicated the tax sale process and had a rational relationship to Wheeler’s investment. Because Assessor determined the challenged properties’ value for tax purposes, using characteristics including whether the property has a garage, and any mistakes, implicates the tax sale process by potentially resulting in an incorrect tax amount. Assessor’s mistakes in identifying whether the challenged properties had garages was rationally related to Wheeler’s investment because if Assessor had correctly identified the challenged properties, the court found that Wheeler may or may not have purchased those tax amounts.

The First District rejected Collector’s argument relating to Wheeler’s failure to show evidence that Assessor’s error affected the tax lien investment by looking to the plain language of the Code which fails to require any such evidence. The court noted that if the General Assembly intended for such a requirement, it would have been expressly included within the Code, and thus imposing such a requirement would “go beyond” the plain language of the Code and related case law. Noting Collector’s public policy arguments, the court found that the Code’s provisions relating to sales in error are beneficial to Collector as well, and to impose restrictions absent from the statute’s plain language would directly contradict the statute’s purpose of furthering economic activity.