Greater Pleasant Valley Church in Christ v. Pappas

2012 IL App (1st) 111853

975 N.E.2d 713

GREATER PLEASANT VALLEY CHURCH IN CHRIST, Petitioner–Appellant,

v.Maria PAPPAS, County Treasurer of Cook County, Illinois, as Trustee of the Indemnity Fund Created by Section 21–295 of the Property Tax Code (35 ILCS 200/21–295), Respondent–Appellee.

No. 1–11–1853.

Appellate Court of Illinois, First District, Second Division.

July 31, 2012.

Law Office of Burton A. Brown, Chicago (Michael J. Gallagher, Burton A. Brown, Barbara A. Riley, and Abrar Azamuddin, of counsel), for appellant.

Anita M. Alvarez, State's Attorney, Chicago (Patrick T. Driscoll, Jr., Marilyn Fusco Schlesinger, Ralph A. Proietti, and Tatia C. Gibbons, Assistant State's Attorneys, of counsel), for appellee.

OPINION

Justice CUNNINGHAM delivered the judgment of the court, with opinion.

¶ 1 This appeal arises from the June 28, 2011 order entered by the circuit court of Cook County, which granted a directed finding against the petitioner-appellant, Greater Pleasant Valley Church in Christ (the Church), and in favor of the respondent-appellee, Maria Pappas, who was the Cook County treasurer acting as trustee of the indemnity fund created under section 21–295 of the Property Tax Code (35 ILCS 200/21–295 (West 2008)) (the County Treasurer). This appeal also arises from the circuit court's June 23, 2011 order quashing certain subpoenas for testimony and documents which were issued by the Church and served upon the legal counsel of the Cook County assessor's office. On appeal, the Church argues that: (1) the circuit court erred in granting a directed finding in favor of the County Treasurer; and (2) the circuit court erred in quashing the Church's subpoenas served upon the legal counsel of the Cook County assessor's office. For the following reasons, we affirm the judgment of the circuit court of Cook County.

¶ 2 BACKGROUND

¶ 3 On January 25, 2005, the Church purchased a building facility located at 910 East 83rd Street in Chicago, Illinois (the property). At closing, the Church was represented by legal counsel. In connection with closing, a United States Department of Housing and Urban Development settlement statement (HUD settlement statement) was executed by the Church and the seller of the property. The HUD settlement statement specified the contract sales price of the property in the amount of $225,000, but listed certain amounts to be credited to the Church against the purchase price. The amounts credited to the Church, which reduced the total price due to the seller, included county taxes owed on the property in the amounts of $18,799.86 for 2004 and $1,287.66 for 2005.

¶ 4 Subsequently, the Church invested resources in rehabilitating the property, but failed to pay the 2004 real estate taxes owed on the property.

¶ 5 On June 16, 2006, at a public auction, the unpaid 2004 taxes for the property were sold to Phoenix Bond & Indemnity Company (Phoenix Bond) in the amount of $24,031.15.

¶ 6 On December 7, 2006, upon application by the Church, the Illinois Department of Revenue issued a “non-homestead property tax exemption certificate” approving the Church for 100% exemption status for the 2006 tax assessment year.

¶ 7 On February 18, 2009, Robert Skinner, Jr., pastor of the Church (Pastor Skinner), received by certified mail a notice from the tax buyer, Phoenix Bond, that the property had been sold due to delinquent taxes. The notice specified that the period of redemption from the sale of the property would expire on June 16, 2009, and that Phoenix Bond, pursuant to a petition for a tax deed, would be entitled to the title and possession of the property should the Church fail to redeem the property by that date. Thereafter, on February 20, 2009, Jimmy Croft, a deacon at the Church (Deacon Croft), contacted the Cook County assessor's office for an “estimate of redemption” for the property, which by then totaled more than $67,400. According to Deacon Croft, however, the representatives at the Church were led to believe by Rita Carthans (Carthans) of the Cook County assessor's office that “everything was going to work out.”

¶ 8 Subsequently, the Church failed to pay the delinquent taxes within the redemption period, which expired on June 16, 2009. As a result, on November 25, 2009, the trial court, pursuant to a petition for tax deed filed by Phoenix Bond, entered an order for the issuance of a tax deed conveying title of the property to Phoenix Bond.

¶ 9 On January 31, 2010, the Church and Phoenix Bond entered into a “repurchase agreement” whereby the Church would remain in possession of the property pending the outcome of a petition for indemnity, which was to be filed by the Church under section 21–305 of the Property Tax Code (the Code) (35 ILCS 200/21–305 (West 2008)), and thereafter to reacquire title to the property. A valuation report prepared by Illinois Appraisal Services, Inc. (Illinois Appraisal Services), on behalf of Phoenix Bond appraised the property at a fair market value of $640,000 as of April 30, 2010.

¶ 10 On May 26, 2010, the Church filed the instant petition for indemnity against the County Treasurer, arguing that the Church was entitled to indemnity pursuant to section 21–305 of the Code for the fair market value of the property of $640,000 “on or about November 25, 2009”; that the Church had failed to pay the 2004 real estate taxes or redeem the sale of those taxes because it was led to believe that the property was tax exempt; and that “the standard of proof is freedom from fault or negligence.” In response, the County Treasurer put forth its own expert's report that valued the property at $184,000 as of November 25, 2009, when the tax deed conveyed title of the property to Phoenix Bond.

¶ 11 On March 10, 2011, the Church filed a motion to set a trial date, stating that “all discovery requested and engaged in [had] been completed,” and that “the issues [had] been framed and the matter [was] now ready for trial on a date certain.”

¶ 12 On May 17, 2011, the trial court entered an order setting the case for trial on June 28, 2011 and June 29, 2011.

¶ 13 On June 14, 2011, the Church issued and served two subpoenas for testimony and documents upon Khang Trinh (Trinh), legal counsel of the Cook County assessor's office. The subpoenas sought information relating to the initial and revised assessments of the property for the 2010 tax year. On June 20, 2011, the Cook County assessor filed an appearance in the case, along with a motion to quash the subpoenas served upon Trinh (motion to quash). The motion argued that the information sought by the subpoenas was irrelevant and inadmissible.

¶ 14 On June 23, 2011, a hearing on the motion to quash was conducted. In granting the motion to quash, the trial court found that the information sought by the subpoenas was not relevant to the issues framed by the pleadings; that the Church's petition for indemnity had already alleged a fair market value of the property at $640,000; and that Trinh's lay witness testimony regarding the valuation of the property was irrelevant to the issues in the case. The court further found that the assessment of the property by the Cook County assessor's office was only “an initial pass” and that any subsequent revisions in valuation of the property had not yet been finalized. The trial court also found that the information sought by the subpoenas regarding the property's assessment for the 2010 tax year was irrelevant to the date of issuance of the tax deed to Phoenix Bond, which occurred in November 2009. The trial court also questioned the Church's timing in raising this issue. The court stated that the Church's March 10, 2011 motion to set a trial date gave the impression that there were no other open discovery issues. The trial court then denied the Church's request to certify the matter for interlocutory appeal, stating:

“I have set this matter for a bifurcated trial. Liability is on June 28th. This argument all goes to damages, which depending on the Court's ruling on the 28th was going to be scheduled for June 29th. I don't think there is any reason to delay. I don't think this is relevant as framed by your pleadings. I think it's designed to delay. I think it's taking us down—it's a red herring. So I'm not going to certify it. That's my reason.”

¶ 15 On June 28, 2011, a bench trial commenced on the liability phase of the case. The Church presented the testimony of three witnesses—Pastor Skinner, Deacon Croft, and another deacon of the Church, Richard Bowens (Deacon Bowens)—all of whom were corporate officers of the Church. At trial, legal counsel for the Church elicited testimony from Pastor Skinner that the estimate of tax redemption for the property in 2009 amounted to over $67,400. Counsel then asked Pastor Skinner whether the Church had “that money in [its] account” at that time, to which legal counsel for the County Treasurer objected and the following exchange ensued:

MR. PROIETTI [counsel for County Treasurer]: Your Honor, the petition is a six-page petition and the ground is that there was confusion with the church as to whether they were tax exempt. Discovery was not taken on financial wherewithal of the church. This would be a basis that has not been pled.

THE COURT: What do you say to that?

MR. BROWN [counsel for the Church]: That's incorrect. Ms. Schlesinger [co-counsel for the County Treasurer] asked him if they had the money to pay that in his deposition transcript. We can look through that. It's like a one-line thing, and it's a—

THE COURT: Well, it may have been a question they asked in discovery. But Mr. Proietti's objection is that you are really limited to what you've alleged in your petition, and your petition does not allege that they had lack of financial wherewithal to redeem. I think that's your objection.

MR. PROIETTI: Yes, it is.

MR. BROWN: I agree that's the objection, but the answer to that, on our part, is that the statute also requires that there has been no other...