Ill. Collaboration on Youth v. Dimas

2017 IL App (1st) 162471

81 N.E.3d 63

ILLINOIS COLLABORATION ON YOUTH ; Abcor Home Health, Inc.; Access Living of Metropolitan Chicago; Addus Healthcare, Inc.; AIDS Foundation of Chicago; Alternatives, Inc.; ASI, Inc.; Association for Individual Development; Aunt Martha's Youth Services Center; Caritas Family Solutions; Carroll County Health Department; Center on Halsted; Center for Housing and Health; Centerstone; Chaddock; Chicago Commons; Chicago House and Social Service Agency, Center for Youth and Family Solutions; Children's Home and Aid ; Childrens' Home Association of Illinois; CJE; Community Youth Network, Inc. ; Connections for the Homeless; Cunningham Children's Home of Ubana, IL; Du Page Youth Services Coalition; Family Alliance; Family Counseling Center, Inc.; Family Focus; Featherfist; Fox Valley Older Adult Services ; Gareda Home Services; Haven Youth and Family Services; Heartland Human Care Services; Healthy Families Chicago; Henry County Health Department; Housing Forward ; Housing Opportunities for Women; Human Support Services; Illinois Coalition Against Sexual Assault; Illinois Public Health Association; Indian Oaks Academy; Interfaith Housing Development Corporation; Inspiration Corp.; Jewish Child and Family Services; Jewish Vocational Service and Employment Center; Kemmerer Village; Knox County Health Department; La Casa Norte; Lessie Bates Davis Neighborhood House; Lutheran Child and Family Services; Medical Gear, LLC ; Metropolitan Family Services; Midwest Youth Services ; New Age Elder Care ; New Moms ; Nexus, Inc.; Nicasa; North Central Behavioral Health Systems, Inc. ; Omni Youth Services; One Hope United, Chicago; Prevention Initiative; The Ounce of Prevention Fund; Polish American Association; Project Oz ; Public Action to Deliver Shelter ; Puerto Rican Cultural Center; Ramp, Inc.; Renaissance Social Services; Revive Center for Housing and Healing ; River to River Senior Services; Rock Island County Health Department ; San Jose Obrero Mission; Senior Helpers; Serior Services Plus Inc.; Shelter, Inc.; Sinnissippi Centers; Stark County Health Department; Stephenson County Health Department ; Stepping Stones of Rockford, Inc.; TASC; Teen Living Programs ; Teen Parent Connection ; The Baby Fold; The Bridge Youth and Family Services ; The Center for Youth and Family Solutions; The Fellowship House ; The Harbour; The Night Ministry; The Resurrection Project; Turning Point Behavioral Health Care Center ; Treatment Alternatives for Safe Communities; Universal Family Connection; Union County; Unity Parenting and Counseling; Western Illinois Managed Home Services; The Whiteside County Health Department; Youth Advocate Program; Youth Crossroads ; Youth Outreach Services; and Youth Service Bureau of Illinois Valley; Plaintiffs,

v.James DIMAS, in His Official Capacity as Secretary of Human Services; Jean Bohnhoff, in Her Official Capacity as Acting Director of Aging; Nirav Shah, in His Official Capacity as Director of Public Health; Felicia Norwood, in Her Official Capacity as Director of Healthcare and Family Services; John R. Baldwin, in His Official Capacity as Director of Corrections; Michael Hoffman, in His Official Capacity as Acting Director of Central Management Services; Audra Hamernik, in Her Official Capacity as Director of the Illinois Housing Development Authority; Leslie Geissner Munger, in Her Official Capacity as Comptroller of the State of Illinois; Bruce Rauner, in His Official Capacity as Governor of the State of Illinois; Defendants–Appellees.

(Illinois Collaboration on Youth ; Addus Healthcare, Inc.; Aids Foundation of Chicago; Caritas Family Solutions; Center for Housing and Health; Center for Youth and Family Solutions; Children's Home and Aid ; Connections for the Homeless; Du Page Youth Services Coalition; Family Focus; Haven Youth and Family Services; Housing Opportunities for Women; Illinois Coalition Against Sexual Assault; Interfaith Housing Development Corporation; Inspiration Corp.; Jewish Child and Family Services; Jewish Vocational Service and Employment Center; Kemmerer Village; Lessie Bates Davis Neighborhood House; Lutheran Child and Family Services; Medical Gear, LLC ; Midwest Youth Services ; New Age Elder Care ; New Moms Metropolitan Family Services; Omni Youth Services; One Hope United; Polish American Association; Project Oz ; Puerto Rican Cultural Center; RAMP, Inc.; Renaissance Social Services; Revive Shelter, Inc.; Sinnissippi Centers; Stepping Stones of Rockford, Inc.; The Baby Fold; The Fellowship House ; The Harbour; The Night Ministry; The Ounce of Prevention Fund; Treatment Alternatives for Safe Communities ; Universal Family Connection; Union County; Unity Parenting ; Western Illinois Managed Home Services; The Whiteside County Health Department; Youth Advocate Program; Youth Crossroads ; and Youth Outreach Services, Plaintiffs–Appellants).

No. 1-16-2471

Appellate Court of Illinois, First District, FOURTH DIVISION.

June 15, 2017

Despres, Schwartz & Geoghegan, Ltd., of Chicago (Thomas H. Geoghegan, Michael P. Persoon, and Sean Morales-Doyle, of counsel), for appellants.

Lisa Madigan, Attorney General, of Chicago (David L. Franklin, Solicitor General, and Richard S. Huszagh, Assistant Attorney General, of counsel), for appellees.

OPINION

JUSTICE BURKE delivered the judgment of the court, with opinion.

¶ 1 The underlying dispute in this case involves the ongoing state budget impasse between the legislature and the Governor. Plaintiffs are social service organizations that have contracts with different state agencies to provide various human services for the State of Illinois in fiscal year 2016.¹ During the fiscal year 2016, plaintiffs did not receive payments on the contracts, despite providing services. The contracts provide that they are subject to legislative appropriations, which were not enacted by the beginning of fiscal year 2016. Plaintiffs filed a complaint seeking payment for their services despite the lack of appropriations, arguing that defendants—Governor Bruce Rauner and officers and heads of various state agencies and departments—were acting beyond the scope of their legal authority, unconstitutionally impairing contractual obligations, denying equal protection of the laws, and depriving them of property without due process. Defendants moved to dismiss on grounds that the complaint was barred by sovereign immunity and failure to state a valid claim for relief. The Circuit Court of Cook County granted the motion to dismiss. Plaintiffs now appeal.

¶ 2 I. BACKGROUND

¶ 3 A. Plaintiffs' Complaint

¶ 4 In May 2015, the General Assembly passed an appropriation bill for fiscal year 2016, which authorized sufficient appropriations to cover plaintiffs' contracts. However, Governor Rauner vetoed the appropriations bill on June 25, 2015. The General Assembly passed another appropriations bill on April 13, 2016, which similarly provided appropriations for most of plaintiffs' contracts. The Governor again vetoed the bill on June 10, 2016.

¶ 5 On June 30, 2016, the General Assembly passed, and the Governor signed into law, Public Act 99–524 (Pub. Act 99–524 (eff. June 30, 2016)). This "stop gap" or interim bill provided some appropriations for the first half of fiscal year 2017, with the option to use these appropriations to pay obligations from fiscal year 2016.

¶ 6 Plaintiffs initially filed a two-count complaint on May 4, 2016, against defendants requesting declaratory and injunctive relief regarding the State's failure to pay on the contracts. Plaintiffs filed a third amended complaint on July 20, 2016. Plaintiffs alleged that the most of their contracts with defendants contained the following clause:

"This contract is contingent upon and subject to the availability of funds. The State, at its sole option, may terminate or suspend this contract, in whole or in part, without penalty or further payment being required if, (1) the Illinois General Assembly or the federal funding source fails to make an appropriation sufficient for any reason, (2) the Governor decreases the Department's funding by reserving some or all of the Department's appropriation(s) pursuant to power delegated to the Governor by the Illinois General Assembly, or (3) the Department determines, in its sole discretion or as directed by the Office of the Governor, that a reduction is necessary or advisable based upon actual or projected budgetary considerations. Contractor will be notified in writing of the failure of appropriation or of a reduction or decrease."

¶ 7 Plaintiffs asserted that before and after the Governor's vetoes, defendant directors induced plaintiffs to enter into the contracts for the provision of services. Plaintiffs alleged that defendants never invoked the termination provision but continued the contracts, and it was not feasible for plaintiffs to withdraw from the contracts because they would have to give 30 days' notice, would risk never receiving any payment, could potentially face liability to their service populations, and were obligated to other foundations and funding sources.

¶ 8 In count I, plaintiffs alleged ultra vires conduct by the Governor and other defendant agency heads in entering into, continuing, and enforcing the contracts, while at the same time vetoing the appropriations bills that provided funding for the contracts. Plaintiffs sought a declaration that defendants exceeded their legal and constitutional authority, injunctive relief in the form of payments of vouchers for services rendered in fiscal year 2016, and preliminary injunctive relief requiring defendants and the Comptroller to immediately pay plaintiffs for bills overdue by 90 days or more.

¶ 9 In count II, plaintiffs alleged that defendants' actions in vetoing the legislative appropriation bills, continuing the contracts, enacting Public Act 99–524, and operating the State without a budget as required by Article VIII, section 2(b) ( Ill. Const. 1970, art. VIII, § 2 (b)), defendants have...