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06/20/88 Chicago Health Clubs, Inc. v. Ronald Picur

June 20, 1988

CHICAGO HEALTH CLUBS, INC., ET AL., APPELLANTS

v.

RONALD PICUR, COMPTROLLER OF THE CITY OF CHICAGO, ET AL., APPELLEES



SUPREME COURT OF ILLINOIS

528 N.E.2d 978, 124 Ill. 2d 1, 124 Ill. Dec. 87 1988.IL.960

Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. George A. Higgins, Judge, presiding.

APPELLATE Judges:

JUSTICE CUNNINGHAM delivered the opinion of the court. JUSTICE RYAN, specially Concurring.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE CUNNINGHAM

Plaintiffs, Chicago Health Clubs, Inc., Chicago Health Clubs Fair Lady, Inc., Exercise Centers of Chicago, Inc., River City Fitness Center, Inc., Downtown Court Club, Inc., Pro's Gym and Nautilus, Inc., Lakeshore Centre Management Company d/b/a Lakeshore Centre, Charles Vavrus d/b/a Charlie Club, Tennis Corporation of America, Women's Workout World, Inc., Women's Workout World II, Inc., Central World, Inc., The River Club, Inc. d/b/a The River Club, Hyde Park Athletic Club, Inc., Combined Fitness Centre-LaSalle, Inc., Combined Fitness Centre-Randolph, Inc., Combined Fitness Centre-Northbrook, Inc., and Patricia Stanis (an individual dues-paying member of a health club in Chicago), brought this suit in the circuit court of Cook County on January 9, 1986, against defendants, the City of Chicago (city) and certain officials, namely, Ronald Picur, comptroller, Cecil A. Partee, treasurer, and Charles Sawyer, director of revenue. In their complaint, plaintiff challenged the constitutionality of the December 23, 1985, amendment to the Chicago Amusement Tax Ordinance (Chicago Municipal Code §§ 104 through 104 -- 8 (1985)), and sought declaratory and permanent injunctive relief.

Defendants filed a motion to dismiss the complaint for failure to state a cause of action. Plaintiffs then filed an amended complaint, and also filed a motion for a preliminary injunction. Defendants let their motion to dismiss the original complaint stand as a basis for dismissing the amended complaint, but filed an additional motion to strike portions of plaintiffs' reply brief, and a motion to strike plaintiffs' exhibits. The court denied the defendants' motions and held that the amendment to the ordinance was an unlawful occupation tax in violation of article VII, section 6(e)(2), of the Illinois Constitution (Ill. Const. 1970,

The appellate court, with one Justice Dissenting, held that the December 23, 1985, amendment to the Chicago Amusement Tax (Chicago Municipal Code §§ 104 -- 1 through 104 -- 8 (1985)) was constitutional in all respects (155 Ill. App. 3d 482) and therefore found that the circuit court erred in denying the motion to dismiss and granting the preliminary injunction. We granted plaintiffs' petition for leave to appeal (107 Ill. 2d R. 315). I. Summary of Amendment and Related Provisions

In 1947 the City of Chicago enacted an amusement tax ordinance which imposed a tax on organizers, sponsors and promoters of various enumerated spectator and participatory events. In 1980 the ordinance was amended to shift the tax from the providers to their patrons. (Chicago Municipal Code §§ 104 -- 1 through 104 -- 2 (1980).) Since then, the Chicago Amusement Tax Ordinance has provided for a tax upon the patrons of amusements located within the city. The city taxes the privilege of witnessing, viewing or participating in such amusements.

On December 23, 1985, the city amended this ordinance, and it is this amendment which the plaintiffs challenge. The ordinance was amended to include racquetball and health clubs as follows:

"ny entertainment or recreational activity offered for the public participation or on a membership or other basis including but not limited to racquetball or health clubs, carnivals, amusement park rides and games, bowling, billiard and pool games, dancing, tennis, racquetball, swimming, weightlifting, body building or similar activities." (Emphasis added.)

This amendment thus adds health clubs and racquetball clubs to the list of "amusements" for purposes of the Amusement Tax Ordinance. While this case was pending in the circuit court the city, on February 26, 1986, passed a related amendment which brought "social and eating clubs" within the definition of "amusement" and also reduced from 4% to 2% the tax rate to be paid by members and guests of health, social and eating clubs (Chicago Municipal Code §§ 104 -- 1 through 104 -- 2.1 (1986)). The February 26, 1986, amendment was challenged by the Chicago Athletic Club (Chicago Athletic Club v. City of Chicago, No. 86 CH 3116) in the circuit court of Cook County. In that case an agreed order was entered exempting social and eating clubs from the amusement tax, in effect holding that social and eating clubs are not "amusements" within the meaning of the amusement tax. This latter amendment is not in issue here and further references to an amendment will be to the December 23, 1985, amendment.

In addition to adding racquetball and health clubs to the list of amusements, the amendment at issue here makes the owners, managers, and operators of amusements the collectors for and on behalf of the city. They are responsible for collecting the tax, keeping accurate records of the moneys collected, and remitting the tax collected to the city. Furthermore, the ordinance subjects them (owners, managers or operators) to penalties and interest for failing to perform these duties. That is, the provider remains liable to pay the taxes if the patron fails or refuses to pay. II. Motion to Dismiss

Regarding the section 2-615 motion to dismiss for failure to state a cause of action (Ill. Rev. Stat. 1985, ch. 110, par. 2-615), we note that defendants sought therein to have the complaint dismissed both because the challenged ordinance was constitutional and because of numerous asserted technical pleading deficiencies. The verified facts alleged in the complaint must be taken as true and correct for the purpose of the motion to dismiss (Ogle v. Fuiten (1984), 102 Ill. 2d 356, 360; Cross v. Wells Fargo Alarm Services (1980), 82 Ill. 2d 313, 317-18), including allegations contained within the exhibits attached to the complaint (Mineral Resources, Inc. v. Classic Coal Corp. (1983), 115 Ill. App. 3d ...


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