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Lyons v. Ryan

August 31, 2001


The opinion of the court was delivered by: Presiding Justice Campbell



Plaintiffs Michael Lyons and the Better Government Association (BGA), on behalf of and for the benefit of the State of Illinois, appeal an order of the circuit court of Cook County dismissing their claims against defendants George H. Ryan, Citizens for Ryan (a State Political Committee) (CFR), Scott Fawell, Mark Sniegowski, Mike Chamness and John Chychula. Plaintiffs had sought the imposition of a constructive trust on funds and benefits alleged to be illegally received by the defendants, as well as remedies provided by statute. Plaintiffs also appeal an order of the circuit court of Cook County denying their motion to disqualify counsel for CFR.

The record on appeal discloses the following facts. On November 18, 1999, plaintiffs filed a four-count complaint against the defendants. In the complaint, Lyons identifies himself as an Illinois taxpayer and registered voter. The BGA identifies itself as an Illinois not-for-profit citizen watchdog organization, with principal offices in Chicago, Illinois.

The complaint alleges that the Illinois Secretary of State's Office (SOS) was responsible for licensing truck and related commercial vehicle drivers for transportation of products within and from Illinois. The SOS administered a written examination and road test for the issuance of commercial drivers licenses (CDLs). The written test was allegedly prepared in the English language, thus requiring CDL applicants to demonstrate a basic understanding of English to obtain a CDL.

The complaint alleged that defendant Ryan served as Illinois Secretary of State from 1990-98 and is presently Governor of the State of Illinois. CFR was a "State Political Committee" as defined by statute (see 10 ILCS 5/9-1.8 (West 1998)) that solicited and accepted donations to Ryan's campaigns for Secretary of State and Governor. Plaintiffs alleged that Fawell served as Assistant Secretary of State from 1990-93 and as Ryan's Chief of Staff from 1993-98, for which he was compensated by the State. Plaintiffs also alleged that Fawell served as Campaign Manager for CFR during the relevant time period. Plaintiffs alleged that: Sniegowski allegedly served as a Metro Area Administrator for Ryan from 1992-98; Chamness served as Driver Services Director for Ryan from 1995-98; Chychula served as a Metro Division Zone Manager for Ryan from 1992-98; and each was compensated by the State in their respective positions. Plaintiffs referred to Sniegowski, Chamness and Chychula as the "SOS defendants."

The complaint alleged that the SOS defendants combined and conspired with CFR and other unnamed co-conspirators to participate in a fraudulent and illegal political fundraising scheme which included: (1) the issuance of CDLs to unqualified drivers in exchange for political donations; (2) pressuring SOS employees to sell CFR fundraiser tickets to entities regulated by the SOS during working hours, and providing said tickets to the employees during working hours at meetings held at SOS CDL facilities; (3) urging SOS employees to give purchasers of substantial numbers of such tickets to give associated CDL applicants passing grades on CDL tests; (4) encouraged and permitted SOS employees to accept fraudulent proof of Illinois domicile from large numbers of non-English speaking CDL applicants; (5) authorized SOS employees and unnamed co-conspirators to make arrangements with certain Illinois Department of Transportation (IDOT) employees to solicit bribes from CDL applicants and accompany these applicants to SOS CDL facilities in IDOT vehicles to ensure "special treatment"; and unfairly disciplined and retaliated against SOS employees who resisted participating in the scheme or failed to sell their allotments of CFR fundraiser tickets. The complaint further alleged that the SOS defendants and unnamed co-conspirators fraudulently concealed these activities through a number of methods, including the obstruction of investigations.

Count I of the complaint alleged that the SOS defendants had breached their fiduciary duties to the people of the State of Illinois and sought to impose a constructive trust upon all funds and benefits illegally obtained by CFR and the SOS defendants, including: the salaries of the SOS defendants and unnamed co-conspirators; the value of IDOT vehicles used in the scheme; costs for re-testing CDL applicants; and the expenses of investigating the alleged wrongdoing. Count II sought similar relief for alleged breaches of fiduciary duties by Fawell and other named State employees who engaged in the alleged scheme.

Count III of the complaint sought similar relief, alleging that Ryan breached his fiduciary duties by: failing to stop the scheme; failing to launch an independent inquiry into the scheme after it was brought to his attention by the BGA and others; failing to discharge SOS employees involved in the scheme; curtailing investigations of the scheme, including closing the SOS Inspector general's office; and directing his secretary to contact an unnamed co-conspirator to issue CDLs to favored applicants. Count III added further allegations of fraudulent concealment by Ryan and his representatives relating to press releases and statements made to the media.

Count IV of the complaint alleged that the defendants had violated sections 20-102 through 20-104 of the Illinois Code of Civil Procedure (735 ILCS 5/20-102, 20-103, 20-104 (West 1998)) (Code). *fn1 Section 20-102 generally provides that any person who has received compensation, remuneration or benefits from the State or a governmental unit by means of false or fraudulent statements or records shall be answerable for the entire amount. 735 ILCS 5/20-102 (West 1998). Section 20-103 generally provides that such a person will be liable not only to repay any such amount, but also for interest and penalties. 735 ILCS 5/20-103 (West 1998).

Section 20-104(b) provides that a private citizen may bring a suit to recover the damages authorized by the prior sections on behalf of the affected governmental unit if: the citizen sends a letter to the appropriate government official by certified mail, return receipt requested, stating an intention to file such an action; and the appropriate government official does not, within 60 days, institute the action, send notice to the citizen that the official has arranged for a settlement, or send notice stating an intent to commence suit within 60 days of the notice. 735 ILCS 5/20-104(b) (West 1998). The appropriate government official's failure to actually settle or commence suit within the designated period also permits the citizen to sue. 735 ILCS 5/20-104(b) (West 1998). The "appropriate government official" is the Attorney General, where the governmental unit allegedly damaged is the State. 735 ILCS 5/20-104(b) (West 1998). Plaintiffs alleged that they were authorized to bring such an action pursuant to section 20-104 of the Code because the Attorney General of the State of Illinois had declined to initiate such an action in response to a letter sent by the BGA. *fn2

On March 21, 2000, plaintiffs sought to disqualify the firm of Altheimer & Grey as counsel for CFR, arguing that a conflict of interest was created where the firm and its members had previously been retained by the State of Illinois on various matters, some of which were related to the allegedly illegal issuance of the CDLs. Following the submission of memoranda on the matter, the trial court denied the disqualification motion on April 18, 2000. *fn3

Shortly thereafter, the defendants moved to dismiss the complaint pursuant to sections 2-615 and 2-619 of the Code (735 ILCS 5/2-615, 2-619 (West 2000)). In their motions, the defendants argued that plaintiffs' claims were barred by the doctrines of res judicata and collateral estoppel by reason of the judgment entered by the Federal District Court for the Northern District of Illinois in Plotkin v. Ryan, No. 99 C 53 (Sept. 28, 1999). *fn4 The defendants also argued that plaintiffs' complaint was barred pursuant to section 2-619(a)(3) due to the pendency of the Plotkin suit. The defendants further argued that plaintiffs lacked standing to bring the claims alleged in Counts I, II and III of their complaint on behalf of the State, and that the BGA lacked standing with respect to count IV. The defendants argued that plaintiffs' claims were barred by the doctrine of sovereign immunity. Finally, defendants claimed that count IV failed to state a claim for which relief could be granted.

On July 25, 2000, following the submission of memoranda and argument on the matter, the trial court granted the defendants' motions to dismiss. The trial court ruled that: (1) plaintiffs' claims were barred under section 2-619(a)(3), due to the pendency of the Plotkin suit; (2) plaintiffs lacked standing with respect to Counts I, II and III of their complaint; and (3) the claims for ...

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