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In Re Application of Robert Skidmore, As County Treasurer, For v. Robert Skidmore

June 10, 2011

IN RE APPLICATION OF ROBERT SKIDMORE, AS COUNTY TREASURER, FOR
JUDGMENT FIXING THE CORRECT AMOUNT OF ANY TAX PAID UNDER PROTEST FOR THE YEAR 2007 AND PRIOR YEARS
THE CITY OF WAUKEGAN,
PLAINTIFF-APPELLANT,
v.
ROBERT SKIDMORE, LAKE COUNTY TREASURER,
DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Lake County. No. 08-TX-8 Honorable Raymond J. McKoski, Judge, Presiding.

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

PRESIDING JUSTICE JORGENSEN delivered the judgment of the court, with opinion. Justices Hutchinson and Hudson concurred in the judgment and opinion.

OPINION

The City of Waukegan filed a tax objection concerning certain abandoned, contaminated lakefront property it obtained by way of trustee's deeds executed by the trustee in bankruptcy for the Outboard Marine Corporation (OMC). The city claimed that the 2000 through 2002 real property taxes levied against the property and billed to the city were abated (i.e., null and void) pursuant to section 21-95 of the Property Tax Code (35 ILCS 200/21-95 (West 2008)). On the parties' cross-motions for summary judgment, the trial court entered judgment against the city and in favor of defendant, Robert Skidmore as Lake County treasurer. The city appeals, arguing that the applicable version of section 21-95 of the Property Tax Code permits abatement of the existing property taxes on the subject property, which the city acquired through bankruptcy proceedings. For the following reasons, we reverse and enter summary judgment in the city's favor.

I. BACKGROUND

In September 2005, the city, a home-rule municipality in Lake County, acquired fee simple title in four parcels of lakefront real property, totaling 56 acres, formerly owned by OMC (the subject property).*fn1 OMC, which manufactured, sold, and distributed outboard marine engines and recreational boats, had used the property as its world headquarters and as a manufacturing facility. A large abandoned office building sits on the property, which also contains an abandoned manufacturing plant and three PCB*fn2 containment cells.

The events that led to the conveyance of the subject property to the city were as follows. On December 22, 2000, OMC petitioned for relief under chapter 11 of the federal Bankruptcy Code. On August 20, 2001, the bankruptcy court converted OMC's case to a chapter 7 liquidation and transferred OMC's property, including the subject property, to the trustee in bankruptcy. Prior to OMC's bankruptcy filing, the subject property was listed as a Superfund*fn3 site, and it continues to be listed as a portion of the Superfund site designated as the Outboard Marine Corp NPL Site (EPA ID: IL00802827).

On November 1, 2001, the trustee moved in bankruptcy court to abandon, inter alia, the subject property, arguing that it was of inconsequential value and benefit to the bankruptcy estate. On November 12, 2001, the city enacted an ordinance, authorizing negotiations to purchase the subject property or, alternatively, to acquire the property through condemnation proceedings. On December 11, 2002, the bankruptcy court granted the trustee's motion and authorized the trustee to enter into an option agreement with the city, wherein the city would acquire the property at such time, if ever, as the city and the federal and Illinois environmental protection agencies approved a consent decree concerning the environmental contamination issues, future containment cell monitoring, and potential reuse. In its order, the bankruptcy court declared the abandonment effective as of the day prior, December 10, 2002. On January 9, 2003, the option agreement (between the city as purchaser and the trustee as seller) was recorded with the Lake County recorder of deeds. In a provision entitled "Method of Conveyance," the option agreement stated that the trustee "shall execute ***Trustee's deeds *** conveying title to" the city.

The city and the federal and Illinois environmental protection agencies successfully negotiated an agreement that was finalized by the entry of a supplemental consent decree on June 23, 2005. Subsequently, on September 30, 2005, the city caused the trustee's deeds to be recorded with the Lake County recorder of deeds.*fn4

The city first received the real property tax bills for the tax years at issue in this appeal (i.e., 2000 through 2002) when it received the 2007 tax bills for the property. On November 19, 2008, the city filed the present tax objection (concerning the taxes for the 2000 through 2002 tax years).*fn5

The city relied on section 21-95 of the Property Tax Code, which provided, in relevant part:

" §21-95. Tax abatement after acquisition by a governmental unit. When any county or municipality acquires property through *** judicial deed, *** all due or unpaid property taxes and existing liens for unpaid property taxes imposed or pending under any law or ordinance of this State or any of its political subdivisions shall become null and void."

35 ILCS 200/21-95 (West 2008).

The city noted that it acquired the subject property by a trustee's deed from the trustee of the OMC bankruptcy estate pursuant to a bankruptcy court order. A deed of conveyance in this factual situation, it alleged, is a "judicial deed" under section 21-95 and, pursuant to that section, the real property taxes on the subject property were null and void.*fn6

On June 28, 2010, following a hearing on the parties' cross-motions for summary judgment, the trial court found that the city did not take title to the subject property pursuant to a "judicial deed" and, therefore, section 21-95 of the Property Tax Code did not apply torender the taxes null and void. The court denied ...


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