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Tyler R. Cain and Talbot D. Cain v. Brian Hamer

July 16, 2012

TYLER R. CAIN AND TALBOT D. CAIN,
PLAINTIFFS-APPELLEES AND CROSS-APPELLANTS,
v.
BRIAN HAMER, IN HIS OFFICIAL CAPACITY AS DIRECTOR, ILLINOIS DEPARTMENT OF REVENUE; THE ILLINOIS DEPARTMENT OF REVENUE; AND JUDITH BAAR TOPINKA, IN HER OFFICIAL CAPACITY AS STATE TREASURER
DEFENDANTS-APPELLANTS AND CROSS-APPELLEES.
PRESIDING.



Appeal from the Circuit Court of Cook County. of the State of Illinois, The Honorable Elmer J. Tolmaire, III, Judge No. 06 L 050986

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

PRESIDING JUSTICE HOFFMAN delivered the judgment of the court, with opinion. Justices Karnezis and Rochford concurred in the judgment and opinion.

OPINION

¶ 1 The defendants, the Illinois Department of Revenue (Department), the Department's Director Brian Hamer, and Illinois State Treasurer Judith Baar Topinka, appeal the decision of the circuit court granting summary judgment to the plaintiffs, Tyler and Talbot Cain, on their complaint for a declaration that they are not required to pay resident Illinois income taxes for the years from 1996 through 2004. On appeal, the parties dispute whether the plaintiffs qualified as Illinois residents during the relevant time period. The plaintiffs have also cross-appealed to argue that, in the event they were residents during the relevant time period, the Department should be barred from collecting their taxes due to certain procedural infirmities. For the reasons that follow, we affirm the judgment of the circuit court on the defendants' appeal, and we dismiss the plaintiffs' cross-appeal as moot.

¶ 2 In August 2006, the Department sent the plaintiffs a notice of tax deficiency, which asserted that the plaintiffs owed $1,842,582 in unpaid income taxes and penalties for the years from 1996 through 2004. After submitting payment under protest, the plaintiffs filed a complaint seeking a declaration that they were not Illinois residents during the disputed period. Prior to filing cross motions for summary judgment, the parties stipulated to the facts of the case.

¶ 3 As the stipulation recites, the plaintiffs married "46 years ago" (approximately 1964, by the date of the stipulation's filing) and began living in Illinois, where Mr. Cain worked as a self-employed trader at the Chicago Board of Options Exchange until 1990. They lived in their longtime Illinois home until 1995, when they purchased another lot in Illinois as part of a plan to sell their old home and build a smaller one. They eventually abandoned that plan, and, in August 1995, began work on an addition to their longtime Illinois home.

¶ 4 In November 1995, the plaintiffs executed and filed in Florida a "declaration of domicile" indicating that they had changed their domicile from Illinois to a Florida home they had constructed in 1990. In the document, the plaintiffs renounced their Illinois residency and declared themselves Florida residents. In 1995 and 1996, the plaintiffs obtained permanent-resident identification cards in Florida. The plaintiffs also held Florida drivers' licenses, voted in Florida, and received Florida jury duty summonses in the relevant time period, and Mr. Cain held a Florida firearm license. They had newspapers delivered to their Florida residence, and Mr. Cain used a cellular telephone with a Florida area code. They also purchased burial plots in Florida.

¶ 5 During the relevant period, the plaintiffs developed relationships with several medical professionals in Florida, but they also continued relationships with Illinois doctors. Likewise, the plaintiffs retained legal advisors in both states. They used Illinois income tax preparers to help them file their federal tax returns, and they made political contributions to Illinois and national candidates, and some other-state candidates, but no Florida candidates.

¶ 6 During the relevant period, the plaintiffs divided their time between Illinois and Florida, with only minimal variation in the time allotment from year to year. In 1996, for example, they spent 159 days in Florida, 161 in Illinois, and 45 elsewhere, while, in 2004, the plaintiffs spent 170 days in Florida, 171 in Illinois, and 24 elsewhere. In total, from 1996 through 2005, the plaintiffs spent 1,700 days in Florida, 1,666 in Illinois, and 284 elsewhere. Testimonial evidence indicated that the plaintiffs had a pattern of going to Florida near the end of October, returning to Illinois for the Christmas holiday, then returning to Florida until May of each year.

¶ 7 The stipulation cites the plaintiffs' July 2001 through August 2004 credit card statements as showing that "73% of their expenditures were made outside of Illinois, and they were making those expenditures outside of Illinois 61% of the time." The plaintiffs maintained private club memberships in both states: their expenditures at those clubs for the years 2003 through 2007 totaled approximately $236,000 for the Illinois clubs and $422,500 for the Florida clubs. Mrs. Cain participated in a Florida bridge club, and the plaintiffs were members, board members, or committee members of several organizations in both Florida and Illinois. They attended regularly scheduled meetings at clubs in both states.

¶ 8 Mrs. Cain, an interior designer, renewed her Illinois interior designer license throughout the relevant period, and, on her renewal forms, she did not indicate that her address had changed. However, she never used her decorator's license for business in either Illinois or Florida.

¶ 9 Although the plaintiffs owned companies during the relevant period, they had limited involvement in those companies. They also controlled a foundation that made charitable donations in both Florida and Illinois, but Mr. Cain was shifting the contributions to focus more on Florida charities.

¶ 10 After considering the parties' cross motions for summary judgment based on these stipulated facts, the circuit court ruled that the plaintiffs were "mere seasonal visitors," not residents, of Illinois. Accordingly, the circuit court granted the plaintiffs' motion for summary judgment and denied the defendants' cross motion. Because there were other matters pending at the time, including claims for discovery sanctions against the defendants, the circuit court entered a finding that there was no just reason to delay enforcement or appeal of its summary judgment order. See Ill. Sup. Ct. R. 304(a) (eff.Feb. 26, 2010). The defendants now appeal.

ΒΆ 11 On appeal, the defendants argue that the circuit court erred in granting the plaintiffs' motion for summary judgment and ruling that they did not owe Illinois income tax from 1996 through 2004. "Summary judgment is proper where 'the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.' " Empress Casino Joliet Corp. v. Giannoulias, 231 Ill. 2d 62, 68-69, 896 N.E.2d 277 (2008) ...


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