Court of Appeals of Illinois, First District, Fourth Division
CHRISTOPHER STASKO, STEVEN NAGLER, BURTON CITRON, PETER LORENZ, CHARLES JENKINS, PAUL VANRID, AUTOMOTIVE PARTS SERVICE COMPANY, MICHAELINE PIEKARSKI, GREG DIPIERO, ARTHUR, L. KELLY, Plaintiffs-Appellants,
THE CITY OF CHICAGO, Defendant-Appellee.
The City of Chicago’s amusement tax on the sale or transfer of permanent seat licenses giving license holders the right to purchase tickets for Chicago Bears’ home football games was a proper exercise of the city’s home rule authority, and the tax is not preempted by section 8-11-6a of the Municipal Code, which states that, with some exceptions, no home rule municipality has the authority to impose a tax on the use, sale or purchase of tangible personal property based on the gross receipts from such sales or the selling or purchase price of said tangible personal property.
Appeal from the Circuit Court of Cook County, No. 09-CH-17167; the Hon. Alexander P. White, Judge, presiding.
Keith L. Hunt, of Hunt & Associates P.C., George Grumley and Saul Wexler, both of Grumley, Kamin, Rosie & Wexler, and Merle L. Royce and Brad Faber, both of Law Offices of Merle L. Royce, all of Chicago, for appellants.
Stephen R. Patton, Corporation Counsel, of Chicago (Benna Ruth Solomon, Myriam Zreczny Kasper, and Julian N. Henriques, Jr., Assistant Corporation Counsel, of counsel), for appellee.
Panel PRESIDING JUSTICE HOWSE delivered the judgment of the court, with opinion. Justices McBride and Palmer concurred in the judgment and opinion.
HOWSE PRESIDING JUSTICE
¶ 1 Plaintiffs sought a declaration that the City of Chicago (the City) may not collect or assess its amusement tax from or against permanent seat license (PSL) owners based on the sale or transfer of a PSL; an order to the City to disgorge all amusement taxes it collected before judgment in this case on the purchase, sale, or transfer of any PSL, with interest; and an injunction against the City enjoining the imposition, assessment, levy, or collection of the amusement tax on PSLs in the future. On the question of the City's right to collect its amusement tax on the sale of PSLs by either the originator of the PSL (the Chicago Park District) or by an owner of a PSL, the trial court granted summary judgment in favor of defendant. For the following reasons, we affirm the trial court's judgment, and remand.
¶ 2 BACKGROUND
¶ 3 On June 1, 2009, plaintiffs filed their first amended class action complaint for declaratory judgment and other relief (hereinafter complaint). The complaint sought a declaration that defendant, the City, may not collect, levy or charge an amusement tax based on the purchase or sale of a PSL. The complaint named 10 plaintiffs and alleged that each purchased, and owns or owned, a PSL. The putative class consisted of all present and former owners of PSL seat licenses, including (1) all original PSL purchasers; (2) subsequent transferees; and (3) any other person, entity or organization who has paid the amusement tax, or on whose behalf the tax was paid, or to whom a demand for payment has been made.
¶ 4 The complaint alleged the Chicago Bears Football Club, Inc. (Bears), began selling PSLs in 2002 as a means of financing renovations at Soldier Field. The Chicago Municipal Code (Chicago Municipal Code § 4-156-020 (amended Nov. 19, 2008)) imposes a 9% tax on the admission fees or other charges paid for the privilege to enter an amusement (amusement tax). In May 2009, the City sent letters to approximately 1, 700 PSL holders stating the amusement tax applies to transfers of PSLs and that the PSL holders may have tax balances due. The complaint alleges the Bears paid the amusement tax on the PSLs it sold, but the City is attempting to collect the amusement tax on subsequent transfer sales of PSLs by original purchasers from the Bears, specifically such sales occurring between 2004 and 2008, by making a demand for payment.
¶ 5 According to the complaint, a "PSL merely confers on the license holder the right to acquire tickets rather than providing the license holder with any right to admittance or to gain entry into an event." The complaint alleged the City may not properly collect an amusement tax from PSL holders for several reasons including, but not limited to, the following: (a) a PSL does not confer any right to enter or to attend any event which constitutes an amusement under the Chicago Municipal Code; (b) PSLs are not admission fees within the meaning of the amusement tax; (c) a PSL is merely a right to purchase tickets and is not a right to gain entry or admittance to any event which constitutes an amusement; (d) the City's attempt to collect the tax is time barred by section 13-205 of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/13-205 (West 2008)); and (e) the amusement tax on PSLs is a tax on tangible personal property in violation of section 8-11-6a of the Illinois Municipal Code (65 ILCS 5/8-11-6a (West 2008)) and the City is not authorized to tax the sale or purchase of tangible personal property. Plaintiffs allege the City was never entitled to collect the amusement tax on the original sale or transfer of PSLs, and thus, to the extent the City collected the amusement tax from the Bears on original sales, the City wrongfully collected those taxes.
¶ 6 On June 10, 2009, plaintiffs moved to certify the putative class of plaintiffs.
¶ 7 On June 18, 2009, defendant filed a motion to dismiss the complaint pursuant to section 2-619.1 of the Code (735 ILCS 5/2-619.1 (West 2008)). Defendant moved to dismiss pursuant to section 2-615 of the Code (735 ILCS 5/2-615 (West 2008)) on the grounds the complaint fails to state a claim for relief. Defendant moved to dismiss pursuant to section 2-619 of the Code (735 ILCS 5/2-619 (West 2008)) on the grounds plaintiffs failed to exhaust their administrative remedies under the City's Uniform Revenue Procedures Ordinance (URPO) (Chicago Municipal Code § 3-4-010 et seq. (added Nov. 14, 1991)); plaintiffs' claims are invalid as a matter of law because plaintiffs' exclusive remedy is under URPO; even if URPO does not apply, plaintiffs' claims are barred by the statute of limitations and a lack of standing to seek refunds of taxes paid; and, alternatively, plaintiffs' claims are barred by the voluntary payment doctrine. On August 6, 2009 defendant voluntarily withdrew its section 2-619 motion without prejudice and the trial court scheduled briefing and argument on defendant's section 2-615 motion to dismiss.
¶ 8 Plaintiffs filed a motion to strike defendant's section 2-615 motion to dismiss on August 27, 2009, contending that defendant's motion was in effect an answer denying various allegations and stating its reasons for taking contrary positions. On February 8, 2010, the trial court granted plaintiffs' motion to strike defendant's section 2-615 motion to dismiss. On February 11, 2010, defendant filed a second motion to dismiss pursuant to section 2-619 for failure to exhaust administrative remedies. Defendant's motion argued that to the extent plaintiffs challenge the assessment of the amusement tax against future sales of PSLs or to the past assessment of the amusement tax, URPO provides an exclusive administrative procedure and provides for appeal to the circuit court under the Administrative Review Law (735 ILCS 5/3-101 et seq. (West 2012)). On May 6, 2010, the trial court denied defendant's motion to dismiss pursuant to section 2-619 for failure to exhaust administrative remedies for plaintiffs' claims regarding taxes already paid on the original PSL purchases and plaintiffs' claims regarding future PSL sales.
¶ 9 On June 1, 2010, defendant filed its answer and counterclaim to plaintiffs' complaint. Defendant's answer asserted affirmative defenses of (1) failure to exhaust administrative remedies, (2) the statute of limitations as to plaintiffs' claim for refunds, (3) the tax refund claims were not filed by the party who paid the tax, (4) the voluntary payment doctrine, and (5) lack of standing to seek refunds of taxes paid by the Bears. Defendant counterclaimed against "all named plaintiffs and plaintiff class members who did not pay the City's amusement tax on the charges they paid to obtain PSLs after 2003." Defendant prayed for a judgment declaring the PSLs are subject to the amusement tax, and a monetary judgment against those who did not pay the tax on the charges they paid to obtain PSLs after 2003. On August 18, 2010, plaintiffs filed a motion to dismiss defendant's counterclaim for failure to state a cause of action because the matter is not appropriate for class certification under section 2-801, any counterclaim is premature, and plaintiffs are not being sued individually. Plaintiffs also argued a lack of personal jurisdiction over the counterdefendants.
¶ 10 On July 16, 2010, the trial court entered an order certifying plaintiffs' class pursuant to sections 2-801 and 2-802 of the Code (735 ILCS 5/2-801, 2-802 (West 2010)). The court's order certifies two classes of plaintiffs: (1) the persons who seek refunds of taxes that the Bears paid to the City in 2002, when PSLs were first issued, and (2) the persons who seek an injunction against any effort by the City to collect taxes on charges paid on subsequent transfers of PSLs.
¶ 11 On July 20, 2010, defendant filed a motion for partial summary judgment on plaintiffs' request for a declaratory judgment that it may not impose the amusement tax on the purchase or sale of a PSL and on plaintiffs' request for a refund of taxes paid on the original sale of PSLs. Defendant attached an affidavit by Karen Murphy, senior director of finance and treasurer for the Bears. Ms. Murphy averred that the Bears began selling PSLs in 2002 as an agent of the Lakefront Improvement Fund. A person may purchase season tickets or individual tickets without purchasing a PSL. A person may purchase individual tickets without purchasing season tickets. If a person purchases a PSL, "the PSL gives that person the right to purchase a season ticket for a specific seat location" for home games. PSL owners have the right to transfer a PSL by, for example, "aftermarket" sale.
¶ 12 On July 26, 2010, plaintiffs filed a motion for summary judgment on the issue of liability as to their complaint for a declaratory judgment that the City's amusement tax is invalid, unconstitutional, and/or inapplicable to the purchase or sale of a PSL at Soldier Field for Bears football games.
¶ 13 On August 12, 2010, defendant filed a motion to certify a counterdefendant class consisting of "all persons who seek an injunction against any effort by the City to collect taxes on charges paid in connection with subsequent transfers of PSLs." The motion stated that the relief sought against the counter-defendant class, which is identical to the second plaintiffs' class, is the relief set forth in defendant's counterclaim.
¶ 14 On August 26, 2010, the trial court entered an agreed order to clarify the class definition. The court's order provided the following class definition:
"All persons and entities who purchased and own or owned a Permanent Seat License ('PSL') at Soldier Field for Chicago Bears football games including: (1) all original PSL purchasers; (2) all subsequent transferees; and (3) any other person or entity who has paid the amusement tax, or on whose behalf the tax was paid, or to whom a demand for payment has been made."
¶ 15 On October 26, 2010, after full briefing by the parties, the trial court took the motions for summary judgment under advisement. On December 14, 2010, the court entered a memorandum decision and judgment making the following orders:
"1. Plaintiffs' motion for summary judgment, barring enforcement of the Ordinance on proceeds of sales of PSLs, as to sales of PSLs from the Bears to a patron, is DENIED.
2. Plaintiffs' motion for summary judgment, barring enforcement of the Ordinance on proceeds of sales of PSLs, as to sales of PSLs from a patron to another buyer, is GRANTED.
3. The City's motion for partial summary judgment, requesting enforcement of the Ordinance, as to sales of PSLs from the Bears to a patron, is GRANTED.
4. The City's motion for partial summary judgment, requesting enforcement of the Ordinance, as to sales of PSLs from a patron to another buyer, is DENIED.
5. The City's motion for partial summary [judgment] regarding whether the URPO acts to bar patrons who have sold their PSLs to a patron, or bought their PSLs from a patron, from seeking a refund of the Amusement Tax is GRANTED."
¶ 16 On December 23, 2010, plaintiffs filed a motion for leave to file a second amended complaint. The motion states "Plaintiffs seek to file a Second Amended Complaint to add a cause of action based on 42 U.S.C. § 1983 predicated on a violation by Defendants of the Takings Clause of the Fifth Amendment." Plaintiffs attached a proposed second amended complaint that contains a count for declaratory judgment (count I) and a count on behalf of the class of subsequent transferees based on the takings clause (U.S. Const., amend. V) (count II). On January 7, 2011, the trial court granted the motion and granted plaintiffs leave to file a second amended complaint.
¶ 17 On January 12, 2011, plaintiffs filed a notice of motion for reconsideration. Plaintiffs asserted that the trial court should reconsider its order sustaining the collection of defendant's amusement tax on the initial sale of PSLs.
¶ 18 On January 13, 2011, defendant filed a motion to reconsider the January 11, 2011 order granting plaintiffs leave to file a second amended complaint and a separate motion to reconsider portions of the trial court's December 14, 2010, summary judgment order. Specifically, defendant sought reconsideration of the portions of the order holding that the City may not enforce its amusement tax with regard to sales of PSLs from a patron to another buyer and holding that plaintiffs' refund claims are not barred by the voluntary payment doctrine.
¶ 19 On February 23, 2011, plaintiffs filed a second amended complaint. On March 28, 2011, plaintiffs filed a response to defendant's motion to reconsider the trial court's order granting plaintiffs leave to file a second amended complaint. On April 8, 2011, defendant moved to dismiss count II of plaintiffs' second amended complaint and a separate reply in support of its motion to reconsider the order granting leave to file the second amended complaint. Defendant's reply addressed plaintiffs' argument that the issue of finality was moot because of the parties' motions to reconsider, which plaintiffs raised in response to the City's argument that the motion to file a second amended complaint was erroneous because the trial court entered a final judgment and the amended complaint adds a new cause of action under the takings clause. Also on April 8, 2011, defendant filed a separate motion to strike counts III and IV of the second amended complaint on the grounds plaintiffs' motion for leave to file a second amended complaint attached the pleading plaintiffs sought to file which, along with the motion, made clear plaintiffs only sought leave to add a count II based on the takings clause. Therefore, plaintiffs failed to obtain leave of court to file the additional counts.
¶ 20 On April 26, 2011, plaintiffs moved for a permanent injunction against the City, enjoining it from "imposing, assessing, levying and/or collection [sic] an Amusement Tax on the sale or transfer of PSLs where the sale takes place between a PSL owner (other than the Chicago Park District and the Chicago Bears Football Club, Inc., as ...