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Stone Street Partners, LLC v. City of Chicago Department of Administrative Hearings

Supreme Court of Illinois

February 17, 2017

STONE STREET PARTNERS, LLC, Appellee and Cross-Appellant,
v.
THE CITY OF CHICAGO DEPARTMENT OF ADMINISTRATIVE HEARINGS et al., Appellants and Cross-Appellees.

          CHIEF JUSTICE KARMEIER delivered the judgment of the court, with opinion. Justices Thomas, Kilbride, and Garman concurred in the judgment and opinion.

          OPINION

          KARMEIER, CHIEF JUSTICE

         ¶ 1 Stone Street Partners, LLC (Stone Street), brought this action in the circuit court of Cook County to obtain administrative review and declaratory and other relief, including an award of damages, after discovering that a judgment had been

recorded against one of its properties for failure to pay $1050 in fines and costs imposed by the city of Chicago's department of administrative hearings (the Department) for violation of various provisions of the city's building code more than a decade earlier. Stone Street's complaint, which named as defendants the city of Chicago, the Department and its director, and the city of Chicago's department of buildings and the commissioner of that department (collectively the City), asserted that the original administrative proceedings were a nullity and could not serve as the basis for the judgment subsequently recorded against its property because, inter alia, it had not been given the requisite notice and therefore had no opportunity to contest the violations alleged by the City before judgment was entered against it.

         ¶ 2 Following a motion filed by the City pursuant to section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2012)), the circuit court rejected Stone Street's cause of action in its entirety. The appellate court, with one justice partially dissenting, subsequently affirmed in part, reversed in part, and remanded for further proceedings. 2014 IL App (1st) 123654. We allowed the City's petition for leave to appeal. Ill. S.Ct. R. 315 (eff. July 1, 2013). For the reasons that follow, the judgment of the appellate court is affirmed, and the cause is remanded to the circuit court for further proceedings.

         ¶ 3 BACKGROUND

         ¶ 4 The standards governing this appeal are well established. A motion to dismiss under section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2012)) admits the legal sufficiency of the complaint but asserts that some affirmative matter defeats the plaintiff's claim. When reviewing whether a motion to dismiss under section 2-619 should have been granted, we may consider all facts presented in the pleadings, affidavits, and depositions found in the record. Doe A. v. Diocese of Dallas, 234 Ill.2d 393, 396 (2009). All well-pleaded facts along with all reasonable inferences that can be drawn from those facts are deemed admitted, and all pleadings and supporting documents must be interpreted in the light most favorable to the nonmoving party. Bjork v. O'Meara, 2013 IL 114044, ¶ 21. Because section 2-619 motions present a question of law, we give no deference to the determinations by the lower courts. Our review is de novo. Doe A., 234 Ill.2d at 396.

         ¶ 5 The record before us, when viewed according to the foregoing principles, establishes the following. Stone Street is a limited liability company created in 1998 and duly registered with the Illinois Secretary of State. Its registered agent is and has always been William G. Daluga, Jr. Mr. Daluga's address is 200 W. Adams Street, Suite 2500, Chicago, Illinois 60606. According to state records, Stone Street's principal office is located at 1343 N. Wells Street, ground level, Chicago, Illinois 60610. These addresses have been on file with the Secretary of State since 1998 and have never changed.

         ¶ 6 Stone Street owns real estate located at 44-46 E. Superior Street, Chicago, Illinois 60611.[1] On March 19, 2009, the City recorded a judgment against that property. The judgment so recorded had actually been entered 10 years earlier, on September 9, 1999, following a hearing on that same date, by an administrative law officer in the City's department of administrative hearings. The judgment was in the amount of $1050 and was based on the administrative officer's determination that "Stone Street Partners" was liable for violation of various provisions of the City's building code. One thousand dollars of this sum was a fine. Fifty dollars was for costs.

         ¶ 7 There is no evidence that Stone Street or anyone with authority to act on behalf of Stone Street had ever been notified of the building code violations that resulted in the 1999 judgment or the judgment itself, at any time prior to 2009. The "communication transmittal form" on which the building inspector had listed the violations to be addressed at the September 9, 1999, hearing showed that during the inspection, the owner was not present. Moreover, the document incorrectly identified the property's owner as "1st Real Estate and Development."

         ¶ 8 Issuance of the foregoing document apparently resulted after code violations discovered by City inspectors in the previous months remained uncorrected. However, neither that document nor the prior reports of violations were mailed to Stone Street's office or the office of its registered agent, Mr. Daluga. The City destroyed most of the records regarding this matter, but the surviving materials indicate that the notices were actually mailed to Supera Properties, 2001 N. Halsted Street, No. 301, Chicago, IL, 60614. Supera Properties was neither an agent nor a representative of Stone Street. Copies were apparently also sent to this address: Stone Street Partners, 44 E. Superior Street, Chicago, IL 60614. Forty-four E. Superior Street, however, was not Stone Street's principal place of business, and Stone Street Partners is not the company's name. The company is registered as Stone Street Partners, LLC, and its address was on N. Wells Street. The street name and number listed on the notice were actually those of the property where the violations were alleged to be, but even at that, the address was inaccurate. The zip code listed, 60614, was incorrect. The property owned by Stone Street is located in the 60611 zip code area.

         ¶ 9 While notice was never given to or received by Stone Street or its agents or representatives, a person named Keith Johnson entered a written appearance in the administrative proceeding that culminated in the fine against Stone Street. Johnson represented that he was there on behalf of Stone Street, but the address and phone number he gave corresponded to those of a business called "First Real Estate, " not Stone Street, and he left blank the section of the appearance form in which he was asked to state under oath that he was either the respondent/owner, lessee, attorney, or authorized agent/representative of Stone Street.[2] Although Johnson died before this litigation arose and therefore could not be questioned, the reason he refrained from selecting any of the options seems apparent. He could not do otherwise without committing perjury. Johnson was not employed by Stone Street and had no affiliation of any kind with the company. He did not even live in the subject property. So far as can be ascertained, he was merely the private caretaker for Philip Farley, the father of an attorney named Brian Farley, who was one of the members of Stone Street.

         ¶ 10 When Johnson was working for Philip in 1999, Philip, who is now also deceased, had suffered a stroke, was in ill health, and lacked the mental capacity to manage his own affairs. Due to his diminished mental capacity, Philip was not involved in the management or affairs of Stone Street and therefore could not have authorized Johnson to act on Stone Street's behalf.[3] Moreover, there is no evidence that Stone Street or anyone associated with Stone Street ever took any action or made any representations that would indicate to others that Johnson had any authority to act on Stone Street's behalf with respect to this or any other matter. To the contrary, Brian Farley, Philip's son, stated unequivocally that he served as attorney for the company at the time and that if the company had been sent proper notice, he would have been the one to appear on the company's behalf. According to Brian's uncontested affidavit, Johnson had no authority to represent Stone Street, and the company "would not have sent a caretaker to defend the charges had it been properly provided with notice of this case."

         ¶ 11 After Stone Street learned that a judgment had been recorded against the company's property in 2009 based on the 1999 administrative judgment imposing the $1050 in fines and costs on "Stone Street Partners, " Brian Farley wrote to the City's counsel in his capacity as Stone Street's attorney to request that the judgment be released and that title to the property be cleared. When that effort proved unsuccessful, Stone Street sought relief from the City's department of

administrative hearings. Specifically, the company asked the Department to vacate and set aside the September 9, 1999, judgment on the grounds that the company had never received notice of the charges or of any orders entered in the case. The company further contended that the proceedings leading to the 1999 administrative judgment were fatally flawed because regardless of Johnson's relationship (or lack thereof) with Stone Street, he was not a lawyer and could not appear for the company without violating the prohibition against the unauthorized practice of law.

         ¶ 12 By order dated December 9, 2011, the administrative law officer for the Department "struck" Stone Street's request for relief with prejudice on the grounds that the Department no longer had jurisdiction to set aside the September 9, 1999, judgment. Thus rebuffed again, Stone Street turned next to the circuit court of Cook County. There, Stone Street filed the complaint that gave rise to this appeal.

         ¶ 13 Stone Street's complaint contained four counts. Count I sought administrative review of the December 9, 2011, decision by the Department striking with prejudice its motion to vacate and set aside the 1999 administrative judgment. That count, which was predicated on the provisions of the Administrative Review Law (735 ILCS 5/3-101 et seq. (West 2012)), asserted, among other things, (1) that there was no legal or factual support for the Department's decision and (2) that the Department erred in failing to consider, on the merits, its claims that the September 9, 1999, judgment was fatally flawed because Stone Street had not been given the requisite notice and opportunity to be heard in violation of the state and federal constitutions and because the judgment resulted from proceedings involving the unauthorized practice of law.

         ¶ 14 Count II of Stone Street's complaint requested a declaratory judgment that the judgment recorded against its property in 2009 is null and void because the September 9, 1999, administrative judgment on which it is based (1) had expired, was not revived, and therefore was unenforceable under sections 12-101, 12-108, and 12-183 of the Code of Civil Procedure (735 ILCS 5/12-101, 12-108, 12-183 (West 2012)); (2) was the product of proceedings involving the unauthorized practice of law; and (3) was entered against a nonexistent entity, namely, Stone Street Partners rather than Stone Street Partners, LLC. Stone Street also complained that in the 2011 administrative proceedings rejecting its efforts to vacate and set aside the 1999 judgment, the City was improperly represented by a private law firm rather than its own corporation counsel. Stone Street further contended that the City's unlawful actions placed a cloud on its title to the subject property and that it should receive monetary compensation, including an award of attorney fees, for the resulting damages it sustained.

         ¶ 15 Count III of Stone Street's complaint incorporated by reference the previous allegations but sought recovery for slander of title based on the additional charge that in recording the September 9, 1999, administrative judgment and then refusing to take the necessary corrective action after being asked to do so by Brian Farley, the City had acted maliciously. Count IV claimed that the September 9, 1999, order imposing the $1050 in fines was void and unenforceable because the administrative complaint culminating in that order was neither drafted nor prosecuted by a licensed attorney and, in pursuing the complaint, the City was therefore engaged in the unauthorized practice of law.

         ¶ 16 The City moved to dismiss Stone Street's cause of action in its entirety pursuant to section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2012)). Following a hearing, the circuit court entered an order granting the City's motion as to the claims asserted in counts II, III, and IV of the complaint. With respect to count I, which sought administrative review, the court affirmed the December 9, 2011, judgment by the Department striking, for lack of jurisdiction, Stone Street's challenge to the September 9, 1999, judgment imposing $1050 in fines and costs.

         ¶ 17 Stone Street appealed. As noted at the outset of this opinion, the appellate court affirmed in part, reversed in part, and remanded for further proceedings. 2014 IL App (1st) 123654. After reviewing the record and the applicable law, the appellate court concluded that Stone Street had not, in fact, been afforded the necessary notice and opportunity to be heard prior to entry of the September 9, 1999, judgment against it. Id. ¶ 13. It further opined that Stone Street cannot be deemed to have waived its objection to proper notice based on Johnson's participation at the September 9 hearing. As grounds for this conclusion, the appellate court relied primarily on the fact that Johnson was not a licensed attorney. Citing a range of authorities, including this court's recent decision in Downtown Disposal Services, Inc. v. City of Chicago, 2012 IL 112040, the appellate court held that nonattorneys cannot represent corporations in administrative hearings, particularly hearings of the type at issue here, "which involve testimony from sworn witnesses, interpretation of laws and ordinances, and can result in the imposition of punitive fines ***." 2014 IL App (1st) 123654, ¶ 16. It further noted, however, that even if Johnson had been a licensed attorney, the result would have been the same because the record affirmatively showed that Johnson lacked authority to represent Stone Street in any capacity. Id. ¶ 21.

         ¶ 18 Once it reached this conclusion, the appellate court next considered how the lack of notice affected the viability of the various counts asserted by Stone Street in its complaint. No discussion was needed regarding count IV, which alleged unauthorized practice of law by the City, because Stone Street had decided not to pursue its challenge to the dismissal of that count.

         ¶ 19 With respect to count I, the court opined that notwithstanding the fatal defect in the September 9, 1999, proceedings and judgment, the Department had no authority to revisit that judgment and its 2011 order striking Stone Street's motion to vacate was therefore properly upheld on review by the circuit court. Id. ¶ 25. The appellate court also concluded that the circuit court had correctly dismissed count III of Stone Street's complaint, which alleged slander of title. The appellate court held that this claim was barred by section 2-107 of the Local Governmental and Governmental Employees Tort Immunity Act (745 ILCS 10/2-107 (West 2012)), which immunizes local public entities from liability for injury caused by any action of its employees that is libelous or slanderous. 2014 IL App (1st) 123654, ¶ 31.

         ¶ 20 The appellate court reached a different result with respect to count II, which sought declaratory and other relief. It held that Stone Street could not recover money damages under that count to the extent that such damages were premised on slander of title principles. As noted, the appellate court believed that the City was cloaked in statutory immunity with respect to such claims. Id. ¶ 28. At the same time, however, the appellate court concluded that because Stone Street's complaint and related materials supported its claim that the 1999 administrative judgment was void because the requisite notice had not been given, Stone Street should be permitted to pursue equitable relief under count II in the circuit court. It therefore reversed in part as to that count and remanded to the circuit court for further proceedings.

         ¶ 21 One justice concurred in part and dissented in part. In her view, the circuit court's dismissal of count II should have been affirmed in its entirety. Id. ¶¶ 43-45 (Connors, J., concurring in part and dissenting in part). She also disagreed with the majority's discussions regarding the unauthorized practice of law by Johnson and the City. In addition, contrary to a view expressed by the majority, the partially dissenting justice believed that this case warranted issuance of a certificate of importance pursuant to Illinois Supreme Court Rule 316 (eff. Dec. 6, 2006). 2014 IL App (1st)123654, ¶ 51 (Connors, J., concurring in part and dissenting in part).

         ¶ 22 The City petitioned our court for leave to appeal, which we allowed. Ill. S.Ct. R. 315 (eff. July 1, 2013). We have also permitted various parties to file friend of the court briefs under Illinois Supreme Court Rule 345 (eff. Sept. 20, 2010). The Illinois State Bar Association has filed a brief supporting Stone Street. The Attorney General of Illinois, the American Automotive Association, and a group including the Society for Human Resource Management have filed three separate briefs supporting the City. In addition, after the case was taken under advisement, we ordered supplemental briefing on the question of whether the notice of the building code violations and the 1999 administrative hearing was "adequate ...


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