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Parmar v. Madigan

Court of Appeals of Illinois, Second District

April 13, 2017

PAMINDER S. PARMAR, Individually and as Executor of the Estate of Surinder K. Parmar, Plaintiff-Appellant,
v.
LISA MADIGAN, as Attorney General of the State of Illinois, and MICHAEL FRERICHS, as Treasurer of the State of Illinois, Defendants-Appellees.

         Appeal from the Circuit Court of Du Page County. No. 15-MR-1412 Honorable Bonnie M. Wheaton, Judge, Presiding.

          JUSTICE BIRKETT delivered the judgment of the court, with opinion. Justices Zenoff and Schostok concurred in the judgment and opinion.

          OPINION

          BIRKETT, JUSTICE

         ¶ 1 Plaintiff, Paminder S. Parmar, appeals the dismissal of his lawsuit seeking a declaratory judgment concerning an amendment to the Illinois Estate and Generation-Skipping Transfer Tax Act (Estate Tax Act) (35 ILCS 405/1 et seq. (West 2014)). We agree with plaintiff that the trial court erred in dismissing his lawsuit as barred on grounds of sovereign immunity. We disagree with defendants, Attorney General Lisa Madigan and Treasurer Michael Frerichs, that the voluntary-payment doctrine provides an alternative ground for affirming the dismissal. Consequently, we reverse the dismissal of the complaint and remand for further proceedings.

         ¶ 2 I. BACKGROUND

         ¶ 3 Plaintiff's decedent, Dr. Surinder K. Parmar, passed away on January 9, 2011. Due to interplay between federal and Illinois law on taxation of estates, which we need not detail here, Parmar's estate was not subject to Illinois estate tax at the time of her death. In fact, since January 1, 2010, there was effectively no Illinois estate tax. See 35 ILCS 405/2(b) (West 2010). Public Act 96-1496, which was introduced as Senate Bill 2505 and became effective on January 13, 2011, revived the Illinois estate tax by amending section 2(b) of the Estate Tax Act (Pub. Act 96-1496 (eff. Jan. 13, 2011) (amending 35 ILCS 405/2(b))). By its terms, the amended section 2(b) applied retroactively to the estates of persons dying after December 31, 2010. 35 ILCS 405/2(b) (West 2014). This included Parmar's estate.

         ¶ 4 In October 2015, plaintiff, as executor of Parmar's estate, filed his "Complaint for a Declaration of the Constitutionality of the Retroactive Application of the New Illinois Estate and Generation-Skipping Transfer Tax Act under the Illinois Constitution and the United States Constitution." In addition to Attorney General Madigan and Treasurer Frerichs, plaintiff named Constance Beard, Director of the Illinois Department of Revenue, and Governor Bruce Rauner. Plaintiff identified Madigan as "responsible for administering and enforcing [the Estate Tax Act], " Frerichs as "responsible for receiving and refunding monies collected pursuant to [the Estate Tax Act], " Beard as "responsible for maximizing collections of revenues for the State of Illinois in a manner that promotes fair and consistent enforcement of state laws, " and Rauner as "responsible for enforcing the laws of the State of Illinois which includes [sic] the [Estate Tax Act]." Plaintiff later voluntarily dismissed Beard and Rauner from the lawsuit.

         ¶ 5 Plaintiff's complaint contained nine counts. Counts I and IX alleged improprieties in the passage of Public Act 96-1496. Specifically, count I alleged that Senate Bill 2505 was not read by title on three different days in each legislative house, in violation of the Illinois Constitution (Ill. Const. 1970, art. IV, § 8). Count IX alleged that one of the promoters of Senate Bill 2505 misrepresented its substance on the floor of the House of Representatives. Citing no authority, plaintiff alleged that the legislator's misrepresentations invalidated the vote on Senate Bill 2505.

         ¶ 6 Counts II through VII concerned the substance of the amended section 2(b) of the Estate Tax Act. Count II alleged that, under the interpretive dictates of the Statute on Statutes (5 ILCS 70/0.01 et seq. (West 2014)) and case law, the amended section 2(b) must be given prospective effect only. Counts III through VII alleged that, if given retroactive application, the amended section 2(b) would violate the due process and takings clauses of the Illinois and federal constitutions (U.S. Const., amends. V, XIV; Ill. Const. 1970, art. I, §§ 2, 15) and the ex post facto clause of the Illinois Constitution (Ill. Const. 1970, art. I, § 16).

         ¶ 7 Finally, count VIII alleged that, since the amended section 2(b) could not lawfully be applied retroactively, all administrative rules issued by Attorney General Madigan that assumed the permissibility of retroactive application were invalid and ineffective.

         ¶ 8 Plaintiff alleged that he incurred "penalties and interest" on the tax he purportedly owed on Parmar's estate. Plaintiff paid the tax, penalties, and interest "[u]nder duress in order to avoid additional penalties and interest." As relief, plaintiff sought both a declaratory judgment as to the lawful scope of the amended section 2(b) and a refund of amounts paid.

         ¶ 9 Defendants filed a joint motion to dismiss pursuant to section 2-619.1 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619.1 (West 2014)), which permits a party to combine a section 2-615 motion to dismiss (735 ILCS 5/2-615 (West 2014)) with a section 2-619 motion to dismiss (735 ILCS 5/2-619 (West 2014)). For their section 2-619 motion to dismiss, defendants raised two affirmative defenses. See id. (providing for involuntary dismissal based upon "certain defects or defenses"). First, they asserted that section 1 of the State Lawsuit Immunity Act (Immunity Act) (745 ILCS 5/1 (West 2014)) barred the proceeding in circuit court, leaving plaintiff with recourse only in the Court of Claims. Second, they claimed that the suit was barred under the voluntary-payment doctrine because, without duress, plaintiff had already paid the estate tax as well as statutory interest.

         ¶ 10 To support the voluntary-payment defense, defendants submitted an affidavit from John Flores, an assistant Attorney General with the Revenue Litigation Bureau. Flores averred that, in September and October 2012, plaintiff paid the State a total of $559, 973 in tax on the Parmar estate. Also in October 2012, plaintiff filed an estate tax return, acknowledging liability for $397, 144 in tax, $99, 286 in late filing penalties, $23, 829 in late payment penalties, and $39, 714 in interest (a total of $559, 973). Flores noted that plaintiff paid these amounts before the Attorney General had opened a file on Parmar's estate, had asserted any liability, or had made any payment demands. According to Flores, plaintiff later applied for and received a waiver of penalties. After further adjustments, plaintiff was calculated to owe $388, 068 in tax and $35, 357 in interest. Flores supported his averments with attached documentation, including an estate tax return filed by plaintiff. The return reported the gross value of Parmar's estate at $5 million.

          ¶ 11 In addition to stating these two affirmative defenses, defendants claimed that several counts in plaintiff's complaint failed to state a claim upon which relief could be granted.

         ¶ 12 In his response, plaintiff claimed that the legislature clearly waived sovereign immunity for lawsuits like the present one by enacting section 15(a) of the Estate Tax Act, which authorizes a circuit court "to hear and determine all disputes in ...


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