Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Shared Imaging, LLC v. Hamer

Court of Appeals of Illinois, First District, Third Division

June 28, 2017

SHARED IMAGING, LLC, Plaintiff-Appellant,
v.
BRIAN HAMER, in His Official Capacity as Director of Revenue; THE DEPARTMENT OF REVENUE; DAN RUTHERFORD, in His Official Capacity as Treasurer of the State of Illinois, Defendants-Appellees.

         Appeal from the Circuit Court of Cook County. No. 12 L 51135 The Honorable James M. McGing, Judge Presiding.

          JUSTICE PUCINSKI delivered the judgment of the court, with opinion. Justices Lavin and Cobbs concurred in the judgment and opinion.

          OPINION

          PUCINSKI JUSTICE.

         ¶ 1 Plaintiff, Shared Imaging, LLC (Shared Imaging), instituted this action pursuant to the State Officers and Employees Money Disposition Act (30 ILCS 230/1 et seq. (West 2012)), seeking review of the Department of Revenue's (Department) determination that Shared Imaging owed $807, 544.00 in back taxes, interest, and penalties under the Use Tax Act (Act) (35 ILCS 105/3-10 (West 2008)) for the period of January 1, 2008, through April 30, 2009 (the Period). The parties filed cross-motions for partial summary judgment, and after a hearing, the trial court entered judgment against Shared Imaging and in favor of the Department.

         ¶ 2 On appeal, Shared Imaging argues that (1) some of its units were not subject to the use tax, because they were subject to the temporary storage exemption under the Act (35 ILCS 105/3-55(e) (West 2008)), (2) other units were not subject to the use tax, because they were subject to the expanded temporary storage exemption under the Act (35 ILCS 105/3-55(j) (West 2008)), (3) the Department's assessment of taxes was unconstitutional because it is not fairly apportioned under the commerce clause of the United States Constitution (U.S. Const., art. I, § 8, cl. 3), (4) if Shared Imaging does owe use tax, it is entitled to a credit for taxes paid to other states, (5) if Shared Imaging does owe use tax, the tax base must be reduced for depreciation, and (6) all late filing and late payment penalties should be abated because Shared Imaging had good cause for not paying its use tax. For the reasons that follow, we affirm in part, reverse in part, and remand for further proceedings.

         ¶ 3 BACKGROUND

         ¶ 4 The record reveals the following. Shared Imaging is a limited liability company with its principal place of business in Streamwood, Illinois, and engages in the business of leasing trailers and other mobile equipment outfitted with medical devices and instruments, such as MRI machines. Shared Imaging leases its equipment to customers both within and outside of Illinois. The length of the leases varies greatly and can be as short as a few days to as long as a few years.

         ¶ 5 In June 2012, following an audit, the Department issued notices of liability to Shared Imaging, stating that on 11 of its units purchased during the Period (Units 52, 55, 229, 231, 553, 579, 582, 585, 587, 588, and 591), Shared Imaging owed $305, 873.00 in use tax, $433, 447.00[1]in penalties (for fraud, late payment, and late filing), and $68, 224 in interest. Shared Imaging paid the total assessed-$807, 544.00-under protest.

         ¶ 6 Shared Imaging then filed suit against the Department, its then-director Brian Hamer, and then-Illinois treasurer, Dan Rutherford, seeking review of the Department's assessment of the use tax against the units at issue. Shared Imaging's first amended verified complaint contained ten counts, alleging the following: Shared Imaging was entitled to a preliminary injunction enjoining the defendants from transferring Shared Imaging's protest payment out of the state protest fund or otherwise continuing collection of the assessed taxes (count I); the units at issue were not subject to the use tax because they were not used in Illinois (count II); the units at issue qualified for the temporary storage exemption (and expanded temporary storage exemption) under the Act (count III); Shared Imaging was entitled to a credit against the assessed taxes for taxes paid to other states (count IV); Shared Imaging was entitled to a deduction in the tax base for depreciation (count V); the Department's tax assessment was not fairly apportioned (count VI); Shared Imaging should not have to pay any penalties because it had reasonable cause for not timely paying the use taxes (count VII); the Department's assessment of double interest and penalties under the Tax Delinquency Amnesty Act (Amnesty Act) (35 ILCS 745/1 et seq. (West 2008)) violated due process (count VIII); the Department's assessment of double interest and penalties under the Amnesty Act was unlawful because the Amnesty Act violates the federal excessive fines clause (U.S. Const., amend. VIII) (count IX); and the double interest should be abated because it was, in essence, a penalty and Shared Imaging had reasonable cause for its failure to pay the assessed taxes (count X).

         ¶ 7 Shared Imaging moved for partial summary judgment on the issues of whether the units at issue were subject to the temporary storage exemption and the expanded temporary storage exemption (count III), the Department's assessment was fairly apportioned (count VI); Shared Imaging was entitled to a credit for taxes paid to other states (count IV); Shared Imaging was entitled to a tax base deduction for depreciation (count V); and late payment, late filing, and fraud penalties should be abated (count VII). The defendants filed a response and cross-motion for summary judgment on the same grounds.

         ¶ 8 After taking a reply from Shared Imaging and hearing the oral arguments of both sides, the trial court granted summary judgment in favor of the defendants on counts III, IV, V, and VI. The trial court also granted the defendants summary judgment on count VII with respect to the late filing and late payment penalties but granted summary judgment to Shared Imaging on the issue of the fraud penalties. Thereafter, Shared Imaging filed a motion to correct the record on the basis that the copies of the trial court's decision issued to Shared Imaging and the defendants was not the same. Shared Imaging also filed a motion requesting that the trial court enter a Supreme Court Rule 304(a) (eff. Feb. 26, 2010) finding.

         ¶ 9 On September 29, 2015, the trial court entered its "Corrected Opinion and Order, " which corrected the discrepancy in the original decision and also contained the statement that "[t]his Opinion and Order is Final and Appealable." On the same date, the trial court issued a handwritten order, stating that Shared Imaging's motions to correct the record and for a Rule 304(a) finding were granted. In that order, the trial court stated that there was "no just cause for delay of enforcement or appeal of the final order entered separately on this day."

         ¶ 10 Shared Imaging filed its notice of appeal on October 1, 2015.

         ¶ 11 On appeal, Shared Imaging cited only the "Corrected Opinion and Order" in its jurisdictional statement. Accordingly, we initially dismissed Shared Imaging's appeal for lack of jurisdiction on the basis that the "Corrected Opinion and Order" did not contain a sufficient Rule 304(a) finding. Thereafter, Shared Imaging filed a petition for rehearing in which it cited, for the first time, the second September 29, 2015, order, which did contain a sufficient Rule 304(a) finding. We granted that petition for rehearing.

         ¶ 12 STANDARD OF REVIEW

         ¶ 13 Summary judgment is appropriate only 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." 735 ILCS 5/2-1005(c) (West 2016)). Although the filing of cross-motions for summary judgment does not necessarily establish the lack of an issue of material fact or obligate a court to render summary judgment, it does indicate that the parties agree that the case involves a question of law and that they invite the court to decide the issues based on the record. Pielet v. Pielet, 2012 IL 112064, ¶ 28. Our review of a trial court's summary judgment determination is de novo. Id. at ¶ 30. "[T]his court may affirm a trial court's grant of summary judgment on any basis apparent in the record, regardless of whether the trial court relied on that basis or whether the court's reasoning was correct." Harlin v. Sears Roebuck & Co., 369 Ill.App.3d 27, 31-32 (2006).

         ¶ 14 The issues presented in this case require us to interpret various provisions of the Act. Matters of statutory interpretation are also reviewed de novo. People ex rel. Madigan v. Illinois Commerce Comm'n, 231 Ill.2d 370, 377 (2008).

         ¶ 15 ANALYSIS

         ¶ 16 On appeal, Shared Imaging argues that (1) Units 229, 231, and 588 were not subject to the use tax, because they were subject to the temporary storage exemption under the Act (35 ILCS 105/3-55(e) (West 2008)), (2) Units 52, 55, 553, 579, 582, 585, 591 were not subject to the use tax, because they were subject to the expanded temporary storage exemption under the Act (35 ILCS 105/3-55(j) (West 2008)), (3) the Department's assessment of taxes was unconstitutional because it was not fairly apportioned under the federal Commerce Clause, (4) if Shared Imaging did owe use tax, it was entitled to a credit for taxes paid to other states, (5) if Shared Imaging did owe use tax, the tax base must be reduced for depreciation, and (6) all late filing and late payment penalties should be abated because Shared Imaging had good cause for not paying its use tax.

         ¶ 17 Jurisdiction

         ¶ 18 We will address all of these contentions in turn. Before doing so, however, we address the issue that has led to our granting of Shared Imaging's petition for rehearing: our jurisdiction. We initially dismissed this appeal for lack of jurisdiction based on our belief that the trial court had not entered a sufficient finding pursuant to Supreme Court Rule 304(a), because the September 29, 2015, "Corrected Order and Opinion" simply stated that the order was "final and appealable." This mistaken belief was a result of Shared Imaging's blatant failure to comply with Illinois Supreme Court Rule 341(h)(4)(ii) (eff. Jan. 1, 2016).

         ¶ 19 Appellants have the burden of establishing appellate jurisdiction. U.S. Bank National Association v. IN Retail Fund Algonquin Commons, LLC, 2013 IL App (2d) 130213, ¶24. Accordingly, Rule 341(h)(4)(ii) requires that all appellants include the following in their opening briefs:

"a brief, but precise statement or explanation under the heading 'Jurisdiction' of the basis for appeal including the supreme court rule or other law which confers jurisdiction upon the reviewing court; the facts of the case which bring it within this rule or other law; and the date that the order being appealed was entered and any other facts which are necessary to demonstrate that the appeal is timely. In appeals from a judgment as to all the claims and all the parties, the statement shall demonstrate the disposition of all claims and all parties. All facts recited in this statement shall be supported by page references to the record on appeal." (Emphases added.) Ill. S.Ct. R. 341(h)(4)(ii) (eff. Jan. 1, 2016).

         Shared Imaging's jurisdictional statement failed to comply with the emphasized language: it failed to state the facts of the case that brought it within Rule 304(a), and it failed to support its statements with page references to the record on appeal.

         ¶ 20 It would seem to us to be readily apparent that an appellant claiming jurisdiction under Rule 304(a) should clearly reference the order (including record citation) in which the trial court made its Rule 304(a) finding, especially when specifically directed by Rule 341(h)(4)(ii) to include in its jurisdictional statement all facts that bring the case within the ambit of Rule 304(a). It appears that Shared Imaging did not share our opinion. Although claiming jurisdiction in this court pursuant to Rule 304(a), the only order referenced in Shared Imaging's jurisdictional statement is the September 29, 2015, "Corrected Opinion and Order." Shared Imaging failed to include any reference to a second order of September 29, 2015, containing a Rule 304(a) finding, nor does the jurisdictional statement include any record citation to the second September 29, 2015, order (in fact, the jurisdictional statement contains no record citations whatsoever).

         ¶ 21 This failure is especially problematic in situations such as these, where the "Corrected Opinion and Order" contained a statement by the trial court that the order was "final and appealable"-language often used by trial courts and parties in failed attempts to make a Rule 304(a) finding. See Palmolive Tower Condominiums, LLC v. Simon, 409 Ill.App.3d 539, 544 (2011) (citing numerous cases holding that the phrase "final and appealable" does not qualify as a Rule 304(a) finding). In addition, there is no reference to the second September 29, 2015, order in Shared Imaging's statement of facts; it is not included in the appendix, and it is not referenced in or attached to Shared Imaging's notice of appeal. Anyone reading Shared Imaging's brief would never even know such an order existed. Instead, one would be led to believe that the "final and appealable" language found in the "Corrected Opinion and Order"-the only order ever referenced by Shared Imaging in support of jurisdiction-was the intended Rule 304(a) finding that formed the basis for Shared Imaging's claim of jurisdiction based on that rule.

         ¶ 22 The brief contents required by Rule 341(h) are not intended as academic exercises or meaningless busywork for appellants. They serve a purpose, and when appellants fail to comply with the Rules, that purpose is thwarted. Were this not an issue of jurisdiction, the dismissal of Shared Imaging's appeal could be considered invited error. See In re Detention of Swope, 213 Ill.2d 210, 217 (2004) ("[A] party cannot complain of error which that party induced the court to make or to which that party consented. The rationale behind this well-established rule is that it would be manifestly unfair to allow a party a second trial upon the basis of error which that party injected into the proceedings."). Moreover, appellants who have failed to comply with Rule 341 have seen their contentions waived, briefs stricken, and appeals dismissed. See Rosestone Investments, LLC v. Garner, 2013 IL App (1st) 123422, ¶ 18 ("Where an appellant's brief contains numerous Rule 341 violations and, in particular, impedes our review of the case at hand because of them, it is our right to strike that brief and dismiss the appeal."); First National Bank of LaGrange v. Lowrey, 375 Ill.App.3d 181, 208-09 (2007) (failure to comply with Rule 341(h)(7) results in waiver of contentions). To avoid these consequences in the future, we strongly urge that Shared Imaging take greater effort to comply with Supreme Court 341(h) in the future. "[T]he rules of this court neither are aspirational nor are they mere suggestions; '[t]hey have the force of law, and the presumption must be that they will be obeyed and enforced as written.' " Robidoux v. Oliphant, 201 Ill.2d 324, 340 (2002) (quoting Bright v. Dicke, 166 Ill.2d 204, 210 (1995)).

         ¶ 23 Use Tax Act

         ¶ 24 The Act imposes a tax "upon the privilege of using in this State tangible personal property purchased at retail from a retailer." 35 ILCS 105/3 (West 2008). This use tax intended to serve as a complement to the Retailers' Occupation Tax Act (35 ILCS 120/1 et seq. (West 2008)), which is the primary means by which Illinois taxes retail sales of tangible goods. The purpose of the use tax is to preclude buyers from avoiding the retailers' occupation tax by making purchases from out-of-state vendors and to protect ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.