Finding that disgruntled property owners had no proper state venue to raise constitutional challenges against Cook County’s property assessment and taxation processes, a federal appeals panel last month revived an equal protection case against the county.
The plaintiffs are a group of Cook County property owners — some that have been in litigation against the county for decades — who allege they overpaid on property taxes based on an unfair valuation of their properties.
Illinois statute provides that “relief is available for assessments that are ‘incorrect or illegal.’” And when an owner challenges the correctness of a valuation, “the court shall consider the objection without regard to the correctness of any practice, procedure or method of valuation followed by the assessor,” the statute holds.
The group moved its suit to federal court in July 2018 after finding it was unable to argue its case in Cook County Circuit Court, where the law shielded officials from turning over evidence on the assessment process.
In their federal claim, the plaintiffs argued their 14th Amendment rights to equal protection were violated, citing the 1989 U.S. Supreme Court ruling in Allegheny Pittsburgh Coal Co. v. Commission of Webster County, which held that “a property owner whose tax assessment comports with state law may nevertheless suffer a violation of the [e]qual [p]rotection [c]lause if similarly situation property is assessed at a lower rate than his.”
U.S. District Judge Charles P. Kocoras dismissed the case for lack of subject-matter jurisdiction in April.
Kocoras cited the federal Tax Injunction Act, which keeps the federal judiciary out of state or local tax questions “where a plain, speedy and efficient remedy may be had” in state courts.
Kocoras found that the state offers enough of a remedy.
“The Illinois procedures are plain because they lay out a clear process for dissatisfied taxpayers to object to their taxation by appealing to the Property Tax Appeal Board or by filing a tax objection complaint with the county circuit court,” Kocoras wrote.
While he acknowledged that the case’s length was not typical, he concluded that was “an unfortunate product of the tactics employed in this case.”
On appeal, the 7th Circuit panel disagreed. Writing for the court, Judge Amy Coney Barrett wrote that the plaintiffs’ case requires “discovery about the assessor’s methods and his intent,” which is not permitted under the state statute.
Barrett wrote that previous cases have not answered whether such restrictions under the state law restricts taxpayers’ constitutional claims.
“To avoid the TIA [Tax Injunction Act]’s jurisdictional bar, the taxpayers must demonstrate that [S]ection 23-15 denies them a complete hearing on any and all constitutional objections,” Barrett wrote. “Their particular constitutional objection is that the assessor violated the [e]qual [p]rotection [c]lause by valuing their properties correctly under the Cook County ordinance but cutting everyone else a break with a lower de facto rate.”
If that section only allows for a double-checking of a property’s assessment, “then they have no state forum for that cognizable constitutional claim.”
Barrett also wrote that since the law “prevents taxpayers from probing into the assessor’s methodology,” they cannot prove the assessment violated their rights. And she added that the plaintiffs’ case was supported by the county’s own concessions.
Barrett wrote that the county’s lawyers don’t dispute the taxpayers’ account, but argue the procedure satisfies state law.
“By the defendants’ own admission, then, the [S]ection 23-15 procedures provide no forum for the taxpayers to raise their constitutional claims,” Barrett wrote. “Nor have the defendants been able to point to any alternative channels in which these taxpayers can raise their federal constitutional claims in Illinois courts.”
With no ability to make an equal protection case in state court and no efficient remedy, the Tax Injunction Act doesn’t bar their suit, Barrett wrote.
Barrett was joined in the opinion by Judges Joel M. Flaum and David F. Hamilton.
The plaintiffs allege that between 2000 and 2008, the Cook County Assessor’s Office valued most of the single-family residential, commercial and industrial property in the county “at rates significantly lower than the rates prescribed by law.”
During that period, the offices were run by former assessors James Houlihan and Joseph Berrios.
Several plaintiffs’ cases were consolidated for discovery.
The plaintiffs include several suburban businesses, the largest of which are Fox Valley/River Oaks Partnership and Simon Property Group, which claim they overpaid by $16 million in property taxes on a shopping center property in Calumet City. The two companies are represented by Richard L. Fenton of Dentons US LLP.
Fenton declined to comment.
Other businesses involved in the lawsuit include A.F. Moore & Associates, J. Emil Anderson & Sons Inc., Prime Group Realty Trust, The American Academy of Orthopedic Surgeons and Earling Eide.
Cook County and county Treasurer Maria Pappas were represented in the appeal by Cook County Assistant State’s Attorney Paul A. Castiglione.
“We are currently evaluating the opinion and determining our next steps,” said Tandra Simonton, a spokesperson for the state’s attorney’s office.
Cook County Assessor Fritz Kaegi was represented by Gretchen Harris Sperry, Louis Joseph Manetti Jr. and Katherine G. Schnake of Hinshaw & Culbertson LLP.
Sperry was unavailable for comment.
This case is A.F. Moore & Associates Inc., et al., v. Maria Pappas, et al., Nos. 19-1971 and 19-1979.