Lutkauskas v. Ricker

By Michael T. Reagan, Law Offices of Michael T. Reagan, Ottawa

Lutkauskas v. Ricker deals with standing to bring a derivative action relating to school funds, the meaning within the School Code of “unlawfully diverted” transfers of funds, and the interaction between res judicata and due process challenges in claims against public entities.  Although there are multiple plaintiffs and several defendants, for purposes of this summary, the distinctions among them will mostly not be treated. Plaintiffs’ core complaint is that the defendant school district’s Working Cash Fund was first abated and then abolished by actions of the school board. The defendants are board members, an accounting firm, and a surety. Plaintiffs’ claims are brought as taxpayer derivative actions.

The court began its analysis with standing, and more specifically whether plaintiffs had suffered an injury. Were plaintiffs required to assert that the money transferred from the Working Cash Fund was used for an improper purpose, such that there was an actual loss to the School District? The court relied on its precedents to hold that an “unlawful diversion” of funds within the meaning of a statute under which the suit was brought requires that the transferred funds have been used for an improper purpose, resulting in an actual loss to the district.  An asserted wrongful transfer from the Fund without an attendant improper use of the money is insufficient to support the requirement of an actual injury.

The claims against one of the defendants was dismissed on the ground of res judicata. The Supreme Court affirmed, based on its application of the principles of River Park, Inc. v City of Highland Park, 184 Ill.2d 290 (1998). An interesting aspect of that analysis was that privity exists because the claims brought by earlier plaintiffs were for the same derivative claim of the District, as opposed to a personal claim of the plaintiffs.

The court also rejected arguments that three Supreme Court of the United States cases supported a due process claim sufficient to negate application of res judicata. Generally speaking, the due process challenge did not succeed because in the SCOTUS cases the claims were personal, which did not support nonparty preclusion. Here, the claims, in contrast, were derivative and thus identical to the claims advanced by other plaintiffs in the prior action which formed the premise for res judicata.

As a last point, the court declined to take the suggestion of a plaintiff that SCR 304(a) needed to be amended to make it clearer to plaintiff that a SCR 304(a) appeal was mandatory rather than permissive.

Grand Chapter, Order of the Eastern Star of the State of Illinois v. Topinka

By Karen Kies DeGrand, Donohue Brown Mathewson & Smyth LLC

Under the uniformity clause of the Illinois Constitution, the Illinois Supreme Court upheld a state tax, collected in part to fund Medicaid, on “every nursing home,” even a nursing home that does not accept government aid. The plaintiff, “Grand Chapter,” is a not-for-profit corporation that operates the Eastern Star Home, a nursing home in Macon, Illinois. Licensed by the state, Eastern Star paid nearly $500,000 in penalties and interest, under protest, to pay a “bed fee” collected by the Department of Public Aid pursuant to the Illinois Public Aid Code, 305 ILCS 5/5E-10 (West 2012).

In a declaratory judgment action, Grand Chapter challenged the constitutionality of the tax in the circuit court. Grand Chapter argued that the bed fee - which requires all Illinois nursing homes to pay a daily per bed fee for each licensed nursing bed - primarily serves to fund the state’s Medicaid-related expenditures. Grand Chapter does not accept government funding or subsidies, and its residents relinquish the receipt of all government assistance, including Medicaid. Thus, Grand Chapter contended that, because it receives no Medicaid funds, “there is nothing to reimburse.” The circuit court agreed and declared that the bed fee violated the uniformity clause of the Illinois Constitution. That provision requires non-property tax or fee classifications to be reasonable, and that the objects of taxation within the classes “be taxed uniformly.” Ill. Const. 1970, art. IX, Section 2.

The supreme court rejected Grand Chapter’s argument and upheld the bed fee. The court considered whether the classification “all nursing homes” bore a reasonable relationship to the object of the legislation or to public policy. First, the court found that the bed fee did not, as Grand Chapter argued, serve simply to fund Medicaid. Rather, the fee pays for other services unrelated to Medicaid, including the enforcement of the state’s nursing home standards and paying the administration expenses of the Department of Public Aid. Second, the taxpayer and the circuit court erred in contending that a taxpayer need not pay a tax for which he receives no direct benefit. The court explained that such reciprocity between the payment of a tax and the receipt of a benefit from that tax has never been required. Any one of the several purposes identified as justifying the fee, including the benefits enjoyed by all of a regulated nursing home industry subject to uniform standards of care, demonstrated that the collection of the fee from Grand Chapter was “perfectly constitutional.”

The court concluded the opinion with the observation that a permissible tax is not necessarily a wise one. Giving kudos to Grand Chapter for its noble charity work, the court requested that the General Assembly reexamine the bed fee provision to assess whether the inclusion of entities such as Grand Chapter within the taxing classification is a wise expression of public policy.

CRIMINAL

People v. Taylor

By Kerry J. Bryson, Office of the State Appellate Defender

Taylor was charged with two counts of armed robbery with a firearm, one count of evading arrest, and one count of reckless driving for his role as a getaway driver in the armed robbery at a Hardee’s restaurant in 2005.

Taylor entered a negotiated guilty plea to a single count of armed robbery with a firearm in exchange for the dismissal of the other charges and the State’s agreement to recommend no more than 30 years of imprisonment, including the statutory 15-year firearm enhancement.  Taylor was sentenced to 24 years, which the court stated was 9 years for the offense plus 15 years for the firearm.

In 2011, Taylor filed a post-conviction petition seeking to vacate his plea.  On appeal from the dismissal of that petition, Taylor challenged his sentence as unconstitutional under People v. Hauschild, 226 Ill. 2d 63 (2007), in which the Illinois Supreme Court had found the 15-year sentence enhancement for armed robbery to violate the proportionate penalties clause (when compared to armed violence based on robbery with a dangerous weapon, an offense with identical elements). The proportionate penalties problem was later corrected by a statutory amendment. The appellate court found that the enhancement as applied to Taylor was constitutional because of the subsequent statutory amendment, and thus affirmed the 24-year sentence.

In the Supreme Court, Taylor argued that the appellate court erred in finding that the statutory amendment retroactively rendered the 15-year enhancement constitutional, and the State conceded that issue.  In question, however, was what remedy to grant.

Taylor was no longer seeking to withdraw his plea.  Instead, he argued that the portion of his sentence attributable to the firearm - 15 years - should be vacated, thereby reducing his sentence to 9 years. The Supreme Court disagreed that Taylor’s sentence could be considered as two separate terms and rejected that argument.

The Supreme Court also declined to reduce Taylor’s sentence itself because it could not be said that the 24-year sentence was “manifestly disproportionate” to the crime committed. There was no argument made that the 24-year sentence was excessive, and no evidence that the trial court had abused its discretion in imposing that term.

Finally, the Court concluded that reducing Taylor’s sentence of 15 years would deprive the State of the benefit of its bargain. The State reasonably believed the minimum term was 21 years (minimum of 6 years plus 15-year firearm enhancement) when it negotiated the plea agreement with Taylor.

The Court concluded that remand for resentencing is the appropriate remedy. On remand, the available range is between 6 and 30 years of imprisonment, as per the original plea agreement. The Court declined to cap the upper range at 24 years, holding that such a cap would be premature without knowing whether the court will impose a sentence longer than 24 years and, if so, whether such a sentence would be the product of vindictiveness.

People v. Chenoweth

By Kerry J. Bryson, Office of the State Appellate Defender

Barbara Chenoweth had served as power of attorney for her stepmother, Ella Stathakis, for several years. In September 2008, Chenoweth was replaced by Lynn Niewohner of the West Central Illinois Area Agency on Aging. In October 2008, the police were notified that money from the sale of Stathakis’s home was missing.  Chenoweth was suspected as having taken the money unlawfully. A police officer investigated, and his was received by the State’s Attorney on January 22, 2009. On December 21, 2009, Chenoweth was charged with financial exploitation of an elderly person occurring “on or about December 1, 2004 through July 31, 2005.”

The general statute of limitations for bringing a felony charge is three years. There are, however, exceptions based on the specific offense [e.g., no limitations period for homicide offenses], as well as statutory exceptions found at 720 ILCS 5/3-6. Where the charging document shows that the charge is not being brought within the limitations period, facts must be alleged in the charge which invoke one of the statutory exceptions, and the State must prove the exception at trial.

At issue in Chenoweth was the meaning of the following exception:

      (2) In any other instance, within one year after the discovery of the
      offense by an aggrieved person, or by a person who has legal capacity
      to represent an aggrieved person or has a legal duty to report the
      offense, and is not himself or herself a party to the offense; or in
      the absence of such discovery, within one year after the proper
      prosecuting officer becomes aware of the offense. However, in no such
      case is the period of limitation so extended more than 3 years beyond
      the expiration of the period otherwise applicable.” 720 ILCS 5/3-6
      (a)(2).

Chenoweth’s conduct of writing unauthorized checks on Stathakis’s account was known by the victim as of December 5, 2008.  The indictment was filed December 21, 2009, and a later-filed information alleged an extension in that the charge was filed within one year of when the prosecutor became aware of the offense. Chenoweth argued that the extension did not apply because it was the“aggrieved person” (Stathakis) who discovered the offense and thus the charge had to be filed within one year of her discovery. Chenoweth argued that the provision for an extension based on when the prosecuting officer became aware of the offense applied only where there is no discovery by the aggrieved person or her representative.

The State argued that Stathakis did not “discover the offense” within the meaning of the statute until such time as the prosecutor became aware of the offense. The Supreme Court agreed, holding that while Stathakis was aware of specific losses in December 2008, her awareness raised the “suspicion” of a crime but did not constitute the “discovery of the offense.” In so holding, the Supreme Court noted that Stathakis had granted power of attorney to Chenoweth, which permitted Chenoweth to “open, close, continue, and control” her accounts. Stathakis did not “know” that Chenoweth had misappropriated her money, but instead only “suspected” it.

The Supreme Court’s opinion noted that this is the sort of case where “the legislature  intended to provide a remedy for victims such as” Stathakis. Section 3-6 was meant to permit increases in the general limitations period for offenses which are capable of easy concealment by the offender from both the victim and the authorities. The instant case fell squarely within that category.

People v. Simpson

By Jay Wiegman, Office of the State Appellate Defender

Generally speaking, what a witness says outside of court and out of the presence of the defendant is hearsay and therefore inadmissible as substantive evidence. There are, of course, exceptions.  725 ILCS 5/115-10.1(c)(2) allows the use of a witness' prior inconsistent statement as substantive evidence in criminal cases where the statement is inconsistent with his testimony, the witness is subject to cross-examination, and the statement narrates, describes or explains an event about which the witness had personal knowledge. In People v. Simpson, 2015 IL 116512, the State argued that the "event" to which the statute refers is not necessarily the offense but could be the statement  made by a defendant describing the event, and thus the witness need only have observed the conversation involving the defendant, and not the offense itself in order for the witness' out-of-court statement to be admissible.

In Simpson, a group of men beat another man to death in Chicago. A man who had not seen the beating purportedly heard the defendant confess to the crime, and gave a recorded statement to the police. At trial, however, the witness testified that he could not remember what the defendant said to him or what he himself had said to police, and so the State sought to admit the recorded statement as a prior inconsistent statement. The trial court granted the State's request, and portions of the recorded statement were played  to  the jury. In closing arguments, the prosecutor argued that the recording showed  that the defendant had boasted about the crime shortly after it happened. Simpson was found guilty by a Cook County jury and received a sentence of 36 years and six months. Use of the recording was challenged on appeal. The appellate court reversed and ordered a new trial.

In  rejecting  the State's argument -- that the witness need not have personal  knowledge  of  the event described in a defendant's statement but need  only have witnessed the statement in order for it to be admissible -- Justice  Thomas, writing for a unanimous  Court, noted that the State's interpretation would render the "personal knowledge" language superfluous, and was contrary to 25 years of decisions by the appellate court, which has repeatedly  and  consistently held that a prior consistent statement is not admissible  unless  the  witness actually perceived the events that are the subject of the statement or admission. The Court went on to find that trial counsel was ineffective for failing to object to the admission of the witness' prior inconsistent  statement pertaining  to  the  defendant's admission, and that the defendant was prejudiced by counsel's ineffectiveness. The Supreme Court thus affirmed  the judgment of the Appellate Court, First District, which had reversed the defendant's conviction and remanded the case for a new trial.

Given the Court's observation that numerous  decisions of the appellate court have consistently and repeatedly concluded that a prior inconsistent statement is not admissible unless the witness actually perceived the events that are the subject of the statement or admission, no new ground was broken, today. However, Simpson  should provide clear guidance for defense counsel, prosecutors and trial judges involved in gang offenses, where recantation of statements to police are frequent.