Quick Takes on Illinois Supreme Court Opinions Issued Thursday, March 20, 2025
Leading appellate attorneys review the Illinois Supreme Court opinions handed down Thursday, March 20.
Village of Arlington Heights v. City of Rolling Meadows, 2025 IL 130461
By Amanda J. Hamilton, Konicek & Dillon, P.C.
In an unanimous opinion authored by Justice O’Brien, the Illinois Supreme Court unequivocally held that the Illinois Department of Revenue [IDOR] has exclusive jurisdiction over tax matters and rejected the argument that Illinois state courts could resolve a tax allocation dispute between two municipalities.
In 2011, a Cooper’s Hawk Winery and Restaurant located in Arlington Heights registered its business and began operating. IDOR wrongly coded the restaurant with a Rolling Meadows location and sent a tax verification letter to Rolling Meadows, requesting Rolling Meadows verify and correct the listings indicating a new business within its boundaries. After the restaurant opened in June 2011, sales taxes generated were distributed to Rolling Meadows. Each August thereafter, IDOR sent reports and annual listings of taxpaying entities to each municipality, and each report indicated that Cooper’s Hawk’s location was in Rolling Meadows. Because neither municipality contacted IDOR with any corrections, IDOR continued disbursing the sales taxes generated to Rolling Meadows.
Arlington Heights discovered the error in 2020 and notified IDOR. The revenues generated by Cooper’s Hawk and wrongfully distributed to Rolling Meadows were in excess of $1.1 million. Because the statute provides that IDOR is only required to reimburse the municipality for the 6 months of sales tax revenues prior to discovery of the error, IDOR reimbursed Arlington Heights $109,000, changed the coding, and encouraged Arlington Heights to reach an agreement with Rolling Meadows to recoup the remainder of the misallocated taxes. The two municipalities could not reach an agreement, and Arlington Heights filed suit in Cook County.
The circuit court dismissed Arlington Height’s complaint with prejudice based on a lack of subject matter jurisdiction pursuant to City of Chicago v. City of Kankakee, 2019 IL 122878. The First District reversed in a divided opinion, finding that the facts of this case, unlike in City of Chicago, were straightforward and could be adjudicated by the circuit courts, as stated in the First District’s 2004 opinion in Village of Itasca v. Village of Lisle, 352 Ill. App. 3d 847 (2004). The dissent, authored by Justice Oden Johnson, maintained that City of Chicago was controlling and that IDOR had exclusive jurisdiction over the dispute.
In its analysis, the Court re-visited the Department of Revenue Law, the State Finance Act, and the Illinois Municipal Code, stating that together, the statutory framework provides IDOR with authority regarding the collection, disbursement, and correction of tax matters. The Court stated that its opinion in City of Chicago “established a bright-line rule that IDOR has exclusive jurisdiction over tax matters, including misallocation disputes, depriving the circuit court of subject matter jurisdiction” which includes “jurisdiction to redistribute the tax revenue due to any error.” The Illinois Supreme Court rejected Arlington Height’s arguments that the circuit court could exercise jurisdiction because the matter was not complicated and further rejected the argument that “explicit divestiture” of general jurisdiction was required. The Court held that the circuit court could only exercise jurisdiction “only for unlawful sales tax rebate agreement disputes.”
As to Arlington Heights’ final argument, that limiting it to the statutory remedy of six months’ reimbursement and precluding it from seeking any additional reimbursement was unjust, unfair, and resulted in a windfall to Rolling Meadows, the Illinois Supreme Court stated: “We acknowledge it may appear unfair that Arlington Heights was deprived of a decade of tax revenues from the Cooper’s Hawk located within its municipal boundaries. When considering the equities, we keep in mind the obligations that the statutory scheme places on municipalities. The six-month reimbursement limit serves to encourage municipalities to timely review the tax reports IDOR regularly sends. Both Arlington Heights and Rolling Meadows were required to regularly review the reports provided by IDOR listing the tax revenue sources within their respective municipal boundaries, and neither municipality did so. They each had multiple opportunities to correct Cooper’s Hawk’s location…Neither municipality corrected the improper coding for Cooper’s Hawk, and per IDOR policy, lack of response indicates agreement with the listing.” The Illinois Supreme Court held that the appellate court erred in reversing the circuit court’s dismissal and affirmed the judgment of the circuit court.
Jordan v. Macedo, 2025 IL 130687
By Amelia Buragas, Illinois State University
In Jordan v. Macedo, the plaintiff filed a negligence complaint in the circuit court alleging personal injuries from an automobile collision. The circuit court referred the case to the Cook County mandatory arbitration program where the arbitrator entered an award in favor of the plaintiff. Neither party rejected the award, and plaintiff submitted the award to the circuit court for entry of the judgment. Plaintiff also filed a motion for statutory costs and prejudgment interest. The circuit court denied the motion for costs and interest, explaining that the arbitration award contained the full amount of compensation to which plaintiff was entitled. The case then worked its way through the appellate process, ultimately reaching the Illinois Supreme Court.
At issue in the supreme court was the question of whether a trial court can grant a request for statutory costs after the parties resolve a dispute through a mandatory arbitration program. More specifically, the court considered whether the plaintiff was required to request statutory costs during the arbitration or if the plaintiff could request those costs after the trial court entered judgment on the arbitration award. (The Illinois Supreme Court did not address and thus left undisturbed the appellate court’s conclusion that plaintiff was entitled to request prejudgment interest.)
To answer this question, the court reviewed the applicable statutes and court rules. The court first looked at section 5-108 of the Code of Civil Procedure, which allows plaintiffs to recover statutory costs. The court explained that there was “no question” that section 5-108 applied to this case because the plaintiff filed a lawsuit and successfully recovered against the defendant. Thus, the only question was whether the plaintiff “waived her right to collect the statutory costs because she did not request them from an arbitrator.”
The court found the answer to this question in Illinois Supreme Court Rule 92(e), which states that the failure of an arbitration panel to address costs “shall not constitute a waiver of a party’s rights to recover costs upon entry of judgment.” The court explained that this language “expressly states” that a party may request statutory costs upon entry of judgment, even if those costs were not determined by the arbitrator. The defendant had argued that Rule 92(e) was inapplicable and that the “no-waiver rule” only applies where the party first submits a request for costs to the arbitrator, but where the arbitrator does not address that request, which did not occur here. The supreme court rejected this interpretation, explaining that it was inconsistent with the explicit language of the rule and would require the court to read language into the rule, which, of course, it declined to do.
The court next addressed whether the failure of the Cook County circuit court to adopt an amendment similar to Rule 92(e) in its local rules changed this analysis and found that it did not. The supreme court noted that Illinois Supreme Court Rule 86(c) allows each judicial circuit court to adopt local rules for the conduct of arbitration proceedings, but only if those local rules “are consistent with Illinois Supreme Court rules.” As a result, the court explained that there was no valid reason to find Rule 92(e) inapplicable even though it was not explicitly codified within the local rules because “local rules must defer to Illinois Supreme Court rules.”
The court then went on to summarize its holding and to provide guidance for future litigants, explaining that under the plain language of Illinois Supreme Court Rule 92(e), a request for statutory costs “can and should” be brought during an arbitration proceeding. However, if the costs are not addressed during those proceedings, the right to seek the costs is not waived and the prevailing party is entitled to seek statutory costs in the trial court upon entry of judgment on the arbitration award.
The unanimous opinion was written by Justice Cunningham.