Our panel of leading appellate attorneys review Thursday's Illinois Supreme Court civil opinions in Center Partners, Ltd. v. Growth Head GP, LLC, Carr v. Koch and Toftoy v. Rosenwinkel et al.

Center Partners, Ltd. v. Growth Head GP, LLC

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

The unanimous opinion in Center Partners, Ltd. v. Growth Head GP, LLC not only decided a case of first impression in any Illinois reviewing court but will also serve as the new baseline primer for attorney-client privilege issues. On a "friendly contempt" appeal brought under Rule 304(b)(5) following the circuit court’s order compelling production of attorney-client communications asserted to be privileged, the court held that the subject matter waiver doctrine does not apply to the extrajudicial disclosure of attorney-client communications not thereafter used by the client to gain an adversarial advantage in litigation. The court noted the overwhelming weight of authority in other jurisdictions in support of its holding, and adverse to the rulings of the circuit and appellate courts below. The opinion develops in depth the policy considerations, evidentiary logic and practical ramifications all militating in favor of the court’s holding.

In short summary, parties involved in intricate business negotiations had apparently shared legal advice among themselves during the course of the transactions. However, the supreme court found that none of the parties had placed any aspect of that legal advice at issue in this subsequent suit.

The court drew a sharp distinction between subject matter waiver attendant to disclosure of a part of a privileged communication in the course of litigation and the different setting presented here, where the partial disclosure took place in a transactional setting. The court’s careful development of its reasoning makes for great reading, but it cannot be related in depth here. The court stated that attaching the consequence of subject matter waiver to disclosure outside of a judicial setting "would strike at the heart of the attorney-client relationship and could deprive clients of counsel at times when such counsel is most valuable." The court further stated that "it is of no matter if disclosure made during a business negotiation is done to gain a tactical advantage…. Such a disclosure … is not in the province of this court, but is between the two entities engaging in the negotiation, unless a law or Illinois legal ethics rule was broken."

It should also be noted that on the day before issuance of this opinion, the court adopted Illinois Rule of Evidence 502, to be effective January 1, 2013, dealing with the attorney-client privilege, work product, and limitations on waiver.

Toftoy v. Rosenwinkel

By Alyssa M. Reiter, Williams, Montgomery & John Ltd.

If you build your house across from a cattle farm, you’ll have to put up with flies. 

Defendants bought farmland in March of 1991. At that time, Clarence Toftoy owned farmland across the street. On that farmland was an ancient farmhouse occupied by a tenant who had been in the home since 1985.

In December of 1991, the tenant left the farmhouse. No other tenant moved in and, in March of 1992, defendants began using their property as a cattle farm.

In 1998, Clarence Toftoy divided his property and gave part of it to the plaintiffs. Before the transfer, plaintiffs tore down the farm house and began building a new home. They finally completed the home and then moved into it in 2004.

When flies from the cattle operations annoyed them, plaintiffs filed this suit, alleging a nuisance. Defendants moved for summary judgment based upon section 3 of the Farm Nuisance Suit Act (740 ILCS 70/3). It provides that “[n]o farm…shall be or become a private or public nuisance because of any changed conditions in the surrounding area occurring after the farm has been in operation for more than one year, when such farm was not a nuisance at the time it began operation….” The trial court denied summary judgment and entered judgment for plaintiffs following trial. The appellate court affirmed, finding that the plaintiffs’ acquisition of the land did not alter the character of the area such that the existing cattle operation thereby became a nuisance.

The Supreme Court reversed. The defendants’ farm could not become a nuisance to plaintiffs until they acquired this property. The change in ownership was the “changed condition” giving rise to the nuisance action. Thus, the statutory provision, above, applied and the plaintiffs’ suit was barred.

Carr v. Koch

By Karen Kies DeGrand, Donohue Brown Mathewson & Smith LLC

The Illinois Supreme Court upheld the dismissal of an equal protection challenge brought by property owners who contended that the state's education funding system requires residents of school districts with low property values to pay substantially higher property taxes than owners in property-rich school districts.  The plaintiffs flunked the test of standing to assert their claim.

The two plaintiffs, one a homeowner in Homewood-Flossmoor and one residing in Cairo, sued the state's superintendent of education, the Illinois State Board of Education and Governor Patrick Quinn for declaratory relief. The plaintiffs contended that a section of the School Code, 105 ILCS 5/18-8.05 (West 2010), in effect requires taxpayers in school districts with low property values to pay a higher rate of property tax to fund local public schools, compared to similarly situated taxpayers in school districts enjoying high property values, such as New Trier High School District 203. Under the complex statutory funding scheme, local resources factor into the level of state aid that is provided to support a per pupil funding figure. Plaintiffs contrasted the percentage of property taxes they paid and the per pupil funding figures: the Homewood-Flossmoor resident paid a rate of 4.10 % to generate instructional spending of $7,292 per student in the 2007-2008 school year, in comparison to a New Trier district resident, who was taxed at a rate of 1.66 % in a school district where the per pupil rate was $10,641 - a difference of more than $ 3,000 per pupil. The plaintiff residing in Cairo alleged similarly contrasting figures with owners in Jo Daviess County. According to the plaintiffs, the state funding statute required the local property tax as a prerequisite to rich and poor districts receiving the same amount of state dollars.

The supreme court agreed with the lower courts that the plaintiffs lacked standing to challenge the statute, which, the court emphasized, is a funding statute; it does not impose a tax; moreover, the challenged statute does not dictate the local property tax rates. The funding statute simply uses the level of local funding as part of the statutory formula that must be satisfied to receive general state aid. For this reason, the court concluded that the alleged injury - paying higher local property taxes than homeowners in other school districts - is not a direct result of enforcing the funding statute and could not be fairly traceable to the actions of the defendants. Given the conclusion on the plaintiffs' lack of standing, the court did not consider the equal protection issue.