By: Brittany Flaherty Theis

On March 23, 2017, the Illinois Supreme Court filed its opinion in Carle Foundation v. Cunningham Township, remanding the case to the circuit court. 2017 IL 120427 (2017). The case reached the Illinois Supreme Court after the appellate court found Section 15-86 unconstitutional, holding that the property tax exemption in Section 15-86 went beyond the exemptions authorized by Article IX, Section 6 of the Illinois Constitution.

Article IX, Section 6 states, “[t]he General Assembly by law may exempt from taxation only the property of the State, units of local government and school districts and property used exclusively for agricultural and horticultural societies, and for school, religious, cemetery and charitable purposes.” Section 15-86 bestows a charitable exemption from property taxation upon hospital entities if the value of qualifying services that the hospital entity provided in the year for which it seeks an exemption equals or exceeds the hospital entity’s estimated property tax liability for that year. The Illinois Appellate Court describes this as settling for something less than exclusive use of the property for charitable purposes, which is beyond the legislature’s authority. You might recall reading an explanation of Section 15-86 and the appellate court’s decision in Whitt Law’s August 4, 2016 blog post (here).

The first issue the Illinois Supreme Court addressed was whether there was appellate jurisdiction in this case based upon Rule 304(a), regarding judgments that dispose of “separate, unrelated claims,” which are immediately appealable. Orders disposing only of “separate issues relating to the same claim” are not immediately appealable. This distinction is important to the policy underlying Rule 304(a), which is to discourage piecemeal appeals.

The court held that the circuit court’s order only disposed of an “issue” as opposed to a “claim.” Specifically, the circuit court’s order determined what law governs the remaining counts of the complaint and “resolve[d] nothing other than the standard by which the underlying claim will be adjudicated,” which is a “textbook example of an ‘issue’ that exists only because of  and ancillary to a ‘claim.’” Therefore, the order was not appealable under Rule 304(a).

Next, the court considered whether to address the merits of the appeal using its supervisory authority regardless of whether Rule 304(a) jurisdiction existed. The court declined to do so based on its concerns regarding facilitating piecemeal litigation, but also due to the court’s long-standing rule that cases should not decide constitutional issues when it can dispose of a case on non-constitutional grounds. For those reasons, the Illinois Supreme Court remanded the case to the circuit court for further proceedings.

Whitt Law will continue to monitor the Carle Foundation case. For questions regarding the Illinois Supreme Court’s opinion in this case or for information regarding the ways in which Whitt Law can help your taxing district, please contact Whitt Law Partner Josh Whitt or Attorney Brittany Flaherty Theis.

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