Cook County Record

Monday, April 6, 2020

Appeals panel: IL property tax laws stymy property tax lawsuits, wrongly shield Cook County from answering for unequal assessments

Federal Court

By Jonathan Bilyk | Jan 29, 2020

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A federal appeals panel has revived a lawsuit brought by a group of property owners against Cook County, as the judges say Illinois laws and tax appeal rules have created a system in which certain taxpayers can't get justice over unequal tax assessments.

“Since the defendants agree that the taxpayers cannot make their equal protection case in state court, the taxpayers have no ‘remedy’ at all for their claims – never mind a ‘plain, speedy and efficient’ one,” the judges said.

On Jan. 29, a three-judge panel of the U.S. Seventh Circuit Court of Appeals ruled a federal judge was wrong to toss the taxpayers’ constitutional challenge to Illinois’ property tax rules and laws.


Former Cook County Assessor Joseph Berrios

The constitutional challenge was filed in 2018 by a group of property owners who said the state’s property tax appeal rules, and a state law governing them, improperly shield certain county officials from lawsuit and deny taxpayers their day in court, and their rights to due process and equal protection under the U.S. Constitution.

That lawsuit had come after nearly two decades of litigation over what the plaintiffs alleged were improper and unequal property tax assessments in Cook County.

Named plaintiffs in the action included A.F. Moore & Associates, J. Emil Anderson & Son, Prime Realty Group Trust, the American Academy of Orthopaedic Surgeons, Erling Eide, Fox Valley/River Oaks Partnership and Simon Property Group.

The plaintiffs, among others, had each been fighting with the county for property tax relief and refunds, in separate cases dating as far back as 2000. Their lawsuits had been consolidated to ease discovery in the similar actions.

However, the cases continued linger in Cook County Circuit Court throughout much of the last two decades. Frustrated at every turn, the plaintiffs turned to the federal courts in Chicago for relief, saying state law and state and county procedural rules make it all but impossible to appeal property tax assessments.

The lawsuit accused the county, essentially, of assessing the plaintiffs’ properties unequally compared to similar properties, forcing them to pay higher tax bills, and then using state law to protect the Cook County assessor’s office from their lawsuits and blocking them from obtaining the evidence they need to support their claims.

The lawsuit specifically accused Cook County’s former assessors, Joseph Berrios and James Houlihan, of “deliberately and systematically” distorting assessment data, including putting “fictitious market values on county records” to make it appear they had followed assessment rules.

As a result, the lawsuit said, property owners were “given the false impression that the value basis of their tax was much lower than the real market value estimated by the Assessor, and these taxpayers could not determine whether their properties were assessed uniformly with others.”

This, in turn, stymied their appeals and jacked up their tax bills by tens of millions of dollars, collectively, compared to what they believe they should have paid compared to the market value of similar properties.

They further said discovery ordered by Cook County judges revealed Berrios’ office had destroyed many of the records the plaintiffs said would prove their allegations.

Cook County's property tax system has gained a degree of notoriety in recent years, as published reports have detailed alleged discriminatory and unequal assessment practices at the office in past years. The reports have noted the practices caused some homeowners, particularly in predominantly lower-income black and Hispanic neighborhoods, to pay substantially more in property taxes, while those in wealthier - and predominantly white - communities, paid less than they otherwise would have. The disparities have been driven by an appeals process that reports indicate have favored property taxpayers who can use politically connected lawyers and firms to appeal their tax bills and assessments.

The reports helped to fuel Berrios' defeat in 2018 to current Assessor Fritz Kaegi, who has announced a raft of reforms he says are designed to remedy those disparities.

The opaque and byzantine tax assessment and appeal system, for instance, helped to fuel the law practice of indicted Chicago Ald. Ed Burke, who is accused by federal prosecutors of using his office to shake down property owners to hire his law firm to handle their tax appeals. 

Illinois House Speaker Michael Madigan, who has served as Speaker of the state House for nearly all of the past four decades, also is a partner at a law firm that specializes in tax appeals and factors prominently in Cook County's property tax appeals system.

In challenging the constitutionality of the system, the plaintiffs took aim at a 1995 state law, which they said the county has used to prevent them from litigating their lawsuits.

They say the taxing process of litigating their cases has confirmed “the tax objection procedures under the (Illinois) Property Tax Code are inherently uncertain, unclear, involve extensive and unwarranted delays, and fail to provide a plain, speedy and efficient remedy for the violations of plaintiffs’ federal and state constitutional rights.”

In federal district court, however, the county argued the federal Tax Injunction Act blocks federal judges from getting involved in such property tax disputes. U.S. District Judge Charles Kocoras agreed. Kocoras ruled, despite the taxpayers’ years of frustration at every turn, and their contentions otherwise, the state courts offered the taxpayers “an adequate state-court remedy.”

On appeal, the Seventh Circuit judges disagreed, finding the Tax Injunction Act doesn’t block the federal courts from weighing in on the questions.

The opinion was authored by Seventh Circuit Judge Amy Coney Barrett, with circuit judges David F. Hamilton and Joel M. Flaum, concurring.

“This appeal concerns whether Illinois courts offer a sufficient forum,” Judge Barrett wrote in the opinion. “The issue is made simpler by the County’s concession that Illinois’ tax-objection procedures do not allow the taxpayers to raise their constitutional claims in state court.

“We are left to conclude that this is the rare case in which taxpayers lack an adequate state-court remedy.”

The judges noted the county does not “dispute the taxpayers’ account” of how the state law operates. Rather, they noted, the county asserts the law’s provisions, which deny taxpayers the opportunity to challenge the assessor’s property assessment methodology, make the process speedier and more efficient.

But the judges said this argument fails in this instance.

“Efficiency is no good to the taxpayers if it means that they cannot bring their equal protection claim in state court,” Judge Barrett wrote. “And the defendants (Cook County) agree with the taxpayers that they cannot.”

Further, Judge Barrett noted, the county could not identify any other court or legal vehicle through which taxpayers can press claims that the county’s tax assessment process violated their constitutional rights.

“These concessions make a potentially complex issue a great deal simpler,” Barrett wrote.

The appeals panel reversed Judge Kocoras’ decision and sent the case back to his court room for further proceedings.

The taxpayers have been represented by attorney Mark R. Davis, of the firm of O’Keefe Lyons & Hynes LLC, of Chicago, and attorney Richard L. Fenton, of the firm of Dentons US LLP, of Chicago, and other attorneys from each firm.

The county has been represented by Assistant Cook County State’s Attorney Paul Castiglione and the office of Cook County State’s Attorney Kim Foxx.

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Organizations in this Story

State of IllinoisCook County AssessorU.S. District Court for the Northern District of IllinoisU.S. Court of Appeals for the Seventh CircuitCook County TreasurerCook County State's Attorney's OfficeO'Keefe Lyons & HynesCook CountyDENTONS US LLP