A state appeals court determined the village of Oak Lawn can’t invoke a technicality in a state law to defeat a lawsuit from a technology firm accusing the village of abruptly and illegally cancelling its contract.
Proven Business Systems sued Oak Lawn and Village Manager Thomas Phelan in 2021, claiming Phelan canceled a five-year contract after just three months. Proven said Oak Lawn paid the monthly fee until Phelan informed the company the deal wasn’t “working out.” then cut off communication and prohibited Proven from providing further services.
The wrongful termination lawsuit filed in Cook County Circuit Court sought at least $800,000 in damages. In response, the village argued the deal itself was void because municipalities cannot sign contracts that exceed a mayor’s term.
In its lawsuit, Proven claimed Oak Lawn’s home rule power superseded that Municipal Code clause.
Cook County Circuit Court Judge Mary Roberts sided with Oak Lawn, noting the village board entered into the contract by unanimously approving a resolution, not through adopting an ordinance. She dismissed the complaint in the fall of 2022.
Proven challenged that ruling before the Illinois First District Appellate Court.
Justice Freddrenna Lyle wrote the opinion, filed April 19; Justices Raymond Mitchell and Mary Mikva concurred. The order was issued under Supreme Court Rule 23, which restricts its use as precedent.
On appeal, Lyle wrote, Proven argued Judge Roberts wrongly rejected Illinois Supreme Court and First Appellate District Court precedent regarding home rule authority. Lyle said the appellate panel felt Oak Lawn employed an “unjustifiably narrow reading” of a 1980 Illinois Supreme Court opinion, Sommer v. Village of Glenview, and noted the court has later cited that holding to determine “a municipality may exercise its home rule power without adopting an ordinance” even in circumstances factually different from that one case.
Furthermore, Lyle wrote, the resolution Oak Lawn’s trustees adopted specifically stated the board was exercising its home rule powers. Boilerplate or not, she said, the panel found “that by unanimously voting to approve the agreement, Oak Lawn exercised its home rule powers to supersede the Municipal Code.”
Oak Lawn invoked a 1995 Illinois Second District Appellate Court ruling, Nielsen-Massey Vanillas v. City of Waukegan. But Proven said that opinion conflicts with Supreme Court precedent, pointing instead to the 1994 First District Appellate Court opinion, Klekamp v. City of Burbank. Oak Lawn argued the Waukegan case rejected the outcome of the Burbank litigation, but Lyle said both Oak Lawn and Judge Roberts improperly read the Waukegan outcome.
“The concern of the Nielsen-Massey court was not the distinction between an ordinance and a resolution, but whether the actions that contravened the Municipal Code were specifically approved by a majority vote of the city council,” Lyle wrote. The panel reiterated that Sommer “specifically stated that a home rule unit was not required to adopt an ordinance in order to supersede pre-1970 legislation.”
Because Oak Lawn’s trustees specifically authorized the contract with Proven, and because the board president and other village “officials were all significantly involved in negotiating the agreement” and then complied with its terms for three months, “it is clear that Oak Lawn exercised its home rule authority to supersede” the Municipal Code and therefore could legally enter into a contract that would expire after the current term of the mayor.
The panel reversed the ruling and remanded the complaint for further proceedings.
Oak Lawn Village Manager Thomas Phelan did not respond to a request for comment.