Illinois Official Reports

Appellate Court

Chicago Title Insurance Co. v. Teachers’ Retirement System,

2014 IL App (1st) 131452

Appellate Court 

Caption

CHICAGO TITLE INSURANCE COMPANY, Successor by Merger 

to Ticor Title Insurance Company, as Subrogee for BankFinancial 

Corporation; LECHNER AND SONS II, LLC, Plaintiffs-Appellants, 

v. THE TEACHERS’ RETIREMENT SYSTEM OF THE STATE OF 

ILLINOIS, Defendant-Appellee.

District & No. First District, First Division

Docket No. 1-13-1452

Filed

Rehearing denied

February 18, 2014

March 20, 2014

Held

(Note: This syllabus 

constitutes no part of the 

opinion of the court but 

has been prepared by the 

Reporter of Decisions 

for the convenience of 

the reader.)

Where defendant, an agency of the State of Illinois, sold a parcel of 

real estate to plaintiff pursuant to a contract providing that if defendant 

paid any real estate taxes on the property and those taxes were 

refunded to defendant upon the grant of defendant’s application for a 

real estate exemption, defendant would be entitled to keep the 

refunded taxes, plaintiffs were not entitled to recover the expenses 

incurred in responding to a notice that even though defendant’s 

exemption had been granted, the taxes were also sold as delinquent 

several years after the sale and plaintiffs paid to prevent the property 

from being sold for the delinquent taxes, since the contract absolved 

defendant of any responsibility for the expenses plaintiffs incurred, 

and defendant did not do anything wrong and was not unjustly 

enriched; therefore, plaintiffs’ action against defendant was properly 

dismissed.

Decision Under 

Review

Appeal from the Circuit Court of Cook County, No. 12-CH-23170; the 

Hon. Kathleen Pantle, Judge, presiding.
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Judgment Affirmed.

Counsel on

Appeal

Fidelity National Law Group, of Chicago (Barry C. Brotine, of 

counsel), for appellants.

Holland & Knight, LLP, of Chicago (Jonathan E. Strouse, James T. 

Mueller, and Michael A. Grill, of counsel), for appellee.

Panel JUSTICE DELORT delivered the judgment of the court, with opinion.

Justices Hoffman and Cunningham concurred in the judgment and 

opinion.

OPINION

¶ 1 Real estate taxes in Illinois are paid annually–not for the current year, but for the preceding 

year. See generally Jeffrey S. Blumenthal & David R. Gray, Jr., Tax Bills and Payments, in 

Real Estate Taxation § 10.3 (Ill. Inst. for Cont. Legal Educ. 2012). Unpaid real estate taxes 

remain a lien on the property until paid. 35 ILCS 200/21-75 (West 2010). Properties with 

delinquent taxes are subject to possible sale at auction. Id. Accordingly, careful buyers of real 

estate will verify that the taxes are paid up, and contractual provisions will address how taxes 

for the immediately preceding and current years will be estimated and split between the parties 

at closing. In the ideal world, buyers and sellers walk away from closings never having to deal 

with each other again regarding the taxes. This case presents a textbook example of how 

Murphy’s Law came into play after what seemed to be a routine real estate closing. The court 

below rejected the buyer’s attempts to recover money it paid to rescue the property from loss at 

a tax sale. We affirm.

¶ 2 BACKGROUND

¶ 3 The facts are generally undisputed. The defendant, Teachers’ Retirement System of the 

State of Illinois (TRS), an agency of the State of Illinois,1 bought the subject property, located 

in Mount Prospect, in 1991. In 2002, it sold the property to the plaintiff, Lechner and Sons II, 

LLC (Lechner). The sale to Lechner was governed by a 16-page contract containing a 

single-spaced provision regarding real estate taxes entitled “PRORATIONS” that covered 

most of a page. The provision stated that “real estate taxes for 2000 (to the extent unpaid) and 

2001 ***, if any, shall be prorated as of the Closing Date.” In the contract, Lechner 

 1

TRS is created by section 16-101 of the Illinois Pension Code. See 40 ILCS 5/16-101 (West 2010); 

see also Jones v. Jones-Blythe Construction Co., 150 Ill. App. 3d 53, 54 (1986) (premises liability claim 

against TRS must be brought in the Court of Claims because it was a “claim against the State”).
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acknowledged that TRS was applying to certain governmental authorities for an exemption 

which “may eliminate or reduce the amount of Taxes assessed against” the property. Finally, 

as is particularly relevant to the dispute before us, Lechner agreed that if TRS received any tax 

refund directly from an applicable governmental taxing authority, then TRS would be entitled 

to retain the refund.

¶ 4 At closing, TRS issued a warranty deed to Lechner, asserting that it conveyed good title 

subject only to taxes which were not yet due and payable, and to some other exceptions not 

relevant here. The 2002 title insurance commitment stated that taxes for 2000 and “prior years”

were “marked exempt on the [county] collector’s warrant book,” and that “[s]atisfactory 

evidence should be furnished to [the title insurer] showing that the subject land is entitled to 

said exemption.” Lechner later obtained a mortgage on the property from codefendant 

BankFinancial.

¶ 5 Real estate owned by governmental bodies is not automatically exempt from property tax.

Governmental bodies must demonstrate to the county board of review and the Illinois 

Department of Revenue (DOR) that their property is exempt because all property of the 

particular government is automatically exempt regardless of use, or the property is used for 

governmental purposes. 35 ILCS 200/16-70, 16-95(1), 16-115 (West 2010). Time delays in 

this process often force the governmental body to pay the taxes and seek a refund later when its 

exemption is finally approved, which is what occurred here.

¶ 6 In 1993, TRS had applied to the DOR for an exemption of the subject property from real 

estate taxes pursuant to then-section 19.5 of the Revenue Act of 1939 (35 ILCS 205/19.5 (West 

1992) (now 35 ILCS 200/15-55(a) (West 2010))), which provided that “[a]ll property 

belonging to the State of Illinois” is exempt from real estate taxation. The Village of Mount 

Prospect (the Village) objected to TRS’s application, and the matter proceeded to a formal 

hearing. In 1997, the DOR overruled the Village’s objection and accepted the recommendation 

of an administrative law judge (ALJ) that the property be declared exempt from taxes for the 

tax year 1993. The ALJ issued a detailed 17-page opinion finding that the property in question, 

which was vacant, was exempt from property taxes unless it was actually leased to a private 

entity. In so holding, the ALJ found that TRS’s real estate was exempt from property tax 

because TRS was an agency of the State of Illinois, and was thus exempt regardless of whether 

TRS was actually using the property, because the sole test for the exemption of state-owned 

property is merely ownership. Teachers’ Retirement System v. Department of Revenue, Nos. 

93-16-1323, 93-16-1396, order at 14 (Ill. Dept. of Revenue Feb. 28, 1997). The ALJ noted, 

however, that if TRS leased the property to a private entity, it could be taxed. Id. at 16-17.

¶ 7 In 2005, the Cook County assessor issued certificates of error (see 35 ILCS 200/14-15 

(West 2010)) reducing the taxes on the property for the three years in question to zero. In 2007, 

based on those certificates of error, the Cook County treasurer issued three tax refund checks to 

TRS, one for each of the tax years at issue, totaling $138,353.24.

¶ 8 In 2012, 10 years after buying the property, Lechner received a notice of sale and 

redemption rights, commonly known as a “Take Notice” form (see 35 ILCS 200/22-5 (West 

2010)), stating the property had been sold for delinquent taxes to a tax buyer by the name of 

“AAA Funding, Inc.” The notice stated that the owner had until July 9, 2012, to redeem the 

property from the sale by paying taxes, interest, penalties, and costs totaling over $277,000.

The allegedly delinquent taxes were for 1992, 1995, and 1996, all years during which TRS had 

owned the property. Lechner’s title insurer, codefendant Chicago Title Insurance Company 
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(CTIC), paid AAA $70,000 for an assignment of its certificate of title.2 With the certificate of 

sale in hand, CTIC avoided transfer of the property to AAA and took some additional steps to 

obtain a tax deed to Lechner’s property, with the goal of assigning its interest back to Lechner 

at some point.

¶ 9 In 2012, Lechner, CTIC, and BankFinancial3 sued TRS and various governmental officials 

to: (1) enjoin the government officials from selling the property for delinquent taxes; and (2) 

recover not only the $70,000 it paid the tax buyer, but additional monies it would incur to clear 

title in the future. Lechner dismissed the governmental officials from the lawsuit for reasons 

not revealed by the record, leaving an amended two-count complaint against only TRS. The 

first count claimed that TRS was unjustly enriched because Lechner paid a debt for which TRS 

was rightfully responsible. The second count sought a declaratory judgment that TRS was 

responsible to pay all future costs Lechner would incur to clear title. According to the 

complaint, the official Cook County warrant books (see 35 ILCS 200/18-250(c) (West 2010)) 

still show that the taxes for these years are delinquent. Nothing in the record explains the 

discrepancy between the warrant books on the one hand and the certificate of error and refund 

checks on the other.

¶ 10 TRS moved to dismiss the amended complaint under section 2-619 of the Illinois Code of 

Civil Procedure (735 ILCS 5/2-619 (West 2010)). TRS’s motion essentially contended that the 

taxes for the property were never delinquent at all. In doing so, TRS implied that the various 

county officials involved in the taxing process erroneously listed the property on the list of 

delinquent parcels subject to judicial sale through some sort of clerical error.

¶ 11 The trial court issued a written opinion granting the motion and dismissing the case with 

prejudice. The court found that TRS was not unjustly enriched to plaintiff’s detriment because 

it had actually paid the real estate taxes at issue and that it rightfully kept the refund checks 

issued pursuant to the certificates of error. The trial court dismissed the remaining declaratory 

judgment count on the same basis, finding that “[a]s TRS has done nothing wrong, there is no 

basis on which to order TRS to pay anything to plaintiffs.” This appeal followed.

¶ 12 ANALYSIS

¶ 13 TRS’s motion to dismiss did not cite which subsection of section 2-619 it was based on, but 

the trial court found, as do we, that it is properly classified as being brought under section 

2-619(9), which allows dismissal if “the claim asserted against defendant is barred by other 

affirmative matter.” 735 ILCS 5/2-619(9) (West 2010). When ruling on a motion to dismiss 

under section 2-619, a court must accept all well-pleaded facts in the complaint as true and 

draw all reasonable inferences from those facts in favor of the nonmoving party. Coghlan v. 

 2

Nothing in the record indicates that, before paying AAA to bail out the property, Lechner or the 

insurer ever pursued any remedies before the court which had authorized the sale on the basis that the 

property was actually exempt from taxes during those years. See 35 ILCS 200/21-310(a)(1) (West 

2010) (allowing court to declare sale in error if property was “not subject to taxation”); 35 ILCS 

200/21-310(a)(7) (West 2010) (same, if property was owned by the State of Illinois). Similarly, nothing 

in the record indicates why Lechner did not pursue a claim for breach of the warranty contained in the 

underlying deed.

3

For simplicity, we refer to all three collectively as “Lechner.”
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Beck, 2013 IL App (1st) 120891, ¶ 24. As a result, a motion to dismiss should not be granted 

unless it is clearly apparent that no set of facts can be proved that would entitle the plaintiff to 

recovery. Id. Section 2-619 motions present issues of law which we review de novo. DeLuna v. 

Burciaga, 223 Ill. 2d 49 (2006).

¶ 14 Lechner suggests there are issues of fact precluding resolution of the case on a section 

2-619 motion, and that the documents TRS submitted with the motion are irrelevant. The 

documents of which Lechner complains are all governmental records of which the court can 

take judicial notice. Ill. R. Evid. 803(8), (14) (eff. Apr. 26, 2012). Lechner does not dispute the 

authenticity of these documents and they are certainly relevant to the issues presented. As 

noted above, however, the record does not explain how the records of three different county 

officials point to completely different answers regarding whether the property was taxable.

Lechner argues that the trial court’s ruling deprived it of the chance to get to the bottom of that 

mystery and “ascertain[ ] the truth as to how the property was sold at auction.”

¶ 15 It is indeed strange that county officials would still list the property on the delinquent tax 

roll and sell it for back taxes even after receiving a DOR exemption ruling, issuing certificates 

of error, and refunding a substantial amount of taxes. Lechner contends that the “evidence is 

clear” that the taxes were not paid. However, it is not so clear at all. At best, there is a conflict 

between the certificates of error and the warrant books regarding whether the taxes were 

delinquent. While Lechner never presented the warrant books to the circuit court in the briefing 

on the motion, we must take as true its allegation that the warrant books showed the property as 

tax-delinquent. A section 2-619 motion cannot be used to contradict a well-pled allegation of 

fact in the complaint. Provenzale v. Forister, 318 Ill. App. 3d 869, 879 (2001) (section 2-619 

motion concedes the truth of all well-pled allegations in the complaint; “evidentiary material in 

support of a section 2-619 motion may not be submitted for the purpose of contradicting 

well-pleaded facts in the complaint”).

¶ 16 With those principles in mind, we turn to whether the court below properly dismissed the 

second amended complaint. Our supreme court has noted:

“Although the circuit court dismissed plaintiff’s complaint for a different reason, the 

reasons given for a judgment or order are not material if the judgment or order itself is 

correct. [Citation.] ‘It is the judgment and not what else may have been said by the 

lower court that is on appeal to a court of review. [Citations.] The reviewing court is not 

bound to accept the reasons given by the trial court for its judgment ***.’ [Citation.]

Rather, a reviewing court ‘can sustain the decision of the circuit court on any grounds 

which are called for by the record regardless of whether the circuit court relied on the 

grounds and regardless of whether the circuit court’s reasoning was correct.’ 

[Citation.]” Rodriguez v. Sheriff’s Merit Comm’n, 218 Ill. 2d 342, 357 (2006).

The trial court relied strongly on the certificate of error and the refund checks to find that the 

taxes had been paid. Like the court below, we believe the amended complaint should be 

dismissed, but employ a different analysis to reach that result.

¶ 17 Under the doctrine of unjust enrichment, a plaintiff must show that the defendant has 

“unjustly retained a benefit to the plaintiff’s detriment, and that defendant’s retention of the 

benefit violates the fundamental principles of justice, equity, and good conscience.” HPI 

Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 131 Ill. 2d 145, 160 (1989). Unjust 

enrichment is not an independent cause of action. Martis v. Grinnell Mutual Reinsurance Co., 

388 Ill. App. 3d 1017, 1024 (2009). Rather, it is a remedy for “unlawful or improper conduct as 
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defined by law, such as fraud, duress or undue influence” (internal quotation marks omitted) 

(Alliance Acceptance Co. v. Yale Insurance Agency, Inc., 271 Ill. App. 3d 483, 492 (1995)), or, 

alternatively, it may be based on contracts which are implied in law (Perez v. Citicorp 

Mortgage, Inc., 301 Ill. App. 3d 413, 425 (1998)). However, this theory is inapplicable when 

an express contract, oral or written, governs the parties’ relationship. Id.

¶ 18 Even though there may be an issue of fact regarding whether the property was taxable, 

there is no dispute regarding: (1) the language of real the estate sale contract; and (2) the fact 

that the county refunded taxes to TRS which it had paid in the first instance. We find that 

unjust enrichment is not available as a remedy here because there was a written contract 

governing the payment of the taxes. The contract contained a specific provision stating that 

TRS would be able to keep any taxes refunded to it upon approval of its exemption.

Additionally, the refund checks demonstrated that TRS had paid the taxes. Its refusal to do so a 

second time–10 years after selling the property–hardly constituted misconduct of such an 

egregious nature as to invoke the extraordinary remedies available to victims of unjust 

enrichment. This is particularly so in light of the other remedies which were available to 

Lechner.

¶ 19 In the declaratory judgment count of the second amended complaint, Lechner seeks a 

determination that TRS is responsible to pay Lechner for all future expenses related to the 

allegedly delinquent property tax expenses. Because the contract absolves TRS of 

responsibility for these expenses, the declaratory judgment count falls along with the unjust 

enrichment count.

¶ 20 CONCLUSION

¶ 21 For the foregoing reasons, we affirm the order of the circuit court dismissing the second 

amended complaint.

¶ 22 Affirmed.