Court Opinion

ID: 9859459
Source: CourtListenerOpinion
Date Created: 2023-09-24 21:52:00.832328+00
Date Added: 2024-06-11T10:48:19.818308
License: Public Domain

JUSTICE FREEMAN, dissenting: The court reverses the judgments of the appellate and circuit courts in this case, which held that jurisdiction over this cause rested in the circuit court of Madison County. I am unable to join in the opinion, however, because I believe several of the more troubling aspects of this case have been overlooked in the court’s haste to rule that jurisdiction lies not in the circuit court but in the Court of Claims. In my view, the court’s conclusory analysis with respect to the issue of sovereign immunity is at odds with the spirit of the officer suit exception to the doctrine of sovereign immunity. I believe today’s opinion will have a negative impact on the future willingness of private citizens to do business in Illinois with state officials and therefore respectfully dissent. The sovereign immunity issue was first raised in the circuit court in a motion to dismiss filed by defendants. The trial judge denied the motion because he believed that the case involved an inseparable combination of contractual and constitutional issues, which were inappropriate issues for the Court of Claims to decide. The appellate court agreed, holding that, inter alia, “ [sovereign immunity cannot provide a defense where the court must determine if a State agent acted in violation of statutory or constitutional law or in excess of authority.” PHL, Inc. v. Pullman Bank & Trust Co., No. 5—97—1064 (July 28, 1998) (unpublished order under Supreme Court Rule 23). The genesis of this suit was the 1982 establishment of the Illinois Insured Mortgage Pilot Program (Mortgage Program), which, as the court correctly notes, was designed to stimulate economic development in depressed areas within central and downstate Illinois. State monies were used to create a trust, which would lend money to various commercial enterprises that had experienced difficulty obtaining conventional financing. The trust agreement at issue in this case was executed by the State of Illinois, with the Treasurer directing the trust’s activities. Relevant here is the fact that the Treasurer was charged under this statutory program with the responsibility of overseeing the state’s investment. In November 1982 and December 1983, two loans were made pursuant to the Mortgage Program to different hotel ventures. Unfortunately during the years that ensued, these borrowers had difficulty in meeting their financial obligations under the Mortgage Program loans. The terms of the loans were eventually restructured, but new disputes subsequently arose over the terms of the restructuring. As a result of the disputes, in 1994, plaintiffs began discussions with Treasurer Judy Baar Topinka regarding the possibility of purchasing the loans from the state. These discussions led to the creation of the buy-sell agreements that are at the heart of this case. The Treasurer and the trustee signed the buy-sell agreement on April 19, 1995. At that time, the Treasurer held a news conference where she explained the agreement and the benefits it would inure to the state. According to the terms of the agreements, the closing date was to be on or before June 30, 1995. Shortly thereafter, on May 3, 1995, the Illinois Attorney General announced that he would investigate the propriety of the Treasurer’s selling of the loans to plaintiffs and that the proposed closing would not take place until his review was completed. During the tenure of the “investigation,” plaintiffs were told of the actions of the Attorney General with respect to his intervention into the buy-sell agreements and of the fact that the Treasurer “was acquiescent in the Attorney General’s assertion that he would make the ultimate decision related to her right to proceed with the buy-sell agreements.” Affidavit of Kathleen Vyborny, Defendants’ Appendix, at A — 117. The final day for the closing, June 30, 1995, passed without action. On July 11, 1995, the Attorney General announced that he would not “approve” the agreements based upon the financial advice of a team of University of Illinois professors. On that same date, he also sent an opinion to State Senator Penny Severns in which he took the position that the Treasurer does not have “the authority to create a program of this sort, which extends to matters far in excess of the Treasurer’s statutory and constitutional duties.” 1995 Ill. Att’y Gen. Op. No. 95 — 003, at 6. The Treasurer publicly disagreed with the Attorney General’s financial assessment of the agreements because, in her view, the agreements represented the best financial deal that could be made by the state with respect to the initial hotel venture loans. According to the record, the proposed sale was 20% higher than any other offer received for the loans, 30% higher than the June 1994 appraised value of the loans, and 50% higher than the book value of those loans. As a result of the Attorney General’s opinion, the deal was considered “dead.” Letter of Chief of Staff of the Attorney General, dated July 11, 1995, Defendants’ Appendix, at A — 112. In a letter to plaintiffs’ attorney, the Attorney General spoke of the need to look to the future in light of the fact that the deal was dead and that “to that end, and to aid this office in an analysis of the current status of the agreement of or any future proposal, please consider this our request to you, on behalf of your clients, to allow us the opportunity to examine the books and expense records of both hotels.” Letter of Chief of Staff of the Attorney General, dated July 11, 1995, Defendants’ Appendix, at A — 112. Soon thereafter, this lawsuit commenced. Plaintiffs argue that the Treasurer acted in derogation of her constitutional duties in refusing to perform her agreement to divest the state’s holdings with respect to the hotel ventures after entering into binding agreements to do so. Defendants respond that the doctrine of sovereign immunity deprives the circuit court of jurisdiction over this cause. They maintain that plaintiffs’ cause of action is a simple breach of contract case and that, as such, it must be brought in the Court of Claims. Whether an action is in fact one against the state and hence one that must be brought in the Court of Claims depends not on the formal identification of the parties, but rather on the issues involved and the relief sought. Healy v. Vaupel, 133 Ill. 2d 295, 308 (1990). The prohibition “ ‘against making the State of Illinois a party to a suit cannot be evaded by making an action nominally one against the servants or agents of the State when the real claim is against the State of Illinois itself and when the State of Illinois is the party vitally interested.’ ” Healy, 133 Ill. 2d at 308, quoting Sass v. Kramer, 72 Ill. 2d 485, 491 (1978). The doctrine of sovereign immunity “affords no protection, however, when it is alleged that the State’s agent acted in violation of statutory or constitutional law or in excess of his authority, and in those instances an action may be brought in circuit court.” Healy, 133 Ill. 2d at 308 (and cases cited therein). The doctrine serves to “protect[ ] the State from interference in its performance of the functions of government and preserve[ ] its control over State coffers.” S.J. Groves & Sons Co. v. State, 93 Ill. 2d 397, 401 (1982). The court holds that the officer suit exception to the doctrine of sovereign immunity is inapplicable here. In doing so, the court notes that “the most that can be said with respect to the Treasurer’s actions is that (1) she misread the terms of the Trust Agreement as requiring the Governor’s consent for an amendment to that agreement when such consent was not, in fact, required and (2) she incorrectly believed that the settlement provisions contained in the buy-sell agreements were material covenants to those agreements, when, in fact, the provisions were rendered irrelevant by the settlement of the reliance letter litigation in October 1995.” 216 Ill. 2d at 267. The court then concludes that these errors are “errors of contract and trust interpretation” and are not unconstitutional, ultra vires acts. I find this conclusion rather troubling under the facts of this case because this case concerns more than just mere questions of contract interpretation. As an initial matter, my disagreement with my colleagues lies not in the recitation of facts, with which I agree, but rather in the interpretation of those facts. Similar to the lower courts, I am troubled by the way in which the Attorney General left the Treasurer with little choice but to follow his opinion even though the Treasurer did not agree with it. In this case, we have a very public disagreement between the Attorney General and the Treasurer as to what steps to take to protect the state’s interest in the Trust Agreement. It is clear from the record that the Treasurer was represented by counsel when she entered into the agreements with plaintiffs. The record is also clear that the Treasurer did not seek the Attorney General’s input into the matter. Had the Treasurer wanted the Attorney General’s opinion, it stands to reason that she would have sought it prior to signing the agreements in the first place. The record indicates clearly that the Attorney General, on his own initiative, only entered into the fray after news accounts started to be published about the impending transaction. Indeed, the Attorney General’s public posturing in this case at the time in question smacks more of sound-bite politics than of true legal or even financial acumen. As I shall explain, our state constitution does not give the Attorney General authority over the Treasurer in the manner that was exercised in this case. Nor does the Trust Agreement give the Attorney General the duties of oversight that the Attorney General willed unto himself. I believe that these concerns are what caused the lower courts that have addressed this issue to rule that sovereign immunity does not lie under these facts. The record makes clear that once the Attorney General entered into the matter, the Treasurer, for all intents and purposes “opted out,” despite her conviction that the deal she brokered was in the best financial interests of the state. The record establishes that the Treasurer did not act in June because she was going to let the Attorney General make the ultimate decision on her right to close. It is clear from reviewing the contemporaneous statements regarding the transaction that are contained in the record that the Treasurer was ready and willing to execute the buy-sell agreements, which she believed to be in the best financial interests of the state, until the Attorney General intervened. As noted previously, plaintiffs were informed in early May 1995, that the ultimate decision regarding the sale would be made by the Attorney General. And it is here where I part company with my colleagues because I do not believe that it is proper to use the doctrine of sovereign immunity under these circumstances. The Treasurer violated her constitutional obligation by allowing the Attorney General to make the ultimate decision regarding whether the sale would be made. As I noted, the Trust Agreement does not charge the Attorney General with any oversight responsibilities. The Trust Agreement names the Treasurer as the constitutional officer charged with such duties. The record affirmatively demonstrates that, despite having this authority, it was the Attorney General who announced that he would not “approve” the agreements. Meanwhile, the Treasurer allowed the closing date to pass while she awaited the final word regarding its merits, both financial and legal, from the Attorney General. Thus, for all intents and purposes, it was the Attorney General who took charge of the oversight of the Trust Agreement. The Attorney General’s review was not completed until July 10, 1995, and it was at that time that he publicly announced that the Treasurer did not have the authority to make the transaction and that her doing so was in excess of any of her statutory or constitutional duties. The Attorney General’s July 11, 1995, letter to plaintiffs, in which he requested the books and expense records of both hotels, indicates to me, at least, that the Attorney General was taking over a greater role in the handling of the Trust Agreement. In light of the above, the Attorney General killed the deal on the basis of his legal conclusion that the buy-sell agreements were invalid and his conclusion that the agreements were fiscally inadvisable for the state. These facts are recounted in the news accounts that were made a part of the record, which reveal that the Attorney General on the day that he announced that the deal was “dead” was quoted as saying, “After a careful, comprehensive review by both my staff and the U of I team, I conclude that it is not in the state’s best interest *** to settle. It’s a bad deal for the state.” Defendants’ Appendix, at A — 123. The Attorney General also took the position that any loan arrangement made by the Treasurer would need his approval.4 Contrariwise, at a separate news conference held on the same day, the Treasurer was quoted as saying that she told the Attorney General that she “could not accept the numbers” and insisted that the deal she struck was financially the most lucrative the state could hope for. Defendants’ Appendix, at A — 121. Clearly, the record establishes that the Attorney General would not allow the Treasurer to proceed with this transaction. Stated simply, the situation we have at bar has two constitutional officers at loggerheads over who has the authority to do what. The Attorney General placed the Treasurer in a situation where she was forced to choose between doing her job, i.e., exercising her judgment on financial matters with respect to the Trust, or following the unsought advice of a fellow state officer. The court states that the Treasurer’s actions must be construed as voluntary because the Attorney General’s advice was not legally binding and that she was free to disregard it. I disagree because the tone and tenor of the contemporaneous comments suggest otherwise. The Attorney General repeatedly stated publicly that the deal would not go through without his approval. Indeed, letters contained in the record indicate that it was the Attorney General, not the Treasurer, who would examine “the books and expense records” with respect to any analysis of the agreement in question or any future proposal. It would seem that this type of conflict would fall within the officer suit exception to the doctrine at least with respect to the circumstances here. On the day that the Attorney General stated his opinion and announced that the deal was dead, the Treasurer publicly characterized the opinion as “illogical” and “unrealistic” and likened the Attorney General’s actions to “reversing the outcome of the Super Bowl on the basis of armchair speculation from Monday morning quarterbacks.” The Treasurer further stated that the agreements were valid, yet still inexplicably followed the Attorney General’s opinion. The Treasurer’s colorful sporting analogy reveals that the Treasurer did in fact delegate her duties to the Attorney General. The only way a Monday morning quarterback can control the outcome of the Super Bowl is if the officials whose job it is to rule on calls allow themselves to be reversed by others. The Treasurer, whose job it was to “make the call” in this case allowed herself to be reversed by an official who had no legal or constitutional right to “make the call.” This demonstrates the type of constitutional derogation of duty that both the lower courts in this case were troubled by and why they ruled that the doctrine of sovereign immunity did not apply to this case. The court today chooses to characterize the Treasurer’s actions as purely voluntary, but I do not. In my view, the Treasurer, at the time all of these events occurred, took a “my hands are tied” approach to the Attorney General’s intervention. The plaintiffs allege that by taking such approach, the Treasurer delegated her constitutional duties in such a way as to render inapplicable the doctrine of sovereign immunity. I agree. The record indicates that the Treasurer believed the agreements were valid and the Attorney General was wrong on a financial level. The Treasurer was constitutionally and statutorily obligated to protect the state’s assets and follow through on her contractual obligations. In her brief, the Treasurer claims that her actions in failing to perform the contract cannot be equated with her violating any constitutional or statutory duty. I believe her argument, however, oversimplifies matters to an extent — the Treasurer failed to perform the contract because the Attorney General would not let her proceed and she did nothing to prevent him from doing so. This raises the troubling specter of our Attorneys General having the power to invalidate every contract entered into by state officials at his or her whim. It also suggests that the Attorney General has the power to “go over the head” of the Treasurer in matters related to the duties of her office. Such a holding would appear to be at odds with our case law in this area. Under our current state constitution, the Treasurer “in accordance with law, shall be responsible for the safekeeping and investment of monies and securities deposited with him.” Ill. Const. 1970, art. V, § 18. Although our Constitution does not provide a precise explanation of the Treasurer’s duties, this court has noted that “[i]n the absence of a constitutional definition of his powers and duties the primal functions of a treasurer are necessarily implied. He is required to perform the duty of receiving and safely keeping the public funds which are entrusted to him, even in the absence of a statute. The very name given to his office denotes his obligation in this regard and the constitution implies it. Both the power and the duty of receiving and safely keeping the public funds entrusted to him are within the purview of the powers and duties which are inherent in his office and in no way depend upon the authority of the General Assembly. He can neither be deprived of the power nor relieved of the duty.” People ex rel. Nelson v. West Englewood Trust & Savings Bank, 353 Ill. 451, 465 (1933). Moreover, the Treasurer, under the terms of the Trust Agreement, was made the state officer responsible for directing the trust activities, a trust which was funded with state monies. Here, it is clear that the Treasurer believed that she had the authority to enter into the agreements and, until the time the Attorney General intervened, was prepared to close on the deal because she believed that it represented the best financial deal the state could get. These actions are consistent with her authority under the Trust Agreement and under her general duties as Treasurer. The Attorney General then stepped into the matter and asserted both his legal and financial opinions over it. I believe that once the Treasurer signed the agreements with plaintiffs, it was too late for the Attorney General to offer his opinion as to the validity of the agreements. Had the Attorney General had doubts about the legality of the Treasurer’s actions, the better approach would have been for him to have initiated, as the state’s chief legal officer, some type of injunctive action to preclude the sale in which a judicial determination regarding how many of this state’s constitutional officers were needed to authorize these agreements could be made. In fact, the Attorney General’s office’s “Guidelines” suggest that this is the proper course of action to take in such instances. See appendix (“Statement of Policy of the Attorney General Relating to Furnishing Written Opinions, Adopted March 29, 1962”).5 The legal questions regarding the authority to enter into the agreements are, at the end of the day, questions that can only be resolved with definitiveness by the judicial branch. Attorney General opinions are advisory in nature and are not binding upon the state or the courts. Bonaguro v. County Officers Electoral Board, 158 Ill. 2d 391 (1994); W. Scott, The Role of Attorney General’s Opinions in Illinois, 67 N.W. L. Rev. 643 (1972). Thus, we do not know whether the Attorney General’s opinion is correct — the analysis used in today’s opinion is such that judiciary need never determine whether that opinion withstands scrutiny. See 216 Ill. 2d at 266-67 (expressing “no opinion” as the correctness of the Attorney General’s opinion). Unfortunately, the court’s treatment of this issue prevents our courts from addressing any of these important matters. The primary case upon which the court relies, Smith v. Jones, 113 Ill. 2d 126 (1986), can be distinguished in that the plaintiffs there did not allege a violation of the law. Indeed, the complaint itself recognized that the state official’s actions in question were done “pursuant to the letter of the [Lottery] Act and the rules and regulations thereunder.” (Emphasis in original.) Smith, 113 Ill. 2d at 132. The court in Smith stressed that the allegations of the complaint were only that the official exceeded his authority by breaching the contract. In contrast, the allegations here are that the Treasurer abdicated her authority to the Attorney General. Plaintiffs argue that the contract was breached, not because the Treasurer was following the letter of the law, but was allowing, contrary to the constitution and her duty under the Mortgage Program, another state official to make calls that she alone had the authority and the discretion to make. Whereas what was involved in Smith was, in the court’s words, “simply a drawing in which the amount of prize money due the plaintiffs is in dispute” (Smith, 113 Ill. 2d at 133), what is involved here is whether it is proper for a constitutional officer to pass her duties on to another constitutional officer. As noted previously, one of the purposes of sovereign immunity is to preserve the state’s coffers. Ironically, the court’s decision to invoke the doctrine here does more to harm those coffers than to protect them. The record is replete with references to the financial cost to the state in maintaining the initial loans. The agreement reached by the Treasurer and the plaintiffs had many benefits— the first of which was that the state would no longer be liable for the hotel properties, which had the potential to end up in foreclosure. The state was also to receive more money than was previously offered by other potential buyers. The record contains no mention of the current financial status of the loans, and the parties have not apprised us of any change to that status. As a result, there is no reason for this court to ignore the record evidence in this case, namely, that the agreements reached by the Treasurer had many financial benefits for the state. Based on the facts as they are currently before us, it is my belief that the application of sovereign immunity to this case frustrates, rather than serves, the goal behind the doctrine. In my view, the court’s opinion simply concludes that any errors made by the Treasurer in this case constitute errors of contract law. I believe this approach fails to address the crux of plaintiffs’ arguments. The question is not whether the Treasurer made a mistake in interpreting a contract or a trust agreement. Rather, the question is whether the Treasurer abdicated her duty by allowing her actions to be dictated by the Attorney General knowing that the financial interests of the state were better served by closing on the agreements. The court states that the Treasurer “should not be placed in the position of having to refuse to hear legal advice in order to avoid violating the constitution.” 216 Ill. 2d at 266. I am not advocating putting the Treasurer in the position of “refusing to hear legal advice.” The Treasurer in this case did not have to “refuse to hear” the Attorney-General’s advice, but she did have an obligation to refuse to follow that advice when she believed that the advice was not in the best interests of the state. The record makes clear that the Treasurer publicly and openly disagreed with the Attorney General on every level — she believed that her agreements with plaintiffs were valid and that the deal was in the financial interests of the state. When such conflicts arise amongst constitutional officers, the solution is not for one to “back down” to the other as the court seemingly suggests today. I am concerned about this because I believe this case, at root, represents the ability of our citizens to trust and have faith in the actions of our public officials. They need to trust, for example, when dealing with a state treasurer in negotiations such as these, that another constitutional officer will not be able to “kill” the deal with such unfettered power. Today’s opinion certainly does not allay fears that dealings with state officials are not fair and evenhanded. I also find another aspect of the court’s opinion troubling. The court notes that the proper tribunal for the adjudication of this claim is the Court of Claims. Plaintiffs here, however, are seeking specific performance. During oral argument, the parties were asked whether the Court of Claims can provide the remedy of specific performance. It would appear from the conclusion reached by this court that the implicit answer to that question is yes. The Court of Claims, however, has persistently recognized that it cannot grant equitable relief (see Garimella v. Board of Trustees of the University of Illinois, 50 Ill. Ct. Cl. 350 (1996) (and cases cited therein)) despite pronunciations by this court and our appellate court which would appear to take a contrary view. See Ellis v. Board of Governors of State Colleges & Universities, 102 Ill. 2d 387 (1984); Management Ass’n of Illinois, Inc. v. Board of Regents of Northern Illinois University, 248 Ill. App. 3d 599 (1993); Brucato v. Edgar, 128 Ill. App. 3d 260 (1984). Given the differing opinions that exist on this issue and the fact that questions were raised at oral argument with respect to it, I would order additional briefing on the matter so that our opinion in this case would speak clearly on this important issue. In light of the above, I am unable to join in my colleagues’ opinion and respectfully dissent. APPENDIX STATEMENT OF POLICY OF THE ATTORNEY GENERAL RELATING TO FURNISHING WRITTEN OPINIONS Adopted March 29,1962 The Attorney General of the State of Illinois makes the following statement ofpolicy relating to the constitutional and statutory duty to give written opinions. A. Persons to Whom Opinions Will Be Issued 1. The Attorney General will furnish written opinions as required by law to the Governor and other elected and appointed State officers upon legal or constitutional questions relating to the duties of those officers, respectively. 2. The Attorney General will furnish written opinions to the officers of either branch ofthe General Assembly and cliairpersons and minority spokespersons of committees thereof on matters that relate to their duties as such. 3. Tlie Attorney General will consult with and advise the several State’s Attorneys in matters relating to the duties of their offices and will furnish written opinions to Statete Attorneys in matters relating to their official duties, when appropriate. 4. The Attorney General is not authorized to furnish written opinions to the officers of, or attorneys for, public corporations, municipal corporations, townships or other political subdivisions of the State, in the absence of specific statutory authority providing therefor. 5. Hie Attorney General is not authorized to furnish opinions to private persons or entities. B. Font! in Which Opinion Requests Should Be Made 1. Requests must be in the form of a letter and addressed to the Attorney General, attention Opinions Bureau, 500 South Second Street, Springfield, Illinois 62706. 2. All requests must contain a clear, concise question of law and a complete statement of the facts describing the situation out of which the legal issue arises. The Attorney General will not seek out the facts or infer the question from enclosed correspondence. All requests should name a person whom the staff of die Attorney General may contact to discuss the request 3. Requests made by executive officers, by chairpersons, directors, heads or executive secretaries of boards, commissions, departments and agencies of the State, by officers of the General Assembly and its committees and commissions and by State's Attorneys must be signed or endorsed by such officers. 4. Requests from officers under the jurisdiction of the Governor must also be forwarded through his office, in accordance with his policy. C. Situations in Which No Opinion Will Be Issued 1. The Attorney General will not furnish opinions regarding the exercise of executive judgment or discretion, nor on questions of fact 2 The Attorney General will not furnish opinions on questions scheduled for determination by the courts. 3. No opinion should be requested unless a bonafide need exists by the party requesting itwith respect to the performance of his or her official duties. 4. For a particularly difficult and important question of law, officials should resort to a declaratory judgment action whenever practicable, and the Attorney General may recommend this or other courses of action that may be more appropriate than the issuance of an opinion D. Miscellaneous Provisions 1. Officers requesting opinions and interested private parties or other governmental agencies may submit memoranda of law and policy and other statements and material for the consideration by the Attorney General. Such material should be submitted to the attention of die Opinions Bureau in the Springfield office of the Attorney General. 2. All official opinions of the Attorney General are signed by the Attorney General. Informal opinions and other letters signed by Assistant Attorneys General are not official opinions 3. All opinions are on file in the Attorney General's office in Springfield. 4. These guidelines do not apply to the furnishing of interpretive opinions by the Attorney General as administrator of the Franchise Disclosure Act of 1987 (815ILCS 705/1 etseq.). 5. In order for the Attorney General to act in the best interests of the public and the State, all guidelines are subject to exception where special circumstances can be shown to warrant an exception Please note that it is very helpful for the Attorney General to be apprised of all background information relating to an opinion request Further, any information relating to the practical effect of any particular resolution of a question posed should be included with a request for an opinion.  It is important to note that nowhere in the statutory program which spawned the Trust Agreement is authority to approve loan arrangements given to the Attorney General. Nor does the statute provide the Attorney General with fiscal oversight with respect to the best interests of the state. Rather, under the statutory framework of the Mortgage Program, the Treasurer was charged with these responsibilities.   The Guidelines give four examples of situations in which no opinion will be issued. At least three of the four situations indicated in the guidelines are arguably at play in this case, including (i) opinions will not be furnished regarding the exercise of executive judgment, (ii) opinions should not be requested unless a bona fide need exists by the party requesting it with respect to the performance of his or her official duties, and (iii) opinions should not be furnished in cases of difficult or important questions of law and resort should be made to a declaratory judgment action. See appendix (“Statement of Policy of the Attorney General Relating to Furnishing Written Opinions, Adopted March 29, 1962”).