Court Opinion

ID: 4415959
Source: CourtListenerOpinion
Date Created: 2019-07-11 19:03:49.919579+00
Date Added: 2024-06-11T14:51:33.956888
License: Public Domain

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                                   Appellate Court                           Date: 2019.07.11
                                                                             11:09:33 -05'00'

                  Dawson v. City of Geneseo, 2018 IL App (3d) 170625

Appellate Court        LARRY DAWSON, Plaintiff-Appellant, v. CITY OF GENESEO,
Caption                Defendant-Appellee.

District & No.         Third District
                       Docket No. 3-17-0625

Filed                  October 23, 2018

Decision Under         Appeal from the Circuit Court of Henry County, No. 16-L-24; the
Review                 Hon. Jeffrey W. O’Connor, Judge, presiding.

Judgment               Affirmed.

Counsel on             John E. Remus, of McCarthy, Callas, & Feeney, P.C., of Rock Island,
Appeal                 for appellant.

                       Margaret Kostopulos, Darcy L. Proctor, and Kurt S. Asprooth, of
                       Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer, P.C., of
                       Chicago, for appellee.

Panel                  PRESIDING JUSTICE CARTER delivered the judgment of the court,
                       with opinion.
                       Justices McDade and Schmidt concurred in the judgment and opinion.
                                                OPINION

¶1        Plaintiff, Larry Dawson, a retired former employee of defendant, the City of Geneseo
     (City), filed a class action lawsuit against the City to challenge the City’s reduction of the
     percentage it contributed to retiree health insurance premiums. Plaintiff alleged in his first
     amended complaint a violation of the pension protection clause of the Illinois Constitution of
     1970 (Ill. Const. 1970, art. XIII, § 5) (count I) and claims of breach of contract (count II),
     promissory estoppel (count III), and equitable estoppel (count IV). The City filed a combined
     motion, seeking to dismiss count I of the first amended complaint pursuant to section 2-615 of
     the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2016)) and to dismiss counts II,
     III, and IV pursuant to section 2-619 of the Code (id. § 2-619). Plaintiff opposed the motion to
     dismiss. After a hearing, the trial court granted the City’s motion and dismissed plaintiff’s first
     amended complaint with prejudice. Plaintiff appeals. We affirm the trial court’s judgment.

¶2                                        I. BACKGROUND
¶3        Plaintiff previously worked for the City and subsequently retired. At the time of his
     retirement, the City’s Personnel Ordinance allowed employees who retired with 10 or more
     years of service to continue to participate in the City’s group health insurance program on a
     shared-cost basis with the City. The fixed percentage of the cost that the City would
     pay/contribute to a retiree’s health insurance premium was specified in the ordinance and
     varied depending upon the employee’s years of service. In November 2011, however, the City
     amended its Personnel Ordinance due to rising healthcare costs, reduced the contribution
     percentage, and capped the amount that it would contribute to an existing retiree’s health
     insurance premium. The amendment went into effect in January 2012.
¶4        In December 2016, plaintiff, on behalf of himself and a proposed class of retired City
     employees, filed the instant class action lawsuit against the City regarding the reduction of the
     health insurance contribution. 1 The complaint was later amended. In count I of the first
     amended complaint, plaintiff alleged that the health insurance contribution was a retirement or
     pension benefit that was protected under the pension protection clause of the Illinois
     Constitution and that the City violated that clause by diminishing or impairing that benefit. In
     count II, plaintiff alleged that the Personnel Ordinance constituted a valid and enforceable
     contract between the City and the retirees and that the City breached that contract by reducing
     the health insurance contribution. In count III, plaintiff sought relief under a theory of
     promissory estoppel, alleging that the contribution percentage specified in the pre-amended
     version of the Personnel Ordinance was an unambiguous promise by the City and that the
     retirees had relied upon that promise to their detriment. Finally, in count IV of the first
     amended complaint, plaintiff alleged that the Personnel Ordinance and the City’s course of
     conduct had created a contract between the City and the retirees, from which the City received
     a benefit, and that the City should be equitably estopped from refusing to pay the prior
     contribution amount. Plaintiff sought money damages and to restore the City’s contribution
     percentage to its prior level for retirees. Copies of the health insurance provisions from the
     pre-amendment and post-amendment versions of the Personnel Ordinance were attached to
     plaintiff’s first amended complaint as supporting documents.

        1
         As of this time, the proposed class specified in plaintiff’s complaint has not been certified.

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¶5        In June 2017, the City filed a combined motion to dismiss plaintiff’s first amended
     complaint. In the combined motion, the City sought to dismiss count I of the first amended
     complaint pursuant to section 2-615 of the Code because count I allegedly failed to state a
     cause of action for violation of the pension protection clause. The City also sought to dismiss
     counts II, III, and IV of the first amended complaint pursuant to section 2-619 of the Code
     because the counts were allegedly barred by a disclaimer clause in the Personnel Ordinance
     that precluded the formation of a contract between the City and the retirees. The City attached
     to its combined motion to dismiss a full copy of the Personnel Ordinance. Of relevance to this
     appeal, the first page of the Personnel Ordinance indicated that the ordinance had been enacted
     in 1995 and had been amended several times over the years. Also of relevance to this appeal,
     section 1.01 of the ordinance, titled “Personnel Ordinance Declaration,” (emphasis omitted)
     provided:
                  “Terms, conditions and policies set forth in this ordinance are not intended to create
              a contract, nor are they to be construed to constitute contractual obligations of any kind
              or a contract of employment between the City and any of its employees for a specified
              period of time. Contents of the Personnel Ordinance are for informational purposes
              only.
                  This ordinance has been developed at the discretion of the Council and may be
              amended or cancelled at anytime, at the City’s sole discretion upon the advice and
              recommendation of the City Boards.”
     Plaintiff filed a response and opposed the City’s combined motion to dismiss, and the City
     filed a reply to that response.
¶6        In August 2017, a hearing was held on the City’s combined motion to dismiss. After
     listening to the arguments of the attorneys, the trial court granted the City’s combined motion,
     dismissed count I of the first amended complaint with prejudice pursuant to section 2-615 of
     the Code, and dismissed counts II, III, and IV of the first amended complaint with prejudice
     pursuant to section 2-619 of the Code. Plaintiff appealed.

¶7                                           II. ANALYSIS
¶8                     A. The Trial Court’s Grant of the City’s Section 2-615
                                      Motion to Dismiss Count I
¶9       As his first point of contention on appeal, plaintiff argues that the trial court erred in
     granting the City’s section 2-615 motion to dismiss count I (the violation of the pension
     protection clause claim) of plaintiff’s first amended complaint. Plaintiff asserts that the motion
     to dismiss should have been denied because (1) the benefit at issue in this case—a health
     insurance contribution provided to employees and retirees by the City, a unit of local
     government—is protected under the pension protection clause, (2) as a protected benefit, the
     health insurance contribution cannot be diminished or impaired by the City, and (3) the City’s
     unilateral action of modifying the Personnel Ordinance, which had the direct effect of
     diminishing and impairing plaintiff’s health insurance benefits, violated the pension protection
     clause. Thus, plaintiff contends, although somewhat implicitly, that count I of his complaint
     was sufficient to state a claim for violation of the pension protection clause. In making that
     contention, plaintiff maintains that the coverage of the pension protection clause is not limited
     solely to the State’s public pension or retirement systems, as the City claims, but applies to

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       benefits provided by a unit of local government, such as the City in the present case, as the
       plain language of the pension protection clause clearly indicates. For those reasons, plaintiff
       asks that we reverse the trial court’s grant of the City’s section 2-615 motion to dismiss count I
       of plaintiff’s first amended complaint and, presumably, that we remand this case for further
       proceedings.
¶ 10        The City argues that the trial court’s ruling was proper and should be upheld. In support of
       that argument, the City asserts that (1) the pension protection clause applies only to benefits
       derived from membership in one of the State’s public pension or retirement systems (those
       governed by the Illinois Pension Code (40 ILCS 5/1-101 et seq. (West 2016))), (2) the health
       insurance contribution provided by the City in this case was not such a benefit but, rather, was
       merely an employment policy of the City, (3) in addition, the health insurance contribution
       was not a pension or retirement system in and of itself, (4) the pension protection clause,
       therefore, did not apply to the health insurance contribution in the present case, and (5) the
       City’s change in its employment policy, which reduced the health insurance contribution, did
       not violate the pension protection clause. Thus, the City contends that the trial court correctly
       found that count I of plaintiff’s first amended complaint failed to state a cause of action for
       violation of the pension protection clause and correctly granted the City’s section 2-615
       motion to dismiss count I on that basis. For that reason, the City asks that we affirm the trial
       court’s grant of the City’s section 2-615 motion to dismiss count I of plaintiff’s first amended
       complaint.
¶ 11        A section 2-615 motion to dismiss challenges the legal sufficiency of a complaint based
       upon defects that are apparent on the face of the complaint. See 735 ILCS 5/2-615 (West
       2016); Heastie v. Roberts, 226 Ill. 2d 515, 531 (2007). In ruling upon a section 2-615 motion, a
       court must accept as true all well-pleaded facts and all reasonable inferences that may be drawn
       from those facts. Heastie, 226 Ill. 2d at 531. The crucial inquiry in ruling upon a section 2-615
       motion to dismiss is whether the allegations of the complaint, when considered in a light most
       favorable to the plaintiff, are sufficient to state a cause of action upon which relief can be
       granted. Board of Directors of Bloomfield Club Recreation Ass’n v. The Hoffman Group, Inc.,
       186 Ill. 2d 419, 424 (1999). A cause of action should not be dismissed pursuant to section
       2-615 unless it is clearly apparent that the plaintiff cannot prove any set of facts that will entitle
       the plaintiff to recovery. Heastie, 226 Ill. 2d at 531. In reviewing a trial court’s ruling on a
       section 2-615 motion to dismiss, the appellate court applies a de novo standard of review. Id. at
       530-31. When de novo review applies, the appellate court performs the same analysis that the
       trial court would perform. Direct Auto Insurance Co. v. Beltran, 2013 IL App (1st) 121128,
       ¶ 43. The appellate court may affirm a trial court’s grant of a section 2-615 motion to dismiss
       on any basis supported by the record. Fidelity National Title Insurance Co. of New York v.
       Westhaven Properties Partnership, 386 Ill. App. 3d 201, 220 (2007).
¶ 12        The pension protection clause of the Illinois Constitution provides that “[m]embership in
       any pension or retirement system of the State, any unit of local government or school district,
       or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the
       benefits of which shall not be diminished or impaired.” Ill. Const. 1970, art. XIII, § 5. Thus,
       members of a pension or retirement plan that is subject to the pension protection clause’s
       provisions have a legally enforceable right to receive the benefits that they have been
       promised. In re Pension Reform Litigation, 2015 IL 118585, ¶ 46. In interpreting the pension
       protection clause, our supreme court has stated that the clause means precisely what it says—if

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       something qualifies as a benefit of the enforceable contractual relationship resulting from
       membership in one of the State’s pension or retirement systems, it cannot be diminished or
       impaired. Id. ¶ 45 (discussing the application of the pension protection clause in a case
       involving a challenge to the constitutionality of an amendment to the Illinois Pension Code);
       Kanerva v. Weems, 2014 IL 115811, ¶ 38 (discussing the application of the pension protection
       clause in a case involving a challenge to a public act eliminating the statutory standards for the
       State’s contributions to health insurance premiums for members of the State’s retirement
       systems). The protections afforded to such benefits by the pension protection clause attach
       once an individual first starts employment in a position covered by a public pension or
       retirement system, not when the employee ultimately retires. Pension Reform Litigation, 2015
IL 118585, ¶ 46. Therefore, once a person begins work and becomes a member of a public
       pension or retirement system, any subsequent changes to the Illinois Pension Code that would
       diminish or impair the benefits conferred by membership in the pension or retirement system
       cannot be applied to that person. Id.
¶ 13        In the present case, after having reviewed the record, we find that the benefit plaintiff seeks
       to enforce, a contribution by the City to health insurance premiums for employees and retirees,
       is not a pension or retirement system in and of itself, as plaintiff seems to imply. Nor is it a
       benefit that results from membership in one of the protected public pension or retirement
       systems—those provided for under the Illinois Pension Code—some of which are established
       and administered by participating municipalities.2 See Kanerva, 2014 IL 115811, ¶ 36. We
       must conclude, therefore, that the City’s health insurance contribution is not a benefit that is
       protected by the pension protection clause from being diminished or impaired by the City. See
       Ill. Const. 1970, art. XIII, § 5; Pension Reform Litigation, 2015 IL 118585, ¶ 45; Kanerva,
       2014 IL 115811, ¶ 38. Rather, as the City maintains, the health insurance contribution was
       merely part of the City’s employment policy and was offered to all employees and to retirees
       with 10 or more years of service, regardless of the employee’s or retiree’s membership in a
       public pension or retirement system. See Pisani v. City of Springfield, 2017 IL App (4th)
160417, ¶¶ 25-32 (finding that the city’s elimination of a vacation buyback provision, which
       was an employment policy contained in an ordinance, did not violate the pension protection
       clause). Thus, the City was free to change its employment policy and to reduce or change the
       health insurance contribution without running afoul of the pension protection clause. Because
       plaintiff did not and could not plead facts sufficient to establish a pension protection clause
       violation, the trial court properly granted the City’s section 2-615 motion to dismiss count I of
       plaintiff’s first amended complaint. See Heastie, 226 Ill. 2d at 531; Board of Directors of
       Bloomfield Club Recreation Ass’n, 186 Ill. 2d at 424.

           2
            Some of the pension or retirement systems provided for under the Illinois Pension Code include
       the General Assembly Retirement System (40 ILCS 5/2-101 et seq. (West 2016)), the Police Pension
       Fund (id. § 3-101 et seq.), the Firefighters’ Pension Fund (id. § 4-101 et seq.), the Illinois Municipal
       Retirement Fund (id. § 7-101 et seq.), the State Employees’ Retirement System of Illinois (id. § 14-101
       et seq.), the State Universities Retirement System (id. § 15-101 et seq.), the Teachers’ Retirement
       System of the State of Illinois (id. § 16-101 et seq.), and the Judges Retirement System of Illinois (id.
       § 18-101 et seq.).

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¶ 14                      B. The Trial Court’s Grant of the City’s Section 2-619
                                  Motion to Dismiss Counts II, III, and IV
¶ 15        As his second point of contention on appeal, plaintiff argues that the trial court erred in
       granting the City’s section 2-619(a)(9) motion to dismiss counts II, III, and IV (the breach of
       contract, promissory estoppel, and equitable estoppel claims) of plaintiff’s first amended
       complaint. Plaintiff asserts that the trial court did not have sufficient information before it to
       grant the City’s section 2-619 motion to dismiss because the first page of the Personnel
       Ordinance that the City tendered indicated that the ordinance had been amended several times
       over the years but did not indicate whether the disclaimer upon which the City relies was
       present in the applicable prior version of the ordinance. Rather, plaintiff contends, a more
       thorough review of the history of the ordinance should be undertaken through the discovery
       process to determine if the disclaimer was present in the applicable prior version. Plaintiff
       asks, therefore, that we reverse the trial court’s grant of the City’s section 2-619 motion to
       dismiss counts II, III, and IV of plaintiff’s first amended complaint and that we remand this
       case with directions for further proceedings.
¶ 16        The City argues that the trial court’s ruling was proper and should be upheld. The City
       asserts that the disclaimer contained in the Personnel Ordinance is a clear and unambiguous
       statement by the City that the Personnel Ordinance does not create any contractual rights or
       constitute a binding unchangeable promise by the City. In fact, the City maintains, the intent of
       the disclaimer was to prevent any employee from relying upon the terms of the ordinance.
       Finally, and more directly to plaintiff’s specific contention, the City asserts that the time for
       plaintiff to investigate the history of the ordinance was prior to filing this lawsuit. The City
       notes that plaintiff has not alleged in his first amended complaint that a different version of the
       Personnel Ordinance applies or that the applicable version of the Personnel Ordinance lacks
       the disclaimer. For all of the reasons stated, the City asks that we affirm the trial court’s grant
       of the City’s section 2-619 motion to dismiss counts II, III, and IV of plaintiff’s first amended
       complaint.
¶ 17        Section 2-619 of the Code allows a litigant to obtain an involuntary dismissal of an action
       or claim based upon certain defects or defenses. See 735 ILCS 5/2-619 (West 2016); Van
       Meter v. Darien Park District, 207 Ill. 2d 359, 367 (2003). The statute’s purpose is to provide
       litigants with a method for disposing of issues of law and easily proven issues of fact early in a
       case, often before discovery has been conducted. See Van Meter, 207 Ill. 2d at 367; Advocate
       Health & Hospitals Corp. v. Bank One, N.A., 348 Ill. App. 3d 755, 759 (2004). In a section
       2-619 proceeding, the moving party admits the legal sufficiency of the complaint but asserts an
       affirmative defense or other matter to defeat the nonmoving party’s claim. Van Meter, 207 Ill.
2d at 367. Section 2-619 lists several different grounds for which an involuntary dismissal may
       be granted. See 735 ILCS 5/2-619(a)(1) to (a)(9) (West 2016). Under subsection (a)(9), the
       subsection that applies in this case, a litigant may obtain an involuntary dismissal of a claim
       asserted against him if the claim is barred by other affirmative matter, which avoids the legal
       effect of or defeats the claim. Id. § 2-619(a)(9). An “affirmative matter” is something in the
       nature of a defense that negates the cause of action completely. Van Meter, 207 Ill. 2d at 367.
       In ruling upon a section 2-619 motion to dismiss, the court must construe all of the pleadings
       and supporting documents in the light most favorable to the nonmoving party. Id. at 367-68.
       On appeal, a dismissal pursuant to section 2-619 is reviewed de novo. Id. at 368. As noted
       above, when de novo review applies, the appellate court performs the same analysis that the

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       trial court would perform. Beltran, 2013 IL App (1st) 121128, ¶ 43. A trial court’s grant of a
       section 2-619 motion to dismiss a complaint may be affirmed on any basis supported by the
       record. Board of Trustees of Community College, District No. 508 v. Coopers & Lybrand LLP,
       296 Ill. App. 3d 538, 543 (1998).
¶ 18        In resolving the employment-related section 2-619 issue in the present case, we are
       mindful of the following principles of employment law. It is well established under Illinois law
       that an employee hired for an indefinite period of time may be terminated at will. See Duldulao
       v. Saint Mary of Nazareth Hospital Center, 115 Ill. 2d 482, 489 (1987). The presumption of
       at-will employment, however, may be overcome by demonstrating that the parties contracted
       otherwise. Id. For example, an employee handbook may create contract rights that may be
       enforced by an employee if the following three traditional contract elements are present:
       (1) the language of the handbook contains a promise clear enough that the employee would
       reasonably believe that an offer has been made, (2) the handbook is disseminated to the
       employee so that the employee is aware of its contents and reasonably believes the promise
       contained therein to be an offer, and (3) the employee starts working for the employer or
       continues to do so, thereby accepting the offer and providing consideration through his or her
       continued employment. See id. at 490; Ivory v. Specialized Assistance Services, Inc., 365 Ill.
       App. 3d 544, 546 (2006). An employer who chooses to set forth policies in an employee
       handbook as an inducement to attract and retain a skilled and loyal workforce cannot later
       disregard those obligations simply because they now seem inconvenient or burdensome. See
       Doyle v. Holy Cross Hospital, 186 Ill. 2d 104, 116 (1999). Nevertheless, an employer may
       negate the promises contained in an employee handbook through the use of a disclaimer. See
       Duldulao, 115 Ill. 2d at 491; Ivory, 365 Ill. App. 3d at 546. Thus, when an employee handbook
       contains a disclaimer indicating that the handbook promises nothing and does not act as a
       contract, no enforceable contract rights will be created in favor of the employee. Ivory, 365 Ill.
       App. 3d at 546. Rather, under those circumstances, it would not be reasonable for the employee
       to interpret the promises made in the handbook as an offer or to rely upon those promises. See
       id.
¶ 19        In the instant case, when we consider the legal principles set forth above along with the
       record presented, we find that the trial court correctly granted the City’s section 2-619 motion
       to dismiss. As the City rightly notes, the disclaimer contained in the City’s Personnel
       Ordinance clearly stated that the terms, condition, and policies set forth in the ordinance were
       for information purposes only, were not intended to create a contract, and were not to be
       construed as constituting contractual obligations of any kind or a contract of employment
       between the City and any of its employees. Based upon the clear language of the instant
       disclaimer, plaintiff could not reasonably believe that the terms of the Personnel Ordinance
       constituted an offer. See id. (holding that it was not reasonable for the plaintiff-employee to
       construe the terms of the employee manual as an offer when the manual contained a clearly
       worded disclaimer in its introduction, stating that the manual should not be read as “ ‘forming
       an expressed or implied contract or promise’ ”); Hogge v. Champion Laboratories, Inc., 190
Ill. App. 3d 620, 629-30 (1989) (finding that the plaintiff-employee could not reasonably
       believe that the terms of the employee handbook constituted an offer when the handbook
       contained an express disclaimer, stating that the handbook was not intended to be all inclusive
       and should not be “construed as an employment contract”). Furthermore, the disclaimer in this
       case also made it clear to plaintiff and the other employees that the City could amend or

                                                   -7-
       eliminate the provisions of the Personnel Ordinance at any time. Indeed, the City had amended
       the ordinance numerous times since the ordinance was enacted. Under the present
       circumstances, we must conclude, therefore, that count II of plaintiff’s first amended
       complaint, which alleged a breach of contract, was negated by the disclaimer and was properly
       dismissed by the trial court.
¶ 20        A similar analysis applies to count III of plaintiff’s first amended complaint, which alleged
       promissory estoppel. Based upon the disclaimer that was contained in the Personnel
       Ordinance, plaintiff could not reasonably rely on any promises made in the ordinance. See
       Ivory, 365 Ill. App. 3d at 546; Hogge, 190 Ill. App. 3d at 629-30. Lacking reasonable reliance,
       plaintiff’s promissory estoppel claim was defeated. See Quake Construction, Inc. v. American
       Airlines, Inc., 141 Ill. 2d 281, 309-10 (1990) (noting that to establish a valid claim of
       promissory estoppel, the plaintiff’s reliance must be reasonable and justifiable). Therefore,
       plaintiff’s claim for promissory estoppel was properly dismissed. See id. Finally, count IV of
       plaintiff’s first amended complaint, which alleged a claim of equitable estoppel, was properly
       dismissed as well because the claim was based upon the existence of a contract between
       plaintiff and the City and we have already determined that such a contract did not exist. In
       concluding that plaintiff’s promissory and equitable estoppel claims against the City were
       properly dismissed, we note that such claims are generally not allowed against a municipality,
       where public revenues are at stake, absent some exceptional circumstances. See Chicago
       Limousine Service, Inc. v. City of Chicago, 335 Ill. App. 3d 489, 499 (2002) (recognizing in the
       context of a promissory estoppel claim that estoppel against a public body is not favored and is
       allowed only in rare and unusual circumstances when necessary to prevent fraud and injustice);
       Patrick Engineering, Inc. v. City of Naperville, 2012 IL 113148, ¶ 40 (noting in the context of
       an equitable estoppel claim that when public revenues are at stake, estoppel is particularly
       disfavored). The circumstances of the present case are not rare or unusual or indicative of any
       type of fraud or injustice on behalf of the City and do not justify the imposition of estoppel. See
       Chicago Limousine Service, Inc., 335 Ill. App. 3d at 499; Patrick Engineering, Inc., 2012 IL
113148, ¶ 40.
¶ 21        As a final matter, we must take a moment to comment upon plaintiff’s assertion that
       additional information was necessary before dismissal could be granted. As the City correctly
       notes, plaintiff did not allege in his first amended complaint that a different version of the
       Personnel Ordinance applied or that the applicable version lacked the disclaimer at issue. Thus,
       we cannot agree with plaintiff’s assertion that more information is needed before dismissal
       could be allowed. Plaintiff’s claims in the instant case were negated by the disclaimer, and the
       trial court properly granted the City’s section 2-619 motion to dismiss counts II, III, and IV of
       plaintiff’s first amended complaint on that basis.

¶ 22                                     III. CONCLUSION
¶ 23      For the foregoing reasons, we affirm the judgment of the circuit court of Henry County.

¶ 24      Affirmed.

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