{ "id": 1281370, "name": "JACK CAVENEY et al., Plaintiffs-Appellees, v. GLEN L. BOWER, Director of the Department of Revenue, et al., Defendants-Appellants", "name_abbreviation": "Caveney v. Bower", "decision_date": "2001-11-28", "docket_number": "No. 2-99-1427", "first_page": "1", "last_page": "9", "citations": [ { "type": "official", "cite": "326 Ill. App. 3d 1" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "312 Ill. App. 3d 35", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 411616 ], "year": 2000, "pin_cites": [ { "page": "48" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/312/0035-01" ] }, { "cite": "295 Ill. App. 3d 48", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 45794 ], "year": 1998, "opinion_index": 0, "case_paths": [ "/ill-app-3d/295/0048-01" ] }, { "cite": "103 Ill. 2d 363", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3152664 ], "year": 1984, "opinion_index": 0, "case_paths": [ "/ill-2d/103/0363-01" ] }, { "cite": "191 Ill. 2d 101", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 229705 ], "weight": 2, "year": 2000, "pin_cites": [ { "page": "109" }, { "page": "109" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/191/0101-01" ] }, { "cite": "186 Ill. 2d 291", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 243872 ], "weight": 2, "year": 1999, "pin_cites": [ { "page": "295" }, { "page": "295-96" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/186/0291-01" ] }, { "cite": "511 U.S. 244", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1147362 ], "weight": 9, "year": 1994, "pin_cites": [ { "page": "269" }, { "page": "254" }, { "page": "1499" }, { "page": "280" }, { "page": "261-62" }, { "page": "1505" } ], "opinion_index": 0, "case_paths": [ "/us/511/0244-01" ] }, { "cite": "171 Ill. 2d 282", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 57335 ], "year": 1996, "pin_cites": [ { "page": "289" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/171/0282-01" ] }, { "cite": "26 U.S.C.A. \u00a7 1362", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 1988, "opinion_index": 0 }, { "cite": "196 Ill. 2d 27", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 351247 ], "weight": 2, "year": 2001, "pin_cites": [ { "page": "38-39" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/196/0027-01" ] }, { "cite": "319 Ill. App. 3d 13", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 1527708 ], "weight": 2, "year": 2001, "pin_cites": [ { "parenthetical": "Caveney I" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/319/0013-01" ] }, { "cite": "416 U.S. 696", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 84534 ], "weight": 3, "year": 1974, "opinion_index": 1, "case_paths": [ "/us/416/0696-01" ] }, { "cite": "95 Ill. 2d 223", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3111261 ], "year": 1983, "pin_cites": [ { "page": "241-42", "parenthetical": "Ryan, C.J., specially concurring, joined by Underwood and Moran, JJ." } ], "opinion_index": 1, "case_paths": [ "/ill-2d/95/0223-01" ] }, { "cite": "511 U.S. 244", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1147362 ], "weight": 20, "year": 1994, "pin_cites": [ { "page": "280" }, { "page": "261-62" }, { "page": "271" }, { "page": "256" }, { "page": "1500" }, { "page": "272" }, { "page": "257" }, { "page": "1501" }, { "page": "273-79" }, { "page": "257-61" }, { "page": "1501-04" }, { "page": "277" }, { "page": "260" }, { "page": "1503" }, { "page": "278" }, { "page": "260" }, { "page": "1504" }, { "page": "278" }, { "page": "260" }, { "page": "1504" } ], "opinion_index": 1, "case_paths": [ "/us/511/0244-01" ] }, { "cite": "196 Ill. 2d 27", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 351247 ], "weight": 4, "year": 2001, "pin_cites": [ { "page": "47" }, { "page": "47" }, { "page": "47-48" }, { "page": "37" } ], "opinion_index": 1, "case_paths": [ "/ill-2d/196/0027-01" ] } ], "analysis": { "cardinality": 846, "char_count": 19458, "ocr_confidence": 0.803, "pagerank": { "raw": 5.12982294956584e-08, "percentile": 0.32180698565823723 }, "sha256": "81f5063f7672ccc9e67ba85d459bcd1006681193005734977f1527c0b0dd8c59", "simhash": "1:c849fe1d735d9c47", "word_count": 3123 }, "last_updated": "2023-07-14T21:10:13.053989+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "JACK CAVENEY et al., Plaintiffs-Appellees, v. GLEN L. BOWER, Director of the Department of Revenue, et al., Defendants-Appellants." ], "opinions": [ { "text": "JUSTICE McLAREN\ndelivered the opinion of the court:\nDefendants, Glen L. Bower, Judy Baar Topinka, and the Illinois Department of Revenue (collectively, the State), filed an appeal from the trial court\u2019s grant of summary judgment in favor of plaintiffs, Jack and Margaret Caveney. We affirmed the trial court\u2019s ruling in Caveney v. Bower, 319 Ill. App. 3d 13 (2001). On June 6, 2001, our supreme court denied defendants\u2019 petition for leave to appeal. However, in the exercise of its supervisory authority, our supreme court vacated this court\u2019s judgment and remanded the cause to this court, for additional consideration in light of its decision in Commonwealth Edison Co. v. Will County Collector, 196 Ill. 2d 27 (2001). After due consideration of the court\u2019s decision in Commonwealth Edison Co., we affirm the judgment of the circuit court.\nThe Caveneys are shareholders in Panduit Corporation. For the tax years ending December 31, 1993, 1994, and 1995, Panduit elected to be treated as a subchapter S corporation for federal and state income tax purposes. See 26 U.S.C.A. \u00a7 1362 (West 1988); 35 ILCS 5/1501(a)(28) (West 1998). During the tax years in question, the Caveneys claimed a research and development tax credit against their Illinois income tax liability, pursuant to section 201(k) of the Illinois Income Tax Act (the Act) (35 ILCS 5/20l(k) (West 1996)), for research and development expenditures made by Panduit. The State disallowed the claims and calculated back taxes and interest owed in the amount of $1,091,131.60. The Caveneys paid this sum under protest, then filed suit under the State Officers and Employees Money Disposition Act, seeking an order requiring defendants to return the sum paid under protest. See 30 ILCS 230/1 et seq. (West 1998). The parties filed cross-motions for summary judgment. The trial court granted the Caveneys\u2019 motion and entered judgment for the Caveneys. Defendants appealed the trial court\u2019s judgment.\nThe Caveneys argued that a 1999 amendment to section 201(k), part of Public Act 91 \u2014 644 (Pub. Act 91 \u2014 644, eff. August 20, 1999), applied to their case and allowed them to take research and development credits for the tax years 1993-95. At the time the Caveneys claimed the tax credit, the Act provided in relevant part:\n\u201cBeginning with tax years ending after July 1, 1990, a taxpayer shall be allowed a credit against the tax imposed by subsections (a) and (b) of this Section for increasing research activities in this State. The credit allowed against the tax imposed by subsections (a) and (b) shall be equal to Q1h% of the qualifying expenditures for increasing research activities in this State.\nFor purposes of this subsection, \u2018qualifying expenditures\u2019 means the qualifying expenditures as defined for the federal credit for increasing research activities which would be allowable under Section 41 of the Internal Revenue Code and which are conducted in this State, \u2018qualifying expenditures for increasing research activities in this State\u2019 means the excess of qualifying expenditures for the taxable year in which incurred over qualifying expenditures for the base period, \u2018qualifying expenditures for the base period\u2019 means the average of the qualifying expenditures for each year in the base period, and \u2018base period\u2019 means the 3 taxable years immediately preceding the taxable year for which the determination is being made.\u201d 35 ILCS 5/201(k) (West 1992).\nHowever, in 1999, the General Assembly added the following language to section 201(k) of the Act:\n\u201cFor partners, shareholders of subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this subsection to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and subchapter S of the Internal Revenue Code.\nsj: >}: %\nNo inference shall be drawn from this amendatory Act of the 91st General Assembly in construing this Section for taxable years beginning before January 1, 1999.\u201d 35 ILCS 5/20l(k) (West Supp. 1999).\nThe legislature amended the Act so that the research and development credit clearly applies to shareholders of subchapter S corporations, such as the Caveneys. In this court\u2019s opinion in Caveney v. Bower, 319 Ill. App. 3d 13 (2001) (Caveney I), we held that under First of America Trust Co. v. Armstead, 171 Ill. 2d 282, 289 (1996), the applicable law is the law in effect at the time of the court\u2019s decision on appeal and that the Department had no \u201cvested right\u201d in the application of the earlier statute.\nIn Commonwealth Edison, our supreme court settled any conflict concerning the application of statutory amendments to existing controversies by adopting the analysis of the United States Supreme Court in Landgraf v. USI Film Products, 511 U.S. 244, 128 L. Ed. 2d 229, 114 S. Ct. 1483 (1994). The court explained the Landgraf approach as follows:\n\u201cUnder the Landgraf test, if the legislature has clearly indicated what the temporal reach of an amended statute should be, then, absent a constitutional prohibition, that expression of legislative intent must be given effect. However, when the legislature has not indicated what the reach of a statute should be, then the court must determine whether applying the statute would have a retroactive impact, i.e., \u2018whether it would impair rights a party possessed when he acted, increase a party\u2019s liability for past conduct, or impose new duties with respect to transactions already completed.\u2019 [Citation.] If there would be no retroactive impact, as that term is defined by the court, then the amended law may be applied. [Citation.] If, however, applying the amended version of the law would have a retroactive impact, then the court must presume that the legislature did not intend that it be so applied.\u201d Commonwealth Edison, 196 Ill. 2d at 38-39.\nThis approach employs a three-step analysis. Initially, the court must determine whether the legislature has expressly prescribed the statute\u2019s proper reach. If there would be no retroactive impact, the amended law may be applied. If it would have a retroactive impact, the new law will not be applied.\nWhen the legislature amended Illinois Income Tax Act section 201(k) to permit shareholders of subchapter S corporations to claim research credits on their individual income tax return, it stated that \u201cno inference\u201d should be drawn from the adoption of the amendatory act. The State does not argue that the no-inference language specifically defines the reach of the amendment, although it does contend that the phrase shows an intent not to apply the amendment retroactively. Therefore, we must determine whether the application of the amendment would have a retroactive impact.\nThere are no hard and fast rules for determining whether a statute would have a \u201cretroactive impact,\u201d as referenced in Commonwealth Edison. However, this term is more meaningful than the simplistic view set forth by the Department, wherein any new statute that is applied to years prior to its adoption is considered to have a retroactive effect. In Landgrafadopted by our supreme court in Commonwealth Edison, the court traced the meaning of the term \u201cretroactive effect\u201d from its earliest usage to the present. The court quoted with approval an 1814 decision by Justice Story, which stated as follows:\n\u201c \u2018 [E]very statute, which takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past, must be deemed retrospective....\u2019 [Citation.]\u201d Landgraf, 511 U.S. at 269, 128 L. Ed. 2d at 254, 114 S. Ct. at 1499.\nThe Court went on to conclude that a statute would have a \u201cretroactive effect\u201d when \u201cit would impair rights a party possessed when he acted, increase a party\u2019s liability for past conduct, or impose new duties with respect to transactions already completed.\u201d Landgraf, 511 U.S. at 280, 128 L. Ed. 2d at 261-62, 114 S. Ct. at 1505. Based on this analysis, it is clear that the concept of vested rights is important in determining whether the application of a new statute to past events would have a retroactive effect. By reaffirming the prevailing definition of \u201cretroactive effect\u201d and equating it to the \u201cimpairment of vested rights,\u201d the decision of our supreme court in Commonwealth Edison is consistent with and supports our prior decision in this case.\nVested rights are interests protected from legislative interference by the due process clause of our constitution (Ill. Const. 1970, art. I, \u00a7 2). Dardeen v. Heartland Manor, Inc., 186 Ill. 2d 291, 295 (1999). A right has not vested until it is so far perfected that it cannot be taken away by legislation and is so unconditional and complete that it may be equated with a property interest. Dardeen, 186 Ill. 2d at 295-96. Since the legislature has an ongoing right to amend a statute, there is no vested right in the continuance of a law. Premier Property Management, Inc. v. Chavez, 191 Ill. 2d 101, 109 (2000). When an amendment does not reach back to and interfere with a vested right, there is no true retroactive impact. In the absence of a vested right, the application of an amended statute to an existing controversy has no retroactive impact; by definition, the amendment then has only prospective application. See General Telephone Co. of Illinois v. Johnson, 103 Ill. 2d 363 (1984); Richard\u2019s Tire Co. v. Zehnder, 295 Ill. App. 3d 48 (1998).\nIn Caveney I, the State did not argue that it had a vested right in the application of the preamendment statute. Indeed, there is no vested right in the mere continuance of a law, since the legislature has an ongoing right to amend a statute. Premier Property Management, 191 Ill. 2d at 109. When the legislature did not specify prospective application, the State gave up any \u201cvested rights\u201d prospective application would have implicated. Borden Chemicals & Plastics, L.P v. Zehnder, 312 Ill. App. 3d 35, 48 (2000).\nThe amendment at issue here proclaimed that \u201cno inference\u201d was to be drawn from its passage regarding the tax years in question; therefore, any vested right that the State might have had in the prospective application of section 201(h) was given up. The new statute is not retroactive because its only possible negative impact would affect the State\u2019s unasserted interest. Applying the analysis set forth in Commonwealth Edison, we determine that application of the tax amendment at issue to prior tax years does not have a retroactive impact, and the amended statute applies to this case.\nBecause of our disposition of this case on statutory grounds, we need not address the constitutional issues raised in Caveney I.\nThe judgment of the circuit court of Du Page County is affirmed.\nAffirmed.\nRAPP J., concurs.", "type": "majority", "author": "JUSTICE McLAREN" }, { "text": "JUSTICE O\u2019MALLEY,\ndissenting:\nThe majority holds that applying the 1999 statutory change to 1993-94 tax years does not give the statutory change retroactive effect because such application does not interfere with a vested right. The majority holds that the new statute is not retroactive because its only possible negative impact would affect the State\u2019s unasserted interest.\nFirst, I disagree with the observation that the State\u2019s interest is unasserted. The State\u2019s conduct, including its defense of this lawsuit, belies that observation. Second, the majority not only fails to indicate why it claims that the State\u2019s interest is unasserted but also fails to indicate the consequences of the interest being unasserted. There certainly is no suggestion of waiver, and the analyses in Landgraf and Commonwealth Edison contain no mention of assertion of an interest.\nI also do not understand why the majority couches its vested rights analysis in terms of whether the State has a vested right in prospective application of the amendment rather than determining whether the amendment takes away vested rights acquired under existing law, as suggested by the Justice Story quotation contained in Commonwealth Edison and Landgraf and in the majority opinion. 326 Ill. App. 3d at 5.\nMost importantly, though, I disagree with the majority\u2019s reliance on the ambivalent concept of \u201cvested\u201d and its conclusion that Commonwealth Edison equated retroactive effect with the impairment of vested rights. In Commonwealth Edison, our supreme court explained that, in the analysis involved in determining whether to apply a new statutory amendment to an existing controversy, the question is not simply whether the rights allegedly impaired are labeled \u201cvested\u201d or \u201cnonvested.\u201d See Commonwealth Edison, 196 Ill. 2d at 47. Rather, the court stated:\n\u201c \u2018The question of the validity of the application of a statute rests on subtle judgments concerning the fairness or unfairness of applying the new statutory rule to affect interests which accrued out of events which transpired when a different prior rule of law was in force. One fundamental consideration of fairness is that settled expectations honestly arrived at with respect to substantial interests ought not to be defeated. [Citation.] The determination of whether the application of the statute unreasonably infringes upon the rights of those to whom it applies involves a balancing and discrimination between reasons for and against the application of the statute to this class of individuals. [Citation.]\u2019 \u201d Commonwealth Edison, 196 Ill. 2d at 47, quoting Moore v. Jackson Park Hospital, 95 Ill. 2d 223, 241-42 (1983) (Ryan, C.J., specially concurring, joined by Underwood and Moran, JJ.).\nCommonwealth Edison also affirmed that \u201c \u2018[a]nalysis of the practical considerations influencing the question whether a retroactive application of a new law is fair and just should afford more meaningful standards of judgment than either catchpenny phrases or the ambivalent concept of \u201cvested.\u201d \u2019 \u201d Commonwealth Edison, 196 Ill. 2d at 47-48, quoting 2 N. Singer, Sutherland on Statutory Construction \u00a7 41.05, at 369 (5th ed. 1993).\nThe majority quotes Commonwealth Edison\u2019s explanation of the Landgraf approach but fails to notice that both of those cases avoid the ambivalent concept of \u201cvested.\u201d The Landgraf test is \u201c \u2018whether it would impair rights a party possessed when he acted.\u2019 \u201d Commonwealth Edison, 196 Ill. 2d at 37, quoting Landgraf, 511 U.S. at 280, 128 L. Ed. 2d at 261-62, 1145 S. Ct. at 1505. The majority fails to note that the word \u201cvested\u201d does not appear before \u201crights\u201d in this quote. If the State had a right to collect taxes in a greater amount from the Caveneys before the amendment, then the application of the amendment to the prior tax years impairs that right and imposes a new duty to refund money to the Caveneys with respect to transactions already completed. The State correctly argues that the effect of applying the statute to preamendment tax years plainly would be to attach new legal consequences to completed events. If applied retroactively, the amendment would change the tax consequences of preamendment corporate activity. Corporate expenditures that did not entitle subchapter S shareholders to their own income tax credits in the tax years when the expenditures were made now would do so.\nLandgraf observed that the largest category of cases where the presumption against retroactivity has been applied has consisted of new provisions affecting contractual or property rights, matters in which predictability and stability are of prime importance. Landgraf, 511 U.S. at 271, 128 L. Ed. 2d at 256, 114 S. Ct. at 1500. Applying tax credit amendments to prior tax years absent a clear legislative directive clearly interferes with the State\u2019s ability to plan and budget for public expenditures, a matter in which predictability and stability are even more important than in private contractual or property rights situations.\nThe majority seems to hold that Commonwealth Edison\u2019s adoption of the Landgraf analysis amounted to nothing more than the reaffirmation of Armstead, which the majority reads as calling for a default rule in favor of applying new law to antecedent events absent a \u201cvested\u201d rights problem or legislative direction to the contrary. But Landgraf expressly held that \u201cprospectivity remains the appropriate default rule.\u201d Landgraf, 511 U.S. at 272, 128 L. Ed. 2d at 257, 114 S. Ct. at 1501.\nFinally, Landgraf pointed out that decisions to apply new law to antecedent events have been limited to situations where analysis of the temporal scope of the law itself required such application (i.e., legislative intent) or where the case involved either prospective relief (e.g., injunctive relief), procedural matters (e.g., jurisdiction), or collateral issues (e.g., attorney fees). Landgraf, 511 U.S. at 273-79, 128 L. Ed. 2d at 257-61, 114 S. Ct. at 1501-04. Landgraf s point in categorizing these cases was to \u201cmake it clear that Bradley [v. School Board of Richmond, 416 U.S. 696, 40 L. Ed. 2d 476, 94 S. Ct. 2006 (1974),] did not alter the well-settled presumption against application of the class of new statutes that would have genuinely \u2018retroactive\u2019 effect.\u201d Landgraf, 511 U.S. at 277, 128 L. Ed. 2d at 260, 114 S. Ct. at 1503. In other words, Bradley and the other cases did not involve genuine retroactivity because they concerned either prospective relief, procedural matters, or collateral issues. The use of \u201cretroactive\u201d versus \u201cgenuinely retroactive\u201d is a fine point, and the final explication of the presumption helpfully avoids these terms and holds:\n\u201cThe authorities we relied upon in Bradley lend further support to the conclusion that we did not intend to displace the traditional presumption against applying statutes affecting substantive rights, liabilities, or duties to conduct arising before their enactment. [Citation.]\u201d Landgraf, 511 U.S. at 278, 128 L. Ed. 2d at 260, 114 S. Ct. at 1504.\nThe quote makes clear that the Landgraf presumption against retroactivity admits only narrow exceptions, such as situations involving prospective relief, procedural matters, or collateral issues.\nThe State\u2019s right to collect taxes from the Caveneys and their obligation to pay taxes clearly trigger what Landgraf called the \u201ctraditional presumption against applying statutes affecting substantive rights, liabilities, or duties to conduct arising before their enactment.\u201d Landgraf, 511 U.S. at 278, 128 L. Ed. 2d at 260, 114 S. Ct. at 1504.\nThe majority does not suggest that its conclusion that the State did not have a vested right to collect taxes under the prior law is conditioned on the fact that the State is not a private party. In other words, the majority\u2019s analysis does not distinguish the State from a private party when determining whether the right in question is a \u201cvested right.\u201d\nThis is true even if the General Assembly failed to expressly state that the amendment was prospective.", "type": "dissent", "author": "JUSTICE O\u2019MALLEY," } ], "attorneys": [ "James E. Ryan, Attorney General, of Chicago (Joel D. Bertocchi, Solicitor General, and Edmund C. Baird and A. Benjamin Goldgar, Assistant Attorneys General, of counsel), for appellants.", "Richard A. Hanson and Theodore R. Bots, both of McDermott, Will & Emery, of Chicago, for appellees." ], "corrections": "", "head_matter": "JACK CAVENEY et al., Plaintiffs-Appellees, v. GLEN L. BOWER, Director of the Department of Revenue, et al., Defendants-Appellants.\nSecond District\nNo. 2 \u2014 99\u20141427\nOpinion filed November 28, 2001.\nO\u2019MALLEY, J., dissenting.\nJames E. Ryan, Attorney General, of Chicago (Joel D. Bertocchi, Solicitor General, and Edmund C. Baird and A. Benjamin Goldgar, Assistant Attorneys General, of counsel), for appellants.\nRichard A. Hanson and Theodore R. Bots, both of McDermott, Will & Emery, of Chicago, for appellees." }, "file_name": "0001-01", "first_page_order": 19, "last_page_order": 27 }