Gilmore v. City of Mattoon

FILED
2019 IL App (4th) 180777 October 16, 2019
Carla Bender
NO. 4-18-0777 4th District Appellate
Court, IL
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
ALAN GILMORE, CHARLES ELLIOTT, ) Appeal from the
DAVID GRIFFITH, BRIAN JANES, ) Circuit Court of
JOSEPH BUTLER, MICHAEL CHISM, ) Coles County
MAX COX, DONALD ARTHUR HALL, ) No. 12L1
ANDY ADAIR, JOE REESE, OREN )
LOCKHART, DAVID McSCHOOLER, )
GERRY PROTZ, JUD McKENZIE, )
DARRYL CARMAN, W. TIM BRAGG, )
GINA LOCKHART, MORRIS SPARR, )
BRUCE GRAFTON, STEVE HORATH, )
JUDY O’DELL, MICK WELCH, RONALD )
SCOTT, CHARLES APPLEGATE, )
WILLIAM BOYLE, JIM NEASON, )
ROBERT ZSCHAU, GEORGE GULLION, )
GERALD NICHOLS, CLARENCE )
GILLESPIE, DENNIS WILSON, JOHN )
ARNETT, JAMES VAUGHT, JACK )
HELDMAN, MITCH STRADER, TERRY )
BARTELS, EDWARD JOHNSON, )
STEVEN WILLIAMS, and ROGER )
CLAXON, )
Plaintiffs-Appellants, )
v. ) Honorable
THE CITY OF MATTOON, ) Steven L. Garst,
Defendant-Appellee. ) Judge Presiding.
JUSTICE DeARMOND delivered the judgment of the court, with opinion.
Justices Steigmann and Harris concurred in the judgment and opinion.
OPINION
¶1 In October 2017, plaintiffs Alan Gilmore, Charles Elliott, David Griffith, Brian
Janes, Joseph Butler, Michael Chism, Max Cox, Donald Arthur Hall, Andy Adair, Joe Reese,
Oren Lockhart, David McSchooler, Gerry Protz, Jud McKenzie, Darryl Carman, W. Tim Bragg,
Gina Lockhart, Morris Sparr, Bruce Grafton, Steve Horath, Judy O’Dell, Mick Welch, Ronald
Scott, Charles Applegate, William Boyle, Jim Neason, Robert Zschau, George Gullion, Gerald
Nichols, Clarence Gillespie, Dennis Wilson, John Arnett, James Vaught, Jack Heldman, Mitch
Strader, Terry Bartels, Edward Johnson, Steven Williams, and Roger Claxon, who are retired
firefighters, police officers, and municipal employees, filed a sixth amended complaint against
the City of Mattoon (City), alleging violations of the Illinois Insurance Code (215 ILCS 5/367f,
367g, 367j (West 2010)), violations of the equal protection clause of the fourteenth amendment
of the United States Constitution (U.S. Const., amend. XIV), breach of contract, promissory
estoppel, unjust enrichment, and violation of the pension protection clause of the Illinois
Constitution (Ill. Const. 1970, art. XIII, § 5) based upon the claim the City required them to pay
a higher contribution toward health insurance premiums, as retired employees, than the
contribution paid by active employees. The trial court, prompted by the City’s combined section
2-615 and 2-619 (735 ILCS 5/2-615, 2-619(a)(9) (West 2010)) motions, dismissed the counts
claiming violations of the Insurance Code, breach of contract, promissory estoppel, unjust
enrichment, and a violation of the pension protection clause. The court allowed plaintiffs’
allegations pursuant to the equal protection clause to proceed; however, the plaintiffs’ request for
attorney fees was stricken.
¶2 On appeal, plaintiffs argue the trial court erred by finding (1) they did not have
standing under the Insurance Code, (2) their claims for breach of contract and promissory
estoppel are barred by the Frauds Act (740 ILCS 80/0.01 et seq. (West 2010)), (3) they failed to
state a claim for breach of contract, promissory estoppel, or unjust enrichment, and (4) they
failed to state facts sufficient to constitute a violation of the pension protection clause. We
affirm.
-2-
¶3 I. BACKGROUND
¶4 In January 2012, a group of 59 retired firefighters, police officers, and municipal
employees, including plaintiffs, filed a 13-count complaint, which consisted of four basic
categories of claims: (1) violations of the Insurance Code, (2) injunctive and declaratory relief
under the Insurance Code, (3) breach of contract based on alleged violations of the collective
bargaining agreements between the three different groups of municipal employees and the City,
and (4) alleged violations of rights protected by the United States Constitution. All 13 counts
were based on the claim the City was requiring higher health insurance contributions by retired
employees than the contributions required of those who were actively employed in the three
identified categories. Over the course of litigation, the City filed multiple motions to dismiss
pursuant to sections 2-615 and 2-619(a)(9) of the Code of Civil Procedure (735 ILCS 5/2-615, 2-
619(a)(9) (West 2010)), to which plaintiffs responded by seeking leave to amend their complaint.
For their third amended complaint filed in September 2013, plaintiffs filed 14 counts realleging
substantially the same claims as they had previously in counts I through XII of their first and
second amended versions. Counts I, V, and IX again claimed violations of sections 367f, 367g,
367j of the Insurance Code (215 ILCS 5/367f, 367g, 367j (West 2010)), which cover firefighters,
police officers, and municipal employees, respectively. Plaintiffs contended, in those counts,
being required to pay a higher contribution toward their health care premiums was
discriminatory and entitled them to money damages based on violations of their respective
continuation privileges contained in the Insurance Code. Counts II, VI, and X of the complaint
sought injunctive relief based on the alleged violation of the statutes, and counts III, VII, and XI
requested declaratory relief because of the alleged violations of the Insurance Code. Plaintiffs
alleged in counts IV, VIII, and XII that the City violated the equal protection clause of the
-3-
fourteenth amendment of the United States Constitution by forcing them to pay higher
contributions toward their health insurance premiums and treating similarly situated retired and
active firefighters, police officers, and municipal employees differently, which was
discriminatory, based on their respective pension benefits. Count XIII was a breach of contract
claim, alleging the City breached a contract with plaintiffs which they said arose from
information and promises contained in an Illinois Municipal Retirement Fund (IMRF) form, a
premium deduction authorization form for continuing health insurance through an employer, the
IMRF website, and certain unidentified communications from the City. According to plaintiffs,
these sources created a contract whereby the City agreed to provide health insurance benefits to
retired employees under the same terms and rates as active employees in exchange for plaintiffs’
early retirement. The last count, count XIV, claimed a violation of the pension protection clause
of the Illinois Constitution as a result of the City increasing the contributions for health insurance
premiums to be paid by plaintiffs beyond those paid by active employees, thereby decreasing or
diminishing the benefits to which they were otherwise entitled after their retirement.
¶5 Plaintiffs contended the City adopted an early retirement incentive (ERI) program
for its IMRF employees whereby all IMRF employees age 50 and over with 20 years of
creditable service were allowed to purchase up to five more years of service in exchange for
“immediate retirement.” Plaintiffs further contend Bill Pettry, an IMRF representative, informed
them at an informational meeting about the ERI program that “in exchange for retaining health
insurance benefits at the same rate or cost to them as active employees[,] they could purchase
service credits under ERI.” Plaintiffs accepted defendant’s offer by submitting a “notice of intent
to retire,” which they say bound defendant to the agreement that plaintiffs’ health insurance
contributions would remain at the same level as active employees. Plaintiffs allege defendant
-4-
breached the contract when it increased the amount of their premium rates compared to active
employees.
¶6 In October 2013, the City filed a fourth motion to dismiss, which asserted
plaintiffs (1) lacked standing under the Insurance Code, (2) failed to state a claim under the equal
protection clause, (3) were not entitled to injunctive or declaratory relief since plaintiffs’ claims
were predicated on the Insurance Code, and (4) failed to state a claim under a breach of contract
cause of action or a violation of the Illinois Constitution.
¶7 In March 2014, the trial court issued its ruling on the motion to dismiss and found
there is no private right of action “available under the Insurance Code,” which resulted in the
dismissal of the counts relating to the Insurance Code (counts I, II, III, V, VI, VII, IX, X, and XI)
with prejudice under section 2-619. The court dismissed plaintiffs’ breach of contract and equal
protection claims under section 2-615 and granted leave to refile. The court denied the motion to
dismiss for the violation of the pension protection clause claims.
¶8 In May 2014, plaintiffs filed a fourth amended complaint, which included the
same claims raised previously along with an additional claim of promissory estoppel labeled as
count XIV, with the pension protection claim renumbered as count XV. The City filed a motion
to dismiss all counts except IV, VIII, and XII, which alleged violations of the equal protection
clause. The City filed answers and affirmative defenses, contending both failure to state a claim
and that plaintiffs did not constitute a protected class. In September 2014, the trial court found
plaintiffs had pleaded sufficient facts to proceed to discovery on their breach of contract and
promissory estoppel claims.
¶9 After written discovery, a motion by the City for a more definite statement
resulted in the filing of a sixth amended complaint in October 2017, adding a claim of unjust
-5-
enrichment and reducing the number of plaintiffs from 59 to the 39 named plaintiffs here.
Plaintiffs realleged the claims based on the Insurance Code (counts I, II, III, V, VI, VII, IX, X,
and XI), which had been dismissed, as well as the equal protection claims (counts IV, VIII, and
XII). In counts XIII and XIV, dealing only with plaintiffs who are retired municipal employees,
they alleged breach of contract, or alternatively, promissory estoppel. Counts XV and XVI,
relating to all plaintiffs, raised claims of unjust enrichment and a violation of the pension
protection clause, respectively. The unjust enrichment claim was based on plaintiffs’ theory the
City was not permitted to require them to contribute more toward their health insurance
premiums than current employees and, as a result, plaintiffs should be permitted to recoup the
“excess premiums” paid. The City sought dismissal of counts XIII through XVI of the sixth
amended complaint, asserting the claims were unenforceable under the Frauds Act (740 ILCS
80/0.01 et seq. (West 2010)), failed to state a claim, or were brought under the Insurance Code,
which does not provide a private right of action. In August 2018, the trial court granted the
City’s motion to dismiss with prejudice. Previously, in December 2017, plaintiffs sought and
received a Rule 304(a) finding from the trial court on counts I through XI of the third amended
complaint, which had already been dismissed by the court with prejudice. See Illinois Supreme
Court Rule 304(a) (eff. Mar. 8, 2016). After the court’s order in August, dismissing counts XIII,
XIV, XV, and XVI of the sixth amended complaint, plaintiffs sought an additional Rule 304(a)
finding as to those counts as well since the court’s orders left count XII, the equal protection
claim, pending.
¶ 10 We note an apparent scrivener’s error in the trial court’s opinion letter of August
7, 2018, wherein the court mentions count XII, the equal protection claim, as dismissed with
prejudice and appealable in its finding, while failing to mention the breach of contract claim in
-6-
count XIII, which was, in fact, dismissed with prejudice. As such, we will proceed with the
understanding count XIII and not count XII was intended to be final and appealable by the
court’s order.
¶ 11 This appeal followed.
¶ 12 II. ANALYSIS
¶ 13 A. Standing
¶ 14 Plaintiffs argue the Insurance Code permits them standing to bring a private right
of action under the Insurance Code. We disagree.
¶ 15 Our supreme court stated unequivocally in Vine Street Clinic v. HealthLink, Inc.,
222 Ill. 2d 276, 301, 856 N.E.2d 422, 439 (2006), “a private right of action is not available” in
the Insurance Code. In Weis v. State Farm Mutual Automobile Insurance Co., 333 Ill. App. 3d
402, 406, 776 N.E.2d 309, 311 (2002), the Second District noted a plaintiff cannot plead a
private cause of action pursuant to the Insurance Code as enforcement is delegated to the
Department of Insurance. The Insurance Code provides that “ ‘[t]he Director [of the Department
of Insurance] is charged with the rights, powers and duties appertaining to the enforcement and
execution of all the insurance laws of this State.’ ” Weis, 333 Ill. App. 3d at 406 (quoting 215
ILCS 5/401 (West 2000)). Examining another provision of the Insurance Code, the First District
in Hamilton v. Safeway Insurance Co., 104 Ill. App. 3d 353, 356-57, 432 N.E.2d 996, 999
(1982), found a private cause of action could not lie where certain actions, although possibly
considered improper under the Insurance Code, provided no personal remedy. Although the
Director had authority to take action, “[s]uch relief is unavailable to [private persons] because
‘[t]he legislature, had it intended to grant a private right of action for injunctive relief, would
have explicitly done so.’ ” Safeway Insurance Co., 104 Ill. App. 3d at 356-57 (quoting Brooks v.
-7-
Midas-International Corp., 47 Ill. App. 3d 266, 277, 361 N.E.2d 815, 822 (1977)). In Village of
McCook v. Illinois Bell Telephone Co., 335 Ill. App. 3d 32, 38, 780 N.E.2d 335, 341 (2002), the
First District relied upon statutory interpretation to find no private right of action within
provisions of the Illinois Emergency Telephone System Act (50 ILCS 750/0.01 et seq. (West
2000)) for the same reason. Looking at the language of the statute, the court found the Attorney
General was invested with the authority to enforce violations of the statute. Illinois Bell
Telephone Co., 335 Ill. App. 3d at 38. Here, the legislature has given that authority to the
director of the Department of Insurance.
¶ 16 As noted by the City, where no express language exists in the statute authorizing a
private right of action, the supreme court has outlined four factors to consider when deciding
whether such a right may exist by implication. Fisher v. Lexington Health Care, Inc., 188 Ill. 2d
455, 460, 722 N.E.2d 1115, 1117-18 (1999). There, it found the Nursing Home Care Act (210
ILCS 45/3-608 (West 1996)) did not imply a private right of action for employees claiming
retaliation by their employer, as it stated courts are to look at whether:
“(1) the plaintiff is a member of the class for whose benefit the
statute was enacted; (2) the plaintiff’s injury is one the statute was
designed to prevent; (3) a private right of action is consistent with
the underlying purpose of the statute; and (4) implying a private
right of action is necessary to provide an adequate remedy for
violations of the statute.” Fisher, 188 Ill. 2d at 460.
See also Metzger v. DaRosa, 209 Ill. 2d 30, 805 N.E.2d 1165 (2004) (reaffirming application of
the factors under circumstances similar to those present here).
-8-
¶ 17 Having chosen not to argue the four-factor test in support of their claimed private
right of action in the trial court, or to claim an implied right existed under the statute, plaintiffs
are foreclosed from doing so now. Sylvester v. Chicago Park District, 179 Ill. 2d 500, 507, 689
N.E.2d 1119, 1123 (1997) (“[I]t is required that the points argued on appeal be commensurate
with the issues presented at trial.” (Internal quotation marks omitted.)). Further, Illinois Supreme
Court Rule 341(h)(7) (eff. May 25, 2018) states arguments raised for the first time in a reply
brief, as plaintiffs seek to do here, are forfeited.
¶ 18 Although plaintiffs contend a private right of action under the Insurance Code was
approved by the supreme court’s decision in Thounsavath v. State Farm Mutual Automobile
Insurance Co., 2018 IL 122558, 104 N.E.3d 1239, their reliance on Thounsavath is somewhat
confusing. Plaintiffs fail to mention standing was not the issue before the supreme court in that
case and, in fact, was never mentioned. Instead, the issues in Thounsavath arose from a
declaratory judgment action related to the extent of underinsured motorist coverage under the
terms of a motor vehicle insurance policy.
¶ 19 In Thounsavath, 2018 IL 122558, ¶ 5, the plaintiff sought underinsured motorist
coverage from the defendant due to an automobile accident while she was a passenger in a
vehicle operated by Clinton Evans. The defendant denied the claim pursuant to its driver
exclusion endorsement because Evans was on its excluded driver list. The plaintiff filed a
complaint against the defendant for a declaratory judgment, “seeking a declaration that she was
entitled to underinsured motorist coverage under her State Farm policies.” Thounsavath, 2018 IL
122558, ¶ 6.
¶ 20 The case involved the interpretation of the plaintiff’s insurance policy as it related
to underinsured motorist coverage. Thounsavath, 2018 IL 122558, ¶ 6. It is inapplicable to the
-9-
situation before us and does not create standing for a cause of action under the Insurance Code.
Plaintiffs can point to no provision within the Insurance Code setting forth a remedy entitling
them to the private claims they seek to assert here. In fact, plaintiffs have ignored the plain
language of the statutes in their discussion of continued group insurance coverage that addresses
this issue: “provided that no municipality shall be required by reason of any provision of this
Section to pay any group insurance premium other than one that may be negotiated in a
collective bargaining agreement.” 215 ILCS 5/367f(3)(b), 367g(3)(b), 367j(b) (West 2010).
Plaintiffs, as retirees, are not covered by the collective bargaining agreements—a point they
conceded and argued before the trial court in support of their claims for unjust enrichment. After
careful review of the statutes and collective bargaining agreements, the trial court correctly noted
neither contained language obligating the City to pay any portion of insurance premiums for
retirees. The court found plaintiffs were entitled to continued coverage that is “equivalent” to
that provided active employees at the same total premium cost. Nothing in the Insurance Code or
any writing upon which plaintiffs rely entitles them to the same employer share or percentage
contribution provided by the City to current employees. As our supreme court has stated, no
private right of action exists under the Insurance Code, and thus, the trial court correctly
dismissed those counts based on claimed Insurance Code violations.
¶ 21 B. Frauds Act
¶ 22 Plaintiffs allege the trial court erred when it dismissed their claims for breach of
contract and promissory estoppel due to the Frauds Act (740 ILCS 80/1 et seq. (West 2010) (also
known as the statute of frauds)). We disagree.
- 10 -
¶ 23 A section 2-619 dismissal is appropriate when “the claim asserted is
unenforceable under the provisions of the Statute of Frauds.” 735 ILCS 5/2-619(a)(7) (West
2010).
“No action shall be brought *** upon any agreement that is not to
be performed within the space of one year from the making
thereof, unless the promise or agreement upon which such action
shall be brought, or some memorandum or note thereof, shall be in
writing, and signed by the party to be charged therewith, or some
other person thereunto by him lawfully authorized.” 740 ILCS 80/1
(West 2010).
¶ 24 Plaintiffs contend, correctly, the Frauds Act can be satisfied from statements
made in more than one document. American College of Surgeons v. Lumbermens Mutual
Casualty Co., 142 Ill. App. 3d 680, 698-99, 491 N.E.2d 1179, 1192 (1986). However, to satisfy
the Frauds Act, “all the essential terms must be in writing, and there must be an express
reference to the other writings or such a connection between the documents, physical or
otherwise, as to demonstrate that they relate to the same contract.” Dickens v. Quincy College
Corp., 245 Ill. App. 3d 1055, 1060, 615 N.E.2d 381, 384 (1993).
¶ 25 Here, plaintiffs allege the Frauds Act does not apply because most of the essential
terms of the contract were in writing. However, they point to a patchwork of oral statements
made by an IMRF representative, not a City employee or representative, in an informational
meeting on August 20, 2001, forms and excerpts from an IMRF handbook published by the state
and available on its website, the ERI resolution adopted by the City, and portions of the
respective collective bargaining agreements with the City. Plaintiffs’ brief states, “the contract
- 11 -
between Plaintiffs and Defendants is largely written, and contains only a small portion related to
the August 20, 2001 meeting.” The “small portion” to which they refer, and which plaintiffs
acknowledge to be absent from their written submissions, happens to be the most important
component—the alleged promise by the City to allow plaintiffs to keep their health insurance
coverage with the same level of contribution as those actively employed by the City. Despite
their characterization, the entire “contract” and basis for their claims turn on that provision. The
trial court noted this omission in its August 7, 2018, order, concluding it was the “essential term”
plaintiffs sought to enforce and, as such, needed to be in writing. We agree. If the group of
documents intended to constitute the “writing” are intended to defeat the Frauds Act, the various
documents must, when read together, either contain all the terms and conditions of the contract
or at least reference them in some way. See Prodromos v. Howard Savings Bank, 295 Ill. App.
3d 470, 474, 692 N.E.2d 707, 710 (1998). The crux of plaintiffs’ case is the purported “promise”
by an IMRF representative not employed by, or working on behalf of the City, who plaintiffs say
told them at an informational meeting their contributions for health care would remain the same
as for those who were still employed. It is also important to note a contract that is partly oral and
partly written is considered oral for its legal effect. Koch v. Illinois Power Co., 175 Ill. App. 3d
248, 255, 529 N.E.2d 281, 286 (1988).
¶ 26 Normally, in order to comply with the Frauds Act, the writing must show the
existence of a contract as well as its relevant terms and conditions. Culbertson v. Carruthers, 66
Ill. App. 3d 47, 54, 383 N.E.2d 618, 624 (1978). Plaintiffs argue the contract, here, is a Duldulao
contract (Duldulao v. St. Mary of Nazareth Hospital Center, 115 Ill. 2d 482, 490, 505 N.E.2d
314, 318 (1987)). In Duldulao, 115 Ill. 2d at 490, the supreme court found, under certain
circumstances, the language of an employee handbook or policy statement may create an
- 12 -
enforceable contract if all elements of contract formation are present. Plaintiffs contend the ERI
resolution, the letter sent to all plaintiffs about the early retirement option, and statements made
in the IMRF handbook and website, along with the specific oral “promise” by Pettry, constitute
policy statements allowing for the creation of a Duldulao contract, which offered plaintiffs
continued health insurance coverage paid for in the same manner as active employees if plaintiffs
accepted early retirement. Defendants accurately note that none of the various writings are part
of an employee handbook or employment policy of the City—those things which the supreme
court found could constitute the basis for a Duldulao contract under proper circumstances. More
importantly, even those contracts are “governed by the traditional requirements for contract
formation.” McInerney v. Charter Golf, Inc., 176 Ill. 2d 482, 487, 680 N.E.2d 1347, 1350
(1997). Unfortunately, none of the writings reference the alleged oral promise, a requirement
when a contract is sought to be formed from multiple writings, and therefore cannot constitute
the basis for a Duldulao contract. The trial court aptly pointed out how neither the ERI resolution
nor IMRF form—the only documents clearly tied to the program in question here—contained
any reference to health insurance at all.
¶ 27 In addition, it is clear, under plaintiffs’ scenario, defendant’s obligation for health
insurance contributions was going to last longer than a year, thus putting it squarely within the
Frauds Act, and therefore unenforceable as a contract for the lifetime receipt of health insurance
benefits under the terms alleged by plaintiffs. See Charter Golf, Inc., 176 Ill. 2d at 493 (stating
an oral lifetime employment contract is unenforceable under the Frauds Act); see also
Underwood v. City of Chicago, 2017 IL App (1st) 162356, ¶ 50, 84 N.E.3d 420 (finding oral
assurances of health care coverage for life violates the Frauds Act unless it is also in writing). As
- 13 -
a result, the trial court’s dismissal of counts XIII and XIV for violating the Frauds Act was not
error.
¶ 28 C. Failure to State a Claim
¶ 29 Plaintiffs argue the trial court erred in dismissing their breach of contract,
promissory estoppel, and unjust enrichment counts based on a failure to state a claim. We
disagree.
¶ 30 Plaintiffs Gilmore, Carman, Elliot, O’Dell, and McKenzie retired pursuant to the
City’s 2009 IMRF ERI program and were not a part of the 2001 ERI program during which
plaintiffs contend the oral promise was made. The original 2001 ERI program ran from
December 15, 2001, to December 15, 2002, and none of the four aforementioned plaintiffs
retired before June 2009. Even if an oral contract existed, as we noted above, it could not have
extended beyond one year to be enforceable under the Frauds Act and could not serve as a basis
for a claim here. The complaint alleges the oral offer was made to the four plaintiffs in 2001 and
was accepted. However, the discovery referenced by the parties in this case shows they were not
eligible to retire under the program at that time. They have acknowledged they did not participate
in the 2001 program. Plaintiffs fail to allege how, or by what means, the offer of 2001 could be
binding on the City in 2009 since they fail to allege the offer was made again. Further, although
plaintiffs contend the promise was made to them by Pettry, there is no allegation identifying who
Pettry was at the time or how he had the ability to bind the City to anything. As a result, the trial
court was correct in concluding plaintiffs failed to allege the existence of a contract. This is
equally significant for count XIV, the claim for promissory estoppel. The court’s written order of
August 3, 2018, correctly noted that in order to support such a claim, plaintiffs must plead
specific facts showing: “(1) an affirmative act by the municipality itself or a municipal official
- 14 -
with express authority to bind the municipality; and (2) reasonable reliance upon that act by the
plaintiff that induces the plaintiff to detrimentally change their position.” See Patrick
Engineering, Inc. v. City of Naperville, 2012 IL 113148, ¶ 40, 976 N.E.2d 318. Where public
bodies are involved, estoppel will only apply where, in addition to the above, plaintiffs can also
show how it is necessary to prevent fraud or injustice. Rockford Life Insurance Co. v.
Department of Revenue, 112 Ill. 2d 174, 185, 492 N.E.2d 1278, 1283 (1986). Further, apparent
authority has not been found applicable against municipalities. Patrick Engineering, 2012 IL
113148, ¶ 35. Plaintiffs failed to plead or establish any facts which identified Pettry as someone
other than an IMRF representative present at an informational meeting to answer any questions
about the new IMRF ERI program. Plaintiffs failed to plead how he was invested with any
authority to bind the City to any “promise” or agreement, and at the time of the meeting, the four
above-named individuals would have done nothing in detrimental reliance since they were not
eligible to take advantage of the program at the time. Further, there has been no allegation of
fraud or injustice. As such, the court also did not err in dismissing the counts as to those
plaintiffs for failing to state a claim for relief under the doctrine of promissory estoppel.
¶ 31 Plaintiffs’ unjust enrichment claim is based on defendant allegedly violating the
Insurance Code. Unjust enrichment “ ‘is a condition that may be brought about by unlawful or
improper conduct as defined by law, such as fraud, duress or undue influence, and may be
redressed by a cause of action based upon that improper conduct.’ ” Alliance Acceptance Co. v.
Yale Insurance Agency, Inc., 271 Ill. App. 3d 483, 492, 648 N.E.2d 971, 977 (1995) (quoting
Charles Hester Enterprises, Inc. v. Illinois Founders Insurance Co., 137 Ill. App. 3d 84, 90-91,
484 N.E.2d 349, 354 (1985)). An unjust enrichment cause of action “ ‘does not require fault or
illegality on the part of [the] defendants; the essence of the cause of action is that one party is
- 15 -
enriched and it would be unjust for that party to retain the enrichment.’ ” Fortech, L.L.C. v. R.W.
Dunteman Co., 366 Ill. App. 3d 804, 818, 852 N.E.2d 451, 463 (2006) (quoting Stathis v.
Geldermann, Inc., 295 Ill. App. 3d 844, 864, 692 N.E.2d 798, 812 (1998)). As we have stated
above, the plaintiffs lacked standing for the foundational claim of a violation of the Insurance
Code; therefore, standing for the derivative claim of unjust enrichment is also deficient because
the City’s actions were not improper.
¶ 32 Plaintiffs alleged both the statutory language of sections 367f, 367g, and 367j of
the Insurance Code and a common law claim for breach of contract as the basis for their claim of
unjust enrichment. As noted, there is nothing in the statutes that obligated the City to contribute
any portion of the total premium costs, let alone the same amount or percentage of health care
costs. In addition, plaintiffs failed to properly allege a contract that the City could have breached.
There is, therefore, no foundational claim upon which plaintiffs can rely to argue unjust
enrichment. The trial court correctly dismissed the claim, concluding the plain language of the
statutes revealed the City is required to allow retirees to elect to continue their health insurance
through it and it is not permitted to charge retirees more than the total premium cost of health
insurance for active employees. Although the percentages of the contributions differ, the total
amounts do not, and the City is in compliance with the Insurance Code. Absent a violation of the
Insurance Code or a contract to be breached, there is no basis upon which to claim the City has
been unjustly enriched.
¶ 33 D. Pension Protection Clause
¶ 34 Plaintiffs argue the City violated the pension protection clause of the Illinois
Constitution of 1970 (Ill. Const. 1970, art. XIII, § 5) because it changed its employer health
insurance contribution for retired employees. We disagree.
- 16 -
¶ 35 “[B]ecause resolution of this issue requires us to determine the applicability and
effect of the pension protection clause ***, our review is de novo.” Matthews v. Chicago Transit
Authority, 2016 IL 117638, ¶ 53, 51 N.E.3d 753. The pension protection clause of article XIII,
section 5 of the Illinois Constitution of 1970 states:
“Membership 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.
¶ 36 “[M]embers of pension plans subject to its provisions have a legally enforceable
right to receive the benefits they have been promised.” In re Pension Reform Litigation, 2015 IL
118585, ¶ 46, 32 N.E.3d 1. “[I]f 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.” Kanerva v. Weems, 2014 IL 115811, ¶ 38, 13 N.E.3d 1228.
This does not mean, however, a municipality is required to protect all benefits it provides to its
employees.
¶ 37 In Dawson v. City of Geneseo, 2018 IL App (3d) 170625, ¶ 1, 127 N.E.3d 655, a
retired city employee sued, claiming the city’s reduction of their percentage of contribution to his
health insurance premiums was in violation of the pension protection clause (Ill. Const. 1970, art.
XIII, § 5). The city’s successful section 2-615 motion to dismiss (735 ILCS 5/2-615 (West
2016)), contended, among other things, that the plaintiff failed to state a claim for a violation of
the pension protection clause. Asked to determine whether the claim was properly dismissed, the
Third District found “the health insurance contribution was merely part of the City’s
- 17 -
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.” Dawson, 2018 IL App (3d) 170625, ¶ 13 (citing Pisani v. City of Springfield, 2017 IL
App (4th) 160417, ¶¶ 25-32, 73 N.E.3d 129). The court said the defendant was free to change its
employment policy and reduce the health insurance contribution without violating the pension
protection clause, so it was impossible for the plaintiffs to plead facts sufficient to establish a
violation thereof. Dawson, 2018 IL App (3d) 170625, ¶ 13.
¶ 38 In Pisani, 2017 IL App (4th) 160417, ¶ 25, this court was asked to determine
whether the defendant’s elimination of a vacation buyback provision in its ordinance violated the
pension protection clause. We stated the plaintiff had a pension contract with the State of Illinois,
not the defendant. “Because the vacation buyback provision was in defendant’s ordinance
instead of in Illinois statutory law, it was not a benefit of the ‘contractual relationship’ to which
the pension protection clause refers.” Pisani, 2017 IL App (4th) 160417, ¶ 26. The court
distinguished cases such as Kanerva and Pension Reform Litigation, explaining in those cases
the General Assembly attempted to modify the pension contract through amendment to Illinois
law. We clarified, in Pisani, 2017 IL App (4th) 160417, ¶ 27, the defendant “had an employment
policy, which was expressed in an ordinance, and [the] defendant revised its employment policy
by passing another ordinance.” This court found the provision was not a benefit of membership
in a pension system of the State. “If it were, all members of the [IMRF] would have had the
vacation buyback option, simply by virtue of being members of the [IMRF]—but they did not.”
(Emphasis in original.) Pisani, 2017 IL App (4th) 160417, ¶ 28.
¶ 39 While we recognized the terms and conditions of the plaintiff’s employment
contract with the defendant had a tangible effect on his pension benefits, our supreme court in
- 18 -
Peters v. City of Springfield, 57 Ill. 2d 142, 151-52, 311 N.E.2d 107, 112 (1974), held the
pension protection clause did not apply to terms of employment, even when the changes to the
terms would cause employees to receive a smaller pension. Pisani, 2017 IL App (4th) 160417,
¶ 29. As there was no change to the Illinois Pension Code (40 ILCS 5/7-101 et seq. (West 2014))
by the General Assembly, we concluded the trial court did not err in granting summary judgment
for the defendant and ruling the pension protection clause did not apply. Pisani, 2017 IL App
(4th) 160417, ¶ 32.
¶ 40 In this case, the City, as a municipality employer, created an ordinance allowing
for early retirement in exchange for the ability to purchase up to five years of extra credit in the
State’s IMRF pension plan. According to plaintiffs, the City also promised to provide health
insurance contributions at the same rate as active employees. However, as stated, these changes
were all part of the terms of employment between the City and plaintiffs, not something which
involved their IMRF pensions directly. Under this set of facts, a plaintiff cannot properly state a
claim against a defendant municipality based on a violation of the pension protection clause.
Nothing found in the relevant Insurance Code sections or the various submissions by plaintiffs
relating to their IMRF retirement benefits even mentioned health insurance contributions. This
was a part of the City’s employment policy and not the State’s pension system. The City was free
to change its employment policy and reduce its contributions toward health insurance as long as
it did not charge plaintiffs more, in overall cost, than current employees. It was clear from the
evidence the total costs were the same. Therefore, plaintiffs could not bring a claim under the
pension protection clause, and the trial court correctly dismissed the action with prejudice.
¶ 41 E. Other Matters
- 19 -
¶ 42 We commend the trial court for its thorough and reasoned analysis in its 12-page
opinion letter. Carefully drafted and well-supported by case citations, such orders are of great
assistance to courts of review by clearly setting forth the trial court’s findings and reasoning and
should be encouraged.
¶ 43 III. CONCLUSION
¶ 44 For the reasons stated, we affirm the trial court’s judgment.
¶ 45 Affirmed.
- 20 -
No. 4-18-0777
Cite as: Gilmore v. City of Mattoon, 2019 IL App (4th) 180777Decision Under Review: Appeal from the Circuit Court of Coles County, No. 12-L-1;
the Hon. Steven L. Garst, Judge, presiding.
Attorneys Jennifer Stuart and H. Kent Heller, of Heller, Holmes &
for Associates, P.C., of Mattoon, for appellants.
Appellant:
Attorneys Julia A. Proscia and Michael D. Wong, of SmithAmundsen
for LLC, of St. Charles, and Michael Resis, of SmithAmundsen
Appellee: LLC, of Chicago, for appellee.
- 21 -