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Class Action Defense Cases-Alvarez v. Pappas: Illinois Appellate Court Holds Class Action Properly Dismissed Because Claims To Recover Duplicate Property Tax Payments Are Subject To Five Year Statute Of Limitations

Class Action Claims were Time-Barred because Duplicate Property Tax Payments are still Properly Deemed “Tax Payments,” Class Action Plaintiff’s Argument to the Contrary Notwithstanding, so Trial Court did not Err in Granting Defense Motion to Dismiss Class Action Complaint

Plaintiffs filed a putative class action in Illinois state court seeking the return of overpaid property taxes; specifically, the class action complaint alleged that plaintiffs “had made duplicate real estate tax installment payments” and that the State of Illinois “refused to refund a duplicate real estate tax payment when the refund was requested more than five years after the duplicate payment was made.” Alvarez v. Pappas, ___ N.E.2d __, Slip Opn., at 2 (Ill.App. June 4, 2007). The thrust of the lawsuit was that the State “had no authority to collect, deposit, or disburse to tax districts any duplicate payments of real estate taxes,”, id., at 2-3; defense attorneys countered that the statute of limitations had run on plaintiffs’ claims thus necessitating that the class action be dismissed, id., at 1. The trial court agreed and dismissed the class action complaint as time-barred; the Illinois appellate court affirmed.

By way of background, the appellate court explained that the Cook County treasurer collects property taxes by sending out estimated tax bills by January 31, and final tax bills by June 30. Alvarez, at 1-2. The class action complaint alleged that the Alvarez plaintiffs received a property tax bill for their first installment of their 1989 taxes, and that their bank paid this installment out of an escrow account but that Alvarez also paid the property tax bill directly. Id., at 3. Alvarez allegedly made additional duplicate payments as well, id. Beginning with his second property tax installment for 1998, plaintiff Douglas also allegedly made duplicate tax payments, id., at 4. The Dratt plaintiffs also allege that they made duplicate property tax payments beginning with the second installment for 1998, id. Finally, the class action alleges that duplicate property tax payments were made on property owned by plaintiff Nazon beginning in 1994 or 1995. Id.

From these facts, the class action complaint, inter alia, advanced causes of action for conversion, for the “taking of plaintiffs’ private property without just compensation and a violation of plaintiffs’ equal protection and due process rights,” and unjust enrichment. Alvarez, at 4-5. Defense attorneys moved to dismiss the class action, arguing that the claims were time-barred by the applicable 5-year statute of limitations. Id., at 6. The trial court granted defendant’s motion and plaintiffs’ appealed. Plaintiffs argued that the statute of limitations did not apply because the duplicate payments were not “tax” payments, id., at 7, “but, rather, represented mistaken payments of real estate tax assessments that had already been satisfied” and “because the duplicate payments were not tax payments, their requests for a return of those payments were not claims for a ‘refund,’” id., at 8. The appellate court disagreed.

The Court explained that the applicable statute specifically covered “refund[s] for erroneous assessments or overpayments,” Alvarez, at 7-8 (citation omitted), and that “plaintiffs’ distinction between “tax payments” and “mistaken payments” to be without consequence,” id., at 8. The appellate court reasoned at pages 8 and 9,

Clearly, these payments were “tax payments,” and we decline to interpret them otherwise. Contrary to plaintiffs’ assertion, the character of these payments is not changed merely because the tax bills had already been satisfied when the payments at issue were made. Rather, the duplicate payments, even if made by mistake, amounted to “overpayments” of plaintiffs’ real estate taxes.

Moreover, plaintiffs’ demands were clearly for “refunds,” Alvarez, at 10, and thus fell squarely within the meaning of the statute, id., at 10-13. The Court then held that the limitations period began to run on the date the tax payment was made, id., at 14-15. The appellate court therefore concluded that plaintiffs’ class action claims were time-barred, id., at 15. Accordingly, the class action complaint was properly dismissed, id., at 15-16.

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