New Heights Recovery & Power, LLC v. Bower

Case Date: 03/09/2004
Court: 1st District Appellate
Docket No: 1-02-3557, 1-02-3688, 1

SECOND DIVISION
March 9, 2004




Nos. 1-02-3557, 1-02-3688 and 1-02-3894, Consolidated
      
NEW HEIGHTS RECOVERY AND POWER, LLC,
formerly known as CGE Ford Heights LLC; and CGE
FULTON, LLC,

                         Plaintiffs-Appellees and Cross-Appellants,
          v.

GLEN BOWER, as Director of the Department of Revenue,
and THE DEPARTMENT OF REVENUE,

                         Defendants-Appellants and Cross-Appellees

(Commonwealth Edison Company,

                         Defendant;

U.S. Bank Trust National Association, formerly known as
First Trust Of Illinois, National Association, as Liquidating
Trustee of the CGE Ford Heights Liquidating Trusts,
formerly as Indenture Trustee,

                         Intervening Plaintiff).


THE VILLAGE OF ROBBINS and ROBBINS
RESOURCE RECOVERY PARTNERS, L.P.,

                         Plaintiffs-Appellees and Cross-Appellants,
          v.

KEVIN WRIGHT, MARY FRANCES SQUIRES, RUTH
KRETSCHMER, TERRY HARVILL, EDWARD
HURLEY, RICHARD MATHIAS, and RICHARD
KOLHAUSER, as Commissioners of the Illinois Commerce
Commission; GLEN BOWER, as Director of the
Department of Revenue,

                         Defendants-Appellants and Cross-Appellees

(Commonwealth Edison Company,

                         Defendant-Appellant).


NEW HEIGHTS RECOVERY AND POWER, LLC,
formerly known as CGE Ford Heights LLC; CGE
FULTON, LLC; THE VILLAGE OF ROBBINS; and
ROBBINS RESOURCE RECOVERY PARTNERS, L.P.,

                         Plaintiffs-Appellees,
          v.

COMMONWEALTH EDISON COMPANY; RICHARD
MATHIAS, RICHARD KOLHAUSER, RUTH
KRETSCHMER, TERRY HARVILL, and EDWARD
HURLEY, as Commissioners of the Illinois Commerce
Commission,

                         Defendants-Appellants

(U.S. Bank Trust National Association, formerly known as
First Trust Of Illinois, National Association, as Liquidating
Trustee of the CGE Ford Heights Liquidating Trusts,
formerly as Indenture Trustee,

                         Intervening Plaintiff-Appellee;

The Department of Revenue,

                         Intervenor).

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Appeal from the
Circuit Court of
Cook County









Nos.  00 CH 3157
          96 CH 2560
          00 CH 3754




Honorable
Robert Boharic
Judge Presiding.



















































 


JUSTICE CAHILL delivered the opinion of the court:

The issue in this case is whether plaintiffs have a constitutionally protected interest in thecontinuation of a specific rate of reimbursement for electricity generated and sold to a publicutility company. The trial court concluded that such rights existed and prohibited application of alegislative enactment abolishing that rate. Because we conclude that a specific rate ofreimbursement once mandated by the legislature does not create a constitutionally protectedinterest in the continuation of that rate, we reverse.

Plaintiffs, New Heights Recovery & Power, LLC, CGE Fulton, LLC, the Village ofRobbins, and Robbins Resource Recovery Partners, L.P., filed two separate complaints againstdefendants. They included Commonwealth Edison (ComEd), commissioners of the IllinoisCommerce Commission (ICC), the Director of the Illinois Department of Revenue (Department)and the Department. Both complaints question whether Public Act 89-448, amending section 8-403.1 of the Public Utilities Act (220 ILCS 5/8-403.1 (West 1996)) (hereinafter, Retail RateLaw), applies to disqualify plaintiffs from receiving a special rate of reimbursement for electricitysold to ComEd. Pub. Act 89-448, eff. March 14, 1996 (hereinafter 1996 amendment).

The Retail Rate Law was adopted in 1987 to "encourage the development of alternateenergy production facilities for the disposal of solid waste." Pub. Act 85-882, eff. Nov. 5, 1987(adding Ill. Rev. Stat. 1987, ch. 111 2/3, par. 8-403.1). The Act directed electric utilitycompanies to enter into 20-year contracts to buy electricity from qualified solid waste energyfacilities (labeled with the acronym QSWEF) at a "retail rate" that was higher than the marketrate. Ill. Rev. Stat. 1987, ch. 111 2/3, par. 8-403.1(c). In return, the utility companies wouldreceive tax credits from the state equal to the difference between the retail rate and the marketrate. Ill. Rev. Stat. 1987, ch. 111 2/3, par. 8-403.1(d).

In reliance on the Retail Rate Law as adopted in 1987, each plaintiff developed anincinerator plant that burned used tires as a source of energy. These plants were certified by theICC as QSWEFs eligible for the special rate of reimbursement. As QSWEFs, plaintiffs enteredinto 20-year contracts with ComEd for the purchase of electricity at the special rate. Thecontracts contained the following provision:

"Service and billing, hereunder *** shall continue for 20 years from the dateCustomer's [q]ualifed [s]olid [w]aste [e]nergy [f]acility begins commercial operation,unless terminated earlier by the written agreement of [the parties], the Customer loses itsstatus as a [QSWEF] [citation] or the Company ceases to obtain full Public UtilitiesRevenue Tax Credits [citation] associated with purchases under this [c]ontract for anyreason."

The 1996 amendment to the Retail Rate Law, entitled "An Act to abolish incineratorsubsidies under the retail rate law," redefined a QSWEF as one that uses methane gas generatedfrom landfills as its primary fuel. Pub. Act 89-448, eff. March 14, 1996. Because plaintiffs' plantsdo not fall within the new definition, ComEd ceased paying plaintiffs the retail rate after theeffective date of the 1996 amendment. The Department affirmed ComEd's decision in a letterdated April 3, 1996. The Department advised ComEd that it was no longer required to buyenergy from incinerator plants at the retail rate or eligible for the tax credit previously available.

The plaintiffs' lawsuits alleged the 1996 amendment could not apply to disqualify them asQSWEFs eligible to receive the special rate of reimbursement under the Retail Rate Law. Thecomplaints also contained breach of contract claims against ComEd. The trial court dismissed thestate defendants on sovereign immunity grounds. In an earlier appeal, we reviewed the dismissalunder Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)). We affirmed in part, dismissed in partand remanded the cause with directions that the trial court consider the remaining claims. CGEFord Heights, L.L.C. v. Miller, 306 Ill. App. 3d 431, 714 N.E.2d 35 (1999).

On remand, the parties filed cross-motions for summary judgment, seeking a declarationon the application of the 1996 amendment. The state defendants also moved to dismiss certainclaims under section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West2000)). The trial court dismissed plaintiffs' claims alleging breach of contract by the state andthose challenging the constitutionality of the amendment. The trial court then granted plaintiffs'motions for summary judgment on some remaining claims and denied defendants' cross-motions. The court ruled that the 1996 amendment did not apply to plaintiffs and enjoined ComEd and thestate defendants from denying plaintiffs benefits under the Retail Rate Law. Plaintiffs' countsagainst ComEd for breach of contract were transferred to the law division.

Defendants now appeal under Rule 304(a) (155 Ill. 2d R. 304(a)), arguing plaintiffs are nolonger eligible for benefits under the Retail Rate Law. Plaintiffs cross-appeal, arguing the trialcourt erred in dismissing claims challenging the constitutionality of the 1996 amendment andalleging breach of contract by the state. Defendants' motion to stay the trial court order pendingappeal has been granted.

We review de novo a trial court order granting summary judgment (City of Chicago v.Holland, 206 Ill. 2d 480, 487, 795 N.E.2d 240 (2003)), as well as an order dismissing claimsunder section 2-615 of the Code (Brandt v. Boston Scientific Corp., 204 Ill. 2d 640, 644-45, 792N.E.2d 296 (2003)).

We first address defendants' contention that the trial court lacked jurisdiction to considerplaintiffs' claims against the state defendants on sovereign immunity grounds. Defendants cite ourearlier decision in this matter where we affirmed the trial court order dismissing plaintiffs' claimsagainst the state on grounds other than sovereign immunity. CGE, 306 Ill. App. 3d 431. Defendants maintain that since CGE, "two events have undermined the basis of [our] decision[]"that sovereign immunity concerns are not implicated by plaintiffs' complaints: (1) the state wasadded as a party; and (2) our supreme court issued an opinion that analyzed retroactivity understatutory construction principals. These two events do not alter the conclusion reached in CGE.

The basis for our decision to affirm the trial court's dismissal of plaintiff's claims againstthe state was plaintiffs' failure to state a cause of action. CGE, 306 Ill. App. 3d at 439. Without avalid claim against the state, there was no need to reach the sovereign immunity issue. CGE, 306Ill. App. 3d at 439. We again find that sovereign immunity concerns are not implicated byplaintiffs' complaints. As discussed below, plaintiffs do not have a valid claim for breach ofcontract against the state. We also conclude, as we did in CGE, that absent a valid breach ofcontract claim, plaintiffs' claims for injunctive and declaratory relief against the state have no placein the Court of Claims because they require consideration of the constitutionality of the 1996amendment. See CGE, 306 Ill. App. 3d at 439-40. "Since the Court of Claims has no power toconstrue the constitutionality of a statute, its injunctive powers lack a predicate in this case." CGE, 306 Ill. App. 439-40.

We turn to the merits of this appeal. We must decide whether the 1996 amendmentabolishes plaintiffs' right to the special rate of reimbursement under the Retail Rate Law. Becausethe parties focus on the retroactivity of the amendment, we look first to the principles governingretroactive application of amendatory acts. In Commonwealth Edison Co. v. Will CountyCollector, 196 Ill. 2d 27, 33, 749 N.E.2d 964 (2001), our supreme court adopted the approach toretroactivity outlined by the United States Supreme Court in Landgraf v. USI Film Products, 511U.S. 244, 128 L. Ed. 2d 229, 114 S. Ct. 1483 (1994). Commonwealth Edison, 196 Ill. 2d at 36-39. Under Landgraf, if the legislature has expressed the temporal reach of a statutoryamendment, then, absent a constitutional prohibition, the legislative intent will be given effect. Commonwealth Edison, 196 Ill. 2d at 38. If the legislature has not expressed the temporal reach,then the court must decide whether applying the statute would have a retroactive impact byimpairing rights a party possessed when he acted, increasing a party's liability for past conduct orimposing new duties with respect to transactions already completed. Commonwealth Edison, 196Ill. 2d at 38. Absent retroactive impact, the amended statute will apply. Commonwealth Edison,196 Ill. 2d at 38.

While affirming the adoption of Landgraf, the court in Caveney v. Bower, 207 Ill. 2d 82,94, 797 N.E.2d 596 (2003), said "it is virtually inconceivable that an Illinois court will ever gobeyond step one of the Landgraf approach," which "requires a court to ascertain whether thelegislature has clearly indicated the temporal reach of the amended statute." Relying on People v.Glisson, 202 Ill. 2d 499, 782 N.E. 2d 251 (2002), the court cited section 4 of the Statute onStatutes (5 ILCS 70/4 (West 2000)), as clear indication by the legislature that, unless otherwiseexpressed in the amendment itself, all statutory amendments should apply prospectively if they aresubstantive in nature. Caveney, 207 Ill. 2d at 92. Procedural changes to existing laws may beapplied retroactively. Caveney, 207 Ill. 2d at 92.

We conclude that the legislature expressed the temporal reach of the 1996 amendment byentitling the amendment: "An Act to abolish incinerator subsidies under the retail rate law." Pub.Act 89-448, eff. March 14, 1996. To "abolish" means "[t]o annul or destroy, esp. an ongoingpractice or thing." Black's Law Dictionary 5 (7th ed. 1999). Under the plain language of the title,we believe the legislature intended that the 1996 amendment abolish subsidies formerly availableto incinerator plants from the date of the amendment forward. We note that we would reach thesame result if we were to apply section 4 of the Statute on Statutes. Because the 1996amendment is a substantive change in the law--it abolishes a previously available subsidy--it mustbe applied prospectively.

Because we find that the 1996 amendment applies prospectively, we need not considerwhether application of the amendment to plaintiffs is constitutionally prohibited. We are unawareof authority that would support a finding that prospective application of amendatory actsimplicates constitutionally protected rights. Caveney illustrates this point. The plaintiffs inCaveney were shareholders in a corporation treated as a subchapter S corporation for taxpurposes. Caveney, 207 Ill. 2d at 84. At issue was a 1999 amendment to section 201(k) of theIllinois Income Tax Act (35 ILCS ILCS 5/201(k) (West 1996)) that would allow shareholders ofa subchapter S corporation to receive tax credits for research and development expenditures. Caveney, 207 Ill. 2d at 85. The plaintiffs sued the state, seeking a return of taxes paid before theeffective date of the amendment. Caveney, 207 Ill. 2d at 85. The state argued retroactiveapplication of the amendment was impermissible because it would affect vested rights held by thestate. Caveney, 207 Ill. 2d at 91. The supreme court, relying on section 4 of the Statute onStatutes, held the amendment applied prospectively because it constituted a substantive change inthe law by establishing a tax credit for S corporation shareholders that previously did not exist. Caveney, 207 Ill. 2d at 95-96. Due to the prospective nature of the amendment, the court did notengage in a constitutional analysis.

To the extent plaintiffs argue they held a constitutionally protected interest in thecontinuation of the former law, we disagree. "A right, to be within the protection of theconstitution, must be a vested right. It must be something more than a mere expectancy basedupon an anticipated continuance of an existing law." Dodge v. Board of Education of City ofChicago, 364 Ill. 547, 552, 5 N.E.2d 84 (1936). Our supreme court has held there is no vestedright in the mere continuation of a law and the legislature has an ongoing right to amend a statute. See Premier Property Management, Inc. v. Chavez, 191 Ill. 2d 101, 109, 728 N.E.2d 476 (2000);People ex rel. Sklodowski v. State, 182 Ill. 2d 220, 232, 695 N.E.2d 374 (1998); First of AmericaTrust Co. v. Armstead, 171 Ill. 2d 282, 291, 664 N.E.2d 36 (1996); Envirite Corp. v. IllinoisEnvironmental Protection Agency, 158 Ill. 2d 210, 215, 632 N.E.2d 1035 (1994). Becauseplaintiffs did not have a vested right in the continuation of the Retail Rate Law as adopted in1987, prospective application of the 1996 amendment to plaintiffs is not prohibited by theconstitution.

Plaintiffs also argue that application of the 1996 amendment would impair plaintiffs'contracts with ComEd. See Ill. Const. 1970, art. I,