# Cepero v. Illinois State Board of Investment

> Appellate Court of Illinois · March 5, 2013 · 986 N.E.2d 1200

URL: https://www.frixlaw.com/law-library/cases/3148470

## Case

- **Court:** Appellate Court of Illinois
- **Decided:** March 5, 2013
- **Citations:** 986 N.E.2d 1200; 2013 IL App (1st) 120919
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 1 later opinions in the Frix Law Library

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## Opinion text

ILLINOIS OFFICIAL REPORTS
Appellate Court

Cepero v. Illinois State Board of Investment, 2013 IL App (1st) 120919

Appellate Court ROBERT LOPEZ CEPERO, Plaintiff-Appellant, v. ILLINOIS STATE
Caption BOARD OF INVESTMENT, an Administrative Agency of the State of
Illinois; WILLIAM R. ATWOOD, Executive Director of the Illinois State
Board of Investment; KATHERINE A. SPINATO, Deputy Director of the
Illinois State Board of Investment; JOHN W. CASEY, FRED
MONTGOMERY, THOMAS E. HOFFMAN, and MICHELE BUSH,
Members of the Executive Committee of the Illinois State Board of
Investment; LINSEY SCHOEMEL, Hearing Officer of the Illinois State
Board of Investment; THE DEPARTMENT OF CENTRAL
MANAGEMENT SERVICES, an Administrative Agency of the State of
Illinois; JAMES P. SLEDGE, Director of the Department of Central
Management Services; KIM BLOCK, Assistant Division Manager
Deferred Compensation Staff of the Department of Central Management
Services; and JASON MUSGRAVE, Executive Secretary Deferred
Compensation Hardship Committee of the Department of Central
Management Services, Defendants-Appellees.

District & No. First District, Second Division
Docket No. 1-12-0919

Filed March 5, 2013

Held The denial of plaintiff’s request for a hardship withdrawal of his deferred
(Note: This syllabus compensation account was upheld, notwithstanding his contention that an
constitutes no part of “unforeseeable emergency” arose when his wife became pregnant with
the opinion of the court triplets as a result of in vitro fertilization and he would have to purchase
but has been prepared a new home for his family, since that situation did not constitute an
by the Reporter of “unforeseeable emergency” for purposes of the provisions of the Illinois
Decisions for the Administrative Code governing deferred compensation plans.
convenience of the
reader.)
Decision Under Appeal from the Circuit Court of Cook County, No. 11-CH-20189; the
Review Hon. Rita Mary Novak, Judge, presiding.

Judgment Affirmed.

Counsel on Tracy A. Robb, of Law Offices of Tracy A. Robb, of Chicago, for
Appeal appellant.

Lisa Madigan, Attorney General, of Chicago (Michael A. Scodro,
Solicitor General, and Carl J. Elitz, Assistant Attorney General, of
counsel), for appellees.

Panel JUSTICE SIMON delivered the judgment of the court, with opinion.
Presiding Justice Harris and Justice Quinn concurred in the judgment and
opinion.

OPINION

¶1 Plaintiff Robert Cepero appeals from an order of the circuit court of Cook County
affirming the decision of the Illinois State Board of Investment (Board) to deny his request
for a hardship withdrawal from his deferred compensation account. On appeal, plaintiff
contends that the denials of his hardship withdrawal request by the Board and the Deferred
Compensation Hardship Committee (Committee) are clearly erroneous in light of
overwhelming evidence that he was experiencing a financial hardship as the consequence of
an unforeseeable emergency at the time. For the reasons that follow, we affirm.

¶2 BACKGROUND
¶3 On January 12, 2011, plaintiff filed a hardship withdrawal request for the balance of his
deferred compensation account, totaling $104,007.82, due to an unforeseeable emergency.
Plaintiff asserted that his wife, Elizabeth, was pregnant with triplets as a result of a
successful in vitro fertilization (IVF) and had reached her twenty-second week of pregnancy.
Due to the medical complications of such a pregnancy, Elizabeth was required to go on
unpaid medical leave no later than January 20, 2011, and likely could not return to work until
December 19, 2011, resulting in $113,972.91 in lost wages. Plaintiff maintained that the
triplet pregnancy was unforeseeable because he and Elizabeth had a long history of infertility
and repeated failed IVF attempts over the past decade and that the pregnancy caused a
financial emergency due to the combination of Elizabeth’s lost wages and the additional

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costs of caring for the triplets, including necessary 24-hour child care assistance and
modifications to plaintiff’s loft condominium. On February 3, 2011, the Committee denied
plaintiff’s request for a hardship distribution because Elizabeth had not yet lost any income
and requested that plaintiff notify it when Elizabeth began her leave of absence.
¶4 On February 24, 2011, plaintiff filed a hardship withdrawal request for the balance of his
deferred compensation account for a down payment on a home. Plaintiff asserted that the
purchase of the home was necessitated by the impending birth of the triplets because his
current condominium had an open floor plan and only one bedroom with four walls, the
condo could not be modified to include a second bedroom with four walls, his request to
construct a temporary bedroom had been rejected by the condo association, and the size of
his family would exceed the design capacity of the condo upon the birth of the triplets.
Plaintiff maintained that he did not have sufficient funds to purchase a home and that the
need to buy a new home was caused by unforeseeable circumstances arising from events
beyond his control. Plaintiff also maintained that the maximum occupancy of his
condominium was three and that no reasonable person could have anticipated the birth of
triplets because the odds against such a pregnancy were 784-to-1 and it was unlikely that the
IVF attempt would be successful where multiple prior IVF attempts had failed. On March
17, 2011, the Committee denied plaintiff’s request for a hardship distribution, finding that
his situation did not meet the criteria for an unforeseeable emergency and noting that the
purchase of a home did not qualify as such an emergency.
¶5 Plaintiff appealed that decision to the Board and alleged that the Committee incorrectly
determined that the purchase of a home does not qualify as an unforeseeable emergency and
that such an emergency existed in this case where Elizabeth’s pregnancy with triplets and
plaintiff’s inability to modify his condominium to accommodate the triplets were
unforeseeable. On April 26, 2011, a hearing was conducted on plaintiff’s appeal, and the
hearing officer then prepared a report of its findings of fact based on plaintiff’s testimony and
other evidence presented at the hearing.
¶6 In that report, the hearing officer related that Elizabeth gave birth to premature triplets
in April 2011, the children were in the process of being released from the hospital, and
Elizabeth had been diagnosed with a heart condition that limited her mobility and required
the hiring of a nanny, which would cost about $4,000 per month. Plaintiff lived with
Elizabeth and their four year-old daughter in a condominium, which had an open floor plan
and contained one bedroom with four walls and a lofted master bedroom. Plaintiff put his
residence on the market in December 2010 in anticipation of the birth of the triplets, but was
unable to secure a purchaser or renter for the unit. Plaintiff retained an architect to modify
the condominium to accommodate the triplets, but on January 28, 2011, the architect told
plaintiff that he could not design such a modification in compliance with the Chicago
building code. Plaintiff sought permission from the condo association to construct a
temporary bedroom in his unit, but on February 18, 2011, that request was denied. Plaintiff
contacted his current mortgage provider and learned that he would likely be required to
provide a lender with at least 25% of the purchase price of a new home as a down payment.
Plaintiff was unable to rent suitable housing because he did not have access to sufficient
funds absent the rental or sale of his current residence and the health risks associated with

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premature babies required that he reside near Northwestern Hospital and avoid subjecting
the triplets to multiple moves.
¶7 On May 9, 2011, the Board denied plaintiff’s request for a hardship withdrawal to
purchase a home, finding that while certain circumstances may warrant a distribution to
purchase a home, this case did not constitute an unforeseeable emergency. The Board found
that it was not unforeseeable that an IVF would result in multiple pregnancies and that
although plaintiff had experienced many failed IVF attempts in the past, the use of IVF and
the resulting pregnancy were not beyond plaintiff’s control. The Board also found that
Elizabeth’s medical condition constituted an unforeseeable emergency, but determined that
a distribution could not be granted “until either a loss of income or unreimbursed medical
expense is incurred.”
¶8 On June 26, 2011, plaintiff filed a petition for a writ of certiorari with the circuit court
alleging that the Board’s decision was against the manifest weight of the evidence and
contrary to fact and law and asking for judgment in his favor. On February 16, 2012, the
court conducted a hearing on the petition and affirmed the Board’s decision, finding that it
was not unforeseeable that an IVF might result in a pregnancy with triplets and that the
addition of even a single child to plaintiff’s residence would have caused difficulty for
plaintiff’s family due to the small size of his condominium.

¶9 ANALYSIS
¶ 10 On appeal, plaintiff contends that the decisions of the Board and the Committee to deny
his hardship withdrawal request are clearly erroneous in light of overwhelming evidence that
he was experiencing a severe financial hardship as the consequence of an unforeseeable
emergency at the time of his request. The standards of review under a common law writ of
certiorari are essentially the same as those under the Administrative Review Law (735 ILCS
5/3-101 et seq. (West 2010)). Hanrahan v. Williams, 174 Ill. 2d 268, 272 (1996). On
administrative review, an appellate court reviews the final decision of the administrative
agency, and not the decision of the circuit court. Nichols v. Chicago Transit Authority
Hardship Committee, 338 Ill. App. 3d 829, 831 (2003). The applicable standard of review
to apply on review of an administrative agency decision depends on whether the question
presented is one of fact, one of law, or a mixed question of fact and law. Cinkus v. Village
of Stickney Municipal Officers Electoral Board, 228 Ill. 2d 200, 210 (2008).
¶ 11 The parties agree that the issue in this case requires an examination of the legal effect of
a given set of facts and, therefore, presents a mixed question of fact and law. As such, we
will review the Board’s decision under a clearly erroneous standard of review. City of
Belvidere v. Illinois State Labor Relations Board, 181 Ill. 2d 191, 205 (1998). An agency’s
decision will be deemed clearly erroneous when the reviewing court is left with the definite
and firm conviction that a mistake has been made. AFM Messenger Service, Inc. v.
Department of Employment Security, 198 Ill. 2d 380, 395 (2001).
¶ 12 The State of Illinois Employees’ Deferred Compensation Plan allows an employee of the
State of Illinois to designate a portion of his or her salary to be withheld each month and
invested in a manner approved by the Board and in compliance with section 457 of the

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Internal Revenue Code (26 U.S.C. § 457 (2006)). 80 Ill. Adm. Code 2700.110(a) (2009). A
distribution from an employee’s deferred compensation account shall be permitted in the
event the employee experiences an unforeseeable emergency. 80 Ill. Adm. Code 2700.740(a),
amended at 33 Ill. Reg. 13451 (eff. Sept. 14, 2009). An “unforeseeable emergency” is
defined as a severe financial hardship to the employee resulting from an unexpected illness
or accident of the employee or a dependent, loss of the employee’s property due to casualty,
“or other similar extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the [employee].” 80 Ill. Adm. Code 2700.200(a), amended at 33 Ill.
Reg. 13451 (eff. Sept. 14, 2009). Although the purchase of a home generally will not qualify
as an unforeseeable emergency, the imminent foreclosure of or eviction from the employee’s
primary residence may constitute such an emergency. 26 C.F.R. § 1.457-6(c)(2)(i) (2011).
¶ 13 Plaintiff asserts that the Committee’s decision was clearly erroneous because it was not
supported by legal or factual analysis. The Committee is responsible for determining whether
an employee is entitled to a distribution due to an unforeseeable emergency (80 Ill. Adm.
Code 2700.320(a) (2009)), and the Board is responsible for resolving all benefit claims and
claims appeals (80 Ill. Adm. Code 2700.310(a)(8), amended at 33 Ill. Reg. 13451 (eff. Sept.
14, 2009)). Here, the Committee denied plaintiff’s request for a hardship distribution,
plaintiff appealed that denial to the Board, a hearing was conducted on plaintiff’s appeal, and
the Board resolved plaintiff’s appeal by denying his request. As such, the Board’s denial of
plaintiff’s request for a hardship withdrawal was the final administrative decision on the
matter and, as such, we will limit our review to the Board’s decision and will not consider
the decision of the Committee. Nichols, 338 Ill. App. 3d at 831.
¶ 14 Plaintiff next asserts that the Board’s decision is clearly erroneous because its finding that
the possibility of multiple pregnancies resulting from IVF was not unforeseeable had no
evidentiary basis where the odds of a pregnancy resulting in triplets were 784-to-1. We
initially note that because plaintiff’s condominium had a maximum occupancy of three and
contained two bedrooms, only one of which had four walls, the birth of a single child would
have caused plaintiff’s family to exceed the condo’s maximum occupancy and that any
multiple birth, not just a birth of triplets, therefore, would have caused a housing crisis. Also,
the odds set forth by plaintiff regarding the chances of a pregnancy resulting in triplets do not
accurately reflect the likelihood of such a development in this case because those odds, as
plaintiff states in his withdrawal request, include both natural and IVF pregnancies. In fact,
the website cited by plaintiff relates that there is about a 19% chance that an IVF pregnancy
will result in twins and a 4% chance an IVF pregnancy will result in triplets (Childbirth
Solutions, Fact Sheet: In Vitro Fertilization (IVF), available at
http://childbirthsolutions.com/articles/fact-sheet-in-vitro-fertilization-ivf (last visited Feb.
27, 2013)),1 and those estimates are roughly consistent with the data showing that the
chances of a multiple pregnancy are higher in IVF pregnancies than in non-IVF pregnancies
(see Centers for Disease Control and Prevention, National ART Success Rates, available at

1
While the fact sheet says that “about 50% are singletons, 24% are twins and 5% are triplets
or more,” it appears that those percentages represent proportions of a total of 78% of IVF
pregnancies that result in a live birth.

-5-
http://apps.nccd.cdc.gov/art/Apps/NationalSummaryReport.aspx (last visited Feb. 27, 2013);
Laura A. Schieve, Herbert B. Peterson, Susan F. Meikle, Gary Jeng, Isabella Danel, Nancy
M. Burnett, Lynne S. Wilcox, Live-Birth Rates and Multiple-Birth Risk Using In Vitro
Fertilization, 282 JAMA 1832 (1999), available at
http://jama.jamanetwork.com/article.aspx?articleid=192105 (last visited Feb. 27, 2013)).
Further, regardless of the exact odds, it is common knowledge that a pregnancy may result
in twins or triplets, and we determine that the Board’s finding that the possibility of multiple
pregnancies resulting from IVF was not unforeseeable is not clearly erroneous.
¶ 15 Plaintiff next asserts that the Board’s determination that the use of IVF and the resulting
pregnancy were within his control ignores the fact that the emergency at issue was caused
by a multitude of unforeseen factors. Plaintiff maintains that the Board incorrectly
determined that, because the decision to pursue IVF was within plaintiff’s control, any
consequences which flowed from that decision, no matter how unlikely, were not
unforeseeable. The Board, however, clearly stated in its decision that Elizabeth’s medical
condition, which was a consequence of her pregnancy and the birth of the triplets, constituted
an unforeseeable emergency and appears to have subsequently granted plaintiff a hardship
withdrawal on that basis. In this case, the Board found that the alleged housing emergency
was not unforeseeable given the possibility of multiple births resulting from IVF and the
small size of plaintiff’s condominium, and the record does not support plaintiff’s claim that
the Board ignored certain factors in reaching its decision.
¶ 16 To the extent plaintiff further asserts that the Board improperly found that the proposed
use of the withdrawal to purchase a home was a de facto bar to a hardship distribution, that
claim is contradicted by the record. In its decision, the Board acknowledged that “there are
certain circumstances which may warrant a distribution in order to purchase a home,” but
found that the circumstances in this case did not constitute an unforeseeable emergency. As
such, the Board did not treat the proposed use of the funds to purchase a home as a de facto
bar to a distribution, and we conclude that the Board’s denial of plaintiff’s request for a
hardship withdrawal to purchase a home is not clearly erroneous.

¶ 17 CONCLUSION
¶ 18 Accordingly, we affirm the judgment of the circuit court of Cook County.

¶ 19 Affirmed.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/3148470. Public record. Not legal advice.