Kampmann v. Hillsboro Community School District No. 3 Board of Education

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Appellate Court Date: 2020.02.05

13:42:47 -06'00'

Kampmann v. Hillsboro Community School District No. 3 Board of Education,

2019 IL App (5th) 180043

Appellate Court SCOTT KAMPMANN, Plaintiff-Appellant, v. THE HILLSBORO

Caption COMMUNITY SCHOOL DISTRICT NO. 3 BOARD OF

EDUCATION, Defendant-Appellee.

District & No. Fifth District

No. 5-18-0043

Filed October 25, 2019

Decision Under Appeal from the Circuit Court of Montgomery County, No. 17-CH-

Review 19; the Hon. Amanda S. Ade-Harlow, Judge, presiding.

Judgment Affirmed.

Counsel on Silver Lake Group, Ltd., of Greenville (Thomas G. DeVore, of

Appeal counsel), for appellant.

S. Jeff Funk, of Miller, Tracy, Braun, Funk & Miller, Ltd., of

Monticello, for appellee.

Panel JUSTICE CATES delivered the judgment of the court, with opinion

Presiding Justice Overstreet and Justice Moore concurred in the

judgment and opinion.

OPINION

¶1 Scott Kampmann filed a complaint for declaratory judgment against the Board of

Education (Board) of the Hillsboro Community School District No. 3 (District) alleging the

Board exceeded its statutory authority in entering into an energy services agreement and four

change orders with Ameresco, Inc. (Ameresco), related to construction projects on District

property. The circuit court dismissed the complaint, finding that Kampmann’s suit was barred

by the doctrine of laches. Kampmann appeals, and we affirm.

¶2 BACKGROUND

¶3 During the spring of 2013, the Board sought proposals for energy and operational cost

savings measures for several District facilities. On April 25, 2013, the Board submitted these

proposals for publication to the Capital Development Board Procurement Bulletin. Three

energy services companies, M360, GRP Mechanical, and Ameresco, submitted proposals to

the Board. Ameresco’s proposal included $7,445,769 of proposed work for Hillsboro High

School, Hillsboro Junior High School, Beckemeyer Elementary School, and Coffeen

Elementary School.

¶4 On June 25, 2013, the Board’s building and grounds committee (Committee) interviewed

representatives of the three companies that had submitted proposals. On July 9, 2013, the

Committee met again to discuss the merits of the proposals that had been submitted. As a result

of their discussions, the Committee held a public hearing and voted to recommend that the

Board pass a resolution authorizing a letter of intent to Ameresco for the upcoming project.

¶5 During a regularly scheduled meeting of the Board held later that same day, the Board

considered the Committee’s recommendation. The July 9, 2013, meeting was open to the

public, and the agenda for that meeting indicated that one of the items to be discussed was the

“Letter of Intent for Performance Contracting.” The minutes from the meeting indicate that the

District superintendent reported the Committee’s recommendation that the Board issue a letter

of intent to Ameresco for two projects. Those projects included bathroom renovations and roof

work to the Hillsboro Junior High School, which had previously been approved by the Board

for fiscal year 2014. The District superintendent concurred in the Committee’s

recommendation. After due consideration, the Board voted to approve a resolution authorizing

that a letter of intent for the two projects at Hillsboro Junior High School be issued to

Ameresco. On July 10, 2013, the superintendent issued the letter of intent to Ameresco on

behalf of the District.

¶6 On September 17, 2013, during a regularly scheduled public meeting, the Board considered

and approved the energy services agreement (Agreement) with Ameresco. Prior to that

meeting, written notice of the Board’s intention to enter into this Agreement had been posted

in the public agenda, available to the community at large. In accordance with the Board’s

approval, the District entered into the Agreement with Ameresco on September 17, 2013. The

next day, the District issued a notice to proceed to Ameresco. The scope of services

encompassed within the Agreement included the renovation of the bathrooms and a roof sealer

for the Hillsboro Junior High School for a price of $170,982.

¶7 On March 14, 2014, the Board provided written notice of a public hearing to be conducted

on April 8, 2014, regarding the District’s proposal to sell bonds in the amount of $5,395,000

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to finance future work to be performed by Ameresco. On April 8, 2014, the Board conducted

the open hearing to receive public comments on the sale of the bonds. No public comments or

questions were raised at the meeting. On May 13, 2014, during the following regularly

scheduled meeting, the Board voted to pass a resolution to sell $5,395,000 in bonds to fund the

Ameresco projects. The District issued the approved bonds on June 9, 2014.

¶8 Meanwhile, between April 1, 2014, and May 5, 2015, the Board approved, and the District

entered into, four change orders to the Agreement with Ameresco, to wit: (1) on April 1, 2014,

a change order in the amount of $108,055; (2) on May 13, 2014, a change order in the amount

of $4,502,597; (3) on July 24, 2014, a change order in the amount of $72,932; and (4) on May

5, 2015, a change order in the amount of $745,747. The work contracted for and performed

under the Agreement and the change orders were all within the scope of Ameresco’s original

proposal and totaled $5,600,313.

¶9 The Agreement and change orders stipulated that a total of $7,883,627 in guaranteed

energy and operational savings would be realized over a 20-year period by the District by

implementing the measures contained therein. The Board, however, waived any audit,

measurement, or recovery of all but $335,018 of the taxpayers’ guaranteed savings. The Board

had no independent evaluation completed by an architect or an engineer to assess the likelihood

of the District realizing the stipulated savings. The Board has never sought to audit, measure,

or recover any of the guaranteed taxpayer savings that it did not waive. On December 15, 2015,

with all work having been completed under the Agreement and change orders, the District

submitted its final payment to Ameresco. Ameresco was paid from the proceeds of the sale of

the bonds.

¶ 10 On March 14, 2017, Kampmann filed a complaint for declaratory and injunctive relief

against the Board; Sandy Leitheiser, as the Montgomery County Clerk and Recorder; and Ron

Jenkins, as the Montgomery County Treasurer. Kampmann requested the circuit court enter an

order finding that the Board entered into the Agreement and change orders in excess of its

statutory authority and declaring the contracts void ab initio. Kampmann also sought an order

permanently enjoining the defendants from levying, extending, or collecting any tax within the

District for the purpose of repaying the outstanding bonds used to fund the Agreement and

change orders. On May 30, 2017, Leitheiser and Jenkins were dismissed without prejudice on

Kampmann’s motion.

¶ 11 On June 2, 2017, Kampmann filed an amended complaint against the Board for declaratory

judgment, alleging the Board exceeded its statutory authority and violated article 19b of the

School Code (105 ILCS 5/art. 19b (West 2012)) by entering into the Agreement and change

orders. Kampmann alleged the Board violated approximately 12 statutory requirements in the

procurement and execution of the contracts, including the District’s waiver of the taxpayers’

guaranteed savings. Kampmann requested the circuit court enter an order finding the Board

entered into the Agreement and change orders in excess of its statutory authority and declaring

the contracts void ab initio.

¶ 12 On July 3, 2017, the Board filed a combined section 2-615 and section 2-619 motion to

dismiss the amended complaint. 735 ILCS 5/2-615, 2-619 (West 2016). As part of its section

2-619 motion, the Board raised the affirmative defense of laches. On July 27, 2017, the circuit

court held a hearing on the Board’s motion to dismiss and took the matter under advisement.

On January 3, 2018, the court entered an order dismissing Kampmann’s amended complaint

against the Board, holding the claim was barred by laches. The circuit court found

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Kampmann’s claim should be barred because Kampmann had notice of the Board’s actions yet

failed to bring suit until after construction had been completed, all payments had been made,

and the Board had issued bonds. This appeal follows.

¶ 13 ANALYSIS

¶ 14 Section 2-619(a)(9) of the Code of Civil Procedure provides for the dismissal of an action

where the claim “is barred by other affirmative matter avoiding the legal effect of or defeating

the claim.” 735 ILCS 5/2-619(a)(9) (West 2016). Laches is one of the affirmative defenses that

may be brought in a section 2-619 motion. Richter v. Prairie Farms Dairy, Inc., 2016 IL

119518, ¶ 50. As an affirmative defense, the defendant has the burden of establishing the

doctrine by a preponderance of the evidence. La Salle National Bank v. Dubin Residential

Communities Corp., 337 Ill. App. 3d 345, 351 (2003). Whether laches is available as a defense

is determined by the facts and circumstances of each case. La Salle National Bank, 337 Ill.

App. 3d at 351. The determination of laches is within the sound discretion of the trial court,

and we will not set aside that court’s determination absent a clear abuse of discretion. Lee v.

City of Decatur, 256 Ill. App. 3d 192, 196 (1994).

¶ 15 Laches, also referred to as the doctrine of stale demand, is an equitable defense that bars

recovery by a litigant whose unreasonable delay in bringing an action has prejudiced the rights

of the other party. Richter, 2016 IL 119518, ¶ 51; Pyle v. Ferrell, 12 Ill. 2d 547, 552 (1958).

Unlike a statute of limitations, laches is more than a mere passage of time “but principally a

question of the inequity of permitting the claim to be enforced, an inequity founded upon some

change in the condition or relation of the property and parties.” Pyle, 12 Ill. 2d at 552; Richter,

2016 IL 119518, ¶ 51. The fundamental elements of laches are lack of due diligence by the

plaintiff and prejudice to the defendant. La Salle National Bank, 337 Ill. App. 3d at 354. It is

essential that the defendant plead and prove, not only that there was an unreasonable delay in

bringing the suit and resultant prejudice, but also that the plaintiff had knowledge or notice of

the facts giving rise to the claim. La Salle National Bank, 337 Ill. App. 3d at 352.

¶ 16 In Pyle, the Illinois Supreme Court held that a suit is barred by laches where (1) there is

conduct on the part of the defendant giving rise to the situation of which complaint is made

and for which the plaintiff seeks a remedy; (2) the plaintiff delayed in asserting his rights, even

though he had notice or knowledge of the defendant’s conduct and he had the opportunity to

institute a suit; (3) the defendant had no knowledge or notice that the plaintiff would assert the

right on which he bases his suit; and (4) injury or prejudice to the defendant if relief is accorded

to the plaintiff or the suit is held not to be barred. Pyle, 12 Ill. 2d at 553.

¶ 17 On appeal, Kampmann argues that the circuit court abused its discretion in dismissing his

claim for laches. We will begin, however, with Kampmann’s ancillary argument that laches

should not be used to bar a claim such as his, where a taxpayer has filed a complaint that a

public body exceeded its statutory authority when entering into a contract. In support of this

proposition, Kampmann argues there are no reported cases vitiating a taxpayer claim for laches

when a public body entered into a contract in excess of its statutory authority; argues that the

circuit court erred in relying on People ex rel. Prindable v. New York Central R.R. Co., 400

Ill. 507 (1948), and Bowman v. County of Lake, 29 Ill. 2d 268 (1963), in dismissing his suit

because neither case involved this specific factual scenario; and argues that allowing laches to

bar a taxpayer complaint would place an affirmative duty on the taxpayers to “micro manage”

a public body’s compliance with statutory limitations.

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¶ 18 First, Kampmann’s assertions—that the circuit court erred in relying on Prindable, 400 Ill.

507, and Bowman, 29 Ill. 2d 268, and that the alleged absence of cases addressing the specific

facts present in this case indicates that laches is not applicable here—are both without merit.

The circuit court looked to Prindable, 400 Ill. 507, and Bowman, 29 Ill. 2d 268, for guidance

in determining whether the doctrine of laches should lie in this case. Those cases provided the

court with appropriate guidance on issues relevant to the case before it, including the length of

time a plaintiff delayed in asserting his rights, the injury or prejudice inflicted if a plaintiff’s

suit is not barred, and a plaintiff’s constructive notice on matters of public record. Prindable,

400 Ill. at 517; Bowman, 29 Ill. 2d at 280-81. Furthermore, Bowman, 29 Ill. 2d 268, was a

taxpayer suit challenging the actions of several public bodies as being in violation of their

statutory and constitutional authority. See also Droste v. Kerner, 34 Ill. 2d 495, 515 (1966)

(Schaefer, J., dissenting) (noting that laches is applicable to taxpayers’ actions).

¶ 19 Furthermore, Kampmann’s contention that laches should not be applied as a matter of

policy because it places too onerous of a burden on taxpayers to oversee public bodies “in real

time” is also misplaced. Oversight of public bodies is the very essence of taxpayer actions. See

Scachitti v. UBS Financial Services, 215 Ill. 2d 484, 493-94 (2005) (a taxpayer action is one

brought by private persons on behalf of themselves and as representatives of other similarly

situated taxpayers “for the purpose of seeking relief from illegal or unauthorized acts of public

bodies or public officials, which acts are injurious to their common interests as such taxpayers”

(internal quotation marks omitted)). Quite simply, Kampmann’s initiation of a taxpayer action

is inherently inconsistent with his rejection of the responsibility of policing public bodies.

Kampmann has provided this court with no compelling justification for rejecting the

requirement that such taxpayer actions be brought within the confines of this equitable

doctrine, which is to say, within a reasonable period of time and before the public body has

suffered prejudice as result of the plaintiff’s lack of diligence.

¶ 20 Next, Kampmann maintains that the circuit court erred in finding his claim was barred by

laches because (1) he did not unreasonably delay in bringing his suit; (2) the delay did not

cause the Board to pursue a different course of action than it otherwise might have if suit had

been initiated sooner; (3) as a public body, the Board was charged with notice of its statutory

limitations and was always on notice that a taxpayer may assert a claim that the Board acted in

excess of its statutory authority; and (4) the Board failed to show that it would suffer any injury

or prejudice if his suit was not barred.

¶ 21 Kampmann argues his initiation of his suit less than two years after the last change order

was entered into was not an unreasonable delay and that the delay did not cause the Board to

pursue a different course of action than it otherwise might have if suit had been initiated sooner.

Notably, Kampmann does not contest that he had knowledge of the Board’s actions. The record

supports a finding that Kampmann had, at least, constructive knowledge of the Board’s actions

because the Board discussed the procurement of the contracts and the issuance of the bonds

during numerous open meetings between July 9, 2013, and May 5, 2015. See La Salle National

Bank, 337 Ill. App. 3d at 352-54 (holding that, as a general rule, matters of public record

establish a plaintiff’s constructive notice of an issue and the plaintiff’s unreasonable delay in

asserting a claim).

¶ 22 Here, Kampmann initiated his suit against the Board in March 2017, which was

approximately four years after the Board entered into the original Agreement, three years after

the bonds were issued, and more than a year after all construction had been completed and all

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payments made. It is undeniable that there have been irreversible changes to the District’s

physical property and to the District’s financial obligations as a result of the District’s and

Ameresco’s performance under the contracts. Kampmann’s contention that there is no

indication that the Board would have pursued a different course of action if suit had been

initiated sooner is belied by the record. The record indicates that on May 13, 2014, as part of

the bond approval process, the Board certified that it had complied with the Open Meetings

Act (5 ILCS 120/1 et seq. (West 2014)) and that there was “no litigation or controversy pending

or threatened and there are no tax objections pending or threated questioning or affecting in

any manner whatsoever *** the right of the District to levy taxes for school purposes.” Over

the course of two years, and without notice that Kampmann would challenge the Board’s

actions, the Board entered into five contracts to have substantial construction work completed

on District property and issued $5,395,000 in bonds to pay for the work. Kampmann’s timely

initiation of a suit challenging the Board’s actions could have impacted the Board’s execution

of future change orders and would have impacted the Board’s ability to issue bonds financing

the contracts. Under the circumstances, it was unreasonable for Kampmann to delay filing his

suit until after the District had irreversibly altered its physical property and its financial

obligations.

¶ 23 Kampmann also asserts that the Board, as a public body, is charged with notice of its

statutory limitations and notice that a taxpayer might assert a claim challenging the Board’s

authority to act. Nothing in the record suggests that the Board had notice that Kampmann or

any other taxpayer intended to file a complaint challenging the Board’s authority to enter into

the subject contracts or to issue the bonds to pay for the work completed under said contracts.

Furthermore, Kampmann provides no citation of any authority supporting a finding that the

Board, due only to its nature as a public body, is presumed to have notice of all potential

lawsuits challenging its authority to act.

¶ 24 Finally, Kampmann argues the Board failed to show that it would suffer any injury or

prejudice if his suit was not barred. In its motion to dismiss, the Board asserted it would suffer

profound injury if the court granted Kampmann his requested relief and declared the contracts

void ab initio because the District would be unable to meet its bond and interest payments

incurred as a result of the contracts. In his brief, Kampmann asserts that he did not request a

remedy related to the bond and interest payments and merely sought an order declaring that

the contracts were void. During oral argument, Kampmann suggested that the circuit court

could possibly reform the contracts in some manner even though this remedy had never been

specifically raised or requested. In his amended complaint, however, Kampmann alleged that,

due to the various statutory violations, all the Board’s actions related to the procurement and

execution of the contracts were void. Kampmann’s amended complaint contested the use of

future taxpayer money to “replenish public funds utilized to finance” the contracts and

specifically requested an order declaring the contracts “void ab initio and invalid and of no

force and effect whatsoever since [their] inception.” In its motion to dismiss, the Board

responded to Kampmann’s specific allegations and request for remedies. On appeal, it cannot

be said that the Board failed to meet its burden of demonstrating prejudice because the Board

did not demonstrate that it would be prejudiced by the circuit court’s entry of some other

unspecified, previously unrequested relief.

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¶ 25 CONCLUSION

¶ 26 Under the facts of this case, the circuit court did not abuse its discretion finding that

Kampmann’s claim against the Board was barred by laches. The circuit court’s judgment

dismissing Kampmann’s complaint is affirmed.

¶ 27 Affirmed.

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