Stone Street Partners v. City of Chicago Department of Administrative Hearings—Non-lawyers cannot represent corporations at administrative hearings

The Appellate Court of Illinois, in Stone Street Partners, LLC v. City of Chicago Dept. of Administrative Hearings, 2014 IL App. (1st) 123654, 382 Ill. Dec 412 (2014) reviewed the issues of notice to corporations of municipal code violations and the propriety of non-lawyers appearing on behalf of a corporation at a municipal administrative hearing.

The court was faced with an incomplete record on appeal. The record did show that the City of Chicago (City) sent notice of building code violations on one of the Stone Street (Stone Street) properties to the property in question, despite a City ordinance requiring notice to be sent to the corporation’s registered agent or its business address. The notice was sent out in 1999. At an administrative hearing, a non-lawyer property caretaker appeared for Stone Street. At that hearing, there was a finding that Stone Street was liable and was fined $1,050. The administrative judgment was not “registered” with the Circuit Court until 2004. The City recorded the judgment in 2009. Stone Street claims it never knew of the 1999 order until 2011 when it filed a motion to vacate and set aside the 1999 order before the City’s administrative hearing officer. Stone Street claimed that the person who appeared for Stone Street in 1999 was not authorized to do so. The administrative hearing officer held that the Administrative Hearings Department did not have jurisdiction to vacate the judgment due to the passage of time.

Stone Street then filed a multi-county complaint in the Circuit Court in 2012, seeking administrative review of the 2011 administrative order denying the motion to vacate. Other counts sought declaratory judgment, quiet title and damages. The Circuit Court granted the City’s motion to dismiss.

The Appellate Court first looked to the sufficiency of notice given to Stone Street in 1999. The City’s Code required that notice of administrative hearings be sent to a corporation’s registered agent. The City sent the notice to the property address and not to the registered agent. The Appellate Court, in criticizing the process followed by the City, reminded litigants at administrative hearings that they are entitled to due process of law, with “the opportunity to be heard, the right to cross-examine adverse witnesses, and impartiality in ruling upon the evidence.” Stone Street, ¶ 11. The court held that “notice in administrative proceedings need only be ‹reasonably calculated … to apprise [the respondents] of the pendency of the action and to afford them an opportunity to present their objections.›” Stone Street, ¶ 12. Because the notice of hearing was not properly served, jurisdiction of the administrative hearing process was not established. Therefore the judgment entered in 1999 was not valid and could be attacked at any time where there was no jurisdiction over Stone Street.

The court turned to the City’s claim that Stone Street waived objections to service by its non-attorney employee participating at the hearing. The employee had filed an appearance on behalf of Stone Street. The court analyzed the similarity between administrative hearings and judicial proceedings and rejected the City’s claim that administrative proceedings are so different than judicial proceedings that would permit corporations to appear through non-lawyers. The court noted that the Illinois Supreme Court recently affirmed that a corporation must be represented by counsel in legal proceedings. Stone Street, ¶ 17. The City’s administrative rule allowing non-lawyers to represent corporations at administrative hearings is not valid where it attempts to control the role of the Supreme Court to administer the practice of law.

Supreme Court Rule 282 (b) allowing corporations to defend against small claims through a non-lawyer in tort or contract claims under $10,000 is not applicable to administrative proceedings because those hearings are not based on tort or contract claims. The enforcement of ordinances and imposition of fines are not covered by Supreme Court Rule 282 (b). The non-lawyer representative’s appearance does not waive objection to jurisdiction over the corporation.

The court, with one justice concurring in part and dissenting in part, reversed the dismissal of the case and remanded the case for further proceedings.

The court did not address whether the government agency alleging an ordinance violation must be represented by counsel.

The issues raised in Stone Street are not concluded. On September 20, 2014, the Supreme Court granted leave to appeal in Docket No. 117720. Resolution of the issues in Stone Street by a decision of the Supreme Court is essential to come to a final determination whether corporations may be represented by non-attorneys at administrative proceedings. ■