* Background is here, here, here and here if you need it. From the Illinois Supreme Court…

Petitioner John Tillman filed a petition for leave to file a taxpayer action under section 11-303 of the Code of Civil Procedure (Code) (735 ILCS 5/11-303 (West 2018)) in the circuit court of Sangamon County. In his attached complaint, petitioner alleged that certain general obligation bonds issued by the State of Illinois in 2003 and 2017 were unconstitutional. The circuit court denied the petition to file the proposed complaint, finding that there was no reasonable ground for the filing of such action. The appellate court reversed the circuit court’s judgment and remanded for further proceedings. 2020 IL App (4th) 190611. For the following reasons, we reverse the judgment of the appellate court and affirm the judgment of the circuit court.

* More…

The State issued and sold the 2003 bonds, applied the proceeds as specified in the law, and made payments on the bonds for years while petitioner did nothing. More than 16 years later, petitioner requested that the court declare the bonds invalid and enjoin the State from making future payments on them. The same is true for the 2017 bonds, which were authorized by the General Assembly and issued and sold by the State. The proceeds from the sale were then used to pay billions of dollars in unpaid state vouchers, all while petitioner did nothing to stop any of these actions. It is patently obvious that the State will suffer some prejudice if relief is granted at this extremely late stage. Respondents maintain that granting relief to petitioner would amount to a de facto default on outstanding bonds that are backed by the full faith and credit of the State. We agree. Enjoining the State from meeting its obligation to make payments on general obligation bonds will, at the very least, have a detrimental effect on the State’s credit rating.

Nevertheless, petitioner argues that the State has not suffered prejudice from his delay because his complaint does not seek to undo past payments made by the State on the bonds but, rather, seeks to enjoin only future payments. Thus, according to petitioner, an individual can wait years, or even decades, after bonds are authorized and issued by the State to challenge the issuance of the bonds in court. We reject this argument. The fact that a petitioner requests only prospective relief does not preclude the application of laches where he had constructive notice of his legal claims years before filing his action. See, e.g., Solomon, 48 Ill. 2d at 322 (holding that laches barred a taxpayer action to enjoin the future issuance of bonds and expenditure of bond proceeds); Schnell v. City of Rock Island, 232 Ill. 89, 93, 96 (1907) (holding that laches barred an action to enjoin future municipal bond payments).

We hold that the necessary elements for laches have been met in this case. There is no reasonable ground under section 11-303 of the Code for filing petitioner’s proposed complaint. We therefore affirm the circuit’s order denying the instant petition, although on different grounds than those relied upon by that court.

I’ll update with responses as they come in.

*** UPDATE 1 *** Comptroller Susana Mendoza…

“The Supreme Court of Illinois got it right: The taxpayers of Illinois should not have to suffer financial Armageddon just so rich people who bet against Illinois can profit. Never bet against Illinois.

“The original judge on this case was right to throw out this irresponsible lawsuit brought by former Gov. Bruce Rauner’s No. 1 advisor and Illinois Policy Institute CEO John Tillman. His ridiculous lawsuit was aimed at tanking Illinois’ finances – for the profit of named or unnamed hedge funds.

“As today’s ruling noted, bond counsel and the state Attorney General signed off on all these bonds. They were constitutional. While the fiscally responsible 2017 bond offering that I championed saved taxpayers $4 to $6 billion in late payment interest penalties and served as a lifeline to businesses across Illinois, it hurt the profit margins of those who chose to bet against Illinois. They gambled and lost. Their irresponsible game is over.

*** UPDATE 2 *** Illinois Attorney General’s office…

We are pleased that the court upheld the legality of the general obligation bonds approved by the General Assembly in 2003 and 2017 and rejected the plaintiff’s belated attempt to create unnecessary havoc in Illinois’ fiscal standing. The fact is that the plaintiff filed a lawsuit opposing the state’s issuance of bonds not days, not months, but years after the bonds were issued – in fact, after the money had been spent. Our position has been that, given the delay in filing the lawsuit, the plaintiff lacked a legal basis for filing at all, and we are pleased the court agreed.

*** UPDATE 3 *** Emily Bittner at the governor’s office…

The administration is pleased that the Supreme Court sided with hardworking taxpayers over a frivolous lawsuit designed to grab headlines.

*** UPDATE 4 *** John Tillman…

“I am of course disappointed in the Illinois Supreme Court’s ruling. We are evaluating our options as to how to proceed from here. In the interim, I continue to be profoundly concerned about Illinois’ reckless debt accumulation. All Illinoisans should care about this. If the state doesn’t tackle pension reform now, it will slide into a fiscal crisis beyond repair that will threaten not only taxpayers and the people who depend on government services, but also people who are counting on their public-sector pension in retirement.”

*** UPDATE 5 *** Bloomberg…

Illinois bonds rose in active trading after the ruling, driving the average yield on some sold in 2017 to 1.12% from 1.4% and the price jumped to more than $1.20 from about $1.19 a day earlier. The case has been closely watched by investors in the $3.9 trillion municipal bond-market, where it was seen as a potential harbinger of potential lawsuits elsewhere if it prevailed.

“Even though the probability was low that the challenge was going to be successful, it wasn’t zero,” said Dan Solender, director of tax-free fixed income for Lord, Abbett & Co., which holds $34 billion in muni assets. “The expectation was this was not going to be a problem but still the bonds are moving up because there is now some definite resolution to the situation.” […]

With the outcome of the case now behind the state, it “can move forward in addressing the more pertinent fiscal issues,” said Dennis Derby, a portfolio manager for Wells Fargo Asset Management, which owns Illinois debt that was challenged as well as other bonds issued by the state as part of a $40 billion municipal-bond portfolio.

* Related…

* National Review: John Tillman Shows How Conservative Activism Can Work