Willmschen v. Trinity Lakes Improvement

Decision Date27 December 2005
Docket NumberNo. 2-05-0343.,2-05-0343.
Citation840 N.E.2d 1275
PartiesRobert WILLMSCHEN, Ronald Cullum, Peter Hlepas, Mark Kaschube, and James Campise, Plaintiffs-Appellants, v. TRINITY LAKES IMPROVEMENT ASSOCIATION and The Board of Directors of Trinity Lakes Improvement Association, Defendants-Appellees.
CourtIllinois Supreme Court

Thomas R. Mulroy III, John A. Leja, Carlin R. Metzger, Jaime L. Hochhausen, McGuire Woods, LLP, Chicago, James Campise, Ronald Cullum, Peter Hlepas, Mark Kaschube, Robert Willmschen.

Tracy A. Mitchell, Pamela J. Park, Richard W. Hillsberg, Kovitz, Shifrin & Nesbit, Buffalo Grove, for Board of Directors Trinity Lakes Improvement Association, Trinity lakes Improvement Association.

Presiding Justice O'MALLEY delivered the opinion of the court:

Plaintiffs, Robert Willmschen, Ronald Cullum, Peter Hlepas, Mark Kaschube, and James Campise, are homeowners in the Trinity Lakes Estates subdivision in Oakbrook (Trinity Lakes). They filed a four-count complaint in the circuit court of Du Page County against defendants, the Trinity Lakes Improvement Association (Association) and its board of directors (Board), alleging that defendants breached certain covenants by failing to properly maintain two lakes, portions of which were part of Trinity Lakes' common areas. Plaintiffs, whose homes bordered the lakes, further alleged that the lakes were both a private and a public nuisance. Defendants filed a combined motion pursuant to sections 2-615 and 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615, 2-619 (West 2004)) to dismiss plaintiffs' second amended complaint. Plaintiffs appeal from the court's order granting the motion and dismissing the complaint with prejudice. We affirm in part, reverse in part, and remand for further proceedings.

According to plaintiffs' second amended complaint, Trinity Lakes was developed in the 1970s and consists of about 200 single-family properties. Trinity Lakes is on the shores of two lakes known as Upper and Lower Mayslake. In connection with the development of the subdivision, the lakes were excavated to remove sediment and vegetation, and they serve to prevent flooding and soil erosion by acting as water drainage, detention, and retention facilities. Trinity Lakes' "Declaration of Covenants, Conditions, and Restrictions" (declaration) identifies portions of the lakes as common areas. The declaration further provides that the Association is responsible for maintenance of the common areas. However, according to plaintiffs, the condition of the lakes deteriorated dramatically since the Association was established. The lakes had come to be filled with sediment and noxious vegetation and algae. According to the complaint, the lakes were an eyesore, produced foul odors, and were hazardous to those who might intentionally or accidently enter the water.

A few years before the lawsuit was filed, the Board, as then constituted, formed a committee to investigate the condition of the lakes and retained an environmental firm to study the problem. The firm compiled a written "vegetation management plan" (VMP). The VMP suggested that the introduction of nutrients into the lakes due to runoff from construction sites and fertilized lawns was the major factor contributing to the overgrowth of vegetation in the lakes. The VMP proposed remedial measures including dredging the lakes to increase their depth and to remove nutrient-rich sediments, removing undesirable vegetation and replacing it with more appropriate aquatic plants, reducing nutrient levels in the water, and monitoring compliance with appropriate erosion control measures. However, the Association did not undertake these measures, and plaintiffs initiated this litigation.

Counts I and II alleged that the Association (count I) and the Board (count II) had breached covenants pertaining to maintenance of the lakes. In both counts, plaintiffs sought (1) orders requiring defendants to comply with the maintenance provisions of the declaration and (2) declaratory judgments clarifying defendants' obligations under those provisions. Counts III and IV, both of which were directed against the Association, asserted theories of private and public nuisance, respectively. As noted, defendants filed a combined motion to dismiss under sections 2-615 and 2-619 of the Code. Under section 2-619, defendants sought dismissal of counts I, II, and III, on the basis that plaintiffs had suffered no special injury distinct from the injury to other homeowners and therefore lacked standing to sue. Defendants similarly argued that plaintiffs lacked standing as to count IV, alleging a public nuisance, because they had suffered no special injury different from that suffered by the public. Under section 2-615, defendants moved to dismiss counts I, II, and III, for failure to state a cause of action. Defendants contended that those counts were defeated by the business judgment rule. As to count III—the private nuisance count—defendants additionally contended that the claim was legally insufficient because plaintiffs had failed to allege that defendants were responsible for creating the vegetation problem in the lakes. Defendants also moved to strike the prayers for declaratory relief in counts I and II. After the trial court granted the motion to dismiss, plaintiffs filed a timely notice of appeal.

Initially, we review the principles governing motions to dismiss under sections 2-615 and 2-619 of the Code. A section 2-615 motion attacks the legal sufficiency of the complaint. Suburban 1, Inc. v. GHS Mortgage, LLC, 358 Ill.App.3d 769, 772, 295 Ill.Dec. 536, 833 N.E.2d 18 (2005). In reviewing the sufficiency of the complaint, the court must accept as true all well-pleaded facts in the complaint and all reasonable inferences that can be drawn from those facts. Suburban 1, 358 Ill.App.3d at 772, 295 Ill.Dec. 536, 833 N.E.2d 18. A section 2-619 motion admits the legal sufficiency of the complaint, but raises defects, defenses, or other affirmative matters that appear on the face of the complaint or are established by external submissions and that defeat the action. Lyons v. Ryan, 324 Ill.App.3d 1094, 1100-01, 258 Ill.Dec. 414, 756 N.E.2d 396 (2001). Lack of standing may be raised under section 2-619. Lyons, 324 Ill.App.3d at 1101, 258 Ill.Dec. 414, 756 N.E.2d 396. Generally, a dismissal under either section is reviewed de novo. Lyons, 324 Ill.App.3d at 1101, 258 Ill.Dec. 414, 756 N.E.2d 396.

The first issue is whether plaintiffs' breach of covenant and private nuisance claims were properly dismissed pursuant to section 2-615 of the Code because the business judgment rule defeats those claims. In sum, defendants' argument is that awarding the relief requested by plaintiffs would interfere with the Board's decision as to how to handle the problem with the lakes. Defendants argue that because the decision was made in the exercise of the Board's sound business judgment, the courts should not interfere with it. As defendants correctly note, the business judgment rule is a presumption that officers and directors of a corporation make decisions on an informed basis, in good faith, and with the best interests of the corporation at heart. Ferris Elevator Co. v. Neffco Inc., 285 Ill.App.3d 350, 354, 220 Ill.Dec. 906, 674 N.E.2d 449 (1996). The principal cases cited by defendants illustrate that the business judgment rule comes into play where mismanagement is the gravamen of the cause of action. See Ferris Elevator Co., 285 Ill.App.3d at 354, 220 Ill.Dec. 906, 674 N.E.2d 449 (in shareholder's derivative suit against directors who surrendered corporation's license to operate as a grain dealer and a grain warehouse, business judgment rule created presumption that decision was an informed one and shareholder-plaintiff alleging injury to the corporation was required to put forth evidence to the contrary); Miller v. Thomas, 275 Ill.App.3d 779, 787-89, 211 Ill.Dec. 897, 656 N.E.2d 89 (1995) (business judgment rule applied to board of director's refusal of shareholder demand to bring a lawsuit against certain present and former directors of the corporation); Stamp v. Touche Ross & Co., 263 Ill.App.3d 1010, 1018, 201 Ill.Dec. 184, 636 N.E.2d 616 (1993) (business judgment rule applied in lawsuit by liquidator of insolvent insurance company against certain directors of the company); Adams v. Meyers, 250 Ill.App.3d 477, 485, 190 Ill.Dec. 37, 620 N.E.2d 1298 (1993) (because business judgment rule limited judicial review of decisions of a condominium association's board of managers, plaintiff unit owners had "tangible and substantial legal interests in being represented by a duly elected board" and thus had standing to challenge election procedures). Thus, had plaintiffs brought suit under a theory that the Board's inattention to the condition of the lakes was injurious to the interests of the Association, the business judgment rule certainly would apply.

In Ferris, Miller, Stamp, and Adams, relief was sought for mismanagement per se; none of the cases involved an independent cause of action against the corporation under a contract or tort theory or otherwise. While courts ordinarily will not interfere with management decisions on the basis of their wisdom or lack thereof, the business judgment rule does not afford a corporation carte blanche to behave unlawfully. Hence, we agree with the observation of a court from a sister state that "it may be good business judgment to walk away from a contract, [but] this is no defense to a breach of contract claim." Dinicu v. Groff Studios Corp., 257 A.D.2d 218, 222-23, 690 N.Y.S.2d 220, 223 (1999). By the same reasoning, though it may also be good business judgment to ignore a public or private nuisance, this is no defense to an action seeking an otherwise proper remedy.

Counts I and III of plaintiffs' complaint seek recovery from the Association, not the Board. Count I essentially sounds...

To continue reading

Request your trial
25 cases
  • Rubio v. Turner Unified School Dist. No. 202
    • United States
    • U.S. District Court — District of Kansas
    • September 28, 2006
    ... ... body corporate and lacks capacity to sue or be sued); see also Willmschen ... Page 1301 ... v. Trinity Lakes Improvement Ass'n, 362 Ill.App.3d ... ...
  • Hill v. State Farm Mutual Automobile Ins. Co.
    • United States
    • California Court of Appeals Court of Appeals
    • September 19, 2008
    ...protects directors' broad discretion].) And to the extent the duty of care was implicated, it was breached. In Willmschen v. Trinity Lakes Impr. Ass'n, supra, 840 N.E.2d 1275, the residents of a subdivision filed suit against the homeowners association and the board, alleging breach of a wr......
  • Heslep v. Americans for African Adoption, Inc.
    • United States
    • U.S. District Court — Northern District of West Virginia
    • August 27, 2012
    ...Youngstown Osteopathic Hosp., 151 Ohio App.3d 92, 783 N.E.2d 582, 585 (2002); see also Willmschen v. Trinity Lakes Improvement Ass'n, 362 Ill.App.3d 546, 298 Ill.Dec. 840, 840 N.E.2d 1275, 1280–81 (2005) (“[The] belief that [a] board [of directors] is a separate entity capable of being sued......
  • Karas v. Strevell
    • United States
    • United States Appellate Court of Illinois
    • December 29, 2006
    ...A section 2-615 motion to dismiss attacks the legal sufficiency of the complaint. Willmschen v. Trinity Lakes Improvement Ass'n, 362 Ill.App.3d 546, 549, 298 Ill.Dec. 840, 840 N.E.2d 1275 (2005). Illinois is a fact-pleading jurisdiction that requires a plaintiff to present a legally and fac......
  • Request a trial to view additional results
1 books & journal articles
  • Lucien J. Dhooge, Due Diligence as a Defense to Corporate Liability Pursuant to the Alien Tort Statute
    • United States
    • Emory University School of Law Emory International Law Reviews No. 22-2, December 2008
    • Invalid date
    ...Ch. 2000); In re Caremark Int'l Inc. Derivative Litig., 698 A.2d 959 (Del. Ch. 1996); Willmschen v. Trinity Lakes Improvement Ass'n, 840 N.E.2d 1275 (Ill. App. Ct. 2005); Shlensky v. Wrigley, 237 N.E.2d 776 (Ill. App. Ct. 1968). Chancellor Chandler of the Delaware Chancery Court summarized ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT