Bd. of MANAGERS of HIDDEN LAKE TOWNHOME OWNERS Ass'n v. GREEN TRAILS IMPROVEMENT Ass'n
| Decision Date | 19 August 2010 |
| Docket Number | 2-09-0964.,No. 2-09-0618,2-09-0618 |
| Citation | 934 N.E.2d 636,343 Ill.Dec. 312,404 Ill.App.3d 184 |
| Parties | BOARD OF MANAGERS OF HIDDEN LAKE TOWNHOME OWNERS ASSOCIATION, Plaintiff-Appellant, v. GREEN TRAILS IMPROVEMENT ASSOCIATION, Defendant-Appellee and Third-Party Plaintiff-Appellant (The Ryland Group, Inc., Third-Party Defendant-Appellee). |
| Court | United States Appellate Court of Illinois |
OPINION TEXT STARTS HERE
COPYRIGHT MATERIAL OMITTED.
Jeffrey M. Hagen, Lisle, for Board of Managers of Hidden Lake Townhome Owners Association.
David E. Kawala, Catherine Basque Weiler, Swanson, Martin & Bell, LLP, Chicago, for Green Trails Improvement Association.
Stephen P. Carponelli, Robert F. Krug, Jr., Brian M. Ozog, Carponelli & Krug, Chicago, for The Ryland Group, Inc. in No. 2-09-0618.
Stephen P. Carponelli, Robert F. Krug, Jr., Brian M. Ozog, Ross S. Carponelli, Carponelli & Krug, Chicago, for The Ryland Group, Inc. in No. 2-09-0964.
Plaintiff, Board of Managers of Hidden Lake Townhome Owners Association (Hidden Lake), sued defendant, Green Trails Improvement Association (Green Trails), seeking a declaration that a license agreement (agreement) entered into between the Ryland Group, Inc. (Ryland), as the developer of Hidden Lake, and Green Trails did not obligate the property owners of Hidden Lake to pay yearly assessments to Green Trails for the use of Green Trails' paths. Hidden Lake also sued Green Trails for unjust enrichment, claiming that Green Trails was illegally retaining the assessments paid. Upon being sued, Green Trails filed a third-party complaint against Ryland, alleging that Ryland breached the agreement when it failed to amend Hidden Lake's declaration of covenants, conditions, and restrictions (Hidden Lake Declaration) to reflect the agreement's terms. Following a bench trial, the court entered judgment against Hidden Lake and in favor of Green Trails on Hidden Lake's complaint. On the third-party complaint, the trial court held that Ryland breached the agreement but that Green Trails suffered no damages. Hidden Lake and Green Trails filed timely appeals. For the reasons that follow, we reverse the judgment in favor of Green Trails on count I of the complaint and direct the trial court to enter judgment in favor of Hidden Lake on count I upon remand, and we affirm the judgment in favor of Green Trails on count II of the complaint. We affirm the judgment in favor of Green Trails and against Ryland on the third-party complaint, but reverse the trial court's determination that Green Trails suffered no damages and remand for further proceedings relating to Green Trails' damages claim.
The record shows that Green Trails is a master plan development in Lisle, Illinois. It consists of approximately 744 acres that contain residential neighborhoods comprised of single-family and multifamily units. The development is distinguished by its ponds, woods, open spaces, and 25 miles of trails, or more properly concrete or asphalt paths, for hiking, jogging, biking, and roller skating or blading. Green Trails' expert described the development as a “primary residential community within the suburban area.”
According to Hidden Lake's complaint, in December 1996, Ryland executed the Hidden Lake Declaration, in which it stated, inter alia, its intention to create on its property a community consisting of townhomes. Testimony showed that, as of the time of trial, Hidden Lake encompassed 19 buildings with 88 units. Hidden Lake is not part of Green Trails, although one has to go through Green Trails to get to Hidden Lake.
In marketing its Hidden Lake townhomes (which had yet to be built), Ryland inaccurately advertised Hidden Lake as a new Green Trails development. Green Trails objected to Ryland's marketing techniques, whereupon Ryland suggested to Green Trails that they formalize a relationship between them. On June 11, 1997, Ryland and Green Trails entered into the agreement.
Under the agreement, Ryland was the licensee and Green Trails was the licensor. The agreement recited that Ryland “believes its marketing efforts will be enhanced and safety issues will be resolved” if future lot owners in Hidden Lake were granted access to and use of certain real estate owned by Green Trails. Green Trails, in consideration of “the mutual covenants, conditions and agreements of the parties hereinafter provided,” granted Ryland an “irrevocable” license to continue for a period of 50 years, renewable for additional periods at Green Trails' option. The license granted Ryland and its “successors or assigns” the right to access and use the paths, parks, recreational equipment, and “devices” located in Green Trails to which members of Green Trails had access. The agreement further provided that Ryland “agrees to include in its declaration of protective covenants a provision requiring the [Hidden Lake] Lot Owners to become Affiliate Members * * * of [Green Trails] and shall be subject to all terms and conditions of [Green Trails'] Declaration except as otherwise provided herein.” The agreement defined an “affiliate member” as any lot owner in Hidden Lake and “its successors and assigns (e.g., subsequent purchasers).” An affiliate member had the rights and obligations of a member of Green Trails, with the exception that an affiliate member had no vote or right to hold any office in the Green Trails Improvement Association, although an affiliate member could serve on committees appointed by Green Trails' board of directors. For the purpose of marketing the sale of lots in Hidden Lake, Ryland was given the right to disclose “the affiliation” with Green Trails in its sales or promotional materials.
The evidence showed that purchasers in Hidden Lake received welcoming letters from Green Trails and were billed annual assessments by Green Trails, which were less than the amounts paid by Green Trails' residents. Hidden Lake owners paid these assessments until 2005.
Ryland created and recorded the Hidden Lake Declaration, which provided that the Hidden Lake property “shall be held, occupied, sold and conveyed subject to the covenants, conditions, restrictions, reservations, easements, charges and liens created herein.” According to the declaration, such conditions, restrictions, reservations, easements, charges, and liens were considered covenants running with the property and “shall be binding on all parties acquiring any interest in and to the aforesaid Property or any part thereof, and shall inure to the benefit of each Owner thereof.” Section 15.01 of article XV of the declaration provided as follows:
It was undisputed that Ryland did not amend this declaration in accordance with its undertaking to do so in the agreement. It was also undisputed that Green Trails recorded the agreement against all of the lots in Hidden Lake.
In 2005, William Dramel, a Hidden Lake resident, approached Green Trails with a request that Green Trails seal coat that portion of a lake path that was on Hidden Lake property. When Green Trails refused, the Hidden Lake board reviewed Hidden Lake's legal status vis-a-vis Green Trails and concluded that Hidden Lake owners were not bound by the agreement entered into between Ryland and Green Trails. On January 17, 2006, Hidden Lake filed suit against Green Trails. Count I sought a declaratory judgment and alleged that Ryland never recorded any amendments to the Hidden Lake Declaration and that, consequently, the owners in Hidden Lake were not bound by the agreement between Ryland and Green Trails. Count II alleged that Green Trails' retention of the assessments that Hidden Lake owners paid through the years amounted to an unjust enrichment. On May 19, 2006, Green Trails filed a third-party complaint against Ryland for breach of contract. The trial court granted Green Trails' motion for summary judgment against Ryland on the issue of Ryland's breach of the agreement, denied the remainder of all parties' motions for summary judgment, and heard the case without a jury.
The evidence at trial showed that the paths in Green Trails were open to and used by the general public, not just by Green Trails' and Hidden Lake's members. Green Trails presented expert testimony that Hidden Lake owners economically benefitted from their affiliation with Green Trails because the perception that Green Trails was a prestigious community resulted in an increased market value of Hidden Lake properties. The trial court held that the agreement was binding on Hidden Lake owners and found in favor of Green Trails on Hidden Lake's complaint. The trial court found that Ryland breached the agreement when it failed to amend the Hidden Lake Declaration, but it ruled that Green Trails suffered no damages. Timely notices of appeal were filed.
Hidden Lake's first contention is that the agreement was personal to Ryland and that the...
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