Cribbin v. City of Chicago

• Decision Date: 15 August 2008
• Docket Number: No. 1-06-1671.,1-06-1671.
• Citation: 893 N.E.2d 1016
• Parties: Anthony CRIBBIN, Peter Koulogeorge, and Donna Koulogeorge, Plaintiffs-Appellees, v. THE CITY OF CHICAGO, Richard Rodriguez, Executive Director, City of Chicago Department of Construction and Permits, and Unknown Others, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

893 N.E.2d 1016

Anthony CRIBBIN, Peter Koulogeorge, and Donna Koulogeorge, Plaintiffs-Appellees, v. THE CITY OF CHICAGO, Richard Rodriguez, Executive Director, City of Chicago Department of Construction and Permits, and Unknown Others, Defendants-Appellants.

No. 1-06-1671.

Appellate Court of Illinois, First District, Sixth Division.

August 15, 2008.

Mara S. Georges, Corporation Counsel of the City of Chicago, Benna Ruth Solomon, Deputy Corporation Counsel, Myriam Zreczny Kasper, Chief Assistant Corporation Counsel, and Nadine J. Wichern, Assistant Corporation Counsel, Chicago, IL, for Appellant.

Thomas J. Ramsdell, Carl E. Meyers, Thomas J. Ramsdell & Associates, Chicago, IL, for Appellees.

Justice JOSEPH GORDON delivered the opinion of the court:

Land developers Anthony Cribbin and Peter Koulogeorge purchased property in Chicago with the intent of constructing apartment buildings on the property and then selling it at a profit. After they had owned the property for several years and incurred various expenditures in pursuit of their plans, the City of Chicago (City) rezoned the property, such that the planned construction was no longer allowed. Cribbin and Peter Koulogeorge then filed an action against the City, seeking a ruling that as a result of their past expenditures, they had acquired vested rights to the previous zoning classification and should be issued building permits based on that previous classification. Following a bench trial, the trial court entered judgment for Cribbin and Peter Koulogeorge and ordered the City to issue the requested permits. The City now appeals. For the reasons that follow, we affirm.

I. BACKGROUND

On April 30, 2004, Cribbin, Peter Koulogeorge, and his wife Donna Koulogeorge (collectively referred to as plaintiffs) filed their complaint in the circuit court, in which they alleged the following: In 1998, Cribbin and Peter Koulogeorge were coowners of a real estate development company known as Crystal Creek Development, Ltd. (Crystal Creek). Crystal Creek purchased a parcel of real property located at 1210-20 N. Kedzie in Chicago, Illinois (the Kedzie property), for $260,000. At the time, the property was zoned as an R5 general residence district; Cribbin and Peter Koulogeorge allegedly intended to develop residential units on the property, and accordingly, they drew up plans to construct two 14-unit buildings there.

The complaint further avers that, in 1999, the Chicago Board of Education (CBE) advised Crystal Creek that it passed a resolution designating the Kedzie property for acquisition under its power of eminent domain, because it needed to use the land to relieve overcrowding at a nearby elementary school. To keep them from doing so, Crystal Creek allegedly agreed to lease the Kedzie property to the CBE for three years. Subsequently, in 2002, the CBE had not resolved its overcrowding issue and therefore negotiated a one-year extension of the lease with Crystal Creek. During this four-year period, Crystal Creek's plans for development were placed on hold. Also during this period, the property was rezoned to an R4 general residence district which roughly halved the number of units that could be constructed on the property.

The complaint then alleges that the CBE's lease ended in 2003, and the CBE vacated the premises. In that same year, Cribbin and Peter Koulogeorge dissolved Crystal Creek and divided the property equally between them.

Both Cribbin and Peter Koulogeorge allegedly proceeded with their plans to develop multiunit residential housing on their respective halves of the property. Cribbin hired the architectural firm of Fajardo & Fajardo, Ltd., to draw up building plans and prepare documentation for submission to the City. He alleges that he spent a total of $18,000 on architectural and engineering fees for the development plans and $4,000 in connection with permit process fees and expenses. Meanwhile, Peter Koulogeorge retained the architectural firm of John Hanna to draw up building plans and prepare documentation. He alleges that he spent $10,000 on architectural and engineering fees plus "several hundred" dollars on permit process fees and expenses. The complaint avers that both of them expended this money in good-faith reliance on the probable issuance of construction permits for the property.

The complaint states that plaintiffs' construction permit applications were nevertheless denied by the City: the alderman of the 26th Ward, William Ocasio, placed a hold on their applications. Additionally, in March 2003, Alderman Ocasio introduced a proposal that the area containing the Kedzie property be downzoned to an R3 general residence district, under which the planned construction could not proceed.

Thus, plaintiffs request that writs of mandamus be issued requiring the City to release any hold on construction permits for the Kedzie property and to issue the requested permits instanter. They also request a declaration that they are lawfully entitled to the issuance of constructed permits for the Cribbin and Koulogeorge properties. Finally, they seek an award of damages, costs, and attorney fees incurred as a result of the City's refusal to issue the construction permits.

In its answer, by way of affirmative defense, the City avers that at the time when plaintiffs applied for their permits, there was a proposed amendment before the city council which, if passed, would prohibit issuance of those permits. Subsequently, that amendment was passed. Thus, the City states that it was within its rights in refusing to issue the permits.

The City then filed a motion to dismiss, in which it states that on September 4, 2003, Alderman Ocasio introduced an ordinance in the city council of Chicago that would change the classification of the Kedzie property from R4 to R3. This ordinance was passed on May 5, 2004. Plaintiffs' multiunit building plans did not conform to R3 zoning requirements, which mandate a minimum of 1,500 to 2,500 square feet of lot area per dwelling space (as opposed to R4 zoning, which only mandates 1,000 square feet per dwelling space).

The City also alleges that Cribbin did not apply for building permits for his half of the property until October 22, 2003, while Peter Koulogeorge did not apply for permits until October 30, 2003, i.e., after the zoning change had been officially proposed. The City argues that it had the power to refrain from issuing permits to plaintiffs while the proposed ordinance was pending passage, and once the ordinance had passed, plaintiffs had no right to be issued permits. It therefore requests that plaintiffs' case be dismissed in its entirety.

In their response to the City's motion to dismiss, plaintiffs argue that under Illinois law, because of the substantial expenditures plaintiffs had made in good-faith reliance on the previous zoning classification, they acquired vested rights in that zoning classification; thus, plaintiffs contend that they are entitled to have building permits issue as if the property were still classified as an R4 district.

The court denied the City's motion to dismiss, agreeing with plaintiffs' interpretation of the law. It noted that plaintiffs had alleged that together they spent $260,000 on purchasing the property and a total of $32,000 on architectural fees, engineering fees, and other permit-related expenses. It also noted that plaintiffs alleged they were unaware of any possible change to the R4 zoning. As a result, it concluded that under the legal standard plaintiffs had articulated, their complaint was sufficient to survive a motion to dismiss.

The case proceeded to a bench trial. Peter Koulogeorge testified that he was a full-time real estate developer involved in purchasing land, constructing residential buildings on it, and then reselling it at a profit. He testified that aside from the Kedzie project, he had been a part of 23 other real estate development projects in Chicago, all of which were small residential projects.

Peter Koulogeorge also testified that he and Cribbin formed Crystal Creek in 1996 for purposes of acquiring real estate to develop. Crystal Creek identified the Kedzie property, which at the time was a vacant lot, as suitable property to develop into multiunit condominiums, and it bought the property for $260,000. To finance this purchase, the corporation had to take out a loan for $195,000, which Cribbin and Peter Koulogeorge personally guaranteed.

Peter Koulogeorge stated that in making this purchase, he and Cribbin were relying on the existing R5 zoning; he also stated that R4 zoning would have been suitable for development, as most of their past projects had been done on R4 land. Thus, when the land was rezoned to R4 in summer of 2001, it was a setback, but not fatal to their plans: it still allowed enough latitude for them to construct profitable multiunit dwellings.

According to Peter Koulogeorge, around June 30, 1999, he and Cribbin received a letter from counsel from the CBE threatening to take the Kedzie property through its power of eminent domain to relieve overcrowding at a nearby elementary school. The CBE informally suggested purchasing the land for $300,000, but plaintiffs were adamantly opposed to this suggestion: "We had no intention of selling the property," Peter Koulogeorge stated. "It wasn't for sale. It was to be developed." Instead, he and Cribbin negotiated a lease with the CBE that would allow them to retain ownership of the property. After signing the lease, he and Cribbin continued meeting with an architect he had retained from the firm of Fajardo & Fajardo to finish building plans; he testified that he had hoped to complete his plans for development before the CBE's lease had ended.

Peter Koulogeorge then said that, in 2002, the CBE asked to extend the lease for two years. The CBE's threat of eminent domain was still present, he said. Nevertheless, Peter Koulogeorge told the CBE that a two-year lease was out of the...