Reserve at Woodstock, LLC v. City of Woodstock

• Decision Date: 28 September 2011
• Docket Number: No. 2–10–0676.,2–10–0676.
• Citation: 958 N.E.2d 1100,354 Ill.Dec. 904,2011 IL App (2d) 100676
• Parties: The RESERVE AT WOODSTOCK, LLC, Plaintiff–Appellee, v. The CITY OF WOODSTOCK, Katherine Thornton, in Her Official Capacity as Chairperson of the City of Woodstock Plan Commission, and Brian Sager, in His Official Capacity as Mayor of the City of Woodstock, Defendants–Appellants.
• Court: United States Appellate Court of Illinois

2011 IL App (2d) 100676

354 Ill.Dec. 904

958 N.E.2d 1100

The RESERVE AT WOODSTOCK, LLC, Plaintiff–Appellee,

v.The CITY OF WOODSTOCK, Katherine Thornton, in Her Official Capacity as Chairperson of the City of Woodstock Plan Commission, and Brian Sager, in His Official Capacity as Mayor of the City of Woodstock, Defendants–Appellants.

No. 2–10–0676.

Appellate Court of Illinois, Second District.

Sept. 28, 2011.

Jennifer J. Gibson, Gregory J. Barry, Zukowski, Rogers, Flood & McArdle, Crystal Lake, for City of Woodstock, Brian Sager, Mayor of the City of Woodstock, Katherine Thornton, Chairperson.

James R. Griffin, Thomas R. Burney, Michael R. Burney, Schain, Burney, Banks & Kenny, Ltd., Chicago, for The Reserve at Woodstock, LLC.

OPINION

Justice BOWMAN delivered the judgment of the court, with opinion.

[354 Ill.Dec. 908] ¶ 1 In this case, plaintiff, The Reserve at Woodstock, LLC (Reserve), submitted a plat to defendant, the City of Woodstock (City), to develop certain property pursuant to an annexation agreement (Annexation Agreement). The City denied the plat and eventually rezoned and disconnected the property. Reserve filed suit; the trial court found in favor of Reserve; and the City appeals. Because the City violated its duty of good faith and fair dealing under the Annexation Agreement by rezoning and disconnecting the property, the trial court properly granted summary judgment in favor of Reserve as to counts VII and VIII. In addition, because Reserve acquired a vested right in the approval of its plat under the prior zoning ordinance, the court properly entered judgement in its favor as to counts IV, V, and VI. Accordingly, we affirm.

¶ 2 I. BACKGROUND

¶ 3 The property at issue is approximately 10 acres of land in Woodstock. First Bank of Oak Park was the original owner of the property, which was annexed to the City pursuant to the Annexation Agreement, dated May 18, 1993. The Annexation Agreement, which zoned the property as residential, was binding on the parties for a term of 20 years. In addition, it contained two provisions relevant to this appeal. First, paragraph 9 stated that “[n]o change or modification of any ordinance, code or regulations, shall be applied during the term of this agreement so as to affect the zoning classification or uses permitted thereunder of the subject property.” Second, paragraph 14 stated that “[i]f development does not occur within five (5) years of annexation, the City has the right to zone the property to the ‘A’ agriculture zoning district, to de-annex it, and/or to void the approved final plats.” The property was not developed within the five-year period.

¶ 4 First Bank of Oak Park sold the property to Reserve in 2005. In 2003, prior to purchasing the property, Reserve had requested approval of a plat of 26 single-family lots. In 2004, the city plan commission voted to recommend denial of that plat and recommended to the city council that it rezone the property as agricultural. The city council did not act on the recommendation to rezone the property. In March 2004, the city attorney gave a written opinion that, in order for Reserve to proceed with the 26–lot development, the Annexation Agreement, which specifically referenced 20 lots, would have to be amended. On March 16, 2004, James Kastner, community development director of the City, reiterated to Reserve the position of the city attorney.

¶ 5 In May 2006, Reserve presented the City with a request for approval of a preliminary plat of subdivision (the plat) for 20 lots. Though the city plan commission recommended that the city council approve the plat, the city council denied approval of the plat on September 19, 2006. In October 2006, based on the City's denial of the plat, Reserve filed a complaint seeking declaratory, injunctive, and mandamus relief under the City's subdivision and platting ordinance (SPO). On November 21, 2006, the City passed an ordinance rezoning the property to an agricultural classification. In addition, the City passed an ordinance on December 5, 2006, repealing the SPO and replacing it with a new, comprehensive development ordinance, the unified development ordinance (UDO). On September 18, 2007, the City passed an ordinance disconnecting the property.

¶ 6 A. Third Amended Complaint

¶ 7 We begin with Reserve's third amended complaint, filed on October 11, 2007, which incorporated several counts from the second amended complaint. The complaint alleged as follows. After Reserve submitted a plat for City approval in May 2006, the “City staff” issued a report dated May 25, 2006, which stated that Reserve's plat complied with the relevant City ordinances and with the Annexation Agreement. At a meeting on May 25, 2006, the city plan commission considered the plat and requested an additional study on the hydrology of the property. Reserve then hired a hydrology consultant and at a substantial cost performed the study, which revealed no adverse impact on the property or surrounding property. On July 13, 2006, the city plan commission voted to recommend approval of the plat.

¶ 8 On August 1, 2006, the city council considered Reserve's application for plat approval. At that meeting, Mayor Brian Sager and the city attorney acknowledged that the property was zoned as residential property; that the application process had occurred properly; that the city plan commission had recommended approval; and that Reserve was in compliance with the City's ordinances. Nevertheless, the City council continued its deliberations and required Reserve to provide an additional study regarding the quality of well water and the quantity of storm water runoff. At this point, Reserve had expended “hundreds of thousands of dollars” and had invested substantial amounts of time in relation to the plat. At the next city council meeting, on September 5, 2006, the city council voted unanimously to reject the plat, despite again being presented with “unrefuted evidence” that the plat was fully compliant with the City's requirements. Two weeks later, on September 19, 2006, the City enacted an ordinance containing the City's “pretextual reasons” for denying Reserve's proposed plat. In particular, the City found that the plat failed to comply with three sections of the SPO, which pertained to protections of the physical amenities of adjacent properties, storm water management, and ground water/surface water contamination.

¶ 9 After Reserve filed its initial complaint challenging the “unlawful” denial of its plat, the city council held a hearing on a petition to rezone the property as agricultural. Though the city plan commission recommended denying the petition, the city council voted unanimously to rezone the property as agricultural.

¶ 10 The relevant counts of Reserve's third amended complaint were counts IV through VIII.¹ Counts IV, V, and VI (the plat compliance counts) challenged the City's denial of the plat, alleging that the plat complied with City ordinances. In particular, count IV sought a declaratory judgment that the plat conformed to all lawful and enforceable City ordinances. In count V, Reserve requested the court to issue a writ of mandamus ordering the City to approve the plat. Count VI sought an injunction enjoining the City from delaying approval of the plat.

¶ 11 Counts VII and VIII (the disconnection counts) challenged the City's ordinances rezoning the property as agricultural and disconnecting it from the corporate limits of the City. Count VII sought a declaratory judgment that the disconnection ordinance passed by the City was invalid, and it sought to enjoin the City from taking any further steps to disconnect the property. Count VIII sought a declaratory judgment that the Annexation Agreement did not allow the City to rezone the property or to disconnect it, and it sought to enjoin the City from taking any action to rezone the property. In addition, count VIII requested the court to enjoin the City from voiding any final plat that was in substantial compliance with City ordinances.

¶ 12 B. Motions and Trial Court Ruling

¶ 13 In October 2007, the City filed an amended affirmative defense, arguing that paragraph 14 of the Annexation Agreement gave it the right to rezone the property if it was not developed within five years of annexation, by May 18, 1998. The City also moved to dismiss Reserve's third amended complaint. Shortly thereafter, on November 8, 2007, Reserve moved for summary judgment as to counts IV through VIII of its third amended complaint.

¶ 14 The parties appeared in court on these motions on March 20, 2008. The court began by summarizing the parties' positions regarding the disconnection counts. The City argued that paragraph 14 of the Annexation Agreement gave it “absolute discretion to rezone, de-annex, and/or void the approved final plats of [Reserve] any time after May 1998 in the event the development of the property [had] not previously occurred on the subject property.” Reserve countered the City's position by arguing that the language of paragraph 14 was overly broad, that it was not in harmony with other provisions of the Annexation Agreement, and that it violated the City's duty of good faith and fair dealing. In addition, Reserve argued that any right to rezone or disconnect the property had been waived under paragraph 9 of the Annexation Agreement, which stated that “[n]o change or modification of any ordinance, code or regulations, shall be applied during the term of this agreement so as to affect the zoning classification or uses permitted thereunder of the subject property.”

¶ 15 The court then stated its ruling regarding the disconnection counts, denying the City's motion to dismiss and granting Reserve's motion for summary judgment. According to the court, paragraph 14 was not in harmony with other provisions of the Annexation Agreement because giving the City an unfettered right to invoke that provision could lead to absurd results, in that...