The Forest Pres. Dist. Of Du Page County v. First Nat'l Bank Of Franklin Park

• Decision Date: 30 June 2010
• Docket Number: No. 2-08-0565.,2-08-0565.
• Citation: 401 Ill.App.3d 966,341 Ill.Dec. 267,930 N.E.2d 477
• Parties: The FOREST PRESERVE DISTRICT OF DU PAGE COUNTY, Plaintiff-Appellee,v.FIRST NATIONAL BANK OF FRANKLIN PARK, as Trustee Under Trust Agreement Dated December 17, 1984, a/k/a Trust No. 1056, American National Bank and Trust Company of Chicago, Successor Trustee to North Shore National Bank of Chicago, as Trustee Under Trust Agreement Dated February 1, 1978, a/k/a Trust No. 87, The Rainbow Group, Robert Krilich, The United States of America, The City of Naperville, and Unknown Owners, Defendants-Appellants (The State of Illinois ex rel. Lisa Madigan, Attorney General, Intervenor).
• Court: United States Appellate Court of Illinois

401 Ill.App.3d 966

930 N.E.2d 477

341 Ill.Dec. 267

The FOREST PRESERVE DISTRICT OF DU PAGE COUNTY, Plaintiff-Appellee,v.FIRST NATIONAL BANK OF FRANKLIN PARK, as Trustee Under Trust Agreement Dated December 17, 1984, a/k/a Trust No. 1056, American National Bank and Trust Company of Chicago, Successor Trustee to North Shore National Bank of Chicago, as Trustee Under Trust Agreement Dated February 1, 1978, a/k/a Trust No. 87, The Rainbow Group, Robert Krilich, The United States of America, The City of Naperville, and Unknown Owners, Defendants-Appellants (The State of Illinois ex rel. Lisa Madigan, Attorney General, Intervenor).

No. 2-08-0565.

Appellate Court of Illinois Second District.

May 27, 2010.

Rehearing Denied June 30, 2010.

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James M. Wagner, Helm & Wagner, Naperville, for American National Bank and Trust Co. of Chicago, City of Naperville, First National Bank of Franklin Park, Robert Krilich, The Rainbow Group.

Robert G. Black, Law Offices of Robert G. Black, Scott M. Day, Rachel K. Robert, Day & Robert, P.C., Naperville, for Forest Preserve District of Du Page County.

Lisa Madigan, Attorney General, Jane Elinor Notz, Deputy Solicitor General, Deborah L. Ahlstrand, Richard S. Huszagh, Assistant Attorneys General, Chicago, for the People.

Justice SCHOSTOK delivered the opinion of the court:

In December 1999, the plaintiff filed this condemnation action against the defendants, seeking to take 204 acres of land in Naperville (the Property). Approximately eight years later, a jury found that just compensation for the taking was $10,725,000, based on the fair market value of the Property in 1999. The defendants appeal, arguing that the trial court erred in: (1) granting summary judgment in favor of the plaintiff on the issue of whether the plaintiff met its obligation to negotiate in good faith before filing suit; (2) granting the plaintiff's motion in limine to bar certain evidence; and (3) denying the defendants' motion for a posttrial hearing to determine the fair market value of the Property as of December 2007. We affirm in part and reverse in part and remand for further proceedings.

BACKGROUND

In 1978, Naper Venture (in which the defendant Robert Krilich held a dominant interest) applied for the annexation into Naperville of a 456-acre planned unit development (PUD) to be called Country Lakes. The PUD was approved as a special use in connection with the annexation agreement. The PUD application for and the preliminary plat of the Country Lakes PUD designated as open space within the PUD an existing 150-acre public golf course, which was used to satisfy part of the open-space requirements for the PUD. Around the golf course were seven areas that were to be developed as residential areas of varying density. Area 1 was already developed at the time of the annexation agreement. By December 1999, areas 2 through 5 had been developed or were in the process of being developed. Areas 6 and 7 (totaling approximately 54 acres) had not yet been developed, and the Summit Development Corporation had a contract pending to purchase these areas (the Summit parcel) for development.

In November 1999, the plaintiff decided to acquire the Property, which was the 204 acres comprising the golf course and the Summit parcel. It obtained a preliminary engineering report and, based on that, a preliminary estimate of value. The Polach Appraisal Group (Polach) provided a verbal estimate on November 23, 1999, that the Property had a value of $10.3 million. That same day, the plaintiff's board of commissioners approved an ordinance authorizing the plaintiff to negotiate for ownership of the Property, and the plaintiff's staff issued form letters to the two trusts that they had determined owned the Property. The letters offered the trustees a total of $9.27 million for the Property and gave them 10 working days to respond before the matter would be referred for condemnation proceedings. No appraisal report or other written basis for the amount of the offer was included with the letters. The plaintiff's chief negotiator for the Property later testified in a deposition that it was the plaintiff's policy to make an initial offer that was 10% below the appraised value. If the landowner made a counteroffer, the negotiator could immediately offer the full appraised value, and could go as high as 10% more than the appraised value before having to seek further approval from the plaintiff's board.

On December 3, 1999, the plaintiff received from Polach an updated verbal appraisal in the amount of $11.02 million. The plaintiff's attorneys and staff then met with representatives of the Property's owners to discuss just compensation for the Property. A representative for the Summit Development Corporation was present, and Summit's pending contract to purchase areas 6 and 7 was distributed and discussed. The owners rejected the plaintiff's initial offer but did not make a counteroffer. After the meeting, the plaintiff received from Polach its first written appraisal of the Property's value, which reflected the verbal estimate of $11.02 million.

Under the plaintiff's acquisition policy, it sought two appraisals on any piece of property it wished to acquire: an initial estimate by one certified appraiser, and a report by a second certified appraiser who reviewed the first estimate and gave his own estimate and the reasons for any difference between the two. The second appraiser for the Property was David W. Phillips. Phillips reviewed the Polach appraisal and, on December 6, 1999, faxed a one-page document to the plaintiff. Phillips stated that, although he concurred with the Polach appraisal of certain parcels, he disagreed on other parcels and believed that Polach's estimate of $11.02 million for the Property was too high. Phillips' estimate for the Property was $8.995 million.

On December 7, 1999, the plaintiff's board of commissioners met and considered the negotiations for the Property. Both the Polach and the Phillips appraisals were before them, as was a log of all of the communications in connection with the negotiations. Neither side had made any further offers or counteroffers since the November 23 offer letters. Krilich (the majority beneficiary under both trusts) had expressly rejected the initial offer. The board of commissioners adopted an ordinance finding an inability to agree, revoking authority to negotiate further, and authorizing condemnation of the Property. The plaintiff sent letters to the two trustees and Summit Development Corporation enclosing a copy of the December 7 ordinance.

On December 21, 1999, the plaintiff filed a complaint for condemnation. At the time the complaint was filed, the ownership of the Property was disputed and separate litigation to determine the ownership was ongoing. Proceedings in this case were stayed until the ownership suit was resolved in October 2001. A further delay arose when Krilich and Edward White, two of the beneficiaries of the trusts that owned the Property, began to dispute among themselves who had the right to control the defense in the condemnation action. That dispute was not resolved until November 2004.

In March 2005, the defendants filed a second amended traverse and a motion to dismiss, arguing that the trial court lacked jurisdiction and that the condemnation complaint should be dismissed for several reasons. The parties conducted discovery on the issues raised in the traverse. In September 2006, the plaintiff filed four motions for partial summary judgment, each motion addressing an issue raised in the traverse. One of the plaintiff's motions concerned whether the plaintiff had engaged in good-faith negotiations prior to filing the condemnation complaint. On December 4, 2006, the trial court granted all four motions and entered summary judgment in the plaintiff's favor on those issues.

On August 3, 2007, the defendants filed a motion asking the trial court to schedule a posttrial evidentiary hearing pursuant to Kirby Forest Industries, Inc. v. United States, 467 U.S. 1, 104 S.Ct. 2187, 81 L.Ed.2d 1 (1984) (a Kirby hearing), on the value of the Property as of the time of trial. On October 18, 2007, the plaintiff filed several motions in limine. The first of these motions (motion in limine No. 1) sought to bar the defendants from presenting any evidence at trial regarding the value of the Property if the defendants were able to develop residential units on the 150 acres then being used as a golf course. Following briefing, on November 13, 2007, the trial court heard oral argument on the Kirby motion and motion in limine No. 1. At the close of the hearing, the trial court denied the motion for a Kirby hearing. The trial court issued its ruling on motion in limine No. 1 on November 20, 2007. In that ruling, the trial court found that the only use permitted for the golf course under the PUD preliminary plat was as a golf course, that no residential uses had ever been contemplated by the parties or approved by the City of Naperville, and that the defendants therefore could not present valuation evidence based on the assumption that the golf course could be developed, as of right, with residential units. The trial court therefore granted motion in limine No. 1.

The case proceeded to a jury trial on December 12, 2007. After the close of evidence, the defendants made an offer of proof to the effect that, if they had been permitted to present evidence regarding the value of the Property if the golf course were developed with residential units, the evidence would have shown a value of up to $20 million. The jury determined that the fair market value of the Property on December 21, 1999 (the date the condemnation complaint was filed), was $10.7 million. The defendants filed a motion for a new trial, which the trial court denied. This appeal followed.

ANALYSIS

On appeal, the defendants raise three...