Toepper v. Brookwood Country Club Road Ass'n

• Decision Date: 05 October 1990
• Docket Number: No. 2-89-1198,2-89-1198
• Citation: Toepper v. Brookwood Country Club Road Ass'n, 561 N.E.2d 1281, 204 Ill.App.3d 479 (Ill. App. 1990)
• Parties: , 149 Ill.Dec. 585 John P. TOEPPER, et al., Plaintiffs-Appellants, v. BROOKWOOD COUNTRY CLUB ROAD ASSOCIATION, et al., Defendants-Appellees.
• Court: Appellate Court of Illinois

Page 1281

561 N.E.2d 1281

204 Ill.App.3d 479, 149 Ill.Dec. 585

John P. TOEPPER, et al., Plaintiffs-Appellants, v. BROOKWOOD COUNTRY CLUB ROAD ASSOCIATION, et al., Defendants-Appellees.

No. 2-89-1198.

Appellate Court of Illinois Second District.

Oct. 5, 1990.

Rehearing Denied Nov. 15, 1990.

William J. Wylie, Stephen A. Rehfeldt, argued, William J. Wylie & Associates, Wheaton, Ill., for John P. Toepper, John Lo Presto, Elizabeth B. Hughes, H. James Murray and Dominion Country Club Home-Owners' Assn.

John Huck, McBride, Baker, Coles, Chicago, John J. Mangan, Rooks, Pitts & Poust, argued, Wheaton, Katten, Muchin & Zavis, Chicago, for Richard F. Reiff, Federal Deposit Ins. Corp., Capitol Bank & Trust Chicago, American National Bank & Trust, Capitol Bank & Trust Chicago, Brookwood Country Club Road Ass'n, Jack P. Cerone, Sam N. Syracuse, Vince Solano, Brookwood Land Venture and LaSalle National Bank.

Howard C. Emmerman, Rudnick & Wolfe, Chicago, Melbourne A. Noel, Katten, Muchin & Zavis, Oakbrook Terrace, Thomas W. Fawell, Barbara J. Stuetzer, Katten, Muchin & Zavis, Oakbrook Terrace, for Chase Manhattan Bank, F.A.

Elizabeth Zott, Marjorie Press Lindblom, Kirkland & Ellis, Chicago, for NEI Corp.

Gerard B. Gallagher, Gallagher & Joslyn, Oakbrook Terrace for Lawrence G. Malanfant.

Justice DUNN delivered the opinion of the court:

Plaintiffs, John Toepper et al., appeal from a judgment order entered by the circuit court of Du Page County granting various defendants' motions for judgment on the pleadings with regard to count I and count II of plaintiffs' class action complaint for injunctive and declaratory relief. Plaintiffs raise the following contentions on appeal: (1) that the trial court, in granting the motions, erroneously interpreted the declaration of covenants, conditions, restrictions and easements for Dominion Country Club Homeowners' Association (Declaration) regarding the use of Dominion Drive; (2) that the court erroneously determined that certain defendants were assignees of the original developer, NEI Corporation, and were therefore entitled to exercise the rights granted the developer in the Declaration; and (3) the trial court erred by failing to apply a provision of the Illinois Condominium Property Act concerning duration of certain developers' rights (Ill.Rev.Stat.1989, ch. 30, par. 318.2(b)). We reverse and remand.

In their class action complaint, which was filed on November 4, 1985, plaintiffs alleged as follows. The Dominion Country Club Homeowners' Association (Dominion Association) was established pursuant to the Declaration, which was recorded on December 30, 1974. The complaint was filed on behalf of the condominium owners who were members of the Dominion Association, a class comprised of more than 135 members. A copy of the Declaration was attached as an exhibit to the complaint. The Declaration gave certain rights and obligations to the developer and defined the term "developer" as NEI Corporation of Illinois "and its successors and assigns." These rights included the right to develop portions of the planned development area and to add other real estate to the planned development area, which would subject any such real estate to the Declaration. The developer had the right to name the directors of the Dominion Association Board until the year 2026 unless 3,499 units were sold in the planned development area or the developer elected to terminate its sole control of the board.

Each condominium owner received an easement for ingress and egress over roadways in the Dominion Association area. Under section 3.03 of the Declaration, this easement was "for pedestrian and vehicular traffic for the benefit of all owners and not for the use or benefit of the public generally." The developer, its agents, employees, guests, and invitees also had the right to use such roadways until the developer's rights were terminated. Section 7.06 of the Declaration stated that its provisions could only be amended by an instrument executed by at least 75% of the unit owners.

Plaintiffs' complaint further alleged that on April 5, 1977, NEI executed a document purporting to assign all its right, title, and interest as developer under the Declaration to American National Bank & Trust Company of Chicago as trustee under trust agreement number 39296. A copy of this document was attached as an exhibit to the complaint.

According to the complaint, defendants, Federal Deposit Insurance Company (FDIC), Chase Manhattan Bank, and Lawrence Malanfant, executed a document titled "Developer Agreement" on September 30, 1979. Plaintiffs attached a copy of this agreement to the complaint. The recitals in this agreement stated that Chase held a mortgage from NEI and had foreclosed upon the mortgage. Although it is not completely clear from the complaint, the property in question was apparently the planned development area mentioned in the Declaration. Title to the land, according to the recitals, was owned by a land trust known as American National Bank, trust number 39296. By virtue of an order entered in the foreclosure proceeding, Chase, through a duly appointed agent, had the sole power of direction over the land trust.

The recitals further stated that Malanfant was the sole beneficiary of a land trust holding title to land adjacent to the Chase parcel. The FDIC held a mortgage on land which was apparently adjacent to the Chase parcel and was also a party to foreclosure proceedings concerning this land. According to the recitals, Chase and Malanfant had received written assignments from NEI of NEI's rights as developer under the Declaration. Chase, Malanfant, and the FDIC wished to share equally the developer's rights under the Declaration so that each could successfully develop its parcels.

The agreement stated that Chase, Malanfant, and the FDIC assign and cross-assign to one another any and all rights they may possess to act as developer under the Declaration. Each would have the power to name one director to the Dominion Association, and the fourth director would be chosen by unanimous consent of all three. The agreement also provided that they would generally instruct their director to vote in accordance with the desire of a majority of the parties. The parties also generally agreed that any actions based upon their rights as developers would be taken upon the affirmative desire of a majority of the parties. The parties further agreed to cause a certain agreement attached as an exhibit to the developer agreement to be executed.

In the attached agreement, the Dominion Association granted the FDIC, the aforementioned American National Bank land trust, and the La Salle National Bank land trust holding title to the Malanfant parcel, a perpetual easement for use of Dominion Drive. In return, the FDIC and La Salle were to pay $500 annually, while American was to pay $200 annually. The Dominion Association also agreed to lease a certain parking lot to the La Salle Bank land trust. This agreement was executed on October 1, 1979.

Plaintiffs' complaint also contained the following allegations. The agreement granting the aforementioned easements to use Dominion Drive was executed by defendants Robert Isarion and Richard Reiff, who were purporting to act as directors of the Dominion Association. Isarion and Reiff were appointed as directors of the Association by the FDIC, but the FDIC had no right to appoint individuals to Association directorships. Isarion and Reiff, therefore, did not have the authority to act as directors.

In conjunction with the developer agreement, NEI executed a document titled "Consent and Assignment," a copy of which was attached to the complaint. In this document, NEI consented to the developer agreement and, in order to confirm the rights of the parties to that agreement, assigned all of its right, title, and interest, if any, as developer under the Declaration to Chase, Malanfant, and the FDIC.

The complaint further alleged that defendants Jack Cerone and Sam Syracuse claimed that, under the developer agreement, they had the authority to act as Dominion Association directors. Cerone and Syracuse stated in a September 1985 letter to the Wood Dale city council that they were the only two directors of the Dominion Association, inferring that they had the authority to execute a document entitled "Agreement Respecting Private Roadway." Under this agreement, American National Bank, as trustee under trust number 64551, would acquire all rights accruing to the developer under the Declaration, including the right to use Dominion Drive. According to the recitals of the agreement, this land trust was about to acquire title to the parcel which the FDIC obtained title to in the foreclosure proceeding and to which title subsequently passed to Capitol Bank & Trust of Chicago under trust number 553. The beneficiary of trust number 64551 was a joint venture between Marquette Properties, Inc., and the National Housing Partnership. Under the terms of the agreement, trust number 64551 was to widen Dominion Drive and install a gate preventing access to that road from Addison Road except by authorized card holders. Plaintiffs alleged, however, that Cerone and Syracuse did not have the authority to enter into this agreement on behalf of the Dominion Association because they were not directors.

The complaint further alleged that the joint venture applied to the Wood Dale Zoning Board of Appeals for a planned unit development (PUD) and the "Agreement Respecting Private Roadway" was submitted in conjunction with the application in order to satisfy a Wood Dale zoning ordinance requiring adequate access roads. In count I, plaintiffs sought injunctive relief to prevent Wood Dale from approving the proposed PUD, to prevent any party from utilizing any easement pursuant to the 1979 developer agreement, to prohibit the Dominion Association from granting any easements to parties who were not Association...