Board of Managers of Hidden Lake Townhome Owners Ass'n v. Green Trails Improvement Ass'n

934 N.E.2d 636, 404 Ill. App. 3d 184, 343 Ill. Dec. 312, 2010 Ill. App. LEXIS 884
Appellate Court of Illinois·Decided August 19, 2010·No. 2—09—0618, 2—09—0964 cons.·Published·Cited by 14 cases

Opinion

PRESIDING JUSTICE ZENOFF

delivered the opinion of the court:

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 Hyland 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 Hyland 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.

BACKGROUND

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 town-homes. 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 Hyland’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.

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 Ry-land “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.

The Hidden Lake Declaration of Covenants, Conditions, and Restrictions

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:

“In addition to any rights or powers reserved to the Declarant and/or Developer under the provisions of this Declaration or the By-Laws, the Declarant and/or Developer shall have the rights and powers set forth in this Article. Anything in this Declaration or the By-Laws to the contrary notwithstanding, the provisions set forth in this Article shall govern. If not sooner terminated as provided in this Article, the provisions of this Article shall terminate and be of no further force and effect from and after such time as both the Declarant and Developer no longer are vested with or control title to any part of the Development Area. Notwithstanding any other provision contained in this Declaration to the contrary, until such time the Declarant shall have the right to amend this Declaration without complying with Article XVII, Section 17.05 of the Declaration. This right shall cease upon the election of the initial Board of Directors by the Members.”

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.

The Litigation

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Board of Managers of Hidden Lake Townhome Owners Ass'n v. Green Trails Improvement Ass'n, 934 N.E.2d 636, 404 Ill. App. 3d 184, 343 Ill. Dec. 312, 2010 Ill. App. LEXIS 884 (Ill. Ct. App. 2010).

934 N.E.2d 636 (Board of Managers of Hidden Lake Townhome Owners Ass'n v. Green Trails Improvement Ass'n) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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