SIXTH DIVISION August 15, 2008
No. 1-06-1671
ANTHONY CRIBBIN, PETER ) Appeal from the KOULOGEORGE, and DONNA ) Circuit Court of KOULOGEORGE, ) Cook County, Illinois. ) Plaintiffs-Appellees, ) ) v. ) No. 04 CH 07217 ) THE CITY OF CHICAGO, RICHARD ) RODRIGUEZ, Executive Director, City of ) Chicago Department of Construction and ) Honorable Permits, and UNKNOWN OTHERS, ) Thomas P. Quinn ) Judge Presiding. Defendants-Appellants. )
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 No. 1-06-1671
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 co-owners 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
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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
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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
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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
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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 question because of their
development plans, and he was able to negotiate a one-year extension of the lease, with the
understanding that the CBE would vacate the premises once the extension was over.
In the summer of 2003, shortly after the CBE’s lease had ended, Cribbin and Peter
Koulogeorge decided to dissolve Crystal Creek. Peter Koulogeorge testified that the Kedzie
property was Crystal Creek’s only project in progress at the time. Thus, the two partners made a
handshake agreement to split the property: Cribbin took the north half, while Peter Koulogeorge
took the south half. Title to his half of the property was officially conveyed to Peter
Koulogeorge in December 2003.
Peter Koulogeorge further testified that he took steps to develop his half of the property
under the then-existing R4 zoning. He paid $250 for a survey of the land in preparation for the
permit application. He intended to build one six-unit building, with a projected cost of
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$600,000; when completed, he calculated that each unit would sell for roughly $300,000, for a
gross of $2 million. He testified that his plans were totally compliant with R4 zoning.
Nevertheless, when he applied for a construction permit, it was not issued, and he was informed
that Alderman Ocasio had put a hold on the issuance of the requested permit due to a proposed
change to R3 zoning. Peter Koulogeorge attended a zoning committee meeting to discuss the
proposal: he voiced his objections, explaining his development plans and the obstacles he had
encountered along the way due to the CBE’s overcrowding problems.
Cribbin also testified regarding the planned development of the Kedzie property. He
affirmed Peter Koulogeorge’s testimony regarding the formation of Crystal Creek and the
purchase of the Kedzie property. “We purchased it to develop within a reasonable amount of
time,” he stated, elaborating that it was their usual practice to begin developing property within
three to six months of purchase. He also stated that they acted in reliance on the existing R5
zoning.
Cribbin further testified that, around the time that they purchased the Kedzie property,
they had other opportunities for real estate development; in fact, he said, they were “constantly
being approached by realtors to purchase property.” However, the purchase of the Kedzie
property left them with no capital, so they had to turn down all such offers for the following year.
Cribbin agreed with Peter Koulogeorge’s testimony regarding the lease of the property to
the CBE, particularly the rationale behind leasing the property instead of selling it: “We wanted
to build on it,” he said. “That was our adamant decision from day one.”
Cribbin also agreed with Peter Koulogeorge’s testimony regarding the dissolution of
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Crystal Creek. Immediately after the property was split, Cribbin called an architect to draw up
plans for developing his half of the property. He planned to construct two residential buildings,
one with three units, the other with four; he calculated that the buildings would cost
approximately $150,000 and $200,000 to build, respectively, and that each of the seven
completed units would sell for approximately $200,000.
On May 16, 2006, the trial court entered judgment for plaintiffs on the mandamus claims,
and it ordered the City to issue them permits based on R4 zoning. In support of its ruling, the
court issued the following findings:
“1) The plaintiffs purchased the subject property with the sole intention of
developing under the then existing zoning;
2) Plaintiffs would not have purchased the subject property had they suspected it
would be down zoned to R-3;
3) The plaintiffs never wavered in their intent and desire to develop the subject
property;
4) The plaintiffs took actions and made substantial expenditures within a
reasonable time after acquiring the subject property;
5) The purchase price of the subject property should be considered as a part of
plaintiff’s expenditures in reliance on existing zoning, See Furniture LLC v. City of
Chicago, 353 Ill. App. 3d 433 (2004);
6) Even if the purchase price were not considered, plaintiffs made the requisite
substantial expenditures in order to create a vested right in the R-4 zoning;
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7) Any delay in development caused by the leases with the Chicago Board of
Education should not be counted against the plaintiffs because they did everything in
their power to salvage the development despite the Board’s interference with their plans;
8) Under the totality of circumstances in this case, it is difficult to imagine what
further efforts at development could have been undertaken by the plaintiffs.”
The trial court’s order did not reference plaintiffs’ declaratory judgment count or their request for
damages, attorney fees, and costs.
The City timely filed the instant appeal.
II. ANALYSIS
Before we proceed to the substance of this case, we must first determine whether we have
jurisdiction to hear this matter despite the fact that the trial court order being appealed from does
not explicitly dispense with plaintiffs’ claims for declaratory judgment, damages, attorney fees,
and costs. The City contends that the order is nonetheless final and appealable under Supreme
Court Rule 303 (134 Ill. 2d R. 303). With respect to plaintiffs’ claims for declaratory judgment,
it argues that those have been adjudicated in substance, because the ultimate rights of the parties
have been determined by the court’s order; furthermore, it argues that plaintiffs have abandoned
their claims for damages, attorney fees, and costs, and it contends that such abandoned claims do
not defeat appellate jurisdiction.
Plaintiffs do not challenge the City’s contentions regarding jurisdiction in their brief.
Nevertheless, it is necessary for us to consider this issue, because any decision rendered beyond a
court’s jurisdiction is void (Davis v. Haas & Haas, Inc., 296 Ill. App. 3d 369, 373, 694 N.E.2d
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588, 590 (1998)), and the issue of jurisdiction may not be waived (Belleville Toyota, Inc. v.
Toyota Motor Sales, U.S.A., Inc., 199 Ill. 2d 325, 334, 770 N.E.2d 177, 184 (2002)).
Jurisdiction of the appellate courts is limited to reviewing appeals from final judgments,
except where statutory or supreme court exceptions apply. In re Marriage of Verdung, 126 Ill.
2d 542, 553, 535 N.E.2d 818, 823 (1989). A judgment is final when it “terminate[s] the
litigation between the parties on the merits of the cause.” People ex rel. Madison Chemical
Corp. v. Gurrie, 52 Ill. App. 2d 360, 363, 202 N.E.2d 123, 125 (1964); see People ex rel. Scott v.
Silverstein, 87 Ill. 2d 167, 171, 429 N.E.2d 483, 485 (1981). Furthermore, for a decision to be
appealable directly under Supreme Court Rule 303 (134 Ill. 2d R. 303), it must dispose of all
pending issues and parties. F.H. Prince & Co. v. Towers Financial Corp., 266 Ill. App. 3d 977,
982, 640 N.E.2d 1313, 1316 (1994). Otherwise, with limited exceptions as provided by Supreme
Court Rules 304(b) and 307, we cannot acquire subject matter jurisdiction over the matter unless
the trial court has made a special finding under Supreme Court Rule 304(a) that there is no just
reason for delaying enforcement or appeal of the adjudicated portion of the controversy. 134 Ill.
2d R. 304, 307; F.H. Prince, 266 Ill. App. 3d at 982-83, 640 N.E.2d at 1316.
We agree with the City that our jurisdiction is not defeated by the fact that the trial
court’s order does not formally dispose of plaintiffs’ request for declaratory judgment. When the
relief sought under different counts is identical, and disposition of the one necessarily entails
disposal of the other, then the grant of relief under one count will be deemed, for purposes of
appeal, to constitute a resolution of the other count as well. Grissom v. Buckley-Loda
Community Unit School District No. 8, 11 Ill. App. 3d 55, 296 N.E.2d 624 (1973) (finding that a
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trial court order was final and appealable when counts I and II of plaintiff’s complaint both
requested that a writ of mandamus be issued and the trial court granted relief under count I); see
Lynch Imports, Ltd. v. Frey, 200 Ill. App. 3d 781, 785, 558 N.E.2d 484, 486-87 (1990)
(defendants’ counterclaim was predicated upon the same grounds as their defense to plaintiff’s
complaint; thus, summary judgment in favor of plaintiff upon its complaint also served to
dispose of defendants’ counterclaim, rendering case final for purposes of appeal). In the instant
case, plaintiffs’ claims for mandamus and declaratory judgment are both predicated upon the
same theory – namely, that they acquired vested rights to construction permits by virtue of their
expenditures on reliance on the preexisting zoning classification – so, for purposes of appeal, the
resolution of the former obviates the necessity of a formal resolution of the latter.
Nor do plaintiffs’ requests for damages, attorney fees, and costs serve to defeat our
jurisdiction here, as they have been abandoned by plaintiffs and are no longer open for
adjudication by the trial court. Plaintiffs did not present evidence in support of such relief at
trial, and they did not ask the trial court to reserve jurisdiction with respect to these matters after
the trial court issued its May 16, 2006, order from which the instant appeal is taken. Moreover,
plaintiffs in their brief do not challenge the City’s contention that they have abandoned these
claims, and their prayer for relief before this court makes no mention of these claims. When a
party abandons a claim, and the trial court does not retain jurisdiction to consider that claim
when it enters judgment, that judgment may be considered final even if the abandoned claim is
not explicitly mentioned in the judgment order. Madison Chemical Corp., 52 Ill. App. 2d at 363-
64, 202 N.E.2d at 125. In Madison Chemical Corp., the court held that even though the
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judgment order in that case did not mention plaintiff’s claims for interest, costs, and damages
sought by his pleading, that judgment was still final, since plaintiff had abandoned all its other
claims. Madison Chemical Corp., 52 Ill. App. 2d at 363-64, 202 N.E.2d at 125. In reaching its
holding, the court explained:
“The record, however, is clear that while plaintiff claimed interest, costs and
damages in its original petition, plaintiff neither made a request for these claims at the
time judgment was entered nor moved that the court reserve jurisdiction for that purpose.
Moreover, the judgment order entered did not provide that the court retain jurisdiction for
any further proceedings.” Madison Chemical Corp., 52 Ill. App. 2d at 362, 202 N.E.2d at
125.
For this reason, we find that the decision below did indeed terminate the litigation between the
parties on the merits, and it is therefore a final and appealable order for purposes of Supreme
Court Rule 303.
Thus we move on to the central issue of this case, namely, whether the trial court erred in
finding that plaintiffs had acquired vested rights to R4 zoning for the North Kedzie Avenue
property.
A legislative body has the right to amend its zoning ordinances (Ropiy v. Hernandez, 363
Ill. App. 3d 47, 51, 842 N.E.2d 747, 751 (2005)), and one who buys land is charged with the
understanding that its zoning classification may be changed in the future within the limits of the
law. Furniture L.L.C. v. City of Chicago, 353 Ill. App. 3d 433, 438, 818 N.E.2d 839, 844
(2004). Thus, the general rule is that property owners have no vested right in the continuation of
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zoning classifications on their land. Pioneer Trust & Savings Bank v. County of Cook, 71 Ill. 2d
510, 517, 377 N.E.2d 21, 24 (1978); Ropiy, 363 Ill. App. 3d at 51, 842 N.E.2d at 751. However,
courts have recognized an exception as follows:
“ ‘[W]here there has been a substantial change of position, expenditures or
incurrence of obligations made in good faith by an innocent party under a building permit
or in reliance upon the probability of its issuance, such party has a vested property right
and he may complete the construction and use the premises for the purposes originally
authorized, irrespective of subsequent zoning or a change in zoning classification.’ ”
Pioneer Trust, 71 Ill. 2d at 522-23, 377 N.E.2d at 26, quoting People ex rel. Skokie Town
House Builders, Inc. v. Village of Morton Grove, 16 Ill. 2d 183, 191, 157 N.E.2d 33, 36
(1959).
See Furniture, 353 Ill. App. 3d 433, 818 N.E.2d 839 (applying the Pioneer Trust rule to hold that
a property owner had acquired vested rights to develop its property in accordance with a previous
zoning ordinance due to its expenditures in reliance on that zoning ordinance).
The purpose of this exception is to mitigate the unfairness caused to property owners who
have made a substantial change in position in good-faith reliance on the probability of obtaining
a building permit, only to have their efforts thwarted by a change in the zoning classification of
their land. 1350 Lake Shore Associates v. Healey, 223 Ill. 2d 607, 626, 861 N.E.2d 944, 956
(2006).
The trial court in this case found that plaintiffs fell within this exception, stating that their
expenditures in pursuit of their building plans were substantial enough for them to obtain vested
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rights to R4 zoning for the subject property. On appeal, the City raises three main arguments:
first, it contends that most of the findings relied upon by the trial court in its order are irrelevant
to the issue of vested rights; second, it contends that in this case, the purchase price of the
property should not count in determining substantiality; third, it contends that when the purchase
price is not taken into account, plaintiffs’ expenditures were not substantial.
For zoning issues such as this one, we defer to the trial court’s findings of fact unless they
are against the manifest weight of the evidence. Pioneer Trust, 71 Ill. 2d at 517, 377 N.E.2d at
24; see also 1350 Lake Shore Associates v. Hill, 326 Ill. App. 3d 788, 794, 761 N.E.2d 760, 765
(2001) (applying an abuse of discretion standard to the trial court’s factual findings in a
mandamus case). A finding is against the manifest weight of the evidence if it is unreasonable or
arbitrary, or an opposite conclusion is clearly evident. Furniture, 353 Ill. App. 3d at 437, 818
N.E.2d at 843. However, we apply a de novo standard of review to the trial court’s resolution of
questions of law. See Price v. Philip Morris, Inc., 219 Ill. 2d 182, 236, 848 N.E.2d 1, 34 (2005).
In the case at hand, the City concedes in its brief that the trial court did not lack evidentiary
support for its factual findings; rather, it challenges the legal standards which the court applied to
these facts, advancing the arguments stated in the preceding paragraph.
The City’s first major contention is that the trial court erred in considering factors
irrelevant to the issue of vested rights. In its order, the trial court made specific findings that (1)
plaintiffs purchased the Kedzie property “with the sole intention of developing under the then
existing zoning”; (2) plaintiffs would not have purchased it if they had suspected it would be
rezoned to R3; and (3) plaintiffs “never wavered in their intent and desire to develop the subject
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property.” The City does not contest the substance of these findings, but rather argues that they
have no impact upon the vested rights analysis as developed in Pioneer Trust and the subsequent
cases applying the Pioneer Trust standard. It contends that the vesting of zoning rights hinges
upon what it classifies as an objective measurement – namely, the substantial expenditures and
obligations incurred by landowners in good-faith reliance on a prior zoning classification – rather
than subjective factors such as desire and intent of the landowners.1
It is true that subjective intent and desire to develop a property, without more, are
insufficient to support a claim of vested rights to a zoning classification. Goldblatt v. City of
Chicago, 30 Ill. App. 2d 211, 219, 174 N.E.2d 222, 226 (1961) (no finding of vested rights
where landowner intended to build gas station on land but did not act in reliance on the probable
issuance of a permit); see Ropiy, 363 Ill. App. 3d at 49, 55, 842 N.E.2d at 754 (rejecting
landowner’s claim of vested rights, despite uncontradicted evidence that he intended to construct
a residential building on the subject property, because his expenditures were not made in good
faith reliance on the previous classification). Substantial and objectively measurable
expenditures in pursuit of that desire are necessary for a landowner’s rights to become vested,
and indeed, that is where the bulk of the analysis lies in prior cases dealing with this issue.
Pioneer Trust, 71 Ill. 2d at 522-23, 377 N.E.2d at 26; see Furniture, 353 Ill. App. 3d at 441, 818
N.E.2d at 846.
1 The City also raises contentions regarding the trial court’s findings with respect to
whether plaintiffs took action to develop the property within a reasonable amount of time. These
contentions shall be discussed below.
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However, the City is incorrect in its conclusion that subjective intent and desire are
entirely irrelevant to the vested rights analysis. Although there is no bright-line test for what
constitutes good-faith reliance (Healey, 223 Ill. 2d at 616, 861 N.E.2d at 950; Furniture, 353 Ill.
App. 3d at 437, 818 N.E.2d at 843), a credibility determination regarding the purpose of the
landowners is pertinent to the issue of good faith. Furniture, 353 Ill. App. 3d at 441, 818 N.E.2d
at 846. For instance, in determining whether a landowner company had demonstrated justifiable
reliance, the Furniture court found it relevant that the trial court made a credibility determination
that the company’s managers bought the land with the intention of developing it and never
wavered from that intention. Furniture, 353 Ill. App. 3d at 441, 818 N.E.2d at 846. The
Furniture court then proceeded to examine whether the expenditures by the landowner qualified
as substantial under the Pioneer Trust standard. Furniture, 353 Ill. App. 3d at 442, 818 N.E.2d
at 847. Thus, while the rights of a property owner to an existing classification do not vest solely
on the basis of his intentions, such intentions by the property owner are nevertheless integral to
any determination as to whether he has relied in good faith upon the preexisting zoning
classification. Furthermore, the intent and desire of plaintiffs has direct bearing upon the issue of
whether the purchase price of the land should be included in the substantiality calculation, as
shall be developed below.
We therefore move to consider the issue of substantiality. As a threshold matter, we note
that in measuring plaintiffs’ good-faith expenditures in reliance on the existing R4 classification,
we cannot count any expenditures incurred after October 1, 2003, the date when the city council
proposal to change the zoning classification to R3 was published in the city council’s journal of
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proceedings. Past this point, plaintiffs had constructive knowledge of the proposed zoning
amendment, so we cannot say that they relied in good faith on a belief that the existing
classification would continue. See Ropiy, 363 Ill. App. 3d at 55, 842 N.E.2d at 754 (landowner
was charged with constructive knowledge of a proposed zoning change once the proposal was
published, and this knowledge was sufficient to defeat his vested rights claim based on
subsequent expenditures). Indeed, plaintiffs concede in their brief that only the expenditures
incurred before October 1, 2003, count toward substantiality.
The biggest expenditure that plaintiffs made prior to October 1, 2003, in pursuit of their
construction plans was the purchase of the property itself for $260,000. Accordingly, both
plaintiffs and the City focus heavily upon this expenditure in their arguments before this court:
the City contends that under the circumstances, the trial court erred in including the purchase
price of the Kedzie property in the substantiality determination. We disagree.
When determining whether expenditures are substantial, courts consider the totality of the
circumstances surrounding the planned development. Healey, 223 Ill. 2d at 627, 861 N.E.2d at
956. Relevant considerations include: the objective amount of expenditures; the balance
between the amount of expenditures and the total projected cost of development (known as
proportionality); and the nature of the person or entity seeking to develop the property. Healey,
223 Ill. 2d at 627, 861 N.E.2d at 956. None of these factors is dispositive by itself, nor is this an
exhaustive list of factors. Rather, substantiality must be determined through careful examination
of the unique features of each case. Healey, 223 Ill. 2d at 626, 861 N.E.2d at 956.
Absent special circumstances, the standard practice in Illinois vested rights decisions is
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that the purchase price of the subject property is taken into account when determining whether
the property owners’ expenditures were substantial. Thus, in Healey, 223 Ill. 2d at 627, 861
N.E.2d at 956, the Illinois Supreme Court states that the cost of the land is an appropriate
consideration in the substantiality calculus. The court in Furniture, 353 Ill. App. 3d at 442, 818
N.E.2d at 847, applied this principle as well. In Furniture, the plaintiff company purchased a site
with the intent of developing it for residential use. Plaintiff subsequently sold part of the land,
but it continued its plans for residential development of the remaining portion, hiring multiple
architectural firms to prepare designs for the project. Yet before plaintiff submitted its
application for a construction permit, the alderman proposed an ordinance to bar residential land
use from the area, which was later passed. In affirming the trial court’s judgment that plaintiff
had acquired a vested right to the earlier zoning classification, the court of appeals stated that the
court below was correct in including the land’s purchase price (incurred before the proposed
revision of the ordinance) in the substantiality determination. Furniture, 353 Ill. App. 3d at 442,
818 N.E.2d at 847. See also American National Bank & Trust Company of Chicago v. City of
Chicago, 19 Ill. App. 3d 30, 311 N.E.2d 325 (1974) (rejecting city’s argument that the cost of the
land should not be included); Sgro v. Howarth, 54 Ill. App. 2d 1, 9, 203 N.E.2d 173, 177 (1964).
The City contends that the purchase price is not always automatically included in the
substantiality determination. Rather, it urges us to take the position that courts have latitude to
take the particular facts and circumstances of each case into account when deciding whether the
purchase price should count. In support, the City cites O’Connell Home Builders, Inc. v. City of
Chicago, 99 Ill. App. 3d 1054, 425 N.E.2d 1339 (1981), as a case where the court found that the
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purchase price ought not be a factor. However, the facts of O’Connell are readily distinguishable
from the case at hand. In O’Connell, plaintiffs entered into a contract to purchase certain real
estate; the contract was made explicitly contingent upon plaintiffs’ ability to obtain a permit to
construct an apartment building on the property. O’Connell, 99 Ill. App. 3d at 1055, 425 N.E.2d
at 1340. The zoning classification of the land was subsequently changed to prohibit such
construction. In determining whether plaintiffs’ rights to the preexisting zoning classification
had vested, the court declined to consider the purchase price because of the contingent nature of
the contract. O’Connell, 99 Ill. App. 3d at 1060, 425 N.E.2d at 1343. By contrast, in the present
case, plaintiffs were not protected by any such safety valve; they had already purchased the
Kedzie property, without the benefit of any contingency clause, when the legal rug was pulled
out from under them by the change in zoning laws. As a result, even if we were to accept the
City’s argument that O’Connell properly stands for the proposition that courts can make a case-
by-case determination of whether to account for purchase price, the O’Connell court’s finding on
that issue is not controlling.
The City advances two further arguments that the purchase price should not count under
the circumstances of this particular case. First, the City contends that the property still retains
most of its value under R3 zoning, as it may still be used for residential purposes; it urges us to
adopt a rule whereby, if property is still usable for similar purposes to those originally permitted,
then the purchase price should not be considered for the substantiality determination. However,
the City fails to cite any Illinois law directly supporting this proposition. Such a rule would be
out of line with the aforementioned Illinois cases where the purchase price is counted despite the
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fact that the land may still be usable for other purposes even after the adverse zoning change.
See Healey, 223 Ill. 2d at 627, 861 N.E.2d at 957 (listing the purchase price as a factor to take
into account without regard to whether the land remained usable for other purposes).
Furthermore, while the City claims that this would be in line with the rule in other
jurisdictions, the cases it cites for this proposition do not entirely support its point. The City first
cites the Delaware case of DiSabatino v. New Castle County, 781 A.2d 698 (Del. 2000), for the
general rule that land acquisition costs are not counted toward the substantial reliance
calculation. However, the DiSabatino court recognizes an exception where the purchase price is
directly related to the purchaser’s intended use; because plaintiffs in that case bought the land for
the sole purpose of building private residences, the court ruled that the purchase price weighed
toward plaintiffs’ substantial expenditures. DiSabatino, 781 A.2d at 704. The court further
noted: “While [the land] may have inherent value as raw land, that value is of no significance to
these plaintiffs, who have no alternative use for [these] lots.” DiSabatino, 781 A.2d at 704. This
analysis is directly pertinent to the case at hand: the trial court found that plaintiffs in the instant
case bought the Kedzie property for the sole purpose of developing it in a certain fashion, and
that purpose remained constant throughout their ownership of the land, even though the land may
still have retained value for alternative uses under the R3 zoning. As this finding was supported
by the testimony of Cribbin and Peter Koulogeorge at trial, we cannot say that it was against the
manifest weight of the evidence. Thus, far from providing support for the City’s position,
DiSabatino weighs in favor of a finding that the purchase price ought to be accounted for. We
agree with the DiSabatino court that when land is bought for a singular purpose, and that purpose
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is entirely thwarted by a subsequent zoning change, the purchase price of the land should be
taken into account in determining substantiality.
The City also cites the Oregon case of Union Oil Co. of California v. Board of County
Commissioners, 81 Or. App. 1, 7, 724 P.2d 341, 344 (1986), in which the court states that land
acquisition costs can never affect the substantiality determination in Oregon. The court gives
two reasons for this determination. It first states that even after land use restrictions are imposed,
land retains value for other purposes than those originally intended by the purchaser. Union Oil,
81 Or. App. at 7, 724 P.2d at 344. The Union Oil court additionally reasons that vested rights are
geared toward those expenditures incurred in the “use” of the land, which can only transpire once
the land is acquired, but that rights will not vest based upon expenditures incurred in its
acquisition, since acquisition is not tantamount to use. Union Oil, 81 Or. App. at 7-8, 724 P.2d
at 344. We decline to adopt the Oregon rule here, as it stands in direct opposition to the body of
Illinois law cited above holding that the purchase price of the land is, indeed, an appropriate
consideration. Healey, 223 Ill. 2d at 627, 861 N.E.2d at 957; Furniture, 353 Ill. App. 3d at 442,
818 N.E.2d at 847; American National, 19 Ill. App. 3d 30, 311 N.E.2d 325; Sgro, 54 Ill. App. 2d
at 9, 203 N.E.2d at 177. Furthermore, we note that even the Union Oil court acknowledges that
it is arguable that the purchase price of the land should be counted toward the substantiality
determination to the extent that the landowner paid a “premium” directly related to the intended
use. Union Oil, 81 Or. App. at 8, 724 P.2d at 344. In the case at hand, the trial court made a
finding, supported by trial testimony, that plaintiffs bought the Kedzie property with the sole
intention of building multiunit dwellings not possible under the revised zoning; thus, it can be
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said that the entire purchase price constituted a premium toward their intended use of the land.
See DiSabatino, 781 A.2d at 704 (using similar reasoning to conclude that the entire price of the
land was a “premium” that should factor into the substantiality analysis).
The City further contends that the purchase price should not count because plaintiffs
failed to develop the Kedzie property within a reasonable time after acquiring it. To acquire
vested rights to a zoning classification under Pioneer Trust and its progeny, “ ‘the buyer must
take action to develop the property within a reasonable time or else a city’s right to amend its
zoning ordinance in response to changing conditions would be greatly impaired.’ ” Furniture,
353 Ill. App. 3d at 438, 818 N.E.2d at 844, quoting Wakeland v. City of Urbana, Illinois, 333 Ill.
App. 3d 1131, 1143, 776 N.E.2d 1194, 1205 (2002). The Wakeland court explains that one
cannot buy land and let it sit unaltered for years, holding it for “inventory” or “investment
purposes” without taking any steps toward development, and still be considered to be acting in
good-faith reliance on an existing zoning classification. Wakeland, 333 Ill. App. 3d at 1142-43,
776 N.E.2d at 1205.
The City points out that plaintiffs were not actively developing the property from 1999 to
2003, and they urge us to adopt a bright-line rule that such a delay in development is
unreasonable regardless of the circumstances that led plaintiffs to take such action. We disagree.
As discussed above, the determination of whether expenditures are substantial is highly
dependent on the individual facts and circumstances of each case. Healey, 223 Ill. 2d at 627, 861
N.E.2d at 957. To look at the passage of time in isolation, without regard to the reasons that may
have contributed to the passage of such time, would be in direct contravention of that principle.
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This is particularly true in light of the fact that the vested rights doctrine is an equitable doctrine
designed to prevent unfairness to landowners. Healey, 223 Ill. 2d at 626, 861 N.E.2d at 957.
Moreover, the plaintiffs were not simply sitting on the Kedzie property without taking
action, as in the scenario described by the Wakeland court. Testimony at trial indicated that
plaintiffs fully intended to begin developing the Kedzie property within a few months of
purchase, as was their standard custom with land they purchased for development, but the CBE
essentially coerced them into leasing the land to it with its threat of condemnation. Furthermore,
plaintiffs testified that even while the CBE was occupying their land, they proceeded to advance
their development plans, meeting with an architect to draw up building designs in hopes that
their plans would be complete by the time the lease ended. In light of this testimony, the trial
court made a specific finding that plaintiffs “did everything in their power to salvage the
development despite the Board’s interference with their plans.” This finding is not contrary to
the manifest weight of the evidence. In point of fact, we note that, as we previously stated, the
City has conceded that the trial court’s factual findings were sufficiently supported by evidence.
Therefore, we find that plaintiffs did not breach the Wakeland requirement of development
within a reasonable timeframe, and the delay in developing the Kedzie property ought not be
counted against them.
Thus, given our conclusion that the purchase price ought to count as part of the plaintiffs’
expenditures in reliance under the previous zoning regime, the only issue left to be decided is
whether those expenditures were substantial. Because substantiality is a necessarily fact-
intensive determination, we cannot say that the court below went against the manifest weight of
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the evidence in deciding this issue in favor of plaintiffs. See In re Estate of Ferguson, 313 Ill.
App. 3d 931, 938, 730 N.E.2d 1205, 1211 (2000) (decision is not against the manifest weight of
the evidence unless complainant can demonstrate “plain, clear, and undisputable error” in the
court’s findings). There was considerable evidence adduced at trial about the magnitude of
expenses incurred by plaintiffs, including the $260,000 cost of the land itself, and Cribbin also
offered testimony about the alternate business opportunities that plaintiffs chose to pass up
because of their purchase of the Kedzie property in reliance on a favorable zoning regime. In
light of the accumulated weight of this evidence, we are unable to say that the trial court’s
judgment was erroneous, particularly since much lesser expenditures have been considered
substantial by Illinois decisions in the past. See, e.g., O’Connell, 99 Ill. App. 3d at 1061, 425
N.E.2d at 1344 ($12,000 fee for architectural services plus $5,500 tree removal expense is
substantial); Sgro, 54 Ill. App. 2d at 9, 203 N.E.2d at 177-78 ($21,000 property appraisal fee plus
a purchase price of approximately $23,000 is substantial).
The City argues that when the purchase price of the property is discounted, it is plain that
the trial court erred in finding plaintiffs’ expenditures to be substantial; however, we need not
reach this argument, as we have already found, for reasons stated earlier, that the purchase price
of the Kedzie property is properly included in the expenditures that plaintiffs made in reliance on
the previous zoning ordinance.
For the foregoing reasons, the judgment of the trial court is affirmed.
Affirmed.
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McBRIDE, P.J.,2 and O’MALLEY, J., concur.
REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT (Front Sheet to be Attached to Each Case)
Please use the following form
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.
Docket No. No. 1-06-1671
COURT Appellate Court of Illinois First District, SIXTH Division
Opinion Filed August 15, 2008 (Give month, day and year) JUSTICE JOSEPH GORDON DELIVERED THE OPINION OF THE COURT:
JUSTICES McBride, P.J., and O’Malley, J. , concur. APPEAL from the Lower Court and Trial Judge(s) in form indicated in margin: Circuit Court of Cook County; the Hon___ Appeal from the Circuit Court of Cook County. Judge Presiding. The Hon. Thomas P. Quinn Judge Presiding.
2 Justice McNulty initially heard the oral argument in this case. Following her retirement,
however, Presiding Justice McBride took her place on the panel; she has listened to the tapes of
the oral argument and read the briefs.
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Indicate if attorney represents APPELLANTS or APPELLEES and include attorneys of counsel. Indicate the word NONE if not represented.
APPELLANTS: APPELLANT: Mara S. Georges, Corporation Counsel of the City of Chicago, Benna Ruth John Doe, of Chicago Solomon, Deputy Corporation Counsel, Myriam Zreczny Kasper, Chief Assistant Corporation Counsel, and Nadine J. Wichern, Assistant Corporation Counsel, 30 North LaSalle Street, Suite 800, Chicago, Illinois 60602 For APPELLEES, APPELLEES: Thomas J. Ramsdell, Carl E. Meyers, Thomas J. Ramsdell & Associates, One Smith and Smith of East Wacker Drive, Suite 2020, Chicago, Illinois 60601 Chicago Add attorneys for 3rd party appellants and/or appellees.
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