La Salle National Bank v. Triumvera Homeowners Ass'n

440 N.E.2d 1073, 109 Ill. App. 3d 654, 65 Ill. Dec. 218, 1982 Ill. App. LEXIS 2335

• Court: Appellate Court of Illinois
• Decided: September 30, 1982
• Docket: 82-1253
• Status: Published

Opinions

JUSTICE JIGANTI

delivered the opinion of the court:

This is an interlocutory appeal from an order denying preliminary injunctive relief to the plaintiffs, La Salle National Bank as trustee, Joseph P. Zekas and TA Corporation as general partners of SRATriumvera, an Illinois Limited Partnership (SRA), and granting a cross-motion for preliminary injunctive relief to the defendant, Triumvera Homeowners Association (Homeowners).

The action arose out of a dispute between SRA and the Homeowners which developed when SRA attempted to rent rather than sell 80 vacant units in the Triumvera condominium complex. In April 1982, SRA took over the Triumvera sales offices and model apartments; changed the promotional signs located about the complex from advertising “sales” to advertising “rentals”; and informed the Homeowners that they intended to take prospective renters on tours of the common areas, recreational building, swimming pool and tennis courts. SRA also represented to their prospective tenants and tenants that they would be allowed to use and enjoy the common areas and community facilities at Triumvera.

According to the testimony of Joseph Zekas, the general partner of SRA, the following events took place in response to SRA’s actions. On April 5, the Homeowners’ attorney phoned him and demanded that SRA remove the signs in the common areas. This phone call was followed by a letter from the attorney advising Zekas that the signs were in violation of the association rules. Then on April 19, Zekas said that he received a phone call from his rental agent at Triumvera advising him that the association had posted a notice in the community center and had informed her that prospective tenants and actual tenants would be denied access to the recreational facilities. On April 21, Zekas testified that he met with the Homeowners and was told that SRA, their agents, prospective tenants and tenants would be barred from access to the recreational facilities. Zekas said that he then talked to the Homeowners’ attorney on April 22 and was advised that the Homeowners’ policy in regard to SRA’s activities remained unchanged. Zekas testified that he then tried to phone the president of the association, but when he was unable to reach him, phoned the association’s treasurer and convinced him to arrange another meeting. According to Zekas, a second meeting was then held in which nothing was resolved in his favor. Zekas then testified that on April 23, he received another phone call from his rental agent at Triumvera informing him that the Homeowners had forcibly removed and confiscated the advertising banners from the common areas. Zekas claimed that he immediately verified this fact in a phone call to the resident manager of the complex. Then, that same afternoon, SRA filed the instant lawsuit.

SRA makes two claims in this appeal. First, SRA contends that it is entitled to use the common areas to advertise rentals and to maintain model apartments for rental purposes. For convenience we will refer to this as the claim to conduct rental activities. In response to this first claim, the Homeowners do not deny that if SRA is the owner of 80 units, it may rent them as any other owner can rent. However, the Homeowners contest SRA’s right to use the common areas to conduct rental activities.

SRA’s second claim is that it is entitled to rent units which it owns with a guarantee to its tenants that they will be granted membership in the recreational facilities and that SRA’s tenants and prospective tenants are entitled to access to the recreational facilities at the present time. The Homeowners respond that such membership and access is not automatic and proper application must be made for membership and access to these facilities. The Homeowners further contend that no factual record has yet been made on the issue of membership and access to the recreational facilities.

The trial court after hearing this matter for several days and considering the relevant documents enjoined SRA from conducting rental activities in the Triumvera common areas but declined to order the Homeowners to grant access to the recreational facilities “at this time.”

SRA’s first contention that it is entitled to conduct rental activities by using the common areas to advertise rentals and to maintain model apartments for rental purposes is based on the fact that the original developer, referred in the documents as the developer/declarant, had such a right and that they are “successors/assignees” as defined under those documents and consequently have the same right. That claim is controlled by the governing documents of Triumvera. Section 2.07(a) and (f) of the “Declaration of Covenants, Conditions, Restrictions and Easements for Triumvera” (Master Declaration), which is the overall governing document for Triumvera, read as follows:

“2.07 DECLARANT’S RESERVED RIGHTS:

*** Declarant, and its agents and invitees shall have the following rights:

(a) The right to ingress and egress over, in, through and upon the Common Area and the right to use the Community Facilities, without the payment of any fees or charges which may be set by the Homeowners’ Board, for the purpose of showing and otherwise promoting the Common Area and the Community Facilities to prospective purchasers of Dwelling Units constructed or to be constructed by Declarant on the Development Area;

(f) The right to place and maintain on the Premises model apartments, sales offices, advertising signs or banners, and lighting in connection therewith at such locations and in such forms as the Declarant may, in its discretion, determine.” (Emphasis added.)

SRA’s first claim is also based upon sections 2.07(a) and (b) of the “Declaration of Condominium Ownership and of Easements, Restrictions and Covenants For the Triumvera 701 Form Square Condominium Association” (Building Declaration) which is the governing document for the 701 Form Square building where the office and model units are located. These sections read:

“207 DECLARANT’S RIGHTS:

Anything herein to the contrary notwithstanding, the Declarant and its agents and invitees shall have the following rights:

(a) The right to place and maintain on the Property model apartments, sales offices, advertising signs or banners, and lighting in connection therewith, at such locations and in such forms as the Declarant may, in its discretion, determine,

(b) The right of ingress and egress and transient parking in and through the Common elements for the purpose of showing and otherwise promoting any building in the Development Area to prospective residents of the planned development of Triumvera.” (Emphasis added.)

SRA’s second claim involving its right to present access to the recreational facilities and its right to rent 80 units with a guarantee to the tenants that they will be given membership in the recreational facilities because it is the owner of 80 units as the assignee/successor of the Developer/Declarant is based on sections 2.04 and 2.05 of the Master Declaration. These sections read:

“204 RIGHT OF ENJOYMENT:

Every Owner shall have the perpetual right and easement to use and enjoy the Common Area and Community Facilities, which right and easement shall include but not be limited to easements for operation and parking of vehicles, pedestrian ingress and egress, and use and enjoyment of open spaces and Community Facilities. Such right and easement shall be appurtenant to and shall pass with the title to every Dwelling Unit, subject to and governed by the provisions of this Declaration, of the By-Laws and of the rules and regulations of the Homeowners’ Board.

2.05 DELEGATION OF USE:

Subject to this Declaration, the By-Laws, and the reasonable rules and regulations of the Homeowners’ Board, any Owner may delegate his right to use and enjoy the Common Area and Community Facilities to persons in his Family or to his tenants or contract purchasers who reside in his Dwelling Unit.” (Emphasis added.)

The Homeowners contend that they have standing to dispute SRA’s claim as the not-for-profit corporation established under Article Four of the Master Declaration, which designates the Homeowners as the “governing body for all the Owners for the administration and operation of the Common Area and Community Facilities.” The Homeowners claim further rights to control the common area and community facilities under section 2.06 of the Master Declaration, which empowers the Board of the Homeowners to use, maintain, lease, grant licenses or concessions and to charge fees to gain access to the common areas and community facilities. SRA concedes that the Homeowners have control over the common areas used by residents of “all Triumvera buildings” but challenges its standing to complain of SRA’s use of the office and model apartments for rentals.

In response to SRA’s first claim that it is entitled to conduct rental activities at Triumvera, the Homeowners initially challenge SRA’s status as the Declarant/Developer but argue that even if SRA is eventually proved to be the Declarant/Developer, sections 2.07(a) and (f) only grant the Declarant the right to conduct sales activities at Triumvera and not rentals. Specifically, the Homeowners cite the language in 2.07(a) which speaks of “showing” and promoting the common area and the community facilities to “prospective purchasers of Dwelling Units” and specific language in section 2.07(f) which speaks of “the right to maintain model apartments, sales offices, advertising signs or banners, and lighting in connection therewith.” The Homeowners further claim that section 2.07(b) of the Building Declaration, which grants the Declarant the right to show “prospective residents” around the complex, must be read in conjunction with section 2.07(a), which speaks specifically of sales activities. The Homeowners argue that because there is no specific language in either the Master Declaration or the Building Declaration which reserves the right to conduct such rental activities to the Declarant, such activities necessarily fall under the proscription against such rental activities which appears in section 3.04 of the Master Declaration. Section 3.04 states:

“3.04 COMMON AREA RESTRICTION:

Except as permitted under Section 2.06 and 2.07, no industry, business, trade, occupation or profession of any kind shall be conducted, maintained or permitted on any part of the Premises and no “For Sale” or “For Rent” signs or any window display advertising be maintained or permitted on any part thereof.”

In response to SRA’s second claim that SRA is entitled to rent units which it owns with a guarantee to its tenants and prospective tenants that they will be granted membership in the recreational facilities, the Homeowners do not dispute SRA’s right to rent if SRA is ultimately proved to hold title to 80 Dwelling Units but argue that any right to use and enjoy the common area and community facilities are “subject to *** the reasonable rules and regulation of the Homeowners’ Board.” This qualification of rights appears in sections 2.04 and 2.05 of the Master Declaration under which SRA claims such rights of membership for its tenants and access for prospective tenants. The Homeowners state that under their existing rules and regulations, before an owner can gain access to the use of the recreational facilities, he must first prove that he is an owner and follow established procedures for applying for membership. The Homeowners claim that SRA tenants have neither proven such ownership through SRA’s title to these units nor have they yet applied for membership according to the procedures established by the Homeowners’ Board. SRA concedes that this is true but contends in its reply brief “that the Homeowners Association made it clear that no such application would be granted.”

The major issues on appeal are whether the trial court abused its discretion when it enjoined the plaintiffs from engaging in rental activities at Triumvera and when it declined to order the Homeowners to grant access to SRA’s tenants and prospective tenants to the recreactional facilities at the time of the order. An additional issue on appeal is whether or not the trial court deprived the plaintiffs of a fair preliminary injunction hearing by disqualifying their counsel one day before that hearing. Because this issue is based on a separate set of facts, it will be considered at the end of this opinion.

The function of the trial court in considering a motion for a preliminary injunction is to grant the injunction if it finds (1) that there is a certain and clearly ascertainable right that needs protection, (2) that the movant will suffer irreparable injury if the injunction is not granted, (3) there is no adequate remedy at law, and (4) the movant has a likelihood of success on the merits. These factors must be established by a preponderance of the evidence. (Baal v. McDonald’s Corp. (1981), 97 Ill. App. 3d 495, 422 N.E.2d 1166.) The trial court has a great deal of discretion in granting or denying an injunction. A reviewing court will only reverse the trial court if it finds that the granting or denial of the preliminary injunction was against the manifest weight of the evidence. Booth v. Greber (1977), 48 Ill. App. 3d 213, 363 N.E.2d 6.

To prevail in its action for a preliminary injunction, it was necessary for SRA to demonstrate a likelihood of success on the merits. (Simpkins v. Maras (1958), 17 Ill. App. 2d 238, 149 N.E.2d 430.) Although SRA was not required to make out a case which in all events would warrant relief at the final hearing, SRA needed to raise a fair question as to the existence of its right to its claim and lead the trial court to believe that it would probably be entitled to such relief if its proof should ultimately sustain its allegations. Wessell Co. v. Busa (1975), 28 Ill. App. 3d 686, 329 N.E.2d 414.

Regardless of whether or not SRA is ultimately adjudicated to be the successor/assignee of the original developer, SRA had to convince the trial court of its likelihood of success on its claim that the original developer had the right to conduct such rental activities at Triumvera. Although to meet the requirement of likelihood of success on the merits, SEA did not have to make out a case which in all events would warrant relief at the final hearing, SEA did have to raise a fair question of this right on the basis of the evidence which it presented. Wessel Co. v. Busa (1975), 28 Ill App. 3d 686, 329 N.E.2d 414.

The documentary evidence presented by SEA to the court consisted of the Master Declaration and the Building Declaration. SEA claims that a broad reading of sections 2.07(a) and (f) of the Master Declaration and section 2.07(b) of the Building Declaration raise this fair question of the Declarant’s right to conduct such rental activities at Triumvera. SEA claims that a broad reading of these sections is necessitated by current economic conditions which force a condominium developer such as SEA to lease units until such time as economic conditions improve to permit the sale of such units at a reasonable price.

Our only task is to review these documents in order to make a determination as to whether or not there was adequate evidence before the court to support its decision that SEA had not raised a fair question of its likelihood of success on its claim. Although SEA argues that a broad reading of these sections is necessary, we believe that it was appropriate for the trial court to base its decision upon specific language used in the instruments presented to it. It is well established that a court must arrive at a meaning from the language used in the documents. Construction is a pure question of law and the court must determine this from the document’s clear language. Sears v. First Federal Savings & Loan Association (1971), 1 Ill. App. 3d 621, 275 N.E.2d 300.

An analysis of the relevant documents indicates that under sections 2.07(a) and (f) of the Master Declaration, the Declarant is granted the right to show and promote the common areas to “prospective purchasers of Dwelling Units” and the right to place and maintain on the premises model apartments, “sales offices,” and advertising signs or banners. There is no specific language in the Master Declaration which grants the Declarant the right to conduct rental activities in the common area and the community facilities of Triumvera. In the absence of specific language granting the Declarant the right to use the common areas to advertise rentals and to maintain model apartments for rental purposes at Triumvera, section 304 of the Master Declaration cited to the court by the Homeowners specifically proscribes such activities. Section 304 clearly states:

“No industry, business, trade, occupation or profession of any kind shall be conducted, maintained or permitted on any part of the Premises and no *** ‘for rent’ signs or any window display advertising be maintained or permitted on any part thereof.”

SRA claims that the lack of specific rental language in the Master Declaration is not fatal to its right to conduct rental activities at Triumvera because this right is preserved in section 2.07(b) of the Building Declaration. Section 2.07(b) of the Building Declaration grants the Declarant the right to show “prospective residents” any “building” or “common elements.” According to SRA, the use of the word “prospective residents” in the Building Declaration covers both prospective renters and prospective buyers. Thus, SRA does have the right to conduct rental activities.

However, we fail to see how the language in section 2.07(b) of the Building Declaration substantiates SRA’s claim that the Declarant has the right to conduct rental activities. Section 2.07(b) is qualified by section 2.07(a) of the Building Declaration which speaks specifically of “sales offices.” An instrument must be read and considered as a whole. (Leavitt v. Kostel (1961), 32 Ill. App. 2d 313, 177 N.E.2d 882; In re Estate of Klinker (1979), 80 Ill. App. 3d 28, 399 N.E.2d 299.) Therefore, we do not believe that section 2.07(b) of the Building Declaration mandates a broad reading of relevant sections of the Master Declaration to include rental activities.

In view of the above analysis of the documents presented to the trial court, it was not against the manifest weight of the evidence for the trial court to conclude at this stage of the case that SRA had failed to raise a fair question that the Declarant had the right to use the common areas to conduct rental activities. Thus, the trial court did not abuse its discretion when it refused to enjoin the Homeowners from interfering with such rental activities. Similarly, on the basis of the same evidence, we do not believe that the trial court was in error when it enjoined SRA from conducting such rental activities at Triumvera.

In addition, regardless of whether or not SRA is ultimately adjudicated to be the owner of 80 dwelling units as the successor/assignee of the Developer/Declarant, in order to qualify for injunctive relief on its second claim that its tenants should be guaranteed membership in the recreational facilities and that prospective tenants should be allowed access to these facilities, SRA first had to make some showing to the court that the Homeowners had in fact refused to grant these privileges to the tenants and prospective tenants. Sections 2.04 and 2.05 of the Master Declaration, which cover such privileges, clearly state that the right to use and enjoy the community facilities by Triumvera Dwelling Unit Owners and their delegatees is subject to the “By-laws and reasonable rules and regulations of the Homeowners’ Board.” The Homeowners claim and SRA concedes that under the Homeowners’ existing rules and regulations, before an owner can gain access to the use of the recreational facilities he must first prove that he is an owner and follow established procedures for applying for membership. The Homeowners further claim and SRA further concedes that SRA tenants have neither proven such ownership through SRA’s title to these units, nor have they yet applied for membership according to the procedures established by the Homeowners’ Board. In addition, although SRA claims that the Homeowners have barred SRA from taking prospective tenants on tours of the recreational facilities, the record is in fact void of any evidence that such a barring has taken place and only sparsely refers to any prospective barring of such tours.

The trial court had before it a matter of considerable personal and economic importance to the individual homeowners and a matter of considerable economic interest to SRA. The court considered the documents and ruled, and as we indicated earlier within its discretion, that SRA was not entitled to use the common areas for rental activities. That ruling bears on a more nebulous second issue, that is, the SRA’s right to access to the recreational facilities. By barring SRA’s use of the common areas for rental activities the court in fact eliminated a great deal of SRA’s presence in the condominium complex. SRA has a right to rent the units it owns but under the same restrictions as any other unit owner. The court did not deny SRA’s motion for an injunction on its request to access to the recreational facilities. It said that it would not grant access “at this time.” A trial court exercising equitable powers should use those powers sparingly. It appears that the court was acting most prudently when it proceeded cautiously by ruling definitively on the first issue and rather tentatively on the second issue. The court could well believe that with the reduced presence of SRA on the premises the parties would be able to resolve the prospective problem of access to the recreational facilities amicably. The court is available as a constant monitor of the situation, and we do not believe that we should retry this matter at this level.

A final issue on appeal is SRA’s claim that the trial court deprived it of a fair preliminary injunction hearing when the court disqualified SRA’s counsel one day before that hearing. According to SRA, there was no basis for disqualifying Jenner & Block and this erroneous disqualification mandates reversal of the preliminary injunction granted to the Homeowners.

The issue arose when the Homeowners moved to disqualify the law firm of Jenner & Block from representing the plaintiffs. The Homeowners claimed that during 1976, the firm had represented five Triumvera unit owners who were now members of the Homeowners Association. On April 23, 1982, the court ruled that there had to be a hearing on the disqualification issue before the motion for the preliminary injunction could be held. The hearing was held on April 27, 1982. At that hearing, a partner at Jenner & Block testified that he had briefly advised five unit owners at Triumvera about their rights as condominium owners. He specifically counselled them as to whether the First National Bank of Chicago would be responsible for operating the Triumvera recreational facilities and repairing certain construction defects after the bank assumed control of Triumvera in lieu of ■ foreclosing on the original developer. Two letters introduced into evidence further confirmed this testimony. At the conclusion of the hearing, the court disqualified Jenner & Block on the grounds that it “did consult with an ad hoc committee or members of an ad hoc committee as to the rights of condominium and that is the very issue that is going to be tried in both these cases ***.” The court gave the plaintiffs until 2 p.m. the next day to find substitute counsel.

The plaintiffs argue that there was no basis for disqualifying Jenner & Block because there is no principle of law prohibiting an attorney from suing a former client. In making this assertion, the plaintiffs apparently are overlooking Canon 4 of the Illinois Code of Professional Responsibility, which provides that “[a] lawyer should preserve the confidences and secrets of a client” and Canon 9, which also cautions that “[a] lawyer should avoid even the appearance of professional impropriety.” The relevant test for disqualification of an attorney under these two canons is “where any substantial relationship can be shown between the subject matter of a former representation and that of a subsequent adverse representation, the latter will be prohibited.” (Silver Chrysler Plymouth, Inc. v. Chrysler Motors Corp. (2d Cir. 1975), 518 F.2d 751, 754; Government of India v. Cook Industries, Inc. (2d Cir. 1978), 569 F.2d 737.) The rationale for such disqualification is to enforce the attorney’s duty of absolute fidelity and to guard against the danger of inadvertent use of confidential information. Silver Chrysler Plymouth, Inc. v. Chrysler Motors Corp. (2d Cir. 1975), 518 F.2d 751.

As proof of a substantial relationship, “the former client need show no more than the matters embraced within the pending suit wherein his former attorney appears on behalf of his adversary are substantially related to the matters or cause of action wherein the attorney previously represented him, the former client.” See T. C. Theatre Corp. v. Warner Bros. Pictures, Inc. (S.D.N.Y. 1953), 113 F. Supp. 265, 268, cited in Silver Chrysler Plymouth, Inc. v. Chrysler Motors Corp. (2d Cir. 1975), 518 F.2d 751, 754.

Applying this test to the instant cause, the trial court found that Jenner & Block had counselled five condominium owners as to their rights as owners at Triumvera vis-a-vis The First National Bank of Chicago. These five former clients now are involved in litigation with a claimed successor to First National Bank of Chicago over their rights as owners at Triumvera. We believe the similarity of clients and issues are not only “substantially related” but are in fact “identical.” (See Ernie Industries, Inc. v. Patentex, Inc. (2d Cir. 1973), 478 F.2d 562.) Therefore, we believe it was not an abuse of the trial court’s discretion to disqualify Jenner & Block from the instant cause.

The plaintiffs further claim that disqualification of their counsel one day before the hearing on the preliminary injunction deprived them of a fair preliminary injunction hearing. The Homeowners respond that SRA has waived the issue of prejudice by specifically failing to object to the prejudice caused by the one day period at the time of the disqualification order. (Castro v. Chicago, Rock Island & Pacific R.R. Co. (1980), 81 Ill. App. 3d 233, 401 N.E.2d 5; Buck v. Alton Memorial Hospital (1980), 86 Ill. App. 3d 347, 407 N.E.2d 1067.) We agree with the Homeowners that since no objection to the alleged prejudice was made in the trial court, this issue cannot be raised for the first time on appeal.

For the above reasons we affirm the decision of the trial court.

Affirmed.

ROMITI, J., concurs.