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Levitt Homes Inc. v. Old Farm Home. Ass'n

OPINION FILED DECEMBER 22, 1982.

LEVITT HOMES, INC., PLAINTIFF,

v.

OLD FARM HOMEOWNERS' ASSOCIATION ET AL., DEFENDANTS. — (GREGORY LOCKE ET AL., PLAINTIFFS-APPELLANTS,

v.

LEVITT HOMES, INC., ET AL., DEFENDANTS-APPELLEES.)



Appeal from the Circuit Court of Du Page County; the Hon. John F. Teschner, Judge, presiding.

JUSTICE REINHARD DELIVERED THE OPINION OF THE COURT:

In these two actions consolidated in the trial court, Levitt Homes, Inc. (Levitt) filed suit against the Old Farm Homeowners' Association, Willowgate Homeowners' Association, and various known and unknown homeowners (Homeowners) seeking injunctive and other relief based upon tortious interference with prospective contractual relations, libel and slander. Homeowners filed suit against Levitt and the city of Naperville (city) for injunctive and other relief to enforce subdivision restrictive covenants and certain city of Naperville ordinances, and to seek damages based upon several theories of recovery. After an evidentiary hearing on Levitt's and Homeowners' motions for preliminary injunctions, the trial court entered an order denying both motions. Only Homeowners appeal from that interlocutory order denying their motion for a preliminary injunction. See Supreme Court Rule 307(a)(1) (87 Ill.2d R. 307(a)(1)).

The issues presented for review by Homeowners are: (1) whether Homeowners have established the elements required for the issuance of a preliminary injunction and are entitled to a preliminary injunction enjoining Levitt from building or selling certain homes on the theories that (a) Levitt violated certain ordinances of the city, (b) Levitt violated certain restrictive covenants which it could not later amend, and (c) Levitt is estopped by its promises to some of the Homeowners; and (2) whether Homeowners are entitled to a preliminary injunction enjoining the city from issuing building permits to Levitt. While Levitt did not appeal the ruling below against it, Levitt affirmatively asserts in its brief that Homeowners' actions constituted such misconduct that they are precluded from equitable relief under the doctrine of "unclean hands."

In 1978, pursuant to city of Naperville ordinance 78-106 (Naperville, Ill., Ordinance 78-106 (1978)) Levitt began marketing the Willowgate subdivision (Willowgate) as a planned unit development on a parcel of property known as Old Farm Unit 5 in Naperville, Illinois. Between 1978 and 1981 Levitt sold approximately 40 homes, selected from five model types, in Willowgate. The owners took title between 1979 and 1981. Levitt's senior vice-president Harvey Rafofsky testified that these homes ranged in price from "the high 60's to the mid 80's" and in size from 1,000 to "16 or 1800 square feet." Thomas Trybus, a homeowner, testified that the smallest model was 1,200 square feet while Doug Engebrethson, another homeowner, testified that the largest model was 2,200 square feet. All of these homes have two car garages. Rafofsky testified that Levitt failed to complete Willowgate due to market conditions which made selling this type of home difficult.

Levitt then decided to market the new Gingerplace subdivision (Gingerplace) in the areas of Old Farm Unit 5, Willowgate subdivision, where homes had not been built. Levitt planned to build 82 homes. These homes were to consist of two models of single-story homes which would be either a 979-square-foot two-bedroom model selling for $48,990 or a 1,068-square-foot three-bedroom model selling for $50,990. Both models would have one-car garages. According to Rafofsky, the Gingerplace homes were to be of comparable quality to the homes in Willowgate except they would be smaller.

Gingerplace would be located in a horseshoe pattern surrounding Willowgate on the east, west and south and across Modaff Road from the Old Farm subdivision (Old Farm). Old Farm was also developed by Levitt and consists of approximately 500 homes built between 1975 and 1980. Rafofsky testified that the homes in Old Farm are generally larger than those in Willowgate and were also generally higher in price.

Sales of the Gingerplace homes began May 22, 1982, preceded by a heavy advertising campaign and a salesperson training program with combined costs of $50,000. On May 22, 1982, as Levitt was beginning its sales drive at Gingerplace, a group of protestors gathered on the side of the public street leading into Gingerplace near Levitt's sales trailer. Though a great deal of testimony at the hearing below dealt with the protestors' activities, it is unnecessary to discuss these activities since Levitt has not appealed the denial of its motion to preliminarily enjoin the protesters.

Ordinance 78-106 (Naperville, Ill., Ordinance 78-106 (1978)) authorizing Levitt to build a planned unit development on Old Farm Unit 5 was enacted September 5, 1978, by the Naperville city council and recorded with the county recorder September 28, 1978. The document entitled "Declarations of Covenants, Conditions and Restrictions" (declaration) at issue in this case was not before the city council at the time it enacted the ordinance nor was it recorded with this ordinance. Rather, the declaration was filed with the county recorder on July 10, 1979.

According to the declaration all homes built in Old Farm Unit 5 were subject to a 1,000 square foot minimum floor space requirement and a minimum cost of construction equal to:

"$45,000 x Consumer Price Index (CPI) at commencement of construction. ---------------------------------------------- CPI as of date hereof."

The declaration contained a provision allowing Levitt to amend the minimum floor space and minimum cost restrictions.

Homeowners introduced another document which attorney Charlotte Rubenstein testified was supplied to her by Levitt. She obtained this document in connection with her clients', the Trybuses, purchase of a home in Willowgate. This document was similar to the declaration filed by Levitt except that the minimum floor space requirement was 1,200 square feet and the minimum cost formula was:

"$65,000 x CPI at commencement of construction. ------------------------------------ CPI as of date hereof."

The Trybuses purchased their home in May 1980, approximately 10 months after Levitt filed its July 10, 1979, declaration.

On May 6, 1982, Levitt invoked the provision allowing it to amend and filed amendments to the declaration changing the minimum floor space requirement to 900 square feet and the minimum cost of construction to a flat $44,000. These amendments, like the original declaration, were not submitted to the city council for approval.

Walter Newman, director of community development for the city of Naperville testified that he administers the city's zoning ordinances and that the city does not require developers of planned unit developments to have minimum floor space or minimum cost restrictions in the agreements annexing these developments to the city. He testified further that the city had no interest in whether such restrictions existed in planned unit developments or in any amendments to such restrictions.

Several Willowgate homeowners testified that Levitt sales personnel represented to them, at the time they bought their homes, that all homes built in Willowgate would be carefully controlled to avoid uniformity of model or color and that at least five different models would be interspersed throughout the subdivision. Gregory Locke testified he had been told that Willowgate would consist of "one of the five models." Thomas Trybus testified he had been told that if he wanted to build a home on a lot next to a similar model or similar colored home, the other homeowner's permission would be required. Thomas Clark testified he had been told that sister model homes would be built on the lots behind his home. Jeanne Noonan testified she had been told that Willowgate was going to be comprised of homes that were like the five models. Mary Chiappetta testified she had been told that Levitt "would be bringing over" to Willowgate two models from Old Farm and would possibly be adding a few more larger models. These homeowners testified that these representations affected their decisions to buy.

Along with the Old Farm Homeowners, the Willowgate Homeowners testified they believed the value of their homes would be lowered by the building of the homes in Gingerplace because of the use of only two models, the lower square footage, and the lower cost. Two real estate appraisers testified. Richard Hauser testified for Homeowners that building the Gingerplace homes would cause a 5-10% depreciation in the value of the existing homes. Ronald Bomba testified for Levitt that the Gingerplace homes would not have a detrimental effect on existing property values.

At the close of all the evidence, the trial court denied all motions for preliminary injunctions. The court found that Homeowners had an adequate remedy at law "if, in fact, they will suffer any damages to the valuation [sic] of their property by virtue of diminution." The court also found that the restrictions concerning minimum floor space and minimum cost were not a part of the final plat. Therefore, no injunction should issue barring the issuance of building permits by the city to Levitt.

• 1-3 In order for a preliminary injunction to issue, a plaintiff must establish (1) that he possesses a clearly ascertained right which needs protection, (2) that he will suffer irreparable harm without the injunction, (3) that there is no adequate remedy at law for his injury, and (4) that he is likely to be successful on the merits of his action. (Cross Wood Products, Inc. v. Suter (1981), 97 Ill. App.3d 282, 284, 422 N.E.2d 953; Crest Builders, Inc. v. Willow Falls Improvement Association (1979), 74 Ill. App.3d 420, 422, 393 N.E.2d 107.) The issuance of a preliminary injunction is applicable only to situations where an extreme emergency exists and irreparable and serious injury will result in the absence of the injunction. (Dixon v. Village of Lombard (1977), 50 Ill. App.3d 590, 593, 365 N.E.2d 1131.) The issuance of a preliminary injunction is within the sound discretion of the trial court and is to be used cautiously and only in cases of great necessity. (50 Ill. App.3d 590, 593, 365 N.E.2d 1131.) Its determination will not be overturned absent a showing of the abuse of that discretion. (Shorr Paper Products, Inc. v. Frary (1979), 74 Ill. App.3d 498, 502, 392 N.E.2d 1148.) As it is not the purpose of the preliminary injunction to determine controverted rights or decide the merits of the case, a court of review looks to the sufficiency of the evidence only for the limited purpose of ascertaining whether the trial court's discretion has been abused. Baal v. McDonald's Corp. (1981), 97 Ill. App.3d 495, 500, 422 N.E.2d 1166.

Homeowners premise their contention that they possess a clearly ascertained right which needs protection upon three bases: (1) that Levitt improperly amended certain restrictive covenants in the declaration; (2) that Levitt has not complied with certain of the city's zoning ordinances; and (3) that Levitt is estopped by its oral and written promises. The declaration was filed in the office of the Du Page County Recorder of Deeds on July 10, 1979. It contained a recital that it created certain covenants, conditions, restrictions, easements and other reservations "so as to assist in assuring the development of the property, in protecting the value and desirability of the property, and in preserving the general character of the property." The declaration provided in section 5.04 that each owner shall have the right to enforce the covenants and other rights created therein except against Levitt. Further, in section 5.08 Levitt specifically reserved the right to amend, alter, change, modify, waive, revoke or delete any of the covenants and other rights pertaining to minimum floor area, minimum cost of construction and other rights created, "it being the intent hereof that the right reserved in this section 5.08 shall not negate the existence of a general development scheme with respect to property so as to deprive the owners of the benefit of, or the power to enforce, the covenants, conditions and restrictions contained in this declaration." Homeowners argue that the amendments to the declaration filed May 6, 1982, which reduced the minimum floor space and cost of construction from that in the declaration, are void since they interfere with the covenants and other rights in the declaration enacted for the general development of the subdivision for the Homeowners' benefit as set forth therein. They contend that the right to amend contained in the declaration "may be exercised only to make the covenants amended more restrictive or amend the covenants in a fashion which will not, in fact, interfere with the development of the community as planned." Levitt counters that it specifically reserved the right to make amendments, that the two amendments do not negate the general development scheme, and that the covenants cannot be enforced against Levitt under the express terms of the declaration.

• 4, 5 Generally, restrictive covenants affecting land will be enforced according to their plain and unambiguous language (Hawthorne Hills Association v. Lawrence (1980), 85 Ill. App.3d 377, 381, 406 N.E.2d 869), and, unless against public policy, or where the principles of waiver or estoppel operate, their violation will be enjoined by the court. (Cordogan v. Union National Bank (1978), 64 Ill. App.3d 248, 253, 380 N.E.2d 1194.) A subdivider who expressly reserves the right to revoke restrictions and conditions set forth in a declaration of rights and conditions contained in contracts of sale of lots may later change the covenants and other promises respecting the use of the land where the intent and purpose of the reservation to revoke is evident. (See Fox Lake Hills Property Owners Association v. Fox Lake Hills, Inc. (1970), 120 Ill. App.2d 139, 256 N.E.2d 496.) We must look to the language of the declaration in order to determine what rights were reserved, applying the rule that an instrument is to be construed most strongly against its author. (See Crest Builders, Inc. v. Willow Falls Improvement Association (1979), 74 Ill. App.3d 420, 393 N.E.2d 107.) Decisions in other jurisdictions generally hold that a grantor may retain the right to make ...


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