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Bd of Directors v. Western National Bank

OPINION FILED DECEMBER 18, 1985.

BOARD OF DIRECTORS OF CARRIAGE WAY PROPERTY OWNERS ASSOCIATION, PLAINTIFF-APPELLEE,

v.

THE WESTERN NATIONAL BANK OF CICERO, TRUSTEE, ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Cook County; the Hon. Joseph M. Wosik, Judge, presiding.

JUSTICE MCGILLICUDDY DELIVERED THE OPINION OF THE COURT:

The plaintiff, Board of Directors of Carriage Way Property Owners Association, an Illinois not-for-profit corporation (the Association), filed a third amended complaint against the defendants, Western National Bank of Cicero, as trustee under trust No. 5920, Carriage Way Apartments, an Illinois general partnership and unknown owners. It alleged that the defendants owned the Carriage Way Apartments (the Apartments) in Burr Ridge and that the Association assessed common expenses and late charges against the Apartments from 1978 through 1981 which were not paid. Following trial, the court ordered the defendants to pay the assessments. The defendants appeal. The issues presented for review are: (1) whether the Carriage Way Property Owners Association declaration constituted a binding agreement between the parties which precluded quasi-contractual relief; (2) whether the trial court erred in finding an implied contractual obligation between the parties; (3) whether the trial court erred in finding the defendants were estopped from asserting a defense to the quasi-contractual claim and (4) whether the trial court erred in ruling that the defendants must pay all future assessments and that the obligation shall run with the land.

The third amended complaint set forth the following allegations: Carriage Way was a residential development of single-family homes and a three-building apartment complex. In 1964, the developer prepared and recorded the Carriage Way Property Owners Association declaration (Carriage Way declaration). In 1966, the Association established an operating budget on which assessments to the owners of the homes and the Apartments were based. The assessments were made separately for sewer maintenance and for a general fund. From 1966 through 1971, the owners of the Apartments fully paid the annual assessments for sewer maintenance and the general fund. In 1971, the village of Burr Ridge commenced maintenance of the sewers at Carriage Way. From 1972 through 1977, the owners of the Apartments fully paid the annual assessments for the general fund. *fn1 In 1978, the defendants informed the Association that they would not pay the 1978 assessment. The defendants failed to pay the assessments for 1979, 1980 and 1981. Count I sought foreclosure, attorney fees and judicial sale.

Count II adopted the allegations of count I and further alleged that the Association provided general maintenance, including landscaping, lighting and preservation of a lake, thus conferring upon the defendants a substantial benefit and unjust enrichment. Count II sought damages and an order requiring the defendants to pay reasonable assessments for general maintenance as long as they owned the property.

Attached to the complaint was a copy of the Carriage Way declaration. It was recorded in April 1964 against both the single-family lots and the property occupied by the Apartments. The Carriage Way declaration authorized the Association to assess and collect dues for sewer maintenance.

At trial, Larry Whitlow testified that he had been on the board of directors and/or an officer of the Association for seven or eight years. The Association maintained the common areas of the Carriage Way development, which consisted of approximately 80 houses and 132 apartments. From photographs, Whitlow identified as common areas the main entrance to Carriage Way, a strip of land with grass and trees running the length of the Apartments, a lake, a field between the Apartments and the lake, a picnic and fishing area and a cul-desac. He testified that since the Apartments stopped paying assessments, the Association has been unable to repair a fence or plant trees.

Harmon Anderson, the director of construction for the Carriage Way development, testified that the maintenance of the common areas in the development contributed to the "curb appeal" of the Apartments. The only common element in front of the Apartments was a 900- by 10- or 12-foot strip of grass and trees. Residents of the Apartments used the field between the Apartments and the lake to walk, jog and picnic.

Thomas Holcer, a real estate appraiser, testified that maintenance of the common areas positively affected the value of the Apartments.

Dwayne Forst, the owner of a Carriage Way house, testified that he was the Association treasurer in 1978 and 1979. He billed the defendants for the general fund in each of those years. The bills were not paid. Forst identified a letter he received from the manager of the Apartments dated May 12, 1978. The letter announced that the 1978 assessment would not be paid because of the rising cost of maintaining the complex and because of the cost of putting a new roof on one of the buildings.

John E. Cernak, a real estate developer, testified that he built a home in the Carriage Way development in 1970. He lived in the house for seven years and in the Apartments for two years. The Association sponsored golf outings, pancake days, fairs, Christmas parties and social dances for residents of both the houses and the Apartments.

At the close of the plaintiff's case, the defendants moved for a directed verdict. The trial court granted the motion only as to count I.

James Avgeris testified for the defense that he was one of the general partners in the defendant partnership. The partnership bought the Apartments in December 1975, at which time it was not disclosed that the Association levied assessments for maintenance of the common areas. In 1976 and 1977, the Apartments were assessed for the Association's general fund. The bills were paid because past assessments had been paid by the previous owners of the Apartments, and the defendants assumed the assessments were justified. In 1978, Avgeris was advised by legal counsel that the Apartments were under no obligation to pay the assessment. In 1978, 1979 and 1980, Avgeris received bills from the Association and informed it that the Apartments were not obligated to pay. Avgeris testified that maintenance of the common areas had not increased the value of the Apartments. Although the Apartments occupied less than 10% of the 70-acre development, the Association had billed the Apartments for approximately 29.2% of its total maintenance cost. On cross-examination, Avgeris stated that when he examined the operating figures in the course of purchasing the Apartments, he could have seen the amounts spent by the prior owners for common maintenance of the property.

Lou Rathje, an attorney, testified that he was one of the general partners in the defendants partnership. Prior to the purchase, he was not aware that owners of the Apartments paid common maintenance assessments. He did not believe that maintenance of the common areas had any effect on the value of the Apartments. After examining the Carriage Way declaration, he assumed the Association had the power to assess only for sewer and storm water. Nothing of record disclosed assessment for common maintenance.

On June 29, 1983, the trial court concluded that the defendants' payment of Association general fund assessments for 1976 and 1977 were acts of acquiescence which operated as a waiver of any rights they may have had to object to their continuing obligation to pay. Moreover, stated the court, the plaintiff in good faith relied on such conduct in maintaining the common areas; thus, the defendants should be estopped from asserting that they had no legal obligation to continue contributing to the general fund. As a result of the conduct and relationship of the parties, the court found an implied contractual obligation between them. Accordingly, the trial court ordered that the defendants pay all ...


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