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LAKE CARYONAH IMPROVEMENT ASSN. v. PULTE HOME CORP

February 2, 1989

LAKE CARYONAH IMPROVEMENT ASSOCIATION, etc., Plaintiff,
v.
PULTE HOME CORPORATION, Defendant


James B. Moran, United States District Judge.


The opinion of the court was delivered by: MORAN

JAMES B. MORAN, UNITED STATES DISTRICT JUDGE

 In 1968 the City of Naperville (City) annexed approximately 105 acres, and in 1970 the City approved, in concept, the development of the property as R-3 multiple dwelling, with an overall density of 22 units per acre. The 1970 ordinance further provided, among other things, that the property owners were to maintain certain designated open space and submit, in stages, plats for planned unit development (PUD).

 Five years later the City granted preliminary PUD approval for a development of a 55-acre portion of the tract, the project being known as the Lake Caryonah Planned Unit Development. The approval was subject to the requirement that prior to final plat approval "Lot 1" (which, we are told, was to be located elsewhere in the 105-acre tract) be conveyed to the City for use as a permanent open space under the City's open space policy, or that Lot 1 be otherwise restricted in a manner agreeable to the City so as to provide permanent open space. A phasing plan at that time indicates that 904 multi-family units were to be built over time in four phases. The first phase was to have 320 multi-family units on the northern portion of the tract, some 16 acres.

 On March 23, 1977, a "close-out package" was recorded in DuPage County. That package contains a number of documents relevant here. One is a November 3, 1976 ordinance authorizing a planned unit development of Lake Caryonah Phase 1 and granting final subdivision approval for Phase 1A as a special use for part of the larger development in accordance with designated plats and an October 4, 1976 statement of intent and agreement (SIA). The SIA was entered into by Honeybee Development Company as subdivider, a land trustee as owner, and the City. The subdivider and owner there agreed to develop the subdivision in accordance with the plans and supporting documents "as required by the Subdivision Control Ordinance and Planned Unit Development Ordinance". Paragraph 6 recognizes that a public park donation of 3.113 acres is required for the subdivision by applicable City ordinances; that the annexation agreement originally provided for the conveyance of Lot 1 to satisfy all park requirements of the entire development and that this conveyance will be made; and that the subdivider and owner agree to provide 6.79 acres of common open space in Phase 1A, thus having a credit of 3.677 acres toward park donations for future phases. In paragraph 7 the subdivider and owner agree to convey to a property owners association those properties identified on the planned unit development preliminary plat as private open space and all properties identified as common open space on the proposed final plat. *fn1"

 The package also includes a copy of the articles of incorporation for the property owners association, named the Lake Caryonah Improvement Association (Association), and a Declaration of Covenants and Restrictions (Declaration) executed by the subdivider and owner, collectively referred to as the "developer." That document recites that the developer incorporated the Association to, among other things, enforce various covenants and restrictions, including those arising from the dedication of land. It designates lots 15, 16, 17 and 18 on the Phase 1 subdivision plat as common area. The Declaration, the final plats and other documents, are defined as Lake Caryonah documents which are to be construed as covenants running with the land. Title to the common areas was to be conveyed to the Association in due course, and the Association would thereafter be responsible for the maintenance and taxes. The common areas are, essentially, the portions of the property outside the building lot lines and not part of the drive system.

 The Phase 1A land was and is an irregularly-shaped property south of the Phase 1 development and separated from it by property which was to be developed as Phase 2. It was not expressly designated as a "common area" in the Declaration of Covenants and Restrictions but it is expressly included in the property subject to the Declaration and it is designated as a common open space in the SIA. It was expected that much of the Phase 1A land would be used as a drainage retention pond, and so it has. That property was not conveyed to the homeowners association and, until recently, it did not request conveyance. In the meantime Phase 1 was developed, but the developer then apparently fell upon evil days. In any event, only the units on the northern 16 acres of the intended 55 acre Lake Caryonah project were completed, and the other acres remained vacant.

 In 1980, after public notice and hearings, the City developed a comprehensive new zoning ordinance. That ordinance zoned the entire 55 acres as R-3 medium density multi-family, thereby causing the developed portion to be non-conforming (R-3 density being considerably less than the PUD density built on the 16 acres), and any future development of the remaining acreage at the density earlier contemplated became illegal.

 To avoid foreclosure, the developer in 1980 deeded the entire subdivision, including Phase 1A, to another land trust, of which a subsidiary of the Central National Bank (Bank) was the beneficiary. The common area within Phase 1 was conveyed to the Association that same month. The Bank and its successors paid the real estate taxes on the Phase 1A property for the years 1978-1985 and paid for the title insurance and, at various times from 1982 through 1985, had the weeds cut, listed the property for sale and posted the property with "no trespassing" and "for sale" signs. In 1980 an association of homeowners of a portion of the Phase 1 property forwarded to the developer the Phase 1A tax bill it had received.

 In 1986 the beneficial interest in the Phase 1A land trust was sold to the Howard Savings & Loan Association. On October 8, 1986, defendant entered into a contract to buy the property. While apparently plans were being formulated for the development of the parcel, the plaintiff, in April 1987, laid claim to the Phase 1A property. On May 18, 1987, defendant received preliminary subdivision plat approval from the City for the development of 214 townhouse units and two single-family homes on the vacant "Lake Caryonah" property, including almost all of the Phase 1A property, and shortly thereafter took legal title. A year later defendant received final plat approval for 88 townhouses and two single-family homes on a portion of the property, that plat also providing for the dedication of land primarily for a drainage retention pond in an area correlating to but not the same configuration or exactly in the same location as the Phase 1A retention pond. This suit was filed in state court shortly before that final approval, and it has been removed to this court on the basis of diversity jurisdiction. It seeks declaratory and injunctive relief.

 The plaintiff claims that, pursuant to sections 6 and 7 of the 1976 SIA, the owner of Phase 1A agreed, as a covenant running with the land, that the property was dedicated for storm drainage, private open space and recreational areas and facilities for the benefit of Phase 1, and that it agreed to convey the property to the homeowners association. While the Association was not a signatory to the SIA, the members are successors-in-interest to the developer with respect to Phase 1 and the Association, by having vested rights in Phase 1A, is the successor in interest to Phase 1A. The Association, on behalf of its members, is also a third party beneficiary of the SIA. Defendant in turn, according to plaintiff, is a successor to the interests of the developer and is bound by the obligations created by the SIA. The Association asks that this court declare that the SIA is binding upon defendant, order the defendant to convey the Phase 1A property to plaintiff, and enjoin defendant from taking action with respect to the Phase 1A property which is inconsistent with plaintiff's rights.

 Defendant has moved to dismiss upon a variety of grounds. Both parties have presented numerous exhibits and have largely agreed upon a local rule 12(f) statement of material facts. At an oral discussion of the matter the parties also were most helpful in clarifying some facts and in explaining their respective positions. We treat the motion, therefore, as one for summary judgment.

 Who agreed or indicated an intention to do what is somewhat confused by the imprecision of the language in the SIA and the Declaration. The SIA refers to Phase 1A as "common open space" in paragraph 6 and, in paragraph 7, to an obligation to convey to a property owners association those properties identified on the PUD preliminary plat as "private open space," and all properties identified on the proposed final plat as "common open space," all of which is to be used for "storm drainage uses and as private open space and recreational area," as defined by the ordinances relating to school and park district donations. The SIA refers to the Declaration, which expressly defines the "COMMON AREA" as those lots in Phase 1 which are outside the building lines, "and additional property which may be added thereto by subsequent subdivision plats." Phase 1A was declared to be an existing property subject to the Declaration. Regardless of how one interprets the various terms, however, it seems clear that a homeowners association was supposed to end up with the Phase 1A property for use as a retention pond and for recreational purposes for the benefit of a fully developed Lake Caryonah PUD.

  Plaintiff contends that the obligation to convey Phase 1A is, by its terms, linked only to the development of Phase 1, and the language of the SIA certainly is capable of that interpretation. The SIA, according to plaintiff, created a restrictive covenant running with the land which is binding on successors, such as defendant, and may be enforced by the benefitted person, such as the Association, even if the restriction is greater than the zoning regulations, Wier v. Isenberg, 95 Ill. App. 3d 839, 420 N.E.2d 790, 51 Ill. Dec. 376 (2d Dist. 1981); that the Association is at least a third party beneficiary of the SIA, Briarcliffe West Townhouse Owners Association v. Wiseman Construction Company, 118 Ill. App. 3d 163, 454 N.E.2d 363, 73 Ill. Dec. 503 (2d Dist. 1983); that there has been no change so radical and complete as to render the restriction unreasonable, Moore v. McDaniel, 48 Ill. App. 3d 152, 362 N.E.2d 382, 5 Ill. Dec. 911 (5th Dist. 1977); that plaintiff is not barred by Pulte and its predecessors paying the taxes the last seven years because they did not manifest ...


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