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04/07/89 Citizens Utilities Company v. Centex-Winston Corporation

April 7, 1989

CITIZENS UTILITIES COMPANY OF ILLINOIS, PLAINTIFF-APPELLEE AND COUNTERAPPELLANT

v.

CENTEX-WINSTON CORPORATION ET AL., DEFENDANTS-APPELLANTS AND COUNTERAPPELLEES (SHELL OIL COMPANY, INTERVENING, DEFENDANT-APPELLANT AND COUNTERAPPELLEE)



APPELLATE COURT OF ILLINOIS, THIRD DISTRICT

541 N.E.2d 681, 185 Ill. App. 3d 610, 133 Ill. Dec. 470 1989.IL.486

Appeal from the Circuit Court of Will County; the Hon. Thomas M. Ewert, Judge, presiding.

APPELLATE Judges:

JUSTICE SCOTT delivered the opinion of the court. BARRY and STOUDER, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE SCOTT

At issue in this appeal is the validity and enforceability of a consent decree entered into in 1971 by the Village of Bolingbrook (Village) and Citizens Utilities Company of Illinois (Citizens). In the court below, Citizens sought a permanent injunction prohibiting the Village from violating the consent decree. Specifically, Citizens sought (1) an order enjoining the Village from supplying water service to Shell Oil Company (Shell) in an area where the consent decree prohibited the Village from providing water and sewer services and (2) an order enjoining the Village from otherwise attempting to provide water or sewer services in the prohibited territory.

The relevant portion of the consent decree entered into in 1971 provides, with a few exceptions not relevant here, that Citizens is generally prohibited from providing water and sewer service east of State Route 53 and the Village is generally prohibited from providing such service west of State Route 53.

In 1978, the Village purchased the Oak Tree Sewer and Water Supply Company (Oak Tree). Oak Tree had previously been certified by the Illinois Commerce Commission to provide water and sewer services to all of section 7 and a portion of section 18 of Du Page Township, an area located west of State Route 53 and at the time of purchase serving but four customers. The only positive step made by Citizens in objecting to the purchase of Oak Tree by the Village was an October 26, 1976, letter to the Village indicating that the consent decree "prohibits Village water or sanitary sewer service in the Oak Tree area." The Village nonetheless went forward with the purchase, but development in the Oak Tree area apparently did not take place as rapidly as the Village anticipated, resulting in an annual deficit in its operation of roughly $100,000 per year. The Oak Tree service area did expand, however, and at the date of hearing in the trial court serviced 140 customers, about one-third the number needed to make the system viable.

In 1981, Citizens learned that the Village was considering supplying water and sewer services to Hinsdale Hospital, located west of Route 53. Citizens promptly notified the Village that the action would violate the consent decree. As a result, an agreement was entered into between the Village and Hinsdale Hospital wherein the Village provided funding for construction of water facilities for the hospital without acquiring any interest in those facilities or providing any water or sewer services to the hospital. Citizens apparently had no participation in securing water and sewer facilities to the hospital, although it was located west of Route 53.

In August 1986, Shell Oil Company contacted Citizens about obtaining water and sewer services for a gas station and car wash to be built in an area west of Route 53. Citizens indicated it would provide such services but, according to a Shell representative, because the nearest water main owned by Citizens was located 2,000 to 3,000 feet away, it was not financially feasible to incur the cost of a water main extension and Citizens would provide no financial assistance. Citizens maintains that Shell then informed Citizens that Shell planned to drill its own well and use a septic system for sewage.

Around the same time period, Shell also applied to the County of Will for a rezoning of the property. The Village objected on the grounds of increased traffic at the intersection, the location of curb cuts at the intersection and the difficulty in fighting a fire if the property was serviced with water from a private well. Following negotiations between the Village and Shell, the Village agreed to absorb 50% of the cost of extending the Oak Tree water main to the Shell parcel and Shell agreed to become annexed to the Village sometime after 1991. A copy of the engineering plans for extending the Oak Tree water main was sent to Citizens in July of 1987. Citizens, however, voiced no objection to the agreement between Shell and the Village until actual construction of the water main was set to begin in February of 1988, well after the contracts were executed and land purchased by Shell.

The Village, in open court, expressed its intention to provide both water and sanitary sewer service, insofar as the same is both economically and physically feasible, to all properties west of Route 53 unless it is restrained from doing so. Citizens, however, has also made plans to serve the area west of Route 53 and has made expenditures of funds in constructing facilities to provide that area with both water and sewer services.

On February 26, 1988, Citizens sought and received a temporary restraining order prohibiting any further construction on the water main from Oak Tree to Shell until further hearing. Subsequent hearings were had, and on June 1, 1988, the trial court denied Citizens' motion for permanent injunction to restrain the Village from completing the installation of the water main to the Shell site and further denied Citizens' motion relating to all areas west of Route 53 previously certified to be served by Oak Tree. The court also found that the consent decree was validly entered into between the parties and, except as mentioned above, remained in full force and effect. The Village submits that the territorial boundary of utility service areas contained in the consent decree are unenforceable by Citizens for various reasons. Citizens basically takes the opposite position.

Consent decrees, which are utilized to effectuate settlement, are considered contracts between parties to litigation, and accordingly, the law of contracts controls their interpretation. (Clark v. Standard Life & Accident Insurance Co. (1979), 68 Ill. App. 3d 977, 386 ...


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