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February 4, 1994


Appeal from the Circuit Court of Lake County. No. 92-MR-375. Honorable Jack Hoogasian, Judge, Presiding.

Doyle, Geiger, Bowman

The opinion of the court was delivered by: Doyle

JUSTICE DOYLE delivered the opinion of the court:

The dispute in this case centers on the ownership of a sewer line extension located near the Village of Mundelein. This consolidated appeal comes before the court following the circuit court's entry of an order permanently enjoining defendant, the Village of Mundelein, from exercising control over, or permitting any party to connect to the sewer line extension, until such time that it acquires title to the sewer line extension from plaintiffs, Anthony Pasquinelli, Bruno Pasquinelli, and Melvin Isenstein. Prior to consolidation, defendant brought a timely interlocutory appeal (see 134 Ill. 2d R. 307) challenging the circuit court's entry of an order preliminarily enjoining defendant from taking any action permitting any party to connect to the sewer line unless and until defendant acquired title to the sewer line. During the pendency of defendant's interlocutory appeal, plaintiffs' cause proceeded to trial, resulting in an order of permanent injunctive relief. Defendant timely appealed from that order, and its motion to consolidate was granted.

In its appeal from the order of preliminary injunctive relief, defendant, in case No. 2-92-1280, raises the following issues: (1) whether the trial court erred by ignoring the uncontested facts showing defendant's ownership and control of a sewer line extension, subject to plaintiffs' right to recapture a portion of the cost thereof from other property owners connecting thereto; and (2) whether the trial court erred in failing to hold an evidentiary hearing on contested issues of fact regarding defendant's ownership and control of the sewer line extension before granting the preliminary injunction.

In case No. 2-93-0945, defendant's appeal from the order of permanent injunctive relief, the following issues are raised: (1) whether the trial court "confused" ownership and control with title; (2) whether plaintiffs relinquished ownership and control of the sewer line extension by installing it in five village-owned easements and otherwise treating it as an extension of the village's sanitary sewer system; and (3) whether plaintiffs bound themselves to accept recapture fees as provided in an unsigned recapture agreement.

The record reveals the following relevant facts. In 1989, the Pasquinelli Construction Company, at plaintiffs' direction, constructed, at an estimated cost of $1.1 million to $1.2 million, a sewer line extension to serve an undeveloped tract of land commonly known as the Brott property, which was owned by plaintiffs, and other properties located within and outside the corporate limits of the Village of Mundelein. It was undisputed that plaintiffs would not be ultimately responsible for the entire cost of construction and that the village and plaintiffs would enter into a recapture agreement. In very general terms, a recapture agreement allows a developer to recoup costs for infrastructure improvements which exceed the developer's own requirements for a particular project. See 65 ILCS 5/9-5-1 (West 1992).

Prior to the installation of the sewer line extension, Lawrence Freedman, an attorney representing plaintiffs, attended various meetings late in 1987 or early in 1988 with village officials to discuss the sizing of the sewer line. During those meetings, it was determined that the line should be sized so as to adequately service the Brott property, other properties located within the village limits of Mundelein, and properties, like the Brott property, which were anticipated to annex into the village.

The parties further contemplated the execution of a recapture agreement. At its July 23, 1988, meeting, the village board of Mundelein passed a resolution authorizing the mayor and village clerk to execute a recapture agreement with Pasquinelli Construction Company, subject to any revisions made by the village staff and approved by the village attorney.

In addition to the recapture agreement, Freedman was negotiating an annexation agreement regarding the Brott property. Freedman testified that all of the annexation agreement drafts contemplated a prior or contemporaneous execution of a recapture agreement. He further testified, however, that during the years since the parties began negotiating annexation, defendant's requirements with respect to fees, donations, and contributions that would be imposed on any property annexing into the village, including the Brott property, increased significantly. Accordingly, the potential cost of development in the village was far in excess of the amount originally contemplated. His clients, therefore, were of the opinion that, in the absence of some relief, annexation would make development in the village economically infeasible. The parties ultimately never reached an agreement on annexation of the Brott property.

During the course of negotiations, several Discussion drafts of the recapture agreement were circulated between the parties. Four draft versions of the recapture agreements were admitted in evidence. The first and second draft versions were dated 6/30/88 and 7/15/88, respectively. The third and fourth versions were dated 1/8/92 and 3/24/92, respectively. None of the four versions were signed by either of the respective parties.

Additionally, contained in the recitals of all four drafts was an express reference to exhibit "B," wherein the properties to be benefitted, other than the developer's, from the installation of the sanitary sewer system were to be depicted and enumerated. None of the four draft versions contained a completed exhibit "B." Kenneth Marabella, administrator for the Village of Mundelein, acknowledged that the recapture agreements were never signed and that the exhibits to the agreements were never filled in. He further admitted that the agreed-on benefitted area was not set forth in a signed document and that the actual benefitted area had not been agreed on as of October 1992.

All of the drafts further contemplated that the conveyance of the utilities to defendant would be by a bill of sale. Marabella admitted that defendant never received a bill of sale for the sewer line extension or received any document transferring ownership.

In addition to the annexation and recapture agreement negotiations, defendant and Pasquinelli Construction participated together in obtaining certain regulatory approvals related to the installation of the sewer line extension. The parties jointly executed an Illinois Environmental Protection Agency application for permit or construction approval of a public sewer line extension. The application, dated December 20, 1988, designated defendant and Pasquinelli Construction as "the applicant to own and operate." In a section entitled, "Certificate by Intermediate Sewer Owner," the application designated the Village of Mundelein as the system owner to which the sewer line extension would be a tributary. This permit was ultimately issued, and it designated the Village of Mundelein as the permittee to own and operate the sewer line extension and Pasquinelli as the permittee to construct.

The Lake County Division of Transportation issued a highway permit, dated June 9, 1989, authorizing the installation of the sewer line extension in the Midlothian Road right-of-way. The permit charges the Village of Mundelein with the ...

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