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04/12/94 DREMCO v. HARTZ CONSTRUCTION COMPANY

April 12, 1994

DREMCO, INC., AN ILLINOIS CORPORATION, PLAINTIFF-APPELLEE,
v.
HARTZ CONSTRUCTION COMPANY, AN ILLINOIS CORPORATION, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County. Honorable Albert Green, Judge Presiding.

Released for Publication June 7, 1994.

Hartman, DiVITO, Scariano

The opinion of the court was delivered by: Hartman

JUSTICE HARTMAN delivered the opinion of the court:

Defendant, Hartz Construction Company (Hartz), appeals from an order requiring it to annex certain property to the Village of Alsip, Illinois (Alsip), as it agreed to do in a settlement agreement with plaintiff, Dremco, Inc. (Dremco). The issues presented for review are whether (1) the circuit court erred in construing the settlement agreement; (2) the circuit court erred in directing Hartz to annex its property to Alsip, a non-party; (3) Hartz is judicially estopped from now complaining that the circuit court lacked authority to enter the order; and (4) the order violates Hartz' due process rights. We affirm.

Both Hartz and Dremco are Illinois corporations engaged in the business of building and selling residential homes and commercial developments. In 1986, they executed a joint venture agreement forming the Laramie Square Partnership. The partnership purchased land at 122nd Street and Laramie Avenue in Alsip (the Laramie property) to develop for residential use. Hartz and Dremco were to share in the profits on a 50/50 basis. Subsequently, in late 1988, the partnership also acquired approximately 40 acres of land at 115th street and Central Avenue in unincorporated Cook County (the subject property or the cemetery property).

Numerous disputes arose between Hartz and Dremco, ultimately resulting in the filing of the instant lawsuit. In its original complaint, Dremco alleged that Hartz, as managing partner of the Laramie property, had wrongly awarded itself extra profits. During trial, the evidence disclosed a second, fundamental dispute between the parties: Hartz preferred annexation of the subject property to Oak Lawn, while Dremco desired Alsip.

Before trial was completed, on May 29, 1992, the parties signed a letter of intent to settle all outstanding issues through negotiation. They later executed a formal settlement agreement on September 11, 1992. In the agreement, the parties resolved the dispute concerning profits earned on the Laramie property. They also divided the subject property in half, with Dremco taking fee simple in the western 20 acres and Hartz taking the same in the eastern 20 acres. The only reference in the agreement concerning annexation of the subject property was contained in the preamble section and provided:

"WHEREAS, Dremco desires to annex the west one-half (1/2) of the cemetery property to Oak Lawn and Hartz desires to annex the east one-half (1/2) of the cemetery property to Alsip."

According to Dremco, it paid Hartz a premium of $670,000 to receive the western 20 acres, because land values are higher in Oak Lawn and Dremco would not have to compete directly with Hartz, which had agreed to annex its 20 acres to Alsip.

In the litigation that followed, Hartz' counsel represented to the circuit court on three occasions that it intended to annex its 20 acres to Alsip, as agreed by the parties. These statements are described more fully later in this opinion.

In May 1993, Hartz decided to seek annexation of three of its 20 acres to Oak Lawn rather than Alsip, and to seek annexation of the other 17 acres to Alsip.

On May 12, 1993, Dremco filed a motion to enforce the terms of the settlement agreement, along with a supporting memorandum, seeking an order directing Hartz to annex its entire 20 acres to Alsip. The motion declared that Dremco will suffer disastrous economic loss if Hartz is permitted to violate the agreement; Dremco never would have paid the $670,000 premium without Hartz' promise to annex its 20 acres to Alsip; the premium was justified only because Dremco's Oak Lawn housing would draw a higher price and Dremco would not be competing with Hartz in the same village; Hartz was attempting to annex three of its 20 acres to Oak Lawn solely as a pretext to require Dremco to build an extra street on its property for the benefit of Hartz and to the detriment of Dremco; and Hartz must be ordered to comply with the settlement agreement, the premise of which was to separate completely the two warring parties. Dremco's motion also recounted the three statements of Hartz' counsel that Hartz was committed to annex its 20 acres to Alsip.

The motion noted a third dispute between the parties involving 13.8 acres of land immediately to the north of the subject property, which Hartz had contracted to purchase from a third party. Dremco filed a separate lawsuit challenging this purchase under the corporate opportunity doctrine. On December 18, 1992, the court ordered Hartz to direct the annexation of the 13.8 acres to Oak Lawn "together [and] on the same day" as Dremco's 20 acres.

Hartz' memorandum in opposition to Dremco's motion admitted that Hartz intended to annex three of its 20 acres to Oak Lawn; averred that the settlement agreement in no way required it to annex its 20 acres to Alsip; denied that the three statements of its counsel indicated it had promised to seek annexation of the 20 acres only to Alsip; claimed that the $670,000 payment was not as Dremco insisted; and professed that it must ...


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