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Board of Managers of Medinah on Lake Homeowners Association v. Bank of Ravenswood

March 31, 1998

BOARD OF MANAGERS OF THE MEDINAH ON THE LAKE HOMEOWNERS ASSOCIATION, PLAINTIFF/ COUNTER-DEFENDANT,
v.
BANK OF RAVENSWOOD AS TRUSTEE UNDER TRUST NO. 25--10165, ET AL., THIRD PARTY PLAINTIFF/ APPELLANT,
v.
120 NORTH LAKEVIEW DRIVE CONDOMINIUM BUILDING, ET AL., THIRD PARTY DEFENDANTS/ APPELLEES.



Appeal from the Circuit Court for the 18th Judicial Circuit, DuPage County, Illinois No. 90--L--1198 Honorable Robert Kilander Judge, Presiding

The opinion of the court was delivered by: Justice Breslin delivered the opinion of the court:

At issue is whether a purchaser of real property can develop property as an assignee of a declarant of a planned unit development (PUD) when it purchased the property through a foreclosure sale and did not receive a written assignment of rights. Based on the intent of the parties, we hold that the purchaser, plaintiff Bank of Ravenswood (Ravenswood), is a valid successor and assignee of the declarant and the developer. Accordingly, we reverse and remand.

FACTS

In 1974, the Village of Bloomingdale approved a PUD of four lots in the Medinah on the Lake Subdivision. Heritage Bank of Addison (Heritage Bank) held title to the lots as trustee in trust, and recorded a declaration of covenants, conditions and restrictions (declaration). A.P. Ross Enterprises, Inc. (A.P. Ross) was the sole beneficiary of the trust.

The declaration defined the term "developer" as A.P. Ross "and its successors and assigns," and the term "declarant" as Heritage Bank as trustee in trust "and its successors and assigns." The declaration's preamble provided that the development tract would be subject to all covenants and restrictions set forth in the declaration and that these covenants ran with the property. It also stated that the developer planned to construct a residential community containing 360 residential units. Article II of the declaration declared that a common area would be developed for use as a clubhouse, swimming pool, tennis courts and miniature golf course. At the time of this appeal, the common area remained undeveloped. Article XIII of the declaration stated, in part, that "he Provisions of the declaration shall be liberally construed to effectuate its purpose for creating a uniform plan of operation for a first-class development."

According to the PUD, a structure containing 120 residential units was to be constructed on each of three of the four lots. To fund the development, Heritage Bank as trustee executed and delivered a note to Exchange Bank for $850,000.00. A.P. Ross guaranteed the note and signed a collateral agreement assigning 100% beneficial interest in the Heritage Bank trust to Exchange Bank upon default. After developing lot two, known as Lakeview Condominium (Lakeview), Heritage Bank and A.P. Ross became insolvent, and the property was purchased by Exchange Bank through a foreclosure proceeding. Eventually Ravenswood Bank acquired the three undeveloped lots and held title as trustee.

Subsequently, the homeowners association created pursuant to the declaration filed suit against Ravenswood to recover part of the operating expenses for maintenance of the common areas. Ravenswood filed a third-party complaint against Lakeview. In response to a motion for summary Judgement filed by Lakeview, the trial court ruled that Ravenswood was not the declarant or the developer and thus had no right to develop or erect any structure on the property. Partial summary judgment was entered in favor of Lakeview and Ravenswood appeals.

STANDARD OF REVIEW

Summary Judgement is a drastic means of ending litigation. Bellerive v. Hilton Hotels Corp., 245 Ill. App. 3d 933, 615 N.E.2d 858 (1993). Therefore, it should only be granted when the pleadings, depositions, admissions and affidavits on file show that there is no genuine issue of material fact and that the moving party is entitled to Judgement as a matter of law. Thompson v. Green Garden Mutual Insurance Co., 261 Ill. App. 3d 286, 633 N.E.2d 1327 (1994). This court's review of an order granting summary Judgement is de novo. Johnson v. Owens-Corning Fiberglass Corp., 284 Ill. App. 3d 669, 672 N.E.2d 885 (1996).

DISCUSSION

The sole issue on appeal is whether the trial court erred in determining that Lakeview was entitled to Judgement as a matter of law.

The rights to construct and maintain structures reserved by a declarant or a developer are personal rights. Fairways of County Lakes Townhouse Ass'n v. Shenandoah Development Corp., 113 Ill. App. 3d 932, 447 N.E.2d 1367 (1983). Personal rights are those rights that can only be exercised by the one who created and imposed the restrictions. Fox Lake Hills Property Owners Ass'n, v. Fox Lake Hills, Inc., 120 Ill. App. 2d 139, 256 N.E.2d 496 (1970). Because these rights are reserved by the creator, personal rights do not run with the land. Fairways, 113 Ill. App. 3d at 936, 447 N.E.2d at 1370. Furthermore, the powers reserved by a declarant or a developer in a declaration, including the right to develop, can only be exercised by those parties specifically mentioned, or their successors or assignees. Toepper v. Brookwood Country Club Road Ass'n, 204 Ill. App. 3d 479, 561 N.E.2d 1281 (1990).

Rights as a successor accrue when there is a consolidation or merger of two or more entities, and the purchaser is merely a continuation of that entity. Fairways, 113 Ill. App. 3d at 937, 447 N.E.2d at 1370; Johnson v. Marshall & Huschart Machinery Co., 66 Ill. App. 3d 766, 384 N.E.2d 141 (1978). An assignee's rights are established when the assignor transfers an identifiable property, right, or claim to the assignee. In re Estate of Martinek, 140 Ill. App. 3d 621, 488 N.E.2d 1332 (1986).

An assignment of a right is a manifestation of the assignor's intention to transfer a particular right by which the assignor's right to performance is terminated in whole or in part, and the assignee acquires the right. Restatement (Second) of Contracts § 317(1)(1981); Season Comfort Corp. v. Ben A. Borenstein Co., 281 Ill. App. 3d 648, 655 N.E.2d 1065 (1995). The creation and existence of an assignment is determined by the intent of the parties. Service Adjustment Co., Inc. v. Underwriters at Lloyd's of London, 205 Ill. App. 3d 329, 562 N.E.2d 1046 (1990). In the absence of an applicable statute, the manifestation of intent necessary for a valid assignment need not be in writing. 4 Corbin, Contracts ยง 879 (1963). When the assignment has not been reduced to writing, the parties' intentions must be determined based upon the instruments executed as well as the surrounding circumstances. ...


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