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Northern Illinois Home Builders Ass'n v. City of St. Charles

July 06, 1998

NORTHERN ILLINOIS HOME BUILDERS ASS'N; GALLANT HOMES, INC.; THE KRUGHOFF COMPANY; SHO DEEN, INC.; JOE KEIM BUILDERS, INC.; KEIM CORPORATION; AND HAVLICEK BUILDERS, INC., PLAINTIFFS-APPELLANTS,
v.
THE CITY OF ST. CHARLES, DEFENDANT-APPELLEE



The opinion of the court was delivered by: Justice McLAREN

(John R. Hall & Sons, Inc., Plaintiff).

Appeal from the Circuit Court of Kane County. No. 92--MR--0013 Honorable R. Peter Grometer and Timothy Q. Sheldon, judges, Presiding.

Justice McLAREN delivered the opinion of the court:

Plaintiffs Gallant Homes, Inc.; The Krughoff Company; Sho Deen, Inc.; Joe Keim Builders, Inc.; Keim Corporation; and Havlicek Builders, Inc., (collectively the Builders) and plaintiff Northern Illinois Home Builders Association appeal the trial court's dismissal of the plaintiffs' second amended complaint seeking a declaratory judgment that the defendant's ordinances mandating an electric service connection fee is unconstitutional and invalid. We reverse in part, affirm in part, and remand for further proceedings.

Since 1892, the defendant, the City of St. Charles, a non-home-rule municipality, has operated its own electric utility system. The defendant, the sole provider of electrical current to residences within St. Charles, buys electrical energy from Commonwealth Edison at wholesale and distributes electricity to customers through facilities owned by the defendant. The defendant's electric utility system is financed by retained earnings, not by bonds. Prior to 1972 the cost of connecting new customers to the system was paid for by the income from the sale of electric energy.

In 1990 the defendant adopted ordinance 1990-M-36 (the old ordinance) (St. Charles Municipal Code §13.08.150 (passed April 16, 1990)), which provided that the cost of connecting new customers to the system would be paid for by the new customers. Under this old ordinance, new customers paid one charge, which was based on standard increments of service capacity, i.e., $1,200 for 100 amps, $2,400 for 200 amps, $4,800 for 400 amps.

In counts I and II, the plaintiffs alleged that the Builders built single-family residential homes within the defendant's corporate borders. The plaintiffs alleged that the Builders paid the connection fees assessed by the defendant when they obtained building permits. The complaint also alleged that the Builders had an ownership interest in the property when they paid the connection fees. Further, all the Builders, except The Krughoff Company and Havlicek Builders, Inc., alleged that they continued to have a property interest in the homes in which they paid the connection fees. The plaintiffs sought a declaration from the court that the old ordinance was invalid and an order for the return of the fees with interest.

On January 7, 1992, the plaintiffs and John R. Hall & Sons, Inc., filed a complaint for declaratory judgment against the defendant. The complaint challenged the validity and constitutionality of the defendant's ordinance. The trial court denied the defendant's motion to dismiss, but then sua sponte requested that the plaintiffs and John R. Hall & Sons, Inc., amend their complaint. The plaintiffs and John R. Hall & Sons, Inc., filed an amended complaint for declaratory judgment on December 16, 1992. On December 21, 1992, the defendant adopted the new ordinance.

On December 21, 1992, the defendant adopted ordinance 1992-M-71 (the new ordinance) (St. Charles Municipal Code §13.08.135 (passed December 21, 1992)), which amended the old ordinance and charged new customers two separate charges for connection, namely, a service origination charge "of $1,500 plus four and one-half percent (4½%) per annum from January 1, 1993 until paid" and a service enrollment charge. The service origination charge is the cost of the hookup from the individual lot to the electrical facilities within the subdivision. The service enrollment charge is the cost of the hookup from the subdivision to a transformer, plus the cost of processing a service application. The defendant passed the new ordinance in reliance on a study that revealed that the connection charge under the old ordinance did not cover the actual costs of connecting new customers to the system. As a result, the existing ratepayers bore some of the connection costs.

On December 20, 1993, the plaintiffs and John R. Hall & Sons, Inc., filed their second amended complaint for declaratory judgment, challenging the validity of both the new and old ordinances. The plaintiffs and John R. Hall & Sons, Inc., repeated counts I and II contained in their amended complaint and alleged in counts III and IV that, from December 21, 1992, through July 16, 1997, the Builders continued to build single-family residential homes within the defendant's corporate borders. The plaintiffs and John R. Hall & Sons, Inc., further alleged that the Builders paid the connection fees in accordance with the new ordinance and that if they did not pay the connection fees under both the old and new ordinances they would not be able to obtain a building permit, resulting in a disastrous effect on their business. Thus, they paid the fees under protest, compulsion, and duress.

The defendant filed an answer to the second amended complaint and on January 26, 1995, filed a section 2--619(a)(9) motion (735 ILCS 5/2-- 619(a)(9) (West 1994)) to dismiss counts I and II of the complaint, alleging that the plaintiffs lacked standing to challenge the validity and constitutionality of the old ordinance and that the repeal of the old ordinance rendered the counts moot. The motion to dismiss also sought the dismissal as plaintiffs of Northern Illinois Home Builders Association and John R. Hall & Sons, Inc., alleging that they had no standing because they had not paid a connection fee.

The plaintiffs and John R. Hall & Sons, Inc., filed a motion to strike the defendant's motion to dismiss, arguing that the defendant's motion was untimely. On May 9, 1995, after a hearing, the trial court denied the motion to strike the defendant's motion to dismiss and granted the defendant's motion to dismiss counts I and II of the complaint based on the plaintiffs' and John R. Hall's lack of standing. The trial court also dismissed Northern Illinois Home Builders Association from all counts for lack of standing and granted John R. Hall & Sons' motion to voluntarily dismiss.

On June 8, 1995, the defendant filed a motion for partial summary judgment pursuant to section 2--1005 of the Code of Civil Procedure (735 ILCS 5/2--1005 (West 1994)). The motion, directed at the remaining counts III and IV, addressed the sole issue of whether the defendant had the statutory authority to enact and impose electrical connection fees under the new ordinance. The plaintiffs filed a cross-motion for partial summary judgment.

After a hearing on February 29, 1996, the trial court granted the defendant's motion for partial summary judgment and denied the plaintiffs' motion for partial summary judgment. The findings were set forth in a letter opinion. On March 18, 1996, the trial court entered an order reflecting its findings.

On July 16, 1996, the defendant amended its motion for summary judgment directed at the remaining issue of whether the connection fee was reasonable. The trial court granted the motion and dismissed all counts of the plaintiffs' second amended complaint with prejudice. The plaintiffs timely filed this appeal.

Initially, we address the plaintiffs' motion to strike portions of the defendant's brief. The plaintiffs urge us to strike the portion of the defendant's brief that espouses the theory that a contract existed in which the Builders impliedly agreed to pay the connection fee. The plaintiffs argue that the defendant failed to raise the contract issue in the trial court and failed to file complete certified copies of the old and new ordinances.

It is well settled that an appellee may urge any point in support of the judgment on appeal that is supported by the record without regard to whether the point was raised before the trial court. Mayfield v. ACME Barrel Co., 258 Ill. App. 3d 32, 37 (1994). In defendant's motion for partial summary judgment and motion for summary judgment, the defendant alleged that it had the authority to pass the new ordinance. The defendant then attached the procedures used by the defendant in providing electric service. The procedure includes the acceptance of a contract by customers seeking connection to the electric utility service. In addition, the defendant attached two such contracts between the defendant and Joe Keim Builders, Inc., and Sho Deen, Inc. Because the record contains support for the defendant's argument regarding a contract, we deny the plaintiffs' motion to strike this portion of the defendant's brief.

Next, the plaintiffs urge us to strike the portion of the St. Charles Municipal Code that provides that the rules and regulations contained in the ordinance will be part of contracts with customers who purchase electricity from the defendant. An appellate court may take judicial notice of an ordinance raised on appeal by an appellee even though the appellee failed to raise the ordinance in the trial court. Szczurek v. City of Park Ridge, 97 Ill. App. 3d 649, 658 (1981); 735 ILCS 5/8--1001, 8--1002 (West 1996). Thus, we deny the plaintiffs' motion to strike this portion of the defendant's brief.

Lastly, the plaintiffs urge us to strike the portion of the defendant's brief that discusses a trial court decision, West v. Batavia, No. 84--MR--213 (Cir. Ct. Kane Co.). In deciding this case below, the trial court cited No. 84--MR--213 and adopted its reasoning. Because the case is contained in the record and the defendant does not claim that it is binding upon this court, we deny the plaintiffs' motion to strike the ...


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