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LaSalle National Bank v. City of Highland Park

September 29, 2003

LASALLE NATIONAL BANK, AS TRUSTEE OF TRUST NO. B8000213124, ESTHER P. EMMERMAN AND RONALD Z. EMMERMAN, PLAINTIFFS-APPELLANTS,
v.
THE CITY OF HIGHLAND PARK; THE ZONING BOARD OF APPEALS OF THE CITY OF HIGHLAND PARK; STEVEN M. LEVIN, CHAIR, ZONING BOARD OF APPEALS OF THE CITY OF HIGHLAND PARK; RICHARD BECKER, CARY GLENNER, MARC S. LICHTMAN, STEPHEN SICKLE, ELLIOTT WICZER, RICHARD A. WOLFE, MEMBERS, ZONING BOARD OF APPEALS OF THE CITY OF HIGHLAND PARK; PETER WALDOCK, DIRECTOR, HIGHLAND PARK DEPARTMENT OF COMMUNITY DEVELOPMENT; STEPHANIE SODKE, DEPARTMENT OF COMMUNITY DEVELOPMENT, CITY OF HIGHLAND PARK; LARRY KING, FORESTER, CITY OF HIGHLAND PARK; HOWARD AND REBECCA GRILL; AMY AND BRIAN HERZOG; BRUCE FRIEDMAN; HERBERT GOLDBERG; PHILIPPE AND DEBBIE COCHRAN; NEAL MALL; BARBARA AND JOSEPH ESDALE; AUDREY WEINBERG; DEBBIE AND JEFFREY ELIAS; MARIO JEDWABNIK; GAIL BRENNER; LAURA AND ANDREW COHEN; MARVIN MARDER; ROBIN STEINBERG; STUART AND ROSALIE EDELSTEIN; JOAN FRIEDMAN; NED ZALLIK; STEPHAN AND SANDRA SALTZMAN; SANDY GROSSMAN; SCOTT AND LISA GOLANT; MARK SHANBERG; ROBERT AND ROBIN BERENSON; MARLA SKOLNIK; CINDY ZALLIK; PAULA DEBOFSKY; MARCIE AND HOWARD WENDER; LYLA MARDER; MARK DEBOFSKY; DANIEL WEINBERG; AND SARI GOLDBERG, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Lake County. No. 01-MR-703 Honorable Barbara Gilleran Johnson, Judge, Presiding.

The opinion of the court was delivered by: Justice Byrne

UNPUBLISHED

Plaintiffs, LaSalle National Bank, as trustee of trust No. B8000213124, and Esther P. and Ronald Z. Emmerman, appeal the judgment of the circuit court of Lake County in dismissing their four-count complaint against defendants, the City of Highland Park (City), and the Zoning Board of Appeals of the City of Highland Park (Board), et al.,. We affirm.

FACTS

In 1968, plaintiffs Esther P. and Ronald Z. Emmerman purchased two lots at 1635 Eastwood Avenue and 1634 Sherwood Avenue in Highland Park. The property consists of two separately platted, contiguous zoned lots, each consisting of 15,415 square feet in area. At the time plaintiffs purchased the property, a single-family home was constructed on the Eastwood lot and the Sherwood lot was vacant. Also at that time, the minimum lot size for all lots in plaintiffs' zoning district was 40,000 square feet. Before plaintiffs purchased the property, the City's zoning ordinance did not permit, and it continues to deny permission for, the separation of contiguous undersized lots that are held under the same ownership. Section 150.104(A) of the Highland Park Zoning Ordinance of 1997 provides, in relevant part:

"When two or more parcels of land (which may contain a lot or lots of record), are adjacent and one or more of such parcels lack adequate area or width to qualify for a permitted use under the requirements of the zoning district in which such parcels are located, all of such parcels shall be maintained and used as one zoning lot for such use if such parcels have been held in contiguous ownership at any time after May 8, 1960 *** ." Highland Park Zoning Ordinance §150.104(A) (1997).
The provision effectively prevented the building of a single-family home on the Sherwood property.

After plaintiffs acquired the property, the City reduced the minimum lot size zoning requirements for plaintiffs' zoning district to 12,000 square feet. During this time, the City permitted the subdivision of land two lots to the north of plaintiffs' property. These lots are approximately 12,000 square feet and the City granted permission for single-family homes to be built on each lot. However, in April 1970, the City increased the minimum lot size zoning requirements for plaintiffs' zoning district to 20,000 square feet. This lot size restriction has remained to this day.

It is undisputed that the entire parcel is located in zoning classification district R-4, a different district from the lots across the street from the Sherwood lot to the east, which are zoned R-6. The R-4 zoning district contemplates much larger lot sizes and open park land than the R-5 and R-6 zoning districts that surround the R-4 district.

On March 29, 2001, plaintiffs filed a petition requesting a variance to permit the separation of the two lots held in common ownership to allow the development of a single-family home on the Sherwood lot. Following a hearing, the Board found that the openness created by the R-4 district serves a public purpose and should be preserved. The Board also found that plaintiffs did not meet their burden of proving each of the necessary elements required to obtain a variance and voted to deny the petition.

Plaintiffs filed a four-count complaint for administrative review and injunctive relief. The first count seeks judicial review of the Board's decision to deny the variance, and the remaining counts challenge the City's zoning regulation on constitutional grounds. Specifically, in counts II, III, and IV, respectively, plaintiffs claim that the City's zoning regulation, which prohibits plaintiffs from separating the lots and building a single-family home on the Sherwood lot, is unlawful and unconstitutional under the "takings" clause and the equal protection clause of the state and federal constitutions.

The circuit court found that the Board's decision in denying the variance was not against the manifest weight of the evidence and affirmed the order of the Board as to count I of plaintiffs' complaint for administrative review. The circuit court also granted the City's motion to dismiss counts II, III, and IV of plaintiffs' complaint pursuant to section 2--615 of the Code of Civil Procedure (735 ILCS 5/ 2--615 (West 2000)). Plaintiffs timely appeal.

ANALYSIS

1. Administrative Review Claim

Plaintiffs first contend that the Board erred in failing to grant them a variance to build a single-family home on the Sherwood lot. Before turning to the merits of plaintiffs' contention, we first review the applicable standards regarding the review of a decision made by a local zoning board. Under the Administrative Review Law (735 ILCS 5/3--101 et seq. (West 2000)), we review the final decision of the administrative agency and not the decision of the circuit court. Hercules, Inc. v. Department of Revenue, 324 Ill. App. 3d 329, 335 (2001). We consider all questions of law and fact presented by the record (735 ILCS 5/3--110 (West 2000)), and the standard of review applied by this court turns on the proper characterization of questions presented. City of Belvidere v. Illinois State Labor Relations Board, 181 Ill. 2d 191, 204 (1998).

Deference is afforded the agency's findings of fact and they will not be disturbed unless against the manifest weight of the evidence. City of Belvidere, 181 Ill. 2d at 204. Unless we are able to conclude that the agency's findings of fact are against the manifest weight of the evidence, we must accept those findings as prima facie true and correct. 735 ILCS 5/3--110 (West 2000); North Avenue Properties, L.L.C. v. Zoning Board of Appeals, 312 Ill. App. 3d 182, 185 (2000). Agency determinations involving mixed questions of fact and law are also provided a degree of deference and are reviewed pursuant to a clearly erroneous standard. City of Belvidere, 181 Ill. 2d at 205. Determinations of law, conversely, are not afforded deference and are reviewed on a de novo basis. City of Belvidere, 181 Ill. 2d at 205. The party seeking the variance must present affirmative evidence to prove each of the necessary elements required to obtain a variance, even in the absence of opposition. Weinstein v. Zoning Board of Appeals , 312 Ill. App. 3d 460, 464 (2000). Because plaintiffs must prove each of the elements required to obtain a variance, if the manifest weight of the evidence shows that plaintiffs failed to prove any one of the necessary elements, we must affirm the board's decision.

Plaintiffs contend that they proved all of the elements necessary to satisfy the standards for a variance, including that they could not make a reasonable return on their investment absent a variance. We disagree.

Section 150.104(A) provides that the Board must evaluate all variance requests under the factors set forth in section 150.1205 of the Highland Park Zoning Ordinance, and, further, that no request for a variance regarding lots held contiguously per section 150.104(A) shall be granted unless additional criteria are met. Section 150.1205(A)(1) provides, in pertinent part, that the Board shall not grant a variance unless, based on the evidence presented at the hearing, it finds:

"(1) [t]he property in question cannot yield a reasonable return if permitted to be used only under the conditions allowed by the regulations of the zoning district in which it is located; however, the purpose of the variation is not based exclusively upon a desire to make more money from the property." Highland Park Zoning Ordinance §150.1205(A)(1) (1997).
Plaintiffs contended at the hearing, and now on appeal, that they would lose money if they were not allowed to separate the two lots and to develop a single-family home on the Sherwood lot. Plaintiffs asserted, in their testimony at the hearing, that of the $45,000 purchase price for the two lots, they intended to apportion a value of $20,000 to the Sherwood lot, and they cannot make a reasonable return on that investment unless a variance is granted to allow them to build on the Sherwood lot. Plaintiffs base their argument on the assumption that the Board was required as a matter of law to treat the Sherwood lot as a separate investment.

In Tim Thompson, Inc. v. Village of Hinsdale, 247 Ill. App. 3d 863 (1993), we chose to view the plaintiff's property not as three distinct segments, as the plaintiff in that case wanted us to; rather, we chose to view the subject lots together as an entire parcel, as this was supported by the well-pleaded facts that the entire parcel was purchased as a single unit at one time. We concluded as a matter of law that the allegations of the plaintiff's complaint failed to allege any substantial deprivation of an economically viable use, thus defeating its claim. Tim Thompson, 247 Ill. App. 3d at 888.

In this case, the evidence reveals that the Eastwood and Sherwood lots were purchased in a single transaction for a single price. Similar to Tim Thompson, because the lots were purchased together, the Board could likewise legally treat them as a single parcel for purposes of determining economic expectations. The claim that Ronald apportioned $20,000 of the purchase price for the vacant lot and that his testimony was uncontroverted is an issue of credibility and weight, which we may not review. See Weinstein, 312 Ill. App. 3d at 466.

Moreover, the record demonstrates that plaintiffs have received a reasonable return on their entire parcel. Here, the evidence shows that plaintiffs purchased the Eastwood and Sherwood lots in a single transaction in 1968 for the single price of $45,000. Plaintiffs admitted that they could sell the entire parcel and house today for somewhere between $800,000 and $1 million. The evidence further reveals that Ronald twice declined to answer the question of what return plaintiffs expected from their original $45,000 investment. Plaintiffs also testified at the hearing that they had made improvements to their home, but they did not present any supporting documents showing the value of the specific improvements, and Ronald stated that he never looked at his house as an investment or anticipated a return on his investment. No evidence was presented regarding what kind of return other houses in the area enjoyed over the same time period. Given the lack of evidence presented, the Board properly found that plaintiffs failed to carry their burden of demonstrating that they could not receive a reasonable return on the property without a variance allowing a second house to be built.

Furthermore, the evidence reveals that plaintiffs knew that the sale and construction of a home on the Sherwood lot were legally prohibited when they bought the property in 1968, and the Board concluded that this was not a reasonable investment expectation. Plaintiffs assert on appeal that the Supreme Court in Palazzolo v. Rhode Island, 533 U.S. 606, 150 L. Ed. 2d 592, 121 S. Ct. 2448 (2001), has rendered irrelevant the fact that plaintiffs knew that they could not build on the vacant property when they bought it, and therefore, plaintiffs assert that the Board could not properly consider this as an impediment to their right to the reasonable economically viable use of their property. We disagree.

In Palazzolo, the lower court held that the purchaser had no right to challenge regulations predating 1978, when he succeeded to legal ownership of the property. The Supreme Court rejected the lower court's holding that the purchaser was deemed to have notice of an earlier-enacted restriction and therefore was barred from claiming that it effected a taking. Palazzolo, 533 U.S. at 626-28, 150 L. Ed. 2d at 613, 121 S. Ct. at 2462. However, the Supreme Court held that such knowledge was not, ipso facto, an absolute bar. The Court believed that it "would be illogical, and unfair, to bar a regulatory takings claim because of the post-enactment transfer of ownership where the steps necessary to make the claim ripe were not taken, or could not have been taken, by a previous owner." Palazzolo, 533 U.S. at 628, 150 L. Ed. 2d at 614, 121 S. Ct. at 2463; see Burke v. Village of Glenview, 257 Ill. App. 3d 63, 70 (1993) ("[t]he purchaser's knowledge of the zoning restriction *** [i]s not an absolute bar to a zoning challenge").

Thus, while knowledge of a regulation at the time of ownership is not an absolute bar to a zoning challenge, it is proper to consider that the zoning restriction existed at the time of the plaintiff's acquisition in determining whether the plaintiff's investment-backed expectations have been met. "Purchasers who acquire property with the expectation of using it for a purpose not permissible under current zoning restrictions should not expect loss resulting from denial of the proposed use to be a persuasive argument in securing the change." Lapkus Builders, Inc. v. City of Chicago, 30 Ill. 2d 304, 310 (1964); National Advertising Co. v. Village of Downers Grove, 204 Ill. App. 3d 499, 512 (1990). Accordingly, we reject plaintiffs' argument. See Palazzolo, 533 U.S. at 634-36, 150 L. Ed. 2d at 618-19, 121 S. Ct. at 2466-67 (O'Connor, J., concurring).

Plaintiffs next argue that the contiguous ownership provision is invalid as applied to them because it constitutes a denial of reasonable economic use in the context of a neighborhood that has been largely developed under less stringent restrictions when only a very few remaining landowners would be subject to the more restrictive regulations. Plaintiffs first cite Gibson v. Village of Wilmette, 97 Ill. App. 3d 1033 (1981), and Welch v. City of Evanston, 65 Ill. App. 3d 249 (1978), as being "virtually identical" to their case. We find these cases directly contrary to the facts here.

Both decisions concern the issue of whether a lot is buildable, but they are distinguishable because the property owners in each case purchased the land before the zoning ordinance that precluded construction was passed. In Gibson, before the plaintiffs purchased two lots in 1972, they asked the village whether the vacant lot was buildable and received both oral and written assurances that it was. However, under an ordinance passed in 1975, the property was not buildable. Gibson, 97 Ill. App. 3d at 1034. Similarly, in Welch, at the time two lots were purchased in 1954, the zoning laws would have permitted the construction of a single-family home. After the adoption of 1960 zoning amendments, only if the two lots were combined would there be sufficient square footage to allow the construction of one home. Welch, 65 Ill. App. 3d at 250. Here, unlike in Gibson and Welch, plaintiffs conceded that, when they purchased the lots in 1968, they knew that the zoning restriction was applicable to the contiguous lots. See La Grange State Bank v. Village of Glen Ellyn, 227 Ill. App. 3d 308, 318 (1992).

After reviewing the record, we find that the Board's determination that plaintiffs' evidence fails to demonstrate that the property in question cannot yield a reasonable return if permitted to be used only under the conditions allowed by the regulations was not against the manifest ...


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