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The Forest Preserve District of Du Page County v. First National Bank of Franklin Park et al

December 1, 2011

THE FOREST PRESERVE DISTRICT OF DU PAGE COUNTY,
APPELLANT,
v.
FIRST NATIONAL BANK OF FRANKLIN PARK ET AL.,
APPELLEES
(THE STATE OF ILLINOIS EX REL. LISA MADIGAN, INTERVENOR-APPELLANT).



The opinion of the court was delivered by: Justice Thomas

JUSTICE THOMAS delivered the judgment of the court, with opinion.

Chief Justice Kilbride and Justices Freeman, Garman, Karmeier, Burke, and Theis concurred in the judgment and opinion.

OPINION

¶ 1 Plaintiff, the Forest Preserve District of Du Page County (the District), filed a condemnation action against defendants on December 21, 1999. At that time, section 7-121 of the Eminent Domain Act provided that the date of filing the complaint was to be considered the valuation date for purposes of determining just compensation. See 735 ILCS 5/7-121 (West 1998). At a trial held December 12, 2007, nearly eight years after the case was filed, a jury determined that the fair market value of the property on December 21, 1999, was $10.725 million. The circuit court entered judgment on the jury's award for that amount. The appellate court affirmed in part, but vacated the jury's verdict as to the value of the property and remanded for further proceedings to determine if the current value of the property is materially different from the amount of the jury's verdict so that it could be said that the verdict does not reflect just compensation as of the actual date of taking. 401 Ill. App. 3d 966, 1005-06.

¶ 2 Before this court, the parties raise the following questions: (1) whether the date of "taking" is considered the date of valuation listed by statute or instead the date that a plaintiff is given title and the right to possess the property; (2) whether the fifth amendment as interpreted by the United States Supreme Court in Kirby Forest Industries, Inc. v. United States, 467 U.S. 1 (1984), requires a remand under the circumstances of the present case to determine if the value of the property has materially changed despite the traditional date-of-filing rule of valuation applied in Illinois; (3) whether defendants forfeited their right to argue that they were denied just compensation where they did not file a "speedy trial demand" at the outset of the litigation and a significant delay subsequently ensued between the time of the filing the complaint and the condemnation trial; (4) whether defendants forfeited their right to claim a lack of just compensation in reliance upon Kirby by failing to argue prior to trial that the jury should be instructed to base its assessment on a more current date of valuation; (5) whether the appellate court erred in ruling that the District could abandon the condemnation case on remand if it chose; and (6) whether the District failed to negotiate in good faith prior to filing its condemnation complaint.

¶ 3 BACKGROUND

¶ 4 The facts in this case were thoroughly set forth by the appellate court in its opinion below. We summarize only those facts necessary for the resolution of the issues before us. In 1978, Naper Venture, in which defendant Robert Krilich held a dominant interest, applied for the annexation into Naperville of a 456-acre planned unit development (PUD) to be called Country Lakes. The PUD was approved as a special use in connection with the annexation agreement. The PUD contained an existing 150-acre public golf course. Around the golf course were seven areas that were to be developed as residential areas of varying density. Area 1 was already developed at the time of the annexation agreement. By December 1999, areas 2 through 5 had been developed or were in the process of being developed. Areas 6 and 7, which consisted of approximately 54 total acres, had not been developed, and the Summit Development Corporation had a contract pending to purchase these areas (the Summit parcel) for development.

¶ 5 In November 1999, the District decided to acquire the 204 acres comprising the golf course and the Summit parcel. On November 23, 1999, the District's board of commissioners approved an ordinance authorizing the District to negotiate acquisition of the property. The District then sent letters to the two trusts it determined owned the property, offering the trustees a total of $9.27 million and giving them 10 business days to respond before pursuing condemnation proceedings. After a meeting between the two sides, the owners, including Krilich, who was the majority beneficiary under both trusts, rejected the District's offer, but did not make a counteroffer.

¶ 6 The District's board of commissioners then met on December 7, 1999, and considered the negotiations for the property. Noting that neither side had made any further offers or counteroffers since the offer letters on November 23, 1999, the board of commissioners adopted an ordinance finding an inability to agree, revoking authority to negotiate further, and authorizing condemnation of the property. The District sent letters to the two trustees and Summit Development Corporation, enclosing a copy of the December 7 ordinance.

¶ 7 On December 21, 1999, the District filed a complaint to condemn the property. At the time the complaint was filed, there was a dispute over ownership of the property and separate litigation was being conducted to determine ownership. Proceedings in this case were stayed until October 2001 when the ownership suit was resolved. A further delay ensued when Krilich and Edward White disputed among themselves about who had a right to control the defense in the condemnation action. That dispute was finally resolved in Krilich's favor in November 2004.

¶ 8 Once the issues of ownership and control of the litigation were settled, defendants filed a second amended traverse and a motion to dismiss on March 28, 2005, arguing that the trial court lacked jurisdiction and that the condemnation complaint should be dismissed for several reasons. The parties conducted discovery on the issues raised in the traverse. In September 2006, the District filed several motions for partial summary judgment relative to the second amended traverse. One of those motions concerned whether the District had engaged in good-faith negotiations prior to the filing of the condemnation complaint. On December 4, 2006, the trial court granted the District's motions for partial summary judgment, and on January 9, 2007, the court denied defendant's second amended traverse and motion to dismiss.

¶ 9 The case then proceeded through case management and discovery.

Several months prior to trial, on August 3, 2007, defendants filed a motion asking the trial court to schedule a posttrial evidentiary hearing under Kirby Forest Industries, Inc. v. United States, 467 U.S. 1 (1984). The motion alleged that the area in which the property is located had substantially increased in value in the period that had elapsed from the date the condemnation complaint was filed in 1999. In order to afford defendants their constitutional right to just compensation, a posttrial hearing under Kirby would be required, they argued, to determine whether the value of the subject property had materially changed from 1999 until the time that the amount of the condemnation award is eventually placed on deposit by the District sometime after trial.

¶ 10 The trial court heard oral argument on the Kirby motion on November 13, 2007. Defendants' counsel argued that Illinois has a "system in place that does not allow for just compensation." Counsel explained that the statute requires valuation as of the date of filing, but the constitution provides that just compensation be measured as of the date of the taking, which is the date that the government chooses to deposit the amount of the jury award. Counsel argued that Kirby provides a remedy for the problem by allowing for a posttrial hearing to modify the value awarded if a substantial delay has caused a material change in the value of the land.

¶ 11 At the conclusion of the hearing, the trial court denied the motion for a Kirby hearing without taking it under advisement. From the court's comments and questioning of counsel, it is clear that the court believed that Kirby should not be applied to Illinois law where there was no wrongful delay caused by the governmental entity seeking condemnation.

¶ 12 The case was thereafter tried by a jury on December 12, 2007.

The jury determined that the fair market value of the property on December 21, 1999 (the date the condemnation complaint was filed), was $10.725 million. On December 19, 2007, the trial court entered judgment on the jury award. However, the trial court did not grant the District the right to take title and possession of the property. Instead, it only allowed the District to deposit the amount of the jury award with the Du Page County treasurer in order to toll the statutory interest due on the award that would accrue from the date of the jury award to the date the payment was placed on deposit. See 735 ILCS 5/7-108 (West 1998). Noting that "defendants intend to file various post-trial and appellate court pleadings, inclusive of a motion to stay the judgment pending appeal," it found that the District could not take immediate possession of the property and that the vesting of title would have to await a future order of the court. On December 20, 2007, the district paid the judgment and interest to the county treasurer, and those funds have remained on deposit earning interest to defendants since that date.

¶ 13 Defendants subsequently filed a posttrial motion, which again raised the constitutional argument that the just compensation clause of the fifth amendment as interpreted in Kirby required the trial court to hold a hearing to determine the appropriate adjustment to the jury verdict to accommodate for the increase in value from the valuation date of December 19, 1999, to the date of the deposit of the condemnation award on December 20, 2007. In support of their motion, defendants attached as an exhibit an appraisal stating that, as of December 20, 2007, the property was worth a minimum of $25.5 million. The trial court denied defendants' posttrial motion on May 22, 2008. However, nothing in the record indicates that the trial court ever ruled that the District could take title and possession to the property, nor did the court rescind its previous order stating that transfer of title and possession would have to wait for a future order of the court.

¶ 14 Defendants timely appealed to the appellate court, arguing that the trial court erred in denying their posttrial motion for a Kirby hearing. They also argued, inter alia, that the trial court erred in granting the District summary judgment on the issue of whether the District engaged in good-faith negotiations prior to filing the condemnation complaint.

¶ 15 The appellate court noted that defendants' appeal of the Kirby issue raised the following additional issues:

"First, what measure of compensation for the taking of property constitutes 'just compensation' under the fifth amendment? Second, were the defendants denied just compensation in this case? Third, if the defendants were denied just compensation, was this the result of their own choices or actions such that the denial does not offend the constitution? In addition, we asked the parties to submit supplemental briefs on two other issues: are the recent amendments to the Act applicable in this case, and, if they are not, is the old version of the statute constitutional as applied?" 401 Ill. App. 3d at 980-81.

After the appellate court ordered supplemental briefing, defendants served notice on the Attorney General that they were challenging the constitutionality of section 7-121 of the Act as applied. The Attorney General was then granted leave to intervene in the appeal and thereafter filed a brief addressing the supplemental issues.

¶ 16 The appellate court's decision first addressed the issue of good-faith negotiations and concluded that the trial court did not err in granting summary judgment in the District's favor on that issue. 401 Ill. App. 3d at 976. With respect to the Kirby issue, the court held that a hearing was required to determine whether "application of section 7-121 did not provide just compensation in this case." See 401 Ill. App. 3d at 1004. The appellate court vacated the jury's verdict as to the value of the property, subject to a possible reinstatement by the trial court following a hearing on just compensation on remand. 401 Ill. App. 3d at 1006. It found that the District remained free to abandon the condemnation proceeding and withdraw its deposit because the date of taking had not yet occurred. 401 Ill. App. 3d at 1005. It further found that in setting the valuation date to be used in determining just compensation on remand, the date of any new trial, rather than the December 20, 2007, date of deposit, will more closely approximate the date of taking. 401 Ill. App. 3d at 1005.

¶ 17 In resolving the Kirby issue and those related to it, the appellate court began its analysis by discussing the development of the Illinois rule that the date of the filing of the condemnation complaint be used for measuring just compensation. The origins of the rule can be traced to South Park Commissioners v. Dunlevy, 91 Ill. 49, 53 (1878), and it was "firmly established" by the time of this court's 1907 decision in Sanitary District of Chicago v. Chapin, 226 Ill. 499, 503 (1907). This court last addressed the rule in Trustees of Schools of Township No. 37 v. First National Bank of Blue Island, 49 Ill. 2d 408, 411 (1971), one year before the rule was codified in 1972 (Ill. Rev. Stat. 1973, ch. 47, ¶ 9.7).

¶ 18 The appellate court then noted that Blue Island relied upon Chapin and Winkelman v. City of Chicago, 213 Ill. 360, 364 (1904), as support for the rule that the property taken must be valued as of the date of filing unless the government is at fault in causing substantial delay, during which time the value of the land rises substantially. It is only when the government is wholly at fault that the landowner could obtain relief by either seeking damages or moving to dismiss the suit so that the government would have to refile if it still wanted the property, thereby establishing a new valuation date. See 401 Ill. App. 3d at 984-85 (citing Blue Island, 49 Ill. 2d at 411). The appellate court also noted that Blue Island suggested that the landowner might have been able to obtain just compensation that included the four years of delay in the case if he had made a request for a "speedy trial." But the appellate court noted that it was unclear what the phrase "speedy trial" request referred to in the context of a condemnation case. 401 Ill. App. 3d at 996.

¶ 19 The appellate court then found that the fifth amendment, as interpreted in Kirby, required modification of the "fault-based exception" set forth in Blue Island. See 401 Ill. App. 3d at 987. In addressing when a taking occurs, Kirby held that "because the federal government retains its right to decide not to acquire land even after a trial setting the amount of just compensation, the 'date of taking' is the date on which the government actually pays the owner and takes title to the land." 401 Ill. App. 3d at 986 (citing Kirby, 467 U.S. at 12). Kirby further held that " '[h]owever reasonable it may be to designate the date of trial as the date of valuation, if the result of that approach is to provide the owner substantially less than the fair market value of his property on the date the [government] tenders payment, it violates the Fifth Amendment.' " (Emphasis added.) 401 Ill. App. 3d at 987 (quoting Kirby, 467 U.S. at 17).

ΒΆ 20 The appellate court concluded that under Illinois law a taking also does not occur until the date the condemning authority tenders payment for the land and gains the right to title and possession. See 401 Ill. App. 3d at 990. It then rejected the claim that Kirby does not apply to Illinois condemnation law. It found that the fifth amendment to the United States Constitution applies to the states through the due process clause of the fourteenth amendment and requires not only that the process for setting just compensation afford the landowner due process, but also that the result of the ...


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