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Dedic v. Board of North Shore Towers Condominium Association

Court of Appeals of Illinois, First District, Fourth Division

May 17, 2018

SELMA DEDIC, Plaintiff-Appellant,

          Appeal from the Circuit Court of Cook County 16-CH-14099, Honorable Diane Joan Larsen, Judge Presiding

          McBRIDE JUSTICE delivered the judgment of the court, with opinion. Presiding Justice Burke and Justice Gordon concurred in the judgment and opinion.


          McBRIDE JUSTICE.

         ¶ 1 Condominium unit owner Selma Dedic sought a permanent injunction to prevent the board of managers of North Shore Towers Condominium Association (Board) from levying a $1.01 million special assessment to remediate all 90 balconies in her residential condominium complex in Skokie, Illinois, and from executing a contract to perform the work.[1] Dedic contended the Board could not proceed until it held a referendum vote of the unit owners. The community's declaration of condominium ownership and the Condominium Property Act (Act) provide that the imposition of a special assessment of this magnitude may be nullified by an owner referendum. 765 ILCS 605/18(a)(8)(ii) (West 2014) (20% of condominium association members may demand a referendum of a large special assessment, and unless a majority of voters reject the assessment, it is ratified). However, regardless of the size of a special assessment, if it addresses an "emergenc[y]" or is "mandated by law, " then owners are not entitled to vote. 765 ILCS 605/18(a)(8)(ii), (iv) (West 2014). It is undisputed that Dedic's balcony, situated within an interior courtyard of the 40-year-old condominium complex, had not deteriorated to the extent that it posed an imminent safety concern to her. After a two-day bench trial, the circuit court judge found that the railings of 56 of the 90 balconies could not withstand the 200-pound minimum point load required by local building code and, thus, remediation was an "emergency" and was also "mandated by law." On appeal, Dedic contends the evidence showed that only a handful of the balconies actually presented an immediate danger, that a general refurbishment of the balconies may be prudent and a sign of good property management but is not an "emergency, " and that, until the Board undertook "extensive repairs, " it would not be "mandated by law" to retrofit or replace the balcony railings so that their height and spindle spacing conformed with a new or updated building code.

         ¶ 2 The Board adopted the special assessment on September 21, 2016, based on competitive bids, which had been received in June and August 2016, and the Board intended to proceed with immediate repairs of the most critical balconies before the arrival of winter weather. However, Dedic and 21 other unit owners petitioned the Board on October 4, 2016, to hold a referendum. Section 14(g) of the North Shore Towers condominium association declaration of condominium ownership allows unit owners to call a referendum vote on any special assessment passed by the Board that exceeds 115% of the sum of the prior year's regular and special assessments. That section states:

"(g) Special Assessment. The Board may levy a special assessment (1) to pay (or to build up reserves to pay) extraordinary expenses incurred (or to be incurred) by the Association for a specific purpose including, without limitation, to make additions, alterations or improvements to the Common Elements, *** or (4) to cover the cost of an emergency. Any special assessment, which will require the aggregate payment with respect to a Unit which results in a sum or all regular separate assessments payable in the current fiscal year exceeding 115% of the sum of all regular and special assessments payable during the preceding fiscal year, the Board, upon written petition of the Unit Owners with twenty percent (20%) of the votes of the Association delivered to the Board within fourteen (14) days of the Board action, shall call a meeting of the Unit Owners within thirty (30) days of the date of delivery of the petition to consider the special assessment; unless a majority of the total votes of the Unit Owners are cast at the meeting to reject the special assessment, it is ratified. Special assessments related to emergencies or mandated by law may be adopted by the Board without Unit Owner approval and will not be subject to the Unit Owners' right to petition as mentioned above. Each Owner shall be responsible for the payment of the amount of the special assessment multiplied by the Unit's Undivided Interest [in the Common Elements appurtenant to a Unit as allocated in the original Declaration]." (Emphasis added.)

         ¶ 3 Section 14(h) of the declaration further addresses emergency special assessments and defines the term "emergency, " stating:

"(h) Emergencies. The Board may levy a special assessment for expenditures related to emergencies or mandated by law, without being subject to Unit Owner approval of [or] the Unit Owners' right to petition as mentioned in section (g) above. An emergency is defined as an immediate danger to the structural integrity of the Common Elements or to the life, health, safety or property of the Unit Owners."

         ¶ 4 These provisions are consistent with the Act's general rules concerning the minimum content of condominium bylaws. Section 18(a)(8) of the Act stated in relevant part:

"(ii) that except as provided in subsection (iv) below, if an adopted budget or any separate assessment adopted by the board would result in the sum of all regular and separate assessments payable in the current fiscal year exceeding 115% of the sum of all regular and separate assessments payable during the preceding fiscal year, the board of managers, upon written petition by unit owners with 20 percent of the votes of the association delivered to the board within 14 days of the board action, shall call a meeting of the unit owners within 30 days of the date of delivery of the petition to consider the budget or separate assessment; unless a majority of the total votes of the unit owners are cast at the meeting to reject the budget or separate assessment, it is ratified, *** (iv) that separate assessments for expenditures relating to emergencies or mandated by law may be adopted by the board of managers without being subject to unit owner approval or the provisions of item (ii) above or item (v) below. As used herein, 'emergency' means an immediate danger to the structural integrity of the common elements or to the life, health, safety or property of the unit owners ***[.]" (Emphases added.) 765 ILCS 605/18(a)(8)(ii), (iv) (West 2014).

         ¶ 5 The Board declined to schedule a unit owners' vote. Attorney Kerry T. Bartell, who specializes in Illinois community association law, sent Dedic an explanatory letter, stating in part:

"It is the opinion of [the licensed, independent structural engineering firm engaged by the Board] that a number of the balconies are unsafe for use by the homeowners, and [this law firm] understand[s] that the Board has already advised those owners to refrain from using them until the repairs can be completed. This is an immediate life and safety hazard for the property and we understand it affects many of the balconies. Pursuant to the Act, this is an emergency repair and therefore, the petition that you submitted is ineffective and not appropriate. Accordingly, the Board will not be calling a meeting of the owners to vote on the rejection of the special assessment since this remedy is not available to you at this time."

         ¶ 6 On October 27, 2016, Dedic filed, in Cook County circuit court, her two-count complaint for preliminary and permanent injunctive relief in which she alleged that the Board violated both the condominium declaration and the Act because "approximately 96% of the contemplated work is not required to be, nor is it, 'immediate' " and it does not constitute an "emergency." Dedic further alleged she had been deprived of "a 'due process' or voting right" under the condominium declaration and the Act. She asked the court to prevent the implementation of the special assessment until a unit owner referendum had been conducted and to prevent the Board from entering into any contract to repair, replace, or perform work on balconies not in need of immediate repair. After the Board filed an answer denying the material allegations, the parties abbreviated their discovery and filed stipulated facts and joint trial exhibits to be used at the hearing on Dedic's motion for a preliminary injunction. There was no dispute over the qualifications of the opposing structural engineering experts, and the joint exhibits included the engineers' reports and deposition transcripts. When the hearing began, Dedic proposed that her motion be treated as one for a permanent, rather than preliminary, injunction, and with the Board's agreement, the judge ruled that Dedic would be held to the higher standard of proving the merits of her claim. We will set out the undisputed facts before summarizing the trial testimony and the court's ruling.

         ¶ 7 North Shore Towers is a 90-unit, residential condominium development in Skokie, consisting of two, six-story buildings. The property is situated at the intersection of Gross Point Road and Golf Road, and the buildings' addresses are 9558 and 9560 Gross Point Road. The complex was developed in 1979, and the buildings were nearing 40 years of age in early 2015 when the Board received complaints about the condition of certain balconies. Each condo has two or three bedrooms and an appurtenant balcony. The balconies each measure approximately 23 feet by 5 feet, with some variation among the units, and they are considered limited common elements of the property.

         ¶ 8 The condominium declaration and Act require the Board to provide for the operation, care, upkeep, maintenance, replacement, and improvement of the common elements. 765 ILCS 605/18.4(a) (West 2014). The Board may levy and spend special assessments to pay for the common benefit of all the owners. 765 ILCS 605/18.4(c) (West 2014). The members and officers of the Board must exercise due care in the exercise of their duties and are held to be fiduciaries to the unit owners. 765 ILCS 605/18.4 (West 2014).

         ¶ 9 In the spring of 2015, the Board retained the engineering and architectural firm of Wiss, Janney, Elstner Associates, Inc., to evaluate the condition of the aging balconies. Licensed structural engineer Tracy R. Naso, who is an associate principal and project manager at the engineering firm, supervised the project and authored a report dated July 14, 2015, setting out the firm's observations and recommendations.

         ¶ 10 Naso's report indicated that she earned a bachelor of science degree in civil engineering from the University of Kentucky in 2003 and a master of science in structural engineering from the University of Illinois at Urbana-Champaign in 2004. Naso "specializes in the investigation and repair of reinforced concrete structures, including conventional, post-tensioned, prestressed, and antiquated systems" and has experience with "tunnels, parking structures, plazas, stadiums, pools, and highrise towers." Naso also "designs structural repairs for the remediation and strengthening of new and existing structures, develops construction documents, and provides construction period observation and administration services for the implementation of repair designs."

         ¶ 11 Naso documented that her firm's inspections at North Shore Towers had begun in response to the reports of four unit owners regarding the condition of their balcony floors or handrails. In April and May 2015, Naso and her team of engineers completed a "close-up" inspection of units 407B, 505B, 602B, and 603B in the 9560 Gross Point Road building and used binoculars to conduct "a visual review from grade" of all the balconies in both condo buildings. Naso, who had experience in this type of evaluation, averred that "[v]isual inspection of balconies from the ground, using binoculars, is a customary method used in the industry to assess structures like North Shore Towers' balconies."

         ¶ 12 After the report and passage of the special assessment, additional owners asked for closer inspections of their balconies. In November 2015, one of Naso's team members, Dick Arnold, returned to the site and stood on and inspected an additional 39 balconies. Naso did not prepare a second written report but was in communication with the Board and also attended some board meetings during this time frame regarding how to best address the identified problems. Naso subsequently completed an affidavit dated March 3, 2017, in connection with this litigation.

         ¶ 13 In her July 2015 report, Naso described the balcony construction as corrugated steel decking, which was supported on floor joists that cantilevered out from the building structure. A steel channel had been installed around the perimeter edge of each balcony, and the steel pan was then filled with concrete. The concrete and steel base was shielded by a green waterproofing membrane, which covered the top of the balcony and had a short return up the exterior of the building's masonry veneer. Six steel posts had been welded into the steel channel installed around the perimeter of the balcony, and then six vertical anchors were fitted over the posts and secured with screws. From there, a prefabricated aluminum railing was anchored by screws into the six vertical posts and into the masonry. The top height of the rails was 41 inches, with a 4-inch gap between the top of the balcony slab and the bottom rail. The vertical spindles were spaced 6 inches apart.

         ¶ 14 Naso documented bubbling, peeling, lifting, and cracking in the waterproofing membranes of the four balconies that had prompted the investigation and been available for "close-up investigation." She indicated that, once water penetrated beneath the membrane, it became trapped, the long-term exposure to moisture caused the steel edge channel to corrode, built-up rust caused the edge channel to rotate outward, and the attached hand railing then also rotated ...

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