The Village of Campton Hills v. Comcast of Illinois V, Inc.

          Appeal from the Circuit Court of Kane County. Nos. 13-L-134 13-MR-279, Honorable Mark A. Pheanis, Judge, Presiding.

          McLAREN JUSTICE delivered the judgment of the court, with opinion. Justices Jorgensen and Bridges concurred in the judgment and opinion.

          OPINION

          McLAREN JUSTICE.

         ¶ 1 This action involves a dispute regarding which government unit is entitled to certain cable franchise fees from Comcast of Illinois V, Inc. (Comcast) for 2008 through 2012. The Village of Campton Hills (Village) filed suit against Comcast to recover the fees. Comcast filed a declaratory judgment action against the Village and the County of Kane (County) to decide the question, as Comcast had paid fees to both the County and the Village at different times during the five-year period. The County filed a counterclaim against Comcast for recovery of unpaid fees and for indemnification. On cross-motions for summary judgment, the trial court determined that, because the Village had incorporated in 2007, it was entitled to the fees for the contested five-year period, and the court ordered Comcast to pay $283, 644.44, the amount Comcast owed for that period. The trial court also ordered the County to reimburse Comcast $410, 243.73 for the fees it paid the County during the five-year period. The trial court denied the County's claim for indemnification against Comcast.

         ¶ 2 The County appeals, arguing that the trial court exceeded its authority by reforming the contract between it and Comcast and that the trial court erred by denying the County's indemnification claim against Comcast. The Village cross-appeals, arguing that the trial court erred by determining that incorporation of a municipality and annexation have the same meaning pursuant to section 5-1095 of the Counties Code (55 ILCS 5/5-1095 (West 2016)). For the reasons that follow, we affirm the trial court's judgment and we dismiss the Village's cross-appeal.

         ¶ 3 I. BACKGROUND

         ¶ 4 In March 1988, the County passed Kane County Ordinance No. 88-31 (eff. Mar. 8, 1988) (Ordinance No. 88-31) establishing a franchise framework for cable services in unincorporated areas of the County, which included the unincorporated area that later became the Village. Comcast is the successor in interest to the original franchise named in Ordinance No. 88-31.

         ¶ 5 Section 11(a) of Ordinance No. 88-31 provided in part:

"The payments required under this section shall continue to the length and extent allowed by law even though all or part of its designated area becomes incorporated by a municipality within the effective term of this ordinance." Kane County Ordinance No. 88-31 (eff. Mar. 8, 1988).

         Section 13 of Ordinance No. 88-31 provided that "[t]his ordinance shall remain in full force and effect until November 2003." Id. Beginning in November 2004, the Kane County Board passed annual resolutions purporting to extend Ordinance No. 88-31.

         ¶ 6 In April 2007, the Village was incorporated. On December 31, 2007, the Village and Comcast entered into a franchise agreement, effective January 1, 2008.

         ¶ 7 In March 2013, the Village filed a complaint against Comcast for recovery of unpaid franchise fees.^[1] Later that same month, Comcast filed a declaratory judgment action against the Village and the County to determine which party was entitled to the franchise fees Comcast had paid to both parties for the years 2008 through 2012.^[2]

         ¶ 8 In May 2013 the County filed a counterclaim against Comcast for recovery of unpaid franchise fees and for indemnification. The County alleged the following:

"Comcast has been and is still subject to Ordinance 88-31. It has operated under the Ordinance for many years and continues to do so today. In fact, Comcast officials continued to negotiate with the County about entering into a 'franchise agreement' through 2011 and 2012 until the County learned Comcast failed to pay certain franchise fees in August 2012. *** Under the terms of the Ordinance, State law, and custom [and] practice, [Comcast] had an obligation to [pay franchise fees] for a five year period commencing on January 16, 2008. It did so, unbeknownst to the County, until it paid only partial franchise fees in 2011, and [paid] no franchise fees in 2012 or 2013."

         ¶ 9 The County further alleged that it was entitled to "expenses including audit expenses, county staff time, costs and reasonable attorney fees for which Comcast is responsible [(pursuant to Ordinance 88-31, section 4, entitled 'OPERATOR LIABILITY AND INDEMNIFICATION')]." The County sought the following: (a) the unpaid franchise fees; (b) reasonable attorney fees, costs, the value of time invested by County staff, and other out-of-pocket expenses incurred by the County; (c) prejudgment interest; and (d) other relief as determined by the court. The County attached Ordinance No. 88-31 and the resolutions purporting to extend Ordinance No. 88-31. The resolutions are listed below:

RESOLUTION NUMBER	DATE PASSED	EXPIRATION DATE
04-408	November 9, 2004	November 30, 2005
06-436	November 14, 2006	November 30, 2007
07-408	December 11, 2007	November 30, 2008
08-345	November 12, 2008	November 30, 2009
11-342	November 8, 2011	November 30, 2012
12-367	December 11, 2012	November 30, 2013

         The trial court consolidated the cases.

         ¶ 10 In August 2016, the Village filed a motion for partial summary judgment, arguing the following. Based on Ordinance No. 88-31, the County's franchise originally expired in November 2003 and, although the County extended the franchise, it expired when the Village granted a franchise to Comcast on December 31, 2007. Section 5-1095(a) of the Counties Code (55 ILCS 5/5-1095(a) (West 2016)) limited the County's franchise authority to the territory outside the boundaries of the Village, a municipality.

         ¶ 11 Section 5-1095(a) of the Counties Code provides in relevant part:

"(a) The County Board may license, tax or franchise the business of operating a community antenna television system or systems within the County and outside of a municipality, as defined in Section 1-1-2 of the Illinois Municipal Code.

When an area is annexed to a municipality, the annexing municipality shall thereby become the franchising authority with respect to that portion of any community antenna television system that, immediately before annexation, had provided cable television services within the annexed area under a franchise granted by the county, and the owner of that community antenna television system shall thereby be authorized to provide cable television services within the annexed area under the terms and provisions of the existing franchise. In that instance, the franchise shall remain in effect until, by its terms, it expires, except that any franchise fees payable under the franchise shall be payable only to the county for a period of 5 years or until, by its terms, the franchise expires, whichever occurs first. After the 5 year period, any franchise fees payable under the franchise shall be paid to the annexing municipality." Id.

         ¶ 12 The Village also argued that annexation is not the same as incorporation and that, thus, the five-year period provided in section 5-1095 of the Counties Code did not apply. The Village asked the trial court to order Comcast to pay the franchise fees that were improperly paid to the County, to be established based on the gross revenue allocable to ...