Vill. of Kirkland v. Kirkland Props. Holdings Co.

2023 IL 128612

221 N.E.3d 300

468 Ill.Dec. 472

The VILLAGE OF KIRKLAND, Appellee,

v.KIRKLAND PROPERTIES HOLDINGS COMPANY, LLC I et al., Appellants.

Docket No. 128612

Supreme Court of Illinois.

Filed May 18, 2023

Colin W. Anderson, of Anderson & Uddin, P.C., of Aurora, for appellants

Michael J. Smoron and Jennifer J. Gibson, of Zukowski, Rogers, Flood & McArdle, of Crystal Lake, for appellee.

OPINION

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

¶ 1 Plaintiff, the Village of Kirkland (Village), filed its third amended complaint against defendants, Kirkland Properties Holdings Company, LLC I, and Kirkland Properties Holdings Company, LLC II (hereinafter KPHCI, KPHCII, and collectively defendants), in the De Kalb County circuit court. In its third amended complaint, the Village alleged that defendants breached a 2003 recorded annexation agreement executed by it and the National Bank and Trust Company of Sycamore as trustee of trust No. 4235000 (Trustee), then legal owner of property now consisting of an annexed 114-acre subdivision. The Village alleged that defendants were subject to the terms of the annexation agreement as successor owners of record to the Trustee when they purchased undeveloped portions of the property from Plank Road, LLC (Plank Road) (not a party to this appeal), which had acquired the property from the Trustee. The Village alleged that defendants breached the annexation agreement by refusing its request for a letter of credit in the amount proportionate to the number of lots defendants owned in the subdivision, to secure completion of roads in the subdivision as it was developed. The Village sought damages for breach of contract or, in the alternative, equitable relief in the form of specific performance.

¶ 2 Defendants moved to dismiss the Village's third amended complaint pursuant to section 2-615 of the Code of Civil Procedure (Code) ( 735 ILCS 5/2-615 (West 2018) ), arguing that, although the annexation agreement was a covenant that ran with the land, it did not confer successor status to an entity that purchased only a portion of the property subject to annexation, as opposed to the whole of the property. See generally Streams Sports Club, Ltd. v. Richmond , 99 Ill. 2d 182, 188, 75 Ill.Dec. 667, 457 N.E.2d 1226 (1983) (covenant that runs with the land is binding on subsequent owners). The circuit court agreed and dismissed the Village's third amended complaint. Having secured the dismissal of the complaint against them, defendants moved for attorney fees pursuant to prevailing-party attorney-fee provisions in the annexation agreement, and the circuit court granted their request.

¶ 3 The Appellate Court, Second District, reversed the circuit court's ruling that defendants were not bound by the terms of the annexation agreement and vacated the award of attorney fees. We hereby affirm the appellate court's decision, reverse the circuit court's decision, and remand for further proceedings consistent with this opinion.

¶ 4 I. BACKGROUND

¶ 5 In reviewing the propriety of a dismissal pursuant to section 2-615 of the Code ( 735 ILCS 5/2-615 (West 2018) ), we accept all well-pleaded facts in the complaint and the reasonable inferences that can be drawn from those facts as true.

Tuite v. Corbitt , 224 Ill. 2d 490, 509, 310 Ill.Dec. 303, 866 N.E.2d 114 (2006). Accordingly, the following facts are drawn from the allegations of the Village's complaint and its attached exhibits.

¶ 6 A. Annexation

¶ 7 On January 31, 2002, Edward Vander-Molen transferred title to real property to the Trustee of the aforementioned trust, the beneficiaries of which consisted of David R. Rood, Barbara L. Rood, Robert D. Rood, and Ann M. Rood. On May 5, 2003, the Village entered into the annexation agreement with the Roods and the Trustee, whereby the Village agreed to annex and incorporate into its municipal boundaries approximately 114.27 acres of property that had been transferred to the trust by Vander-Molen. In exchange, the Roods and the Trustee agreed to develop the property into a residential subdivision, which required the completion of certain public improvements on the property.

¶ 8 The annexation agreement stated that it was executed pursuant to and in accordance with the provisions of article 11, division 15.1, of the Illinois Municipal Code ( 65 ILCS 5/11-15.1-1 to 11-15.1-5 (West 2002) (titled "Annexation Agreements")). The annexation agreement also identified the beneficial owners, the Roods, and the legal owner, the Trust, as the collective "[l]andowner" who desired to annex the "[s]ubject [p]roperty" to the Village and to develop a residential subdivision according to an attached preliminary subdivision plat. The "[s]ubject [p]roperty" was identified as the real estate described in an attached exhibit, which consisted of the 114.27 acres of land located west of the Village's corporate limits.

¶ 9 According to the annexation agreement, the Village had concluded that the annexation of the property into the Village, under the terms and conditions set forth in the annexation agreement, "would further the orderly growth and quality of life of the Village," "enable the Village to control the development of the area," and "serve the best interests of the Village." The annexation agreement provided that

"the development of the [s]ubject [p]roperty for the use as permitted under the [z]oning [o]rdinance of the Village and in accordance with the terms and conditions of this [Annexation] Agreement, will inure to the benefit and improvements of the Village and its residents, *** promote the sound planning and development of the Village[,] and *** otherwise enhance and promote the general welfare of the people of the Village."

¶ 10 Pursuant to section 3 of the annexation agreement, the Village agreed to, within 60 days of the execution of the annexation agreement, enact a valid and binding ordinance annexing the subject property to the Village and rezone the property to single family residential zoning. In section 5 of the annexation agreement, the parties acknowledged that the property would be developed in stages, requiring the submission of plats and plans for each stage or unit.

¶ 11 In the annexation agreement, the landowner agreed to provide "proper storm drains and water main systems" (section 7) and "storm water storage" (section 11) "in accordance with the Village's standards and ordinances." Moreover, the Village agreed that, upon the landowner's proper completion of construction and satisfactory testing of, inter alia , the storm sewer and water main systems (section 7) and the well and water supply and distribution facility (section 9), "the Village shall promptly accept such improvements and thereafter maintain such improvements."

¶ 12 In section 10 of the annexation agreement, the landowner agreed to "construct all roadways required to be developed on the [s]ubject [p]roperty." Pursuant to section 10, the roadways were to be constructed, with certain exceptions, in accordance with the Village's standards and ordinances. Section 10 provided, in pertinent part:

"Prior to the occupancy of any building, the gravel base shall be constructed to the approved thickness. Once 50% of the buildings in a particular phase are occupied, no further occupancy permits shall be issued for that phase until the first layer of the bituminous surface has been installed throughout that phase [i.e. , until the road was complete to a certain stage of development]. Once 80% of the buildings in a particular phase are occupied, no further occupancy permits shall be issued for that phase until the final layer of the bituminous surface has been installed throughout that phase [i.e. , until the road was complete to a certain, later stage of development]. The [l]andowner shall maintain the stone base and shall seal coat the same to control dust if required by [the] Village prior to the installation of the bituminous surface. Landowner shall be responsible for maintenance and snow removal on all roads in the subdivision until said roads are accepted by the Village. Upon the proper completion of the street construction, the Village shall promptly accept such improvements and thereafter maintain such improvements."

¶ 13 Section 13 provided that the landowner shall dedicate the roadways, public improvements, certain water lines, and certain storm sewers to the Village and "[t]he Village shall promptly accept such improvements upon completion of construction *** and thereafter maintain such improvements." Section 14 of the annexation agreement provided as follows:

"In lieu of a construction bond or development bond or bonds, the Village will require an irrevocable letter of credit from a financial institution to guarantee construction and quality of all public facilities to be constructed in any stage or unit of development for which approval is sought. Said letter of credit shall be in the amount of one hundred percent (100%) of the contract costs of construction of all of the public facilities in the unit or stage or one hundred twenty five percent (125%) of [l]andowner’[s] engineer's contract estimate for the unit or stage as approved by the Village [e]ngineer; and said letter of credit shall be payable to the Village.

As the [l]andowner completes items within each letter of credit, subject to approval by the Village [e]ngineer, the letter of credit shall be abated accordingly. Landowner agrees to cause the letter of credit to be extended to cover the actual time of construction."

¶ 14 Section 27 provided for a 20-year term for the annexation agreement, and section 28, subsection I, stated:

"All terms and provisions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto, their heirs, executors, administrators, successors[,] and assigns."

¶ 15 The annexation agreement was recorded with the De Kalb County Recorder's Office. Pursuant to the provisions of the annexation agreement, the...