Village of Hebron v. J&L Contractors, Inc. , 2021 IL App (2d) 200124-U ( 2021 )

2021 IL App (2d) 200124-UNos. 2-20-0124 & 2-20-0129 cons.
Order filed December 21, 2021
NOTICE: This order was filed under Supreme Court Rule 23(b) and is not precedent
except in the limited circumstances allowed under Rule 23(e)(l).
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
______________________________________________________________________________
THE VILLAGE OF HEBRON, ) Appeal from the Circuit Court
) of McHenry County.
Plaintiff and Third-Party Defendant- )
Appellant and Cross-Appellee, )
)
v. ) No. 15 LA 129)
J & L CONTRACTORS, INC., )
)
Defendant and Third-Party Plaintiff- )
Appellee and Cross-Appellant )
) Honorable
(Kennedy Homes Limited Partnership, Third- ) Thomas A. Meyer
Party Plaintiff and Third-Party Defendant). ) Judge, Presiding
______________________________________________________________________________
JUSTICE BIRKETT delivered the judgment of the court.
Justices Schostok and Hudson concurred in the judgment.
ORDER
¶1 Held: The circuit court erred in granting the Village’s motion for partial summary
judgment finding that a bulk purchaser of residential lots was the successor “Owner” under
an annexation agreement. The agreement provided unambiguous conditions for the
transfer of the “Owner’s” developer obligations to a purchaser, but no evidence was
presented to demonstrate that the conditions were satisfied. Therefore, we reverse and
remand for further proceedings.
¶2 The Village of Hebron (Village) entered into an annexation agreement (Annexation
Agreement or Agreement) with LaSalle Bank N.A., as trustee under a trust agreement dated July
2021 IL App (2d) 200124-U28, 1994, and known as Trust No. 118757-1-0 (the trustee), to develop a residential subdivision.
The Agreement identified the trustee as “the Owner” and outlined various responsibilities of “the
Owner,” including snowplowing the roads in the subdivision and obtaining a letter of credit
guaranteeing completion of the streets and other public and private improvements.
¶3 The trustee conveyed a portion of the property to Kennedy Homes Limited Partnership
(Kennedy Homes), and a “First Amendment to an Annexation Agreement” (Amendment) was
executed, in which Kennedy Homes expressly replaced the trustee as “the Owner” and agreed to
assume all of its obligations for the property. Kennedy Homes’ lots were foreclosed on during the
2008 housing market crash, and a receiver was appointed. After selling several lots to individual
purchasers, the receiver sold the remainder of the development to J&L Contractors, Inc. (JLC).
¶4 The Village brought suit against JLC for breach of the Annexation Agreement for failure
to post a letter of credit and seeking declaratory relief that JLC is obligated to snowplow the roads.
The parties filed cross-motions for summary judgment on the issue of whether JLC was the
successor Owner, and the Village prevailed. JLC later moved for summary judgment on the
grounds of res judicata, arguing that the Village’s breach of contract claim was barred by a small
claims action that the Village dismissed in 2009 against Kennedy Homes, wherein it alleged that
Kennedy Homes breached the Annexation Agreement and Amendment by “failing to maintain the
agreed upon security for improvements.” The circuit court granted JLC’s motion and barred the
Village’s breach of contract claim. The parties cross-appealed. In JLC’s appeal (No. 2-20-0129),
we reverse and remand. Based on this resolution, the Village’s cross-appeal (No. 2-20-0124) is
moot, and we therefore dismiss it.
¶5 I. BACKGROUND
¶6 On August 30, 2004, the Village and the trustee, as the then-owner of record of a plot of
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2021 IL App (2d) 200124-Uvacant farmland (trust property) contiguous to Village borders, entered into the Annexation
Agreement to develop what would become a residential subdivision known as the Trails of Hebron.
The Agreement identified the trustee as “the ‘Owner,’ ” upon which it imposed various obligations
for the development of the trust property. Relevant to this appeal, the agreement requires the
Owner to, prior to passage of a final plat for all or any portion of the subdivision, “deposit with
the Village a letter of credit guaranteeing the completion of the streets and other public and private
improvements.” It also makes clear that the Owner is “responsible for maintaining such roads,
including but not limited to, street cleaning and snow plowing,” until the Village’s acceptance of
the roads. In the event the Owner fails to snowplow, maintain, or remove debris from the roads,
the Agreement provides that the Village may arrange for such services, subject to reimbursement
by the Owner.
¶7 The trustee sold to Kennedy Homes a portion of the trust property (Kennedy Property). On
September 19, 2005, the Village and Kennedy Homes entered into the Amendment, whereby
certain changes were made to the Agreement. The Amendment designated Kennedy Homes as
“the ‘Owner,’” and recognized that the trustee “sold a portion of the [trust property] and Kennedy
Homes *** is now the sole and exclusive title holder and owner of record of the Kennedy
property.” Like the Agreement, the Amendment required Kennedy Homes, as “the Owner,” to
provide an irrevocable letter of credit to the Village to ensure completion of certain improvements
within the subdivision. Specifically, the Amendment stated that “the Owner, its agents, assigns
and successors, shall guarantee the performance and fulfillment of any such public or private
improvement requirements by submitting an irrevocable letter of credit in favor of the Village.
*** Upon completion of all improvements and acceptance by the Village, the letter of credit shall
be released.” Kennedy Homes thereafter provided letters of credit to the Village beginning in
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2021 IL App (2d) 200124-USeptember 2005, which expired in March 2008. The Amendment did not alter the Owner’s
obligations to maintain the roads.
¶8 The final paragraph in the Amendment states that the Village “hereby consents to the sale
of the Kennedy Property from [the trustee] to the [Kennedy Homes].” It continues that “the Owner
agrees to assume all obligations of [the trustee] relative to the Kennedy Property and to comply
with this First Agreement [sic], the Agreement, the Village’s Subdivision Ordinance ***, and the
Illinois Plat Act (765 ILCS 201/1 et seq.).” Both the Annexation Agreement and the Amendment
were approved by Village ordinance pursuant to the procedures set forth in section 11-15.1-1 of
the Illinois Municipal Code (Municipal Code) (65 ILCS 5/11-15.1-1 (West 2004)), which
authorizes municipalities “to enter into an annexation agreement with one or more of the owners
of record of land in unincorporated territory.” From September 2007 to February 2008, Kennedy
Homes conveyed to approximately fifteen non-party owners via warranty deed different portions
of the Kennedy Property as individual lots.
¶9 In June 2008, Bank of Montreal initiated foreclosure proceedings against Kennedy Homes
for the remainder of the Kennedy Property, and a receiver was appointed. The Village was not
named as a defendant or otherwise a party to the foreclosure litigation. The record demonstrates
that the Village was aware both of the foreclosure proceedings and of the fact that a receiver was
appointed regarding the remainder of the Kennedy Property, as reflected in Village Board’s
meeting minutes from August 11, 2008. Beginning in November 2008, the receiver conveyed to
three additional non-party owners portions of the Kennedy Property as individual lots. The
receiver eventually placed the remaining Kennedy Property lots (subject property) up for auction.
¶ 10 On September 26, 2013, the foreclosure court entered an order approving the sale of the
subject property to JLC. The order approving sale reflects that JLC paid $214,000 for the subject
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2021 IL App (2d) 200124-Uproperty and that the purchase and sales contract “is approved in all respects and made free and
clear of all liens and interests.” On October 3, 2013, the receiver executed a receiver’s deed
conveying the subject property to JLC. In total, the receiver transferred 138 of the 174 platted lots
that comprised phase I of the Trails of Hebron to JLC
¶ 11 On April 20, 2015, the Village filed a two-count complaint against JLC for breach of the
Annexation Agreement. It alleged that JLC was the present owner of record of the subject
property, and that JLC “is the successor Owner to the Trust and Kennedy Homes relative to the
Subject Property.” Count one alleged breach of the Agreement based on JLC’s refusal to place a
letter of credit or other security or bond with the Village to secure completion of the roads and
other infrastructure within the Trails of Hebron. Count two sought declaratory judgment that,
under the Agreement, JLC was liable for snowplowing the subdivision’s roads. The Village
stressed certain provisions in the Agreement it argued had bearing on JLC’s liability to assume
Kennedy Homes’ obligations as the successor “Owner.” It also alleged that JLC had paid the
Village to snowplow the road within the Trails of Hebron during the 2014-2015 winter season.
¶ 12 On June 4, 2015, JLC answered the Village’s complaint. It admitted that it was present
owner of the subject property, that it had paid the Village to snowplow the roads for the 2014-2015
winter season, and that the Village had not yet accepted the roads. However, it denied that it was
“the successor Owner to the Trust and Kennedy Homes relative to the Subject Property.”
¶ 13 On July 15, 2015, the Village moved for partial summary judgment on both counts of its
complaint. It argued that “JLC is a successor owner” and “owns the majority of lots within the
Trails of Hebron,” such that “the Agreement is binding on JLC as a successor owner.” It requested,
among other relief, that the circuit court find that JLC (1) is bound by the Agreement as Kennedy
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2021 IL App (2d) 200124-UHomes’ successor, (2) breached the Agreement by failing to post security, and (3) was responsible
for snowplowing and maintaining the roads.
¶ 14 On October 16, 2015, JLC filed a combined cross-motion for summary judgment and
response to the Village’s motion. It argued that it was not “the Owner” because the contractual
conditions set forth in the Agreement that provide how to transfer the obligations of “the Owner,”
or Kennedy Homes, to a purchaser were not satisfied. It stressed that the Agreement and
Amendment distinguish between (1) “the Owner,” who is responsible for certain affirmative
developer obligations, and (2) owners who purchase portions of the trust property subject to the
Annexation Agreement and Amendment. JLC argued that it fell into the latter category, and that
it was one of many purchasers in the Trails of Hebron, but not “the Owner” as contemplated in the
Agreement or the Amendment. It additionally argued that the Village’s was attempting to recover
from JLC what it should have pursued against Kennedy Homes, because the final letter of credit
provided by Kennedy Homes had expired five years before JLC acquired its interest in the subject
property. The circuit court denied JLC’s cross-motion for summary judgment on March 15, 2016.
¶ 15 JLC also filed a two-count counterclaim. Count one alleged that the Village breached the
Annexation Agreement “by demanding and inducing [JLC] to pay for snowplowing services,”
rather than seek reimbursement from “the Owner,” which was identified in the Agreement as the
trustee and in the Amendment as Kennedy Homes. Count two sought, in the alternative, rescission
of the contracts with the Village for snowplowing services. It sought judgment in the amount it
paid the Village for snowplowing services when it “acquiesced to the Village’s demands” to do
so.
¶ 16 On November 13, 2015, the Village moved for judgment on the pleadings relative to JLC’s
counterclaim, and it attached to the motion the agreements that JLC entered into with the Village
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2021 IL App (2d) 200124-Ufor snowplowing. It argued that nothing in the Agreement required the Village to pay for snow
removal or repay sums that JLC voluntarily paid the Village for that service. It also asserted that
JLC waived its claim by entering into the written contracts for snow removal that postdated the
Agreement, and that JCL’s count one was barred by the voluntary payment doctrine. Concerning
count two, the Village argued that JLC’s argument was rooted in alleged misrepresentations made
by the Village, but JLC’s own pleadings demonstrated that it would be unable to prove the required
elements for an equitable claim of recission.
¶ 17 On March 24, 2016, the circuit court granted the Village’s motion for partial summary
judgment. The court found that JLC “is bound by the Annexation Agreement as the Owner and
as the sole successor to Kennedy Homes,” and that JLC had “all the obligations to the Village
under the Annexation Agreement which Kennedy [Homes] had when it was the Owner under the
Annexation Agreement, with respect to the property acquired by [JLC] from Kennedy [Homes].”
The circuit court noted that JLC purchased “everything that Kennedy [Homes] owned after
Kennedy Homes had sold off some properties to individual homeowners.” It also stated that JLC
exercised control over the subdivision by paying for snowplowing services and requesting police
protection for the subdivision. As to count one, the circuit court found that JLC breached the
Agreement by failing to post security. Regarding count two, it found that JLC was obligated under
the Agreement to snowplow and maintain the roads. The circuit court did not rule on damages
because the parties did not brief or present evidence on damages. Instead, it ruled as to liability
under the Agreement. It stated that “[t]he Village asked that I enter summary judgment specifically
finding that the Agreement is binding on *** [JLC], and I am in agreement with the Village’s
position and will so find.”
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2021 IL App (2d) 200124-U¶ 18 On June 15, 2016, in light of its finding that JLC was “the successor Owner,” the circuit
court granted the Village’s motion for judgment on the pleadings concerning both counts of JLC’s
counterclaim.
¶ 19 On August 25, 2016, the circuit court granted JLC leave to amend its answer to allow it to
plead the affirmative defenses of waiver, laches, satisfaction, and set off. It also allowed JLC to
amend its previous admission that the Village had not yet accepted the roads, “with the caveat that
such amendment only be used as to the issue of damages and cannot be used as to against rulings
already made by the Court.” Following this ruling, the parties litigated JLC’s affirmative defenses.
¶ 20 On September 16, 2016, while the parties litigated JLC’s affirmative defenses, the Village
moved to compel specific performance of the Agreement concerning the letter of credit. It relied
on the circuit court’s prior finding that JLC was “the Owner” and that JLC breached by failing to
post security for the improvements. The Village noted that Kennedy Homes had previously filed
an irrevocable letter of credit in the amount of $2,017,774 (Kennedy LOC), that the Village in
January 2008 approved a reduction in the Kennedy LOC to $967,542.63, but that the Kennedy
LOC expired on March 16, 2008. The Village argued that the expiration of the Kennedy LOC
violated the Agreement, and that specific performance was an appropriate remedy. On March 8,
2017, the circuit court granted the motion but declined to set the amount of the letter of credit or
order JLC to file a letter of credit until it could determine the appropriate amount.
¶ 21 The following month, on October 12, 2016, the Village moved to compel JLC to snowplow
the roads in the subdivision. Like its prior motion to compel, the Village stressed the circuit court’s
March 24, 2016, finding that JLC was the successor “Owner,” and was thus obligated under the
Agreement to snowplow the roads until the Village’s acceptance of the roads. It also noted that
JLC admitted in its answer that the Village had not yet accepted the road in its answer. The circuit
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2021 IL App (2d) 200124-Ucourt granted the motion on December 14, 2016, but the written order provided that “final
judgment is deferred at this time.”
¶ 22 On April 26, 2019, JLC filed a “motion for summary judgment as to res judicata.” It
argued that count one of the Village’s complaint was precluded by a 2009 small claims action
seeking attorney’s fees filed by the Village against Kennedy Homes, which was filed during the
pendency of the foreclosure proceedings. The motion also noted that on March 2, 2009, before it
filed its small claims complaint, the Village sent Kennedy Homes a letter regarding its failure to
replace the expired letter of credit and requested that a new letter of credit be issued. The Village
filed its small claims complaint against Kennedy Homes on June 5, 2009, where it argued that it
had “incurred attorneys [sic] fees in connection with Defendant Kennedy Homes’ breaching such
Agreement and Amendment by, among other things, failing to maintain the agreed upon security
for improvements.” JLC attached numerous exhibits, including the small claims complaint and an
amended complaint, a letter the Village sent to Kennedy Homes offering to dismiss the complaint
with prejudice upon payment of $1662.14, and a copy of the order granting the Village’s motion
to dismiss based on Kennedy Home’s payment of the amount requested. JLC argued that, in the
instant matter, the Village raised the same claim against it that the Village had already settled with
Kennedy Homes and that the claim was barred by the doctrine of res judicata.
¶ 23 On January 10, 2020, after an evidentiary hearing, the circuit court agreed with JLC and
found that the Village’s count against JLC for failure to post a letter of credit was barred by res
judicata. It found that the Village’s dismissal of its small claims action against Kennedy Homes
for breach of the annexation agreement “constituted a dismissal with prejudice of not only the
claims explicitly alleged in the [c]omplaint, but all claims that then existed for breach of the subject
Annexation Agreement.”
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2021 IL App (2d) 200124-U¶ 24 On February 6, 2020, the circuit court made findings pursuant to Supreme Court Rule
304(a) (eff. Mar. 8, 2016) that there was no just reason for delaying either enforcement or appeal
or both concerning (1) the December 14, 2016, order entering judgment in favor of the Village on
count two of its complaint regarding snowplowing the roads; and (2) the January 10, 2020, order
finding that the Village’s claim against JLC in count one of its complaint, pertaining to JLC’s
alleged breach for failure to post a letter of credit, was barred by res judicata.
¶ 25 The Village filed a notice of appeal on February 7, 2020, and it was docketed in this court
as appeal no. 2-20-0124. JLC thereafter filed a notice of appeal on February 14, 2020, and the
appeal was docketed as appeal no. 2-20-0129. On May 19, 2020, we granted the Village’s motion
to consolidate the appeals and ordered that the appeals be consolidated for briefing and decision.
¶ 26 II. ANALYSIS
¶ 27 These consolidated appeals arise from the disposition of cross-motions for summary
judgment on the issue of JLC’s liability under the Agreement, as well as a subsequent motion for
summary judgment filed by the Village asserting that the Village’s count one, breach of the
Annexation Agreement stemming from JLC’s refusal to post a letter of credit, is barred by the
doctrine of res judicata. Summary judgment is proper where “the pleadings, depositions, and
admissions on file, together with the affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to judgment as a matter of law.” 735 ILCS
5/2-1005(c) (West 2018). In evaluating whether a genuine issue of material facts is present, the
pleadings, depositions, admissions, and affidavits must be construed strictly against the movant
and liberally in favor of the opponent. Marshal v. City of Chicago, 2012 IL 112341, ¶ 49. A
genuine issue of material fact precluding summary judgment exists where the material facts are
disputed or, if they are undisputed, reasonable persons could draw different inferences from them.
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2021 IL App (2d) 200124-UId. If, however, the parties file cross-motions for summary judgment, they concede that no genuine
issue of material fact is presented and agree that only questions of law are presented. Nationwide
Financial, LP v. Pobuda, 2014 IL 116717, ¶ 24. On appeal from the entry of summary judgment,
our standard of review is de novo. American Family Mutual Insurance Co. v. Chiczewski, 298 Ill.
App. 3d 1092, 1094 (1998). Likewise, the issue of whether a claim is barred by the doctrine of
res judicata is a question of law subject to de novo review. Law Offices of Nye & Associates, Ltd.
v. Boado, 2012 IL App (2d) 110804, ¶ 12.
¶ 28 The obligations imposed by the Annexation Agreement and Amendment are governed by
basic rules of contract interpretation. See Reserve at Woodstock, LLC v. City of Woodstrock, 2011
IL App (2d) 100676, ¶ 39 (observing that annexation agreements are contracts and basic principles
of contract interpretation apply). In construing a contract, our primary objective is to give effect
to the intent of the parties. Thompson v. Gordon, 241 Ill. 2d 428, 441 (2001). To this end, we
construe the contract as a whole by viewing each provision in light of the other provisions. Reserve
at Woodstock, 2011 IL App (2d) 100676, ¶ 39. The best indicator of the parties’ intent is the
language of the contract when given its plain and ordinary meaning. If the provisions of a contract
are unambiguous, we ascertain the parties’ intent from the language chosen in the contract. First
Bank and Trust Co. of Illinois v. Village of Orland Hills, 338 Ill. App. 3d 35, 40 (2003). “When
parties agree to and insert provisions into their agreement, we presume that this is done
purposefully[,] and that the language employed is to be given effect.” Id.¶ 29 At the outset, we take this opportunity to emphasize that the Annexation Agreement and
the Amendment refer to two different types of successor owners of property within the Trails of
Hebron. The first type is referred to as “the Owner,” who is tasked with certain affirmative
responsibilities to develop the subdivision. For example, and relevant to the Village’s underlying
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2021 IL App (2d) 200124-Ucomplaint, “the Owner” is obligated to maintain the roads and post security to complete the public
improvements. Though not at issue in this appeal, by way of example, “the Owner” is also
obligated to perform numerous other tasks, such as constructing and installing a private walking
path, sidewalk, and roadways, as well as installing other public improvements and utilities, such
as storm and sanitary sewers. The Owner must also establish a homeowners’ association and
install lines for natural gas, electric, telephone, and cable television services. In the Annexation
Agreement, the trustee is identified as the Owner. In the Amendment, Kennedy Homes is
identified as the Owner, effectively replacing the trustee.
¶ 30 The other type of successor owner is referred to in the Annexation Agreement and the
Amendment as “owner,” with a lower case “o,” or as “purchaser.” A successor owner, unlike
“the Owner,” does not have affirmative obligations for the completion of the subdivision. Rather,
a successor owner, or purchaser, is required to adhere to certain passive restrictions, such as
abiding by zoning standards. Several discrete portions of the Annexation Agreement refer to both
types of successors, which confirms that the contractual duties owed by “the Owner” are not the
same as those owed by a purchaser. In short, the Annexation Agreement and the Amendment
impose on “the Owner” affirmative obligations for the development of the trust property that are
not likewise imposed on purchasers. Having recited the appropriate interpretive framework and
distinguished between the “the Owner,” who is responsible for developing the property, and
“owner,” who is burdened with passive restrictions on their property, we turn to the language of
the Annexation Agreement.
¶ 31 Several sections in the Annexation Agreement pertain to its binding effect on the
successors of the original parties. Section 18 states:
“BINDING EFFECT AND TERM
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2021 IL App (2d) 200124-UThis Agreement shall be binding upon and inure to the benefit of the Parties hereto, their
successors and assigns including, but not limited to, successor Owner of record, successor
owners, lessees and successor lessees and upon any successor municipal authority of the
Village and successor municipalities for a period of 15 years from the later of the date of
execution hereof and the date of adoption of the ordinances pursuant hereto.”
Section 20 provides:
“SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of, and be binding upon the Owner and its
respective successors, grantees, purchasers, lessees, and assigns, and upon successor
corporate authorities of the Village.”
Section 23 states:
“COVENANTS RUNNING WITH THE LAND
All obligations of the Owner in this Agreement, including but not limited to monetary
obligations in existence now as well as those which may come to exist in the future as a
result of the Agreement, shall constitute covenants running with the land and such
monetary obligations shall also be liens upon the land. The Owner hereby consents to the
filing of a lien on the Property for which the obligations are owned when any obligations
are more than 90 days overdue.”
Finally, section 28 provides:
“SALE OF PROPERTY
It is expressly understood and agreed that the Owner may sell or convey all or any part of
the Property for the purposes of development, and upon each sale or conveyance, the
purchaser shall be bound by and entitled to the benefits of this Agreement with respect to
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2021 IL App (2d) 200124-Uthe part of the Property sold or conveyed. When any such purchaser agrees to assume
Owner’s obligations hereunder, and when the Village is notified of such purchase and
agreement, the Village hereby covenants and agrees that it shall consent to such
assumption, and that it shall release Owner from its respective obligations hereunder with
respect to that part of the Property so purchased. A selling Owner, however, may only be
released where:
1. Provision has been made that all such public improvements and private improvements
such as the walking path required by the Agreement or Village ordinances for the
development of the parcel being sold will be installed and guaranteed in accordance
with this Agreement and the ordinances of the Village; and
2. The Village has remaining in place some reasonable assurances of performance to
assure the Village that any development responsibilities not yet satisfactorily
completed by the Owner anywhere on the Property will be completed; and
3. The specific facts and terms of assignment are made known to the Village and the
Village approves such assignment by corporate resolution; and
4. All monetary obligations of the Owner due to the Village as of the time of conveyance
and attributable to the property conveyed have been satisfied in full; and
5. The purchasing Owner assumes all obligations of the selling Owner; and
6. The Owner complies with the Subdivision Ordinance and the Illinois Plat Act; and
7. There are no violations of Village ordinances or this Agreement.”
The Village shall not unreasonably exercise its right to deny release herein and shall
consider only those factors set forth in this paragraph. The provisions of this paragraph
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2021 IL App (2d) 200124-Ushall not apply to or limit conveyances of any portions of the Property from Owner prior
to submission of a final plat of subdivisions for any portion of the Property.”
¶ 32 JLC argues on appeal that the circuit court erroneously found that it was obligated as the
successor “Owner” under the Annexation Agreement and the Amendment. JLC’s arguments
largely recapitulate those it advanced in its combined cross-motion for summary judgment and
response to the Village’s request for partial summary judgment. JLC relies extensively on section
28, titled “SALE OF PROPERTY,” and argues that it is not the successor “Owner” because it
neither agreed to assume developer obligations nor were any of the conditions satisfied that were
necessary to “transfer” those obligations from “the Owner,” meaning Kennedy Homes, to any
other party. JLC concedes that the Annexation Agreement and Amendment are binding on it, but
it argues that it is an “owner,” with a lower case “o,” or purchaser, akin to the 18 or so individual
purchasers who acquired a portion of the Kennedy Property before it, rather than the successor
“Owner.” It points out that, like those other purchasers before it, it acquired its portion of the
Kennedy Property via a deed, with no assumption of the obligations of “the Owner,” and that its
deed contained language nearly identical to the other purchasers. It argues that taking title to a
portion of the Kennedy Property does not, in itself, impose obligations of “the Owner” upon
purchasers.
¶ 33 For its part, the Village only briefly responds to JLC’s argument regarding section 28 and
its impact on JLC’s obligations under the Agreement. It asserts that JLC “hyper-focuses” on
section 28 and fails to harmonize it with the provisions that state the Annexation Agreement is a
covenant running with the land that is binding on successor owners or purchasers. The Village
argues that JLC cannot avail itself of section 28 because this section describes only “how a selling
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2021 IL App (2d) 200124-Uowner may be released from liability.” It argues that JLC “is not a selling owner and Section [28]
is simply not applicable.”
¶ 34 We agree with JLC. Notwithstanding the fact that JLC purchased the bulk of the lots in
the first platted phase of the subdivision, under the plain terms of the Annexation Agreement, the
purchase, by itself, does not impose Owner obligations on the purchaser. Section 28 of the
Annexation Agreement, titled “SALE OF PROPERTY,” plainly governs how “the Owner,” or
developer, may be released from its obligations and transfer those obligations to another party.
The Annexation Agreement provides no other mechanism to transfer developer obligations to a
purchasing party, and section 28 was neither revoked nor amended in the Amendment. It therefore
controls with respect to the subject property. Admittedly, the general tenor of section 28 describes
how “the Owner” may free itself from its obligations to develop the property though the sale of all
or any part of the trust property. Nevertheless, section 28 is dispositive of the central question
posed in this appeal—whether JLC assumed the Owner’s obligations under the Annexation
Agreement and Amendment through the purchase of the subject property from the receiver. This
is so because the plain language of section 28 conditions the purchaser’s assumption of Owner
obligations on the purchaser agreeing to assume those obligations, and further requires that the
seven requirements enumerated in section 28 of the Annexation Agreement be satisfied.
¶ 35 For clarity, we break down section 28 into its component parts. Section 28 begins: “It is
expressly understood and agreed that the Owner may sell or convey all or any part of the [Trust]
Property for the purposes of development, and upon each sale or conveyance, the purchaser shall
be bound by and entitled to the benefits of this Agreement with respect to the part of the [Trust]
Property sold or conveyed.” Relevant to the appeal, this language unambiguously provides that
all purchasers are bound by the Agreement and are entitled to its benefits, regardless of whether
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2021 IL App (2d) 200124-Uthe purchaser acquires a portion of the trust property or all of it. By purchasing any amount of
property within the Trails of Hebron, the purchaser is bound by the Agreement and the benefits of
the Agreement transfer automatically to the purchaser, irrespective of the size of the portion of the
trust property purchased. No mention is made in this sentence regarding the various developer
obligations required of “the Owner.”
¶ 36 The next segments of the SALE OF PROPERTY provision, though couched primarily in
terms of releasing the current “Owner” from its developer obligations, detail the requirements for
a purchaser to assume the obligations of “the Owner,” and further requires that certain enumerated
conditions be met in order to release the selling Owner from those obligations. It provides that,
“[w]hen any such purchaser agrees to assume Owner obligations hereunder, and when the Village
is notified of such purchase and agreement, the Village hereby covenants and agrees that it shall
consent to such assumption, and that it shall release Owner from its respective obligations
hereunder with respect to that part of the [Trust] Property so purchased.” Here, the Agreement
conditions the release of the Owner from its developer obligations on the purchaser agreeing to
assume those obligations. The circuit court recognized that section 28 was dispositive and “at
issue,” but it erred in its reading thereof. In granting the Village’s motion for partial summary
judgment, the circuit court explained:
“[I]t’s clear from my reading of Section 28 of the Annexation Agreement[,] which was at
issue, that *** while [JLC] focuses on language ‘when any such purchaser agrees to assume
[the developer’s] obligations,’ that’s being read to the exclusion of the prior sentence,
which states that the Owner, it would have referred to Kennedy [Homes] at that time, may
*** ‘sell or convey any and/or all [sic] part of the property for [the] purposes of
development,’ and the purchaser ‘shall be bound by and entitled to the benefits of this
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2021 IL App (2d) 200124-UAgreement with respect to [the part of] the property sold or conveyed.’ The property sold
or conveyed to [JLC] was all that remained.”
The circuit court failed to recognize that the benefits of the Annexation Agreement received by
purchasers are distinct from the obligations of the “Owner” to develop the property and transfer
automatically to the purchaser. The court’s interpretation also fails to acknowledge the remainder
of section 28, which provides an exhaustive list of the conditions that must be met for an
assumption of developer obligations to occur. It provides that the Owner “may only be released”
where:
1. Provision has been made that all such public improvements and private improvements
such as the walking path required by this Agreement or Village ordinances for development
of the parcel being sold will be installed and guaranteed in accordance with this Agreement
and the ordinances of the Village; and
2. The Village has remaining in place some reasonable assurances of performance to assure
the Village that any development responsibilities not yet satisfactorily completed by the
Owner anywhere on the [trust] property will be completed; and
3. The specific facts and terms of assignment are made known to the Village and the Village
approves such assignment by corporate resolution; and
4. All monetary obligations of the Owner due to the Village as of the time of conveyance
and attributable to the property conveyed have been satisfied in full, and
5. The purchasing Owner assumes all obligations of the selling Owner; and
6. The Owner complies with the Subdivision Ordinance and the Illinois Plat Act; and
7. There are no violations of Village ordinances or this Agreement.”
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2021 IL App (2d) 200124-UAlthough described in terms of describing how the Owner may be released from its obligations to
develop the trust property, the practical effect of this language is that a purchaser does not
automatically assume “Owner” obligations simply by purchasing a portion of the trust property.
Rather, in order for the “Owner” to be freed from its developer obligations and transfer those
obligations through a sale to a purchaser, the purchaser must agree to assume those obligations
and the seven “factors” enumerated in section 28 must also be satisfied. Based on a plain reading
of the Annexation Agreement, the mere purchase of land within the Trails of Hebron do not make
the purchaser “the Owner” who is tasked with developer obligations. To interpret the Annexation
Agreement as providing that purchase, alone, of a portion of the trust property is sufficient to
confer Owner obligations on the purchaser would render other, more specific provisions in the
Agreement meaningless. See Thompson v. Gordon, 241 Ill. 2d 428, 442 (2001) (a court should
“not interpret a contract in a manner that would nullify or render provisions meaningless”). Such
provisions include the statement in section 28 referencing the purchaser’s agreement to assume
Owner obligations, as well as factor 5, above, which provides that a selling Owner may be released
if “the purchasing Owner assumes all obligations of the selling Owner,” among the other factors.
A contrary interpretation would also mean that Owner obligations also passed to every non-party
owner who purchased portions of the Kennedy Property from Kennedy Homes between September
2007 and February 2008, as well every non-party owner who purchased from the receiver during
the foreclosure proceedings.
¶ 37 Here, the record does not support the conclusion that that JLC expressly agreed to assume
the obligations of “the Owner” when it purchased the subject property. Likewise, there is no
evidence that Kennedy Homes met any of the conditions necessary to be released as “the Owner.”
By comparison, the trustee was released as “the Owner” when Kennedy Homes entered into the
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2021 IL App (2d) 200124-UAmendment with the Village and agreed to assume all of “the Owner’s” obligations. For example,
Kennedy Homes, identified as “the Owner” in the Amendment, expressly agreed to complete the
public and private improvements in the Kennedy Property, post security in the form of letters of
credit or bonds, snowplow the roads, pay for school donations, and perform all other obligations
of “the Owner.” The Amendment also reflects that the Village and Kennedy Homes contemplated
section 28 in executing the Amendment. The final paragraph in the Amendment, titled “Consent
to Sale of Kennedy Property,” states:
“The Village hereby consents to the sale of the Kennedy Property from [the trustee] to the
Owner [expressly identified as Kennedy Homes]. The Owner agrees to assume all
obligations of [the trustee] relative to the Kennedy Property and to comply with this First
Agreement [sic], the Agreement, the Village’s Subdivision Ordinance (Title 5B of the
Hebron Municipal Code) and the Illinois Plat Act (765 ILCS 205/1 et seq.)”
As argued by JLC, the Amendment “checked every box” for Kennedy Homes to assume the
obligations of “the Owner” in accordance with the terms of Section 28 of the Agreement. The
Amendment stands as an example of satisfying the clear and unambiguous conditions outlined in
section 28 to release “the Owner” and transfer those obligations to a third party. Conversely, here,
no document identifies JLC as “the Owner,” there is no evidence that JLC agreed to assume Owner
obligations, and the Village does not directly make such an argument on appeal. Moreover, the
Village offers no argument that Kennedy met any of the conditions in section 28 to transfer the
obligations of “the Owner” to any other party. In the absence of any evidence or argument from
the Village regarding whether Kennedy Homes satisfied the seven conditions necessary to be
released from its Owner obligations, we need not analyze whether JLC acquiesced to assume the
Owner’s obligations by its actions of paying for snowplowing services for two winters and by
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2021 IL App (2d) 200124-Usigning a document authorizing the Village’s police department to enforce applicable laws in the
subdivision. Both agreement to assume Owner’s obligations and the fulfillment of the seven
conditions are necessary to release the Owner and to allow the purchasing party “to assume
Owner’s obligations” are necessary to transfer that burden under the Annexation Agreement.
¶ 38 The Village spends the bulk of its brief arguing that JLC is a successor owner, with a lower
case “o,” of the Trust Property, which is subject to the Annexation Agreement, and that the
Annexation Agreement is binding on JLC. The Village argues that JLC’s lack of agreement “to
abide by the obligations of the relevant annexation agreement” is irrelevant because “they do not
have to agree.” It highlights sections 18, 20, and 23 of the Annexation Agreement and argues that
these provisions “contain no requirement that a successor owner must agree to assume the
obligations in the Annexation Agreement.” In the Village’s view, these provisions negate JLC’s
position entirely.
¶ 39 The Village’s arguments in this portion of its brief are largely unresponsive to JLC’s points
regarding section 28, which is the portion of the Annexation Agreement that we find dispositive.
It overlooks JLC’s acknowledgment that the Agreement and Amendment run with the land and is
binding on all purchasers, or owners, with a lower case “o,” including JLC. On appeal, JLC neither
argues that it is not an “owner,” with a lower case “o,” nor does it dispute that the Agreement and
Amendment are covenants that run with the land. Rather, JLC expressly recognizes that the
contracts are binding on it, but it disputes that it is the successor “Owner” who is tasked with
completing the streets and other public and private improvements within the trust property. In its
brief, the Village repeatedly conflates “Owner” with “owner,” or purchaser, and in doing so, fails
to recognize that the “Owner” has obligations to develop the trust property that a purchaser does
not. In short, the Village devotes much of its brief to an argument that JLC readily concedes,
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2021 IL App (2d) 200124-Uwhile failing to refute or even acknowledge the primary argument that JLC does make.
¶ 40 The Village also seems to interpret JLC’s argument as being dependent on JLC not being
a developer, and it goes to great pains to stress that the Annexation Agreement does not use the
term “developer,” nor does section 11-15.1-1 of the Municipal Code condition the binding effect
of an annexation agreement on a successor owner being a developer. It construes JLC’s argument
as limiting “the obligations of constructing and maintaining the streets to purchasers who are
developers.” JLC made no such argument on appeal. We can only guess that the Village
overlooked JLC’s designation of “developer” in its opening brief to refer to “the Owner.” Early
in its opening brief, JLC asserted that it “did not agree to undertake ‘Owner’ obligations
(hereinafter referred to as ‘Owner’ or ‘Developer’) of the [Annexation] Agreement or Amendment
when it acquired” the subject property. (Emphasis added.) JLC explained in its reply brief that it
changed “Owner to Developer [in its opening brief] for ease of understanding the argument due to
the fact that the difference between Owner and owner is slight[,] especially if the term is at the
beginning of a sentence.” There being no argument made by JLC that the annexation agreement
is binding only on successors who are developers, the Village’s assertion in this regard is likewise
unresponsive to JLC’s arguments on appeal.
¶ 41 Because JLC is not responsible for the developer obligations of the Owner, its refusal to
post a letter of credit with the Village did not amount to a breach of the Annexation Agreement.
Likewise, JLC’s denial of responsibility for snowplowing the roads actionable. Therefore, the
circuit court erred in denying JLC’s cross-motion for summary judgment and in allowing the
Village’s motion for partial summary judgment. Accordingly, we reverse. In light of this court’s
reversal of the circuit court’s order granting partial summary judgment in favor of the Village
finding that JLC was “bound by the [A]nnexation [A]greement as the Owner,” the issues raised in
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2021 IL App (2d) 200124-Uthe Village’s cross-appeal are moot and will not be addressed.
¶ 42 III. CONCLUSION
¶ 43 For the foregoing reasons, we reverse the judgment of the circuit court of McHenry County
granting partial summary judgment in favor of the Village and against JLC, as well as the circuit
court’s order granting judgment on the pleadings as to JLC’s counterclaim, and we remand the
cause for further proceedings on JLC’s counterclaim. The Village’s cross-appeal is moot, and we
therefore dismiss it.
¶ 44 Appeal No. 2-20-0124 dismissed.
¶ 45 Appeal No. 2-20-0129 reversed and remanded.
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