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No. 3--03--0039

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

JUSTICE BOWMAN delivered the opinion of the court:

In this matter transferred from the Appellate Court, Third District, plaintiff, Monica J.Sadler, appeals from orders entered in the circuit court of Knox County dismissing her secondamended complaint with respect to certain defendants, granting summary judgment in favor ofother defendants, and entering sanctions against her pursuant to Supreme Court Rule 137 (155 Ill.2d R. 137). Sadler argues on appeal that: (1) the trial court erred in interpreting the restrictivecovenant at issue, (2) genuine issues of material fact preclude the dismissal of her complaints andthe entry of summary judgment against her, (3) her claims against defendants were not moot, (4)the trial court erroneously denied her request for a temporary injunction, (5) the trial courtimproperly granted defendants' dispositive motions while her motion for substitution of judge waspending, and (6) the trial court abused its discretion in sanctioning her.

I. BACKGROUND

This dispute involves certain real property located in the Forest Ridge subdivision of theOak Run community, a group of eight subdivisions, in Knox County. Sadler owned, in feesimple, lot 107 Forest Ridge, and also held an undivided interest in lots 195, 536, and 249 ForestRidge. Defendants William and Nira Del Creekmur were the beneficial owners of lot 194 ForestRidge, which was held in two trusts. The Creekmurs had a house on their lot, where they resided. At all times relevant to this litigation, the Forest Ridge subdivision was governed by a declarationof restrictive covenants. Defendant Oak Run Property Owners Association (Association) wascharged with maintaining and administering the community properties and facilities and enforcingthe restrictive covenants.

In January 1997, the Creekmurs recorded a plat that subdivided lot 194 into two lotscalled Sandy Ridge lot 1 and Sandy Ridge lot 2. They intended to build another residence on thesubdivided lot and, toward that end, obtained a building permit (County building permit) from theKnox County zoning administrator. The Creekmurs also obtained a building permit (Associationbuilding permit) from the Association's architectural control committee.

Sadler objected to the subdivision of lot 194 and to allowing the Creekmurs to build another house on the subdivided lot. She contended that the subdivision of the lot violated theForest Ridge restrictive covenants. Article VII, section 1, of the restrictive covenants provides inrelevant part:

"No building shall be erected, altered, placed or permitted to remain on any lotother than one single family dwelling not exceeding two and one-half stories in height, andone private garage or boathouse, or combination garage and boathouse for familyautomobiles and boats, in keeping with the dwelling so erected."

The covenants did not define "lot."

Also in existence was a sanitary district ordinance prohibiting a sewer tap-on or privatesewage treatment system on any Forest Ridge lot other than an originally platted lot. Based onthis ordinance, the sanitary district denied the Creekmurs' request for a permit to tap on theproposed new residence to the sewer system. The Creekmurs also sought a permit to install aprivate septic system on their lot, but the Knox County zoning administrator denied their request. Because the Creekmurs did not have the necessary permit from the sanitary district, theAssociation's architectural control committee suspended the Creekmurs' Association buildingpermit on April 12, 1997.

On May 24, 1997, the Creekmurs agreed to sell Sandy Ridge lots 1 and 2 to defendantsPeter and Chantal Williams, with the intention that the Williamses would acquire the former lot194 as two separate parcels of land, each able to contain a single-family home.

On June 12, 1997, Sadler filed a verified petition for declaratory and injunctive relief(petition) against the Creekmurs, the Williamses, and the Association, alleging that the restrictivecovenant prohibited the Creekmurs from subdividing their property and building a secondresidence on it. She sought declarations that the Creekmurs' acts of subdividing their propertyand recording the subdivision were illegal, null, and void, and that the County building permit wasillegal, null, and void. She also sought a temporary restraining order and a preliminary injunctionprohibiting the Creekmurs from conveying any interest in lot 194 and from taking any action tobuild a second house on lot 194. She further requested that the court enter a permanentinjunction, requiring the Creekmurs to take all steps necessary to vacate the subdivision andprohibiting them from building on lot 194.

In response to Sadler's petition, the Association filed a motion to dismiss pursuant tosection 2--619 of the Code of Civil Procedure (Code) (735 ILCS 5/2--619 (West 1996)), arguingthat the dispute had become moot because the Creekmurs intended to vacate the plat ofsubdivision and the Williamses did not oppose vacating the plat. The trial court determined thatthe case was not yet moot, but granted the Association's motion to dismiss without prejudicebecause Sadler did not request any declaratory or injunctive relief as to the Association. Thecourt denied Sadler's request for a temporary restraining order and preliminary injunction, on theground that Sadler had not suffered any immediate or irreparable harm.

On July 3, 1997, Sadler conveyed by deed her interest in lot 195 Forest Ridge, whichadjoined the Creekmurs' property, to a nonparty. On July 14, 1997, she filed a lis pendens againstapproximately 2,600 lots in all 8 Oak Run subdivisions, but the court limited the lis pendens to theCreekmur property.

Also on July 14, 1997, the Creekmurs presented to the Knox County zoning administratora petition to vacate the Sandy Ridge subdivision plat. On July 17, 1997, the Association adopteda resolution providing that, prospectively, it would not provide permits for more than oneresidence per original lot. On July 19, 1997, the Williamses and the Creekmurs agreed toterminate the contract for the sale of lots 1 and 2 Sandy Ridge. On August 6, 1997, the executiveland use committee of the Knox County Board held a hearing and recommended to the full KnoxCounty Board that it should vacate the Sandy Ridge plat. At a meeting before the Knox CountyBoard on August 20, 1997, Sadler's attorney spoke against vacating the plat. The Knox CountyBoard took no action on the recommendation to vacate the plat. On August 26, 1997, KnoxCounty filed an application to intervene in the instant litigation, which the court granted.

Sadler filed an amended petition on August 28, 1997, without leave of court, in which sheadded as defendants all individual members of the Association's board of directors, namely,defendants Robert Brenkman, Tom Sacco, Dale E. Sundberg, Merle G. Huff, A. Dean Dearing,James L. Kuntz, and Gene Shrader (Board). Sadler also sought relief from defendants Jim Lairand Bill Cain, who were members of the Association's architectural control committee, as well asBoard attorney Michael Massie. The Association moved to dismiss the amended petitionpursuant to section 2--619(a)(9) of the Code, arguing that the events following the filing ofSadler's petition rendered her claims moot. At that time, the Creekmurs and Williamses still hadpending motions to dismiss on file.

The trial court conducted hearings on the parties' motions to dismiss in September andNovember 1997. On January 6, 1998, it entered an order dismissing with prejudice Sadler'sclaims against the Williamses, her claims for declaratory and injunctive relief against theAssociation, and her claim for injunctive relief against the Creekmurs. The court granted Sadlerleave to file an amended complaint.

On March 3, 1998, Sadler filed a verified second amended complaint. Count I sought adeclaration that the Creekmurs' subdivision of lot 194 violated the restrictive covenants and wasnull and void. It also sought a declaration that the County building permit was illegal because itviolated the restrictive covenants. Count II sought damages against the Creekmurs for thematerial breach of the restrictive covenants. Count III alleged breach of contract against theAssociation and the Board for refusing to enforce the restrictive covenants. Count IV alleged abreach of fiduciary duty by the Association and the Board. Count V alleged a breach of fiduciaryduty by defendants Lair and Cain in approving the Creekmurs' building permit. Count VI allegedthat attorney Massie failed to enforce the restrictive covenants, gave erroneous legal advice to theBoard, and had a conflict of interest because he owned lots in another Oak Run subdivision.

The Creekmurs moved to dismiss counts I and II of the second amended complaintpursuant to section 2--619(a)(9) of the Code, arguing mootness and that the subdivision of lot194 did not, by itself, violate the restrictive covenants. In a letter decision dated August 18, 1998,the trial court granted the Creekmurs' motion to dismiss and stated that the restrictive covenantsdid not prohibit subdivision of Forest Ridge lots but did prohibit building a second residence on asubdivided lot. (For reasons not made clear by the parties, the order granting the Creekmurs'motion to dismiss was not entered until September 13, 1999.)

Defendant Massie also filed a section 2--619(a)(9) motion to dismiss, arguing that heowed no duty to Sadler because she was not his client. The trial court agreed with Massie andgranted his motion to dismiss.

The Association, along with its individual Board members and Lair and Cain, moved forsummary judgment, arguing that (1) the "business judgment rule" barred Sadler's claims of breachof fiduciary duty, (2) Lair and Cain owed no duty to Sadler, and (3) as a matter of law, Sadlerwas not entitled to recover attorney fees. The trial court granted summary judgment for thesedefendants.

Defendants subsequently filed motions for Rule 137 sanctions against Sadler and herattorney, Barney Olson II. Sadler filed a cross-motion for sanctions against defendants. TheCreekmurs later withdrew their motion for sanctions. The trial court determined that sanctionsagainst Sadler were warranted because all of the proceedings that took place after August 20,1997, lacked a reasonably objective basis. The court did not sanction Sadler's attorney. Thecourt awarded attorney fees in the amount of $97,854 to the Association and the Board. It alsoawarded Massie attorney fees in the amount of $44,990.19. The court denied Sadler's motion toreconsider, and this appeal ensued.

II. ANALYSIS

A. Denial of Temporary Restraining Order and Injunctive Relief

Sadler asserts that the trial court erred in denying her petition for a temporary restrainingorder. We lack jurisdiction over this issue. The trial court entered the order denying Sadler'spetition for a temporary restraining order on June 27, 1997. Supreme Court Rule 307(d) providesthat a petition to appeal the denial of a temporary restraining order shall be filed within two daysof the entry or denial of the order from which review is sought. 188 Ill. 2d R. 307(d). Sadler didnot file a petition within the time specified in Rule 307(d). Accordingly, we do not havejurisdiction over this issue. See People ex rel. Sherman v. Cryns, 321 Ill. App. 3d 990, 992-93(2001).

Sadler also challenges the denials of her claims for injunctive relief. However, she failedto timely appeal from the order dismissing these claims, as required by Supreme Court Rule307(a) (Official Reports Advance Sheet No. 5 (March 5, 2003), R. 307(a), eff. January 1, 2003). The order dismissing Sadler's claims for injunctive relief against the Association, the Board, andthe Creekmurs was entered on January 6, 1998. Pursuant to Supreme Court Rule 307(a), Sadlerwas required to file a notice of appeal within 30 days of the entry of the order refusing to enter aninjunction. Because she failed to do so, we have no jurisdiction over those issues dealing with thedenial of injunctive relief.

In addition, Sadler contends that the trial court erroneously denied her a hearing on herrequest for a preliminary injunction. Sadler has not identified an order denying a hearing, nor hasshe provided the court with any citations to the record that would illuminate us on this issue. Accordingly, she has waived this issue for purposes of appeal. Spinelli v. Immanuel LutheranEvangelical Congregation, Inc., 118 Ill. 2d 389, 401 (1987) (arguments that are insufficientlypresented do not warrant consideration on appeal).

B. Interpretation of the Restrictive Covenant

The interpretation of the subject covenant relates to several remaining issues on appeal,including the dismissal of Sadler's claims against the Association, and therefore we will begin byaddressing this issue. The trial court determined that the restrictive covenant did not prohibit thesubdivision of an original lot. For the following reasons, we agree with the trial court'sinterpretation.

Restrictions on the use of property conveyed in fee are not favored, but courts will enforcerestrictive covenants if they are reasonable, clear, definite, and not contrary to public policy. Sherwood v. Rigsby, 221 Ill. App. 3d 260, 261 (1991). The interpretation of a restrictivecovenant is a question of law. See Dam, Snell and Taveirne, Ltd. v. Verchota, 324 Ill. App. 3d146, 154 (2001). When interpreting a covenant, a court must give effect to the parties' actualintent at the time the covenant was made. Vandelogt v. Brach, 325 Ill. App. 3d 847, 853 (2001). As with any other contract, the terms must be given their ordinary and natural meaning when theyare clear and unambiguous. Dam, 324 Ill. App. 3d at 154. When there is no ambiguity, there is noneed to inquire into the intention of the parties. Dam, 324 Ill. App. 3d at 154.

With the above principles in mind, we review the language of the covenant at issue. Itstates:

"All lots not otherwise specifically designated upon a recorded plat or recorded Declaration by Developer shall be used for residential purposes only, and no business,commercial or manufacturing enterprise shall be conducted on said premises. No buildingshall be erected, altered, placed or permitted to remain on any lot other than one singlefamily dwelling not exceeding two and one-half stories in height, and one private garageor boathouse, or combination garage and boathouse for family automobiles and boats, inkeeping with the dwelling so erected." (Emphasis added.)

Sadler relies heavily on authority from other jurisdictions for the proposition that arestriction prohibiting the construction of more than one residence per lot also prohibits a lotowner from subdividing the lot. She contends that these foreign cases control our interpretationof the covenant. We disagree. Decisions by courts from other states are not binding on courts ofthis state. Skipper Marine Electronics, Inc. v. United Parcel Service, Inc., 210 Ill. App. 3d 231(1991). When there is Illinois case law directly on point, we need not look to other states forguidance. Graham v. Commonwealth Edison Co., 318 Ill. App. 3d 736 (2000). In this case, wefind it unnecessary to consider the foreign cases Sadler cites, as Illinois law adequately addressesthe issues presented.

Illinois courts have declined to read a restriction on subdivision into a covenant, based onthe reasoning that a developer who intended to prohibit subdivision of the original lots wouldhave expressly included such a restriction. See Watts v. Fritz, 29 Ill. 2d 517, 522 (1963). InWatts, the plaintiffs sought to restrain the defendants from subdividing their lot and constructingan additional building on it. The court held that the plaintiffs could not do so, because therestrictions did not expressly prohibit subdividing lots or building another dwelling on asubdivided lot and because the plaintiffs had acquiesced in previous violations of the restrictions. In analyzing the restrictions, the court noted that " '[r]estrictive covenants are strictly construed infavor of the full and unlimited legitimate use of property and, where there is any doubt, the mattermust be resolved in favor of natural rights and against restrictions.' " Watts, 29 Ill. 2d at 521,quoting Henricks v. Bowles, 20 Ill. App. 2d 148, 151 (1958). With respect to the specificrestrictions at issue in Watts, the court reasoned as follows:

"[I]t is evident that if the developer had so intended he could and would haveplaced in the deeds a clear and definite covenant or restriction expressly so stating. That hedid not do so is practically conceded by both parties to this suit. It would also appear thathe could and would expressly have provided that there was to be no splitting or subdividingof the original platted lots if none was to be done. In our opinion, he did not place anysuch express prohibitions in the deeds." Watts, 29 Ill. 2d at 522.

Watts differs somewhat from the case at bar; in Watts, there was no express restriction onconstructing more than one residence per lot and the plaintiffs were found to have acquiesced inprior violations of the covenants. However, the message in Watts regarding the interpretation ofcovenants is clear: restrictions on the use of property must be expressly stated in order to be giveneffect.

The court in Paquette v. Coble, 271 Ill. App. 3d 1110 (1995), reached a similar conclusion. In that case, the court interpreted a restrictive covenant that provided that no more than onesingle-family residence could be built on any parcel of land having an area of less than 2