Siena at Old Orchard Condominium Association v. Siena at Old Orchard, LLC
75 N.E.3d 420
Ill. App. Ct.2017Background
- Siena at Old Orchard Condominium Association (the Association) sued the developer (Siena at Old Orchard, LLC and Lennar Chicago, Inc.) and former board president Larry Keer for latent construction defects and for Keer’s execution of releases in 2008. Claims included breach of fiduciary duty, breach of contract, and implied-warranty torts; damages alleged > $500,000.
- The recorded declaration originally required a written “Notice” and a mandatory sequence: cure period, negotiation, mediation, then binding arbitration for disputes involving the Declarant (Article 12). Article 12 also contained a 20‑year anti‑amendment clause requiring the developer’s prior written consent (Section 12.05).
- The Association’s board voted in 2011 to amend the declaration and delete Article 12; the amendment was recorded. The Association alleges it never gave the formal Article 12 notice before amendment.
- Developers argued the Association previously sent an August 13, 2010 attorney letter that satisfied Article 12 notice and thus waived the Association’s claims by failing to proceed to mediation/arbitration. Developers also relied on the 2008 releases signed by Keer.
- The trial court initially dismissed the complaint for failure to comply with Article 12; on reconsideration it held Section 12.05 was void under the Condominium Property Act so the amendment deleting Article 12 was valid, but later concluded the August 2010 letter did trigger Article 12 and dismissed the second amended complaint with prejudice and awarded attorneys’ fees to defendants. The Association appealed; defendants cross‑appealed on fee issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Aug. 13, 2010 attorney letter constituted "Notice" under Article 12.04(a) to trigger mandatory mediation/arbitration | The letter was only to prevent spoliation and did not meet Article 12.04(a) formal requirements (delivery method, listing legal basis, meeting commitment, etc.). | The letter gave actual notice of claims and was sufficient despite form defects; defendants received the information. | Court: Letter did not satisfy Article 12.04(a)’s required contents and delivery methods; it did not trigger the mandatory dispute resolution. (Reversed dismissal on this ground.) |
| Whether the board’s 2011 amendment deleting Article 12 was valid given Section 12.05 (developer consent required) | Amendment valid: Condominium Property Act controls and prohibits added restraints beyond statutory amendment procedure. | Amendment invalid because Section 12.05 barred amendment for 20 years without Declarant consent; deletion without consent is voidable. | Court: Section 12.05 conflicted with the Condominium Property Act (section 27) and was void; the amendment deleting Article 12 was valid. |
| Whether the 2008 releases executed by Keer barred the Association’s claims | Releases are invalid because Keer lacked authority to sign (no board majority approval and releases were not properly attested); no ratification by Association. | Releases were broadly worded and release Association’s claims; accepting funds ratified the releases or otherwise bound the Association. | Court: On the pleadings, Keer lacked actual and apparent authority and the Association did not ratify the releases as a matter of law; releases do not provide an alternate basis to affirm dismissal. |
| Whether defendants were entitled to attorneys’ fees under Article 12.04(e) and Rule 137 sanctions | Association: Article 12 no longer applies after valid amendment; fees and sanctions were improper. | Developers: Entitled to fees/costs for defending Article 12’s validity and for contesting arbitration scope; also sought Rule 137 sanctions. | Court: Because dismissal was reversed and merits remain, the appellate court did not decide fee/sanctions issues; trial court’s prior fee award vacated by reversal of dismissal. |
Key Cases Cited
- Thompson v. Gordon, 241 Ill. 2d 428 (Supreme Court of Illinois) (clear contract language must be given its plain meaning)
- Bjork v. O’Meara, 2013 IL 114044 (Supreme Court of Illinois) (distinguishes motions to dismiss under section 2‑615 and 2‑619 and standard of review)
- Pooh‑Bah Enterprises, Inc. v. County of Cook, 232 Ill. 2d 463 (Supreme Court of Illinois) (pleading sufficiency standard for dismissal)
- Feltmeier v. Feltmeier, 207 Ill. 2d 263 (Supreme Court of Illinois) (affirmative matter under section 2‑619 defeats a claim only if it is clearly apparent)