Updated: Yorkville Settles Lawsuit With Aspen Ridge Estates

Yorkville aldermen agreed to pay $100,000 toward the $725,000 that Aspen Ridge Estates, LLC will receive in a legal settlement surrounding its August 2006 annexation into the city.

The city’s insurer will front $75,000, which the city will repay in May, according to a prepared statement Mayor Valerie Burd read at Tuesday’s City Council meeting. The city will pay the remaining $25,000 to Aspen Ridge in May as well.

Aldermen voted 6-0 Tuesday to approve the settlement agreement, with Aldermen Joe Plocher and Marty Munns absent. Munns, who was an alderman during the incidents alleged in the lawsuit, was named in the suit, but an attorney for the city indicated that neither aldermen's absence was related to the vote on the settlement agreement.

The funds will be taken from the city’s general fund in the fiscal year that starts May 1, Burd said.

“Though this settlement will undoubtedly have a significant impact on the already strained city budget for fiscal year 2011-2012, this settlement is nonetheless in the best interest of the taxpayers, who might have faced far more in litigation expenses before even reaching a trial on the merits of the case,” Burd said in the prepared statement.

Burd estimated the city has spent more than $1 million in legal fees on this case and about four other lawsuits related to Aspen Ridge Estates and a proposed nearby landfill.

The lawsuit

The settlement ends about 2 1/2 years of litigation. Aspen Ridge Estates filed a lawsuit against the city, its engineering firm, its attorney and several elected officials alleging that they had conspired against the developer to induce him to annex into the city.

The lawsuit also alleged city officials lied to Aspen Ridge developer Paul Dresden in May 2006 about discussions to put a landfill on neighboring land, the Hamman Farm property. It also alleged that the city crafted a special-service area in which Aspen Ridge and other neighboring property owners would pay for infrastructure that would support a future landfill on the Hamman Farm.

About a month after Aspen Ridge Estates and four nearby properties were annexed into the city, the city annexed the Hamman Farm, the potential landfill site, according to the November 2008 amended complaint.

Had Dresden and other neighboring property owners known of the landfill plans, they would have refused to annex into the city or demanded terms more favorable to them for the annexation agreement, according to the November 2008 amended lawsuit.

The alleged incidents happened when Arthur Prochaska Jr. was mayor, Engineering Enterprises, Inc. was the city’s engineering firm and Tony Graff was city administrator, according to the November 2008 amended lawsuit.

Aspen Ridge Estates was seeking several millions of dollars in damages.

Destruction of documents

During the lawsuit, Aspen Ridge Estates accused city officials of purposefully destroying thousands of documents that might have been related to the lawsuit.

On April 23, 2007, more than a year before filing the lawsuit, the developer’s attorney sent city officials a letter notifying them that they were responsible for maintaining records that might later become evidence in the litigation.

The city had not destroyed any records in about two decades, but in October 2007, city staff received permission from state officials to destroy several cubic feet of documents under the direction of Deputy City Clerk Lisa Pickering, federal court records show.

An attorney for Yorkville said that Pickering and other city staff properly followed the state procedure for destroying city documents and that “virtually zero, if not zero,” would relate to the lawsuit, according to a transcript of the June 15 hearing on the matter.

The city attorney also indicated that the city reviewed and segregated any documents related to the case after the lawsuit was filed in August 2008.

In June, federal judge Charles Kocoras rejected Aspen Ridge Estate’s motion to decide the case in the developer’s favor because of the alleged document mishandling.

Kocoras suggested that Aspen Ridge Estates could raise the issue again after exploring whether the documents, some of which were electronic, could be recreated. The judge also indicated little evidence had surfaced at that point suggesting a conspiracy to destroy legally valuable documents.

Countersuits and settlement

In July the city filed a counterclaim alleging that Aspen Ridge Estates owed the city $73,380 for engineering and other review fees for its annexation and zoning requests, as well as $154,400 in engineering and other fees related to infrastructure improvements. Aspen Ridge later filed its own counterclaim.

Throughout the litigation, both sides denied the allegations made by the other party. In October, the city’s insurer, the Illinois Municipal League, told other parties that it intended to claim the city’s policy didn’t cover the allegations against the city in this lawsuit, according the Burd’s prepared statement.

“After carefully considering the substantial costs and uncertainties inherent to continued litigation, all of the parties opted to settle the case,” Burd said in the statement. “The settlement resolved and released all claims that were or could have been brought by any party to the litigation.”

The settlement agreement also states that the city and its insurer will cover $675,000 of the total settlement cost on behalf of the city and the city officials, except the engineering firm. Engineering Enterprises, Inc. will pay Aspen Ridge Estates $50,000, according to the agreement.

Aspen Ridge Estates and its affiliates cannot share information it learned during the litigation with the other parties in this litigation or anyone else who may be considering suing the other parties, according to the settlement agreement.

The agreement also limits what the parties can say publicly about the lawsuit. The city has to provide Engineering Enterprises, Inc. and Aspen Ridge Estates with copies of proposed news releases and allow them to be edited before they are distributed, according to the agreement.

Neither side admitted any liability as part of the settlement agreement.

Editor's note: This article was updated Thursday morning to reflect comments from an attorney for the city regarding Aldermen Joe Plocher's and Marty Munns' absence from the vote. On Thursday afternoon, the section on alleged document destruction was added.

Editor's note, part 2: An earlier version of this story had the incorrect date for the April 23, 2007, litigation hold letter.