Village Did Not Breach Contract by Failing to Disclose County Permit Requirements
According to a recent Illinois case, the
issuance of a building permit does not create a contract between an applicant
and a municipality. In 2008, Paul and Dana Mosier obtained a building
permit from the Village of Holiday Hills to construct a garage, patio, and
driveway on their property. Five years later, the Mosiers were sued by
McHenry County for constructing improvements within a regulatory flood-prone
area without a County stormwater management permit. In turn, the Mosiers
sued the Village for breach of contract and violations of the Consumer Fraud
and Deceptive Business Practices Act (“Consumer Fraud Act”).
Mosiers claimed the Village’s building inspector
breached an "oral contract" with them when he advised they undertake certain
structural improvements, issued a building permit, but failed to notify them of
the County’s permit requirements. In addition, the Mosiers claimed the
building official violated the Consumer Fraud Act because he induced them to
construct the improvements and knowingly made false statements.
In Mosier
v. Village of Holiday Hills, the court ruled in favor of the Village on
both claims. First, it deemed a building permit more similar to a license than a
contract because, similar to a license, a municipality has the power to impose
restrictions and revoke building permits pursuant to its police powers. Second, when an applicant qualifies for a building permit, a municipality is
required to issue it without receiving any “consideration” in return (other
than the permit fee which pays for its costs).
The court also found the Consumer Fraud Act
inapplicable. The Act is intended to prevent deceptive behavior during a
transaction “involving trade or commerce” involving such things as advertising,
offers for sale, or distribution of services or property. According to
the court, instead of being a private commercial activity, the issuance of a
building permit is a municipality’s fulfillment of its regulatory and statutory
functions in accordance with state law and local ordinance.
Post Authored by David Warner, Ancel Glink
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