Sugar Grove wins $2 million in lawsuit to finish subdivision's streets

Residents of the Settlers Ridge subdivision in Sugar Grove may finally see their streets and sidewalks finished, since a judge has ordered an insurance company to pay for the work.

Kane County Circuit Court Judge David Akemann ruled Nov. 13 that Fidelity and Deposit Co. of Maryland has to pay the village more than $2 million, so it can finish the work that was supposed to be done when Kimball Hill Corp. was building the subdivision in the mid-2000s.

When it began construction, Kimball Hill posted a bond with the village, guaranteeing it would finish building all the streets, sidewalks and other public infrastructure in the subdivision. The bond was backed by Fidelity, which is owned by Zurich Insurance of Schaumburg.

But Kimball Hill went bankrupt as a result of the 2008 recession and housing-market crash. Only 110 of 948 approved houses were built. Kimball Hill had planned to ultimately build about 2,400 units in the 1,300-acre development, roughly bounded by Route 56 and Galena Boulevard to the north and Gordon Road to the east.

The village tried to get Fidelity to pay for finishing the work in the areas it had built, including putting the final layer of asphalt on roads. The village estimated it would cost $2.9 million; Fidelity was willing to pay about $800,000, and claimed it wasn't responsible for the rest, according to village President Sean Michels.

Michels said Fidelity can appeal the judgment, but would have to pay interest on the money while the appeal is considered. A spokesman for Fidelity could not be reached for comment.

The village plans to finish the construction in the spring. Michels said it likely would have cost Fidelity less to contract the work themselves, because contractors the village hires have to pay prevailing-wage labor rates under state law, and those are usually higher.

Michels said the village spent about $300,000 in legal fees for the lawsuit.

"We are very pleased with the verdict," Michels said in a news release. "The residents have had to wait far too long for their roadways and other improvements to be completed. This verdict brings us closer to that reality. It is also is an important vindication of the process and that surety companies in Illinois cannot simply ignore the needs of the communities they purport to do business with."