IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION

JOSEPH LEVATO and ANGELA 

DEVATO, 

Plaintiffs, 

v. 

MARY A. O’CONNOR, MARY A. 

O’CONNOR TRUST, GALE G. 

ACKER and GALE G. ACKER 

TRUST, 

Defendants. 

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No. 20 C 1999 

Magistrate Judge 

Maria Valdez

MEMORANDUM OPINION AND ORDER 

 Before the Court is Defendants’ Motion for Summary Judgment [Doc. No. 33]. 

The parties have consented to the jurisdiction of the United States Magistrate 

Judge pursuant to 28 U.S.C. § 636(c). For the reasons that follow, Defendants’ 

motion is denied. 

FACTS1

 Defendants previously owned a house and parcel of land (the “Property”) 

located at 111 East Clarendon Street, Prospect Heights, Illinois, which is within 

this judicial district. (LR 56.1(a)(3) ¶¶ 2-3; LR 56.1(b)(3) ¶ 16.) Plaintiffs are 

residents of Illinois and Defendants are residents of Arizona. (LR 56.1(a)(3) ¶ 2.) 

1 Unless otherwise noted, the following material facts are undisputed or are deemed 

admitted due to a party’s failure to comply with Local Rule 56.1, which this Court strictly 

enforces. 

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The amount in controversy in the case exceeds $75,000, (id.), and thus the Court 

has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a). 

 On April 27, 2019, Defendants listed the Property for sale and executed a 

Residential Real Property Disclosure Report that did not refer to or disclose certain 

alleged defects. (Id. ¶ 6.) The alleged defects that Defendants did not disclose 

included (a) “a problem with the air conditioning system that caused an 

accumulation of moisture and, therefore, mold growth throughout the system[,]” (b) 

“a defect in the drain tile system involving the presence of iron bacteria that causes 

clogs in the drains, pipes, and the sump pump[,]” and (c) “recurring leakage and/or 

seepage issues in the basement of the Property.” (Id. ¶ 5; LR 56.1(b)(3) ¶ 5.) 

Defendants and Plaintiffs entered a contract for the sale of the Property on April 29, 

2019 and closed on the sale on May 30, 2019. (LR 56.1(a)(3) ¶ 7.) 

 Defendants previously had the drain tile system at the Property “jetted” 

twice per year to clear out iron bacteria buildup. (LR 56.1(b)(3) ¶ 18.) If the iron 

bacteria buildup was not dealt with, the iron bacteria would eventually clog the 

drain tile system. (Id. ¶ 19.) Defendants had the drain tile system jetted on April 19, 

2019, prior to selling the Property to Plaintiffs. (Id. ¶ 22.) As part of the sale of the 

Property, on April 29, 2019 Defendants provided Plaintiffs with a copy of the 

Disclosure Report. (Id. ¶ 23.) 

 Prior to closing, Plaintiffs discovered that there was no radiant heat in the 

floor of the basement bedroom. (LR 56.1(a)(3) ¶ 9.) The parties determined that they 

would set aside $5,000 to make sure the basement bedroom radiant floor heating 

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was working. (Id.) On July 8, 2019, after Plaintiffs learned that repairs would need 

to be made to the radiant floor heating, the parties agreed that Plaintiffs would 

receive $2,758 of the escrow to pay the repair quote. (Id. ¶ 13.) Plaintiff Joseph 

Levato thereafter signed a release (the “Release”) in exchange for the $2,758, which 

stated that Mr. Levato would indemnify, hold harmless, and release Defendants “for 

any issues stemming from or arising out of [the] purchase of [the property], 

including but not limited to the radiant heat in the basement bedroom.” (LR 

56.1(a)(3) ¶ 15.) 

 On or about May 26, 2019, Plaintiffs did a walkthrough of the Property with 

Defendants before the closing on May 30, 2019. (LR 56.1(b)(3) ¶ 26.) On or about 

November 30, 2019, Plaintiffs discovered the alleged defects including the existence 

of mold in the air conditioning system. (LR 56.1(a)(3) ¶ 8; LR 56.1(b)(3) ¶ 31.) In 

February 2020, Plaintiffs discovered water stains on the ceilings of the main floor of 

the Property. (LR 56.1(b)(3) ¶ 35.) 

DISCUSSION 

I. SUMMARY JUDGMENT STANDARD 

 Summary judgment is appropriate where “the pleadings, depositions, 

answers to interrogatories, and admissions on file, together with the affidavits, if 

any, show that there is no genuine issue as to any material fact and that the moving 

party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). The Court 

must draw all reasonable inferences in favor of the nonmovant. Bennington v. 

Caterpillar Inc., 275 F.3d 654, 658 (7th Cir. 2001). 

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However, once the movant has carried its burden under Rule 56(c), “its 

opponent must do more than simply show that there is some metaphysical doubt as 

to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 

574, 586 (1986). The party opposing summary judgment must offer admissible 

evidence in support of his version of events, and hearsay evidence does not create a 

genuine issue of material fact. McKenzie v. Ill. Dep’t of Transp., 92 F.3d 473, 484 

(7th Cir. 1996); see Larimer v. Dayton Hudson Corp., 137 F.3d 497, 500 (7th Cir. 

1998) (“‘If the non-moving party bears the burden of proof on an issue, . . . that 

party may not rest on the pleadings and must instead show that there is a genuine 

issue of material fact.’”) (citation omitted). “The mere existence of an alleged factual 

dispute is not sufficient to defeat a summary judgment motion. . . . The nonmovant 

will successfully oppose summary judgment only when it presents ‘definite, 

competent evidence to rebut the motion.’” Vukadinovich v. Bd. of Sch. Trs. of N. 

Newton Sch. Corp., 278 F.3d 693, 699 (7th Cir. 2002) (citations omitted). 

Furthermore, courts are “‘not required to draw every conceivable inference from the 

record,”’ United States v. Luce, 873 F.3d 999, 1005 (7th Cir. 2017) (citation omitted), 

nor do they “have to scour the record or make a party’s argument for it,” Varlen 

Corp. v. Liberty Mut. Ins. Co., 924 F.3d 456, 460 (7th Cir. 2019). 

II. ANALYSIS 

 The parties’ dispute centers completely around whether the Release signed 

by Plaintiffs is valid, enforceable, and encompasses the defects alleged in the 

complaint. If the answer to that collective inquiry is “yes” and there are no material 

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issues of fact as to the validity and scope of the Release, Defendants are entitled to 

summary judgment on all claims alleged in the complaint. Plaintiffs argue, 

however, that the Release is unenforceable because it was obtained by fraud and 

does not encompass the defects at issue, and that determination of both (1) the 

validity and (2) the scope of the Release involve disputed issues of material fact. The 

Court agrees with Plaintiffs that genuine issues of material fact exist as to both the 

validity and scope of the Release. 

A. Validity 

Under Illinois law, a release is a contract and is governed by contract law. 

Farm Credit Bank of St. Louis v. Whitlock, 144 Ill.2d 440, 447 (1991). As with any 

other contract, a “release may be set aside if there is fraud in the inducement.” 

Havoco of Am., Ltd. v. Sumitomo Corp. of Am., 971 F.2d 1332, 1341 (7th Cir. 1992) 

(citing Phil Dressler & Assoc. v. Old Oak Brook Inv. Corp., 192 Ill. App. 3d 577 (2d 

Dist. 1989)). Fraudulent inducement occurs where the following elements are met: 

(1) a false statement of material fact; (2) known or believed to be false by the person 

making it; (3) an intent to induce the other party to act; (4) action by the other party 

in reliance on the truth of the statement; and (5) damage to the other party 

resulting from such reliance. Id. (citation omitted). 

 Plaintiff argues the Release was obtained by fraud because Defendants 

knowingly misrepresented and concealed the existence of iron bacteria in the drain 

tile system, water intrusion issues at the Property, and defects in the air 

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conditioning system, and but for the misrepresentations, Plaintiffs would not have 

signed the Release. 

The Court agrees that whether Defendants fraudulently induced Plaintiffs 

into purchasing the Property, and signing the Release, by intentionally concealing 

defects and making false statements in the disclosure report, is a disputed question 

of fact which could change the outcome of the case. See Janowiak v. Tiesi, 402 Ill. 

Supp. 3d 997, 1005 (1st Dist. 2010) (stating that “genuine issues of material fact 

remain concerning whether there was fraud in the inducement of the release, which 

could invalidate the release in its entirety. Where such facts are alleged, an issue of 

material fact exists, which if proven, would likely defeat the affirmative defense of 

prior release.”). For example, Defendants had the drain tile system at the Property 

“jetted” twice per year to clear out iron bacteria buildup, which may have prevented 

Plaintiffs from learning of its existence. (See LR 56.1(b)(3) ¶ 18.) Because the 

Release would be invalid under Illinois law if induced by fraud, and that could 

change the outcome of the case, the issue in inappropriate for summary judgment. 

B. Scope 

If the Release’s terms are “clear and explicit, the court must enforce them as 

written and construction of the release is a question of law.” Construction Systems, 

Inc. v. FagelHaber, LLC, 2015 IL App (1st) 141700, ¶ 25 (citation omitted). 

“Releases are construed against the benefitting party and must spell out the 

intention of the parties with great particularity.” Fuller Family Holdings, LLC v. 

Northern Trust Co., 371 Ill.App.3d 605, 614 (2007) (citation omitted). The scope and 

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effect of a release are determined from both the express language of the release and 

“the circumstances surrounding its execution.” Construction Systems, 2015 IL App 

(1st) 141700, ¶ 25. “Under Illinois law, a release will not be construed to defeat a 

valid claim that was not contemplated by the parties at the time the agreement was 

executed, and general words of release are inapplicable to claims that were 

unknown to the releasing party. Id. (citing Whitlock, 144 Ill.2d at 447). 

 Although the construction of the Release is ultimately an issue of law, the 

“circumstances surrounding its execution” is a question of fact and disputed issues 

of fact related to the circumstances may defeat summary judgment. See 

Construction Systems, 2015 IL App (1st) 141700, ¶ 25. Here, the Court finds that 

genuine issues of material fact exist as to the scope of the Release, which would 

make a legal conclusion regarding the scope inappropriate at summary judgment. 

The language of the Release is one issue, but “[t]he intention of the parties 

controls the scope and effect of a release, and this intent ‘is discerned from the 

language used and the circumstances of the transaction.’” Carlile v. Snap-on Tools, 

271 Ill. App. 3d 833, 838 (4th Dist. 1995) (emphasis in original). Furthermore, “[a] 

release cannot be construed to include claims not within the contemplation of the 

parties.” Id. Plaintiffs signed the Release without being aware of the defects they 

claim were fraudulently concealed, so the scope of the Release cannot be determined 

without resolution of the genuine issues of disputed fact regarding the 

circumstances surrounding the execution of the Release, including whether and to 

what extent Defendants concealed certain defects. 

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CONCLUSION

 For the foregoing reasons, Defendants’ Motion for Summary Judgment [Doc. 

No. 33] is denied. 

SO ORDERED. ENTERED: 

 

 

 

DATE: June 17, 2021 ___________________________

 HON. MARIA VALDEZ 

 United States Magistrate Judge

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