Title: Board of Managers of the Village Centre Condominium Ass'n v. Wilmette Partners
Citation: N/A
Docket Number: 90439
State: Illinois
Issuer: Illinois Supreme Court
Date: November 21, 2001

Docket No. 90439-Agenda 18-September 2001.
THE BOARD OF MANAGERS OF THE VILLAGE CENTRE 
CONDOMINIUM ASSOCIATION, INC., Appellant, v. 
WILMETTE PARTNERS, an Illinois Limited Partnership, et al., 								Appellees.
Opinion filed November 21, 2001.
	JUSTICE THOMAS delivered the opinion of the court:
	At issue in this case are the requirements for a valid waiver of
the implied warranty of habitability. The plaintiff, the Board of
Managers of the Village Centre Condominium Association, Inc.
(the Board), as representative of the owners of condominium units
in relation to matters involving common elements, filed a one-count complaint in the circuit court of Cook County against
defendants, Wilmette Partners (Wilmette), and Wilmette's general
partner, Richard A. Keefe (Keefe), for breach of the implied
warranty of habitability. The breach concerned the garage of the
Board's condominium building.
	Defendants moved to dismiss the Board's complaint with
prejudice pursuant to section 2-619(a)(9) of the Illinois Code of
Civil Procedure (735 ILCS 5/2-619(a)(9) (West 1996)), on the
ground that a disclaimer in the purchase contracts entered into by
the unit owners and defendants barred any claims for breach of the
implied warranty of habitability. The circuit court agreed with
defendants and dismissed the Board's complaint with prejudice.
The circuit court thereafter denied the Board's motion to vacate
and entered a Supreme Court Rule 304(a) finding (155 Ill. 2d R.
304(a)). The Board thereafter filed a first amended complaint and
a second amended complaint. The Board's second amended
complaint remains pending before the circuit court.
	The appellate court adopted the circuit court's written order
as its order and affirmed the circuit court. No. 1-99-0571
(unpublished order under Supreme Court Rule 23). We allowed
the Board's petition for leave to appeal (177 Ill. 2d R. 315), and
now reverse the circuit and appellate courts.

BACKGROUND
	For purposes of reviewing a court's ruling on a defendant's
motion to dismiss, this court accepts as true the well-pleaded
allegations of a plaintiff's complaint. River Park, Inc. v. City of
Highland Park, 184 Ill. 2d 290, 293 (1998). The well-pleaded
facts in the Board's complaint show that in 1988 and 1989,
defendant Wilmette developed a 36-unit condominium building in
Wilmette, Illinois. The condominium building is a five-story
structure. The two lowest levels include an indoor parking garage,
which contains indoor ramps connecting the levels and leading
from the upper level of the garage to the street. The parking garage
is a common element of the building.
	Wilmette used various real estate contracts to sell the
condominium units. Twenty-nine of those contracts contained
purported waivers of the implied warranty of habitability, while
seven of those contracts did not. Only those contracts containing
purported waivers of the implied warranty of habitability are at
issue in this case.
	The Board's complaint alleges that the upper level of the
garage had certain specified design and construction defects which
were not apparent prior to the sale of the condominium units. As
a result of the design and construction defects, the concrete on the
upper level of the garage floor developed cracks and separated,
and the floor's structural support corroded. The upper level of the
garage thus was incapable of supporting its own weight, was
incapable of safely supporting the weight of normal vehicular
traffic in the garage, and was in danger of collapsing into the lower
level of the garage. Consequently, the garage could not be used by
the unit owners for its intended purpose.
	As noted, the Board filed suit against defendants for breach of
the implied warranty of habitability with regard to the parking
garage. Defendants then moved to dismiss the Board's complaint,
arguing that a disclaimer in the purchase agreements was a valid
disclaimer of the implied warranty of habitability. Defendants
contended that the disclaimer was so clear and conspicuous that no
other conclusion could be reached but that the unit owners read
and understood the language in those disclaimers.
	The disclaimers were set forth in section 10 of the purchase
contracts and provided:
			"EXCEPT AS EXPRESSLY SET FORTH IN THIS
PARAGRAPH 10, SELLER HEREBY EXCLUDES
AND DISCLAIMS ANY AND ALL OTHER
WARRANTIES, WHETHER EXPRESS OR IMPLIED,
INCLUDING BY WAY OF ILLUSTRATION AND NOT
LIMITATION, WARRANTIES OF FITNESS FOR
PARTICULAR PURPOSE AND MERCHANTABILITY.
			THE LIMITED WARRANTIES CONTAINED
HEREIN SHALL BE IN LIEU OF ANY OTHER
WARRANTY, WHETHER EXPRESSED OR IMPLIED,
PROVIDED THAT IN THE EVENT ANY ITEM
WARRANTED HEREIN IS DEEMED TO BE A
CONSUMER PRODUCT UNDER THE MAGNUSON-MOSS WARRANTY-FEDERAL TRADE
COMMISSION IMPROVEMENT ACT, THEN, AND
ONLY IN THAT EVENT, THE DISCLAIMER OF
IMPLIED WARRANTY SHALL COMMENCE FROM
AND AFTER THE EXPIRATION OF THE EXPRESS
WARRANTIES SET FORTH HEREIN."
	Following briefing and argument, the circuit court entered a
written order dismissing the Board's complaint with prejudice
pursuant to section 2-619. The circuit court rejected the Board's
argument that the disclaimer at issue was defective because it did
not use the phrase "implied warranty of habitability." The circuit
court also rejected the Board's argument that the disclaimer failed
to put unit owners on notice of its implications. The circuit court
concluded that given the conspicuous location of the disclaimer
near the signature page, the large size print of the disclaimer, and
the plain language of the disclaimer, the disclaimer was, as a
matter of law, part of the agreement between the parties. The
circuit court therefore held that the unit owners had waived and/or
disclaimed their warranties of habitability when they signed the
purchase contracts.
	The appellate court adopted the ruling of the circuit court in
its entirety. As noted, the Board then filed a petition for leave to
appeal to this court (177 Ill. 2d R. 315), which was granted.

ANALYSIS
	At the outset, we note that because this appeal arises from the
dismissal of the Board's complaint based upon section 2-619, our
review is de novo. Kedzie &amp; 103rd Currency Exchange, Inc. v.
Hodge, 156 Ill. 2d 112, 116 (1993). In this appeal, the Board again
challenges the circuit court's finding that the disclaimer at issue
was sufficient to defeat its claim. The Board argues that the circuit
and appellate courts erred in finding that the disclaimer: (1) did
not have to reference the implied warranty of habitability; (2) was
conspicuous; (3) made a full disclosure of the consequences of
disclaimer; and (4) was proven to be the "in-fact" agreement of the
parties.
	The dispute in this case essentially turns on language in this
court's decision in Petersen v. Hubschman Construction Co., 76 Ill. 2d 31 (1979). In Petersen, this court for the first time held that
the implied warranty of habitability applies to contracts for the sale
of new homes by builder-vendors. Petersen, 76 Ill. 2d  at 39-40.
We noted that the implied warranty of habitability in cases
concerning the sale of new homes by builder-vendors was a
judicial innovation of recent origin. Petersen, 76 Ill. 2d  at 38. The
implied warranty of habitability was created to avoid the harshness
of caveat emptor and the doctrine of merger where the purchasers
of new homes discover latent defects in their home. Petersen, 76 Ill. 2d  at 38. We concluded that "implied in the contract for sale
from the builder-vendor to the vendees is a warranty that the
house, when completed and conveyed to the vendees, would be
reasonably suited for its intended use." Petersen, 76 Ill. 2d  at 42.
	In defining the implied warranty of habitability in the context
of a new home purchase, we noted that the use of the term
"habitability" was unfortunate because that term implied that the
warranty was satisfied where a house merely was capable of being
inhabited. Petersen, 76 Ill. 2d  at 41. In fact, prior to Petersen, the
warranty of habitability was found to be violated only where a
home did not keep out the elements, did not provide a reasonably
safe place to live, or was not structurally sound. See Park v. Sohn,
90 Ill. App. 3d 794, 797-98 (1980), aff'd in part &amp; rev'd in part on
other grounds, 89 Ill. 2d 453 (1982). Consequently, in order to
clarify the implied warranty of habitability, we stated that the
meaning of habitability in the context of a new home purchase
might more accurately be conveyed through language similar to
that used in the Uniform Commercial Code (UCC) warranties of
merchantability or of fitness for a particular purpose. Petersen, 76 Ill. 2d  at 41-42. Drawing an analogy to the provisions of the UCC,
we held that implied in a contract for sale from a builder-vendor
is a warranty that the home, when completed and sold, would be
reasonably suited for its intended use. Petersen, 76 Ill. 2d  at 42.
	This court further held that a knowing disclaimer of the
implied warranty of habitability would not be against public
policy, although such a disclaimer must be strictly construed
against the builder-vendor. Petersen, 76 Ill. 2d  at 43. Quoting a
decision from the Supreme Court of Missouri, we held that a party
raising disclaimer as a defense must show that the disclaimer was
a conspicuous provision that fully disclosed its consequences, and
that the disclaimer in fact was the agreement reached by the
parties. Petersen, 76 Ill. 2d  at 43, quoting Crowder v.
Vandendeale, 564 S.W.2d 879, 881 n.4 (Mo. 1978).
	In their motion to dismiss, and again before this court,
defendants argue that based upon this court's language in
Petersen, a party need not use the phrase "implied warranty of
habitability" in order to effectively disclaim that warranty, but
instead may use the "more meaningful" terminology "implied
warranties of merchantability and fitness." Defendants then
contend that their disclaimer, using the terminology "implied
warranties of merchantability and fitness," effectively barred the
Board's cause of action because it was conspicuous, it fully
disclosed its consequences, and it was the agreement reached by
the parties.
	In support of their position, defendants cite the decision of the
Third District of the appellate court, in Country Squire
Homeowners Ass'n v. Crest Hill Development Corp., 150 Ill. App.
3d 30 (1986). The court in that case rejected the plaintiff's
argument that a disclaimer was defective because it failed to use
the phrase "warranty of habitability." Country Squire, 150 Ill. App.
3d at 32. The court held that the plaintiff's argument failed
"because the contract did use the more meaningful terminology
suggested by the supreme court-'the implied warranties of
merchantability and fitness.' " Country Squire, 150 Ill. App. 3d at
32. The circuit court in this case, although it did not cite Country
Squire, likewise held that the absence of the phrase "implied
warranty of habitability" was not fatal, "because the purchase
contracts used the more meaningful terminology suggested by the
supreme court in Petersen-'the implied warranties of
merchantability and fitness.' "
	In this court, the Board again argues that the disclaimer was
defective because it did not refer to the implied warranty of
habitability by name. The Board observes that aside from the court
in Country Squire, appellate court panels have focused on whether
a disclaimer mentioned the word "habitability" as a factor in
deciding whether a disclaimer was valid. See Briarcliffe West
Townhouse Owners Ass'n v. Wiseman Construction Co., 134 Ill.
App. 3d 402, 410 (1985); Herlihy v. Dunbar Builders Corp., 92
Ill. App. 3d 310, 316 (1980); Tassan v. United Development Co.,
88 Ill. App. 3d 581, 589 (1980). The Board argues that the court
in Country Squire erred in finding that the terms "merchantability"
and "fitness for a particular purpose" are effective substitutes for
"implied warranty of habitability," as this court in Petersen was
referencing the UCC for purposes of analogy only.
	We agree. In Petersen, this court stated that it was drawing an
analogy to the UCC in order to more accurately convey the
meaning of the implied warranty of habitability. Petersen, 76 Ill. 2d  at 41-42. More recently, in Board of Directors of Bloomfield
Club Recreation Ass'n v. Hoffman Group, Inc., 186 Ill. 2d 419
(1999), we again noted that reference to the UCC in Petersen was
for purposes of analogy. Specifically, we noted that:
			"[T]he Association mischaracterizes the purpose behind
our comparison of the implied warranty of habitability
with the commercial warranties of merchantability and
fitness for a particular purpose. *** In departing from that
inequitable approach [of requiring a dwelling to be wholly
unsafe and unliveable in order to support a claim], the
court found favor in viewing the implied warranty of
habitability as somewhat like the warranties of
merchantability and fitness for a particular purpose. ***
Therefore, even in drawing a comparison with the
Uniform Commercial Code, the court kept intact both
main elements of the implied warranty of habitability-a
lack of defects affecting the residential unit and the fitness
of that unit for use as a residence." (Emphasis added.)
Board of Directors of Bloomfield Club, 186 Ill. 2d  at 427-28.
	It is clear, then, that in analogizing the implied warranty of
habitability to the UCC warranties, this court never intended that
those warranties would be interchangeable. Given that the implied
warranty of habitability is distinct from other warranties by its very
nature, we find any disclaimer that does not reference the implied
warranty of habitability by name is not a valid disclaimer of that
warranty. Consequently, because the disclaimer in this case did not
refer to the implied warranty of habitability by name, that
disclaimer was not effective to waive the warranty. The circuit
court, therefore, erred in dismissing the Board's complaint with
prejudice pursuant to section 2-619(a)(9) of the Code on the
ground that the disclaimer barred the Board's cause of action.
	Because we find that the disclaimer in this case was not valid
because it did not refer to the implied warranty of habitability by
name, we need not address the Board's additional claims that the
disclaimer at issue was invalid because it did not appear on the
signature page, it was not conspicuous, it did not make a full
disclosure of its consequences, and it was not proven to be the in
fact agreement of the parties. We do note that in most cases,
however, those issues will present questions of fact unique to each
case.
	The Board also asks this court to adopt or recommend the
model disclaimer of the implied warranty of habitability published
by the Chicago Bar Association. See T. Homburger, The Waiver
and Disclaimer of the Implied Warranty of Habitability, Chi. B.
Rec. 364, Appendix I (May-June 1984). Although we decline to
adopt that disclaimer as the law of this court, we do observe that
disclaimers such as that published by the Chicago Bar Association
or similar to the disclaimer at issue in Breckenridge v. Cambridge
Homes, Inc., 246 Ill. App. 3d 810, 813-14 (1993), clearly identify
the implied warranty of habitability, set forth the consequences of
waiving the warranty, and establish that the disclaimer was the
agreement of the parties. As the court noted in Breckenridge,
where disclaimer language is brought to a purchasers' attention,
the consequences of the waiver are made known to the purchasers,
and the purchasers knowingly waive their rights to pursue an
action for any alleged breach of the implied warranty of
habitability, there is an effective disclaimer of the implied
warranty of habitability under Petersen. See Breckenridge, 246 Ill.
App. 3d at 818-19.

CONCLUSION
	For all the foregoing reasons, the judgments of the appellate
and circuit courts are reversed, and the cause is remanded to the
circuit court of Cook County for further proceedings consistent
with this opinion.
Reversed and remanded.