Court Opinion

ID: 9226177
Source: CourtListenerOpinion
Date Created: 2022-11-28 16:02:32.443873+00
Date Added: 2024-06-11T17:12:45.551232
License: Public Domain

2022 IL 128040

                                        IN THE
                               SUPREME COURT
                                           OF
                         THE STATE OF ILLINOIS

                                   (Docket No. 128040)

                 HARRY CHANNON et al., Appellees, v. WESTWARD
                        MANAGEMENT, INC., Appellant.

                            Opinion filed November 28, 2022.

        JUSTICE CARTER delivered the judgment of the court, with opinion.

        Chief Justice Theis and Justices Anne M. Burke, Neville, Overstreet, and
     Holder White concurred in the judgment and opinion.

        Justice Michael J. Burke specially concurred, with opinion.

                                        OPINION

¶1      In this appeal, we answer the following certified question:

        “Whether section 22.1 of the Condominium Property Act provides an implied
        cause of action in favor of a condominium unit seller against a property
        manager, as agent of a condominium association or board of directors, based on
        allegations that the property manager charged excessive fees for the production
        of information required to be disclosed to a prospective buyer under that
        statute.”

     The appellate court answered the question in the affirmative. 2021 IL App (1st)
     210176, ¶ 38.

¶2      After applying the test from Metzger v. DaRosa, 209 Ill. 2d 30, 36 (2004), we
     conclude that section 22.1 of the Condominium Property Act (Act) (765 ILCS
     605/22.1 (West 2016)) does not create an implied private right of action by
     condominium unit sellers. Because we answer the certified question in the negative,
     we reverse the appellate court judgment and remand the cause to the circuit court.

¶3                                   I. BACKGROUND

¶4       The plaintiffs, Harry and Dawn Channon, decided to sell their condominium
     unit in the Kenmore Club Condominium Association (Association). Section 22.1
     of the Act (id.) requires condominium unit sellers to obtain specific disclosure
     documents from the Association or its agent prior to a sale and to provide them to
     potential buyers on request. After entering into a standard sales contract with a
     potential buyer who requested those disclosures, the Channons obtained them from
     the defendant, Westward Management, Inc. (Westward), a management agent hired
     by the Association’s board of managers. Westward charged the Channons $245 for
     the documents.

¶5       The Channons later filed a class-action lawsuit in the Cook County circuit court,
     naming Westward as the defendant. In one count, they alleged that Westward
     violated section 22.1 of the Act by charging unreasonable fees for the statutorily
     required documents. In a separate count, their complaint asserted that Westward’s
     conduct also violated the Consumer Fraud and Deceptive Business Practices Act
     (Fraud Act) (815 ILCS 505/1 et seq. (West 2016)).

¶6      Westward filed a motion to dismiss, which was denied. At Westward’s request,
     however, the trial court certified a question of law to the appellate court:

                                             -2-
          “Whether section 22.1 of the Condominium Property Act provides an implied
          cause of action in favor of a condominium unit seller against a property
          manager, as agent of a condominium association or board of directors, based on
          allegations that the property manager charged excessive fees for the production
          of information required to be disclosed to a prospective buyer under that
          statute.”

¶7         In answering the certified question, the appellate court applied the four-factor
       test from Metzger, 209 Ill. 2d at 36. The Metzger test examines whether (1) the
       plaintiffs are members of the class the statute was intended to benefit, (2) the statute
       was designed to prevent the plaintiffs from suffering the injury they incurred,
       (3) the statute’s purpose is consistent with the creation of a private right of action,
       and (4) it is necessary to imply a private right of action to provide an adequate
       remedy for the statutory violation. Id.

¶8         After reviewing the first factor, the appellate court determined that, while the
       primary purpose of section 22.1 was to protect potential buyers, it was also intended
       to protect sellers. 2021 IL App (1st) 210176, ¶ 21. Because sellers typically lack
       personal access to the mandated disclosure documents, they must seek them from
       their condominium associations. By limiting the fee that could be charged for those
       documents, that section benefitted the sellers who were required to provide them to
       potential buyers. The appellate court concluded, therefore, that the Channons were
       members of a class that section 22.1 was intended to benefit, satisfying the first
       factor in the Metzger test. Id. ¶ 22.

¶9         In considering the second Metzger factor, the appellate court noted that section
       22.1 permits sellers to be charged “ ‘[a] reasonable fee covering the direct out-of-
       pocket cost of providing [the required] information.’ ” Id. ¶ 23 (quoting 765 ILCS
       605/22.1(c) (West 2016)). Because Westward allegedly charged fees that exceeded
       its “direct out-of-pocket costs,” the appellate court concluded that the Channons
       incurred precisely the type of injury the statute was intended to prevent. Id.

¶ 10       The court then reviewed the third factor of the Metzger test. Id. ¶ 24. It
       concluded that implying a private right of action for sellers required to pay
       excessive fees to obtain the mandated disclosure documents was consistent with the
       legislative intent expressed in section 22.1 because placing a ceiling on the fees that
       could be charged protects sellers. Id.

                                                -3-
¶ 11       Addressing the fourth Metzger factor, the appellate court found that implying a
       private right of action was necessary to give unit sellers an adequate remedy for
       violations of section 22.1. Id. ¶ 25. Because the statute lacked an express
       enforcement mechanism, the appellate court believed it would be ineffective if a
       private right of action were not implied. Id. Stating that the issue was not part of
       the certified question before it and had been insufficiently briefed, the appellate
       court declined to address Westward’s argument that here the Fraud Act provides
       the Channons with an adequate alternative source of relief. Id. ¶ 26.

¶ 12       By answering the certified question in the affirmative, the appellate court
       rejected the contrary holdings in Horist v. Sudler & Co., 941 F.3d 274 (7th Cir.
       2019), Ahrendt v. Condocerts.com, Inc., No. 17-cv-8418, 2018 WL 2193140, at *2
       (N.D. Ill. May 14, 2018), and Murphy v. Foster Premier, Inc., No. 17 CV 8114,
       2018 WL 3428084, at *3 (N.D. Ill. July 16, 2018), because they construed the
       legislative purpose underlying section 22.1 too narrowly. 2021 IL App (1st)
       210176, ¶ 27. The court also distinguished the decisions in Nikolopulos v.
       Balourdos, 245 Ill. App. 3d 71 (1993), and D’Attomo v. Baumbeck, 2015 IL App
       (2d) 140865, finding that they did not address the question of whether section 22.1
       was intended to protect sellers. 2021 IL App (1st) 210176, ¶ 27. Thus, the court
       effectively upheld the trial court’s denial of Westward’s dismissal motion.

¶ 13        The appellate court next considered whether a seller’s section 22.1 implied a
       private right of action could be asserted against a property manager that was acting
       as the agent of a condominium board of managers, such as Westward. Id. ¶ 28.
       Westward contended that section 19 of the Act obliged only the Association, not
       its contractual agent, to provide sellers with the specified information at its actual
       cost. Westward asserted that an aggrieved seller could still pursue a direct cause of
       action against the Association for breach of its statutory duty. See 765 ILCS 605/19
       (West 2016). By creating a remedial action under section 19, the legislature
       demonstrated its intent to make condominium associations and boards of managers
       directly responsible for providing the mandated disclosures at a reasonable cost.

¶ 14       The appellate court rejected that argument and declined to apply section 19 as
       an interpretative guide for construing section 22.1, reasoning that section 19 lacked
       a clear legislative intent to impose exclusive liability for section 22.1 violations on
       associations and their boards. 2021 IL App (1st) 210176, ¶ 35. Because Westward

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       contracted with the Association to act as its agent for the purpose of fulfilling its
       statutory duties under the Act, the appellate court concluded that Westward could
       also be liable if it actively participated in breaching the Association’s section 22.1
       duty. Id.; see Landau v. Landau, 409 Ill. 556, 564 (1951).

¶ 15       Westward filed a petition for leave to appeal in this court, and we allowed that
       petition. Ill. S. Ct. R. 308 (eff. July 1, 2017); R. 315 (eff. Oct. 1, 2021).

¶ 16                                      II. ANALYSIS

¶ 17      The only issue before this court is the instant certified question:

          “Whether section 22.1 of the Condominium Property Act provides an implied
          cause of action in favor of a condominium unit seller against a property
          manager, as agent of a condominium association or board of directors, based on
          allegations that the property manager charged excessive fees for the production
          of information required to be disclosed to a prospective buyer under that
          statute.”

       The resolution of that question requires us to construe the Act, creating a question
       of law that we review de novo. Metzger, 209 Ill. 2d at 34. In construing a statute,
       our principal objective is to ascertain and effectuate the underlying legislative
       intent. The best way to accomplish that goal is to apply the plain language of the
       statute, when read as a whole, whenever possible. Id. at 34-35, 37.

¶ 18      In relevant part, section 22.1 of the Act states:

              “§ 22.1. (a) In the event of any resale of a condominium unit by a unit owner
          other than the developer such owner shall obtain from the Board of Managers
          and shall make available for inspection to the prospective purchaser, upon
          demand, the following:

                 (1) A copy of the Declaration, by-laws, other condominium instruments
              and any rules and regulations.

                  (2) A statement of any liens, including *** unpaid assessments and
              other charges due ***.

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                 (3) A statement of any capital expenditures anticipated by the unit
              owner’s association ***.

                 (4) A statement of the status and amount of any reserve for replacement
              fund and any portion of such fund earmarked for any specified project ***.

                  (5) A copy of the statement of financial condition of the unit owner’s
              association for the last fiscal year ***.

                  (6) A statement of the status of any pending suits or judgments in which
              the unit owner’s association is a party.

                  (7) A statement setting forth what insurance coverage is provided for all
              unit owners by the unit owner’s association.

                  (8) A statement that any improvements or alterations made to the unit,
              or the limited common elements assigned thereto, by the prior unit owner
              are in good faith believed to be in compliance with the condominium
              instruments.

                 (9) The identity and mailing address of the principal officer of the unit
              owner’s association *** as is specifically designated to receive notices.”

              (b) The principal officer of the unit owner’s association *** shall furnish
          the above information when requested to do so in writing and within 30 days of
          the request.

              (c) ***

              A reasonable fee covering the direct out-of-pocket cost of providing such
          information and copying may be charged by the association or its Board of
          Managers to the unit seller for providing such information.” 765 ILCS 605/22.1
          (West 2016).

¶ 19       Breaking section 22.1 into its component parts, subsection (a) requires owners
       who wish to sell their condominium units to obtain and disclose specific
       information about the legal structure and rules of the condominium association as
       well as information about its financial status. Id. § 22.1(a). Subsection (b)
       effectuates subsection (a) by requiring the association to provide that

                                              -6-
       documentation within 30 days of the seller’s written request. Id. § 22.1(b). Finally,
       subsection (c) establishes a ceiling for the fee sellers may be charged to obtain that
       information. That fee must be “reasonable” and reflect the “direct out-of-pocket
       cost of providing such information and copying.” Notably, subsection (c) refers to
       only a fee that “may be charged by the association or its Board of Managers to the
       unit seller.” Id. § 22.1(c). Here, the Association chose not to fulfill that duty itself,
       instead contracting with Westward to provide the requisite information, along with
       other enumerated duties.

¶ 20       The instant appeal arose after the Channons, who wished to sell the
       condominium unit they owned, filed a lawsuit against Westward, alleging that the
       $245 fee it charged them to obtain the subsection (a) disclosures violated the
       “reasonable fee” limitation set forth in subsection (c). They did not pursue a
       potential statutory claim against the Association or its board of managers. Because
       the Act does not expressly provide for a private right of action against an agent of
       an association such as Westward, we are asked to determine whether section 22.1
       creates an implied right of action by a unit seller against the designated agent of a
       condominium association for an alleged violation of subsection (c). As this court
       has explained, “we will ‘imply a private remedy where there exists a clear need to
       effectuate the purpose of an act.’ ” (Emphasis in original.) Board of Education of
       Chicago v. A, C & S, Inc., 131 Ill. 2d 428, 471 (1989) (quoting Sawyer Realty
       Group, Inc. v. Jarvis Corp., 89 Ill. 2d 379, 389 (1982)). Our prior case law has
       implied that remedy only if “the statute would be ineffective, as a practical matter,
       unless a private right of action were implied.” Abbasi v. Paraskevoulakos, 187 Ill.
       2d 386, 395 (1999).

¶ 21       In answering a certified question addressing whether an Illinois Personnel Code
       (20 ILCS 415/19c.1 (West 2002)) provision created an implied private right of
       action in Metzger, 209 Ill. 2d at 36, we applied the four-factor test previously set
       out in Fisher v. Lexington Health Care, Inc., 188 Ill. 2d 455, 460 (1999). Under the
       Metzger test, courts examine whether (1) the plaintiffs are members of the class the
       statute was intended to benefit, (2) the statute was designed to protect the plaintiffs
       from suffering the kind of injury they incurred, (3) the statute’s purpose is
       consistent with the creation of a private right of action, and (4) it is necessary to
       imply a private right of action to provide an adequate remedy for a violation of the

                                                 -7-
       statute. Metzger, 209 Ill. 2d at 36. The appellate court and the parties to this appeal
       all employed that test, and we agree that it is dispositive.

¶ 22       Turning to the first factor, we consider whether the Channons are part of the
       class section 22.1 was intended to benefit. The parties’ arguments largely focus on
       whether the plaintiffs are members of the class the legislature intended to primarily
       benefit or if their receipt of a merely incidental benefit is sufficient to confer class
       status. Westward argues that, as unit sellers, the Channons must establish that the
       legislature intended them to receive the primary benefit of the statutory protection.
       For their part, the Channons contend that receiving even an incidental benefit will
       suffice.

¶ 23       The test recited in Metzger, 209 Ill. 2d at 36, did not expressly require the
       plaintiffs to be the intended recipients of a “primary” benefit. Throughout our
       analysis, however, we sprinkled numerous references to receipt of a “primary”
       benefit, adding that judicial gloss to the first factor. See id. at 38 (The court stated
       that, “[w]hen viewed as a whole, it is clear that the Personnel Code was primarily
       designed to benefit the state and the people of Illinois by ensuring competent
       employees for government bodies,” (citing Fisher, 188 Ill. 2d at 463), for the
       proposition that the “primary purpose of Nursing Home Care Act is to protect
       nursing home residents, despite specific provision protecting nursing home
       employees from retaliation for reporting violation of Act,” and concluding “that the
       Personnel Code was enacted primarily to benefit the state and the people of Illinois
       by providing efficient government administration. Therefore, Metzger is not a
       member of the primary class for whose benefit the statute was enacted.”); id. at 39
       (explaining that “[j]ust as state employees are not the class for whom the statute
       was primarily enacted to benefit, it is clear that the Personnel Code was not
       primarily designed to prevent retaliation against state employees”).

¶ 24       Read in its entirety, section 22.1(a) expressly obliges a condominium owner
       who wishes to resell a unit to “obtain from the Board of Managers and *** make
       available for inspection to the prospective purchaser, upon demand” a
       comprehensive assortment of information related to the financial obligations and
       well-being of the unit and its condominium association. Applying the plain
       meaning of the statutory language, sellers were given a duty to disclose, not a
       protection. See 765 ILCS 605/22.1(a) (West 2016). The mandate that sellers make

                                                -8-
       those disclosures was clearly intended to protect potential buyers by providing them
       with information vital to making their purchasing decisions. It is virtually
       unimaginable that the legislature’s decision to include that litany of nine distinct
       types of mandated disclosures was intended to protect anyone other than a potential
       unit buyer. We conclude that section 22.1(a)’s mandated disclosures establish a
       clear legislative intent to impose a duty on unit sellers for the sole benefit of
       potential buyers.

¶ 25       That conclusion is furthered by our review of subsection (b), requiring the
       association’s “principal officer” to make those mandated disclosures within 30 days
       of a written request by a seller. Id. § 22.1(b). On its face, the plain language of that
       requirement again protects only potential buyers by providing them with timely
       access to information needed to make their purchasing decisions. The time limit
       offers no benefit to unit sellers that we can discern.

¶ 26       Nonetheless, the Channons argue that subsection (c) shows a legislative intent
       to provide unit sellers with a benefit by limiting the sum they may be charged to
       obtain disclosures to “[a] reasonable fee covering the direct out-of-pocket cost of
       providing such information and copying.” Id. § 22.1(c). Although the Channons
       maintain that this limit is plainly intended to benefit sellers by making the requisite
       documents more affordable for them to obtain, that language can just as readily be
       viewed as aiding potential buyers by ensuring that information critical to their
       purchasing decisions is readily available. In that way, the protections in subsection
       (c) are similar to the time limit the legislature imposed on associations stated in
       subsection (b).

¶ 27       Reading section 22.1 as a whole and applying the judicial gloss announced in
       Metzger, the legislative intent of that section is primarily to benefit potential unit
       buyers. The single benefit arguably bestowed on sellers in subsection (c) is merely
       incidental to the underlying purpose of section 22.1. We hold that the plain and
       ordinary meaning of that section clearly establishes the legislature’s intent of
       protecting potential buyers of condominium units. Because the Channons are not
       members of a class the legislature primarily intended to benefit in section 22.1, they
       have failed to establish the first prong of the Metzger test.

¶ 28      Although we need not look further than the plain statutory language in our
       analysis, we note that this conclusion is further bolstered by the legislative history

                                                -9-
       of section 22.1. Because that section was not originally part of the Act, potential
       buyers originally had no statutory right to receive information about the operation
       and incurred expenses of a condominium unit or its association. When section 22.1
       was added in 1980 to enable buyers to make better informed decisions, associations
       were permitted to charge sellers a “reasonable fee” “not to exceed 10 cents per page
       of copy.” Ill. Rev. Stat. 1981, ch. 30, ¶ 322.1. Sellers, however, had to provide
       buyers with that information free of charge. See id. By imposing the expense of
       providing the requisite disclosures on sellers rather the buyers, the amendment’s
       plain language strongly suggests that the legislature intended to primarily benefit
       buyers.

¶ 29       Moreover, eight years before section 22.1 was enacted, section 22 required
       developers to disclose similar information to the original buyers of new
       condominium units. See Ill. Rev. Stat. 1973, ch. 30, § 322. The House sponsor of
       that provision deemed it a “ ‘truth in selling’ ” bill. Mikulecky v. Bart, 355 Ill. App.
       3d 1006, 1011 (2004) (quoting 77th Ill. Gen. Assem., House Proceedings, May 15,
       1972, at 149 (statements of Representative Regner)). In Mikulecky, our appellate
       court concluded that the primary purpose of section 22 was to meet “the need for
       purchaser protection” from hidden management agreements. Id. Later, section 22
       served as a model for section 22.1, suggesting that the legislature intended to imbue
       section 22.1 with that same primary purpose. Indeed, in Nikolopulos, 245 Ill. App.
       3d at 77, the appellate court reached the same conclusion, determining that section
       22.1 was “clearly designed to protect prospective purchasers of condominium
       units.” Similarly, in D’Attomo, the appellate court expressly followed Nikolopoulos
       and Mikulecky (D’Attomo, 2015 IL App (2d) 140865, ¶¶ 34, 37), concluding that
       section 22.1 was enacted with the goal of protecting potential unit buyers (id. ¶¶ 39,
       47).

¶ 30        Federal case law addressing section 22.1 has also reached that conclusion. In
       Horist, 941 F.3d 274, the Seventh Circuit Court of Appeals affirmed the trial court’s
       finding that condominium unit sellers in a class-action lawsuit had no express or
       implied cause of action for alleged violations of the fee limits imposed in section
       22.1. In reaching that conclusion, the Seventh Circuit applied the four-factor
       Metzger test and relied on our appellate court’s analysis in Nikolopulos, stating that
       it “largely control[led] the outcome.” Id. at 279. Concluding that section 22.1 was
       intended to protect potential buyers, the Seventh Circuit expressly rejected the

                                                - 10 -
       argument raised here by the Channons, namely that the fee limit in section 22.1
       indicates a legislative intent to protect sellers. Id. We join the Seventh Circuit in
       rejecting that argument in light of the plain meaning of the statutory language
       enacted.

¶ 31        As we recognized in Abbasi, 187 Ill. 2d at 393, without a “clear need” for this
       court to imply a private right to obtain relief, “[i]t is unnecessary to analyze in detail
       all four” Metzger factors. Because the Channons have failed to establish the first
       factor by showing that they are members of the class the Act was intended to
       benefit, they cannot prove a “clear need” for an implied private right of action.
       Under the facts of this case, we conclude the legislature did not intend section 22.1
       to imply a private right to relief for unit sellers such as the Channons.

¶ 32                                     III. CONCLUSION

¶ 33       The standard that must be met for a court to imply a private right of action in a
       statute is quite high. We will take that extraordinary step only when it is clearly
       needed to advance the statutory purpose and when the statute would “be ineffective,
       as a practical matter, unless a private right of action were implied.” Id. at 395; see
       A, C & S, Inc., 131 Ill. 2d at 471 (citing Sawyer Realty, 89 Ill. 2d at 389). That high
       bar was not overcome here.

¶ 34       We hold that section 22.1 of the Condominium Property Act does not create an
       implied private right of action by a condominium unit seller against an agent of a
       condominium association or its board of managers for allegedly violating the fee
       limitations set forth in subsection 22.1(c). Accordingly, we answer the certified
       question in the negative and reverse the judgment of the appellate court, and remand
       the cause to the circuit court for further proceedings consistent with this opinion.

¶ 35       Certified question answered.

¶ 36       Reversed and remanded.

¶ 37       JUSTICE MICHAEL J. BURKE, specially concurring:

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¶ 38       I agree with the analysis and the result in this case. I write separately because I
       believe that this court should make clear that a court will not find an implied private
       right of action unless all four parts of the test are met. That this is the case is obvious
       from the way the court lists the factors:

           “Implication of a private right of action is appropriate if: (1) the plaintiff is a
           member of the class for whose benefit the statute was enacted; (2) the plaintiff’s
           injury is one the statute was designed to prevent; (3) a private right of action is
           consistent with the underlying purpose of the statute; and (4) implying a private
           right of action is necessary to provide an adequate remedy for violations of the
           statute.” (Emphases added.) Fisher v. Lexington Health Care, Inc., 188 Ill. 2d
           455, 460 (1999).

       This court has stated that a private right of action will be implied only if four
       elements, joined by the conjunction “and,” are established, and this is precisely how
       other courts have read our cases. See Horist v. Sudler & Co., 941 F.3d 274, 278-79
       (7th Cir. 2019) (“[a]ll four factors must be met before a court will recognize an
       implied remedy”); Marque Medicos Fullerton, LLC v. Zurich American Insurance
       Co., 2017 IL App (1st) 160756, ¶ 57 (“[a]ll four factors must be met before a private
       right of action will be implied”). The majority apparently recognizes this, as it ends
       its analysis after finding that the plaintiffs failed to establish one of the factors.
       Moreover, it is clear just from reading the factors that a court would not find an
       implied private right of action if one of them could not be met.

¶ 39       Instead of making this point clear once and for all, the majority perpetuates the
       confusing language that this court used in Abassi v. Paraskevoulakos, 187 Ill. 2d
       386 (1999), which suggests that there is a “clear need” consideration that
       determines whether a court considers all of the factors. Supra ¶ 31. In Abassi, this
       court said:

               “It is unnecessary to analyze in detail all four of these factors as they apply
           to the Act and to these parties. As this court observed in Board of Education v.
           A, C & S, Inc., 131 Ill. 2d 428, 471 (1989): ‘Sawyer was clear that we will
           “imply a private remedy where there exists a clear need to effectuate the
           purpose of an act.” (Emphasis added.) (89 Ill. 2d at 389.) In this case there does
           not exist a clear need.’ An application of the fourth factor to this case leads to
           the same conclusion.” Abassi, 187 Ill. 2d at 393.

                                                 - 12 -
I would simply say what the courts in Horist and Marque Medicos said: all four
factors must be met before this court will find an implied private right of action.

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