Court Opinion

ID: 9861455
Source: CourtListenerOpinion
Date Created: 2023-09-25 00:04:25.807625+00
Date Added: 2024-06-11T11:28:30.577526
License: Public Domain

CHIEF JUSTICE BILANDIC, dissenting: I strongly disagree with the majority opinion affirming the dismissal of the plaintiffs’ complaint on statute of limitations grounds. The plaintiffs’ action is clearly one for breach of a written contract and, thus, is governed by the 10-year statute of limitations established in section 13 — 206 of the Code of Civil Procedure. Even a cursory analysis of the plaintiffs’ complaint reveals that it raises a cause of action for breach of a written contract. The contract is a standardized "Multiple Listing Service” agreement entered into between the plaintiffs and defendant Russell Smith, a real estate agent for defendant Bob Smith Agency. By virtue of the listing contract, defendants Smith and the Bob Smith Agency became agents of the plaintiffs in connection with the sale of the plaintiffs’ property. Under the express terms of the contract, the plaintiffs agreed to pay a 5% commission to the defendants if the property was sold during the term of the contract, and the defendants obligated themselves to list the property with the Peoria multiple listing service and to use diligence in procuring a purchaser. The defendants’ duty to the plaintiffs under the contract, however, did not end there. Implied as a matter of law into that contract was that the defendant agents owed the plaintiffs a fiduciary duty to disclose all material facts regarding the sale of the plaintiffs’ property and to act with loyalty and fidelity. This implied term was as much a part of the listing contract as if it had been expressly stated therein. Schiro v. W.E. Gould & Co., 18 Ill. 2d 538 (1960); Economy Fuse & Mfg. Co. v. Raymond Concrete Pile Co., 111 F.2d 875 (7th Cir. 1940). It was this fiduciary duty which the plaintiffs’ complaint charged was breached by the defendants. The complaint set forth factual allegations establishing the defendants’ breach. According to the complaint, Smith, purporting to act as the plaintiffs’ sales agent, submitted a proposal to purchase the plaintiffs’ property on behalf of himself and several other undisclosed buyers. The proposal, which the plaintiffs ultimately accepted, included an agreement that the undisclosed buyers would assume the plaintiffs’ mortgage on the property. Both Smith and another agent, Walter Guigler, who was also the chief operating officer of the bank holding the plaintiffs’ mortgages, knew that the buyers had no intention of assuming the mortgage. The plaintiffs, unaware of this secret intent, consummated the sale. Pursuant to the terms of the contract, the defendants were paid a real estate commission exceeding $18,000. Agents Smith and Guigler and the owner of the Bob Smith Agency each received a portion of this commission. These facts, if true, clearly allege a breach of the defendants’ fiduciary duty to the plaintiffs implied in the listing agreement. The majority, however, concludes that the plaintiffs’ cause of action is not an "action on a written contract” and is therefore barred by the five-year statute of limitations found in section 13 — 205 of the Code. The precise rationale for the majority decision is unclear. Several portions of the opinion suggest that the majority’s ultimate conclusion rests upon a finding that the plaintiffs’ complaint did not adequately allege a cause of action for breach of contract. For example, the majority claims that "a review of the allegations in the complaint reveals that plaintiffs do not seek damages for defendants’ failure to perform the contractual duties in the listing agreement.” 174 Ill. 2d at 292. The majority does not accurately characterize the allegations of the plaintiffs’ complaint. The plaintiffs’ complaint clearly sought to impose liability on the defendants for breach of a duty arising out of the listing contract. The contract was attached to the complaint as an exhibit, obviously to satisfy the Code of Civil Procedure’s requirement that, where a claim is founded upon a written instrument, a copy of the writing must be attached to the pleading or recited therein. 735 ILCS 5/2 — 606 (West 1992). Paragraph 17 of the complaint alleges that "[p]ursuant to the Listing Contract as agents of Plaintiffs, Defendants had a duty to disclose to Plaintiffs all material facts regarding the sale of Plaintiffs’ Property, and a duty of loyalty and fidelity.” Paragraph 18 describes the manner in which the defendants breached the contract, stating: "In violation of the Listing Contract and the duties owed by Defendants to Plaintiffs as Plaintiffs’ agents, Defendants failed to disclose all material facts regarding the sale of the Property and failed to perform their duties of loyalty and fidelity to the plaintiffs.” That paragraph then goes on to detail the particular breaches at issue, stating that "[s]uch breach under the Listing Contract includes the following:” (1) the failure to disclose that the buyers did not intend to assume the mortgage; (2) the active misrepresentation that such assumption would occur; and (3) the failure to disclose that Guigler was to receive 25% of the sales commission. In view of these explicit allegations, I am bewildered by the majority’s claim that the plaintiffs’ complaint "do[es] not seek damages for defendants’ failure to perform the contractual duties in the listing agreement.” 174 Ill. 2d at 292. It is evident that the plaintiffs have sued the defendants for breach of the written listing contract. Absent the listing contract, there is no agency relationship and the defendants have no independent obligation to act in good faith and with loyalty to the plaintiffs. It is the written contract alone which created the agency relationship from which the implied contractual obligations flow. It is true that an implied fiduciary duty can arise even absent a written contract. However, that is not the situation in this case. Here, the implied contractual obligations flow solely from the written listing contract that created the agency relationship between the plaintiffs and the defendants. Because the plaintiffs’ cause of action clearly emanates from breach of a duty arising from a written contract, the 10-year limitations period applicable to actions on written contracts should govern. Although it is unclear, the majority opinion may also rest upon an alternative finding that breach of an implied, rather than express, contractual term will always be governed by the five-year limitations period. Such a conclusion, however, is inconsistent with our courts’ prior holdings. In Schiro v. W.E. Gould & Co., 18 Ill. 2d 538 (1960), this court determined that contracts are not limited to the terms expressly set out in a writing. Rather, the law existing at the time and place of making the contract necessarily forms a part of the written contract, as though expressly incorporated therein. Schiro, 18 Ill. 2d at 544. Consequently, the defendants’ duty to disclose material facts relating to the sale of the plaintiffs’ property was incorporated into the listing contract as fully as if expressly stated therein. Our courts have also held that a cause of action is not removed from the 10-year limitations period governing written contracts simply because the action arises from an implied legal duty incorporated into the written contract. Board of Education of Community Consolidated School District No. 54 v. Del Bianco & Associates, Inc., 57 Ill. App. 3d 302 (1978); Stanley v. Chastek, 34 Ill. App. 2d 220 (1962); see also Economy Fuse & Mfg. Co. v. Raymond Concrete Pile Co. (7th Cir. 1940), 111 F.2d 875. The rationale underlying these rules is that the parties to the contract would have expressed that which the law implies " 'had they not supposed that it was unnecessary to speak of it because the law provided for it.’ ” Schiro v. W.E. Gould & Co., 18 Ill. 2d 538, 544 (1960), quoting 12 Ill. L. & Prac. Contracts § 154, at 399 (1983). Thus, the 10-year limitations period governing actions on written contracts applies to the present action even though the contractual duty breached is an implied term in the written contract, rather than a term expressly set out in the writing. In closing, I note that this is the second time this court has deprived the plaintiffs of a remedy for the fraud and deceit practiced upon them by various defendants involved in the sale of the plaintiffs’ property. In a prior case, the plaintiffs obtained a $1,133,000 judgment against the Resolution Trust Corporation, as receiver of Chillicothe Federal Savings & Loan Association, based on the savings and loan’s fraudulent misrepresentations to the plaintiffs. One of the principal actors in the misrepresentation was one of the defendants in this action, Walter F. Guigler, who was the chief operating officer for the savings and loan at the time the plaintiffs sold their property. This court ultimately reversed the judgment for the plaintiffs, finding that the receiver of a failed savings and loan association enjoyed immunity under the D’Oench doctrine and its statutory codification, 12 U.S.C. § 1823(e) (1994). Armstrong v. Resolution Trust Corp., 157 Ill. 2d 49 (1993) (Armstrong I). The plaintiffs filed the present action shortly after this court entered its order in Armstrong I. The majority opinion improperly deprives the plaintiffs of their opportunity to obtain redress from the defendants who not only breached the fiduciary duties that formed the very essence of the written listing contract, but also accepted a substantial commission for allegedly performing those duties in accordance with that contract. For the foregoing reasons, I respectfully dissent. JUSTICES HARRISON and NICKELS join in this dissent.