Court Opinion

ID: 4648064
Source: CourtListenerOpinion
Date Created: 2020-12-30 23:03:41.778514+00
Date Added: 2024-06-11T08:01:10.923971
License: Public Domain

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                                    Appellate Court                            Date: 2020.12.30
                                                                               12:51:05 -06'00'

             Chinlund v. Heffernan Builders, LLC, 2020 IL App (1st) 191528

Appellate Court         GREGORY J. CHINLUND and COLLEEN A. CHINLUND,
Caption                 Plaintiffs-Appellees, v. HEFFERNAN BUILDERS, LLC, and
                        GERRY HEFFERNAN, Defendants-Appellants.

District & No.          First District, First Division
                        No. 1-19-1528

Filed                   June 29, 2020

Decision Under          Appeal from the Circuit Court of Cook County, No. 17-L-8917; the
Review                  Hon. Patrick J. Sherlock, Judge, presiding.

Judgment                Reversed and remanded.

Counsel on              Andrew E. Porter, of Chicago, for appellants.
Appeal
                        Colleen Chinlund and Leah Jakubowski, of Chinlund Law, of
                        Chicago, for appellees.

Panel                   JUSTICE WALKER delivered the judgment of the court, with
                        opinion.
                        Presiding Justice Griffin and Justice Pierce concurred in the judgment
                        and opinion.
                                              OPINION

¶1       Plaintiffs, Gregory and Colleen Chinlund, contracted with Gerry Heffernan (Mr.
     Heffernan) and his company, Heffernan Builders, LLC (Heffernan Builders) (collectively,
     defendants), to purchase a newly constructed home. The property closing was delayed, and
     plaintiffs filed suit alleging multiple claims. The circuit court referred the matter to the Cook
     County Law Division Commercial Calendar Mandatory Arbitration Program, and the
     arbitrator found in favor of plaintiffs. The circuit court entered judgment on all counts, even
     though the arbitrator did not make individual findings on any count. Defendants argue that the
     circuit court erred by entering judgment on specific counts when the arbitrator made no factual
     findings. For the following reasons, we reverse and remand.

¶2                                         BACKGROUND
¶3       Plaintiffs are a married couple residing at 3514 N. Leavitt Avenue (property) in Chicago.
     Prior to September 16, 2015, plaintiffs sought to build a new home. At that time, Mr. Heffernan
     represented to plaintiffs that he and Heffernan Builders were construction contractors and
     developers. Defendants owned the property and informed plaintiffs they performed
     construction services on the property to sell it.
¶4       Plaintiffs entered negotiations to purchase the property from defendants and stated that all
     construction services needed to be completed by November 2, 2015, because that was plaintiffs
     intended move-in date. Defendants represented that they had the knowledge, skill, and
     capability to perform the services necessary and that those services would be completed in the
     timeframe requested.
¶5       On September 16, 2015, plaintiffs contracted to purchase the property from defendants for
     $1.94 million with a closing date of November 2, 2015. The contract specified that the property
     would be constructed in a workmanlike manner, free from defects, and that defendants were
     responsible for correcting any faulty work not consistent with the plaintiffs’ plans. Plaintiffs
     also attached a rider to the contract providing for additional improvements to the property
     (punch list) prior to closing.
¶6       The property did not close on November 2, 2015, causing plaintiffs to incur costs for
     alternative living and storage arrangements. On November 5, 2015, the closing took place, and
     plaintiffs and defendants entered a “Post-Closing Agreement,” which included additional
     punch list items as well as remediation services for identified defects. Plaintiffs paid defendants
     $1.94 million for the property and defendants’ services. Defendants failed to deliver the
     property on time and failed to perform the obligations listed in the initial contract and post-
     closing agreement.
¶7       On September 5, 2017, plaintiffs filed a five-count complaint asserting claims for breach
     of contract, breach of implied warranty of workmanlike performance, fraud in the inducement,
     rescission (in the alternative), and unjust enrichment (also in the alternative).
¶8       On December 4, 2017, defendants moved to dismiss the breach of contract and breach of
     warranty claims asserted against Mr. Heffernan and to strike plaintiffs’ claim for attorney fees.
     The circuit court granted both motions on February 21, 2018. On September 28, 2018,
     plaintiffs filed their amended complaint. The amended complaint consisted of the following
     claims: count I—breach of contract against Heffernan Builders, count II—breach of express

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       warranty against Heffernan Builders, count III—breach of implied warranty of workmanlike
       performance against Heffernan Builders, count IV—fraud in the inducement against
       defendants, count V—breach of implied warranty of habitability against Heffernan Builders,
       count VI—rescission in the alternative as to defendants, and count VII—unjust enrichment as
       to defendants. The amended complaint asserted no claims for attorney fees.
¶9         On October 22, 2018, the circuit court referred the matter to the Law Division’s
       Commercial Calendar Mandatory Arbitration Program but excluded the rescission claim.
¶ 10       The arbitration was held on February 28, 2019, and the arbitrator filed notice of the
       arbitration award the next day. The award, in its entirety, read, “1. All parties participated in
       good faith. 2. Award in favor of Plaintiff in the amount of $59,500.00.” The arbitrator did not
       make findings of fact or disclose on which claims plaintiffs prevailed. No party rejected the
       award.
¶ 11       On April 26, 2019, the circuit court entered a judgment on the arbitration award in favor
       of plaintiffs and imposed jointly and severally liability upon defendants on each claim in the
       amended complaint (including counts on which Mr. Heffernan was not sued), except the
       rescission claim. The circuit court scheduled trial on the rescission claim for June 24, 2019.
¶ 12       On May 9, 2019, defendants moved for reconsideration of the judgment on the arbitration
       award. This motion did not dispute the arbitrator’s award in favor of the plaintiffs or the amount
       awarded. The circuit court entered a briefing schedule with a hearing date of June 21, 2019.
¶ 13       On June 3, 2019, defendants filed a motion to delay the trial set for June 24, 2019, which
       was denied. On June 21, 2019, the parties agreed to dismiss the rescission claim and strike the
       June 24, 2019, trial date. On that same date, the circuit court set a hearing for defendants’
       motion to reconsider for June 28, 2019.
¶ 14       On June 28, 2019, the circuit court entered its amended judgment on arbitration award and
       found Heffernan Builders liable for breach of contract, breach of express warranty, breach of
       implied warranty of workmanlike performance, fraud in the inducement, and breach of implied
       warranty of habitability. Additionally, the circuit court dismissed the unjust enrichment claim
       based upon the judgment on the express contract. Mr. Heffernan was found liable solely for
       fraudulent inducement. Defendants tendered payment in satisfaction of the judgment and
       timely filed a notice of appeal on July 22, 2019.

¶ 15                                           ANALYSIS
¶ 16       On appeal, defendants contend the circuit court erred by entering judgment on specific
       counts when the arbitrator did not provide a basis for the award. Defendants do not dispute the
       arbitrator’s decision or the amount of the award, but instead, defendants contest the form of
       the judgment entered by the circuit court.
¶ 17       Before reaching the merits of this appeal, we must first address the issue of mootness. “A
       case must remain a legal controversy from the time filed in the appellate court until the moment
       of disposition.” Davis v. City of Country Club Hills, 2013 IL App (1st) 123634, ¶ 10. An appeal
       is moot if no actual controversy exists or when events have occurred that make it impossible
       for the reviewing court to render effectual relief. In re Marriage of Peters-Farrell, 216 Ill. 2d
       287, 291 (2005). Generally, this court will not decide moot questions, render advisory
       opinions, or consider issues where the result will not be affected regardless of how those issues
       are decided. In re Barbara H., 183 Ill. 2d 482, 491 (1998). Additionally, this court will not

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       review cases simply to establish a precedent or guide future litigation. Madison Park Bank v.
       Zagel, 91 Ill. 2d 231, 235 (1982). When a decision on the merits would not result in appropriate
       relief, such a decision would essentially be an advisory opinion. Berlin v. Sarah Bush Lincoln
       Health Center, 179 Ill. 2d 1, 8 (1997).
¶ 18        Here, defendants do not seek to reject the arbitration award or the circuit court’s decision
       affirming the award. In fact, defendants have already satisfied the monetary judgment in full.
       Instead, defendants only argue to modify the language of the judgment so that it conforms to
       the language of the arbitration award. The controversy, according to defendants, is the
       “continuing injury on the defendants, whose reputations remain unfairly harmed every day”
       by the circuit court’s entry of the judgment for fraudulent inducement against each defendant.
       As real estate developers, defendants allege that a judgment for fraudulent inducement
       negatively impacts opportunities for acquisition and construction financing during the loan
       application process. Defendants argue that the “cloud on their reputation” amounts to judicial
       libel. Plaintiffs, however, argue that defendants’ reputational injury is not an actual controversy
       and defendant’s satisfaction of the judgment renders this appeal moot.
¶ 19        This case involves a matter of first impression. Defendants did not reject the arbitration
       award because there was no explicit finding of fraud in the inducement, which is defendants’
       primary concern. However, the circuit court’s amended judgment presumed liability on every
       count, including fraudulent inducement. The date on which the circuit court entered judgment
       for fraudulent inducement was beyond that which defendant could have rejected the arbitration
       award. Hence, an appeal from the judgment was defendants’ only recourse. We are
       unpersuaded by defendants’ judicial libel argument since their reputational injury from the
       judgment is not an actual controversy before this court. However, defendants’ primary
       argument concerns the circuit court’s entry of the judgment for fraudulent inducement.
       Therefore, we find that this appeal is not moot.
¶ 20        Defendants argue that the standard of review is de novo because the judgment involved the
       application of law. While plaintiffs assert that review is for abuse of discretion because the
       trial court’s decision to affirm the arbitrator’s award is not reversed unless there is an abuse of
       discretion. Before we analyze whether the circuit court abused its discretion, we must first
       determine, as a matter of law, whether the court had discretion to enter a judgment for
       fraudulent inducement based on the general award of the arbitrator where no finding of
       fraudulent inducement was made.
¶ 21        To address the arguments of the parties, we must interpret the language of Cook County
       Circuit Court Rule 25.11 (Cook County Cir. Ct. R. 25.11 (Dec. 1, 2014)). This undertaking
       presents a question of law that we review de novo. See Medical Alliances, LLC v. Health Care
       Service Corp., 371 Ill. App. 3d 755, 756-57 (2007) (“[C]onstruction of a supreme court rule
       presents a question of law that we consider de novo.”).
¶ 22        The goal of the court is to interpret local and supreme court rules by ascertaining and giving
       effect to the drafter’s intentions. See In re Estate of Rennick, 181 Ill. 2d 395, 404-05 (1998).
       While a circuit court rule is not a statute enacted by the Illinois legislature or the Cook County
       Board, the interpretation of a rule should follow the same guidelines as statutory interpretation
       in that each section must be construed consistently with the other sections and subsections.
       Longstreet v. Cottrell, Inc., 374 Ill. App. 3d 549, 552 (2007). Further, the words utilized in the
       rule must be given their plain and ordinary meanings. See Nix v. Whitehead, 368 Ill. App. 3d
       1, 5 (2006).

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¶ 23        The purpose of the mandatory arbitration program is to provide a feasible vehicle for an
       economical and fair resolution of monetary disputes. Babcock v. Wallace, 2012 IL App (1st)
       111090, ¶ 17. Local rule 25.11 which governs the arbitration award and judgment, provides:
                    “Either party may reject the award if the rejecting party does so within seven
                business days after receiving the notice of the award from the Administrator.
                Thereafter, and on the date specified in the trial court’s order of Referral to Mandatory
                Arbitration, the case will be returned to the trial judge for further proceedings or for the
                entry of judgment on the award.” Cook County Cir. Ct. R. 25.11 (Dec. 1, 2014).
¶ 24        A straightforward reading of local rule 25.11 reveals that absent rejection, the simple
       instruction for the circuit court is to enter “judgment on the award.” See id. Limiting a party’s
       sole remedy to rejection ensures that the process will not be “unnecessarily prolonged by
       attempts to dispute the minutiae of an award.” Babcock, 2012 IL App (1st) 111090, ¶ 17. The
       issue here, however, is not a dispute over the minutiae of the award but of the judgment for
       fraudulent inducement. This court has long held that the role of the circuit court in mandatory
       arbitration cases is limited. Cruz v. Northwestern Chrysler Plymouth Sales, Inc., 179 Ill. 2d
       271, 279 (1997).
¶ 25        In Cruz, our supreme court held that the responsibility of “administering oaths, ruling on
       the admissibility of evidence, and, most importantly, deciding the law and facts of the case is
       expressly vested in the arbitrators.” Id. Furthermore, the circuit court should play no role in
       adjudicating the merits of the case and has no real function beyond entering judgment on the
       award. Id.
¶ 26        Considering the limited role of the court and the efficient purpose of mandatory arbitration,
       the circuit court’s judgment on the arbitration award must be limited to entering a “judgment
       on the award.”
¶ 27        Plaintiffs argue that defendants knew the award was based on those claims and should have
       simply rejected the award. However, defendants have made clear that the award, which only
       listed the prevailing party and the amount in monetary damages, was not objectionable.
       Defendants had no reason to reject this simple award. It was the circuit court’s judgment for
       fraudulent inducement that defendants found problematic.
¶ 28        Plaintiffs then argue that entering judgment on specific counts is consistent with the Illinois
       law that states that courts presume arbitrators considered and determined all claims submitted.
       Arbitration is an alternative to trial where all issues raised by the parties are decided by the
       arbitrator. Mrugala v. Fairfield Ford, Inc., 325 Ill. App. 3d 484, 491 (2001). Mandatory
       arbitration is designed to combat the “evils” of a “costly, complicated, and time consuming”
       litigation. Cruz, 179 Ill. 2d at 280. Courts presume that arbitrators determine all claims to
       streamline the process, conserve resources, and avoid a detailed inquiry into the legitimacy of
       the arbitration award. Babcock, 2012 IL App (1st) 111090, ¶ 18.
¶ 29        Here, the circuit court entered the judgment for fraud in the inducement without any
       findings of fraud. Hence, there was no basis for entering a judgment on the fraudulent
       inducement count because pursuant to local rule 25.11, the circuit court can only enter
       “judgement on the award.” Cook County Cir. Ct. R. 25.11 (Dec. 1, 2014). After an arbitration
       award that is not rejected, judgment should not be entered on the pleadings. The arbitration
       award stated, “award in favor of Plaintiffs in the amount of $59,500.00.”

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¶ 30       Based on the record, the circuit court’s amended judgment on the arbitration award is
       reversed, and the case is remanded. On remand, the circuit court shall enter a judgment order
       that states, “judgment in favor of plaintiffs and against defendants in the amount of
       $59,500.00.”

¶ 31                                         CONCLUSION
¶ 32       There is no language in local rule 25.11 that provides for judgment on specific counts, but
       instead the rule provides that the circuit court shall enter “judgment on the award.” Cook
       County Cir. Ct. R. 25.11 (Dec. 1, 2014). The purpose of the commercial calendar mandatory
       arbitration program is to provide an economical and fair resolution of monetary disputes. We
       reverse the judgment of the circuit court and remand for further proceedings consistent with
       this opinion.

¶ 33      Reversed and remanded.

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