Court Opinion

ID: 3142809
Source: CourtListenerOpinion
Date Created: 2015-10-22 17:57:15.269129+00
Date Added: 2024-06-11T12:07:14.672586
License: Public Domain

ILLINOIS OFFICIAL REPORTS
                                 Appellate Court

           Olson v. Hunter’s Point Homes, LLC, 2012 IL App (5th) 100506

Appellate Court      JOSHUA C. OLSON and LYDIA K. OLSON, Plaintiffs-Appellants, v.
Caption              HUNTER’S POINT HOMES, LLC, TLC CONSTRUCTION OF
                     O’FALLON, LTD., JAMES D. HETTLER, JASON C. COLEMAN, J.
                     COLEMAN ENTERPRISES, INC., AMY SUJANANI, and CENTURY
                     21 BAILEY & CO., Defendants-Appellees.–ELTON DINTELMAN and
                     BEVERLY DINTELMAN, Plaintiffs-Appellants, v. HUNTER’S POINT
                     HOMES, LLC, TLC CONSTRUCTION OF O’FALLON, LTD., JAMES
                     D. HETTLER, and JASON C. COLEMAN, Defendants-
                     Appellees.–BERYL L. FORESHEE, JR., and DOROTHY M.
                     FORESHEE, Plaintiffs-Appellants, v. HUNTER’S POINT HOMES,
                     LLC, TLC CONSTRUCTION OF O’FALLON, LTD., JAMES D.
                     HETTLER, JASON C. COLEMAN, J. COLEMAN ENTERPRISES,
                     INC., TINA ZIEGLER, DIANA NANEY, and CENTURY 21 BAILEY
                     & CO., Defendants-Appellees.–KELLY R. BLAKELY, Plaintiff-
                     Appellant, v. HUNTER’S POINT HOMES, LLC, TLC
                     CONSTRUCTION OF O’FALLON, LTD., JAMES D. HETTLER,
                     JASON C. COLEMAN, J. COLEMAN ENTERPRISES, INC., TINA
                     BESSERMAN, and CENTURY 21 BAILEY & CO., Defendants-
                     Appellees.–DANIEL J. LUSICIC, JR., Plaintiff-Appellant, v.
                     HUNTER’S POINT HOMES, LLC, TLC CONSTRUCTION OF
                     O’FALLON, LTD., JAMES D. HETTLER, JASON C. COLEMAN, J.
                     COLEMAN ENTERPRISES, INC., DIANA NANEY, and CENTURY
                     21 BAILEY& CO., Defendants-Appellees.

District & No.       Fifth District
                     Docket Nos. 5-10-0506, 5-10-0507, 5-10-0508, 5-10-0509, 5-10-0510
                     cons.
Rule 23 Order filed        November 28, 2011
Motion to publish
granted                    January 4, 2012
Opinion filed              January 4, 2012

Held                       In consolidated actions arising from plaintiffs’ purchase of residential lots
(Note: This syllabus       on which structures were allegedly built in violation of applicable laws,
constitutes no part of     codes and easements, the trial court’s dismissal of all of plaintiffs’ claims
the opinion of the court   on the basis of the Moorman doctrine was affirmed in part and reversed
but has been prepared      in part, since the counts alleging common law fraud and a violation of the
by the Reporter of         Consumer Fraud Act contained allegations of intentional
Decisions for the          misrepresentation that were not subject to the Moorman doctrine, the
convenience of the         doctrine did not apply to the counts alleging promissory estoppel, and the
reader.)
                           doctrine did not bar the counts against the broker defendants who could
                           be said to be in the business of supplying information to others in their
                           business transactions and could therefore be held liable for negligent
                           representation, but the counts alleging negligent misrepresentation on the
                           part of the sellers were properly dismissed.

Decision Under             Appeal from the Circuit Court of Madison County, Nos. 07-CH-1014, 07-
Review                     CH-922, 07-CH-1117, 07-CH-992, 07-CH-921 cons.; the Hon. Clarence
                           W. Harrison II, Judge, presiding.

Judgment                   Affirmed in part and reversed in part; cause remanded.

Counsel on                 Thomas G. Maag and Peter J. Maag, both of Maag Law Firm, of Wood
Appeal                     River, for appellants.

                           Douglas C. Gruenke, of Belsheim & Bruckert, L.L.C., of O’Fallon, and
                           T. Michael Ward, of Brown & James, P.C., of St. Louis, Missouri, for
                           appellees.

                                                 -2-
Panel                      JUSTICE SPOMER delivered the judgment of the court, with
                           opinion.
                           Presiding Justice Donovan and Justice Goldenhersh concurred in
                           the judgment and opinion.

                                              OPINION

¶1          In this consolidated appeal, the plaintiffs, Joshua C. Olson, Lydia K. Olson, Elton
        Dintelman, Beverly Dintelman, Beryl L. Foreshee, Jr., Dorothy M. Foreshee, Kelly R.
        Blakely, and Daniel J. Lusicic, Jr., appeal from the September 20, 2010, order of the circuit
        court of Madison County, which dismissed all of their claims against the defendants,
        Hunter’s Point Homes, LLC, James D. Hettler, Jason C. Coleman, Amy Sujanani (in the
        Olson and Foreshee cases), Diana Naney (in the Lusicic case), Tina Ziegler (in the Foreshee
        case), Tina Besserman (in the Blakely case), and Century 21 Bailey & Co. (Century 21). For
        the reasons that follow, we affirm in part and reverse in part and remand for further
        proceedings.

¶2                                                 FACTS
¶3           Because the claims in each of the cases on appeal are substantially similar, we will set
        forth the facts alleged in the Olson complaint as the basis for our analysis. On April 23, 2010,
        the Olsons filed a third amended complaint in the circuit court of Madison County, which
        was erroneously titled as a second amended complaint. The Olsons alleged that they entered
        into a contract to purchase property located at lot number 7, Hunter’s Point Drive, in Granite
        City, from the defendant, Hunter’s Point Homes. The Olsons alleged that agents and
        employees of Hunter’s Point Homes, including Jason Coleman, James Hettler, and Amy
        Sujanani of Century 21, made representations to them that the property was located on a lot
        upon which permanent structures could be built, that the house was built in accordance with
        all laws, codes, specifications, and easements, and that a garage, fence, or other structure
        could be built in the backyard area of the property. The complaint alleged that, in truth and
        fact, the majority of the lot behind the house cannot be used to build structures due to an
        easement in favor of Illinois Power which prohibits such structures, that the house is
        encroaching on the easement, and no other structures, such as a garage or a fence, can be
        built on the lot. The Dintelman, Foreshee, Blakely, and Lusicic plaintiffs made identical
        allegations regarding their purchase of properties located within the same subdivision,
        although other real estate agents from Century 21 were named as defendants, as indicated
        above, except in the operative complaint in the Dintelman case, which contained only eight
        counts and contained no claims against Century 21 or any of its agents.
¶4           In count I, the plaintiffs alleged a cause of action for common law fraud against Hunter’s
        Point Homes. In count II, the plaintiffs alleged a cause of action against Hunter’s Point

                                                  -3-
     Homes pursuant to the Illinois Consumer Fraud and Deceptive Business Practices Act (the
     Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2010)). Counts III and IV alleged
     Consumer Fraud Act claims against James Hettler and Jason Coleman, respectively. Count
     V alleged a piercing-the-corporate-veil theory against James Hettler and Jason Coleman with
     respect to any liability on the part of Hunter’s Point Homes. Count VI alleged a cause of
     action against Hunter’s Point Homes for ordinary negligence, and counts VII and VIII alleged
     causes of action against James Hettler and Jason Coleman, respectively for promissory
     estoppel. Count IX alleged a cause of action for negligent or intentional misrepresentation
     against real estate agent Amy Sujanani, and count X alleged Century 21 is vicariously liable
     for the acts and omissions of Ms. Sujanani. The operative complaints in all of the cases
     contained no allegations against J. Coleman Enterprises or TLC Construction of O’Fallon,
     although both were named defendants in the caption of the complaints.
¶5       Century 21 and its agents filed answers in all of the cases where they were named as
     defendants. In all of the cases, Hunter’s Point Homes, Jason Coleman, and James Hettler
     filed motions to dismiss counts I through VIII of each complaint. On June 23, 2010, the
     circuit court entered an order dismissing all of the claims of the various plaintiffs based on
     the Moorman doctrine and ordered the plaintiffs to advise within 30 days whether they would
     seek to amend their complaints or would stand on their pleadings. The plaintiffs never sought
     to amend their pleadings, and on September 20, 2010, the circuit court entered an order
     dismissing all the claims of all of the plaintiffs with prejudice. On October 19, 2010, the
     plaintiffs filed a timely notice of appeal.

¶6                                         ANALYSIS
¶7       The standard of review for a dismissal of a complaint, whether pursuant to section 2-615
     of the Illinois Code of Civil Procedure (the Code) (735 ILCS 5/2-615 (West 2010)) or section
     2-619 of the Code (735 ILCS 5/2-619 (West 2010)), is de novo. Colmar, Ltd. v.
     Fremantlemedia North America, Inc., 344 Ill. App. 3d 977, 983 (2003). This court may
     affirm the circuit court’s order dismissing the case upon any grounds for which a basis exists
     in the record. Id.
¶8       In this case, the circuit court dismissed all of the counts of all the complaints based on
     the Moorman doctrine. Pursuant to the Moorman doctrine, a party may not recover in
     negligence for a purely economic loss. Moorman Manufacturing Co. v. National Tank Co.,
     91 Ill. 2d 69, 86-87 (1982). However, it is clear that under Illinois law, economic loss is
     recoverable where one intentionally makes false representations. Id. at 88-89. Additionally,
     an exception to the Moorman doctrine exists where one who is in the business of supplying
     information for the guidance of others in their business transactions makes a negligent
     representation. Id. Consequently, a plaintiff may recover economic losses in negligence from
     a real estate broker. Zimmerman v. Northfield Real Estate, Inc., 156 Ill. App. 3d 154, 164
     (1986). While a seller of real estate does not fall under this Moorman exception, and thus a
     plaintiff cannot recover for economic losses under a theory of negligence, a plaintiff may
     recover from a seller of real estate where intentional misrepresentation is sufficiently alleged.
     Id.

                                               -4-
¶9          Applying these principles to the operative complaints in the cases at bar, using the Olson
       complaint as the example, we conclude that counts I through V, which allege common law
       fraud and a violation of the Consumer Fraud Act (815 ILCS 505/1 et seq. (West 2010))
       against the seller defendants, were not properly dismissed on the basis of the Moorman
       doctrine because they contain allegations of intentional misrepresentation. Count VI, which
       alleges negligent misrepresentation on the part of the sellers, was properly dismissed on the
       basis of Moorman, and we affirm the dismissal of count VI. Counts VII and VIII allege
       theories of promissory estoppel, which is a theory of recovery to which Moorman does not
       apply because it does not contain allegations of negligence. Finally, counts IX and X, against
       the broker defendants, were not properly dismissed on the basis of the Moorman because real
       estate brokers can be said to be in the business of supplying information to others in their
       business transactions and, thus, can be held liable for negligent misrepresentation.
       Zimmerman, 156 Ill. App. 3d at 164. Moreover, we note that the broker defendants answered
       the operative complaints in all the cases before us on appeal and did not move to dismiss the
       counts against them. In summary, the only count of the operative complaints in the cases at
       bar that was properly dismissed pursuant to the Moorman doctrine is count VI, which alleges
       negligent misrepresentation on the part of Hunter’s Point Homes, the sellers of the real estate
       at issue.
¶ 10        Because we can affirm the circuit court’s order dismissing the remaining counts on any
       basis in the record, we will address the alternative arguments set forth by the defendants in
       their briefs. First, the seller defendants, Hunter’s Point Homes, James Hettler, and Jason
       Coleman, argue that counts I through V, alleging common law fraud and violations of the
       Consumer Fraud Act (815 ILCS 505/1 et seq. (West 2010)), were properly dismissed because
       the alleged misrepresentations regarding the easements and building codes were
       representations of facts that are contained in the public records and, as such, are really
       representations of law on which the plaintiffs, as a matter of law, had no right to rely. The
       broker defendants make an identical argument with regard to the counts alleging negligent
       misrepresentation against them, counts IX and X in the Olson complaint. We agree that
       justified reliance is an element of a cause of action for common law fraud. See Kinsey v.
       Scott, 124 Ill. App. 3d 329, 335 (1984). Furthermore, we recognize that case law exists in
       Illinois that sets forth a general rule that one is not entitled to rely on a representation of law
       since both parties are presumed to be equally capable of knowing and interpreting the law
       and that this rule has been applied to bar causes of action based on misrepresentation of the
       zoning of property. See, e.g., Hamming v. Murphy, 83 Ill. App. 3d 1130, 1135 (1980); City
       of Aurora v. Green, 126 Ill. App. 3d 684, 687 (1984). However, as subsequent case law has
       clarified, the issue in such cases is whether or not the seller’s misrepresentations could have
       been discovered merely by reviewing applicable zoning or building ordinances or, in other
       words, whether the misrepresentations were discoverable by the plaintiffs in the exercise of
       ordinary prudence. See Stichauf v. Cermak Road Realty, 236 Ill. App. 3d 557, 568 (1992).
       In a case such as this, “ ‘'liability will be found when the defendant misrepresents facts of
       which he possesses almost exclusive knowledge and the truth or falsity of which are not
       readily ascertainable by the plaintiff.’ ” Id. (quoting O’Brien v. Noble, 106 Ill. App. 3d 126,
       130 (1982)). We find that it is a question of fact as to whether the alleged misrepresentations

                                                  -5-
       regarding the nature and character of the utility easements and building code violations at
       issue fit within this category. Accordingly, neither counts I through V of the various
       complaints nor the counts against the broker defendants for negligent misrepresentation were
       properly dismissed on this basis.
¶ 11        Likewise, we decline to affirm the dismissal of counts I through V of the various
       complaints on the basis that they lack specificity regarding what misrepresentations were
       made, who made the representations, and to whom they were made. We find the complaints
       sufficient to put the defendants on notice of the claims that are being made. It is clear that the
       plaintiffs are alleging that, prior to their executing the real estate purchase contracts at issue,
       agents and employees of Hunter’s Point Homes and Century 21 made representations to them
       regarding the ability of the plaintiffs to build in their yards and compliance of the existing
       structures with codes and easements. We believe these counts meet the requirements of
       section 2-612(b) of the Code (735 ILCS 5/2-612(b) (West 2010)), as they reasonably inform
       the defendants of the nature of the claims against them. The details of these representations
       can be borne out by discovery and we find no reason to affirm the dismissal of counts I
       through V on this basis.
¶ 12        We also reject the defendants’ argument that we should affirm the dismissal of counts
       II, III, and IV of the various complaints, which allege causes of action for common law fraud
       and violations of the Consumer Fraud Act against Jason Coleman and James Hettler
       individually, both on a theory that they themselves made misrepresentations to the plaintiffs,
       and in count IV, based on a corporate-veil-piercing theory. We find that these counts state
       claims on which relief may be granted should the plaintiffs prove the facts alleged therein.
       See Citizens Savings & Loan Ass’n v. Fischer, 67 Ill. App. 2d 315, 324 (1966) (officer of
       corporation individually liable for acts of fraud in which he participates); see also Cosgrove
       Distributors, Inc. v. Haff, 343 Ill. App. 3d 426, 430 (2003) (a court can pierce the corporate
       veil and hold shareholders of corporation individually liable where (1) a unity of interests and
       ownership exists and (2) piercing is required to avoid fraud, injustice, or inequitable
       consequences).
¶ 13        We now turn our attention to counts VII and VIII of the complaints, which allege causes
       of action based upon promissory estoppel against Hunter’s Point Homes and James Hettler,
       respectively. Promissory estoppel is unavailable when an enforceable contract between the
       parties exists. Prentice v. UDC Advisory Services, Inc., 271 Ill. App. 3d 505, 512-13 (1995).
       Here, the parties have acknowledged the existence of contracts to purchase the real estate at
       issue in all of the cases. Accordingly, we must affirm the circuit court’s dismissal of counts
       VII and VIII in the various complaints.

¶ 14                                  CONCLUSION
¶ 15      For the foregoing reasons, we reverse the dismissal of counts I through V in all the
       complaints, as well as the counts for negligent misrepresentation against the broker

                                                  -6-
       defendants, which are counts IX and X in the Olson complaint.1 We affirm the dismissal of
       counts VI, VII, and VIII in all the complaints and remand for further proceedings.

¶ 16       Affirmed in part and reversed in part; cause remanded.

               1
               Thus, we reverse the dismissal of counts IX, X, and XI in the Foreshee complaint, counts
       IX and X in the Blakely complaint, and counts IX and X in the Lusicic complaint. We note that the
       Dintelman complaint did not allege a cause of action against any real estate broker.

                                                 -7-