Proof of causation proves difficult without direct evidence.

Approximately one month after the Third District Appellate Court in Majetich v. P.T. Ferro Construction Company explained that circumstantial evidence alone cannot establish proximate causation where more than one conclusion can be drawn from the circumstances (see “When is circumstantial evidence sufficient to create a question of fact as to proximate cause?”), the First District Appellate Court in Strutz v. Vicere also affirmed entry of summary judgment in favor of defendants where direct evidence of the cause of injury was lacking.

In Strutz, Henriette Strutz filed a negligence action against Christine and Christopher Vicere for the wrongful death of her husband, Russell Strutz. Russell and Henriette had lived in a two-flat owned by the Viceres when Russell fell down the indoor common stairway at their apartment. As a result of the fall, Russell sustained multiple cervical spine fractures, and he died 23 days later. 

There were no witnesses to the accident. Rather, on the morning of March 6, 2005, Henriette found Russell at the bottom of the stairs. At that time, Russell told Henriette, “I fell down over the railing.” When paramedics arrived, Russell stated that he was walking backwards while taking out the garbage when he slipped and fell. 

The paramedics transported Russell to Advocate Lutheran Hosptial. Shortly after his admission to the hospital, Russell’s condition deteriorated, and he lost the ability to speak, became paralyzed and later died on March 29, 2005

In the wrongful death suit, Plaintiff claimed that the Viceres failed to maintain the stairs and railing in a reasonably safe condition. Plaintiff further alleged that the staircase and railing violated the Chicago building code. Defendants moved for summary judgment arguing that the element of proximate cause could not be sustained by Plaintiff. The trial court granted the motion and Plaintiff appealed.

On appeal, Plaintiff argued that a jury could reasonably conclude that Russell’s fall was caused by the alleged defects in the stairs. In support of this argument, Plaintiff offered the testimony of an architect expert. The architect testified that the staircase violated the City of Chicago Building Code and was dangerous due to small treads, inadequate and uneven riser heights and tread widths and inadequate lighting. The architect also testified that the staircase was dangerous because there was no handrail on the wall side of the stairs, the height of the handrail on the opposite side was too low, and the staircase was excessively steep. Further, Plaintiff cited Christopher Vicere who testified that he repaired a loose newel post at the railing after Russell’s fall. Plaintiff maintained that evidence of these defects in conjunction with Russell’s statement that he “fell down over the railing” constituted direct evidence of a causal connection between the condition of the staircase and the accident. In the very least, Plaintiff argued that this evidence was sufficient to create a question of fact as to what caused Russell’s fall. 

Moreover, Plaintiff presented evidence of Russell’s careful habits in arguing that a presumption that Russell was exercising due care at the time of his fall precludes entry of summary judgment.

The Appellate Court held that there was no evidence addressing the issue of proximate cause. Strutz v. Vicere No. 1-07-2564, p. 6 (April 29, 2009). Rather, the evidence simply established defects in the premises. “Violations of an ordinance or a failure to comply with the building code, by themselves without evidence that the violation caused the injury, do not establish proximate cause.” Id. Evidence of the defendants’ negligence is insufficient to establish the cause of the alleged injuries. Id. Such evidence only establishes the possibility that the alleged conduct caused the slip and fall. Id. Further, the court stated that evidence of careful habits has no bearing on the issue of evidentiary support for the element of proximate cause. Id. at 7. 

The fact that an accident occurred in the presence of building code violations and/or defects in the premises, without more, is not sufficient to create a question of fact as to proximate cause.  Evidence that a defendant’s conduct was a possible cause will not suffice. Rather, the Illinois Appellate Courts have made it clear that some affirmative proof of causation must be established to sustain a claim of negligence.

Could You Be Held Liable For Judgments Against Your Corporation?

It's called piercing the corporate veil and the case of Fontana v. TLD Builders, Inc. (2nd Dist. Doc. No. 2-05-0045) is a simple lesson in what to watch out for when you’re running a small business. It is also an excellent read for anyone wanting to know about the factors a court will look to in determining whether or not your choice of operating as a corporate entity will limit your liability.

In Fontana, the Fontanas sued TLD Builders after TLD defaulted on a contract to build the Fontanas' a home in Clarendon Hills, Illinois. The Fontanas had signed a contract for TLD to build the home and TLD started and apparently didn’t finish the project. As a result the Fontana’s had to demolish the partially constructed home because the damage caused by the work stoppage made the cost of completion well in excess of the $2.2 million the home would be worth if it was completed.

The Fontanas also sued the architect who settled with them prior to trial.

The Fontanas sought not only to be reimbursed from TLD, but recognizing that TLD was an underfunded corporation that would likely not have the ability to satisfy the $2 million judgment they were seeking, they also filed an action against TLD’s president seeking to hold him personally liable for any damages – even though his wife was the sole owner of the company and he only ran it.

The Fontanas won their case and the court determined that the president was liable and that the corporation, even though it was properly incorporated, was used as nothing more than a shell where the president ran the operation.

The appellate court upheld the decision… The factors the court looked to in determining whether or not liability would be limited to the corporation or passed on to the president are important factors to watch for in your operations to make sure that the corporate designation you’ve paid for is actually going to protect you:

  • The fact that the president didn’t own the company but that all the shares were in his wife’s name was not a factor that would protect him – he ran the business and acted as though its assets were his own.
  • There was no record of the initial $1000 check purported to be paid by the wife for the 1000 shares ($1 per share) when the corporation was created.
  • The corporation had little to no money in its accounts and even made loans after it was sued – an alleged attempt to divert the assets to try and avoid having any money to pay in satisfying a possible judgment.
  • The corporate minutes did not reflect resolutions or votes authorizing some of the loans made to various people and entities.
  • The corporate minutes did not attach legal descriptions to resolutions to sell properties.
  • The director (owner) had no real decision making power and/or did not exercise it.
  • Even though by-laws, resolutions, shareholder actions, and tax returns were filed with the state and a separate bank account and financial records were kept, there were many corporate records that were not kept, like the resolutions regarding loans, notes or claims of indebtedness, nor records of repayments.
  • The company never actually paid a salary to anyone, and the tax returns did not show payment to corporate officers – funds were transferred from the corporate account into personal checking accounts.
  • Monies were transferred after the suit was filed and the corporation was left with little money at the time of judgment - salaries were paid and monies were loaned when a suit was in place (this was read as an apparent attempt to transfer assets before a judgment was rendered).

For both people going after a corporation that has been less than honest, and for those looking to use their corporate status in order to keep from being held personally liable, paying attention to these formalities is important.

The corporation, or LLC exists as a method of helping us all come together to create more wealth and to take chances on creating capital that we might otherwise not take. Not keeping up the requirements imposed by states for operating those entities will result in losing the protections they offer.

On a different note, this opinion also contains a section on awarding attorneys fees pursuant to a contractual provision that read:

"To the extent Builder or Purchaser fails to comply with provisions of this Contract, the other party may retain an attorney to assist it in the enforcement of the provisions of this Contract, and the party at fault (i.e., not in compliance with the provisions of this Contract), shall pay any and all reasonable expense relating to the enforcement of the provisions of this Contract."

While the court did find that reasonable attorney's fees were recoverable under the contract, the opinion does note that it may be better practice to include the term “attorney’s fees” when drafting a provision for a party to bear the costs of another’s attorney.

Condo Associations' Standing Can Be Challenged By Defendants

 

Apparently defendants in an action brought against them by a condominium association can now challenge the ability of the board to bring the action even if the entity named in the suit is just the association.

We haven’t seen the pleadings, and the opinion only states that the “complaint was filed by the Association’s board of directors.” However, the named plaintiff in the caption is the association and not the board of directors on behalf of the association and the trial court docket reflects the association as the party as well.

In River Plaza Homeowner’s Association v. Healey et al. (1st Dist. Doc. No. 1-07-1281), The suit was brought to stop the proposed construction of a multi-unit condominium by an existing multi-unit condominium building next door to the construction site. As we said, the opinion states that the named plaintiff is the association for the existing condominium, but the board of directors brought the suit. The defendants challenged the standing of the board of directors to bring the suit because the board had not gotten the 2/3’s vote of the association’s members required by the condo’s by-laws for the board to bring suit on behalf of the association. The trial court dismissed the case and all the parties apparently agreed that the suit could be brought if the vote were taken and 2/3 majority voted to sue. The plaintiff appealed the issue. (other issues were also raised by defendants on appeal based on the trial court’s dismissal, but they are not the topic of the opinion nor the topic we are addressing).

The opinion is about the standing of the board to bring the suit, but another word is used once in the opinion to describe the case. On page 12 of the opinion the court says “In the case at bar, the trial court dismissed the complaint due to the board’s legal incapacity to bring this suit on behalf of the Association.” (our emphasis). Again, this leads us to believe there was something in the pleadings that led to this result, but the Association is the only named entity and the board is not implicated by the caption.

In addressing the issue of whether or not defendants had the ability to challenge the standing of the board, the court cited a case about the exclusive authority of the board to bring a suit in a case where unit owners had attempted to intervene and bring their own suit when a condo board was already bringing a suit on behalf of an association. Board of Directors of Kennelly Square Condominium Ass'n v. MOB Ventures, LLC, 359 Ill.App.3d 991, 836 N.E.2d 115 (1 Dist. 2005).

However, in Kennelly, the matter raised by defendants was the impropriety of the unit owners individual suits when Section 9.1(b) of the Illinois Condominium Property Act (765 ILCS 605/1 et seq.) gave the Association the right to bring the action and the ability to enforce the rights of the unit owners exclusive of the unit owners individual suits. The court reasoned that this was proper given the language of 9.1(b) and the public policy result that no defendant should be made to defend piecemeal litigation if suits could be maintained by every unit owner and the Association.

There appears to be no such implication in this suit, rather, the court has allowed defendants who are neither parties to a contract (the condo declaration and its by-laws), third-party beneficiaries of a contract or who have been given a statutory right, to enforce the terms of the agreement. 

This doesn’t seem right. If ABC corporation’s rights have been infringed and a suit is brought in which ABC is the named plaintiff against a defendant -- would the defendant in such a case have a right to say that because ABC’s corporate by-laws contain a provision that requires that before a suit be brought in the name of ABC a 2/3 vote of the shareholders must be obtained and the 2/3 vote has not been obtained therefore a suit cannot be filed against the defendant? Aren’t the shareholders of ABC the only parties who have the ability to challenge whether or not the conditions of the by-laws have been met. How could a third-party, without any stake in ABC contest whether or not ABC followed the by-laws.

Again, the use of the term “incapacity” on page 12 is interesting. Black’s law dictionary defines “representative capacity” as The position of one standing or acting for another, esp. through delegated authority.” The laws give the condo association the status of a not-for-profit entity and it must be registered as such, it has the ability to sue and be sued, but the court here looks to the fact that the board of the association seems to have directed that the association bring suit without attaining a 2/3 vote. It appears that what the court is doing is stating that because the authority was not given, the association has no capacity to bring suit... but standing is the doctrine that they invoke when the board apparently directed that suit be brought and even though the association has standing and it is the named entity, not the board.  Perhaps some strange application of the ultra vires doctrine is being applied stating that unlike other corporations, a condo association must show that it complied with its by-laws before asserting the rights that any other corporation would have... but that's not addressed in the opinion.

Apart from the idea that we do not know what was in the pleading that brought the issue of the board bringing the suit on behalf of the association into question, or why, when the association is the named party, a capacity/authority/standing issue can be raised about the board not achieving a 2/3 vote, some real issues arise from this opinion:

  • Does it only apply to associations or will defendants be allowed to challenge the standing of a corporation if the corporation has a rule in its charter or operating agreement that contains a clause stating that before an action can be brought on behalf of the corporation, a vote of the shareholders must be taken? 
  • Does this mean that in pleadings both corporations and associations must state that authority has been granted to bring the suit or that no such clause requiring authority exists or does the burden first fall to the defendants to discover such a provision and attempt to enforce it? – if so, is Illinois at odds with Federal Rule 9(a)(1) which specifically addresses the capacity/authority argument apart from rules regarding standing.

The lack of information in the opinion leads us to the narrow conclusion that from now on in condominium cases it may be best to plead that the condo association’s by-laws for bringing suit have been met or to challenge standing based on such a requirement if you are defending against such an association

 

Inter-Rail Systems, Inc., v. Ravi Corp., et al. (1st Dist., Doc. No. 1-07-2369)

An important lesson in asserting a claim for a lien is elaborated in Inter-Rail Systems, v. Ravi Corp. Determining whether your work is maintenance or lienable work that has improved the property as part of an overall plan for improvement, and whether you can and have provided proof of the overall value added to the land because of your work is important where the statute doesn’t explicitly describe your work as an improvement. (See the Mechanic’s Lien Act – 770 ILCS 60/1(b))

In Inter-Rail, the plaintiff was contracted by the land owners to clean up a portion of a site containing drums and waste in a warehouse and an adjacent parking lot deemed hazardous by the U.S. EPA.

Specifically, the plaintiff was contracted for the removal and disposal of drums from both the parking lot and the warehouse. The cleanup also required the plaintiff to scrape, sweep and decontaminate or remove any areas of the site or trailers in the parking lot where spills of the hazardous materials had occurred. The plaintiff completed its cleanup work and the defendant failed to pay the balance due – the plaintiff filed a lien and sued to enforce the lien and for other causes of action.

The defendants moved for summary judgment (a finding that they should win without a trial based on the evidence) and the trial court granted their motion finding that part of the work was non-lienable and that the plaintiff’s failure to apportion the lien amount in order to allow the court to distinguish between the amounts owed for lienable and non-lienable meant that the lien failed. The trial court did allow the plaintiff 30 days to re-plead its causes of action on the lien to include apportionment, but when the plaintiff failed to do so, the court entered judgment for the defendants.

The plaintiff appealed and the appellate court upheld the judgment. In its finding, the court noted that the purpose of the Mechanics Lien Act is to “require a person with an interest in real property to pay for the improvements or benefits which have been induced or encouraged by his or her own conduct.” “The focus of the inquiry to determine whether a mechanic’s lien should be granted is whether the work performed has enhanced the value of the land to be charged with the lien.” This notion of “enhanced value” appears to necessitate that the work be part of an overall plan to improve the property. The court cited cases it distinguished from this one by noting that in all the other cases involving debris clean-up where removal of debris/contamination was concerned, the removal was also part of other work in a plan to improve the property, whether it be the removal of debris from a demolition site, or removal of debris after storage tanks are taken out of the ground, such removal is part of an overall plan to improve the property and thus, not similar to the present case where the plaintiff cleaned up the site. 

The court even went so far as to say that the plaintiff had not filled the contaminated drums with the hazardous waste, did not change the structure of the site… “It merely removed and disposed of the drums, already filled with the waste, and performed incidental cleaning activities. None of these activities were shown to be part of an overall plan to improve rather than simply maintain the property.”

Surprisingly, the court went on to distinguish this case from a case of asbestos removal where the removal of asbestos was found by a federal court to have improved the premises where the plaintiff in that case had provided expert testimony that the value of the asbestos contaminated property was significantly less with the asbestos inside of it than without the asbestos – and a trial was held where that information was provided… Here, as the court points out, the plaintiff failed to offer evidence that its work improved the property, “such as evidence of the value of the site prior to and after the work it performed.”

The golden ruling:

“We conclude that the activity of removing and disposing of drums containing hazardous waste, in and of itself, does not constitute an improvement to real property so as to be a lienable activity under the Act. As there was no evidence that plaintiff’s work was part of an overall plan to improve the property, its work was not a lienable activity under the Act.”

The court went on to note that even if some of the work were lienable the failure of the plaintiff to apportion its lien and subsequently amend its complaint meant that the plaintiff had waived the argument.

A lesson in defending against the liens for owners should be obvious… look for a way to argue maintenance. For those looking enforce a lien, apportionment and characterization of the work and proof of an enhanced value should be paramount.

Ready v. United/Goedecke Services, Inc.

On November 25, 2008, in Ready v. United/Goedecke Services, Inc., Docket No. 103474, the Illinois Supreme Court, in a plurality decision, held that section 2-1117 of the Code of Civil Procedure does not apply to tortfeasors or defendants who have settled before judgment.   As a result, the Court found that settling defendants should not be included in the apportionment of fault for the purposes of determining relative liability pursuant to section 2-1117.

In doing so, the Illinois Supreme Court ostensibly resolved a conflict among the Illinois Appellate Courts.  Justice Freeman construed the statutory language "defendants sued by the plaintiff" to be ambiguous, citing the diverse appellate holdings and the majority's disagreement with the dissenting opinion. The plurality relied upon:  (1) the Legislature's failure to amend the statute after it was first construed not to apply to settled parties in Blake v. Hy Ho Restaurant, Inc., 273 Ill.App.3d 372 (5th Dist. 1995); and (2) the 1995 tort reform amendments (deemed unconstitutional in Best v. Taylor Machine Works, 179 Ill.2d 367 (1997)) which had included settling defendants in the apportionment of fault as evidence that section 2-1117, as enacted in 1986, was never intended to include settling tortfeasors in the allocation of fault.  In a special concurrence that supplied the fourth vote to reverse, Justice Kilbride agreed that section 2-1117 was unclear but concluded that the meaning was clear from an examination of the statute as a whole.  Justice Thomas took no part in the decision. Justice Garman, in a dissent in which Justice Karmeier concurred, would have found the plain meaning of section 2-1117 to be unambiguous based on dictionary definitions of the word "sued" and disagreed with the plurality's reliance on certain tools of statutory construction. The dissent concluded that the result reached by the plurality was contrary to the goals of the legislature in striking a balance between fully compensating injured parties and fair imposition of liability upon tortfeasors. 

As a result of this decision, a minimally responsible defendant may not be allowed to present evidence of the fault of settled parties or other tortfeasors who might have been responsible for the plaintiff's injuries.   A lone defendant, which may be only 1% at fault, could be liable for 100% of the judgment, less the amount of the settlements with the more culpable defendants.  Similarly, defendants confident that they are less than 25% at fault in comparison to other parties may find themselves jointly and severally liable because the more culpable defendants settle at the eve of trial.  On the other hand, plaintiffs benefit from only needing to present their cases against defendants at trial rather than having to deal with the empty chairs of the settling, and potentially more culpable, defendants.  While the non-settling defendants are entitled to an offset of any settlement amount, it appears from this decision that the fault of the settling defendant is not to be considered by the jury in allocating fault.  It is unknown at this time whether the legislature will address this ruling through an amendment to section 2-1117.

Don't Forget to Apportion a Lien Filed Against a Condo Association

Pepper Construction Company is being sued for its work constructing the high-rise condo building over at 720-726 Randolph in Chicago.  The complaint alleges multiple counts including:

  • Delays on the project
  • Faulty workmanship
  • Slandering the title to the land
  • Breach of warranty
  • Breach of their contract with the owner
  • And fraudulent concealment of defective work

This may be the first in a series of suits over this property, the City View Tower. 

Starting on page 23 of the complaint, you’ll see an interesting claim regarding the mechanic’s lien and its something worth noting if you’re either involved in the construction of condominium projects (high-rise or not) or if you’re developing them.  There are multiple cases presently before the courts regarding this issue.  The Condominium Property Act requires that mechanic’s liens be apportioned – Section 9.1.  So, in addition to making sure the strict timing requirements of the Mechanic’s Lien Act are followed, anyone seeking to file their lien against a condominium property (any property where the condominium declaration has been recorded) should familiarize themselves with Section 9.1 before filing.

 

Think You Have The Right To Contest A Mechanic's Lien Claim? Think Again.

Here's something you're sure to be interested in.  We had previously discussed an order in Vancil v. Tres Amigos (C.D.IL, Doc. No. 06-71254) regarding Tres Amigos attempt at attaining summary judgment to extinguish two mechanic's liens filed by former subcontractors of Vancil in a bankruptcy proceeding initiated by Vancil.  That entry is here.


Today, the court denied Tres Amigo's motion for reconsideration.  Of note to everyone working in the industry and dealing with mechanic's liens, this order, holds that section §60/9 of the mechanic's lien act, which allows the parties to an Illinois mechanic's lien foreclosure to contest each other's rights without the need for multiple pleadings between all of the parties, is a procedural statute and not a substantive right given to the parties.  Because the federal court is not bound by state procedure, but rather, by state substantive law, in order to maintain an action against the other lien claimants, a party must file pleadings against the other parties in order to contest the issues between them.  Given this assessment of the nature of the rights granted under §60/9 the court denied Tres Amigo's motion for reconsideration and held, again, that it needed to have pleadings on file against the lien claimants it was contesting, or no remedy was available from the federal court.

Lakewood Prairie, LLC v. Ibarra Concrete Company, et al. (N.D.IL Doc. No. 08 C 1200)

Given the glut of Bankruptcy cases we have been seeing over the past four months where differing lien matters are being resolved over limited funds in bankruptcy actions, it's refreshing to see an interpleader action.  (An action filed by a party that has control or possession of property that should go to some other party, but first it needs the court to determine which party is the correct party.  In the context of this action, which involved a developer in control of funds that would have been paid to a general contractor but for the fact that the contractor was no longer in business.)  The reason this is refreshing is that lately we have been seeing cases where the GC gets behind and starts using all kinds of funds from different projects to pay its bills.  Often, the GC does not reveal its financial state to the parties it contracts with know of its financial state until it is too late.  The GC goes bankrupt, which consumes the remaining monen that was to be paid out to its subs and other creditors... resulting in a GC that can't pay and multiple liens filed against property owners who had no idea that the payments they were certifying weren't getting to the subcontractors and creditors.

In this action, the company that went under had also failed to make its FICA payments to the IRS.  At the time the interpleader action was filed, the developer was still in possession of some money that it intended to use to pay the GC.  This money was put forth in the interpleader action with a request to adjudicate a settlement of the pending mechanic's lien claims in state court.  The developer also added the US as a party because of the lien the US had on the missing FICA tax payments.  The US then filed a motion to remove the case to federal court to which the mechanic's lienors and other creditors objected.  The court denied the motion to remove the case back to state court finding that the interpleader action had properly consolidated all the cases, and that venue was correctly in federal court under the US Code.

The case is also a reminder that one quick way to federal court when you can't get diversity jurisdiction is to join the U.S. Government as a party.

The case is available here.

The Illinois Drainage Act - A Farmer's Approach

Thumbnail image for Sluice_Gate.JPGIllinois farmers are a tough bunch.  So it's not surprising that as a pro se defendant and appellant, farmer Peter Schultz, was instrumental in allowing the court to deliver one of the nine cases in existence dealing with the Illinois Drainage Act (70 ILCS 605/1 et seq.) 


This act is important to anyone developing a parcel of land and many contractors.  It establishes the Drainage Districts in the State and also governs taxation and contracting and bidding on projects with the Districts.  It provides the process by which determinations regarding drainage from one parcel to the next are made, along with establishing a procedure for adjudicating issues involving drainage.

In Halpin v. Schultz, Doc. No. 3-06-0767 (3rd Dist.) the appellate court was faced with a trial court's decision granting Mr. Schultz' neighbors the right to enter onto his land and install new drainage tiles.  The neighboring farm wanted to extend their drainage tiles beyond their property, connect them to Schultz' and thereby, arguably, change the course of drainage on their property.  Schultz argued that the tiles between the property were never connected, and shouldn't be connected.  This is important given that, in addition to excess water, many toxins from pesticides and sewage from livestock also end up in being transported through these types of tiles and can effect the quality of groundwater in the area and the growth of crops.

At trial, the plaintiffs did not introduce any evidence comporting with the Drainage Act's requirements that a dominant landowner seeking to extend and replace tiles on a subservient landowners property show that the tiles would then drain at an exit point off the property of the subservient landowner.  In other words, if the neighbors wanted to drain in the direction of Schultz' property, they were required to show that they would be draining "through" Schultz' property and that the water would exit into a proper ditch or culvert beyond Schultz' property.  They failed to introduce any evidence to that effect and the appellate court reversed the trial court's decision outright.

Additionally, the court noted the severe constitutional implications involved in letting one private land owner assert rights with regard to another individual's lands. 

  • "The law does not favor the expropriation of private property for the public good without just compensation.  Even less attractive is the expropriation of private property for the private benefit of an adjoining property owner."

The judgment of the trial court was reversed.

Justice Holdridge dissented asserting that a different standard of review should be applied and framed the issue of this case, not as one addressing the interpretation of the Drainage Act, but of one regarding the trial court's determination of the evidence in competing testimony and felt that the trial judge did not create reversible error in his determination regarding the course of the natural drainage of the properties at issue.

Holdridge saw this case as a question of whether certain new improvements on portions of the neighbors land, namely the creation of a two-acre pond and the development of a housing division on a portion of the property had created a new "natural" flow of water where water that may previously not have traveled over Shultz' land.  However, addressing these questions under the act would require more time and effort than the plaintiffs may want to put into this matter.  And, without an attorney, perhaps Shultz was unequipped to properly raise these issues.

Developments, ponds, and farms aside, the act of construction on open land can raise a host of issues that, if not properly considered at the time of construction, can lead to a mess of litigation, which can be a headache, unless, of course, you know how to farm.

Kirkpatrick v. Strosberg

Illinois is certainly no stranger to the Condo Craze, a quick Google search for blogs on the topic in Illinois should put to rest any notions to the contrary.   There are plenty of interesting and responsible resources on the topic... and the law regarding the issues involved in condominium matters continues to grow.

A case touching on those matters and construction and development as well as architecture is the feature today.  Kirkpatrick v. Strosberg, Doc. Nos. 2-06-0724 and 02-06-0731 consolidated (April 16, 2008, 2nd Dist.)

The plaintiffs were individuals who contracted to purchase luxury condominium units in Glen Ellyn.  The developer built the units and the plaintiff's moved in.

Some of the measurements of the completed luxury units did not turn out to comport exactly with the finished condos.  For example, depending upon the method in which one measures the square footage of the units, the units did not meet the advertised square footage, additionally, because alterations were necessary towards the end of the project, the ceilings on the top floor units measured eight feet, six inches and not nine feet as advertised in the original brochures.  One of the unit owners spent extra money having his bathroom reconfigured after the initial plans failed to put the pipes in the right places, and another owner measured his cabinetry installation in accordance with the nine foot specs and not the eight feet, six inch specifications.

The owners sued the developer for violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, common-law fraud, and breach of contract.

There was a bench-trial on the matter and the trial court made findings in favor of the plaintiffs for the breach of contract claims, the common-law fraud and the consumer fraud claims involving the ceiling heights, but not the square footage issues.  The court also found that due to the nature of the contracts and the evidence presented by the plaintiffs there was damage, but the plaintiffs' evidence was insufficient and thus awarded only nominal damages of $100 each.  For the plaintiff with the bathroom plans, the court found fault at 50% with the plaintiff's architect, who was the plaintiff's agent, and at 50% with the developer, and thus reduced the damage award of $31,730 by half.  The court found the cabinet plaintiff's claims were barred by language in a rider to the contract by which the seller eschewed liability for improvements made by the buyer:

  • "Seller shall not be required to review Buyer's architectural plans for the Buyer's improvements, and Seller shall not oversee Buyer's work on the premises. Seller makes no warranty whatsoever to Buyer that the premises and its components are complete or compatible with the Buyer's improvements. Buyers understand that all dimensions on the Seller's plans and specifications are approximate and subject to modification for actual field conditions. Field measurement is required to conform dimensions prior to ordering materials."

The trial court also awarded $83,000 to the plaintiffs in attorneys fees and $300,000 in punitive damages.

The appellate court upheld the trial court's determination that the square footage of the units, when measured properly, was not contradicted by any of the plaintiffs' evidence.  The court also upheld the $100 damage award finding that the plaintiffs' expert appraiser had taken cost approximations regarding damages from housing prices as they existed seven years after the actual date of sale for the units.

The court's statement of the black-letter law regarding the proper calculation of damages in a dispute over the breach of contract for the sale of real estate is familiar:

  • "Damages, in a breach of contract for the sale of real estate, are calculated by the difference between the fair market value of the real estate on the day of the breach and the sale price contracted for by the purchasers."

The appellate then upheld the nominal damages award, finding again that there was no credible evidence on the matter given the appraiser's failure to estimate from the time of the sale and not the market value at the time of the case.  The court struck the $300,000 in punitive damages, citing a 1st District opinion holding that nominal damages cannot provide a basis for awarding punitive damages.  The court also upheld the trial court's determination that the plaintiff and the defendants were 50% mutually responsible for the cost of the repair to the bathroom; affirmed the cabinetry decision; and awarded the attorneys fees.

Of additional note to appellate practitioners is the court's enforcement of Rule 341(e)(7) granting the defendants' motion to strike portions of the plaintiffs' reply brief, where the brief raised arguments in the reply that were not raised in their initial brief.

For designers: the court stood by the Architect's method of measuring the square footage of the condominiums as the distance from the outside wall to half of the demising wall rather than the plaintiffs' appraiser's "paint-to-paint" method of measuring from the inside wall to the inside wall.

The actual relief in this case would likely have been substantial had the appraiser computed comparable sales in accordance with the proper measure for damages.

Make Sure There's Relief to Be Had

Here's a reminder from the Northern District of Illinois Bankruptcy Court.  In Vancil v. Tres Amigos (docket #06-71254) the owner of a property, Tres Amigos, was looking to extinguish liens filed by two subcontractors of Vancil.  Tres Amigos brought the action to extinguish the liens where the two subs had not properly served Tres Amigos with their 90 day notices under the Illinois Mechanic's Lien Act.

A problem arose when the Court noted the Tres Amigos had never made one of the subs a party to the action and that it failed to assert a claim against the other sub, which was a co-defendant.  The Court pointed out the Tres Amigos would likely have prevailed on its claim, had it not failed to properly plead actions for which relief could be granted against the subcontractors.

  • The lesson learned here:  Make sure all your ducks are in a row before time, effort and money are spent asking the Court for relief that cannot be granted.

Free Public Records...?

    For anyone practicing law in today's information age, the constant fees and assessments put forth by different counties for access to recorded documents, court filings, or any other public record is well known.  In fact, the charges for information can sometimes be exorbitant if someone is getting involved in multi-party litigation.

    This newly proposed Senate Bill #2175 should come as a welcome proposal to the small practioner concerned about handing over the expense of accessing public data to a client.

Keeping old records...

            If the story in this case (Klose v. Mende, (3rd Dist.)) were about saving a school or an orphanage, it would be a made for TV Movie.  A town found documents from 1856 while cleaning out the old town hall, and those documents were enough to save their proposed plan to repave a portion of their roads.  The lack of the documents had forced a court to rule against the town and in favor of plaintiffs - who did not want a portion of their property paved over.

            After finding the records, the town made their deadline for filing before the limitations period ran and it looks like they'll be getting their road.

            The lesson for everyone here cannot be underscored enough, save the documents.  From lien waivers to deeds and even mortgage releases, the chance that they could defeat some form of litigation is worth placing them in a safe or safety deposit box, and if nothing else, they may serve to clarify some issues that might otherwise be disputed.