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Provenzale v. Forister
State: Illinois
Court: 2nd District Appellate
Docket No: 2-00-0108 Rel
Case Date: 01/23/2001

No. 2--00--0108
January 23, 2001

____________________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

____________________________________________________________________________________



DONALD J. PROVENZALE, JR.,and)Appeal from the CircuitCourt
DANIELLE T. PROVENZALE,                                                                                      )of Du Page County.
                                                                                                                                      )
Plaintiffs-Appellants,)
)
v.)No. 96--L--1413
                                                                                                                                      )
HAROLD FORISTER and )
RUTH FORISTER,                                                                                                         ) Honorable
                                                                                                                                        ) Edward R. Duncan,
Defendants-Appellees. ) Judge, Presiding.


_____________________________________________________________________________________

JUSTICE RAPP delivered the opinion of the court:

Plaintiffs, Donald J. Provenzale, Jr., and Danielle T.Provenzale, appeal from the trial court's orders granting themotions to dismiss of defendants, Harold Forister and RuthForister. Plaintiffs contend that the trial court erred indismissing their claims for (1) violation of the Residential RealProperty Disclosure Act (Disclosure Act) (765 ILCS 77/1 et seq.(West 1996)); (2) violation of the Consumer Fraud and DeceptiveBusiness Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq.(West 1996)); (3) fraud; (4) breach of contract; and (5) conspiracyto defraud. The Provenzales also appeal the trial court's orders forfeiting their earnest money and awarding attorney fees todefendants. We affirm in part, reverse in part, vacate in part,and remand for further proceedings.

I. FACTS AND PROCEDURAL HISTORY

The Provenzales filed a complaint in the circuit court of DuPage County after a contract to purchase a parcel of real estatefrom the Foristers failed to close. In the first amendedcomplaint, it was alleged that the Foristers owned a parcel of realproperty at 8 S 049 S. Mitchell, Naperville, Du Page County (theproperty), that was offered for sale in October 1994. At thattime, the Foristers executed a residential real property disclosurereport (disclosure report) pursuant to the Disclosure Act,indicating that they were not aware that the property was locatedin a flood plain. A copy of the disclosure report was attached asan exhibit to the complaint.

On July 23, 1996, the Provenzales entered into a contract topurchase the property (the contract) and deposited $5,000 inearnest money. A copy of the contract was attached as an exhibitto the complaint. It was alleged further that, prior to theProvenzales' execution of the contract, Harold Foristeraffirmatively stated to the Provenzales that the property was notlocated within a flood plain. The Provenzales alleged that,contrary to the statements and the disclosure report, the propertyis, in fact, located within a flood plain and that the Foristershad knowledge of this fact when making the statement and whenexecuting the disclosure report.

In count I of the first amended complaint, the Provenzalesalleged that the Foristers materially breached the contract by (1)intentionally and knowingly inducing the execution of the contractby fraud, in making misrepresentations to conceal the flood plainstatus of the property; (2) failing to comply with the "operablefurnace" contract term; and (3) failing to tender a septic systemreport on the date set for closing. The Provenzales prayed for adeclaration that the contract was null and void; for damages in theamount of $34,946 or, alternatively, for compensatory damages equalto the diminution in value of the property; and for attorney feesand costs.

Count II alleged fraud in that the disclosure report andHarold Forister's statements were wilfully made with full knowledgethat the property was located within a flood plain, to induce theProvenzales to enter into the contract. Counts III and IV allegedviolations of the Disclosure Act and the Consumer Fraud Act.

On May 21, 1997, the trial court dismissed counts III(violation of the Disclosure Act) and IV (violation of the ConsumerFraud Act) of the first amended complaint with prejudice. OnNovember 12, 1997, the Foristers' attorney was granted leave towithdraw. Subsequently, separate counsel entered appearances onbehalf of each of the Foristers.

In a bill of particulars, the Provenzales stated that theyfirst obtained the disclosure report on May 2, 1996, more than twomonths before entering into the contract. The Provenzales obtainedthe disclosure report from their real estate agent, who hadobtained it from the Foristers' real estate agent.

The Provenzales were granted leave to file a second amendedcomplaint. The second amended complaint differed from the firstamended complaint in that it alleged that Harold Forister made oralstatements that the property did not flood in addition to hisstatements that the property was not located within a flood plain. Harold Forister and Ruth Forister filed separate motions to strikeand dismiss the second amended complaint pursuant to sections2--615 and 2--619(a)(9) of the Code of Civil Procedure (735 ILCS5/2--615, 2--619(a)(9) (West 1998)). The Provenzales filed aconsolidated response to the motions to dismiss the second amendedcomplaint.

On June 4, 1998, the trial court entered an order granting theForisters' section 2--615 motions, striking the paragraph of countI alleging breach of contract by misrepresentation of material factand the paragraph alleging damages for breach of contract. Thetrial court granted the Foristers' section 2--619 motions, strikingthe paragraph alleging breach of contract for failure to complywith the operable furnace term. The Foristers' section 2--619motions were denied as to the paragraph alleging breach of contractfor failure to provide a septic system report. As to count II(alleging fraud) of the second amended complaint, the trial courtgranted the Foristers' section 2--615 motions with respect toreliance on the disclosure report and allegations of damages, butdenied the motions with respect to Harold Forister's oralmisrepresentation of the flood plain status of the property. Accordingly, the trial court dismissed count II with prejudice asto Ruth Forister. The Provenzales filed a motion to reconsider thedismissal of the fraud count as to Ruth Forister. The trial courtdenied that motion.

The Provenzales were then granted leave to file a thirdamended complaint. Count I of the third amended complaint allegeda breach of contract because the Foristers could not perform theirpromise to convey to the Provenzales a property that did not floodand was not located in a flood plain. The third amended complaintalso omitted the claim for breach of contract due to the Foristers'failure to provide an operable furnace and added a count V allegingconspiracy to defraud. In support of the allegation that theForisters had knowledge that the property was located within aflood plain and floods, the fraud count was amended to specify thatHarold Forister submitted documents in 1988 and 1990 challengingthe property's tax assessment. In those documents, Harold Foristerstated that the property was in a flood plain and that the propertyfloods four times per year. Harold and Ruth Forister each filedmotions to strike and dismiss the third amended complaint pursuantto sections 2--615 and 2--619(a)(9) (735 ILCS 5/2--615, 2--619(a)(9) (West 1998)).

On November 3, 1998, the trial court entered an orderdismissing all counts alleged in the third amended complaint withprejudice pursuant to section 2--615. On March 17, 1999, thetrial court entered an order granting Ruth Forister's motion forforfeiture of the $5,000 earnest money deposited by theProvenzales. On December 17, 1999, the trial court granted theForisters' petitions for attorney fees. Plaintiffs timelyappealed.

II. DISCUSSION

In reviewing the dismissal of a complaint under section 2--615and section 2--619 we apply a de novo standard of review. SeeNeade v. Portes, 193 Ill. 2d 433, 439 (2000); Mio v. Albert-CulverCo., 306 Ill. App. 3d 822, 825 (1999).

A. VIOLATION OF THE RESIDENTIAL REAL PROPERTY DISCLOSURE ACT

Count III of the Provenzales' first amended complaint allegedthat the Foristers violated the Disclosure Act by falselyrepresenting the property's flood plain status in the disclosurereport. The Disclosure Act requires the seller of residential realproperty to complete a disclosure report containing certainstatements about the property. 765 ILCS 77/35 (West 1996). Statement number three on the disclosure report reads: "I am awarethat the property is located within a flood plain or that Icurrently have flood insurance on the property." The Foristersplaced an "x" in the "no" column next to that statement.

Section 10 of the Disclosure Act provides:

"Except as provided in Section 15, this Act applies toany transfer by sale, exchange, installment land salecontract, assignment of beneficial interest, lease with anoption to purchase, ground lease, or assignment of groundlease of residential real property." 765 ILCS 77/10 (West1996).

In granting the Foristers' motion to dismiss, the trial courtstated that "since there was not a transfer alleged in Count [III],the motion must be granted."

The Provenzales contend that they have stated a cause ofaction under the Disclosure Act and the trial court erred ininterpreting the Disclosure Act as requiring an actual transfer ofreal property. The Provenzales point to the inclusion anddefinition of "prospective buyer" (765 ILCS 77/5 West 1996)) andthe pretransfer duty imposed on sellers to deliver the disclosurereport to the prospective buyer before the signing of a contract(765 ILCS 77/20 West 1996)) in support of their position. TheProvenzales argue that the trial court misinterpreted the word"transfer" as a verb rather than a noun because "transfer" refersgenerally to the different types of transactions that are or arenot subject to the Disclosure Act, not simply the act oftransferring the property.

The Foristers collectively argue on appeal that the languageof the Disclosure Act clearly and unambiguously requires a"transfer" of real property. The Foristers point to section 60 ofthe Disclosure Act, which provides:

"No action for violation of this Act may be commencedlater than one year from the earlier of the date possession,date of occupancy, or date of recording of an instrument ofconveyance of the residential real property." 765 ILCS 77/60(West 1996).

The Foristers argue that there would be no limitation on an actionunder the Disclosure Act where no transfer occurred because none ofthose three things can happen without a transfer of the property. The Foristers further contend that, if no actual transfer isrequired, a seller would be liable to any prospective purchaser whosigned a contract to purchase property regardless of whether thesale was completed.

Whether the plaintiff must allege an actual transfer of realproperty in order to state a cause of action under the DisclosureAct is an issue of first impression in this state and involves theproper interpretation of the Disclosure Act. We review a questionof statutory construction de novo. Bank of Waukegan v. Kischer,246 Ill. App. 3d 616, 621 (1993). The goal of statutoryconstruction is to effectuate the intent of the legislature, whichis best demonstrated by the plain language of the statute. Peoplev. Frieberg, 147 Ill. 2d 326, 345 (1992). If the language of thestatute is clear, it will be given effect without resorting toother aids of construction. In re Marriage of Mitchell, 181 Ill.2d 169, 173 (1998). However, an ambiguous statute will bereasonably construed in a manner that will not produce absurd,unjust, or unreasonable results that the legislature could not haveintended. In re Application of the County Collector of Du PageCounty for Judgment for Taxes for the Year 1993, 187 Ill. 2d 326,332 (1999).

Section 10 of the Disclosure Act deals with the applicabilityof the statute. We believe that the word "transfer" utilizedthroughout the Disclosure Act and specifically in section 10 mayreasonably be interpreted in two ways and, therefore, section 10 isambiguous. First, it can be interpreted to mean an actual transferof the listed type must take place in order for the statute'sduties and remedies to apply. Second, section 10 can beinterpreted as a list of the types of contemplated transfers towhich the statute's duties and remedies apply. Accordingly, wemust consider which interpretation better effectuates thelegislative intent and is more consistent with the goals of theDisclosure Act.

The purpose of the Disclosure Act is to provide prospectivebuyers with information about material defects known to the sellerconcerning the property. See 765 ILCS 77/25, 35 (West 1996). Theseller is required to complete and deliver the disclosure report tothe prospective buyer before the signing of a written agreementthat would require the buyer to accept a transfer of the property. 765 ILCS 77/20 (West 1996). A prospective buyer may choose to relyon this information in deciding whether and on what terms topurchase the property. 765 ILCS 77/35 (West 1996).

If the word "transfer" is given the first interpretation, theprovision of the Disclosure Act assigning the seller the duty todisclose material defects (765 ILCS 77/25(b) (West 1996)) ismeaningless because this is a pretransfer duty. Clearly, theseller owes this duty to a prospective buyer when any transfer ofthe type listed in section 10 is contemplated, not when it isconsummated. Moreover, the Disclosure Act provides bothprospective buyers and actual buyers with remedies for violation ofits provisions.

At the time of this transaction, section 40 providedprospective buyers with the remedy of terminating the contractalong with the return of any earnest money deposit if they weredelivered a disclosure report disclosing a material defect afterentering into a contract to purchase the property but beforeclosing the transaction. 765 ILCS 77/40 (West 1996). When aseller discloses false information in the disclosure report, as isalleged here, ordinarily the buyer discovers the material defectafter the property is conveyed. In such case, the buyer's remedyunder the Disclosure Act lies in section 55, which provides thatone who knowingly violates or fails to perform any duty prescribedby any provision of the Disclosure Act, or discloses information onthe report known to be false, is liable for actual damages andcourt costs. 765 ILCS 77/55 (West 1996).

The Provenzales have alleged that they were delivered thedisclosure report before entering into the contract and that thedisclosure report did not disclose a material defect. Therefore,section 40 did not provide them with the remedy of terminating thecontract when they discovered that the disclosure report containedfalse information. However, we believe that section 55 of theDisclosure Act provides a remedy for the actual damages incurred bya prospective buyer of real property who discovers falseinformation on the disclosure report before closing the transactioneven though the property was never transferred.

We find no merit in the Foristers' argument that the sellerwould be liable to any prospective buyer for a violation of the Disclosure Act. Obviously, a potential buyer would have to allegeactual damage to state a cause of action under the Disclosure Act(see 765 ILCS 77/65 (West 1996)), not merely receive a disclosurereport containing false information.

We are also unpersuaded by the Foristers' argument that therewould be no limitation on an action under the Disclosure Act whereno actual transfer occurred. The seller is required to disclosematerial defects of which the seller has actual knowledge. 765ILCS 77/25(b) (West 1996). Section 55 of the Disclosure Actprovides that one who knowingly discloses false information on thedisclosure report is liable for actual damages and court costs. 765 ILCS 77/55 (West 1996). While it is true that an action for aviolation of the Disclosure Act that accrues before the possession,occupancy, or recording of an instrument of conveyance could neverbe commenced more than a year after the earliest of them, section13--205 of the Code of Civil Procedure (735 ILCS 5/13--205 (West1996)) provides that all civil actions not otherwise provided forshall be commenced within five years next after the cause of actionaccrued.

For the forgoing reasons, we hold that an allegation of anactual transfer of real property is not required to state a causeof action for violation of the Disclosure Act. Accordingly, wehold that the trial court erred in dismissing count III of thefirst amended complaint.

B. VIOLATION OF THE CONSUMER FRAUD AND DECEPTIVE BUSINESS

PRACTICES ACT

The Provenzales contend that the trial court erred indismissing count IV of the first amended complaint alleging aviolation of the Consumer Fraud Act. This court has specificallyheld that an individual who casually sells his or her own single-family home is not subject to liability under the Consumer FraudAct. Carrera v. Smith, 305 Ill. App. 3d 1079, 1082 (1999). Accordingly, the trial court did not err in dismissing count IV ofthe first amended complaint.

C. THE FRAUD, BREACH OF CONTRACT, AND CONSPIRACY TO DEFRAUD COUNTS In this case the trial court ruled on motions to dismiss boththe second and the third amended complaints that were broughtpursuant to both section 2--615 and section 2--619 (735 ILCS 5/2--615, 2--619 (West 1998)). While this practice is permitted (see735 ILCS 5/2--619.1 (West 1998)), courts of review have criticizedthe use of hybrid motions that simultaneously claim that a cause ofaction has and has not been stated. See Janes v. First FederalSavings & Loan Ass'n, 57 Ill. 2d 398, 406 (1974); In re Estate ofBerry, 277 Ill. App. 3d 1088, 1090 (1996).

A brief review of the purposes of section 2--615 and section2--619 motions will be useful in understanding our disposition ofthis case. A motion brought pursuant to section 2--615 of the Codeof Civil Procedure (735 ILCS 5/2--615 (West 1998)) attacks thelegal sufficiency of the complaint. Abbasi v. Paraskevoulakos, 187Ill. 2d 386, 391 (1999). It must be determined whether theallegations of the complaint, when viewed in a light most favorableto the plaintiffs, are sufficient to state a cause of action uponwhich relief can be granted. Abbasi, 187 Ill. 2d at 391. A section 2--615 motion admits as true all well-pleaded facts, butnot conclusions of law or factual conclusions that are unsupportedby allegations of specific facts. Lagen v. Balcor Co., 274 Ill.App. 3d 11, 16 (1995).

A motion for involuntary dismissal brought pursuant to section2--619(a)(9) of the Code of Civil Procedure raises an "affirmativematter avoiding the legal effect of or defeating the claim" (735ILCS 5/2--619(a) (9) (West 1998)). The "affirmative matter" mustbe something more than evidence offered to refute a material factalleged in the complaint. Barber-Colman Co. v. A & K MidwestInsulation Co., 236 Ill. App. 3d 1065, 1073 (1992). A section2--619 motion is properly used to raise affirmative matters thatnegate the claim, not to challenge the essential allegations of theplaintiff's cause of action. Kedzie & 103rd Currency Exchange,Inc. v. Hodge, 156 Ill. 2d 112, 115 (1993).

In their motions to dismiss the second amended complaint, bothHarold Forister and Ruth Forister submitted an affidavit of theattorney who represented them in the transaction to contradict theProvenzales' allegations that the Foristers failed to comply withthe operable furnace and septic system report terms of thecontract. Ruth Forister's motion to dismiss relies on her owndeposition testimony, as well as that of Donald and DanielProvenzale, to contradict the allegation that Ruth Forister made astatement regarding the flood plain status of the property. Moreover, Ruth Forister submitted an affidavit of an engineer tocontradict the allegation of reasonable reliance on the statementsregarding the property's flood plain status that was countered byan affidavit of an engineer submitted by the Provenzales in theirresponse to the motion to dismiss.

With regard to the motions to dismiss the third amendedcomplaint, Harold Forister's motion relies on the depositiontestimony of the Provenzales to contradict the allegations ofdamages. Ruth's motion to dismiss relies on her own depositiontestimony to contradict the allegation that she made a statement tothe Provenzales.

Ruth and Harold Forister not only presented hybrid sections2--615 and 2--619 motions, but they also presented evidentiarymaterial going to the truth of the allegations contained in thecomplaint. This is improper because a motion pursuant to eithersection 2--615 or section 2--619 concedes the truth of all well-pled allegations in the complaint. Anderson v. Anchor Organizationfor Health Maintenance, 274 Ill. App. 3d 1001, 1012 (1995). Further, a section 2--615 motion, unlike a section 2--619 motion ora motion for summary judgment pursuant to section 2--1005 (735 ILCS5/2--1005(c) (West 1998)), is a motion based on the pleadingsrather than the underlying facts. Accordingly, depositions (Beckerv. Zellner, 292 Ill. App. 3d 116, 124 (1997)), affidavits, andother supporting materials (Premier Electrical Construction Co. v.La Salle National Bank, 115 Ill. App. 3d 638, 643 (1983)) may notbe considered by the court in ruling on a section 2--615 motion.Moreover, evidentiary material in support of a section 2--619motion may not be submitted for the purpose of contradicting well-pleaded facts in the complaint. Kedzie, 156 Ill. 2d at 115. Ifthe Foristers wished to contest factual allegations in thecomplaint, they should have filed motions for summary judgment.

It is recognized that judicial economy would best be served todecide the appeal when the opposing party has not been prejudicedby the motion's hybrid nature. Berry, 277 Ill. App. 3d at 1090-91.Where the trial court gives sufficiently clear reasons for itsdisposition on each count, the appellate court may consider theappeal despite the commingling of factual allegations andarguments. Anderson, 274 Ill. App. 3d at 1010. However, afterreviewing the record, we find neither a lack of prejudice to theProvenzales nor a clear reason for the dismissal of each count, andtherefore we will not review the merits of the issues raised withrespect to these counts. Accordingly, we reverse the trial court'sorders dismissing counts I, II, and IV with prejudice and remandthe cause in order to afford the Provenzales an opportunity toreplead.

D. EARNEST MONEY AND ATTORNEY FEES

Ruth Forister filed a "Motion for Forfeiture of Earnest Money"and prayed that the trial court find that there was a breach ofcontract by the Provenzales and declare forfeiture of the $5,000 inearnest money. The trial court granted Ruth's motion. The trialcourt also awarded Ruth Forister $30,483.74 and Harold Forister$13,123.25 in attorney fees pursuant to a provision of thecontract. Because we reverse the dismissal of several of theProvenzales' claims, the trial court's award of earnest money andattorney fees is vacated.

III. CONCLUSION

For the foregoing reasons, we affirm the trial court'sdismissal of count IV of the first amended complaint. We reversethe trial court's dismissal of count III of the first amendedcomplaint and counts I, II, and V of the third amended complaintand remand these claims for further proceedings. We vacate thetrial court's orders forfeiting the earnest money and awardingattorney fees.

Affirmed in part, reversed in part, and vacated in part; causeremanded.

COLWELL, P.J., and McLAREN, J., concur.

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