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Laws-info.com » Cases » Illinois » 4th District Appellate » 2002 » Hogan v. Adams
Hogan v. Adams
State: Illinois
Court: 4th District Appellate
Docket No: 4-01-0974 Rel
Case Date: 08/14/2002

NO. 4-01-0974

IN THE APPELLATE COURT

OF ILLINOIS

FOURTH DISTRICT


DONNA J. HOGAN and SARAH COLE, ) Appeal from
                Plaintiffs-Appellants, ) Circuit Court of
                 v. ) Sangamon County
WILLIAM B. ADAMS and WILMA ADAMS, ) No. 99LM777
Defendants-Appellees. )
) Honorable
) Stuart H. Shiffman,
) Judge Presiding.

JUSTICE TURNER delivered the opinion of the court:

In April 1999, plaintiffs, Donna J. Hogan and SarahCole, filed a two-count complaint against defendants, William B.and Wilma Adams, alleging a violation of the Residential RealProperty Disclosure Act (Act) (765 ILCS 77/1 through 99 (West1998)) and common-law fraud related to plaintiffs' purchase ofdefendants' home. After an October 2001 bench trial, the trialcourt found in favor of defendants on both counts. Plaintiffsappeal, contending (1) the trial court erred in finding a violation of the Act required a showing of bad faith, (2) the trialcourt erred in finding a residential-property purchaser wasrequired to investigate a seller's disclosure under the Act, and(3) the trial court's judgment was against the manifest weight ofthe evidence. We affirm in part, reverse in part, and remandwith directions.

I. BACKGROUND

In May 1993, defendants purchased the subject property,commonly known as 25 Marquette Road, Springfield, Illinois. Thehouse located on the property was bi-level. The basement levelconsisted of two bedrooms, a bathroom, a recreation room, abilliards room, and a laundry/utility room. A door in thelaundry room led to an outside stairwell. At the bottom of thestairwell was a sump pump pit with a sump pump. Another sumppump pit was located adjacent to the home's foundation on thenortheast corner of the home.

In April or May 1995, after a tornado, the power wentout and the stairwell sump pump could not operate. Water enteredthe basement under the laundry room door, saturating the carpetin a large portion of the basement. As a result of the water,the carpets had to be pulled out and the carpet pad replaced. Defendants also replaced the stairwell sump pump in 1995.

In May or June 1996 after a large rainfall, water againentered the basement saturating the carpet of a large portion ofthe basement. This time the stairwell sump pump was operating. The carpet was again removed but this time was reinstalledwithout a carpet pad.

A third incident occurred when an outside drain becameclogged and a small amount of water entered the basement under apatio door.

In April 1998, defendants hired Peter Steward as a realestate agent to sell the home. On April 10, 1998, defendantscompleted a residential real property disclosure report (disclosure report) as required by the Act (see 765 ILCS 77/20, 35 (West1998)). Steward and defendants' friend Pam Morgan were presentwhen defendants completed the disclosure report. Defendantsmarked "yes" on line No. 2 that states "I am aware of flooding orrecurring leakage problems in the crawl space or basement." Onthe lines provided to explain any "yes" marks, defendants wrote"#2 tornado in 1995 interrupted power for 3 hours[--]sump pumpwas unable to operate and water entered lower[-]level well."

On April 20, 1998, plaintiffs made an offer to purchasethe home. On that date, plaintiffs signed the disclosure report. The parties eventually entered into a contract for the purchaseof the home for $125,500, and the property was conveyed toplaintiffs on May 28, 1998. Steward acted as a dual agent.

On June 11, 1998, water entered the basement under thelaundry room door. Joseph "Jody" Hogan, Donna's husband, noticedthe stairwell sump pump was not working, and he could not get itto function properly. The water was in the hallway, the bedrooms, the family room, and the laundry room. The next day,plaintiffs had a new sump pump installed in the stairwell.

On June 18, 1998, the same areas in the basement wereagain covered by water that had come in under the laundry roomdoor. The sump pump was working properly when the water enteredthe basement.

As a result of the flooding, plaintiffs had the basement cleaned and new carpeting installed. Plaintiffs alsopurchased a new sump pump, drywall, and bathroom vanity andchanged the grade of the yard with new landscaping.

In April 1999, plaintiffs sued defendants seekingdamages for a violation of the Act and common-law fraud. OnOctober 11, 2001, the trial court held a bench trial. Plaintiffspresented the testimony of Jody, Donna, Steward, the contractorshired by plaintiffs to make repairs after the June 1998 floods,and William as an adverse witness.

William testified he and his wife decided to sell theirhome because his employer required him to move to a differentstate. He further stated he had knowledge of the two floodingoccurrences when he completed the report. He also stated he knewhe had to disclose a defect in full. According to William, afterwriting down the first occurrence, Steward told defendants thatwas all that was required. William testified Steward had fullknowledge of both flooding events when William was writing theexplanation. William also testified it was his understanding heonly needed to include an example of flooding in the explanationsection of the disclosure report.

Steward testified he told defendants to fill out thereport to the best of their ability. He further stated defendants only told him about one flooding incident in which thewater was confined to the laundry room. Steward recalled aconversation in the laundry room between William and Jody whereWilliam told Jody the same information about the one floodingincident. Steward testified when he went through the home, henever noticed any evidence of prior flooding. He also testifiedhe usually tells buyers to investigate all disclosures.

Donna testified she went through the home three timesbefore purchasing it and did not notice any water damage. Afterpurchasing the home, she noticed water lines on the furnace andin the bedrooms. She testified she and her husband had beenconcerned about the slope of the yard, but William and Stewardhad told her husband that they did not have water except for atrickle in the well area. She never was a part of a discussionwith defendants about water in the lower level. Donna alsotestified they have not had water in the lower level since thegrade of the yard was changed with landscaping.

Jody testified he went through the home with Williambefore plaintiffs purchased the home. When they were in thelaundry room, Jody asked if they ever got water in here andWilliam replied that in 1995, the sump pump stopped, and watercame in and went over to the drain. Jody also testified Williamtold him to keep the sump pump and the drains in the yard clean.

Defendants presented the testimony of Morgan, themselves, and a plumber.

Morgan testified she was visiting defendants when theywere filling out the report with Steward. She recalled a discussion about all three of the water incidents with Steward present. According to Morgan, William wanted to put more down on thereport about the flooding, but Steward told him to just put downan example. Steward said it was not necessary to put all theinformation down.

William testified other measures existed to keep waterout of the house. Besides the sump pumps, indentations in theground directed water away from the home, and the area near thehome contained surface drains, a retaining wall, and a gravelpit. Because of the location of the sump pumps, William wouldhave to clean them sometimes as often as two times per week forthem to run properly. After the two floods, defendants did notmake any changes to the home because they believed the floodswere isolated events.

As to the disclosure report, William testified he hadnever completed a report before April 1998. Steward told defendants they had to disclose the flooding even if they believed itmight never occur again. William testified he discussed thethree water incidents with Steward. Steward did not give Williamany suggestions regarding the explanation but he did agree withthe language William used.

William further testified he was the one who initiatedthe discussion about water in the basement with Jody and Steward. William stated he told Jody that if the sump pump was not keptclean, it would not function and water would get in the house. According to William, plaintiffs never asked for an explanationof the disclosure report or whether the basement got water.

Wilma testified she did not discuss basement floodingwith Donna. Wilma also testified she and Donna were present whenWilliam stated the home would get water if the occupants did notkeep the sump pump and yard drains clean.

On October 15, 2001, plaintiffs submitted a second-amended computation of damages and a statement of costs withdamages totaling $20,939.09 and costs at $1,741.25. On October26, 2001, the trial court issued a memorandum opinion finding infavor of defendants on both counts. This appeal followed.

II. ANALYSIS

A. State of Mind

Plaintiffs first assert the trial court erred in rulinga violation of the Act requires a showing of bad faith. Thus,the question before us is what state of mind of the seller-defendant does the Act require for a buyer-plaintiff to recoverfor a violation of the Act. Because the interpretation of astatute is a question of law, our review is de novo. People v.Shanklin, 329 Ill. App. 3d 1144, 1145, 769 N.E.2d 547, 548(2002).

In interpreting a statute, a fundamental canon is toascertain and give effect to the intention of the legislature. Such an inquiry appropriately begins with the language of thestatute itself, as the language used by the legislature is thebest indication of legislative intent. People v. Bowden, 313Ill. App. 3d 666, 668, 730 N.E.2d 138, 140 (2000).

Section 55 of the Act states, in pertinent part, thefollowing:

"A person who knowingly violates or fails toperform any duty prescribed by any provisionof this Act or who discloses any informationon the [r]esidential [r]eal [p]roperty[d]isclosure [r]eport that he knows to befalse shall be liable in the amount of actualdamages and court costs ***." (Emphasisadded.) 765 ILCS 77/55 (West 1998).

Additionally, section 25(a)(i) of the Act (765 ILCS 77/25(a)(i)(West 1998)) states the seller is not liable for any error,inaccuracy, or omission of any information delivered pursuant tothe Act where the seller had no knowledge of the error, inaccuracy, or omission. Accordingly, the Act attaches liability toknowing violations. See Woods v. Pence, 303 Ill. App. 3d 573,576, 708 N.E.2d 563, 565 (1999) (a violation of the Act must bedone knowingly).

In this case, citing two cases from other states (Amyotv. Luchini, 932 P.2d 244, 247 (Alaska 1997); Engelhart v. Kramer,570 N.W.2d 550, 553-54 (S.D. 1997)), the trial court determinedliability would not attach to misrepresentations made in goodfaith. The court noted "[g]ood [f]aith emphasizes faithfulnessto an agreed common purpose and consistency with the justifiedexpectations of the other party." The trial court concluded theevidence did not establish defendants acted in bad faith.

Unlike the statutes addressed in Amyot and Engelhart(see Alaska Stat.

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