1400 Museum Park Condo. Ass'n by Its Bd. of Managers v. Kenny Constr. Co.

• Decision Date: 05 August 2021
• Docket Number: 1-19-2167
• Citation: 2021 IL App (1st) 192167,200 N.E.3d 798,460 Ill.Dec. 250
• Parties: 1400 MUSEUM PARK CONDOMINIUM ASSOCIATION BY Its BOARD OF MANAGERS, Plaintiff-Appellant, v. KENNY CONSTRUCTION COMPANY and Frank's Mechanical Contractors, Inc., Defendants (Kenny Construction Company, Defendant-Appellee).
• Court: United States Appellate Court of Illinois

2021 IL App (1st) 192167

200 N.E.3d 798

460 Ill.Dec. 250

1400 MUSEUM PARK CONDOMINIUM ASSOCIATION BY Its BOARD OF MANAGERS, Plaintiff-Appellant,

v.KENNY CONSTRUCTION COMPANY and Frank's Mechanical Contractors, Inc., Defendants

(Kenny Construction Company, Defendant-Appellee).

No. 1-19-2167

Appellate Court of Illinois, First District, Fourth Division.

Filed August 5, 2021

Jeffrey S. Youngerman, Stephen D. Sharp, and Christopher L. Gallinari, of Flaherty & Youngerman, P.C., of Chicago, for appellant.

Robert J. Franco and Randall W. Slade, of Franco Moroney Buenik, LLC, of Chicago, for appellee.

JUSTICE MARTIN delivered the judgment of the court, with opinion.

¶ 1 In Sienna Court Condominium Association v. Champion Aluminum Corporation , 2018 IL 122022, ¶ 30, 432 Ill.Dec. 569, 129 N.E.3d 1112, our supreme court held that a claim for breach of implied warranty of habitability is a "creature of contract, not tort" and therefore the purchaser of a newly constructed condominium unit may not pursue such a claim against a subcontractor where the subcontractor had no contractual relationship with the purchaser. We find the reasoning and analysis employed by our supreme court in Sienna to subcontractors applies equally as well to general contractors, and therefore we affirm.

¶ 2 I. BACKGROUND

¶ 3 "A condominium is an interest in real estate created by statute that gives each owner an interest in an individual unit as well as an undivided interest in common elements. Administration and operation of the condominium are vested in the condominium association, which is comprised of all unit owners. The administration is exercised through the board of directors, which is elected by the owners." Board of Directors of 175 East Delaware Place Homeowners Ass'n v. Hinojosa , 287 Ill. App. 3d 886, 889, 223 Ill.Dec. 222, 679 N.E.2d 407 (1997).

¶ 4 This appeal concerns claims arising out of alleged latent defects in the construction of the common elements of a condominium building. Specifically, the alleged defects were in the design, materials, and construction of the building's plumbing system.

¶ 5 In 2006, 1400 Museum Park, LLC (Museum Park), began construction of a 260-unit condominium building known as 1400 Museum Park Condominiums located at 100 E. 14th Street in Chicago, Illinois. Museum Park, acting as the developer, hired Kenny Construction Company (Kenny) as its general contractor. Franks Mechanical Contractors, Inc. (Franks Mechanical), was hired as the plumbing subcontractor.¹ Construction of the building was completed in 2008.

¶ 6 From 2008 through 2011, Museum Park sold the condominium units to prospective purchasers pursuant to individual sales contracts. At some point after all units were sold, and subsequent to the presumed dissolution of Museum Park,² , the unit owners formed a condominium association, 1400 Museum Park Condominium Association (Association), to manage and administer the property.

¶ 7 The Association claimed that in June 2013, it was alerted to leaks in the building's hot water supply riser,³ which prompted it to conduct further investigation of four pipe fan coil risers and branch lines in the building. The Association alleged that additional investigation revealed latent defects in the design, materials, and construction of the building's plumbing riser system. The Association also alleged that the defects required repairs, which Kenny refused to investigate and remediate. According to the Association, it incurred repair costs in excess of $1 million as a direct result of the defects.

¶ 8 On November 30, 2016, the Association, through its board of managers, filed a one-count complaint against Kenny for breach of implied warranty of habitability. The Association sought to recover the costs it incurred in repairing the defective hot water supply risers. On September 6, 2018, the Association filed an amended compliant adding Franks Mechanical as a defendant.

¶ 9 On December 28, 2018, the Illinois Supreme Court issued its opinion in Sienna , 2018 IL 122022, 432 Ill.Dec. 569, 129 N.E.3d 1112. On January 4, 2019, Kenny moved, pursuant to section 2-615 of the Code of Civil Procedure (Code) ( 735 ILCS 5/2-615 (West 2018) ), to dismiss the claim for breach of implied warranty of habitability. In its motion to dismiss, Kenny requested the circuit court apply the reasoning and analysis employed by the supreme court in Sienna to subcontractors—to general contractors.

¶ 10 The Association thereafter sought and obtained leave to amend its amended complaint to add a claim for breach of contract against Kenny. On May 31, 2019, the Association filed a second amended complaint against Kenny and Franks Mechanical. The Association pleaded two theories of liability and recovery against Kenny: breach of implied warranty of habitability (count I) and breach of contract (count III). Again, the Association sought to recover the costs it incurred in repairing the defective hot water supply risers.

¶ 11 Kenny moved to dismiss count I of the amended complaint pursuant to section 2-615 of the Code (id. ). Kenny argued that count I for breach of implied warranty of habitability should be dismissed with prejudice based on the reasoning employed by the Illinois Supreme Court in Sienna . Kenny noted that the Sienna court clarified that contractual privity was a required element of a claim for breach of implied warranty of habitability. Kenny maintained that the Association could not pursue a claim against it for economic damages for breach of implied warranty of habitability, as no contractual privity existed between Kenny and the individual unit owners. For similar reasons, Kenny argued that count III for breach of contract should be dismissed with prejudice under section 2-619(a)(9) of the Code (id. § 2-619(a)(9)).

¶ 12 The circuit court conducted a three-day hearing on Kenny's motions to dismiss and ultimately entered an order granting the motions with prejudice. The circuit court applied the reasoning from Sienna and determined that the Association could not pursue a claim for breach of implied warranty of habitability against Kenny to recover economic damages, as there was no contractual privity between Kenny and the individual unit owners. For the same reasons, the court held that the Association could not pursue a breach of contract claim against Kenny.

¶ 13 The circuit court subsequently entered an order pursuant to Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016), finding that there was no just reason to delay enforcement or appeal of its order dismissing, with prejudice, counts I and III of the Association's second amended complaint against Kenny.⁴ Rule 304(a) provides, in part, that if

"multiple parties or multiple claims for relief are involved in an action, an appeal may be taken from a final judgment as to one or more but fewer than all of the parties or claims only if the trial court has made an express written finding that there is no just reason for delaying either enforcement or appeal or both." Id.

The Association filed a timely notice of appeal to this court. Accordingly, we have jurisdiction over this appeal pursuant to Rule 304(a) governing appeals from judgments that do not dispose of the entire proceeding.

¶ 14 II. ANALYSIS

¶ 15 A. Standard of Review

¶ 16 We begin our analysis with a summary of the applicable standard of review. The circuit court dismissed the Association's claim for breach of implied warranty of habitability with prejudice pursuant to section 2-615 of the Code ( 735 ILCS 5/2-615 (West 2018) ) and dismissed the claim for breach of contract with prejudice pursuant to section 2-619(a)(9) of the Code (id. § 2-619(a)(9)).

¶ 17 A motion to dismiss under section 2-615 challenges the legal sufficiency of a complaint based on defects apparent on its face. Marshall v. Burger King Corp. , 222 Ill. 2d 422, 429, 305 Ill.Dec. 897, 856 N.E.2d 1048 (2006). All well-pleaded facts are taken as true, and reasonable inferences are drawn in favor of the plaintiff. Id. The critical question in reviewing a section 2-615 motion is whether the allegations in the complaint when construed in the light most favorable to plaintiff are sufficient to state a cause of action upon which relief may be granted. Doe-3 v. McLean County Unit District No. 5 Board of Directors , 2012 IL 112479, ¶ 16, 362 Ill.Dec. 484, 973 N.E.2d 880. A "cause of action should not be dismissed pursuant to section 2-615 unless it is clearly apparent that no set of facts can be proved that would entitle the plaintiff to recovery." Marshall , 222 Ill. 2d at 429, 305 Ill.Dec. 897, 856 N.E.2d 1048.

¶ 18 In contrast, a section 2-619(a)(9) motion to dismiss admits the legal sufficiency of the complaint but asserts an affirmative defense or other matter that avoids or defeats the plaintiff's claim. Patrick Engineering, Inc. v. City of Naperville , 2012 IL 113148, ¶ 31, 364 Ill.Dec. 40, 976 N.E.2d 318. Again, all well-pleaded facts are accepted as true, as well as any reasonable inferences that may arise from them; however, a court cannot accept as true mere conclusions, unsupported by specific facts. Id. Dismissals under either section 2-615 or 2-619 are reviewed de novo. Id. We now turn to the two counts before us, starting with count I for breach of implied warranty of habitability.

¶ 19 B. Breach of Implied Warranty of Habitability

¶ 20 Historically, the purchaser of a newly constructed home took the property at his or her own risk, and if they failed to discover latent defects in the home's design or construction before the time of sale, the common law doctrines of caveat emptor and merger prevented them from maintaining an action against the builder for the defects. See Petersen v. Hubschman Construction Co. , 76 Ill. 2d 31, 38-40, 27 Ill.Dec. 746, 389 N.E.2d 1154 (1979).

¶ 21 The merger doctrine is a common law doctrine that provides that the provisions in a contract for the sale of real property are merged into a subsequently executed deed. See Redarowicz v....