Coughlin v. Gustafson

• Citation: 772 N.E.2d 864,265 Ill.Dec. 493,332 Ill. App.3d 406
• Decision Date: 21 June 2002
• Docket Number: No. 1-99-1691.,1-99-1691.
• Parties: William C. COUGHLIN and Pamela Coughlin, Plaintiffs-Appellants, v. Nuala GUSTAFSON, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

772 N.E.2d 864

332 Ill. App.3d 406

265 Ill.Dec. 493

William C. COUGHLIN and Pamela Coughlin, Plaintiffs-Appellants, v. Nuala GUSTAFSON, Defendant-Appellee.

No. 1-99-1691.

Appellate Court of Illinois, First District, Sixth Division.

June 21, 2002.

Timothy Gallagher, Chicago, for Appellants.

William J. Sneckenberg & Associates, Chicago, for Appellee.

Justice BUCKLEY delivered the opinion of the court:

This appeal arises from summary judgment entered in favor of defendant Nuala Gustafson and against plaintiffs William Coughlin and Pamela Coughlin on plaintiffs' four-count complaint which alleged breach of a real estate sales contract, violation of the Residential Real Property Disclosure Act (the Disclosure Act) (765 ILCS 77/1 et seq. (West 1998)), negligence in the removal of fuel oil tanks and cleaning of contaminated areas, and breach of implied warranties of habitability. Plaintiffs concede that summary judgment was proper as to count IV; therefore, we address only the propriety of summary judgment on counts I through III. The issues on appeal are: (1) whether the merger doctrine bars plaintiffs' breach of contract action; (2) whether the merger doctrine bars plaintiffs' action under the Disclosure Act; (3) whether there are genuine issues of material fact which preclude summary judgment on plaintiffs' action under the Disclosure Act; and (4) whether there are genuine issues of material fact which preclude summary judgment as to defendant's alleged negligence. For the reasons that follow, we reverse and remand for further proceedings.

I. Background

On February 27, 1996, plaintiffs entered into a real estate sales contract with defendant to purchase defendant's home located at 129 South Old Creek Road, Palos Park, Illinois.

The contract contained, inter alia, a home inspection rider, which gave plaintiffs the right to have the property inspected by a certified home inspection service of their choice. The rider provided:

"If said condition report reveals any structual mechanical, and electrical defect(s) for which the cost of correcting any said defect(s) shall exceed $1,000.00, the Seller shall have the following options, to wit: (A) effecting the necessary correction of said defect(s), (B) negotiating the cost of correcting said defect(s) with Buyer or (C) declaring this agreement null and void.

In the event Seller does not exercise any of these options and, in the further event, that the Buyer does not waive said defect[s], the Buyer shall have the right to declare this agreement null and void. Should either party to this agreement make such a declaration, any deposit made by the Buyer shall be refunded in full."

Also, attached to the contract was a rider entitled, "Rider # 5, Seller's Representations," which provided:

"The Seller represents to the Buyer that all mechanical equipment, heating and cooling equipment, water heaters and softeners, septic, plumbing, electrical systems, kitchen equipment remaining with the premises, and any miscellaneous mechanical personal property to be transferred to the Buyer shall be in operating condition at the time of closing. In the absence of written notice of any deficiency from the Buyer prior to closing, it shall be concluded that the condition of the above equipment is satisfactory to the Buyer and the Seller shall have no further responsibility with reference thereto."

The language below the signature line on rider No. 5 states "Certification that roof and foundation are waterproof." The last paragraph on rider No. 5 provides: "Seller will provide written verification from the appropriate governmental authority that the tanks [oil] remaining in crawl space are not in violation of any ordinance or statute."

The contract also provides:

"Seller, at his expense, prior to closing, shall obtain and deliver to Buyer a water test performed or acceptable to the county in which the property is located, and a septic system test indicating that the system is in proper operating condition and in compliance with applicable state, county and local statutes. Such tests shall be performed not more than 60 days prior to the closing date.

If either of said written test reports indicate that the water is not potable, that the septic system is not in proper operating condition, or that the systems are not in compliance with the relevant statutes, Seller shall have the option to make the necessary repairs and bring the system[s] into compliance prior to the closing date. In the event Seller elects not to make the necessary repairs, then this Contract, at the option of Buyer, shall become null and void, and all earnest money shall be refunded to Buyer."

On March 10, 1996, a representative of HouseMaster of America, a home inspection service retained by plaintiffs, inspected the property. The report issued to plaintiffs included the following observations of the crawl space: "(2) oil, (2) water tanks noted in crawl. Heavy smell of oil. (Saturated with oil) on floor. Recommend evaluation by Health Department." Plaintiff William Coughlin attended the inspection and, on March 11, 1996, wrote a letter to defendant's attorney stating that he had personally been in the basement, had seen the oil residue, and had smelled the petroleum odor. Plaintiffs requested that defendant remove the fuel tanks and have any contaminated areas cleaned professionally prior to purchase. Plaintiffs gave defendant the name of E.R.I. General Contracting to perform the job and defendant subsequently engaged their services.

On May 23, 1996, Carl's Septic Service, Inc., inspected the septic system and issued a report finding, "[s]eptic field lines are leaking at ends." The parties agreed that defendant would place $1,000 of the proceeds of the sale in an escrow account to ensure the repair of the septic system. In a letter dated June 3, 1996, Carl's Septic Service, Inc., informed plaintiff William Coughlin that the cost of repairing the septic system would range from $8,000 to $9,000.

With regard to the roof, defendant stated at her deposition that she contacted a roofer to obtain certification that the roof was waterproof but he could not come out before the closing. She stated that she informed plaintiffs of this fact. She further stated that she did not agree to furnish certification after closing.

The closing took place on June 3, 1996. The record contains no evidence that plaintiffs gave written notice to defendant of any remaining deficiency. There is no evidence that plaintiffs exercised their right to declare the contract null and void, refused to go through with the closing, or objected to the closing in any way.

On June 2, 1997, plaintiffs filed a four-count complaint against defendant and E.R.I. General Contracting. Count I of the complaint alleged that defendant breached the terms of the written real estate contract by failing to provide certification that the roof and foundation were waterproof and that the septic system was in operating condition. Count II alleged that defendant failed to disclose material defects in the septic system, roof, and foundation in violation of the Disclosure Act (765 ILCS 77/1 et seq. (West 1998)). Count III alleged that defendant was negligent in her removal of the underground oil tanks and in cleaning the areas contaminated by fuel oil. Count IV alleged that defendant was guilty of violation of implied warranties of habitability. On January 12, 1999, defendant filed a motion for summary judgment as to all counts. On April 1, 1999, the trial court granted plaintiffs' oral motion to nonsuit E.R.I. General Contracting and, in addition, granted defendant's motion for summary judgment. As to counts I and II of the complaint, the trial court found as follows:

"Plaintiff[s'] contract claim [count I] and `statutory claim' [count II] must fail because on the face of this record it is clear that the terms of the written contract were met. Plaintiffs accepted an escrow fund and elected to close when they were not obligated to do so, with full knowledge of the state of affairs at the subject property. Indeed, even now plaintiffs have not sought recovery against the escrow fund. On this record it is clear that the contract has merged into the deed exchanged for good and valuable consideration."

As to count III, the trial court found:

"Plaintiffs' `negligence' claim [count III] is somewhat obscure. Plaintiffs seek relief against both [defendant] and E.R.I. General Contracting for asserted negligence in removing oil tanks from the property. The record makes clear however, that [defendant's] duties to plaintiffs in this regarded [sic], if any, were contoured by the written contract between the parties. E.R.I. General Contracting owed duties in this regard not to plaintiffs, but to defendant."

Plaintiffs now appeal as to counts I through III.

II. Discussion

A. Standard of Review

Summary judgment is proper only when the pleadings, together with any depositions, admissions, or affidavits on file demonstrate that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. (735 ILCS 5/2-1005(c) (West 1998)); Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 180 Ill.Dec. 691, 607 N.E.2d 1204 (1992). Summary judgment is a drastic measure and should only be granted if the movant's right to judgment is clear and free from doubt. Purtill v. Hess, 111 Ill.2d 229, 240, 95 Ill.Dec. 305, 489 N.E.2d 867 (1986). The standard of review on appeal from a grant of summary judgment is de novo. See Outboard Marine Corp., 154 Ill.2d at 102, 180 Ill.Dec. 691, 607 N.E.2d 1204.

B. Breach of Contract

Plaintiffs first contend that the trial court erred in granting summary judgment on count I of their complaint because defendant breached the written real estate contract by failing to provide certifications that the roof and foundation are waterproof and that the septic system is in proper operating condition. We find...