Duhl v. Nash Realty Inc.

• Citation: 429 N.E.2d 1267,102 Ill.App.3d 483,57 Ill.Dec. 904
• Decision Date: 03 December 1981
• Docket Number: No. 80-2787,80-2787
• Parties: , 57 Ill.Dec. 904, 33 A.L.R.4th 928 Michael F. DUHL and Judith C. Duhl, Plaintiffs-Appellants, v. NASH REALTY INC. and Dorothy Reigel, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 1267

429 N.E.2d 1267

102 Ill.App.3d 483, 57 Ill.Dec. 904,

33 A.L.R.4th 928

Michael F. DUHL and Judith C. Duhl, Plaintiffs-Appellants, v. NASH REALTY INC. and Dorothy Reigel, Defendants-Appellees.

No. 80-2787.

Appellate Court of Illinois, First District, Fourth Division.

Dec. 3, 1981.

Rehearing Denied Jan. 7, 1982.

Glen H. Kanwit, Hopkins & Sutter, Chicago, for plaintiffs-appellants.

McKenna, Storer, Rowe, White & Farrug, Chicago (Robert S. Soderstrom, Andrew Fylypovych, Chicago, of counsel), for defendants-appellees.

ROMITI, Presiding Justice:

The plaintiffs relying on the defendant realtors' advice as to the value and saleability of their house, purchased a new house through defendants. When they discovered that the defendants' representations were in error, they sued in fraud, negligence, contract and for violation of the Consumer Fraud and Deceptive Business Practices Act. (Ill.Rev.Stat.1979, ch. 1211/2, par. 261 et seq.) The trial court dismissed the complaint as not stating a cause of action. We agree that the claim for breach of contract did not state a cause of action but reverse as to the other counts.

In deciding whether the complaint states a cause of action we must accept the facts alleged in the complaint as true. (Faber v. General Telephone Co. (1974), 19 Ill.App.3d 135, 311 N.E.2d 281, leave to appeal denied (Abst.).) According to the plaintiff's amended complaint:

The plaintiffs, Michael and Judith Duhl (Duhls), own a home in Winnetka, Illinois. They purchased the home in 1973. Defendant Nash Realty is in the real estate brokerage business and holds itself out as an expert in the field. Defendant Reigel is a licensed real estate broker and an agent of Nash Realty Inc.

On or about March 20, 1979, the Duhls contacted Reigel, whose services they had used when they purchased their home in 1973, and told her they would like to engage her services for the purchase of a new home. ¹ Reigel agreed to act as their agent. The Duhls advised her that the price they could pay for a new home depended upon the price at which the present home could be sold as they did not have any other sources of equity to finance the purchase of a new home. Reigel stated that she had the professional skill and competence to determine the market value of their present home, the price for which it could be sold and the speed with which it could be sold. The Duhls asked Reigel for her professional judgment on these matters, informing her that they had no knowledge of real estate values and were relying on her expertise. After inspecting the Duhls' home, Reigel told them, that, in her professional judgment, their home should be listed for $168,000, and that it would be sold very quickly for between $162,000 and $163,000. The Duhls expressed some doubt at this and told her they wanted to know with certainty how much the home could be sold for. They wanted to know the lowest possible price they would get, even if it was likely that the home would be sold for more since the proceeds from the sale would be their only source of equity for the purchase of a new home. Reigel stated that she had performed a great number of such appraisals over many years, that she had always been within five per cent of the actual selling price and that her representations as to the market value and speed of sale were correct. Nevertheless, as further confirmation, she promised that she would have Richard Nash, president of Nash Realty, appraise the house. She stated that Richard Nash was a professional appraiser and had the skill and expertise to form a professional opinion as to the precise price at which the home would sell.

In mid-April 1979 Reigel informed the Duhls that Richard Nash had appraised the home and that his professional judgment was that the home had a minimum market value of $158,000 and would sell for at least that amount. She also told them that Nash agreed that the home would be sold very quickly. At the same time, Reigel gave the Duhls a brochure entitled "Seven Reasons You Should Consult a Realtor." The brochure, inter alia, stated:

"2. A REALTOR knows market value. When your property is priced right for the market, you can expect fast action-and full value. A REALTOR knows market value because he stays abreast of all real estate sales transactions as well as economic and social factors which affect property value."

It was alleged in the original complaint that in reliance on these representations the Duhls engaged Reigel and Nash Realty as agents to purchase a new home. But regardless of the date on which their services were engaged, on May 4, 1979 the Duhls purchased a new home in reliance on their representations. (This contract was contingent on their acquiring financing within 14 days.) Reigel advised the Duhls that the house was worth that price and, for resale purposes, was a very desirable home which would always be able to be sold very quickly. The Duhls relied upon these representations as well in deciding to purchase the house and in setting a closing date of July 23, 1979. Nash Realty as agent for the seller earned a commission of $10,920 on the purchase of this new home.

About two weeks later, on May 20, 1979, the Duhls also engaged Nash Realty and Reigel as their exclusive real estate brokers to sell their present home. Following their representations and Reigel's express recommendation at that time, the home was listed for $167,500. During the next two months they did not receive a single offer to purchase the home; indeed, less than five prospective buyers came to look at the house. Early in July 1979, at Reigel's express recommendation, they reduced the asking price to $164,900. Reigel continued to assure them that the house would be sold for not less than $158,000. The Duhls, however, received no offers to purchase at the reduced asking price. Thereafter, the Duhls obtained independent appraisals as to the value of their home. Without exception, these appraisals indicated that the Duhls' home had been grossly overpriced, and that the market value and price at which the home could be sold was at least $20,000 less than it had been represented to be by the defendant Reigel and Richard Nash. The Duhls conveyed this information to the defendant Reigel, who stated that she suspected that the house had been overpriced by $10,000 (though she had never mentioned this to the Duhls). She continued to hold to the position that the house would sell for at least $158,000.

The Duhls and the defendants agreed, however, to terminate the brokerage contract and on July 27, 1979 the home was listed with Baird and Warner for $144,000; this price was lowered to $137,000 on November 5, 1979. As of the date of the filing of the Amended Complaint (April 3, 1980) the plaintiffs had still not received any offers to purchase the home. Because of the defendants' misrepresentations, the Duhls were forced to put the new house up for sale. The initial asking price was $185,000; this was reduced to $177,000 on November 5, 1979. As of the date of the Amended Complaint, plaintiffs had received no offers to purchase the new house at either price. As a direct result of defendants' false representations, the Duhls have been injured in that:

1. they have been forced to incur substantial and continuing costs of owning two residences including a complete refinancing of their loans on disadvantageous terms;

2. they purchased a home in excess of what they could finance, since the present house did not have the value represented; as a result they will be forced either to sell the new home at a loss, including a broker's commission, or to incur additional borrowing costs;

3. they were deprived of an opportunity to sell their present home at a price approximating its true market value in May through July 1979 because it was overpriced. The price it will ultimately be sold for will be less than it could have been sold for in May 1979 had its true value been accurately represented.

The complaint was in four counts, seeking recovery in (1) breach of contract, (2) fraud and deceit, (3) negligent misrepresentation, (4) violation of the Consumer Fraud and Deceptive Business Practices Act. (Ill.Rev.Stat.1979, ch. 1211/2, par. 261 et seq.) The court granted the defendants' motion to dismiss all four counts.

I.

In their claim for breach of contract plaintiffs contended that defendants, having been engaged as real estate brokers in the purchase of a home, agreed to determine the market value, and lowest price at which the home would sell and the length of time needed and breached the contract by their false representations. The plaintiffs have cited no cases for their contention that false representations can constitute a breach of such a contract and we have found none. According to the complaint, the defendants agreed to value the property and did indeed value the property. If they erred in the value, the remedy properly lies in tort. Accordingly we affirm the trial court's dismissal of this count.

II.

In Count I of the complaint, plaintiffs alleged that Reigel and Nash Realty intentionally and in reckless disregard of the truth, falsely represented that:

(a) Reigel was a professional real estate broker in whom the Duhls could place their trust, who knew real estate values and could determine the true market value of their present home, the price at which it could be sold and the speed with which it would sell;

(b) Richard Nash was a professional appraiser, an expert in real estate values, in whom the Duhls could place their trust and that Nash had the ability to determine the minimum market value of the Duhls' present home, the lowest price at which the Duhls' present home could be sold and the speed with which it would sell;

(c) the Duhls' present home had a minimum market value of $158,000 and would sell for at least that amount;

(d) the home should be listed for $168,000 and would be sold very quickly;

(e) the new...