Foxcroft Townhome Owners Ass'n v. Hoffman Rosner Corp.

• Decision Date: 23 April 1982
• Docket Number: No. 81-540,81-540
• Citation: 105 Ill.App.3d 951,61 Ill.Dec. 721,435 N.E.2d 210
• Parties: , 61 Ill.Dec. 721 FOXCROFT TOWNHOME OWNERS ASSOCIATION, an Illinois Corporation; and Beverly Phillips, Victor Settergren, Cathy Moore, Robert Bleau, and Dixie Day, each individually and all as the Former Board of Directors of Foxcroft Townhome Owners Association, an Illinois Corporation, in a Representative Capacity on Behalf of the Unit Owners as Their Interest May Appear in Certain Condominium Property known as the Townhomes of Foxcroft; Donald Cool, James VanHam, Clark Friedrichs, Yvonne Ruehl, and Betty Falotico, each individually, and also as The Present Board of Directors of The Foxcroft Townhome Owners Association, an Illinois Corporation, in a Representative Capacity on behalf of Certain Unit Owners as their Interest Appear in certain Condominium Property known as the Townhomes of Foxcroft, and in a Representative Capacity on behalf of persons similarly situated, Plaintiffs-Appellants, v. HOFFMAN ROSNER CORPORATION, a Delaware Corporation, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 210

435 N.E.2d 210

105 Ill.App.3d 951, 61 Ill.Dec. 721

FOXCROFT TOWNHOME OWNERS ASSOCIATION, an Illinois Corporation; and Beverly Phillips, Victor Settergren, Cathy Moore, Robert Bleau, and Dixie Day, each individually and all as the Former Board of Directors of Foxcroft Townhome Owners Association, an Illinois Corporation, in a Representative Capacity on Behalf of the Unit Owners as Their Interest May Appear in Certain Condominium Property known as the Townhomes of Foxcroft; Donald Cool, James VanHam, Clark Friedrichs, Yvonne Ruehl, and Betty Falotico each individually, and also as The Present Board of Directors of The Foxcroft Townhome Owners Association, an Illinois Corporation, in a Representative Capacity on behalf of Certain Unit Owners as their Interest Appear in certain Condominium Property known as the Townhomes of Foxcroft, and in a Representative Capacity on behalf of persons similarly situated, Plaintiffs-Appellants, v. HOFFMAN ROSNER CORPORATION, a Delaware Corporation Defendant-Appellee.

No. 81-540.

Appellate Court of Illinois, Second District.

April 23, 1982.

Lindner, Speers & Reuland, Timothy J. Reuland, Aurora, for plaintiffs-appellants.

Reid, Ochsenschlager, Murphy & Hupp, William C. Murphy, J. Patrick Gallagher, Goldsmith, Thelin, Schiller & Dickson, Bruce A. Brown, Aurora, for defendant-appellee.

UNVERZAGT, Justice:

This suit began as a class action suit on behalf of the owners of townhouse condominiums built by Hoffman Rosner Corporation (hereafter "Hoffman Rosner"). It was brought by the Foxcroft Townhome Owners Association (hereafter "Association") and those individuals who were formerly or were at the time of suit directors of the Association, individually and in their representative capacity on behalf of all the condominium owners. The defendant, Hoffman Rosner, is the builder and developer of the property known as Foxcroft.

The condominiums were built in the early 1970's and the condominium declaration was filed in March of 1972. The Association was formed in April of 1972. Defects in the siding of the buildings were discovered in the spring of 1975. They are described in the complaint as "latent defects."

In 1979, the plaintiffs began suit against Hoffman Rosner for damage due to the defective siding on the buildings which, they claimed, diminished the value of the property. Count I of the original complaint was a class action on behalf of all tenants of Foxcroft based on breach of the implied warranty of habitability (Petersen v. Hubschman Construction Co. (1979), 76 Ill.2d 31, 27 Ill.Dec. 746, 389 N.E.2d 1154.) Count II was brought as a class action based on negligence in using defective siding or in negligently installing the siding. Count III was a class action based on an alleged breach of a fiduciary relationship which proceeded from the fact that Hoffman Rosner was the developer and incorporator and also the author of the condominium declarations and had filed the declarations on behalf of the condominium owners.

The defendant filed a motion to dismiss the complaint as a class action because of procedural deficiencies, also a motion to dismiss for failure to state a cause of action under the implied warranty theory of Count I, for lack of privity under Count II and for failure to state facts amounting to a fiduciary relationship under Count III. The trial court, after further pleadings and arguments on the defendant's motion to dismiss, dismissed Counts II (negligence) and III (breach of fiduciary duty) for failure to state a cause of action. Subsequently, Count I was dismissed as to those plaintiffs who were not the original purchasers from the defendant and who were, therefore, not in privity with the defendant.

The plaintiffs then filed an amended complaint. Count I of the amended complaint was brought as a class action on behalf of the original purchasers who are present owners, under a theory of breach of warranty of habitability; Count II was brought on behalf of the original purchasers under a theory of negligence; Count III was a class action suit on behalf of those who did not purchase directly from Hoffman Rosner but were subsequent purchasers from the original buyers. This count was based on negligence.

The trial court denied the motion to dismiss the amended complaint as to Counts I and II and granted the motion as to Count III. Hoffman Rosner subsequently settled with the original owners (the plaintiffs under Counts I and II of the amended complaint) and the present appeal is only on behalf of those who purchased the units from the original owners and were not in privity with Hoffman Rosner.

In this appeal, the plaintiffs attempt to sustain their appeal as to the dismissal of Counts I (implied warranty) and III (breach of fiduciary duty) of the original complaint, as well as bringing an appeal on the dismissal of Count III of the amended complaint (based on negligence). The defendant contends that the issues under Counts I and III of the original complaint cannot be raised in this appeal because, by pleading over after the original complaint was dismissed, in an amended complaint, the plaintiffs abandoned Counts I and III of the original complaint and cannot now appeal the dismissal of those counts. We are inclined to agree. In the case of Coffey v. MacKay (1972), 2 Ill.App.3d 802, 277 N.E.2d 748, this court held that the plaintiff could not appeal the dismissal of the original complaint after pleading over in an amended complaint. See also, Moore v. Everett Snodgrass, Inc. (1980), 87 Ill.App.3d 388, 42 Ill.Dec. 1166, 408 N.E.2d 1166 and Henkaus v. Barton (1977), 56 Ill.App.3d 767, 14 Ill.Dec. 113, 371 N.E.2d 1166.

The plaintiffs invoke the decision of this court in Enlow v. Illinois Central Railroad Company (1969), 103 Ill.App.2d 269, 243 N.E.2d 847, which holds that where the trial court dismissed the original complaint on the merits, with leave to plead over, indicating that it would not accept the theory of the original complaint as stated, the plaintiff, in pleading over, on the basis suggested by the trial court, did not waive the dismissed counts of the original complaint.

In any event, however, the question of waiver is not determinative in this case for we are of the opinion that the trial court was correct in dismissing Counts I and III of the original complaint on the merits.

As to Count I (implied warranty of habitability), that theory rests squarely on Petersen v. Hubschman Construction Co., Inc. (1979), 76 Ill.2d 31, 27 Ill.Dec. 746, 389 N.E.2d 1154, and in that case the supreme court construed the contract between the builder and his vendee to contain an implied warranty that the house being purchased from the builder would be "reasonably suitable for its intended use" as a dwelling. (76 Ill.2d 31, 41, 27 Ill.Dec. 746, 389 N.E.2d 1154.) It is clear from the language of Petersen that the case was decided on the basis of a contract between the builder and the buyer of the house. There is no indication in the opinion that it might extend beyond the relationship of builder and initial purchaser from the builder. In using the analogy of the "merchantability" warranty under the Uniform Commercial Code, rather than stressing "habitability" the opinion retains the privity concept. The implied warranty of habitability arises out of a contract between the builder and the initial buyer and there is no hint in Petersen that it arises out of a general duty to build a reasonably fit house, by reason of which the builder would be liable to remote purchasers, that is, the general public, having no privity with him.

Nor can the plaintiffs here, being subsequent purchasers, recover under a theory of warranty made to the original purchaser for the benefit of a third-party subsequent purchaser. In the recent case of Altevogt v. Brinkoetter (1981), 85 Ill.2d 44, 51 Ill.Dec. 674, 421 N.E.2d 182, Altevogt sued both Brinkoetter, the original owner of the house, and Hinton, the contractor who built it. The supreme court in reviewing the case held that the action against Brinkoetter was barred by the Statute of Limitations but considered at some length whether the count against Hinton, the contractor who actually built the house, could be maintained on a theory of implied warranty that Hinton would build the house in a reasonably workmanlike manner and whether this would inure to the benefit of Altevogt as a third-party beneficiary. After an extensive review of the cases involving implied promises for the benefit of a third-party beneficiary, the court came to the conclusion that since, in this case, there was nothing in the record to show that Hinton had any knowledge that Brinkoetter would sell the house to another person, there was not sufficient identification of a third-party beneficiary or a class of beneficiaries to make it a contract for the benefit of any and all subsequent purchasers. In discussing the necessary connection between the original promisee and the third-party beneficiary, the court quoted as follows from the leading case of Carson Pirie Scott & Co. v. Parrett (1931), 346 Ill. 252, 178 N.E. 498:

" 'The rule is, that the right of a third party benefited by a contract to sue thereon rests upon the liability of the promisor, and this liability must affirmatively appear from the language of the instrument when properly interpreted and construed. The liability so appearing can not be extended or enlarged on the ground, alone, that the situation and circumstances of the parties justify or demand further or other liability. (Citation.)' 346 Ill. 252, 258 (178 N.E. 498)." Altevogt v. Brinkoetter (1981), 85 Ill.2d 44, 54-55, 51 Ill.Dec. 674, 421 N.E.2d 182.

In commenting on that language, the court said in Altevogt :

"While some other jurisdictions might view the matter differently, Illinois, as shown by the Carson Pirie Scott decision, holds that a third party is a direct rather than an incidental beneficiary only if the...