Grass v. Homann

• Decision Date: 11 October 1984
• Docket Number: No. 4-84-0022,4-84-0022
• Citation: 474 N.E.2d 711,130 Ill.App.3d 874,85 Ill.Dec. 751
• Parties: , 85 Ill.Dec. 751 William GRASS and Yolanda Grass, Plaintiffs-Appellees, v. Gerald HOMANN, d/b/a B & R Enterprises, a Partnership, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 711

474 N.E.2d 711

130 Ill.App.3d 874, 85 Ill.Dec. 751

William GRASS and Yolanda Grass, Plaintiffs-Appellees, v. Gerald HOMANN, d/b/a B & R Enterprises, a Partnership,

Defendant-Appellant.

No. 4-84-0022.

Appellate Court of Illinois,

Fourth District.

Oct. 11, 1984.

As Modified on Denial of Rehearing

March 7, 1985.

Joseph P. Smith, Jr., Mattoon, for defendant-appellant.

M. John Hefner, Jr., Harlan Heller, Ltd., Mattoon, for plaintiffs-appellees.

MILLS, Presiding Justice:

False termite inspection report.

Suit sounding in negligence and consumer fraud.

Neither theory applies here.

Reversed and remanded.

William and Yolanda Grass bought a home at 908 Lafayette in Mattoon, Illinois. The home was financed by Paul Shafer, who bought it from David and Sheryl Crawford, and then resold it to the Grasses for his purchase price--plus $1,000. Yolanda Grass wanted the home inspected for termites and termite damage before consummating the deal. On June 13, 1977, William Bright of B & R Enterprises conducted a termite inspection and gave a termite inspection certificate to the Crawfords.

Two aspects of the certificate are pertinent here. First, the certificate stated that B & R Enterprises was bonded, which it was not. Second, the certificate stated that the home was free from termites and needed no repairs because of these pests. In fact, most of the support system for the entire home--including the floor joists and main weight-bearing timbers--were entirely eaten away with termite damage. Bright admitted at trial that the conditions were known to him at the time he issued and signed the certificate.

Plaintiffs first became aware of the termite damage in June of 1979 when the floors of the home began pulling away from the walls. They brought suit against Bright in 1981 and received a judgment which Bright discharged in bankruptcy.

Plaintiffs then brought the instant suit against Gerald Homann. They alleged that at the time the certificate was issued, Homann was a partner of Bright in B & R Enterprises. The complaint was stated in four counts. Count I alleged that B & R had breached an agreement with David Crawford, which agreement had been entered for the benefit of the Grasses, and sought damages in an amount exceeding $15,000. Count II alleged that William Bright, acting on behalf of B & R Enterprises, had negligently and carelessly performed a termite examination of the home, which negligence had damaged the plaintiffs in an amount exceeding $15,000. Count III alleged that William Bright wilfully and wantonly failed in his responsibility to perform a termite inspection of the premises, thereby damaging plaintiffs in an amount exceeding $15,000 and creating a liability for $50,000 in punitive damages. Count IV stated the existence of the Consumer Fraud and Deceptive Business Practices Act (Ill.Rev.Stat.1983, ch. 121 1/2, par. 261 et seq.) and alleged that B & R Enterprises had violated the Act by misrepresenting to the plaintiffs the absence of termite damage and in issuing a certificate which bore the untrue assertion that B & R Enterprises was bonded and insured, when in fact it was not bonded. This count alleged that plaintiffs had been damaged in an amount exceeding $15,000 and also sought attorney's fees.

Following a trial on all the issues, an instruction conference was held. At this time plaintiffs' counsel moved that count I (the count sounding in contract) be voluntarily dismissed. The motion was granted. Defense counsel moved that count III seeking punitive damages be dismissed. That motion was also granted, leaving for the jury count II sounding in negligence and count IV alleging the violation of the Consumer Fraud and Deceptive Business Practices Act.

After settling on the appropriate instructions, both counsel gave closing arguments to the jury. During his closing argument, plaintiffs' attorney asked the jury to determine whether the defendant had been negligent or had violated a statute. He told them that they were to be put to a choice and could not find that the defendant had been both negligent and had violated the statute. He suggested that the evidence more strongly supported a finding based on the statutory violation.

Defense counsel gave his closing argument and the jury was instructed. After deliberations, the jury returned two verdict forms, both favoring plaintiffs. The jury found that the defendant had been negligent in his inspection of the home and set damages at $11,600. The jury also found that the defendant had violated the Consumer Fraud and Deceptive Business Practices Act and fixed damages for that violation at $2,500.

After the judgment was entered, an appeal was filed. But this court dismissed the appeal because the trial court had reserved its ruling on attorney's fees sought in count II. Following a hearing on attorney's fees, the court eventually decided that plaintiffs were entitled to 35% of the entire verdict as attorney's fees, based on a contingent fee arrangement between the plaintiffs and their attorney.

Defendant now appeals from both the judgment and the order for attorney's fees.

We reverse.

Defendant's counsel--in an inarticulate, disjointed, and poorly researched effort at appellate advocacy--has alluded to numerous factors upon which he apparently relies in seeking relief for his client. (We note that during oral argument, counsel was uncertain as to exactly what type of relief was desired: reversal, remandment, or remittitur.) We have reluctantly concluded that this cause must go back for a new trial, although on grounds not raised by either party to this appeal.

As previously mentioned, plaintiffs took a voluntary dismissal of the count sounding in contract and chose to go to the jury on the counts sounding in negligence and statute. In our opinion, the loss suffered by plaintiffs in this case is simply not compensable through a cause of action sounding in negligence and the proofs were insufficient to allow recovery under the statute.

I. NEGLIGENCE

Plaintiffs here purchased a home which defendant's partner certified to be free of termites and termite damage. In fact, the home they purchased had been riddled by termites. We take judicial notice of the fact that a home which is indisputably in need of substantial repairs at the time of purchase is worth considerably less than a home which does not require such repairs. In other words, plaintiffs paid more for this property than it was worth. The reason they paid more was that defendant's partner certified to them that the home had no termite damage. Defendant's partner caused plaintiffs to suffer a purely economic loss. At no time did any action of defendant's partner cause property damage through negligence.

In Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill.2d 69, 86, 61 Ill.Dec. 746, 435 N.E.2d 443, 450, our supreme court stated unequivocally that "[t]ort theory is appropriately suited for personal injury or property damage resulting from a sudden or dangerous occurrence * * *. The remedy for economic loss, loss relating to a purchaser's disappointed expectations due to deterioration, internal breakdown or nonaccidental cause, on the other hand, lies in contract."

The court held that the tort theories of strict liability, negligence, or innocent misrepresentation could not support a cause of action which sought the recovery of purely economic losses. This left open the tort of negligent or intentional misrepresentation as a possible vehicle to support such a recovery. We are of the opinion, however, that plaintiff's complaint--as well as the facts underlying the complaint--are insufficient to state a cause of action for negligent or intentional misrepresentation.

It is well established that in Illinois there is no cause of action for negligent misrepresentation unless the defendant is in the business of supplying information for the guidance of others in their business transactions with third parties. (Knox College v. Celotex Corp. (1983), 117 Ill.App.3d 304, 72 Ill.Dec. 703, 453 N.E.2d 8.) Furthermore, courts have allowed the named third parties to assert claims of tortious misrepresentation where the document relied upon contained an unequivocal guarantee of accuracy. Rozny v. Marnul (1969), 43 Ill.2d 54, 250 N.E.2d 656.

Turning to the facts of this case, William Bright delivered the certificate in question to Paul Shafer, a person not the plaintiff in this case. The record contains a letter from plaintiffs to Paul Shafer indicating that he furnished the certificate to plaintiffs. Further, the certificate is addressed "To Whom it May Concern" and bears no guarantee of accuracy whatsoever. Under these circumstances, we are of the opinion that plaintiffs may not state a cause of action for negligent misrepresentation against defendant. Rozny.

While it is most unusual for a court to decide a case based on matters not directly raised by the parties, such a course of action is appropriate where the concern is the maintenance of a uniform body of precedent. (...