Linhart v. Bridgeview Creek Dev., Inc.

• Decision Date: 20 May 2009
• Docket Number: No. 1-07-2712.,1-07-2712.
• Citation: 391 Ill. App. 3d 630,909 N.E.2d 865
• Parties: Ken LINHART, Beverly Linhart, Amy Gable, Jane Longo, Lloyd Clark, and Diane Latta, Plaintiffs-Appellees, v. BRIDGEVIEW CREEK DEVELOPMENT, INC., Bridgeview West Development, Inc., Carriageway Builders, Inc., Premier Trust and Investment, Inc., as Trustee Under Trust No. 6951135, Wayne Johnson, Individually and as the Beneficiary under Premier Trust and Investment, Inc., Trustee Under Trust No. 6951134, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

909 N.E.2d 865

391 Ill. App. 3d 630

Ken LINHART, Beverly Linhart, Amy Gable, Jane Longo, Lloyd Clark, and Diane Latta, Plaintiffs-Appellees, v. BRIDGEVIEW CREEK DEVELOPMENT, INC., Bridgeview West Development, Inc., Carriageway Builders, Inc., Premier Trust and Investment, Inc., as Trustee Under Trust No. 6951135, Wayne Johnson, Individually and as the Beneficiary under Premier Trust and Investment, Inc., Trustee Under Trust No. 6951134, Defendants-Appellants.

No. 1-07-2712.

Appellate Court of Illinois, First District, Third Division.

May 20, 2009.

Arnstein & Lehr LLP (Arthur L. Klein, Arthur L. Janura, Hal R. Morris, and Jason B. Hirsh, of Counsel), Chicago, for Appellant.

Sneckenberg, Thompson & Brody, LLP (William J. Sneckenberg, Matthew L. McBride, and Emilie G. Kaplan, of Counsel), Chicago, for Appellee.

Justice COLEMAN delivered the opinion of the court:

This cause arises from the purchase of four townhomes in Palatine, Illinois. Subsequent to purchase, plaintiffs discovered various defects and damage to the property which were not obvious during plaintiffs' final walk-through prior to closing. The same defects were reported to defendants by a village inspector prior to completion of construction of the property. Plaintiffs filed a complaint alleging fraudulent misrepresentation and breach of the implied warranty of habitability against the seller-builder of the property. A jury trial resulted in a verdict in favor of plaintiffs in the amount of $1,380,781. After a separate hearing on the consumer fraud count, count III of the complaint, the trial court awarded punitive damages. The trial court denied defendants' motion for a new trial and entered judgment on the verdict. Defendants appeal seeking reversal of the judgment and remand for a new trial.

BACKGROUND

Between July 1997 and February 1998, plaintiffs, Ken and Beverly Linhart (Unit 79), Amy Gable (Unit 75), Jane Longo and Lloyd Clark (Unit 77), and Diane Latta (Unit 73), purchased four townhomes from defendant Wayne Johnson, which were constructed by Carriageway Builders, Inc. (Carriageway). Wayne Johnson owned and operated Carriageway. His son, C.J. Johnson, was the project manager in charge of overseeing the construction of the property at issue. The property is located at 73-79 N. Crescent Avenue in Palatine, Illinois, and is part of the Bridgeview subdivision.

The four townhomes were constructed as a single building with a common foundation, slab, common walls, and roof. During construction, the Palatine village inspector reported that the foundation was sinking and an engineer should assess the problem. Prior to October 1997, cracks appeared in the foundation walls. The building settled between 7 inches to 10 inches and plaintiffs claim that the settlement caused damage to the interior and exterior of the building. Plaintiffs all claimed extensive damage to the structure including, windows and doors either sticking shut or remaining open, walls, floors and ceilings pulling apart, slanted floors, and flooding from cracks in the foundation.

In 2001, plaintiffs filed this lawsuit against Wayne Johnson and Carriageway seeking damages based on implied warranty of habitability, fraudulent misrepresentation and concealment, and consumer fraud pursuant to the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. (West 2006). Following a jury trial in the circuit court of Cook County, the jury returned a verdict in favor of plaintiffs on all counts in the amount of $1,380,781. The trial court awarded punitive damages in the amount of $5,000, plus attorney fees, each to plaintiffs Amy Gable, Jane Longo, Lloyd Clark, and Diane Latta. This appeal followed.

ISSUES ON APPEAL

Defendants raise numerous issues on appeal: (1) whether the jury verdict was supported by the manifest weight of the evidence on the fraud and consumer fraud claims; (2) whether a single verdict form was proper since six separate plaintiffs incurred differing damages, and whether the single verdict form relieved plaintiffs of their burden of proof; (3) whether the jury was properly instructed on the elements of implied warranty of habitability; (4) whether the jury was properly instructed as to the correct measure of damages for a breach of the implied warranty of habitability; (5) whether the trial court committed plain error in the manner it instructed the jury; and (6) whether the trial court properly awarded punitive damages.

ANALYSIS

A. Manifest Weight of the Evidence

1. Liability for Fraud

Defendants argue that the verdict on the fraud and consumer fraud counts of the complaint was against the manifest weight of the evidence because plaintiffs failed to establish that they detrimentally relied on misrepresentations made by defendants prior to executing the sales contracts to purchase the townhomes.

We will only reverse a jury verdict where the verdict is contrary to the manifest weight of the evidence in the light most favorable to the nonmoving party. Maple v. Gustafson, 151 Ill.2d 445, 455, 177 Ill.Dec. 438, 603 N.E.2d 508 (1992). A verdict is against the manifest weight of the evidence when it is unreasonable, arbitrary, and not based on the evidence or the opposite conclusion is clearly evident. Barth v. State Farm, Fire & Casualty Co., 228 Ill.2d 163, 179, 319 Ill.Dec. 852, 886 N.E.2d 976 (2008).

The elements of common law fraud are:(1) a false statement of material fact; (2) defendant's knowledge that the statement was false; (3) defendant's intent that the statement induce the plaintiff to act; (4) plaintiff's reliance upon the truth of the statement; and (5) plaintiff's damages resulting from reliance on the statement. Connick v. Suzuki Motor Co., 174 Ill.2d 482, 496, 221 Ill.Dec. 389, 675 N.E.2d 584 (1996). The elements of common law fraud must be proven by clear and convincing evidence. Washington Courte Condominium Ass'n-Four v. Washington-Golf Corp., 267 Ill.App.3d 790, 833, 205 Ill.Dec. 248, 643 N.E.2d 199 (1994).

Amy Gable, Jane Longo, Lloyd Clark, and Diane Latta were plaintiffs on the fraud counts.¹ There was ample evidence to support the jury's verdict for plaintiffs on the issue of fraud. Each plaintiff testified that at various times Wayne and C.J. Johnson told them that the cracks in the foundation were "normal" and "a result of natural settling." During pre-closing walk-throughs with each plaintiff, C.J. Johnson, on behalf of Carriageway, or Wayne Johnson made false statements about the foundation. Clark and Longo testified that Wayne Johnson told them there was a 20-year warranty on the basement and foundation. Johnson never produced the warranty. Gable testified that C.J. Johnson told her "it's not like the house is going to sink or anything." Latta also noticed cracks in the foundation. She testified that when she asked C.J. Johnson about the cracks that he told her not to be concerned. Latta testified that when she asked to have a structural engineer examine the problem, C.J. Johnson told her that had been done and he would provide the report. Johnson never gave her an engineer's report.

The jury heard evidence sufficient to conclude that defendants knew these statements were false at the time they were made because a village inspector informed them that the foundation was sinking and they should consult an engineer. C.J. Johnson testified that he was aware of the cracks prior to October 1997. Preconstruction soil testing was conducted in the area and revealed significant water content. The company retained by Carriageway to conduct the preconstruction soil testing recommended further testing, especially in the lower areas of the subdivision. C.J. Johnson testified that when construction on the foundation began at the property in question he added stone to the soil because of the soil conditions, but never ordered soil testing at that specific location. A rational jury could find that defendants' statements to plaintiffs were to reassure them and assuage their concerns so that they would proceed with the purchase of the townhomes. Plaintiffs each testified that they relied on those statements and purchased the homes. The damage to the foundation and the structure of the building was established by plaintiffs' testimony regarding all of the defects now prevalent in their homes. Plaintiffs had three experts testify to the damage and the cost of repairs. Moreover, defendants did not contest that the structure is damaged, but provided their own expert to estimate the cost of repairs.

Based on the foregoing review of the evidence, the jury's verdict was not unreasonable or arbitrary. Therefore, we hold that the verdict imposing liability for common law fraud was not against the manifest weight of the evidence. See Washington Courte Condominium Ass'n-Four, 267 Ill.App.3d at 815, 205 Ill.Dec. 248, 643 N.E.2d 199. Additionally, if a plaintiff has established a prima facie case for common law fraud, then that is sufficient to conclude that the same facts satisfy statutory fraud. Washington Courte Condominium Ass'n-Four, 267 Ill.App.3d at 824, 205 Ill.Dec. 248, 643 N.E.2d 199. Accordingly, we also hold the verdict for plaintiffs on the consumer fraud count of the complaint was not against the manifest weight of the evidence.

2. Amount of the Award

Defendants argue that the jury's verdict was against the manifest weight of the evidence because it was not based on the evidence. Defendants contend that the evidence presented by plaintiffs' experts indicated a maximum repair cost of $733,453. Defendants obtained this number by adding together the estimates of plaintiffs' experts for repairs to the structure at $506,400 and for aboveground repairs of $227,053. Defendants further argue that plaintiffs provided only a cost estimate for repairing the entire structure rather than presenting evidence of the individual repair cost for each townhome. Defendants assert that the replacement cost ($1,380,781) was awarded...