Mitchell v. Skubiak

• Decision Date: 30 June 1993
• Docket Number: No. 1-89-3514,1-89-3514
• Citation: 248 Ill.App.3d 1000,188 Ill.Dec. 443,618 N.E.2d 1013
• Parties: , 188 Ill.Dec. 443 Michael L. MITCHELL and Renee Mehlinger Mitchell, Plaintiffs-Appellants, v. John and Luba SKUBIAK, Defendants-Appellees (Home Inspection Consultants of Greater Chicago, Inc., Defendant).
• Court: United States Appellate Court of Illinois

Page 1013

618 N.E.2d 1013

248 Ill.App.3d 1000, 188 Ill.Dec. 443

Michael L. MITCHELL and Renee Mehlinger Mitchell Plaintiffs-Appellants, v. John and Luba SKUBIAK, Defendants-Appellees (Home Inspection Consultants of Greater Chicago, Inc., Defendant).

No. 1-89-3514.

Appellate Court of Illinois First District, Third Division.

June 30, 1993.

Brackett, Poulsom, Bretscher & Wirth, Chicago (Robert C. Brackett, Ralph L. Brill, of counsel), for appellants.

Charysh & Schroeder, Michael W. Rathsack, Chicago, for appellees.

Presiding Justice TULLY delivered the opinion of the court:

This cause arises out of the purchase of a residential home in Oak Park, Illinois by plaintiffs, Michael and Renee Mitchell, from defendants, John and Luba Skubiak. Subsequent to purchase, plaintiffs discovered various defects and damage to the property which were not obvious or were concealed during plaintiffs' inspection of the property. The same defects were also not discovered by a third-party professional inspection firm, employed by plaintiffs to inspect the property prior to closing. Plaintiffs filed a complaint alleging fraudulent misrepresentation, concealment and nondisclosure by the defendant-sellers as well as negligence by the inspection company. The trial court dismissed plaintiff's complaint against the defendant-sellers, finding as a matter of law that plaintiffs could not have reasonably relied upon the representations or actions of the sellers, since plaintiffs employed their own expert home inspector. Plaintiffs appeal from the dismissal of their complaint.

On May 9, 1987, plaintiffs and defendants signed a contract for the purchase of defendants' residence in Oak Park. An addendum to the contract allowed plaintiffs four days to retain an expert to inspect the residence for defects. Plaintiffs were given the option, based upon the inspector's report, to either rescind the contract or negotiate for a reduction in price. Plaintiffs then engaged defendant, Home Inspection Consultants of Greater Chicago, Inc. (Home Inspection Consultants), to perform the inspection. Following examination of the premises, Home Inspection Consultants sent a written report to plaintiffs, listing various defects which were discovered and on the basis of this report, the parties mutually agreed to adjust the purchase price.

Pursuant to the contract of sale, plaintiffs were permitted a final walk-through inspection of the property, prior to closing. This final inspection took place on May 20, 1987, although the closing did not occur until July 15, 1987.

During the walk-through inspection, plaintiffs discovered new cracks in the walls and ceiling of the master bedroom. Defendants represented to plaintiffs that these were due to the differences in humidity between the attic and the bedroom and further stated that the cracks were not due to any other cause. While inspecting the garage, defendants stated that "from time to time a little rain water collected on the roof of the garage and would require sweeping the water off." While inspecting the porch, plaintiffs did not notice any structural defects to the door or area leading under the porch, although they subsequently discovered that a damaged doorway area had been covered with carpeting.

Count I of plaintiffs' complaint alleges that defendants knew that the roof of the main residence contained serious structural defects affecting value; that defendants affirmatively misrepresented the roof's condition and the reason for the cracks in the master bedroom; that such statements were made with the intention of inducing plaintiffs' reliance thereon; and that plaintiffs justifiably relied upon the representations of defendants, resulting in substantial damage to plaintiffs.

Count II of the complaint alleges essentially the same elements of misrepresentation found in count I, except the facts concerned the representation that the garage roof had to be swept from time to time after a rainfall. According to the complaint, this statement was a "half-truth", creating an impression that the garage roof was not defective and misrepresenting the roof's true condition.

Count III alleges that defendant knew of serious structural defects in the front porch and the doorway leading to the area beneath the front porch; that as a result of these defects, water was allowed to accumulate in the basement after each rain; that prior to any inspection by either plaintiffs or Home Inspection Consultants, the Skubiaks concealed the alleged defects by permanently gluing carpeting in place and placing furniture and other objects in front of the damaged doorway; that these acts of concealment amounted to affirmative misrepresentations that the porch was in good condition; that the acts were done with the intent of inducing reliance by plaintiffs and Home Inspection Consultants on the outward appearance of the porch and to discourage further investigation.

Count IV of the complaint alleges that defendants knew of the various defects described in the other counts; knew that such defects were not easily discoverable upon inspection; knew that plaintiffs and their inspector would be misled by the nondisclosure of such defects; knew that these defects would be material to plaintiffs' decision in purchasing their home; and that defendants possessed an affirmative duty as vendors of real estate to disclose the existence of these defects to the plaintiffs as purchasers. Furthermore, plaintiffs allege that they reasonably relied on the silence of defendants in purchasing their home and as a result of this reliance they incurred damages.

After hearing arguments on defendants' motion to dismiss, the trial court concluded the following:

"Gentlemen, I conclude here there was not reasonable reliance. There may have been reliance, but it was not reasonable when you had an inspector, your clients had an inspector to go out and inspect the property. You have an action against the inspector. That is why I asked you if you were charging collusion between the owners and the inspector.

* * * * * *

That failing, you have an independent inspector to go out, then there was no--it was not reasonable for your clients to rely on the sellers. And in fact they didn't rely on them because they got their own inspector to go out.

* * * * * *

I will grant the motion."

The trial court dismissed plaintiffs' complaint, finding as a matter of law: (1) plaintiffs did not actually rely upon the acts or omissions of defendants because they hired a third-party inspection company, upon whose opinion they relied; and (2) even if plaintiffs could show actual reliance on the sellers' representations, such reliance was unreasonable because they hired a professional inspector.

On appeal, plaintiffs contend: (1) by actively concealing defects from the buyers as well as the home inspector, defendants can be held liable for fraud; (2) examination by an independent home inspector does not, as a matter of law, preclude buyers from relying upon the representations of sellers; (3) plaintiffs' action against the home inspector does not defeat a claim against the vendors of the property, even if the pleadings are inconsistent.

On appeal, the appropriate standard for considering a motion to dismiss is de novo. That is, this court must examine the complaint and consider, in light of all factual and legal circumstances, whether or not there exists any set of facts, if proven, which would support a cause of action under the laws of Illinois. (Ostendorf v. International Harvester Co. (1982), 89 Ill.2d 273, 60 Ill.Dec. 456, 433 N.E.2d 253.) All sufficiently plead facts must be accepted as true and any reasonable inferences to be drawn must be construed in a light most favorable to the plaintiff. (Towne v. Cole (1985), 133 Ill.App.3d 380, 88 Ill.Dec. 404, 478 N.E.2d 895.) A complaint should only be dismissed where there appears absolutely no set of facts which would permit recovery. Neuman v. City of Chicago (1982), 110 Ill.App.3d 907, 66 Ill.Dec. 700, 443 N.E.2d 626.

We initially consider whether plaintiffs' complaint sufficiently states a cause of action for fraudulent misrepresentation and fraudulent nondisclosure in the purchase and sale of a residential home.

The requisite elements of a common law fraud cause of action are: (1) a false statement of material fact, intentionally made; (2) the party to whom the statement was made had a right to rely on it; (3) the statement was made for the purpose of inducing reliance thereon; and (4) the reliance by the person to whom the statement was made led to his injury. (Redarowicz v. Ohlendorf (1982), 92 Ill.2d 171, 65 Ill.Dec. 411, 441 N.E.2d 324.) While silence in a business transaction does not generally amount to fraud, mere silence is quite different from concealment. Silence accompanied by deceptive conduct or suppression of material facts results in active concealment and it then becomes the duty of a person to speak. Under such circumstances, if a party to a contract of sale fails to disclose the whole truth, having the requisite intent to deceive, this amounts to fraud, equivalent to an affirmative falsehood. Russow v. Bobola (1972), 2 Ill.App.3d 837, 277 N.E.2d 769.

While traditionally, sellers of real estate were not liable for undisclosed defects under the doctrine of caveat emptor, the modern trend among courts is to impose a duty upon the sellers for failure to disclose defects which could not be discovered upon a reasonable and diligent inspection. (See, Petersen v. Hubschman Construction Co. (1979), 76 Ill.2d 31, 27 Ill.Dec. 746, 389 N.E.2d 1154; Zimmerman v. Northfield Real Estate, Inc. (1986), 156 Ill.App.3d 154, 109 Ill.Dec. 541, 510 N.E.2d 409; Posner v. Davis (1979), 76 Ill.App.3d 638, 32 Ill.Dec. 186, 395 N.E.2d 133.) However, a seller's silence in not disclosing defects, standing alone, does not give rise to a cause of action for misrepresentation. Silence must be combined with active...