Pacelli v. Kloppenberg

• Decision Date: 23 October 1978
• Docket Number: No. 77-1175,77-1175
• Citation: 22 Ill.Dec. 250,382 N.E.2d 570,65 Ill.App.3d 150
• Parties: , 22 Ill.Dec. 250 Emilio G. PACELLI and Maria R. Pacelli, Plaintiffs-Appellants, v. William KLOPPENBERG, Lucy Jelez, Colonial Real Estate Co. d/b/a New Colony Real Estate Co., an Illinois Corporation, Gene E. Musselman, Janene M. Musselman, Nello Gamberdino and Great Lakes Mortgage Corporation, an Illinois Corporation, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 570

382 N.E.2d 570

65 Ill.App.3d 150, 22 Ill.Dec. 250

Emilio G. PACELLI and Maria R. Pacelli, Plaintiffs-Appellants, v. William KLOPPENBERG, Lucy Jelez, Colonial Real Estate Co. d/b/a New Colony Real Estate Co., an Illinois Corporation Gene E. Musselman, Janene M. Musselman, Nello Gamberdino and Great Lakes Mortgage Corporation, an Illinois Corporation Defendants-Appellees.

No. 77-1175.

Appellate Court of Illinois, First District, First Division.

Oct. 23, 1978.

Kevin M. Forde Ltd., Chicago (Kevin M. Forde and William D. Serpico, Chicago, of counsel), for plaintiffs-appellants.

Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Chicago (Paul L. Pawlowski and Stanley J. Davidson, Chicago, of counsel), for defendant-appellee Nello Gamberdino.

O'CONNOR, Justice:

Emilio G. Pacelli and Maria R. Pacelli (plaintiffs) sued Nello Gamberdino (defendant) for legal malpractice arising out of defendant's representation of plaintiffs in a residential real estate purchase. Defendant's motion to dismiss for failure to state a cause of action was granted and plaintiffs appeal, arguing that their complaint did state a cause of action for legal malpractice.

Plaintiffs, with the aid of real estate broker William Kloppenberg and Colonial Real Estate Co. (Colonial), agreed to purchase real estate listed by another broker. The contract for sale provided that plaintiffs were to receive good title. Plaintiffs hired defendant to represent them in the purchase. The parcel plaintiffs purchased was encumbered by a mortgage which was to be paid off and released with the proceeds of the sale. At the closing, an agent of Colonial offered to deposit the amount needed to discharge the mortgage in Colonial's escrow account and apply the funds to the mortgage. The money was deposited with Colonial. Subsequently, William Kloppenberg, Colonial's sole proprietor, converted the funds to his own use and failed to obtain the release of the mortgage. Plaintiffs' realty remains encumbered by the mortgage.

On appeal, plaintiffs argue that defendant had a duty to see that plaintiffs received title free and clear of encumbrance. They argue that defendant breached that duty by not investigating Colonial before allowing them to pay their funds to Colonial, that this was negligence on defendant's part and was the proximate cause of the failure to secure a release of the outstanding mortgage on their property. Defendant contends that he had no duty to prevent plaintiffs from using a licensed real estate broker acting as a fiduciary as escrowee for the release of the prior mortgage, that the escrowee's conversion of plaintiffs' funds was unforeseeable and that requiring defendant personally to obtain the release of the mortgage would place an undue burden on defendant. We agree.

Colonial secured plaintiffs as purchasers. Defendant argues that Colonial was plaintiffs' agent in securing the property (Moehling v. O'Neil Construction Co. (1960), 20 Ill.2d 255, 267, 170 N.E.2d 100, 107; see Hyman v. Burmeister (1919), 216 Ill.App. 98, 100-101) and was obliged to act in utmost good faith. (Lerk v. McCabe (1932), 349 Ill. 348, 360-361, 182 N.E. 388, 393.) Even if we agree with plaintiffs that the record is unclear concerning plaintiffs' relationship with Colonial and Kloppenberg prior to closing, it is beyond dispute that Colonial and Kloppenberg...