Siegel v. Levy Organization Development Co., Inc.

• Decision Date: 04 December 1992
• Docket Number: No. 72713,72713
• Parties: , 180 Ill.Dec. 300 Joseph E. SIEGEL, Appellant, v. The LEVY ORGANIZATION DEVELOPMENT COMPANY, INC., et al., Appellees.
• Court: Illinois Supreme Court

Page 194

607 N.E.2d 194

153 Ill.2d 534, 180 Ill.Dec. 300

Joseph E. SIEGEL, Appellant, v. The LEVY ORGANIZATION DEVELOPMENT COMPANY, INC., et al., Appellees.

No. 72713.

Supreme Court of Illinois.

Dec. 4, 1992.

Bernard L. Rivkin and Lee M. Weisz, Braun & Rivkin, Ltd., Chicago, for appellant.

James A. Clark and Christine D. Wright, Schiff, Hardin & Waite, Chicago, for appellees.

Justice HEIPLE delivered the opinion of the court:

The plaintiff, Joseph E. Siegel is a commodities trader. He and his fiancee, Kay Kimberly (now Siegel), were interested in purchasing a condominium residence with the capacity to entertain large groups of people. As the result of a newspaper advertisement, the Siegels met with Lawrence F. Levy, president of the Levy Organization, and Helen Jaeger, a vice president of that entity, to discuss the possible purchase of a condominium unit in One Magnificent Mile (OMM), a luxury development located on Michigan Avenue in Chicago.

Throughout the initial discussion and all subsequent negotiations regarding the purchase of an apartment in OMM, the Siegels expressed their desire for an apartment large enough to entertain on a lavish scale. Levy directed the discussions toward OMM, unit 48A, which he represented would suit the Siegels' needs. Levy informed the Siegels that unit 48A would be the largest apartment in the development and that it would have a "very special terrace arrangement, whereby you could have a band there and have tables and chairs and people dancing on it." The Siegels claim that Levy referred to the terrace as a "dancing terrace." During the course of that initial meeting, Levy and Yeager showed the Siegels a scale model of OMM which depicted unobstructed terraces. The Siegels assert that Levy's representations concerning the expansive, 500-square-foot, open terrace made unit 48A particularly attractive to them. The discussions regarding the terrace would later prove to be the provenance of this litigation.

In subsequent negotiations with the Levy Organization, the Siegels were given a sales brochure and property report which contained floor plans for unit 48A. Henry Mikolajcyk, an architect and engineer, retained by Siegel as an expert witness in the instant litigation, stated that neither the floor plans contained in the 8 1/2- by 11-inch sales brochure nor the property report disclosed the existence of free standing mullions or other obstructions on the terrace of unit 48A.

On January 26, 1981, Siegel entered into a purchase agreement with the Levy Organization for the purchase of unit 48A. The condominium's purchase price was $1.6 million.

Paragraph 3 of the purchase agreement provides that unit 48A "shall be constructed substantially in accordance with the floor plan attached as Exhibit B hereto and made a part hereof." The floor plan included architectural drawings indicating the presence of mullions on the terrace. According to Jaeger, a full-size copy of the floor plan was attached to the purchase agreement. Siegel disputes defendants' contention that the floor plans were attached.

Edward Faron, an architect hired by Siegel in 1981 to work on the interior of the apartment, reviewed floor plans for unit 48A prepared by one of defendants' architects. During a discovery deposition, Faron testified that the drawings and plans that he reviewed did not reveal the presence of mullions on the terrace.

On November 22, 1982, Siegel entered into a first amendment to purchase agreement with the Levy Organization which incorporated some remodeling work and its added cost. In lieu of a cash earnest money deposit down payment, Siegel delivered to Levy two unconditional, irrevocable letters of credit in the sum total of $386,594.

On February 14, 1983, the Levy Organization sent Siegel a letter informing him that his letter of credit would expire on August 24, 1983. The pertinent portion of the correspondence stated:

"As you know, if we do not receive the replacement letter of credit, or the extension of the letter of credit by thirty days prior to August 24, 1983, we are entitled to draw on the letter of credit."

On March 3, 1983, Helen Jaeger sent Siegel a letter regarding the completion of the apartment. In part, the letter stated "We would like to advise you concerning the new estimated completion date of the purchased unit. We now estimate, based on construction of the building to date and the construction schedule, the purchased unit will be substantially completed on December 5, 1983. The estimated completion date set forth in your contract was delayed due to the adverse weather conditions last year and other causes beyond our control."

Originally, the purchase agreement had provided:

"[I]t is estimated that the purchased unit will be substantially completed by August 3, 1983 (estimated completion date), subject to extensions for delays occasioned by strikes, material shortages, labor shortages, casualties, inclement weather conditions, acts of God and other causes beyond the reasonable control of seller."

Nine days after the March 3 letter informing Siegel of the new completion date, he extended the letters of credit until December 31, 1982.

In August of 1983, the Siegels viewed the partially completed apartment for the first time. They discovered that the terrace was obstructed with mullions, spaced approximately 2 1/2 feet apart, which were centered across the length of the terrace. Siegel immediately demanded the removal of these posts. Initially, Levy responded that "[t]his is a major cost item, but one which I will bear to make you happy." Siegel was subsequently told, however, that the mullions could not be moved. According to the OMM construction superintendent, it was not practicable to erect an obstruction-free terrace for unit 48A.

On October 21, 1983, Siegel terminated the purchase agreement. Siegel demanded the return of his down payment, but the Levy Organization drew on the letters of credit which he had posted. The current litigation then ensued.

Siegel's third-amended complaint contained eight counts. Count I alleged common law fraud on the part of the Levy Organization with respect to misrepresentations as to unit 48A's terrace. Count II sought rescission on a theory of unilateral mistake by Siegel with respect to the terrace. Count III sought rescission on the basis that defendants breached the purchase agreement by failing to complete the apartment by August 3, 1983. Count IV requested rescission alleging that defendants diminished the value of Siegel's apartment when it reduced the price of condominiums in OMM. Count V sought recovery under section 2 of the Consumer Fraud and Deceptive Business Practices Act for the alleged misconduct. (Ill.Rev.Stat.1987, ch. 121 1/2, par. 262.) Count VI alleged a cause of action for breach of contract, and counts VII and VIII sought punitive damages for the alleged fraud and negligent misrepresentation.

The trial court granted the Levy Organization's motion for summary judgment on all counts of Siegel's complaint. The appellate court affirmed the award of summary judgment for counts II through VIII, but reversed the award of summary judgment as to count I, Siegel's claim for common law fraud. 219 Ill.App.3d 579, 162 Ill.Dec. 298, 579 N.E.2d 1112.

On appeal to this court, plaintiff raises three issues for review: (1) whether facts establishing common law fraud sufficiently state a cause of action under the Consumer Fraud and Deceptive Business Practices Act so as to preclude summary judgment as to count V; (2) whether the appellate court's affirmance of summary judgment in favor of defendants as to certain counts of plaintiff's claim without discussion or analysis constitutes error when such affirmance is inconsistent with the court's holding as to the existence of common law fraud; and (3) whether the appellate court's failure to consider, discuss, or analyze the breach of contract allegations of count III in itself constitutes reversible error.

CONSUMER FRAUD AND DECEPTIVE BUSINESS PRACTICES ACT

Plaintiff first argues that the appellate court erred when it affirmed the summary judgment on the alleged violation of the Consumer Fraud Act, but at the same Section 2 of the Consumer Fraud and Deceptive Business Practices Act provides:

[180 Ill.Dec. 304] time found disputed issues of material fact precluding summary judgment of plaintiff's common law fraud claim. Plaintiff contends that the Consumer Fraud Act [153 Ill.2d 542] provides broader protection than common law fraud and that the consumer need prove fewer elements to satisfy a claim under the Act. Plaintiff posits that if the transaction under scrutiny is one which falls under the ambit of the Act, then facts that establish common law fraud must also establish a statutory violation. Thus, the appellate court logically could not have reinstated the common law fraud claim and at the same time dismissed a claim subsumed under the Act requiring a lower burden of proof. We agree.

"[U]nfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact, or the use or employment of any practice described in Section 2 of the 'Uniform Deceptive Trade Practices Act' * * * in the conduct of any trade or commerce are hereby declared unlawful whether any person has in fact been misled, deceived or damaged thereby." (Ill.Rev.Stat.1987, ch. 121 1/2, par. 262.)

The Act also specifically provides for a private right of action. Ill.Rev.Stat.1987, ch. 121 1/2, par. 270a.

On its face, it appears that all a plaintiff need prove to establish a violation of the Act is: (1) a deceptive act or practice, (2) intent on the defendants' part that plaintiff rely on the deception, and (3) that the deception...