Smith v. NVR, Inc., 17 C 8328
| Decision Date | 05 December 2018 |
| Docket Number | 17 C 8328 |
| Parties | PAUL SMITH and DEBORAH SMITH, Plaintiffs, v. NVR, INC., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
In this diversity suit against NVR, Inc. on behalf of themselves and a putative class of fellow homebuyers in the Tall Pines development in the Village of Plainfield, Illinois, Paul and Deborah Smith alleged that their home did not conform to the features list and building plans that NVR advertised to them and submitted to the Village. Doc. 1. On NVR's motion under Civil Rule 12(b)(6), the court dismissed without prejudice the Smiths' claim under the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. ("ICFA"), and much of their breach of contract claim. Docs. 44-45 (reported at 2018 WL 2718038 (N.D. Ill. June 6, 2018)). The Smiths filed an amended complaint, Doc. 46, which NVR moves to dismiss under Rule 12(b)(6), Doc. 57. The motion is granted in part and denied in part.
In resolving a Rule 12(b)(6) motion, the court must accept the operative complaint's well-pleaded factual allegations, with all reasonable inferences drawn in the Smiths' favor, but not its legal conclusions. See Zahn v. N. Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). The court must also consider "documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice," along with additional facts set forth in the Smiths' brief opposing dismissal, so long as those additional facts "are consistent with the pleadings." Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th Cir. 2013) (internal quotation marks omitted). The facts are set forth as favorably to the Smiths as those materials permit. See Domanus v. Locke Lord, LLP, 847 F.3d 469, 479 (7th Cir. 2017). In setting forth the facts at this stage, the court does not vouch for their accuracy. See Goldberg v. United States, 881 F.3d 529, 531 (7th Cir. 2018).
On April 28, 2016, the Smiths agreed to purchase from NVR a home in the Tall Pines development. Doc. 46 at ¶ 8; Doc. 58-1 at 2. The Purchase Agreement states in pertinent part:
[T]he Home may be different than what You have seen in our advertisements and marketing information. The Home will be constructed as shown on the construction drawings (or blueprints), the grading plan, floor plans and other plans related to the construction of the Home ... together with the options You selected on the Master Selection sheet ... and any Change Orders we mutually agree to ... . All of these together are called the "Plans and Specifications."
Doc. 58-1 at 2. The Agreement further provides that NVR "ha[s] the right to substitute similar materials of substantially equivalent quality" and "reserve[s] the right to make changes in the Plans and Specifications for purposes of mechanical installations, building code and site requirements, and reasonable architectural design improvements subsequent to the date of this Agreement." Id. at 5. In November 2016, the Village of Plainfield issued a "Certificate of Occupancy and Compliance" for the home, granting a "right to occupancy as a Duplex Permit" and stating that the home "does comply with the provisions of the Zoning Ordinance of the Village." Doc. 58-2; Doc. 46 at ¶¶ 17-18.
Before purchasing the home, the Smiths visited an NVR sales center, where they met with sales representatives Tammy Quinn and "Renee." Doc. 46 at ¶¶ 9-10. Quinn provided the Smiths with advertising and sales materials, including a brochure titled "Tall Pines at Grande Park Included Features." Id. at ¶ 11; Doc. 30-1. The brochure indicated that the home wouldhave TAMKO 30-year architectural, self-sealing shingles and TIMBERLAKE wooden cabinets in the kitchen and bathroom. Doc. 46 at ¶ 12; Doc. 30-1 at 2. The Smiths relied on those representations when deciding to purchase, but later discovered that NVR had instead installed 25-year shingles and cabinets with an artificial non-wood wrap. Doc. 46 at ¶¶ 13-14. While the actual shingles and cabinets are substantially inferior in quality than what was promised, they are indistinguishable in appearance. Ibid.; Doc. 62 at 9-10.
The home as constructed also includes materials that are substantially inferior to the materials that the Village approved based on construction plans that NVR submitted during the permitting process. Doc. 46 at ¶¶ 17-18. NVR installed a Goodman Manufacturing Condenser model #GSX13031BE, a 2.5-ton unit rated at 30,000 British Thermal Units ("BTU"), rather than the Goodman Manufacturing Condenser model #GSX130361E, a 3-ton unit rated at 36,000 BTU, that the Village had approved. Id. at ¶¶ 21-22. Likewise, NVR installed a Goodman Manufacturing Furnace model #GMSS920603BNAA, rated at 60,000 BTU, rather than the Goodman Manufacturing Furnace model #GMSS920804CN, rated at 80,000 BTU, that the Village had approved. Id. at ¶¶ 19-20. In addition, the home's heating, ventilation, and air conditioning ("HVAC") system includes duct work inferior to what the Village had approved. Id. at ¶ 23. Moreover, although NVR's plans indicated that the home's joists would be supported by web stiffeners, no web stiffeners were installed. Id. at ¶ 26. Finally, the home's water supply lines have a narrower diameter than indicated in the plumbing fixture calculations approved by the Village. Id. at ¶ 24.
Village inspectors did not discover these discrepancies because, while significant in terms of quality, they were inconspicuous in appearance and thus not readily detectable during inspection. Id. at ¶¶ 18, 23, 25, 27; Doc. 62 at 9-10.
Like the original complaint, the amended complaint brings ICFA and breach of contract claims under Illinois law.
The ICFA claim alleges that NVR deceived the Smiths by providing them a home inferior to the home that NVR advertised and that the Village approved in the permitting process. Doc. 46 at ¶¶ 38-40. The ICFA "is a regulatory and remedial statute intended to protect consumers, borrowers, and business persons against fraud, unfair methods of competition, and other unfair and deceptive business practices." Cohen v. Am. Sec. Ins. Co., 735 F.3d 601, 608 (7th Cir. 2013) (quoting Robinson v. Toyota Motor Credit Corp., 775 N.E.2d 951, 960 (Ill. 2002)). "To state a claim under the ICFA ... [the Smiths] must plausibly allege: (1) a deceptive act or promise by [NVR]; (2) [NVR's] intent that [they] rely on the deceptive act; (3) the deceptive act occurred during a course of conduct involving trade or commerce; and (4) actual damage as a result of the deceptive act." Haywood v. Massage Envy Franchising, LLC, 887 F.3d 329, 333 (7th Cir. 2018). T final element requires that the Smiths' actual damages be "proximately caused by [NVR's] deceptive act." Phila. Indem. Ins. Co. v. Chi. Title Ins. Co., 771 F.3d 391, 402 (7th Cir. 2014).
The ICFA prohibits both "unfair" and "deceptive" acts or practices. 815 ILCS 505/2; see Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 575 (7th Cir. 2012) (). While allegations of unfair acts under the ICFA need only satisfy the notice pleading standard of Rule 8(a), see Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 446 (7th Cir. 2011), allegations of deceptive acts "sound[] in fraud" and are subject to Rule 9(b)'s heightened pleading standard, seeHaywood, 887 F.3d at 333. Because the Smiths allege only deceptive acts, Doc. 46 at ¶¶ 38 (), 39 ("[NVR's] acts and omissions created a likelihood of deception and had the capacity to deceive new home purchasers and the Village."), 40 (alleging that NVR "misrepresent[ed] the actual finished product" and intended "that new home purchasers would rely on the deception when purchasing a home[] and that the Village would rely on the deception when issuing a permit"), their ICFA claim must satisfy Rule 9(b). See Haywood, 887 F.3d at 333 (); Pirelli, 631 F.3d at 446 ().
Rule 9(b) provides that "[i]n alleging fraud ... , a party must state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). Typically, "[t]hat means that [the complaint] must specifically allege the 'who, what, when, where, and how of the fraud.'" Haywood, 887 F.3d at 333 (quoting Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 737 (7th Cir. 2014)). "A principal purpose of requiring that fraud be pleaded with particularity is, by establishing this rather slight obstacle to loose charges of fraud, to protect individuals and businesses from privileged libel (privileged because it is contained in a pleading)." Kennedy v. Venrock Assocs., 348 F.3d 584, 594 (7th Cir. 2003). That said, it is important to avoid "an overly rigid view of the [who, what, when, where, and how] formulation" and to recognize "that the precise details that must be included in a complaint 'may vary on the facts of a given case.'" United States ex rel. Presser v. Acacia Mental Health Clinic, LLC, 836 F.3d 770, 776 (7th Cir. 2016) (quoting Pirelli, 631 F.3d at 442).
In seeking dismissal, NVR argues that the amended complaint's ICFA allegations are not sufficiently particular under Rule 9(b), that any misrepresentations to the Smiths about the shingles and cabinets amounted only to breach of contract, and that no misrepresentation to the Village about the HVAC system, joists, and water supply lines proximately caused any damages to...
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