Werderman v. Liberty Ventures, LLC

• Decision Date: 19 October 2006
• Docket Number: No. 2-06-0036.,No. 2-05-1073.,2-05-1073.,2-06-0036.
• Citation: 306 Ill.Dec. 227,857 N.E.2d 320
• Parties: Jeffrey WERDERMAN and Tina Werderman, Plaintiffs-Appellants and Cross-Appellees, v. LIBERTY VENTURES, LLC, Brian Marshall, Eugene Rosendale, and Ron Mick, d/b/a The Hometeam Inspection Service, Defendants-Appellees (Naperville Professionals, Inc., d/b/a Re/Max Professionals Select, Matthew Bailey, Christian Chase, and Walter Chase, Defendants-Appellees and Cross-Appellants). Jeffrey Werderman and Tina Werderman, Plaintiffs-Appellants, v. Liberty Ventures, LLC, Brian Marshall, Eugene Rosendale, Ron Mick, d/b/a The Hometeam Inspection Service, Naperville Professionals, Inc., d/b/a Re/Max Professionals Select, Matthew Bailey, Christian Chase, and Walter Chase, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

857 N.E.2d 320

306 Ill.Dec. 227

Jeffrey WERDERMAN and Tina Werderman, Plaintiffs-Appellants and Cross-Appellees, v. LIBERTY VENTURES, LLC, Brian Marshall, Eugene Rosendale, and Ron Mick, d/b/a The Hometeam Inspection Service, Defendants-Appellees (Naperville Professionals, Inc., d/b/a Re/Max Professionals Select, Matthew Bailey, Christian Chase, and Walter Chase, Defendants-Appellees and Cross-Appellants).

Jeffrey Werderman and Tina Werderman, Plaintiffs-Appellants, v. Liberty Ventures, LLC, Brian Marshall, Eugene Rosendale, Ron Mick, d/b/a The Hometeam Inspection Service, Naperville Professionals, Inc., d/b/a Re/Max Professionals Select, Matthew Bailey, Christian Chase, and Walter Chase, Defendants-Appellees.

No. 2-05-1073.

No. 2-06-0036.

Appellate Court of Illinois, Second District.

October 19, 2006.

Jean M. Prendergast, Jamie L. Ross, Kathleen J. Doyle, Crisham & Kubes, Ltd.,

Chicago, for Jeffery Werderman, Tina Werderman.

Robert Connor Heist, Anne-Marie Foster, R. Connor & Associates, P.C., Chicago, for Naperville Professionals Inc.

William N. Howard, Patrick J. Woytek, Freeborn & Peters, LLP, Chicago, for Liberty Ventures, LLC, Brian Marshall, Eugene Rosendale.

Justice O'MALLEY delivered the opinion of the court:

Plaintiffs, Jeffrey and Tina Werderman, purchased a house that, as soon as they moved in, exhibited an unsafe and unhealthy mold infestation, the effects of which forced plaintiffs almost immediately to move out of the house. Plaintiffs sued defendants, Liberty Ventures, LLC (Liberty Ventures), Brian Marshall and Eugene Rosendale (collectively, the Liberty Ventures defendants); Ron Mick, d/b/a The Hometeam Inspection Service (Hometeam); Naperville Professionals, Inc., d/b/a Re/Max Professionals Select (Re/Max), Matthew Bailey, Christian Chase, and Walter Chase (collectively, the Re/Max defendants), alleging that defendants had defrauded them by marketing and selling to them a home that had water damage and mold infestation. Following a joint bench and jury trial, the jury returned a general verdict in favor of plaintiffs on their claims at law, including common-law fraud, breach of fiduciary duty, civil conspiracy, breach of contract, negligent misrepresentation, and professional negligence, against defendants Re/Max, Liberty Ventures, and Hometeam. The trial court returned a judgment in favor of defendants Re/Max and Liberty Ventures and against plaintiffs on plaintiffs' claims under the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/10a, 10b (West 2002)) and the Residential Real Property Disclosure Act (Disclosure Act) (765 ILCS 77/55 (West 2002)). On appeal in case No. 2-05-1073, plaintiffs contend that the trial court's judgment on their statutory claims cannot stand in light of the jury's verdict on their common-law claim. On cross-appeal in that case, the Re/Max defendants contend that the trial court erred by allowing plaintiffs to amend their complaint to allege punitive damages and that the jury verdict awarding compensatory and punitive damages awards was against the manifest weight of the evidence. We affirm. On appeal in case No. 2-06-0036, plaintiffs contend that the trial court erroneously dismissed their petition for costs due to lack of jurisdiction. We reverse and remand.

As an initial matter, this opinion involves issues of first impression as well as issues that are not precedential. Accordingly, we have denominated portions of the opinion nonpublishable under Supreme Court Rule 23 (166 Ill.2d R. 23), including most of the detailed recitation of facts. In order to provide context for the publishable portion of this opinion, we provide a brief summary of the salient facts.

These consolidated appeals arise out of several real estate transactions involving a three-bedroom, two-bathroom, ranch home located at Boat Lane in Oswego, Illinois. Late in 2001, the home had been foreclosed by the Department of Veterans Affairs (VA) and, while it stood vacant, had experienced flooding and water filtration. The VA cleaned up the property by removing debris, but did not check for mold or take steps to remedy any potential mold infestation. The VA offered the property for sale "as is." During that time, neighbors observed water damage and mold damage to the property. The VA eventually sold the home "as is" to the Re/Max defendants.

The Re/Max defendants offered easily repaired properties for sale to investors. Their business plan was to purchase such a property and immediately sell it to an investor. The Re/Max defendants would suggest persons who could accomplish the repairs, list and sell the property for the investor, and earn a commission on the sale. The investor would earn profit through flipping the property after completing the repairs.

Before purchasing the Boat Lane property, the Re/Max defendants, along with the Liberty Ventures defendants, inspected the property several times. The Liberty Ventures defendants observed that the floor had been warped and buckled as a result of water infiltration. The Liberty Ventures defendants testified at trial that they believed the water damage was due to a burst pipe. The Re/Max defendants consistently denied that, at any time relevant, they had observed any water damage or mold infestation. Immediately upon their purchase, the Re/Max defendants sold the property to the Liberty Ventures defendants. The Liberty Ventures defendants repaired the property and painted it. The Re/Max defendants listed the property for sale. While listed with the Re/Max defendants, interested realtors and buyers who toured the property observed what they believed to be mold in the basement and an overwhelming moldy or musty smell in the house. One realtor called Walter Chase and explained that a client's lowball offer was the result of mold. Chase replied that the client did not know what he was talking about and that everyone knows that bleach and water will clean up mold. During his testimony, Chase denied that this conversation occurred. Ultimately, plaintiffs purchased the Boat Lane property.

Before completing the purchase, plaintiffs toured the property and had it inspected. Plaintiffs did not discover mold or other damage. Plaintiffs were not informed that water damage had been repaired in the property. After they moved in, plaintiffs discovered extensive mold infestation in the property and experienced adverse health effects as a result of the presence of mold. Plaintiffs sued defendants, alleging common-law fraud and consumer fraud under the Consumer Fraud Act, based on defendants' failure to disclose the presence of water damage and mold in the property.

Note: Text omitted pursuant to Supreme Court Rule 23.

Following the presentation of evidence, the jury returned a general verdict in favor of plaintiffs, and against Re/Max, Liberty Ventures, and Hometeam, on all of the claims submitted to the jury, including common-law fraud, breach of fiduciary duty, civil conspiracy, breach of contract, negligent misrepresentation, and professional negligence. The jury awarded plaintiffs $71,545 in compensatory damages and awarded $69,175 in punitive damages against Re/Max only. The jury hand-wrote its allocation of compensatory damages on the verdict form, attributing $9,100 to Liberty Ventures, $62,160 to Re/ Max, and $285 to Hometeam. On July 22, 2005, the court entered judgment on the jury's verdict, and the judgment order was filed on July 26, 2005.

On August 2, 2005, the trial court entered judgment in favor of the Re/Max defendants and the Liberty Ventures defendants and against plaintiffs on plaintiffs' statutory claims under the Consumer Fraud Act and the Disclosure Act. The trial court's order was entered nunc pro tunc to July 25, 2005.¹ The parties filed posttrial motions, which, on August 30, 2005 (the Re/Max defendants' motion), and September 22, 2005 (plaintiffs' and the Liberty Ventures defendants' motions), were denied. Plaintiffs' timely appeals and the Re/Max defendants' timely cross-appeal in case No. 2-05-1073 followed.

Note: Text omitted pursuant to Supreme Court Rule 23.

We turn first to the issues raised in plaintiffs' appeals. In case No. 2-05-1073, plaintiffs contend that, in light of the jury's resolution of their common-law fraud claim against Re/Max, Liberty Ventures, and Hometeam, the trial court's judgment on the statutory claim under the Consumer Fraud Act is inconsistent and must be brought into accord with the jury's verdict. We note that this is the only ground on which plaintiffs challenge the trial court's judgment. Plaintiffs do not raise an alternative argument that the trial court's judgment on the statutory claim was against the manifest weight of the evidence.

We begin with plaintiffs' arguments in case No. 2-05-1073. Plaintiffs first argue that the inconsistency between the results of the bench trial and the jury trial must be resolved. Plaintiffs note that the requirements to prevail in an action under the Consumer Fraud Act are less demanding than those necessary to prevail on a common-law fraud claim. They then argue that, because the jury found against Re/Max, Liberty Ventures, and Hometeam on the more stringent claim of common-law fraud, the trial court's judgment on the statutory claim must give way and be brought into line with the jury's verdict. Plaintiffs base their argument ultimately on the concept that the jury verdict acts as a collateral estoppel of the trial court to come to a different result. Additionally, plaintiffs cite to several cases, from both Illinois and federal courts, that plaintiffs assert support their position. Plaintiffs also invoke the sanctity of the right to a jury trial on their common-law claims as a further reason that the trial court's judgment cannot stand.

Plaintiffs present the interesting issue of when and to what extent the jury's verdict must bind the trial court's judgment on common factual issues when a joint bench...