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Tassan v. United Development Co.





APPEAL from the Circuit Court of Cook County; the Hon. ALLEN HARTMAN, Judge, presiding. MR. PRESIDING JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

Rehearing denied October 9, 1980.

Plaintiffs bring this appeal from an order entered in the circuit court of Cook County dismissing counts I and IV of their four-count amended complaint. The order was made final and appealable by the trial court. Count I sought damages from defendants Inland-Robbins Construction, Inc. (Inland), and United Development Company (United) for an alleged breach of an implied warranty of habitability. Court IV sought damages from United for an alleged breach of an express warranty.

On appeal, plaintiffs contend that the two counts should not have been dismissed. We agree and reverse and remand.

The seven named plaintiffs are all original owners of condominium units in a newly constructed 95-unit building located in Elk Grove Village and called "Village on the Lake Condominium No. 5." This building is one of several condominium buildings constructed by Inland on land beneficially owned by United. United was both the developer and seller of the condominium units.

Plaintiffs brought this action on behalf of themselves and all past and present owners of units in Condominium No. 5. Plaintiffs and all members of the proposed class are past or present members of the Village on the Lake Condominium No. 5 Association, an unincorporated, not-for-profit association in charge of managing Condominium No. 5.

Count I of plaintiff's amended complaint alleged that United, as developer-seller of the condominium units, had breached an implied warranty of habitability by continuously refusing to repair certain defects in the condominiums that existed at the time of sale. The alleged defects were all defects in the common elements in which each unit owner owned an individual interest. Those defects were as follows:

(a) The exterior walls were built of inferior materials resulting in water leaking into the units;

(b) The central heating system was inadequate and could not sufficiently heat all of the bedrooms in some of the units;

(c) There was a faulty hot water system so that certain of the units did not get sufficient hot water;

(d) The central smoke detection system was improperly installed;

(e) There was inadequate drainage of the surface waters in front of the building;

(f) Certain central plumbing equipment was corroding as a result of inadequate protection provided for the equipment;

(g) The fire sprinkler heads were blocked in violation of local fire codes;

(h) The trash rooms on four of the floors were inadequately ventilated.

Plaintiffs alleged that as a result of United's failure to repair the above defects all of the members of the proposed class had and would suffer pecuniary damage because the Condominium Association spent and would spend money to carry out the repairs, the cost of which was and would be assessed to the members of the association. Plaintiffs also alleged that "certain" of the class members had suffered damage to their personal property within their respective units because of water leaking into the units through the exterior walls. Plaintiffs sought to hold United liable for all of the above damages and to hold Inland jointly and severally liable as a joint venturer with United in the construction and sale of the units.

Count IV of the amended complaint was brought against United only and sought damages for breach of an express warranty found in the individual contracts for sale of the units. Count IV alleged the same defects and the same kinds of damages as count I of the amended complaint.

The express warranty was found in a rider attached to the standard form contract of sale used by United to sell the units to each individual owner. Under one part of the express warranty, United warranted that it would repair all defects in the common elements due to faulty materials or workmanship if United received written notice of such defects within one year after the date they were first used.

The record discloses that some of the original sales by United to unit purchasers were made more than one year before the plaintiffs brought this action. Since the express warranty was conditioned on United's receiving notice of defects in the common elements within one year from the date they were first used, plaintiffs alleged, on information and belief, that "numerous" of the unit owners had given the required notice of the defects in the common elements. Though the seven named plaintiffs did not themselves allege compliance with the one-year provision, the plaintiffs in another paragraph of count IV alleged that "plaintiffs" had performed all conditions precedent necessary to recover from United for breach of the express warranty.

The trial court, pursuant to defendants' motion to dismiss under sections 45 and 48 of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, pars. 45, 48), dismissed counts I and IV of the amended complaint. In a six-page order, the court explained its reasoning. The reasons given by the trial court have been the subject of much dispute on this appeal. Plaintiffs have attempted to interpret the order as being dispositive on only a limited number of issues and allege only those issues need be reviewed and determined here. Defendants, on the other hand, have briefed and argued a plethora of issues and subissues based on the assumption that the trial court gave a multitude of reasons for dismissing the two counts. Though our review of the issue of whether the two counts of the amended complaint should have been dismissed, a question of law, is not limited to the specific reasons given by the trial court, to the extent we feel it appropriate, we will address those issues we consider relevant to our decision and point out those issues that we believe have not been determined below and, for the reasons we will state, should not be determined here.



The trial court dismissed count I of the amended complaint by holding that United had effectively disclaimed the implied warranty of habitability by a disclaimer clause found in the standard form contract used by United to sell the individual units. This standard form contract is one page long with terms listed in 20 different paragraphs on both sides of the page. The contract provides blanks to be filled in with each purchaser's name, the purchase unit number and price, the terms for financing, and the designation of the percentage of the unit owner's undivided interest in the common elements. Outside of this, all of the terms are preprinted in like-size, small print.

Paragraph 18 of the contract contains the disclaimer clause in dispute here. In appears on the back of the form approximately one to two inches above the buyer's signature. This paragraph does not stand out from the other paragraphs of the contract. It reads:

"Entire Agreement: This contract and the matters expressly referred to herein constitute the entire agreement between the parties. No representations, warranties, undertakings or promises, whether oral, implied or otherwise, have been made by Seller or Purchaser to the other unless expressly stated herein, or unless mutually agreed to in writing between Seller and Purchaser. All amendments, modifications, and supplements to this contract shall be in writing executed by both Seller and Purchaser."

The trial court held, as a matter of law, that this paragraph effectively disclaimed any implied warranty of habitability given by United. Implicit in the trial court's ruling is the underlying assumption that an implied warranty of habitability can exist at all in this case. Though the parties appear to concede that an implied warranty of habitability may attach to the sale of a new condominium and to defects in the common elements, they have briefed and argued several related issues including the following: (1) does a developer-seller (United) who is not technically the builder make an implied warranty ...

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