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Redarowicz v. Ohlendorf





APPEAL from the Circuit Court of McLean County; the Hon. WAYNE C. TOWNLEY, Judge, presiding.


This appeal presents questions of pleading. The circuit court of McLean County dismissed all six counts of plaintiff's complaint for various reasons as will be more fully discussed. The complaint centered around defects which appeared in plaintiff's home. Defendant was the builder.

Counts I and V alleged negligence resulting in economic loss to the plaintiff. Count II alleged that plaintiff was a third-party beneficiary of an agreement between defendant and the City of Bloomington, which had agreed not to prosecute defendant under the city building code if he made repairs. Count III alleged breach of the warranty of habitability. Count IV alleged fraud. Count VI was based on contract, an agreement by defendant with plaintiff to make repairs in exchange for plaintiff's promise to forego further legal action.

We affirm the dismissal of all counts except Count VI based on the agreement.

The factual situation is relatively uncomplicated. The complaint alleges that defendant constructed the home, completing it in late 1975 or early 1976, for the original owners. Plaintiff purchased the premises from those original owners in April 1977. Shortly thereafter he discovered the defects complained of. In summary form, these are that the chimney and adjoining brick outer wall began to pull away from the rest of the house because defendant did not attach them firmly, that the wall and chimney were set in loose soil, thereby violating the local building code, that the supporting lintel was set only 24 inches deep, being another violation of the building code, and that the patio was improperly constructed. As a result of the movement of the chimney and the wall, a basement wall cracked and admitted water. Water also entered the roof near the affected area. Plaintiff has since caused repairs to be made by others.

• 1 In reviewing a complaint dismissed for failure to state a cause of action, properly pleaded allegations are assumed to be true. Giers v. Anten (1978), 68 Ill. App.3d 535, 386 N.E.2d 82.

Counts I and V (the negligence counts) were dismissed by the trial court on the basis (1) that only economic loss was alleged, and (2) that there was either a lack of duty or lack of privity. The parties are in dispute over which was the true basis of the court's ruling.

As to the economic loss, we are aware of the recent ruling in Moorman Manufacturing Co. v. National Tank Co. (1980), 92 Ill. App.3d 136, 414 N.E.2d 1302, appeal allowed (1981), 84 Ill.2d 19, which is cited in the dissent. However, we find significant differences between the instant case and Moorman. Moorman defined economic loss as:

"Economic loss may be either direct or consequential. Direct economic loss occurs when a product damages itself or is unfit for the purpose for which it was sold. Such losses are generally limited to the price of the product. Consequential economic loss consists of an injury extrinsic to the product, such as lost profits or the loss of use of the product." (92 Ill. App.3d 136, 138, 414 N.E.2d 1302, 1305.)

There is no allegation in the instant case that the house was a total loss as a result of the purported defects. In fact, it is apparent that plaintiff continued to use the house for its intended purpose, albeit with some disaccommodation.

Furthermore, Moorman was concerned with a "product." In holding that a grain storage tank was a product for purposes of strict liability, the court said:

"Illinois courts> have said that certain items, under the facts presented, were not products: a condominium [citation]; a shelter care home [citation]; and a multilevel parking garage [citation]. The question of whether something is a product is determined by looking to the policies supporting the strict liability in tort doctrine. We have discussed these policies above — the manufacturer's special responsibility to buyers, the need to protect helpless buyers, and the cost-spreading capacity of the manufacturer." 92 Ill. App.3d 136, 146, 414 N.E.2d 1302.

It is apparent that a single-family, custom-built dwelling is not such an item as will permit the manufacturer to spread the cost of a defect over a large number of persons under the rationale of Moorman.

For these reasons we find Moorman inapposite.

• 2 We agree that under modern tort theory privity is no longer a requirement. However, we know of no well-reasoned case which eliminates the requirement of duty. (Hunt v. Blasius (1978), 74 Ill.2d 203, 384 N.E.2d 368.) Defendant, as the original contractor, owed no duty to third persons under a negligence theory. Defendant argues that duty should be a matter of "public policy" and should be grounded in "fairness." We do not agree. Duty rests in an obligation imposed by law of which public policy and fairness are consequences, not antecedents. Plaintiff's effort in counts I and V is to counteract the traditional contract limitations on damages by converting the action into one of tort. The trial court properly dismissed counts I and V.

Count II was based upon an admitted agreement between the city of Bloomington and defendant that the city would not prosecute under its building code if defendant made the necessary corrections and repairs. Plaintiff claims to be a third-party beneficiary of this agreement.

• 3 The third party to an agreement may not sue on it unless he was the direct and intended beneficiary. (People ex rel. Resnik v. Curtis & Davis, Architects & Planners, Inc. (1980), 78 Ill.2d 381, 400 N.E.2d 918; Carson Pirie Scott & Co. v. Parrett (1931), 346 Ill. 252, 178 N.E. 498.) Parrett said:

"The rule is, that the right of a third party benefited by a contract to sue thereon rests upon the liability of the promisor, and this liability must affirmatively appear from the language of the instrument when properly interpreted and construed. The liability so appearing can not be extended or enlarged on the ground, alone, that the situation and circumstances of the parties justify or demand further or other liability." 346 Ill. 252, 258, 178 N.E. 498, 501.

• 4 Two propositions militate against plaintiff's position on this issue. First, we find nothing in the agreement which indicates that plaintiff was anything but a collateral and incidental beneficiary. The purpose of the agreement was to compel compliance with the building code, not to repair plaintiff's house. Second, the enforcement of laws is not for the benefit of any individual, but for the public at large. (Porter v. ...

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