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Himmelstein v. Valenti Development Corp.





APPEAL from the Circuit Court of Cook County; the Hon. PAUL F. ELWARD, Judge, presiding.


Sydney and Ingeborg Himmelstein (plaintiffs) sued Valenti Development Corporation, Valenti Builders, Incorporated, and Joseph Valenti (defendants), seeking rescission of a real estate contract and other relief. In the amended complaint count I sought rescission of the contract. Count II sought to enjoin defendants from declaring a forfeiture of money paid by plaintiffs and from disposing of the subject real estate. Count II also prayed for reformation of the contract to reflect a more than 40% reduction in the purchase price. Count III alleged pre-contract tortious misrepresentation. Count IV sought to "pierce the corporate veil" and hold all three defendants personally liable upon the contract signed only by Valenti Development Corporation. The trial court dismissed counts I, II, and IV under section 48 of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 48). Plaintiffs' motion for leave to file a second amended complaint was denied. Plaintiffs appeal.

On March 12, 1979, plaintiffs contracted with defendant, Valenti Development Corporation, for the construction and purchase of a residence and adjoining lot in Lincolnshire, Illinois, for $185,900. Article 5 of the contract provides in part:

"* * *. Seller further agrees that (A) The construction shall be in a good and workmanlike manner and of good and substantial material, and shall comply with all applicable state and local zoning and building codes; (B) Residence shall be delivered free of substantial defects in material or workmanship to the extent set forth in the new warranty and service policy formerly adopted by the Home Builders Association of Chicagoland * * * Seller will promptly repair, replace or otherwise attend to substantial defects in material or workmanship in or about the real estate which has been brought to its attention by purchaser during construction and within one year from the date of delivery of possession to Purchaser * * *."

Article 8 of the contract provides:

"Any dispute between Purchaser and Seller with respect to labor and/or material, or whether the residence has been constructed as herein required, shall be determined by the architect preparing plans and specifications and such determination shall be conclusive and binding upon Purchaser and Seller."

Plaintiffs alleged that about September 10, 1979, before conveyance of the finished property, plaintiffs observed a crack in a basement wall. Water was leaking from the crack onto the basement floor. Plaintiffs informed defendants of the situation. At the request of defendant, Valenti Builders, the architect who prepared the plans for the building inspected the premises in December. Plaintiffs accompanied the architect during his inspection.

By letter dated December 19, 1979, the architect stated he could not detect the crack complained of but "it was apparent that repair work had been performed" and that two of the basement walls "had been coated with a cement wash." In the letter the architect also related the methods of repair which he was "advised" had been performed on the walls. The architect wrote:

"* * * I do not believe that there is [sic] any structural problems. It would appear that Valenti Builders had used three different methods of waterproofing, when any one of them might have proved sufficient.

It appears that plans and specifications hace [sic] been followed in a workmanlike manner. When a deficiency did develop, Valenti has more than adequately attempted to rectify it."

Nevertheless, the architect cautioned, "the real test, of course, is can the walls survive a wet season without leaks. This can be expected to occur next spring." He finally suggested that the one-year warranty be extended an extra year "so that if for any reason a leak did not occur the first year, but for some reason did become evident the second, the Owner could be assured it would be repaired."

This letter from the architect was presented to the trial court as a part of the motion by defendants to dismiss plaintiffs' amended complaint. Defendants interpreted the architect's report as a determination that no "substantial defect" then existed in the premises and scheduled a final closing date. Plaintiffs did not accept tender of the deed nor did they tender the balance of the purchase price. Thereafter, defendant, Valenti Development Corporation, invoked a forfeiture clause in the contract and declared a forfeiture of all money received from plaintiffs to date, the sum of $46,754.80.

Plaintiff, Sydney Himmelstein, filed an affidavit stating he inspected the subject premises on May 31, 1980, presumably after the "wet season" described by the architect. The affidavit avers plaintiff observed some cracks in the basement walls, discoloration "by leaks and water seepage," and repair patches which were not visible at the earlier inspection in December of 1979. Plaintiffs also submitted color photographs taken during the May inspection which evidence the veracity of the affidavit.

• 1 There is no dispute that a contract can legitimately provide for binding arbitration as to any "controversy thereafter arising between the parties" and such a provision "is valid, enforceable and irrevocable save upon such grounds as exist for the revocation of any contract * * *." Ill. Rev. Stat. 1979, ch. 10, par. 101. See also Iser Electric Co. v. Fossier Builders, Ltd. (1980), 84 ...

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