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Maere v. Churchill

OPINION FILED JULY 27, 1983.

FRANCIS R. MAERE ET AL., PLAINTIFFS-APPELLANTS,

v.

CYRUS CHURCHILL ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Rock Island County; the Hon. Robert W. Castendyck, the Hon. Jay M. Hanson, and the Hon. Edward Keefe, Judges, presiding.

JUSTICE ALLOY DELIVERED THE OPINION OF THE COURT:

The plaintiffs Francis Maere and Joann Maere, husband and wife, appeal from judgments of the circuit court in their action against defendants Cyrus Churchill and Daniel Churchill, individually and as partners in the law firm of Churchill & Churchill. The Maere's action was brought against the Churchills to recover damages caused by an alleged breach of an oral contract to provide legal services and by alleged negligence in the performance of services to the Maeres in a real estate purchase transaction. The circuit court, on defense motion to strike, ruled that the Maeres could not recover, in this action, for damages resulting in mental anguish, emotional distress, disappointment and inconvenience. From the striking of these alleged damages, the Maeres now appeal, arguing that such damages are recoverable. The Maeres also appeal from the decision of the circuit court disallowing their filing of a late jury demand. On the merits, the court denied the Maeres' motion for partial summary judgment, on the question of liability, and granted the Churchills' motion for summary judgment against the Maeres. From both of these rulings, the Maeres now appeal.

The record reveals the following undisputed pertinent facts before the court in conjunction with the parties' motion for summary judgment. On April 24, 1977, the Maeres entered into a real estate purchase contract for Lots 20A and 21A in "Arcadia," a subdivision of Moline, Illinois. The sellers under the contract were Roderick and Marlene Saelens. Subsequent to the execution of the purchase contract, the Maeres entered into an oral agreement with Cyrus Churchill, of the law firm of Churchill & Churchill, to retain the firm for the purpose of reviewing the abstracts of title and rendering a certificate of title. They were retained to represent the Maeres in connection with the closing of the real estate transaction, effecting a transfer of the property from the sellers, in accordance with the contract terms. Defendant Cyrus Churchill examined the abstracts of title on the properties, and the transfer was made by warranty deed, dated July 14, 1977. The certificate of title was issued by the defendants on September 24, 1977, indicating that the Maeres had merchantable title, in fee simple, to Lots 20A and 21A.

In the fall of 1978, almost a year later, the Maeres proceeded with their plans to build on the lots in question, receiving bids from various subcontractors. In the course of their progress towards construction, the Maeres obtained information from a variety of sources concerning certain restrictive covenants pertaining to Lots 20A and 21A. These covenants, contained in the plat for Arcadia Subdivision, provided in substance that the "A" lots of the subdivision were to be considered a part of the lots of like number and were to be conveyed with such like numbered lots. The plat also restricted improvements on the lots, prohibiting any buildings on "A" lots. Concerned about possible obstacles to their planned construction, the Maeres contacted the Churchill firm to discuss the problem. This was in January 1979, and at that time, Cyrus Churchill informed Mr. Maere that if they, the Maeres, would come to his office, a policy of title insurance could be obtained to take care of any problem that might exist. The Maeres did not follow up the offer of title insurance, and instead contacted other counsel in regard to their problems.

In March or April, 1979, independent counsel for the Maeres contacted the Churchills about the problems, explaining the nature of the restrictive covenants and requesting that the Churchills cure the difficulties arising due to their existence. The Churchills, in response, obtained a commitment from an agent for Chicago Title Insurance, indicating that the restrictions were insurable and that his company would insure them. The Churchills' position, at that time, was that the restrictions were void, as contrary to public policy, and were not a defect in title. However, in an attempt to settle the matter and put the Maeres' concerns to rest, they agreed to obtain the title insurance. In any event, on July 23, 1979, the Churchills paid for and obtained a formal commitment for title insurance, which was in the amount of the purchase price of the lots, or $10,500. By endorsement, Chicago Title specifically agreed to insure over the alleged defects, being the restrictive covenants above noted. The policy, as written, was not acceptable to the Maeres.

In September 1979, without having resolved the question of title, or the dispute with the Churchills, the Maeres applied for a construction loan, with Union Federal Savings and Loan Association, for the purpose of obtaining financing for construction of improvements on Lots 20A and 21A. The loan application was in the amount of $40,500, at 10.6% interest. They received a loan commitment from Union Federal for those figures. In processing, an attorney for Union Federal examined the abstracts of title for the lots in question, and he issued a preliminary report on title, dated October 22, 1979, in which the restrictive covenants above noted were set forth as encumbrances and title defects. Shortly thereafter, Union Federal informed the Maeres that those defects would have to be rectified before finalizing the construction loan. The Churchills were informed of these developments promptly, and on November 5, 1979, they tendered to Union Federal a title insurance policy, in the amount of the purchase price ($10,500), specifically insuring against the defects complained of, with an issue date of July 23, 1979. Union Federal, for purposes of finalizing the construction loan, however, required title insurance sufficient to cover the improvements which the plaintiffs intended to make on the properties. The issuing agent for the company had also agreed that such additional insurance would be available, upon request and payment of the premium. The record indicates that the attorney for Union Federal considered the form of the policy adequate, and he recommended that the loan application be processed, subject to receiving the additional insurance to protect the mortgage. The Maeres also understood that if they had paid the additional premium (later determined to be $300), their loan would have been approved and they could have proceeded with construction. However, neither the Maeres, nor the Churchills, would pay the additional premium to cover value of improvements, and on or about November 22, 1979, the loan commitment was lost. That loan application with Union Federal was the only such application made by the Maeres in connection with their planned construction on Lots 20A and 21A.

Thereafter, unsuccessful negotiations continued between counsel for the Maeres and the Churchills in an attempt to resolve the matter. Finally, in July 1980, the Maeres filed their original complaint, without a jury demand. A first amended complaint was filed in August 1980, in which the Maeres asserted claims against the Churchills based upon breach of contract and negligence. Their claims sought compensatory damages and damages based upon their "great mental anguish, emotional distress, disappointment and inconvenience." The circuit court, pursuant to a defense motion to strike, found that the mental anguish damages were not recoverable in the action, and it ordered those portions of the amended complaint stricken.

The Maeres' third amended complaint was filed in March 1981, and discovery in the action proceeded. The case was set for jury trial, pursuant to the co-defendants' (Saelens, the sellers) jury demand. Shortly before the scheduled trial date, the Saelens' attorney indicated to the Maeres' attorney that his clients were going to withdraw their jury demand. That same day, January 13, 1982, the Maeres filed a motion for leave to file a late jury demand. The following day the Saelens filed a withdrawal of their jury demand. The Churchills opposed any late jury demand by plaintiffs Maeres, and a hearing on that motion was held.

Both parties also filed motions for summary judgment, supported by deposition, affidavits and briefs. The Maeres sought entry of partial summary judgment, on the issue of liability, against the Churchills, and the Churchills sought summary judgment as against the Maeres. The court thereafter entered orders. It denied the request for the filing of a late jury demand, and it also granted the Churchills' motion for summary judgment. The Maeres' motion for summary judgment was denied. This appeal followed, with the Maeres contending that the court erred (1) in striking the damages for mental anguish, (2) in denying the request for filing of a late jury demand, (3) in denying their motion for partial summary judgment, and (4) in granting the Churchills' summary judgment. We turn then to the issues, and any disputed factual matters will be brought forth with our analysis, as pertinent.

• 1, 2 The first issue raised is whether the trial court erred in striking the plaintiffs' damage claims for mental anguish and emotional distress, under both the contract and negligence theories. We find no error. The general rule is that

"damages for mental anguish are limited to cases in which there has been a personal physical injury or where the defendant wilfully, wantonly, recklessly, or intentionally caused the mental anguish. Thus, recovery for mental anguish is not, as a general rule, allowed in actions for breach of contract; the courts> evidently believe that the mental suffering which accompanies a breach of contract is too remote for compensation." (22 Am.Jur.2d Damages sec. 195 (1965).)

In the contract area, damages for breach will not be given as compensation for mental suffering, except where the breach was wanton or reckless and caused bodily harm, or where the defendant had reason to know, when the contract was made, that its breach would cause mental suffering for reasons other than mere pecuniary loss. (Restatement of Contracts sec. 341, at 559 (1932).) As more succinctly stated in the Restatement (Second) of Contracts sec. 353, at 149 (1981):

"Recovery for emotional disturbance will be excluded unless the breach also caused bodily harm or the contract or the breach is of such a kind that serious emotional disturbance was a particularly likely result." (See also Annot., 61 A.L.R.3d 922 (1975); 38 Am.Jur.2d Fright, Shock, and Mental Disturbance sec. 33 (1968).)

The plaintiffs' complaint herein does not allege that the defendants' breach of contract was intentional, reckless or wanton, nor are physical injuries alleged from the said breach. Furthermore, the contract at issue is for examination of abstracts of title to real estate and related services in connection with the real estate transaction. Even though real estate is unique and the attorney-client relationship is a fiduciary one, we are unable to conclude that serious emotional disturbance is a particularly likely result of an attorney's breach of contract in his examination of title to real estate. At least, on the allegations contained in plaintiffs' amended complaint, we conclude that such emotional disturbance was not set forth as a particularly likely ...


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