United States District Court, Northern District of Illinois, E.D
January 19, 1984
DIETER REICHELT, PLAINTIFF,
URBAN INVESTMENT AND DEVELOPMENT COMPANY, A DELAWARE CORPORATION, UNITED DEVELOPMENT COMPANY, AN ILLINOIS CORPORATION; CHICAGO TITLE AND TRUST COMPANY, AS TRUSTEE UNDER TRUST DATED APRIL 2, 1967 AND KNOWN AS TRUST NO. 51875; AND BERT THOMAS D/B/A HOME INSPECTION CONSULTANTS, DEFENDANTS.
The opinion of the court was delivered by: Bua, District Judge.
Three of the four defendants in this case — Urban Investment
and Development Company, United Development Company, and Chicago
Title and Trust Company — have moved this Court for an order
dismissing Counts I and II of the plaintiff's First Amended
Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure. For the reasons stated below, defendants' motion to
dismiss Count I is denied and defendants' motion to dismiss Count
II is granted.
In considering a motion to dismiss under Rule 12(b)(6), a
complaint should not be dismissed unless it appears beyond doubt
that the plaintiff can prove no set of facts in support of his
claim that would entitle him to the relief requested. Cruz v.
Beto, 405 U.S. 319, 322, 92 S.Ct. 1079, 1081, 31 L.Ed.2d 263
(1972). The following facts are alleged in the First Amended
Complaint. For purposes of this motion, the Court assumes they
are true. City of Milwaukee v. Saxbe, 546 F.2d 693, 704 (7th Cir.
In 1969, defendants were engaged in the business of
constructing and selling residential homes in DuPage County,
Illinois. In February of 1969, defendants finished construction
of a residence located in Oak Brook, Illinois (hereinafter "the
house"), and on February 5, 1969, sold the house to James and
Ruth Heinis. On March 14, 1980, plaintiff Dieter Reichelt
purchased the house from the Heinises. On December 15, 1982,
Reichelt discovered large cracks in the floor and walls of the
basement, along with movement of the west
wall and excessive settlement of the interior floors and exterior
Reichelt charges that these structural defects, not discovered
by Reichelt until 1982, were caused by defendants' failure to
properly construct the house. Specifically, Dieter charges that
defendants, in violation of the National Housing Code,
constructed the house on soil which could not reasonably be
expected to support adequately the weight of the house.
Furthermore, in an attempt to avoid the 12-year statute of repose
imposed by Ill.Rev.Stat., ch. 110, § 13-214(b), Reichelt alleges
that defendants intentionally and fraudulently concealed the
defects in the house. In support of the fraudulent concealment
charge, Reichelt alleges that defendants, while constructing the
house, knew the house had been built on highly compressible fill
material and that defendants covered the inadequate soil base
with three to six inches of clay with the intent of concealing
that defect. Furthermore, Reichelt charges that defendants
fraudulently concealed the defects in the house by filling the
cracks that had developed in the basement walls with hydraulic
cement and by covering the walls with fiberglass mat and
Reichelt predicates defendants' liability upon two theories.
Count I charges that defendants' conduct constitutes a breach of
the implied warranty of habitability as articulated by the
Illinois Supreme Court in Redarowicz v. Ohlendorf, 92 Ill.2d 171,
65 Ill.Dec. 411, 441 N.E.2d 324 (1982). Count II charges that
defendants' conduct constitutes an unfair and deceptive trade
practice in violation of the Illinois Consumer Fraud and
Deceptive Business Practices Act, Ill. Rev.Stat. ch. 121 1/2, §
261 et seq.
In support of their motion to dismiss, defendants argue that
both claims, filed more than 14 years after construction of the
house, are barred by the 12-year statute of repose provided by
Ill.Rev.Stat., ch. 110, § 13-214(b). In the alternative,
defendants argue that Reichelt has failed to state a cause of
action under either the implied warranty of habitability theory
or the Illinois Consumer Fraud and Deceptive Business Practices
Act. In reply, Reichelt argues that the 12-year statute of repose
should be tolled due to defendants' fraudulent concealment of the
cause of action and that the First Amended Complaint states
causes of action under both the implied warranty of habitability
theory and the Illinois Consumer Fraud and Deceptive Business
A. Statute of Repose
Section 13-214(b) of the Illinois Code of Civil Procedure
No action based upon tort, contract or otherwise may
be brought against any person for an act or omission
of such person in the design, planning, supervision,
observation or management of construction, or
construction of an improvement to real property after
12 years have elapsed from the time of such act or
omission. However, any person who discovers such act
or omission prior to expiration of 12 years from the
time of such act or omission shall in no event have
less than 2 years to bring an action as provided in
Without more, Reichelt's complaint would fail since it was filed
more than 12 years after the house was built.
Reichelt, however, argues that the 12-year statute of repose is
inapplicable for two reasons. First, that under the Illinois
"discovery rule," Reichelt's cause of action did not accrue until
December 15, 1982, the date he discovered the structural defects
in the house. Second, that this Court should
toll the 12-year statute of repose pursuant to Ill.Rev.Stat., ch.
110, § 13-215. That section provides:
If a person liable to an action fraudulently conceals
the cause of such action from the knowledge of the
person entitled thereto, the action may be commenced
at any time within 5 years after the person entitled
to bring the same discovers that he or she has such
cause of action, and not afterwards.*fn2
Generally, a cause of action accrues when the plaintiff knows
or reasonably should know of an injury and also knows or
reasonably should know that the injury was wrongfully caused.
Nolan v. Johns-Manville Asbestos, 85 Ill.2d 161, 52 Ill.Dec. 1,
421 N.E.2d 864 (1981). In a case in which the plaintiff seeks
damages for the faulty construction of a house, however, Section
13-214 requires that a plaintiff "discover" his or her cause of
action within 12 years from the date the house was built. If a
plaintiff discovers the cause of action within the 12-year
period, Section 13-214 allows an additional two years from the
date of discovery in which to file suit. Ill.Rev.Stat., ch. 110,
§ 13-214(b). In this case, Reichelt failed to discover his cause
of action until nearly 14 years after his house was constructed.
Therefore, the Illinois "discovery rule" cannot be utilized to
avoid application of the 12-year statute of repose.
Reichelt further alleges that defendants intentionally and
fraudulently concealed their wrongful conduct in 1969 and thereby
fraudulently concealed Reichelt's cause of action. Unlike the
"discovery rule," fraudulent concealment of a cause of action
will toll the 12-year limitations period. Ill.Rev.Stat., ch. 110,
Generally, the concealment of a cause of action sufficient to
toll the statute of limitations requires affirmative acts or
representations which are designed to, and in fact do, prevent
discovery of the cause of action. Chicago Park District v.
Kenroy, Inc., 78 Ill.2d 555, 37 Ill.Dec. 291, 294,
402 N.E.2d 181, 184 (1980); Zagar v. Health and Hospitals Governing
Commission of Cook County, 83 Ill.App.3d 894, 39 Ill.Dec. 112,
116, 404 N.E.2d 496, 500 (1st Dist. 1980). Mere silence by the
defendant, accompanied by the failure of the plaintiff to
discover the cause of action, is not sufficient to toll the
limitations period. Chicago Park District, 37 Ill.Dec. at 295,
402 N.E.2d at 185; Zagar, 39 Ill.Dec. at 116, 404 N.E.2d at 500.
Reichelt alleges two "affirmative acts" by defendants which, if
proven at trial, may have prevented discovery of the structural
defects in the house. First, Reichelt alleges that defendants, in
an attempt to conceal the inadequate foundation for the house,
covered the highly compressible soil base with three to six
inches of clay. Second, Reichelt alleges that defendants further
concealed the structural defects in the house by filling the
cracks in the basement walls with cement and covering the walls
with fiberglass mat and paint. Whether these affirmative acts
were "designed to, and in fact [did], prevent discovery of the
cause of action," is, at this juncture, an issue not capable of
resolution on a motion to dismiss.
Defendants argue that they could not possibly have fraudulently
concealed a cause of action from Reichelt in 1969 because they
did not have any contact with Reichelt until 1983. Defendants,
however, have confused fraudulent misrepresentation (requiring
that a plaintiff reasonably rely upon misrepresentations of the
defendant) with fraudulent concealment of a cause of action
(requiring acts which are calculated to prevent the discovery of
a cause of action). Cf. Redarowicz v. Ohlendorf, 92 Ill.2d 171,
65 Ill.Dec. 411, 418, 441 N.E.2d 324, 331 (1982). Defendants have
submitted no authority for their novel argument that a plaintiff
must personally rely upon misrepresentations of a defendant
in order to allege fraudulent concealment of a cause of action.
Defendants further argue that Reichelt's claims are barred
because he should have discovered his cause of action on March
14, 1980, when he purchased the house. If the fraudulent
concealment period ended March 14, 1980, Reichelt's complaint is
untimely since it was filed more than two years after March 14,
1980. Reichelt, however, alleges that the structural defects in
the house did not become apparent until December 15, 1982. There
is no indication from the First Amended Complaint that Reichelt
failed to exercise reasonable diligence in discovering the
defects in the house. The facts alleged in the complaint, and not
in defendants' motion, are assumed true. See City of Milwaukee v.
Saxbe, 546 F.2d 693, 704 (7th Cir. 1976). At this stage,
therefore, defendants' argument that the First Amended Complaint
is barred by the 12-year statute of repose is without merit.
B. Implied Warranty of Habitability
In Redarowicz v. Ohlendorf, 92 Ill.2d 171, 65 Ill.Dec. 411,
441 N.E.2d 324 (1982), the Illinois Supreme Court extended the
implied warranty of habitability from builder-vendors to
subsequent purchasers of homes. The court reasoned:
Like the initial purchaser, the subsequent purchaser
is usually not knowledgeable in construction
practices and must, to a substantial degree, rely
upon the expertise of the person who built the home.
If construction of a new house is defective, its
repair costs should be borne by the responsible
builder-vendor who created the latent defect.
Id. at 417. The Redarowicz court limited its holding in two
respects. First, the defects complained of must be "latent."
Second, the defects must manifest themselves within a reasonable
time after the purchase of the house. Redarowicz, 65 Ill.Dec.
418, 441 N.E.2d at 331. Defendants argue that Reichelt's
discovery of the structural defects in his house on December 15,
1982 — nearly 14 years after construction of the house — is not a
"reasonable time" under the Redarowicz holding.
This Court, however, need not decide the question of whether a
subsequent purchaser of a home may sue the builder-vendor for a
latent defect manifesting itself 14 years after the original sale
of the house.*fn3 In his complaint, Reichelt alleges that the
structural defects in the house were not only "latent" but were
"intentionally and fraudulently concealed" by defendants. Faced
with such allegations, defendants cannot successfully argue' that
since the defects in the house did not manifest themselves within
a "reasonable time," Reichelt's claim under the implied warranty
of habitability must fail. According to Reichelt, the reason that
the structural defects did not manifest themselves within a
"reasonable time" was that defendants intentionally concealed
those defects when the house was built. The Court holds therefore
that the Redarowicz "reasonable time" limitation was tolled
during the period of defendants' alleged fraudulent concealment.
Accordingly, Count I of the complaint, based upon the implied
warranty of habitability, states a cognizable claim.
C. Illinois Consumer Fraud Act
The Illinois Consumer Fraud and Deceptive Business Practices
Act, Ill.Rev. Stat., ch. 121 1/2, § 261 et seq. ("the Act"),
makes it unlawful to engage in "unfair or deceptive acts or
practices." Id. § 262. The use or employment of any
"misrepresentation or the concealment, suppression or omission of
any material fact, with the intent that others rely upon the
concealment, suppression or omission of such material fact"
constitutes a deceptive practice under the Act. Id. The Act
further provides that any person who suffers damages as a result
of a violation of the Act may
bring a private action for actual damages. Id. § 270a.
Reichelt argues that defendants' wrongful conduct — building a
house on highly compressible fill materials and then fraudulently
concealing all evidence that the house was seriously defective —
constitutes a deceptive practice under the Act. Defendants argue
that at the time the house was constructed (1969), the Act did
not cover real estate transactions and that this Court should not
apply the present Act retroactively.
On October 1, 1973, the Act was amended to permit purchasers of
real estate to sue for violations of the Act. Prior to that date,
there was no such provision. Beard v. Gress, 90 Ill.App.3d 622,
46 Ill.Dec. 8, 11-12, 413 N.E.2d 448, 451-52 (4th Dist. 1980).
The Act cannot be given retroactive effect to protect persons not
previously included within its scope. Snyder v. Howard Johnson's
Motor Lodges, Inc., 412 F. Supp. 724, 731 (N.D.Ill. 1976); People
ex rel. Scott v. Cardet International, Inc., 24 Ill.App.3d 740,
321 N.E.2d 386, 392-93 (1st Dist. 1974). See also Beard v. Gress,
90 Ill.App.3d 622, 46 Ill.Dec. 8, 11-12, 413 N.E.2d 448, 451-52
(4th Dist. 1980). Since Reichelt is a purchaser of real estate
and the deceptive practices alleged in Count II occurred prior to
October 1, 1973, Count II fails to state a cause of action under
the prior Act. As the present Act cannot be given retroactive
effect, Count II fails to state a cause of action and is hereby
Defendants' motion to dismiss Count I of the First Amended
Complaint is denied. Defendants' motion to dismiss Count II of
the First Amended Complaint is granted. Count II of the First
Amended Complaint is hereby dismissed.
IT IS SO ORDERED.