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Morrow v. L.a. Goldschmidt Assoc.

OPINION FILED AUGUST 16, 1984.

RONALD D. MORROW ET AL., PLAINTIFFS-APPELLANTS,

v.

L.A. GOLDSCHMIDT ASSOCIATES, INC., ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. Myron T. Gomberg, Judge, presiding.

PRESIDING JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

Plaintiffs, purchasers of townhomes, brought an 11-count complaint against defendants, designer/builder/vendors, alleging breach of express warranty and breach of implied warranty of habitability, and requesting punitive damages. Counts VIII through XI, requesting punitive damages for wilful and wanton misconduct by defendants, were dismissed with prejudice. The remaining counts were sustained.

Plaintiffs now appeal the dismissal of counts VIII through XI.

We reverse the decision of the trial court and remand with directions to reinstate counts VIII through XI.

FACTS

Plaintiffs alleged the following facts in their third amended complaint. Defendant, L.A. Goldschmidt Associates, Inc., is an Illinois corporation engaged in the construction business. Defendant Leo A. Goldschmidt is a contractor and developer, and defendant First Charter Service Corporation (First Charter) is a bank service corporation. In 1976, these defendants jointly purchased a parcel of land in Palos Park, Illinois, and placed title to the property in defendant American National Bank, as land trustee.

Defendants Goldschmidt Associates, Leo A. Goldschmidt and First Charter formed a business entity known as The Commons of Palos Park (Commons). The Commons planned, designed and constructed a residential housing project in Palos Park known as "The Commons, Phase I," consisting of single-family townhomes and condominiums. The homes ranged in price from over $70,000 to over $90,000.

Plaintiffs contracted with the Commons, agent for the trustee, to purchase four of the townhomes in the development. These purchase contracts were entered into prior to the completion of the construction of the homes. Closings on plaintiffs' transactions respectively occurred on December 29, 1978 (Morrow), December 15, 1978 (Strenk), February 27, 1979 (Majchrzak and Kukulka), and July 21, 1978 (Levings).

At the time of each closing, the Commons executed an express warranty with the purchaser which provided that for a period of one year from the date of the execution of the warranty, the Commons would, among other things:

A. Correct all structural defects due to faulty construction and/or defective materials;

B. Warrant the basement to be waterproof and free from infiltration of water from penetration through the walls or floors;

C. Warrant the roof and roof flashings to be free from leaks; and

D. Warrant all plumbing to be in proper working order and free from all defects of workmanship and/or materials.

Both the sales contracts and the express warranties were made part of the pleadings.

Plaintiffs allege that at the time the townhomes were conveyed to them by defendants, numerous and substantial structural defects and contract variances were present. Several such defects are common to each home purchased: these include floors improperly supported due to lack of or improper installation of the floor support system, nonfunctioning of the reverse osmosis water system, and defective carpentry. In addition to these common defects, plaintiffs allege other defects particular to each home: these include extraordinary flooding and water leakage in the basement; roofs incapable of supporting design loads; gas and water leaks resulting from improperly fitted fixtures; sump pumps connected in violation of the Palos Park Municipal Sanitary Code; and malfunctioning of the heating/ventilation system.

Plaintiffs further allege that defendants had actual knowledge of these defects. In factual support of this allegation, plaintiffs refer to letters, made part of the pleadings, informing defendants of various building and code violations. In a letter dated September 11, 1978, authored by the building inspector of the village of Palos Park and hand delivered by the police to the construction manager of the Commons, defendants were informed that ...


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