United States District Court, Northern District of Illinois, E.D
June 27, 1985
DIETER W. REICHELT, PLAINTIFF,
URBAN INVESTMENT AND DEVELOPMENT COMPANY, A DELAWARE CORPORATION; UNITED DEVELOPMENT COMPANY, AN ILLINOIS CORPORATION; CHICAGO TITLE AND TRUST COMPANY, AS TRUSTEE UNDER A TRUST DATED APRIL 2, 1968 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.
Plaintiff filed his original complaint against these
defendants and others in August 1983. In it he alleged a
breach of an implied warranty of habitability and a violation
of the Illinois Consumer Fraud Act. Plaintiff's claim arose
out of a defect in the foundation of a townhouse built by
defendants in 1969 and purchased by the plaintiff in 1980.
Plaintiff charges that these structural defects were caused by
the defendants' failure to properly construct the townhouse.
In fact, he alleges that the defendants knew the house was
built on highly compressible fill material and they concealed
the inadequate soil base with three to six inches of clay. As
a result, large cracks developed in the floor and walls of the
basement and excessive settlement occurred in the interior
floors and exterior patio.
After this Court granted defendants' motion to dismiss the
portion of the action under the Illinois Consumer Fraud Act,
the parties reached a partial settlement, 577 F. Supp. 971. In
May 1984 this Court, by agreement of the parties, ordered the
case dismissed without prejudice and retained jurisdiction for
six months to allow the parties to fulfill the terms of the
settlement agreement. The terms of the settlement agreement
are contained in the following five points:
1. Urban Investment and Development Company (UIDC) will
repair all defects in the foundation and structure and will
correct any above-ground damage caused by those repairs.
2. UIDC will pay plaintiff's currently unpaid expert fees.
3. UIDC will pay reasonable hotel expenses for plaintiff
during the period of foundation repairs.
4. The parties agree to continue negotiations as to:
(a) reimbursement/supervision of repairs to
townhouse above ground to correct prior existing
(b) (rendered irrelevant by UIDC repairing total
(c) all other costs and fees incurred by
5. Plaintiff agrees to "cease prosecution of all aspects of
his lawsuit . . . except for those unsettled claims outlined
in paragraph four," and if those claims remain unsettled and
go to trial, plaintiff agrees to release defendants from "all
liability pertaining to all foundation defects and repairs."
With their motion, defendants have filed an affidavit of
UIDC Vice President David McCoy stating that the foundation
repairs were completed and expert fees paid in accordance with
the settlement agreement.
Plaintiff has offered no contradictory evidence of malfeasance
with regard to the work done by defendants.
In November 1984, the plaintiff moved the Court to vacate
the dismissal order and set the matter for a pretrial
conference. However, no further settlement could be reached.
In February 1985, the plaintiff filed his Second Amended
Complaint. In Count I plaintiff alleges a breach of an implied
warranty of habitability and fraudulent concealment. As
damages he claims the cost of repair of the above-ground
portions damaged, loss of use during the repairs and loss of
economic value of the townhouse. In Count II he also seeks
A motion for summary judgment is properly granted if the
pleadings, depositions and admissions on file, together with
any affidavits or exhibits show that there is no genuine issue
as to any material fact. Fed.R.Civ.P. 56. Although it is true
that a court should give to the nonmoving party the benefit of
all reasonably drawn inferences, the mere possibility that a
factual dispute may exist, without more, is an insufficient
basis upon which to justify denial of a motion for summary
judgment. Powers v. Dole, 607 F. Supp. 841, 844 (1984); Posey v.
Skyline Corp., 702 F.2d 102, 106 (7th Cir. 1983). A settlement
agreement is a contract and as such the construction and
enforcement of settlement agreements are governed by principles
of local law applicable to contracts generally. Airline
Stewards and Stewardesses Assoc. v. Trans World Airlines,
713 F.2d 319 (7th Cir. 1983).
In this case, the issue before the Court is one of contract
interpretation. The plaintiff claims that defendants' motion
for summary judgment should be denied because an ambiguity
exists in the language of the contract. However, whether or
not an ambiguity exists in a contract is to be determined by
the court as a matter of law. Susmano v. Assoc. Internists,
97 Ill. App.3d 215, 52 Ill.Dec. 670, 422 N.E.2d 879 (1st Dist.
1981). If the court determines that there is an ambiguity,
there may be a genuine issue of fact concerning the intention
of the parties contracting, which would preclude the entry of
summary judgment. However, in this case the Court finds no
ambiguity in the contract. As stated in Whiting Stoker Co. v.
Chicago Stoker Corp., 171 F.2d 248, 250-251 (7th Cir. 1948) and
quoted in Public Relations Board v. United Van Lines:
A contract is ambiguous if, and only if, it is
reasonably or fairly susceptible of different
constructions; it is not ambiguous if the Court
can determine its meaning without any guide other
than a knowledge of the simple facts on which
from the nature of the language in general, its
meaning depends. 17 C.J.S. Contracts § 294, and
cases there cited. Contracts are not rendered
ambiguous by the mere fact that the parties do not
agree upon their proper construction.
15 Ill.Dec. 381, 382, 373 N.E.2d 727, 728.
In this case, the letter of settlement can be construed by
the Court without the need to resort to other sources. As
summarized above, the settlement calls for defendants to
repair the foundation, pay the unpaid expert fees and
plaintiff's hotel expenses during those repairs. In exchange,
plaintiff agreed to "cease prosecution of all aspects of his
lawsuit except for those unsettled claims outlined in
Plaintiff's argument that paragraph 5 of the settlement
letter is inconsistent with paragraph 4 is unconvincing. The
first sentence of paragraph 5 states:
Mr. Reichelt will cease prosecution of all
aspects of his lawsuit, captioned above, against
Urban and United Development Company ("UDC")
except for those unsettled claims outlined in
paragraph 4 above.
The meaning of this sentence is clear: to prohibit prosecution
by the plaintiff of any claims not included in paragraph 4. In
other words, after the settlement, any subsequent action by
the plaintiff is limited to those claims listed in paragraph
Subsection (a) of paragraph 4 specifies that the plaintiff's
only remaining cause of action in this case is for
"[r]eimbursement for and supervision of repairs to the
townhouse to correct prior-existing damage resulting from the
foundation problems." This subsection (a) covers all repairs
to the townhouse caused by the foundation problems, but does
not include repairs to the foundation itself. Therefore, the
only remaining cause of action here is for repairs to the
above-ground structure which were necessitated by the
foundation problems. In addition, it is clear that no punitive
damages may be awarded in this action because the relief in
subsection (a) is limited to "reimbursement for and
supervision of repairs."
The Court finds that no "internal inconsistency" or
ambiguity is found in the language of the settlement
agreement. Where a contract is unambiguous, the instrument
itself is the only source of the parties' intentions.
Halper v. Halper, 57 Ill.App.3d 588, 15 Ill.Dec. 252,
373 N.E.2d 598 (1st Dist. 1978). Therefore, the Court holds that no
genuine issue of material fact exists that would preclude an
entry of summary judgment. The plaintiff's remaining claims are
for the cost of above-ground repairs along with other fees
incurred therein. It was the intention of the parties to
release defendants from liability for punitive damages. The
Court accordingly grants defendants' motion for partial summary
For the reasons stated above, defendants' motion for partial
summary judgment is granted.
IT IS SO ORDERED.
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