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Munjal v. Baird & Warner

OPINION FILED OCTOBER 18, 1985.

PREM J. MUNJAL ET AL., PLAINTIFFS-APPELLEES,

v.

BAIRD & WARNER, INC., ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Kane County; the Hon. William H. Ellsworth, Judge, presiding.

JUSTICE HOPF DELIVERED THE OPINION OF THE COURT:

Plaintiffs, Prem and Sudesh Munjal, brought this action against defendants, Baird & Warner, Inc. (Baird & Warner), Richard M. Bartelt (Bartelt) and Philip and Christine Verdung (Verdungs), alleging common law fraud and misrepresentation pursuant to the Consumer Fraud and Deceptive Business Practices Act (the Act) (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 262) in connection with the sale of a home in St. Charles. The plaintiffs specifically alleged that they were damaged by the defendants' fraudulent concealment of a flooding problem in the basement of the home which they purchased from the Verdungs in 1980. Following a jury trial, judgment was entered in favor of the plaintiffs in the amount of $43,000. On appeal defendants raise five contentions of error: (1) that the jury verdict was against the manifest weight of the evidence; (2) that the trial court erred in permitting plaintiffs' counsel to use Christine Verdung's deposition to refresh the memory of Philip Verdung; (3) that the court below erred in denying defendant Verdung's motion to view the premises; (4) that the lower court erred in admitting the testimony of plaintiffs' real estate appraiser; and (5) that the jury improperly determined the measure of damages resulting in a windfall to plaintiffs.

The home was constructed by defendants, Philip and Christine Verdung, in 1976. Several creeks run through the property and intersect with Norton Creek, a larger stream seven or eight hundred feet north of the residence. At trial Philip Verdung testified that he was present when excavation for the house was begun in 1976 and he recalled no water problems at that time. He also stated that he had no knowledge that the house was on a floodplain until several years after the house was sold. He later qualified that statement by admitting that in 1976 he had been notified by the village of Wayne that a significant portion of the five-acre parcel was on a floodplain. He also admitted that while no adverse water conditions were noted on the home's building and zoning permits, he did encounter some water leakage in the northwest side of the basement in the fall of 1979.

The Verdungs separated and the home was placed on the market with defendant-real estate broker, Bartelt, of Baird & Warner. Plaintiffs saw an ad for the property and contacted Bartelt for an inspection. The plaintiff, Dr. Munjal, testified that he first visited the subject property with defendant Bartelt on January 30, 1980, and at that time noticed a large pool of water approximately 12 by 10 feet wide in the northeast corner of the basement. He also noticed a sump pump with a plastic sheet wrapped around it, running continuously. He immediately asked Bartelt if there was a flooding problem and the broker told him that the excess water was only caused by a leaky check valve on the sump pump. Bartelt also advised him that the valve would be fixed and there would be no further problem.

About a week later plaintiff took his wife to see the property and observed the same situation with the water and the sump pump. Bartelt again explained that it was only a leaky check valve, that once the sump pump was raised, the pump would stop running so frequently. He also assured them that he would see to it that the problem was corrected. The plaintiff stated that he accepted Bartelt's explanation and signed the contract to purchase the property around February 8, 1980.

Plaintiff testified that he reinspected the premises on two subsequent occasions and noticed the same problem with the water and sump pump. He said he asked Bartelt when it would be repaired and was told it would be fixed by the time of closing and there would be no further problems. He also repeatedly asked Bartelt if he could tour the house with Verdung to find out if there was anything else he needed to know about the house. Bartelt advised him that he was extremely busy but would try to arrange such a meeting.

Plaintiff's subsequent inspection with Bartelt approximately one week before closing revealed that the check valve on the sump pump had been fixed and there was no longer any flooding from the pump. However, plaintiff observed that the pump still ran continuously and also noticed water leakage around the northwest wall of the basement. Evidently all the boxes and furniture that had previously been in the basement had been removed and plaintiff could then see, for the first time, water leaking into the northwest side of the basement. At this point plaintiff told Bartelt that the house had a flooding problem and he did not want to buy it. Bartelt agreed there was a problem and advised plaintiff to talk to his attorney; however, he also warned plaintiff that he was not sure plaintiff could get his $20,750 in earnest money back. According to Bartelt, he knew nothing about the water leakage in the northwest wall prior to that inspection; he had only been aware of excess water in the northeast corner caused by what he had been told by Verdung was a leaky check valve. He said that although he had noticed some wet boxes and water damage to the basement stairs, he assumed the damage was due to the faulty pump and that at no time during the year and a half that the house was up for sale did he or Baird & Warner make any further investigation of the problem.

Plaintiff testified that after consulting his attorney, the contract was not cancelled but arrangements were made with Bartelt to obtain three estimates for correcting the problem in the northwest corner of the basement. A $1,100 bid from Mike Carr at Structural Concrete was accepted and presented at closing.

On April 14, 1980, the day prior to closing, plaintiff again toured the premises, this time with Ray Madejewski, an acquaintance who had had previous experience in supervising construction. Madejewski was shown the entire house including the basement. Based on a brief five-minute visit to the basement, he indicated that the proposed work by Carr might take care of the water problem. However, plaintiff testified that Madejewski had no special expertise in foundation construction or engineering, and that he had only asked him there to give him his overall impression of the house.

Also present at that inspection was defendant-seller, Philip Verdung. Plaintiff stated that during his visit he noticed a lot of noise coming from two sump pumps in the basement and he asked Verdung about it. According to plaintiff, Verdung replied that the sump pumps had just been raised and that this would eliminate the constant pumping. When asked about the water seepage in the northwest wall, Verdung stated that he had noticed some leaking approximately two years before that but that it had dried up and he had done nothing further about it.

The following day, April 15, 1980, the closing was held. Plaintiff testified that the only problem encountered was that he asked for a full guarantee on the basement to cover any future water problems, but was only given a guarantee on Mike Carr's work on the northwest corner along with Verdung's written guarantee to cover Carr's costs over and above the $1,100.

Approximately two to three weeks after the closing, Carr performed the proposed repairs, plus some additional work requested by plaintiff. Immediately after the drain was installed, there was no longer water in the northwest corner of the basement. However, before moving into the house in June 1980, plaintiff discovered about six inches of water in the basement. This flooding continued to occur about four or five times during the next six months. Evidently the flooding would occur whenever the sump pumps shut down due to an electrical failure; it would then subside once the pumps started up again, although some freestanding water always remained in the northeast corner of the basement. There would also be accumulations of up to an inch of water in the basement after a heavy rainstorm even with the sump pumps running continuously.

Plaintiff testified that when he contacted Verdung shortly after the closing about the problem, Verdung came out to view the property and stated that there must be either a spring or artesian well underneath the basement. Carr, who performed the work on the northwest corner of the basement in 1980, testified at trial that in his judgment there was free flowing water under the floor slab in the basement and that the bottom of the basement floor was very close to if not lower than, the stream bed. He stated that, in his opinion, a high water table was causing the flooding problem in the basement.

Maxwell Calhoon, a professional engineer specializing in field and soil mechanics, testified that as a result of soil borings taken from the subject property on January 2, 1984, it was his opinion that a substantial portion of the house was definitely on a floodplain. He also stated that the ground water level was approximately eight inches above the basement floor, causing the sump pumps to run all the time. According to the witness, there was no doubt that the house was prone to flooding given a heavy rainfall, a pump failure or a combination of both. He further testified that it was likely these conditions existed from the time the house was built, although he stated that the excavation itself may have taken place during a dry season when the water table was low.

Kelly McGinley, manager of the loan closing department of Mid-America Federal Savings (Mid-America), plaintiffs' mortgagee, testified that the subject property was valued by Mid-America at $228,000 on February 15, 1980. Roy Krueger, a certified real estate appraiser contacted by plaintiffs in the fall of 1980, testified that on November 12, 1980, he appraised the value of the subject property without flooding ...


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