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Warren v. Lemay

OPINION FILED MARCH 24, 1986.

TERRY WARREN ET AL., PLAINTIFFS-APPELLEES,

v.

ROBERT LEMAY ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of St. Clair County; the Hon. Dennis Jacobsen, Judge, presiding.

JUSTICE HARRISON DELIVERED THE OPINION OF THE COURT:

Rehearing denied April 23, 1986.

Defendants Orkin Exterminating Company (Orkin) and Century 21-Baebler Realtors (Century 21) appeal from a judgment and order of the circuit court of St. Clair County awarding plaintiffs, Terry and Rondice Warren, actual and punitive damages and attorney fees for damage to their home caused by termite infestation. Plaintiffs cross-appeal as to the amount of attorney fees and costs they received. Plaintiffs also cross-appeal from a judgment in favor of defendants Robert and Karen LeMay, but request reversal and remand of that judgment only if a new trial is otherwise granted to defendants Orkin and Century 21. Finally, plaintiffs move for an award of their reasonable attorney fees and costs on this appeal. For the reasons which follow, we affirm the circuit court's judgment in favor of plaintiffs and against defendants Orkin and Century 21, and its award of statutory attorney fees and costs to plaintiffs. In addition, we grant plaintiffs' motion for attorney fees and costs on this appeal, and remand the cause for further proceedings regarding the amount of fees and costs to be awarded.

The home at issue in this case was purchased by plaintiffs, the Warrens, from defendants the LeMays. The Warrens financed the purchase through Town & Country Mortgage Company with a mortgage guaranteed by the Veterans Administration (VA). A requirement of VA financing was that a termite inspection be made of the property at the sellers' expense. Defendant Orkin was selected to handle this inspection and prepare the necessary report. All details of obtaining and processing Orkins' report were performed by the sellers and the real estate agency representing them, defendant Century 21. The termite report was prepared, financing was approved, and in April of 1981, the sale was closed. The purchase price paid by plaintiffs was $41,000.

Neither plaintiffs, Town & Country Mortgage Company, nor the VA was advised of any current termite infestation or damage to the home at the time of the sale. In fact, termite infestation and damage were so extensive that by the end of 1982, the home was unsafe for human occupancy, and plaintiffs were forced to move. When the extent of the damage became apparent, plaintiffs filed suit against defendants the LeMays, Orkin, Century 21 and others in the circuit court of St. Clair County, seeking actual and punitive damages and attorney fees for the property damage they sustained.

Plaintiffs' complaint was amended numerous times during the course of the proceedings, but the case was ultimately submitted on the following theories. Defendants the LeMays were alleged to have intentionally misrepresented the condition of the home in that they represented to plaintiffs that it was free from termites and termite damage when they knew that this representation was false. Defendant Century 21 was alleged to have been guilty of wilful and wanton misconduct, violation of the Real Estate Brokers and Salesmen License Act (Ill. Rev. Stat. 1981, ch. 111, par. 5701 et seq.) and rules of the Department of Registration and Education promulgated thereunder, and violation of the Consumer Fraud and Deceptive Practices Act (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 261 et seq.). Defendant Orkin was also alleged to have violated the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 261 et seq.) in addition to being guilty of negligence and wilful and wanton misconduct.

Following a lengthy jury trial, a general verdict was rendered in favor of plaintiffs and against defendants Orkin and Century 21, and plaintiffs were awarded actual damages in the amount of $34,700. The jury also rendered separate verdicts in favor of plaintiffs and against defendants Orkin and Century 21 respectively, assessing $25,000 in punitive damages against each. In addition, the jury answered numerous special interrogatories finding, inter alia, that plaintiffs had failed to meet their burden of proof on their claim against defendants the LeMays, but had proved all of their claims against Orkin and Century 21, and that defendants Orkin and Century 21 had each shown an utter indifference to or conscious disregard for plaintiffs. The circuit court entered judgment on the jury's verdicts. Thereafter, the court granted plaintiffs' petition for attorney fees and costs pursuant to section 10a(c) of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 270a(c)), but reduced the fees awarded to $17,464.50 from the $37,563.75 requested, and awarded only $335.42 of the $3,959.85 in requested costs. At the same time, the court denied various post-trial motions filed by defendants Orkin and Century 21. This appeal followed.

A pivotal issue before us is applicability of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 261 et seq.), under which both defendant Orkin and defendant Century 21 were found liable. Section 2 of the Act (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 262) provides:

"Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact or the use or employment of any practice described in section 2 of the `Uniform Deceptive Trade Practices Act,' approved August 5, 1965, in the conduct of any trade or commerce are hereby declared unlawful whether any person has in fact been misled, deceived or damaged thereby. * * *"

• 1, 2 Persons harmed by a violation of this statute have a private right of action for damages, or any other relief deemed proper by the court. (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 270a.) In reviewing such private rights of action, we are guided by the terms of section 11a of the statute (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 271a), which expressly provides, "This Act shall be liberally construed to effect the purposes thereof." As this court has previously ruled, "we perceive a clear mandate from the Illinois legislature that the courts of this State are to utilize the Consumer Fraud Act to the utmost degree in eradicating all forms of deceptive and unfair business practices and to grant appropriate remedies to defrauded consumers." American Buyers Club v. Honecker (1977), 46 Ill. App.3d 252, 257, 361 N.E.2d 1370, 1374.

Defendant Orkin contends that its conduct was not of "the character and magnitude" proscribed by the Act. We disagree. The evidence showed that the LeMays purchased the home in question in 1973. Shortly after moving in, the LeMays discovered an infestation of termites. Defendant Orkin was called to inspect the home and perform termite treatments. The LeMays also entered into a contract with Orkin, under which Orkin agreed to reinspect and re-treat the home as necessary and to pay up to $100,000 for any subsequent termite damage. Termite problems nevertheless persisted. Orkin re-treated the home in 1975 and again in 1979. Orkin admits that these re-treatments would not have been made unless the house had termites. The LeMays, however, were apparently never told about the continued infestation.

The LeMays placed their home on the market in 1980, after Mr. LeMay was notified he was being transferred by his employer to another State. The LeMays listed the home with defendant Century 21. Doris Hock of Century 21 was the listing agent. During this same period, plaintiffs, the Warrens, had begun to look for what was to be their first home. The Warrens were represented by Millie Sedgwick, a real estate agent associated with Bud Sullivan Realty. The Warrens first viewed the LeMays home in January of 1981. They liked the home and submitted an offer for it, but indicated that they had to obtain VA financing. Although the Warrens' initial offer was refused, the LeMays accepted a subsequent offer from them, and on February 21, 1981, the Warrens and the LeMays signed a sales agreement specifying a purchase price of $41,000.

At about the same time the sales agreement was signed, Mrs. LeMay observed termite activity in the house. Specifically, she noticed termites surface through a "pinhole" in a board covering the main support beam for the upper story of the house. The termites surfaced in an area over the kitchen. Upon observing this activity, Mrs. LeMay telephoned Doris Hock of defendant Century 21 to advise her that the house had termites. LeMay also reported the termite activity to defendant Orkin, and on three occasions in February 1981, Orkin treated the premises by drilling and applying chemicals. The last such treatment was made by defendant Orkin on February 26, 1981.

As previously noted, the VA financing sought by plaintiffs for the home required a termite inspection report to be paid for by the sellers. On the suggestion of Doris Hock, the real estate agent for the LeMays, the Warrens agreed to have this report prepared by defendant Orkin. On February 27, 1981, a representative for Orkin returned to the home to conduct the necessary inspection. This was the fourth visit to the home by an Orkin representative that month.

Testimony by Elmer Garee, district manager for defendant Orkin during the period at issue, established that Orkin was familiar with VA termite inspection reports and had company policies governing their preparation. The Orkin representative who actually conducted the inspection prepared a two-page report. Page one of the report consisted of a VA form. On that form the inspector indicated that the house had been treated in 1973 and was re-treated on February 26, 1981. Under this notation he wrote "Guarantee #0574388 LR." No mention was made of the two additional re-treatments performed in February of 1981, or of those done in 1975 and 1979. The inspector also checked the box on the form stating, "No visible evidence of infestation from wood destroying insects was observed," ignoring the "pinhole" reported by Mrs. LeMay.

Page two of Orkin's report consisted of a form used by Orkin in its daily operations. This form was not required by the VA. On it, the Orkin inspector drew an outline of the house and wrote the letter T, which he circled, at two points on that outline. The key on the base of the form explained only that T meant "Termite Activity." No further definition of that term is given.

After completing his report, the Orkin representative gave both pages of it to Mrs. LeMay. LeMay gave it to Doris Hock who, in turn, forwarded it to the office of Century 21. The Warrens were never shown page two of the report. The Town & Country Mortgage Company, which handled financing for the Warrens, received only page one of the report and had no record of page two in its files. The VA, which guaranteed the Warren's mortgage, likewise received only page one.

There is no dispute that the Warrens, Town & Country Mortgage Company and the VA each believed, relying on page one of Orkin's report, that the house was free of termite activity or damage. On the basis of this mistaken belief, the Warren's loan was approved, and they closed on the sale of the house in April of 1981. In July or August of the following year, however, the Warrens discovered that their home was, in fact, infested with termites. Subsequent investigation revealed extensive damage to load bearing beams in their home, and the Warrens were advised by a contractor that they should vacate the premises, which they did. Expert testimony at trial established that this damage had begun well before the Warrens closed the sale in 1981. A contractor called by plaintiffs stated that the house was now beyond repair. Although another contractor, called by defendants, indicated that repair was possible, that contractor estimated repair costs to be approximately $26,000 and admitted on cross-examination that the expense might be greater.

• 3 Based upon the foregoing evidence, we hold that plaintiffs have established a claim against defendant Orkin for violation of section 2 of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 262). All re-treatments of the home performed by Orkin and any termite activity or damage its inspector observed were "material facts" which should have been included in the report it was responsible for preparing. Orkin's failure to disclose on page one of the VA form the re-treatments it performed in 1975 and 1979, two of the three re-treatments it made in February of 1981, around the time of the sale, or the visible evidence of termite activity and damage then present constituted the "misrepresentation or the concealment, suppression or omission" of these material facts. Orkin obviously intended for plaintiffs and the VA to rely on its misrepresentation, concealment, suppression or omission of these material facts. In addition, the misrepresentation, concealment, suppression or omission of these material facts was made by Orkin in the conduct of "trade and commerce." As defined by section 1(f) of the Act (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 261(f)), the terms "trade" and "commerce" include the "distribution of any services * * * or thing of value wherever situated, and shall include any trade or commerce directly or indirectly affecting the people of this State."

• 4 Defendant Orkin raises several arguments in an attempt to refute this analysis. First, it claims that the trial court erred in permitting plaintiffs to amend their complaint after the close of evidence to include allegations regarding defendant Orkin's failure to disclose all but one of the multiple re-treatments for termites performed on the home. This claim is without merit. Prior to the challenged amendment, plaintiffs' complaint alleged only that defendant Orkin had violated the statute by misrepresenting that the home was free of termite activity and damage, but this allegation would have been sufficient in itself to support plaintiffs' claim against Orkin. The amendment was therefore not determinative of the outcome. Moreover, while the additional allegations were formally made after the close of the evidence, the question of multiple re-treatments was clearly raised and argued in the course of the litigation, and the amendment was made before the case was sent to the jury. Section 2-616(a) of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-616(a)) authorizes amendments of this kind at any time before final judgment "on just and reasonable terms." To be sure, this was the sixth amendment made by plaintiffs, and we believe as a general matter that repeated and piecemeal changes in the pleadings should be avoided whenever possible. Nevertheless, amendments to conform the complaint to the evidence should be granted liberally, and any doubt should be resolved in favor of the amendment. (Lawson v. Hill (1979), 77 Ill. App.3d 835, 845, 396 N.E.2d 617, 625.) Because we do not see, and defendant Orkin never adequately explains, how the amendment challenged here resulted in any prejudice to its case, we conclude that the trial court was clearly within its discretion in permitting the amendment to be made.

• 5 Defendant Orkin next contends that it cannot be held liable under the statute because it did not intend to deceive plaintiffs. This, however, is no defense. Under the statute, state of mind is immaterial, and a defendant need not be motivated by an intent to deceive. (Peterson, Tort Claims By Real Estate Purchasers Against Sellers & Brokers, 1983 S.I.U.L.J. 161, 178.) As Justice Carter of this court wrote eight years ago, a violator's good or bad faith is not important. (American Buyers Club v. Honecker (1977), 46 Ill. App.3d 252, 259, 361 N.E.2d 1370, 1374-75.) Even innocent misrepresentations may be actionable. (Duhl v. Nash Realty, Inc. (1981), 102 Ill. App.3d 483, 495, 429 N.E.2d 1267, 1277.) By its own terms, the statute requires only that a violator intend for a purchaser to rely on his acts or omissions. A party is considered to intend the necessary consequences of his own acts or conduct. (Posner v. Davis (1979), 76 Ill. App.3d 638, 643, 395 N.E.2d 133, 137.) Because the sole purpose for the requested report in this case was to assist plaintiffs in securing VA financing, the very fact that defendant Orkin submitted that report evinces the requisite intent.

A third argument raised by defendant Orkin is that liability cannot be imposed under the statute for a single transaction. To support its position, defendant Orkin cites Grass v. Homann (1984), 130 Ill. App.3d 874, 474 N.E.2d 711. There, however, the fourth district merely held that an admittedly erroneous termite inspection report did not violate the Consumer Fraud and Deceptive Business Practices Act because: (1) the plaintiff home purchasers had themselves hired the termite inspection company and could therefore proceed against it directly for simple breach of contract; (2) the termite inspection company was only "tangentially involved" in the purchase of the home; and (3) one of the misrepresentations in the report, that the inspection ...


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