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03/09/89 Dearlove Cove Condominiums v. Kin Construction Company

March 9, 1989

DEARLOVE COVE CONDOMINIUMS ET AL., PLAINTIFFS-APPELLEES

v.

KIN CONSTRUCTION COMPANY, INC., DEFENDANT-APPELLANT (JOSADA BUILDERS, INC., ET AL., DEFENDANTS)



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FOURTH DIVISION

535 N.E.2d 1141, 180 Ill. App. 3d 437, 129 Ill. Dec. 376 1989.IL.298

Appeal from the Circuit Court of Cook County; the Hon. Harold A. Siegan, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE JIGANTI delivered the opinion of the court. LINN and McMORROW, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE JIGANTI

This appeal involves a question of whether a complaint alleging a breach of implied warranty of habitability was time barred by the limitations period dealing with building-construction actions. Ill. Rev. Stat. 1983, ch. 110, par. 13-214.

On April 26, 1983, the plaintiffs, Dearlove Cove Condominiums, an Illinois entity, and owners of various condominium units in the Dearlove Cove Condominium project, filed a complaint against Josada Builders, Inc., the general contractor for Dearlove Cove Condominiums, and others to recover damages for faults and defects that appeared in the construction of a condominium development project. On April 1, 1985, the plaintiffs discovered that Josada Builders, not a party to this appeal, was insolvent. On July 21, 1986, the plaintiffs filed an amended complaint adding several defendants, including Kin Construction Company, a subcontractor who performed work under a contract with Josada Builders. in their amended complaint, the plaintiffs sought damages on the basis that Kin Construction breached its implied warranty of habitability. Kin moved to dismiss the complaint on the ground that the plaintiffs' action was time barred by the building-construction statute of limitations. (Ill. Rev. Stat. 1983, ch. 110, par. 13-214.) The motion was denied. Kin appeals pursuant to Supreme Court Rule 308 (107 Ill. 2d R. 308).

Section 13 -- 214 provides, in pertinent part:

"(a) Actions based upon tort, contract or otherwise 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 shall be commenced within 2 years from the time the person bringing an action, or his or her privity, knew or should reasonably have known of such act or omission.

(b) 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 subsection (a) of this Section." Ill. Rev. Stat. 1983, ch. 110, pars. 13-214(a), (b).

Kin argues on appeal that under section 13 -- 214(a) the two-year statute of limitations was triggered when the plaintiffs knew or should have known of the act or omission of Kin which caused the fault or defects. According to Kin, the plaintiffs knew of the act or omission at least as early as April 26, 1983, the date the original complaint was filed against Josada Builders, and therefore, the plaintiffs' complaint against Kin, which was filed July 21, 1986, over three years later, was untimely.

The plaintiffs maintain that their complaint against Kin was timely because it was based on Minton v. The Richards Group of Chicago (1983), 116 Ill. App. 3d 852, 452 N.E.2d 835. Minton held that where the purchaser of a newly constructed residential property has no recourse against the general contractor by reason of insolvency, and allegedly sustained loss due to defects caused by the subcontractor, the implied warranty of habitability would extend to the subcontractors who participated in the construction of the property. (116 Ill. App. 3d at 855, 452 N.E.2d at 837.) Minton followed the reasoning of Redarowicz v. Ohlendorf (1982), 92 Ill. 2d 171, 441 N.E.2d 324, in which the supreme court extended the implied warranty of habitability, as first adopted in Petersen v. Hubschman Construction Co. (1979), 76 Ill. 2d 31, 389 N.E.2d 1154, to the benefit of subsequent purchasers of newly constructed residential properties despite the lack of privity between the parties. Relying on the strong public policy enunciated in Redarowicz to protect innocent purchasers of newly constructed residential property, the court in Minton extended the implied warranty of habitability to subcontractors when the purchaser has no recourse against the general contractor due to insolvency, despite the lack of privity of contract between the purchaser and the subcontractors.

Although Minton did not involve a statute of limitations question, the plaintiffs argue that, because under Minton their cause of action against Kin did not arise until Josada Builders was insolvent, the statute of limitations under section 13 -- 214(a) is triggered at the time the plaintiffs knew or should have known of Josada Builders' insolvency. The plaintiffs conclude that because they knew of Josada's insolvency on April 1, 1985, the filing of their complaint against Kin Construction on July 21, 1986, 15 months later, was timely under the two-year limitations period of section 13 -- 214(a).

Kin insists that under the clear wording of section 13 -- 214(a), the limitations period is triggered at the time that the plaintiffs knew or should reasonably have known of the act or omission of Kin which resulted in faulty or defective construction. Thus, according to Kin, to hold that the limitations period is triggered when the plaintiff had a cause of action against the subcontractor because of the insolvency of the general contractor would be contrary to the unambiguous language of section 13 -- 214. Kin further argues that the court has no authority to engraft an exception upon a statute of limitations. Finally, Kin argues that to allow the statute to be triggered by the insolvency of the general contractor would be contrary ...


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