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03/27/95 RICHARD GENENDER v. RICHARD ERLICH

March 27, 1995

RICHARD GENENDER, AND CARLA GENENDER, PLAINTIFFS-APPELLANTS,
v.
RICHARD ERLICH, ROBERT A. LEVIN, AND ERL DEVELOPMENT, DEFENDANTS-APPELLEES.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. HONORABLE EDWIN BERMAN, JUDGE PRESIDING.

Rehearing Denied June 21, 1995. Released for Publication July 10, 1995.

Presiding Justice Campbell delivered the opinion of the court: Wolfson, J., and Braden, J., concur.

The opinion of the court was delivered by: Campbell

PRESIDING JUSTICE CAMPBELL delivered the opinion of the court:

Plaintiffs, Richard and Carla Genender, appeal an order of the circuit court of Cook County, granting partial summary judgment in favor of Richard Erlich (Erlich), Robert A. Levin (Levin) and ERL Development (cumulatively, defendants), in an action by plaintiffs for rescission of a contract for the sale of real estate. On appeal, plaintiffs contend that the trial court erred in dismissing counts I, II and III of their first amended complaint. For the following reasons, we reverse the judgment of the trial court.

The record reveals the following relevant facts. On or about September 13, 1989, plaintiffs visited a house for sale by defendants, real estate developers, located at 1824 North Fremont Street, Chicago. At that time, the property was still under construction, butwould be improved with a two-story, single family house, a garage and outside decks. The front third of the house is a renovated structure, while the rear two thirds of the house is brand new construction. The garage is also new construction.

Plaintiffs examined a written brochure obtained from Levin, and a specification sheet containing information about the property. Later, plaintiffs reviewed the stamped plans and specifications containing the details of the construction, and discussed the property with Levin. On November 13, 1989, plaintiffs signed a contract to purchase the house for $675,000. Plaintiffs closed the sale of the property on December 15, 1989, and moved into the house on January 26, 1990.

On June 12, 1990, plaintiffs filed a six count complaint *fn1 seeking rescission of a contract for the sale of the house, (counts I - III), and damages for breach of contract and consumer fraud (counts IV - VI). In their first amended complaint, filed on February 28, 1991, plaintiffs allege that shortly after moving into the house, they discovered numerous structural and other defects, which they allege violated the Chicago Building Code, and are contrary to the offering sheet, stamped plans and specifications for the house. Plaintiffs listed numerous examples of alleged defects and their results, including: improperly supported floors and ceilings; water infiltration and flooding; sewage back-up: toxic and other odor leaks; disintegrating exterior material; and improper heating, ventilation and cooling. Plaintiffs also alleged that the garage is incorrectly constructed, as evidenced by water infiltration, and is located over plaintiff's property line.

Plaintiffs requested rescission of the contract for sale of the house on the theories of: common law fraud (count I); substantial non-performance of contract terms (count II); and statutory consumer fraud (count III). Plaintiffs further requested damages for: breach of contract and express contractual warranties (count IV); breach of implied warranty of habitability (count V); statutory consumer fraud (second count V); and common law consumer fraud (count VI.) In plaintiffs' count for breach of the implied warranty of habitability, plaintiffs request alternatively an award of judgment in the full amount of the cost of repairs, if repairs are possible, and if not, an order that the property be sold to the highest bidder, and a judgmentamount equal to the $675,000 plaintiffs paid for the house, plus expenses and damages.

On November 18, 1992, defendants filed a motion for partial summary judgment on count V ofplaintiffs' amended complaint for violation of the implied warranty of habitability. Defendants argued that plaintiffs are precluded from obtaining a rescission of the contract for sale of the property or invoking the implied warranty of habitability on the grounds that the plaintiffs have continuously occupied the property since January 1990, and have taken only minimal steps to repair or remedy the structural or plumbing defects of which they complain. Defendants further argued that plaintiffs failed to identify an expert witness.

Plaintiffs filed a response, attaching affidavits, letters, and excerpts of deposition testimony. Plaintiffs argued that defendants' motion failed to negate all of the allegations set forth in count V of plaintiffs' complaint, failed to provide supporting affidavits, and that failure to identify expert witnesses is not grounds for summary judgment. Plaintiffs attached the affidavit of Lloyd E. Wevang, a consulting structural engineer, who stated that he observed problems with the house that merit further investigation, which would involve partial removal of some of the architectural finishes to expose structural elements and their connections in questions.

Plaintiffs also attached the affidavit of Patrick Fitzgerald, a registered professional architect. Fitzgerald stated that he examined the house and determined that a substantial amount of remedial work is necessary to "put the house into what we would consider acceptable condition." Fitzgerald stated that a complete specification would require removal of portions of drywall, because there are no "as built" drawings. Fitzgerald further stated that it is necessary to entirely replace the stucco material on the outside of the house.

Defendants filed a reply brief in support of their motion, disputing plaintiffs' response. Defendants argued that plaintiffs failed to distinguish authority which requires that plaintiffs move out of the house in order to seek rescission, and that the affidavit of the architect did not support the allegation of serious structural damage.

Following a hearing on January 27, 1993, the trial court determined that the plaintiffs could not claim rescission where they have already lived in the house ...


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