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07/10/97 JEANNE JOHNSON v. MAKI AND ASSOCIATES

July 10, 1997

JEANNE JOHNSON, PLAINTIFF-APPELLANT,
v.
MAKI AND ASSOCIATES, INC., AND LARRY DESMOND, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Lake County. No. 95--L--2045. Honorable Jane Drew Waller, Judge, Presiding.

Released for Publication August 8, 1997.

Presiding Justice Geiger delivered the opinion of the court. Rathje and Hutchinson, JJ., concur.

The opinion of the court was delivered by: Geiger

The Honorable Justice GEIGER delivered the opinion of the court:

The plaintiff, Jeanne Johnson, appeals from the April 3, 1996, order of the circuit court of Lake County dismissing her complaint for breach of fiduciary duty against the defendants, Maki & Associates, Inc., and Larry Desmond (collectively referred to as Maki). The trial court dismissed her complaint after finding that she had signed a valid release which relinquished all her claims against Maki. On appeal, she argues (1) that the trial court erred in finding that the release was valid; and (2) that the trial court erred in finding that the release had not been procured by fraud. We reverse and remand.

Our review of the record reveals the following facts. On October 28, 1994, the plaintiff executed a listing agreement with Maki to sell her home in Beach Park. On December 31, 1994, the plaintiff entered into a real estate contract with Tim Ganley and Virginia Phillips (the buyers) to sell her home. The buyers deposited $2,000 in earnest money which was held by Maki in an escrow account. The real estate contract provided that Maki would not disburse the earnest money unless it was provided a written demand to do so by both the buyers and the seller.

Prior to closing, the plaintiff and the buyers could not reach agreement over which repairs the plaintiff would make to the home. On January 13, 1995, the buyers declared that they would not go through with the purchase and requested the immediate return of the earnest money. On May 25, 1995, after the plaintiff had refused to return the earnest money, the buyers filed suit. After several months of litigation, the plaintiff agreed to return the earnest money, and the buyers dismissed their suit.

On October 13, 1995, the plaintiff sent a letter to Maki directing it to return the earnest money to the buyers. Maki refused, demanding that the plaintiff sign a document entitled "Cancellation Agreement For Contract to Purchase Real Estate" (the cancellation agreement) before it would return the earnest money. The cancellation agreement contained a general release provision which provided as follows:

"The Buyer and Seller shall indemnify, save, and hold harmless Broker and Broker's agents from all claims, litigations, judgments, and costs arising from the cancellation of the Contract."

On October 13, 1995, the plaintiff signed the cancellation agreement.

On December 29, 1995, the plaintiff filed suit against Maki alleging that Maki had breached its fiduciary duty to her (1) by making false misrepresentations regarding the buyers' ability to obtain financing; and (2) by misrepresenting the operation and effect of the home inspection contingency. The plaintiff also alleged that Maki had breached its duty of loyalty to her by instructing her to have her tenants vacate the home even though Maki should have known that the closing would not occur. The plaintiff alleged that, as a result of Maki's conduct, she lost rents, incurred unnecessary repair and inspection expenses, and had to pay attorney fees in connection with the aborted sale.

On February 28, 1996, Maki filed a motion to dismiss pursuant to section 2--619 of the Code of Civil Procedure (the Code) (735 ILCS 5/2--619 (West 1994)). Maki argued that the plaintiff's action was barred by the release contained in the cancellation agreement. The plaintiff responded that the release was invalid because it was not supported by consideration and because it had been procured through fraud.

On April 3, 1996, the trial court granted Maki's motion and dismissed the plaintiff's action with prejudice. The trial court found that the release in the cancellation agreement was valid and that the plaintiff had not demonstrated that the release was otherwise unenforceable. The plaintiff filed a timely notice of appeal.

On appeal, the plaintiff argues that the trial court erred in granting Maki's motion to dismiss. The plaintiff argues that the release, like any other contract, requires consideration to be enforceable. She contends that, because she received no consideration from Maki in return for her promise ...


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