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Peter J. Hartmann Co. v. Capital Bank and Trust Co.

May 15, 1998

PETER J. HARTMANN CO., AN ILLINOIS CORPORATION, PLAINTIFF,
v.
CAPITAL BANK AND TRUST COMPANY, AS TRUSTEE UNDER TRUST AGREEMENT NO. 1975, ET AL., DEFENDANTS. PARKVIEW PLAZA ASSOCIATES, INC., STEPHEN D. KORSHAK, ROBERT NEIL BEAULIEU, DANIEL R. PONTARELLI, ANTHONY E. MINISCALCO, AND EMIL ROSS, INC., COUNTER-PLAINTIFFS/APPELLANTS,
v.
PETER J. HARTMANN CO., COUNTER-DEFENDANT/APPELLEE.



Appeal from the Circuit Court of Cook County.Honorable David Lichtenstein, judge Presiding.

The opinion of the court was delivered by: Justice Hartman

Counterplaintiffs Parkview Plaza Associates, Inc. (Parkview), Stephen D. Korshak, Robert Neil Beaulieu, Daniel R. Pontarelli, Anthony E. Miniscalco (individual appellants), and Emil Ross, Inc. (Ross) appeal the dismissal of Parkview's fifth amended counterclaim against counterdefendant, Peter J. Hartmann Co. (Hartmann), and the dismissal of the remaining counterplaintiffs from the countersuit, contending that Parkview's fifth amended counterclaim stated a cause of action for common law fraud, a violation of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 (West 1994)) (Consumer Fraud Act), and negligent misrepresentation. They also assert that they had standing to bring a counterclaim against Hartmann.

From the fifth amended counterclaim, the following factual allegations appear. In September 1989, Hartmann was engaged in the business of providing, installing, testing, repairing, removing, and disposing of underground storage tanks, and cleaning up environmental contaminants. On or about November 24, 1989, Hartmann contracted with Ross, a general contractor, to perform the following services on property owned by counterclaimants (subject property), except Ross: (1) excavate and dispose of four underground storage tanks; (2) obtain an analysis of the surrounding soil; and (3), if necessary, remove contaminated soil from a former gasoline station located at 2700 W. Irving Park Road in Chicago. Individual counterplaintiffs contracted to purchase the subject property. Beaulieu and Korshak were Illinois licensed attorneys at law. Pontarelli and Miniscalco owned Ross.

Parkview asserts that prior to September 1989, Hartmann's agent John Corkill (J. Corkill), learned that Ross was seeking an excavator/subcontractor to remove certain underground storage tanks from the subject property, and that Ross could not enter into such a subcontract without Parkview's approval. In September 1989, J. Corkill introduced Hartmann to Parkview representing that Hartmann possessed expertise to remove the underground tanks, analyze the surrounding soil for any contamination, and cleanup any contaminated soil. Parkview, through its president, Beaulieu, responded to Hartmann's solicitation by explaining to J. Corkill that Parkview was presently negotiating to purchase the subject property for commercial development and was concerned about several old petroleum storage tanks buried in the ground, as well as the extent of contamination in the soil due to possible leaking of the old tanks. Beaulieu allegedly told J. Corkill that Parkview: was negotiating with another tank removal company to determine the cost of clean-up; was in need of an expert to advise it as to the total cost of tank removal and soil clean-up so that the purchase price of the realty could be determined; and was presently considering termination of the property purchase and development if the cost of soil contamination removal was too high.

The instant pleading claims further that during the negotiations, Hartmann, through J. Corkill, represented to Parkview, through Beaulieu, that Hartmann was fully capable of evaluating the extent of underground soil contamination on the subject realty; its engineers and other employees were at that time experienced in analyzing contaminated soil problems like the one then present in the subject realty; its engineers and other employees could provide all the knowledge, expertise, experience and manpower necessary to determine the amount of contaminated soil; it could establish an accurate price or cost for tank removal, contaminated soil clean-up and disposal prior to Parkview's making any final commitment to purchase the subject realty; its evaluation will be accurate enough for Parkview to pre-determine the cost of any required clean-up of contaminated soil in conjunction with tank removal; it had reviewed soil tests received from Illinois Drilling & Testing, Inc. (which previously secured samples from the subject property) and determined that, to establish clean-up costs, no further soil testing would be needed prior to excavation; it had enough information by November 1989 (from said soil tests, site inspection and prior knowledge of the site) to conclude that the amount of contaminated soil then present on site could be cleaned up with less than one week's work, and that the soil contamination then present on site could be cleaned up for less the $10,000, including tank removal and disposal.

The fifth amended counterclaim then asserts that the foregoing statements were known by Hartmann through J. Corkill to be false when he made them, or they were made with reckless disregard of whether they were true or false and were in fact false and untrue in that Hartmann lacked the capability in 1989 to accomplish the type of precise pre-excavation soil analysis and evaluation which Corkill described; and/or the clean-up costs of subterranean soil contamination then present in said realty was more than twenty times greater than Hartmann claimed was there by virtue of its analysis of the property.

Parkview next alleged that these statements were made by Hartmann through J. Corkill for the purpose and with the intent of deceiving and defrauding Parkview and, in reliance on them, to induce it to refrain from terminating the purchase of said realty and instead continue the plans to purchase and develop said realty; and to induce the authorized execution of a contract between Hartmann and Ross for tank removal and soil clean-up from which Hartmann would benefit. Parkview next claimed the right of reasonable reliance on the statements made by Hartmann because Hartmann held itself out to be an expert in tank removal/soil clean-up, an expert advisor to clients on the extent of soil contamination, and an expert on the cost of clean-up prior to excavation.

Further allegations assert that Parkview believed the statements made by Hartmann were true; Parkview relied on them and was induced by them to refrain from exercising its option to terminate the real estate purchase contract and instead proceed with plans to purchase said realty and the related construction efforts; and Parkview thereby was induced by Hartmann to authorize general contractor Ross to execute an agreement with Hartmann for a sum less than $10,000 for removal of tanks and contaminated soil clean-up. Ross and Hartmann thereafter entered into a written agreement for tank removal and contaminated soil clean-up on November 24, 1989. After execution of the agreement with Ross to remove tanks and clean-up soil for $9,700, Hartmann disclosed that the actual cost of clean-up and tank removal would exceed $10,000. Hartmann is alleged to have known that the prospect of clean-up costs exceeding the $9,700 contract price was likely to result in Parkview terminating the real estate purchase and eliminating Hartmann's subcontract.

From December 1989 through July 1990, Parkview claims, through its agents, J. Corkill and Gary Corkill (G. Corkill), intending to further deceive and defraud it to protect its status as subcontractor, represented and stated that Hartmann, by virtue of Illinois E.P.A. Superfund coverage, had limited Parkview's exposure to a maximum of $10,000 and that any "extra" costs of clean-up would be paid by the Superfund; Hartmann had qualified the clean-up site for Illinois E.P.A. Superfund reimbursement; all required government permits and permission, and other paperwork needed to meet Illinois E.P.A. requirements for reimbursement, were Hartmann's responsibility and would be taken care of by Hartmann; once work began in earnest, tank removal and soil clean-up would be completed in a short period of time; and delays in work completion from December 1989 to June 1990 were weather related, or otherwise were not Hartmann's fault. The foregoing statements were known by Hartmann through its agents, the Corkills, to be false when made, or were made by them in reckless disregard of whether they were true or false; they were in fact false and untrue in that Hartmann failed to secure any government permits, permission or other paperwork necessary to qualify the site for Illinois E.P.A. Superfund reimbursement, it never qualified the site for Illinois E.P.A. Superfund reimbursement, it did nothing to trigger Illinois E.P.A. Superfund reimbursement for any clean-up costs in excess of $10,000, its work effort never reached a point where work would be completed in a short period of time, and delay of completion of work was not weather related, and was in fact due to Hartmann's deliberate stalling.

After Ross and Hartmann subcontracted for Hartmann's removal of four underground storage tanks and contaminated soil from the Irving Park property, Hartmann almost immediately began work on the environmental cleanup, and periodically sent requests for payment to Ross, all of which were ignored. On January 15, 1990, Hartmann requested payment of $4,500. On February 5, 1990, Hartmann sent a bill for $1,820. On July 31, 1990, Hartmann issued an invoice for $2,700. In its last statement, dated August 12, 1990, Hartmann requested the balance, $9,020. Hartmann subsequently removed its employees and equipment from the Irving Park property, filed a claim for a mechanic's lien, and issued a bill calculating the total amount due at $279,824.35.

Hartmann also filed a complaint to foreclose the mechanic's lien and for breach of contract against Parkview, Ross, the four individual counterplaintiffs, and other interested parties. Hartmann alleged that during its performance of the contract, Ross asked Hartmann to perform additional work on the Irving Park property, and agreed to pay for the extra expenses. Hartmann subsequently filed three more mechanic's lien notices against the property's title, each in the amount of $279,824.35, which Hartmann alleged it was owed under the subcontract.

Several of the defendants responded to the complaint by filing a counterclaim against Hartmann most of which is detailed above as part of the fifth amended counterclaim. They sought damages in the amount of $450,000.

The circuit court dismissed the counterclaim pursuant to Hartmann's motion, but granted leave to file an amended counterclaim. Hartmann successfully moved to dismiss Count II of the amended counterclaim, which alleged negligent misrepresentation, and filed an answer to Count I, which asserted a claim for fraud. The four individual counterplaintiffs moved for summary judgment on Hartmann's complaint, arguing that they could not be held personally liable and were not proper parties to the suit. Hartmann moved for summary judgment on the remaining count of counterplaintiffs' amended counterclaim.

The circuit court denied the summary judgment motions, then transferred the case to the law division for a jury trial. The law court struck the amended counterclaim pursuant to section 2-612 of the Code of Civil Procedure (735 ILCS 5/2-612 (West 1994)) (section 2-612). Counterplaintiffs filed a three-count, 40-page, 87-paragraph second amended counterclaim, which the court also struck. Counterplaintiffs filed a third amended counterclaim, alleging that Hartmann committed common law fraud, violated the Consumer Fraud Act, and made negligent misrepresentations. The circuit court again struck this counterclaim pursuant to ...


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