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Board of Directors of Bloomfield Club Recreation Association v. Hoffman Group Inc.

May 20, 1999

THE BOARD OF DIRECTORS OF BLOOMFIELD CLUB RECREATION ASSOCIATION, AN ILLINOIS CONDOMINIUM ASSOCIATION, APPELLANT,
v.
THE HOFFMAN GROUP, INC., A DELAWARE CORPORATION, ET AL., APPELLEES.



The opinion of the court was delivered by: Chief Justice Freeman

Agenda 6-January 1999.

The Board of Directors of the Bloomfield Club Recreation Association (the Association) filed a complaint in the circuit court of Du Page County against defendants, claiming in count I that defendants breached an implied warranty of habitability with respect to a certain commonly held facility within their residential development. The circuit court dismissed count I of the complaint with prejudice pursuant to section 2-615 of the Code of Civil Procedure (the Code) (735 ILCS 5/2-615 (West 1996)). The circuit court subsequently denied the Association's motion to reconsider the dismissal of count I and denied the Association leave to file an amended complaint. Consequently, the circuit court ordered its ruling dismissing count I final and appealable pursuant to Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)) and granted the Association's motion to stay the proceedings on the remaining count II of its complaint pending appeal. The appellate court affirmed the order of the circuit court. We allowed the Association's petition for leave to appeal (166 Ill. 2d R. 315) and now affirm the appellate court.

BACKGROUND

Bloomfield Club is a residential development in Du Page County that is comprised of single-family homes, town homes, common areas, and common amenities. The Association is the governing body of the Bloomfield Club homeowners and is responsible for managing, operating, and maintaining all of the common areas and amenities within the development. Defendants, The Hoffman Group, Inc. (Hoffman), and Ahmanson Developments, Inc. (Ahmanson), created the development and constructed and sold all of the residential units and common areas in Bloomfield Club.

Defendants also created the declaration of covenants agreed to by each homeowner, which, inter alia, grants each owner a right of easement for access to and use of all the common areas of the development. Included among the common areas governed by the Association, and central to the controversy at bar, is the development's clubhouse. It is a freestanding building that includes a library, a hospitality room, an exercise room, an indoor pool, and restrooms. Maintenance, taxes, and insurance for the clubhouse are assessed proportionally to each homeowner.

On February 29, 1996, the Association filed a two-count complaint against defendants. Count I of the complaint alleged that, upon selling the clubhouse to the Association, defendants had impliedly warranted its suitability for the uses and purposes for which it was intended. Count I further alleged that, in violation of this implied warranty, defendants developed, constructed, and sold the clubhouse with deficient design, workmanship, and materials. Specifically, the Association alleged that the clubhouse was defective due to: (1) the installation of substandard roofing materials; (2) the installation of an inadequate number of roofing nails; (3) deficient roofing ventilation; and (4) the improper installation of a heating/ventilation unit in the pool area. Count II of the complaint, alleging breach of fiduciary duty, remains alive in the circuit court and is not at issue in the present appeal.

In May 1996, Ahmanson and Hoffman separately moved to dismiss the Association's complaint pursuant to section 2-615 of the Code. 735 ILCS 5/2-615 (West 1996). Defendants argued that the implied warranty of habitability does not apply to unoccupied, nonresidential construction, such as the clubhouse, but only to occupied residences. In its response, the Association countered that the implied warranty of habitability has been extended to apply to common areas within residential property, such as the clubhouse. The circuit court subsequently granted defendants' motion and dismissed count I of the Association's complaint with prejudice.

On November 1, 1996, the Association filed a motion to modify or reconsider the circuit court's order dismissing its complaint. The circuit court entered an order continuing the Association's motion and allowing it to file a proposed amended complaint. The Association timely filed its proposed amended complaint, which, in addition to the allegations contained in its original complaint, included the following allegations: (1) that the homeowners became property owners "with the full and reasonable expectation that they would be able to use such facilities as their own and that such facilities would be or would have been properly constructed"; (2) that the clubhouse contained rooms and facilities that could be found in a home; and (3) that the homeowners had used the clubhouse facilities as if they were located within the walls of their own homes. After considering the proposed amended complaint and hearing argument, the circuit court denied the Association's motion to reconsider and did not grant it leave to file its amended complaint. The appellate court affirmed the judgment of the circuit court (295 Ill. App. 3d 279), and we granted leave to appeal.

ANALYSIS

In the present appeal, the Association initially argues that the circuit court erred in finding that count I of its complaint failed to state a cause of action for breach of an implied warranty of habitability. Initially, we observe that a section 2-615 motion to dismiss challenges only the legal sufficiency of a complaint and alleges only defects on the face of the complaint. Vernon v. Schuster, 179 Ill. 2d 338, 344 (1997). The critical inquiry in deciding upon a section 2-615 motion to dismiss is whether the allegations of the complaint, when considered in a light most favorable to the plaintiff, are sufficient to state a cause of action upon which relief can be granted. Vernon, 179 Ill. 2d at 344, citing Bryson v. News America Publications, Inc., 174 Ill. 2d 77, 86-87 (1996), and Urbaitis v. Commonwealth Edison, 143 Ill. 2d 458, 475 (1991). A cause of action will not be dismissed on the pleadings unless it clearly appears that the plaintiff cannot prove any set of facts that will entitle it to relief. Vernon, 179 Ill. 2d at 344, citing Gouge v. Central Illinois Public Service Co., 144 Ill. 2d 535, 542 (1991). Accordingly, in reviewing the circuit court's ruling on defendants' section 2-615 motion to dismiss, we must apply the de novo standard of review. Doe v. McKay, 183 Ill. 2d 272, 274 (1998).

Addressing the merits, we note that the doctrine of implied warranty of habitability is a creature of the judiciary that is narrowly tailored to protect residential dwellers from latent defects that interfere with the habitability of their residences. See VonHoldt v. Barba & Barba Construction, Inc., 175 Ill. 2d 426, 430 (1997); Glasoe v. Trinkle, 107 Ill. 2d 1, 13 (1985); Petersen v. Hubschman Construction Co., 76 Ill. 2d 31, 38 (1979). The doctrine was originally designed to help equalize the imbalance that exists in modern landlord-tenant relationships, where tenants have far less bargaining power and capacity to inspect and maintain premises than landlords. See A. Fusco, N. Collins & J. Birnbaum, Damages for Breach of the Implied Warranty of Habitability in Illinois-A Realistic Approach, 55 Chi.-Kent L. Rev. 337 (1979). The seminal case on this subject is Jack Spring, Inc. v. Little, 50 Ill. 2d 351 (1972), in which this court rejected the doctrine of caveat lessee and held that the implied warranty of habitability applied to oral and written leases of multiunit dwellings.

Since Jack Spring, this court has gradually expanded the scope of the implied warranty of habitability. In Pole Realty Co. v. Sorrells, 84 Ill. 2d 178 (1981), this court extended the warranty to leases of single-family residences. In Petersen v. Hubschman Construction Co., 76 Ill. 2d 31 (1979), the court ventured beyond the landlord-tenant realm and held that the implied warranty of habitability applied to contracts for the sale of new homes by builder-vendors. In Park v. Sohn, 89 Ill. 2d 453 (1982), this court held that the warranty applied to the sale of homes by builder-vendors even when those vendors had lived in the homes for a reasonable amount of time before selling to original purchasers. In Redarowicz v. Ohlendorf, 92 Ill. 2d 171 (1982), the court further extended the implied warranty of habitability to protect subsequent purchasers of new homes from builder-vendors. More recently in VonHoldt, 175 Ill. 2d 426, we held that the warranty is applicable to builders who make significant additions to previously built residences.

Notwithstanding this enlargement of the warranty's scope, we observe that the same original policy considerations have consistently guided the growth of this doctrine. The policy, as explained in Petersen, applies the implied warranty of habitability to the sale of homes to protect today's purchasers, who generally do not possess the ability to determine whether the houses they have purchased contain latent defects. Petersen, 76 Ill. 2d at 39-40; see also VonHoldt, 175 Ill. 2d at 430. The purchaser needs this protection because, in most cases, the purchaser is making the largest single investment of his or her life and is usually relying upon the honesty and competence of the builder, who, unlike the typical purchaser, is in the business of building homes. VonHoldt, 175 Ill. 2d at 430; Petersen, 76 Ill. 2d at 40.

Importantly, the basic rule governing the application of the implied warranty of habitability has been as unwavering as the aforementioned policy considerations. This simple rule states, in essence, that the warranty is applicable against a lessor or builder of a residential unit where latent defects thereabout interfere with the inhabitant's reasonable expectation that the unit will be suitable for habitation. See VonHoldt, 175 Ill. 2d at 432-33; Glasoe, 107 Ill. 2d at 13-14; Petersen, 76 Ill. 2d at 40. What is critical about this rule, therefore, is not simply that there be a hidden defect in or around a residence, but that the defect interfere with the dweller's use of that unit as a residence. This emphasis on a defect's interference with the habitability of one's residence is the key distinction between the implied warranty of habitability and other warranties.

In the present case, the Association asks this court to further expand the doctrine of implied warranty of habitability by applying it to the circumstance where a commonly held amenity in a residential development contains defects that do not affect the habitability of the nearby residential dwellings. The Association bases its argument partly on its interpretation of Petersen as stating that the implied warranty of habitability protects an owner's expectation that ...


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