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Neppl v. Murphy

September 22, 2000


The opinion of the court was delivered by: Justice Gallagher

Appeal from the Circuit Court of Cook County Honorable John Laurie Judge Presiding.

Plaintiffs, Daniel J. Neppl and S. Leigh Jeter, appeal from an order of the circuit court of Cook County dismissing their complaint against defendants, Glenn S. Murphy and Deborah A. Murphy. Plaintiffs had brought an action against defendants for breach of a real estate contract, seeking damages for breach of an express warranty in the contract which provided that the heating system would be in "operating condition at possession." Defendants brought a combined motion to dismiss plaintiffs' complaint pursuant to sections 2-615, 2-619, and 2-619.1 of the Code of Civil Procedure (the Code) (735 ILCS 5/2-615, 2-619, 2-619.1 (West 1998)). On January 27, 2000, the trial court granted defendants' motion. Plaintiffs now contend on appeal that the circuit court erroneously granted the defendants' motion to dismiss plaintiffs' breach of contract claim on the grounds that it was barred under the doctrine of merger. The relevant facts follow.

On May 3, 1999, plaintiffs entered into a written contract to purchase a single-family home known as 3835 North Alta Vista Terrace in Chicago, Cook County, Illinois (residence), from the defendants. Section 3 of the contract provided, in relevant part: "Seller warrants to Buyer that all fixtures, systems and personal property included in this Contract shall be in operating condition at possession ***. A system or item shall be deemed to be in operating condition if it performs the function for which it is intended, regardless of age, and does not constitute a threat to health or safety"(the express warranty).

Pursuant to the contract, plaintiffs had the right to a professional inspection, which they obtained. The inspection took place on May 7, 1999. The inspector identified a crack in the heat exchanger, which defendants replaced. The inspector's report also contained a recommendation that a safety inspection be performed by the local gas utility company, the final authority for all gas appliances. The parties closed the real estate transaction on July 16, 1999 and plaintiffs took possession. On the same day, the local gas utility company, Peoples Gas Light & Coke Co. (Peoples Gas) transferred the gas service to plaintiffs. As a result of doing so, a representative of Peoples Gas determined that the furnace was not in compliance with the requirements of Peoples Gas or the City of Chicago and "red-tagged" the furnace. He immediately disconnected the supply of natural gas to the furnace, advising plaintiffs that such action was being taken because the system presented an unacceptable threat to the health and safety of the residents. A supervisor from Peoples Gas subsequently confirmed that the gas furnace was not in compliance with Peoples Gas or the City of Chicago's building code, specifically the venting requirements, because the gas furnace could only be accessed through a bathroom in the basement, was located in an improper place, and lacked adequate access to a source of air. He further informed plaintiffs that unless and until the gas furnace was brought into compliance, Peoples Gas could not and would not supply gas for the furnace due to the threat of carbon monoxide poisoning, which constitutes a serious threat to health and safety.

On July 28, 1999, plaintiffs sent a letter to defendants and notified them of a potential warranty claim against them. The letter informed defendants of the actions taken by Peoples Gas and expressed plaintiffs' position that the condition constituted a breach of the warranty contained in the contract. In response, on July 29, 1999, defendants sent a letter to plaintiffs suggesting that the Peoples Gas representative who refused to connect the gas service must have been in a "bad mood." Defendants further stated that they disagreed that the condition constituted a breach of the warranty contained in the contract. On August 25, 1999, plaintiffs sent another letter to defendants requesting they honor the express warranty given by them in the contract. Plaintiffs enclosed a letter from a Peoples Gas supervisor confirming their previous finding and stating that the only acceptable solution was replacement of the furnace with a high efficiency model. Plaintiffs enclosed copies of two estimates they had obtained to remedy the condition and requested that defendants fulfill the warranty obligation by forwarding $3,100. On September 2, 1999, defendants sent a letter to plaintiffs in which they informed plaintiffs that there had been no change in their position as stated in their July 29, 1999, letter.

On September 10, 1999, plaintiffs installed a closed combustion chamber design furnace, and incurred half the cost of obtaining a building permit from the City of Chicago for purposes of the installation. Plaintiffs filed suit against defendants on October 20, 1999. On October 21, 1999, an inspection by Peoples Gas resulted in a finding that the furnace now complies with the venting requirements.

Our standard of review of motions to dismiss, under either section 2-615 or 2-619, is de novo. R-Five, Inc. v. Shadeco, Inc., 305 Ill. App. 3d 635, 639, 712 N.E.2d 913, 915 (1999). A motion to dismiss based on section 2-615 admits all well-pleaded facts and attacks the legal sufficiency of the complaint; but a motion to dismiss under section 2-619 motion admits the legal sufficiency of the complaint and raises defects, defenses or other affirmative matter which appear on the face of the complaint or are established by external submissions which act to defeat the plaintiff's claim. Joseph v. Chicago Transit Authority, 306 Ill. App. 3d 927, 930, 715 N.E.2d 733, 736 (1999). Thus, we apply a separate analysis to each basis of defendants' motion.

We first consider defendants' motion to dismiss under section 2-615. A motion to dismiss brought under section 2-615 challenges only the legal sufficiency of a complaint and alleges only defects on the face of the complaint. Board of Directors of Bloomfield Club Recreation Ass'n v. Hoffman Group, Inc., 186 Ill. 2d 419, 423, 712 N.E.2d 330, 333 (1999). In ruling on a section 2-615 motion, a court must accept as true all well-pled facts in the complaint and all reasonable inferences that can be drawn therefrom. Lewis E. v. Spagnolo, 186 Ill. 2d 198, 236, 710 N.E.2d 798, 817 (1999).

Plaintiffs' complaint, into which was incorporated the sales contract, refers to the express warranty and alleges as follows:

"The Sellers breached the Contract because the furnace and the heating system were not in 'operating condition at possession' at the time the Contract was entered into and accepted, or at any time. On the day the Buyers took possession and before they had even moved into the residence, the furnace did not perform the function for which it was intended as it was disconnected by the utility company because it posed a threat to health and safety due to a risk of excessive carbon monoxide accumulation within the residence."

For purposes of defendants' section 2-615 motion, we accept these allegations as true.

In support of their section 2-615 motion, defendants contend: " 'In the absence of an express clause in a contract, the contract for the sale of real estate is "merged" into the deed when it is delivered to the buyer at closing, and the deed supersedes all of the contract provisions.' " While true, this statement, standing alone, is an oversimplification of the law regarding the doctrine of merger. Under Illinois law, the doctrine of merger is not absolute. See, e.g., Trapp v. Gordon, 366 Ill. 102, 110, 7 N.E.2d 869, 873 (1937) ("While it is the general rule that all prior verbal understandings or agreements with reference to the subject matter become merged in a deed upon its acceptance and the deed constitutes the only contract between the parties which binds them [citations] yet this rule, like many other rules in the field of law, is subject to exceptions and qualifications"). A notable exception, germane to the instant case, is that when the contract for the sale of real estate contains provisions that are not fulfilled by delivery of the deed, the contract is not merged as to such provisions, but remains open for performance of such terms. Daniels v. Anderson, 162 Ill. 2d 47, 63, 642 N.E.2d 128 (1994); Petersen v. Hubschmun Construction Co., Inc., 76 Ill. 2d 31, 39, 389 N.E.2d 1154, 1157 (1979); Chicago Title & Trust Co. v. Wabash-Randolph Corp., 384 Ill. 78, 87, 51 N.E.2d 132, 137 (1943); Trapp v. Gordon, 366 Ill. 102, 7 N.E.2d 869 (1937). Thus, the merger doctrine is not the absolute bar to plaintiffs' claim for breach of the express warranty in the contract that defendants assert it to be. Instead, the applicability of the merger doctrine here first requires a determination of whether the express warranty constituted a collateral undertaking excepted from the merger doctrine.

Since any consideration of whether the merger doctrine applies here necessarily requires that we go beyond the four corners of the complaint, the merger doctrine may not be considered in ruling on a section 2-615 motion. Indeed, none of the cases cited by defendants involving the doctrine of merger involved a section 2-615 motion to dismiss for failure to state a cause of action. Accepting plaintiffs' allegations as true, for purposes of section 2-615, we conclude that those allegations sufficiently state a cause of action for breach of express warranty.

Although a section 2-615 motion concerns itself solely with defects on the face of the complaint, a section 2-619 proceeding enables the court to dismiss the complaint after considering issues of law or easily proved issues of fact. Yu v. Kobayashi, 281 Ill. App. 3d 489, 492, 667 N.E.2d 106, 108 (1996). Section 2-619(a)(9), in particular, allows dismissal when "the claim asserted * * * is barred by other affirmative matter avoiding the legal effect of or defeating the claim." 735 ILCS 5/619(a)(9)(West 1998). Our supreme court has acknowledged that there is "some degree of overlap" between the two motions. Illinois Graphics Co. v. Nickum, 159 ...

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