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Hogan v. Adams

August 14, 2002

DONNA J. HOGAN AND SARAH COLE, PLAINTIFFS-APPELLANTS,
v.
WILLIAM B. ADAMS AND WILMA ADAMS, DEFENDANTS-APPELLEES.



Appeal from Circuit Court of Sangamon County No. 99LM777 Honorable Stuart H. Shiffman, Judge Presiding.

The opinion of the court was delivered by: Justice Turner

In April 1999, plaintiffs, Donna J. Hogan and Sarah Cole, filed a two-count complaint against defendants, William B. and Wilma Adams, alleging a violation of the Residential Real Property Disclosure Act (Act) (765 ILCS 77/1 through 99 (West 1998)) and common-law fraud related to plaintiffs' purchase of defendants' home. After an October 2001 bench trial, the trial court found in favor of defendants on both counts. Plaintiffs appeal, contending (1) the trial court erred in finding a violation of the Act required a showing of bad faith, (2) the trial court erred in finding a residential-property purchaser was required to investigate a seller's disclosure under the Act, and (3) the trial court's judgment was against the manifest weight of the evidence. We affirm in part, reverse in part, and remand with directions.

I. BACKGROUND

In May 1993, defendants purchased the subject property, commonly known as 25 Marquette Road, Springfield, Illinois. The house located on the property was bi-level. The basement level consisted of two bedrooms, a bathroom, a recreation room, a billiards room, and a laundry/utility room. A door in the laundry room led to an outside stairwell. At the bottom of the stairwell was a sump pump pit with a sump pump. Another sump pump pit was located adjacent to the home's foundation on the northeast corner of the home.

In April or May 1995, after a tornado, the power went out and the stairwell sump pump could not operate. Water entered the basement under the laundry room door, saturating the carpet in a large portion of the basement. As a result of the water, the carpets had to be pulled out and the carpet pad replaced. Defendants also replaced the stairwell sump pump in 1995.

In May or June 1996 after a large rainfall, water again entered the basement saturating the carpet of a large portion of the basement. This time the stairwell sump pump was operating. The carpet was again removed but this time was reinstalled without a carpet pad.

A third incident occurred when an outside drain became clogged and a small amount of water entered the basement under a patio door.

In April 1998, defendants hired Peter Steward as a real estate agent to sell the home. On April 10, 1998, defendants completed a residential real property disclosure report (disclosure report) as required by the Act (see 765 ILCS 77/20, 35 (West 1998)). Steward and defendants' friend Pam Morgan were present when defendants completed the disclosure report. Defendants marked "yes" on line No. 2 that states "I am aware of flooding or recurring leakage problems in the crawl space or basement." On the lines provided to explain any "yes" marks, defendants wrote "#2 tornado in 1995 interrupted power for 3 hours[--]sump pump was unable to operate and water entered lower[-]level well."

On April 20, 1998, plaintiffs made an offer to purchase the home. On that date, plaintiffs signed the disclosure report. The parties eventually entered into a contract for the purchase of the home for $125,500, and the property was conveyed to plaintiffs on May 28, 1998. Steward acted as a dual agent.

On June 11, 1998, water entered the basement under the laundry room door. Joseph "Jody" Hogan, Donna's husband, noticed the stairwell sump pump was not working, and he could not get it to function properly. The water was in the hallway, the bedrooms, the family room, and the laundry room. The next day, plaintiffs had a new sump pump installed in the stairwell.

On June 18, 1998, the same areas in the basement were again covered by water that had come in under the laundry room door. The sump pump was working properly when the water entered the basement.

As a result of the flooding, plaintiffs had the basement cleaned and new carpeting installed. Plaintiffs also purchased a new sump pump, drywall, and bathroom vanity and changed the grade of the yard with new landscaping.

In April 1999, plaintiffs sued defendants seeking damages for a violation of the Act and common-law fraud. On October 11, 2001, the trial court held a bench trial. Plaintiffs presented the testimony of Jody, Donna, Steward, the contractors hired by plaintiffs to make repairs after the June 1998 floods, and William as an adverse witness.

William testified he and his wife decided to sell their home because his employer required him to move to a different state. He further stated he had knowledge of the two flooding occurrences when he completed the report. He also stated he knew he had to disclose a defect in full. According to William, after writing down the first occurrence, Steward told defendants that was all that was required. William testified Steward had full knowledge of both flooding events when William was writing the explanation. William also testified it was his understanding he only needed to include an example of flooding in the explanation section of the disclosure report.

Steward testified he told defendants to fill out the report to the best of their ability. He further stated defendants only told him about one flooding incident in which the water was confined to the laundry room. Steward recalled a conversation in the laundry room between William and Jody where William told Jody the same information about the one flooding incident. Steward testified when he went through the home, he never noticed any evidence of prior flooding. He also testified he usually tells buyers to investigate all disclosures.

Donna testified she went through the home three times before purchasing it and did not notice any water damage. After purchasing the home, she noticed water lines on the furnace and in the bedrooms. She testified she and her husband had been concerned about the slope of the yard, but William and Steward had told her husband that they did not have water except for a trickle in the well area. She never was a part of a discussion with defendants about water in the lower level. ...


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