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Muirfield Village-Vernor Hills, LLC v. Reinke

May 13, 2004


Appeal from the Circuit Court of Lake County. No. 01--L--488. Honorable Henry C. Tonigan, III, Judge, Presiding.

The opinion of the court was delivered by: Presiding Justice O'malley


Plaintiffs, Muirfield Village-Vernon Hills, LLC, and Muirfield, LLC, appeal from the circuit court of Lake County's dismissal with prejudice of their third amended complaint and the denial of their motion to reinstate and for leave to file a fourth amended complaint. Plaintiffs argue that the third amended complaint stated a claim for contribution against defendants K. Reinke, Jr., & Co., Denk & Roche Builders, Inc., Air-Rite Heating & Cooling, Inc., JMB Electric, Inc., Keystone Mechanical Industries, Inc., and R.M. Sellergren & Associates, Inc., and that the trial court abused its discretion in denying plaintiffs leave to file a fourth amended complaint against defendants. We affirm in part and reverse in part.

The following facts are taken from plaintiffs' third amended complaint and the record. Muirfield, LLC, acted as the general contractor in the construction of a home for Kerry and Jodi Strain in the subdivision known as Gregg's Landing. Muirfield Village-Vernon Hills, LLC, was the owner of the project. Defendants, as subcontractors, all provided services to Muirfield, LLC, in the construction of the Strain home. Reinke provided insulation installation, Denk & Roche provided siding and carpentry services, Sellergren provided drywall and drywall installation, Air-Rite provided heating, ventilation, flashing, and air conditioning installation, JMB Electric provided services related to the electrical systems, and Keystone provided services related to the plumbing systems.

During the construction of the Strains' home, one or more of defendants allowed an excess of moisture into the interior areas of the home. They either failed to close up the house during construction or failed to keep the materials dry prior to installation. This led to the growth of mold and bacteria within the Strains' home. On January 13, 2000, the Strains took possession of the home and moved in. About two months later, the Strains detected a putrid odor in their home. On July 26, 2000, the Strains were advised to vacate the home due to the presence of abnormally high levels of mold and bacteria in the home. In addition to moving out of their home, the Strains experienced damages to their personal effects.

On June 19, 2000, the Strains filed suit against Reinke and Denk & Roche, alleging that they had negligently installed wet or saturated insulation or carpentry materials in their home, which led to the growth of unacceptably high levels of mold and bacteria. The Strains and various Muirfield entities and agents entered into mediation in an attempt to resolve the suit. On September 22, 2000, the Strains, plaintiffs, Zale Homes, and Hearthstone Advisors entered into a handwritten settlement agreement whereby plaintiffs, Zale Homes, and Hearthstone Advisors would buy back the Strains' home, pay $59,000 for other costs and damages to the Strains, and pay Amica Insurance Company, the Strains' insurer, $49,200 in exchange for the release from liability of Muirfield, LLC, Muirfield Village-Vernon Hills, LLC, Zale Homes, and Hearthstone Advisors, and the assignment to those entities of all of the Strains' legal rights. (Zale Homes and Hearthstone Advisors are not parties to this appeal.)

On October 25, 2001, plaintiffs filed their first amended complaint. This complaint added Air-Rite, JMB Electric, Sellergren, and Keystone as parties defendant, and substituted plaintiffs, both individually and as assignees of the Strains, as parties plaintiff. The first amended complaint set forth three claims against each of the six defendants, alleging the negligence of each individual defendant in the performance of its particular work, alleging negligence against all defendants for failing to properly secure and protect the home from the intrusion of moisture, and alleging breach of contract against each defendant for failing to procure insurance. The settlement agreement between plaintiffs and the Strains was not attached to the first amended complaint. Instead, plaintiffs alleged the existence of the settlement agreement, that it was confidential, and that the Strains had assigned their rights to "Muirfield."

On April 25, 2002, plaintiffs filed their second amended complaint. This complaint alleged three counts against each defendant, namely, negligent construction, breach of contract for failing to procure insurance, and "contractual contribution." In addition, plaintiffs again did not attach the settlement agreement to the complaint. Instead, plaintiffs alleged the existence of a confidential settlement agreement with the Strains, and quoted language from the agreement by which the Strains released "Muirfield [sic]-Vernon Hills, LLC, Muirfield, LLC, Zale Homes and Hearthstone Advisors" and their subcontractors. Defendants filed motions to dismiss the second amended complaint. In addition, defendants sought to compel plaintiffs to disclose the terms of the settlement agreement with the Strains.

The trial court dismissed the second amended complaint in its entirety, but gave plaintiffs the opportunity to file a third amended complaint. In addition, the trial court ordered plaintiffs to produce the settlement agreement to defendants. The parties agreed to the entry of a protective order against the disclosure of any settlement agreements, releases, or other settlement documents. On October 1, 2002, after plaintiffs failed to file their third amended complaint within the trial court's original time limit, they were granted leave, over defendants' objections, to file the third amended complaint.

This complaint contained only one count for contribution against each defendant. Additionally, plaintiffs attached a typed document entitled "settlement release," which was executed in July and August of 2002. The document was signed by the Strains and their insurer, but not by plaintiffs. The parties released in this document included "Muirfield-Vernon Hills, LLC, sometimes referred to as Muirfield Village-Vernon Hills, LLC, and Muirfield, LLC, their related companies *** including Zale Homes and Hearthstone Advisors, Inc." In addition, each defendant was expressly released by name. Defendants moved to dismiss the third amended complaint on the grounds that (1) substituting the 2002 settlement release document for the September 22, 2001, settlement agreement was contrary to the "mend-the-hold" doctrine, (2) plaintiffs did not allocate the amounts that each paid in the settlement with the Strains, making it impossible to determine whether any plaintiff or other Muirfield entity paid more than its pro rata share of liability, and (3) plaintiffs could not recover in tort any of the amounts paid to the Strains for the buyback of their home as these sums constituted economic losses. On December 3, 2002, the trial court expressly denied the portions of the motions to dismiss relying on the "mend-the-hold" doctrine, and granted with prejudice the portions of the motions to dismiss based on plaintiffs' failure to plead a claim in contribution and on the economic loss rule. Apparently, at that point, plaintiffs orally moved for leave to file a fourth amended complaint. This oral motion was denied.

On January 2, 2003, plaintiffs filed a motion to reinstate their cause of action and for leave to file a fourth amended complaint. Plaintiffs attached a copy of the proposed fourth amended complaint to their motion. The proposed fourth amended complaint contained two counts against each defendant, one for contribution and one for breach of contract. The contribution counts alleged that "liability is apportioned 100% to plaintiffs due to the fact they are the same entity," and that plaintiffs had paid more than their proportionate share of the liability. The breach of contract counts alleged that defendants had failed to perform their services in a workmanlike manner.

On January 14, 2003, Reinke filed a suggestion of record that plaintiffs had not filed a postjudgment motion sufficient to toll the 30-day period following the entry of a final order and that the trial court's jurisdiction had lapsed. Additionally, Reinke filed a response in opposition to plaintiffs' motion, requesting that the trial court deny the motion and seeking sanctions against plaintiffs pursuant to Supreme Court Rule 137 (155 Ill. 2d R. 137). The other defendants also filed or adopted responses in opposition to plaintiffs' motion. On February 4, 2003, the trial court denied plaintiffs' motion to reinstate and for leave to file a fourth amended complaint. In addition, the February 4, 2003, order stated that Reinke's "Motion For Sanctions Is Not Ruled Upon." On March 5, 2003, plaintiffs filed their notice of appeal.

Before turning to the issues raised on appeal, we must first contend with what could be termed a "housekeeping" issue. After this cause was briefed and submitted to this court for deliberation, plaintiffs and Reinke entered into a settlement agreement among themselves. Plaintiffs and Reinke submitted a joint motion to dismiss with prejudice Reinke from this action, with each party representing that it had dropped all claims against the other. Denk & Roche filed an objection to the motion, raising concerns that, as it had adopted Reinke's briefs and arguments on appeal, it could be prejudiced by Reinke's dismissal from this action. Denk & Roche further suggested that granting the motion could be construed as this court's approval of the settlement agreement among plaintiffs and Reinke (which those parties did not submit to this court), and that it could prejudice Denk & Roche's rights to contribution against Reinke and the other defendants. Due to the timing of plaintiffs' and Reinke's joint motion to dismiss, we choose to resolve it with the case.

Upon consideration of the joint motion to dismiss, we grant it, but with the following qualifications. First, our grant of the motion to dismiss is not a finding in any way concerning the good faith of the settlement agreement or the fairness of its terms. Our order also does not disturb any rights any of defendants may have to set-off or contribution from Reinke or each other. We also allow the briefs on appeal submitted by Reinke to stand as Denk & Roche's briefs and arguments on appeal and note that Reinke's dismissal from this action does not prejudice Denk & Roche's rights in this appeal in any way.

Next, we turn to the actual issues raised by this appeal. However, before we can address plaintiffs' arguments on appeal, we must first resolve two issues regarding our jurisdiction over this appeal. Defendants Air-Rite, Denk & Roche, and Sellergren all urge that plaintiffs' postjudgment motion to reinstate and for leave to file an amended complaint be held to be insufficient to toll the 30-day time limit for filing a notice of appeal. These defendants argue that plaintiffs' motion was not a postjudgment motion within the meaning of section 2--1203(a) of the Code of Civil Procedure (Code) (735 ILCS 5/2-- 1203(a) (West 2002)).

Supreme Court Rule 303(a) (155 Ill. 2d R. 303(a)) provides:

"[A] notice of appeal must be filed with the clerk of the circuit court within 30 days after the entry of the final judgment appealed from, or, if a timely post-trial motion directed against the judgment is filed, whether in a jury or a non-jury case, within 30 days after the ...

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