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Elovic v. Nagar Construction Co.

April 16, 2007

DAVID ELOVIC AND ANNE ELOVIC, PLAINTIFFS,
v.
NAGAR CONSTRUCTION COMPANY, INC., ESTATES WINDOWS, LTD., AND HURD WINDOWS & DOORS, INC. DEFENDANTS.



The opinion of the court was delivered by: Judge Joan B. Gottschall

MEMORANDUM OPINION AND ORDER

This case arises from a home construction contract between plaintiffs David and Anne Elovic ("the Elovics") and defendant Nagar Construction Company, Inc. ("Nagar"), which was the general contractor for the construction of the Elovics' residence in Skokie, Illinois. The other defendants are Estates Windows, Ltd. ("Estates"), the subcontractor hired by Nagar to purchase and install windows at the Elovic residence, and Hurd Windows & Doors, Inc. ("Hurd"), the manufacturer of the windows purchased and installed by Estates. In the Elovics' second amended complaint, they raise the following claims: (1) breach of contract against Nagar ("Count I"); (2) violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. Ann. 505/1-505/12 (West 1999 & Supp. 2006) ("CFA"), against Nagar ("Count II"); (3) violation of the CFA against Estates ("Count III"); (4) violation of the Magnuson-Moss Warranty- Federal Trade Commission Improvement Act, 15 U.S.C. §§ 2301-2312 (2006), against Hurd ("Count IV"); (5) breach of the implied warranty of habitability against Nagar ("Count V"); and (6) negligence against Nagar ("Count VI"). Nagar and Estates have each moved to dismiss certain claims in the Elovics' second amended complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure; Nagar seeks the dismissal of Counts I, II, V, and VI, and Estates seeks the dismissal of Count III. For the reasons set forth below, Nagar's and Estates' motions are denied in their entirety.

I.BACKGROUND

The following facts relevant to the pending motions, which are taken primarily from the Elovics' second amended complaint, are assumed to be true for purposes of this order and are recited in the light most favorable to the Elovics. See, e.g., McMillan v. Collection Prof'ls, Inc., 455 F.3d 754, 758 (7th Cir. 2006) (on a Rule 12(b)(6) motion, the plaintiff's facts are assumed true and any inferences should be drawn in the plaintiff's favor). On October 17, 1999, the Elovics entered into a contract ("the Agreement") with Nagar, an Illinois corporation, for the construction of a residence in Skokie, Illinois. The Agreement referenced and incorporated architect's blueprints which specified that Pella brand windows would be used in the construction. At the time the Agreement was entered, Nagar, through its agent Linda Kogen ("Kogen"), represented to the Elovics that Nagar had the experience and expertise to properly perform, or contract for the performance of, the work specified in the Agreement, including the installation of windows suitable for the climate where the property is located.

Shortly after the Agreement was entered, Nagar subcontracted the window installation component of the Agreement to Estates, a Delaware corporation licensed to do business in Illinois. Nagar, again through Kogen, told the Elovics that Estates was qualified to perform the work required under the Agreement. In December of 1999, Estates installed the windows in the Elovic residence. However, Estates did not use Pella windows, as required by the Agreement. Instead, Estates purchased and installed windows manufactured by Hurd. According to the Elovics, Kogen told them that the Hurd windows were of the same quality as the Pella windows specified in the Agreement and were appropriate for the weather conditions in the area where the Elovic residence is located. The Elovics also allege that Estates knew or should have known that the Hurd windows were not suitable for the climate in the locale, but did not disclose this fact.

Upon moving into their residence after the construction was complete, the Elovics began experiencing problems with the Hurd windows installed by Estates. Specifically, in November of 2000 the Elovics noticed that an excessive amount of moisture was accumulating on nearly all of the windows in the house, causing fogging and icing. The Elovics informed Nagar and Estates about the problem, and were told that it is typical for newly constructed residences to have condensation problems because of moisture in the building products. According to the Elovics, Kogen and agents on behalf of Estates told them that the issue would resolve itself by the second year after construction.

Contrary to Nagar's and Estates' representations, however, the condensation did not alleviate. The following winter, the Elovics experienced the same moisture problems. Once again, the Elovics complained to Nagar and Estates. This time, Kogen, on behalf of Nagar, and Dennis Stangel ("Stangel"), on behalf of Estates, told the Elovics that the problem was due to excess humidity in the Elovics' residence and that the situation would improve if the Elovics stopped using their humidifier. The Elovics did as they were told and turned their humidifier off. For the next year, the Elovics monitored the humidity levels in their residence, and even conducted research to determine the proper humidity level for houses in their geographic area during the winter. Even though the Elovics maintained an appropriate humidity level in their home, the condensation problem resurfaced the following winter. Once more, the Elovics notified Nagar and Estates. On November 5, 2003, Gary Popowski, on behalf of Hurd, and Stangel, on behalf of Estates, inspected the windows and advised the Elovics to purchase and install a dehumidifier in their home. The Elovics did so, but the problem still did not abate.

Finally, on December 2, 2003, the Elovics allegedly discovered the true cause of their problems: inferior windows. Specifically, the Elovics claim they learned that the Hurd windows installed by Estates had a "U-factor" energy performance rating that was insufficient for the geographic area in which the Elovics' home is located. Second Am. Compl. ¶ 21e; Pl.'s Resp. Nagar's Mot. Dismiss 4. A U-factor rating is a rating that indicates the amount of heat loss a window will allow-the lower the U-factor rating, the greater a window's insulating capacity. In the Elovics' case, the Hurd windows installed in their residence had a U-factor rating that was too high for the locale and were therefore losing too much heat during the winter months, resulting in excessive condensation on the inside of the windows. The Elovics allege that the Hurd windows were inferior to the Pella windows called for in the Agreement, and suggest that the moisture problems would not have occurred if the Pella windows had been installed.

According to the Elovics, they have suffered numerous injuries due to the Hurd windows, including property damage caused by excessive mold as well as unspecified physical harm (allegedly resulting from the artificial alteration of the humidity level in the house). The Elovics state that, but for Nagar's and Estate's representations and omissions, they would not have entered into the Agreement or consented to the installation of the Hurd windows in their residence and would have discovered the cause of the excessive moisture long before December 2, 2003.

The Elovics informed Nagar and Estates of the cause of the condensation problems, but the parties were apparently unable to arrive at a mutually agreeable resolution because the Elovics filed this lawsuit in the Circuit Court of Cook County, Illinois, on February 14, 2005. The case was subsequently removed to this court on February 21, 2006. Following the filing of the Elovics' second amended complaint, Nagar and Estates filed the motions to dismiss that are the subject of this order.

II. ANALYSIS

In ruling on a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. McMillan v. Collection Prof'ls, Inc., 455 F.3d 754, 758 (7th Cir. 2006). A Rule 12(b)(6) motion should be granted only when it is clear that the plaintiff cannot prove any set of facts that would entitle the plaintiff to relief on the claim at issue. McCready v. eBay, Inc., 453 F.3d 882, 888 (7th Cir. 2006).

In their respective motions to dismiss, Nagar and Estates raise legal issues that overlap to a certain extent (indeed, Nagar adopted Estates' arguments regarding Count III wholesale, simply asking the court to analyze those arguments as they apply to Count II). For the sake of simplicity, the court will treat the legal questions raised in a cohesive manner rather than considering Nagar's and Estate's positions separately. When necessary, the court will indicate that a particular argument was made with regard to a specific count or on behalf of a specific defendant. The court addresses the following issues in turn: (1) whether Counts I, II, III, V, and VI are barred by the statute of limitations; (2) whether the Elovics have pleaded their CFA claims, Counts II and III, with sufficient ...


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