Appeal from the Circuit Court of the 21st Judicial Circuit, Iroquois County, Illinois, Circuit No. 08--L--25 Honorable James B. Kinzer, Judge, Presiding.
The opinion of the court was delivered by: Justice Holdridge
JUSTICE HOLDRIDGE delivered the judgment of the court with opinion. Justices Lytton and Schmidt concurred in the judgment and opinion.
¶ 1 The home of the plaintiffs, Jeffrey and Karen Klecan, was damaged by widespread flooding in 2008. When the Klecans turned to their lender, Countrywide Home Loans, Inc. (Countrywide), for coverage, they learned that Countrywide did not require them to purchase flood insurance. The Klecans sued Countrywide and its subsidiary flood determiner, Landsafe Flood Determination, Inc. (Landsafe). The trial court dismissed the Klecans' complaint. The Klecans argue on appeal that the trial court erred in dismissing their complaint. We reverse and remand for further proceedings.
¶ 3 The Klecans own a home in Watseka, Illinois. In early 2007, they refinanced their home through Countrywide. As part of the refinancing, the National Flood Insurance Act of 1968 (Flood Act) required Countrywide to conduct a flood determination. 42 U.S.C. § 4012a (2006). If the determination revealed that the Klecans' home was located in a special flood hazard area, Countrywide was statutorily mandated to require the Klecans to purchase flood insurance. 42 U.S.C. § 4012a (2006).
¶ 4 Countrywide engaged its subsidiary, Landsafe, to conduct the flood zone determination. Landsafe determined that the Klecans' home was not located in a flood zone. Countrywide allegedly did not notify the Klecans of this determination and did not require them to purchase flood insurance.
¶ 5 In 2008, Watseka experienced widespread flooding. As a result, the Klecans suffered severe damage to their home and personal property.
¶ 6 Following the flood, the Klecans discovered that Landsafe had not determined that their home was located in a flood zone. Consequently, the Klecans did not have flood insurance coverage through Countrywide. The Klecans also had not individually purchased flood insurance.
¶ 7 The Klecans alleged in their complaint that their previous lender required them to purchase flood insurance as a condition of their loan. They further stated that portions of their monthly loan payments to their prior lender were placed in escrow to pay the flood insurance premiums. However, Countrywide did not require the Klecans to purchase flood insurance or escrow portions of their loan payments.
¶ 8 In September 2008, the Klecans filed a complaint alleging that Countrywide was negligent for not requiring them to obtain flood insurance and that Landsafe erroneously determined that their home was not located in a flood zone. The Klecans conceded that their cause of action against Countrywide was barred by the Flood Act. However, they maintained that their claim against Landsafe was not barred. Despite this contention, the trial court granted Countrywide and Landsafe's motion to dismiss pursuant to section 2--619 of the Code of Civil Procedure (735 ILCS 5/2--619(a)(9) (West 2008)). The Klecans appealed.
¶ 10 The Klecans argue that the trial court erred in dismissing their complaint against Landsafe. They contend that the Flood Act does not bar their state common law negligence claim against Landsafe, a third-party flood determiner. We agree.
¶ 11 The Flood Act requires federally insured lenders of mortgage real estate loans to determine if the borrower's property is located in a special flood hazard area. 42 U.S.C. § 4012a(e)(1) (2006). Following an affirmative flood determination, the lender must notify the borrower and require him or her to purchase flood insurance. 42 U.S.C. § 4012a(e) (2006). If the borrower fails to purchase flood insurance 45 days after notification, "the lender or servicer for the loan shall purchase the insurance on behalf of the borrower and may charge the borrower for the cost of premiums and fees incurred by the lender or servicer for the loan in purchasing the insurance." 42 U.S.C. § 4012a(e)(2) (2006). A lender ...