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Dass v. Yale

Court of Appeals of Illinois, First District, Fifth Division

December 20, 2013

BIPLOB DASS and BRETT GARRY, Plaintiffs-Appellants,
v.
CRAIG YALE, Defendant-Appellee (LDC, Inc., f/k/a Lexus Development Corporation, an Illinois Corporation, Defendant).

Appeal from the Circuit Court of Cook County No. 08 L 12717 Honorable Lynn M. Egan, Judge Presiding.

PRESIDING JUSTICE GORDON delivered the judgment of the court, with opinion. Justices McBride and Taylor concurred in the judgment and opinion.

OPINION

GORDON, PRESIDING JUSTICE.

¶ 1 According to plaintiffs, the instant case provides a case of first impression. They claim that the legislature never intended section 10-10 of the Limited Liability Company Act (the LLC Act) (805 ILCS 180/10-10 (West 2010)) to shield limited liability company members or managers who commit fraud. The trial court found immunity under the LLC Act, which caused the instant appeal arising from the dismissal of plaintiffs' fifth amended complaint pursuant to sections 2-619(a)(5) and (a)(9) of the Code of Civil Procedure (the Code) (735 ILCS 5/2-619(a)(5), (a)(9) (West 2010)).

¶ 2 Plaintiffs' complaint alleges that plaintiffs, Dr. Biplob Dass and Brett Garry, owned a garden condominium unit that they purchased in 2006 from Wolcott LLC (Wolcott), a limited liability company of which defendant Craig Yale is the managing member. Their unit flooded in 2007 and, after plaintiffs had the sewer lines serving the unit inspected, plaintiffs discovered a number of problems with the building's sewer lines and drainage system, and further discovered that the existing sewer pipes were not as represented when they purchased the unit. Plaintiffs filed suit against Wolcott; LDC, Inc. (LDC); and Property Consultants Realty, Inc. (Property Consultants); the three entities involved in the sale of the unit. Plaintiffs also, in their fifth amended complaint, named Yale as a defendant, suing him for common-law and statutory fraud. Currently, LDC and Yale are the only remaining defendants, and Yale is the sole defendant that is a party to the instant appeal.[1]

¶ 3 Yale filed a motion to dismiss the claims against him pursuant to sections 2-619(a)(5) and (a)(9) of the Code, claiming that he was insulated from liability under section 10-10 of the LLC Act and that plaintiffs' claim based on the Consumer Fraud and Deceptive Business Practices Act (the Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2010)) was time-barred and that Wolcott, not Yale, sold the unit to plaintiffs. The trial court granted Yale's motion to dismiss, finding that Yale was insulated from liability under section 10-10 of the LLC Act and that plaintiffs' claim under the Consumer Fraud Act was time-barred. Plaintiffs appeal, and we affirm.

¶ 4 BACKGROUND

¶ 5 The following facts are taken from plaintiffs' fifth amended complaint, the complaint at issue in the case at bar, and from the procedural history of the case as established by the record on appeal.

¶ 6 I. Plaintiffs' Condominium Unit

¶ 7 Plaintiffs, a married couple, owned a garden condominium unit at 4845-4851 North Wolcott in Chicago (the Wolcott Court condominiums) from December 2006 to July 2010. When the building was originally constructed, the unit purchased by plaintiffs was a one-bedroom, one-bath unit; however, the unit was being converted to a two-bedroom, two-bath unit at the time plaintiffs purchased it. In order to expand plaintiffs' unit, the floor of the unit had to be lowered to satisfy City of Chicago (the City) ceiling-height code requirements, among other changes not relevant to the instant appeal.

¶ 8 When plaintiffs purchased the unit, LDC was named as the general contractor for construction of the Wolcott Court condominiums in a property report provided to plaintiffs, Wolcott was the developer of the Wolcott Court condominiums, and Property Consultants was the sales agent for the Wolcott Court condominiums. "Until the [Allen] Liss and [Bruce] Teitelbaum[2] depositions in 2011, Dass' only knowledge of Yale's involvement in the project was his signature as manager of Wolcott, L.L.C. on the Property Report and on the Listing Agreement with Property Consultants for condominium sales."[3]

¶ 9 During heavy rains in June and August 2007, and again in the summer of 2009, plaintiffs experienced extensive flooding in their unit. The flooding was primarily caused by water entering the unit at the bathrooms' toilets and drains and at the HVAC drain. The flood damage included warping and cracking of the hardwood floors throughout the unit, damage to subflooring, and mold on the subfloors and walls in the unit.

¶ 10 After the flood damage in 2007, plaintiffs arranged for multiple inspections of the sewer lines servicing their unit. On October 29, 2007, Kerrigan Plumbing inspected the sewer lines and discovered:

"A. The Dass Unit was tied directly into the house sewer line going from the rear of the building, underneath the Dass Unit, to ultimately connect with the city sewer at the street;
B. The house sewer line under the Dass Unit was back-pitched[4], and was severely broken which allowed dirt and sand to enter and block all but 10-15% of the line;
C. The Dass Unit is the lowest point in the Wolcott Court condominiums, a condition created by construction of the Dass unit; and
D. The gutters and drains at the Wolcott Court condominiums direct rainwater to the main house sewer system at points in the back-pitched sewer line both ahead of and behind the points where the drains from the Dass Unit were tied in." Kerrigan Plumbing concluded that new sewer piping and an independent system for insulating plaintiffs' unit from the main house sewer were necessary to significantly decrease the chance of future flooding of the unit.

¶ 11 Furthermore, the deteriorated condition of the sewer lines servicing plaintiffs' unit existed prior to the construction of plaintiffs' unit and the condition of the sewer lines in October 2007 was not as reported to plaintiffs in the property report provided to them prior to closing on their purchase of the unit. The property report stated that the contractor would conduct a closed-circuit television examination of the entire sewer system in the presence of the City's sewer inspector to confirm the condition of the system; that the existing underground sanitary waste lines would be inspected and cleared of any obstructions discovered and that damaged or otherwise unusable sections of sewers would be removed and replaced; that all existing waste lines and vents serving bathroom fixtures would be inspected for any deteriorating lines and repaired; and that all existing cast-iron soil stacks would be inspected for loose or cracked fittings or pipe and repaired. Additionally, in a feature sheet incorporated into the property report, Property Consultants represented that the building would have " '[a]ll new plumbing.' " Finally, "[a]t page 15 of the Property Report, Wolcott, L.L.C., through its manager Yale, expressly 'affirm[ed] that this Property Report and any supplements, modifications and amendments hereto, are or will be true, full, complete and correct.' " Based on these representations, plaintiffs believed that the building sewer and waste systems would be functionally new.

ΒΆ 12 However, at no time were any of the inspections or repairs performed, based on the fact that no permit for such work was provided by the City and no videotape of the inspection was provided to the City, as is required when rehabbing a building such as the Wolcott Court condominiums while keeping the existing house sewer system. Defendants knew or should have known that none of the inspections or repairs had been done and that the representations in the property report were false, and they also knew or should have known of the measures necessary to prevent flooding of plaintiffs' unit, because they ...


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