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933 Van Buren Condominium Association v. West Van Buren, LLC

Court of Appeals of Illinois, First District, Fourth Division

September 8, 2016

933 VAN BUREN CONDOMINIUM ASSOCIATION, an Illinois Not-for-Profit Corporation, Plaintiff,
v.
WEST VAN BUREN, LLC, an Illinois Limited Liability Company; GLENN RUTLEDGE, an Individual; ROGER K. MANKEDICK, an Individual; ROSEMARY GODEK, an Individual; LENNAR CHICAGO, INC., Successor by Merger to Concord Homes, Inc., d/b/a Lennar; ILLINOIS ROOF CONSULTING ASSOCIATES, INC., an Illinois Corporation; and TOTAL ROOFING AND CONSTRUCTION SERVICES, INC., Defendants (West Van Buren, LLC, an Illinois Limited Liability Company, Counterplaintiff-Appellant and Cross-Appellee; Total Roofing and Construction Services, Inc., and Illinois Roof Consulting Associates, Inc., an Illinois Corporation, Counterdefendants-Appellees and Cross-Appellants).

          Rule 23 order filed June 16, 2016

          Motion to publish allowed July 27, 2016

          Rehearing denied July 27, 2016

         Appeal from the Circuit Court of Cook County, No. 11-L-8267; the Hon. Eileen O'Neill Burke, Judge, presiding.

         Affirmed in part and reversed in part; cause remanded.

          Shawn M. Doorhy, Trina K. Taylor, and Colby A. Kingsbury, all of Faegre Baker Daniels LLP, of Chicago, for appellant.

          Hughes Socol Piers Resnick & Dym, Ltd., of Chicago (Donald G. Peterson, of counsel), for appellee Total Roofing & Construction Services, Inc.

          Anne L. Blume, Bryan J. Johnson, and Cozen O'Connor, all of Chicago, for appellee Illinois Roof Consulting Associates, Inc.

          JUSTICE HOWSE delivered the judgment of the court, with opinion. Presiding Justice Ellis and Justice McBride concurred in the judgment and opinion.

          OPINION

          HOWSE JUSTICE

         ¶ 1 Real estate developer-appellant West Van Buren, LLC (WVB), hired two roofing contractors, Illinois Roof Consulting Associates, Inc. (IRCA), and Total Roofing & Construction Services, Inc. (Total), to perform roofing work on a condominium building it was constructing in Chicago. After the building was completed and had been turned over to the condominium home owner's association, 933 West Van Buren Condominium Association (HOA), the HOA discovered that the condominium roof was leaking and subsequently filed a lawsuit against WVB.

         ¶ 2 WVB filed counterclaims against IRCA and Total arguing that they had a duty to defend and indemnify WVB pursuant to their respective contracts and that they breached this duty by refusing to defend and indemnify WVB against the HOA's claims. Total filed a claim for contribution against IRCA and WVB. Following a settlement between the HOA and WVB, all that remained pending before the trial court were claims the developer and contractors filed against each other. The trial court granted IRCA's and Total's motions for summary judgment on WVB's indemnification counterclaims, finding that IRCA and Total did not have a duty to defend or indemnify WVB for the HOA's underlying claims pursuant to their contractual agreements. WVB timely filed this appeal from those rulings. Total also filed a cross-appeal challenging the trial court's dismissal of its claim for contribution; however, Total did not make any argument on appeal regarding its cross-appeal. For the reasons that follow, we reverse that part of the trial court's ruling that found IRCA and Total had no duty to defend WVB against the HOA's claims of breach of warranty and breach of the implied warranty of habitability under the indemnity provisions of their respective contracts and remand this matter to the trial court for further proceedings consistent with this opinion. We affirm the trial court's dismissal of WVB's counterclaims against IRCA and Total with respect to IRCA's and Total's duties to indemnify WVB against fraud claims alleged by the HOA. Finally, Total did not raise any arguments on appeal regarding its cross-appeal of the dismissal of its counterclaims for contribution, thus waiving those claims. Therefore, we affirm the dismissal of those claims.

         ¶ 3 I. Background

         ¶ 4 The record shows that in 2002, WVB caused a condominium building to be constructed at 933 West Van Buren Street in Chicago, Illinois, on property that WVB owned. WVB hired numerous contractors to perform the construction work, including IRCA to provide roof consulting services and Total to perform the actual roof installation work.

         ¶ 5 The contract between WVB and IRCA, dated November 15, 2001, discusses the parameters of the work to be performed by IRCA. The contract contains a provision regarding indemnity, which requires IRCA to indemnify WVB from claims that may result from any act, omission, or neglect whether the loss was caused by the negligence of any other person or party, which under the plain language of the contract could include IRCA. Specifically, it states:

"INDEMNITY
[IRCA] shall, at its own cost and expense, defend, indemnify and save harmless [WVB] and its agents, representatives, officers and employees from any and all loss, claims, liabilities, obligation suits or actions of any kind or character *** and from any and all expense (including costs and attorneys fees) arising from any injury, death or damage which may be sustained, incurred or received by any person *** or property and which may directly or indirectly result from the following:
A. Any act, omission, neglect or misconduct of [IRCA] or any employee or agent of [IRCA] in connection with the performance of any covenant, term or provision of this Agreement, irrespective of whether such loss, claim, liability, obligation, suit, action and/or expense was actually or allegedly caused wholly or in part from the negligence of any other person or party. ***
C. Any failure, neglect, act or omission on the part of [IRCA] or any employee or agent of [IRCA] with regard to any law, requirement, ordinance or regulation or any governmental authority."

         ¶ 6 The contract between WVB and Total, dated July 18, 2002, discusses the parameters of the work to be performed by Total. The contract between WVB and Total includes an indemnity provision that is not as broad as the provision in the IRCA contract but that requires Total to indemnify WVB from any claims resulting from the failure or neglect of the employees or agents of Total. Specifically, it states: "INDEMNITY

A. To the fullest extent permitted by law, [Total] shall defend, indemnify and save harmless [WVB] and Lender (as hereinafter defined), their respective affiliates, and each of their respective partners, directors, officers, shareholders, agents, employees, consultants, successors in interest and anyone else acting for or on behalf of them (collectively, the 'Indemnities') from and against all damages, costs, liabilities, claims, loss and expense (including without limitation, attorneys' fees) arising out of or in connection with:
(I) Any act, omission, neglect or misconduct of [Total] or any employee or agent of [Total] in connection with the Work or performance of any covenant, term or provision of the Contract Documents;
(II) Any failure, neglect, act or omission on the part of [Total] or any employee or agent of [Total] in connection with any law, requirement, ordinance or regulation of any governmental authority;
F. All indemnities provided in this Agreement shall survive termination of this Agreement."

         The contract between WVB and Total also contained the following provision:

"I. Notwithstanding anything in the Contract Documents to the contrary, [WVB] shall have no responsibility or obligation in connection with safety or the construction means, methods, techniques or procedures in connection with the Work or the acts or omissions of [Total], any other contractors, subcontractors, materialmen or others or any of their agents or employees or others performing the Work."

         ¶ 7 The condominium building was constructed, containing 10 floors and 180 condominium units, which WVB sold to individual purchasers during and after construction via separate individual purchase contracts. Turnover of the condominium building to the unit-owner elected board, the HOA, occurred on August 22, 2003. In 2006, attorneys for the HOA wrote a letter to the attorneys for WVB and reported water leaking from the roof into common areas and individual units.

         ¶ 8 On August 8, 2011, the HOA filed a complaint against WVB as the developer of the condominium project; Lennar Chicago, Inc., f/d/b/a Summit Development Corporation, d/b/a Lennar Chicago, as the general contractor allegedly hired by the developer for purposes of selling the units; Glenn Rutledge, Roger Mankedick, and Rosemary Godek as the individual employees of Lennar and members of the HOA until it was turned over to the HOA; IRCA as the roof consultant; and Total as the roof contractor.

         ¶ 9 In its complaint, the HOA alleged that it notified WVB of the defects now at issue in the lawsuit but that WVB refused to remedy the problems. The HOA alleged: "[a]s a result of [WVB's] refusal to remedy the defects in the roofing system, 933 Van Buren continued to experience water infiltration" and individual unit owners purportedly sustained damages to personal property, causing the HOA to spend $309, 000 to fix the water infiltration issues. All of these facts are incorporated into every claim in the complaint.

         ¶ 10 The original complaint contained the following counts: count I: "Breach of Warranty-West Van Buren"; count II: "Consumer Fraud Pursuant to 815 ILCS 505/10a-West Van Buren"; count III: "Breach of Fiduciary Duty-Rutledge, Mankedick & Godek"; count IV: "Fraud"; and count V: "Breach of Implied Warranty of Habitability."

         ¶ 11 Count I, "Breach of Warranty" against WVB, contains the following allegations that are relevant here:

"45. Each contract contained a Limited Warranty Statement wherein [WVB] warranted against any defects in material and workmanship in the common elements of the Condo Building.
46. [WVB] breached their Condominium Purchase Agreements with individual Unit owners by failing to complete the scope of its contract including, but not limited to:
(a) the failure to properly install the roofing ...

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