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Kuykendall v. Schneidewind

Court of Appeals of Illinois, Fifth District

May 26, 2017

EDWARD KUYKENDALL, Plaintiff-Appellant and Cross-Appellee,
v.
DAVID G. SCHNEIDEWIND, Individually and in His Capacity as Trustee of the Evelyn J. Schneidewind Revocable Trust; SCHNEIDEWIND INSURANCE AGENCY, INC., an Illinois Corporation; JOHN DOE, in His or Her Capacity as Trustee of the Evelyn J. Schneidewind Revocable Trust; EVELYN J. SCHNEIDEWIND REVOCABLE TRUST; EVELYN J. SCHNEIDEWIND, Individually and in Her Capacity as Trustee of the Evelyn J. Schneidewind Trust; ADVANTAGE REALTY; and JOHN DOES 1 THROUGH 5, Defendants-Appellees and Cross-Appellants.

         Appeal from the Circuit Court of St. Clair County, No. 15-AR-863; the Hon. Heinz M. Rudolf, Judge, presiding.

          Jana Yocom Rine, of Jana Yocom, P.C., of Evansville, Indiana, for appellant.

          David B. Schneidewind, of Boyle Brasher, LLC, of Belleville, and Elizabeth A. Stuart, of Stuart & Johnston LLC, of Atlanta, Georgia, for appellees.

          Panel JUSTICE CATES delivered the judgment of the court, with opinion.Presiding Justice Moore and Justice Chapman concurred in the judgment and opinion.

          OPINION

          JUSTICE CATES

         ¶ 1 The plaintiff, Edward Kuykendall, filed an action in the circuit court of St. Clair County against the defendants alleging fraud, breach of contract, and violations of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2014)) arising from the purchase of a commercial property. The defendants moved to dismiss the action with prejudice under section 2-619(a)(9) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(9) (West 2014)) and requested attorney fees and costs under a fee-shifting provision in the purchase agreement. The defendants also sought sanctions under Illinois Supreme Court Rule 137 (eff. July 1, 2013). Following a hearing, the trial court granted the defendants' motions and dismissed the plaintiff's action with prejudice but denied their requests for attorney fees, costs, and sanctions. The plaintiff appealed from the order of dismissal, and the defendants cross-appealed from the order denying attorney fees and sanctions. For reasons that follow, we reverse the order of dismissal, affirm the order denying sanctions, and remand the cause for further proceedings.

         ¶ 2 BACKGROUND

         ¶ 3 In June 2014, the plaintiff, Edward Kuykendall, a California resident, entered into an agreement to purchase a commercial building and surrounding property located on East Broadway in Mt. Vernon, Illinois, from defendant Evelyn J. Schneidewind Revocable Trust (Trust). The "Commercial Building Purchase Agreement" (Agreement) was executed by both parties as of June 18, 2014. In accordance with the Agreement, the Trust provided the plaintiff with an estoppel certificate prepared by the commercial property's sole tenant, DG Retail LLC (Dollar General). The certificate stated that as of June 27, 2014, the Trust was not in default of its obligations under the lease. The sale closed on July 16, 2014.

         ¶ 4 In the meantime, Dollar General sent a certified letter, dated July 15, 2014, to Evelyn J. Schneidewind, as trustee of the Trust, notifying the Trust that some parking bumpers in the parking lot were in poor condition and required repair. The certified letter was received by the Trust on July 17, 2014, one day after the closing. Over the next two weeks, Dollar General sent three more certified letters to the Trust, two dated July 17, 2014, and a third dated July 31, 2014, notifying the Trust that the drainage ditch, exterior lighting, portions of the building's roof, parking lot, and loading zone required maintenance or repairs. In each letter, Dollar General noted that a failure to address the issues within 30 days would constitute a breach of the lease.

         ¶ 5 On August 28, 2014, Dollar General sent the first of four certified letters to the plaintiff, notifying him of several maintenance issues, including potholes throughout the parking lot, problems with exterior lighting in the receiving area, broken parking bumpers, drainage ditch issues, and restriping of the parking lot. In a second letter, dated September 3, 2014, Dollar General notified the plaintiff that the exterior guttering was in disrepair. The third letter, dated September 9, 2014, advised that the roof was leaking again. The fourth letter, dated November 5, 2014, indicated that there was a problem with the parking lot repairs.

         ¶ 6 The plaintiff and the Trust corresponded, but they could not agree on which party was responsible for the maintenance issues. The plaintiff paid for repairs totaling $8973 and then demanded that the Trust reimburse him. The plaintiff claimed that the Trust had knowledge of the condition of the premises prior to the closing and intentionally concealed the information from the plaintiff. The Trust refused to reimburse plaintiff. The Trust asserted that it had no knowledge of the condition of the premises prior to the closing and that, under the terms of the Agreement, the property was sold in an "as is" condition and the plaintiff bore the responsibility to inspect the premises prior to the sale.

         ¶ 7 On June 11, 2015, the plaintiff initiated this action seeking to recoup the amount he spent on the repairs. The second amended complaint, at issue here, alleges fraud (count I), breach of contract (count II), and violations of the Consumer Fraud Act (count III). The crux of the plaintiff's complaint is that the defendants had actual or constructive knowledge of the need for repairs to the commercial building and surrounding property prior to the closing date and that they intentionally concealed this information from the plaintiff, despite a duty to disclose it.

         ¶ 8 Counts I and III of the second amended complaint are directed against Evelyn J. Schneidewind, individually and as trustee of the Trust; John Doe, as trustee of the Trust; David G. Schneidewind; Schneidewind Insurance Agency; Advantage Realty; and John Does 1 through 5. In counts I and III, the plaintiff alleges that the defendants had a duty to disclose defects in the property and any breach of the lease, that the defendants intentionally concealed material facts regarding the conditions of the premises and breaches of the lease, and that the plaintiff was fraudulently induced to purchase the property. The plaintiff asserts that the defendants had a heightened duty to disclose the condition of and defects in the property because Evelyn J. Schneidewind and David G. Schneidewind held real estate licenses, which were sponsored by Schneidewind Insurance Agency and Advantage Realty. The plaintiff further asserts that the Trust is liable as the seller and the remaining defendants are liable as trust beneficiaries and/or as licensed realtors. In counts I and III, the plaintiff seeks compensatory damages in the sum of $8973 and punitive damages. He seeks as an additional award of attorney fees in count III.

         ¶ 9 Count II of the second amended complaint is directed only against defendant Evelyn J. Schneidewind, in her capacity as trustee of the Trust. In count II, the plaintiff alleges that Dollar General issued an estoppel certificate that provided that the Trust was in compliance with the terms of the lease; that the estoppel certificate was inaccurate, as evidenced by Dollar General's letters dated July 15, 2014, and July 17, 2014; that under the terms of the Agreement, the Trust promised to warrant the accuracy of Dollar General's estoppel certificate; and that the Trust breached the Agreement in that it refused to pay for repairs when it became evident that the estoppel certificate was inaccurate. The plaintiff seeks an award of $8973, due to the Trust's breach of its promise to warrant the accuracy of the estoppel certificate, and attorney fees and costs under the fee-shifting provision in the Agreement.

         ¶ 10 Several documents were attached and incorporated as part of the second amended complaint, including the Agreement, the estoppel certificate, the repair receipts, and Dollar General's certified letters regarding needed repairs. At the outset, we note that the copy of the Agreement that has been appended as an exhibit and referenced by all parties is incomplete. Two pages are missing, apparently inadvertently omitted, from the initial copy of the Agreement, which was filed as part of a defendant's motion to dismiss the original complaint. Neither the plaintiff nor the defendants recognized the omission. Apparently, the parties made copies of the incomplete document and proceeded to attach and incorporate those copies into their respective pleadings.

         ¶ 11 According to the opening page of the Agreement, Edward Kuykendall and Barbara Kuykendall are the buyers of the property and Evelyn J. Schneidewind, as trustee for the Trust, is the seller of the property. HL Commercial Real Estate is named as the selling broker, and Tri-Oak Consulting Group is named as the listing broker.

         ¶ 12 Section 10 of the Agreement sets out the seller's warranties and states in part:

"Seller represents, warrants, covenants, and agrees that as of the date of this agreement, the following are, and as of closing, will be true and correct, and further agrees that such representations, warranties and ...

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