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Horist v. Sudler and Co.

United States District Court, N.D. Illinois, Eastern Division

April 24, 2018



          Robert W. Gettleman United States District Judge.

         Plaintiffs Keith Horist, and Joshua and Lori Eyman, brought a five count putative class action complaint against defendants Sudler and Company d/b/a Sudler Property Management (“Sudler”), and HomeWise Service Corp., Inc., and Nextlevel Association Solutions, Inc. (jointly as (“HomeWise”), alleging: (1) violations of the Illinois Consumer Fraud and Deceptive Practices Act (“ICFA”), 815 ILCS 505/1 (Count I); (2) violations of the Illinois Condominium Property Act, 765 ILCS 605/1 et seq. (“Condo Act”) (Count II); (3) adding and abetting/inducement to breach fiduciary duty (Count III); (4) common law conspiracy (Count IV); and (5) unjust enrichment (Count V). HomeWise removed the case to this court under the Class Action Fairness Act, 28 U.S.C. § 1332(d). Sudler and HomeWise have filed separate motions to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons stated below, those motions are granted.


         Plaintiff Horist owned a condominium unit at 400 East Ohio Street, Chicago, Illinois and was a member of the 400 East Ohio Association. Plaintiffs Joshua and Lori Eyman owned a condominium unit at 1515 S. Prairie Avenue, Chicago Illinois and were members of the (808) Prairie House at Central Stations Association (the “Prairie House Association”).

         Defendant Sudler is a property management company that was engaged by both the 404 East Ohio Association and the Prairie House Association to manage their operations. According to the complaint, HomeWise contracts with property managers to provide, via the internet, electronic copies of documents that sellers of condominium units are required by § 22.1 of the Condo Act to provide to prospective purchasers. The complaint alleges that Sudler's website has a drop-down menu “for its associations' homeowners who need ‘selling information, '” and regardless of the association selected, Sudler's site forwards the person seeking selling information directly to the HomeWise internet site.

         During 2017, both Horist and the Eymans contracted to sell their units. Claiming they had no other option, each had to obtain their selling information from HomeWise. Horist paid $240, consisting of $155 for a paid assessment letter, $80 for a § 22.1 resale certificate and a $5 convenience fee. The Eymans paid $365, consisting of $150 for a paid assessment letter, $205 for a § 22.1 “resale disclosure package with Assoc. docs.” and a $5 convenience fee.

         According to plaintiffs, HomeWise retained what plaintiffs describe as a minimal “click-fee” and then “kicked back” the rest of its fee to Sudler. Plaintiffs claim that the Associations indirectly benefit from this practice because it helps reduce Sudler's management fee.


         Sudler and HomeWise have each moved to dismiss the complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6). Such a motion challenges the sufficiency of the complaint, not its merits. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). The court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in plaintiff's favor. Sprint Spectrum, L.P. v. City of Carmel, Indiana, 361 F.3d 998, 1001 (7th Cir. 2004). The complaint must allege sufficient facts, that if true, would raise a right to relief above the speculative level, showing that the claim is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 549, 555 (2007). To be plausible on its face, the complaint must plead facts sufficient for the court to draw the reasonable inference that the defendant is liable for the alleged misconduct. Ashcroft v. Iqbal, 556 U.S. at 678 (2009).

         I. Condo Act

         Section 22.1(a) of the Condo Act provides that when an individual unit owner resells the unit, the unit “owner shall obtain from the Board of Managers and shall make available for inspection to the prospective purchaser upon demand, ” certain listed documents: (1) a copy of the declaration, bylaws, other condominium instruments and any rules and regulations; (2) a statement of any liens and a statement of the account of the unit including unpaid assessments and charges due; (3) any capital expenditures anticipated by the association within the next two years; (4) the status and amount of any reserves or replacement fund and any portion earmarked for specified projects; (5) a statement of the association's financial condition for the last fiscal year; (6) the status of any pending suits or judgments in which the association is a party; (7) a statement of insurance coverage provided to unit owners; (8) a statement that any improvement or alterations to the unit made by the seller are in good faith believed to be in compliance with the condominium instruments; and (9) the identity and mailing address of the associations principal officer or of any other officer or agent specifically designated to receive notice. These documents are commonly referred to as the “Disclosure Documents” or § 22.1 disclosures.

         The Condo Act further provides that “the principal officer of [the association] or such other officer as is specifically designated shall furnish the above information when requested to do so in writing and within thirty days of the request.” 765 ILCS 605/22.1(b). Finally, subsection (c) provides that “a reasonable fee covering the direct out-of-pocket cost of providing such information and copying may be charged by the association or its Board of Managers to the unit seller for providing such information. 765 ILCS 605/22.1(c).

         Plaintiffs argue that defendants have turned this process into a “profit center, ” by causing the associations managed by Sudler to stop providing disclosure documents, thereby effectively requiring unit sellers to utilize HomeWise. HomeWise then charges hundreds of dollars for providing the documents when the actual cost to do so is nominal because they are typically provided in portable document file (“PDF”) format, and in large part are identical from seller to seller within the same association. Therefore, according to plaintiffs, there is little to no “direct out-of-pocket cost” to provide the documents, and defendants' charges violate § 22.1(c).

         Defendants identify a number of problems with this argument, the first of which is that the complaint does not contain any factual allegation that defendants somehow caused the association to stop providing disclosure documents. Nor is there any allegation that the associations refuse to provide such documents upon request or, for that matter, if requested, directs the requester to Sudler or HomeWise thereby abdicating their responsibilities under the Act. The closest the complaint comes is to allege that the association hired Sudler to manage the property, including to provide disclosure documents, and that Sudler hired HomeWise to provide those documents electronically. Consequently, the complaint fails to allege any facts to support plaintiffs' argument ...

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