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Smith v. NVR, Inc.

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

June 6, 2018

NVR, INC., Defendant.


         In this suit against NVR, Inc. on behalf of themselves and a putative class of fellow home buyers in the Tall Pines development in Plainfield, Illinois, Paul and Deborah Smith allege that their home (1) does not conform to the building plans NVR advertised to them and submitted for approval to the Village of Plainfield and (2) does not comply with the Village's building code. Doc. 1. NVR moves under Federal Rule of Civil Procedure 12(b)(6) to dismiss the complaint. Doc. 12. The motion is granted in part and denied in part, though the Smiths will be given a chance to replead.


         In resolving a Rule 12(b)(6) motion, the court assumes the truth of the operative complaint's well-pleaded factual allegations, though not its legal conclusions. See Zahn v. N. Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). The court must also consider “documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice, ” along with additional facts set forth in the Smiths' brief opposing dismissal, so long as those additional facts “are consistent with the pleadings.” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1019-20 (7th Cir. 2013). The facts are set forth as favorably to the Smiths as those materials allow. See Pierce v. Zoetis, Inc., 818 F.3d 274, 277 (7th Cir. 2016). In setting forth those facts at the pleading stage, the court does not vouch for their accuracy. See Jay E. Hayden Found. v. First Neighbor Bank, N.A., 610 F.3d 382, 384 (7th Cir. 2010).

         On April 28, 2016, the Smiths agreed to purchase a home in the Tall Pines development in Plainfield, which consists of 46 homes built by NVR. Doc. 1 at ¶ 8; Doc. 1-1. The Purchase Agreement between the Smiths and NVR states in pertinent part:

[T]he Home may be different than what You have seen in our advertisements and marketing information. The Home will be constructed as shown on the construction drawings (or blueprints), the grading plan, floor plans and other plans related to the construction of the Home … together with the options You selected on the Master Selection sheet … and any Change Orders we mutually agree to … . All of these together are called the “Plans and Specifications.”

Doc. 1-1 at 1. The Agreement further provides that NVR “ha[s] the right to substitute similar materials of substantially equivalent quality” and “reserve[s] the right to make changes in the Plans and Specifications for purposes of mechanical installations, building code and site requirements, and reasonable architectural design improvements subsequent to the date of this Agreement.” Id. at 4. The Agreement also waives Illinois's implied warranty of habitability. Id. at 2-3. In November 2016, the Village of Plainfield issued a “Certificate of Occupancy and Compliance” for the Smiths' home, granting a “right to occupancy as a Duplex Permit” and stating that the home “does comply with the provisions of the Zoning Ordinance of the Village of Plainfield.” Doc. 16-2 at 2; Doc. 23 at 10.

         The complaint alleges that the home has several “material construction defects.” Doc. 1 at ¶ 9. First, NVR installed an HVAC system with a 2.5-ton (or smaller) compressor even though the Village's building code requires at least a 3-ton compressor. Id. at ¶ 12. Likewise, NVR installed a “region 1 sized furnace[]” even though the building code requires a “region 5 sized furnace.” Ibid. Second, the home's floor joists are not spaced properly, leading to inadequate floor support in violation of the building code. Id. at ¶ 13. Third, the water supply lines have too narrow a diameter as compared to the supply lines represented on the Plans and Specifications, and also do not comply with the building code. Id. at ¶ 16. Fourth, NVR used 25-year shingles in constructing the home, not the 30-year shingles it advertised. Id. at ¶ 14. Finally, contrary to NVR's representations, the home's cabinets are made not of natural wood, but instead of an “artificial non-wood material” with a wood veneer. Id. at ¶ 15.


         The complaint has two counts, both under Illinois law. Count I alleges that NVR violated the Illinois Consumer Fraud and Deceptive Practices Act (“ICFA”), 815 ILCS 505/1 et seq., id. at ¶¶ 25-29, while Count II alleges that NVR breached the Purchase Agreement, id. at ¶¶ 30-33.

         I. ICFA Claim

         For their ICFA claim, the Smiths allege that NVR deceived them by “misrepresenting the actual finished product” given that their home was not “code compliant or built to specifications.” Id. at ¶ 28. The ICFA “is a regulatory and remedial statute intended to protect consumers, borrowers, and business persons against fraud, unfair methods of competition, and other unfair and deceptive business practices.” Robinson v. Toyota Motor Credit Corp., 775 N.E.2d 951, 960 (Ill. 2002). “To state a claim under the ICFA … [the Smiths] must plausibly allege: (1) a deceptive act or promise by [NVR]; (2) [NVR's] intent that [they] rely on the deceptive act; (3) the deceptive act occurred during a course of conduct involving trade or commerce; and (4) actual damage as a result of the deceptive act.” Haywood v. Massage Envy Franchising, LLC, 887 F.3d 329, 333 (7th Cir. 2018). The ICFA prohibits both “unfair” and “deceptive” acts or practices. 815 ILCS 505/2. Allegations of unfair acts under the ICFA are subject to Rule 8(a)'s general pleading standard, see Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 446 (7th Cir. 2011), while allegations of deceptive acts “sound[] in fraud” and therefore are subject to Rule 9(b)'s heightened pleading standard, see Haywood, 887 F.3d at 333. Because the Smiths allege only deceptive acts, Doc. 1 at ¶¶ 26 (“Defendant deceived new home purchasers.”), 27 (“Defendants' [sic] acts and omissions create a likelihood of deception and have the capacity to deceive home purchasers.”), 29 (“Plaintiff[s] and the Class were damaged by Defendant's deceptive practices … .”), their ICFA claim must satisfy Rule 9(b). See Haywood, 887 F.3d at 333 (“Although Haywood brings one ICFA claim alleging unfair practices, that claim still sounds in fraud because it relies upon the same baseline allegation that Massage Envy intentionally misled consumers by hiding information on the length of massage time.”); Goldberg v. 401 N. Wabash Venture LLC, 755 F.3d 456, 464 (7th Cir. 2014) (holding that because “[w]hat is deceptive is also unfair, ” a plaintiff who alleges only deceptive unfairness has not preserved a non-deceptive unfairness claim under the ICFA).

         Rule 9(b) provides that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). “That means that [the complaint] must specifically allege the ‘who, what, when, where, and how of the fraud.'” Haywood, 887 F.3d at 333 (quoting Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 737 (7th Cir. 2014)). “A principal purpose of requiring that fraud be pleaded with particularity is, by establishing this rather slight obstacle to loose charges of fraud, to protect individuals and businesses from privileged libel (privileged because it is contained in a pleading).” Kennedy v. Venrock Assocs., 348 F.3d 584, 594 (7th Cir. 2003). Accordingly, Rule 9(b) “requires the plaintiff to conduct a precomplaint investigation in sufficient depth to assure that the charge of fraud is responsible and supported.” Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 950 (7th Cir. 2013) (internal quotation marks omitted).

         The Smiths allege that NVR, “prior to its sales of the homes in Tall Pines, represented to [them] that the home[] would be constructed as shown on the construction drawings.” Doc. 1 at ¶ 19. That allegation does not satisfy Rule 9(b) because it does not indicate “the identity of the person making the misrepresentation, the time [or] place … of the misrepresentation, and the method by which the misrepresentation was communicated to [the Smiths].” Camasta, 761 F.3d at 737; see also Rocha v. Rudd, 826 F.3d 905, 911 (7th Cir. 2016) (“For each of his allegations, Rocha fails to provide the specific names, dates [or] times … of the misrepresentations or omissions that give rise to the alleged fraud.”). The same applies to the Smith's allegations that NVR “deceived” them and that “[its] acts and omissions create a likelihood of deception and have the capacity to deceive new home purchasers.” Doc. 1 at ¶¶ 26-27. True, Rule 9(b) does not demand total recall. See Camasta, 761 F.3d at 737 (“We do not require that [the plaintiff] provide the precise date, time, and location that he saw the advertisement or every word that was included on it … .”) (emphasis added). But, given that the Smiths presumably know with whom they communicated, when, and by what means, the Rule requires the Smiths to do more than simply assert that a misrepresentation about their home's fixtures was made by some unnamed person at some unknown point via some unspecified means. See ibid. (“[S]omething more than [the plaintiff's] assertion that ‘merchandise was offered at sale prices' is needed.”); Pirelli, 631 F.3d at 445 (“Pirelli's de ...

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