NOTICE 2026 IL App (5th) 250208-U NOTICE Decision filed 04/23/26. The This order was filed under text of this decision may be NO. 5-25-0208 Supreme Court Rule 23 and is changed or corrected prior to not precedent except in the the filing of a Petition for IN THE limited circumstances allowed Rehearing or the disposition of under Rule 23(e)(1). the same. APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT ______________________________________________________________________________
ACA ILLINOIS TIER 1 STUDENT HOUSING DST, ) Appeal from the ) Circuit Court of Plaintiff-Appellant, ) Champaign County. ) v. ) No. 23-LA-165 ) LARSON COMPANY, LLC; XFD, LLC; 206 GREEN ) STREET, LLC; KAP ARCHITECTURE, LLC; and ) BROEREN RUSSO CONSTRUCTION, INC., ) ) Defendants ) ) (Larson Company, LLC; XFD, LLC; KAP Architecture, ) Honorable LLC; and Broeren Russo Construction, Inc., Defendants- ) Benjamin W. Dyer, Appellees). ) Judge, presiding. ______________________________________________________________________________
JUSTICE VAUGHAN delivered the judgment of the court. Justices Boie and Clarke concurred in the judgment.
ORDER
¶1 Held: The circuit court’s order dismissing plaintiff’s complaint is affirmed where plaintiff had no standing to bring its breach of implied warrant of habitability claims, no privity for the remaining breach of implied warranty claims exists, and its claim for negligence was precluded by the Moorman doctrine.
¶2 Plaintiff, ACA Illinois Tier 1 Student Housing DST (ACA), appeals the circuit court’s
dismissal of its claims for breach of implied warranty and negligence. The claims were filed against
defendants, Larson Company, LLC; XFD, LLC; KAP Architecture, LLC; and Broeren Russo
Construction, Inc. (collectively defendants), related to the design and construction of a six-story
1 residential building located at 212 E. Green Street in Champaign, Illinois, purchased by ACA. For
the following reasons, we affirm.
¶3 I. BACKGROUND
¶4 On December 16, 2022, ACA filed an eight-count verified complaint against defendants 1
in Cook County, Illinois. The Cook County circuit court ultimately determined that venue was
improper and transferred the case to Champaign County, Illinois. The introductory paragraph of
the complaint claimed that ACA sought “to recover compensatory damages to redress ***
Defendants’ breaches of their respective duties under professional and construction contracts and
their implied warranties, in connection with their development and construction of a six story
residential building *** in Champaign, Illinois.” ACA alleged that Larson Company, LLC
(Larson) and XFD, LLC (XFD) (collectively Developers) had a development plan to sell the
building after construction and that Developers entered into a consulting contract with KAP
Architecture, LLC (Architect). No copy of either the development plan or the contract with
Architect was attached to the complaint. ACA also claimed that pursuant to the contract, Architect
developed a design that included roof and roof framing plans, the latter of which required R-15
Batt insulation in the wall stud cavity or blown-in insulation to the ceiling. ACA further alleged
that Developers entered into a construction contract with Broeren Russo Construction, Inc.
(Builder), naming Builder as the general contractor, which required it to manage and oversee the
construction of the building. No copy of the construction contract was attached to the complaint.
ACA claimed it was a third-party beneficiary to both the architect and construction contracts.
1 While 206 Green Street was listed as a defendant in the caption, service was never obtained on 206 Green Street and none of the allegations listed 206 Green Street as a defendant. As such, 206 Green Street is irrelevant as to this appeal. 2 ¶5 In the complaint, ACA also alleged that it took possession of the building from 206 Green
Street, LLC (Seller) on September 26, 2018, pursuant to a sales agreement executed on July 23,
2018. No copy of the sales agreement was attached to the complaint. ACA alleged that property
tenants reported moisture problems and odors in the hallways and units in 2021 and 2022. It also
alleged that it notified Developers and Builder of the moisture problems in 2022, and two
inspections, one by ACA and the other by Builder, confirmed a faulty roof design was the cause
of the problem.
¶6 ACA’s complaint alleged fraudulent concealment against Developers (count I), breach of
implied warranty of habitability against Developers (count II), breach of construction agreement
against Builder (count III), breach of implied warranty of habitability against Builder (count IV),
breach of implied warranty of good workmanship against Builder (count V), breach of the
architecture agreement against Architect (count VI), breach of implied warranty of specifications
against Architect (count VII), and negligence against Architect (count VIII). Each count requested
compensatory damages in excess of $1.6 million.
¶7 On February 22, 2023, Builder filed a combined motion to dismiss counts III, IV, and V
pursuant to section 2-619.1 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619.1 (West
2022)). Pursuant to section 2-619 of the Code (id. § 2-619), Builder’s motion contended that all of
ACA’s claims required contractual privity with Builder, but no such privity existed. It also claimed
that no contract existed between Builder and ACA, and ACA failed to overcome the presumption
that it was not an intended third-party beneficiary of Builder’s contract with Seller. The motion
further argued that even if ACA was an intended third-party beneficiary, the contract between
Builder and Seller required binding arbitration.
3 ¶8 Pursuant to section 2-615 of the Code (id. § 2-615), Builder argued that plaintiff failed to
provide factually supported allegations of contractual privity with Builder in any of the three
counts against Builder, failed to allege that it performed all obligations under any contract which
was a necessary element of a breach of contract claim, and further alleged that Builder followed
the planned designs for the roof, which logically could not form the basis of any of ACA’s claims.
Documents attached in support of the motion to dismiss included: (1) the underlying complaint
and (2) the affidavit of Jim Lopez, president of Builder, which stated that Builder’s work was
governed by two contracts: (a) the A133 agreement and (b) the A201 agreement, both of which
were also attached to the motion to dismiss. The former was an agreement between Seller and
Builder that listed the architect as KAP Architecture, LLC (Architect). The latter agreement was
between the owner, which was listed as Larson Company, and Architect.
¶9 A motion to dismiss was also filed by Architect requesting dismissal of counts VI, VII, and
VIII for the same reasons provided by Builder, except no claim of arbitration was presented by
Architect. As to the count VIII claim of negligence, Architect contended dismissal was required
because ACA was seeking recovery of economic loss, which was not recoverable in tort pursuant
to Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69, 85-86 (1982).
¶ 10 On March 24, 2023, ACA filed a response to Builder’s motion to dismiss claiming privity
existed because Larson marketed itself as “an investor, developer and manager of student housing
assets” and had a website that reflected sale of its various properties, including the building at
issue. ACA further argued that breach of warranty did not require strict contractual privity and a
footnote contended that third-party beneficiaries were not bound by arbitration clauses. On the
same date, ACA also filed a response to Architect’s motion to dismiss. Therein, ACA stated that
it established that Architect and Builder intended to benefit ACA as a third-party beneficiary,
4 which allowed the breach of contract and breach of implied warranty of specifications claims to
remain. It further argued that the economic loss doctrine did not apply where the alleged defects
posed a risk of harm to people and property, a threat to safety, or were hazardous or dangerous.
¶ 11 Replies were filed by Architect on April 3, 2023, and Builder on April 6, 2023. On April
12, 2023, the circuit court issued an order prohibiting further briefing. The order further stated that
written rulings on the motion would be issued later. However, no ruling was issued and instead,
on November 3, 2023, the Cook County circuit court issued an order granting defendants’ motion
to transfer venue to Champaign County.
¶ 12 On January 22, 2024, Developers moved to dismiss counts I and II pursuant to section 2-
615 of the Code. As to count I (fraudulent concealment), they argued that no purchase agreement
was attached to the complaint as required by section 2-606 of the Code (735 ILCS 5/2-606 (West
2022)). They also contended that there were no allegations that they intended to induce a false
belief. The motion further argued that ACA could have discovered the truth through reasonable
inquiry or inspection and there was no allegation that Developers prevented either. The motion
noted the lack of any allegation that ACA made reasonable inquiries or inspection and instead
relied on an “Offering Memorandum” without attaching that document either. It further alleged
that while ACA claimed that Seller was defendant’s affiliate, no factual information for that
allegation was included.
¶ 13 As to count II (breach of implied warranty of habitability), Developers argued that no copy
of any contract involving Developers was attached to the complaint and neither was the sales
agreement. They further argued that count II of the complaint contained no allegations and instead
relied on legal conclusions claiming that negligent and improper design and construction
materially violated implied warranties of habitability; however, ACA failed to identify any duties
5 owed by the Developers and instead relied upon allegations of negligence by Architect and
Builder.
¶ 14 On February 5, 2024, ACA filed a response arguing that it was not required to attach the
sales agreement because the suit was not based on that agreement. It argued that Developers stated
there were no items in need of repair in the offering memorandum and repaired the moisture and
mold conditions by cleaning and repainting the units so no discovery could be made through an
inspection. ACA further claimed, citing Redarowicz v. Ohlendorf, 92 Ill. 2d 171, 183 (1982), that
a warranty of habitability extended to a subsequent purchaser, like the initial purchaser, who had
little opportunity to inspect the construction methods.
¶ 15 On June 5, 2024, the circuit court issued an order on the motions to dismiss. As to Builder,
the court found that the contract between Builder and the owner, Larson Company, excluded any
other contractual relationship, which undermined ACA’s claim of third-party beneficiary status.
Because the defect could not be cured by repleading, Builder’s motion to dismiss as to the breach
of contract claim (count III) was granted with prejudice. The court further noted that even if ACA
were a third-party beneficiary, it would be obligated to engage in mediation and then binding
arbitration. As to the warranty of habitability claim (count IV), the court relied on Redarowicz to
state that privity was not required; however, the circuit court found that expansion of the warranty
in Redarowicz to include subsequent purchasers did not apply to ACA. The court, citing Hopkins
v. Hartman, 101 Ill. App. 3d 260 (1981), noted that ACA was neither unknowledgeable in
construction practices nor an unsophisticated home buyer and that implied warranties of
habitability did not apply to investment property. Therefore, the court dismissed count IV with
prejudice. As to the warranty of good workmanship claim (count V), the court stated that the claim
lacked privity and further noted that ACA’s complaint did not contend that the workmanship was
6 bad or that Builder deviated from the plans or designs of the building. Therefore, the court
dismissed count V, with prejudice.
¶ 16 The court next addressed counts VI-VIII against Architect. Starting with the breach of
contract claim (count VI), the court noted that the contract was between Architect and Builder and
the contract specifically stated that no third-party beneficiary was contemplated. As such, the court
dismissed count VI, with prejudice. As to the implied warranty of specifications (count VII), the
court found, citing Hopkins, that the purchase by a corporation of a 111-unit building for use as an
investment or rental property precluded reliance on the implied warranty of specifications and
dismissed that count with prejudice.
¶ 17 As to the negligence claim (count VIII), the court addressed Architect’s reliance on the
Moorman doctrine and its preclusion of any tort claim. The court noted three exceptions to the
Moorman economic loss rule that existed and ACA claimed two applied: (1) a sudden and
dangerous occurrence; and (2) claims of professional negligence. As to ACA’s former argument,
citing 1324 W. Pratt Condominium Ass’n v. Platt Construction Group, Inc., 404 Ill. App. 3d 611,
620 (2010), and Washington Courte Condominium Ass’n-Four v. Washington-Golf Corp., 150 Ill.
App. 3d 681, 787 (1986), the circuit court noted that case law previously found that mold was not
a sudden and dangerous occurrence. It also noted, citing Mayer v. Chicago Mechanical Services,
Inc., 398 Ill. App. 3d 1005, 1010 (2010), that a different court reached the opposite conclusion.
Ultimately, the circuit court found the first exception did not apply because the corporation did not
suffer from a respiratory problem, was incapable of sustaining a personal injury, and was not even
a resident of the building.
¶ 18 As to ACA’s latter exception to the Moorman doctrine based on architectural professional
negligence, the court held that no case cited by ACA—in support of its claim that the economic
7 loss doctrine did not preclude a claim for professional negligence—involved the economic loss
doctrine. It further found the decision in 2314 Lincoln Park West Condominium Ass’n v. Mann,
Gin, Ebel & Frazier, Ltd., 136 Ill. 2d 302, 316-17 (1990), precedential. Ultimately, the court stated
that “professional services” was not a fourth exception to the economic loss rule and dismissed
count VIII, with prejudice, because no reformation would fix the defects.
¶ 19 Finally, the court addressed counts I and II against Developers. Count I, which alleged
fraudulent concealment, was dismissed. However, prejudice was not attached to the dismissal, and
ACA was granted leave to file an amended complaint by June 28, 2024. Count II, which alleged
breach of implied warranty of habitability, was dismissed with prejudice because the court, again
citing Hopkins, found that the implied warranty of habitability did not apply to investment
property.
¶ 20 In addition to filing a first amended complaint on June 28, 2024, ACA also filed a motion
to reconsider the circuit court’s previous rulings as to counts II, IV, V, VII, and VIII. As to the
latter filing, ACA contended that the circuit court erred in its previous application of existing law
to the facts. It first noted that the court erroneously found that Architect’s contract was with
Builder, not Developers, and asked that it be allowed to replead since it did not have the contract
attached to the original complaint. It further contended that Hopkins was old law that was
previously criticized by the Idaho Supreme Court, citing Tusch Enterprises v. Coffin, 740 P.2d
1022 (Idaho 1987), and was never applied in Illinois thereafter. It also claimed that the court’s
ruling regarding Architect ignored Ferentchak v. Village of Frankfort, 121 Ill. App. 3d 599, 608
(1984), which would not bar negligence under the economic loss doctrine when no other remedy
existed for the architect’s negligence. Defendants filed separate responses to ACA’s motion for
8 reconsideration with each requesting affirmation of the dismissal. Thereafter, ACA filed separate
replies to the responses.
¶ 21 On November 19, 2024, the circuit court issued an order denying ACA’s motion to
reconsider. On December 12, 2024, ACA moved the court to certify its ruling pursuant to Illinois
Supreme Court Rule 304(a) (eff. Mar. 8, 2016) (no reason to delay appeal or enforcement) or
Illinois Supreme Court Rule 308(a) (eff. Oct. 1, 2019) (question of law for which there is
substantial ground for difference of opinion and immediate appeal would materially advance the
termination of the litigation). On February 13, 2025, the court issued an order granting plaintiff’s
motion to certify pursuant to Rule 304(a).
¶ 22 II. ANALYSIS
¶ 23 On appeal, ACA raises eight issues stemming from the circuit court’s dismissal with
prejudice pursuant to sections 2-615 and 2-619(a)(9) of the Code (735 ILCS 5/2-615, 2-619(a)(9)
(West 2022)) of its claims in counts II, IV, V, VII, and VIII. A motion to dismiss under section 2-
615 “challenges the legal sufficiency of a complaint based on defects apparent on its face.”
Marshall v. Burger King Corp., 222 Ill. 2d 422, 429 (2006). All well-pleaded facts are taken as
true, and reasonable inferences are drawn in the plaintiff’s favor. Id. The critical question in
reviewing a section 2-615 motion is whether the allegations are sufficient to state a cause of action
upon which relief may be granted. Rehfield v. Diocese of Joliet, 2021 IL 125656, ¶ 20. A complaint
should only be dismissed under section 2-615 where no set of facts can be provided which would
entitle the plaintiff to recovery. Id.
¶ 24 Conversely, a motion to dismiss under section 2-619(a)(9) admits the legal sufficiency of
the complaint but asserts an affirmative defense that defeats the claim. O’Connell v. County of
Cook, 2022 IL 127527, ¶ 19. Again, the court must accept as true all well-pleaded facts, and
9 inferences arising therefrom, but does not accept mere conclusions unsupported by specific facts.
Patrick Engineering, Inc. v. City of Naperville, 2012 IL 113148, ¶ 31. We review, de novo, the
circuit court’s rulings under either section 2-615(a) or section 2-619(a) of the Code. Solaia
Technology, LLC v. Specialty Publishing Co., 221 Ill. 2d 558, 579 (2006).
¶ 25 ACA initially contends, as to counts II, IV, and V, that the circuit court erred in holding
that the implied warranties of habitability and good workmanship do not apply to income-
producing property even when latent defects are in issue. Based on our review of the history behind
the implied warranty of habitability, we disagree.
¶ 26 In Illinois, the implied warranty of habitability originated in Jack Spring, Inc. v. Little, 50
Ill. 2d 351, 352-53 (1972), a case that involved nonpayment of rent in which the tenant raised an
affirmative defense stemming from the landlord’s promise to repair. The Illinois Supreme Court
considered Ingalls v. Hobbs, 31 N.E. 286, 286 (Mass. 1892), and Javins v. First National Realty
Corp., 428 F.2d 1071, 1072-76 (D.C. Cir. 1970), both of which addressed the implied warranty of
habitability applied in other areas. Jack Spring, 50 Ill. 2d at 360-66. The court noted that Javins
was based on consumer protection cases and changes in trends related to repairs by tenants and
landlords. Id. at 363-66. Ultimately, the court found Javins persuasive and held that “included in
the contracts, both oral and written, governing the tenancies of the defendants in the multiple unit
dwellings occupied by them, is an implied warranty of habitability ***.” Id. at 366. As such,
tenants of leased property were the first parties permitted to bring claims under the implied
warranty of habitability against their landlords in Illinois. Id.
¶ 27 The Illinois Supreme Court later expanded the implied warranty of habitability to include
buyers of new residential homes against a builder-vendor thereby ending the doctrines of caveat
emptor and merger as to land purchases. Petersen v. Hubschman Construction Co., 76 Ill. 2d 31,
10 39-40 (1979). Prior to Petersen, if a new home buyer failed to discover defects before the transfer
of property, caveat emptor prevented him from maintaining a suit against the builder. Id. at 38.
The doctrine of caveat emptor essentially required the purchaser to take title of property at his own
risk. Checkley & Co. v. Citizens National Bank of Decatur, 43 Ill. 2d 347, 349 (1969). Further,
under the merger doctrine, agreements between a new home seller and buyer merged with the deed
and if the deed did not include reservations or warranties that might have been in the building
contract, once the buyer received the property via the deed, he had no right of recourse regarding
the quality of his property. Petersen, 76 Ill. 2d at 38.
¶ 28 The Petersen court noted “the vast change” that had “taken place in the method of
constructing and marketing new houses” and found the doctrine was available for latent defects.
Id. at 39-40. In rendering the decision, the court classified the buyer as a person relying on a model
home or pre-drawn plans, with little or no opportunity to inspect construction despite the buyer
making “in many instances the largest single investment of his life.” Id. at 40. The court further
classified the residential buyer as a person with a lack of knowledge in construction practices,
which forced reliance on “the integrity and skill of the builder-vendor” and noted that while
inspections were possible, latent defects would not be discoverable if the house was already
complete. Id. Based on those public policy reasons, the Petersen court expanded the implied
warranty of habitability to include residential home purchasers and the vendor/builder of the home
to alleviate the harshness of the doctrines of merger and caveat emptor.
¶ 29 The Illinois Supreme Court later expanded the implied warranty of habitability to
subsequent purchasers of a residential home; however, that expansion was “limited to latent
defects which manifest themselves within a reasonable time after the purchase of the house.”
Redarowicz v. Ohlendorf, 92 Ill. 2d 171, 185 (1982). In so doing, the court also held, “While the
11 warranty of habitability has roots in the execution of the contract for sale [citation], we emphasize
that it exists independently [citation]. Privity of contract is not required.” Id. at 183.
¶ 30 The issue here is whether the doctrine should be further expanded to include purchasers of
commercial income-producing property. Notably, the implied warranty of habitability extends to
the board of managers for a condominium pursuant to statutory authority provided by the Illinois
legislature in the Condominium Property Act. See 765 ILCS 605/9.1(b) (West 2022). Section
9.1(b) of the Condominium Property Act provides the board of managers “standing and capacity
to act in a representative capacity in relation to matters involving the common elements or more
than one unit, on behalf of the unit owners, as their interest may appear.” Id. The board of managers
is basically the board of directors of the corporation. Id. § 18.1(d).
¶ 31 While the doctrine is generally limited to one-unit residential homes and condominiums,
in Briarcliffe West Townhouse Owners Ass’n v. Wiseman Construction Co., 118 Ill. App. 3d 163,
167 (1983), the appellate court addressed standing of a townhouse owners association as “owner
of the common land, as third-party beneficiary of the contract between the Developer and the
homeowners, or as a representative of the homeowners.” The appellate court ultimately found that
“under the particular circumstances” of that case, the association had “standing to sue as a
representative of the individual townhouse owners” because the association was created to handle
the common areas of the townhouse property. Id. at 169. However, credence in the Briarcliffe
decision is undermined by the Illinois Supreme Court’s later decision that precluded reliance on a
warranty of habitability theory in a recreational building, in which no one resided, which was the
basis of the underlying claim in Briarcliffe. See Board of Directors of Bloomfield Club Recreation
Ass’n v. Hoffman Group, Inc., 186 Ill. 2d 419, 426 (1999).
12 ¶ 32 Equally relevant are the cases that reached a different conclusion and denied application of
the warranty of habitability for nonresidential property or commercial leases. In J.B. Stein & Co.
v. Sandberg, 95 Ill. App. 3d 19 (1981), the court did not extend the implied warranty of habitability
established in Jack Spring to commercial leases, noting that the decision in Jack Spring “limited
its decision to multiple dwelling units.” Id. at 25-26 (citing Elizondo v. Perez, 42 Ill. App. 3d 313
(1976), Clark Oil & Refining Corp. v. Banks, 34 Ill. App. 3d 67 (1975), Ing v. Levy, 26 Ill. App.
3d 889 (1975), and Germania Federal Savings & Loan Ass’n v. Jacoby, 23 Ill. App. 3d 145
(1974)).
¶ 33 Similarly, in Hopkins v. Hartman, 101 Ill. App. 3d 260, 262-63 (1981), the court held that
owners of a duplex residence were not within the class of persons protected by an implied warranty
of habitability and extension was not warranted for commercial property never occupied by the
owners. It noted that the motivation of an income-producing property owner had different
pressures than the Petersen purchaser, stating, “The income-seeker, whether he be purchasing
common stocks, chattels, real estate, or any other form of investment, has ample opportunity to
investigate, study, appraise and assess the relative merits and demerits of the subject matter and
then to make a calculated judgment as to how profitable it will be.” Id.
¶ 34 The Hopkins court noted, in contrast, the Petersen purchaser was “seeking shelter for
himself and his family, oftentimes under considerable pressure brought about by job transfer,
increase in family, deterioration of his former neighborhood, or other circumstance over which he
has no control.” Id. at 263. The court further stated:
“If the Petersen warranty is to be extended to an investor in real estate, by extension
of logic the Board of Governors of the New York Stock Exchange should warrant
that no common stock traded there will ever decrease in value. The relaxation of
13 the rules of caveat emptor and merger by the supreme court was intended to protect
a consumer, not an investor.” Id.
¶ 35 ACA argues that the Hopkins decision is old and was not followed by the Idaho Supreme
Court, in Tusch Enterprises v. Coffin, 740 P.2d 1022 (Idaho 1987). In Tusch Enterprises, the court
disagreed with the ruling in Hopkins and extended the implied warranty of habitability to
“residential dwellings purchased for income-producing purposes which have never been occupied
by the buyers.” Id. at 1032. While relevant, we do not find the ruling persuasive, especially when
such a substantial variance in the expansion or reduction of rights under the implied warranty of
habitability would create conflicting case law within our state based on the decision in Hopkins, a
case that while aged, has never been overruled.
¶ 36 Notably, the most recent decision addressing the implied warranty of habitability by the
Illinois Supreme Court curtailed expansion of the doctrine to include subcontractors where there
was no contractual relationship. See Sienna Court Condominium Ass’n v. Champion Aluminum
Corp., 2018 IL 122022, ¶ 30. As noted therein, the warranty of habitability is “implied by the
courts as a matter of public policy” (id. ¶ 23); however, the court declined to extend public policy
even when denial of the claim left the owner without a judicial remedy. See id. ¶ 28.
¶ 37 As noted above, the underlying basis for the adoption and expansion of the implied
warranty of habitability to homes was to protect buyers of residential homes from latent building
defects causing the home to be uninhabitable where the buyer was unsophisticated in construction
practices and reliant on “the integrity and the skill of the builder-vendor.” See Petersen, 76 Ill. 2d
at 39-40. Further, expansion of the warranty provided in the 1982 decision issued in Redarowicz
was subsumed, in part, by the Residential Real Property Disclosure Act (RRPDA) (765 ILCS 77/1
et seq. (West 2024)), enacted by the Illinois legislature and made effective on October 1, 1994.
14 Notably sections 20 and 55 of the RRPDA, respectively, require the seller to provide certain
disclosures to the purchaser and sets forth remedies for violations of the failure to provide said
disclosure. See id. §§ 20, 55.
¶ 38 In the 30 years since that enactment, the Illinois legislature did not promulgate similar
legislation for commercial purchasers. Nor has the Illinois Supreme Court expanded the implied
warranty of habitability to include both residential and commercial purchases. Based on the history
of the implied warranty of habitability in Illinois, and the lack of expansion by either the legislature
or our supreme court, we cannot find that a commercial purchaser of a six-story, 111 residential
unit commercial student housing building stands in a position similar to an unsophisticated
purchaser of residential property in which the purchaser and his family reside. Accordingly, we
decline ACA’s request to expand the implied warranty of habitability to the purchase of
commercial property.
¶ 39 ACA next argues, relying on Redarowicz, that the circuit court erred by dismissing its
claims for breaches of the implied warranties of habitability against Developers and Builder
(counts II and V) because a subsequent purchaser’s claim for breach of the implied warranty of
habitability does not require strict contractual privity. While we agree that Redarowicz appeared
to abolish a privity requirement, the Redarowicz language must be considered and reconciled with
recent cases addressing the same issue. Notably, contrary to the 1982 language in Redarowicz, in
2018, the Illinois Supreme Court expressly required contractual privity between the plaintiff and
the defendant in actions involving economic loss. Sienna Court Condominium Ass’n, 2018 IL
122022, ¶ 21. The decision further clarified that the loss covered by implied warranty of
habitability was “pure economic loss.” Id. ¶ 30. At best, Redarowicz is related solely to the narrow
15 principle implied by the right of assignment for residential cases involving subsequent purchasers
that invoke the implied warranty of habitability. Id. ¶ 27.
¶ 40 Here, no argument was raised that the circuit court erred in finding that ACA was not a
third-party beneficiary to any of the contracts between defendants. Nor does ACA dispute that it
was not in privity with either Developers or Builder and that its claims against them were for
economic loss under the implied warranty of habitability. Moreover, even if privity were not
required, the claims would remain untenable because it is our position that the implied warranty
of habitability is inapplicable to commercial, income-producing, purchases. Under the facts in this
case, and the language in Sienna Court Condominium Ass’n, we find no error with the dismissal
of the implied warranty claims in counts II and V.
¶ 41 ACA’s third and fourth arguments contend that the circuit court erred in dismissing its
claim for breach of implied warranty of good workmanship (count V) against Builder. ACA first
argues the dismissal was erroneous because the circuit court relied on its previous holding that
implied warranty claims did not extend to corporate income-producing purchasers. It further
argues that the implied warranty of good workmanship does not require strict privity. We disagree
with both claims.
¶ 42 “Under the implied warranty of good workmanship, ‘one who contracts to perform
construction work impliedly warrants to do the work in a reasonably workmanlike manner.’ ”
Smith v. Jones, 2025 IL App (5th) 231136, ¶ 23 (quoting Harmon v. Dawson, 175 Ill. App. 3d 846,
849 (1988)). “ ‘[T]he failure to so perform constitutes a breach of contract.’ ” Id. (quoting Harmon,
175 Ill. App. 3d at 849). Here, there is no contract between ACA and Builder. While the implied
warranty of habitability has been expanded to include subsequent purchasers of residential
property (see Petersen, 76 Ill. 2d at 40), ACA provides no basis to extend the implied warranty of
16 good workmanship in a similar manner and, for the reasons set forth above, we do not believe the
warranty would extend to corporate-owned investor property.
¶ 43 However, even if it did, ACA’s contention that the implied warranty of good workmanship
does not require strict contractual privity, has no merit. “Privity of contract is ‘[t]hat connection or
relationship which exists between two or more contracting parties.’ ” Collins Co. v. Carboline Co.,
125 Ill. 2d 498, 511 (1988) (quoting Black’s Law Dictionary 1079 (5th ed. 1979)). “ ‘Privity
requires that the party suing has some contractual relationship with the one sued.’ ” Id. (quoting
Crest Container Corp. v. R.H. Bishop Co., 111 Ill. App. 3d 1068, 1076 (1982)).
¶ 44 Here, it was undisputed that ACA had no contractual relationship with Builder. Notably,
all of the cases cited by ACA, in support of its argument that no privity is necessary, were based
on underlying contracts. The first two cases involved contracts and were also based on
nondelegable duties of providing seaworthy vehicles under maritime and admiralty law, which
provides additional obligations and duties inapplicable here. See Waterman S.S. Corp. v. Dugan
& McNamara, 364 U.S. 421, 422 (1960); Orgulf Transport Co. v. Hill’s Marine Enterprises, Inc.,
188 F. Supp. 2d 1056, 1060 (S.D. Ill. 2002).
¶ 45 The remaining cases cited by ACA regarding privity were also based on an underlying
contractual relationship. While Stark Excavating, Inc. involved the implied warranty of good
workmanship, the claims addressed therein were related to contractual obligations between the
contractor and a subcontractor. Stark Excavating, Inc. v. Carter Construction Services, Inc., 2012
IL App (4th) 110357, ¶ 10. Similarly, in Ruprecht, there was an underlying contract between the
demolition company and the injured plaintiffs’ employer. StarNet Insurance Co. v. Ruprecht, 3
F.4th 342, 346-47 (7th Cir. 2021). While the employer assigned its claim for contribution to the
injured employees and there was privity between the employer and the demolition company that
17 would support a claim for implied warranty of good workmanship, the employer did not assign the
contractual claim to the injured plaintiffs, and therefore recovery from the insurance company was
denied because there was no privity between the injured employees and the demolition company.
Id. at 347-48.
¶ 46 Here, there is neither a contract nor privity between ACA and Builder. The privity
requirement for economic loss claims remains viable in Illinois. See Sienna Court Condominium
Ass’n, 2018 IL 122022, ¶¶ 21, 30. Accordingly, we cannot find it was error for the circuit court to
dismiss count V against Builder based on ACA’s lack of privity with Builder.
¶ 47 ACA’s fifth argument contends that the circuit court erred by assuming that Developers,
not Builder, contracted with Architect. However, it was ACA’s own allegation on which the circuit
court relied. Plaintiff alleged in paragraph 14, “Pursuant to their joint development plan,
Developers entered into a consulting contract (the ‘Architecture Contract’) with Architect for the
design of the Building.” While no copy of the contract was attached with the complaint, a copy of
the contract was submitted by Builder as an attachment in the motion to dismiss. As noted above,
the court was required to accept any “well-pleaded facts and all reasonable inferences that may be
drawn from those facts” as true and further construe the complaint’s allegations in the light most
favorable to the plaintiff. Marshall, 222 Ill. 2d at 429. Therefore, any error stems from ACA’s own
allegations.
¶ 48 It is equally relevant that the issue was only mentioned in ACA’s motion for
reconsideration. As noted above, the contract at issue was filed as an attachment to Builder’s
motion to dismiss which was filed in February 2023. At no time between February 2023 and June
2024, when the court issued its ruling on the motions to dismiss, did ACA move to amend its
complaint to comport with the contracts attached to Builder’s motion to dismiss. The doctrine of
18 “invited error” prohibits a party from complaining of an error on appeal “which that party induced
the court to make or to which that party consented.” In re Detention of Swope, 213 Ill. 2d 210, 217
(2004). As the court’s order was based on ACA’s allegations, we find no error.
¶ 49 Sixth, ACA argues that the circuit court erred when it dismissed ACA’s claim for warranty
of good workmanship in count V because under Illinois law, a general contractor assumes the duty
to supervise the work of an architect or a subcontractor. While case law supports ACA’s position,
it is unclear why the doctrine would be beneficial to ACA where it was not in privity with either
Builder or Architect. Notably, in A.W. Wendell & Sons, Inc. v Qazi, 254 Ill. App. 3d 97, 113-14
(1993), cited by ACA, there was privity between the contractor and the owner. The remaining
cases cited are from different states and federal circuits and so, at best, are only mildly persuasive,
given the lack of privity seen here.
¶ 50 ACA’s reliance on section 818 Corpus Juris Secundum, Contracts, is equally misplaced.
See 17B C.J.S. Contracts § 818 (2025). The section states, “A builder is not liable for defects due
to the plans unless the contractor drew them or warranted their correctness or guaranteed the result
or knew or should have known about the defects but failed to point them out to the owner or
architect.” Id. ACA’s complaint did not allege that Builder drew the architectural plans, that
Builder warranted the plans, or that Builder knew, or should have known, that Architect’s plans
were defective. Instead, the complaint merely alleged that Builder “follow[ed] Architect’s
improper architectural design and building plans for the construction of the roof of the Building”
and then alleged that Builder’s following Architect’s plan “materially violated Builder’s implied
warranty of good workmanship pursuant to the Construction Contract.” As such, ACA’s
allegations were insufficient to make a claim of implied warranty of good workmanship.
19 ¶ 51 ACA’s reliance on Clark v. Scanlan, 33 Ill. App. 48, 53 (1889), for a similar premise is
equally unwarranted. In Clark, the court found that a contractor owed a duty to seek direction from
the architect if there was any doubt as to the details of the architectural plan; however, if the
contractor instead “relied on his own skill he would have to bear the consequences.” Id. Again,
ACA did not allege that Builder was aware of the architectural defect. Nor was there any allegation
that the Builder questioned Architect’s plan. Instead, the allegation was Builder followed
Architect’s plan. Because the elements for implied warranty of good workmanship were not pled,
and even if pled, did not have the privity required for economic loss claims, we affirm the circuit
court’s dismissal of count V.
¶ 52 ACA’s seventh and eighth issues contend that the circuit court erred by dismissing its claim
(count VII) against Architect based on Architect’s breach of the implied warranty of reasonable
judgment, skill and care or specifications because under Illinois law, an architect provides an
implied warranty. While numerous issues are raised on this topic, the count is easily dismissed
under the language in Sienna Court Condominium Ass’n, 2018 IL 122022, ¶ 30, precluding
reliance on implied warranties beyond contractual parties. Further, support for the dismissal is
found in Board of Managers of Park Point at Wheeling Condominiums Ass’n v. Park Point at
Wheeling, LLC, 2015 IL App (1st) 123452, ¶¶ 22-24, which noted that “courts have consistently
declined” to hold architects and other service providers liable under implied warranty theories and
further noted plaintiff’s reliance on Minton v. The Richards Group of Chicago, 116 Ill. App. 3d
852 (1983), which was the same case overruled by Sienna Court Condominium Ass’n, 2018 IL
122022, ¶ 25.
¶ 53 ACA’s final issue claims the circuit court erred by dismissing ACA’s claim for professional
negligence (count VIII) against Architect. We again disagree. ACA’s argument before the circuit
20 court confirms that its request for “negligence” stemmed from the contract between Builder and
Architect and was not a tort claim. The relevance of the Moorman economic doctrine (see
Moorman Manufacturing Co., 91 Ill. 2d at 91) undermines ACA’s argument. See Sienna Court
Condominium Ass’n, 2018 IL 122022, ¶ 20.
¶ 54 “The Moorman doctrine is intended to preserve the distinction between tort and contract.”
Id. ¶ 21. As previously explained by the court, and recently reiterated again, in Sienna Court
Condominium Ass’n:
“In essence, the economic loss, or commercial loss, doctrine denies a remedy in tort
to a party whose complaint is rooted in disappointed contractual or commercial
expectations. [Citations.] The doctrine reflects the principle that there are varying
degrees of quality, all commercially acceptable, that parties to a commercial
transaction are free to bargain over if they choose. For example, an architect’s
selection of the construction materials to be used in a particular structure will
depend in large part on the amount of money the owner is willing to spend on the
project. Disputes later arising from the character of the materials used should be
determined under principles of contract law, and should be controlled by the
requirements imposed by the parties’ own undertaking. In that instance, the contract
itself serves best to define the parties’ respective rights and obligations.” (Internal
quotation marks omitted.) Id.
¶ 55 Here, ACA repeatedly advised the circuit court that its negligence claim against Architect
was founded in contract, not tort. However, ACA was not a party to any of the contracts and failed
to argue on appeal that the circuit court erred in finding it was not a third-party beneficiary under
any of the contracts. With no contract and no privity, ACA has no contractual claim against
21 Architect. See id. (“In general then, an action for economic loss requires the plaintiff to be in
contractual privity with the defendant.”); 2314 Lincoln Park West Condominium Ass’n, 136 Ill. 2d
at 316-17 (declining to allow tort claim against an architect where the claim was founded in
economic loss). As such, we affirm the circuit court’s dismissal of count VIII.
¶ 56 III. CONCLUSION
¶ 57 For the above-stated reasons, we affirm the circuit court’s dismissal with prejudice of
counts II, IV, V, VII, and VIII.
¶ 58 Affirmed.