Bauer v. Giannis

834 N.E.2d 952, 359 Ill. App. 3d 897, 296 Ill. Dec. 147, 2005 Ill. App. LEXIS 869
CourtAppellate Court of Illinois
DecidedAugust 16, 2005
Docket2-04-1155
StatusPublished
Cited by55 cases

This text of 834 N.E.2d 952 (Bauer v. Giannis) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bauer v. Giannis, 834 N.E.2d 952, 359 Ill. App. 3d 897, 296 Ill. Dec. 147, 2005 Ill. App. LEXIS 869 (Ill. Ct. App. 2005).

Opinions

JUSTICE CALLUM

delivered the opinion of the court:

I. INTRODUCTION

Plaintiff, Marshall Bauer, purchased a home from defendants, Nick Giannis and Donna Giannis. Four years later, the basement flooded after a heavy rain. Alleging that defendants concealed that the basement had flooded once before the sale, plaintiff sued defendants for fraud. The trial court denied defendants’ motion for summary-judgment and, finding that an “as is” clause contained in the real estate sale contract was unenforceable, granted plaintiff partial summary judgment.

Thereafter, the trial court certified three questions for interlocutory appeal pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308): (1) whether the legal effect of the “as is” clause is different if the clause is viewed as a disclaimer as opposed to an exculpatory clause; (2) whether the “as is” clause is unenforceable and therefore not a defense to the fraud claims; and (3) if the clause is unenforceable, whether it is nevertheless admissible as evidence on the issues of fraudulent intent and reliance. We answer “no” to the first question. As a result, on the remaining questions, we hold that the “as is” clause is not a defense to the fraud claims and that the clause is not admissible on the issue of reliance.

II. BACKGROUND

Plaintiffs complaint alleged that defendants listed their home in Bannockburn for sale during the summer of 1997. On September 7, 1997, plaintiff agreed to purchase the home for $1.7 million. On the residential real property disclosure report that defendants prepared pursuant to section 35 of the Residential Real Property Disclosure Act (Act) (765 ILCS 77/35 (West 1996)), defendants knowingly misrepresented that they were not aware of flooding or recurring leakage problems in the crawlspace or basement. Also, defendants concealed that, in May 1996, the home had flooded and sustained damage that required significant renovation.

In October 2001, plaintiffs basement flooded. One of the two basement rooms filled with water to the ceiling, and the second room filled almost to the ceiling. It was not until after the 2001 flood that plaintiff learned of the 1996 flood and the resulting damage and renovation.

As a result of the flood, plaintiff incurred substantial damages and had to take remedial measures that included hiring engineers, erecting berms, creating drainage pits, and installing drainage pipes, ejector pumps, and generators. The complaint asserted causes of action sounding in fraudulent misrepresentation and fraudulent concealment.

The parties engaged in extensive discovery. We recite only those facts necessary to understand the issues on appeal. Defendants first placed their home on the market in October 1994. On May 17, 1996, severe rainfall caused groundwater to fill a below-grade window well, stairway, and patio. The water shattered basement windows and entered the basement on the northwest side of the home. A basement bedroom and a basement office filled to the ceiling. The flood caused $425,000 in damage to the home and personal property. The flood and its effect on specific homes in Bannockburn, including that of defendants, was discussed during a village board meeting and in the May 24, 1996, village administrator report.

Defendants took the home off of the market so they could repair the damage. They rebuilt the two basement rooms that filled with water, cleaned the crawl space and east side basement, refinished the floors of rooms above ground level, installed a new exterior sump pump, and replaced the interior sump pumps.

Defendants hired Daniel Creaney, a civil engineer, to assist them with their flood-control efforts. On May 28, 1996, Creaney recommended concentrating on the areas around the house from which storm water entered the basement, namely, the window well and the exterior stairwell. Creaney’s proposal stated:

“Please keep in mind that there may be several factors that may have contributed to the flooding in your basement. We will address the items mentioned above and the items we may find during our investigation. The grading plan, when implemented, will help alleviate the basement flooding, but we cannot guarantee that the basement will not flood again.”

Creaney recommended, among other things, constructing a berm. Defendants hired Cal Nelson, a landscaper, to construct the berm around the northwest side of the home to divert ground water away from the lower level patio. Defendants asserted that the May 1996 incident was the only time the home flooded during the eight years they owned it.

Defendants placed the home back on the market. In September 1997, the home was listed at $2,775,000 and was appraised at $2.3 million.

During his deposition, plaintiff testified that defendants never informed him before the sale that the home had flooded in 1996. Defendant Nick Giannis testified that he told plaintiff about the flood and pointed out the newly constructed berm. Defendant Donna Giannis executed the disclosure report that the Act mandates. She answered “no” to the following statement: “I am aware of flooding or recurring leakage problems in the crawlspace or basement.” The report makes two references to a potential “as is” sale. Located near the top of the form is the following statement: “This report does not limit the parties!”] right to contract for the sale of residential real property in ‘as is’ condition.” Located near the bottom of the form is the following statement: “Prospective buyer is aware that the parties may choose to negotiate an agreement for the sale of the property subject to any or all material defects disclosed in this report (‘as is’).”

On September 5, 1997, the parties executed a rider to the real estate sale contract. The purpose of the rider was to add an “as is” clause that provided:

“Purchaser acknowledges and represents that Purchaser and his representatives have personally examined the Property and Personal Property on at least six occasions and [have] had the Property professionally inspected. Purchaser is fully aware of the condition of the Property and accepts the Property in its ‘As Is’ and ‘[Where] Is’ condition, without any warranty or representation on the part of the Seller and Purchaser is fully satisfied with the condition of the Property.”

During his deposition, Nick explained that he prompted his attorney to draft the rider for protection because he “had bad vibes.” He testified that plaintiff knew about the flooding and that plaintiffs wife did not want to buy the home. Defendants’ attorney, Ron Rosenblum, explained that he prepared the rider because he was frustrated over the number of times plaintiff inspected the home, and he wanted to clarify that defendants were not making any representations or warranties regarding the home.

On October 13, 2001, the home flooded due to heavy rain. The water entered through the garage, flowed into the crawlspace, and eventually flooded the basement office and bedroom with as much as eight feet of water.

Relying on the “as is” clause, defendants moved for summary judgment.

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Cite This Page — Counsel Stack

Bluebook (online)
834 N.E.2d 952, 359 Ill. App. 3d 897, 296 Ill. Dec. 147, 2005 Ill. App. LEXIS 869, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bauer-v-giannis-illappct-2005.