Dunsmore v. Gallegly

• Court: Appellate Court of Illinois
• Decided: July 30, 2024
• Docket: 3-32-20431
• Status: Unpublished

Opinion

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).

2024 IL App (3d) 3220431-U

Order filed July 30, 2024 ____________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

PETER DUNSMORE & KIMBERLY ) Appeal from the Circuit Court LATOUR, ) of the 18th Judicial Circuit, ) Du Page County, Illinois, Plaintiff-Appellants, ) ) Appeal No. 3-22-0431 v. ) Circuit No. 18-L-94 ) ) Honorable SHAWN GALLEGLY, TEA GALLEGLY, ) Neal W. Cerne, COLDWELL BANKER REAL ESTATE, ) Judge, Presiding. LLC, and JEANNIE D. POTERACKI, ) ) Defendant-Appellees. ) ___________________________________________________________________________

JUSTICE HOLDRIDGE delivered the judgment of the court. Justices Brennan and Hettel concurred in the judgment. ____________________________________________________________________________

ORDER

¶1 Held: The circuit court did not err when it granted the defendants’ motion for summary judgment.

¶2 The plaintiffs, Peter Densmore and Kimberly Latour (Buyers), purchased residential

property from the defendants, Shawn Gallegly and Tea Gallegly (Sellers). Coldwell Banker Real

Estate, LLC, and Jeannie Poteracki (Brokers) acted as brokers. After the property’s back yard flooded multiple times, the Buyers brought suit alleging fraudulent concealment of a material

defect. The Sellers filed a motion seeking summary judgment, arguing (1) they owed no duty to

disclose the flooding, (2) the Buyers did not make reasonable inquiry into the issue of flooding,

and (3) the Buyers failed to demonstrate any resulting damages. The Brokers joined in the motion.

The circuit court granted the defendants’ motion for summary judgment, and the Buyers appealed.

¶3 I. BACKGROUND

¶4 On October 1, 2016, the Buyers entered into a contract to purchase residential real estate

from the Sellers. Prior to the sale, the Sellers generated a Residential Real Property Disclosure

Report (Disclosure Report), which stated that the Sellers were not aware of any “flooding or

recurring leakage problems in the crawlspace or basement.” Also prior to the sale, the Buyers had

the home inspected by a licensed home inspector, who generated an inspection report (Inspection

Report). Portions of the Inspection Report were provided to the Sellers’ attorney on October 16,

2016, in a letter requesting repair or replacement of rotted wood at the base of the deck located in

the property’s back yard. The Inspection Report stated, in relevant part, “[w]ood deck frame

structure and support showed evidence of wood being rotted on several portions of the wood deck

frame and support.” The report also noted that one of the support posts for the deck’s steps had

rotted and become detached.

¶5 The Sellers’ attorney responded by informing the Buyers that “[m]uch of the deck has been

replaced in the past year. While there is some visibly present wood rot, my client is getting quotes

for repairs.” A few days later, the Sellers’ attorney sent another letter stating, “approximately half

the deck wood has been replaced in the past year and only minor issues remain.” The Sellers’

attorney suggested granting the Buyers a repair credit in the amount of $1,600, and the Buyers

agreed. The contract closed on January 27, 2017, and the Buyers took possession of the property.

2 ¶6 On January 26, 2018, the Buyers filed a complaint against the Sellers and the Brokers,

alleging violations of the Residential Real Estate Property Disclosure Act (765 ILCS 77/1 et seq.

(West 2018)) (Disclosure Act) and common law fraud based on three periods of “severe and

prolonged inundation” of the property. The Buyers did not allege that the water intruded into the

house. However, the Buyers alleged that the Sellers and Brokers had knowledge of flooding issues

due to (1) disclosure of a prior basement flooding incident at the time the Sellers purchased the

property, (2) an incident of flooding in the neighborhood that occurred while the Sellers owned

the house, and (3) the fact that the Sellers discussed flooding in the neighborhood with a neighbor

in 2015. The Brokers moved to dismiss the complaint.

¶7 On July 21, 2021, the circuit court dismissed the Buyers’ claims under the Disclosure Act

and granted the Buyers leave to replead the fraud claim. The Buyers filed an amended complaint,

again alleging violations of the Disclosure Act, common law fraud, fraudulent concealment, and

additional statutory violations against the Brokers. Again, the Brokers moved to dismiss the

complaint. Following a hearing, the circuit court dismissed all claims and granted the Buyers leave

to replead. The Buyers filed a second amended complaint, which again alleged violations of the

Disclosure Act, common law fraud, fraudulent concealment, and additional statutory violations

against the Brokers. The Brokers and Sellers separately moved to dismiss the second amended

complaint, and the circuit court dismissed all claims with prejudice except for the fraudulent

concealment claim, which the court granted the Buyers leave to amend.

¶8 The Buyers filed a third amended complaint, followed shortly by a fourth amended

complaint. The Brokers moved to dismiss the fourth amended complaint and, following a hearing,

the circuit court again granted the Buyers leave to amend the complaint. On February 8, 2022, the

Buyers filed a fifth amended complaint, the subject of this appeal. The only counts that had not

3 been previously dismissed alleged fraudulent concealment against the Sellers and Brokers. On July

26, 2022, the Sellers filed a motion seeking summary judgment. The Sellers articulated three

grounds for the motion: (1) the Sellers did not have a duty to disclose the flooding described in the

complaint, (2) the Buyers did not make sufficient inquiry into the issue of flooding, which could

have been discovered upon reasonable investigation, and (3) the Buyers failed to demonstrate that

they were damaged by the flooding. The Brokers joined the Sellers’ motion, and the court granted

summary judgment on all remaining claims on September 29, 2022. This appeal followed.

¶9 II. ANALYSIS

¶ 10 On appeal, the Buyers solely contend the circuit court erred when it granted summary

judgment in favor of the Sellers on the issue of fraudulent concealment. Summary judgment is

appropriate when the pleadings, depositions, and admissions on file, together with any affidavits

and exhibits indicate that there is no genuine issue of material fact, and the moving party is entitled

to judgment as a matter of law.” Morris v. Margulis, 197 Ill. 2d 28, 35 (2001). If the plaintiff fails

to establish an element of the claim, summary judgment is appropriate. Id.

The purpose of summary judgment is to determine if triable questions of fact exist. Pielet v.

Pielet, 2012 IL 112064, ¶ 53. Summary judgment is not appropriate unless the moving party’s

right to judgment is “clear and free from doubt.” Id. “If the undisputed material facts could lead

reasonable observers to divergent inferences, or where there is a dispute as to a material

fact, summary judgment should be denied and the issue decided by the trier of fact.” Id. We review

a circuit court’s rulings on summary judgment motions de novo. La Salle Bank, N.I. v. First

American Bank, 316 Ill. App. 3d 515, 521 (2001).

¶ 11 To state a cause of action for fraudulent concealment, a plaintiff must establish

(1) concealment of a material fact, (2) intent to induce a false belief where there exists a duty to

4 speak, (3) that the other party could not have discovered the truth through reasonable inquiry and

relied upon that silence as an indication that the concealed fact did not exist, (4) that the other party

would have acted differently had it known of the concealed information, and (5) that its reliance

resulted in its injury. Vandenburg v. Brunswick Corp., 2017 IL App (1st) 170181, ¶ 31. We focus

our inquiry on the second element, whether the Sellers had a duty to speak, as the failure to

establish any element of a claim warrants summary judgment. Morris, 197 Ill. 2d at 35.

¶ 12 Silence alone does not give rise to fraud. Heider v. Leewards Creative Crafts, Inc., 245 Ill.

App. 3d 258, 269 (1993). To create a duty to speak, silence must be accompanied by deceptive

conduct or the suppression of material facts, which results in “active concealment.” Mitchell v.

Skubiak, 248 Ill. App. 3d 1000, 1005 (1993). “Under such circumstances, if a party to a contract

of sale fails to disclose the whole truth, having the requisite intent to deceive, this amounts to fraud,

equivalent to an affirmative falsehood.” Id. Removing or concealing damage can serve as evidence

of active concealment. See Posner v. Davis, 76 Ill. App. 3d 638, 642 (1979).

¶ 13 Here, the record indicates the Sellers did not engage in “active concealment.” Mitchell, 248

Ill. App. 3d at 1005. The Sellers were, at most, silent on the adequacy or inadequacy of the

property’s drainage. The Sellers were bound by the Disclosure Act, the purpose of which is to

provide prospective home buyers with information about material defects known to the seller. Muir

v. Merano, 378 Ill. App. 3d 1103, 1103 (2008). However, the Disclosure Act does not require

disclosure of issues or defects not described in the Disclosure Act (see Kalkman v. Nedved, 2013

IL App (3d) 120800, ¶ 23 (the Disclosure Act requires disclosure only of the defects listed in the

Act and not other material defects)), and a lack of adequate drainage is not among the defects listed

in the Disclosure Act. See 765 ILCS 77/1 et seq (West 2018).

¶ 14 More broadly, the Sellers had a duty to disclose facts that could materially affect the value

5 of the home, provided those facts were (1) known to them and (2) unavailable to the Buyers.

Illinois Central Gulf R. Co. v. Dep’t of Local Gov’t Affairs, 169 Ill. App. 3d 683, 690 (1988) (“For

example, if the seller of a used house knows of and conceals facts materially affecting the value or

desirability of the home and the buyer has no access to that information, the seller has a duty to

disclose those facts.”) The accumulation of excessive standing water has the potential to affect the

value or desirability of a home. See, e.g., Van Meter v. Darian Park Dist., 207 Ill. 2d 359, 369

(2003). However, even assuming the Sellers were aware of the issue, we cannot say the Buyers

had “no access” to the relevant information. Illinois Central Gulf R. Co., 169 Ill. App. 3d at 683.

The flooding described in the complaint occurred exclusively in the yard, and evidence of such

flooding consisted of water damage to the back deck. The Sellers permitted the Buyers to inspect

the back yard and the back deck.

¶ 15 Further, the Sellers disclosed the replacement of rotted deck wood prior to the sale. This

fact, coupled with the Buyers’ commissioned Inspection Report, which also described wood rot

on the deck, suggests the Buyers had full access to all relevant information prior to the sale. Having

discovered this information prior to the sale, the Buyers cannot now complain that it was not

disclosed to them. Fleischer v. Lettvin, 199 Ill. App. 3d 504, 510 (1990) (buyer barred from

claiming concealment of a defect related to an exterior downspout after the buyer’s agents

conducted an inspection of the exterior of the house). A party may not enter into a transaction with

its eyes closed to available information and then claim deception. Seefeldt v. Millikin Nat. Bank of

Decatur, 154 Ill. App. 3d 715, 719 (1987).

¶ 16 It is additionally significant that the Buyers did not inquire about the cause of the damage.

When a buyer inquires about the cause of damage and the seller’s answers are evasive, deceptive,

or false, such actions can be said to evince active concealment. See Russow v. Bobola, 2 Ill. App.

6 3d 837, 841-42 (1972) (evidence supported fraudulent concealment where the seller failed to

disclose flooding, painted and washed away water marks, and gave deceptive or false answers to

inquiries about the drainage system). Here, the Buyers did not inquire about the cause of the

damage to the deck, and the Sellers disclosed both the wood rot and the fact of its replacement

prior to the sale. The Sellers’ failure to volunteer unasked-for information, particularly when such

information was (1) not required by the Disclosure Act, and (2) readily observable, did not give

rise to a claim of fraud or constitute concealment. See Heider, 245 Ill. App. 3d at 269 (in claim for

fraudulent concealment, vendor of warehouse had “a duty to reveal the existence of the [asbestos]

report and the asbestos in the building upon inquiry from plaintiff”) (emphasis added).

¶ 17 In reaching this conclusion, we reject the Buyers’ contention that the Sellers’ “position of

influence and superiority” created a duty to disclose the property’s inadequate drainage. See

Schrager v. North Community Bank, 328 Ill. App. 3d 696, 707 (2002), quoting Connick v. Suzuki

Motor Co., 174 Ill. 2d 482, 500 (1996). A duty to disclose material facts may arise in situations

where “friendship, agency, or experience” places one party in a special position of trust and

confidence with respect to the other party. Kurti v. Fox Valley Radiologists, Ltd., 124 Ill. App. 3d

933, 938 (1984). Here, the Buyers and the Sellers were situated on opposite sides of a real estate

contract, and each was represented by an attorney. There is no evidence the Buyers formed

anything but an arms-length, transactional relationship with the Sellers. See Gonzalzles v.

American Express Credit Corp., 315 Ill. App. 3d 199, 210 (2000) (no fiduciary relationship found

where the plaintiff failed to allege any kinship between the parties or a disparity in age, health, or

mental condition).

¶ 18 The Sellers’ disclosure of the deck repair also suggests the Buyers could have detected the

alleged defect prior to purchasing the property with reasonable inquiry. However, we need not

7 reach this issue, nor the issue of whether the Buyers adequately put forth a claim for damages

because the Buyers failed to establish that the Sellers actively concealed a defect and incurred a

resulting duty. The circuit court did not err in granting summary judgment for the Sellers.

¶ 19 III. CONCLUSION

¶ 20 For these reasons, the judgment of the circuit court of Du Page County is affirmed.

¶ 21 Affirmed.