Linhart v. Bridgeview Creek Dev., Inc., 2009 LEXIS 295 ( Ill. App. Ct. May 20, 2009) brings good news to property owners who may have been misled in making their purchases. In this case, the builder and seller of a four-townhome building allegedly concealed and misrepresented information pertaining to the foundation of the building. When the homeowners began to experience problems with the houses, the developer claimed no liability and refused to fund the repairs. Fortunately for the homeowners, the Illinois court characterized the defendant’s conduct as common law fraud.
The five elements of common law fraud are:
1) a false statement of material fact,
2) the defendant’s knowledge that thestatement was false,
3) the defendant’s intention to inducea party to act,
4) the plaintiff’s reliance on the falsestatement as fact, and
5) the plaintiff’s damages resultingfrom reliance on the false statement.
Prior to purchasing the homes, homeowners had asked about cracks in the foundation and they had been reassured by the seller that the cracks were nothing to worry about. The seller stated, “it’s not like the house is going to sink or anything.” One homeowner asked to have a structural engineer examine the problem. The developer claimed that a report had already been completed and that the developer would deliver the homeowner a copy. The developer never gave the purchaser a copy of the report. Another misrepresentation took place when the developer reported to one homeowner that the basement and foundation had a 20-year warranty.
Evidence that the developer had known these statements were false was presented in court. The most persuasive evidence was the testimony of a village inspector who had informed the developer during construction that the foundation was sinking and recommended that the developer consult an engineer. Additional evidence revealed that pre-construction soil testing had revealed a significant amount of water content, a sure sign that the soil was not suitable for construction.
The homeowners had three experts testify to the damage and the cost of repairs for their townhomes. According to expert testimony, the most economical route for repair would cost about $1.38 million. The court awarded the homeowners the $1.38 million in compensatory damages, punitive damages, and attorneys’ fees to each homeowner.
