Zerjal v. Daech & Bauer Construction, Inc. ( 2010 )

NO. 5-10-0066
N O T IC E
Decision filed 12/01/10. The text of
IN THE
this dec ision m ay b e changed or
corrected prior to the filing of a
APPELLATE COURT OF ILLINOIS
P e t i ti o n for Re hea ring or the
disposition of the same.
FIFTH DISTRICT
________________________________________________________________________
JACKIE ZERJAL and DOUG ZERJAL, ) Appeal from the
) Circuit Court of
Plaintiffs-Appellants, ) St. Clair County.
)
v. ) No. 09-L-319
)
DAECH & BAUER CONSTRUCTION, INC., )
)
Defendant, )
)
and )
)
BILL THEISMAN, d/b/a Sure Home )
Appraisal and Inspection Services, ) Honorable
) Patrick M. Young,
Defendant-Appellee. ) Judge, presiding.
________________________________________________________________________
JUSTICE WELCH delivered the judgment of the court, with opinion.
Justices Spomer and Wexstten concurred in the judgment and opinion.
The plaintiffs, Doug and Jackie Zerjal, appeal the involuntary dismissal of their
breach-of-contract action against the defendant, Bill Theisman, doing business as Sure Home
Appraisal and Inspection Services, by the circuit court of St. Clair County. On appeal, the
plaintiffs argue (1) that home inspectors should not be allowed to disclaim liability when they
fail to provide promised services, (2) that a contractual limitation period is not enforceable
when it is shorter than the applicable statute of limitations and the latter has not been
knowingly and voluntarily waived, and (3) that the spouse of a contract signatory has a
justiciable interest in the contract. For the following reasons, we affirm the circuit court's
dismissal.
The facts necessary for our disposition of this appeal are as follows. Before
1
purchasing an existing house in Fairview Heights, the plaintiffs had the property inspected
by Bill Theisman, doing business as Sure Home Appraisal and Inspection Services, pursuant
to a contract signed by Theisman and Doug Zerjal. Jackie Zerjal, Doug's wife, did not sign
the home inspection contract. The inspection occurred on May 13, 2006, and the plaintiffs
purchased the property from Daech & Bauer Construction, Inc., on M ay 31, 2006.
On June 16, 2009, the plaintiffs filed a three-count complaint against Daech & Bauer
Construction, Inc., and Bill Theisman. Counts I and II were directed at Daech & Bauer
Construction, Inc., and are not at issue in the instant appeal. Count III was a breach-of-
contract claim against Bill Theisman, doing business as Sure Home Appraisal and Inspection
Services. The plaintiffs allege that Theisman failed to discover and/or disclose numerous
defects in the home that "should have been known to a reasonably careful licensed building
inspector." Specifically, the plaintiffs claim that defendant Theisman did not inform them
that the foundation was insufficient to support the home's load, the underlayment was
decayed and structurally unstable, the walls were unstable and unable to support the
necessary loads, water was entering the home at the footing and the foundation, the HVAC
unit was blowing moist air against wooden components of the house, and the home's
electrical system was installed and maintained in an unsafe manner.
Theisman moved to dismiss the complaint pursuant to section 2-619 of the Code of
Civil Procedure (735 ILCS 5/2-619 (West 2008)) on three grounds: (1) the limit-of-liability
provision in the contract was valid and enforceable under Illinois law and, without admitting
liability, Theisman had tendered the cost of the inspection ($175) to the plaintiffs, (2) the suit
was barred because it was not filed within the two-year period provided for in the contract,
and (3) Jackie Zerjal's claim was barred because she was not a party to the contract. In
support of the motion to dismiss, Theisman submitted the entire home inspection contract and
the completed inspection report.
2
The home inspection contract contained the following relevant provisions. The
inspection was to be conducted under American Society of Home Inspector standards or, if
more stringent, the standards of the State of Illinois. The parties contracted for a visual
inspection of the property and a written report of the apparent condition of the "readily
accessible installed systems and components of the property existing at the time of the
inspection." Latent and concealed defects and deficiencies were excluded from the
inspection. The inspector assumed no liability or responsibility for the costs of repairing or
replacing any unreported defects or deficiencies either current or arising in the future if not
given the required notice, in this case 72 hours. Theisman made no warranties, express or
implied, on the fitness of the property, nor did he insure or guarantee against defects in the
structure. By the terms of the contract, Theisman's liability was limited to the cost of the
inspection, or $175. The contract also provided that any legal action must be brought within
two years of the date of inspection or was deemed forever waived and barred.
The circuit court granted the defendant's motion to dismiss with prejudice on January
13, 2010. The court did not specify the grounds on which it based its decision. On the same
day, the circuit court entered a judgment in favor of the plaintiffs and against Daech & Bauer
Construction, Inc., for $94,000 plus the costs of the suit. The plaintiffs filed a timely notice
of appeal on January 25, 2010.
On appeal, the plaintiffs raise three issues regarding the court's dismissal of count III
of the complaint. First, the plaintiffs argue that home inspectors should not be allowed to
disclaim or severely limit their liability when they fail to provide contractually promised
services. They root this argument in public policy considerations, arguing that the state
should protect homeowners from home inspectors. Second, the plaintiffs argue that a
contractual limitation period for filing suit is not enforceable when it is shorter than the
applicable statute of limitations and the latter has not been knowingly and voluntarily waived.
3
Last, the plaintiffs argue that Jackie Zerjal has a justiciable interest in the home inspection
contract. We will address each contention in turn after determining the scope of our review.
The plaintiffs' complaint was dismissed pursuant to section 2-619 of the Code of Civil
Procedure (735 ILCS 5/2-619 (West 2008)), which governs the involuntary dismissal of a
complaint based upon certain defects or defenses. "A section 2-619 motion to dismiss admits
the legal sufficiency of the complaint and raises defects, defenses, or other affirmative
matters that appear on the face of the complaint or are established by external submissions
that act to defeat the claim." Krilich v. American National Bank & Trust Co. of Chicago, 334
Ill. App. 3d 563, 569-70 (2002). The purpose of a section 2-619 motion is to dispose of
issues of law and easily proved issues of fact early in the litigation. Czarobski v. Lata, 227
Ill. 2d 364, 369 (2008). When ruling on a section 2-619 motion, the court must construe the
pleadings and supporting documents in the light most favorable to the nonmoving party.
Czarobski, 227 Ill. 2d at 369. The reviewing court must consider whether the existence of
a genuine issue of material fact should have precluded the dismissal or, absent an issue of
material fact, whether a dismissal was proper as a matter of law. Czarobski, 227 Ill. 2d at
369. We may affirm the dismissal on any proper basis found in the record. Barber v.
American Airlines, Inc., 398 Ill. App. 3d 868, 878 (2010), appeal allowed, 236 Ill. 2d 550
(2010). Our review is de novo. Czarobski, 227 Ill. 2d at 369.
As to the first issue on appeal, the plaintiffs argue that exculpation clauses that
severely limit inspector liability are unconscionable and that Theisman should not be
permitted to avoid liability when he failed to provide contractually promised services. In
response, Theisman argues that the contract specifies recoverable damages and that absent
a violation of settled public policy of the state or a fiduciary relationship between the parties,
the contractual provision is valid and enforceable. We agree with Theisman.
While generally disfavored under Illinois law (Platt v. Gateway International
4
Motorsports Corp., 351 Ill. App. 3d 326, 330 (2004)), exculpatory clauses are enforceable
unless (1) enforcement would be against a settled public policy of the state and (2) something
in the social relationship of the parties militates against enforcement. Harris v. Walker, 119
Ill. 2d 542, 548 (1988). As to the first prong, there is no precise definition of "public policy."
The term is generally used to describe the customs, morals, and notions of justice that prevail
in a state. Marchlik v. Coronet Insurance Co., 40 Ill. 2d 327, 332 (1968). Public policy is
not static and, when not fixed by the constitution, can be set by the legislature or courts.
Roedelsheim v. Twelfth Street Store Corp., 325 Ill. App. 692 (1945) (abstract of op.). Illinois
courts have applied a strict test in determining when public policy interests will invalidate
a contract. Rutter v. Arlington Park Jockey Club, 510 F.2d 1065, 1069 (7th Cir. 1975). A
contract provision will be found to be against public policy " 'if it is injurious to the interests
of the public, contravenes some established interest of society, violates some public statute,
is against good morals, tends to interfere with the public welfare or safety, or is at war with
the interests of society or is in conflict with the morals of the time.' " In re Estate of
Feinberg, 235 Ill. 2d 256, 265 (2009) (quoting Vine Street Clinic v. HealthLink, Inc., 222 Ill.
2d 276, 296 (2006)).
The plaintiffs argue that the contract provision limiting Theisman's liability to the cost
of the inspection is against public policy because it violates the Home Inspector License Act
(the Act) (225 ILCS 441/1-1 et seq. (West 2008)). The plaintiffs argue that the Act was
intended to regulate the home inspection industry for the "protection of the public" (225
ILCS 441/1-5 (West 2008)). The plaintiffs argue that since the legislature intended to
regulate the home inspection industry and wanted to protect the public, this court should
further the legislature's goals by prohibiting exculpatory clauses in home inspection contracts.
It takes more than the legislature's regulation of an industry, however, for a public policy
interest to be found. Rutter v. Arlington Park Jockey Club, 510 F.2d 1065 (7th Cir. 1975).
5
When the legislature has intended to regulate the liability of parties, it has done so; the
legislature has declared it to be against public policy for innkeepers, professional bailees,
landlords, and building contractors to be exculpated from liability for their negligence. First
Financial Insurance Co. v. Purolator Security, Inc., 69 Ill. App. 3d 413, 417-18 (1979). The
instant Act addresses the licensing and regulation of home inspectors but does not address
inspectors' liability. Since the legislature had the opportunity to prohibit or limit exculpatory
clauses in home inspection contracts but did not, we decline the opportunity as well.
The second test used to determine whether an exculpatory clause is enforceable is
whether there is a special relationship of a semipublic nature between the parties. First
Financial Insurance Co., 69 Ill. App. 3d at 418. Examples of this special social relationship
are common carriers and employer-employee relationships. First Financial Insurance Co.,
69 Ill. App. 3d at 418. The special-social-relationship argument has been rejected in cases
involving building leases, health club memberships, agreements involving stock car racing,
the rental of riding equipment, and the stabling of horses. First Financial Insurance Co., 69
Ill. App. 3d at 418.
The heightened status afforded to common carriers and employer-employee
relationships is based on the protection of the public and to ensure that the carrier performs
its essential and important duties. Checkley v. Illinois Central R.R. Co., 257 Ill. 491, 494
(1913). The relationship between a home inspector and a homeowner differs from the
"special" relationships because of the duties assumed; common carriers are responsible for
their patrons' physical safety for which there is no second chance if a mistake should occur,
and employers have the duty of protecting their employees while they are serving the
employer's interests. Here, the homeowners are not in a position similar to the position of
patrons of common carriers or employees; the homeowners were in control of their own fate
and could have gotten a second inspection or bargained for different terms with Theisman.
6
See Owen v. Vic Tanny's Enterprises, 48 Ill. App. 2d 344, 347-48 (1964). Thus, we refuse
to find that the relationship between a home inspector and a home purchaser reaches the level
of a "special social relationship" sufficient to invalidate an exculpatory clause.
In their argument, the plaintiffs cite numerous cases, one of which is Shorr Paper
Products, Inc. v. Aurora Elevator, Inc., 198 Ill. App. 3d 9 (1990). In Shorr Paper Products,
Inc., the defendant contracted to maintain and repair an elevator that subsequently broke.
Shorr Paper Products, Inc., 198 Ill. App. 3d at 10. In holding the defendant's exculpatory
clause inapplicable, the court stated that the defendant's exculpatory clause could not protect
it from its breach of contractual obligations to maintain and repair the elevator. Shorr Paper
Products, Inc., 198 Ill. App. 3d at 13-14. What distinguishes Shorr Paper Products, Inc.
from the instant case is the duty assumed in the contract; in the instant case, Theisman's duty
was to inspect the property and prepare a written report, while in Shorr Paper Products, Inc.
the defendant's duty was to maintain the elevator in good working condition. In other words,
in Shorr Paper Products, Inc., the elevator problems were a direct result of the defendant's
breach of its contractual duties, while here the plaintiffs' problems with their home were not
a direct result of an alleged breach of Theisman's duty to inspect and report on the condition
of the home.
The plaintiffs also argue that the contract's liquidated-damages provision is
unconscionable. The term "unconscionable" encompasses the absence of meaningful choice
by one party, as well as contract terms that are unreasonably favorable to the other party.
First Financial Insurance Co., 69 Ill. App. 3d at 419. In general, Illinois courts give effect
to liquidated-damages provisions so long as the parties have "expressed their agreement in
clear and explicit terms and there is no evidence of fraud or unconscionable oppression, a
legislative directive to the contrary, or a special social relationship between the parties of a
semipublic nature." Hartford Fire Insurance Co. v. Architectural Management, Inc., 194 Ill.
7
App. 3d 110, 115 (1990). Here, the liquidated-damages provision was clear and explicit,
stating, "The Client further agrees that the Inspector is liable only up to the cost of the
inspection." This provision is in the fourth paragraph and is located on the first page of the
contract, in regular typeface.
The plaintiffs contend that the contract is unconscionable because of the parties'
disparate bargaining power. Bargaining power, however, is only one factor to be taken into
consideration by a court when determining whether a liquidated-damages provision is
unconscionable. First Financial Insurance Co., 69 Ill. App. 3d at 419. Here, the plaintiffs
rely heavily on the fact that the provisions were included in a form contract prepared by
Theisman. The plaintiffs do not claim that they did not understand the contract; they merely
argue that the liquidated-damages provision was not conspicuously marked within the
contract. The contract, however, is two pages long, and the liquidated-damages provision
is in the same font as the entire contract, excluding the waiver of warranties, which is in all-
capital letters. Further, the plaintiffs were under no economic or other compulsion to sign
the inspection contract. See Schlessman v. Henson, 83 Ill. 2d 82, 87 (1980). Barring some
affirmative matter not argued by the plaintiffs, the mere fact that Theisman presented the
plaintiffs with a preprinted contract is insufficient to hold that the contract or its terms are
unconscionable.
The plaintiffs rely on Lucier v. Williams, 366 N.J. Super. 485, 841 A.2d 907 (2004),
in which a limitation-of-liability clause in a home inspection contract was overturned by a
New Jersey court. In so doing, the court relied upon the statutes' legislative history of
consumer protection and the statutory provision that required home inspectors to maintain
errors-and-omissions insurance of at least $500,000 per year. Lucier, 366 N.J. Super. at 497,
841 A.2d at 914. These two factors distinguish this case from the case at bar; Illinois does
not require home inspectors to have errors-and-omissions insurance, nor is the legislative
8
history of the Illinois statute comparable to that of the New Jersey statute. Moreover, Lucier
is not binding on this court. In light of the foregoing, we do not find that Theisman's
limitation-of-liability clause is invalid, and we decline to find that it is against the public
policy of Illinois.
The plaintiffs' second contention on appeal is that the two-year period of limitations
for filing suit contained in the contract is invalid and should not be enforced. First, the
plaintiffs argue that the two-year limitation period was concealed in the body of the contract.
The contract is only two pages long and contains 13 paragraphs. The relevant provision is
in paragraph 11 and states, "[A]ny legal action must be brought within two (2) years from the
date of the inspection." This provision is in the same typeface, font, and size as the rest of
the contract; the only portion of the contract that is in different type is the portion that
disclaims warranties and that is in all-capital letters. Thus, there is no merit to the contention
that the limitations period was concealed in the contract.
Second, the plaintiffs argue that they did not knowingly and voluntarily waive the 10-
year statute of limitations. While this issue was also not raised before the trial court and
therefore forfeited on appeal, we will address it briefly. "[W]aiver arises from an affirmative
act, is consensual, and consists of an intentional relinquishment of a known right." People
v. Houston, 229 Ill. 2d 1, 9-10 n.3 (2008). In other words, a waiver requires that a person
knowingly possess a right and, with that knowledge, manifest his desire to intentionally
relinquish that right. A waiver is not at issue in the instant case because the plaintiffs did not
possess the right to a 10-year statute of limitations and elect to not enforce it; instead, without
having a right to the 10-year statute of limitations, the plaintiffs contracted for a different
limitations period. Thus, the plaintiffs' nonwaiver argument is unavailing.
" '[I]t is well established that parties to a contract may agree upon a shortened
contractual limitations period to replace a statute of limitations, as long as it is reasonable.' "
9
Federal Insurance Co. v. Konstant Architecture Planning, Inc., 388 Ill. App. 3d 122, 126
(2009) (quoting Medrano v. Production Engineering Co., 332 Ill. App. 3d 562, 566 (2002)).
The plaintiffs do not present any cogent argument regarding the unreasonableness of the two-
year limitations period. Instead, they argue that they did not know of the two-year limitations
period or that it was negotiable. This argument fails because competent parties can contract
for any lawful purpose on any terms agreeable to them. Ostrowsky v. Berg, 337 Ill. App.
422, 424-25 (1949). It is not the duty of one party to a contract to inform another of the
duties or obligations assumed under the contract. Schoonover v. American Family Insurance
Co., 214 Ill. App. 3d 33, 43 (1991) (stating that it is not the duty of the insurer to inform the
insured of the contents of a contract when the contract was available for the insured's
review). Here, the contract was only two pages long and contained 13 paragraphs, and the
entire contract was in the same typeface and size, with the exception of the limitations of
warranties. Further, the plaintiffs did not aver in their complaint that they were forced or
rushed into signing the contract. Thus, there are no facts to support the arguments that the
two-year limitation was unreasonable or that the plaintiffs were not aware of the two-year
limitation.
Third, the plaintiffs argue that the "discovery rule" should be applied and that the two-
year limitations period should not have started to run until the plaintiffs discovered the
defects unreported by Theisman. The plaintiffs, however, did not raise this issue in their
written response to the defendant's motion to dismiss and therefore forfeited it on appeal.
See Buckner v. O'Brien, 287 Ill. App. 3d 173, 177 (1997), aff'd sub nom. Buckner v. Atlantic
Plant Maintenance, Inc., 182 Ill. 2d 12 (1998). In light of the foregoing, we find the two-
year contractual limitations period to be valid and enforceable.
The plaintiffs' last contention on appeal is that Jackie Zerjal is a proper plaintiff in the
instant case even though she did not sign the home inspection contract with Theisman.
10
Supreme Court Rule 341 states that the appellant's brief shall contain "[a]rgument, which
shall contain the contentions of the appellant and the reasons therefor, with citation of the
authorities and the pages of the record relied on." 210 Ill. 2d R. 341(h)(7). "A reviewing
court *** is not a repository into which an appellant may foist the burden of argument and
research ***." Obert v. Saville, 253 Ill. App. 3d 677, 682 (1993). In direct violation of Rule
341(h)(7), the plaintiffs' point is merely stated and is not supported with coherent argument
or any citation to authority. Consequently, it will not be addressed in this opinion.
Because the trial court did not state the ground on which it relied in granting
Theisman's motion to dismiss, a reviewing court may affirm on any ground present in the
record. See Barber, 398 Ill. App. 3d at 878. We decline to act in place of the legislature in
declaring limitation-of-liability clauses in home inspection contracts against public policy.
Further, we find the two-year contractual limitations period at issue in this case to be valid
and enforceable. Thus, we affirm the dismissal of count III of the plaintiffs' complaint.
Affirmed.
11
NO. 5-10-0066
IN THE
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
___________________________________________________________________________________
JACKIE ZERJAL and DOUG ZERJAL, ) Appeal from the
) Circuit Court of
Plaintiffs-Appellants, ) St. Clair County.
)
v. ) No. 09-L-319
)
DAECH & BAUER CONSTRUCTION, INC., )
)
Defendant, )
)
and )
)
BILL THEISMAN, d/b/a Sure Home )
Appraisal and Inspection Services, ) Honorable
) Patrick M. Young,
Defendant-Appellee. ) Judge, presiding.
___________________________________________________________________________________
Opinion Filed: December 1, 2010
___________________________________________________________________________________
Justices: Honorable Thomas M. Welch, J.
Honorable Stephen L. Spomer, J., and
Honorable James M. Wexstten, J.,
Concur
___________________________________________________________________________________
Attorney Timothy J. Bates, The Bates Law Firm, 1112 West Main Street, Belleville, IL 62220
for
Appellants
___________________________________________________________________________________
Attorney Joseph B. McDonnell, Greensfelder, Hemker & Gale, P.C., 12 Wolf Creek Drive,
for Suite 100, Swansea, IL 62226
Appellee
___________________________________________________________________________________