Library Tower Condominium Ass'n v. Library Tower, LLC ( 2021 )

2021 IL App (1st) 200486-USIXTH DIVISION
February 19, 2021
No. 1-20-0486
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).
IN THE
APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
LIBRARY TOWER CONDOMINIUM ) Appeal from the
ASSOCIATION, ) Circuit Court of
) Cook County.
Plaintiff-Appellant, )
)
v. ) No. 17 L 5988
)
LIBRARY TOWER, LLC, and LENNAR ) Honorable
CHICAGO, INC., successor by merger to ) Daniel J. Kubasiak,
CONCORD HOMES, INC., ) Judge Presiding.
)
Defendants )
)
(Library Tower, LLC-Appellee). )
JUSTICE CONNORS delivered the judgment of the court.
Presiding Justice Mikva and Justice Harris concurred in the judgment.
ORDER
¶1 Held: The circuit court did not err when it granted defendant’s motion to dismiss
plaintiff’s claims because the purchase agreement contained waivers of implied warranties;
affirmed.
¶2 Plaintiff, Library Tower Condominium Association (plaintiff or Association), appeals
from the circuit court’s order that granted defendant, Library Tower, LLC’s motion to dismiss
the breach of implied warranties of habitability and good workmanship claims contained in
plaintiff’s complaint pursuant to section 2-619 of the Illinois Code of Civil Procedure (735 ILCS
No. 1-20-0486
5/2-619 (West 2018)). On appeal, plaintiff contends that the circuit court erred when it granted
defendant’s motion to dismiss based on waivers of the implied warranties of habitability and
good workmanship contained in the purchase agreement and the Association’s Declaration.
Plaintiff argues that the disclaimer of the implied warranties in the purchase agreement was
invalid and unconscionable and defendant failed to establish that each unit purchaser signed the
agreement and agreed to the disclaimer. Plaintiff contends that the Association’s Declaration
only referenced the disclaimer contained in the purchase agreement, and the unit purchasers
received no consideration in exchange for the disclaimer. For the following reasons, we affirm.
¶3 I. BACKGROUND
¶4 This action arises out of a condominium construction and development project
located at 520 South State Street, in Chicago, which is a high rise building with 184 units.
Plaintiff is the condominium association of the development. Defendant was the developer and
seller of the individual units and performed construction operations on the building. Lennar
Chicago, Inc., successor by merger to Concord Homes, Inc., was the general contractor on the
project and is not a party to this appeal. Plaintiff filed claims against defendant and Lennar for
breach of implied warranty of habitability and breach of implied warranty of good workmanship.
¶5 This is the second time this case has been on appeal. In the first appeal, defendant
challenged the circuit court’s order that denied its motion to compel arbitration. Library Tower
Condominium Association v. Library Tower, LLC, 2019 IL App (1st) 181035-U, ¶¶ 24, 48. In
our previous decision, we dismissed the appeal for lack of jurisdiction because defendant did not
file an interlocutory notice of appeal within 30 days of the circuit court’s interlocutory order
denying defendant’s motion to compel arbitration. Id. ¶ 48.
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¶6 On remand, the circuit court granted defendant’s motion to dismiss plaintiff’s claims
based on waivers of implied warranty of habitability and good workmanship contained in the
purchase agreement and the Association’s Declaration. Our previous decision set forth the facts
leading up to the first appeal. The following is a limited recitation of those facts as well as
additional facts necessary for an understanding of the case for this appeal.
¶7 In June 2017, plaintiff filed a three-count complaint against defendant and Lennar,
which was the successor by merger to Concord Homes, Inc., and the general contractor on the
project. Plaintiff alleged as follows. Plaintiff was an Illinois condominium association and an
apartment-style development of 184 units in a high rise building at 520 South State Street, in
downtown Chicago. Defendant was the developer and seller of the condominium units for the
development and performed construction operations on the building for the Association. The
Association was established by a document entitled Declaration of Condominium Ownership for
Library Tower Condominium and Provisions relating to Certain Non-Condominium Property
(Declaration). On May 8, 2018, the Declaration was recorded with the Cook County Recorder of
Deeds. On August 18, 2010, defendant turned control of the Association to a Board of Directors
elected from the unit owner membership.
¶8 Plaintiff alleged that in September 2015, it discovered numerous masonry
construction defects at the building, including the following:
“flashing does not extend beyond the perimeter of the wall, which allows water to
remain behind the façade and causes the exterior bricks to spall, deteriorate, and fall off
the [b]uilding; flashing is missing in other locations on the [b]uilding, which leads to the
same spalling, deterioration, and falling off of bricks; insufficient or missing drip edges,
which also allows water to remain within the façade and cause the same aforementioned
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damage to the bricks; and the [b]uilding lacks end-dams, which also contributes to water
penetration behind the facade.”
¶9 Plaintiff alleged that in December 2016, it discovered that the building had other
construction defects, including:
“metal coping on the top of the parapet of the roof lacks sufficient flashing to prevent
water infiltration; stone capping on top of the masonry façade lacks sufficient flashing,
which allows water penetration; improper and insufficient expansion joints are causing
bricks to crack; cast stone window sills lack proper flashing, which allows water
infiltration; balconies do not pitch away from the building, causing water to pool and
make the balconies unusable after periods of rain; and window frames were improperly
sealed, which allows water penetration.”
Plaintiff alleged that the defects were caused by inferior workmanship during the construction
and development of the building. It alleged that the defects adversely affected the habitability of
the building because water penetrated through the façade into the units, which caused damage to
the building, units, and personal property inside.
¶ 10 Plaintiff asserted a claim for breach of implied warranty of habitability against
defendant, alleging that defendant had an obligation to construct the building for its intended
purpose of habitation and, as evidenced by the defects, defendant failed to deliver the building to
the Association for this purpose. Plaintiff also asserted a claim against defendant for breach of
implied warranty of good workmanship, alleging that defendant had an obligation to construct
the building in a reasonably workmanlike manner and, as evidenced by the defects, defendant
failed to deliver the building to the Association in a reasonably workmanlike manner.
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¶ 11 As previously discussed, defendant subsequently filed a motion to compel arbitration.
Library Tower Condominium Association, LLC, 2019 IL App (1st) 181035-U, ¶ 19. The circuit
court denied defendant’s motion and we dismissed defendant’s interlocutory appeal under
Illinois Supreme Court Rule 307(a)(1) (eff. Nov. 1, 2017) because we did not have jurisdiction.
Id. ¶ 36. On remand, defendant filed a section 2-619 motion to dismiss plaintiff’s claims, arguing
that the claims were barred because the Declaration and purchase agreement contained waivers
of the implied warranty of habitability and all other implied warranties.
¶ 12 Defendant argued that the Declaration, by itself, was sufficient to dismiss plaintiff’s
claims based on the waiver of implied warranties. It cited section 14.06 of the Declaration, which
states:
“14.06 WAIVER OF IMPLIED WARRANTY OF HABITABILITY AND OTHER
WARRANTIES: Illinois courts have held that every contract for the construction of a
new home in Illinois carries with it a warranty that when completed, the home will be
free of defects and will be fit for its intended use as a home. The courts have also held
that this ‘Implied Warranty of Habitability’ does not have to be in writing to be a part of
the contract and that it covers not only structural and mechanical defects such as may be
found in the foundation, roof, masonry, heating, electrical and plumbing, but it also
covers any defect in workmanship which may not easily be seen by the buyer. However,
the courts have also held that a seller-builder and buyer may agree in writing that the
Implied Warranty of Habitability is not included as a part of their particular contract.
Each buyer of a Dwelling Unit from Declarant agreed in the purchase contract that the
Declarant has excluded and disclaimed the Implied Warranty of Habitability and all other
implied warranties, whether created judicially, statutorily or by common law, including
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No. 1-20-0486
the implied warranty of fitness for a particular purpose. Such exclusion and disclaimer
shall apply to and bind any subsequent Owner of a Dwelling Unit and, accordingly, no
Owner of a Dwelling Unit shall be able to assert a claim against Declarant for a breach of
the Implied Warranty of Habitability or any other implied warranty.”
Defendant argued that the unit purchasers agreed to be bound by the Declaration because the
purchase agreement listed the Declaration as a governing document.
¶ 13 Specifically, defendant cited paragraph 18 of the purchase agreement, which states:
“18. Association Documents/Assessments: (a) Purchaser acknowledges that the
Property is subject to the Association or Associations set forth on Addendum D and the
documents governing same (the ‘Association Documents’). Purchaser further
acknowledges that the Association(s) may not be in existence at the time of entering into
this Agreement. Seller reserves the right to make or correct any changes or amendments
to the Association Documents as permitted by law. Purchaser acknowledges having
received and agrees to be bound by the terms of the Association Documents.”
Defendant argued that section two of Addendum D of the purchase agreement specifically
identifies the Declaration as an Association Document. This section states as follows:
“2. Purchaser acknowledges that Purchaser shall be a member of the Library Tower
Condominium Association (‘Association’) and shall be subject to the documents
governing the Association (the ‘Association Documents’). Purchaser acknowledges
receipt of copies of the Association Documents***Purchaser has been advised to read the
Association Documents and agrees to be bound by the terms of the Illinois Condominium
Property Act (the ‘Act’) and the following Association Documents and any amendments
thereto:
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No. 1-20-0486
(a) The Declaration
***
Seller reserves the right to make any changes to the Association Documents which are
permitted by law.”
¶ 14 Defendant attached a purchase agreement to its motion to dismiss and stated that the
exhibit was “a true and correct copy of an exemplar Purchase Agreement.” Defendant also
attached an affidavit signed by an employee of Lennar Chicago, the managing member of
defendant. The affidavit stated that the purchase agreement attached to the motion was “a copy
of an exemplar purchase agreement documenting purchase transactions associated with the
Library Tower Property” and that the “exemplar attached is an exact duplicate of the original
purchase agreement and was not prepared by Library Tower or Lennar Chicago in anticipation of
this litigation.”
¶ 15 In addition to arguing that the purchase agreement showed that the unit purchasers
agreed to be bound by the Declaration, defendant argued that the purchase agreement confirmed
that plaintiff’s claims must be dismissed based on waivers of the implied warranties contained in
the purchase agreement. Defendant cited paragraph 11 of the purchase agreement, which states:
“11. SELLER’S LIMITED WARRANTY/WAIVER OF IMPLIED WARRANTY
OF HABITABILITY:
Except as otherwise provided in Addendum D:
(a) Limited Warranty. Purchaser understands and agrees that Seller is making only those
express limited warranties set forth in the 2-10 HBW Booklet provided to Purchaser.
Purchaser acknowledges having received and having been advised to read a sample copy
of the 2-10 HBW Booklet and view the video ‘Warranty Teamwork: You, Your Builder
and HBW’ and agrees to be bound by the terms of the 2-10 HBW program including any
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No. 1-20-0486
and all binding arbitration provisions. THE 2-10 HBW CONSTITUTES THE SOLE
AND EXCLUSIVE WARRANTY OF THE SELLER WITH RESPECT TO THE HOME
AND IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, AND
ALL WARRANTIES, GUARANTEES OR REPRESENTATIONS OF HABITABILITY
AND/OR MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
ARE HEREBY DISCLAIMED BY THE SELLER AND EXCLUDED. In no event shall
Seller be liable for any other damages, incidental, consequential, special or otherwise.
(b) Waiver of Implied Warranty of Habitability. Illinois courts have held that every
contract for the construction of a new residence in Illinois carries with it a warranty that,
when completed, the residence will be free of defects and will be fit for its intended use
as a residence. The courts have also held that this ‘Implied Warranty of Habitability’ does
not have to be in writing to be a part of the contract and that it covers not only structural
and mechanical defects such as may be found in the foundation, roof, masonry, heating,
electrical and plumbing, but it also covers any defect in workmanship which may not
easily be seen by the Purchaser. However, the courts have also held that a seller-builder
and Purchaser may agree in writing, as here, that the Implied Warranty of Habitability is
not included as part of their particular contract. Seller’s limited warranty as referred
to above covers some, BUT NOT ALL, of the matters covered by the Implied Warranty
of Habitability. Conversely, Seller’s limited warranty may cover matters which are not
covered by the Implied Warranty of Habitability. Thus, Seller’s limited warranty may,
and likely will, be different, in a number of respects, from the protection afforded a buyer
by the Implied Warranty of Habitability. Purchaser agrees that in consideration for Seller
providing Purchaser with the express limited warranties contained in the 2-10 HBW,
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No. 1-20-0486
Purchaser will accept the 2-10 HBW as a substitute for the Implied Warranty of
Habitability.”
¶ 16 Following this paragraph, the agreement contains a space for the purchaser(s) and the
“New Home Consultant” to provide their initials. Defendant then cited the next paragraph in
section 11, which states as follows:
“ACCORDINGLY, SELLER HEREBY DISCLAIMS AND PURCHASER
HEREBY WAIVES THE IMPLIED WARRANTY OF HABITABILITY DESCRIBED
ABOVE. PURCHASER HEREBY ACKNOWLEDGES, UNDERSTANDS AND
AGREES THAT THE IMPLIED WARRANTY OF HABITABILITY IS NOT A PART
OF THIS AGREEMENT AND THAT IF A DISPUTE ARISES WITH SELLER AND
THE DISPUTE RESULTS IN A LAWSUIT, PURCHASER WILL NOT BE ABLE TO
RELY ON THE IMPLIED WARRANTY OF HABITABILTY DESCRIBED ABOVE
AS A BASIS FOR SUING THE SELLER OR AS THE BASIS OF A DEFENSE IF
SELLER SUES THE PURCHASER. PURCHASER MAY, HOWEVER, RELY ON
THE EXPRESS LIMITED WARRANTIES MADE BY SELLER TO PURCHASER.
ALL REPRESENTATIONS MADE HEREIN SHALL SURVIVE THE CLOSING AND
THE RECORDING OF THE DEED TO THE PROPERTY.”
Following this paragraph the purchase agreement contains a line for the purchaser(s) to provide
their initials.
¶ 17 Defendant then argued that in paragraph 10 of Addendum D to the purchase
agreement, the unit purchasers agreed to an even more specifically worded waiver of implied
warranties. Defendant cited paragraph 10 of Addendum D, which states as follows:
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No. 1-20-0486
“10. Paragraph 11 of the Agreement is hereby amended and restated, in its entirety, to
be and read as follows:
11. SELLER’S LIMITED WARRANTIES/WAIVER OF IMPLIED WARRANTY OF
HABITABILITY:
(a) Limited Warranties. Seller warrants (i) the Home against defects in material and
workmanship for a period of one (1) year from the date of Closing or occupancy,
whichever first occurs and (ii) the common elements of the building in which the Home
is located against defects in material and workmanship for a period of one (1) year from
the date on which the Common Elements are made part of the Condominium Property, all
as more fully provided in Seller’s standard limited warranty which shall be delivered to
Purchaser at Closing. These ‘Limited Warranties’ shall be in lieu of all other warranties,
express or implied. Seller’s sole liability for a breach of these Limited Warranties shall be
to provide necessary labor and materials to repair or replace the defect. Under no
circumstances shall Seller be liable for consequential or incidental damages.
(b) Waiver of Implied Warranty of Habitability. Illinois courts have held that every
contract for the construction of a new residence in Illinois carries with it a warranty that,
when completed, the residence will be free of defects and will be fit for its intended use
as a residence. The courts have also held that this ‘Implied Warranty of Habitability’ does
not have to be in writing to be a part of the contract and that it covers not only structural
and mechanical defects such as may be found in the foundation, roof, masonry, heating,
electrical and plumbing, but it also covers any defect in workmanship which may not
easily be seen by the Purchaser. However, the courts have also held that a seller-builder
and Purchaser may agree in writing, as here, that the Implied Warranty of ***
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No. 1-20-0486
Habitability is not included as part of their particular contract. Seller’s Limited
Warranties provided for above cover some, BUT NOT ALL, of the matters covered by
the Implied Warranty of Habitability. Conversely, Seller’s Limited Warranties may cover
matters which are not covered by the Implied Warranty of Habitability. Thus, Seller’s
Limited Warranties may, and likely will, be different, in a number of respects, from the
protection afforded a buyer by the Implied Warranty of Habitability. Purchaser agrees
that in consideration for Seller providing Purchaser with Limited Warranties, Purchaser
will accept the Limited Warranties as a substitute for the Implied Warranty of
Habitability. ACCORDINGLY, SELLER HEREBY DISCLAIMS AND PURCHASER
HEREBY WAIVES THE IMPLIED WARRANTY OF HABITABILITY DESCRIBED
ABOVE. PURCHASER HEREBY ACKNOWLEDGES, UNDERSTANDS AND
AGREES THAT THE IMPLIED WARRANTY OF HABITABILITY IS NOT A PART
OF THIS AGREEMENT AND THAT IF A DISPUTE ARISES WITH SELLER AND
THE DISPUTE RESULTS IN A LAWSUIT, PURCHASER WILL NOT BE ABLE TO
RELY ON THE IMPLIED WARRANTY OF HABITABILITY DESCRIBED ABOVE
AS A BASIS FOR SUING THE SELLER OR AS THE BASIS OF A DEFENSE IF
SELLER SUES THE PURCHASER. PURCHASER MAY, HOWEVER, RELY ON
THE LIMITED WARRANTIES MADE BY SELLER TO PURCHASER. ALL
REPRESENTATIONS MADE HEREIN SHALL SURVIVE THE CLOSING AND THE
RECORDING OF THE DEED TO THE PROPERTY.”
Following this paragraph, the agreement contains a line for the purchaser(s) to provide their
initials.
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No. 1-20-0486
¶ 18 Defendant argued that based on the waivers of implied warranties contained in the
Declaration and purchase agreement, plaintiff’s claims should be dismissed. Defendant also
contended that plaintiff’s claims should be dismissed based on the statute of limitations. It
argued that plaintiff failed to timely file its claims within the four-year statute of limitations
because it discovered the alleged act or omission on October 10, 2010, but did not file its
complaint until seven years later in 2017.
¶ 19 In response, plaintiff argued, inter alia, that the disclaimer contained in the purchase
agreement was ineffective, that defendant failed to provide evidence that every purchaser
executed the same purchase agreement, and that the purchasers received no consideration for the
disclaimer contained in the addendum to the purchase agreement that applied to the common
elements. Plaintiff further argued that the disclaimer in the purchase agreement was
unenforceable because it was not conspicuous, did not explain the consequences of its inclusion,
and was not agreed upon by the unit purchasers. Plaintiff argued that the disclaimer contained in
the Declaration was also ineffective, that the unit owners did not receive consideration for the
purported disclaimer, and that it did not meet the requirements necessary to disclaim the implied
warranties.
¶ 20 In reply, defendant argued, inter alia, that the Declaration made “crystal clear” that
there were no implied warranties and that the unit purchasers were legally bound to have
received notice of the recorded Declaration and were deemed to have taken their real estate
subject to its covenants. Defendant argued that the Declaration and purchase agreement were
clear that there were no implied warranties involved in any sale. Defendant asserted that the
waivers in these documents were “prominent and clear.”
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No. 1-20-0486
¶ 21 The circuit court granted defendant’s motion to dismiss plaintiff’s claims with
prejudice. In the court’s written order, it stated as follows:
“Here, [defendant] has provided two documents containing express waivers of the
implied warranty of habitability, one in the Association’s Declaration, and confirmed
again in the Purchase Agreements executed by the unit owners. The court finds that upon
review of the documents, both waivers are both prominent and clear. The Declaration
calls the waiver out by name in its Table of Contents, and again in the actual paragraph
itself. Paragraph 11 of the Purchase Agreement is entitled, ‘Seller’s Limited
Warranty/Waiver of Implied Warranty of Habitability,’ in all capital letters, bold, and
underlined. Section (b) of Paragraph 11 is then separately entitled ‘Waiver of Implied
Warranty of Habitability,’ underlined, with three separate paragraphs below explaining
that the purchaser is waiving the implied warranty of habitability. The court finds that
these provisions constitute ‘conspicuous’ provisions ‘which fully disclose[] the
consequences’ of their inclusions. Most importantly, the Purchasers’ initials immediately
below the all capital letter paragraphs show that the waivers were ‘in fact the agreement
reached.’ ” (Emphasis in original.)
The court further concluded that plaintiff’s argument that defendant improperly disclaimed the
warranties failed and that “[n]otice of the implied waivers were sufficiently provided through
both the Declaration and the Purchase Agreements.”
¶ 22 The circuit court subsequently granted plaintiff’s motion for an Illinois Supreme
Court Rule 304(a) (eff. Mar. 8, 2016) finding, as defendant’s third-party complaints against
third-party defendants remained pending. This appeal followed.
¶ 23 II. ANALYSIS
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¶ 24 On appeal, plaintiff contends that the circuit court erred when it granted defendant’s
motion to dismiss based on disclaimers of the implied warranties contained in the purchase
agreement and Declaration. Plaintiff argues that the disclaimer in the purchase agreement is
unenforceable because the Association’s members did not receive consideration in exchange for
waiving the implied warranties. Plaintiff asserts that defendant failed to establish that each unit
purchaser actually received and agreed to the purchase agreement and disclaimer contained
therein. Plaintiff contends that the disclaimers in the purchase agreement and Declaration lacked
the required conspicuousness and did not disclose the consequences of its inclusion. Plaintiff
argues that the Declaration does not contain a disclaimer, as it simply references the purchase
agreement disclaimer, and that the purchasers received no consideration in exchange for the
disclaimer.
¶ 25 As previously discussed, the circuit court granted defendant’s section 2-619 motion to
dismiss based on the waivers of implied warranties contained in the purchase agreement and
Declaration. Under a section 2-619 motion to dismiss, a defendant “admits the legal sufficiency
of the plaintiff’s claim but asserts certain defects or defenses outside the pleading that defeat the
claim.” Board of Managers of Park Point at Wheeling Condominium Association v. Park Point
at Wheeling, LLC, 2015 IL App (1st) 123452, ¶ 33. Specifically, under section 2-619(a)(9),
dismissal of a complaint is proper where the claim “is barred by other affirmative matter
avoiding the legal effect of or defeating the claim.” 735 ILCS 5/2-619(a)(9) (West 2018). When
we review a circuit court’s order granting dismissal based on section 2-619, we must accept as
true all well-pled facts contained in the complaint and in any uncontradicted affidavits attached
to the motion to dismiss. 1324 W. Pratt Condominium Association v. Platt Construction Group.,
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Inc., 2012 IL App (1st) 111474, ¶ 21. We review de novo the circuit court’s order dismissing
claims based on section 2-619. Id.¶ 26 “The implied warranty of habitability is a ‘creature of public policy’ that was
designed ‘to protect purchasers of new houses upon discovery of latent defects in their homes.’ ”
Id. ¶ 23 (quoting Redarowicz v. Ohlendorf, 92 Ill. 2d 171, 183 (1982)). However, buyers may
waive the protection of the implied warranty of habitability. Board of Managers of Park Point at
Wheeling Condominium Association, 2015 IL App (1st) 123452, ¶ 34. “A waiver is an
intentional relinquishment of a known right and cannot occur through mistake or
misapprehension of fact.” Id. ¶ 35. A disclaimer of the implied warranty of habitability will be
strictly construed against the builder-vendor. Petersen v. Hubschman Construction Co., 76 Ill. 2d
31, 43 (1979). A disclaimer of the warranty of habitability is valid if it is “a conspicuous part of
the contract, refers to the warranty by name, and uses plain language that fully discloses the
consequences of its inclusion.” Board of Managers of Park Point at Wheeling Condominium
Association, 2015 IL App (1st) 123452, ¶ 41. “A seller is not required to specifically point out a
disclaimer in a written contract.” Id. Further, the “court may find that the language of a contract
is so clear and so conspicuous that no other reasonable conclusion could be reached but that the
buyer both read and understood the language and therefore as a matter of law effectively waived
the implied warranty.” Id. ¶ 36.
¶ 27 Here, we conclude that the disclaimer of the implied warranties in the purchase
agreement was clear and conspicuous such that the unit purchasers waived the implied
warranties. Paragraph 11 of the purchase agreement specifically refers to the implied warranty of
habitability by name. In bold and underlined capital letters, it states “SELLER’S LIMITED
WARRANTY/WAIVER OF IMPLIED WARRANTY OF HABITABILITY.” Under this
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No. 1-20-0486
header, there are three separate paragraphs relating to the waiver as it relates to the “Home,”
which the agreement defines as the “residence.” Under the second paragraph, the words “Waiver
of Implied Warranty of Habitability” are underlined, and the paragraph explains the implied
warranty of habitability in Illinois, including that every contract for the construction of a new
residence carries with it an implied warranty of habitability that the residence will be free of
defects and will be fit for its intended use as a residence and that a seller-builder and purchaser
may agree in writing that the warranty is not included as part of their particular contract. In the
third paragraph, it states in capital letters that the purchaser is waiving the implied warranty of
habitability and then explains the consequences of the waiver, i.e., if a dispute arises with the
seller and results in a lawsuit, the purchaser will not be able to rely on the implied warranty of
habitability. Immediately below this paragraph, the agreement contains space for the
purchaser(s) to provide his or her initials.
¶ 28 Then, in Addendum D of the purchase agreement, paragraph 10 amends section 11
and addresses the seller’s limited warranty and the purchaser’s waiver of all implied and express
warranties as they relate to both the home and the common elements. The section states as
follows:
“10. Paragraph 11 of the Agreement is hereby amended and restated, in its entirety, to
be and read as follows:
11. SELLER’S LIMITED WARRANTIES/WAIVER OF IMPLIED WARRANTY OF
HABITABILITY:
(a) Limited Warranties. Seller warrants (i) the Home against defects in material and
workmanship for a period of one (1) year from the date of Closing or occupancy,
whichever first occurs and (ii) the common elements of the building in which the Home
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is located against defects in material and workmanship for a period of one (1) year from
the date on which the Common Elements are made part of the Condominium Property, all
as more fully provided in Seller’s standard limited warranty which shall be delivered to
Purchaser at Closing. These ‘Limited Warranties’ shall be in lieu of all other warranties,
express or implied.***” (Emphasis added.)
Thus, the agreement expressly provides that the seller’s limited warranties were “in lieu” of all
other warranties. Then, following the paragraph regarding all warranties, section (b) specifically
addresses the implied warranty of habitability, refers to it by the full name, i.e., “Waiver of
Implied Warranty of Habitability,” and explains the warranty, including that it is contained in
every contract in Illinois and that the seller and purchaser “may agree in writing, as here,” that
the warranty is not included as a part of the contract.
¶ 29 In the next part of section (b) in paragraph 10 regarding the “Waiver of Implied
Warranty of Habitability,” the agreement specifically states that the purchaser agrees to disclaim
the implied warranty of habitability in exchange for the seller’s limited warranty, expressly
disclaims the implied warranty of habitability, and then explains the consequences of doing so as
follows:
“Purchaser agrees that in consideration for Seller providing Purchaser with Limited
Warranties, Purchaser will accept the Limited Warranties as a substitute for the Implied
Warranty of Habitability. ACCORDINGLY, SELLER HEREBY DISCLAIMS AND
PURCHASER HEREBY WAIVES THE IMPLIED WARRANTY OF HABITABILITY
DESCRIBED ABOVE. PURCHASER HEREBY ACKNOWLEDGES,
UNDERSTANDS AND AGREES THAT THE IMPLIED WARRANTY OF
HABITABILITY IS NOT A PART OF THIS AGREEMENT AND THAT IF A
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DISPUTE ARISES WITH SELLER AND THE DISPUTE RESULTS IN A LAWSUIT,
PURCHASER WILL NOT BE ABLE TO RELY ON THE IMPLIED WARRANTY OF
HABITABILITY DESCRIBED ABOVE AS A BASIS FOR SUING THE SELLER OR
AS THE BASIS OF A DEFENSE IF SELLER SUES THE PURCHASER.
PURCHASER MAY, HOWEVER, RELY ON THE LIMITED WARRANTIES MADE
BY SELLER TO PURCHASER. ALL REPRESENTATIONS MADE HEREIN SHALL
SURVIVE THE CLOSING AND THE RECORDING OF THE DEED TO THE
PROPERTY.”
Accordingly, the agreement conspicuously states in all capital letters that the purchaser waived
the implied warranty of habitability and then explains the consequences, including that the
purchaser cannot rely on the warranty as a basis for suing the seller. The agreement brings the
all-capitalized font disclaimer to the purchaser’s attention because immediately below the all-
capitalized font it contains a line for the purchaser(s) to provide their initials.
¶ 30 From our review of the entire purchase agreement, we conclude that the disclaimer of
implied warranty of habitability was conspicuous, referred to the warranty of habitability by
name, fully disclosed the consequences of its inclusion in the agreement, and was a part of the
parties’ agreement. See Board of Managers of Park Point at Wheeling Condominium
Association, 2015 IL App (1st) 123452, ¶ 41 (“In Illinois, a disclaimer of the warranty of
habitability is effective if it is a conspicuous part of the contract, refers to the warranty by name,
and uses plain language that fully discloses the consequences of its inclusion.”). Thus, the
disclaimer of the implied warranty of habitability in the purchase agreement was an effective
disclaimer.
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¶ 31 Furthermore, the Declaration confirmed the disclaimer of implied warranty of
habitability and all other warranty provisions contained in the purchase agreement. The purchase
agreement specifically states that the unit purchaser agreed to be bound by the Association
Documents, which included the Declaration. In section 14.06 of the Declaration, it specifically
refers to the warranty of implied habitability by name in all capital and underlined letters. The
paragraph under this header explains the warranty and expressly states that the purchaser agreed
to the disclaimer of the implied warranties in the purchase agreement, as it states: “Each buyer of
a Dwelling Unit from Declarant agreed in the purchase contract that the Declarant has excluded
and disclaimed the Implied Warranty of Habitability and all other implied warranties, whether
created judicially, statutorily or by common law, including the implied warranty of fitness for a
particular purpose.” The paragraph also explains the consequences of the disclaimer, including
that no owner “shall be able to assert a claim against Declarant for a breach of the Implied
Warranty of Habitability or any other implied warranty.”
¶ 32 Plaintiff asserts that the disclaimer of the implied warranties in the purchase
agreement is invalid because the Association’s members did not receive consideration in
exchange for waiving the implied warranties. Plaintiff argues that the one-year limited warranty
period associated with the common elements as consideration for disclaiming the implied
warranties began when defendant made the common elements part of the condominium property
and then expired before defendant turned control over to a unit-elected Board of Directors such
that defendant had exclusive control over when the limited warranty period expired, and plaintiff
never had an opportunity to assert a claim based on the limited warranty through its Board of
Directors. Plaintiff therefore argues that it did not receive anything in exchange for the
disclaimer of implied warranties. However, there is nothing in the record to show that plaintiff
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did not receive the one-year limited warranty in exchange for disclaiming the implied warranties.
Further, plaintiff did not discover the alleged defects until 2015, and there is nothing to show
that, had plaintiff discovered the alleged defects within the one-year limited warranty period of
January 8, 2009 to January 8, 2010, the limited warranty would not have been effective or that
defendant would have breached the contract by not adhering to the limited warranty. Plaintiff
also does not provide any authority to support that a provision in a contract whereby a seller-
developer provides a limited warranty in exchange for the purchaser waiving the implied
warranties is unenforceable due to lack of consideration because the turnover of the Association
from the seller to the unit-elected board of directors did not occur until after the limited warranty
period had expired.
¶ 33 Plaintiff asserts that the unit purchasers were “duped into waiving” the implied
warranties “in exchange for a limited warranty that could never be exercised,” which
demonstrates that the provision was unconscionable and a circumstance of “gross inadequacy
and unfairness” such that the court should not enforce the contract.
¶ 34 “ ‘It is not [the] court’s function to review the amount of consideration unless the
amount is so grossly inadequate as to shock the conscience.’ ” Rohr Burg Motors, Inc. v.
Kulbarsh, 2014 IL App (1st) 131664, ¶ 48 (quoting Hurd v. Wildman, Harrold, Allen & Dixon,
303 Ill. App. 3d 84, 93 (1999)). Factors relevant to finding a contract unconscionable include the
age, education, and commercial experience of the parties, whether the aggrieved party had a
meaningful choice when faced with unreasonably unfavorable terms, the gross disparity in the
values exchanged, and the gross inequality in the bargaining positions of the parties together
with terms unreasonably favorable to the stronger party. Ahern v. Knecht, 202 Ill. App. 3d 709,
716, (1990). However, “[m]ere inadequacy of consideration, in the absence of fraud or
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unconscionable advantage, ordinarily is insufficient to justify setting aside a contract.” Gavery v.
McMahon & Elliott, 283 Ill. App. 3d 484, 490-91 (1996).
¶ 35 Applying these principles, plaintiff does not allege that defendant engaged in fraud
nor does it direct us to anything in the record to support the existence of any factors described
above that are relevant to finding that the contract was unconscionable. We therefore cannot find
that the consideration in the purchase agreement was so grossly inadequate as to shock the
conscience.
¶ 36 Plaintiff asserts that the disclaimer of the warranties in the purchase agreement is
invalid because defendant failed to prove that every unit purchaser agreed to and signed the
agreement. Defendant attached to its motion to dismiss a purchase agreement and an affidavit
signed by an employee of Lennar Chicago, the managing member of defendant. The affidavit
stated that the purchase agreement attached to the motion was “a copy of an exemplar purchase
agreement documenting purchase transactions associated with the Library Tower Property” and
that the “exemplar attached is an exact duplicate of the original purchase agreement and was not
prepared by Library Tower or Lennar Chicago in anticipation of this litigation.” Plaintiff did not
file a counter-affidavit with any contrary facts, i.e., that not every unit purchaser signed the same
copy of the exemplar purchase agreement attached to defendant’s motion. Because defendant’s
affidavit was not refuted by a counter-affidavit, the facts in defendant’s affidavit are deemed
admitted. See Board of Managers of Park Point at Wheeling Condominium Association, 2015 IL
App (1st) 123452, ¶ 45 (“When a supporting affidavit has not been refuted by a counter-affidavit
or other appropriate means, the facts in that supporting affidavit are deemed admitted.”). We are
therefore unpersuaded by plaintiff’s argument that the disclaimer in the purchase agreement
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No. 1-20-0486
attached to defendant’s motion to dismiss is invalid because not every purchaser signed the
purchase agreement containing the disclaimer.
¶ 37 Further, we note that plaintiff attached the Declaration to its complaint. As previously
discussed, the section regarding the disclaimer of the implied warranty of habitability and other
implied warranties in the Declaration confirms the disclaimer contained in the purchase
agreement, as the Declaration states in section 14.06: “Each buyer of a Dwelling Unit from
Declarant agreed in the purchase contract that the Declarant has excluded and disclaimed the
Implied Warranty of Habitability and all other implied warranties, whether created judicially,
statutorily or by common law, including the implied warranty of fitness for a particular purpose.”
¶ 38 Lastly, we note that defendant argues that plaintiff’s claims are barred by the statute
of limitations. However, the circuit court found that there were questions of fact as to when the
cause of action for plaintiff’s claims accrued. Given our disposition, we need not address this
issue.
¶ 39 III. CONCLUSION
¶ 40 Based on the foregoing, the circuit court properly granted defendant’s motion to
dismiss because the purchase agreement contained effective disclaimers of the implied
warranties.
¶ 41 Affirmed.
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