                                                                                 THIRD DIVISION
                                                                                  December 9, 2009



Nos. 1-08-1347 & 1-08-1378 (consolidated)




JUDITH HIRSCH,                                              )   Appeal from the Circuit
                                                            )   Court of Cook County, Illinois
        Plaintiff-Appellee and Cross-Appellant,             )
                                                            )   No. 05 CH 6841
v.                                                          )
                                                            )   Honorable Martin Agran,
OPTIMA, INC., an Illinois Corporation,                      )   Judge Presiding
                                                            )
        Defendant-Appellant and Cross-Appellee              )
                                                            )
(John H. Kelsey and Coromandel Town Home                    )
Association,                                                )
                                                            )
        Defendants).                                        )




        PRESIDING JUSTICE MURPHY delivered the opinion of the court:

        After plaintiff, Judith Hirsch, purchased a townhouse from defendant John Kelsey in

2002, the basement flooded. On April 18, 2005, plaintiff sued Kelsey, the seller of the

townhouse; Coromandel Town Home Association, the homeowner’s association; and Optima,

Inc., the builder. The trial court dismissed with prejudice plaintiff’s case against Optima but later

granted in part plaintiff’s petition under section 2-1401 of the Code of Civil Procedure (735 ILCS

5/2-1401 (West 2006)) based on newly discovered evidence. On appeal, Optima argues that the

trial court erred in granting plaintiff’s petition because the evidence was not new. Plaintiff cross-

appeals the trial court’s partial denial of her petition.
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                                        I. BACKGROUND

       Plaintiff filed a complaint and two amended complaints alleging that Optima designed

and constructed the townhouse at 415 Milford Road in Deerfield, Illinois, in 1994 and 1995. In

June or July 2001, when Kelsey owned the property, “there was a leakage of water in the

basement through a crack in the foundation.” Kelsey notified Optima and Coromandel of the

problem, and they concluded that the flooding was due to the improper design and installation of

the drain-tile storm-water discharge system around the foundation of the unit. They arranged for

Roto-Rooter to fix the problem and to do maintenance work on the drain-tile storm-water

discharge system on a biannual basis.

       Kelsey sold the property to plaintiff in 2002. None of the defendants informed plaintiff

that there was a problem with the drain tiles or that the repairs were not permanent. The real

property disclosure report completed by Kelsey indicated that he was not “aware of flooding or

recurring leakage problems in the crawlspace or in the basement” or of “material defects in the

basement in foundation (including cracks and bulges).” Furthermore, defendants cancelled the

biannual servicing by Roto-Rooter on the property. In June 2003 and March 2005, plaintiff’s

basement flooded. The second amended complaint alleged that Optima breached the implied

warranty of habitability and negligently performed a voluntary undertaking. These counts were

dismissed with prejudice on December 13, 2006, for failure to state a claim.

       On January 10, 2007, plaintiff filed a motion for reconsideration. In March 2007,

between filing the motion and the court’s decision, plaintiff received answers to interrogatories

that she had served on Kelsey. These answers provided that there was “some seepage” in the


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basement in 1997 and one leak in June or July 2001 and that Optima and Coromandel undertook

to repair the problem on both occasions. Plaintiff did not raise Kelsey’s responses about the

1997 seepage during the proceedings on her motion for reconsideration. The hearing on

plaintiff’s motion occurred on May 10, 2007, and the trial court denied the motion on June 6,

2007.

        On July 17, 2007, Kelsey filed a motion for leave to file an amended counterclaim against

Optima and Coromandel. It alleged that in 1997, Kelsey “observed water accumulation” in the

basement of the townhouse and that he contacted Optima and Coromandel, which undertook to

remedy the problem. In 2000, water accumulated in another part of the basement, and Optima

and Coromandel again took care of it.

        Plaintiff filed a motion for leave to file a third amended complaint on August 10, 2007.

The motion argued that Kelsey’s July 17, 2007, motion for leave to file an amended counterclaim

raised new facts regarding the relationship among defendants, that a recently decided case

affirmed the correctness of her position, and that “a motion to reconsider would be appropriate,

given the discovery of new facts not previously discoverable.”

        The proposed third amended complaint alleged that Kelsey informed Optima and

Coromandel in 1997 that there was “a leakage of water into the basement” of the townhouse and

that when Kelsey decided to sell the townhouse, Optima advised him that he did not have to

disclose the history of flooding or water seepage. Thus, the proposed complaint alleged,

Kelsey’s misrepresentations were made “with the knowledge and blessing” of Optima. After the

flooding in 2003, Optima continued to misrepresent its prior knowledge of the defective drain-


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tile storm-water discharge system. In addition to breach of the warranty of habitability and

negligent performance of a voluntary undertaking, which were alleged in earlier complaints, the

proposed third amended complaint alleged that Optima engaged in fraudulent misrepresentation

and violated the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud

Act) (815 ILCS 505/1 et seq. (West 2006)).

       On September 5, 2007, the trial court denied plaintiff’s motion for leave to file the third

amended complaint as to Optima. It noted that the proposed third amended complaint “does not

state a new cause of action or a sufficient cause of action against Optima.” Accordingly, the

court found that the order dismissing Optima with prejudice would stand. It entered a Supreme

Court Rule 304(a) (210 Ill. 2d R. 304(a)) finding as to the dismissal with prejudice of plaintiff’s

claims against Optima and the denial of plaintiff’s motion for leave to file a third amended

complaint against Optima.

       On October 2, 2007, plaintiff filed a notice of appeal as to the court’s September 5, 2007,

order. On January 22, 2008, while her appeal was pending, plaintiff was granted leave to file a

section 2-1401 petition for relief from judgment based on the discovery of new facts.

       The petition cited the following: (1) Kelsey’s July 17, 2007, motion for leave to file an

amended counterclaim, from which plaintiff “learned for the first time that the property had

flooded as early as 1997”; (2) Kelsey’s December 21, 2007, affidavit, wherein Kelsey “for the

first time admitted in a document submitted to this Court” that he called Optima and Coromandel

before completing the disclosure report; and (3) records from Roto-Rooter that Kelsey filed in his

December 21, 2007, response to Optima’s motion to dismiss his second amended counterclaim,


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showing that the company was at the townhouse at least six times between 1997 and 2002 for

rodding and jetting out the drain tiles. According to the petition, the Roto-Rooter records

demonstrated that Optima repeatedly misrepresented to the court its level of involvement in the

maintenance of the drain-tile storm-water discharge system. In addition, plaintiff asserted that

Optima’s representations in earlier pleadings that it did not enter into a maintenance agreement

with Roto-Rooter until 2003 was refuted by the cited new facts. Plaintiff sought an order

vacating the dismissal with prejudice of her two claims against Optima and permitting her to file

the third amended complaint that the court previously would not permit her to file.

       On April 30, 2008, the trial court granted the petition in part and denied it in part. The

trial court found that plaintiff alleged a meritorious claim or defense as to her claim for breach of

warranty. Relying on Kelsey’s amended counterclaim, the court found that the allegation that the

basement first flooded in 1997 was “relevant because in dismissing the breach of warranty count,

the Court relied on the amount of time that had elapsed between the construction of the

Townhome and the first occurrence of flooding.” It continued:

               “In dismissing the Second Amended Complaint the Court found that the

       basement defect did not arise until six years after construction of the Townhome.

       The Court found that six years did not satisfy the ‘reasonable time’ standard for

       determining whether subsequent purchasers are entitled to protection of the

       warranty of habitability. However, it now appears that the basement did

       experience flooding in 1997. Thus, in fact, the basement’s defect manifested

       itself approximately two years after the completion of the Townhome. Although


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       guideposts for decision making with respect to the ‘reasonable time’ standard of

       Redarowicz are sparse, this lapse of time is much more reasonable than six years.

       As such, had the Court been presented the additional facts in connection with the

       motion to dismiss the Second Amended Complaint, the Court would have likely

       denied the motion to dismiss.”

The court further concluded that “it is not likely” that plaintiff’s failure to present the new facts

was caused by her own negligence, as she first learned of them when they were presented in

Kelsey’s motion for leave to file an amended counterclaim, which was filed in July 2007, the

month after the court dismissed the second amended complaint with prejudice. It also noted that

while “six months is a significant amount of time, it is not such a significant amount of time so

as to find Hirsch dilatory in filing the petition.” Therefore, the court granted plaintiff’s petition

with respect to the breach of warranty count.

       The court concluded that its decision to dismiss the negligent performance of a voluntary

undertaking count was not dependent on the amount of time that elapsed before the basement

defect was discovered; rather, the court “dismissed this count because Hirsch could not plead

reliance on Optima’s agreement to have Roto-Rooter service the drains.” The court further found

that the proposed third amended complaint failed to state a cause of action for fraudulent

misrepresentation or a violation of the Consumer Fraud Act. Accordingly, the court denied

plaintiff’s petition for relief from judgment with respect to the voluntary undertaking count, and

it denied plaintiff leave to file a third amended complaint.

       On May 20, 2008, this court granted plaintiff’s motion to withdraw her appeal in case No.


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1-07-2736. The record on appeal had been filed, and plaintiff filed her motion to withdraw the

appeal the day after her opening brief was due.

       Defendant appeals the trial court’s granting of relief from judgment as to the warranty of

habitability claim. See 210 Ill. 2d R. 304(b)(3). Plaintiff cross-appeals the trial court’s denial of

her petition for relief from judgment with respect to the voluntary undertaking count and her

request to file a third amended complaint.

                                           II. ANALYSIS

       Section 2-1401 of the Code of Civil Procedure provides a comprehensive procedure by

which final orders, judgments, and decrees may be vacated “after 30 days from the entry

thereof.” 735 ILCS 5/2-1401(a) (West 2006). The purpose of a motion to reconsider is to bring

to the trial court’s attention (1) newly discovered evidence not available at the time of the

hearing, (2) changes in the law, or (3) errors in the trial court’s previous application of existing

law. Stringer v. Packaging Corp. of America, 351 Ill. App. 3d 1135, 1140 (2004). “To be

entitled to relief under section 2-1401, the petitioner must affirmatively set forth specific factual

allegations supporting each of the following elements: (1) the existence of a meritorious defense

or claim; (2) due diligence in presenting this defense or claim to the circuit court in the original

action; and (3) due diligence in filing the section 2-1401 petition for relief.” Smith v. Airoom,

Inc., 114 Ill. 2d 209, 220-21 (1986). Section 2-1401 “does not afford a remedy to relieve a

litigant of the consequences of his own mistakes or his counsel’s negligence.” La Rabida

Children’s Hospital & Research Center v. Harrison, 263 Ill. App. 3d 790, 796 (1994). Whether

a section 2-1401 petition should be granted lies within the sound discretion of the trial court,


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depending on the facts and equities presented. Robinson v. Ryan, 372 Ill. App. 3d 167, 173

(2007). A trial court abuses its discretion if it fails to apply the proper criteria when it reviews

the facts, and a reviewing court must consider both the legal adequacy of the way the trial court

reached its result as well as whether the result is within the bounds of reason. Robinson, 372 Ill.

App. 3d at 173.

       On appeal, Optima argues that the trial court erred in granting plaintiff’s section 2-1401

petition as to plaintiff’s claim for the implied warranty of habitability claim because, inter alia,

the “newly discovered information” was not new. On cross-appeal, plaintiff contends that the

trial court erred when it denied her petition as to her claims for negligent performance of a

voluntary undertaking, common law fraud, and consumer fraud. Optima argues that this court

lacks jurisdiction to address plaintiff’s cross-appeal. Because Optima cites no authority in

support of its position, we find it waived. 210 Ill. 2d R. 341(h)(7).

                     A. Diligence in Presenting Claim in the Original Action

       Optima contends that the “new” facts alleged in plaintiff’s section 2-1401 petition were

not only known before the time of judgment, but were raised before and rejected by the trial court

when it denied plaintiff’s motion for leave to file a third amended complaint as to Optima. First,

we note that the parties and the trial court each rely on different dates for when plaintiff first

learned of the “new” information. On appeal, Optima relies extensively on the March 2007

interrogatory responses as providing the “new” information. We note that Optima’s motion to

dismiss the section 2-1401 petition did not cite Kelsey’s March 2007 interrogatory responses,

which provided that there was “some seepage” in the basement in 1997. Instead, Optima’s


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motion claimed that plaintiff knew that the townhouse flooded in 1997 because Kelsey filed a

motion for leave to file a counterclaim on April 18, 2007, which “alleged facts that Optima knew

of the leakage and took steps to fix the leak.” Significantly, however, the original counterclaim

made no mention of the 1997 date; it was Kelsey’s motion for leave to file an amended

counterclaim, filed in July 2007, that did. Thus, having failed to argue in the trial court that

plaintiff knew of the “new” information when she received the interrogatory responses in March

2007, Optima is not permitted to do so on appeal. River Plaza Homeowner’s Ass’n v. Healey,

389 Ill. App. 3d 268, 280 (2009). See also Johnson v. Burlington Northern, Inc., 107 Ill. App. 3d

130, 138 (1982) (parties to an appeal must adhere to the theory presented to the trial court and

that theory must be treated as the law of the case on appeal).

       In fact, the trial court relied on two dates when it granted plaintiff’s petition: the July

2007 motion for leave to file an amended counterclaim and the Roto-Rooter records that were

filed by Kelsey in December 2007. The trial court found that plaintiff first learned of these facts

when they were presented in Kelsey’s motion for leave to file an amended counterclaim, which

was filed in July 2007, “the month after the Court dismissed the Second Amended Complaint

with prejudice.” Further, the “granting of motions to stay discovery in the case makes [it] likely

that Hirsch would not have been able to discover these facts of her own volition. It was not until

December 21, 2007 that the Roto-Rooter records were filed by Kelsey.” Accordingly, the trial

court found that “it is not likely that the failure to present the facts was caused by Hirsch’s own

negligence.”

       In Smith v. Airoom, 114 Ill. 2d 209 (1986), our supreme court noted that section 2-1401


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“does not afford a litigant a remedy whereby he may be relieved of the consequences of his own

mistake or negligence.” Smith, 114 Ill. 2d at 222. Therefore, a party relying on section 2-1401

“is not entitled to relief ‘unless he shows that through no fault or negligence of his own, the error

of fact *** was not made to appear to the trial court.’ ” Smith, 114 Ill. 2d at 222, quoting

Brockmeyer v. Duncan, 18 Ill. 2d 502, 505 (1960). Furthermore, section 2-1401 is not a

substitute for an appeal, nor can it be used to shield a litigant from the consequences of his own

mistakes or his counsel’s negligence. Shapira v. Lutheran General Hospital, 199 Ill. App. 3d

479, 483 (1990). “Consistent with the strong judicial policy favoring finality of judgments, our

courts have held that a section 2-1401 petition is not to be used as a device to relitigate issues

already decided or to put in issue matters which have previously been or could have been

adjudicated.” In re Marriage of Halas, 173 Ill. App. 3d 218, 223 (1988). See also Stacke v.

Bates, 225 Ill. App. 3d 1050, 1054 (1992); Shapira, 199 Ill. App. 3d at 483 (“The section 2-1401

remedy was not intended to put in issue matters that previously could have been adjudicated”); In

re Marriage of Ohlson, 126 Ill. App. 3d 374, 381 (1984); Davis v. Chicago Transit Authority, 82

Ill. App. 3d 987, 989 (1980).

       Optima argues that plaintiff’s petition raised matters that not only could have been

adjudicated, but that were presented to the court and rejected. Plaintiff received Kelsey’s

amended counterclaim in July 2007, after the dismissal of Optima from plaintiff’s case and the

denial of plaintiff’s motion for reconsideration. On August 10, 2007, plaintiff filed a motion for

leave to file a third amended complaint, which specifically argued that Kelsey’s July 17, 2007,

motion for leave to file an amended counterclaim raised new facts. The trial court denied


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plaintiff’s motion as to Optima and granted her Rule 304(a) language. Plaintiff filed an appeal,

filed a section 2-1401 petition, and withdrew the appeal after the section 2-1401 petition was

granted.

       Generally, errors of fact on which a section 2-1401 petition is based must not have been

known to the court or the moving party at the time of judgment. Lubbers v. Norfolk & Western

Ry. Co., 105 Ill. 2d 201, 209-10 (1985). However, “[t]his rule does not operate to preclude

petitions based on newly discovered evidence bearing on the ultimate issue of the original trial,

particularly where the prevailing party has engaged in fraudulent conduct designed to conceal the

evidence from the petitioner before trial.” Lubbers, 105 Ill. 2d at 210. The evidence that

plaintiff cited in her petition bore “on the ultimate issue of the original trial,” which was

Optima’s level of participation in the maintenance of the drain-tile system and the time period

during which it did so. Throughout the trial court proceedings, Optima insisted that before 2003,

it had nothing to do with the maintenance of the drain system. For example, in its motion to

dismiss the second amended complaint, Optima refuted plaintiff’s allegation that it undertook a

duty to provide biannual maintenance to the drain system in 2001 and stopped doing so at some

time in the future by claiming that “Optima did not even enter into the Maintenance Agreement

until September of 2003. Accordingly, Hirsch’s claim that Optima entered into a 2001

agreement and cancelled it when she moved in is patently wrong.” In its reply to its motion to

dismiss the second amended complaint, Optima further claimed:

               “Here, Hirsch’s theory that Optima voluntarily undertook a duty to provide

       bi-annual maintenance to the drain system in 2001 and stopped doing so at


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        sometime in the future is baseless and unsupported by facts. Instead, the facts

        support that Optima fulfilled the agreement that was in place. The September

        2003 Maintenance Agreement between Optima and Coromandel provides that

        Optima would ensure that the drain and sump basin of the townhome would be

        serviced twice per year commencing from September 17, 2003 at a cost of only

        $250 to Coromandel.”

        The information that plaintiff raised in her section 2-1401 petition demonstrates that

defendant’s representations were false or misleading. The Roto-Rooter records showed that the

company was at the property at least six times between March 1997 and March 2002 for rodding

and jetting. These tickets list the property’s address, and many list Optima’s phone number and

show Optima as the client. T.J. Lenick, Optima’s vice-president, was also referenced in several

of the tickets.

        Optima contends that the representations were merely challenging the sufficiency of the

complaint under section 2-615 of the Code of Civil Procedure. However, the motion to dismiss

the second amended complaint was filed pursuant to both sections 2-615 and 2-619, and Optima

filed numerous exhibits in support, including the affidavit of Matt Cison and the maintenance

agreement. Cison, a vice-president of Optima, said that the September 17, 2003, maintenance

agreement “is the first and only Maintenance Agreement entered into by Optima, Inc. and

Coromandel Townhome Association for service to the drain-tile storm water discharge system

for the townhome at issue in this litigation.” While it may have been the first written contract, it

was certainly not the first agreement that Optima entered into to service the drain tile system.


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Optima also argues that the Roto-Rooter records provided no new facts of significance because

plaintiff already knew that Roto-Rooter serviced the property on multiple occasions. However,

the initial complaints alleged that the first leakage occurred in June or July of 2001, after which

they entered into the agreement--not that the first water issue was in 1997 and that Optima

undertook to service the drain system then.

        “One of the guiding principles *** in the administration of section 2-1401 relief is that

the petition invokes the equitable powers of the circuit court.” Smith, 114 Ill. 2d at 225. The

power to set aside a judgment, and thus allow a litigant to have his or her day in court, “ ‘is based

upon substantial principles of right and wrong and is to be exercised for the prevention of injury

and [for the] furtherance of justice.’ ” Smith, 114 Ill. 2d at 225, quoting Diner’s Club, Inc. v.

Gronwald, 43 Ill. App. 3d 164, 168 (1976); Spencer v. American United Cab Ass’n, 59 Ill. App.

2d 165, 172 (1965); Lubbers, 105 Ill. 2d at 210. Upon discovering that its previous position was

incorrect, the trial court properly corrected itself.

        We also find the cases cited by Optima to be distinguishable because they analyze

whether the trial court properly denied a petition because the evidence was in the movant’s

possession. Rahill Corp. v. Urbanski, 123 Ill. App. 3d 769, 778 (1984); Kosten v. St. Anne’s

Hospital, 132 Ill. App. 3d 1073, 1080 (1985) (revised affidavit attached to petition did not

provide new information); Gas Power, Inc. v. Forsythe Gas Co., 249 Ill. App. 3d 255 (1993).

                                    B. Diligence in Filing Petition

        Optima argues that plaintiff lacked diligence in filing her petition where she “was aware

of and sat on the information from March through August and then, post-judgment, inexplicably


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waited until late January to file her petition.” Plaintiff responds that her petition was filed within

a month after Kelsey produced the Roto-Rooter records in December 2007. However, it was the

July 2007 date, not March or December, that the trial court relied on in assessing plaintiff’s

diligence. The court found that “[a]lthough six months is a significant amount of time, it is not

such a significant amount of time so as to find Hirsch dilatory in filing the petition.”

       “No bright-line rule exists for judging whether a petitioner has acted diligently. Rather,

due diligence is judged by the reasonableness of the petitioner’s conduct under all of the

circumstances.” Paul v. Gerald Adelman & Associates, Ltd., 223 Ill. 2d 85, 99-100 (2006), citing

Airoom, 114 Ill. 2d at 222. In determining the reasonableness of the excuse offered by the

petitioner, the court must consider all of the circumstances attendant upon entry of the judgment,

including the conduct of the litigants and their attorneys. Airoom, 114 Ill. 2d at 222. Paul found

that “a six-month delay in requesting section 2-1401 relief does not, ipso facto, demonstrate a

fatal lack of diligence.” Paul, 223 Ill. 2d at 100. In addition, while Optima argues that plaintiff

was not diligent because she did not subpoena the service records from Roto-Rooter, the trial

court found that the “granting of motions to stay discovery in the case makes [it] likely that

Hirsch would not have been able to discover these facts of her own volition.”

       More important, the equitable powers of the trial court are invoked when it rules on a

section 2-1401 petition. Smith, 114 Ill. 2d at 221. A section 2-1401 petition “must be decided

according to the principles of fundamental fairness [and] the object of preventing injury and

seeking the furtherance of justice.” Commercial National Bank of Chicago v. Mehta, 144 Ill.

App. 3d 924, 930 (1986). When “evidence of unconscionable behavior is presented, the


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requirement of due diligence need not be rigidly enforced.” Gas Power Inc. v. Forsythe Gas Co.,

249 Ill. App. 3d 255, 263 (1993). See Lubbers v. Norfolk & Western Ry. Co., 105 Ill. 2d 201,

210-11 (1985). The trial court apparently recognized this when it held that “the interest of

fairness and substantial justice compel the exercise of the equitable powers of this court.” “The

appellate court will be loathe [sic] to overturn a decision on a petition to vacate when that

decision rests on equitable considerations unless an abuse of discretion by the trial court is

clearly established.” Zee Jay, Inc. v. Illinois Insurance Guaranty Fund, 194 Ill. App. 3d 1098,

1103 (1990).

        “Where a reasonable excuse is shown, a party should be allowed to have its day in court,

provided no prejudice results to the other party.” Cunningham v. Miller’s General Insurance

Co., 188 Ill. App. 3d 689, 695 (1989), citing Verson Allsteel Press Co. v. Mackworth Rees, 99 Ill.

App. 3d 789, 793 (1981). For example, with the passage of time, parties may change their

position or destroy or misplace crucial evidence. That is hardly the case here. Optima knew of

the leakage in 1997. It also knew of the agreement with Roto-Rooter, as it was Optima that

engaged its services. Optima knew of Kelsey’s false statement regarding the leakage, since

Optima advised Kelsey not to disclose the leakage. Optima knew that Roto-Rooter’s services

were being terminated; Optima cancelled the biannual servicing by Roto-Rooter on the property.

There is no evidence that Optima was prejudiced by the six-month delay in bringing the petition.

Accordingly, we find that the trial court did not err in finding that plaintiff was diligent in filing

her petition.

                                        C. Meritorious Claim


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                                1. Implied warranty of habitability

       The trial court concluded that plaintiff presented a meritorious claim for breach of

warranty of habitability. Citing Redarowicz v. Ohlendorf, 92 Ill. 2d 171 (1982), the trial court

found that if it had known that the defect had manifested itself only two years after the

completion of the townhouse instead of six, it would not have dismissed the second amended

complaint.

       The implied warranty of habitability has been adopted by our courts to protect purchasers

of new homes upon discovery of latent defects. Cotter v. Parrish, 166 Ill. App. 3d 836, 840

(1988). In Redarowicz, our supreme court held:

       “Like the initial purchasers, the subsequent purchaser is usually not knowledgeable

       in construction practices and must, to a substantial degree, rely upon the expertise

       of the person who built the home. If construction of a new house is defective, its

       repair costs should be borne by the responsible builder-vendor who created the

       latent defect.” Redarowicz, 92 Ill. 2d at 183.

“The compelling public policies underlying the implied warranty of habitability should not be

frustrated because of the short intervening ownership of the first purchaser; in these

circumstances the implied warranty of habitability survives a change of hands in the ownership.”

Redarowicz, 92 Ill. 2d at 183. The court limited its holding, however, to latent defects that

“manifest themselves within a reasonable time after the purchase of the house” by the original

owner. Redarowicz, 92 Ill. 2d at 185. See Swaw v. Ortell, 137 Ill. App. 3d 60, 72 (1984).

       In dismissing the warranty count, the trial court relied on the amount of time that had


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elapsed between the construction of the townhouse and the first occurrence of the flooding; it

initially dismissed the claim because the defect arose six years after construction, which the court

concluded did not satisfy the “reasonable time” standard for determining whether a subsequent

purchaser is entitled to protection of the warranty of habitability. In her section 2-1401 petition,

plaintiff alleged that the defect first manifested itself not in 2001, as originally alleged in her

complaint, but in 1997, only two years after the completion of the townhouse. The trial court

found that while guideposts for what constitutes a “reasonable time” are sparse, this two-year

lapse of time “is much more reasonable than six years.”

        Optima argues that the trial court erred because Redarowicz contemplates time passage in

ownership as the determining factor in whether an implied warranty survives a change in

ownership. Optima relies on the supreme court’s statements that the policy underlying the

warranty of habitability should not be frustrated because of “the short intervening ownership of

the first purchaser” and that the subsequent purchaser should not be denied the protection of the

warranty “because he happened to purchase the home about one year after the original buyer.”

Redarowicz, 92 Ill. 2d at 183, 185. Optima contends that plaintiff bought the townhouse seven to

eight years after it was built, and “the alleged 1997 water issues do not shorten this seven to eight

year period of the first purchaser’s intervening ownership.”

        Redarowicz held that for a subsequent purchaser to maintain a lawsuit against the builder,

latent defects must manifest themselves within a reasonable time after the purchase of the house

by the original owner. Redarowicz, 92 Ill. 2d at 185. Similarly, VonHoldt v. Barba & Barba

Construction, Inc., 175 Ill. 2d 426, 434 (1997), concluded that “the reasonable time for bringing


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a cause of action under the ‘reasonable time’ standard of Redarowicz begins with the act or

omission causing the defect rather than the date on which the subsequent purchaser takes title to

the property.” VonHoldt, 175 Ill. 2d at 434. Therefore, the fact that the defect manifested itself

only two years after Kelsey bought the house, instead of the six years originally pled in the

complaint, is highly relevant to the analysis of plaintiff’s section 2-1401 petition. See VonHoldt,

175 Ill. 2d at 434 (11-year period between act or omission causing the defect and the time the

action was brought was unreasonable to hold the builder liable); Redarowicz, 92 Ill. 2d at 185

(one year was reasonable); Eickmeyer v. Blietz Organization, Inc., 284 Ill. App. 3d 134 (1996)

(not reasonable where defect manifested itself 14 years after original sale of home).

       Accordingly, we conclude that the trial court did not err when it found that plaintiff

presented a meritorious claim for breach of the implied warranty of merchantability when the

two-year time period between the completion of the townhouse and the manifestation of the

defect “is much more reasonable than six years.”

                                             2. Fraud

       The proposed third amended complaint alleged new counts for fraudulent

misrepresentation and consumer fraud. Plaintiff alleged that when Kelsey decided to sell the

townhouse, he contacted an Optima representative, who told him that he did not have to disclose

the history of flooding, water seepage, or defects in the basement or foundation, despite knowing

that Kelsey would convey this information to potential purchasers in the residential real property

disclosure report. It was alleged that this misrepresentation would allow Optima to escape its

costly maintenance obligations. The trial court denied plaintiff leave to add claims for fraudulent


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misrepresentation and consumer fraud because she “fails to allege that Optima made any

misrepresentations to her.” The court rejected plaintiff’s argument that Optima’s statements to

Kelsey were sufficient to state a claim for fraud, finding the supreme court’s discussion of

“indirect misrepresentation” in Shannon v. Boise Cascade Corp., 208 Ill. 2d 517 (2004), was

dicta. The court relied on this court’s statement in County of Cook v. Philip Morris, Inc., 353 Ill.

App. 3d 55, 61 n.1 (2004), that “[i]n dicta, the [Shannon] court suggested that if the plaintiffs

had been ‘indirectly’ deceived because the builder or architect had been deceived, [the]

proximate cause requirement under the Fraud Act could be satisfied.”

       To establish a claim for common law fraud, a plaintiff must allege: (1) a false statement

of material fact, (2) the party making the statement knew or believed it to be untrue, (3) the party

to whom the statement was made had a right to rely on the statement, (4) the party to whom the

statement was made did rely on the statement, (5) the statement was made for the purpose of

inducing the other party to act, and (6) the reliance by the person to whom the statement was

made led to that person’s injury. Siegel v. Levy Organization Development Co., Inc., 153 Ill. 2d

534, 542-43 (1992). There is a high standard of specificity for pleading claims of fraud. Cwikla

v. Sheir, 345 Ill. App. 3d 23, 31 (2003). “The facts must be [pled] with sufficient specificity,

particularity, and certainty to apprise the opposing party of what he is called upon to answer.”

Cwikla, 345 Ill. App. 3d at 31. The pleadings must contain specific allegations from which fraud

is the necessary or probable inference, including what representations were made, when they

were made, who made the representations, and to whom they were made. Cwikla, 345 Ill. App.

3d at 31.


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         In Siegel, the court found that “so long as the alleged deception occurred in a course of

conduct involving trade or commerce, facts satisfying a claim for common law fraud will

necessarily satisfy a claim” under the Consumer Fraud Act. Siegel, 153 Ill. 2d at 543. See also

Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 501 (1996) (a complaint alleging a consumer fraud

violation must be pled with the same particularity as that required for common law fraud). A

private cause of action brought under section 10a(a) of the Consumer Fraud Act requires proof of

“actual damage” that occurred “as a result of” the deceptive act or practice. 815 ILCS 505/10a(a)

(West 2006). This language imposes a proximate-cause requirement. Oliveira v. Amoco Oil Co.,

201 Ill. 2d 134, 149 (2002).

         Plaintiff argues that the trial court erred in concluding that she could not pursue a fraud

claim against Optima where Optima knowingly gave Kelsey false information with the intent that

Kelsey give that information to plaintiff. She disputes that Shannon’s “indirect

misrepresentation” language was dicta and argues that even if it was, this court must follow it.

We agree and find that even if the relevant language in Shannon could be considered dicta,

earlier cases by our supreme court have recognized the potential for an indirect misrepresentation

claim.

         In Oliveira, a putative class action against a gasoline company under the Consumer Fraud

Act, the plaintiff alleged that Amoco engaged in a deceptive advertising campaign for its

premium gasolines. Oliveira, 201 Ill. 2d at 140. The plaintiff did not allege that the

advertisements induced him to buy the gasoline, nor did he allege that he saw, heard, or read any

of the allegedly deceptive advertisements. Oliveira, 201 Ill. 2d at 140. Instead, he alleged that


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he was damaged because the ads created an “artificially inflated” price for the gasoline he

purchased. Oliveira, 201 Ill. 2d at 140. The court rejected the plaintiff’s “market theory” of

proximate causation and found that the plaintiff failed to allege that he was deceived by the ads:

“Because plaintiff does not allege that he saw, heard or read any of defendant’s ads, plaintiff

cannot allege that he believed that he was buying gasoline which benefitted the environment or

improved engine performance.” Oliveira, 201 Ill. 2d at 155.

       In Shannon, a putative class action of homeowners asserted, inter alia, a claim under the

Consumer Fraud Act alleging that the defendant’s composite wood siding was defective and that

the defendant deceptively advertised the composite siding. None of the homeowners received

any representations regarding the siding from the defendant, and the complaint did not allege that

any named builder, architect, or engineer had received defendant’s product literature. The

plaintiffs claimed that the defendant’s alleged deceptions created a market for their product that

would not otherwise exist, thus resulting in its use on their homes and the plaintiffs’ ultimate

damages. Shannon, 208 Ill. 2d at 525. On appeal, our supreme court, relying on Oliveira, held

that “deceptive advertising cannot be the proximate cause of damages under the Act unless it

actually deceives the plaintiff.” Shannon, 208 Ill. 2d at 525. Because the advertising “did not in

any way deceive the plaintiffs, [it] could not have proximately caused the claimed damages,

whatever their nature.” Shannon, 208 Ill. 2d at 525.

       The court continued that although “proof of actual deception of a plaintiff is required, this

is not to say that the deception must always be direct between the defendant and the plaintiff to

satisfy the requirement of proximate cause under the Act.” Shannon, 208 Ill. 2d at 525-26.


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       “For instance, if the product literature had in fact deceived a particular builder,

       architect, or contractor, resulting in the installation of defective siding on a home,

       the damage could arguably have occurred ‘as a result of’ the indirect deception, as

       required by section 10(a) of the Act (815 ILCS 505/10a(a) (West 2000)). In those

       circumstances, the purchaser, who may have no independent knowledge of the

       qualities or expected performance standards of siding, is deceived because of the

       deception of the builder, architect, or contractor, who reasonably should have had

       correct knowledge. Plaintiffs did not plead any facts to support that theory at any

       time.” Shannon, 208 Ill. 2d at 526.

       Shannon cited St. Joseph Hospital v. Corbetta Construction Co., 21 Ill. App. 3d 925

(1974). In St. Joseph, a hospital asserted a common law fraud claim against the manufacturer-

supplier of wall paneling based on that defendant’s failure to disclose to the architect and builder

that testing had revealed the paneling to have a flame spread of 17 times the maximum allowed

under the building code. Shannon, 208 Ill. 2d at 526, citing St. Joseph, 21 Ill. App. 3d at 956-57.

The court in St. Joseph noted that traditional privity was not a requirement in fraud actions and

held that “ ‘[i]t is enough that the statements by the defendant be made with the intention that it

reach the plaintiff and influence his action and that it does reach him and he does rely upon it, to

his damage.’ ” Shannon, 208 Ill. 2d at 526, quoting St. Joseph, 21 Ill. App. 3d at 954. While the

misrepresentation to the architect and builder in St. Joseph ultimately deceived the hospital, the

record in Shannon “does not support a finding of indirect deception.” Shannon, 208 Ill. 2d at




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527.1

        In his affidavit, which plaintiff cited in her section 2-1401 petition, Kelsey averred that

while his basement was being finished, he observed water accumulation on the floor. He talked

to T.J. Lenick from Optima, who said he would remedy the problem. Kelsey was not sure what

steps were taken to fix the problem. A couple of days after he first reported the water

accumulation to Lenick, Kelsey spoke to him again, and Lenick told him that “the problem had

been taken care of and was repaired.” Kelsey had no further problems until 2000 or 2001, when

he noticed water coming through the basement wall in a different location than where he

previously noticed water accumulation. Kelsey reported the issue to Lenick, who said he would

inspect the problem and resolve the issue. Kelsey was not sure what was done to repair the

second water issue, but several days later, he again spoke to Lenick, who told Kelsey “that he had

inspected the area and that steps had been taken to ensure that the problem would not cause

additional water accumulation in the basement. Mr. Lenick specifically promised me that there

was nothing wrong with our basement.”

        Kelsey further stated that before he placed his townhouse on the market, he spoke to

Optima and Coromandel, who both assured him that no problems existed with the townhouse’s

basement. In reliance on their assurances, he completed the real estate disclosure form stating


        1
            In DeBouse v. Bayer AG, 385 Ill. App. 3d 812, 819-20 (2008), appeal allowed, 231 Ill.

2d 630 (2009), the Fifth District extended Shannon’s concept of “indirect deception” to a claim

of “indirect deception by silent concealment” where a drug manufacturer allegedly concealed

information about the drug’s safety and efficacy from the plaintiff’s physician and pharmacist.

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that there were no leaking or flooding problems in the basement. He stated that Optima never

told him that it hired Roto-Rooter to do ongoing work on the drain-tile system; Optima told him

that the problem had been resolved, not that it hired Roto-Rooter to continuously service the

system.

       Unlike the plaintiff in Shannon, plaintiff in the instant case has alleged sufficient facts to

show that plaintiff’s damages occurred “as a result of” Optima’s indirect deception, as Optima

misrepresented to Kelsey that the water problem was fixed, and Kelsey completed the real estate

disclosure form in reliance on Optima’s assurances. Furthermore, where Kelsey contacted

Optima about the basement before he put the townhouse on the market, Optima’s assurance to

Kelsey that there were no problems with the basement was “ ‘made with the intention that it

reach the plaintiff and influence his action.’ ” Shannon, 208 Ill. 2d at 526, quoting St. Joseph, 21

Ill. App. 3d at 954. Plaintiff alleged that Kelsey’s misrepresentations, “made with the knowledge

and blessing” of Optima, induced her to purchase the property. Accordingly, we conclude that

plaintiff stated a claim for fraudulent misrepresentation and consumer fraud.

                                     3. Voluntary undertaking

       The trial court found that plaintiff failed to allege a meritorious claim under section 2-

1401 for negligent performance of a voluntary undertaking because its decision to dismiss the

voluntary undertaking count was not dependent on the amount of time that lapsed before the

basement defect was discovered. “Rather, the court dismissed this count because Hirsch could

not plead reliance on Optima’s agreement to have Roto-Rooter service the drains. Moreover,

none of the other ‘new facts’ would have changed the court’s decision.”


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       Whether a defendant has voluntarily undertaken a legal duty to a plaintiff is a question of

law. Iseberg v. Gross, 366 Ill. App. 3d 857, 864 (2006). Any duty imposed on a defendant under

this theory is limited to the extent of the undertaking. Iseberg, 366 Ill. App. 3d at 864. Illinois

courts have adopted section 324A of the Restatement (Second) of Torts (Restatement (Second)

of Torts §324A (1965)) to analyze voluntary undertaking claims. Pippin v. Chicago Housing

Authority, 78 Ill. 2d 204, 211 (1979); Iseberg, 366 Ill. App. 3d at 864. Section 324A provides as

follows:

               “One who undertakes, gratuitously or for consideration, to render services

       to another which he should recognize as necessary for the protection of a third

       person or his things, is subject to liability to the third person for physical harm

       resulting from his failure to exercise reasonable care to protect his undertaking, if

                         (a) his failure to exercise reasonable care increases the risk of such

               harm, or

                         (b) he has undertaken to perform a duty owed by the other to the

               third person, or

                         (c) the harm is suffered because of reliance of the other or the third

               person upon the undertaking.” Restatement (Second) of Torts §324A

               (1965).

“The essential element of the voluntary undertaking doctrine is an undertaking, and the duty of

care imposed on a defendant is limited to the extent of his undertaking.” Iseberg, 366 Ill. App.

3d at 865, citing Bailey v. Edward Hines Lumber Co., 308 Ill. App. 3d 58, 66 (1999).


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       Plaintiff argues that the trial court incorrectly relied on section 323 of the Restatement

(Second) of Torts (1965) instead of section 324A and that her complaint stated a claim for

negligent performance of a voluntary undertaking. Section 323 provides as follows:

               “One who undertakes, gratuitously or for consideration, to render services

       for another which he should recognize as necessary for the protection of the

       other’s person or things, is subject to liability to the other for physical harm

       resulting from his failure to exercise reasonable care to perform his undertaking, if,

                       (a) his failure to exercise such care increases the risk of such harm,

               or

                       (b) the harm is suffered because of the other’s reliance upon the

               undertaking.” Restatement (Second) of Torts §323 (1965).

See also Cross v. Wells Fargo Alarm Services, 82 Ill. 2d 313, 319-20 (1980).

       The trial court did cite section 323 instead of section 324A, which relates to liability to a

third person, when it denied plaintiff’s motion for reconsideration. When it denied plaintiff’s

section 2-1401 petition as to the voluntary undertaking claim, the court found that it originally

dismissed the count “because Hirsch could not plead reliance on Optima’s agreement to have

Roto-Rooter service the drains.” Under section 324A, however, reliance is not the only route for

establishing liability. Rather, a person is liable to a third person for negligent performance of a

voluntary undertaking when (a) his failure to exercise reasonable care increases the risk of such

harm, or (b) he has undertaken to perform a duty owed by the other to the third person, or (c) the

harm is suffered because of reliance of the other or the third person upon the undertaking.


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Restatement (Second) of Torts §324A (1965). Plaintiff relies on prong (a), which does not

require reliance. Furthermore, even if reliance were the only path, section 324A requires that it

be by “the other” or “the third person”--not just “the other,” i.e., Kelsey, as the trial court seemed

to hold. See Scott & Fetzer Co. v. Montgomery Ward & Co., 112 Ill. 2d 378, 391 (1986).

       Optima does not address the sufficiency of plaintiff’s voluntary undertaking claim, except

to argue that the new facts alleged in her petition do not alter her inability to plead reliance. As

we found above, however, plaintiff does not need to plead reliance under prong (a). Therefore,

we find that the court erred when it concluded that plaintiff could not state a meritorious claim

because she did not plead reliance.

                                        III. CONCLUSION

       We conclude that the trial court properly granted plaintiff’s section 2-1401 petition as to

her claim for the implied warranty of habitability but improperly denied her petition as to her

claims for consumer fraud, common law fraud, and negligent performance of a voluntary

undertaking.

       Affirmed in part and reversed in part; cause remanded.

       QUINN and STEELE, JJ., concur.




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                                 REPORTER OF DECISIONS – ILLINOIS APPELLATE COURT
Please Use
Following                                  (Front Sheet to be Attached to Each Case)
Form:
                        JUDITH HIRSCH,
Comple te
TITLE
                                                                  Plaintiff-Appellee/Cross-Appellant,
of Case                 v.

                        OPTIMA, INC., an Illinois corporation,
                                                            Defendant-Appellant/Cross-Appellee,
                        and
                        (JOHN H. KELSEY, COROMANDEL TOWN HOME ASSOCIATION,

                                                                  Defendants.)

Docket No.
                                                   Nos. 1-08-1347 and 1-08-1378 (cons.)
COURT                                                      Appellate Court of Illinois
                                                         First District, THIRD Division
Opinion
                                                                December 9, 2009
Filed
                                                          (Give month, day and year)

                               PRESIDING JUSTICE MURPHY, delivered the opinion of the court:
JUSTICES
                               Quinn and Steele, JJ.,                                                                  concur [s]

                                                                                                                       dissent[s]



APPEAL from                                Lower Court and T rial Judge(s) in form indicated in the margin:
the Circuit Ct. of
Cook County,
Chancery Div.                  The Honorable             Martin Agran                                 , Judge Presiding.




                                      Indicate if attorney represents APPELLANTS or APPELLEE S and include
For                                        attorneys of counsel. Indicate the word NONE if not represented.
APPELLANTS,
John Doe, of            Attorney for Defendant-Appellant/         Clausen Miller P.C.
Chicago.
                                    Cross-Appellee:               Of counsel: Edward M. Kay, Richard M. Kaplan,
For                                                               Joseph J. Ferrini
APPELLEES,                                                        10 S. La Salle Street
Smith and Smith                                                   Chicago, IL 60603
of Chicago,                                                       Phone: (312) 855-1010
Joseph Brown,
(of Counsel)
                        Attorneys for Plaintiff-Appellee/         Milton M. Blumenthal & Associates
Also add                             Cross-Appellant              Of counsel: Michael L. Blumenthal, David J. Piell,
attorneys for                                                     Milton M. Blumenthal
third-party
appellants or
                                                                  77 W. Washington Street, Suite 1720
appellees.                                                        Chicago, IL 60602
                                                                  Phone: (312) 372-3566


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