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Skarin Custom Homes, Inc v Ross, No. 2-08-0061 (2d D 2009) (seewww.state.il.us/court/Opinions/AppellateCourt/2009/2ndDistrict/February/2080061.pdf)

Facts:On March 10, 2006, plaintiff Skarin Custom Homes, Inc. (Skarin) entered into a real estate contract for the purchase of property from defendants Joseph and Stephanie Ross (the Rosses). Prior to the sale, the Rosses filled out a residential real property disclosure report (report) as required by Section 35 of the Disclosure Act, 765 ILCS 77/35. In their report, they stated that they were aware of flooding or recurring leakage in the basement, explaining that there was some seepage during heavy rains. Sometime after the parties executed the contract, Skarin allegedly discovered that there was a history of severe flooding in the basement and elsewhere on the property.

Skarin filed a complaint, seeking recovery for breach of contract, breach of the Disclosure Act, and common law fraud. The trial court initially dismissed with prejudice the breach of Disclosure Act and common law fraud claims. The court dismissed without prejudice the breach of contact case and granted leave to file an amended claim. On a motion to reconsider, the court granted leave to replead the breach of Disclosure Act.

On October 15, 2007, Skarin filed an amended two count complaint, alleging breach of contract and breach of the Disclosure Act. Again, the trial court granted a motion to dismiss, finding that Skarin's intent to raze the home property removed the transaction from the realm of the Disclosure Act. The trial court further determined that, because both claims were based on the Rosses failure to disclose under the Disclosure Act, both claims must be dismissed with prejudice. Skarin appealed both the order to dismiss its amended complaint and the original order that dismissed the common law fraud claim.

Holding:Reversed in part and remanded. The appellate court found no ambiguity in the Disclosure Act and held that absent specific exceptions the act applies to any transfer of residential real property. A buyer's intent to tear down a residential structure and rebuild on the property is not listed as an exception. The appellate court did not find any reason to depart from the plain meaning of the statute. Thus the Disclosure Act is applicable to this transaction. The trial court's judgment was reversed with regards to the dismissal of the breach of contract and breach of the Disclosure Act claims.

With regard to Skarin's claim of common law fraud, the court held that Skarin failed to replead, make reference to, or incorporate the claim in its amended complaint. Therefore, Skarin forfeited any objection to the trial court's dismissal.

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