Misrepresentations

A recent Illinois Appellate Court decision illustrates why real estate professionals are advised to beware of making misrepresentations about a property in order to make a sale.

The appeals court ruled that a trial judge erroneously dismissed allegations that a real estate broker and an agent improperly misrepresented that the residence sold to the plaintiffs was in a certain school district while in fact, the property was in another, less-desirable school district

In 1998, plaintiffs Dean and Majel Capiccioni moved from Ohio to Illinois and purchased a home in Bolingbrook. Defendant Brennan Naperville, Inc., a residential real estate brokerage company, and Sharon Clermont, a licensed real estate broker and one of Brennan’s agents, represented the Bolingbrook property’s sellers. The defendants’ sales brochure for the Bolingbrook property listed the “acclaimed (school) District 204” as one of the home’s selling points.

The plaintiffs moved into the home and their three children attended District 204 schools for three years. However, the children were unable to attend District 204 classes during the 2001-2002 academic year after the plaintiffs discovered that their property was actually located in District 365-U. The plaintiffs then sold their property and bought a home in District 204.

The plaintiffs then filed suit against the defendants, asserting claims of common-law fraud, negligent misrepresentation and violations of the Consumer Fraud Act and Real Estate License Act. The plaintiffs alleged that the school district information was material because it was one of the major reasons they bought the property and they would not have purchased it if they had known otherwise.

The plaintiffs also argued that they were damaged as a result of the defendant’s misleading representation because they bought a home they otherwise would not have bought and paid more for the property than it was worth. They also claimed that the property did not appreciate as much as it would have if it were within the boundaries of District 204 and that they had to pay expenses associated with buying another home.

The defendants filed a motion to dismiss the lawsuit, arguing that the plaintiffs’ admission that they spoke to District 204 employees undermined their allegations that the defendants knew or should have known that the property was not located in District 204 or that the plaintiffs relied on the defendants’ representations.

The trial judge, DuPage County Circuit Judge Richard A. Lucas, granted the defendants’ motion to dismiss. The appeals court reversed the trial court’s dismissal of plaintiffs’ Consumer Fraud Act claim. The elements of such a claim include: a deceptive act or practice by the defendant; the defendant’s intent that the plaintiff rely on the deception; the occurrence of the deception in the course of conduct involving trade and commerce; and actual damage to the plaintiff.

The 2dt District Appellate Court said that one of the key issues in determining whether an act is deceptive is whether a defendant’s misrepresentations or omissions were discoverable through the exercise of ordinary prudence by the plaintiff. In this case, the appeals court said, the plaintiffs claimed that they contacted District 204 employees, who misinformed them of about their school district.

The appeals court found that the plaintiffs alleged sufficient facts to show that the defendants intended that the plaintiff rely on their representations and that the misrepresentation occurred in the course of conduct involving trade or commerce. The court also found that the plaintiffs adequately pleaded that they suffered damages.

The appeals court also found that the trial court erred in dismissing the claims of negligent misrepresentation and violation of the Real Estate License Act. The appeals court affirmed the dismissal of the common-law fraud count, finding that the plaintiffs pleaded no facts supporting their allegation that the defendants knew that the statements about the school district were false.

(Dean and Majel Capiccioni v. Brennan Naperville, Inc. and Sharon Clermont, No. 2-02-0145. Justice Thomas E. Callum wrote the court’s opinion with Justices Frederick J. Kapala and Barbara G. Johnson concurring.)