Channon v. Westward Mgmt., Inc.

2022 IL 128040

215 N.E.3d 926

465 Ill.Dec. 721

Harry CHANNON et al., Appellees,

v.WESTWARD MANAGEMENT, INC., Appellant.

Docket No. 128040

Supreme Court of Illinois.

Filed November 28, 2022.

Rehearing Denied January 23, 2023

Melinda S. Kollross, Brian J. Riordan, James M. Weck, and Paul V. Esposito, of Clausen Miller P.C., of Chicago, for appellant.

Terrie C. Sullivan, Michael D. Richman, and Jeffrey C. Blumenthal, of Jeffrey C. Blumenthal Chtrd., of Northbrook, Paul A. Castiglione and Kasif Khowaja, of Khowaja Law Firm, LLC, of Chicago, and Karnig Kerkonian and Elizabeth Al-Dajani, of Kerkonian Dajani LLP, of Evanston, for appellees.

JUSTICE CARTER delivered the judgment of the court, with opinion.

¶ 1 In this appeal, we answer the following certified question:

"Whether section 22.1 of the Condominium Property Act provides an implied cause of action in favor of a condominium unit seller against a property manager, as agent of a condominium association or board of directors, based on allegations that the property manager charged excessive fees for the production of information required to be disclosed to a prospective buyer under that statute."

The appellate court answered the question in the affirmative. 2021 IL App (1st) 210176, ¶ 38, 453 Ill.Dec. 76, 186 N.E.3d 1110.

¶ 2 After applying the test from Metzger v. DaRosa , 209 Ill. 2d 30, 36, 282 Ill.Dec. 148, 805 N.E.2d 1165 (2004), we conclude that section 22.1 of the Condominium Property Act (Act) ( 765 ILCS 605/22.1 (West 2016) ) does not create an implied private right of action by condominium unit sellers. Because we answer the certified question in the negative, we reverse the appellate court judgment and remand the cause to the circuit court.

¶ 3 I. BACKGROUND

¶ 4 The plaintiffs, Harry and Dawn Channon, decided to sell their condominium unit in the Kenmore Club Condominium Association (Association). Section 22.1 of the Act (id. ) requires condominium unit sellers to obtain specific disclosure documents from the Association or its agent prior to a sale and to provide them to potential buyers on request. After entering into a standard sales contract with a potential buyer who requested those disclosures, the Channons obtained them from the defendant, Westward Management, Inc. (Westward), a management agent hired by the Association's board of managers. Westward charged the Channons $245 for the documents.

¶ 5 The Channons later filed a class-action lawsuit in the Cook County circuit court, naming Westward as the defendant. In one count, they alleged that Westward violated section 22.1 of the Act by charging unreasonable fees for the statutorily required documents. In a separate count, their complaint asserted that Westward's conduct also violated the Consumer Fraud and Deceptive Business Practices Act (Fraud Act) ( 815 ILCS 505/1 et seq. (West 2016)).

¶ 6 Westward filed a motion to dismiss, which was denied. At Westward's request, however, the trial court certified a question of law to the appellate court: "Whether section 22.1 of the Condominium Property Act provides an implied cause of action in favor of a condominium unit seller against a property manager, as agent of a condominium association or board of directors, based on allegations that the property manager charged excessive fees for the production of information required to be disclosed to a prospective buyer under that statute."

¶ 7 In answering the certified question, the appellate court applied the four-factor test from Metzger , 209 Ill. 2d at 36, 282 Ill.Dec. 148, 805 N.E.2d 1165. The Metzger test examines whether (1) the plaintiffs are members of the class the statute was intended to benefit, (2) the statute was designed to prevent the plaintiffs from suffering the injury they incurred, (3) the statute's purpose is consistent with the creation of a private right of action, and (4) it is necessary to imply a private right of action to provide an adequate remedy for the statutory violation. Id.

¶ 8 After reviewing the first factor, the appellate court determined that, while the primary purpose of section 22.1 was to protect potential buyers, it was also intended to protect sellers. 2021 IL App (1st) 210176, ¶ 21, 453 Ill.Dec. 76, 186 N.E.3d 1110. Because sellers typically lack personal access to the mandated disclosure documents, they must seek them from their condominium associations. By limiting the fee that could be charged for those documents, that section benefitted the sellers who were required to provide them to potential buyers. The appellate court concluded, therefore, that the Channons were members of a class that section 22.1 was intended to benefit, satisfying the first factor in the Metzger test. Id. ¶ 22.

¶ 9 In considering the second Metzger factor, the appellate court noted that section 22.1 permits sellers to be charged " ‘[a] reasonable fee covering the direct out-of-pocket cost of providing [the required] information.’ " Id. ¶ 23 (quoting 765 ILCS 605/22.1(c) (West 2016)). Because Westward allegedly charged fees that exceeded its "direct out-of-pocket costs," the appellate court concluded that the Channons incurred precisely the type of injury the statute was intended to prevent. Id.

¶ 10 The court then reviewed the third factor of the Metzger test. Id. ¶ 24. It concluded that implying a private right of action for sellers required to pay excessive fees to obtain the mandated disclosure documents was consistent with the legislative intent expressed in section 22.1 because placing a ceiling on the fees that could be charged protects sellers. Id.

¶ 11 Addressing the fourth Metzger factor, the appellate court found that implying a private right of action was necessary to give unit sellers an adequate remedy for violations of section 22.1. Id. ¶ 25. Because the statute lacked an express enforcement mechanism, the appellate court believed it would be ineffective if a private right of action were not implied. Id. Stating that the issue was not part of the certified question before it and had been insufficiently briefed, the appellate court declined to address Westward's argument that here the Fraud Act provides the Channons with an adequate alternative source of relief. Id. ¶ 26.

¶ 12 By answering the certified question in the affirmative, the appellate court rejected the contrary holdings in Horist v. Sudler & Co. , 941 F.3d 274 (7th Cir. 2019), Ahrendt v. Condocerts.com, Inc. , No. 17-cv-8418, 2018 WL 2193140, at *2 (N.D. Ill. May 14, 2018), and Murphy v. Foster Premier, Inc. , No. 17 CV 8114, 2018 WL 3428084, at *3 (N.D. Ill. July 16, 2018), because they construed the legislative purpose underlying section 22.1 too narrowly. 2021 IL App (1st) 210176, ¶ 27, 453 Ill.Dec. 76, 186 N.E.3d 1110. The court also distinguished the decisions in Nikolopulos v. Balourdos , 245 Ill. App. 3d 71, 185 Ill.Dec. 278, 614 N.E.2d 412 (1993), and D'Attomo v. Baumbeck , 2015 IL App (2d) 140865, 394 Ill.Dec. 601, 36 N.E.3d 892, finding that they did not address the question of whether section 22.1 was intended to protect sellers. 2021 IL App (1st) 210176, ¶ 27, 453 Ill.Dec. 76, 186 N.E.3d 1110. Thus, the court effectively upheld the trial court's denial of Westward's dismissal motion.

¶ 13 The appellate court next considered whether a seller's section 22.1 implied a private right of action could be asserted against a property manager that was acting as the agent of a condominium board of managers, such as Westward. Id. ¶ 28. Westward contended that section 19 of the Act obliged only the Association, not its contractual agent, to provide sellers with the specified information at its actual cost. Westward asserted that an aggrieved seller could still pursue a direct cause of action against the Association for breach of its statutory duty. See 765 ILCS 605/19 (West 2016). By creating a remedial action under section 19, the legislature demonstrated its intent to make condominium associations and boards of managers directly responsible for providing the mandated disclosures at a reasonable cost.

¶ 14 The appellate court rejected that argument and declined to apply section 19 as an interpretive guide for construing section 22.1, reasoning that section 19 lacked a clear legislative intent to impose exclusive liability for section 22.1 violations on associations and their boards. 2021 IL App (1st) 210176, ¶ 35, 453 Ill.Dec. 76, 186 N.E.3d 1110. Because Westward contracted with the Association to act as its agent for the purpose of fulfilling its statutory duties under the Act, the appellate court concluded that Westward could also be liable if it actively participated in breaching the Association's section 22.1 duty. Id. ; see Landau v. Landau , 409 Ill. 556, 564, 101 N.E.2d 103 (1951).

¶ 15 Westward filed a petition for leave to appeal in this court, and we allowed that petition. Ill. S. Ct. R. 308 (eff. July 1, 2017); R. 315 (eff. Oct. 1, 2021).

¶ 16 II. ANALYSIS

¶ 17 The only issue before this court is the instant certified question:

"Whether section 22.1 of the Condominium Property Act provides an implied cause of action in favor of a condominium unit seller against a property manager, as agent of a condominium association or board of directors, based on allegations that the property manager charged excessive fees for the production of information required to be disclosed to a prospective buyer under that statute."

The resolution of that question requires us to construe the Act, creating a question of law that we review de novo. Metzger , 209 Ill. 2d at 34, 282 Ill.Dec. 148, 805 N.E.2d 1165. In construing a statute, our principal objective is to ascertain and effectuate the underlying legislative intent. The best way to accomplish that goal is to apply the plain language of the statute, when read as a whole, whenever possible. Id. at 34-35, 37, 282 Ill.Dec. 148, 805 N.E.2d 1165.

¶ 18 In relevant part, section 22.1 of the Act states:

"§ 22.1. (a) In the event of any resale of a condominium unit by a unit owner other than the

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