‘Surviving Partner’ Statute Defeats Fraud Suit in Mobile Home Spat – IL Court

The plaintiff in Jett v. Zeman Homes sued a mobile home seller for fraud and negligence after it failed to disclose a home’s history of mold damage and location in a flood zone.  The plaintiff’s claims were premised mainly on an agent of the defendant mobile home owner who died during the course of the litigation.  Affirming summary judgment for the owner, the court considered and answered some important questions on the applicability of common law and consumer fraud actions to the real estate context and when the death of an agent will immunize a corporate principal for claims based on the deceased agent’s comments.

The plaintiff’s fraud claims alleged that defendant’s agent made material misrepresentations that there was not a mold problem in the mobile home park and that any mold the plaintiff noticed in her pre-purchase walk-through was an isolated occurrence.  Plaintiff also alleged the seller’s agent failed to disclose a history of flooding on the property the mobile home occupied and the home’s lack of concrete foundation which contributed to flooding in the home.

Plaintiff’s negligence count alleged defendant breached duties of disclosure delineated in Section 21 of the Mobile Home Landlord and Tenant Rights Act. 765 ILCS 745/21 (West 2016). Plaintiff alleged defendant breached its duty to her by failing to disclose the home’s history of mold infestation and failure to alleviate the mold problem after plaintiff notified defendant.

The appeals court rejected the plaintiff’s fraud claims based on Illinois Evidence Code Section 301 which provides that a party who contracts with a now-deceased agent of an adverse party is not competent to testify to any admission of the deceased agent unless the admission was made in the presence of other surviving agents of the adverse party. 735 ILCS 5/8-301 (West 2016).  This is an application of the “Dead Man’s Act” (see 735 ILCS 5/8-201) principles to the principal-agent setting.

Applying this surviving agent rule, the Court noted that plaintiff admitted in her deposition that the predicate statements giving rise to both her common law and statutory fraud counts were made solely by the deceased defendant’s agent.  Since plaintiff could not identify any other agents of the defendant who were present when the deceased agent made statements concerning prior mold damage on the home, she could not attribute a materially false statement (a common law fraud element) or a deceptive act or practice (a consumer fraud element) to the defendant.

The appeals court also affirmed summary judgment for the defendant on plaintiff’s negligence count.  An Illinois negligence plaintiff must plead and prove: (1) the existence of a duty of care owed to the plaintiff by the defendant; (2) a breach of that duty, and (3) an injury proximately caused by that breach.

Since the lease agreement attached to plaintiff’s complaint demonstrated that the owner/lessor was someone other than the defendant, the plaintiff could not establish that defendant owed plaintiff a legal duty.

Afterwords:

A fraud plaintiff relying on statements of a deceased agent to hold a principal (e.g. an employer) liable, will have to prove the statement in question was made in the presence of surviving agents.  Otherwise, as this case shows, Illinois’ surviving partner or joint contractor statute will defeat the claim by barring the plaintiff from presenting evidence of the deceased’s statements or conduct.

 

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PaulP

Litigation attorney at Fisher Kanaris, P.C. representing businesses and individuals in all types of commercial disputes.