1324 W. Pratt Condominium Association v. Platt Construction Group, Inc.
2013 IL App (1st) 130744
Ill. App. Ct.2013Background
- Condominium building at 1324 W. Pratt (8 units) built in 2004–2005 by developer Wayne; Platt was general contractor and EZ Masonry a masonry subcontractor.
- After sale, owners discovered latent water leaks; owners formed condominium association and sued in 2008.
- Litigation proceeded through multiple amended complaints; EZ Masonry was added in a December 2009 (third amended) complaint; later a fourth amended complaint (Jan. 8, 2013) alleged Platt’s insolvency.
- Earlier appeals: this court held the implied warranty of habitability applies to builders generally (Pratt I) but clarified that subcontractor liability depends on builder insolvency (Pratt II).
- On limited discovery the trial court found Platt "insolvent, but in good standing with limited assets" and certified two Rule 308 questions about (1) the relevant date for determining general-contractor insolvency and (2) whether the association may proceed against EZ Masonry given Platt’s condition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper date to test general-contractor insolvency for Minton exception (allowing suit against subcontractor) | Use date of amended complaint alleging insolvency (i.e., when plaintiff pleads and seeks relief against subcontractor) | Use date of initial complaint or an earlier fixed date tied to construction; otherwise indefinite exposure for subcontractors | Court: Use the date the plaintiff files the amended complaint alleging the general contractor is insolvent (not the construction-completion date) |
| Whether association may proceed against subcontractor when general contractor is "insolvent but in good standing with limited assets" | If general contractor is insolvent (liabilities exceed assets/ceased paying debts), plaintiff may proceed against subcontractor regardless of corporate good-standing formality | Subcontractor: Even if insolvent on paper, corporate viability/good-standing and long defense in litigation means plaintiff should not proceed against subcontractor | Court: Insolvency (liabilities > assets / not paying debts) is the controlling factor; where trial court found Platt insolvent, the association may proceed against EZ Masonry |
Key Cases Cited
- Minton v. Richards Group of Chicago, 116 Ill. App. 3d 852 (1983) (extends implied warranty of habitability to subcontractors where builder-vendor is insolvent and purchaser has no recourse)
- Redarowicz v. Ohlendorf, 92 Ill. 2d 171 (1982) (describes implied warranty of habitability as a judicially created public‑policy protection for purchasers against latent defects)
- Board of Directors of Bloomfield Club Recreation Ass'n v. The Hoffman Group, Inc., 186 Ill. 2d 419 (1999) (discusses policy reasons for expanding warranty protection)
- Washington Courte Condominium Ass'n-Four v. Washington-Golf Corp., 150 Ill. App. 3d 681 (1986) (refuses to apply Minton where insolvency allegation was not supported in the record)
- Dearlove Cove Condominiums v. Kin Construction Co., Inc., 180 Ill. App. 3d 437 (1989) (allows amendment to add subcontractor after general contractor becomes insolvent; plaintiffs have two years from awareness of insolvency to sue subcontractor)