Channon v. Westward Management, Inc.
186 N.E.3d 1110
Ill. App. Ct.2021Background
- Plaintiffs Harry and Dawn Channon (sellers) alleged Westward Management, the condominium association's management agent, charged an excessive $245 fee to produce documents required by section 22.1 of the Condominium Property Act when they sold their unit.
- Section 22.1 requires unit owners (non-developers) to obtain nine categories of association documents for prospective buyers; subsection (b) requires association officers to furnish them within 30 days; subsection (c) permits the association or its board to charge a reasonable fee covering direct out-of-pocket costs for providing and copying the information.
- Plaintiffs sued as a putative class, claiming Westward violated section 22.1(c) (and alleged a Consumer Fraud Act claim). Westward moved to dismiss, arguing no implied private right exists for sellers and that section 22.1 governs only associations, not managers.
- The trial court denied dismissal, found an implied cause of action exists for sellers, and held an agent that takes an active part in violating a principal's statutory duty can be liable.
- The trial court certified the question whether section 22.1 implies a cause of action for sellers against a property manager acting as the association's agent; the Appellate Court accepted and answered the certified question.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether section 22.1 implies a private right of action for sellers charged excessive fees | Sellers are within the class the statute protects because they need the documents to sell; subsection (c) limits fees to direct out-of-pocket costs | Section 22.1 protects prospective purchasers only; (b) and (c) implement (a) and are not independent entitlements for sellers | Implied private right exists for sellers under the four-factor Metzger test |
| Whether sellers are members of the class the statute protects | Sellers are unit owners who rely on association-held info to effect sales; statute facilitates sales | Statute's purpose is to protect buyers; sellers have the duty to obtain, not the statute's beneficiary | Court: sellers are within the protected class; statute also benefits sellers by creating a mechanism to obtain documents and limiting fees |
| Whether the alleged injury (excessive fee) is the type the statute was meant to prevent and whether a private action is necessary | Charging more than direct out-of-pocket costs is precisely what (c) forbids; no other enforcement exists so private action is necessary | Plaintiffs may have other remedies (e.g., Consumer Fraud Act, recourse against association) so implication unnecessary | Court: excessive fee is the injury the statute aims to prevent and an implied action is necessary because section 22.1 provides no enforcement mechanism |
| Whether a property manager acting as agent can be sued under the implied cause of action | An agent who accepts and performs the association's section 22.1 duties and charges unlawful fees takes an active part in violating the association's statutory duty and may be liable | Section 22.1 imposes duties only on associations/boards; managers are not mentioned and should not be treated like agents for liability purposes | Court: an agent that is delegated and agrees to perform the association's section 22.1 duties can be liable if it actively participates in violating those duties (Landau rule) |
Key Cases Cited
- Metzger v. DaRosa, 209 Ill. 2d 30 (2004) (establishes four-factor test for implying a private cause of action)
- Fisher v. Lexington Health Care, Inc., 188 Ill. 2d 455 (1999) (private action implied only where statute otherwise ineffective)
- Nikolopulos v. Balourdos, 245 Ill. App. 3d 71 (1993) (characterizes section 22.1 as disclosure scheme protecting prospective purchasers; recognized buyer remedies)
- Mikulecky v. Bart, 355 Ill. App. 3d 1006 (2004) (applies section 22.1 disclosure principles in dispute over undisclosed anticipated capital expenditures)
- Landau v. Landau, 409 Ill. 556 (1951) (agent liable when taking an active part in violating a duty owed by principal)
- Horist v. Sudler & Co., 941 F.3d 274 (7th Cir. 2019) (contrasting authority: held section 22.1 protects purchasers only and rejected seller implied cause of action)