Fattah v. Bim
2016 IL 119365
Ill.2016Background
- Masterklad, Inc. (builder) constructed a new Glenview house with a rear paver-brick patio and a retaining wall. Mirek Bim was Masterklad’s president.
- In 2007 Masterklad sold the house to first purchaser Beth Lubeck; the sales contract included a conspicuous, bargained-for "Waiver and Disclaimer of Implied Warranty of Habitability" in exchange for an express (one-year) warranty.
- In 2010 Lubeck sold the house to John Fattah; his purchase contract contained an "As Is" addendum and advised him to seek counsel.
- In February 2011 portions of the patio retaining wall failed; Fattah sued the individual defendants (former builder principals) in July 2011 asserting breach of the implied warranty of habitability for latent defects.
- The trial court found latent defects but held Fattah could not recover because Lubeck had validly waived the implied warranty; the appellate court reversed, extending Redarowicz to allow a second purchaser to sue despite the prior waiver. The Illinois Supreme Court granted review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an implied warranty of habitability may be asserted by a second purchaser when the first purchaser validly waived that warranty | Fattah: Redarowicz allows extension of the implied warranty to second purchasers; he never waived the warranty | Bim/Masterklad: A valid, bargained-for waiver by the first purchaser prevents extension to subsequent buyers because it was part of the original contractual bargain | Held: No — the implied warranty cannot be extended to a second purchaser when the first purchaser executed a valid, bargained-for waiver |
| Whether extending the warranty would alter builder’s contractual expectations and burdens | Fattah: Extension is consistent with public policy and prior case law protecting subsequent buyers within a short time | Bim/Masterklad: Extension would undo the bargained-for certainty and consideration obtained for the waiver | Held: Extension would alter burdens and frustrate the waiver’s purpose; therefore not allowed |
| Whether an "as is" clause in the second sale or lack of privity affects the claim against the builder | Fattah: "As is" between private parties does not erase rights against the builder; privity not required under Redarowicz | Bim/Masterklad: Second buyer chose "as is" and could have negotiated; waiver should bind subsequent buyers | Held: Secondary arguments unnecessary after resolving waiver issue; court rejected extension regardless of "as is" status |
| Whether appellate procedural/service irregularities warranted relief | Fattah: Errors did not change outcome; case proceeded on merits | Bim/Masterklad: Service defects denied meaningful appellate participation and violated due process | Held: Court resolved the case on the merits (waiver issue) and did not need to address remaining procedural arguments |
Key Cases Cited
- Petersen v. Hubschman Construction Co., 76 Ill. 2d 31 (1979) (recognizes implied warranty of habitability from builder to first purchaser and permits valid waiver)
- Redarowicz v. Ohlendorf, 92 Ill. 2d 171 (1982) (extends implied warranty to second purchaser under facts where first purchaser did not waive warranty)
- Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69 (1982) (adopts economic loss rule limiting recovery in tort for purely economic losses)
- First Capitol Mortgage Corp. v. Talandis Construction Corp., 63 Ill. 2d 128 (1976) (procedural principle referenced by appellate court when opposing party fails to appear)
- Board of Managers of the Village Centre Condominium Ass’n v. Wilmette Partners, 198 Ill. 2d 132 (2001) (waiver of implied warranty must refer to the warranty by name and be conspicuous)