Klecan v. Countrywide Home Loans, Inc.
351 Ill. Dec. 548
Ill. App. Ct.2011Background
- Klecans refinanced their home with Countrywide in early 2007; Flood Act required a flood determination by lender’s affiliate Landsafe.
- Landsafe determined the property was not in a flood zone; Countrywide allegedly did not notify the Klecans or require flood insurance.
- In 2008 widespread flooding damaged the Klecans’ home and personal property.
- After flood, Klecans learned Landsafe’s prior determination placed their property outside a flood zone and they had no flood insurance.
- Klecans sued Countrywide (barred by Flood Act) and Landsafe for negligence; trial court dismissed under 735 ILCS 5/2-619; Klecans appealed.
- Appellate court reversed and remanded, holding the Flood Act does not bar a common-law negligence claim against a flood determiner and that Landsafe owed a duty under Illinois law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Flood Act bar a borrower’s negligence claim against a flood determiner? | Klecans contend Landsafe is not protected by the Flood Act. | Landsafe argues the Flood Act immunizes lenders and flood determiners. | Flood Act does not bar the borrower’s negligence claim against Landsafe. |
| Whether Landsafe owed a duty of care to the Klecans under Illinois law? | Klecans assert Landsafe breached its duty by an erroneous determination despite an earlier determination. | Landsafe contends there was no duty absent privity or statutory duty. | Landsafe owed a duty to the Klecans; the trial court erred in dismissal. |
Key Cases Cited
- Rozny v. Marnul, 43 Ill. 2d 54 (Ill. 1969) (foreseeable third-party liability principle for professional errors)
- Kelley v. Carbone, 361 Ill.App.3d 477 (Ill. App. 2005) (duty and foreseeability in professional negligence)
- Lehmann v. Arnold, 137 Ill.App.3d 412 (Ill. App. 1985) (private action barred for Flood Act noncompliance with lenders)
- Mid-America National Bank of Chicago v. First Savings & Loan Ass'n of South Holland, 161 Ill.App.3d 531 (Ill. App. 1987) (Flood Act does not create duty to disclose flood hazards)