FRANKLIN P. FRIEDMAN, as Trustee of the Franklin P. Friedman Living Trust, Individually, and on Behalf of All Others Similarly Situated, Plaintiff-Appellee, v. LIEBERMAN MANAGEMENT SERVICES, INC., Defendant-Appellant.
No. 1-18-0059
Appellate Court of Illinois, First District, First Division
March 25, 2019
2019 IL App (1st) 180059-U
JUSTICE PIERCE delivered the judgment of the court. Justice Griffin concurred in the judgment. Justice Walker dissented.
Appeal from the Circuit Court of Cook County. No. 16 CH 15920. The Honorable Thomas R. Allen, Judge Presiding. NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).
ORDER
¶ 1 Held: We vacate our order granting defendant’s
¶ 2 This appeal is before us on two substantially similar questions of law certified by the circuit court undеr
I. BACKGROUND
¶ 4 Plaintiff’s operative complaint alleges that Franklin P. Friedman decided to sell his condominium unit in the Mission Hills Condominiums in Northbrook, Illinois. The Mission Hills Condominiums Association (Association) retained defendant Lieberman Management Services, Inc., a for-profit property management company, to provide property management services. Plaintiff went to defendant’s website and submitted a request for certain disclosure documents set forth in section 22.1(a) of the Act (
¶ 5 Plaintiff, as trustee of the Franklin P. Friedman Living Trust, individually, and on behalf of all others similarly situated, filed this action in the circuit court of Cook County against defendant. The Association was not named as a defendant. In relevant part, count I of plaintiff’s complaint asserted that defendant “is a condominium association management company that, with the authorization of the applicable Condominium Association and/or its Board of Managers,
¶ 6 Defendant did not answer the complaint. Rather, defendant moved to dismiss count I of plaintiff’s complaint due to a failure to state a cause of action pursuant to section 2-615 of the Code of Civil Procedure (
¶ 7 Defendant then filed a motion to certify a question for interlocutory appeal pursuant to
¶ 8 Defendant’s reply in support of its motion for a
“(1) Whether [section 22.1 of the Act] allows a cause of action to be brought by a condominium unit seller against a property management company,
acting as an agent for the Condominium Board of Managers and/or the ‘Unit Owners’ Association, with respect to the fees charged by the property management company to the condominium unit seller for the documents described in Section 22.1(a) of the Act? (2) Whether a private cause of action can be implied on behalf of a condominium unit seller and against a property management company, under Section 22.1 of the Act *** where the property management company is acting as agent for the Condominium Board of Managers and/or the ‘Unit Owners’ Association, with respect to the fees charged by the property management company to the condominium unit seller for the documents described in Section 22.1(a) of the Act?”
¶ 9 We granted defendant’s application for leave to appeal. However, for the reasons that follow, we find that our earlier order granting defendant leave to appeal was improvidently granted, and we decline to answer the certified questions. We vacate our order granting defendant’s application for leave to appeal, dismiss this appeal, and remand to the circuit court for further proceedings.
II. ANALYSIS
¶ 11
¶ 12 We find the two certified questions are improper in form because the underlying facts of the operative complaint do not allege or otherwise establish the existence of an agency relationship between the defendant and the Association or its board of managers, a relationship that forms the basis of both certified questions. There are two major flaws with the сertified questions: each question contains an assumption that an agency relationship in fact exists between defendant and the Association or its board of managers. First, plaintiff’s complaint does not allege the existence of an agency relationship. Plaintiff merely alleged that defendant “is a condominium association management company that, with the authorization of the applicable Condominium Association and/or its Board of Managers, provides [section 22.1 disclosure documents] that a prospective condominium seller must, upon demand from the prospective purchaser, legally disclose[.]” Critically, plaintiff did not plead the existence of an agency relationship. It is well established that the existence of a principal-agent relationship is ordinarily a question of fact, and that it is the plaintiff’s burden to “plead facts, which, if true, could
¶ 13 Furthermore, because defendant has not admitted that it is in fact the Association’s agent in providing the section 22.1 disclosure documents, we reviewed the briefing on the motion to dismiss and the briefing on the motion to certify a question of law under
¶ 14 Second, because the existence of an agency relationship was not pleaded and is not yet at issue, an answer to the certified questions would be provisional and would not lead to the ultimate termination of this lawsuit. For example, assume that plaintiff properly pleaded that defendant aсted as the Association’s agent when it provided the section 22.1 disclosure documents, and that defendant answered by denying that it acted as the Association’s agent. In that hypothetical situation, any answer to either certified question would not assist in the ultimate termination of this lawsuit because the question of agency would first need to be resolved; if that question of fact was resolved by finding that defendant did not act as an agent, our answers to the certified questions before us would have no connection to the case and would be advisory and provisional.
III. CONCLUSION
¶ 16 Given our review of the pleadings and filings in the circuit court, as well as the form of eаch certified question, we vacate our order granting defendant’s application for leave to appeal pursuant to
¶ 17 Appeal dismissed; cause remanded.
FRANKLIN P. FRIEDMAN, as Trustee of the Franklin P. Friedman Living Trust, Individually, and on Behalf of All Others Similarly Situated, Plaintiff-Appellee, v. LIEBERMAN MANAGEMENT SERVICES, INC., Defendant-Appellant.
No. 1-18-0059
Appellate Court of Illinois, First District, First Division
March 25, 2019
2019 IL App (1st) 180059-U
¶ 19 I respectfully dissent. The majority chooses to not answer the certified question, finding that the answer will not avoid protracted litigation. Because one possible answer to the certified question would cause immediate dismissal of the lawsuit, the majority effectively concedes that the correct answer to the certified question is “Yes.”
¶ 20 After the circuit court did not rule in its favor on a motion to dismiss, the defendant asked the circuit court to certify a question that involved application of the law to the specific facts,
¶ 21 The certified question does not ask us to resolve any issue of fact. Cf. De Bouse v. Bayer AG, 235 Ill. 2d 544 (2009). If we answer “No” to the certified question, the plaintiff has no cause of action even if defendant acted as the board‘s agent. Defendant would have no need to persuade the circuit court that, although it signed a contract to act as the board‘s agent, and the board directed the plaintiff to obtain, from defendant, documents needed to complete the sale of his unit, the defendant still did not act as the board‘s agent when it supplied the necessary documents to plaintiff. The circuit court‘s certified question presents a question of law.
¶ 22
“When the trial court, in making an interlocutory order not otherwise appealable, finds that the order involves a question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may
materially advance the ultimate termination of the litigation, the court shall so state in writing, identifying the question of law involved. *** The Appellate Court may thereupon in its discretion allow an appeal from the order.” Ill. S. Ct. R. 308 (eff. July 1, 2017).
¶ 23 Our supreme court modeled
¶ 24
¶ 25 Second, the court must certify a question “as to which there is substantial ground for difference of opinion.”
¶ 26 Third, the circuit court should not certify a question for a
¶ 27 Some courts have stressed that the appellate court need not accept jurisdiction in all cases that meet the requirements of
¶ 28 Here, if we refuse to answer the certifiеd question, the parties will need to resolve issues concerning agency, the class certification plaintiff seeks, and possibly extensive accounting for damages to all members of the class. The parties and the circuit court all seek resolution of the legal issue because “early appellate review might avoid protracted and expensive litigation.” North Carolina ex rel. Howes v. W.R. Peele, Sr. Trust, 889 F. Supp. 849, 851-52 (E.D.N.C. 1995). Answering the certified question meets the criteria and serves the purpose of the rule.
¶ 29 The circuit court asks us whether the courts can imply a private cause of action for violation of the Condominium Property Act by a condominium unit owner against a property management company if the property management company acts as agent for the condominium board and charges fees in excess of the fees permitted by the Condominium Property Act for providing the documents required for sale of the condominium unit. To determine whether a statute implies a private cause of action, courts consider “(1) whether the plaintiff is within the class of persons the statute was designed to protect, (2) whether implying the cause of action is consistent with the underlying purpose of the Condominium Property Act, (3) whether the plaintiff‘s injury is one the statute was designed to prevent, and (4) whether implying a cause of action is necessary to effectuate the purposes of the [A]ct.” Board of Education v. A, C & S, Inc., 131 Ill. 2d 428, 470 (1989).
¶ 30 In support of the amendment to the Condominium Property Act that included the language at issue here, a representative asserted that the amendment would be “consistent with the Uniform Condominium Property Act (Uniform Act).” 82nd Ill. Gen. Assem., House Proceedings, May 23, 1979, at 8. The Uniform Act serves the purpose of “specifying certain rights, duties, responsibilities and liabilities of lenders, unit owners, developers, and other persons and organizations having interests in condominiums; *** [and] specifying rights and duties of buyers and sellers of condominium units.” Anderson v. Council of Unit Owners of Gables on Tuckerman Condominium, 948 A.2d 11 (Md. Ct. App. 2008). The Uniform Act protects both potential purchasers and owners, even owners who may later become sellers. State v. Rupe, 428 S.E.2d 480, 488 (N.C. App. 1993); James H. Jeffries IV, Note, North Carolina Adopts the Uniform Condominium Act, 66 N.C.L. Rev. 199, 221 (1987). The Uniform Act “was enacted *** to make unit holders’ ‘bundle of rights’ more uniform.” Plano v. Parkway Office Condominiums Bever Properties, LLC, 246 S.W.3d 188 (Tex. Ct. App. 2007).
¶ 31 The specific provision at issue limits the amount charged for the documents every owner must “obtain from the [condominium‘s] Board of Managers” before sale of the owner‘s unit. (
¶ 32 Implying a cause of action for charging an amount in excess of the “reasonable fee covering the direct out-of-pocket cost of providing such information and copying,” (
¶ 33 In one of the three cases in which the District Court for the Northern District of Illinois addressed the issue of whether the courts need to imply a private cause of action under section 22.1(c), the court implausibly concluded that Condominium Property Act protects only prospective purchasers, not unit owners seeking to sell, and therefore a cause of action in favor of owners would not serve the Condominium Property Act‘s purposes. Horist v. Sudler & Co., 17 C 8113 (N.D. Ill. 2018). The Horist court disregarded the relationship between the Condominium Property Act and the Uniform Act, and the court did not address the many provisions throughout the Condominium Property Act that protect owners, not prospective
¶ 34 In the third case, the Northern District of Illinois acknowledged that the Condominium Property Act served the purpose of protecting owners, even when they sought to sell, but found no need to imply a private cause of action in favor of the owners for violations of section 22.1(c). Murphy, 2018 WL 3428084, at *7. The Murphy court suggested unit owners could simply charge purchasers higher amounts for their units to cover the document costs. Id. However, the purchaser could in turn reduce the offer to ensure that the seller pays the cost. When the market favors purchasers, the suggestion offers no help at all to the overcharged owner. Moreover, the court‘s suggestion only makes the buyer a new victim of the statutory violation. Without a private cause of action against the party who overcharges the unit owner for the documents, the document supplier keeps the amount it overcharges its victims.
¶ 35 The Murphy court also suggested the overcharged owner could protest the charges to the condominium board. In an amicus brief filed by the Community Associations Institute – Illinois Chapter (the Institute), the Institute said that if managing agents recover only a “reasonable fee covering the direct out-of-pocket cost of providing such information and copying,” “there would be no business reason to assume the risk of liability. With the reduced involvement of property management companies, in turn, it is likely that associations will be unable to meet the deadline for providing the disclosure documents.” The Institute added a further threat: if condominium associations or the courts disallow the excessive charges managing agents demand, “it may
¶ 36 The Institute admitted that its “1300 members includ[e] 250 businesses, 350 community association Board members and unit owners, and over 650 community association managers and management companies,” assuring that managers and management companies support the threats in the Institute‘s brief. Thus, the managing agents threaten to increase fees and withhold the required documents, thus preventing sales, if the courts apply statutory fee limits to them. In view of such threats one might conclude that the vast majority of condominium boards will accede to the demands of the managing agents, and ignore the protest of the owner who pays the excessive fee only when he sells the unit, and thus only when the board expects the owner to no longer have any say in the government of the condominium association.
¶ 37 Therefore, if the courts do not imply a private right of action against the board for violations of the Condominium Property Act‘s limitation on charges for documents that the owner must “obtain from the [condominium‘s] Board of Managers” to sell the unit (
¶ 38 The trial court here specifically asked whether the Condominium Property Act implies that the unit owner has a cause of action against “a property management company, acting as an agent for the Condominium Board of Managers.” An agent may incur liability if “he takes some active part in violating some duty the principal owes to a third person.” Landau, 409 Ill. at 564. The Condominium Property Act imposes a duty on unit owners to obtain required documents
¶ 39 In Ramirez v. Smart Corp., 371 Ill. App. 3d 797, 810 (2007), Ramirez asked Pekin Hospital for medical records concerning her treatment at the hospital. In accord with its contract with Pekin, Smart Corporation sent the requested records to Ramirez along with a bill for $34.78 for its services. Ramirez filed a class action complaint against Smart, alleging that Smart‘s charges exceeded the amount permitted under the Inspection of Hospital Records Act (Hospital Records Act) (
¶ 40 “Section 8-2001 of the Hospital Records Act obligates every hospital in Illinois to enable patients to obtain copies of their medical records. ***
¶ 41 The statute leaves implementation of that duty to those who are most intimately involved. It has been generally accepted that hospitals can compel a patient to obtain their records by paying an outside copying service. Clay v. Little Company of Mary Hospital, 277 Ill. App. 3d 175 (1995). In Clay, the court construed the statute to imply a reasonableness standard in both the charges to the patient as well as the manner of photocopying, finding that the intent of the statute could not bе otherwise. Thus, in order to implement the Hospital Records Act, hospitals can use copying services, but they must act reasonably in its implementation. [Citation.] The purpose of section 8-2001, as construed, leads us to agree with Pratt [v. Smart Corp., 968 S.W.2d 868 (Tenn. App. 1997)] that, like Tennessee, this state has an interest in transactions that
¶ 42 The Condominium Property Act here establishes a public policy of limiting the charge for the documents required for sale to the amount set by the Condominium Property Act. Just as the allеgations against Smart, if proven, could show a violation of the Hospital Records Act, the allegation against defendant here could show a violation of the Condominium Property Act.
¶ 43 Defendant argues that this court should not follow Landau because our supreme court erred when it held that a court could hold an agent liable if “he takes some active part in violating some duty the principal owes to a third person.” Landau, 409 Ill. at 564. We lack the authority to overrule Landau, and we must follow that decision. Blumenthal v. Brewer, 2016 IL 118781, ¶ 28.
¶ 44 Moreover, Landau states a reasonable standard for liability of an agent. Defendant points out that the fees it charged to plaintiff could be charged to the Association, “and if passed through the Association to Plaintiff would comprise the Association’s exact cоsts,” so that the Condominium Property Act would permit the Association to recover the excessive charge from plaintiff. The Condominium Property Act‘s purpose of assuring that the owner can obtain the required documents at a limited price “would be completely defeated through a construction of Act that would allow [owners] to be charged more than the reasonable copying and mailing costs if the providers hire others to perform the task of supplying the records.” Cotton v. Med-Cor Health Information Solutions, Inc., 472 S.E.2d 92 (Ga. App. 1996). Landau establishes that the Condominium Property Act here, like the Hospital Records Act at issue in Ramirez, Cotton, and Pratt, “applies to independent entities that are retained tо provide” the documents. Pratt v. Smart
¶ 45 Thus, in accord with Landau and the purpose of the Act, this court should answer “Yes” to both of the circuit court‘s questions. The decision to not answer the certified question will have one obvious effect: managing agents will continue collecting excessive fees from condominium unit sellers, secure in the knowledge that many of their victims, leaving the condominiums, will not seek rеcompense even after the courts declare that the excessive fees violate the Condominium Property Act. The excessive fees will continue until Illinois law is made clear on this issue as explained here. Accordingly, I dissent from the decision to not answer the certified questions, and answer “Yes” a unit owner has a statutory cause of action against a managing agent for a condominium board, assuming the managing agent acted as agent for the board in providing the documents required under section 22.1 of the Act.
