NORTH SPAULDING CONDOMINIUM ASSOCIATION, an Illinois not-for-profit corporation, Plaintiff/Counterdefendant-Appellee, v. MICHAEL CAVANAUGH and TIFFANY CAVANAUGH, Defendants/Counterplaintiffs-Appellants; MICHAEL CAVANAUGH and TIFFANY CAVANAUGH, Third-Party Plaintiffs-Appellants, v. WESTWARD MANAGEMENT, INC., Third-Party Defendant-Appellee.
No. 1-15-3387
2017 IL App (1st) 153387-U
February 14, 2017
JUSTICE PIERCE delivered the judgment of the court. Justices Neville and Mason concurred in the judgment.
SECOND DIVISION. Appeal from the Circuit Court of Cook County. No. 13 M1 717924. Honorable David A. Skryd, Judge Presiding.
ORDER
¶ 1 Held: The trial court properly dismissed the unit owners’ counterclaim and third-party complaint.
¶ 2 A condominium association initiated a forcible entry and detainer action against the
¶ 3 BACKGROUND
¶ 4 On August 1, 2013, North Spaulding Condominium Association (North Spaulding) initiated a forcible entry and detainer action pursuant to section 9-102 of the Code of Civil Procedure (Forcible Entry and Detainer Act) (
¶ 5 The Cavanaughs initially sought to quash service of the complaint, but withdrew that motion and filed a verified answer, along with affirmative defenses, a counterclaim, and a third-
¶ 6 The Cavanaughs’ amended counterclaim and amended third-party complaint contained the following factual allegations.3 North Spaulding‘s “common practice” was to assess association fees on an irregular basis and that “[a]lthough [the Cavanaughs], at times, paid the association fees on a semi-regular basis, during those times when [they] paid the association fees in a lump sum, North Spaulding did not take legal action.” The Cavanaughs alleged that North Spaulding “did not provide notice *** that it would be strictly enforcing payment of the association fees on a monthly basis” instead of accepting lump sum payments. They further alleged that North Spaulding sent notice “that it would be taking legal action” to the condominium unit and not to the Cavanaugh‘s home address, “although [North Spaulding] knew” that the Cavanaughs did not reside at the condominium unit. The Cavanaughs alleged that North Spaulding did not send a “customary” 30-day demand letter regarding delinquent payments, and that the Cavanaughs did not learn of the “legal action” until a condominium board meeting in September 2013. Finally, they alleged that, despite Michael‘s attempt to work out a payment plan, North Spaulding “continued to proceed with legal action and continued to incur,
¶ 7 The amended counterclaim contained four counts. Count I alleged that North Spaulding owed the Cavanaughs a fiduciary duty by virtue of section 18.4 of the Illinois Condominium Property Act (Condominium Property Act) (
¶ 8 Count II alleged that a contract existed between the Cavanaughs and North Spaulding that governed the assessment and collection of association fees.4 The Cavanaughs alleged that North Spaulding breached that contract and its implied covenant of good faith and fair dealing by “fail[ing] to give [the Cavanaughs] notice and demand for payment during the calendar year 2013,” assessing attorneys’ fees prior to a court determination of the reasonableness of those fees, incurring “unreasonable and unnecessary” attorneys’ fees, failing to inform the Cavanaughs that their prior method of payment would not be accepted, and failing to allow a reasonable opportunity to correct any deficiencies.
¶ 9 Count III alleged fraud, and asserted the same allegations as count I with the additional assertion that the Cavanaughs “reasonably relied on the information that they had been given by North Spaulding, including the fact that legal action would not be instituted against them if they paid fees and assessments on a semi-regular or quarterly basis.”
¶ 10 Count IV alleged a breach of “an oral modification of the contract between the parties.”5
¶ 11 The Cavanaughs’ amended third-party complaint against Westward contained the same factual allegations as the counterclaim, and contained two counts: breach of fiduciary duty (count I) and breach of contract (count II). Count I alleged that Westward was North Spaulding‘s “actual or apparent agent for the collection, assessment, and computation of assessments and fees regarding the Unit,” that Westward owed the Cavanaughs a fiduciary duty that was created by the agency relationship between Westward and North Spaulding, and that the Cavanaughs “reasonably trusted” Westward to carry out its fiduciary duty. Westward allegedly breached this fiduciary duty by failing to act with reasonable care by “fail[ing] to give [the Cavanaughs] notice and demand for payment during the calendar year 2013,” assessing and incurring “unreasonable and unnecessary” attorneys’ fees, “neglect[ing] to inform [the Cavanaughs] that their prior method of payment would no longer be accepted,” and “fail[ing] to allow a reasonable opportunity to correct any deficiencies before instituting costly legal action[.]”
¶ 12 Count II alleged “upon information and belief” that a written contract existed between North Spaulding and Westward regarding collection of association fees of individual unit
¶ 13 In each count in the amended counterclaim and amended third party complaint, the Cavanaughs alleged that, due to North Spaulding‘s and Westward‘s actions, the balance on the Cavanaughs’ “account” increased from “$2,072.42 to $7,230.83 in three months’ time,” and over the course of one year, increased “from $2,072.42 to $13,080.91.”
¶ 14 North Spaulding and Westward filed separate motions to dismiss pursuant to section 2-619.1 of the Code of Civil Procedure (Code) (
¶ 15 Westward moved to dismiss the breach of fiduciary duty claim (count I) of the amended third-party complaint pursuant to section 2-619(a)(9) of the Code for the same reasons that North Spaulding moved to dismiss counts I and III of the amended counterclaim. Additionally, Westward relied on an unpublished federal district court decision to argue that it could not be sued for breach of fiduciary duty where there were no contractual duties between it and the Cavanaughs.
¶ 16 Both North Spaulding and Westward moved to dismiss the breach of contract claims (counts II and IV of the amended counterclaim and count II of the amended third-party complaint) pursuant to section 2-615 of the Code (
¶ 17 The Cavanaughs, in response to the motion to dismiss the breach of fiduciary duty and fraud claims, admitted that the Notice and Demand was sent to the unit address, but argued that
¶ 18 On October 22, 2015, the trial court heard oral argument on the motions,8 and entered a written order that stated: “Plaintiff‘s motions to dismiss (combined [sic] 215 – 219) is granted. Defendant‘s counterclaim and third-party complaint are dismissed w/ prejudice.” The written order contained the following language: “Pursuant to Ill. S. Ct. R. 304(a), the Court finds that there is no just reason for delaying an appeal of this present Order.”
¶ 19 On November 17, 2015, the Cavanaughs filed an “Emergency Motion to Correct the Court‘s Order of October 22, 2015,” asserting that, due to a “scrivener‘s error,” the October 22, 2015, order did not accurately set forth the language required for a Rule 304(a) finding, and requested that the trial court correct the order. On November 18, 2015, the trial court granted the motion, finding “The Court‘s order of 10/22/15 is corrected as follows[:] *** ‘Pursuant to Ill. S. Ct. R. 304(a), the Court finds that there is no just reason for delaying either enforcement or appeal or both of this Order.’ ” The Cavanaughs filed their notice of appeal on November 23, 2015.
¶ 20 ANALYSIS
¶ 22 On appeal, the Cavanaughs argue that the trial court erred in dismissing each count of their amended counterclaim and amended third-party complaint with prejudice. They argue that North Spaulding‘s and Westward‘s section 2-619.1 motions improperly conflated sections 2-615 and 2-619 of the Code. They argue that neither North Spaulding nor Westward properly alleged an affirmative matter pursuant to section 2-619(a)(9) that would defeat the Cavanaughs’ breach of fiduciary duty and fraud claims, since North Spaulding‘s and Westward‘s assertions that the Notice and Demand was properly sent “disputed the truth of the *** well-pleaded allegations.” They further argue that neither North Spaulding nor Westward produced a complete copy of the Declaration containing all of the “relevant provisions,” or demonstrated that the Cavanaughs’ claims fell within the Declaration‘s arbitration provision. They claim that the trial court erred in dismissing all of their breach of contract claims because it was not necessary for them to attach
¶ 23 Section 2-619.1 of the Code permits a party to file a motion to dismiss that combines a motion under section 2-615 and a motion under section 2-619.
¶ 24 A motion to dismiss pursuant to section 2-615 challenges the legal sufficiency of a complaint, and inquires whether the allegations state a cause of action upon which relief may be granted. Bonhomme v. St. James, 2012 IL 112393, ¶ 34. All well-pleaded facts must be taken as true, but conclusions of law will not be taken as true unless supported by specific factual allegations. Id.
¶ 25 Section 2-619(a)(9) of the Code permits the involuntary dismissal of a claim where the claim asserted is “barred by other affirmative matter avoiding the legal effect of or defeating the claim.”
¶ 26 Our review of a dismissal under either section 2-615 or 2-619 of the Code is de novo. Patrick Engineering, Inc. v. City of Naperville, 2012 IL 113148, ¶ 31.
¶ 27 The Cavanaughs first argue that North Spaulding and Westward improperly conflated sections 2-615 and 2-619 in their section 2-619.1 motions to dismiss. The Cavanaughs argue that North Spaulding‘s and Westward‘s section 2-619.1 motion improperly attacked the legal sufficiency of the Cavanaughs’ pleadings in the part of their motions designated for section 2-619.
¶ 29 The Cavanaughs argue that the trial court erred by dismissing their breach of fiduciary duty claims against North Spaulding (count I of the amended counterclaim) and Westward (count I of the amended third-party complaint) pursuant to section 2-619 of the Code. They argue that neither North Spaulding nor Westward raised any affirmative matter that defeated their claim, that North Spaulding and Westward failed to provide a complete basis for their motions to dismiss by not presenting the entire Declaration, and failed to demonstrate that the Cavanaughs’ breach of fiduciary duty was subject to the Declaration‘s arbitration provision. The Cavanaughs further argue that they alleged sufficient facts to state a cause of action. Alternatively, they argue that the trial court abused its discretion in dismissing their claims with prejudice.
¶ 30 The circuit court dismissed the Cavanaughs’ breach of fiduciary duty claim against North Spaulding pursuant to section 2-619 of the Code. The record supports a finding that North Spaulding complied with both the Condominium Property Act and the Forcible Entry and Detainer Act (
¶ 31 The Cavanaughs’ response to the motion to dismiss count I of the amended counterclaim admitted that the notice had been sent to the unit, but argued that North Spaulding “fraudulently and intentionally sent notice to the Unit when it knew that the Cavanaughs did not reside there and would never receive actual notice of the claim.” The response did not include any counteraffidavit or other evidence that might suggest that North Spaulding did not send the notice in accord with the proof of mailing attached to the Notice and Demand, or that the address to which the notice was sent was not the Cavanaughs’ last known address in December 2012.
¶ 33 Finally, the Cavanaughs’ breach of fiduciary duty claims alleged that North Spaulding and Westward breached their fiduciary duties by seeking attorneys’ fees, which the Cavanaughs alleged were “unnecessary and unreasonable,” and which North Spaulding and Westward sought without first having a court determine the reasonableness of the fees. The Cavanaughs advanced no argument in the trial court or on appeal on this point, and have therefore forfeited this argument. Ill. S. Ct. R. 341(h)(7) (eff. Jan. 1, 2016); see also Housing Authority of Champaign County v. Lyles, 395 Ill. App. 3d 1036, 1040 (2009) (finding that failure to properly develop an argument does “not merit consideration on appeal and may be rejected for that reason alone“). Forfeiture aside, we note that section 9.2(b) of the Condominium Property Act provides that “[a]ny attorneys’ fees incurred by the Association arising out of a default by any unit owner *** in the performance of any of the provisions of the condominium instruments, rules and regulations *** shall be added to, and deemed a part of, his respective share of the common expense.”
¶ 35 Next, the Cavanaughs argue that the trial court erred in dismissing their fraud claim against North Spaulding (count III of the amended counterclaim) pursuant to section 2-619(a)(9). They argue that North Spaulding‘s motion to dismiss advanced “no independent argument regarding [the Cavanaughs‘] fraud claim,” and that North Spaulding “merely re-recited [sic] its argument regarding Count I and adopted it, almost word-for-word, as its argument regarding Count III.10
¶ 36 Count III of the Cavanaughs’ amended counterclaim recites, almost word for word, the allegations set forth in count I of the amended counterclaim. The only substantive difference is that the Cavanaughs alleged in count III that they “reasonably relied on the information they had been given by North Spaulding, including the fact that legal action would not be instituted against them if they paid fees and assessments on a semi-regular or quarterly basis.” We note that the Cavanaughs’ fraud claim is not well-pleaded, as it fails to allege facts forming the basis of their fraud claim with any specificity or particularity. See People ex rel. Peters v. Murphy-Knight, 248 Ill. App. 3d 382, 387 (1993) (“The facts which constitute an alleged fraud must be pleaded with specificity and particularity, including ‘what representations were made, when they were made, who made the representations and to whom they were made.’ “) (quoting Board of Education of City of Chicago v. A, C & S, Inc., 131 Ill. 2d 428, 457 (1989)). Regardless,
¶ 37 Next, the Cavanaughs argue that the trial court erred in dismissing their breach of contract claims against North Spaulding (counts II and IV of the amended counterclaim) and against Westward (count II of the amended third-party complaint) pursuant to section 2-615 of the Code. They argue that it was not necessary for them to attach any written contracts to their pleadings pursuant to section 2-606 of the Code (
¶ 38 North Spaulding and Westward argue that the Cavanaughs failed to allege sufficient facts to state a cause of action for breach of contract. North Spaulding argues the Cavanaughs failed to allege any circumstances leading to an oral modification or how such a modification overcame the no-waiver clause in the Declaration, and failed to attach the written contract giving rise to
¶ 39 In order to state a cause of action for breach of contract, plaintiff must establish an offer and acceptance, consideration, the terms of the contract, plaintiff‘s performance of all required contractual conditions, the defendant‘s breach of the terms of the contract, and damages resulting from the breach. Penzell v. Taylor, 219 Ill. App. 3d 680, 688 (1991). “A general allegation that a contract exists, without supporting facts, is a legal conclusion which is not admitted as true by a motion to dismiss or strike.” Martin-Trigona v. Bloomington Federal Savings & Loan Ass‘n, 101 Ill. App. 3d 943, 946 (1981).
¶ 40 Although every contract implies good faith and fair dealing, the duty of good faith and fair dealing is a derivative principle of contract law that is essentially used as a construction aid in determining the intent of the parties where an instrument is susceptible of two conflicting constructions. Resolution Trust Corp. v. Holtzman, 248 Ill. App. 3d 105, 112 (1993). The purpose of the implied covenant of good faith and fair dealing “is to ensure that parties do not take advantage of each other in a way that could not have been contemplated at the time the contract was drafted or do anything that will destroy the other party‘s right to receive the benefit of the contract.” Gore v. Indiana Insurance Co., 376 Ill. App. 3d 282, 286 (2007). It is axiomatic that parties are entitled to enforce the terms of the contract to the letter and an implied covenant good faith cannot overrule or modify the express terms of a contract. Northern Trust Co. v. VIII South Michigan Associates, 276 Ill. App. 3d 355, 367 (1995) (citing Resolution Trust, 248 Ill. App. 3d at 113).
¶ 41 Here, neither count II of the amended counterclaim nor count II of the amended third party complaint alleges sufficient facts to establish the existence of a contract into which the
¶ 42 The Cavanaughs also did not comply with section 2-606 of the Code, which states in relevant part:
“If a claim or defense is founded upon a written instrument, a copy thereof, or of so much of the same as is relevant, must be attached to the pleading as an exhibit or recited therein, unless the pleader attaches to his or her pleading an affidavit stating facts showing that the instrument is not accessible to him or her.”
735 ILCS 5/2-606 (West 2014).
Here, the Cavanaughs failed to attach the written instrument, and similarly failed to attach an affidavit “stating facts showing that the instrument is not accessible to him or her.” Within their counterclaim, they conclusorily stated that the contract “has been misplaced and therefore cannot be attached.” This is insufficient as there is no factual support for this claim. The failure to comply with section 2-606 of the Code was also a proper basis for dismissal under section 2-615 of the Code. Velocity Investments, LLC v. Alston, 397 Ill. App. 3d 296, 300 (2010).
¶ 44 On appeal, the Cavanaughs argue that they were not required to attach a copy of a written contract to their third-party complaint because they were “unsure whether or not the contract between [North Spaulding] and [Westward] was actually in writing because [the Cavanaughs] were only third party beneficiaries of the contract, not parties themselves.”
¶ 45 Count II of the amended third-party complaint suffers from the same defects as count II of the amended counterclaim. The Cavanaughs do not allege sufficient facts to establish the existence of a contract between North Spaulding and Westward, they admit they are unsure of its nature, and instead merely allege that one exists. As discussed above, this is insufficient. See Martin-Trigona, 101 Ill. App. 3d at 946 (“A general allegation that a contract exists, without supporting facts, is a legal conclusion which is not admitted as true by a motion to dismiss or strike.“). This is particularly true where the Cavanaughs claim to be intended third party beneficiaries of the contract. As we explained in Martis v. Grinnell Mutual Reinsurance Co.:
“Whether someone is a third party beneficiary depends on the intent of the contracting parties, as evidenced by the contract language. It must appear from the language of the contract that the contract was made for the direct, not merely incidental, benefit of the third person. Such an intention must be shown by an express provision in
the contract identifying the third party beneficiary by name or by description of a class to which the third party belongs. If a contract makes no mention of the plaintiff or the class to which he belongs, he is not a third party beneficiary of the contract. The plaintiff bears the burden of showing that the parties to the contract intended to confer a direct benefit on him.” (Internal citations omitted.) Martis v. Grinnell Mutual Reinsurance Co., 388 Ill. App. 3d 1017, 1020 (2009).
¶ 46 Here, the Cavanaughs allege no facts to support their assertion that they were intended third party beneficiaries of a contract between North Spaulding and Westward. Third party beneficiary status depends on the precise terms of the contract, which the Cavanaughs make no effort to describe. The trial court correctly dismissed count II of the amended third-party complaint pursuant to section 2-615 of the Code.
¶ 47 Count IV of the amended counterclaim suffers from similar defects. The Cavanaughs alleged that the “parties’ course and conduct constituted an oral modification of the contract between the [Cavanaughs and North Spaulding].” They fail, however, to identify the contract allegedly modified. Again, the Cavanaughs failed to allege facts that establish the existence of a contract, the material terms of that contract, and whether the Cavanaughs themselves had performed their obligations under the contract. Furthermore, they assert that there was an oral modification to the contract without explaining which, or identifying how, the terms of the contract were modified. Their statement that the “parties’ course and conduct constituted an oral modification” is a legal conclusion devoid of factual support, which is insufficient to survive a motion to dismiss. Martin-Trigona, 101 Ill. App. 3d at 946. The trial court correctly dismissed count IV of the amended counterclaim pursuant to section 2-615 of the Code.
¶ 48 Furthermore, we note that the Cavanaughs did not allege the existence of an oral contract,
¶ 49 Finally, the Cavanaughs argue that the trial court abused its discretion by dismissing their breach of contract claims with prejudice. They argue that their breach of contract counts are “based on claims that [are] outside the four corners of any written contract that would have existed,” and that any violation of section 2-606 of the Code could be “easily remedied by amendment to include either a copy of the contract or the required affidavit.” The Cavanaughs made the same argument in the trial court in their response to the motion to dismiss. Their response did not attach any proposed amended pleading or proposed affidavit.
¶ 50 Regardless of whether the Cavanaughs could re-plead their breach of contract claims to comply with section 2-606 of the Code, any amendment would be futile. The breach of contract counts asserted that North Spaulding and Westward breached their contractual obligations by “fail[ing] to give [the Cavanaughs] notice and demand for payment during the calendar year 2013,” assessing attorneys’ fees prior to a court‘s determination of the reasonableness of those fees, incurring “unreasonable and unnecessary” attorneys’ fees, failing to inform the Cavanaughs that their prior method of payment would not be accepted, and failing to allow a reasonable
¶ 51 The allegation that no proper notice was sent is belied by the Notice and Demand dated December 5, 2012. The notice and demand made clear that the Cavanaughs were in default, it specified the amount due, informed the Cavanaughs they had thirty days to pay the amount due in full, and stated that only payment in full would be accepted. Additionally, as previously stated, North Spaulding was statutorily authorized to seek reasonable attorneys’ fees in connection with its attempt to recover the unpaid assessments. These are affirmative matters that would bar the Cavanaughs’ re-pleaded breach of contract claims. We therefore affirm the trial court‘s dismissal of counts II and IV of the amended counterclaim and count II of the amended third-party complaint with prejudice.
¶ 52 CONCLUSION
¶ 53 In sum, we find that the trial court properly dismissed counts I and III of the amended counterclaim, as well as count I of the amended third party complaint, with prejudice pursuant to section 2-619 of the Code. The trial court properly dismissed counts II and IV of the amended counterclaim, as well as count II of the amended third party complaint, with prejudice pursuant to section 2-615 of the Code.
¶ 54 For the foregoing reasons, we affirm the trial court‘s judgment.
¶ 55 Affirmed.