Plaintiff seeks to bring a class action suit against Lieberman, a third-party property management company, under a novel implied-right-of-action theory, for an alleged violation of Section 22.1 of the Condominium Property Act, 765 ILCS 605/1 et seq. (the “Condo Act"). Section 22.1 allows sellers of condominium units to obtain from their condominium association board certain documents and information regarding the condominium and make those documents “available for inspection to the prospective purchaser, upon demand." Section 22.1 requires that the information be furnished within 30 days of the written request, and provides that the board may charge a “reasonable fee covering the direct out-of-pocket cost." 765 ILCS 605/22.1. The statute makes no reference to property management companies or document processing companies.
Plaintiff bases his theory of liability on the premise that Defendant violated Illinois law by allegedly charging amounts beyond a “reasonable fee covering the direct out-of-pocket cost" in providing a package of disclosure documents listed in Section 22.1 (the “Disclosure Documents") to the prospective seller of the condo. Plaintiff concedes that the language of Section 22.1 makes no reference to a third-party property management business, and does not purport to regulate the business of third-party property management businesses. Despite this, Plaintiff alleges Lieberman can be sued as an agent of the condo associations, and can be individually liable for breaching a duty of the condominium associations under an “active-part agency" theory of legal liability.
Specifically, the class representative alleges that on October 7, 2016, Plaintiff sold a condo unit that was part of the Mission Hills Condominium Association in Northbrook, Illinois. On September 27, 2016, the prospective buyer requested information from Plaintiff regarding the condominium and association pursuant to Section 22.1 of the Condo Act. In turn, Plaintiff's real estate attorney directly requested that Lieberman prepare and provide the Disclosure Documents, as well as additional documentation, within five days. Plaintiff's attorney affirmatively submitted an order form from Defendant's web site requesting a Section 22.1 Disclosure and additional documents for a total cost of $220. Plaintiff's attorney also ordered a paid assessment letter, agreed to a rush fee, and buyer's transfer fee for a total of $250.
Defendant moved to dismiss the claim for violation of the Condo Act, arguing 1) that Section 22.1 does not apply to property management companies under the express terms of the statute; 2) there was no arguable violation of the statute because Plaintiff did not pay more than the condominium association's out-of-pocket costs; and 3) that Section 22.1 does not create a private cause of action, and no cause of action could be implied in favor of a seller against a property management company. The trial court allowed Plaintiff's cause of action for violation of the Condo Act to survive relying on the Seventh Circuit's decision Merrill Tenant Council v. HUD, 638 F.2d 1086 (7th Cir. 1981). The trial court found that Plaintiff could bring a cause of action under the Condo Act on the theory that Lieberman acted as the condominium association's agent and played an active part in breaching a duty owed by the condominium association under Section 22.1.
Following this order, the parties and the trial court agreed an interlocutory appeal was appropriate in this case given that it was an issue of first impression, and the trial court certified questions for appeal concerning whether Plaintiff could bring a cause of action under the Condo Act against the Defendant for actions taken by Defendant allegedly as the agent of a condominium association. Lieberman filed an application for leave to appeal, and the Appellate Court quickly granted the application.
Amicus Brief
Status: Remanded to Circuit Court 3/25/19
Leave to Appeal
CAI Amicus Review Panel: Robert Diamond, Esq., Chair of Amicus Committee, Edmund Allcock, Esq. (MA), Jennifer Loheac (GA), Jim Strichartz (WA), and Steven Sugarman, Esq. (PA)