Capiccioni v. Brennan Naperville, Inc.: Lawsuit against Broker for Alleged Misstatement of School District Boundaries Reinstated

An Illinois appellate court has considered whether buyers' lawsuit against a listing broker for incorrectly identifying a property's school district could proceed.

Dean and Majel Capiccioni ("Buyers") purchased a home in Bolingbrook, Illinois. The seller had hired Sharon Clermont ("Salesperson") of Brennan Naperville, Inc. d/b/a Remax Naperville ("Brokerage") to market the property. The marketing materials prepared by the Brokerage for the seller's home asserted that the home was located in the "Acclaimed [school] District 204" ("School District"). The Buyers moved into the home and enrolled their children in the School District for the next three years. However, the Buyers learned that their property was not located in the School District and so their children were not able to attend classes in the School District the fourth year.

The Buyers subsequently moved to a home in the School District, and then filed a lawsuit against the Brokerage and Salesperson. The lawsuit alleged fraud, negligent misrepresentation, violation of the Illinois real estate license law, and Illinois consumer fraud legislation. No allegations were made against the seller because he had no children nor did he expect to have any children and so he had no reason to know the school district in which his home was located. The trial court dismissed the Buyers' lawsuit, and the Buyers appealed.

The Appellate Court of Illinois, Second District, partially reversed the trial court's rulings, sending the case back to the trial court for further proceedings. The court first considered the fraud allegations made against the Brokerage. In order to allege fraud, the Buyers would need to allege a false statement of a material fact; the Brokerage's knowledge that the statement was false; the Brokerage made the statement intending the Buyers to act upon the statement; the Buyers relied upon the truth of the statement; and the Buyers suffered damages because of their reliance upon the Brokerage's statements. The court found that the trial court's dismissal of the fraud allegations was appropriate because the Buyers did not allege that the Brokerage knew the statements about the property's location in the School District were false. Thus, the court affirmed the trial court's dismissal of the fraud allegations.

Next, the court considered the Buyers' allegations under the Illinois consumer fraud act ("Act"). To allege violations of the Act, the Buyers needed to state the following: a deceptive act or practice by the Brokerage; the Brokerage's intent for the Buyers to rely upon this deception; the occurrence of the deception during conduct involving trade or commerce; and damage to the Buyers proximately caused by the Brokerage. The Brokerage argued that they were protected by language in the Act that protected real estate licensees from lawsuits when a real estate licensee transmits false information the licensee receives from the seller of real estate. The court rejected this argument, since the information that the Brokerage transmitted about the School District was not alleged to have come from the seller.

The court then considered whether the Brokerage's statements about the location of the property in the School District constituted a statement of Illinois law. Act violations cannot be based on statements of law, as each party is assumed to have an equal opportunity to know the law and so a party cannot claim to rely upon statements of law made by the other party. The Buyers had attempted to verify the truth of the Brokerage's statements by speaking with employees of the School District about the location of the home. Illinois law states that each school district superintendent has a map which details the boundaries of each school district. The court allowed the Buyers' allegations of Act violations to proceed, as it is possible that the Buyers could show that they exercised reasonable prudence in ascertaining the law by calling School District employees to inquire about the home's location. Thus, the court reversed the trial court's dismissal of the Act violations.

The court next examined the negligent misrepresentation allegations against the Brokerage. To make negligent misrepresentation allegations, the Buyers needed to allege the following: a false statement of a material fact by the Brokerage; carelessness or negligence by the Brokerage in ascertaining the truth of the statement; an intention to induce the Buyers to act upon the statement; Buyers justifiable reliance upon the statement; and damage to the other party who acts in reliance upon the statement. The court focused on whether the Buyers adequately alleged that they had relied upon the statements about the School District made by the Brokerage, since the Buyers had also spoken to School District employees about the property's location. While the court found that the Buyers conversations with the School District employees about the property's location undermined their reliance arguments, the court found that they still had successfully alleged negligent misrepresentation. Thus, the court allowed the negligent misrepresentation allegations to proceed.

Finally, the court considered the allegations based on violations of Illinois's real estate license law. A section of the state's license law allows for injured parties to bring lawsuits against licensees for damages suffered when a licensee violates this section of the license law. The Brokerage argued that this section only applied to disclosure duties concerning the physical conditions on the property, and the School District boundary did not constitute a physical condition requiring disclosure. The court disagreed with the Brokerage's interpretation of the license law section because the section is not so limited. Thus, the court reversed the trial court's dismissal of these allegations and so the case was sent back to the trial court for further proceedings.

Capiccioni v. Brennan Naperville, Inc., No. 2-02-0145, 2003 WL 1889598 (Ill. App. Ct. Apr. 15, 2003). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information].

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