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Condominium Law FLASHPOINTS January 2022

Kenneth Michaels, Jr., Bauch & Michaels, LLC, Chicago
312-588-5000 | E-Mail Kenneth Michaels, Jr.

No Implied Right of Action Under Chicago Self-Certification Permit Program

Occasionally, my mentor would set down a case he was reading, sigh, and observe that bad facts make bad law. It is one of our better qualities as humans to yearn for justice. Nevertheless, one of the qualities of a good jurist is the ability to say, “These facts scream for justice, but the rules cannot bend that far, or we will not have rules that work.” A couple weeks ago such a case came down from the First District in which the court reversed the trial court’s judgment for the plaintiff condominium association for $1.5 million against the architect who designed the structurally unsound three-unit building and used Chicago’s “Self-Certification Permit Program” (SCPP) to bypass any design review. 1541 North Bosworth Condominium Ass’n v. Hanna Architects, Inc., 2021 IL App (1st) 200594.

Chicago’s Self-Certification Permit Program

In Chicago, when a property owner wishes to perform virtually any construction work on his or her property, he or she must submit plans to the city’s Department of Buildings and upon approval of the plans, a permit is issued. 2021 IL App (1st) 200594 at ¶1. For decades, the permitting process has been the bane of developers because of sometimes extraordinary delays and inevitable rejection of plans requiring revisions and further review. In 2008, the city adopted Municipal Code §13-32-031, which authorizes the Commissioner of Buildings to create a program “authorizing qualified licensed design professionals to self-certify plans.” 2021 IL App (1st) 200594 at ¶11, quoting §13-32-031. This program allows architects and structural engineers to bypass the normal Department plan review before obtaining a building permit. 2021 IL App (1st) 200594 at ¶2. Under the ordinance, the Department was to promulgate and adopt administrative rules to implement the program. The Department eventually did so in October 2009. 2021 IL App (1st) 200594 at ¶12. But the Department initiated the program a year earlier without any administrative rules. 2021 IL App (1st) 200594 at ¶13.

The Facts

In 2008, John Hanna and his company Hanna Architects, Inc., designed and self-certified a three-story condominium building being built in Chicago’s Lakeview area. 2021 IL App (1st) 200594 at ¶3. Upon self-certifying the plans and obtaining the permits for the developer, Hanna had no further involvement in the project. In connection with self-certifying the plans, Hanna signed a self-certification statement that certified (1) all information in the application was accurate and prepared by him (2) pursuant to a professional standard of care in the preparation, (3) which the Department could rely on, and (4) in the event the plans do not conform to law, the design professional will take all necessary remedial measures and will correct any false statements in the plans. 2021 IL App (1st) 200594 at ¶16. Additionally, the signer acknowledged that if he or she did not take corrective action, he or she may lose self-certification privileges and may be reported to the Illinois Department of Professional Regulation. Id.

Meanwhile, the developer signed a certification to the Department that he would (1) take any necessary measures to correct any misrepresentation or falsification of facts made by his design professional either knowingly or negligently and (2) take any remedial measures to bring the plans and completed structure into conformity with the building code and any applicable state or federal law. 2021 IL App (1st) 200594 at ¶17.

The plans were self-certified in 2008 and permits were issued. Construction of the building was completed in 2009. By 2010, all three units had been sold. By 2014, all three units had been re-sold to successive purchasers. 2021 IL App (1st) 200594 at ¶19.

On Halloween 2014, Chicago experienced a major windstorm, and the building began swaying. This resulted in cracking and structural damage in the building. A structural engineer determined that the building had been designed and built “without a lateral support system that complied with minimum wind pressure requirements of the Building Code.” 2021 IL App (1st) 200594 at ¶20. In the vernacular, a lateral support system is the diagonal bracing in support columns of buildings that keeps them from swaying sideways and bending or breaking. There was no dispute that the plans were deficient. 2021 IL App (1st) 200594 at ¶21. Hanna admitted he did not do structural calculations but rather went with a “gut feeling.” Id.

The Trial Court

The plaintiffs sued the developer, general contractor, marketer/seller of units, and Hanna. 2021 IL App (1st) 200594 at ¶22. Of course, by the time suit was filed, the developer and contractor were dissolved corporations and the original purchasers had waived any implied warranty of habitability as to the developer. 2021 IL App (1st) 200594 at ¶73.

As regular readers of these articles and any lawyer familiar with Illinois construction law could predict, the negligence and misrepresentation counts against the architect defendants were dismissed under the economic loss doctrine or Moorman doctrine (see Moorman Manufacturing Co. v. National Tank Co., 91 Ill.2d 69, 435 N.E.2d 443, 61 Ill.Dec. 746 (1982)), whichever name is your preference. Moorman was held decades ago to bar economic recovery from architects and design professionals for their malpractice in designing buildings. 2021 IL App (1st) 200594 at ¶23, citing 2314 Lincoln Park West Condominium Ass’n v. Mann, Gin, Ebel & Frazier, Ltd., 136 Ill.2d 302, 555 N.E.2d 346, 350 – 351, 144 Ill.Dec. 227 (1990).

Surviving motion practice, the plaintiffs proceeded to trial with one claim, an implied right of action against the architect and his firm for violating the Chicago Building Code and affirmative representations of architect in his self-certification statement. 2021 IL App (1st) 200594 at ¶24. At bench trial, “[t]he evidence presented mostly revolved around the scope of the [b]uilding’s deficiency and the cost of remediating it.” 2021 IL App (1st) 200594 at ¶28. The trial court entered a judgment against the architect and his firm for $1.5 million. 2021 IL App (1st) 200594 at ¶29.

Appellate Court’s Analysis

The appellate court exercised de novo review on legal questions. The architect defendants argued three grounds for reversal: (1) neither a municipal ordinance or program can be the grounds for recognizing an implied cause of action; (2) allowing this claim would eviscerate Moorman; and (3) even if a cause of action could be implied under these circumstances, it should not have been. 2021 IL App (1st) 200594 at ¶32.

Illinois has adopted a four-factor test for recognizing an implied right of action under a statute that prescribes or proscribes certain conduct but does not provide a private remedy.

To find an implied right of action, a court must determine that (1) the plaintiff is a member of the class for whose benefit the statute was enacted, (2) the plaintiff's injury is one the statute was designed to protect, (3) implying a private right of action would be consistent with the purposes of the statute and the overall statutory scheme, and (4) implying a private right of action is necessary to provide an adequate remedy for violations of the statute. 2021 IL App (1st) 200594 at ¶34, citing Metzger v. DaRosa, 209 Ill.2d 30, 805 N.E.2d 1165, 1168, 282 Ill.Dec. 148 (2004).

However, the first challenge was that no statute was at issue. The appellate court found one case that provided “some support for the proposition that a court may imply a cause of action in a municipal ordinance.” 2021 IL App (1st) 200594 at ¶36, citing Henderson Square Condominium Ass’n v. LAB Townhomes, LLC, 2015 IL 118139, ¶¶74 – 75, 46 N.E.3d 706, 399 Ill.Dec. 387.

As far as the parties and we can discern, this is the only decision standing for, or even suggesting the proposition that a municipal ordinance may serve as the basis for an implied cause of action.

We do not see any particular reason why a municipal ordinance could not serve as a basis for an implied cause of action. Like a statute, a municipal ordinance may expressly provide for a cause of action to redress a violation of its provisions; that is not unusual at all. 2021 IL App (1st) 200594 at ¶¶36 – 37.

However, after this point the analysis went against plaintiff.

[W]e must first stop and make this fundamental observation, so basic that it should go without saying: the plaintiff must first identify the specific ordinance that was violated. A court cannot imply a cause of action out of thin air; the plaintiff must identify the legislative enactment that the defendant allegedly violated, so that the court can review the language of that enactment, along with the overall statutory scheme in which that enactment is contained, to determine whether that violation should be redressable by a private lawsuit. 2021 IL App (1st) 200594 at ¶38.

The court explored, without success, the plaintiff’s brief to find any ordinance quoted or language specifically relied on. “Much like it did before the trial court, in its brief on appeal, plaintiff alternates between referencing one of three sources for its implied cause of action, almost interchangeably and often in tandem: (1) the Chicago Building Code generally, (2) the SCPP program itself, and (3) the self-certification statement that Hanna signed and submitted to the Department.” 2021 IL App (1st) 200594 at ¶40.

Section 13-32-031, the SCPP ordinance, merely authorized the commissioner to authorize the self-certification program. At the time the Hanna defendants self-certified the plans, the city had started the program without adopting any administrative rules. All this ordinance does is delegate authority. 2021 IL App (1st) 200594 at ¶48. As the appellate court observed, “[t]he absence of a violation of a statute (or ordinance) is a death knell for a claim of an implied cause of action. The only reason to even consider implying a private right of action in a statute or ordinance is to redress a violation of that enactment.” 2021 IL App (1st) 200594 at ¶50.

The court then proceeded to conduct the Metzger four-factor analysis of the ordinance, including the self-certification statement made by the architect and found that these factors still could not be satisfied.

We cannot find that plaintiff is a member of the class for whose benefit the ordinance was enacted. The purpose of a self-certification program is obvious — to streamline and expedite the permitting process, reduce bureaucracy, “cut red tape” as one might say. The architect or engineer is allowed to circumvent the traditional departmental review of its plans in favor of self-certification. Obviously, one would hope that safety and soundness of buildings would not be sacrificed as a result — thus the self-certification. But we could not possibly find that the creation of a deregulatory provision that removes government oversight from the permitting process is aimed at enhancing safety; its purpose was obviously to make it quicker and easier for contractors to obtain their permits. 2021 IL App (1st) 200594 at ¶52.

The court’s continued lengthy analysis of the SCPP authorization ordinance and the self-certification statement of the architect only reinforced the conclusion that none of the four-factors to recognize an implied right of action could be met under the instant facts. In the end, the court agreed with the Hanna architects that “if we were to imply a cause of action in the municipal self-certification ordinance as plaintiff requests, we would significantly unsettle the common-law doctrines in this area. We would be creating a non-contractual cause of action against an entity that the common law disallows.” 2021 IL App (1st) 200594 at ¶70.

Takeaway

Judge Pelligi, who many years ago became supervising judge of the Cook County housing court, understood construction and the law. He would occasionally observe that nowadays anyone who can buy a hammer declares themself a mason and developer. In the end, the safety and soundness of buildings was sacrificed to make it quicker and easier for contractors to obtain their permits. Many of us probably feel that the trial judge got it right.

As much as this author would want to complain about the unjust result of the appellate court’s decision, the deficiency is not in the court’s reasoning. The problem arises from our system of laws that not only permits but encourages people to abdicate responsibility or accountability for their work. Is eviscerating Moorman a bad thing? Our Supreme Court decided decades ago that lawyers would be the exception to Moorman, and our profession has not collapsed as a result.

The appellate opinion concludes with a justification suggesting that this result is an aberration. “It is not uncommon at all for a home buyer in a situation like this one, faced with significant structural defects, to sue entities with whom they did have a contractual relationship.” 2021 IL App (1st) 200594 at ¶72. However, this author’s experience is that this result of having no remedies available is routine in addressing new construction.

For more information about condominium law, see CONDOMINIUM LAW: GOVERNANCE, AUTHORITY, AND CONTROLLING DOCUMENTS (IICLE®, 2021). Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

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Comments
1/16/2022 10:33 PM
I agree with your concluding comments. Where there is a wrong there should be a remedy. Just think about the Surfside disaster. I would guess in Illinois under Moorman a unit owner who was not insured would have no legal recourse except against the shell company that sold the units. One reason to act responsibly is to avoid liability. If there is no prospect of liability, why act responsibly? What if the lack of cross-bracing at 1541 North Bosworth caused the building to collapse and people to die? Perhaps the potential of legal liability would prompt the next architect to actually crunch the numbers rather that go with a hunch. A hunch can be fatal.
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