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Illinois Court Of Appeals Affirms Design Professionals Not Liable For Breach Of Warranty Of Habitability Despite Contractor’s Insolvency

In Sierra Court Condominium Association v. Champion Aluminum Corporation, 2017 IL App (1st) 143364, 75 N.E.3d 260 (Ill. Ct. App. 2017), First District Appellate Court of Illinois reaffirmed architects and engineering firms are not subject to the implied warranty of habitability of construction, even in the event the developer and general contractor are insolvent. 

TR Sienna Partners, LLC (“Sienna”) developed Sienna Court Condominiums, a condominium development in Evanston, Illinois, utilizing Roszak/ADC, LLC (“Roszak”) as its general contractor on the project. Wallin-Gomez Architects (“Wallin-Gomez”) was the architect on the project, while HMS Services, Inc. (HMS) and Matsen Ford Design Associates (“Matsen”) were the engineers.

The Condominium Association filed suit for various construction defects, alleging claims against Wallin-Gomez, HMS and Matsen for breach of the implied warranty of habitability. Unbeknownst to Plaintiff, after selling the condominium units to individual owners, both Roszak and Sienna filed for bankruptcy.

Wallin-Gomez, HMS, and Matsen filed for summary judgment, asserting the implied warranty of habitability is limited to entities that engage in the construction of the building, not entities involved in design. The trial court granted summary judgment, agreeing with the design defendants.

Plaintiffs appealed this decision. Plaintiffs primarily rely on the Illinois Supreme Court’s decision in Minton v. The Richards Group of Chicago, 72 Ill. Dec. 582, 452 N.E.2d 835 (1983). Minton set a precedent in permitting implied warranty of habitability claims against subcontractors when the builder has been dissolved or is insolvent, in order to provide a recourse for innocent purchasers.

The Court had previously rejected claims for breach of implied warranty of habitability against design defendants. The Court differentiated design defendants and subcontractors, stating design defendants do not participate in the actual construction of the property like subcontractors. The Court held the buyers did not have a “dependent relationship” with the design defendants like the subcontractors in Minton.  The Court found, therefore, a design defendant who assisted only in the design of the project is not subject to a claim for breach of implied warranty of habitability.