After buying a 1800s-era house, the purchasers sued the sellers for allegedly failing to provide a lead paint hazard disclosure form. They wanted compensation for the cost of remediation, but the court couldn’t find evidence that lead paint had even been uncovered. Read on to see if they were entitled to collect any damages.
The buyers of an Illinois home built in the 1800s went after the sellers for damages after they allegedly neglected to provide a lead paint hazard disclosure form. But the courts were troubled by the fact that there was no inspection performed by the buyers and no evidence of lead paint found in the home.
Those alleged facts, along with other issues pertaining to the court’s jurisdiction, allowed the U.S. District Court, C.D. Illinois, Urbana Division on Aug. 5 to affirm a previous dismissal of the buyers’ claims.
The owners of a 1800s-era building in Iroquois County, Ill., defendants Robert L. Thortenson, John W. Healey and William E. Coffel, doing business as Coheth Properties, conveyed title of the property in December 1991 to BankIllinois as trustee under provisions of a trust.
The property had been used as office space by Coheth Properties. It was later listed for sale by defendant Rosenboom Realty Inc.
Office space
Plaintiffs William and Rachel Sue McCready were looking to buy the property for their son Kenneth so he could use it as a residence and office space. The McCreadys entered into a contract to buy the building. Real estate agent Larry E. Hall with Rosenboom Realty was Main Street Trust’s agent.
The McCreadys received a warranty deed to the property and a title insurance policy. The deed was recorded May 16, 2002.
The McCreadys claimed the defendants violated the Residential Lead-Based Paint Hazard Reduction Act (RLPHRA) and the Toxic Substances Control Act (TSCA) by allegedly failing to provide them with a lead-based paint disclosure before or after the sale closed.
The defendants allegedly admitting to failing to provide the disclosure, but argued that they were unaware of lead-based paint on the property, and asserted that since the property had been listed as commercial real estate, they weren’t obligated to do so under RLPHRA or TSCA.
The McCreadys sued on May 15, 2007, seeking an order against Rosenboom and Hall to enjoin them to provide disclosures, and a declaratory judgment that the property was considered “target housing” and “residential real property” under TSCA and RLPHRA. They demanded restitution and requested damages and an award for costs and attorney fees.
The court ruled on June 20, 2008 that the plaintiffs weren’t entitled to relief because instead of trying to restrain the defendants’ conduct, they were actually attempting to “rectify a past error” and thus concluded they were not entitled to injunctive relief.
The McCreadys were also unable to recover damages under RLPHRA, as the court concluded they hadn’t incurred any expenses to remedy lead-based paint conditions in their property. Since the McCreadys could not be considered a prevailing party, the court noted, they were not entitled to recover costs associated with the complaint. The McCreadys appealed, seeking to vacate the dismissal and alter or amend judgment.
Ongoing violations?
The plaintiffs argued that injunctive relief was appropriate because the defendants’ alleged violations of the acts were “ongoing” since they had not disclosed everything as the law required. Also, the plaintiffs had not yet become obligated under the contract to buy the property, they asserted.
The court was not persuaded by these arguments, however.
“First, the fact of non-disclosure itself does not affect the validity of a contract for sale,” the court stated. “The RLPHRA explicitly states that none of its stipulations ‘shall affect the validity or enforceability of any sale or contract for the purchase and sale or lease of any interest in residential property.’ Therefore, the contract cannot be void under federal law for the failure to make the necessary disclosures.”
Although the McCreadys had alleged that the contract was void under state law, the district court explained that this would have no bearing on whether an injunction was appropriate relief under the TSCA. If the contract was considered void under the state law, the TSCA and RLPHRA requirements don’t factor in, even if one were to assume that the property in question was residential, the court noted.
“Plaintiffs have clearly stated that they ‘no longer have any desire to enter into any contract’ to buy the property until the offer is comprehensively rewritten,” the court said. “It is clear by plaintiffs’ own assertions that the parties are not in negotiations regarding the sale of the property and therefore, there is no current requirement that the defendants disclose anything.”
No inspection and no lead paint apparent
The McCreadys claimed the court had overlooked its request for nominal damages and declaratory relief for the alleged violations of TSCA and RLPHRA. The district court agreed that a private plaintiff may recover damages under RLPHRA, but the McCreadys had already admitted that they didn’t perform an inspection of the property and had not uncovered any lead paint. Thus, they were ineligible for compensatory damages.
The court had failed to consider their request for nominal damages, the McCreadys argued, but the court concluded that they had failed to provide support for their assertion that damages were even available to them under RLPHRA.
“Given the language of the statute, focusing on the costs incurred by the plaintiff, this court has no reason to believe that the statute even contemplates the awarding of nominal damages when no costs have been incurred by plaintiffs as a result of the alleged violation of the statute. Thus, this court concludes that nominal damages are not available to the plaintiffs as a remedy,” stated the court.
The McCreadys insisted they were due to receive restitution in the amount of the property’s purchase price plus interest and costs they incurred to remedy the home’s defects. They claimed they paid $45,000 for the property and an additional $3,100 for other costs associated with the sale. They further cited $8,500 they spent for improvements and repairs.
That total would be about $56,600, the district court noted, which fell below the threshold amount of $75,000 that was required in order to establish the court’s jurisdiction over the matter under 28 U.S.C. § 1332.
In their final attempt, the McCreadys sought declaratory relief under Article III of the U.S. Constitution, 28 U.S.C. § 2201, which allows federal courts the authority to provide declaratory judgment in cases where an “actual controversy” occurs within its jurisdiction, but isn’t an independent grant of jurisdiction. Instead, jurisdiction has to be predicated on another statute, the district court noted.
But since the McCreadys’ claims were found to be improper under the TSCA and RLPHRA, there was no actual case of controversy and the statutes couldn’t provide a basis for jurisdiction.
William H. McCready, Rachel Sue McCready v. Main Street Trust Inc., Robert L. Thortenson, John W. Healey, William E. Coffel d/b/a Coheth Properties, Rosenboom Realty Inc. and Larry Eugene Hall.