Illinois Supreme Court Justice P. Scott Neville
SPRINGFIELD — The Illinois Supreme Court has again closed off an avenue for condo sellers to sue associations and management companies for charging hundreds of dollars in “unreasonable” document fees required to complete a sale.
The Sept. 24 ruling landed as the latest chapter of a decade-old legal dispute over the fees.
Justice P. Scott Neville wrote the 6-0 opinion. Justice Sanjay Tailor took no part in the decision.
The current ruling involves similar circumstances as a case the court resolved in December 2022 in a dispute over a 2016 condo transaction, in which the seller alleged a condo association charged excessive and unreasonable fees to produce disclosure materials for prospective buyers. That litigation rested on claims the charges violated the Condominium Property Act and the Consumer Fraud and Deceptive Business Practices Act, but a unanimous court found the CPA did not allow sellers to sue over the fees directly.
The new ruling resolves a complaint stemming from plaintiff Franklin Friedman’s efforts to sell a unit managed by Lieberman Management Services. He said the firm charged him $470 to prepare documents as the condo law requires and brought his “excessive and unreasonable fee” claim under the fraud law. A Cook County judge granted Lieberman’s motion to dismiss the complaint, and a state appeals panel affirmed that ruling.
Friedman closed on the sales Oct. 7, 2016. After he died, Deborah Greenswag became successor trustee of the living trust. The lawsuit alleged Lieberman charged more than its actual expenses in providing the documents, noting the firm already prepared such information in the regular course of business and could provide them immediately in electronic formats, while also claiming Friedman and potential class members had already paid for preparation and maintenance of such files through association fees.
The appeals panel stayed its ruling pending the Supreme Court’s 2022 opinion in Channon v. Westward Management, after which it dismissed Friedman’s appeal. With the action back in circuit court, Lieberman again sought dismissal of the fraud claim, further noting lawmakers amended the condo law to cap these types of fees at $375 with an allowance of an extra $100 for service requested within 72 hours. The circuit court judge agreed, noting a $470 fee couldn’t support a Consumer Fraud Act claim when predicated on an allegation of violating the Condominium Property Act’s “reasonable fee” standard.
The Illinois First District Appellate Court then found there was no express or implied right to file a civil suit challenging disclosure document fees and agreed there was no error in dismissing a complaint over a $470 fee after the General Assembly set the limit at $475.
Before the Supreme Court, Greenswag again argued the $470 fee exceeded Lieberman’s out-of-pocket costs and said class members were a captive group forced to may the fees in order to sell their condos.
Neville first wrote that the relevant count on appeal is brought under the Consumer Fraud Act but “its primary allegation” is a violation of a provision found in the condo law. He revisited the 2022 Channon ruling and explained again the determination lawmakers didn’t intend to imply the right for sellers to trigger civil litigation.
As to the fraud complaint, the court noted the complaint didn’t allege “deception or fraudulent conduct,” just that the disclosure document fee was unfair.
“Charging a high price, even an unconscionably high price, is generally insufficient to establish a claim of an unfair business practice,” Neville wrote. “Illinois courts require additional evidence of unfairness.”
The complaint lacks such evidence, the court said, because Greenswag failed to show a violation of public policy and didn’t “sufficiently allege that Lieberman’s business practice is immoral, unethical, oppressive or unscrupulous” because although condo sellers may be a captive audience, that results from “the statutory scheme, not Lieberman’s business practice.”
It likewise followed that “Greenswag failed to allege that she was substantially injured by Lieberman’s business practice,” Neville wrote. “Lieberman delivered the statutorily required documents in a timely manner, allowing the condominium sale to occur seamlessly. The crux of Greenswag’s claim, that the documents were too costly, is not the type of injury that the Consumer Fraud Act was designed to remedy.”
As to the condo law amendment that clarified what constitutes a reasonable fee, the Supreme Court said that although the lower courts invoked that development in their rulings, “It suffices to say that the legislature implicitly rejected two of Greenswag’s primary arguments: namely, that Lieberman’s compilation and delivery of the disclosure documents provide a de minimis value and that plaintiffs had already paid for the preparation and delivery of the disclosure documents through association fees.”
Neville explained the fact Lieberman could prepare documents to make them immediately accessible undercuts a claim that condo management firms aren’t providing a valuable service while adding that the original and amended versions of the law “reject the notion that the service provided by Lieberman has already been paid for” through association fees.
