Czarobski v Lata (IL)

Merger Doctrine

227 Ill 2d 364, 882 NE2d 536, 317 Ill Dec 656 (Ill 2008)

Facts: This litigation arose from a real estate transaction in September of 2005. In that transaction, the Latas, sellers/defendants, agreed to give the Czarobskis, buyers/plaintiffs, a credit for the years' 2004 and 2005 real estate taxes. They agreed to a tax credit of $3,025.92 for 2004. The assessed taxes were actually $7,876.59. The discrepancy was caused by a partial tax assessment for the 2004 tax year.

The Czarobskis sued for repropration, alleging mutual mistake of fact or fraud. The Latas moved to dismiss under the doctrine of merger claiming the contract merged into the deed. The trial court granted the motion, and the appellate court reversed finding that fraud and mutual mistake are recognized exceptions to the doctrine of merger. The Latas appealed.

Holding: Appellate holding affirmed.

The court held that mutual mistake and fraud, in the appropriate cases, are valid exceptions to the doctrine of merger. The court then found the instant case to be an appropriate case on the grounds of mutual mistake and declined to reach the question of fraud, because it was unnecessary. The court agreed with the Latas' contention that under Illinois law, due care is required for a claim of mutual mistake. However, they were not persuaded by the Latas' claim that the Czarobskis did not meet the standard of due care. The court found that it was not clear that all reasonable buyers would take the time to search the tax records before closing. Further, the court found the Latas were barred from claiming otherwise because in their reply brief for the dismissal motion they asserted that standard practice was for the parties to rely on the tax information provided by the title commitment. Therefore, the Latas could not assert a contradictory claim at a later point in the proceedings.

Opinion Year: 
By: ATG Underwriting Department | Posted on: Mon, 08/25/2008 - 2:51pm