Farwell Const. Co. v. Ticktin, 79-497

CourtUnited States Appellate Court of Illinois
Writing for the CourtSULLIVAN
Citation39 Ill.Dec. 916,405 N.E.2d 1051,84 Ill.App.3d 791
Parties, 39 Ill.Dec. 916 FARWELL CONSTRUCTION COMPANY, an Illinois Corporation, Plaintiff-Appellee and Cross-Appellant, v. Harold J. TICKTIN and Hartin Corporation, Defendants-Appellants and Cross-Appellees.
Docket NumberNo. 79-497,79-497
Decision Date07 March 1980

Page 1051

405 N.E.2d 1051
84 Ill.App.3d 791, 39 Ill.Dec. 916
Plaintiff-Appellee and Cross-Appellant,
Harold J. TICKTIN and Hartin Corporation,
Defendants-Appellants and Cross-Appellees.
No. 79-497.
Appellate Court of Illinois, First District, Fifth Division.
March 7, 1980.
Rehearing Denied June 6, 1980.

[84 Ill.App.3d 792]

Page 1053

[39 Ill.Dec. 918] Joseph J. Ticktin, Chicago, for defendants-appellants and cross-appellees.

Robert R. Tepper and Ross P. Benjamin, Chicago, for plaintiff-appellee and cross-appellant; Rosenthal & Schanfield, Chicago, of counsel.

SULLIVAN, Presiding Justice:

In this action for damages because of the anticipatory breach of an agreement to purchase real estate and the plans for an apartment complex, plaintiff was awarded $154,202.76. On appeal, defendants contend that (1) the trial court misconstrued the warranty provision in the agreement; (2) as a matter of law, plaintiff was not entitled to recover since it was not ready, willing and able to perform under the contract; (3) the trial judge incorrectly believed that an opinion of this court in a prior appeal required him to make a finding of anticipatory breach; (4) since the parties disagreed as to the interpretation of the contract, defendants did not commit an anticipatory breach as a matter of law; (5) plaintiff cannot recover because it was not yet entitled to performance at the time of the alleged repudiation; (6) recovery could not be had because the contract could not have been performed by either party in any event; [84 Ill.App.3d 793] (7) the trial court erred in its determination of damages; and (8) the trial court erred in amending the judgment after defendants had filed a notice of appeal. In a cross-appeal, plaintiff asserted that the damages were less than it was entitled to and that it was improperly denied prejudgment interest.

It appears that sometime in 1971, defendants were seeking to construct an apartment complex known as "Brush Hill Apartments" in Naperville, Illinois. Defendants retained an architectural firm to develop plans for the complex and also sought mortgage insurance from the Federal Housing Administration (FHA). They submitted a set of plans dated June 11, 1971, to the FHA, as was required to obtain insurance and, on August 30, 1971, the FHA informed them via a "site planner's memo" that the June 11 plan was "acceptable for feasibility processing subject to" 11 changes which would have to be incorporated in the plans.

Page 1054

[39 Ill.Dec. 919] Defendants' architects accordingly developed several revisions culminating in a site plan bearing the most recent revision date of May 30, 1972.

Sometime in the spring of 1972, Richard Fanslow, president of plaintiff, met with Ticktin regarding the possible purchase of defendants' property and plans. Concerning this meeting, Fanslow testified that Ticktin showed him the original set of plans and said that they were approved by the FHA with the exception of the items specified in the FHA site planner's memo; that he (Fanslow) voiced his opinion that the plans would not be acceptable to FHA; that Ticktin then affirmatively said the plans were approved except for items 3 and 7 on the memo; that he (Fanslow) reiterated his belief that FHA would not consent to the deletion of the other items in the memo; and that Ticktin said FHA had given consent to delete the other objections.

Ticktin testified also that on August 19, 1972, he flew to Washington, D.C. to finalize an agreement for equity financing with American Housing Partners. No agreement was reached, however, and immediately afterward he returned to the airport to meet Fanslow and his attorney, who had also flown to Washington, D.C. The three went to a restaurant for lunch where Fanslow's attorney produced for signing the two documents giving rise to the instant litigation. One was an option contract granting plaintiff the option to purchase the property and all plans for the apartment complex prepared as of that date for $340,000, and the other was a letter containing a warranty agreement. The letter, in pertinent part, stated that defendants undertook to

"(1) warrant and represent to you that the Plans entitled 'Brush Hill Apartments, December , 1971' drawn by Weinper & Balaban, Inc. have been approved by FHA and meet FHA's MPS requirements; and

[84 Ill.App.3d 794] (2) agree with you that in the event FHA, prior to initial endorsement by FHA of the insured mortgage note, requires any changes, refinements or modifications in said Plans which shall increase construction costs by more than Twenty Thousand ($20,000.00) Dollars, the undersigned (defendant) shall pay to you at the initial endorsement the full amount of any such increased construction costs in excess of Twenty Thousand ($20,000.00) Dollars."

Fanslow testified that at this luncheon meeting Ticktin said "all the items were approved and the drawings"; that Ticktin was worried about items 3 and 7 on the August 30 FHA memo; that Ticktin wrote on the letter a clause excluding those items from the warranty and stated, "Let's make those exclusions, and I feel very comfortable that I will get everything else approved"; and that he (Fanslow) responded "fine." He also testified with respect to the handwritten revision that "(Ticktin said the) drawings were approved on that date except for the exception letter. And he said everything else could be waived except for items 3 and 7 that is dated, the August 31 letter date. That is the reason they are excluded from that document." The warranty letter was introduced into evidence, and it bore the inscription "except items 3 & 7 in FHA's letter dated August 31, 1971," which was written in after paragraph (1) and initialed by both parties. In addition, Ticktin also testified that at this meeting he expressed concern that "Exhibit A," which was attached to the grant of option and which described the property covered by the option, was not sufficiently clear. He asked Fanslow's attorney if the property could be more fully described, and the attorney then added (in his handwriting) the phrase, "and not reduce the number of buildings in said Resubdivision as per site plan dated 1/25/72 revised to 5/30/72 by Weinper and Balaban, Inc.," which apparently clarified matters in the minds of the parties.

On November 10, 1972, Ticktin sent plaintiff a letter wherein it exercised the option and also stated, "the Plans referred to in (the warranty) letter do not meet F.H.A.'s M.P.S. requirements, and the construction cost of meeting F.H.A.' § requirements will be in excess of Twenty-Thousand ($20,000)

Page 1055

[39 Ill.Dec. 920] Dollars. We shall advise you of the exact amount of such additional costs when a closing date is established and shall expect payment thereof at the initial endorsement of the F.H.A. mortgage." Plaintiff then sent a letter dated January 29, 1973, which proposed a closing date of February 8, 1973 and asked that the parties meet on February 5 at the offices of Pioneer National Title Insurance Company to establish an escrow. In addition, the letter listed 12 items which plaintiff claimed were required to be added to the original plans by the FHA. It was stated that items 1 through 8 were required by the FHA [84 Ill.App.3d 795] outright, and items 9 through 12 were necessary to bring the project into compliance with the Naperville Building Code. The letter also set forth the additional costs totaling $147,069.76.

Ticktin responded in a letter dated February 1, 1973, agreeing to the dates for escrow and closing but denying that plaintiff was entitled to any payments, stating:

"It is our opinion that you are not entitled to (the credits) and in passing we wish to point out to you some of the reasons for your non-entitlement. Credits 1-8 were items of construction as shown in plans drawn by Weinper & Balaban dated December , 1971 and revised through May 31, 1972 which were in the F.H.A.'s and your possession on or before June 30, 1972 and were all part of plans referred to as 'Brush Hill Apartment, December , 1971 drawn by Weinper & Balaban,' in our letter agreement of August 17, 1972. Credits 9-12 were required by the City of Naperville and have nothing to do with the MPS of the F.H.A. to which the letter agreement of August 17, 1972, is directed."

At this point, it should be noted that it is apparently undisputed that items 1 through 8 did not appear in the original plans but were incorporated in the May 31, 1972 revisions.

The record indicates that during this period of time, Ticktin and Fanslow had 5 to 10 conversations. Fanslow specifically testified to one telephone conversation concerning the payments under the warranty where Ticktin "told me that he was never going to pay it and I should go 'F' myself." Ticktin admitted making this statement. Fanslow also testified to a conversation held with Ticktin at Pioneer Title where he "refused to acknowledge any of" the items and "(j)ust would not agree" to them.

At any rate, it appears that Ticktin was present at Pioneer Title on February 5, 1973, to set up the escrow, but Fanslow did not attend. The next day, Ticktin wrote another letter to Fanslow stating that he would nonetheless attend the February 8 closing. On that date, Ticktin appeared, but again Fanslow did not.

Plaintiff then filed suit on February 15, 1973, for specific performance of the contract. Upon learning that defendants no longer held title to the property, plaintiff filed an amended complaint for damages alleging an anticipatory breach of the contract and defendants counterclaimed, alleging that plaintiff had exercised the option and breached the agreement. The trial court found, however, that the option was never in fact exercised and, accordingly, entered judgment against plaintiff in its action and against defendants on the counterclaim. Plaintiff appealed, and this court held that plaintiff had...

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