Jameson Realty Group v. Kostiner

• Decision Date: 29 July 2004
• Docket Number: No. 1-03-2914.,1-03-2914.
• Citation: 813 N.E.2d 1124,351 Ill. App.3d 416,286 Ill.Dec. 431
• Parties: JAMESON REALTY GROUP, Plaintiff-Appellee, v. Lewis KOSTINER, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

813 N.E.2d 1124

351 Ill. App.3d 416

286 Ill.Dec. 431

JAMESON REALTY GROUP, Plaintiff-Appellee, v. Lewis KOSTINER, Defendant-Appellant.

No. 1-03-2914.

Appellate Court of Illinois, First District, Fourth Division.

July 29, 2004.

Vurdelja & Heaphy, Chicago (George N. Vurdelja, Jr., of counsel), for Appellant.

Schain, Burney, Ross & Citron, Ltd., of Chicago (Jerome Wiener and Timothy J. McGonegle, of counsel), for Appellee.

Presiding Justice QUINN delivered the opinion of the court:

This appeal concerns, inter alia, the validity of a liquidated damages clause in a real estate brokerage contract under which a broker sought to recover damages against a seller who prematurely terminated an exclusive listing agreement with the broker. For the following reasons, we hold that the provision is valid and affirm the judgment of the circuit court.

BACKGROUND

In March 1998, defendant Lewis Kostiner hired plaintiff Jameson Realty Group (Jameson) to sell the remaining condominium units in an apartment building located at 850 West Adams Avenue in Chicago. According to the "Exclusive Listing Agreement" (Agreement), Jameson received the "sole and exclusive right to sell" the units from April 1, 1998, until March 31, 1999. Jameson was to receive a commission of 5% in the event it produced a buyer "ready, willing, and able" to purchase the units. "Anna Robertson/Carl Mandenberg, sales associates affiliated with Jameson," were listed as Kostiner's "exclusive designated legal agents."

The Agreement contained two clauses that are relevant here on appeal. The first, a liquidated damages clause, stated:

"If Broker's authority to sell is revoked or said property is withdrawn from the market during the period of Broker's authority to sell hereunder, Seller shall pay Broker upon such revocation or withdrawal, not as a penalty, but as liquidated damages, an amount equal to the commission payable on the full price listed above.

No amendment or alteration with respect to the amount of commission or time of payment of commission shall be valid or binding unless made in writing and signed by the parties hereto."

The Agreement itself did not contain any "full price" upon which to base Jameson's commissions. Instead, it referred to an attached list, which was signed and dated by Kostiner and contained the price for each individual unit.

The Agreement also contained an arbitration clause, which stated:

"The parties hereby agree that any dispute, controversy, or claim arising out of or relating to this exclusive listing agreement, or any breach thereof by either party, shall be resolved by arbitration in accordance with the Code of Ethics and Arbitration Manual of the National Association of REALTORS, as amended from time to time, through the facility of the Chicago Association of REALTORS. The parties agree to be bound by any award rendered by any professional standards arbitration hearing panel of the Chicago Association of REALTORS and further agree that judgment upon any award rendered by a professional standard arbitration hearing panel of the Chicago Association of REALTORS may be entered in any court having jurisdiction thereof. The parties agree to execute any arbitration agreements and documents as may be required by the Chicago Association of REALTORS to facilitate any arbitration."

Kostiner signed the agreement and, in the space labeled "Seller," provided his home and work telephone numbers as well as his social security number. Nothing in the Agreement indicated that Kostiner was acting as an agent for another entity.

A few days after signing the Agreement, an incident occurred between Kostiner and Anna Robertson. After the incident, Ms. Robertson told Jameson's president, Charles Huzenis, that Kostiner had been "abusive and rude" to her and that she refused to work on the project. When Mr. Huzenis told Kostiner that Ms. Robertson she had quit, "[Kostiner] laughed like he didn't even understand; that he was just laughing about it. He said, `fine; let's go on, get somebody else."' As a result, Jameson assigned another agent, Chris Anderson, to take Ms. Robertson's place.

Five and one-half months later, after four units had been sold and thirteen units were still unsold, Kostiner terminated the Agreement. On December 10, 1998, seeking to have the matter arbitrated before a grievance committee of the Chicago Association of Realtors (Committee), Jameson filed a complaint requesting commissions for the 13 unsold units and 14 unsold parking spaces, marketing expenses, and commissions for the four units that had been sold prior to the termination. The "Request and Agreement to Arbitrate" Jameson filed with the Committee stated:

"I request and consent to arbitration through the Board in accordance with its Code of Ethics and Arbitration Manual * * *, and I agree to abide by the arbitration award and to comply with it promptly.

In the event I do not comply with the arbitration award and it is necessary for any party to this arbitration to obtain judicial confirmation and enforcement of the arbitration award against me, I agree to pay the party obtaining such confirmation the costs and reasonable attorney's fees incurred in obtaining such confirmation and enforcement."

On June 16, 1999, the Committee informed Jameson that "[i]t was the decision of [the] Committee to dismiss this case as it fails to merit further consideration."

On June 29, 1999, Jameson appealed the Committee's decision. Granting the appeal, the Committee allowed Jameson to file an amended complaint regarding only three of the four units that were sold prior to the termination. In its amended complaint, Jameson reserved "its right to file a Complaint in the Circuit Court of Cook County regarding the claims in its initial Request for Arbitration which the Chicago Association of Realtors [would] not consider," which it did later that same day, filing a complaint for breach of contract against Kostiner in the circuit court.

On January 20, 2000, Kostiner filed a motion to dismiss Jameson's complaint. Kostiner argued that Jameson's claims had been dismissed by the Committee, Jameson had failed to properly appeal that decision, and Jameson's complaint was not timely filed pursuant to the Illinois Administrative Review Law (735 ILCS 5/3-101 et seq. (West 2000)). The circuit court denied Kostiner's motion.

Meanwhile, the Committee set an arbitration hearing date of March 16, 2000. Two days before the arbitration was to take place, however, Kostiner's attorney sent a letter to the Committee declining to participate in the arbitration. The letter stated:

"[T]his matter [the pending arbitration] is to be heard on a voluntary basis. If I correctly understand this, Mr. Kostiner must therefore voluntarily submit to the arbitration. To date, he has not done so; and we do not anticipate, at this time, submitting to such arbitration.

* * *

It may be that my client will, at a later time, decide to voluntarily submit to the arbitration request, and we reserve the right to do so; but until such time, we must respectfully decline the current invitation to arbitrate this matter."

According to Jameson's brief, after receiving this letter, the Committee cancelled the arbitration hearing and "closed the matter."

On April 5, 2000, Jameson filed a five-count amended complaint against Kostiner for breach of contract in which it sought recovery under the liquidated damages clause of the Agreement (count I), commissions for three units it had sold prior to the termination of the Agreement (counts II through IV), and reimbursement for its marketing expenses (count V). The circuit court ordered Kostiner to file an answer and any counterclaim on or before May 29, 2000. On May 30, 2000, Kostiner filed his answer, which did not contain a counterclaim.

On July 10, 2001, the circuit court granted Jameson's motion for partial summary judgment, finding that the liquidated damages clause was enforceable.

On September 19, 2001, nearly 1 1/2 years after the deadline set by the circuit court, Kostiner requested leave to file a three-count counterclaim (breach of contract, violation of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/2 et seq. (West 2000)) (Consumer Fraud Act), and breach of fiduciary duty) against Jameson and attempted to add 844 West Adams, L.L.C., as a party. On December 7, 2001, the circuit court, in a written memorandum order, denied his motion, stating: (1) it was untimely "as it [came] more than a year and a half after the filing of the answer and there [was] no allegation that [Kostiner was] somehow unaware of the damage [he] allegedly suffered until this late date in the preparation for trial;" (2) Jameson would suffer prejudice due to "the late nature of the claim and additional discovery required", and (3) "most importantly, the counterclaim would in no way further the ends of justice and is simply untenable because it improperly attempts to add '844 West Adams, L.L.C.' as a counter-plaintiff without any legal basis for doing so." The court also found that Kostiner's consumer fraud claim was "merely a breach of contract claim masquerading as a fraud claim."

On March 25, 2002, Kostiner filed a three-count complaint against Jameson in the chancery division. Just as in his rejected counterclaim, Kostiner alleged claims for breach of contract, violation of the Consumer Fraud Act, and breach of fiduciary duty. The case was transferred to the law division and consolidated with the original pending action. The circuit court then granted Jameson's motion to dismiss Kostiner's three-count complaint, finding that "[t]he Chancery Complaint contains the same allegations that this court denied leave to file in the counterclaim." The court found that Jameson had "stated sufficient facts to support a laches defense in this case, in addition to `law of the case."' The court further found that because "the parties have already engaged in discovery," any further...