Karimi v. 401 North Wabash Venture Llc

• Citation: 952 N.E.2d 1278,352 Ill.Dec. 52,2011 IL App (1st) 102670
• Decision Date: 26 July 2011
• Docket Number: No. 1–10–2670.,1–10–2670.
• Parties: Farid KARIMI and Mahmobah Kashani, Plaintiffs–Appellants,v.401 NORTH WABASH VENTURE, LLC, a Delaware Limited Liability Company; Trump Chicago Managing Member LLC, a Delaware Limited Liability Company; and Deutsch Bank Trust Company Americas, Defendants–Appellees.
• Court: United States Appellate Court of Illinois

2011 IL App (1st) 102,670
952 N.E.2d 1278
352 Ill.Dec. 52

Farid KARIMI and Mahmobah Kashani, Plaintiffs–Appellants,
v.
401 NORTH WABASH VENTURE, LLC, a Delaware Limited Liability Company; Trump Chicago Managing Member LLC, a Delaware Limited Liability Company; and Deutsch Bank Trust Company Americas, Defendants–Appellees.

No. 1–10–2670.

Appellate Court of Illinois, First District, Second Division.

July 26, 2011.

[952 N.E.2d 1281]

John A. Kukankos, P.C., Chicago, IL (John A. Kukankos, of counsel), for Appellants.Novack and Macey LLP, Chicago, IL (Stephen Novack, John F. Shonkwiler, Rebekah H. Parker, of counsel), for Appellees.[352 Ill.Dec. 55] OPINION Justice HARRIS delivered the judgment of the court, with opinion.

¶ 1 Plaintiffs Farid Karimi and Mahmobah Kashani appeal the trial court's dismissal[352 Ill.Dec. 56]

[952 N.E.2d 1282]

of their first amended complaint pursuant to section 2–615 of the Code of Civil Procedure (735 ILCS 5/2–615 (West 2006)). On appeal, plaintiffs contend the trial court erred in dismissing counts I through VI of their complaint.¹ In their complaint, plaintiffs sought a declaration that the condominium purchase agreement they entered into with defendants was still in effect when defendants sold the condominium unit to a third party and that defendants improperly retained as liquidated damages the earnest money and earned interest. Plaintiffs also alleged breach of contract, unjust enrichment, and conversion. Plaintiffs further argued that the liquidated damages provision in the purchase agreement is unenforceable because it fails to set a certain sum as liquidated damages and effectively operates as a penalty. For the reasons hereinafter set forth, we affirm.¶ 2 JURISDICTION

¶ 3 The trial court entered a final judgment in the instant case on August 5, 2010, and plaintiffs filed their notice of appeal on September 3, 2010. Accordingly, this court has jurisdiction pursuant to Illinois Supreme Court Rules 301 and 303 governing appeals from final judgments entered below. Ill. S.Ct. R. 301 (eff.Feb.1, 1994); R. 303 (eff. May 30, 2008).

¶ 4 BACKGROUND

¶ 5 The following facts are taken from plaintiffs' first amended complaint and attached exhibits. On or about September 25, 2003, plaintiffs entered into an agreement with defendants to purchase condominium 46A (later renamed 47A) and parking spaces 253, 254 and 255 at the Trump International Hotel and Tower. The total purchase price was $2,188,464 and pursuant to the purchase agreement, plaintiffs deposited $328,269.60 (15% of the purchase price) as earnest money. The agreement provided an anticipated closing date of late 2008.

¶ 6 On September 5, 2008, defendants notified plaintiffs that the unit would be substantially completed and ready to close on October 6, 2008. However, the closing was extended to May 15, 2009, due to plaintiffs' inability to obtain financing. Plaintiffs failed to close on May 15, 2009, and in a letter dated July 6, 2009, defendants declared:

“The time and date for closing and the applicable cure period per the default notice has elapsed and Purchaser has not closed on the unit. Therefore, Purchaser is in breach of and in default under the Purchase Agreement. Consequently, Seller hereby terminates the Purchase Agreement.”

Whereupon, defendants retained the earnest money and earned interest as liquidated damages. In November 2009, defendants subsequently sold the unit and one less parking space to a third party for $2.5 million.

¶ 7 Plaintiffs filed a seven-count first amended complaint. Count I alleged that the purchase agreement was still in effect and sought a declaration of the parties' rights under the agreement; count II alleged breach of contract; count III sought a declaration that the earnest money deposit should be returned; count IV sought a declaration, in the alternative, that the liquidated damages clause is unenforceable; count V alleged unjust enrichment; count VI alleged conversion; and count [352 Ill.Dec. 57]

[952 N.E.2d 1283]

VII alleged a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2006)). Defendants filed a motion to dismiss pursuant to section 2–615, and on August 5, 2010, the trial court granted the motion and dismissed the complaint with prejudice. Plaintiffs filed this timely appeal.¶ 8 ANALYSIS

¶ 9 On appeal, plaintiffs challenge the trial court's dismissal of counts I through VI. A motion to dismiss pursuant to section 2–615 challenges the legal sufficiency of the complaint. Dloogatch v. Brincat, 396 Ill.App.3d 842, 846, 336 Ill.Dec. 571, 920 N.E.2d 1161 (2009). In ruling on the motion, the court accepts as true all well-pleaded facts in the complaint as well as all reasonable inferences drawn therefrom. Vitro v. Mihelcic, 209 Ill.2d 76, 81, 282 Ill.Dec. 335, 806 N.E.2d 632 (2004). Any exhibits attached to the complaint are also considered. Beahringer v. Page, 204 Ill.2d 363, 365, 273 Ill.Dec. 784, 789 N.E.2d 1216 (2003). Dismissal under section 2–615 is proper if the pleadings and attachments, when construed in the light most favorable to the plaintiff, clearly show that plaintiff cannot prove any set of facts that would entitle him to relief. Board of Directors of Bloomfield Club Recreation Ass'n v. Hoffman Group, Inc., 186 Ill.2d 419, 424, 238 Ill.Dec. 608, 712 N.E.2d 330 (1999). Review of the trial court's dismissal of plaintiff's complaint pursuant to section 2–615 is de novo. Doe v. McKay, 183 Ill.2d 272, 274, 233 Ill.Dec. 310, 700 N.E.2d 1018 (1998).

¶ 10 Counts I and III, respectively, request the court to issue a declaratory judgment. A claim for declaratory judgment, however, is not the proper vehicle for presenting what are, in essence, plaintiffs' breach of contract allegations. The declaratory judgment process allows a court to address a controversy after a dispute arises but before steps are taken that give rise to a claim for damages or other relief. Beahringer, 204 Ill.2d at 372–73, 273 Ill.Dec. 784, 789 N.E.2d 1216. Although a declaratory judgment action is proper to determine the parties' existing rights, a court may dismiss such an action if “a party, seeks to enforce his rights after the fact.” Senese v. Climatemp, Inc., 222 Ill.App.3d 302, 314, 164 Ill.Dec. 236, 582 N.E.2d 1180 (1991). Here, defendants have already terminated the purchase agreement and sold the unit to a third party. Plaintiffs are seeking “to enforce [their] rights after the fact” and these allegations are properly breach of contract allegations. The dismissal of the declaratory judgment counts was proper on that basis.

¶ 11 Even on the merits, plaintiffs' allegations in counts I through III fail to state a cause of action upon which relief can be granted. Count I essentially contends that defendants breached the purchase agreement by selling the unit to a third party while the agreement was still in full force and effect. Count II, alleging straightforward breach of contract, echoes count I and adds that defendants further breached the agreement by failing to maintain plaintiffs' earnest money in an interest-bearing account. Count III alleges that defendants failed to return plaintiffs' earnest money and earned interest pursuant to paragraph 12 of the purchase agreement. Paragraph 12(a) states as follows:

“Time is of the essence with regard to Purchaser's obligations and covenants hereunder. In the event of a default or breach of this Purchase Agreement by Purchaser, Seller shall notify Purchaser of such breach or default and of the opportunity, which shall be given the [352 Ill.Dec. 58]

[952 N.E.2d 1284]

Purchaser, to remedy such breach or default within twenty (20) days after the date such notice was received. If Purchaser fails to remedy such breach or default within twenty (20) days after receipt of Seller's notice, then, subject to the limitations set forth below, Seller may terminate this Purchase Agreement and, as its sole and exclusive remedy upon termination, retain as liquidated damages from Purchaser an amount equal to the sum of (i) the amount set forth * * * required to be paid as an Earnest Money deposit and (ii) all amounts paid or to be paid by Purchaser to Seller for any other services or work performed or to be performed by Seller. * * * In accordance with Section 1703(d) of the Interstate Land Sales Full Disclosure Act, if Seller is otherwise entitled to the liquidated damages described above, Seller shall return to Purchaser amounts paid to Seller (excluding interest paid under the Purchase Agreement) in excess of: (x) 15% of the Purchase Price (excluding any interest owed under the Purchase Agreement) or (y) the amount of Seller's actual damages, whichever is greater.”

¶ 12 Plaintiffs' first amended complaint states that defendants first notified plaintiffs that the unit would be ready to close on October 6, 2008. Due to plaintiffs' inability to obtain financing, the closing was extended to May 15, 2009. Plaintiffs, however, failed to close on that date and on July 6, 2009, more than 20 days later, defendants sent a letter to plaintiffs terminating the purchase agreement. After terminating the agreement, defendants sold the unit to a third party. The facts alleged by plaintiffs show that defendants properly terminated the purchase agreement pursuant to paragraph 12(a) before selling the unit to a third party. Accordingly, plaintiffs' allegation that the purchase agreement was in full force and effect when defendants sold the unit to a third party (counts I and II) is incorrect and plaintiffs cannot prove any set of facts entitling them to relief.

¶ 13 The remaining allegations contained in counts II and III also fail to state a cause of action upon which relief can be granted. In support of their contentions, plaintiffs merely conclude that “[u]pon information and belief, the account into which the Trump defendants placed the Earnest Money Deposit failed to pay any interest for a period of time” (count II);...