Ner Tamid Congregation of N. Town v. Krivoruchko

• Citation: 638 F.Supp.2d 913
• Decision Date: 07 July 2009
• Docket Number: No. 08 C 1261.,08 C 1261.
• Parties: NER TAMID CONGREGATION OF NORTH TOWN, Plaintiff, v. Igor KRIVORUCHKO, Defendant.
• Court: U.S. District Court — Northern District of Illinois

638 F.Supp.2d 913

NER TAMID CONGREGATION OF NORTH TOWN, Plaintiff, v. Igor KRIVORUCHKO, Defendant.

No. 08 C 1261.

United States District Court, N.D. Illinois, Eastern Division.

July 7, 2009.

As Amended July 9, 2009.

COPYRIGHT MATERIAL OMITTED

Jay R. Hoffman, Attorney at Law, Chicago, IL, for Plaintiff.

Thadford A. Felton, Justin L. Weisberg, W. Matthew Bryant, Arnstein & Lehr, LLP, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

JEFFREY COLE, United States Magistrate Judge.

INTRODUCTION

In 2007, real estate developer, Igor Krivoruchko, contracted with Ner Tamid Congregation of North Town, an Illinois not-for-profit corporation (Amended Answer, ¶ 2), to purchase property Ner Tamid owned on Rosemont Avenue in Chicago. After postponing the closing once, Mr. Krivoruchko refused to go forward with the deal because he said he could not obtain the kind of financing he hoped to get. The purchase contract contained no financing contingency clause, because, believing he was "creditworthy" and had not had problems in the past with the lender with which he was dealing, Mr. Krivoruchko did not desire one.

Ner Tamid sued for breach of contract. Mr. Krivoruchko, after conceding that he was a resident and citizen of Florida in three separate filings, contended that he was actually a resident and citizen of Illinois and moved to dismiss for want of jurisdiction. That motion was denied. See Ner Tamid Congregation of North Town v. Krivoruchko, 620 F.Supp.2d 924 (N.D.Ill.2009). Ner Tamid has now moved for partial summary judgment on liability and the affirmative defenses of impossibility and impracticability, which are based on what Mr. Krivoruchko claims was the "unanticipated" and "unforeseeable" downturn in the economy, which precluded him from obtaining the precise financing he wanted. The motion argues that the only real issue in the case is the amount of damages, which it concedes should be left for another day. Summary judgment, if otherwise proper, can be granted in a case such as this. See e.g., Columbian Nat. Title Ins. Co. v. Township Title Services, Inc., 659 F.Supp. 796, 803 (D.Kan.1987).

As always, the facts underlying this summary judgment proceeding are drawn from the parties' Local Rule 56.1 submissions. Local Rule 56.1(a)(3) requires a party seeking summary judgment to include with its motion "a statement of material facts as to which the ... party contends there is no genuine issue and that entitle the ... party to a judgment as a matter of law." See Ciomber v. Cooperative Plus, Inc., 527 F.3d 635, 643 (7th Cir.2008). The party opposing summary judgment must then respond to the movant's statement of proposed material facts; that response must contain both "a response to each numbered paragraph in the moving party's statement," L.R. 56.1(b)(3)(B), and a separate statement "consisting of short numbered paragraphs, of any additional facts that require the denial of summary judgment." L.R. 56.1(b)(3)(C); Ciomber, 527 F.3d at 643. District courts are "`entitled to expect strict compliance'" with Rule 56.1, and they do not abuse their discretion when they opt to disregard facts presented in a manner that does follow the Rule's instructions. Ciomber, 527 F.3d at 643; Ammons v. Aramark Uniform Services, Inc., 368 F.3d 809, 817 (7th Cir.2004).

I. FACTUAL BACKGROUND

On May 3, 2007, Mr. Krivoruchko and Ner Tamid entered into a written agreement whereby Mr. Krivoruchko agreed to purchase the Rosemont Avenue property for $3,825,000. Ner Tamid would give Mr. Krivoruchko a $340,000 credit at the closing, making the net purchase price under the agreement $3,485,000. There was no mortgage contingency clause in the agreement. (Plaintiff's Local Rule 56.1(a)(3) Statement of Material Facts ("Pl. St."), ¶¶ 9-12; Ex. B).

Originally, the closing was to be on or before October 31, 2007, but Mr. Krivoruchko sought an extension. On October 23rd, his counsel wrote to Ner Tamid's counsel "strongly reinforc[ing Mr. Krivoruchko's] desire to purchase the subject property [,] ... to punctuate that he is very sympathetic to the seller's concerns," and to stress that the "request for an extension is in no way a reflection of my client's inability to procure financing, but is instead the nature of the financing he is procuring." (Pl. St., ¶ 31; Ex. D). He wrote off the delay to the lender's heightened scrutiny over the type of loan he was seeking, which was combination acquisition-construction financing. (Id.). He explained:

with the nature of these types of financing projects, lenders tend to require architectural drawings/renderings, zoning confirmation, contracts for the sale of prospective units, contracts with contractors and subcontractors, and a slew of other miscellaneous items. My client indicated that he has closed over 250 units over the last year, many of which have been with this firm, both purchases and sales, so my clients[sic] are confident that the closing will take place, but the nature of the financing necessitates the lenders' meticulous review.

(Id.). He suggested Ner Tamid contact either First Midwest Bank or First DuPage Bank in order to "put the seller at ease, and allay any of the seller's anxieties, of the purchaser's good faith to finalize the financing in this matter." (Id.). Ner Tamid thus agreed to extend the closing date to January 15, 2008. That modification also called for Mr. Krivoruchko to deposit an additional $50,000 in escrow, bringing the total to $150,000. (Pl. St., ¶¶ 14; Ex. B).

The letter of October 23rd was less than forthcoming. In opposing summary judgment, Mr. Krivoruchko has submitted the affidavit of Dean Lawrence, vice president of the commercial real estate division of First DuPage Bank. (Krivoruchko's L.R. 56.1(b)(3)(A) and (B) Response; Ex. A). Mr. Lawrence explained that beginning in the summer of 2007—about the time Mr. Krivoruchko approached him with the Ner Tamid deal—the lending market in general began to reject loans that previously would have been accepted. (Ex. A, ¶¶ 5, 11). The "primary driver of this decline in loan acceptance was the market, not the individual credit-worthiness of the applicants." (¶ 5). As a result, "[i]n or about mid-2007, First DuPage funded its last commercial real estate development loan"—commonly known as "build-and-sell loans"—which was the type of loan Mr. Krivoruchko wanted. (¶ 6). He explained that this was the reason Mr. Krivoruchko could not get financing—not his creditworthiness or the proposed transaction. (¶ 8).

Mr. Lawrence's affidavit concludes that the "depth of the real estate recession that began in mid-2007 was not foreseen or foreseeable in the summer of 2007...." (¶ 11). Thus, Mr. Krivoruchko argues that his failure to close was through no fault of his own. But it is worth noting that the claimed moratorium on the type of loan he sought occurred perhaps three or four months before the October 23rd letter that lulled Ner Tamid into believing that nothing out of the ordinary was going on with Mr. Krivoruchko's financing. Moreover Mr. Krivoruchko's affidavit admits that between the Summer of 2007 and the end of 2007 he "became increasingly aware" that his bank and other lending institutions were rejecting loans they previously would have accepted. (Response, Ex. B at ¶ 4). Yet he did nothing to alert Ner Tamid that there might be difficulties.

First Midwest Bank was not quite so averse to making real estate loans as was First DuPage Bank, and it offered Mr. Krivoruchko a partial financing package on October 30, 2007: the bank would loan $2,085 million, with Mr. Krivoruchko contributing $1.74 million toward the purchase. Additional releases of funds for construction would be made contingent on the presale of condominium and commercial space. The total package would amount to $9.86 million. (Pl. St., Ex. E at K000118-000121). The offer apparently failed to entice Mr. Krivoruchko.¹

On November 29, 2007, Mr. Krivoruchko's attorney wrote a terse letter to Ner Tamid's counsel stating that Mr. Krivoruchko requested that he make the "following proposition for consideration":

Would the seller be willing to carry a second mortgage on the property in the amount of $650,000, to balloon in 24 months, at an annual rate of 7%?

This is not a counter-offer, but merely a suggestion as we move forward with our financing.

Please do contact me at your earliest convenience.

(Pl. St., ¶ 28; Ex. C at K000110).

Krivoruchko's counsel reiterated the suggestion for Ner Tamid's consideration made on December 13th. The letter again asked if Ner Tamid "would be willing" to carry a second mortgage of $650,000 on the property as this "will certain [sic] assist the purchaser in finalizing the transaction." Like its predecessor, the letter stressed that "[t]his is not a counter-offer, but merely a suggestion as we move forward with our financing." (Pl. St., Ex. C at K000108).

Ner Tamid's counsel responded on January 9, 2008, rejecting the suggestion:

I understand that your client Mr. Krivoruchko is presently unable to proceed to closing due to lack of sufficient financing. It is thus anticipated that he will be in breach of the contract on the extended contract closing date of January 15, 2008. Accordingly, on behalf of my client, the contract is hereby declared in default as of January 15, 2008, based on Mr. Krivoruchko's inability to provide closing funds as per the contract.

(Pl. St., ¶ 29; Ex. C at K000107). Ner Tamid reminded Mr. Krivoruchko that there was no financing contingency clause in their agreement and indicated that it would be willing to close no later than January 31st, if Mr. Krivoruchko was able to live up to his contractual obligations by then. (Id.).

Mr. Krivoruchko failed to close on the property. His attorney informed Ner Tamid's attorney that he would be unable to do so because he had been unable to obtain financing. (Pl. St., ¶¶ 13-17). Ner Tamid put the Rosemont Avenue property back on the market and sued Mr. Krivoruchko...