Phelps v. O'Malley

• Decision Date: 03 August 1987
• Docket Number: No. 2-86-0849,2-86-0849
• Citation: 159 Ill.App.3d 214,511 N.E.2d 974
• Parties: , 110 Ill.Dec. 797 Frank K. PHELPS, et al., Plaintiffs-Appellees, v. Michael J. O'MALLEY, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 974

511 N.E.2d 974

159 Ill.App.3d 214, 110 Ill.Dec. 797

Frank K. PHELPS, et al., Plaintiffs-Appellees, v. Michael J. O'MALLEY, Defendant-Appellant.

No. 2-86-0849.

Appellate Court of Illinois Second District.

Aug. 3, 1987.

Rehearing Denied Aug. 28, 1987.

Peter A. Zamis, Rathje, Woodward, Dyer & Burt, Wheaton, for defendant-appellant.

David I. Herbst, Portes, Sharp, Herbst & Kravets, Ltd., Chicago, for plaintiffs-appellees.

Justice DUNN delivered the opinion of the court:

On June 30, 1979, plaintiffs, Frank K. Phelps and Robert W. Topping, entered into a contract to purchase 10 enumerated lots in Trinity Lakes Unit II, an Oak Brook, Illinois, subdivision, from defendant, Michael J. O'Malley. The contract price was $800,000. Plaintiffs paid $80,000 earnest money to defendant. The deal never closed, though, and defendant subsequently sold the lots to other purchasers, declaring that plaintiffs had forfeited their earnest money.

Plaintiffs brought this action for return of the earnest money plus compensatory damages. After a bench trial, the trial court found that defendant had breached the contract by failing to substantially perform the prerequisites necessary for setting the transaction for closing. The trial court awarded plaintiffs $387,500, representing the $80,000 earnest money and $307,500 as the difference between the contract price and the fair market value of the lots at the time of the breach. The court also awarded $12,000 as prejudgment interest on the earnest money from the time of the breach. Defendant appeals, arguing that he substantially performed the prerequisites necessary for setting the transaction for closing, that the prejudgment interest award was improper, and that plaintiffs' expert witness should not have been allowed to testify because he had not been disclosed prior to trial in violation of Supreme Court Rule 220. (103 Ill.2d R. 220.) We affirm the trial court on the first two issues, but find that plaintiffs' expert should not have been allowed to testify.

The trial court found that defendant breached the contract by failing to substantially perform the prerequisites necessary for setting the transaction for closing. Defendant acknowledges that a determination of whether the provisions of a contract have been substantially performed depends on the particular facts of a given case and that the trial court's findings thereon will not be disturbed unless contrary to the manifest weight of the evidence. (Luczak Brothers, Inc. v. Generes (1983), 116 Ill.App.3d 286, 299, 71 Ill.Dec. 900, 451 N.E.2d 1267.) For a judgment to be against the manifest weight of the evidence, it must appear that an opposite conclusion is clearly evident. (J.R. Sinnott Carpentry, Inc. v. Phillips (1982), 110 Ill.App.3d 632, 636, 66 Ill.Dec. 671, 443 N.E.2d 597.) Such a conclusion does not appear clearly evident in this case.

At the time the contract was signed, defendant had not yet developed the Trinity Lakes Unit II subdivision to a point where the village of Oak Brook would issue building permits for the lots in question. At plaintiffs' insistence, therefore, the contract included the following clause:

"The date of closing shall be 45 days after notice is given to Purchaser by Seller that Seller has complied with all requirements of the Village of Oak Brook that are conditions precedent to the issuance of a building permit by the Village."

Subsequent to entering into the contract with plaintiff, defendant, through his corporation, Swissco, Inc., entered into a subdivision improvement agreement with the village of Oak Brook. The agreement contained the following provision regarding the issuance of building permits:

"9. It is agreed that no building permit shall be granted by any Village official for the construction of any structure until required utility facilities have been installed and made ready to service the property; and that roadways providing access to the subject lot or lots have been constructed or are in the course of construction and are suitable for vehicular traffic. It is understood and agreed that building permits may be granted for buildings on specific lots to which utility facilities have been installed and are operative and to which roadway access is suitable for vehicular traffic, notwithstanding the fact that all improvements within the subdivision may not be completed."

On May 7, 1982, defendant sent notice to plaintiffs that the village requirements with respect to issuance of building permits on the lots in question had been met and set a closing date of June 21, 1982. There does not seem to be any question as to whether the required utility facilities had been installed when defendant sent the aforementioned notice. There is conflicting evidence, however, of whether the roadways providing access to the lots were suitable for vehicular traffic on May 7 1982, or on June 21, 1982. There is also a dispute as to whether defendant was required to submit "as built" drawings to the village prior to issuance of building permits.

Defendant argues that the trial court misconstrued the subdivision agreement by requiring that the roadways servicing the lots be completed, rather than just suitable for vehicular traffic. The record, however, does not support this argument.

Plaintiff Topping testified that upon receipt of defendant's letter, he called the Oak Brook village engineer, Dale Durfey, to confirm that building permits would issue. Durfey advised Topping that permits could not yet be issued, so Topping called defendant to relay Durfey's information. Defendant replied that there were only a few details to clear up and that he would do so.

Topping testified that he contacted Durfey again a few weeks later and again was informed that permits could not yet be issued. Topping advised Phelps of the problem, and Phelps also called Durfey. Durfey then sent a letter to Phelps on July 8, 1982, confirming that the village requirements were not satisfied.

In the meantime, the closing date had passed. Defendant's son testified that he received no indication from plaintiffs that they would not be closing, and that he had waited for plaintiffs at the title insurance company on June 21, 1982, to no avail. The parties dispute the amount of contact after that date. It does seem clear, however, that defendant did not again notify plaintiffs that the village requirements for issuance of building permits had been met.

Plaintiffs later noticed excavation on some of the subject lots. Defendant had sold the first of the lots to other purchasers on July 1, 1983, and eventually sold all the lots. Defendant also notified plaintiffs that they were in default and forfeited their earnest money.

Durfey testified that it was the responsibility of the village engineering department to determine whether the roadways were suitable for vehicular traffic as required by the subdivision agreement. Durfey testified that "suitable for vehicular traffic" meant "constructed of some type of material" as opposed to a dirt surface. Durfey did admit that traffic used the roadways in question in May and June 1982. On redirect examination, however, he testified that the only traffic in May and June 1982 was construction traffic necessary to build the roadways and utilities and that the roads were unsurfaced at that time. He further testified that the roads were not surfaced until July 15, 1982. He concluded that the earliest building permits could have been issued was August 8, 1983, when "as-built" drawings for the lots in question were approved.

Defendant produced conflicting testimony from John Ezzi, a civil engineer who was project manager for Trinity Lakes. Mr. Ezzi testified that the roadways were suitable for vehicular traffic as early as late April or early May 1982. At that time, curb and gutter systems had been installed. He later admitted, however, that the roads were unsurfaced until June 16, 1982, and that it was not until July 1982 that all the roadways in question received surface materials.

It thus appears that the trial court was presented with conflicting evidence as to the suitability of the roads in question for vehicular traffic at the time defendant sent the notice to plaintiffs. Where the judgment of the trial court is not accompanied by findings of fact, the presumption is that the trial court found all issues and controverted facts in favor of the prevailing party. (National Acceptance Co. of America v. Pintura Corp. (1981), 94 Ill.App.3d 703, 707, 50 Ill.Dec. 120, 418 N.E.2d 1114.) Here, then, we assume that the trial court found that the roadways in question were not suitable for vehicular traffic when defendant notified plaintiffs that the village requirements for issuance of building permits had been met. The conflicting testimony of Durfey and Ezzi required resolution of a credibility issue, and the trial court apparently accepted Durfey's testimony over Ezzi's. As it has been said many times before, the trial court is in a far better position to determine the credibility of witnesses and to resolve inconsistencies in testimony. (Amoco Realty Co. v. Montalbano (1985), 133 Ill.App.3d 327, 333, 88 Ill.Dec. 369, 478 N.E.2d 860.) As such, this court will not substitute its judgment on these matters unless the findings are against the manifest weight of the evidence. (133 Ill.App.3d 327, 333, 88 Ill.Dec. 369, 478 N.E.2d 860.) Since it does not appear that the trial court's finding that defendant had not substantially performed the prerequisites necessary for setting the transaction for closing is against the manifest weight of the evidence, the finding that defendant breached the contract is affirmed.

The above analysis also disposes of defendant's argument that it was not necessary to submit "as-built" drawings in order to obtain building permits. Even if this court were to conclude that "as-builts" were not necessary, defendant had not constructed the roadways to the...