Prospect Enter. LLC v. Ruff

• Court: U.S. District Court — Central District of Illinois
• Writing for the Court: JOHN A. GORMAN
• Decision Date: 11 July 2011
• Docket Number: Case No. 10-1026
• Citation: Prospect Enter. LLC v. Ruff, Case No. 10-1026 (C.D. Ill. Jul 11, 2011)
• Parties: Prospect Enterprises, L.L.C., Plaintiff v. Donald N. Ruff, Jr. and Annette Ruff, Defendants

Prospect Enterprises, L.L.C., Plaintiff

v.Donald N. Ruff, Jr. and Annette Ruff, Defendants

Case No. 10-1026

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF ILLINOIS

ENTERED: July 11, 2011

OPINIONandJUDGMENT ORDER

The parties have consented to have this case heard to judgment by a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c), and the District Judge has referred the case to me. The case was tried before the bench on May 2, 2011. The parties have each submitted post-trial briefs, and I have carefully considered the arguments made therein and the testimony and evidence produced at trial.

FINDINGS OF FACT

Prospect Enterprises L.L.C. ("Prospect") owns a condominium development in Peoria Illinois known as The Townhomes of Williamsburg. Edward Sutkowski ("Edward") and his wife Linda Bruniga Washkuhn Sutkowski ("Linda"), are two of the owners of Prospect. Edward makes financial decisions for Prospect.

At the time of trial in this matter, the development contained 33 townhome units. Of the 33 units, 28 are completely finished and are available for sale. The remaining 5 units are built but not complete; they are not yet available for sale. By the end of 2009, 13 of the 33 units had been sold. Prospect was actively involved in sales efforts at the time, and has remained active from then until the date of trial. Since the end of 2009, Prospect has sold only two of the remaining units; 18available units remain available for sale, including Unit 3319. Sale of these units was adversely affected, according to Edward, by the economic downturn.

Donald and Annette Ruff are a married couple. In June of 2008, Donald was laid off from his employment as a contract engineer at Ford Motor Company in Michigan. In October, he was recruited and then hired by Caterpillar. He did not sign an employment contract with Caterpillar. The terms of his hire, however, were very favorable. All expenses related to his move were reimbursed, including loss of value from the sale of his home; these expenses were valued at $55,000. The salary was generous. Donald believed that he would finish his career at Caterpillar.

In preparation for the Ruffs' move to the Peoria area, they visited the Townhomes at Williamsburg. At the time of this visit, the Ruffs were trying to sell their house in Michigan. They did not wish to purchase one of the units until their house sold. They inquired about renting one of the units, but were told that Prospect did not rent any of its units. However, Prospect also told them that if they agreed to purchase the unit in which they had shown an interest (referred to herein as "Unit 3319"), Prospect would allow them to rent Unit 3319 until July 31, 2009. This would, everyone hoped, give them time to sell the Michigan house. A verbal agreement for the rent and sale price was reached.

Edward, who is an attorney, prepared a written agreement to memorialize the verbal agreement. As is pertinent here, the written Lease/Purchase Agreement ("Agreement") identified the Seller (Prospect) and the Buyers (Donald and Annette Ruff) and provided as follows:

Lease Term: Buyer shall lease the Unit from Seller on the terms described in the following paragraph during the period beginning on November 1, 2008, and ending on the first to occur of: (a) July 31, 2009, or (b) the date upon which Buyer elects to close the purchase of the Unit.

Buyer shall: (a) pay Seller rent computed at the rate of $900 per month...; (b) pay all utilities...;(c) maintain the interior of the unit...; (d) install Buyer's kitchen appliances and washer and dryer at Buyer's cost and (3) maintain and provide Seller with evidence of liability and fire insurance in respect of the interior of the Unit.

Purchase Price: $135,500, less $1,000 earnest money deposit.

Closing Date: Not later than July 31, 2009

Pre-Closing: Seller Deliveries: (a) [Condominium-related documentation]

Closing: Seller Deliveries: (a) Warranty Deed ... (b) Title Insurance Policy ... (c) evidence of compliance with the Real Estate Settlement Procedures Act of 1974, as amended; and (d) such other instruments required by Buyers' lender, if any, to conclude the transaction

Closing: Buyer Deliveries: (a) certified funds in the amount of the Purchase Price; (b) evidence of compliance with the Real Estate Settlement Procedures Act of 1974, as amended; and (c) such other instruments required by Buyers' lender, if any, to conclude the transaction.

Edward sent the Agreement to the Ruffs. The Ruffs each signed the Agreement on October 19, 2008, and returned it to Prospect with a check for the earnest money. Donald then moved into the unit, while Annette remained in Michigan to sell the house there. Donald purchased and installed appliances.

About four months later, Donald was laid off by Caterpillar. Although the Michigan house had sold at about the same time, Donald's unemployment created problems for the Ruffs in obtaining financing and closing on the sale. Donald sent a letter to Prospect sometime between April 28 and June 10, 2009. The letter read in pertinent part, "We have sold our house. ... Since I am not back to work, I have not been able to get a mortgage for the townhouse. Cat has not given me any idea on when they expect to call me back to work." Both Donald and Edward understood this letter to mean that the Ruffs would not be able to close the transaction until Donald was called back to work.

Edward sent an email to his assistant Donna Cleer on June 29, 2009, stating that there wouldbe no closing in July. July 31, 2009, came and went with no further communication between the parties to the Agreement. Donald continued to live in Unit 3319, paying the $900 monthly rent. Because Edward believed Donald would be called back by Caterpillar or that he would find other employment in the Peoria area, he was willing to defer the July 31 date to allow the Ruffs additional time; he did not, however, discuss this with the Ruffs. No documents for closing were prepared by Prospect, because Edward thought preparing them would have been a waste of time under the circumstances. Obviously, the Ruffs did not ask that the closing documents be prepared.

In October 2009, Donald received a letter from Caterpillar, advising that he would not be called back to work and that his employment was terminated. Donald then sent another letter to Prospect, dated October 29, 2009, advising Prospect of this new development and stating that he "will no longer be able to afford the townhouse." The letter concluded, "My intention is to move my belongings back to Michigan, and to have the place cleaned and ready for your inspection by the 1st of December."

Edward responded by letter dated November 4, 2009. In that letter he referred to the Agreement as providing for closing "upon the first to occur of the dates mentioned." He went on, "With a view toward minimizing your loss by reason of your failure to close the transaction - the contract does not contain any condition associated with your continued employment with Caterpillar - please call at your convenience." The letter also mentioned that the Ruffs had missed their October rent payment; a check the Ruffs sent later bounced, and was never made good.

Neither of the Ruffs called Edward in response to this letter. Donald moved out of Unit 3319 sometime in November. Prospect never tendered closing documents, based on Edward's belief that it would be futile given Donald's statement that they could no longer afford the Unit. The Ruffsnever closed on the purchase of the Unit or paid the remaining $134,500 of the purchase price.

In addition to the lost sale price and the skipped rent payment, Prospect has incurred other expenses connected to Unit 3319. Those expenses include: real estate taxes ($5,614.62), common area expenses ($1,394.00), interest expense ($7,145.31); utility expenses ($788.76) and sanitary district expense ($26.24), for a total of $14,968.93.

Prospect filed this lawsuit on January 29, 2010. The one-count complaint seeks specific performance of the Agreement.

CONCLUSIONS OF LAW

SPECIFIC PERFORMANCE GENERALLY

Specific performance is an equitable remedy requiring a defendant to perform an affirmative act in order to fulfill a contract. See, Hoxha v. LaSalle Nat. Bank, 847 N.E.2d 725, 729 (Ill.App. 2006); Schwinder v. Austin Bank of Chicago, 809 N.E.2d 180 (Ill.App.2004); McCormick Road Associates L.P. II v. Taub, 659 N.E.2d 52 (Ill.App.1995); Dixon v. City of Monticello, 585 N.E.2d 609, 610 (Ill.App.1991).

Where a specific and unambiguous written contract for the sale of real estate has been entered into fairly and understandingly, each party is entitled to specific performance of the contract as a matter of right. Curtis Casket Co. v. D.A. Brown & Co. 632 N.E.2d 204, 208 (Ill.App. 1994), citing Young v. Kich,15 N.E.2d 692 (Ill.1938). Generally, contracts to convey real estate will be enforced by specific performance on the grounds that perfect justice cannot be done at law. Dixon, 585 N.E.2d at 610. The remedy is available to either the buyer or the seller. Nave v. Heinzmann, 801 N.E.2d 121, 126 (Ill.App.2003).

To state a cause of action for specific performance, a plaintiff must allege: (1) the existenceof a valid, binding, and enforceable contract; (2) compliance by the plaintiff with the terms of the contract, or proof that the plaintiff is ready, willing, and able to perform the contract but was prevented and thus is excused from doing so by acts of the other party; and (3) the failure or refusal of the defendant to perform his part of the contract. Hoxha, 847 N.E.2d 725.

For a contract to be specifically performed, it must be so certain and unambiguous in its terms and in all its parts that a court can require the specific thing contracted for to be done. Schilling v. Stahl, 918 N.E.2d 1077, 1080 (Ill.App.2009), citing Cefalu v. Breznik, 154 N.E.2d 237 (Ill.1958). It is not sufficient to show the existence of some kind of agreement between the parties; where there is...