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Arnold v. Leahy Home Building Co.

OPINION FILED APRIL 28, 1981.

LESLIE B. ARNOLD ET AL., PLAINTIFFS-APPELLANTS,

v.

LEAHY HOME BUILDING CO., INC., ET AL., DEFENDANTS-APPELLEES. (LEAHY HOME BUILDING CO., INC., THIRD-PARTY PLAINTIFF,

v.

LESLIE B. ARNOLD ET AL., THIRD-PARTY DEFENDANTS.)



APPEAL from the Circuit Court of Du Page County; the Hon. ROBERT A. NOLAN, Judge, presiding.

MR. JUSTICE REINHARD DELIVERED THE OPINION OF THE COURT:

Plaintiffs, Leslie Arnold and his wife, brought suit against defendant, Leahy Home Building Co., Inc. (Leahy), seller, and defendant Heritage/Pullman Bank & Trust Co., legal and equitable titleholder to the property, arising out of a written contract wherein Leahy was to construct a house for Arnolds and convey them the house and lot pursuant to specified terms of the contract. Count I of the first amended complaint sought damages at law for Leahy's breach of the contract, and count II sought the equitable remedy of specific performance of the contract. On January 2, 1980, and on Leahy's motion to dismiss, the trial court dismissed by written order count II denying leave to amend that count, and dismissed count I granting leave to amend within a specified time. Plaintiffs appeal the dismissal of count II, contending that (1) the trial court erred in denying them leave to file an amended complaint seeking specific performance; and (2) the trial court erred in ruling that certain damages could not be sought as a part of plaintiffs' specific performance action. As count I is still pending in the trial court, the trial judge found no just reason to delay either the enforcement or appeal of the dismissal of count II.

Subsequent to the plaintiffs' filing of their notice of appeal on January 24, 1980, Leahy filed a motion asking the trial judge to vacate a prior order entered on April 17, 1979, which provided by agreement of the parties that the defendant shall not convey the subject premises during the pending litigation. On April 28, 1980, the trial judge found that his order of January 2, 1980, dismissing count II was a final order terminating the agreed order of April 17, 1979. By separate appeal, No. 80-409, plaintiffs now appeal the April 28, 1980, order contending that the trial court was without jurisdiction to enter that order. Our court has consolidated those appeals. Defendant Heritage/Pullman Bank is not a party to either appeal as the primary relief sought is against Leahy.

Plaintiffs' amended complaint requested relief in two counts. In count I, plaintiffs sought to recover damages resulting from the failure of Leahy to construct properly a personal residence at the property and to convey the property to plaintiffs at the time specified in the written contract. The damages sought by plaintiffs included storage, travel, commuting and lodging expenses incurred as a result of Leahy's failure to convey the property to plaintiffs on August 25, 1978, the agreed closing date stipulated in the contract, and loss of use of moneys paid to Leahy and independent contractors as well as loss of a first mortgage financing commitment for the purchase of the property. In count II, plaintiffs sought specific performance of Leahy's promise to convey the property to plaintiffs in accordance with the contract, plus damages for incomplete and incorrectly completed construction items, delay damages, including storage, travel, commuting and lodging expenses, as well as loss of a first mortgage commitment incurred by the plaintiffs as a result of Leahy's failure to perform on time where the contract specifically provided that time was of the essence. More specifically, in their action for specific performance in count II, plaintiffs alleged:

"11. At no time prior or subsequent to August 25, 1978 did defendant ever notify plaintiffs of any request for extension of the time of closing specified in Paragraph 5 of the agreement, but to the contrary from and after April 18, 1978 repeatedly assured plaintiffs that it would be able timely to perform in accordance with the agreement.

13. On August 25, 1978, and at all times thereafter, the plaintiffs were, and are now, ready, willing and able to fulfill the agreement in all respects on their part. Plaintiffs have offered to pay defendant the purchase money in cash and have otherwise duly performed all conditions of the agreement on their part.

14. On March 13, 1979, and March 23, 1979, plaintiffs, through their attorneys, notified defendant that they were ready, willing and able to proceed with the closing of the purchase of the premises subject to appropriate offsetting credits to the purchaser for those items not yet completed by the defendant and for the damages caused by the defendant's failure to perform in accordance with the agreement. On or about March 15, 1979, defendant caused to be delivered to plaintiffs a proposed closing statement, under cover of defendant's letter dated March 15, 1979, true and correct copies of which letter and closing statement are attached hereto and made a part hereof as Exhibit B, and which letter contained the threat to terminate the agreement in the event plaintiffs refused to close the transaction on the basis of the closing statement delivered to the plaintiffs. On March 23, 1979, plaintiffs caused to be delivered to defendant's attorneys a revised closing statement setting forth those credits to which plaintiffs were entitled, a true and correct copy of which closing statement is set forth in Exhibit C attached hereto, and plaintiffs notified defendant that they were ready, willing and able to close the purchase of the premises. On or about March 27, 1979, defendant caused its letter dated March 27, 1979 to be delivered to plaintiffs, a true and correct copy of which is attached hereto and made a part hereof as Exhibit D, whereby defendant notified plaintiffs that it had elected to terminate the agreement, and that the earnest money deposited with defendant by plaintiffs was being forfeited and retained by defendant. Defendant's action is so attempting to terminate the agreement constitutes a wrongful, willful and malicious refusal to perform in accordance with the terms of the agreement to the great detriment and damage of the plaintiffs.

23. The defendant has refused and still refuses to substantially perform in accordance with the agreement and to convey the premises pursuant to the agreement.

25. Defendant, by his actions, has purposefully and willfully attempted to force defendant to accept the premises on terms and conditions not in accordance with the agreement and which failed to take into account and credit to plaintiffs amounts necessary to compensate plaintiffs for the damages incurred by reason of defendant's delay in completing construction of the two-story house on the premises and the amounts necessary to compensate plaintiffs for the unfinished or damaged items as set forth in page 5 of Exhibit C to the first amended complaint.

26. Defendant has willfully and wrongfully attempted to terminate the agreement pursuant to his letter dated March 27, 1979, as set forth in Exhibit D to this complaint.

27. Plaintiffs have been and remain ready, willing and able to close the purchase of the premises in accordance with the agreement and the closing statement set forth in Exhibit C to this agreement."

These allegations have been set out at length since it is upon them, particularly paragraphs 13 and 14, that the trial judge in his memorandum of decision found were inconsistent allegations in verified pleadings. He ruled that paragraph 14 showed conclusively that plaintiffs were not at all times ready, willing and able to fulfill the agreement by setting unreasonable preconditions to closing. The trial judge further reasoned that in view of the verified allegations in paragraph 14, plaintiffs forfeited any action they might have had for specific performance and could not make out by repleading a sufficient cause of action for specific performance. The trial court also found that the claims for damages included in the specific performance count were not "equitable compensation" in the nature of an accounting, but were legal damages inconsistent with the relief of specific performance.

• 1-4 An action should not be dismissed for insufficiency at law unless it clearly appears that no set of facts could be proven under the pleadings which would entitle plaintiff to relief. (Dangeles v. Marcus (1978), 57 Ill. App.3d 662, 373 N.E.2d 645; Johnston v. Girvin (1965), 61 Ill. App.2d 47, 208 N.E.2d 894.) A motion to dismiss a complaint admits, for purposes of disposition of that motion, all facts well pleaded together with all reasonable inferences which can be drawn therefrom. (Talley v. Yonan (1979), 72 Ill. App.3d 851, 391 N.E.2d 79; Lucchetti v. Lucchetti (1980), 82 Ill. App.3d 630, 402 N.E.2d 854; Pierce v. Board of Education (1976), 44 Ill. App.3d 324, 358 N.E.2d 67.) Pleadings are to be liberally construed with a view to doing substantial justice between the parties. (Lucchetti v. Lucchetti; Ill. Rev. Stat. 1979, ch. 110, par. 33(3).) Moreover, the court must determine if, in any event, plaintiffs would be able to amend their complaint to state a cause of action. Leave to amend should be granted unless it is apparent that even after amendment no cause of action can be stated. (Horwath v. Parker (1979), 72 Ill. App.3d 128, 390 N.E.2d 72; Miller v. Enslen (1978), 60 Ill. App.3d 865, 377 N.E.2d 282.) However, the decision to allow an amendment is a matter within the sound discretion of the trial court and, absent a manifest abuse of that discretion, its decision will not be disturbed on appeal. (Whildin v. Kovacs (1980), 82 Ill. App.3d 1015, 1017, 403 N.E.2d 694; Intini v. Schwartz (1979), 78 Ill. App.3d 575, 579, 397 N.E.2d 84.) Finally, it should be noted that the policy under the Civil Practice Act is for courts> to exercise their discretion liberally in favor of such amendments. (Pierson v. Bloodworth (1980), 81 Ill. App.3d 645, 649, 401 N.E.2d 1320.) The most important question is whether the amendment will be in furtherance of justice. (Blazina v. Blazina (1976), 42 Ill. App.3d 159, 165, 356 N.E.2d 164.) It is against these legal principles that we test plaintiffs' complaint.

• 5-7 An action for specific performance of a land contract is sustained by allegations of ultimate facts showing a refusal on the part of the seller to comply with the contract and a tender by the purchaser of the full amount required to entitle him to a deed pursuant to the contract. (Yale Development Co. v. Oak Park Trust & Savings Bank (1975), 26 Ill. App.3d 1015, 325 N.E.2d 418; 71 Am.Jur.2d Specific Performance § 65 (1973).) The rule is that before specific performance will be awarded all conditions of the contract must be met by the party seeking performance. (Mitchell v. White (1920), 295 Ill. 135, 128 N.E. 803.) Purchasers have no right to impose conditions not contained in the contract of sale and if they do so, they fail to show they complied with the terms of the contract and are ready, able and willing to do the acts required in the contract. (Sullivan v. Burke (1958), 15 Ill.2d 101, 153 N.E.2d 824.) Further, the party seeking specific performance of a contract must show he has himself always been ready, willing and able to perform the contract on his part, and he is not entitled to specific performance if the circumstances or a course of conduct clearly show an abandonment of the contract by him. Wolford v. James E. Kolls Investment Co. (1978), 61 Ill. App.3d 405, 409, 377 N.E.2d 1314.

In the case at bar, plaintiffs contend on appeal that the trial court should have allowed them to amend their complaint to eliminate certain claims for offsetting damages if the court thought them improper. They further argue that the complaint establishes that they were ready, willing and able to perform and Leahy was the first party to condition performance pursuant to its closing statement and demand presented to plaintiffs on March 15, 1979. Leahy's position on appeal is that plaintiffs conditioned their tender by their demand on March 23, 1979, to close only in accordance with their revised closing statement which included offsets for damages and by their other pleadings in paragraph 14 of their complaint. Therefore, they do not stand ready, willing and able to perform according to the contract. In our analysis of these arguments we view as important the fact that this case was decided upon the pleadings without any opportunity to amend.

• 8-10 Taking the critical allegations in paragraphs 13 and 14 which the trial judge found, as a matter of law, to be inconsistent and, in paragraph 14, a conditional tender, we focus on what was alleged. In paragraph 13 the plaintiffs clearly allege they were on the closing date, and all times thereafter, and now are ready, willing and able to fulfill the agreement on their part. This alone is obviously a sufficient pleading of tender to state a cause of action for specific performance. Next, we examine whether the specific facts alleged in paragraph 14 are such that they constitute a conditional tender which is a more specific pleading than paragraph 13 and supersede it. We do not believe that the allegations of paragraph 14 conclusively establish a conditional tender and abandonment of the original contract between the parties. Our examination of the entire complaint indicates that plaintiffs have unequivocally alleged in paragraph 23, and those facts must be taken as true, that Leahy at no time prior to or subsequent to closing has been able to perform in accordance with the terms of the contract. Moreover, plaintiffs allege in paragraph 14 that Leahy sent them a closing statement on March 15, 1979, which "contained the threat to terminate the agreement in the event plaintiffs refused to close the transaction on the basis of the closing statement delivered to the plaintiffs." It is in that context in the pleadings that plaintiffs allege they sent out their own closing statement notifying defendants that they would close pursuant to their own statement, and alleged in paragraph 27 they are ready, willing and able to close in accordance with that closing statement. The critical distinction, in our view, is whether these allegations constitute an abandonment of the contract and withdrawal of their previously pleaded unconditional tender, or whether they are factual pleadings of events prior to filing of the suit which amount to settlement attempts by the parties. Apparently there were communications from plaintiffs' attorneys to Leahy on March 13, which culminated in Leahy's threat to terminate the contract unless closed on the basis of its closing statement. Plaintiffs refused to close on that basis, but countered with their proposal. At the pleading stage, without benefit of testimony, we do not believe that plaintiffs' pleadings in the full context of paragraph 14 and the entire complaint constitute a repudiation of the contract by a conditional tender. Rather, it appears from the pleadings that both parties were negotiating in order to close this transaction. In an equity action the technical rules of tender are relaxed to prevent injustice, and the question is whether the plaintiff has made a conscientious effort to comply honestly with the contract. (Macy v. Brown (1927), 326 Ill. 556, 158 N.E. 216.) This is especially true where there is ...


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