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08/26/94 BRADLEY REAL ESTATE TRUST v. DOLAN

August 26, 1994

BRADLEY REAL ESTATE TRUST, PLAINTIFF-APPELLEE,
v.
DOLAN ASSOCIATES LIMITED, AND NORWOOD PLAZA VENTURE, DEFENDANTS-APPELLANTS, AND TICOR TITLE INSURANCE COMPANY OF CALIFORNIA DEFENDANT. NORWOOD PLAZA VENTURE, COUNTERPLAINTIFF/THIRD PARTY PLAINTIFF-APPELLANT, V. BRADLEY REAL ESTATE TRUST, COUNTERDEFENDANT-APPELLEE, AND TICOR TITLE INSURANCE COMPANY OF CALIFORNIA, COUNTERDEFENDANT, AND E. LAWRENCE MILLER, THIRD PARTY DEFENDANT-APPELLEE, AND R. DANIEL CLAUD THIRD PARTY DEFENDANT.



Appeal from the Circuit Court of Cook County. Honorable James J. Heyda, Judge Presiding.

Released for Publication October 14, 1994.

Giannis, Egan, Rakowski

The opinion of the court was delivered by: Giannis

JUSTICE GIANNIS delivered the opinion of the court:

Bradley Real Estate Trust (Bradley), filed this action seeking a declaration that it was entitled to receive funds held in escrow by Ticor Title Insurance Company of California (Ticor). Norwood Plaza Venture (Norwood), filed a counterclaim and later an amended counterclaim and third party complaint against Bradley, its president E. Lawrence Miller and R. Daniel Claud, a real estate broker acting as an agent for Bradley. Norwood alleged interference with prospective business advantage, promissory fraud, quantum meruit and breach of contract. The court dismissed Norwood's interference with prospective business advantage and quantum meruit claims and R. Daniel Claud was subsequently dismissed as a third party defendant prior to trial. Following a bench trial on the remaining breach of contract and promissory fraud issues, the court entered judgment in favor of Bradley and Miller and against Norwood. In addition, the court ordered Ticor to release the escrow funds to Bradley. Norwood brings this appeal.

Bradley was a Massachusetts business trust and the owner of the Champlain Building located in Chicago. Strobeck Reis & Company (Strobeck) was a real estate brokerage firm which employed Claud. Miller hoped Bradley would be able to sell the Champlain Building and simultaneously purchase other Chicagoland real estate. Structuring the sale of the Champlain Building in this way would allowBradley to avoid incurring tax liability and would also prevent a partial liquidation of Bradley. Strobeck and Claud assisted Miller in finding property suitable for Bradley to buy. Strobeck also considered purchasing the Champlain Building from Bradley.

Norwood owned the Norwood Plaza Shopping Center (Norwood Plaza). Harry Dolan was the president of Dolan Associates Limited and the general partner of Norwood. Claud contacted Dolan regarding Bradley's interest in purchasing Norwood Plaza. After initial Discussions and on April 15, 1986, Claud, as agent for Bradley, wrote to Dolan and proposed to buy Norwood Plaza in a letter of intent. The letter proposed that a formal sales agreement for Norwood Plaza be signed within 60 days. Dolan accepted Claud's proposal by signing the letter on April 22, 1986. Subsequently, on May 23, 1986, Claud again wrote Dolan and indicated that the trustees of Bradley had authorized him to place $100,000 into escrow for the purchase of Norwood Plaza provided certain additional conditions were met, including the approval of the transaction by Bradley's trustees. $100,000 was ultimately placed into an escrow account at Ticor.

Claud's letter of intent proposed that Bradley would buy Norwood Plaza for $9,826,400, less the assumption of certain industrial revenue bonds which then had an outstanding balance of $6,825,000. Almost immediately after the letter was signed by Dolan, however, bond counsel informed the parties that if the letter were a binding contract for the sale of Norwood Plaza, the bonds would accelerate. A provision in the letter of intent stated that Bradley's proposal was contingent on verification that the bonds would not accelerate.

The parties attempted to restructure the deal in an attempt to get around the Norwood Plaza bond problem and Bradley continued to negotiate with Strobeck regarding the sale of the Champlain Building. Norwood was aware of the significance of the Champlain sale to Bradley and had specifically "acknowledged" in the letter of intent that the sale of Norwood Plaza was being structured as part of a three-way exchange.

In December 1986, Claud was still looking for financing for the Champlain Building and Federal tax changes regarding Norwood Plaza's industrial revenue bonds were about to make the three-way deal impossible if not closed before December 31. Although Claud attempted to persuade Bradley to finance the purchase of the Champlain Building itself and continued to express optimism, negotiations ended near year end. Norwood was informed that Bradley was no longer interested in Norwood Plaza. This litigation resulted.

The trial court found that there was no binding contract for thesale of Norwood Plaza between Norwood and Bradley. Norwood argues that this was error in light of the letter dated April 15, 1986. Even though the letter called for the execution of a subsequent "formal Sale Agreement," Bradley and Miller concede that the letter could be an enforceable contract if the parties had intended such an effect. Borg-Warner Corp. v. Anchor Coupling Co. (1958), 16 Ill. 2d 234, 156 N.E.2d 513; Cinman v. Reliance Federal Savings and Loan Ass'n (1987), 155 Ill. App. 3d 417, 508 N.E.2d 239, 108 Ill. Dec. 78.

The question of whether an enforceable contract exists is dependent upon the intent of the parties, as evidenced by the language of the document. ( Interway, Inc. v. Alagna (1980), 85 Ill. App. 3d 1094, 407 N.E.2d 615, 41 Ill. Dec. 117.) The determination of this issue may be a question of law or a question of fact. ( Terracom Development Group, Inc. v. Coleman Cable & Wire Co. (1977), 50 Ill. App. 3d 739, 365 N.E.2d 1028, 8 Ill. Dec. 642.) If the terms of the alleged contract are unambiguous, then the intent of the parties must be ascertained solely from the words used and is a question of law. ( Lenzi v. Morkin (1984), 103 Ill. 2d 290, 469 N.E.2d 178, 82 Ill. Dec. 644; Interway, 85 Ill. App. 3d at 1098.) If the language is ambiguous, extrinsic evidence is admissible to determine the parties' intent and the interpretation of the language is a question of fact. ( Pre-Fab Transit Co. v. Northbrook Property & Casualty Insurance Co. (1992), 235 Ill. App. 3d 103, 106, 600 N.E.2d 866, 175 Ill. Dec. 623; Chicago Principals Association v. Board of Education (1980), 84 Ill. App. 3d 1095, 406 N.E.2d 82, 40 Ill. Dec. 381.) Where ambiguity exists, the trial court's determination of the intent of the parties must not be disturbed on review unless it is contrary to the manifest weight of the evidence. See Chicago Investment Corp. v. Dolins (1985), 107 Ill. 2d 120, 128-29, 481 N.E.2d 712, 89 Ill. Dec. 869.

Regardless of how the letter of intent is construed, however, we do not believe an enforceable contract for the sale of Norwood Plaza exists under these facts. Section 2 of the Frauds Act, also known as the statute of frauds, states in pertinent part:

"No action shall be brought to charge any person upon a contract for the sale of lands * * * unless such contract or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized in ...


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