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Schwinder v. Austin Bank of Chicago

April 26, 2004


Appeal from the Circuit Court of Cook County. No. 01-CH-1262. Honorable Robert Boharic, Judge Presiding.

The opinion of the court was delivered by: Justice Gordon

The instant suit arises from a chancery action filed by plaintiffs, Thomas F. Schwinder and Susan L. Londay, seeking specific performance of a condominium purchase contract against defendants, Austin Bank of Chicago and Marian Baginski. Baginski subsequently filed a counterclaim, seeking possession of the condominium unit and claiming a rental rate of $1,500 per month. Following a bench trial, the trial court entered judgment for plaintiffs, granting specific performance and returning to plaintiffs a portion of rent they paid to defendant for November 2000. On appeal, defendants contend that the trial court abused its discretion in granting specific performance because the purchase contract granted defendants the exclusive right to terminate the purchase contract and limited plaintiffs to the exclusive remedy of the return of their earnest money. Defendants further contend that the subsequent preclosing possession agreement did not modify either of those provisions. Plaintiffs respond that defendants never had an unfettered right to terminate the purchase contract due to a mutuality of obligation that conferred on the purchase contract an implied covenant of good faith and fair dealing. Further, plaintiffs respond that if defendants ever had such a right, the preclosing possession agreement modified the purchase contract and terminated that right. Therefore, plaintiffs argue that the trial court properly granted specific performance of the purchase contract. In the alternative, plaintiffs claim that even if defendants had an unfettered right to terminate the purchase contract, they were estopped from doing so due to Baginski's actions and plaintiffs' detrimental reliance thereon. For the reasons that follow, we affirm the trial court's ruling.


The record and testimony in this case reveal that on June 21, 2000, plaintiffs, Thomas F. Schwinder and Susan L. Londay, tendered an offer to purchase a condominium unit located at 3117 South Benson, in Chicago, Illinois, which was owned by defendants, Austin Bank of Chicago, trustee under trust agreement dated February 24, 1978, known as trust No. 5861 (hereinafter Trustee), and Marian Baginski. As the sole beneficiary of this land trust, Baginski was thus authorized to convey the title to plaintiffs.

On July 5, 2000, Baginski accepted the offer from plaintiffs to purchase the condominium unit. The purchase contract between the parties was a form real estate contract prepared by Baginski's attorney and utilized for all real estate transactions in the Bridgeport Crossing Condominium complex in which the condominium unit was located. Relevant to this case is paragraph 12 of the purchase contract, which provided as follows:

"12. Termination and Default.

(a) If this Contract is terminated without Purchaser's fault, the earnest money shall be returned to Purchaser, but if the termination is caused by the Purchaser's fault, then at the option of the Seller and upon notice to the Purchaser, the earnest money shall be forfeited to the Seller and applied first to the payment of the Seller's expenses; the balance, if any, to be retained by the Seller as liquidated damages. Return of the Purchaser's funds shall be the Purchaser's sole exclusive remedy in the event of Seller's default. Purchaser acknowledges that the listing agent is hereby authorized by Purchaser to release the earnest money to seller upon written direction by the Seller that Purchaser's fault has caused a termination of the contract.

(b) A failure to appear at the time and place stated in the notice of the closing date, a failure to furnish all requested credit information, or a failure to enter into an escrow agreement or to make the deposits required thereunder shall be a default. If the Purchaser shall fail or refuse to carry out any obligation of the Purchaser contained herein within three (3) days after receipt of written notice then, at the option of the Seller, the earnest money shall be retained by Seller as liquidated damages, and/or the Seller may elect any other available remedy. In the event Seller shall fail to be unable to deliver title to the property as herein provided on account of title defects which Purchaser is unwilling to waive and Seller cannot cure or secure insurance over, or if Seller fails or refuses to carry out any material covenant or obligation hereunder or if Seller declines to close and notifies Purchaser, this contract shall be terminated and the earnest money and interest shall be returned to Purchaser. The return of such earnest money shall be Purchaser's sole and only remedy in such instance, the sufficiency of which is hereby acknowledged. Purchaser hereby waives all other remedies, other than a return of earnest money, which may be otherwise available to Purchaser."

According to the record, attorney approval and other modifications to the purchase contract were completed on August 1, 2000. Thereafter, closing of the sale and purchase of the condominium unit was originally scheduled for August 16, 2000. However, by mutual agreement of the parties, the closing was rescheduled for August 31, 2000, at the offices of Stewart Title. The purchase price for the condominium unit was $215,000*fn1, which included certain "custom*fn2" items of construction.

According to the testimony of Schwinder and Londay, they deposited the earnest money and obtained mortgage approval as required by the purchase contract. They further withdrew $10,000 from their 401(k) retirement plan for use as the down payment on the purchase of the condominium unit. Also, they testified that they were ready willing and able to close the purchase of the condominium unit on the previously agreed-upon date. However, one day prior to the scheduled closing, plaintiffs were advised that the closing of the condominium purchase contract would be delayed due to an injunction entered in Baginski's divorce action No. 00 D 6184 (Cir. Ct. Cook County) (hereinafter Baginski divorce action). Because the plaintiffs' lease on their pervious residence was expiring on August 31, 2000, the plaintiffs needed possession of the condominium unit pending closing. In order to provide plaintiffs with possession prior to closing, Baginski's attorney prepared a preclosing possession agreement (hereinafter PCPA). The PCPA was executed by plaintiffs and Baginski on August 31, 2000. Although the purchase contract, by its terms, prohibited possession of the condominium unit prior to closing, the PCPA granted possession of the condominium to plaintiffs until the seller, Baginski, "was able to close on the sale of the property." The PCPA did not afford Baginski the right to terminate the contract*fn3 but, on the contrary, granted plaintiffs "the sole option [to] terminate this [PCPA] together with the Condominium Purchase Agreement *** by giving 30 days written notice to the seller" if closing had not occurred "on or prior to November 30, 2000."

Schwinder testified that on August 31, 2000, pursuant to the PCPA, plaintiffs took possession of the condominium unit and he and his coplaintiff were to pay a monthly fee of $1,500 for the use and occupancy of the condominium unit. Pursuant to the express terms of the PCPA, the monthly fee of $1,500 was payable only "until such time as Seller is able to close on the sale of the property." Plaintiffs also testified that after they took possession of the condominium unit, they purchased and installed a washer and dryer and made other such improvements therein.

Schwinder, Londay and Baginski testified that on August 31, 2000, they executed a "Punch List of Items to be Finished at 3117 South Benson" (hereinafter punch list) pursuant to the terms of the purchase contract. That day, Baginski repaired some of the punch list items. Then in early September, Baginski repaired additional punch list items; however, there are punch list items that remain unperformed.

On November 8, 2000, Judge Bellows entered an agreed order in the Baginski divorce action allowing the sale of the condominium unit to proceed. Baginski's real estate attorney, Stephen Witt, was advised of the entry of the agreed order by a letter, in evidence, dated November 8, 2000, sent by plaintiffs' attorney. That letter also requested that the plaintiffs be advised of possible closing dates so that a definitive closing date could be scheduled amongst the parties.

Baginski testified that after receipt of the letter of November 8, 2000, from plaintiffs' attorney, he directed Witt to schedule a closing date. Baginski further testified that he was willing to close the sale of the condominium unit if the terms of the purchase contract were met. However, Schwinder and Loday testified that neither they nor their attorney received a response to the November 8th letter. There was no testimony or evidence introduced at trial regarding efforts made to schedule a closing for the sale of the condominium unit or an inability to do so. Likewise, the record is devoid of any facts that would excuse or explain Baginski's refusal to consummate the sale of the condominium unit.

Schwinder and Londay testified that on December 15, 2000, they sent a certified letter to Baginski requesting that Baginski schedule a closing date for the purchase of the condominium unit. They obtained acknowledgment that Baginski received the letter, but never received a reply thereto. They further testified that the next month, Baginski requested rent payments for the months November thru January. Plaintiffs paid the rent for November, but plaintiffs refused to pay any further rent, claiming that they did not want to be renters; Baginski responded that the matter was in the lawyers' hands.

Plaintiffs testified that they made one final attempt on January 16, 2001, to procure a closing date by sending Baginski's attorney a letter to that effect. A response from Baginski's attorney, in evidence, provided that he was no longer representing Baginski, and no closing date was scheduled in response to the January 16th letter.

On January 24, 2001, plaintiffs filed a complaint for specific performance against defendants. Defendants filed a counterclaim seeking possession of the condominium unit and claiming unpaid rent after November 2000.

On October 18, 2002, the trial court entered its judgment. The trial court found that the purchase contract and the PCPA were binding upon the parties. Despite the existence of paragraph 12 previously discussed, the trial court required specific performance on the part of Baginski in proceeding with the purchase contact. Further, the trial court denied Baginski's counterclaim and found that Baginski was not owed rent after November 8, 2000, the ...

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