Appeal from the Circuit Court of Du Page County. No. 01-CH-1372. Honorable Edward R. Duncan, Jr., Judge, Presiding.
The opinion of the court was delivered by: Presiding Justice O'malley
Olympia Investments (Olympia) appeals from the judgment of the circuit court finding that Olympia breached its real estate contract with Edward F. Radkiewicz and Robert J. Radkiewicz (the Radkiewiczes) and awarding the Radkiewiczes the earnest money that Olympia had put down on the contract. We reverse.
The following facts are taken from the bench trial on the Radkiewiczes' claim. The Radkiewiczes, together with their brother William, were beneficiaries of a trust established by their parents. The primary asset of the trust was a 27-acre tract of land (the Berco property), in unincorporated Du Page County. In June 2001, having represented to Olympia that they had the authority to bind the trust without William's consent, the Radkiewiczes entered into a contract with Olympia for the sale of the land. Pursuant to the contract, Olympia deposited in escrow $25,000 in earnest money. The contract specified September 1, 2001, as the "Final Contingency Date." Section R--4(a) of the contract provided:
"The closing hereunder *** shall take place within fifteen (15) days of either a) the last applicable Final Contingency Date or b) March 1, 2002 if elected by PURCHASER *** to extend the Closing Date, as extended if extended or on such earlier date as shall be mutually agreeable to the parties."
In August 2001, Olympia obtained a 90-day extension of all applicable dates under the contract by depositing an additional $30,000 earnest money in escrow.
In October 2001, William filed suit against the Radkiewiczes and Olympia, challenging the legal ability of the Radkiewiczes to execute a sale without William's endorsement. William also filed a lis pendens on the Berco property. In November 2001, Olympia procured a second 90-day extension from the Radkiewiczes with a nonrefundable payment of $8,500. The amendment memorializing the extension cited "economic and market uncertainties" as the reason for the extension.
The lis pendens was not lifted before the time for closing specified in the contract expired. (In fact, it appears that the lis pendens was still in existence at the time of trial.) Closing on the sale never occurred. On March 11, 2002, the Radkiewiczes sent Olympia the following notice of default:
"Pursuant to the terms of the *** contract, Olympia was either to be prepared to close the transaction on March 1, 2002, or to exercise the option of extending the closing date by tendering the option fee and placing additional earnest money in escrow. Neither of the foregoing has been done by Olympia.
Seller hereby gives notice that Olympia is in default of the contract and the contract has thereby terminated through no fault of Seller who is ready, willing and able to close the transaction."
When Olympia refused to release the earnest money in escrow, the Radkiewiczes filed a claim against Olympia for breach of contract, claiming right to the $55,000 in earnest money.
There was conflicting testimony at trial as to who was responsible for the failure to close. Each party's witnesses generally accused the other party of not initiating the closing process and not being prepared to close in any event. Michael Mills, who was employed by Olympia to locate investment properties, testified that the lis pendens was of concern to Olympia because it was a cloud on title and diminished the likelihood of securing an end user for the Berco property. Mills testified that he expressed his concerns about the lis pendens to the Radkiewiczes and was assured by them that they would "take care" of the problem. As the March 1, 2002, deadline for closing approached, Mills reiterated his concerns but never received any indication that the problem of the lis pendens had been resolved by the Radkiewiczes. Mills testified that Olympia did not ultimately close on the property because the lis pendens was not removed and hence a cloud on title remained. Mills testified that Olympia would have closed on the property had the Radkiewiczes been able to produce clear title. Mills admitted that he did not recall ordering a title commitment on the Berco property as required of Olympia under the contract.
David Barr, Olympia's attorney on the contract, testified that he informed Duane Slayton, the attorney for the Radkiewiczes, that Olympia would not close unless the lis pendens was removed. According to Barr, Slayton responded that he and the Radkiewiczes would attempt to have the lis pendens removed. The following exchange occurred when Barr was asked why Olympia did not close on the sale:
"Q: Were you ever given a closing date by Mr. Slayton?
Q: Did he ever supply you with any closing documents?
Q: Did he ever notify you of a closing date?
Q: Did Mr. Slayton ever indicate to you in writing or verbally that the lis pendens had been taken care of?
Q: Or that the litigation was terminated?
Barr testified that he advised Olympia not to close on the property because of the lis pendens. Barr admitted that Olympia never expressed in writing that the lis pendens was an obstacle to closing.
Michael Rose, a principal of Olympia, also testified that Olympia did not close on the property because of the lis pendens. Rose testified that Olympia was prepared to close on the contract on March 1, 2002. Rose testified that, although he had a loan commitment from a bank on March 1, 2002, the commitment was not in writing.
Duane Slayton acknowledged that the lis pendens had to be "taken care of at or prior to closing." Slayton testified that after William filed suit, Slayton spoke to Richard Bales of Chicago Title Insurance about the possibility of insuring over or waiving the lis pendens. Bales informed Slayton that "when [Olympia] was ready to close, [Bales] would very seriously attempt to seek a way" to deal with the lis pendens. Because no closing date had yet been ...