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Goldberg v. 401 North Wabash Venture LLC

April 22, 2010

JACQUELINE GOLDBERG, PLAINTIFF,
v.
401 NORTH WABASH VENTURE LLC AND TRUMP CHICAGO MANAGING MEMBER, LLC, DEFENDANTS.



The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge

MEMORANDUM OPINION AND ORDER

Plaintiff, Jacqueline Goldberg, filed a complaint ("Complaint") against 401 North Wabash Venture LLC ("401 North Wabash") and Trump Chicago Managing Member, LLC ("Trump") asserting claims for breach of contract and violations of the Illinois Condominium Act ("Condo Act"), the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), the Interstate Land Sales Full Disclosure Act ("ILSA"), and the Illinois Securities Act ("ISA").*fn1 Defendants filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) ("Motion"), which the Court grants in part and denies in part for the following reasons.

LEGAL STANDARD

"A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). Pursuant to Rule 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). As the Seventh Circuit recently explained, this "[r]ule reflects a liberal notice pleading regime, which is intended to 'focus litigation on the merits of a claim' rather than on technicalities that might keep plaintiffs out of court." Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.E.2d 1 (2002)). This short and plain statement must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atlantic v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.E.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). Under the federal notice pleading standards, a plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Put differently, a "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). "[W]hen ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007); Justice v. Town of Cicero, 577 F.3d 768, 771 (7th Cir. 2009) (court construes complaint in light most favorable to plaintiff, drawing all reasonable inferences in plaintiff's favor). Further, in deciding the Motion, the Court can consider exhibits attached to the Complaint. See Reger Dev., LLC v. National City Bank, 592 F.3d 759, 764 (7th Cir. 2010); Hecker v. Deere & Co., 556 F.3d 575, 582-83 (7th Cir. 2009); Local 15, Int'l Bhd. of Elec. Workers, AFL-CIO v. Exelon Corp., 495 F.3d 779, 782 (7th Cir. 2007).

BACKGROUND

As alleged in her Complaint, Plaintiff, Jacqueline Goldberg, entered into agreements ("Purchase Agreements") with Defendants to purchase two hotel condominium units ("HCUs") at Trump International Hotel and Tower ("Trump Tower"), located at 401 North Wabash in Chicago, Illinois. (R. 1-1, Compl. at ¶ 1.) Defendant 401 North Wabash's managing member is Defendant Trump, and its principal business has been constructing Trump Tower and marketing HCUs. (Id. at ¶¶ 5-6.)

Trump Tower is a ninety-two-story building that consists of private condominium residences, HCUs, a health club, meeting rooms, ballrooms, public parking, parking for the condominium residences, retail space, restaurants, concierge desk, and lobby, among other things. (Id. at ¶¶ 8-9.) There are approximately 339 HCUs in Trump Tower, about 55% of which the Trump Defendants had sold between 2003 and September 2009. (Id. at ¶ 11.)

Prior to entering into the Purchase Agreements with Plaintiff, the Trump Defendants provided her with various written materials, including documents entitled (1) Trump International Hotel Owner Use and Rental, (2) Frequently Asked Questions ("FAQ"), (3) Project Overview, (4) Property Reports, and (5) Amended Property Reports. (Id. at ¶¶ 14-17, 20.) The FAQ provided, among other things, that:

* "The hotel program will be managed through a specialized computer reservation system that assigns 'rotation points' to guestrooms as they are occupied. The hotel rooms with the least number of rotation points are the next to be rented in the system."*fn2

* "When an owner, or the designated guest of an owner, occupies their personal guestroom, the reservation system does not assign any points for that night. Therefore, you are encouraged to stay in your personal guestroom since the reservation system will make up for the 'vacancy' of the room after your departure." (Id. at ¶¶ 18-19.)

Additionally, the Trump Defendants represented to Plaintiff that:

* At no additional cost beyond the monthly assessment, each HCU owner would have a membership with the Trump Tower's health club, which the owner could use at any time. (Id. at ¶¶ 21, 29.)

* Each HCU owner would own a percentage of the common elements, including Trump Towers' meeting/function rooms, laundry facilities, storage areas, and ballrooms. Accordingly, the Condominium Association would receive a share of revenues, estimated to be roughly $5 million per year, generated from the meeting rooms and ballrooms. (Id. at ¶¶ 21, 28, 32, 36.)

* When HCU owners rented their units, they would be entitled to receive the gross revenue from the rental, which consisted of the rental rate, less a per-use fee, HCU monthly costs, credit-card fees, and travel-agent fees. (Id. at ¶ 21.)

Plaintiff entered into the first of the Purchase Agreements, to purchase HCU 2238 for $1,239,500, on August 2, 2006, paying an earnest money deposit at that time of $114,950. (Id. at ¶¶ 50, 54.) Plaintiff entered into the second of the Purchase Agreements, to purchase HCU 2240 for $971,687, on August 8, 2006, paying an earnest money deposit at that time of $92,668.70. (Id. at ¶¶ 51, 55.) The Purchase Agreements provided Plaintiff with (1) an interest in the common elements of meeting/function rooms, storage rooms, laundry facilities, and ballrooms; and (2) a membership in the Trump Tower health club that entitled Plaintiff to use the health club at any time. (Id. at ¶¶ 52-53, 56-57.) Furthermore, the Purchase Agreements provided,

Seller reserves the right, in its sole and absolute discretion, to modify the Condominium Documents, together with the Articles of Incorporation of the Association and the Statement of Record required by the Interstate Land Sales Full Disclosure Act (the 'HUD Report'), provided that Seller shall notify Purchaser or obtain the Purchaser's approval of any changes in the Condominium Documents, the HUD Report and any such other documents, as the case may be, when and if such notice or approval is required by law.*fn3

(R. 1-12, Exs. L, M, Purchase Agreements at § 4(a).) By April 2009, Plaintiff had paid to the Trump Defendants a total of about $516,487.40 toward the purchase of her HCUs. (R. 1-1, Compl. at ¶ 72.)

The October 1, 2007, and October 25, 2007, Property Reports, which Plaintiff received in October and November 2007, provided that HCU owners would no longer own a percentage of the meeting/function rooms, ballrooms, storage areas, and laundry facilities. (Id. at ¶¶ 39, 41, 73-74.) They further provided that HCU owners' health club memberships would only entitle them to use the health club when they occupied their HCU. (Id. at ¶ 41.) None of these changes was approved by 75% of the HCU owners. (Id. at ¶ 43.) Also in October 2007, the Trump Defendants issued to Plaintiff an HCU Rental Agreement, which provided that:

* Owners' use of their HCU would have an adverse impact on their HCU's priority in the rental-reservation allocation.

* Each time owners rented their HCU, they would be charged an administrative fee of 3% of the gross room rental fee, a $6-per-night-reservation ...


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