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Michael Burke v. 401 N. Wabash Venture

June 28, 2011

MICHAEL BURKE, PLAINTIFF,
v.
401 N. WABASH VENTURE, LLC, DEFENDANT.



The opinion of the court was delivered by: Judge George M. Marovich

MEMORANDUM OPINION AND ORDER

After the Court dismissed his first two complaints (in rounds one and two), plaintiff Michael Burke ("Burke") filed a second-amended complaint against defendant 401 N. Wabash Venture, LLC. (the "developer"). The second-amended complaint included sixteen counts. The Court struck Counts IX, X, XI, XII and XV, because, in those counts, plaintiff had attempted to re-plead claims the Court had already dismissed with prejudice. Defendant now moves to dismiss the remaining claims in the first-amended complaint. For the reasons set forth below, the Court grants in part and denies in part the motion to dismiss.

I. Background

For purposes of this motion to dismiss, the Court takes as true the allegations in plaintiff's second-amended complaint. The Court may consider the documents plaintiff attached to his complaint. See Fed.R.Civ.P. 10(c). The Court may also consider documents referred to in plaintiff's complaint and central to his claim (so long as the documents do not require discovery to authenticate or disambiguate), because those documents are considered part of the pleadings. See Tierney v. Vahle, 304 F.3d 734, 739 (7th Cir. 2002).

In this case that means the Court considers the 2003Property Report, which plaintiff referred to in his complaint and defendant attached to its motion to dismiss. This should come as no surprise to plaintiff since the Court considered the 2003 Property Report when it dismissed plaintiff's first-amended complaint. Still, plaintiff asked the Court to convert defendant's motion to a motion for summary judgment. The Court declined, because the Court had (and still has) no intention of considering matters outside the pleadings. When it so ruled, the Court instructed plaintiff as follows:

Should plaintiff believe that any matters defendant submitted in connection with its motion to dismiss are outside the pleadings, the plaintiff should so argue in its response to the motion to dismiss and should support its argument with citations to legal authority. (Dkt. No. 85). Plaintiff failed to do so. Instead, plaintiff assumed (incorrectly) that everything attached to defendant's motion was outside the pleadings and refused to address those documents in his response to defendant's motion. Burying one's head in the sand is a strategy, but it is not a good one.

Plaintiff Burke wants his deposit back for a condominium unit he agreed to purchase but on which he failed to close. Defendant 401 N. Wabash, LLC developed a building at 401 N. Wabash in Chicago. The building includes several hundred condominium units, which defendant ventured to sell.

In or about December 2006, plaintiff Burke entered a purchase agreement (the "Agreement") with defendant for the purchase of unit 31K and two parking spaces. Plaintiff paid an earnest money deposit of more than $400,000.00. At the time, defendant gave plaintiff a copy of the Property Report dated September 24, 2003 (the "2003 Property Report"). Among other things, the 2003 Property Report stated:

The Condominium will contain approximately three hundred twenty-six (326) residential dwelling units that the Developer currently intends will occupy floors forty (40) through forty-eight (48) and fifty-one (51) through eighty-eight (88) in the Building, an undetermined number of unit parking spaces within the aboveground parking facilities that the Developer currently intends will be located on some of floors three (3) through twelve (12) in the Building (provided that the unit parking spaces will occupy only a portion of such above-ground parking garage area, and the balance of the above-ground parking garage area will be occupied by the public parking garage facility more fully described below) . . . (2003 Property Report at 2).

On or about August 5, 2008, defendant set a closing date of August 7, 2008. Defendant also provided Burke a copy of the condominium's Declaration and a copy of a Special Amendment to the Declaration. The Special Amendment stated that the sixth floor would be used for parking spaces. Plaintiff asserts that turning the sixth floor into parking lowered the value of his parking space and increased the amount of maintenance fees he would be required to pay. In addition, in or about October 2007, defendant issued a Fourth Property Report. In the Fourth Property Report, as compared to the September 2003 Property Report, annual common expenses (which would be charged to the unit owners) increased to $7,328,455 from $5,595,700. Finally, plaintiff asserts that defendant put only $69,584 in reserves.

Plaintiff refused to close on the unit. Defendant refused to return his earnest money deposit. This suit followed.

II. Standard on a motion to dismiss

The Court may dismiss a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure if the plaintiff fails "to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). In considering a motion to dismiss, the Court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in the plaintiff's favor. McCullah v. Gadert, 344 F.3d 655, 657 (7th Cir. 2003). Legal conclusions, however, are not entitled to a presumption of truth. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1951 (2009) (rejecting, as conclusory, allegations that defendants "knew of, condoned, and willfully and maliciously" engaged in conduct). Under the notice-pleading requirements of the Federal Rules of Civil Procedure, a complaint must "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint need not provide detailed factual allegations, but mere conclusions and a "formulaic recitation of the elements of a cause of action" will not suffice. Bell Atlantic, 127 S.Ct. at 1964-1965. A complaint must include enough factual allegations to "raise a right to relief above a speculative level." Bell Atlantic, 127 S.Ct. at 1965. "After Bell Atlantic, it is no longer sufficient for a complaint 'to avoid foreclosing possible bases for relief; it must actually suggest that the plaintiff has a right to relief, by providing allegations that raise a right to relief above the speculative level.'" Tamayo v. Blagojevich, 526 F.3d 1074, 1084 (7th Cir. 2008) (quoting Equal Employment Opportunity Comm'n v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir. 2007)). To survive a motion to dismiss, a claim must be plausible. Iqbal, 129 S.Ct. at 1950.

III. Discussion

A. Plaintiff's claims that defendant breached the contract by not seeking plaintiff's approval for changes

In Counts I, II, and III of the second-amended complaint, respectively, plaintiff again alleges that defendant breached its agreement with plaintiff by: I) using the sixth floor for parking, II) making changes to the budget, and III) providing inadequate reserves when the developer turned over the building to the condominium association. The Court previously dismissed these claims, because plaintiff failed to cite any contract provision that had been breached and, therefore, failed to state a plausible claim.

This time, plaintiff cites a contract provision he believes defendant breached. The contract defendant is alleged to have breached is the Agreement between plaintiff and defendant for the sale of the unit at 401 N. Wabash. (Plaintiff attached a copy of the Agreement to ...


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