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Al A. Martinez and Greg Campos v. River Park Place

November 20, 2012

AL A. MARTINEZ AND GREG CAMPOS, PLAINTIFFS-APPELLANTS,
v.
RIVER PARK PLACE, LLC, AN ILLINOIS LIMITED LIABILITY COMPANY, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County. No. 07 CH 6438 Honorable Martin S. Agran. Judge Presiding.

The opinion of the court was delivered by: Justice Quinn

JUSTICE QUINN delivered the judgment of the court, with opinion.

Presiding Justice Harris and Justice Connors concurred in the judgment and opinion.*fn1

OPINION

¶ 1 Plaintiffs, Al A. Martinez and Greg Campos, appeal from an order of the circuit court of Cook County finding that plaintiffs' damages arising from defendant's breach of their contracts to purchase two condominium units in a planned development in Elgin, Illinois, were limited to a return of plaintiffs' earnest money and nominal damages of $1 each. The order was issued in response to defendant's motion to reconsider the trial court's memorandum opinion, issued after a bench trial, finding that defendant had breached the contracts by terminating plaintiffs' purchase agreements when they would not agree to an increase in the purchase price and awarding damages to each plaintiff equal to the difference between the increased price and the contract __________________________ price for their condominium units. Plaintiffs also appeal from the trial court's finding that defendant did not violate the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2008)), by increasing the purchase price of the condominium units in order to coerce plaintiffs to either agree to the price increase or terminate their purchase agreements. On appeal, plaintiffs argue that: (1) the trial court erred in finding that they failed to present evidence to support an award of damages more than the return of their earnest money; and (2) the trial court's finding that defendant did not violate the Consumer Fraud Act was contrary to law and against the manifest weight of the evidence. For the reasons set forth below, we affirm the trial court.

¶ 2 I. Background

¶ 3 Prior to 1992, the City of Elgin (City) acquired real estate near the Grand Victoria Casino (Casino) in an effort to redevelop its downtown area. The real estate consisted of two parcels, a townhouse parcel and a condominium parcel, and the City held a competition among developers for the best redevelopment plan. Defendant's predecessor, Par Development, Inc. (Par), submitted the winning proposal. In February 2002, the City and Par entered into a development agreement that provided that before the property could be conveyed to Par and construction could proceed, the City had to complete several conditions precedent, including environmental remediation, demolition of a theater, and acquisition of a parcel on the condominium site through eminent domain proceedings. In February 2004, River Park Place (RPP) was formed as an Illinois limited liability company to pursue development on the two parcels of land. By March 2004, the City had substantially completed its remedial work on the townhouse parcel and was preparing to convey it to RPP. In April 2004, RPP opened a sales office on the site and, although the City had not yet conveyed the property, RPP began to market both the townhouses and the condominiums. RPP based its pricing on the per-square-foot costs from a similar development in Chicago, which had served as a blueprint for River Park Place.

¶ 4 In October 2004, plaintiffs, who were frequent visitors to the Casino, each decided to purchase a unit in the planned condominium development as a second residence. On October 31, 2004, Martinez signed an agreement to purchase unit 608 for $243,338. That same day, Campos agreed to purchase unit 304 for $240,535. Both plaintiffs delivered their signed purchase agreements along with checks for $1,000 earnest money to RPP's sales office and shortly thereafter submitted checks for $6,000 to RPP to complete payment of their earnest money deposits of $7,000 each. There were no negotiations over the price of the condominium units, as they were presented to the public on a "take it or leave it" basis, and each plaintiff was to purchase his unit with cash rather than obtaining a mortgage. The parties' attorneys proposed several modifications to the purchase agreements; however, none of those proposed modifications were adopted.

¶ 5 The purchase agreements contained a default provision, paragraph 20, which states, in relevant part:

"If Seller refuses or is unable to deliver title for the Residence as herein provided prior to Closing, or if this Agreement is terminated prior to the time for Closing for any reason (including the failure to acquire ownership of the real property upon which the Residence is to be constructed from the City of Elgin) other than a default of Purchaser, the sole and exclusive remedy of Purchaser shall be the return of the Earnest Money deposit. Seller's sole liability at law or in equity shall be limited to the return of such funds to Purchaser."

¶ 6 The condominium site was conveyed to RPP by deed recorded on January 19, 2006. As of February 13, 2006, defendant had not begun work on the condominium building. On that date, defendant mailed a letter to all of the purchasers of the condominium units, including the plaintiffs, advising them that RPP had received title to the property from the City and had "finalized development plans for the project," but that due to delays in obtaining the property and modified building codes, the cost of construction had increased, and therefore, RPP was increasing the price of each condominium unit. The revised price for Martinez's unit was $336,070, an increase of $92,732 over the purchase agreement price, while the revised price for Campos' unit was $335,128, an increase of $94,593. The letters stated that if plaintiffs did not accept the revised price, their contracts would be terminated and their earnest money would be returned, with interest. Plaintiffs did not consent to the price increase, and on March 20, 2006, defendant sent letters to the plaintiffs informing them that their purchase agreements were terminated and returning their earnest money, with interest. Plaintiffs rejected the return of their deposits.

¶ 7 On March 8, 2007, plaintiffs filed a three-count complaint against RPP in the circuit court of Cook County. Count I of the complaint alleged breach of contract and sought specific performance, count II sought a declaratory judgment that the contracts were valid and enforceable and that defendant breached the contracts by refusing to close and convey title, and count III alleged a violation of section 2 of the Illinois Consumer Fraud Act. 815 ILCS 505/2 (West 2008). Defendant filed a motion to dismiss pursuant to sections 2-619(a)(5) and (a)(9) of the Illinois Code of Civil Procedure (735 ILCS 5/2-619(a)(5), (a)(9) (West 2008)). The trial court granted defendant's motion to dismiss as to count I seeking specific performance but denied the motion as to counts II and III and granted plaintiffs leave to file an amended complaint.

¶ 8 On December 9, 2008, plaintiffs filed their first amended complaint for breach of contract, declaratory judgment, and violation of the Consumer Fraud Act. Plaintiffs sought damages equal to the difference between their purchase agreement prices and the prices that defendant allegedly requested for each unit when it put them back on the market after terminating their agreements. Plaintiff Martinez had obtained a 2008 price list from RPP's sales office, which showed that the asking price for unit 608 was $336,070, the same price RPP had sought from Martinez in its February 2006 letter. The price list also indicated that unit 608 had been sold, although no evidence was presented at trial showing that it had indeed been sold for that price.*fn2 Since the contract price for his unit was $243,338, Martinez asked for damages in the amount of $91,790.*fn3 The 2008 list price for Campos' unit was $335,128 as compared to his purchase agreement price of $240,535, a difference of $94,593.

ΒΆ 9 A bench trial was held on January 10, 11, and 12, 2011. Construction on the condominium parcel had not commenced at the conclusion of the trial, and there appears to be no planned commencement date. Following the trial, on March 8, 2011, the trial court entered a memorandum opinion finding that defendant's termination of the purchase agreements by its letters dated March 20, 2006 and the return of the earnest money deposits, with interest, constituted a breach of contract. With regard to damages, the court found that paragraph 20, the default provision of the purchase agreements, was not a valid and enforceable liquidated damages provision and instead agreed with plaintiffs that the proper measure of damages was the difference between the contract prices for the condominium units and the market prices on the date of the breach. To determine the market price on the date of the breach, the court relied on RPP's 2008 price list, ...


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