United States District Court, N.D. Illinois, Eastern Division
MEADOWDALE APARTMENTS UNIT I, LLC et al., Plaintiffs/Counter-defendants,
AMERICAN HOUSING SOLUTIONS, Defendant/Counter-plaintiff.
MEMORANDUM OPINION AND ORDER
Virginia M. Kendall United States District Judge.
Meadowdale Apartments Unit I, LLC, Meadowdale Apartments Unit
II, LLC, and Meadowdale Apartments Unit III, LLC, owners of
three residential real estate developments, entered into
three nearly identical purchase agreements with Defendant
American Housing Solutions (“AHS”). Plaintiffs
filed suit against AHS in the Circuit Court of Kane County,
Illinois seeking a declaratory judgment that each of the
three agreements terminated by its own terms and are of no
further force and effect and that Plaintiffs did not default
in any of its obligations under the agreements (Count I).
(Dkt. 1-2). AHS removed the case and it was assigned to this
Court. (Dkt. 1). AHS then filed two counterclaims against
Plaintiffs seeking declaratory judgment that the agreements
are still valid and enforceable (Count I) and alleging breach
of contract and seeking an order of specific performance
(Count II). (Dkt. 9). Plaintiffs moved for judgment on the
pleadings in their favor and against AHS on all counts in
their Complaint and AHS' Counterclaims. (Dkt. 16). For
the following reasons, Plaintiffs' Motion for Judgment on
the Pleadings Pursuant to F.R.C.P. 12(c)  is denied.
own three separate apartment developments in Carpentersville,
Illinois, each of which consists of 216 residential units.
(Dkt. 1-2 at ¶ 6). On July 24, 2017, each of the
Plaintiffs executed a Purchase Agreement and Escrow
Instructions with AHS for one of the properties in
Carpentersville (the “Agreements”). (Id.
at ¶ 3, Exs. 1-3). The Agreements are governed by
Illinois law and are identical in all respects material to
the parties' allegations. (Id. at Exs. 1-3).
Each agreement provides a 90-day period of investigation of
the respective property and requires AHS' approval of the
investigation as a condition to the Closing. (Id.).
The terms of the Agreements related to the investigation and
approval state, in relevant part:
6. Buyer's Investigation and Other Matters.
On or prior to Ninety (90) days following the
date of this Agreement (“Decision Date”), Buyer
shall conduct the investigations of the
Property described in Sections 6.1, 6.2, and
6.3. Buyer's approval of such investigations shall
constitute a condition to the Closing. Such period of time is
referred to as the “Feasibility Period.”
6.3 Property Documents. Buyer shall
review on or before the Decision Date, all documents or
materials in the possession of Seller, or reasonably
available to the Seller, issued or prepared in
connection with the ownership, operation, management, use,
and/or proposed development of the Property, including [list
of documents] and any other reports of documents reasonably
requested of the Seller by the Buyer, which the Buyer
determines in their sole and absolute unfettered right is
needed to evaluate the Real Property for acquisition,
excluding the Excluded Documents (as defined below)
(collectively, “Property Documents”).
Seller shall deliver the Property Documents to
Buyer or shall make the Property Documents available to Buyer
for inspection. Buyer's failure to approve
or disapprove the Property Documents by delivery of written
notice thereof to Seller and Escrow Holder on or before the
Decision Date shall be deemed Buyer's disapproval. . . .
6.4 Termination. If, on or prior to the
Decision Date, Buyer fails, for any reason or for no reason,
to deliver written notice (“Approval Notice”) to
Seller and Escrow Holder approving the Title
Report described in Section 6.1 above, approving its
investigation of the Property pursuant to Section 6.2 above,
approving the Property Documents pursuant to Section 6.3
above, and approving the matters set forth in Section 6.4
with respect to the Wetlands, which approval or disapproval
shall be in Buyer's sole and absolute discretion,
then this Agreement
shall automatically terminate, in which event:
. . . (b) Escrow Holder shall return the Initial Deposit to
Buyer (regardless of whether or not Seller has signed a
consent or cancellation instructions), less one-half (1/2) of
Escrow Holder's cancellation fees and expenses and the
Independent Consideration; . . . and (f) this Agreement shall
terminate and neither party hereto shall have any further
obligation or responsibility hereunder or liability of any
nature or amount whatsoever to the other party hereunder,
except those obligations that expressly survive the
termination of this Agreement.
(Id. at Exs. 1-3 (emphasis added)).
Decision Date marking the end of the 90-day Feasibility
Period fell on October 23, 2017. AHS did not provide Approval
Notice on or before October 23, 2017. (Dkt. 1-2 at ¶ 5).
AHS alleges it was precluded from doing so because Plaintiffs
failed to provide or otherwise make available all Property
Documents, as required by Section 6.3, within the 90-day
Feasibility Period. (Dkt. 9 at ¶ 37). Plaintiffs deny
that they failed to meet any obligations under Section 6.3.
(Dkt. 1-2 at ¶ 18; Dkt. 13 at ¶ 36). The parties
disagree on the current status of the Agreements and which
party, if any, is in breach.
contend that, pursuant to Section 6.4, the Agreements
automatically terminated by their own terms on October 23,
2017 when AHS failed to provide Approval Notice within the
90-day Feasibility Period. (Dkt. 9 at ¶ 19). They argue,
therefore that the Agreements have no further force or
effect. (Id.) Plaintiffs argue also that whether
they provided all Property Documents is irrelevant because
Section 6.4 unambiguously states that the Agreements
“automatically terminate” if AHS does not provide
Approval Notice by the Decision Date “for any reason or
no reason at all.” (Dkt. 1-2 at ¶ 17; Dkt. 16 at
¶ 5, 8-9).
claims the Agreements are still valid and enforceable and
that Plaintiffs are in breach. Specifically, AHS argues that
the obligation to deliver or otherwise make available all
Property Documents under Section 6.3 constitutes a condition
precedent to AHS' obligation to provide Approval Notice
under Section 6.4 and, because Plaintiffs failed to meet the
condition precedent in Section 6.3, Section 6.4 was never
triggered. (Id. at ¶¶ 41-43). AHS further
alleges that Plaintiffs breached the Agreements by failing to
meet its obligations under Section 6.3 and seeks specific
performance of the Agreements pursuant to Section 11.2, which
11.2 Buyer's Remedies. In the event
Seller shall default under any of the terms and provisions of
this Agreement on or prior to Closing, Buyer shall have the
right, but not the obligation, either (a) to
terminate Buyer's obligations under this Agreement and
the Escrow created hereby in which event Buyer shall be
entitled to the immediate refund of the Deposit and any other
funds deposited by Buyer into Escrow, including all interest
earned thereon; or (b) enforce specific
performance of this Agreement, and Buyer shall
not be entitled to recover any damages whether actual,
direct, indirect, consequential, punitive or otherwise
notwithstanding such failure or breach by Seller.
(Dkt. 1-2, Exs. 1-3 (emphasis added); Dkt. 9 at ¶¶