Radkiewicz v. Radkiewicz

Case Date: 11/05/2004
Court: 2nd District Appellate
Docket No: 2-03-0878 Rel

No. 2--03--0878


 
IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT
 


WILLIAM RADKIEWICZ,

          Plaintiff and Counterdefendant,

v.

EDWARD F. RADKIEWICZ; ROBERT
J. RADKIEWICZ, Indiv. and as Assignee of
Lease by Berco Floral Company, Lessee;
FIFTH THIRD BANK, as Successor to Old
Kent Bank, as Successor to Pinnacle Bank, as
Successor to Suburban Trust and Savings
Bank, not Indiv. but as Trustee under Trust
Agreement dated November 19, 1973, and
Known as Trust No. 2615,

          Defendants and Counterplaintiffs and
          Third-Party Plaintiffs-Appellees

(Olympia Investments, Defendant and
Counterdefendant-Appellant; Colliers, Bennett
and Kahnweiler, Third-Party Defendant).

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Appeal from the Circuit Court
of Du Page County.


No.  01--CH--1372














Honorable
Edward R. Duncan, Jr.,
Judge, Presiding.

 

PRESIDING JUSTICE O'MALLEY delivered the opinion of the court:

Olympia Investments (Olympia) appeals from the judgment of the circuit court finding thatOlympia breached its real estate contract with Edward F. Radkiewicz and Robert J. Radkiewicz (theRadkiewiczes) and awarding the Radkiewiczes the earnest money that Olympia had put down on thecontract. We reverse.

The following facts are taken from the bench trial on the Radkiewiczes' claim. TheRadkiewiczes, together with their brother William, were beneficiaries of a trust established by theirparents. The primary asset of the trust was a 27-acre tract of land (the Berco property), inunincorporated Du Page County. In June 2001, having represented to Olympia that they had theauthority to bind the trust without William's consent, the Radkiewiczes entered into a contract withOlympia for the sale of the land. Pursuant to the contract, Olympia deposited in escrow $25,000 inearnest money. The contract specified September 1, 2001, as the "Final Contingency Date." SectionR--4(a) of the contract provided:

"The closing hereunder *** shall take place within fifteen (15) days of either a) thelast 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 bemutually agreeable to the parties."

In August 2001, Olympia obtained a 90-day extension of all applicable dates under the contract bydepositing an additional $30,000 earnest money in escrow.

In October 2001, William filed suit against the Radkiewiczes and Olympia, challenging thelegal ability of the Radkiewiczes to execute a sale without William's endorsement. William also fileda lis pendens on the Berco property. In November 2001, Olympia procured a second 90-dayextension from the Radkiewiczes with a nonrefundable payment of $8,500. The amendmentmemorializing the extension cited "economic and market uncertainties" as the reason for theextension.

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 salenever 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 theforegoing 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 thetransaction."

When Olympia refused to release the earnest money in escrow, the Radkiewiczes filed a claim againstOlympia 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 notbeing prepared to close in any event. Michael Mills, who was employed by Olympia to locateinvestment properties, testified that the lis pendens was of concern to Olympia because it was a cloudon title and diminished the likelihood of securing an end user for the Berco property. Mills testifiedthat he expressed his concerns about the lis pendens to the Radkiewiczes and was assured by themthat 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 hadbeen resolved by the Radkiewiczes. Mills testified that Olympia did not ultimately close on theproperty because the lis pendens was not removed and hence a cloud on title remained. Mills testifiedthat Olympia would have closed on the property had the Radkiewiczes been able to produce cleartitle. Mills admitted that he did not recall ordering a title commitment on the Berco property asrequired of Olympia under the contract.

David Barr, Olympia's attorney on the contract, testified that he informed Duane Slayton, theattorney 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 lispendens removed. The following exchange occurred when Barr was asked why Olympia did notclose on the sale:

"Q. Were you ever given a closing date by Mr. Slayton?

A. No.

Q. Did he ever supply you with any closing documents?

A. No.

Q. Did he ever notify you of a closing date?

A. No.

Q. Did Mr. Slayton ever indicate to you in writing or verbally that the lis pendens had been taken care of?

A. No.

Q. Or that the litigation was terminated?

A. No."

Barr testified that he advised Olympia not to close on the property because of the lis pendens. Barradmitted 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 propertybecause of the lis pendens. Rose testified that Olympia was prepared to close on the contract onMarch 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 toclosing." Slayton testified that after William filed suit, Slayton spoke to Richard Bales of ChicagoTitle Insurance about the possibility of insuring over or waiving the lis pendens. Bales informedSlayton that "when [Olympia] was ready to close, [Bales] would very seriously attempt to seek away" to deal with the lis pendens. Because no closing date had yet been scheduled, Bales said he"was not going to commit" to dealing with the lis pendens. Slayton further testified as follows:

"Q. So what did you do in preparation for the March 1st tentative closing date to eradicate, expunge or otherwise release the lis pendens?

A. I had discussions with Mr. Bales and did other things getting ready to get it waived in the event there was a closing.

* * *

Q. So would it be fair to say it's true you didn't know if Chicago Title or any other title company would waive or insure over the lis pendens by the March 1st closing date?

A. I had very good indications all around that it could and would be done.

* * *

Q. When you issued the default letter in March of 2002--

A. The what letter?

Q. The default letter.

A. Okay.

Q. Did you have clear title?

A. We were getting ready to close.

Q. The question is, did you have clear title, sir?

A. We would have had clear title when they're ready to close.

* * *

Q. And that's through Mr. Bales with Chicago Title?

A. Be it through Mr. Bales or other means.

* * *

Q. Mr. Slayton, did you schedule a closing for this real estate transaction prior to your issuance of a notice of default in March, 2002?

A. The buyer did not schedule a closing.

Q. Did you schedule a closing, sir? Did you schedule a closing?

* * *

A. I--I tentatively inquired about scheduling a closing with the title company, but I had not heard from the buyer so I didn't schedule one.

THE COURT: So you did not schedule a closing?

THE WITNESS: I did not schedule--

THE COURT: Thank you.

THE WITNESS: --a closing.

MR. DWYER [Olympia's attorney]: Mr. Slayton, what is the reason that you did not schedule a formal closing with Mr. Mills?

* * *

A. The date of closing, March 1st, had come and gone and there was no action by the buyer to schedule it. And therefore, I didn't schedule one but I was ready for one."

Robert Radkiewicz testified that, at a meeting in January or February 2002, Mills stated that"it didn't look like [closing] was going to take place" on March 1, 2002, because "the economy wasn'tproper *** and they were having problems finding [end users]." Robert testified that Olympia didnot "appear on the 28th of February or 1st of March ready, willing and able to close the transaction." Edward Rakiewicz testified as follows:

"Q. *** [D]id Mr. Mills actually perform the contract by appearing at the closing on the 28th of February or the 1st of March--

A. No.

Q. --to close this transaction? Did he ever give you a reason as to why the closing did not go ahead?

A. He said it just wasn't--they couldn't perform, and it just wasn't opportune at that time.

* * *

Q. As far as your understanding goes, did you have all the necessary documents in order to close the property for March 1st of 2002?

A. We were in the process of gaining all of them, yes.

Q. Well, you either had them, sir[,] or you didn't.

A. Well, I if--I guess if a closing was imminent, we would have had them.

Q. But did you have them as of March 1st of 2002?

A. There was no closing. There was no closing scheduled."

The trial court found that Olympia defaulted on the contract. First, the trial court found thatOlympia's answer to the Radkiewiczes' complaint did not specify how the Radkiewiczes failed tocomply with all conditions precedent in the real estate contract. Citing Supreme Court Rule 133(c) (134 Ill. 2d. R. 133(c)), the trial court concluded that Olympia conceded that the Radkiewiczescomplied with all conditions precedent under the contract. The trial court further found that Olympia"failed to meet its obligation of being prepared to close at the time designated in the contract." Specifically, the trial court noted that Olympia did not order a title commitment as required by thecontract and, assuming that Olympia considered the lis pendens an impediment to closing, did not sonotify the Radkiewiczes and afford them a chance to cure. Olympia filed this timely appeal.

The relevant facts here are not in dispute. Rather, this case hinges on the interpretation of theparties' real estate contract. Interpretation of contract language is a question of law, which we reviewde novo. In re Shaffer, 319 Ill. App. 3d 1048, 1051 (2001).

Olympia challenges the trial court's finding that Olympia breached the real estate contract. Olympia concedes that it did not order a title commitment as required by the contract but insists that its lack of compliance was excused by the Radkiewiczes' admitted failure to obtain clear title. Olympia submits that ordering a title commitment would have been futile when it was apparent to both Olympia and the Radkiewiczes that clear title could not be conveyed as required by the contract.The Radkiewiczes reply that Olympia was presumptuous in believing that the lis pendens would stillbe in existence at the time of closing:

"Illinois law is clear that a purchaser cannot assume that because a title objection appears twomonths before a closing that it's going to exist on the date of closing. Olympia did notschedule or appear at a closing to say it was ready, willing and able to accept the property,There was no lender, there was no title, there were no tenants, there were no end users. Olympia never ordered the title, never indicated to seller that there was an impediment, neverappeared at a closing asking for releases and had no construction plans for the property."

Olympia rejoins: "[The Radkiewiczes] did nothing to effectuate a closing. [The Radkiewiczes] didnot schedule a closing date, order closing documents or anything of a like nature."

In our view, Olympia never breached the real estate contract because the Radkiewiczes nevertendered their performance. The contract between the parties contemplated that the balance of thepurchase price and the deed of sale would be exchanged at closing.

"Where the contract requires the buyer to pay money and the seller to deliver the object ofthe sale at a certain time, those covenants are mutual and dependent. Under suchcircumstances, neither party can compel the other to perform without first tendering themoney or the item." Rothner v. Mermelstein, 219 Ill. App. 3d 502, 507 (1991).

See also Johnson v. Hermanson, 221 Ill. App. 3d 582, 584 (1991). The tender required is anexpression of readiness, willingness, and ability to perform. Dunham v. Dangeles, 67 Ill. App. 3d252, 256 (1978). Section R--4 of the contract addresses the time of closing and provides:

"(a) The closing hereunder shall be through the escrow referred to in R--4(b) below and shall take place within fifteen (15) days of either a) the last applicable Final ContingencyDate or b) March 1, 2002 if elected by PURCHASER per Section R--2(b) to extend theClosing Date, as extended if extended or on such earlier date as shall be mutually agreeableto the parties.

(b) Not later than five (5) days prior to Closing, the parties shall establish the usual form of deed and money escrow with Chicago Title & Trust Company, at which timethe earnest money and any interest thereon shall be deposited therein. Counsel for therespective parties are hereby authorized to execute the escrow trust instructions, as well asany amendments thereto."

The final contingency date specified in the original real estate contract was September 1, 2001. Thetwo amendments, each an extension of 90 days, moved the final contingency date to March 1, 2002. Thus, under section R--4(a), closing was to occur within 15 days of March 1, 2002, or earlier asagreed by the parties. The contract does not indicate which party was responsible for taking theinitiative in scheduling a closing date within the required period.

Although there was conflicting testimony at trial as to whether a closing date was scheduled,the Radkiewiczes and Olympia conceded at oral argument that no such date was ever scheduled. Itis clear to us that the Radkiewiczes failed to prove that they were ready, willing, and able to performon this contract at any time during the closing period specified by the contract. Edward, who faultedOlympia for not appearing on February 28 or March 1, 2002, to close the transaction, admitted thathe and his brother did not possess all of the required closing documents on those dates. Then,curiously, Edward explained that he had not yet gathered all of the documents on those dates becauseno closing date had been scheduled. Slayton admitted that the Radkiewiczes did not have clear titleon March 11, 2002, when the default letter was issued, but emphasized that he would have had cleartitle by the time of closing. Slayton blamed Olympia for not scheduling the closing, but we see noindication in the contract that it was Olympia's duty to take the initiative in scheduling the closing. Rather, this appears to be a case where each party expected the other to initiate, yet neither had theright to so expect.

We recognize that the Radkiewiczes sent a letter to Olympia on March 11, 2002 (within therequired closing period), proclaiming themselves ready, willing, and able to perform. However, that letter was a notice of termination, not a tender. Therefore, as we view the record, the Radkiewiczeshave identified no date on which they conveyed or could have conveyed that they were ready, willing,and able to furnish unencumbered title as required by the contract. Absent proof of tender by theRadkiewiczes, we cannot say that Olympia defaulted on the contract. In fact, the Radkiewiczesterminated the contract on March 11, 2002--four days before the time for closing expired.

Given the foregoing, the flaw in the trial court's reasoning is obvious. The trial court foundOlympia in breach because it "failed to meet its obligation of being prepared to close at the timedesignated in the contract." Although neither Olympia nor the Radkiewiczes were at any timeprepared to close on the contract, the trial court laid the blame on Olympia. As the above authoritiesindicate, only a tender of performance by the Radkiewiczes could have placed Olympia in default, andthe trial court identified no evidence that the Radkiewiczes either tendered or could have tenderedtheir performance before they terminated the contract via the March 11, 2002, letter.

We disagree with the trial court that, by operation of Rule 133(c), Olympia waived theRadkiewiczes' performance of conditions precedent under the contract. Rule 133(c) provides:

"In pleading the performance of a condition precedent in a contract, it is sufficient toallege generally that the party performed all the conditions on his part; if the allegation bedenied, the facts must be alleged in connection with the denial showing wherein there was afailure to perform." 134 Ill. 2d R. 133(c).

Thus, under Rule 133(c), "[a] general denial to an allegation of the performance of a conditionprecedent is treated as an admission of performance." Wilbur v. Potpora, 123 Ill. App. 3d 166, 171(1984). The Radkiewiczes argue that Olympia was not specific in its denials and therefore concededthe Radkiewiczes' performance of all conditions precedent. Olympia responds that its affirmativedefense of impossibility contained a specific denial that the Radkiewiczes had clear title as requiredby the contract and that this denial was supported by a reference to the lis pendens. We agree withOlympia that the specific denial required by Rule 133(c) may be contained in an affirmative defense. There is no suggestion in Rule 133(c) that the denial it contemplates must be contained in a particularpart of a party's responsive pleading.

Notably, in rendering its verdict for the Radkiewiczes, the trial court reasoned that thepresence of the lis pendens did not nullify Olympia's obligation under the contract to order the titlecommitment and plat of survey. Accordingly, the trial court "denied" Olympia's affirmative defenseof impossibility and announced that it would then "go to the pleadings" to determine the applicabilityof Rule 133(c). However, the affirmative defense was part of the pleadings. Moreover, the ultimatevalidity of an affirmative defense does not affect whether the denial it contains satisfies Rule 133(c)'s specificity requirement. Rule 133(c) is concerned with the pleadings themselves, not with the proofin support of them.

The Radkiewiczes state, emphatically but conclusorily, that impossibility is not a recognizedaffirmative defense in Illinois. For support they cite, without explanation, section 2--613(d) of theCode of Civil Procedure (735 ILCS 5/2--613(d) (West 2002)), which provides:

"The facts constituting any affirmative defense, such as payment, release, satisfaction,discharge, license, fraud, duress, estoppel, laches, statute of frauds, illegality, that thenegligence of a complaining party contributed in whole or in part to the injury of which hecomplains, that an instrument or transaction is either void or voidable in point of law, orcannot be recovered upon by reason of any statute or by reason of nondelivery, want orfailure of consideration in whole or in part, and any defense which by other affirmative matterseeks to avoid the legal effect of or defeat the cause of action set forth in the complaint,counterclaim, or third-party complaint, in whole or in part, and any ground or defense,whether affirmative or not, which, if not expressly stated in the pleading, would be likely totake the opposite party by surprise, must be plainly set forth in the answer or reply." (Emphasis added.)

Presumably, the Radkiewiczes believe that impossibility is not an affirmative defense because it is notspecifically enumerated in the provision. However, the emphasized language of the statute clearlyindicates that the list is not meant to be exhaustive. The affirmative defense of impossibility is wellestablished in the common law of Illinois. See, e.g., Illinois-American Water Co. v. City of Peoria,332 Ill. App. 3d 1098, 1106 (2002).

As for the fate of the $55,000 in earnest money, the contract provides:

"If this contract is terminated without Purchaser's fault, the earnest money shall bereturned to the Purchaser, but if the termination is caused by the Purchaser's fault, then uponnotice to the Purchaser, the earnest money (plus interest thereon), shall be forfeited to theSeller ***."

Here, the contract was terminated by the Radkiewiczes via the March 11, 2002, letter. This occurredprior to the Radkiewiczes' tendering their performance and the expiration of the time designated inthe contract for closing. Therefore, the earnest money shall be returned to Olympia.

For the foregoing reasons, we reverse the judgment of the circuit court of Du Page County. Reversed.

BOWMAN and CALLUM, JJ., concur.