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Karimi v. 401 North Wabash Venture
Appellate Court of Illinois
952 N.E.2d 1278 (2011)
Farid Karimi and Mahmobah Kashani (the buyers) (plaintiffs) entered into a contract with 401 North Wabash Venture (401 North Wabash) (defendant) to purchase a condominium and three parking spaces in Trump International Hotel and Tower for $2.2 million. The buyers paid earnest money, or a deposit, of 15 percent of the purchase price, about $330,000. Under the contract, 401 North Wabash was entitled to liquidated damages if the buyers defaulted on the purchase agreement. The liquidated damages would equal the buyers’ deposit plus any other amounts they had paid toward the purchase price. Additionally, the liquidated damages were limited to this sum regardless of actual damages. The initial closing date for the purchase was set for October 6, 2008. When the buyers could not obtain financing, the parties pushed the closing date to May 15, 2009. The buyers failed to close on May 15, 2009. Consequently, 401 North Wabash terminated the purchase agreement and retained the $330,000 as liquidated damages. In September 2009, 401 North Wabash sold the condominium plus two parking spaces for $2.5 million. The buyers sued 401 North Wabash, arguing that the contract’s liquidated damages clause was unenforceable because it was for an uncertain sum and because it operated as a penalty. Specifically, the buyers argued that the clause was a penalty because the clause gave the seller an option to seek actual damages and because 401 North Wabash suffered no actual damages. 401 North Wabash moved to dismiss. The trial court dismissed the buyers’ complaint. The buyers appealed.
Rule of Law
Holding and Reasoning (Harris, J.)
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