Chapman v. Engel

SUPREME COURT CASES

Laws-info.com » Cases » Illinois » 1st District Appellate » 2007 » Chapman v. Engel

Chapman v. Engel

State: Illinois

Court: 1st District Appellate

Docket No: 1-06-0791 Rel

Case Date: 03/27/2007

Preview:SECOND DIVISION March 27, 2007

No. 1-06-0791 TODD J. CHAPMAN and WENDI L. CHAPMAN, Plaintiffs-CounterdefendantsAppellants, v. ROBERT S. ENGEL and LINDA R. ENGEL, Defendants-CounterplaintiffsAppellees. ) ) ) ) ) ) ) ) ) ) ) Appeal from the Circuit Court of Cook County.

Honorable Thomas Hogan, Judge Presiding.

PRESIDING JUSTICE WOLFSON delivered the opinion of the court: We are called on to construe a fee-shifting provision in a home purchase contract, no simple matter considering the way the bench trial concluded. Each side claimed the other materially breached the contract. The trial court held neither one of them did, although

the plaintiffs did get back the earnest money they sued for. Plaintiffs contend they should be awarded attorney fees and costs because they were the "prevailing Party" as that term is used in the contract. The trial court held they were not

entitled to fees and costs because they were not the prevailing parties. We affirm the trial court's conclusion, although our

reason is not the same. FACTS

1-06-0791 The Chapmans entered into a real estate contract for the purchase of the Engels' home for $550,000. The Chapmans tendered

$55,000 in earnest money to Coldwell Banker, the listing broker. The parties were scheduled to close on August 15, 2002. The

Chapmans conducted a final walk-through of the property the morning before closing, as authorized by the contract. During

the walk-through, the Chapmans noticed the house was not in the same condition as it had been when the contract was signed. Chapmans requested either a credit or escrow of money so the house could be repaired. to negotiate a resolution. At the closing, the parties attempted The contract was terminated when the The

parties could not reach an agreement. Following the termination of the contract, the Chapmans demanded the release of the earnest money. The Engels made their

own claim to the earnest money, which remained in the Coldwell Banker account. On October 2, 2002, the Chapmans filed a lawsuit Count I of the complaint was a declaratory

against the Engels.

judgment action, which sought an order from the trial court declaring the contract was properly terminated, directing the Engels to release the Chapmans' earnest money and awarding the Chapmans their attorney fees and costs in bringing the suit. Count II of the complaint alleged the Engels breached the contract by not having the home in the same condition at closing

-2-

1-06-0791 as it was when the contract was signed. The Engels filed a counterclaim, seeking recovery of the earnest money as liquidated damages for the Chapmans' alleged breach of contract. The Engels also sought an award of While the litigation was

reasonable attorney fees and costs.

pending, the Engels sold their house to a third party for $520,000. On December 18, 2003, the Chapmans filed a motion for partial summary judgment, contending the Engels were entitled to only $30,000 of the earnest money--the difference between what the Engels eventually sold the house for and the amount the Chapmans agreed to pay. In response, the Engels contended they In

were entitled to the full $55,000 as liquidated damages.

their reply brief in support of summary judgment, the Chapmans contended the Engels could not recover liquidated damages because the contract did not contain a liquidated damages provision. The trial court denied the Chapmans' motion, finding there were questions of fact precluding any dispositive ruling. The

Engels were granted leave to file an amended counterclaim, which sought the recovery of actual damages in the event liquidated damages were unavailable. Prior to trial, the Chapmans filed several motions in limine. Motion in limine #2 sought to bar the Engels from

-3-

1-06-0791 presenting evidence and argument regarding liquidated damages. The trial court denied the Chapmans' motion in limine, but informed the Engels that they had to elect a remedy before trial. The Engels elected to pursue actual damages. As a result, on

November 12, 2005, the trial court ordered the Engels to "immediately take all actions appropriate and necessary to cause Coldwell Banker to release [the Chapmans] $55,000 in earnest money." Following a bench trial, the court dismissed both the

Chapmans' complaint and the Engels' counterclaim with prejudice. On December 22, 2005, the Chapmans filed a petition for attorney fees and costs, requesting reimbursement for fees up to the day the trial court ordered the Engels to release the earnest money. The "attorney fees" provision in the contract signed by

the parties provided for the payment of legal fees and costs to the prevailing party "in the event of default" by either party. Because the trial court ordered the release of the earnest money, the Chapmans contend they were the prevailing party in the litigation. During a hearing on the motion for fees, the trial court noted it was "perplexed" by the Chapmans' position that they were the prevailing party. The trial court denied the Chapmans'

motion, saying: "I do not think [the Chapmans] were the prevailing party as contemplated by the contract." The Chapmans

-4-

1-06-0791 appealed. DECISION Ordinarily, the losing party in a lawsuit cannot be required to pay attorney fees to the winning party. Ill. 2d 484, 488, 426 N.E.2d 1204 (1981). Saltiel v. Olsen, 85 But there is an

exception to the rule: provisions in contracts for award of attorney fees will be enforced by the courts. Abdul-Karim v.

First Federal Savings and Loan Association, 101 Ill. 2d 400, 41112, 462 N.E.2d 488 (1984). These are "fee-shifting" provisions.

Wildman, Harold, Allen and Dixon v. Gaylord, 317 Ill. App. 3d 590, 594, 740 N.E.2d 501 (2000). Here, the home purchase contract entered into by the parties did contain a fee and costs provision: "In the event of default by Seller or Buyer, the Parties are free to pursue any legal remedies at law or in equity. The prevailing

Party in litigation shall be entitled to collect reasonable attorney fees and costs from the losing Party as ordered by a court of competent jurisdiction." Our decision in this case turns on the precise wording of the fee-shifting provision in the contract. dispute. There is no factual

Our task is to interpret the contract, a question of

-5-

1-06-0791 law calling for de novo review of the trial court's decision. Erlenbush v. Largent, 353 Ill. App. 3d 949, 952, 819 N.E.2d 1186 (2004); Gallagher v. Lenart, 367 Ill. App. 3d 293, 301, 854 N.E.2d 800 (2006). We may affirm the trial court's decision on

any basis supported by the record, regardless of whether the trial court relied on that ground when it made its decision. See

Home Insurance Co. v. Cincinnati Insurance Co., 213 Ill. 2d 307, 315, 821 N.E.2d 269 (2005). We are required to strictly construe a contractual provision for attorney fees. Grossinger Motorcorp, Inc. v. American

National Bank and Trust, 240 Ill. App. 3d 737, 752, 607 N.E.2d 1337 (1993). That is, we construe the fee-shifting provision "to

mean nothing more

Download Chapman v. Engel.pdf