Archive for January 2014

Laurie & Brennan Secures Jury Verdict In Favor Of General Contractor Client, Harold O. Schulz Company, Inc.

January 27, 2014

Harold O. Schulz Co., Inc. v. Astor Street, LLC et. al.

On November 15, 2013, a jury sitting in the Law Division of the Cook County Circuit Court entered a verdict in favor of Laurie & Brennan client, Harold O. Schulz Company, Inc. and against defendant, Astor Street, LLC.  After hearing five weeks of evidence, the jury found in favor of Schulz and awarded Schulz every dollar it requested in the amount of $971,858.33, exclusive of accruing interest, attorneys’ fees and costs.  The jury also rejected Astor Street’s claims in excess of $6 million.

The case arises from renovation and construction work performed by Schulz as general contractor at three residential buildings in Chicago, Illinois including a 20,000 square foot historic residence, a coach house and an adjacent residence located at 1435 and 1431 North Astor Street in Chicago.  The 20,000 square foot main house is inhabited by Jay Robert Pritzker, Mary Kathryn Pritzker and their family.  Schulz dutifully performed renovation and construction activities at the project beginning in October, 2006 until March 23, 2010 at which time Astor Street terminated Schulz’s contract.

At trial, Laurie & Brennan asserted that Astor Street wrongfully terminated Schulz and improperly refused Schulz full payment for work Schulz performed at the request of Astor Street.   The jury agreed and unanimously awarded Schulz the full amount it requested at trial and outright rejected Astor Street’s asserted defenses for non-payment and affirmative claims in over $6 million in damages.  Laurie & Brennan is seeking an additional award to Schulz of statutory interest, attorneys’ fees and costs.

Laurie & Brennan’s trial team was comprised of Ty Laurie, Dan Brenner, Erin Krejci, Kendall Woods, and Kevan Carpenter.

For additional news coverage of Laurie & Brennan’s victory see:

This Blog is made available by Laurie & Brennan, LLP for general educational purposes only. The purpose of the Blog is not to provide specific legal advice on any particular matter. By using this Blog site you understand that there is no attorney client relationship between you and this firm and the authors or members of the firm. This Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Under rules applicable to the professional conduct of attorneys in various jurisdictions, the material on this Blog may be considered advertising material.

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Illinois Court Strikes Down Liquidated Damages Clause as a Penalty

January 9, 2014

In the case of GK Development, Inc., et al. v. Iowa Malls Financing Corp., et al., the plaintiffs GK Development, Inc. and College Square Mall Development, LLC (“Buyer”) purchased four shopping centers in eastern Iowa. A portion of the purchase price, $4.3 million, was to be held in escrow and paid to the seller only if certain conditions and deadlines were timely met. If the deadlines were not met, then the escrowed funds were to be returned to the Buyer.  The deadlines centered on a tenant’s expansion lease, including a deadline for the tenant to obtain all necessary permits for the store’s expansion. Once the deadline passed, both parties demanded the escrow. The trial court found the $4.3 million placed in escrow was a valid and enforceable award of liquidated damages for breach of contract and directed it be returned to the Buyer. However, the appellate court reversed the trial court’s order stating the contract provision was unenforceable as a penalty clause.

The appellate court stated that in Illinois a liquidated damages provision is generally valid and enforceable when three factors are satisfied: (1) the parties intended to agree in advance to the settlement of damages that might arise from the breach; (2) the amount of liquidated damages was reasonable at the time of contracting, bearing some relation to the damages which might be sustained, and (3) actual damages would be uncertain in amount and difficult to prove.  Jameson Realty Grp. v. Kostiner, 351 Ill. App. 3d 416, 423 (2004).

The appellate court held that the escrow did not meet the first two requirements as there was no evidence that the parties contemplated damages for a delay in obtaining permits at the time of creating the liquidated damages clause, and therefore the parties could not have agreed in advance that $4.3 million would represent the damages for any breach, including a delay of 91-days in obtaining permits. Further, the amount of the liquidated damages bore no relation to the anticipated damages from the delay in performance because the $4.3 million figure represented the amount of loss to the Buyer if the entire tenant lease fell through and not an amount for the damages sustained for a 91-day delay in securing permits.

Lastly, the appellate court found the escrow constituted an unenforceable penalty clause because the provision amounted to a windfall recovery for the Buyer. If the Buyer were to be awarded the escrowed funds for a 91-day delay in securing permits but the entire tenant lease was still in force, the Buyer would still receive the benefits of that lease for the next 20 to 45 years.  Under these circumstances, the liquidated damages awarded were grossly disproportionate to the Buyer’s loss.

This Blog is made available by Laurie & Brennan, LLP for general educational purposes only. The purpose of the Blog is not to provide specific legal advice on any particular matter. By using this Blog site you understand that there is no attorney client relationship between you and this firm and the authors or members of the firm. This Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Under rules applicable to the professional conduct of attorneys in various jurisdictions, the material on this Blog may be considered advertising material.


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