Appellate Court Decides Damages Claims in Development Agreement Dispute
A developer entered into a 2012 development agreement with a Village to, among other things, purchase property and grade it for the Village’s later use. The agreement required the developer to transfer the property to the Village within three years. This development agreement resulted in years of litigation between the parties, which recently resulted in an Appellate Court decision on the issue of damages for the breach of contract claims. PML Development, LLC v. Village of Hawthorn Woods.
In 2015, the developer filed a lawsuit against the Village claiming that while it was working on the property, the Village issued restricting permits and stop-work orders while it developed a plan for its use of the property, which it claims interfered with the work on the property and caused it to incur additional costs. The Village filed a counterclaim against the developer, alleging that the developer failed to repair the road leading to the property, failed to pay taxes on the property, and the failure to fund the project draw-down account.
In 2020, the trial court found both parties in material breach of the agreement and both parties appealed. In a previous ruling, the Appellate Court agreed that both parties were in breach but held that neither was entitled to damages. The case made its way to the Illinois Supreme Court, which held that both parties alleged viable breach of contract claims and remanded the case back to the trial court to hear and decide the parties' damages claims. We reported on the previous Appellate Court decision here and the Illinois Supreme Court's decision here.
On remand from the Illinois Supreme Court, the trial court awarded $5,349,677.70 to the developer for costs incurred as a result of the Village’s interference with the development, and $408,000.00 to the Village for the developer’s failure to fund the draw-down account and the failure to repair the road. The developer was awarded attorneys fees for the initial proceedings, but the court denied the request for additional fees. Both parties appealed.
On appeal, the Village contends the developer was not entitled to any damages because it did not establish damages to a reasonable degree of certainty because it had no history of profits. The Appellate Court reviewed the developer’s expert witness testimony and held that the damages were not based entirely on speculation and the calculations were credible. The Village also argued that the trial court erred because it did not award damages for the developer’s failure to convey the property. The Appellate Court held that the Village was not entitled to these damages because it did not pursue monetary damages on this issue until the final appeal.
The developer argued it was improperly denied damages related to overhead costs because of the Village’s delay. However, at trial, multiple witnesses recognized that even if everything had gone according to the plan the project would not have been completed by December 31, 2015. The Appellate Court upheld the trial court’s decision because the damages the developer sought were not reasonably certain.
Finally, both parties challenged the award of attorney fees. The trial court had ruled that the developer was the prevailing party at the first trial, but neither of the parties were prevailing at the following hearings. The Appellate Court did not agree with the trial court's ruling and held that the developer was the prevailing party entitled to all reasonable costs associated with all of the stages of this case.
Post Authored by Alexis Carter & Julie Tappendorf, Ancel Glink
