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Monday, June 26, 2023

Illinois Supreme Court Analyzes Breach of Contract Claims in Development Agreement Case

We previously reported on an Appellate Court decision in a case involving claims of breach of contract relating to the development of a 62 acre parcel of land. The developer had initiated the lawsuit by filing a breach of contract claim, among other claims, against the municipality arguing that the municipality interfered with its proposed development that was the subject of a development agreement between the two parties. The municipality filed a counterclaim against the developer, arguing that it had breached the development agreement when it failed to transfer ownership of certain property, pay property taxes on the property, and fund an escrow account with the municipality. The circuit court found that both parties had breached the development agreement but ultimately ruled in favor of the developer because finding that the municipality could not enforce the terms of the agreement because the municipality had breached the development agreement first. The circuit court awarded the developer over $6 million in damages and attorneys fees. Both parties appealed, and the Appellate Court found the circuit court erred in finding that the municipality's breach excused the developer of its own breach, as discussed here.

The case was appealed again and the Illinois Supreme Court issued its ruling on the breach of contract claims made by both parties last week. PML Development LLC v. Village of Hawthorn Woods. In its ruling, the Illinois Supreme Court upheld the circuit court's ruling in favor of the developer on its breach of contract claim against the municipality but reversed that part of the circuit court's ruling that was in favor of the developer on the municipality's breach of contract counterclaim. The Supreme Court held that both parties had viable breach of contract claims against the other party and neither was excused from its own obligations under the development agreement merely because the other party had also breached the contract or based on which party breached first. The Supreme Court remanded the case back to the circuit court and directed the court to calculate each party's respective damages for the other party's breach of contract. 

This breach of contract case is a complicated one with a long history and we have only discussed a small part of the case here but the case could provide some guidance to developers and municipalities on how the Illinois Supreme Court will analyze and decide breach of contract claims involving development agreements.


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