divided equally between the two sides the apollon can reserve some time for rebuttal the thirty minutes is a goal we can be look at flexible this morning because this is the only case in the doctors that we will try to keep those time thank you honors my name is kent maynard and as i said i represent the apple launch of this case which is the seller of four shopping malls located in iowa the sale closed in december of two thousand and four and at the time the deal close on the seventeenth of december two thousand and four a tenant of the mall was in the process of moving to a larger and more expensive leasehold in the mall which would generate substantial incremental revenue for the owner of the the charges here had a three week trial and made certain findings which is the standard of review on her finding that this was a proper liquidated damage to vision what we're looking for is an articulation of what the appropriate standard of review is here we have a stand that the ultimate question of whether or not this is liquidated damages as the no hopes as question of law but how though how do we look at the evidence to support the conclusion that this was a valid award of liquidated damages as distinct from a penalty then those findings of fact to the extent that they are tied to record evidence would be entitled to some deference however when you review the opinion you don't see any reference to any record evidence what you see is speculation which frankly is speculation about matters which are entirely moved in a relevant and by that i'm referring to the notion that that possibility that the tenant in the mall might not move to the larger space could have signaling a fax and by signaling a fax i mean this notion that it was a marketing tool that you had a big box that was vacant that this might drive tenants out of the mall and prevent new tenants from coming in all of which is completely speculative and completely irrelevant because the buyer bought all that risk by that i mean the buyer purchased them all without any right of rescission without any representation and warranty about the relocation that we're talking about here actually occurring or not they owned the risk that the space might not be occupied and so to speculate about whether damages might be recoverable for a contingency that they already own and is beside the point i'm not sure if there are other findings of fact that you are concerned about just as lot and i i have to be honest and say that one of our concerns and i think we expressed it some length in our pleadings is that the of the opinion really doesn't provide any real analysis they spend i want to say eighty percent of the analysis is about whether this is a drop dead deadline well if a drop dead deadline is a code word for a penalty it really doesn't matter if they intended that at all because penalties are on a forcible as a matter of public policy and as a matter of illinois long so after spending all this time to figure out what the parties intended which is irrelevant if it's a penalty then we have at the tail end a kind of cod which is a very perfunctory walk through of the elements under jamison real t v christine and by perfunctory i mean for example the fact that there are three elements and the courts analysis of the first prong of the test consists of a single sentence to know is one of the first prong did the parties agree that a specific sum of money would be awarded as damages for specific breach she didn't consider the question if she had she would have seen that that is manifestly impossible based on the unrebutted universally acknowledged facts of the case and but what i mean by that i mean that the parties both they stipulated at trial and we agreed based on the pleadings that have been submitted to this court that the number in question this four point three million dollar number was calculated by the buyer as the entire value on the margin incrementally a twenty year stream of cash flow from pay from the new lease that we're talking about twenty years two hundred forty monthly payments and the way they calculated that was by saying the incremental cash flow is four hundred thirty thousand dollars here we divide by an appropriate cap rate which is risk adjusted in this case it was ten percent it was the same cap rate that was applied to all the cash flow on all the four properties that were purchased and in this case and then we say the value of that incremental cash flow is four point three million dollars now that's an estimate or a valuation it's not an attempt to predict damage can't be and estimate of the value of a financial asset over a twenty year period is not the same thing as predicting what damages may flow from a big box retail space remaining vacant for another month or two or three in this case but in  case then you're saying the total absence of evidence as to any other reference to something less than absolute so that means they did not negotiate therefore if we could go back now with the fullest you know i have no idea who did it but i'm saying when i drafted things for the city and its planes we never left you had five alternatives when there was any of them chill with a contractor to build the road or do some well you know if you look at the language here i mean it was the supreme irony in this case this four point three million dollar price adjustment and we all know what it we know what it was intended but it wasn't there well it is if you look at the record evidence it is if you look at what happened in october of two thousand and four when mr tom rogers sent in the communication and he said you know we have an issue because we hints here the genesis of this four point three million dollar number is mr tom rogers on behalf of the buyer saying look we buyer don't want to pay for something that we don't get perfectly reasonable if i b doesn't move into the new space why should they pay the four point three million dollars if that had happened if that if that contingency had failed we wouldn't be here today the problem is they did move into the space and since november of two thousand and six the buyer has been getting reaping the benefits of the bargain which they asked for every month and will continue to do so for another thirteen years and potentially for another twenty five years after that and they say they don't want to pay for it in other words this provision which in its genesis was to protect the paying for something it didn't gag as applied by the trial court permitted the buyer to get something that it didn't pay for it's a complete inversion and a complete proof version of what that provision was supposed to do it couldn't be more wrong we're not put off by four point three million dollars or we're off by for a point three times two because we didn't get paid we did what we were supposed to do and by the way when you talk about a specific sum for a the lease for execution to the buyer on june sixteenth of two thousand and five what does the buyer do strangely they sit on it for a month and they say it's because they had two concerns which they  bad we don't know what they were or there's nothing the record about what they were but they must've been terribly important because no one even talks about and with us that one month delay due well if you purse to these deadlines and you discover all of a sudden that the hundred  twenty day window for the two parties buyer intended not us but was from if they had signed it right around that original date that it was sent to them that then i would have been the fourteenth of october still time to comply with this so called drop dead date but guess what happens when you sit on a contract for a month then you're in such a hurry remember we're really in a hurry ninety one days profits are four point three million dollars here we're in such a hurry that we sit on it for a month and what does that do that moves the deadline for these two parties to agree to november thirteenth now we can't complain strange coincidence strange when you think that this buyer had through point three this was a penalty it was not a reasonable prediction of loss we know what it was it was a number that was generated by mr tom rogers in october as a price adjustment to protect the buyer from paying for something it didn't get could it have heidi relocation does not occur now this would have been obviously different language but in the event the heidi relocation does not occur then escrow balance shall be returned to the buyer right because he didn't get the benefit of the part if there's a relationship between the amount of money absolutely it's because they think the number four point three million is the for it and it isn't just damaged from the one day delay it's a complete forfeiture of your tire purchase price this is the position that we're dealing with here and the sad thing is that if you if you step back and look at it it's absurd on its face but liquidated damages tend to create confusion which is what the supreme court has told us and the reason i think is in part because the standard itself is is is somewhat peculiar in that we are instructed in the ponds two and three that it should be a reasonable prediction of damages which are difficult or impossible to prove this a contradiction there it has to be a reasonable prediction of something which is difficult or impossible to prove now when you read the case law it becomes more clear and one of the important points about difficult or impossible to prove is that  in the case law that says well look if at the time you're contracting you really don't have a reasonable concern about whether you can prove damages then you really shouldn't be talking about liquidated damages and that's true here we didn't need a liquidated damage shish between you know sort of big players in the real estate business well first of all dealing with that the only case was absolutely clear that you don't know if it's a penalty it's on a forcible doesn't matter how sophisticated the parties are period so you don't get to say well it's a penalty but everybody was really smart they all had m b a s and j d s which is what really happened here this judge was so impressed with the fact that my clients are sophisticated intelligent people that she said well let's give them what they agreed to but that's not the way it works in this court the courts of the state of illinois will not enforce a penalty it doesn't matter if the contracting parties are both you know genius i q this just doesn't matter so the court got confused because she started to think apparently and she spends most of her time analyzing what it is that the parties intended with respect to this drop dead deadline and i submit to you to the extent it is a drop dead deadline it's a penalty and it really doesn't matter  we too it or not just doesn't matter and she spent so much time worrying about this red herring issue that by the time she got around to doing the work on jameson as i say first prong one sentence you're talking about they have but we recognize i i have to be candid with the street too and say that you know we we slaved over our our pleadings i don't know that there's a lot more i can  fundamentally incapable of a precise prediction i think it confuses a lot of people a lot of tourists and that's what the almost supreme court has said so there was confusion here there was no malice the problem is the result is shocking its space could be modified to house two new additional anchor stores and then expanded hihi was marketed as a draw for other retailers to the mall based upon that finding she found that there could be more damages than just the incremental value of the rand that heidi was going to be paid over this additional time but it could result in other tenants smaller t not signing leases are not coming to the small in this matter fact what she helped them is to clues and based upon that finding was that there were a number of scenarios that could have a the approval of the plans to the government agencies that was three months late what could have happened during that three months what he calls a total supposition and hypothetical is very critical of the trial judge for suggesting that there could be damages over and above i v failing to sign well if this court would look at weiss versus us for that only which is one of the few only supreme court cases that it's addressed this issue that case also involved plated that if they were not to complete the job on time it would result in loss of renters and of the rents of the building not only for the actual time that the building was delayed in completion but also for some considerable time thereafter there are many reasons that it might be suggested why it might have been important to the owner to have this building completed on time to insure him rent and save him from damages and we think it was within the province of the parties to determine the amount of compensation to be paid for that the a what we have here is a delay case there's no question about it there was not a total or total failure of i signing the lease but this council said again your honor his are just as lavish questions well how could you have drafted differently first of all let me say and i'll say it again that again this was a negotiated lease that is a fine if in fact that was a stipulation by the parties at what they negotiated was not if there is a total failure for hifi to sign you get the whole back what they negotiated was a deadline that if hifi doesn't have everything together by a toper thirty first two thousand and five the whole back goes it's not clearly stated anywhere in the dream oh absolutely we are in the third amendment to the real estate debts if to the thing that really no no no your honor this with all due respect they had sign an agreement in december of two thousand and five prior to the closing in that agreement in one k in the record in that agreement it says that if three things are not done by those deadlines hold back is returning one of them is by october thirty first they were ready to handover the premises the hifi that this sounds like it's a means to punish nonperformance and the the problem i have with your position here in the problem that they have with the judge's decision below is that i just don't know how the judge's decision below complied with this specific language from jamison which i think is what this case is all about court says additionally the damages contained in the liquidated damages clause must be for a specific amount for a specific breach the provision may nat merely service a threat to secure performance or is a means to nonperformance in the form of social month the way what your response to that your honor what happened here and i think with the trial judge found is that if you look at the jamieson test it's when the parties and it into the agreement what talking here about a thirty eight point five million dollar purchase of a mall if during that time of delay the ninety days other tenants started to get concerned about the fact that h honor when you look at the cases careen me and bethlehem steel both were cases where there was a delay and there were no actual damages and the courts said they upheld the liquidated damages there because you don't look at what actually happened you look at what the parties were negotiating when they were anticipating damages and in fact in the creamy case decided by this first district in that case the buyer was unable to get financing to purchased unit they forfeited  money which is about ten percent of the total cost and then they were able to sell the unit from more money so that it was no actually which is there's actually profit to be made and yet the court said you look back when you're in to speed damages and i would submit that that four point five was a reasonable number to anticipate now only what they would have lost had there been a total failure but the possible consequences if they didn't get that thing signed on time so the specific amount of those four point getting settled in charge rent eventually because they did not have their permits but it is not there it's i be it so you don't miss it what i'm saying is when i said earlier whoever drafted this contr were going to be able to meet those deadlines and that hyphy would have it honored before october thirty first she also found as a finding that in july of two thousand and five that there still was time to complete the deadline back toper thirty first that was a finding that that least she also found was negotiated largely by the seller not by u and that we couldn't object to the terms of the lease even though we signed it leslie it was not commercially reasonable so we had to sign it and we had no input with respect to those deadlines so as of july fifteenth there is a finding which look at this thirty member i mention one k which is the whole back of the four point three look at one l which is the next provision in one l it deals with three other tenets it deals with starbucks it deals with it's a cold stone creamery and i think in shadows in that provision there was a whole pack of i think one point four million dollars  this each of those leases were signed monies were released to the seller that is not well it was a go she did a number of pay and l there were no deadlines in case there was a deadline they care about hifi and that's why they put that line in there because of the concern that if that the headline is not met there could be problems with other tenants not signing on so i submit record indicate that there was some discussion of what the buyers damages would be if the provisions were satisfied on october third on nov thirtieth is the post october thirty first and what and it was checkers versus hawkins him in that case there had been a breach of in that stallman payment that was missed by one day and then there was another breach or another and some paper this estate eight days in the court said we're not going to impose this hundred  fifty thousand dollar healthy if he failed to make those payments but if you also look at another seven circuit case was decided later exco international versus specific scientific they talk about where you have like your honor so to your question if you have a one month delay what does that mean they say it's not to invalidate the liquidated liquidated damages clause is perhaps the form of the contract to make it reasonable so under those circumstances it would not be too punitive i mean that's what the discussion was or if you have a situation and we would have an entirely different argument if we're talking about one day or seven days we're talking about ninety one days past a deadline that was important enough to put him in agreement based upon the possibility that other tenants may let's sign up and we'd lose the value of a thirty eight point five million dollars deal and  said we're talking about either three percent of the total deal which is one hundred seventeen million are we're talking about ten percent of the value of the mall which isn't much in terms of liquidated damages because if we don't get those other talents to sign in a timely fashion we could lose the value of the entire deal that's why this had a deadline in one k in this third amendment and why there was no deadline in one hou so we believe the trial court found correctly and i'm not here to denigrate the trial judge's opinion i think she did a fine job she in fact most of the fine is a factor principally by the parties and where she did have findings of fact that dealt with the parties and temps and what actually could happen such as where they believed could be done in terms of the deadlines what when they thought it could be done and those findings of facts have not been really contested what conclusion she drew from that is there's more here than just heidi not signing because again if you look at one l the parties knew how to address a total failure to execute a lease they knew how to do that have not done if you base it upon what the parties reasonably anticipated could happen during a delay of ninety days and that is your honor the other tenants leaving the premises we would really commit far more than a four point three million dollars loss and so you can look at it after it happened to see whether or not other tennis left in the ninety days you have to look at it it's time the parties were trying to intice a paid damages and  anticipated or actual and again the two cases that we cited in our brief and there were there were others to create a case the bethlehem steel cases were both cases where there were no actual  council was argued well look at what how we benefited by this will run we took a great risk to go forward with this with i v s in the area and we thought we had negotiated a resolution to that number two in terms of what we actually were able to get like in both of those cases and i cited the city of chicago was paid liquidated damages for no damages to them at all for the delay in the account as the trial judge said what the effect would have been on other talents so that was probably just a minor number given the top failure secondly with respect to just a significant lag we're talking about ninety days during the period where is the trial judge found in there who says that that could have had an impact on the other tenants in the end you have to look at the time they had reached that agreement he was not going to be in that space it would have had a domino effect and there's no question in my mind that had hyping not sign at all that and then we wanted the four point three the other side w that number would have been really low when you bring up one thing that is how we brought up in the reply brief and that is they have the third jameson factor requires you to the court to evaluate whether actual damages would be of a certain amount in typical proof and that he ties they had statement to the facts of this case by saying that you have to establish that the buyer will receive four point three million dollars if heikki was ninety one days late in getting the building permits do you think those two therefore would flow together do you think that's a reasonable lead them logic law but since really there's two things that you're doing here you're trying to come up with a number that might reasonably proxima eight damages which in this case it would look at the amount of value although that was just one component of it and third you're looking at it i know and the unknown was the effect on other talents and so both of those factors were here and i think that suggests quinn found the unknown part was what's going to happen to the we've met those three i don't know if i hazard your question exactly but i was dealing with those two in this response of up this court has addressed this issue a number of times and in fact i think the seventh circuit is right in the xcode case that the trend now has been more towards inforcing liquidated damages clauses than not as opposed to what counsel said in their brief and we did cite to or where there was a total failure proof and by the way i just want to mention one one more thing in the hope here happy to answer your question before a clue as to whether it's a penalty the only supreme court has set in the case since then the burden is on the party who is trying to avoid the imposition of liquidated damages the burden is on that party to show that this can only be construed as a penalty and i would submit that they did not me that burton because is the trial court correctly found there were other circumstances here that would justify that number beyond just the incremental value of what heidi would have paid there been a total failure she was talking about two situations either a total failure or a  hi v to proceed to take the steps that would get this least signed by the date they didn't him that's what the parties and because she did there's no deadline for starbucks enforceable liquidity damage provisions in the late case such as bethlehem generally there are a function a linear function which vary as a function of time in bethlehem it was a thousand or whatever it was a day each or each day of the leg here we don't have we have the whole whammy as as just as house said we've got the whole whammy coming down at the stroke of midnight on the top of thirty first two thousand and five and it's justified again by pointing to something to a risk a contingency which by or own they only needed the risk they bought this this property knowing full well that the wal mart space that we're talking about had been vacated by wal mart in march of two thousand and four and was empty during the time they were examining the property doing their due diligence issuing their letter of intent entering into a contract to purchase entering into the deposit money escrow agreement the third amendment it was empty that whole time and so we're asked to believe here that at the stroke of midnight on october thirty first two thousand and five there was going to be some kind of tenant revolt all the tenants were suddenly going to say we're tired of waiting for the space to be occupied and there's something magical about october thirty first that wasn't there some concern on the part of the purge of the people that you represent here as proven by the fact that they started communicating a couple days later about let's extend this deadline that had already passed wasn't there something in the record about that absolutely and in fact the trial judge when she was spent most of her opinion trying to decide what the parties intended by this date and finding that it was a drop dead deadline so you know the that this was like an admission that they express concern she's the true friend they fretted about her and they're really smart people and they fretted about it and they reached out and said let's remove this issue because obviously we didn't intend i'm guessing you don't agree with her i don't agree that reasonable business people trying to resolve what may be construed as a contingency that they're where they're being set up if you will right right oh i would submit to you that smart people it can say we don't agree with this position but it certainly is valuable to reach out and resolve it and the response they got which is very interesting here they did reach out and in november of two thousand and five they got a response from the buyer and what did they say were no after october thirty first all the tenants are going to leave whether they're under lease or not and all these unnamed hordes of people who would have come in and rented space they're all gone to now mind you there isn't anything in this record to support any of that and if you look at the judge's opinion she doesn't cite any record evidence and council hasn't done it here on earth so you're asked to speculate and join in this fantasy about the terrible effect that would occur at the stroke of midnight on october thirty first of two thousand and five notwithstanding the fact that there's absolutely nothing in the record to support that other than rank speculation nothing in the council talks about the exco case let's  case says and i quote the element common the most liquidated damages clauses that get struck down as penalty clauses is that they specify the same damages regardless of the severity of the british so we're a day late and by the way whose breach is this hifi we have no control over what was this it was a wager it was an illegal wager on the conduct of a third party that wasn't in our control and by the way heidi wouldn't be able to go and get the building plan approvals without first getting approval from the landlord and if you look at the history here it looks like the landlord wasn't really into bigger hurry to make sure that the original deadlines  it's a delay case but there is a red flag here the courts of illinois have said liquidated damages and i quote they must place the non breaching party in a position that he or she would have been in had the contract been performed not provide the non preaching party with a windfall recovery it's jones v her the decision of the first district in two thousand and two so what we have here is the day they contract it for this what they claim is a liquid damage it would have been the buyer's fondest hope that not the seller breach but that hides the somehow not get its building permits prior to over thirty first because it would be better off if the contract were not observed and that's what's happened so did everything they were supposed to do they delivered an asset that the buyer valued at four point three million dollars the buyer doesn't want to pay for penalty and there should perhaps be further proceedings with respect to some issues related to the parking lot that's mentioned in the pleading of hundred thousand for the purpose for which our position is that that's excessive we would have to litigate that because the court didn't reach it because of the finding that