In the

United States Court of Appeals

For the Seventh Circuit

No. 11-3208

MICHAEL BURKE,

Plaintiff-Appellant,

v.

401 N. WABASH VENTURE, LLC,

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 08-CV-05330–George M. Marovich, Judge.

ARGUED NOVEMBER 26, 2012—DECIDED APRIL 10, 2013

Before ROVNER, WILLIAMS, and TINDER, Circuit Judges.

WILLIAMS, Circuit Judge. Michael Burke signed a contract to purchase a condominium unit and two parking

spaces in the Trump International Hotel & Tower in

downtown Chicago for about $2.2 million. Burke made

two earnest payments totaling 20% of the purchase

price. When it came time to close, however, Burke

refused to pay. He filed this lawsuit after the developer

declined to refund his earnest money. Burke maintains
2 No. 11-3208

that the developer made a material change when it

placed parking on the Trump Tower’s sixth floor. But the

documents he signed demonstrate that Burke was on

notice that the use of the sixth floor for parking was

always a possibility. Burke also argues on appeal that

the agreement he signed was unenforceable from the

start, but the agreement is not void for lack of mutuality

as the developer had an obligation to act in good faith

to convey the condominium to him. Nor is the contract unenforceable due to a penalty clause, because

the contract did not give the developer the option to

choose between actual or liquidated damages. For

these reasons, we affirm the district court’s dismissal

of Burke’s second amended complaint.

I. BACKGROUND

On December 31, 2006, when the real estate market

was still strong, Michael Burke, a citizen of Ireland,

signed a contract with 401 N. Wabash Venture, LLC, the

developer for the Trump International Hotel & Tower

in Chicago, to buy a condominium unit and two parking

spaces in the Trump Tower. The total purchase price

was $2,282,130, which included $150,000 for the

parking spaces. Burke deposited $456,426 in earnest

money, an amount equal to 20% of the purchase price.

Before he signed the purchase agreement, Burke

received a copy of the initial Trump Tower Property

Report that was dated September 24, 2003. The Property Report stated that the development would contain

an “undetermined number of unit parking spaces within
No. 11-3208 3

the above-ground facilities that the Developer currently

intends will be located on some floors three (3) through

twelve (12) . . . .” The developer later set a closing

date of August 7, 2008. On August 6, the developer

gave Burke a copy of the condominium’s Declaration

and Special Amendment to the Covenants, Conditions,

and Restrictions (CCR’s). The Special Amendment stated

that the sixth floor would be used for parking spaces.

Burke did not close on the unit, asserting that the use

of the sixth floor for parking lowered the value of his

investment and increased the amount of maintenance

fees he would be required to pay. Burke sought to

rescind the contract. He asked the developer to refund

his earnest money, but it refused. Burke then filed

this lawsuit, styling it as a class action.

The developer moved to dismiss Burke’s suit for

failure to state a claim upon which relief could be

granted. After the district court dismissed Burke’s

original complaint, Burke amended his complaint

twice. The second amended complaint contained sixteen

counts. The district court struck five counts, it granted the

developer’s motion to dismiss for failure to state a claim

on nine counts, and Burke voluntarily dismissed two

counts. In light of its conclusion that the complaint

failed to state any claims for relief, the court did not

reach the issue of class certification. Burke appeals.

II. ANALYSIS

We review dismissals under Federal Rule of Civil

Procedure 12(b)(6) de novo. Citadel Group Ltd. v. Wash. Reg’l
4 No. 11-3208

Med. Ctr., 692 F.3d 580, 591 (7th Cir. 2012). In doing so

here, we construe the amended complaint in the light

most favorable to Burke, accept Burke’s well-pleaded

facts as true, and draw all reasonable inferences in

Burke’s favor. See Ashcroft v. Iqbal, 556 U.S. 662, 678,

(2009); McReynolds v. Merrill Lynch & Co., 694 F.3d 873,

979 (7th Cir. 2012). To survive a motion to dismiss, the

complaint must contain enough facts to state a claim

for relief that is plausible on its face. Citadel Group, 692

F.3d at 591.

A. No Material Change

Burke argues that after he and the developer signed

the purchase agreement, the developer made a material

change to the Property Report, and that it did so without

the approval of 75% of the Trump Tower owners. So

he maintains that he is entitled to a remedy under section 22 of the Illinois Condominium Property Act,

765 Ill. Comp. Stat. 606/22, or under a common law

breach of contract theory. 

The Illinois Condominium Property Act requires that,

with respect to the initial sale of any condominium

unit, the seller must make certain disclosures and

provide copies of certain documents to the prospective purchaser including the declaration, bylaws of

the association, the projected operating budget for the

condominium unit, and the unit’s floor plan. 765 Ill.

Comp. Stat. 605/22(a)-(e). The parties use the term “Property Report” to refer collectively to the documents
No. 11-3208 5

that the seller must disclose to the buyer in section 22,

as do we.

In reviewing Burke’s claim, we first note that the

district court properly considered the Property Report

in ruling on the motion to dismiss even though Burke

had not attached the Property Report to his complaint.

In general, a court may only consider the plaintiff’s complaint when ruling on a Rule 12(b)(6) motion. Rosenblum v. Travelbyus.com Ltd., 299 F.3d 657, 661 (7th Cir.

2002). However, Federal Rule of Procedure 10(c) provides that “[a] copy of any written instrument which

is an exhibit to a pleading is a part thereof for all purposes.” We have concluded that this rule includes a

limited class of attachments to motions to dismiss

pursuant to Rule 12(b)(6). Rosenblum, 299 F.3d at 661.

“ ‘[D]ocuments attached to a motion to dismiss are considered part of the pleadings if they are referred to in

the plaintiff’s complaint and are central to his claim.’ ”

McCready v. eBay, Inc., 453 F.3d 882, 891 (7th Cir. 2006)

(quoting 188 LLC v. Trinity Indus., Inc., 300 F.3d 730, 735

(7th Cir. 2002)) (additional quotation omitted). These

documents may be considered by a district court in

ruling on the motion to dismiss without converting

the motion into a motion for summary judgment. Id.

The court “ ‘is not bound to accept the pleader’s allegations as to the effect of the exhibit, but can independently

examine the document and form its own conclusions

as to the proper construction and meaning to be given

the material.’ ” Rosenblum, 299 F.3d at 661 (quoting 5

Charles Alan Wright & Arthur R. Miller, Federal Practice

& Procedure: Civil 2d, § 1327 at 766 (1990)).
6 No. 11-3208

Here, Burke’s complaint makes repeated reference to

the Property Report, and the Property Report is central

to his claims that the developer violated the Illinois

Condominium Property Act and breached a contract.

He alleges that the developer made a material change

to the information in the Property Report, and that it

did so without sufficient buyer approval. The Property

Report is clearly central to these claims, and the district

court was right to consider it.

In addition to requiring the disclosure of certain documents, section 22 of the Condominium Act also provides:

All of the information required by this Section

which is available at the time shall be furnished

to the prospective buyer before execution of

the contract for sale. Thereafter, no changes or

amendments may be made in any of the items

furnished to the prospective buyer which would

materially affect the rights of the buyer or the

value of the unit without obtaining the approval

of at least 75% of the buyers then owning

interest in the condominium. If all of the information is not available at the time of execution

of the contract for sale, then the contract shall

be voidable at option of the buyer at any time

up until 5 days after the last item of required

information is furnished to the prospective

buyer, or until the closing of the sale, whichever

is earlier. Failure on the part of the seller to

make full disclosure as required by this Section

shall entitle the buyer to rescind the contract
No. 11-3208 7

for sale at any time before the closing of the contract and to receive a refund of all deposit

moneys paid with interest thereon at the rate

then in effect for interest on judgments.

765 Ill. Comp. Stat. 605/22. 

Burke maintains that the developer made a change

or amendment to the information in the Property

Report that affected him without obtaining approval of

at least 75% of the buyers. The developer responds that

rescission for a violation of the disclosure obligation

is the only remedy provided to a buyer under section 22,

yet Burke does not allege that the developer failed to

make full disclosure about any matter required by

section 22. The parties do not point us to any Illinois

state court decision squarely answering whether the

Condominium Act contains a private right of action or

remedy when a buyer alleges that the developer made

a material change without 75% approval. Cf. Luster v.

Jones, 388 N.E.2d 1029, 1033 (Ill. App. Ct. 1979) (ruling

that rescission due to seller’s failure to disclose is a

remedy for the prospective buyer only prior to closing,

not after); Goldberg v. 401 N. Wabash Venture, LLC, 2010

WL 1655089, at *6 (N.D. Ill. 2010) (concluding that

Illinois Condominium Act does not include an implied private right of action for violation of section 22’s

amendment provision).

We need not predict whether the Supreme Court of

Illinois would find that Burke has an available remedy

because there was no material change. Cf. Allstate Ins.

Co. v. Menards, Inc., 285 F.3d 630, 637 (7th Cir. 2002)
8 No. 11-3208

(discussing obligation of federal court sitting in diversity to ascertain how state’s highest court would

decide). The only purported material change Burke

asserts is the “addition” of parking on the sixth floor. The

initial Trump Tower Property Report was issued in

September 2003, and Burke received a copy of it before

signing the purchase agreement. It states in relevant part:

The Condominium will contain . . . an undetermined number of unit parking spaces within

the above-ground parking facilities that the Developer currently intends will be located on some

of floors three (3) through twelve (12) . . . .

Consistent with the Property Report, the purchase agreement Burke signed stated:

In addition to the Condominium and the

Hotel Condominium, the Building will likely

include: . . . (B) a public parking garage area,

currently anticipated to contain parking spaces

located on floors LL2, LL3, and LL4 of the

Building and some of floors three (3) through

twelve (12) of the Building . . . . 

So from the outset, it was clear from the documents

Burke received that the number of parking spaces had

yet to be determined and also that Wabash Venture

planned to locate parking on “some of floors three (3)

through twelve (12).” Burke was put on notice of the

possibility that any of those floors could be used for

parking. Clearly, floor six was a possibility for parking.

Locating parking on the sixth floor was not a change or

amendment from the disclosed plans that materially
No. 11-3208 9

affected his rights or his unit’s value. Indeed, it was not

a change at all. The parking space matter does not

amount to material breach under either the Condominium Act or a common law breach of contract theory.

B. Agreement Does Not Fail for Lack of Mutuality

Burke also argues that the purchase agreement was

faulty from the outset and that he is therefore entitled

to rescission. For one, Burke argues that the purchase

agreement is unenforceable for lack of mutuality.

Because Burke breached the agreement, the developer

maintains that under the contract it can keep the earnest

money Burke deposited that is equal to 20% of the purchase price. Burke emphasizes that the purchase agreement states that if the developer had instead been the

party that defaulted, the return of earnest money is

Burke’s sole remedy. (He does not mention the possibility of specific performance, nor does he seek it here.)

Burke maintains that the developer’s obligations under

the contract are therefore merely illusory and that it

could simply sell the unit to a new buyer willing to pay

a higher price than the existing contract price with

no harmful consequences.

“In its most elemental sense, the doctrine of mutuality

of obligation means that unless both parties to a

contract are bound by its terms, neither is bound.”

Schwinder v. Austin Bank of Chi., 809 N.E.2d 180, 193 (Ill.

App. Ct. 2004); see also Kraftco Corp. v. Kolbus, 274 N.E.2d

153, 155 (Ill. App. Ct. 1971). The idea of a strict mutuality

requirement is, however, disfavored. See, e.g., Carter v. SSC
10 No. 11-3208

Odin Operating Co., 976 N.E.2d 344, 351 (Ill. 2012); Restatement (Second) of Contracts § 79 cmts. a, f (1979). The

Supreme Court of Illinois has explained:

While consideration is essential to the validity of

a contract, mutuality of obligation is not. Where

there is no other consideration for a contract,

the mutual promises of the parties constitute

consideration, and these promises must be

binding on both parties or the contract falls for

want of consideration, but where there is any

other consideration for the contract, mutuality of

obligation is not essential.

Carter, 976 N.E.2d at 351 (quoting Armstrong Paint &

Varnish Works v. Cont’l Can Co., 133 N.E. 711, 714 (Ill. 1922));

see also McInerney v. Charter Golf, Inc., 680 N.W.2d 1347,

1351-52 (Ill. 1997). 

In Illinois, courts have imputed an implied promise of

good faith and fair dealing in real estate purchase agreements. Schwinder, 809 N.E.2d at 194. As a result, Illinois

courts have rejected arguments similar to the one

Burke makes now. In Borys v. Josada Builders, Inc., 441

N.E.2d 1263 (Ill. App. Ct. 1982), for example, the Illinois

appellate court considered a dispute over the sale of

condominium units. The contract provided that if the

seller failed to deliver good title to the unit, the buyers’

remedy was limited to a return of all funds paid or deposited. Borys, 441 N.E.2d at 1266. The buyers argued

that because the seller could control the quality of the

title and the seller’s liability was limited to return of

the deposit, the seller was free to perform or not
No. 11-3208 11

perform at will and that the contract therefore lacked

mutuality. Id. In light of the implied promise of good

faith and fair dealing, however, the court rejected the

buyers’ argument. Id. The court concluded that when

the contract was construed, as it said it must be, as requiring the parties to act in good faith, the seller had an

obligation to obtain the quality of title required under

the contract to consummate the sale. Id. at 1267. Therefore, mutuality of obligation existed. Id.

More recently, in Schwinder v. Austin Bank of Chicago,

809 N.E.2d 180 (Ill. App. Ct. 2004), the Illinois appellate

court analyzed a condominium purchase agreement

that contained a provision similar to the one here. That

contract provided that return of the earnest money to

the purchaser was the purchaser’s “sole exclusive remedy” in the event of the seller’s default. 809 N.E.2d

at 185. Although neither party contended that the

clause was invalid, the court analyzed whether there

was mutuality of obligation because of the buyer’s claim

that the seller had an unfettered right to terminate

the purchase agreement. Id. at 194-95. The court stated

that the duty of good faith and fair dealing was

imposed on the provision of the contract granting the

seller the right to terminate the contract, with the

result that there were mutually binding obligations on

both the buyer and seller. Id. at 195.

Under Illinois law, then, Burke’s argument that the

purchase agreement is unenforceable on the basis that

the developer can “breach at will and all he has to do is

give [Burke’s] money back” has no merit. As in Borys
12 No. 11-3208

and Schwinder, Illinois law imputes the implied obligation of good faith and fair dealing into the developer’s

obligation to convey the condominium unit and parking

spaces to Burke. And although Burke contends that

applying the implied covenant of good faith “overrides”

contract provisions, we have rejected that argument

before. See, e.g., L.A.P.D., Inc. v. Gen. Elec. Corp., 132 F.3d

402, 403-04 (7th Cir. 1997) (explaining that “good faith” in

Illinois contract law is a gap-filling approach and is

essentially used as construction aid). The developer

had the obligation under the contract to convey the condominium unit and parking spaces to Burke. In light

of the implied obligation of good faith and fair dealing,

the agreement did not lack mutuality.

C. Liquidated Damages Clause Enforceable

Burke’s complaint also contains a count asserting he

can rescind the agreement on the ground that it contains

an unenforceable penalty clause. As an initial matter,

Burke does not point to any case suggesting that the

remedy for an unenforceable damages clause under

Illinois law is rescission of the contract. Cf. Grossinger

Motorcorp, Inc. v. Am. Nat’l Bank and Trust, 607 N.E.2d

1337, 1348 (Ill. App. Ct. 1992) (“In sum, we conclude

that the liquidated damages provision is unenforceable

and that consequently defendant is only allowed to

recover actual damages resulting from the breach.”); see

also Hamming v. Murphy, 404 N.E.2d 1026, 1032 (Ill.

App. Ct. 1980). 
No. 11-3208 13

In any event, the clause is enforceable. Whether a provision constitutes a valid liquidated damages clause or

an unenforceable penalty clause is a question of state

law that we review de novo. Energy Plus Consulting, LLC

v. Ill. Fuel Co., LLC, 371 F.3d 907, 909 (7th Cir. 2004).

Paragraph 12(a) of the purchase agreement provides, as

it relates to damages:

In the event of a default or breach of this Purchase

Agreement by Purchaser, . . . Seller may terminate

this Purchase Agreement and, as its sole and

exclusive remedy upon termination, retain as

liquidated damages . . . [the] Earnest Money deposit . . . and if Seller is otherwise entitled to

the liquidated damages described above, Seller

shall return to Purchaser amounts paid to

seller . . . . In accordance with Section 1703(d) of the

Interstate Land Sales Full Disclosure Act, if Seller

is otherwise entitled to the liquidated damages

described above, Seller shall return to Purchaser

amounts paid to Seller . . . in excess of (x) 15%

of the Purchase Price (excluding any interest

paid under the Purchase Agreement) or (y) the

amount of Seller’s actual damages, whichever

is greater.

In Illinois, a provision that allows a defendant the

option to receive liquidated damages or seek actual

damages is unenforceable as a penalty. Karimi v. 401 N.

Wabash Venture, LLC, 952 N.E.2d 1278, 1287 (Ill. App. Ct.

2011) (citing Grossinger, 607 N.E.2d at 1347). Such a provision is unenforceable because it gives the defendants
14 No. 11-3208

a minimum recovery regardless of actual damages, yet

also allows the defendants to disregard liquidated damages if the actual damages were greater than the

specified amount. Id. That negates the purpose of liquidated damages, which is to provide parties with an

agreed upon, predetermined damages amount when

actual damages may be difficult to ascertain. Id.; Hickox

v. Bell, 552 N.E.2d 1133, 1140-41 (Ill. App. Ct. 1990).

Here, the developer maintains that the clause does

not give it the option to choose between liquidated

and actual damages, and we agree. The plain language

of the provision shows that the only “option” the developer has upon the buyer’s breach is whether to

terminate the agreement, as the clause states that the

seller “may terminate” upon the buyer’s default or

breach. But there is no “may” in the provision as it

relates to the type of damages. 

Notably, the Illinois appellate court construed this

same liquidated damages provision in response to

another suit against the developer here and rejected the

argument Burke makes now. Karimi, 952 N.E.2d at 1287.

The court ruled that despite paragraph 12(a)’s reference

to actual damages, it did not give the seller the option

to seek them. Id. Rather, “[a]lthough a calculation of

actual damages may be necessary to determine a

liquidated damages amount, defendants can receive no

more than the amount plaintiffs have deposited

pursuant to the agreement, even if actual damages

prove greater than the sum deposited.” Id. The court

also rejected the plaintiffs’ argument that paragraph 12(a)
No. 11-3208 15

was a penalty because the developer sold the unit at

issue for more than the price in the plaintiffs’ purchase

agreement, reasoning that under the terms of the agreement, it was irrelevant to the liquidated damages

issue whether the unit was later resold. Id. We see no

indication that the Supreme Court of Illinois would

disagree with this reasoning.

D. No Violation of Interstate Land Sales Full Disclosure Act

Burke also maintains he has stated claims for violations of the Interstate Land Sales Full Disclosure Act

(“ILSFDA”), 15 U.S.C. § 1703(d). One of the Act’s core

purposes is “ ‘to prevent false and deceptive practices in

the sale of . . . land by requiring developers to disclose

information needed by potential buyers.’ ” Bacolitsas v.

86th & 3rd Owner, LLC, 702 F.3d 673, 680 (2d Cir. 2012)

(quoting Flint Ridge Dev. Co. v. Scenic Rivers Ass’n of

Okla., 426 U.S. 776, 778 (1976)); see also Long v. Merrifield

Town Center Ltd. P’ship, 611 F.3d 240, 244 (4th Cir. 2010)

(“ILSFDA is a remedial statute enacted to prevent interstate land fraud and to protect unsuspecting and illinformed investors from buying undesirable land.”).

In instances where the statute applies (the developer

does not argue that any of its exemptions apply here),

section 1703(d)(3) permits revocation at the option of

the purchaser for two years after the date the purchase agreement is signed if the agreement does

not provide that
16 No. 11-3208

if the purchaser . . . loses rights and interest in the

lot as a result of a default or breach of the contract or agreement which occurs after the purchaser . . . has paid 15 per centum of the purchase

price of the lot, excluding any interest owed under

the contract or agreement, the seller . . . shall

refund to such purchaser . . . any amount which

remains after subtracting (A) 15 per centum of

the purchase price of the lot, excluding any

interest owed under the contract or agreement,

or the amount of damages incurred by the seller . . .

as a result of said breach, whichever is greater,

from (B) the amount paid by the purchaser . . . . .

15 U.S.C. § 1703(d)(3).

Burke argues that the purchase agreement’s statement that the “Seller may terminate this Purchase Agreement and, as its sole and exclusive remedy upon termination retain as liquidated damages . . .” fails to

comply with the ILSFDA’s requirement that the purchaser be notified that “if the purchaser . . . loses rights

and interest . . . the seller . . . shall refund to such

purchaser . . . any amount which remains after

subtracting . . . .” (emphases added). This argument is

meritless. The word “shall” in that part of the statute

refers to the requirement that the seller refund any

amount remaining after application of a liquidated damages formula, if an amount must be refunded. The agreement’s use of “may” comes in a different context altogether, namely in giving the seller the choice of whether

to terminate the agreement or keep it in effect if the

purchaser defaults.
No. 11-3208 17

Burke also argues that even if the contract is

enforceable and the developer is entitled to keep some

of his earnest money as a result of his breach, the

ILSFDA means that the developer may only keep an

amount equal to 15% of the purchase price. Once again,

we disagree. Section 1703(d)(3) does not create a maximum of 15% of the purchase price as the measure of

liquidated damages upon a purchaser’s breach. It

explicitly states that the amount the seller is to refund

is 15% of the purchase price, “or the amount of damages

incurred by the seller,” whichever is greater, 15 U.S.C.

§ 1703(d)(3) (emphasis added), so the 15% figure in

the ILSFDA is not a cap on damages.

E. No Breach of Contract in Retaining Earnest Money

After Breach

Burke’s complaint also asserts the developer’s failure to

return $114,106.50 of the earnest money he deposited,

an amount equaling 5% of the purchase price, means

that the developer breached paragraph 12(a) of the purchase agreement. Paragraph 12(a) provides in relevant

part: “if Seller is otherwise entitled to the liquidated

damages described above, Seller shall return to

Purchaser amounts paid to Seller . . . in excess of (x) 15%

of the Purchase Price (excluding any interest paid

under the Purchase Agreement) or (y) the amount of

Seller’s actual damages, whichever is greater.”

The district court dismissed this claim because Burke

made no allegations that the developer’s actual damages

were not greater than 20% of the purchase price. Without
18 No. 11-3208

an allegation that the developer’s actual damages were

less than 20% of the purchase price, the complaint fails

to state a claim upon which relief could be granted.

Indeed, as the district court stated, it is widely understood that the value of the residential real estate market

fell after December 2006, when Burke entered into the

contract. We also note that the 20% figure is not so high

as to be unenforceable on public policy grounds. In

Illinois, “[c]ourts have considered earnest money representing up to 20% of the purchase price a reasonable

sum as liquidated damages.” Karimi, 952 N.E.2d at 1288.

Burke received three opportunities to plead an actionable claim. We agree with the district court that

he failed to plead a plausible claim for relief on this

breach of contract claim or any of the claims he challenges on appeal.

III. CONCLUSION

For the foregoing reasons, we AFFIRM the judgment of

the district court.

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