## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 11

- 3208 M ICHAEL B UR KE, Plai nt i f f

-Appe l l ant, v. 401 N. W AB AS H V EN TURE , LLC , D efend a nt-A pp ellee.

A pp eal from the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 08- CV-05330– George M. Marovich, Judge .
A RG UE D N OVE MBE R 26, 2012

— D ECI DE D A PRI L 10, 2013

B efore R OV NER, W I L L I A MS, a nd T INDER, C ircu it Judges. W I L L I A MS, Cir cu i tJudg e . Mi c h a e l B u r k e s i g n e d a c o ntr ac t to pur ch as e a con d om i ni um uni t an d t wo pa r k i ng sp ac es in t h e T ru m p Int e r n a t ion al H ot el & T ow er in do wnt o wn Ch i c a g o f o r ab o ut$ 2
. 2 mil l i o n. Bu r k e ma de tw o earne st p aym ents tot al i ng 20 % o fthe pu rchas e pri ce. W hen i t ca m e t i m e t o cl ose , howev er , Burke refused to pay . He fi l e d thi s l a ws ui ta ft e r the de vel oper dec l i ne d t o r efund h i s ea r ne stmone y . Bur k e m aintains2 N o. 11

- 3208 th at th e d ev elo p er m ad e a m at er ial c h a n g e w h en it pl ac ed par k i ngo n the Tr um p To wer ’ s si xth fl o o r . Butthe docum e nt s h e s i g ne d d e mon s t r a t e tha tBu r k e wa s o n noti ce that the use ofthe si xth floor forpark i ng was always a possibi l i ty. Burke al so ar gues on a pp ealthat th e ag r ee m en t he s i g ne d w as une nf o r ce ab l e fr o m the sta rt, but the a gr eem ent i s no t v oi d fo r l ack ofm utual i ty as the deve l operhad an o bl i gat i on t o act i n go od f aith to c o nv eythe c o ndo m i ni um t o hi m . Noris the c o ntr act unenfo rce abl e due to a penal ty cl au se , bec ause the c ontr act did notgi ve the deve l operthe opti on t o choos e be tw een a ctualo r l i quidate d dam age s. Fo r these r eas ons, we affi rm the dist ri ct c ourt ’ s di sm i ssa l ofBurke’ s s eco nd am ended com pla i nt.

I . B AC KGR OUND On Decem ber31 , 20 06, wh en the r eales tat e m arket wa s s t i l ls t r o ng, Mi c ha e lBu r k e , a c i t i z e n o fI re l a nd , si g ne d a c o nt r act w ith 40 1 N
. W ab as h Ve ntur e, LLC, the devel operf orthe Trum p I nt ernati onalH ote l& Tower i n C h i c a g o , t o b u y a c o n d o mi n i u m u n i ta n d t wo p a r k i ng spaces i n the Trum p Tow er . The t ot al pu rchas e pr i ce was $ 2, 28 2, 13 0, whi chi nc l ude d $ 15 0,000 f o r the parking space s. Burke deposi ted $4 56, 426 i n earnest m oney, an a m ount e qual to 20% o fthe pu rchas e pr i ce. Befo re he s i gned the pu rchas e a gr eem ent, B u rk e re cei ved a copy o fthe i ni ti alTrum p Tow erPro perty Re po r ttha twa s da t e d S e pt e mbe r 2 4 , 2 00 3
. T he P r o per ty R ep or t s ta te d th a t t h e d ev elo p m en t w ou ld co n ta in an “u n d et er m in ed n u m b er of u n it p ar kin g s p ac es w ith inN o. 11

- 3208 3 th e a b ov e-g ro u n d fac ilitie s t h at th e D e ve lop er cu rre n tly i nt e nd s wi l lb e l o c a t e d o n s o me fl o o r s thr e e ( 3 ) thr ough twe l ve ( 12 )
. . . .” T he de ve l o perl at ers eta c l o sing date o fA ugust 7, 2 008. On A ugust 6 , the devel oper ga v e Bu r k e a c o pyo fthe c o nd o mi nium’ s De c l a ra ti on and Spe c ial A m endm ent t o the Cove nants, Conditi ons, and Restr i cti ons ( CC R’s )
. The S peci alA m endm ent s tat ed that the s i xth fl oo r w oul d be use d fo r parking space s. Bu rk e di d n ot c lose o n the unit, as ser ti ng tha t the use of th e s ix th floor for p ar kin g lo w er ed th e v alu e o f h is i nvest m ent a nd i ncre ased the am ount o fm ai ntenance fees he woul d be r equi re d to pay. Burke soughtto r esci nd the c o nt r ac t. He a sk ed th e dev el o pert o r efund hi s e ar nest m oney, b ut i t r efused. Burke then fi l ed th i s l aws ui t, s ty l i ngi t as a c l as s ac ti o n. The devel operm ove d to dis m i ss Bu rk e’ s s uitfor f ai l ure to sta te a cl ai m upon w hi ch r el i efco uld be g r a nt e d. A fter the d istric t cou rt dism issed Bu rke’s o r i g i na lc o m pl aint, Bur k e amende d hi s co m pl aint tw i ce. The se cond am ended com plain t contained si xteen co unt s. The di st r i ctc o ur t st r uckfi ve c o unt s, i t g r an te d the d ev elo p er ’s m ot ion to d i s m i s s fo r failu re to st at e a cla im o n n i n e co u n t s , a n d B u r k e v o l u n t a r i l y d i s mi s s e d t wo co unt s. In l i g htof its c o nc l us i o n tha t th e co m pl aint f ai l ed to st ate any cl ai m s forr el i ef, the c ou rt d i d not re ach the i ssue ofcl ass cer ti fi cati on. Burke appeal s.

II. A N A L Y S IS W e re vie w d ism iss al s u n d er Fe d er al R u le of C ivil Pro cedure 12(b) ( 6) d e n ov o. C it adel Group Ltd. v. Wash. Reg’l4 N o. 11

- 3208 M ed. C tr. , 692 F.3d 580 , 591 (7th C ir. 2012). In d oing so he r e , we c o n s t r u e th e a me n d e d c o mpl a i n ti n th e l i g ht m ostf avo rabl e t o Bu rk e, ac cept Burke ’ s wel l

- ple aded fac ts as tru e, an d d ra w all rea so n ab le in fer en c e s in B u rk e’s fav or . Se eAs hc r of tv. Iq b al , 556 U
. S. 662, 67 8, (20 09 ); M cR eyn o lds v . M errill Ly nc h & C o ., 694 F. 3d 873, 97 9 ( 7th Ci r . 2 01 2)
. To s ur vi ve a m o ti o n t o di smi ss , the c om p lain t m u st co n ta inen ou gh fac ts to st at e a c l a im f orr el i efthati s pl ausibl e o n i ts f ace . Cit ade l Gr oup , 69 2 F. 3d at 591.

A . No M at er i al Chan ge Bu rk e a r g ue s tha ta ft e r h e a nd the de v e l o pe r s i gned the pu rchas e a gr eem ent, the devel operm ade a m ate ri al ch an g e to the Pr o per tyRe po r t, a nd tha t i t di d s o wi th o ut th e ap p roval of75% oft h e Tru m p Tow er ow ne rs. So he m ai ntai ns that he i s enti tl ed to a re m edy und erse cti on 2 2 o fthe I l l i noi s Condom i ni u m P ro pertyA ct, 765 I l l

. C om p. S tat
. 60 6/22, o r und era com m on l aw b re ac h of co n tr ac t t h eo ry . The Il l i noi s Condom i ni um Pro pertyA ct r equi re s that, wi thr es pec t to the i ni ti als al e o f an y c o ndo m i ni um uni t, the s el l ermustmake certa i n di sc l o su r es a nd provi de copi es ofcer tain docum ents to th e pr ospecti ve pu rchas er i ncl ud i ng the decl ar ati on, by l aw s o f th e as so ci at i o n, th e pr oj ec te d o per at i ng budg et f o r the c on d om in iu m u n it, an d th e u n it’s floor p lan . 765 Il l. Co mp. S t a t
. 6 0 5 /2 2 ( a )

- ( e )
. T he part i es u s e the t e r m “ Pr o per ty Report ” t o re ferco l l ecti vel y t o the docum entsN o. 11

- 3208 5 that the s el l erm ust di scl ose to the buyerin s ec tio n 22, as do w e. I n r ev i ewi ngBur k e’ s cl ai m , we fi r stn o te tha t th e d istri ct cou rt prop erly con sid e r e d the P rop erty Re p ort i n rul i ng o n the m ot i on t o dism i ss eve n though Bu rk e had not a tta ched th e Pr oper ty Reportto hi s co m pla i nt. I n g e n e r a l, a c o u r tma y o n l y c o n s i d e r th e p l a i n t i ff’ s c o mpla i nt wh en r uling o n a Rul e 1 2( b) ( 6) m oti on . R o s e nblum v. Tr ave l b yus . co m Lt d. , 299 F.3d 657, 661 (7th C ir. 2002 )
. H owever, Fe deralRule o fPro cedure 10( c) pro vi des that“[ a] copy o fany w ri tte n i nstr um ent which is an exh ibi t to a plead ing is a p art the reof for al l p urposes . ” W e hav e co ncl ud ed that thi s r ule i ncl u d es a l i m i ted class ofat tachm ents to m oti ons to dism i ss p u r s u an t t o R u le 1 2(b )(6)
. Rose nb l um , 2 9 9 F
. 3 d a t66 1.

“ ‘ [ D] o cument s at ta ch ed to a mot i o n t o di smi ss a r e co nsid er ed p ar t o f th e p lea d in g s if th ey are refe rre d to in th e p lain tiff’s co m p lain t a n d are ce n tr a l t o h is c laim .’ ” M cCready v. eBa y, Inc. , 45 3 F.3d 8 82, 89 1 ( 7th Ci r. 20 06) ( quoti ng 188 LLC v. Trinity Indus. , Inc. , 30 0 F
. 3d 730, 73 5 ( 7th Ci r. 20 02) ) ( ad d iti onalquotat i on o m i tte d). These d ocum ents m ay be consi dered by a dist ri ct cour t in r ul i ngo n the mot i o n t o di sm i ss wi th o utc o nv er ting th e m ot i on int o a m ot ion for s u m m ar y jud gm en t. Id. The cour t “ ‘i s no t bo und to acc ept the pl eader ’ s a l l ega tio n s as to th e e ffec t o f th e e x h ibit, bu t c an ind ep en d en tly ex ami ne the do cumenta nd f o r m i ts o wn co nc l us i o ns as to the pr operco nstr ucti on a nd m eani ng to be gi ven the m ate ri al

. ’ ” Rose nb l um , 29 9 F.3 d at 6 61 ( quoti ng 5 C h ar les A lan W rig h t & A rt h u r R . M i l l er , Federal Practic e & Pr oc e dure : Ci vi l 2d, § 1327 at 766 ( 1990 ))
.6 N o. 11

- 3208 H er e, Burke’ s co m pla i nt m akes r epeate d refer ence to the Pr oper ty Report, and the Pro pertyRepor t i s ce ntra l to h is c laim s th at th e d ev elo p er vio lat ed th e Illino is Cond om i ni um Pro pertyA ct a nd br eached a cont ra ct. H e a l l ege s that the d ev elo per m ade a m ate ri alchange to th e in for m at ion in t h e P ro p er ty R ep or t, an d th at it did so w i thout suffi ci ent buyer approval

. T h e Proper ty Reporti s cl ear l y c entr al to these c l ai m s, and the dist ri ct cour t was r i ght t o consi der i t. I n a ddi ti o n t o requi r i ngthe di sc l o su r e o fc er ta i n do cum ents, se cti on 2 2 o fthe Cond om i ni um A ct a l so provi des: A l lo fthe i nfo rm ati on r eq uir ed by thi s S ecti on w hi ch i s avai l abl e at the ti m e shal l b e fu rn i shed to the pr ospect ive buyerbefor e e xecuti on o f the con tract f orsa l e. There after, no changes o r a me n d me n t s ma y b e ma d e i n an y o fth e i t e ms fu rn ish ed to th e p ro sp ec tiv e b u ye r w h ich w ou ld m at er i al ly af fec t th e r i ght s o fthe b uy ero r the val ue o fthe unitwitho ut o btaini ng the approv al o fatl ea st7 5% o fthe b uy er s th eno wni ng interest in th e con d om inium
. I f all of th e inform ati on i s no t a vai l abl e a t the ti m e o fexec u ti on of th e c on tr ac t fo r sa le, th en th e c on tr ac t s h all b e v o i d ab l e a to p t i o n o fth e b u y e r atan y t i me up unti l5 days a fterthe l asti te m o fr equi re d i nfo rm ati on i s furni shed to the pros p ec ti ve b u yer, o r unti lthe cl osing o fthe sal e, wh i chever i s ea rli er . Fa i l ure on the par t o fthe sel l erto m ake fulldi scl osur e a s r equi re d by thi s S ecti on shal lenti tl e the buy er to r escind the contr actN o. 11

- 3208 7 f o r s al e ata ny t i m e be f o r e th e cl o singof the c o ntr act and to re cei ve a r efund o fal ldep os it m oney s paid w ith inte re st ther eon at the r ate then i n effect f ori nter esto n j ud gm ents. 76 5 Ill. C om p . Sta t. 60 5/ 22
. Bu rk e m ai ntai ns thatthe devel operm ade a change oram endm ent t o the info rm ati on in t he Pr oper ty Re p or t that affecte d him witho ut o btaini ng appro valo f at l eas t 75% o fthe buyer s. The devel operr esponds that re sci ssi on f ora vi ol ati on o f the disc l osur e obl i gat i on i s the o nl y r em edy pro vi d ed to a buyerunder s ecti on 2 2, yetBurke does not al l ege thatth e deve l operf ai l ed to m ake fulldi scl osu re about anym att err equi re d by se c tio n 22 . Th e p ar tie s d o n otp oin t u s t o a n y Il lin ois st at e co ur t dec i si o n s qua r ely a ns wer i ngwhether the Cond om i ni um A ct c ontains a pri vate r i ght o fa c tio n or r e me d y wh e n a b u y e r a l l e g e s th a t th e d e v e l o p e r ma de a m ate ri alchange witho ut 75 % approv al

. C f. L us t e rv. Jo nes , 3 88 N. E. 2d 1029 , 10 33 ( I l l

. App. Ct
. 1 97 9) ( r ul i ng that re sci ssi on d ue to se l l er ’ s f ai l ure to disc l ose i s a re m edy f orthe pros p ec tive buye r onl y pr i orto cl osing, n otaft er ); Gold b e rg v . 40 1 N. Wab as h Ve nt ure, LL C , 20 10 W L 16550 89, a t *6 (N.D. I l l

. 20 10) ( concl ud i ng tha t I l l i n o i s C o n d o m i n i u m A c t d o e s n o t i n c l u d e a n i mp li ed private right ofa ction for vi olation of sect ion 22’s am en d m en t prov isi on). W e need not pr edi ct whether the S up re m e Cour t o f I l l i no i s wo ul d fi nd tha t Bu r k e ha s a n a v a i l ab l e r em e dy b ec a u s e t h er e w as n o m at er ial c h an ge . C f. All stat e Ins. C o. v. M enards, Inc. , 28 5 F.3 d 63 0, 63 7 ( 7th Ci r. 20 02)8 N o. 11

- 3208 (d isc u ss in g ob liga tio n of fed er al c ou rtsit tin g in d ive rs ity to as c er ta inh ow st at e’s h igh es t c ou rtw ou ld deci de )
. T he o nly p ur po r t e d ma t e r i a lc ha ng e Bu r ke as se r ts i s th e “a ddi ti o n” o fpa r k i ngon th e s i xth fl o o r . The in itia l T ru m p T ow er P ro p er ty R ep or t w as iss u ed in Sep tem ber 2003 , and Bu r k e r eceived a cop y of it before si gni ng the p urchase agre em ent. Itstate s in re l evantpart : T he Con d om inium w il l con tain .
. . an u nd eterm ined num bero funi t par ki ng space s with in th e a b ov e-g ro u n d p ar kin g fa c ilitie s th at t h e D ev elo p e r c u r r e nt l y i n t e n d s w i l lb e l o c a t e d o n s o me of floo rs th re e (3 ) th ro u gh tw elv e (1 2) . .
. . Con sist ent with the Pro pertyRepor t, the pu rchas e a gr eemen tBu r k e s i g ne d s t a t e d: I n a ddi ti o n t o the Co nd om i ni um a nd the H ot el C on d om in iu m , th e B u ild in g w ill l ike ly i ncl ud e: . . . ( B) a public park i ng g ar age ar ea, curr entl y a nti ci pated to co n tain park i ng space s locate d o n fl o o r s LL2, LL3 , a nd LL4 o fthe Bu i l ding and som e o ffl oo rs thr ee ( 3) thr ough tw elv e (1 2) o f th e B u ild in g . . . . So fro m the outse t, i t was cle arfro m the docum ents Bu rk e re cei ved that the num ber of parking spa c es h ad yet to be d eterm in e d and also th at W aba sh Ven tu re pla nned to l oca te parking o n “so m e o ffl oo rs thr ee ( 3) th r o ug h twel ve ( 12). ” Bur k e was puto n n o ti ce o fthe possibi l i ty that a n y oftho se fl oo rs co uld be used f or parking. Cl ear l y, fl oo r six w as a poss ibi l i ty f orpark i ng. Locating par ki ng o n the si xth fl oo r w as not a c h an ge or am en d m en t fro m th e d i sc los ed p lan s t h at m at er iallyN o. 11

- 3208 9 affecte d his r i ghts orhi s uni t’ s v al ue. Ind eed, i t was not a chang e at a ll

. The park i ng space m att erdoes not am oun tt o ma t e r i a lb r e a c h un de re i the r the Co nd om i ni um A ct o r a co m m on l aw br each ofco ntra ct theor y.
B. A greem en t D oes N ot Fail forLack ofM u tua li ty Bu rk e a l so ar gues that the pu rc hase agr eem ent was f aul ty fro m the outse t an d thathe i s there f or e e nti tl ed to re sci ssi on. Fo r on e, Burke ar gues that the purchas e agr eem ent i s unenf or ceab le fo r l ack ofm utual i ty. Because Burk e br eached the ag re em ent, th e deve l oper m ai ntai ns thatu n der the co ntra ct i t ca n kee p the e ar nest m one y Bur k e depo si te d th at i s equa l to 20 % o f th e pu rchase pri ce. Bur ke em phasi zes thatthe pu rchas e a gr eem en t st at es tha t i fthe de ve l o perha d ins tead be enthe p ar ty th at d efa u lte d , th e re t u r n of ea rn es t m on ey is B u r k e ’ s so le re m ed y. (H e d oe s n otm en tio n th e p os sib ility of sp ec ific p e r f o rm an c e, n or d oe s h e s ee k it h er e.) Bu rk e m ai ntains that the deve l oper ’ s obl i gat i ons und er th e c on tr ac t a re th er efo re m er ely illu so ry an d th at it coul d si m plyse l lthe u n it to a new buye r w i l l i ng to pay a hi gherpri ce than the e x i sting co ntra ct pr i ce with no har m ful conse quences. “I n i ts m os t el em entalse nse, the doctr i ne o fm utual i ty of obl i gat i on m eans that unle ss both parti es to a c on tr ac t a re bo u n d by its te rm s, n eit h er is bo u n d .” Schw inderv. Austin B a n ko f Chi. , 809 N .E .2d 18 0, 19 3 (Ill. A p p . C t. 20 04 ); see also Kra f t c o C o rp . v . Ko l b us , 274 N
. E.2 d 153, 155 (Ill. A pp . Ct. 19 71)
. The i dea ofa str i ct m utual i ty re q u ire m en t is , ho w ev er , d isfa vo re d

. Se e, e. g. , Car t e rv. SS C10 N o. 11

- 3208 O din O pera ting C o ., 976 N
. E.2 d 344, 351 (I l l

. 2012) ; Rest ate
m en t ( S ec o nd) o f Con tr ac ts § 79 cmts
. a, f ( 19 79)
. The S up r e me Co ur to fI l l i no i s h a s e xp l a i ne d: W hi l e c on sidera ti on i s e sse nti alto the val i dity o f a con tract, m ut ua li ty of obligati on is n o t. W he re ther e i s no o therco nsi de ra tio n f ora contr act, the m utual pro m i ses o fthe parti es const i tute consi de ra ti on, and thes e pr om i ses m ust be bi nd i ng o n bot h p ar ti es orthe contr act f al l s for wanto fc o ns i der at i on, b utwher e th er e i s an y othe r consi derat i on f orthe contr act, m u tu al i ty of ob liga tio n is n otes se n tia l. C a rter, 97 6 N .E .2d at35 1 ( quoti ng A rm st rong P aint & Var ni s h Works v. Cont ’ l Can Co. , 133 N
. E
. 711, 714 ( I ll

. 1922)); s ee also M cIne rney v. C harte r G olf, Inc. , 6 8 0 N. W
. 2 d 1 347, 13 51 -52 (Ill . 199 7). I n I l l i noi s, co urts have i m pu ted a n i m pli ed prom i se of goo d fa i th and f ai r deal i n g in r eales tat e purchas e a gr eem en ts
. Sc hw ind er, 809 N .E .2d at19 4. A s a r es u lt, Illin ois cou r ts ha ve r ej ec te d a r g um en ts s i m i l art o the o ne Bur k e m ak es no w. In B o rys v. Josada B uilde rs, Inc. , 44 1 N .E .2d 12 63 (Ill. A p p . C t. 19 82 ), for ex am p le , t h e Il lin ois ap p ell ate co urt consi dered a dispute ove r the s al e o f co ndo m i ni um uni ts
. The c o nt r ac t prov ide d tha t i fthe sel l erf ai l ed to del i vergo od ti tl e to th e unit, the buyer s’ re m edy was l i m i ted to a re turn o fal lfund s pai d ordep os ite d

. Bory s , 44 1 N
. E.2 d at 1 266. The buyers ar gued th atb ec au se the s el l erc o ul d c o nt r o lthe q ua l i tyo fthe titl e a nd the sel l er ’ s l i abi l i ty w as l i m i ted to r etur n of the deposi t, the sel l erwas fre e to p erf or m o r notN o. 11

- 3208 11 perf or m atwil land that the contr act ther ef or e l acke d m u tu alit y. Id. I n l i ght of the i m pli ed prom i se of good f ai tha nd f ai r d ealin g, ho wev er, the c o ur t r ej ec te d the b u ye rs ’ arg u m en t. Id. The co urt concl ud ed that w hen the c o nt r a c t wa s c o ns t r ue d, a s i t s a i d i t mus t b e , as r equir i n g the par ti es to act i n go od f ai th, the sel l erhad an obl i gat i on t o obt ai n the quality o fti tl e r equi re d und er th e c on tr ac t t o c on su m m at e t h e s ale

. Id. at12 67. There

for e, m u tu alit y of o b liga tio n ex ist ed

. Id. M o r e rece nt l y, i n Sc hwin de rv. Aus t i n Bank of Chi cago , 809 N
. E. 2 d 1 8 0 ( I l l

. App
. Ct
. 2 0 0 4 ) , the I l l i no i s a pp e l l a te co ur t an aly ze d a c o ndo m i ni um purc ha se a g r ee m en t that conta i ned a pro vi si on s i m i l arto the one here

. That contr act provi ded thatr etur n ofthe earnest m oneyto t he p u r c h a s e r w a s th e p u r c h a s e r ’ s “ s o l e e x c l u s i v e r e medy” in the eve nt o fthe sel l er ’ s def aul t. 80 9 N
. E.2 d at1 85. Al th o ug h n ei th erpa r tyc o nt en ded th atthe claus e w as invalid, the cou rt ana lyzed w he th er there w as m u tu a l ity of ob liga tio n be c au se of th e b u ye r’s cla im that the s el l erhad an unfett er ed ri gh t to te rm i nate th e p u rc h as e a gr ee m en t. Id. at1 94-95
. The co urt sta ted that the duty ofgo od f ai th and fairdeal i ng was i m po se d on the pr o vi si o n o fthe c o nt r ac t g r an tingthe se l l erthe r i g htt o t er m i na te the c ont ract, wi ththe re sul t that there were m utual l y b i nd i ng o bl i gat i ons on b ot h th e b u ye r an d se ller. Id. at19 5. UnderI l l i no i s l aw, the n, B ur k e’ s ar g um en t th atthe pu rchas e a gr eem en t is unenf or ceabl e o n the basi s that th e d ev e l o p er ca n “b re ac h atw ill an d all h e h as to d o is g i ve [ Bur k e’ s] mone y b ac k ” ha s no m er i t. As in Bory s12 N o. 11

- 3208

a nd Sc hw ind er, I l l i noi s l aw i m p u te s the i m pli ed obl i gation of good f aith an d f air d ealing i nt o the d evelop er ’s o bl i g at i o n t o c o nveythe c o ndo m i ni um uni t an d pa r k i ng spaces to Bu rk e. A nd al though Bu rk e co ntends that applying the i m pli ed cov enant o fgo od f ai th “o ver ri d es” co nt r ac t prov i si o ns , we ha ve r ej ec te d tha t ar g um en t b efo re . Se e, e . g. , L. A. P.D. , Inc
. v. Ge n. Ele c. Corp. , 13 2 F
. 3d 40 2, 40 3-0 4 (7 th C ir. 19 97 ) (ex p lain in g th at “g oo d fait h ” in Illino is c on tr ac t la w is a ga p -filli n g a p p ro ac h an d is ess enti al l y use d as co nstr ucti on a i d). The d ev elo per ha d the o bl i g at i o n un derthe c o nt r ac t to c onv eythe c o ndo m i ni um uni t an d parking spac es t o Bur k e. In l i g ht ofthe i mpl i e d ob l i g a t i o n o fg o o d f a i th a nd f a i r de a l i ng, the a gr eem ent di d not l ack m utual i ty.

C . Liqu ida ted D am ages Clau se En for cea b le Bur k e’ s co m pl ainta l so c o nt ains a c o unta ss er tinghe ca n r es cind the a g r ee m en t o n the g r o und tha t i t co nt ains an un en forceable p e n alty clause. A s an initialm atter, Bur k e do es no t po i ntt o a ny c ase s ug g es tingtha t th e re m edy f oran unenf or ceabl e dam age s cl ause under Illino is law is re s c i ss ion of th e c on tr ac t. C f. Gro ssing er M o to rco rp, Inc. v. A m . Na t’l B a nkan d Trust, 60 7 N
. E.2 d 1 3 3 7, 1 3 4 8 ( I l l

. App
. Ct
. 1 9 9 2 ) ( “ I n s um, we c o nc l ud e th at th e liq u id at ed d am ag es p ro vis ion is u n en for c ea b le and that c ons eq u en tl y defendant i s o nl y a l l owed to re c ov er ac tu al d am ag e s r es u ltin g fro m th e b re ac h .”); see al s o Ham m i ng v. M urphy, 404 N .E .2d 10 26 , 103 2 (Ill. A p p . C t. 19 80 ).N o. 11

- 3208 13 I n any eve nt, the cl ause i s en for c eable

. W hethera provi si on co nsti tutes a val i d l i quidate d dam age s cl au se or an unenf or ceabl e penal ty cl ause i s a questi on o fst ate law th at w e re vie w d e n ov o. Ene rgy P lus Cons ul t i ng, LL C v. Ill. Fuel C o ., L L C , 371 F. 3d 907, 909 ( 7th C ir. 2004 ). Para gr aph 12( a) o fthe pur c h as e agr eem ent pr ovi des, as i t r el ate s t o dam age s: I n the eventof a defaul t o r bre ach o fthi s Purc hase A gr eem ent by Purchase r, . . . S el l erm ay ter m i nate th i s Pur ch as e Agr ee m en t and , a s i ts s o l e an d excl usi ve re m edy upon te rm i nati on, r eta i n as l i qu id ate d dam age s . . . [ the] Earnes t M oneydeposi t .
. . a nd i fS e l l e r i s o the r wi s e e nt i t l e d t o the l i quidate d dam age s descr ibed a b ove , S el l er shal lr etur n t o Purchase r am ounts pai d to se l l er. . . . I n ac co r dan ce w i thS ec ti o n 1 70 3( d) o fthe I nter sta te Land S al es Ful lDis cl osur e Act, i fS el l er i s o ther w i se enti tl ed to the l i quidate d dam age s described abo ve, S el l ershal lreturn to Purchas er am ounts pai d to S elle r . . . i n exces s o f( x) 15% of the Purchas e Pr i ce ( excl ud i ng anyi nter est pa i d u n d e r th e P u r c h a s e Ag r e e me n t ) o r ( y ) t he am ount o fS el l er ’ s a ctualdam age s, w hi chever is greater. I n I l l i n o i s , a p r o v i s i o n th a ta l l o ws a d e fe n d a n tthe opti on t o re cei ve l i quidate d dam age s o r see k a ctual d am ag es is u n en for c ea b le a s a p en alt y. Ka r i miv . 4 0 1 N. Wa ba sh V

entu re, LLC, 95 2 N
. E.2 d 1278, 12 87 (Ill

. A pp . Ct. 2011 ) (cit i ng G rossin ger, 60 7 N
. E.2 d at 1 347)
. S uch a pro

vi si on i s unenf or ceabl e be cause it gi ves the defendants14 N o. 11

- 3208

a m i ni m um r eco ver y r ega rdl ess o factual dam age s, ye t a l s o a l l o ws th e d e fe n d a n t s t o d i s r e g a r d l i q u i d a t e d d a mag es i fthe a ctua lda m ag es wer e g r ea te r tha n the sp ec ified am ou n t. Id. T h at n eg at e s t h e p u rp os e o f liqu idated dam age s, wh i ch i s t o provi de parti es w i th an agr eed upon, pre deter m i ned dam age s a m ount wh en ac tu al d am ag es m ay be d i f f i c u lt t o a sc er ta in
. Id .; H i ckox v. B el l , 552 N
. E
. 2d 1133, 1140-41 (I ll

. A p p . Ct
. 1990). H er e, the devel op er m ai ntai ns thatthe cl ause does not gi ve i t the o p tio n t o choos e be tw een l i quidate d and actualdam ages, and w e a gr ee. The pl ai n l anguage ofthe provi si on s how s that the o nl y “ opti on” the developerhas up on th e buyer ’ s br each i s whether to te r m i na te the a g r ee m en t, a s the c l au se s ta te s th atthe sel l er“m ay ter m i nate” upon the buyer ’ s d efa ulto r b re ac h . B u t t h er e is n o “ m ay ” in th e p r o v i s ion as it re lat es to th e t yp e o f d am ag es . N ot ab ly, th e Illino is a p p ella te co u rtco n st ru ed th is sam e l i quidate d dam age s p ro vi si on in re sponse to an o th ers ui t ag ainst the de ve l o perhe r e an d r ej ec te d the ar gu m en t B u rk e m ak es n ow . Ka rim i, 952 N
. E.2 d at 1 287. The c o ur tr ul e d tha tde s pi t e p a r a g r a ph1 2 ( a ) ’ s r e fe re nce to actualdam ag es , i t di d not g i ve the s el l erthe opti on to se ek th em . Id. Rather, “ [ a] l though a cal cul ati on o f actual dam age s m ay be ne cess ar y t o deter m i ne a l i qui dat ed damag es a m o unt, de fend an ts c anr ec ei ve no m or e than the am ount pl ai nti ff s hav e deposi ted pu rs u an t t o the a gr eem ent, ev en i factual dam age s prov e gr eat erthan the s um deposi ted. ” Id. Th e cou rt al so rej ecte d the pl ai nti ff s’ ar gum ent that par agr aph 12( a)N o. 11

- 3208 15

w as a penal ty because the devel operso l d the uni t a t iss ue f orm or e than the pri ce in the pla i nti ff s’ purchase agr eem ent, rea soni ng tha t under the t er m s o fthe agr eem en t, i t was i rr el evantto the liq u idated dam age s i ss ue w h et h er th e u n it w as lat er res old

. Id. W e se e no in d ica tio n t h at th e Su p re m e C ou rtof Illin ois w ou ld disa gr ee w i th thi s r eas oni ng.

D . N o Viol at i on ofIn t er st at e Land Sale s Full D i scl osur e Act Bu rk e a l so m ain ta i ns he has s tat ed cl ai m s forvi ol ati ons ofthe I nter sta te Land S al es Fu l lDis cl osur e Act (“ IL S F D A ”), 15 U
. S. C
. § 1703(d ). On e of th e A ct’s core p u rp os es is “ ‘to p re ve n t fa ls e a n d d ec ep tiv e p ra c tic es in the s al e o f

. . . l and by r equi ring devel op er s t o disc l ose i nfo rm ati on nee ded bypote nti albuye rs . ’ ” Bacol i t s as v. 86th & 3r d Ow ne r, LL C, 70 2 F
. 3d 673, 68 0 ( 2d Cir

. 20 12) ( quoti ng Fl i ntRi dge D ev. Co. v. Sc e ni c Rive rs As s ’ n o f O kl a. , 426 U .S. 77 6 , 77 8 (1 97 6)); se e also Long v. M er ri fi el d To w n C en te r Ltd. P’ship , 61 1 F
. 3d 240, 24 4 ( 4th Ci r. 20 10) (“I L SFD A i s a rem ed ialstatu te en acte d to preve nt i nt erst at e la n d frau d an d to p ro te c t u n su s p e c tin g a n d illinform ed i nv estors fr o m bu ying un d esirable l an d

. ”). I n i nstance s where the s tatut e ap pli es ( the deve l oper d oes not argue that any of i ts ex em p tions ap p ly h ere), sect i on 1 703( d)( 3) per m i ts re voca ti on a t the o pti on o f th e pu rch aser for tw o year s a ft e r the d ate th e pu rchase agr eem ent i s s i gned i fthe agree m ent doe s not provi de that16 N o. 11

- 3208 i fthe pur ch as er. . . l o se s r i g ht s a nd i nt er es t i n the l o t as a r es ul t o fa de f aul t o r b r ea cho fthe c o ntract or agreem en t w hich occu rs a ft er the p urchaser

. . . has paid 15 p ercentum of the pu rchas e pri ce o fthe l ot, excl ud i ng anyi nter est owed under th e c on tr ac t o r a gr ee m en t, th e s elle r . . . sh all re fund to s u ch purchaser

. . . any am ount wh i ch re m ai ns aftersubtr acting ( A ) 15 p er centum o f th e pur ch as e pr i ce ofthe l o t, e xc l udi nga ny i nter esto w ed und erthe contr act orag re em ent, or th e am ou n t of d am ag es in c u rre d by th e s elle r . . . as a r esu lt ofsaid brea ch, w hich ever is greater, fro m (B ) th e a m ou n t p aid by th e p u rc h as er . . . . . 15 U
. S. C
. § 1703(d )( 3). Bu rk e a rgues that the purchase agre em ent’ s s tat em e n t t ha t the “Sell er m ayte rm i nate thi s Purc hase A gr eem en t a nd , as i ts sole and exc lusive rem ed y up on term i nati on r eta i n as l i quidate d dam age s . . .” f ai l s t o com p ly w ith th e I L SFD A ’s requ irem en t tha t the pu rchaser be noti fi ed that “i f the pu rchas er . . . l oses rights and inter est
. . . the sel l er . . . shall r efund to such pu rchas er. . . any am ount w h ich r em ai ns after s u b t r a c tin g . . . .” (em p h as es ad d ed ). Th is a rg u m en t is m er i tl ess . The word “s h all ” in that part ofthe sta tute r efe r s t o th e r e q u i r e me n tth a tth e s e l l e r r e fu n d a ny a mo un t r e ma i n i n ga ft e r a p p l i c a t i o n o fa l i q u i d a t e d d a mage s for m ula, i fan a m ou nt m ust be r efund ed. The ag re em ent’ s use of “m ay” com es i n a differ ent conte xt altogether, nam el y in gi vi ng the se l l erthe choi ce o fwh ether to t er m i na te the a g r ee m en t o r k ee p i t i n e ffec t i fthe pu rchas erdef aul ts.N o. 11

- 3208 17 B u rk e a lso arg u es t h at ev en if th e c on tr ac t is e n f o r c e ab l e a n d th e d e v e l o p e r i s e n t i t l e d t o k e e p s o me o fhi s ea r ne stmone y a s a r esu lt ofhi s br ea ch, the I LS F DA mea ns tha t the de v e l o pe r may o nly k e e p an am ou nt equalt o 1 5% o fthe pur ch as e pr i ce . Onc e ag ain, w e d isa gr ee . Se c t ion 17 03 (d )(3) d oe s n otcr ea te a m ax im um o f 1 5% of the purchas e pr i ce a s the m eas ure of liqu id at ed d am ag es u p on a p u rc h as e r ’ s br ea c h . I t ex pl i ci tly s ta te s th atthe a m o untthe s el l eri s to r efund i s 1 5% o fthe pu rchas e pr i ce, “orthe am ou nt o fdam age s i nc ur r e d b y the s e l l e r, ” wh i c he v e r i s gr eat e r, 1 5 U. S
. C. § 1 70 3(d )(3) (em p h as is a d d ed ), so th e 1 5% figu re in the I LSFDA i s no t a cap o n dam age s.

E. N o Br each ofContr acti n R et ai n in g Earnest M oney A f t erBr each Bu rk e’ s co m pla i nt al so ass er ts the deve l oper ’ s f ai l ure to r e t urn $ 1 1 4 , 1 0 6
. 5 0 o fthe e a r ne s tmone y h e de po s i t e d, ana m o unte qua l i ng5 % o fthe pur ch as e pr i ce , mean s th at th e d evelop er breach ed pa ragrap h 12 (a) of t he pu rch as e a g r e e me n t
. P a r a g r a p h 1 2 ( a ) p r o v i d e s i n r e l e v a nt part: “i f Se l l er i s othe rwis e enti tl ed to th e li quidate d dam age s d e s c r ib e d ab o v e , S e l l e r s ha l l r etur n to Pur c ha s e r a mou nt s p a i d t o S e l l e r . . . i n e xc e s s o f( x) 15 % of th e P u rc h as e P ric e (e x c l u d in g a n y in te re st p aid und ert he Purchas e Agree m ent) o r ( y) the am ount o f Se ller’ s a c tu al d am ag es , w h ich ev er is gre at er .” Th e di s t r i c tc o ur tdi s mi s s e d thi s c l a i m be c a us e Bu rk e m ade no al l ega ti ons that the devel oper ’ s actuald am ages we re n ot g r ea te r tha n 2 0% o fthe pur ch as e pr i ce . W i th o ut18 N o. 11

- 3208

an all egation that the d e v eloper’s actu al dam ages w ere les s than 20% o fthe pu rchas e pr i ce, the com pla i nt fails t o s t a t e a c l a i m up o n w hi c h r e l i e fc o ul d b e g r a nt e d. I nd eed , as the d istri ct cou rt s t a t e d , i t is w idely un d ersto od thatthe val ue o fthe re si denti alr ealesta te m ar ket fel la fte r De ce m be r 2 00 6, whenBu rke e nt er ed i nt o the contr act. W e a l so n ot e that the 20 % fi gure i s no t s o hi gh as to be u n en for c ea b le on p u b lic p olic y g ro u n d s. In I l linoi s, “[ c] ourt s hav e co nsi dered ea rnes t m oneyr eprese n tin g u p to 20 % of th e p u rc h as e p ric e a rea so n ab le su m a s l i quidate d dam age s. ” Ka r i mi, 95 2 N
. E.2 d at 1 288. B urke r ecei ved thr ee opportunit i es to ple ad an acti onabl e cl ai m . W e a gr ee w i th the distr i ct c ourtthat h e f aile d to p lea d a p lau sib le c laim for re lief on th is b re ac h of co n tr ac t c laim or a n y of t h e c laim s h e c h allen ge s o n ap p ea l.

I I I . C ONC L US I ON Fo r th e for ego i ng r eas ons, we A FFIRM the j ud gm ent o f the di str i ct c ourt
.

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