Court Opinion

ID: 4556292
Source: CourtListenerOpinion
Date Created: 2020-08-17 22:00:20.256783+00
Date Added: 2024-06-11T09:26:56.855005
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 19‐2542
SMART OIL, LLC,
                                                   Plaintiff‐Appellee,
                                 v.

DW MAZEL, LLC,
                                               Defendant‐Appellant.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
         No. 1:15‐cv‐08146 — Harry D. Leinenweber, Judge.
                     ____________________

     ARGUED MAY 21, 2020 — DECIDED AUGUST 17, 2020
                ____________________

   Before MANION, BARRETT, and BRENNAN, Circuit Judges.
    BRENNAN, Circuit Judge. Smart Oil, LLC agreed to sell
thirty parcels of land with gas stations and convenience stores
to DW Mazel, LLC (“DWM”). DWM failed to close under the
agreement, which by its terms granted Smart Oil the earnest
money for the transaction as liquidated damages. But DWM
never paid that money, and Smart Oil sued. DWM counter‐
claimed for breach of contract and fraudulent inducement.
2                                                  No. 19‐2542

    The district court granted Smart Oil summary judgment,
ruling that DWM breached the agreement by not paying the
earnest money, which Smart Oil was entitled to as liquidated
damages under Illinois law. The court also ruled that DWM’s
counterclaims for breach of contract and fraudulent induce‐
ment failed for the same reason. DWM appeals. The district
court ruled correctly in all respects, so we aﬃrm.
                       I. BACKGROUND
    During 2014, Smart Oil’s sole member, Mehmood Syed,
marketed for sale numerous properties with gas stations and
convenience stores. After lengthy negotiations, Smart Oil and
DWM executed a Purchase and Sale Agreement and Joint Es‐
crow Instructions (the “Agreement”) by which DWM agreed
to purchase thirty such parcels of real property for $67 mil‐
lion. Both parties were represented by counsel throughout the
negotiations.
    The Agreement requires DWM to initially deposit
$300,000 into an escrow account. That deposit was to take
place during a due diligence period following acceptance of
the Agreement. The Agreement obliges the escrow account
holder to transfer that deposit to the title company. Then, at
the close of the due diligence period, DWM is to pay a second
deposit of $450,000 to the title company. The total earnest
money of $750,000 is about one percent of the total purchase
price.
    DWM never paid the initial earnest money deposit. De‐
spite DWM’s failure to do so, the parties continued their due
diligence investigations and negotiations. By the close of the
due diligence period, the Agreement requires DWM to pro‐
vide Smart Oil with written notice if, after its investigations,
No. 19‐2542                                                   3

DWM disapproved of the purchase. If DWM had provided
this written notice, the Agreement would have terminated,
and the earnest money would have been returned to DWM. If
DWM did not provide that written notice, section 4(a)(i) of the
Agreement states that such “failure to timely deliver [written]
notice [of its disapproval] shall be deemed Buyer’s approval
of such investigations,” and Smart Oil would be entitled to
keep the earnest money if the deal otherwise fell through.
DWM asserts it negotiated with Smart Oil to lengthen the due
diligence period, extending the time to provide written notice
of disapproval. Regardless, DWM failed to provide written
notice of disapproval, which DWM does not dispute. At the
close of the due diligence period, DWM also did not pay the
second deposit.
    In the meantime, Syed contacted property owners about
selling their properties to Smart Oil which would then sell
them in the aggregate to DWM. This is known as a “flip deal,”
and according to Smart Oil was contemplated under section
17(c) of the Agreement, which states in bold: “The parties
acknowledge that Seller is the holder of a portfolio of gas sta‐
tion businesses, real estate and/or leases and only nominal ti‐
tle holder for purposes of transferring title to the Buyer.” To
make good on its end of the Agreement, Smart Oil executed
contracts with various property owners for the sale of their
properties.
   Ultimately, DWM failed to close under the terms of the
Agreement and the parties’ deal fell through. The individual
property owners did not sell their properties to Smart Oil un‐
der the individual contracts, and Smart Oil never flipped
those properties to DWM.
4                                                   No. 19‐2542

    Smart Oil sued DWM for breach of contract, arguing it was
entitled to $750,000 in earnest money as liquidated damages
under the following term: “If Buyer defaults in its perfor‐
mance … under this Agreement, including the obligation of
Buyer to purchase the Property if all conditions precedent to
such obligations has been satisfied, Seller shall receive the en‐
tire Earnest Money Deposit and all accrued interest thereon
as complete liquidated damages.” The Agreement explains
the need for liquidated damages in conspicuous language: “IT
BEING UNDERSTOOD THAT THE DAMAGE TO SELLER
CAUSED BY ANY SUCH DEFAULT OF BUYER WOULD BE
EXTREMELY DIFFICULT TO OR IMPOSSIBLE TO
ASCERTAIN.” The liquidated damages clause survives ter‐
mination of the contract per section 17(a). Both parties signed
under that clause demonstrating their consent and agree‐
ment.
    DWM counterclaimed for breach of contract and fraudu‐
lent inducement, asserting Smart Oil failed to perform condi‐
tions precedent under the Agreement and deceived DWM
into executing the Agreement. According to DWM, Smart Oil
did not have authority to convey the properties and failed to
provide adequate due diligence materials. After discovery
both parties moved for summary judgment.
    The district court ruled that Smart Oil satisfied all condi‐
tions precedent of the Agreement and that DWM breached
the contract by not paying the earnest money. First, the court
found that Smart Oil had authority to convey the properties,
relying on numerous sworn statements from property owners
verifying that they were ready to sell the properties to Smart
Oil for Smart Oil to “flip” them to DWM. Second, the court
found that DWM failed to give written notice of disapproval
No. 19‐2542                                                      5

of the due diligence investigations, and that failure was
“deemed Buyer’s approval of such investigations” under Sec‐
tion 4(a)(i) of the Agreement. Because DWM approved of the
due diligence materials under the Agreement, Smart Oil sat‐
isfied its condition precedent for due diligence disclosures. So
DWM’s obligation to pay the earnest money remained, and
DWM admits it never paid.
   The district court also held that Smart Oil was entitled to
the earnest money as liquidated damages under Illinois law,
noting that DWM’s representative signed the liquidated dam‐
ages clause that explicitly stated actual damages would be ex‐
tremely diﬃcult or impossible to ascertain. The court found
the liquidated damages figure to be a fair and reasonable
amount and granted Smart Oil’s motion for summary judg‐
ment.
    The district court also denied DWM’s cross‐motion for
summary judgment on its breach of contract and fraudulent
inducement claims. Construing the facts in the light most fa‐
vorable to Smart Oil, the court found that the property owners
authorized Smart Oil to eﬀectuate the flip transactions and
that they were ready to sell their properties to DWM. The
Agreement includes a prevailing party attorneys’ fees and
costs provision, under which the court granted fees and costs
to Smart Oil. DWM appeals.
                         II. DISCUSSION
    As a federal court sitting in diversity, we honor the Agree‐
ment’s choice‐of‐law clause specifying Illinois law as control‐
ling, unless to do so would be contrary to public policy. Life
Plans, Inc. v. Sec. Life of Denver Ins. Co., 800 F.3d 343, 357 (7th
Cir. 2014). We review the district court’s decision granting
6                                                     No. 19‐2542

summary judgment de novo, construing the facts in a light
favorable to the non‐moving party. Westfield Ins. Co. v. Nat’l
Decorating Serv., Inc., 863 F.3d 690, 694–95 (7th Cir. 2017).
    A. Breach of Contract
    Under Illinois law, a plaintiﬀ suing for breach of contract
must prove: (1) the contract existed, (2) the plaintiﬀ per‐
formed the conditions precedent required by the contract,
(3) the defendant breached the contract, and (4) damages.
DeliverMed Holdings, LLC v. Schaltenbrand, 734 F.3d 616, 626
(7th Cir. 2013) (citing Law Oﬃces of Colleen M. McLaughlin v.
First Star Fin. Corp., 963 N.E.2d 968, 981 (Ill. App. Ct. 2011)).
    The parties agree a contract exists, and they also agree
DWM never paid the earnest money. They disagree whether
Smart Oil performed its conditions precedent under the
Agreement. DWM asserts Smart Oil’s breach of contract claim
fails because DWM is excused from paying the earnest
money. DWM reasons that Smart Oil is only entitled to keep
the earnest money under Section 17(a) of the Agreement if it
has satisfied conditions precedent, which DWM alleges Smart
Oil failed to do. Smart Oil’s alleged failure to satisfy its condi‐
tions precedent is also the basis for DWM’s breach of contract
counterclaim.
   A “condition precedent is one that must be met before a
contract becomes eﬀective or that is to be performed by one
party to an existing contract before the other party is obligated
to perform.” Catholic Charities of the Archdiocese of Chicago v.
Thorpe, 741 N.E.2d 651, 653 (Ill. App. Ct. 2000) (quoting
McAnelly v. Graves, 467 N.E.2d 377, 379 (Ill. App. Ct. 1984)).
Section 4 of the Agreement provides that DWM’s obligation
to consummate the transaction is subject to the following
No. 19‐2542                                                    7

conditions precedent for DWM’s benefit: (1) due diligence in‐
vestigations and materials; (2) title insurance commitments
for each of the properties; (3) inventories of the personal prop‐
erty for each of the businesses; and (4) that Smart Oil’s repre‐
sentations and warranties were truthful and accurate under
Section 15 of the Agreement. DWM argues Smart Oil failed to
satisfy two of these conditions: it did not have authority to
convey the properties, and it failed to produce the requisite
due diligence materials. Both arguments fail, however.
    First, Smart Oil has shown that it had authority to execute
the Agreement. Section 17(c) of the Agreement states in bold:
“The parties acknowledge that Seller is the holder of a portfo‐
lio of gas station businesses, real estate and/or leases and only
nominal title holder for purposes of transferring title to the
Buyer.” To eﬀectuate the “flip deal” contemplated by the
Agreement, Smart Oil executed contracts with numerous
property owners for the sale of their properties, which would
then be sold to the aggregate purchaser, DWM. To prove
Smart Oil had authority to execute the Agreement, Smart Oil
provided sworn statements from owners of 21 of the 30 prop‐
erties. They declared under penalty of perjury they were
ready and willing to sell their properties to carry out the
Agreement and that Smart Oil had authority to flip the prop‐
erties to DWM. As for the remaining nine properties, DWM
has not produced any evidence to show that Smart Oil did not
have authority to do a “flip deal” or that Smart Oil misled
DWM. Nevertheless, DWM maintains that Smart Oil failed to
“produce the necessary evidence to establish that it had the
actual legal right and authority to sell 30 Gas Stations to
DWM” because Smart Oil’s discovery production was “nine
short of the 30 Gas Stations.”
8                                                     No. 19‐2542

    The Agreement does not require Smart Oil to submit the
specific proof that DWM requests. On its breach of contract
claim Smart Oil must prove it satisfied its conditions prece‐
dent by a preponderance of the evidence. Extra Equipamentos
E Exportacao Ltda. v. Case Corp., 541 F.3d 719, 724 (7th Cir. 2008)
(noting “all that is required to prove a breach of contract”
claim in Illinois is “preponderance of the evidence”). Submit‐
ting declarations from more than two‐thirds of the property
owners—with no evidence to the contrary for the remaining
properties and no evidence that Smart Oil deceived DWM—
satisfies that standard.
    Second, even if Smart Oil failed to provide DWM with the
requisite due diligence materials—which we do not con‐
clude—DWM approved Smart Oil’s due diligence disclosures
by not submitting written notice of disapproval. Sec‐
tion 4(a)(i) of the Agreement states: “On or before the expira‐
tion of the Due Diligence Period, Buyer shall deliver to Seller;
Buyer’s written notice of its disapproval of its due diligence
investigations for the Property. Buyer’s failure to timely de‐
liver such notice shall be deemed Buyer’s approval of such in‐
vestigations.” DWM argues the parties agreed to an extension
of the due diligence period. Even if so, an extension is not
written notice of disapproval. Had DWM provided such no‐
tice, the Agreement would have terminated, and DWM could
have recovered the earnest money. But that is not what hap‐
pened, so DWM’s obligation to pay the earnest money re‐
mains unfulfilled.
    DWM argues even if it did not provide written notice of
disapproval under section 4(a)(i), Smart Oil is still not entitled
to the earnest money because section 4(a)(i) “does not address
the recovery of liquidated damages, but instead the eﬀect of
No. 19‐2542                                                   9

DWM’s written disapproval of due diligence materials.” This
argument is misplaced. DWM contends Smart Oil failed to
satisfy a condition precedent by not submitting proper due
diligence materials. DWM’s lack of written notice of disap‐
proval under Section 4(a)(i), which per the Agreement indi‐
cated DWM approved Smart Oil’s due diligence materials,
rebuts DWM’s assertion that Smart Oil failed to satisfy its con‐
ditions precedent.
    Because Smart Oil satisfied its conditions precedent under
the Agreement, DWM breached the contract by not paying
the earnest money. DWM’s counterclaim for breach of con‐
tract fails for the same reason. We turn next to the question
whether Smart Oil is entitled to the earnest money as liqui‐
dated damages.
   B. Liquidated Damages
    A liquidated damages clause provides a predetermined
remedy in the event a party breaches. McNamara v. O’Donnell
Haddad LLC, 2016 IL App (2d) 150519‐U, ¶28. “This predeter‐
mined amount may or may not exceed the actual damages
and both parties agree to accept this inherent risk.” Id. An un‐
reasonably large liquidated damages clause is unenforceable
under Illinois law on grounds of public policy. Id. Liquidated
damages clauses in real estate contracts are common to avoid
the difficulty of proving damages by methods such as market
value, resale value, or otherwise. Karimi v. 401 N. Wabash
Venture, LLC, 2011 IL App (1st) 102670, ¶16 (citing Siegel v.
Levy Organization Dev. Co., 538 N.E.2d 715, 717 (Ill. App. Ct.
1989)).
   Whether a liquidated damages clause in a contract is a
penalty or a valid provision is a question of law. Grossinger
10                                                 No. 19‐2542

Motocorp, Inc. v. Am. Nat’l Bank & Trust Co., 607 N.E.2d 1337,
1345 (Ill. App. Ct. 1992). The burden of proof “rests on the
party resisting enforcement of a liquidated damages clause to
show that the agreed‐upon damages are clearly dispropor‐
tionate to a reasonable estimate of the actual damages likely
to be caused by a breach.” XCO Int’l, Inc. v. Pac. Sci. Co., 369
F.3d 998, 1003 (7th Cir. 2003). Here, that burden rests on
DWM.
    Under Illinois law, a liquidated damages clause is valid
and enforceable if: (1) the parties intended to agree in advance
to the settlement of damages that might arise from the breach;
(2) the amount of liquidated damages was reasonable at the
time of contracting, bearing some relation to the damages that
might occur; and (3) actual damages would be uncertain in
amount and difficult to prove. Karimi, 2011 IL App (1st)
102670, ¶16 (citing Grossinger, 607 N.E.2d at 1346). “The rea‐
sonableness of the amount, though, depends not on the actual
damages suffered by the non‐breaching party, but on whether
the amount reasonably forecasts and bears some relation to
the parties’ potential loss as determined at the time of con‐
tracting.” Id. ¶24
    Illinois’s requirement that liquidated damages be reason‐
able has been characterized as “mysterious,” especially in
cases involving sophisticated parties. XCO Int’l, Inc., 369 F.3d
at 1001. “[W]here both parties are substantial commercial en‐
terprises … it is difficult to see why the law should take an
interest in whether the estimate of harm underlying the liqui‐
dation of damages is reasonable. Courts don’t review the
other provisions of contracts for reasonableness; why this
one?” Id. Yet the rule against contractual penalties “hangs on,
but is chastened by an emerging presumption against
No. 19‐2542                                                  11

interpreting liquidated damages clauses as penalty clauses.”
Id. at 1003.
    We do not forget that state courts are the “ultimate expos‐
itors” of their own laws. Mullaney v. Wilbur, 421 U.S. 684, 691
(1975); see, e.g., Lexington Ins. Co. v. Rugg & Knopp, Inc., 165
F.3d 1087, 1093 (7th Cir. 1999) (“Lacking any inherent power
to make state law such as a state court might have … a federal
court must be careful to avoid the temptation to impose upon
a state what it, or other jurisdictions, might consider to be
wise policy.”). So we do not opine on whether Illinois’s liqui‐
dated damages law constitutes wise policy; we only apply it.
    Here, the Agreement states if DWM fails to purchase the
properties, Smart Oil “shall receive the entire Earnest Money
Deposit and all accrued interest thereon as complete liqui‐
dated damages.” The Agreement further explains the ra‐
tionale for liquidated damages in conspicuous language that
damages to Smart Oil caused by DWM’s default “WOULD BE
EXTREMELY DIFFICULT TO OR IMPOSSIBLE TO
ASCERTAIN.” Both parties signed immediately below the
liquidated damages clause, demonstrating their consent and
agreement to the provision.
    The plain language of the Agreement satisfies two of the
three elements for liquidated damages under Illinois law.
Specifically, the Agreement states that the parties’ signature
under the liquidated damages clause demonstrated their con‐
sent and agreement to the provision, satisfying the first
element that “the parties intended to agree in advance to the
settlement of damages that might arise from the breach.”
Karimi, 2011 IL App (1st) 102670, ¶16. The Agreement also sat‐
isfies the third element that “actual damages would be uncer‐
tain in amount and diﬃcult to prove” by explicitly stating:
12                                                   No. 19‐2542

“DAMAGE TO SELLER … WOULD BE EXTREMELY
DIFFICULT TO OR IMPOSSIBLE TO ASCERTAIN.” What re‐
mains is to evaluate the second element, the reasonableness of
the damages amount.
     The liquidated damages amount here was $750,000, or ap‐
proximately one percent of the contractual purchase price of
$67 million. Under Illinois law, a liquidated damages clause
of one percent of the purchase price is reasonable, given that
Illinois “[c]ourts have considered earnest money representing
up to 20% of the purchase price a reasonable sum as liqui‐
dated damages.” Karimi, 2011 IL App (1st) 102670, ¶24 (hold‐
ing earnest money of 15% of the purchase price in real estate
contract was reasonable liquidated damages); see, e.g., Siegel v.
Levy Org. Dev. Co., 182 Ill. App. 3d 859, 860–63 (Ill. App. Ct.
1989) (holding earnest money of $320,000 on a $1,600,000 con‐
tract, representing two percent of the purchase price, was rea‐
sonable). One percent of the Agreement’s purchase price is
not “clearly disproportionate” under XCO Int’l, Inc., 369 F.3d
at 1003.
    DWM argues the liquidated damages clause is unenforce‐
able because Smart Oil has not incurred any actual damages.
But whether Smart Oil ultimately incurred any actual dam‐
ages is not relevant to the reasonableness decision, and actual
damages are not required under Illinois law before liquidated
damages can be assessed. See, e.g., Kensington Rock Island Ltd.
P’ship v. Am. Eagle Historic Partners, 921 F.2d 122, 124 (7th Cir.
1990) (noting the “Illinois rule is clear” that plaintiﬀ was enti‐
tled to earnest money in real estate contract because of buyer’s
default regardless of the amount of actual damages which
may have resulted); Bamberg v. Griﬃn, 394 N.E.2d 910, 914 (Ill.
App. Ct. 1979) (noting “it has been long established in Illinois
No. 19‐2542                                                   13

that the provision for earnest money in a contract, in the ab‐
sence of an express provision to the contrary, will be inter‐
preted as a provision for liquidated damages and enforced
without actual proof of damages required”). The only re‐
quirement under Illinois law is whether, at the time of con‐
tracting, the damages amount was reasonable in that it bore
some relation to the damages that might occur. Karimi, 2011
IL App (1st) 102670, ¶16. The liquidated damages figure here
meets that test. “The nature of a liquidated damages provi‐
sion is such that the set amount may at times exceed actual
damages, and other times actual damages may exceed the set
amount. In entering into the purchase agreement, both parties
here agreed to accept this inherent risk.” Id. ¶27. Here, the set
amount was a minor fraction of the damages amount.
    DWM also contends Smart Oil is not entitled to the earnest
money because the Agreement limits Smart Oil’s recovery to
the amount actually deposited in escrow. Because DWM
never deposited the earnest money, it claims there is nothing
for Smart Oil to recover. The liquidated damages provision
states in unambiguous terms: “Seller shall receive the entire
Earnest Money Deposit and all accrued interest thereon as
complete liquidated damages.” The Agreement defines
“Earnest Money Deposit” as “the Deposit and the Additional
Deposit,” which was the $300,000 initially due then the addi‐
tional $450,000 at the close of the due diligence period.
   This court (like others) has consistently interpreted “shall”
as mandatory language. See, e.g., Judge v. Quinn, 612 F.3d 537,
547 (7th Cir. 2010) (noting that “shall” is “normally under‐
stood as mandatory language”); Thompson v. Veach, 501 F.3d
832, 836 (7th Cir. 2007) (discussing “shall” as mandatory lan‐
guage); Paper Express, Ltd. v. Pfankuch Maschinen GmbH, 972
14                                                    No. 19‐2542

F.2d 753, 756 (7th Cir. 1992) (finding use of the word “shall”
in a contract “mandatory” and “obligatory”). Black’s Law
Dictionary defines “shall” as “has a duty to, more broadly is
required to” and explains that “[t]his is the mandatory sense
that drafters typically intend and that courts typically up‐
hold.” BLACK’S LAW DICTIONARY 1653 (11th ed. 2019). Alt‐
hough the Agreement describes the earnest money due as the
“Deposit,” it does not limit liquidated damages to funds actu‐
ally deposited. And the language of “shall receive the entire
Earnest Money Deposit” is mandatory, even if DWM did not
already deposit the money. Because DWM failed to close on
the transaction, by the plain language of the Agreement,
Smart Oil “shall receive the entire Earnest Money Deposit and
all accrued interest thereon as complete liquidated damages.”
    DWM’s argument that it does not have to pay the earnest
money deposit because it never paid it in the first instance
would result in the absurd outcome of wrongdoers being ab‐
solved of their debts simply by not paying them. DWM “can‐
not insist on abandoning [its] contract and yet [not pay] the
deposit because that would enable [it] to take advantage of
[its] own wrong.” Summers v. Hedenber, 198 Ill. App. 460, 467
(1916).
    Our role “in interpreting a contract is to give effect to the
intention of the parties as expressed in the agreed terms.” Life
Plans, Inc., 800 F.3d at 349. “The first and most reliable indica‐
tor of the parties’ intent is what the parties wrote.” Ocean Atl.
Dev. Corp. v. Aurora Christian Schs., Inc., 322 F.3d 983, 1006 (7th
Cir. 2003) (citing Venture Assocs. Corp. v. Zenith Data Sys. Corp.,
987 F.2d 429, 432 (7th Cir. 1993)). The parties here are sophis‐
ticated commercial enterprises that engaged in extensive,
arms‐length negotiations and, with the advice of counsel,
No. 19‐2542                                                   15

reached an agreement. When experienced businesses agree to
a liquidated damages clause that satisfies the requirements of
Illinois law, we hold the parties to their bargained deal.
   C. Fraudulent Inducement
    Finally, DWM argues the district court erred by dismiss‐
ing its fraudulent inducement counterclaim. DWM asserts
Smart Oil knowingly made false statements concerning its
ability to complete a sale under the Agreement. To prove
fraudulent inducement under Illinois law, DWM must show:
(1) a false statement of material fact; (2) knowledge or belief
by Smart Oil that the statement was false; (3) an intention to
induce DWM to act; (4) reasonable reliance upon the truth of
the statement by DWM; and (5) damages. Avon Hardware Co.
v. Ace Hardware Corp., 998 N.E.2d 1281, 1287 (Ill. App. Ct. 2013)
(citing Lagen v. Balcor Co., 653 N.E.2d 968, 973 (Ill. App. Ct.
1995)). These elements must be proved by clear and convinc‐
ing evidence. Hoseman v. Weinschneider, 322 F.3d 468, 476 (7th
Cir. 2003). Again, we review the district court’s grant of sum‐
mary judgment de novo in the light most favorable to the non‐
movant, here Smart Oil. Westfield Ins. Co., 863 F.3d at 694–95.
    The district court opined “[t]here is not much, if anything
at all, by way of showing that Smart Oil fraudulently induced
DWM to enter into the [] Agreement.” That has not changed
on appeal. Construing the facts in the light most favorable to
the non‐movant on this request, Smart Oil, the record shows
that the property owners were ready and willing to sell their
properties to DWM to fulfill the Agreement. As discussed
above, Smart Oil had authority to purchase these properties
and then “flip” them to DWM as the ultimate buyer. So
DWM’s fraudulent inducement claim fails as a matter of law.
16                                                No. 19‐2542

                      III. CONCLUSION
   Smart Oil satisfied all conditions precedent under the
Agreement. DWM breached the contract by failing to pay the
earnest money due, which constitutes valid liquidated dam‐
ages under Illinois law. And DWM’s counterclaims, including
for fraudulent inducement, fail as a matter of law. So we
AFFIRM the judgment of the district court.
    As noted above, the Agreement contains a clause shifting
attorneys’ fees and costs to the prevailing party. Having pre‐
vailed on appeal, Smart Oil has 14 days to submit its re‐
quested attorneys’ fees and costs, and DWM has 14 days to
respond.