Court Opinion

ID: 4636160
Source: CourtListenerOpinion
Date Created: 2020-11-24 22:32:59.020791+00
Date Added: 2024-06-11T07:58:29.869919
License: Public Domain

2020 IL App (2d) 190840
                                        No. 2-19-0840
                               Opinion filed September 29, 2020

                                            IN THE

                             APPELLATE COURT OF ILLINOIS

                                     SECOND DISTRICT

JUDITH MAYSTER and SCARAMOUCHE                  )   Appeal from the Circuit Court
ENTERPRISES, LLC,                               )   of Lake County.
                                                )
       Plaintiffs,                              )
                                                )
v.                                              )   No. 17-L-655
                                                )
J. STEVE SANTACRUZ and                          )
SCHOOLHOUSE 4 MATH, LLC,                        )
                                                )
       Defendants                               )
                                                )
(Scaramouche Enterprises, LLC, Plaintiff-       )
Appellant and Cross-Appellee;                   )   Honorable
Schoolhouse 4 Math, LLC,                        )   Michael J. Fusz,
Defendant-Appellee and Cross-Appellant.)        )   Judge, Presiding.

       JUSTICE ZENOFF delivered the judgment of the court, with opinion.
       Justices Hudson and Schostok concurred in the judgment and opinion.

                                            OPINION

¶ 1 This breach-of-contract action involves     the purchase and sale of a Mathnasium math

tutoring franchise. After a bench trial, the trial court found that defendant, Schoolhouse 4 Math,

LLC (Math), wrongfully terminated the purchase contract but that plaintiff, Scaramouche

Enterprises, LLC (Scaramouche), was precluded from collecting damages, because of its complete

failure to mitigate its losses. Scaramouche appeals. Though Math prevailed below, Math cross-
2020 IL App (2d) 190840

appealed, challenging one of the trial court’s findings. As we discuss below, Math withdrew the

cross-appeal at oral argument. For the following reasons, we affirm.

¶2                                     I. BACKGROUND

¶ 3 Before trial, the court dismissed the individuals, plaintiff Judith Mayster and defendant J.

Steve Santacruz, from the litigation. At trial, the evidence showed the following. Mayster formed

Scaramouche to purchase and operate two Mathnasium franchises, Mathnasium of Grayslake

(Grayslake) and Mathnasium of Barrington (Barrington). In December 2015, Mayster decided to

sell the businesses. She listed Grayslake for $90,000, but she sold it back to the franchisor for

approximately $15,000. Pursuant to the buy-back agreement, Grayslake’s financial status

remained confidential. Mayster listed Barrington for $150,000. She later reduced the price to

$130,000.

¶ 4 Santacruz manages Math, which owns seven Mathnasium franchises. In September 2016,

Santacruz and Mayster began discussions for Math to purchase Barrington. They agreed upon a

purchase price of $100,000. Math would also assume Barrington’s property and copier leases.

Math terminated the contract after the Illinois Department of Revenue (Department) issued a bulk-

sales stop order requiring Math to withhold almost $13,000 in taxes from the purchase price at

closing.1 Math then offered to reinstate the contract and purchase Barrington at the same price.

When Mayster, as Scaramouche’s manager, demanded 100% of the purchase price in cash at

closing as a condition of reinstatement, Math’s attempt to reinstate the contract was aborted. This

litigation began when Mayster sued Santacruz individually over allegedly defamatory letters that

       1   Upon the sale of a business, the Department can order the purchaser to withhold an

amount to cover any liability for tax, penalty, and interest due from the seller. 86 Ill. Adm. Code

130.1701 (2007).

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2020 IL App (2d) 190840

Santacruz wrote, voicing his perception that Mayster had failed to pay taxes. The defamation

counts of the lawsuit were dismissed with prejudice and are not at issue in this appeal.

¶ 5 Before the dismissal of the defamation counts, Scaramouche and Math were added to the

lawsuit. Scaramouche claimed $100,000 in damages for breach of contract plus consequential

damages of approximately $11,000 for the lease payments that Math failed to assume. Math raised

the affirmative defense that Scaramouche failed to mitigate its damages.

¶ 6 At trial, which occurred on June 4 to June 7, 2019, Mayster testified as follows. In June

2017, the parties entered into a letter of intent (LOI), which outlined the terms of the proposed

transaction. Pursuant to the LOI, Math had 30 days to complete a due diligence review of

Barrington’s financial, accounting, and business records. Mayster provided certain documents in

response to Santacruz’s due diligence request. However, that response did not include balance

sheets. Mayster testified that the balance sheets contained combined financial information for

Barrington and Grayslake. When Santacruz did not object to the nondisclosure of the balance

sheets, Mayster assumed that he agreed not to pursue the matter.

¶ 7 On June 29, 2017, the parties signed an asset purchase agreement (APA). The APA

contained a representation that Mayster had provided the balance sheets. She knew that the

representation was not accurate, but she assumed that “everything was done that had to be done.”

In July 2017, Santacruz met Mayster at Barrington, where she gave him additional documentation

pertaining to the business. Santacruz did not mention the balance sheets.

¶ 8 Mayster next heard from Santacruz after the issuance of the bulk-sales stop order. Mayster

was confused by the Department’s action, as her taxes were paid. Mayster’s attorney explained to

Santacruz that the Department was demanding payment of future taxes, and then “everything

seemed to settle.” Mayster’s attorney was to prepare the closing documents, Santacruz asked for

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wiring instructions, and Mayster assumed that the transaction would close. However, the closing

did not occur, because of the “tax situation.”

¶9    In an attempt “to resurrect the deal,” Santacruz demanded that Mayster pay for an asset

lien search. At first, Mayster refused to have a search conducted, because the APA did not require

it. Later, Mayster agreed to an asset lien search if Santacruz paid for it. He refused. Mayster also

agreed to provide Barrington’s balance sheets, but Santacruz wanted the information pertaining to

Grayslake as well. In the end, efforts to renegotiate the contract failed.

¶ 10 Mayster relisted Barrington for sale at $130,000. She obtained the names of an interested

couple through the franchisor, and her attorney contacted three current franchise owners who

expressed interest. However, the “opportunity” to sell Barrington did not arise. In January 2018,

Mayster decided to close the business rather than lower the asking price. Mayster testified that the

business was not profitable, she was unable to keep up with both her full-time job and Barrington,

and she “just didn’t want to put any more money into it.” She voluntarily closed Barrington in

February 2018.

¶ 11 On cross-examination, Mayster agreed that, after Santacruz terminated the contract, he

“almost immediately” reached out to “get the deal back on track.” Mayster also agreed that she

would close on the transaction only if Santacruz paid the full purchase price at closing, instead of

adhering to the APA’s pricing structure. Mayster did not sign Santacruz’s proposed reinstatement

agreement, but instead she filed suit against Santacruz for defamation.

¶ 12 Mayster testified that she listed Barrington on BizBuySell, which was a public listing not

targeted to potential franchise buyers. When the franchisor suggested that Mayster advertise the

sale of Barrington in an internal publication called “Mathnasium Matters,” which targeted

Mathnasium owners, Mayster declined. She informed the franchisor that she intended to close the

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business. Mayster testified that she was also concerned that the tutors would find other jobs if they

found out that she was trying to sell or close the business, which would leave her students stranded.

Mayster agreed that she did not consider reducing the asking price from $130,000, even though

she had no offers to purchase Barrington. She also denied that the franchisor suggested that the

purchase price be linked to the number of students.

¶ 13 Attorney Lauren LoMonaco, who represented Mayster in the sale of Barrington, testified

next on behalf of Scaramouche. LoMonaco testified that the APA was the entire agreement of the

parties. LoMonaco had conversations with Santacruz in which he “didn’t really care so much about

updated balance sheets” as he cared about incoming student contracts and revenue from student

enrollment. LoMonaco testified that, after she explained the meaning of the bulk-sales stop order

to Santacruz, he asked LoMonaco for the closing documents. He also asked Mayster for wiring

instructions, which led LoMonaco to believe that he was ready to close the transaction. However,

Santacruz then demanded an asset lien search, in the absence of which he threatened to terminate

the contract. Next, LoMonaco received a termination letter. LoMonaco testified that Santacruz was

“unhappy” about the bulk-sales stop order. He did not mention the balance sheets in his termination

letter.

¶ 14 On cross-examination, LoMonaco testified that she and Mayster would have cooperated

with an asset lien search if Santacruz had agreed to pay for it. LoMonaco agreed that she received

e-mails in June 2017 in which Santacruz was asking for the balance sheets. LoMonaco testified

that the Grayslake information was confidential but that she learned from Mayster’s accountant

that the Grayslake information could be separated from the Barrington information.

¶ 15 LoMonaco testified that two days after Santacruz terminated the contract, he was willing

to reinstate it. His terms were that Mayster produce the balance sheets, conduct an asset lien search,

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and extend the closing date. Mayster responded that Santacruz would have to pay for the lien

search, she would not extend the closing date, and Santacruz would have to pay the full purchase

price in cash at closing. Santacruz rejected that proposal.

¶ 16 On redirect examination, LoMonaco testified that the APA did not require Mayster to

produce documents and that the due diligence period under the LOI ended before the APA was

signed. Because LoMonaco received Santacruz’s termination letter, which convinced her that the

“deal was dead,” she did not follow up with the accountant’s suggestion to separate the Grayslake

and Barrington balance sheets. With that testimony, Scaramouche rested.

¶ 17 After the court denied Math’s motion for a directed finding, Santacruz testified on behalf

of Math. Santacruz testified that he wanted to close on August 31, 2017, but Mayster insisted on

closing on July 31, 2017, because she was going to retire. Rather than conduct due diligence in a

short amount of time, Santacruz concentrated on getting “an asset purchase agreement in place.”

Santacruz testified that receiving the balance sheets was critical to him. He knew that Mayster’s

businesses were struggling, so he wanted a provision in the APA for disclosure of the balance

sheets.

¶ 18 According to Santacruz, he had engaged in discussions with Mayster when she first listed

Barrington, because he was “determined to have Barrington in my portfolio.” However, he

considered her asking prices of $150,000 and then $130,000 “way off reality.” Santacruz testified

that the franchisor recommended pricing a failing business at $1000 for every student. Barrington

had 65 to 70 students. Santacruz testified that he told Mayster that Barrington was worth $65,000

to $75,000. Nevertheless, Santacruz offered to purchase Barrington for $100,000 because he knew

that the Barrington market could be lucrative.

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2020 IL App (2d) 190840

¶ 19 Santacruz testified that he assumed early on that the balance sheets would be

“forthcoming.” He was not concerned then that Mayster would refuse to produce them. According

to Santacruz, he asked Mayster about the balance sheets when he visited Barrington in July 2017,

and she told him that they had not yet been separated. Santacruz denied ever speaking to

LoMonaco about the balance sheets. He testified that he never told LoMonaco that he did not want

or need the balance sheets.

¶ 20 Santacruz testified that he became “alarmed” about Barrington’s financial health when he

received the bulk-sales stop order, which he interpreted to mean that Mayster’s taxes were

delinquent. He testified that the missing balance sheets “started raising hairs on the back of my

neck.” Santacruz then demanded “financial statements,” which he said meant the balance sheets.

He also demanded an asset lien search. Even though Santacruz considered the bulk-sales stop order

to be a violation of the APA, he “was moving forward” toward the closing. However, when

Santacruz’s concerns were not allayed, he terminated the contract on July 24, 2017. Then, he told

another of Mayster’s lawyers, Diana Taylor, that they were in a “ridiculous situation,” threatening

litigation against each other, when “we should be putting this deal together.” Santacruz offered to

reinstate the APA with three additional conditions: (1) an asset lien search, (2) production of the

balance sheets, and (3) an extension of the closing date to August 31, 2017. According to

Santacruz, Mayster eventually agreed to all three of his demands, but she rejected his proposed

reinstatement agreement. Mayster “changed the economic terms of the transaction” to “an all cash

deal.” According to Santacruz, “the deal died in August 2017.”

¶ 21 Santacruz testified that he was currently in the process of selling a Mathnasium franchise.

He listed it in Mathnasium Matters and on BizBuySell. In Santacruz’s experience, Mathnasium

Matters generated more substantial leads. Math then rested.

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2020 IL App (2d) 190840

¶ 22 The court made the following findings. Santacruz was less credible than Mayster and

LoMonaco. The LOI merged into the APA. Only the LOI contained a due-diligence clause. The

APA did not require Mayster to produce any documents. Santacruz should have, but did not,

request the balance sheets before he signed the APA. Santacruz’s assumption that the balance

sheets would be forthcoming, when Mayster produced everything except the balance sheets, was

unreasonable. According to Santacruz’s e-mails after the Department issued the bulk-sales stop

order, his main concern was the taxes, not the balance sheets. Also, Santacruz’s termination letter

cited only Mayster’s nondisclosure of “outstanding and unpaid taxes.” The court concluded that

Santacruz terminated the transaction based on his “increasing uncertainty as to the financial status

of the company.” Mayster’s nonproduction of the balance sheets was not material to Santacruz’s

decision to terminate the contract, nor was their production required under the APA. Consequently,

“any breach” by Scaramouche was not material and did not justify termination of thecontract.

¶ 23 The court then stated: “We get to the issue of mitigation of damages.” The court found that

Scaramouche had a duty to mitigate its damages. In that vein, the court found as follows. Santacruz

was still interested in buying Barrington after he terminated the contract, and he was still “willing

to negotiate.” If Mayster could have sold Barrington for $100,000 or less, Scaramouche would

have mitigated its damages. Mayster, however, increased the selling price to $130,000 after the

breach, and she refused to list it with Mathnasium Matters, which was “more likely” to produce a

buyer than BizBuySell. Increasing the price to $130,000 after the termination was not a reasonable

attempt to mitigate its damages. Consequently, the court found “no damages attributable to”

Math’s breach of the contract. The court entered judgment in favor of Math on its affirmative

defense that Scaramouche failed to mitigate damages.

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¶ 24 Scaramouche filed a motion to reconsider, arguing that Math presented no evidence as to

which of Scaramouche’s losses were avoidable and that Scaramouche acted reasonably in

attempting to mitigate damages. In denying the motion to reconsider, the court noted that Mayster

increasing her asking price 30% over the contract price after the breach was an “absolute failure

to mitigate.” The court stated that it was not incumbent upon Math to prove at what price Mayster

could have sold Barrington after the breach because Mayster’s failure to make any reasonable

efforts to mitigate its damages precluded the award of any damages. Scaramouche filed a timely

notice of appeal. Math filed a timely notice of cross-appeal.

¶ 25                                      II. ANALYSIS

¶ 26                                 A. Math’s Cross-Appeal

¶ 27 Math appealed the trial court’s finding that it breached the APA, and it asked us to reverse

that finding. However, in its brief, Math conceded that the trial court granted judgment entirely in

Math’s favor on other grounds. At oral argument, Math formally withdrew the cross-appeal,

recognizing that the forum of the appellate court is not afforded to successful litigants who do not

agree with the reasons, conclusions, or findings below. Material Service Corp. v. Department of

Revenue, 98 Ill. 2d 382, 386 (1983); Chicago Tribune v. College of Du Page, 2017 IL App (2d)

160274, ¶ 28. We note that a party cannot complain of error that does not prejudicially affect it,

and one who has obtained by the trial court’s judgment all that has been asked for cannot appeal

from that judgment. Material Service Corp., 98 Ill. 2d at 386; Chicago Tribune, 2017 IL App (2d)

160274, ¶ 28. Accordingly, Math’s cross-appeal is withdrawn.

¶ 28                                B. Scaramouche’s Appeal

¶ 29 Scaramouche argues that (1) the trial court erred in finding that it failed to mitigate its

damages and (2) the trial court erroneously found that Scaramouche’s failure to mitigate damages

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was a bar to any recovery. Math contends that Scaramouche’s complete failure to mitigate damages

properly resulted in a 100% reduction of its damages.

¶ 30 Preliminarily, we comment on Math’s brief. First, we note the ubiquitous use of footnotes

to argue substantive matters and include substantive material that should have been presented in

the body of its brief. It is within our discretion to strike such footnotes as violations of Illinois

Supreme Court Rule 341(a) (eff. May 25, 2018), which discourages the use of footnotes. See

Lundy v. Farmers Group, Inc., 322 Ill. App. 3d 214, 218 (2001) (appellate court struck footnotes

that should have been integrated into the body of a reply brief). Second, we note the lavish use of

a condensed, barely readable font to present excerpts from documents and e-mails. This is in

violation of Rule 341(a), which requires 12-point typeface throughout the document, including

“quoted material and any footnotes.” Ill. S. Ct. R. 341(a) (eff. May 25, 2018). The rule explicitly

provides that “[c]ondensed type is prohibited.” Ill. S. Ct. R. 341(a) (May 25, 2018). It is clear to

us that Math, in both the excessive use of single-spaced footnotes and the condensed type, violated

the rule to fit more facts and arguments into a 50-page brief than it could have if it complied with

the rule. It is within our authority to strike Math’s brief based on this noncompliance. See Epstein

v. Galuska, 362 Ill. App. 3d 36, 42 (2005). However, striking a party’s brief, in whole or in part,

is a harsh sanction that is appropriate only when the violations hinder our review. Gruby v.

Department of Public Health, 2015 IL App (2d) 140790, ¶ 12. Consequently, we decline to strike

Math’s brief, but we remind Math’s counsel that failure to comply with the supreme court rules

regarding appellate briefs is not an inconsequential matter. See Hall v. Naper Gold Hospitality

LLC, 2012 IL App (2d) 111151, ¶ 7.

¶ 31 We turn to the merits. The measure of damages for a breach of contract is the amount that

will compensate the aggrieved party for the loss that the breach entailed. Santorini Cab Corp. v.

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Banco Popular North America, 2013 IL App (1st) 122070, ¶ 26. The purpose of damages is to put

the nonbreaching party into the same position, but not a better position, as if the contract had been

performed. Santorini, 2013 IL App (1st) 122070, ¶ 26. Where the contract pertains to something

that is obtainable in the market, the measure of damages is the difference between the contract

price and the fair market value at the time of the breach. Santorini, 2013 IL App (1st) 122070,

¶ 27. The general rule is that a person who is injured by a breach of contract must make a

reasonable effort to avoid damages therefrom. Maere v. Churchill, 116 Ill. App. 3d 939, 947

(1983). The “doctrine of avoidable consequences” dictates that there can be no recovery for

damages that might have been avoided by a reasonable effort on the part of the person injured.

Maere, 116 Ill. App. 3d at 947. The failure to mitigate damages is an affirmative defense that must

be pleaded and proved by the defendant. Boyer v. Buol Properties, 2014 IL App (1st) 132780,

¶ 67.

¶ 32    The parties disagree on the standard of review. Scaramouche argues that our review is

de novo, as the matter involves undisputed facts and the only question is “whether the doctrine of

mitigation of damages should apply.” Math contends that the correct standard of review is whether

the court’s finding that Scaramouche failed to mitigate its damages was against the manifest weight

of the evidence. We agree with Math. The issue of damages is a question of fact, and a trial court’s

finding of damages will not be disturbed unless it was against the manifest weight of the evidence.

Doornbos Heating & Air Conditioning, Inc. v. James D. Schlenker, M.D., S.C., 403 Ill. App. 3d

468, 485 (2010). A damages assessment is against the manifest weight of the evidence when the

court ignored the evidence or used an incorrect measure of damages. Morse v. Donati, 2019 IL

App (2d) 180328, ¶ 17.

¶ 33                 1. Whether Scaramouche Failed to Mitigate Its Damages

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¶ 34 The duty2 to mitigate damages requires the injured party to exercise reasonable diligence

and ordinary care to minimize its damages. Holland v. Schwan’s Home Service, Inc., 2013 IL App

(5th) 110560, ¶ 213. Here, the court found that Mayster acted unreasonably when she (1) listed

Barrington for 30% more than the contract price following Math’s breach, (2) never considered

reducing the asking price, and (3) rejected the franchisor’s advice to advertise the sale of

Barrington in Mathnasium Matters, a publication targeted to persons interested in acquiring these

particular franchises. The court also found that Santacruz was willing to negotiate a reinstatement

of the APA after Math’s termination and that, if Scaramouche could have sold Barrington for

$100,000, it would have mitigated its damages.

¶ 35   Scaramouche argues that Mayster acted reasonably in increasing the asking price to

$130,000, because that was the asking price when Santacruz agreed to purchase Barrington for

$100,000. According to Scaramouche, the franchisor did not suggest that Mayster lower the price,

and it notes that Mayster had previously received offers of $120,000 and $110,000 from other

potential buyers. Scaramouche contends that the court failed to take into account that the listing

price would not necessarily be the price at which Mayster would agree to sell. Scaramouche further

asserts that Mayster’s decision not to advertise in Mathnasium Matters was justified by her concern

that her tutors would find other jobs. Thus, Scaramouche concludes, the court was “hypercritical”

in finding that Mayster did not act reasonably. See Holland, 2013 IL App (5th) 110560, ¶ 213 (the

duty to mitigate cannot be invoked as grounds for a hypercritical examination of the plaintiff’s

conduct).

¶ 36 Based on the evidence, we determine that the court was not hypercritical. As the court

noted, Mayster had the obligation to sell Barrington “at whatever price she could.” Raising the

       2 For   a full discussion of this “duty,” see infra ¶¶ 41-42.

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price by 30% to profit from Math’s abandonment of the APA was itself a breach of the duty to

exercise reasonable diligence to mitigate damages. See MBC, Inc. v. Space Center Minnesota,

Inc., 177 Ill. App. 3d 226, 233-34 (1988) (landlord’s failure to offer warehouses at same rent and

terms after sublessee’s breach constituted a breach of the duty to exercise reasonable diligence to

mitigate damages). Moreover, while Mayster might have had offers above $100,000 before

Santacruz’s offer, none of those offers materialized into a sale. Mayster had no offers after she

relisted Barrington for $130,000, which makes her refusal to reduce the price unreasonable. As the

court noted, it is common sense that reducing the sales price would make it easier to sell.

¶ 37 Further, the court was entitled to discount Mayster’s explanation for not advertising in

Mathnasium Matters. Mayster testified that she was concerned that her tutors would learn that she

was selling the business and that they would find other jobs, stranding the students. However,

when Santacruz visited Barrington in July 2017, Mayster introduced him to an employee as the

buyer. Consequently, at least one of her employees already knew that she was selling the business

when the opportunity to advertise in Mathnasium Matters arose. Most telling is Mayster’s reply in

an e-mail to the franchisor’s suggestion to post in Mathnasium Matters. Mayster wrote that she

was “considering closing [Barrington] for several reasons.” Among those reasons, Mayster listed

her commitment to her full-time job, “[which] is much more than a regular work week,” and being

“67 years old and adding the hours to continue [Barrington] is more than I can physically keep up

with.” Mayster added: “Obviously I would really rather sell than close[,] but I just cannot keep up

the pace to wait another year or however long it takes ***.” While this court sympathizes with

Mayster’s plight, she is not entitled to have Math pay for her voluntary decision to close the

business. Accordingly, we cannot say that the court’s finding that Scaramouche made no

reasonable efforts to mitigate its damages was against the manifest weight of the evidence.

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¶ 38 2. Whether the Trial Court Misapplied the Doctrine of Avoidable Consequences

¶ 39 Scaramouche argues that the court erred in finding that its failure to mitigate its damages

barred any recovery. Scaramouche asserts that Math had to produce evidence of the difference

between the contract price and the amount for which Barrington would have sold to prove its

affirmative defense. Math responds that the court found that 100% of Scaramouche’s damages

were avoidable and correctly found in Math’s favor.

¶ 40 Illinois has long recognized the doctrine of avoidable consequences. Gaylor v. Campion,

Curran, Rausch, Gummerson & Dunlop, P.C., 2012 IL App (2d) 110718, ¶ 61. In the breach-of-

contract context, a plaintiff cannot recover losses that could reasonably have been avoided.

Crawford v. Belhaven Realty LLC, 2018 IL App (1st) 170731, ¶ 49. Scaramouche argues that,

because its damages would only be diminished by any amount that could have been avoided (see

Med+Plus Neck & Back Pain Center, S.C. v. Noffsinger, 311 Ill. App. 3d 853, 857 (2000)), and

Math did not prove by how much those damages would be diminished, the court erred in entering

judgment for Math. In other words, even assuming the failure to mitigate, Scaramouche presumes

that its damages cannot be reduced to zero.

¶ 41 We take this opportunity to clarify the doctrine of avoidable consequences. The injured

party incurs no liability to the breaching party by failing to take appropriate steps to mitigate its

damages. St. George Chicago, Inc. v. George J. Murges & Associates, Ltd., 296 Ill. App. 3d 285,

293 (1998); 3 Edward A. Farnsworth, Farnsworth on Contracts § 12.12 (3d ed. 2004). Put another

way, the law does not assess damages against a plaintiff who fails to mitigate, it just “fails to

compensate him for any injury he reasonably could have avoided.” Wired Music, Inc. v. Clark, 26

Ill. App. 2d 413, 416 (1960). Thus, it is “misleading” to say that the aggrieved party has a “duty”

to mitigate damages. St. George, 296 Ill. App. 3d at 293. Rather, the injured party is merely

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precluded from recovering damages for losses that it could have avoided had it taken such steps.

3 Edward A. Farnsworth, Farnsworth on Contracts § 12.12 (3d ed. 2004). The party asserting

failure to mitigate damages bears the burden of proof as to the extent of nonmitigation. Washington

Courte Condominium Ass’n-Four v. Washington Golf-Corp., 267 Ill. App. 3d 790, 822 (1994).

¶ 42 This view is consistent with the Restatement (Second) of Contracts § 350 (1981). St.

George, 296 Ill. App. 3d at 293. However, the injured party is expected to take such affirmative

steps as are appropriate in the circumstances to avoid loss. Restatement (Second) of Contracts

§ 350, cmt. b (1981). So, whether or not we couch it as a “duty” to mitigate damages, the doctrine

of avoidable consequences operates to deprive a plaintiff of recovery “for those consequences of

defendant’s act which were readily avoidable by the plaintiff.” Kelly v. Chicago Park District, 409

Ill. 91, 98 (1951). Illinois Pattern Jury Instructions, Civil, No. 33.02 (approved Dec. 8, 2011)

instructs that “[d]amages proximately caused by a failure to exercise [ordinary care to minimize

existing damages] cannot be recovered.” Thus, if 100% of Scaramouche’s loss was proximately

caused by Scaramouche’s failure to mitigate its damages, Scaramouche’s damages would not be

recoverable. As a practical matter, whether a court reduces the plaintiffs’ damages to zero, or bars

them, the result is the same. See Maere, 116 Ill. App. 3d at 947 (as all the plaintiffs’ damages were

caused by their own inaction and could have been avoided, those damages were not recoverable,

and the plaintiffs were “barred” from seeking those damages from the defendants).

¶ 43 Scaramouche sweeps aside that Mayster could have sold Barrington to Math for $100,000

immediately after Math terminated the APA, thus avoiding 100% of its damages. The documentary

evidence supports Math’s contention that Mayster unreasonably rejected Santacruz’s attempts to

reinstate the purchase. On July 26, 2017, two days after he terminated the APA, Santacruz offered

to go forward with the purchase if Mayster provided an asset lien search at Barrington’s expense,

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produced the balance sheets, and extended the closing date one month. On July 28, Mayster

rejected each of these proposals. On July 31, Santacruz sent Mayster a proposed reinstatement

agreement, which provided for the $100,000 purchase price. The proposed reinstatement

agreement also provided that Mayster would produce the balance sheets, Santacruz would place

the amount of the bulk-sales stop order in escrow, and Mayster would continue business operations

until the closing. On August 2, Mayster agreed to an asset lien search at Santacruz’s expense, to

produce Barrington’s balance sheets, and to extend the closing date. In addition, Mayster wanted

a written retraction of statements Santacruz had made concerning her nonpayment of taxes. On

August 3, Santacruz wrote that he was “committed” to going forward with the transaction. He

agreed to retract his statements, but he demanded that Mayster pay for the asset lien search, and

he demanded the Grayslake balance sheets as well as Barrington’s. Mayster replied that her “offer

remained the same.” Santacruz immediately inquired about Mayster’s position with respect to

continuing business operations. On August 9, Mayster agreed to “reinstate the contract,” but she

required the entire purchase price to be paid at closing on August 31. Santacruz rejected the new

economic demand, but he again indicated his desire to purchase Barrington, and he sent another

proposed reinstatement agreement, to which Mayster never responded.

¶ 44 Scaramouche relies on Danada Square, LLC v. KFC National Management Co., 392 Ill.

App. 3d 598 (2009), although that case supports Math’s contention. In Danada Square, the

defendant-lessee, which breached a retail lease, was ready, willing, and able to enter into a

comparable lease. Danada Square, 392 Ill. App. 3d at 609. The plaintiff-lessor refused unless the

substitute lease contained a provision that the plaintiff could retake the property on 60 days’ notice,

as it wanted to explore more profitable opportunities. Danada Square, 392 Ill. App. 3d at 609. The

defendant was unwilling to accept such a provision. Danada Square, 392 Ill. App. 3d at 609. This

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court held that the plaintiff could have avoided all its lost rent and reletting costs by accepting the

defendant’s offer. Danada Square, 392 Ill. App. 3d at 609. In other words, the plaintiff was bound

to accept that offer without conditions to avoid the consequences of the defendant’s breach. Here,

as soon as Math terminated the APA, Santacruz offered to reinstate it. Instead of accepting that

offer, Mayster attached the condition that Santacruz pay the entire purchase price at closing.

Immediately after the attempt to reinstate the APA failed, Mayster listed Barrington at 30% above

the APA contract price. Like the plaintiff in Danada Square, she wanted to explore more profitable

opportunities. However, in so doing, she failed to avoid the consequences of Math’s breach.

¶ 45 Scaramouche also relies on Coffey v. DSW Shoe Warehouse, Inc., 145 F. Supp. 3d 771

(N.D. Ill. 2015). The issue in Coffey was whether the plaintiff, who was wrongfully fired from

employment under a federal statute, mitigated her damages. Coffey, 145 F. Supp. 3d at 778. We

question the relevance of a federal wrongful termination case that involved a presumption that the

plaintiff was reasonably diligent in conducting a job search. See Coffey, 145 F. Supp. 3d at 779.

In Coffey, the district court found that the defendant failed to rebut the presumption by presenting

evidence from a potential employer that a job application by the plaintiff would have resulted in

an offer. Coffey, 145 F. Supp. 3d at 779. Scaramouche argues that “here, [as in Coffey,] there is

no evidence as to a point in time, or an act or inaction by Mayster, that would have offered a

different alternative.” As discussed at length, two days after Math terminated the APA, Math

offered to reinstate it. That is when Mayster was offered an alternative. That substitute arrangement

would have mitigated 100% of Scaramouche’s damages, including the consequential damages of

the property and copier leases.

¶ 46 We believe that Maere is apt. In Maere, the plaintiffs sued the defendants for breach of an

oral contract to provide legal services in connection with a real estate purchase. Maere, 116 Ill.

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App. 3d at 940. The defendant attorneys were to review abstracts of title and render a certificate

of title. Maere, 116 Ill. App. 3d at 941. The defendants issued a certificate of title indicating that

the plaintiffs were owners in fee simple of the lots that they purchased. Maere, 116 Ill. App. 3d at

941. When the plaintiffs discovered the existence of restrictive covenants, the defendants offered

to obtain title insurance “to take care of any problem.” Maere, 116 Ill. App. 3d at 941. However,

the plaintiffs did not take advantage of that offer. Maere, 116 Ill. App. 3d at 941. When the

plaintiffs again complained to the defendants, the defendants obtained title insurance that insured

over the alleged defects. Maere, 116 Ill. App. 3d at 942. However, the policy was not acceptable

to the plaintiffs. Maere, 116 Ill. App. 3d at 942. The plaintiffs then applied for a construction loan,

but the lender noted the title defects. Maere, 116 Ill. App. 3d at 942. The lender agreed to make

the loan if the plaintiffs obtained additional title insurance, but neither the plaintiffs nor the

defendants would pay for it. Maere, 116 Ill. App. 3d at 942-43. The trial court granted summary

judgment in the defendants’ favor, finding that the plaintiffs’ damages in not securing the loan

were caused by their own inaction. Maere, 116 Ill. App. 3d at 943, 945. The appellate court applied

the doctrine of avoidable consequences to hold that the plaintiffs could have avoided all their

damages, including consequential damages, by accepting the title insurance policy and paying the

fee for the extra coverage. Maere, 116 Ill. App. 3d at 946-49. Here, as in Maere, Scaramouche

could have avoided all of its damages, including the costs of the leases, if Mayster had accepted

Santacruz’s offer to reinstate the APA. Eventually, Mayster accepted Santacruz’s conditions,

except that she refused to pay for the asset lien search. There is no evidence of the cost of such a

search, but Mayster did not claim that the cost was what prohibited her from agreeing to it.

¶ 47 Lastly, Scaramouche argues that the obligation to mitigate its damages was suspended

during Mayster’s discussions with Santacruz. Scaramouche asserts that it should be awarded

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“minimal” damages for that period. Even if the law permitted such damages, the record shows that

Mayster did not negotiate the reinstatement in good faith. As in Danada Square, Mayster attached

a condition that was so onerous (100% of the purchase price in cash at closing) that it killed the

transaction. Then, Mayster tried to sell Barrington at a higher price. When Mayster received no

offers, she closed the business purely for personal reasons. As noted, the law does not require Math

to pay for Mayster’s voluntary decision to close the business. Moreover, the appellate court will

not reverse a case to permit recovery of nominal damages. Morris v. Vulgamott, 158 Ill. App. 434,

439 (1910).

¶ 48 Math additionally contends as reason to affirm that (1) Scaramouche failed to prove the

element of damages in its case and (2) the court erroneously found that Math committed a breach

of the APA. Because we have determined that Math properly prevailed on its affirmative defense,

we need not address those arguments.

¶ 49                                   III. CONCLUSION

¶ 50 For the reasons stated, we affirm the judgment of the circuit court of Lake County.

¶ 51 Affirmed.

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2020 IL App (2d) 190840

                                   No. 2-19-0840

Cite as:                  Mayster v. Santacruz, 2020 IL App (2d) 190840

Decision Under Review:    Appeal from the Circuit Court of Lake County, No. 17-L-655; the
                          Hon. Michael J. Fusz, Judge, presiding.

Attorneys                 Diana C. Taylor, of DeSanto Morgan & Taylor, of Libertyville, for
for                       appellant.
Appellant:

Attorneys                 Aharon S. Kaye, Kara Allen, and Valerie C. Lengerich,
for                       of Gutnicki LLP, of Skokie, for appellee.
Appellee:

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