Court Opinion

ID: 9379720
Source: CourtListenerOpinion
Date Created: 2023-03-16 14:03:20.084796+00
Date Added: 2024-06-11T17:16:16.692013
License: Public Domain

2023 IL App (1st) 221080-U

                                         No. 1-22-1080

                                   Order filed March 16, 2023

                                                                                  Fourth Division

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the
limited circumstances allowed under Rule 23(e)(1).

                                             IN THE
                                APPELLATE COURT OF ILLINOIS
                                  FIRST JUDICIAL DISTRICT

APX DEVELOPMENT GROUP, INC. and DYNAMIC                             )       Appeal from the
BUILDERS, LLC,                                                      )       Circuit Court of
                                                                    )       Cook County
       Plaintiffs-Appellants,                                       )
                                                                    )
                      v.                                            )       2020 M1 121165
                                                                    )
606 CHICAGO PROPERTIES, LLC,                                        )       Honorable
                                                                    )       H. Yvonne Coleman,
       Defendant-Appellee.                                          )       Judge Presiding.

       JUSTICE MARTIN delivered the judgment of the court.
       Justices Hoffman and Rochford concurred in the judgment.

                                            ORDER

¶1     Held: The trial court abused its discretion by finding there was no prevailing party in the
             litigation.

¶2     This appeal stems from a breach of contract action brought by plaintiffs-appellants APX

Development Group, Inc. and Dynamic Builders, LLC (plaintiffs), against defendant-appellee 606

Chicago Properties, LLC (defendant). The trial court found that despite awarding plaintiffs

monetary relief, neither plaintiffs nor defendant was a “prevailing party.” As a result, the court
No. 1-22-1080

determined that plaintiffs were not entitled to attorney fees under the fee-shifting provision found

in the parties’ contract.

¶3      The question presented herein is of a singular nature. Did the trial court err when it

determined that neither party of this dispute was the prevailing party? For the reasons that follow,

we answer this question in the affirmative. 1

¶4                                         I. BACKGROUND

¶5      On April 9, 2019, plaintiffs executed a contract with defendant to purchase a parcel of real

property located at 7654 W. Berwyn Avenue, Chicago. Paragraph 9(a) of the contract provided for

the proration of real estate taxes based on a percentage “of the most recent ascertainable full year

tax bill.” In Cook County, real estate taxes are paid one year in arrears. 2 Here, because the property

was previously used a church, it had been exempt from being assessed real estate taxes.

¶6      The parties executed a “Real Estate Tax Reproration Agreement” (reproration agreement)

on May 7, 2019, modifying the proration provision as a safeguard against the possibility that future

real estate taxes might be substantially higher than estimated. Pursuant to the agreement, if the

county assessor determined that a tax liability exceeding $100 was assessed during the time

defendant owned the property, defendant would be responsible for that liability. Defendant placed

$5,400 in escrow to guarantee this obligation. For their part, plaintiffs were required to give

defendant notice of any amounts due within thirty days after “the final installment of real estate

taxes is due.” The transaction closed the following day. 3

        1
          In adherence with the requirements of Illinois Supreme Court Rule 352(a) (eff. July 1, 2018), this
appeal has been resolved without oral argument upon entry of a separate written order.
        2
          Cook County assesses real estate taxes in arrears, meaning that taxes paid in the 2000, are based
on assessed property value in 1999, and are the taxes owed for 1999. See, e.g., Greenwood Associates, L.P.
v. Perry, 399 F. 3d 1317, 1318 (Fed. Cir. 2005).
        3
           A real estate closing is “the final transaction between the buyer and seller, whereby the
conveyancing documents are concluded and the money and property transferred.” Black’s Law Dictionary
311 (10th ed. 2014).
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No. 1-22-1080

¶7     On September 22, 2020, plaintiffs’ attorney gave defendant notice that the county assessor

had assessed the property for tax years 2018 and 2019. The real estate tax liability for 2018 was

$17,404.46, and the prorated tax for 2019 was $8,550.88. Plaintiffs claimed that the total tax

liability was $25,995.34, and plaintiffs sent defendant a demand letter for that sum. Despite

repeated demands, defendant nonetheless refused to satisfy the outstanding tax bill.

¶8     Plaintiffs filed suit for breach of contract on October 30, 2020. Plaintiffs alleged that

defendant breached the contract by failing to pay the real estate taxes when they became due, as

agreed in the reproration agreement. In response, defendant filed an answer and asserted the

affirmative defense of mutual mistake.

¶9     Defendant claimed that “[t]he tax valuation amounts later assessed by the Cook County

Assessor’s Office were never contemplated by the parties during the formation of the [reproration]

agreement.” Defendant maintained, however, that at the time the parties negotiated the reproration

agreement, they “considered” that the funds held in escrow, were “more than sufficient to satisfy

any future tax assessment.”

¶ 10   Defendant asserted that this constituted a mutual mistake of material fact made during the

formation of the reproration agreement, which rendered the agreement null and void. Defendant

argued that the agreement should either be rescinded or reformed. As relief, defendant requested

the trial court either dismiss the breach of contract action with prejudice or order that the funds

held in escrow be released to plaintiff in total satisfaction of the reproration agreement.

¶ 11   Plaintiffs filed a motion for summary judgment on April 12, 2021. In the motion, plaintiffs

argued that the parties never agreed that defendant’s tax liability would be limited to the amount

of funds held in escrow. Plaintiffs further claimed that defendant’s affirmative defense of mutual

mistake failed as a matter of law. Plaintiffs contended that a mutual mistake must concern a fact

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No. 1-22-1080

in existence at the time the agreement was entered into, rather than a mistake about the amount of

a future tax bill. Plaintiffs argued that a party cannot be mistaken about the amount of a tax bill

that does not exist.

¶ 12   Following briefing, the trial court heard arguments on the motion for summary judgment.

The arguments were taken under advisement and the matter was continued for disposition on

October 8, 2021.

¶ 13   On October 1, 2021, one week prior to the scheduled disposition date, defendant filed a

motion to dismiss the breach of contract action with prejudice, pursuant to section 2-619(a)(6) of

the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(6) (West 2018)). Relevant, here, section

2-619(a)(6) of the Code allows for the involuntary dismissal of a claim when “the claim set forth

in the plaintiff’s pleading has been *** satisfied of record.” Id.

¶ 14   In its motion to dismiss, defendant asserted that the damages calculations contained in

plaintiffs’ complaint “were based on erroneously issued tax bills.” Defendant claimed that it had

contacted the Cook County Treasurer’s Office, which “correctly adjusted” the tax bills. The 2018

tax bill was corrected and reduced to “$0.” The tax bill for 2019, which was due August 3, 2020,

was corrected to reflect that it was delinquent and had accrued interest due to plaintiffs’ failure to

pay the bill. Defendant requested that the breach of contract claim be dismissed with prejudice and

that the funds held in escrow be released to plaintiff. Defendant further requested that, as the

prevailing party, plaintiffs be ordered to pay its attorney fees.

¶ 15   The trial court allowed briefing on defendant’s motion to dismiss and continued both the

motion to dismiss and motion for summary judgment to January 25, 2022. At that hearing, the

court denied the motion to dismiss but continued to take the motion for summary judgment under

advisement.

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No. 1-22-1080

¶ 16   On March 29, 2022, defendant filed a second motion to dismiss pursuant to section

2-619(a)(6) of the Code; the motion was styled as an emergency. In its motion, defendant presented

proof that it had paid the 2018 tax liability as well as its prorated share of the 2019 tax liability.

Defendant contended that plaintiffs’ breach of contract claim was therefore moot and should be

dismissed with prejudice.

¶ 17   The trial court ordered the parties to submit a Joint Statement of Remaining Issues and

allowed plaintiffs to submit a fee petition. In addition, the court ordered that the funds held in

escrow be released to plaintiffs.

¶ 18   The parties filed a “Joint Statement of Remaining Issues,” outlining their respective

positions. Plaintiffs no longer sought payment of the tax bills, but instead sought an order from the

trial court directing defendant to pay interest on the portion of the tax bill that had previously been

outstanding. Plaintiffs also sought attorney fees and costs related to bringing the action.

Defendant’s position was that no fees were owed and that the matter was moot.

¶ 19   The trial court heard arguments and, on July 12, 2022, entered a final judgment in favor of

plaintiffs in the amount of $993.98. This amount represented the penalties and interest due on

defendant’s portion of the 2019 tax obligation on the property from January 1, 2019 through the

closing date of May 8, 2019. In its ruling, the court denied plaintiffs’ request for attorney fees,

based on its finding that neither party was a prevailing party. Plaintiffs timely appealed.

¶ 20                                     II. ANALYSIS

¶ 21   The pivotal issue raised in this appeal is whether the trial court erred when it found there

was no prevailing party in the litigation. The parties disagree as to what standard of review applies.

Defendant argues that a de novo standard of review is appropriate because plaintiffs’ breach of

contract claim became moot after the taxes were paid, and thus the trial court was not required to

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No. 1-22-1080

interpret the fee-shifting provision in the parties’ contract. We disagree.

¶ 22    The determination of whether a party qualifies as a “prevailing party” for purposes of

awarding attorney fees is subject to an abuse of discretion standard of review. Timan, 2012 IL App

(2d) 100834, ¶ 29; Powers v. Rockford Stop -N-Go, Inc., 326 Ill. App. 3d 511, 515 (2001). A trial

court abuses its discretion when its ruling is arbitrary, fanciful, or unreasonable, or where its ruling

rests on an error of law. Urban Partnership Bank v. Chicago Title Land Trust Co., 2017 IL App

(1st) 162086, ¶ 15.

¶ 23    “A party is considered to be a prevailing party if he succeeds ‘on any significant issue in

the litigation which achieves some of the benefit the parties sought in bringing suit.’ ” Cameo

Convalescent Center, Inc. v. Senn, 738 F. 2d 836, 846 (7th Cir. 1984) (quoting Hensley v.

Eckerhart, 461 U.S. 424, 433 (1983)). “A party can be considered a prevailing party for the

purposes of a fee award when it is successful on any significant action and achieves some benefit

in bringing suit, receives a judgment in its favor, or obtains an affirmative recovery.” Pepper

Construction Co. v. Palmolive Tower Condominiums, LLC, 2021 IL App (1st) 200753, ¶ 100;

Aliano v. Transform SR LLC, 2020 IL App (1st) 172325, ¶ 27 (same).

¶ 24    “ ‘To qualify as a prevailing party, a plaintiff must succeed in obtaining some relief from

the defendant against whom attorney fees are sought.’ ” Timan v. Ourada, 2012 IL App (2d)

100834, ¶ 29 (quoting Community Consolidated School District No. 54 v. Illinois State Board of

Education, 216 Ill. App. 3d 90, 94 (1991)). “ ‘A successful litigant is still considered the prevailing

party under a fee-shifting provision even if the judgment amount is below the amount claimed.’ ”

Timan, 2012 IL App (2d) 100834, ¶ 29 (quoting Powers v. Rockford Stop -N-Go, Inc., 326 Ill.

App. 3d 511, 515 (2001)).

¶ 25    In this case, after plaintiffs filed their action for breach of contract, they obtained a court

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No. 1-22-1080

order directing that the funds placed in escrow by defendant be released to them. Thereafter,

defendant subsequently presented proof that it paid the 2018 tax liability as well as its prorated

share of the 2019 tax liability. The trial court ultimately entered a final judgment awarding

plaintiffs $993.98, which constitutes a clear benefit to plaintiffs. This amount represented penalties

and interest assessed as a result of defendant’s failure to timely pay the 2019 taxes.

¶ 26   Under these facts, we hold that the trial court abused its discretion in finding that plaintiffs

were not a prevailing party. We find that plaintiffs achieved a benefit in bringing the lawsuit and

that they were the only party to receive a money judgment. “[T]he prevailing party inquiry does

not turn on the magnitude of the relief obtained.” Farrar v. Hobby, 506 U.S. 103, 114 (1992).

¶ 27   In most instances, the prevailing party in a lawsuit is not entitled to reimbursement for

attorney fees and costs. See, e.g., McCormick v. McCormick, 180 Ill. App. 3d 184, 212 (1988)

(“As a general rule, Illinois courts look with disfavor upon assessing fees against a losing party”).

However, the law does recognize certain exceptions. Illinois courts follow the “American Rule,”

whereby attorney fees may be awarded when authorized by statute or by contractual agreement.

Uncle Tom’s, Inc. v. Lynn Plaza, LLC, 2021 IL App (1st) 200205, ¶ 72; Pepper Construction Co.,

2021 IL App (1st) 200753, ¶ 99. Here, the parties’ contract contained a fee-shifting provision,

which provided in relevant part that, “[T]he prevailing party in litigation shall be entitled to collect

reasonable attorney fees and costs from the non-prevailing party as ordered by a court of competent

jurisdiction.”

¶ 28   We find that, as the prevailing party, plaintiffs are entitled to collect reasonable attorney

fees under the fee-shifting provision in the parties’ contract.

¶ 29   As an aside, plaintiffs suggest that if we rule in their favor, they should be awarded the

attorney fees incurred in bringing this appeal. We decline to do so. The sole issue in this appeal is

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No. 1-22-1080

who prevailed on the underlying cause of action. The identity of the prevailing party is ancillary

to the issue brought before the circuit court—whether defendant was responsible for the

outstanding tax assessment on the property. Accordingly, plaintiffs are not entitled to the attorney

fees associated with this appeal.

¶ 30                                   III. CONCLUSION

¶ 31    For the foregoing reasons, we reverse the trial court’s determination that there was no

prevailing party and remand for the court to calculate reasonable attorney fees and costs pursuant

to the fee-shifting provision in the parties’ contract.

¶ 32    Reversed and remanded, with directions.

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