Arnhold, Elda v. Ocean Atlantic Wood

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-1611
ELDA ARNHOLD and BYZANTIO, L.L.C.,
Plaintiffs-Appellees,
v.
OCEAN ATLANTIC WOODLAND CORPORATION,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 C 7953--Arlander Keys, Magistrate Judge.
Argued SEPTEMBER 26, 2001--Decided March 21, 2002
Before FLAUM, Chief Judge, and COFFEY and
MANION, Circuit Judges.
COFFEY, Circuit Judge. Ocean Atlantic
Woodland Corporation ("the Buyers" or
"Ocean Atlantic") entered into a final
settlement agreement with Elda Arnhold
and Byzantio, L.L.C. ("the Sellers")
concerning the sale of farmland in Will
County, Illinois. The agreement contained
a "time-essence" clause that required the
parties to close on the property no later
than January 25, 2001./1 Ocean Atlantic
failed to meet the closing deadline but
nevertheless moved to enforce the
agreement and obtain specific performance
of the contract. After a two-day
evidentiary hearing, the magistrate judge
denied the motion, finding that Ocean
Atlantic had lost its rights to the
property and declaring the contract
terminated. 132 F. Supp. 2d 662. We
affirm.
I. INTRODUCTION
"What a diff’rence a day makes . . .
twenty-four
little hours."/2
This case concerns Ocean Atlantic’s
inability to close on a real estate
transaction until one day after the
deadline imposed by a clear and
unambiguous "time-essence" clause that
was thoroughly negotiated and viewed by
the parties as a material term of their
contract. At the heart of this
controversy is paragraph 15 of the
contract, which contains what the parties
typically refer to as "the drop-dead
clause." The clause provides as follows:
It is intended by Sellers and Purchasers
that January 25, 2001 shall be the
absolute final date for closing . . . .
If closing has not occurred on or before
January 25, 2001, for any reason other
than Sellers’ default . . . Purchaser
shall have no right to purchase or
otherwise encumber the Property or
Homestead parcel, the Contract shall be
terminated, and Purchaser shall have no
rights with respect to the Property or
Homestead Parcel.
Based upon our review of the record, we
agree with the district court’s finding
that the parties clearly intended to end
their acrimonious three-year
relationship--which had resulted in two
previous federal lawsuits and three
extensions in the closing date--one way
or another, no later than January 25,
2001. The magistrate judge properly found
that Ocean Atlantic assumed the risk of
losing title to the property if it failed
to close, for any reason, by that
specific date. Thus, the Sellers were
entitled to terminate the contract on
January 26, 2001--one day after their
offer to sell the property expired.
II. FACTUAL BACKGROUND
A. August 6, 1997 to October 26, 2000
The Sellers, Edith Arnhold and John
Argoudelis, are lifelong farmers who own
280 acres of land near Plainfield, Ill.,
a far southwestern suburb of Chicago that
is presently regarded as one of the
fastest growing areas in the state. In
exchange for $7.56 million payable over
three years, the Sellers agreed on August
6, 1997 to sell their farm to Ocean
Atlantic, a sophisticated development
corporation that planned to transform the
land into a residential subdivision with
more than 700 homes. The parties
scheduled the initial closing on November
15, 1997 and agreed to cooperate and
ensure that all the conditions precedent
to initial closing--such as the rezoning
and annexation of the land by the
Plainfield Village Board--would be met in
a timely manner.
Despite their best efforts, however, the
parties realized that they were in no
position to meet the November 15, 1997
deadline, for they had neither executed
the necessary documents nor obtained the
Board’s approval of the annexation. At
this juncture, the Sellers granted Ocean
Atlantic’s request to extend the initial
closing to January 15, 1999. Thereafter,
during the next twelve months, several
events occurred that laid the seeds for
this present civil action.
1. The Buyers’ federal lawsuit
Throughout the spring and summer of
1998, Ocean Atlantic met with local
planning officials to discuss their
proposed development involving the
Sellers’ land. However, by the fall,
Ocean Atlantic still had not presented
the Board with a petition for annexation
of the property. The Sellers accused
Ocean Atlantic of dragging its feet by
refusing to draft a final engineering
plan, which, upon approval by the Board,
would have triggered a mandatory closing
date within thirty days. The Sellers also
expressed frustration over Ocean
Atlantic’s repeated proposals to
renegotiate the purchase price of the
land. The Sellers, therefore, retaliated
by refusing to execute any annexation
petition unless Ocean Atlantic
accelerated the first closing date to
December 31, 1998. The parties continued
to meet regularly in the hopes of
resolving this standoff, but with neither
side budging, it appeared unlikely that
the property would be sold on time.
In the midst of these bargaining
sessions, unbeknownst to the Sellers,
Ocean Atlantic filed a federal lawsuit in
November 1998, asking the court to order
the Sellers to sign the requisite
annexation petition. The Sellers, on
their own accord, did execute the
document on December 1, 1998, thereby
providing Ocean Atlantic with the relief
it sought in its lawsuit and thus
removing the final impediment to the
property’s annexation over which the
Sellers had any control. Nevertheless,
for reasons not explained in the record,
Ocean Atlantic proceeded to serve the
Sellers in January 1999 with their now
moot lawsuit for specific performance.
Three months later, Ocean Atlantic
voluntarily dismissed its suit and
dropped its demand for a price reduction.
The parties subsequently agreed to a
second extension of the contract, which
pushed back the initial date of closing
to November 30, 1999. Significantly, the
Sellers thereafter notified Ocean
Atlantic on numerous occasions that they
would consider the contract terminated if
the closing failed to occur by that date.
According to one of the sellers, John
Argoudelis, "We made the decision,
probably in 1998 or 1999, after we got
sued for the first time, that we were not
enamored with Ocean Atlantic and it was
not our intention to have any more
relationship with them than what we were
contractually obligated to have."
2. The Sellers’ federal lawsuit
Seemingly oblivious to the November 30
deadline looming overhead, Ocean Atlantic
sought to delay the initial closing for a
third time. In early November, Ocean
Atlantic claimed that it was entitled to
another extension, based on a clause in
the contract allowing for a minimum 45-
day postponement of the closing date if
the Board failed to issue sewer permits
for the property. Ocean Atlantic asserted
that the village had imposed a moratorium
on such permits because its sewer plant
was operating at total capacity. The
Sellers, however, obtained information
from village officials leading them to
believe that permits were available but
that Ocean Atlantic deliberately failed
to obtain them. The Sellers further
contended that Ocean Atlantic invoked the
moratorium clause merely as a pretext for
delay, in order to capitalize on the
Sellers’ desire to close quickly and,
once again, attempt to force them to
agree to a price reduction. It appears
that Ocean Atlantic’s lenders agreed to
finance the deal on the assumption that
other developers would be building
expensive homes in the surrounding area.
When these developments were scaled back,
Ocean Atlantic and its lenders became
concerned that the value of the Sellers’
property also would decline; this caused
the lenders to insist on more costly
guarantees that were eating into Ocean
Atlantic’s anticipated profit margin. The
Sellers believed that Ocean Atlantic’s
president, Michael Ferraguto, was trying
to defray his added costs by forcing the
Sellers to accept less for their
property. Specifically, by threatening to
hold up the closing and bring a second
lawsuit, Ferraguto hoped to pressure the
Sellers into accepting a $1 million price
reduction instead of walking away from
the contract, inviting litigation, and
running the risk of paying damages if
they were saddled with a judgment against
them./3
In response to Ocean Atlantic’s
vexatious conduct, the Sellers filed a
federal lawsuit November 22, 1999,
seeking a declaratory judgment that the
contract would be terminated if the
closing did not occur by November 30,
1999. The lawsuit--which was now the
second civil action involving the
property--moved rather slowly. It was not
until September 26, 2000 that the
district judge ruled on the Sellers’
motion for summary judgment. The court
denied the motion and set the trial for
October 30, 2000, finding that there were
genuine factual disputes
concerningwhether the Village of
Plainfield had, in fact, imposed a
moratorium on sewer permits and thereby
extended the closing date. Rather than
proceed to trial, the Sellers and Ocean
Atlantic entered into serious
negotiations, and on October 26, 2000,
they signed the settlement agreement
containing the time-essence clause that
is the basis of this lawsuit. The Sellers
thereafter dismissed their lawsuit with
prejudice and agreed for the third time
to postpone the closing. The new date was
scheduled for January 25, 2001.
B. October 26, 2000 to January 25, 2001
1. Final negotiations and material
terms
Throughout the negotiations preceding
the settlement agreement, the Sellers
insisted upon a rigid, absolute closing
date. Indeed, three days before Ocean
Atlantic signed the agreement, the
Sellers’ attorneys stressed that an
essential and material part of the
bargain had to be that, "If Ocean
Atlantic, for any reason whatsoever,
fails to close on the property within 90
days from the execution of [the]
settlement document, it shall forfeit any
and all rights it may have to purchase
the property." Ocean Atlantic’s attorney
acknowledged that negotiations would fail
unless his client agreed to: (1) "a
closing date or dates without the
possibility of extensions or delays"; and
(2) "the absolute right of [the Sellers]
to terminate the contract in the event of
a failure to close on the set closing
date(s)." Ocean Atlantic further
emphasized its understanding of the
importance of these terms in the same
signed letter, stating, "Ocean Atlantic
will agree that failure to close . . .
shall result in Plaintiff’s unequivocal
right to terminate the contract." After
reviewing this and other evidence in the
record before him, the trial judge found
that "a final ’drop-dead’ closing date
[was] an integral part of any final
settlement agreement."
The district court specifically
concluded that there were three material
provisions in the settlement agreement.
First, the parties unequivocally agreed
to close and transfer the funds and the
property on one fixed date, January 25,
2001, rather than on three separate
dates, as they had originally planned.
Second, the parties agreed that January
25, 2001 would be an absolute, final date
for closing. Third, the Sellers agreed to
waive any future litigation over the
sewer moratorium. With respect to the
time-essence clause, the trial judge
found that "[the Sellers] wanted the
certainty that by one particular date (in
this case, January 25, 2001) either a
closing would occur, or the contract
would be terminated." 132 F. Supp. 2d at
665-66. Underscoring the importance of
the drop-dead closing clause, the trial
court found that the Sellers "would never
have dismissed their lawsuit with
prejudice, and entered into the
Settlement Agreement if paragraph 15--
providing for a final, absolute closing
date--had not been included" and agreed
upon. Id. at 671.
2. The drop-dead date
Ocean Atlantic had the right to schedule
the closing on any of the ninety-one days
between October 26, 2000 and January 25,
2001. Nevertheless, it exercised that
right by informing the Sellers that it
had chosen to close January 24--a mere
one day prior to the drop-dead date.
In keeping with what was an unseemly yet
now-familiar pattern of delay, Ocean
Atlantic’s words were betrayed by its
actions. On January 18, Ocean Atlantic
sent the Sellers a letter demanding that
they move the closing to May 1 and pay an
additional $680,000 in development fees.
These fees had never been the subject of
any prior negotiations nor were they
embodied in any prior agreement between
the parties. The Sellers rejected Ocean
Atlantic’s demand-- which the trial judge
described as an attempt "to extort nearly
10% of the purchase price on the eve of
closing"--and warned that "[i]f the
closing does not occur in accordance with
the terms of the settlement agreement,
your clients will have no rights
whatsoever to the property after January
25, 2001, as clearly spelled out in that
same agreement." At this point, Ocean
Atlantic withdrew its proposals and
thereafter assured the Sellers that it
would "fully participate in the scheduled
closing [January 24], pursuant to the
settlement agreement."
Sadly, this assurance proved worthless.
The Sellers arrived for the closing at
the offices of a local trust company on
the morning of January 24. The Sellers
executed each and every document, and,
according to the district court, "were
entirely willing and able to close" that
day. However, closing failed to occur on
either January 24 (the date selected by
Ocean Atlantic) or January 25 (the
absolute, final drop-dead date in the
Settlement Agreement) because Ocean
Atlantic failed to tender the purchase
price of $7.267 million for deposit into
the Sellers’ escrow account. Ocean
Atlantic’s chosen lender--Yorkville
National Bank--refused to release the
money until: (1) Ocean Atlantic provided
the bank with a written loan guarantee
from Ocean Atlantic’s equity investment
partner, the New York-based Black Acre
Capital Group; and (2) Black Acre
tendered to the bank a copy of Black
Acre’s corporate resolution, along with
an opinion from its legal counsel,
stating that it is authorized to issue
such guarantees. The attorneys
representing Ocean Atlantic and Black
Acre failed to deliver the documents to
the bank until sometime in the afternoon
of January 26-- one day after the drop-
dead date provided for in the contract.
Several hours before the documents
reached the bank, the Sellers’ attorneys
notified Ocean Atlantic that the contract
was terminated. After receiving this
notice, Ocean Atlantic pleaded with the
Sellers to go forward with the sale, but
the Sellers refused and this lawsuit
followed. Ocean Atlantic sought specific
performance of the contract, and the
Sellers asked the district court to rule
that the contract was null and void. The
district court held a two-day evidentiary
hearing and concluded that Ocean
Atlantic’s failure to close by the date
specified in the contract was a material
breach of the agreement. Furthermore, the
court found that the agreement "has been
properly terminated, pursuant to its
terms," and that "Ocean Atlantic has no
rights with respect to the Property at
issue in the case sub judice." We are now
presented with Ocean Atlantic’s appeal.
III. STANDARD OF REVIEW
We review the district court’s legal
conclusions de novo. We review its
application of law to fact and its
factual findings for clear error.
American Suzuki Motor Corp. v. Bill
Kummer Inc., 65 F.3d 1381, 1385 (7th Cir.
1995). We give "due regard . . . to the
opportunity of the trial court to judge
the credibility of the witnesses," Lange
v. United States, 31 F.3d 535, 539 (7th
Cir. 1994), and when there are two
permissible views of the evidence, the
factfinder’s choice between them cannot
be clearly erroneous. Anderson v.
Bessemer City, 470 U.S. 564, 574 (1985).
IV. DISCUSSION
The only issue before us is whether
Ocean Atlantic materially breached the
Settlement Agreement by failing to tender
$7.267 million and close on the property
by January 25, 2001. We are convinced
that the magistrate judge, acting as a
factfinder applying Illinois law, could
have reasonably determined that Ocean
Atlantic’s inability to comply with the
drop-dead clause until January 26, 2001
constituted a material breach, thereby
absolving the Sellers of all their duties
under the contract. Therefore, based upon
our review of the evidence presented at
trial, we affirm the judgment of the
district court.
A. The Two-Step Materiality Inquiry
"Parties to a contract may make ’time is
of the essence’ a provision of the
contract," meaning that performance by
one party at the time or within the time
frame specified in the contract is
essential to enable him to require
counterperformance by the other party.
Maywood Proviso St. Bank v. York St. Bank
& Trust Co., 252 Ill.App.3d 164, 169 (1st
Dist. 1993). Timely performance often is
an absolute requirement even if the
contract does not contain the talismanic
phrase "time is of the essence"; it is
well-settled that "the intention of the
parties as expressed by the agreement
controls," Will v. Will Prods. Inc., 109
Ill.App.3d 778, 782 (2d Dist. 1982), and
courts "will give effect to this
provision when no peculiar circumstances
have intervened to prevent or excuse
strict compliance." Maywood, 252
Ill.App.3d at 169 (citing Hart v. Lyons,
106 Ill.App.3d 803, 805 (2d Dist. 1982)).
A party that fails to perform its
contractual duties is liable for breach
of contract, and a material breach of the
terms of the contract will serve to
excuse the other party from its duty of
counterperformance. Finch v. Illinois
Cmty. Coll. Bd., 315 Ill.App.3d 831, 836
(5th Dist. 2000); Circle Sec. Agency Inc.
v. Ross, 107 Ill.App.3d 195, 202-03 (1st
Dist. 1982). In determining whether a
breach is material, some Illinois courts
have stated that the question is whether
performance of the disputed provision was
the "sine qua non of the agreement,"
i.e., "of such a nature and such
importance that the contract would not
have been made without it." Arrow Master
Inc. v. Unique Forming Ltd., 12 F.3d 709,
715 (7th Cir. 1993); Dragon Constr. Inc.
v. Parkway Bank & Trust, 287 Ill.App.3d
29, 33 (1st Dist. 1997); Newton v.
Aitken, 260 Ill.App.3d 717, 719 (2d Dist.
1994). Other courts have stated that the
question of "whether a breach is
material, thereby discharging the other
party’s duty to perform, is based on the
inherent justice of the matter." Kel-Keef
Enters. Inc. v. Quality Components Corp.,
316 Ill.App.3d 998, 1016 (1st Dist.
2000); Francorp Inc. v. Siebert, 126 F.
Supp.2d 543, 547 (N.D. Ill. 2000); Rogers
v. Balsley, 240 Ill.App.3d 1005, 1011 (2d
Dist. 1993).
We are convinced that these cases
demonstrate that, under Illinois law, the
materiality inquiry focuses on two
interrelated issues: (1) the intent of
the parties with respect to the disputed
provision; and (2) the equitable factors
and circumstances surrounding the breach
of the provision. See, e.g., Maywood
Proviso, 252 Ill.App.3d at 169 (citing
Cantrell v. Kruck, 25 Ill.App.3d 1060,
1064 (2d Dist. 1975)); Krentz v. Johnson,
36 Ill.App.3d 142, 144-46 (2d Dist.
1976). When analyzing the materiality of
a time-essence clause, the factfinder
initially must ask whether performance by
a particular date was truly of such
significance that the contract would not
have been made if the provision had not
been included. A negative answer to this
initial question means that the clause
did not meet the materiality test and
that the breach was minor, provided that
the party has completed performance
within a reasonable period of time.
Intervisual Communications Inc. v.
Volkert, 975 F. Supp. 1092, 1101 n.17
(N.D. Ill. 1997); Omni Partners v. Down,
246 Ill.App.3d 57, 63 (2d Dist. 1993). On
the other hand, an affirmative answer to
the first question does not end the
materiality inquiry. As we stated in our
seminal case of Sahadi v. Continental
Illinois National Bank, "even where the
parties clearly intended to regard a
specific payment date as crucial, ’equity
will refuse to enforce such a provision
when to do so would be unconscionable or
would give one party an unfair advantage
over the other.’" 706 F.2d 193, 197 (7th
Cir. 1983) (quoting Janssen Bros. Inc. v.
Northbrook Trust & Sav. Bank, 12
Ill.App.3d 840, 844 (2d Dist. 1973)). As
a result, even if the factfinder
concludes that timely performance is an
essential element of the contract, he or
she must also decide whether to award
damages and require counterperformance in
spite of the breach. See 8 Corbin on
Contracts sec. 37.3 (2000) ("Equity limits
our power to determine our own
contractual rights and obligations.").
The factfinder must take into account
the totality of the circumstances and
focus on the inherent justice of the mat
ter. This analysis "may not be made
through a mechanical process," Sahadi,
706 F.2d at 198, and case law makes clear
that it is impossible to provide an
exhaustive, dispositive checklist of
factors for the trier of fact to consider
in every situation. See id.; Restatement
(Second) of Contracts sec. 241 cmt. a
(1981). However, at a minimum, the focus
should be on factors such as: whether the
breach defeated the bargained-for
objective of the parties; whether the
non-breaching party suffered
disproportionate prejudice; and whether
undue economic inefficiency and waste, or
an unreasonable or unfair advantage would
inure to the non-breaching party./4
Arrow Master, 12 F.3d at 715; Sahadi, 706
F.2d at 196; Regan v. Garfield Ridge
Trust & Sav. Bank, 220 Ill.App.3d 1078
(2d Dist. 1991); Chariot Holdings Ltd. v.
Eastmet Corp., 153 Ill.App.3d 50 (1st
Dist. 1987); O’Malley v. Cummings, 86
Ill.App.2d 846 (1st Dist. 1967). We
review the district court’s analysis of
these factors below.
1. Step one: Intent of the parties
As noted previously, paragraph 15 of the
settlement agreement states:
It is intended by Sellers and Purchasers
that January 25, 2001 shall be the
absolute final date for closing . . . .
If closing has not occurred on or before
January 25, 2001, for any reason other
than Sellers’ default . . . Purchaser
shall have no right to purchase or
otherwise encumber the Property or
Homestead parcel, the Contract shall be
terminated, and Purchaser shall have no
rights with respect to the Property or
Homestead Parcel.
The magistrate judge found that this
clause was "an essential (if not ’the’
essential) term of the Settlement
Agreement," and we agree.
In Illinois, the "primary object in
construing a contract is to give effect
to the intention of the parties." Arrow
Master, 12 F.3d at 713. The extent to
which a time-essence clause should be
strictly enforced "depends upon the
parties’ intentions, which are to be
determined both by the language used in
the agreement and the circumstances
surrounding the agreement." Anest v.
Bailey, 198 Ill.App.3d 740, 746 (2d Dist.
1990). When considering extrinsic
evidence, the factfinder should focus, in
descending order of importance, on: (1)
the parties’ negotiations over the
contract at issue; (2) their course of
performance; (3) their prior course of
dealing; and (4) trade usage in the
relevant industry. See, e.g., Reynolds v.
Roberts, 202 F.3d 1303, 1316 (11th Cir.
2000); Den Norske Bank AS v. First Nat’l
Bank of Boston, 75 F.3d 49, 52-53 (1st
Cir. 1996).
In the case before us, the district
court considered the language of the
settlement agreement, along with the
substance of the parties’ negotiations
and their course of performance prior to
January 26, 2001./5 All three
categories of evidence support a finding
of materiality. The explicit and
unequivocal language of the contract is
an unambiguous expression of intent,
referring to January 25, 2001 as an
"absolute, final date for closing" that
"shall" be enforced without exception.
These contract terms were chosen with
precision after extensive negotiations
during which Ocean Atlantic conceded, in
its own words, "that failure to close . .
. shall result in Plaintiffs’ unequivocal
right to terminate the contract."
Extrinsic evidence establishing the
bitterness of the parties’ protracted
relationship also supports the
magistrate’s finding that the parties
intended strict adherence to the January
25, 2001 closing date. The record
reflects that the initial contract
contemplated closing in November 1997,
and nearly three years had passed without
reaching that objective. Thus, by the
time the most recent settlement agreement
was drafted, the Sellers testified that
their heart was no longer in selling
their property to Ocean Atlantic, and
Ocean Atlantic’s president similarly
testified that he was "sick and tired" of
dealing with the Sellers./6
We are convinced that the settlement
agreement reflects a compromise. The
Sellers agreed to continue their
relationship through January 25, 2001 and
give Ocean Atlantic one last, final
chance to comply with the language of the
contract and purchase the farmland. In
exchange, Ocean Atlantic agreed that
absolutely no further delays would be
tolerated. In light of the testimony that
the Sellers would not have signed the
settlement agreement unless it contained
the drop-dead clause, as well as myriad
additional evidence referred to in the
trial judge’s opinion, we agree with the
district court’s conclusion that the
clause was a material term of the
contract. Mayfair Constr. Co. v. Waveland
Assocs., 249 Ill.App.3d 188, 202 (1st
Dist. 1993).
We see no merit to Ocean Atlantic’s
assertion that, "although the Sellers
vigorously contend that they would have
never entered into the Settlement
Agreement without the inclusion of the
drop-dead clause," the Sellers "would
have entered into the Settlement
Agreement if the language of the clause
had been slightly altered to make January
26 (or any other reasonable date) the
outside closing date." (Br. at 38.) Ocean
Atlantic supports this claim with
Argoudelis’s testimony during cross-
examination that the Sellers: (1) were
seeking to close "fairly quickly" after
October 26, 2000; (2) readily agreed to
Ocean Atlantic’s offer to set the closing
date for January 25, 2001 or before; and
(3) "probably would have agreed" to close
on January 26, 2001 if Ocean Atlantic had
suggested this date, and it had been the
drop-dead date provided for in the
contract instead of January 25. Ocean
Atlantic concludes from this evidence
that "closing on January 25, 2001 was not
the sine qua non of the settlement
agreement." (Id.)
Ocean Atlantic’s flaccid argument
denigrates the fundamental value of the
drop-dead clause: finality. The Sellers
granted Ocean Atlantic the right to
propose any given closing date within
several months of October 25. However,
when the Sellers accepted the offer to
close January 25, they did so with the
understanding that this date was final.
Thus, this date became a material term of
the contract because it established the
definite and fixed moment after which the
parties’ mutual rights, responsibilities,
and relationship would terminate--
something the Sellers had been seeking to
accomplish for almost three years. It is
of no consequence that the Sellers
allowed Ocean Atlantic to pick the
precise final closing date and stated
that they would have accepted payment on
some date other than January 25 if that
date had been selected by Ocean Atlantic
and accepted by both parties in the first
instance. Argoudelis gave clear,
convincing, and undisputed testimony that
"once the date [January 25] was selected
. . . that particular date held
significance" because it was a rigid
deadline that "could not be violated"
instead of some approximation of a
reasonably elastic date. Ocean Atlantic
points us to no evidence demonstrating
that the Sellers were willing to accept
payment after January 25, once that date
was offered and accepted as the final
date for performance. The trial judge
expressly credited Argoudelis’s
testimony, and we reject Ocean Atlantic’s
argument that the trial judge’s finding
was clearly erroneous./7 Freeman United
Coal Mining Co. v. Sum-mers, 272 F.3d
473, 480 (7th Cir. 2001) ("one cannot
rationally ignore credible, uncontested
evidence"); Central St. S.E. & S.W. Areas
Pension Fund v. Koder, 969 F.2d 451, 454-
55 (7th Cir. 1992).
2. Step two: Totality of the
circumstances
Having concluded that time was of the
essence, we must next consider whether
the trial court erred in finding that
Ocean Atlantic committed a material
breach by failing to meet all of the
requirements for closing until January
26, 2001--one day after the drop-dead
date in the contract.
We emphasized ante at 12-13 that even
when the parties agree to make timely
performance an essential element of the
contract, the factfinder must also
consider whether the breach was material
as to justify the other party’s
subsequent refusal to perform, based upon
the totality of the circumstances.
Although the majority of the magistrate
judge’s opinion focused on the language
of the drop-dead clause and the intent of
the parties when entering into it, 132 F.
Supp.2d at 663-72, the judge also dealt
with the overall nature of the breach in
light of several countervailing equitable
factors. Id. at 672-74. In the latter
portion of his opinion, the judge
carefully explained why these factors
fail to justify preserving the contract
and found that Ocean Atlantic committed a
material breach even after considering
such factors. Id.
Thus, we are convinced that the
magistrate properly applied the law and
reached findings of fact that are
reasonably supported in the record.
Accordingly, we hold that Illinois law
permits a finding of material breach
based upon Ocean Atlantic’s one-day delay
in performance. See Chariot Holdings, 153
Ill.App.3d at 58-59 (distinguishing on
the facts yet approvingly citing
Schneider v. Dumbarton Devs. Inc., 767
F.2d 1007 (D.C. Cir. 1985), which
affirmed a finding of material breach
based on a one-day delay in a real estate
transaction); John H. Scheid, Buying
Blackacre, 23 J. Marshall L. Rev. 15, 59
(1989) (If time is of the essence,
"Illinois courts, tending to be strict
constructionists, will enforce the clause
and hold that a delay of one day is a
material breach."); 12A Illinois Law &
Practice sec.sec. 303-05 (1983 & Supp.
2001); see also Hardin Rodriguez & Boivin
v. Paradigm Ins. Co., 962 F.2d 628, 637
(7th Cir. 1992) (Doctrine of substantial
performance "[does] not extend to cases
like the one before us, where the
plaintiff insisted upon strict compliance
with its conditions and has never waived
them."). Our holding is consistent with
those from other jurisdictions that have
found material breaches in cases that are
analogous to the one before us. See FDIC
v. Kansas Bankers Sur. Co., 963 F.2d 289
(10th Cir. 1992); Schneider, 767 F.2d
1007; Sun Bank of Miami v. Lester, 404
So. 2d 141 (Fla. App. Ct. 1981); see also
Jacob & Youngs Inc. v. Kent, 129 N.E.
889, 891 (N.Y. 1921) (Cardozo, J.) (the
parties are "free by apt and certain
words to effectuate a purpose that
performance of every term shall be a con
dition of recovery"); Brady v. Oliver,
147 S.W. 1135, 1140 (Tenn. 1911) ("A case
can be conceived where a default of one
day might defeat the whole purpose of the
contract."); 15 Williston on Contracts sec.
44:53 at 225 (2000) ("A typical example
of a clause requiring strict compliance
is one making time of the essence of the
contract; substantial, although late,
performance is not generally sufficient.
. . .").
b. The relevant factors
i. Bargained-for objective
Ocean Atlantic disputes the court’s
finding that the failure to close by
January 25, 2001 defeated the bargained-
for objective of the contract. Ocean
Atlantic contends that "the general
objective of the Settlement Agreement was
to effectuate the sale of the property."
In Ocean Atlantic’s view, "termination of
the Settlement Agreement was never a
bargained-for objective of either party,
but rather a potential consequence if the
bargained-for objective was not met."
(Br. at 16-17.) We cannot accept this
unduly narrow reading of the agreement in
this case.
Illinois courts construe contract terms
"so as to avoid rendering other terms
redundant or meaningless." Carroll v.
Acme-Cleveland Corp., 955 F.2d 1107, 1112
(7th Cir. 1992). "[W]here a contract does
not set a closing date and time is not
made of the essence, the law will imply
that the contract is to be performed
within a reasonable time." Omni Partners,
246 Ill.App.3d at 63. Thus, a material
time-essence provision indicates that
substantial but incomplete performance is
not the central objective of the
contract. Rather, the deal must be done
on time if it may be done at all.
By enforcing such provisions, courts
avoid substituting their judgment for
those of sophisticated parties and
concomitantly extinguishing the parties’
legitimate expectations in freedom of
contract as well as freedom from
contract. See, e.g., Venture Assoc. Corp.
v. Zenith Data Sys. Corp., 96 F.3d 275,
281 (7th Cir. 1996) (Cudahy, J.,
concurring) ("Freedom not to contract
should be protected as stringently as
freedom to contract."). The trial judge
in this case concluded that a material,
bargained-for objective of the contract
was to establish an absolute date beyond
which the parties’ obligations to each
other would terminate, either by the sale
of the property or by the passage of
time. This finding was supported by ample
evidence, including seller John
Argoudelis’s statements that we quoted
and discussed in Part IV.A.1 to the
effect that "we bargained for . . . we
wanted finality. We wanted a date whereby
our relationship with Ocean Atlantic
would end, one way or the other."
When Ocean Atlantic failed to pay the
Sellers any money and failed to take
title to the property by January 25,
2001, it deprived the Sellers of the
finality for which they had bargained.
This breach went to the very heart and
substance of the contract. It was
material; indeed, it is difficult to
imagine anything more material, given
nearly three years of delays, three
contract extensions, and two federal
lawsuits involving the sale of this very
property. The Sellers displayed the
patience of Job by waiting nearly 3
years to accomplish the sale of farmland
that was originally intended to be
transferred within six months. Paragraph
15 of the settlement agreement clearly
called for closing or termination "[i]f
closing has not occurred on or before
January 25, 2001, for any reason," and
the closing failed to occur in a timely
fashion. Based on the facts before us, we
do not perceive any clear error with the
district court’s findings. See O’Malley,
86 Ill.App.2d at 451 (holding that
explicit deadline, coupled with
forfeiture provision, was sufficient
evidence of materiality); Schneider, 767
F.2d at 1014 ("The parties bargained for
the strict construction that Schneider
urges and it would be improper for the
courts to put any other interpretation on
the ’time is of the essence’ clause.").
ii. Proportionality of prejudice
Ocean Atlantic also asserts that the
trial judge mistakenly determined that
Ocean Atlantic only "arguably"--rather
than "substantially"--suffered greater
prejudice than the Sellers as a result of
its breach of contract. (Br. at 22-26.)
We decline Ocean Atlantic’s none-too-
subtle invitation to reweigh the facts
and revisit the trial court’s findings.
The proportionality-of-prejudice element
of the materiality test requires the
factfinder to compare the relative
burdens that each side would suffer if
the contract were terminated. McBride v.
Pennant Supply Corp., 253 Ill.App.3d 363,
368 (5th Dist. 1993); Maywood Proviso,
252 Ill.App.3d at 169-70; see also
Markhoff-Fitzgerald Assocs. v. Sable
Corp., 1990 U.S. Dist. LEXIS 2875 *22-25
(N.D. Ill. 1990) (finding immateriality
as matter of law; breach of option-to-
purchase-insurance clause failed to
defeat bargained-for objective and
disparity of prejudice was significant).
In the case before us, the district
court found that Ocean Atlantic spent
$1.7 million in fees and expenses related
to the annexation, rezoning, planning,
preliminary engineering, and marketing of
the property between 1997 and 2001. On
the other hand, because the Sellers
testified that they would have placed the
funds in a non-interest bearing account
if they had been transferred one-day
earlier, the trial judge concluded that
the Sellers were not financially
prejudiced by Ocean Atlantic’s delay in
payment. In arguing that the district
court’s findings are clearly erroneous,
Ocean Atlantic assumes that the disparity
of prejudice is calculated in terms of
the absolute economic loss suffered by
each party as a result of the breach, and
that a $1.7 million difference is simply
too much. We cannot agree. If we fully
accepted Ocean Atlantic’s view, then
idiosyncratic parties would have the
scale tipped against them and would be
gravely handicapped in their efforts to
obtain the full, objective, bargained-for
benefits of their contract. Although the
Sellers suffered no consequential damages
in this case, Argoudelis testified that
they suffered at least nominal damages in
the sense that "we were robbed of the
benefit of our bargain if the contract is
not terminated on that date. That’s what
we bargained for. Either we close or we
terminate."
The question of prejudice is one for the
trier of fact, with each case resting
upon its own merits. Arrow Master, 12
F.3d at 714; Sahadi, 706 F.2d at 196. We
have repeatedly noted that appellate
courts do not reweigh the evidence
considered by the trier of fact. United
States v. Suarez, 225 F.3d 777 (7th Cir.
2000); Merriweather v. Family Dollar
Stores of Ind., 103 F.3d 576 (7th Cir.
1996); Lange, 31 F.3d at 539. Ocean
Atlantic’s million-dollar loss was,
admittedly, substantial. However, a
reasonable factfinder, believing that
promises conditioned upon timely
performance should be kept when made,
could have determined that the loss was
not enough to warrant granting Ocean
Atlantic’s motion for specific
performance. See Kansas Bankers, 963 F.2d
at 294 (parties "who have bargained for
strict compliance with specific time
requirements . . . inherently are
prejudiced by noncompliance" with those
deadlines); Dove v. Rose Acre Farms Inc.,
434 N.E.2d 931 (Ind. App. Ct. 1982); see
also Jacob & Youngs, 129 N.E. at 891
(suggesting that eccentric homeowner who
insists on using Reading pipe should not
be forced to accept Cohoes pipe that
general contractor believes is "just as
good"). We refuse to hold that the trial
judge committed clear error. Anderson,
470 U.S. at 574.
iii. Unreasonable, unfair advantage
In this section, we reject Ocean
Atlantic’s final argument that the
magistrate judge’s ruling "allows
Plaintiffs to reap an unreasonable and
unfair advantage over Ocean Atlantic by
retaining the benefits of Ocean
Atlantic’s development efforts without
incurring any of the costs." (Br. at 32.)
The record reflects that some, if not
most, of the added value of the Sellers’
farmland is attributable to natural
appreciation from an upswing in the real
estate market. In any event, as we
explain below, it is neither unreasonable
nor unfair for the Sellers to avail
themselves of any extent to which Ocean
Atlantic’s $1.7 million expenditures have
improved the value of the Sellers’
property.
Under Illinois law, two important
factors to consider at this juncture are:
(1) whether the breaching party used rea
sonable efforts to perform its
contractual obligations; and (2) whether
the parties contemplated that the
breaching party would forfeit its
contractual rights if it committed the
type of breach that is at issue. See,
e.g., Spartech Corp. v. Opper, 890 F.2d
949, 955 (7th Cir. 1990) ("A principal
purpose of contracts and contract law is
to allocate the risk of the unexpected in
accordance with the parties’ respective
preference for or aversion to risk and
their ability or inability to prevent the
risk from materializing--not to place it
always on the promisee."); Restatement
(Second) of Contracts sec. 205 cmt. d (1981)
(contractual duty of good faith seeks to
minimize behavior such as "evasion of the
spirit of the bargain, lack of diligence
and slacking off"). Neither of these
factors favors Ocean Atlantic.
Ocean Atlantic argues that it missed the
deadline because it needed an extra day
to obtain and prepare certain corporate
loan guarantees requested by Yorkville
National Bank on the morning of January
25, 2001. Ocean Atlantic tries to excuse
its failure to complete the documents
prior to the close of business that day
by claiming that it could not foresee
that the bank would request such
materials and characterizing the bank’s
actions as commercially unreasonable in
the context of a complex, multi-million
dollar real estate transaction. The
district court expressed "its doubts"
about this testimony, however, reasoning
that Ocean Atlantic is a sophisticated
corporation that dealt with the bank on
prior occasions, had been negotiating the
loan for several weeks, should have
prepared for any possible emergency, and
should have been able to broker some type
of deal to satisfy the bank’s demands
without delaying the sale. Ocean Atlantic
is represented by a half dozen learned
and qualified attorneys from the giant
Chicago law firm of Gardner, Carton &
Douglas. The magistrate judge recognized
that Ocean Atlantic could have avoided
forfeiture or obtained restitution for
its development costs either by
purchasing insurance or having the
foresight to draft more favorable terms
in the contract, which, it must be empha
sized, had been extended three times
stretching back to November 1997. The
judge further inferred from Ocean
Atlantic’s historical relationship with
the Sellers and the language of the
contract itself--a contract which
wasnegotiated by experienced commercial
attorneys--that Ocean Atlantic assumed
the risk of forfeiting title to the
property if it failed to complete the
necessary documents prior to the
deadline. These findings are not
unreasonable. Anderson, 470 U.S. at 574.
Moreover, although Ocean Atlantic blames
its investment partner (Black Acre) and
its lender of choice (Yorkville National
Bank) for its failure to comply with the
drop-dead clause, it appears to us that
the problem more likely was caused by
Ocean Atlantic waiting until the eleventh
hour to execute and revise all the
requisite documents. "When parties wait
until the last minute to comply with a
deadline, they are playing with fire."
Spears, 74 F.3d at 157. The bank
forwarded every initial loan document to
Ocean Atlantic on January 19, 2001. Ocean
Atlantic and Black Acre then exhausted
six full days meeting with their
attorneys and revising the papers before
returning them to the bank along with
comments and proposed changes on the
morning of the closing--January 25. The
bank reviewed the revised documents over
the course of several hours, and it was
at this point, in response to the
counteroffers made by Ocean Atlantic and
Black Acre, that the bank first asked for
additional documentation from Black Acre.
Ocean Atlantic would have had additional
time to respond to the bank’s request if
it had returned the paperwork to the bank
on January 23 or 24, and from our review,
we conclude that it had ample opportunity
to do so. Ocean Atlantic asserts that its
entire legal staff needed the full six
days to revamp the documents but ignores
the fact that it played the waiting game
for more than three years and then agreed
to the very deadline it is now attacking.
Furthermore, as the magistrate judge
noted, Ocean Atlantic wasted at least
some time and energy contacting the
Sellers in a last-ditch attempt to
renegotiate terms of the settlement
agreement itself./8 If Ocean Atlantic
had truly focused all of its legal
resources on completing the deal, instead
of trying to rewrite it, then perhaps we
would not be here today. We therefore
reject Ocean Atlantic’s anemic attempt to
find a scapegoat for its own lack of
diligence.
We are convinced that Ocean Atlantic
failed to use reasonable efforts to
complete the deal by the material date
required in the contract. We agree with
the district court that it would have
been improper to deprive the Sellers of
the benefit of the drop-dead provision
merely because of Ocean Atlantic’s
difficulties with its lender of choice.
Cf. Chariot Holdings, 153 Ill.App.3d at
54, 60. The magistrate judge stated as
follows:
Although Ocean Atlantic argues that it
would suffer "unconscionable prejudice,"
the [c]ourt is not persuaded by that
argument. Ocean Atlantic is a
sophisticated and experienced land
development company, which has been
represented by counsel since the
beginning of this controversy in 1997.
Ocean Atlantic made this same
"prejudicial" argument in its 1998
lawsuit against Plaintiffs for specific
performance (a lawsuit that it eventually
voluntarily dismissed). Indeed, paragraph
20 of Ocean Atlantic’s Complaint for
Specific Performance in that case
references its "extensive expenditure of
time, effort and money to prepare the
Property for development." It is now
2001, and Ocean Atlantic is, essentially,
making the same argument. If Ocean
Atlantic did not want to lose its
investment, then it either should not
have agreed to paragraph 15 of the
Settlement Agreement, or it should have
complied with paragraph 15 of the
Settlement Agreement (or at least
selected a closing date that was not one
day before the final, "drop-dead" closing
date).
132 F. Supp. 2d at 673-74. The
magistrate’s findings are amply supported
by the evidence; thus, we refuse to hold
that it is unfair for Ocean Atlantic to
forfeit all rights to the property, while
the Sellers retain the same property and
all improvements thereto. See Hemenway v.
Peabody Coal Co., 159 F.3d 255 (7th Cir.
1998) (discussing tenets of risk
allocation); Maywood Proviso, 252
Ill.App.3d at 170 (courts sitting in
equity are not required to "revise a
contract and give a litigant a better
bargain than he himself made").
As a final point, we reject Ocean
Atlantic’s assertion that the Sellers
should be equitably estopped from walking
away from the contract. Ocean Atlantic
claims that the Sellers have "unclean
hands" because they presently wish
topursue a better deal with another
developer, who is willing to pay a
premium for the land now that it has been
improved. (Reply at 5-6.) Ocean
Atlantic’s argument reflects a deep
misunderstanding of accepted business
practices and is without merit, for we
are convinced that the Sellers have acted
in good faith while performing their
contractual obligations. The Sellers were
entitled to insist on strict adherence to
the deadline, which was first set for
November 15, 1997 and had been generously
extended three times. The deadline was a
material provision of the contract,
rather than a boilerplate, technical term
seized upon as an afterthought in an
attempt to reap a windfall at Ocean
Atlantic’s expense. Because the Sellers
had the legal right to terminate the
agreement, it is legally irrelevant
whether they were also motivated by
reasons which would not themselves
constitute valid grounds for termination.
Refinement Int’l Co. v. Eastbourne N.V.,
815 F. Supp. 738, 742 (S.D.N.Y. 1993),
aff’d, 25 F.3d 105 (2d Cir. 1994). Cf.
Commonwealth Petro. Co. v. Billings, 759
P.2d 736, 740 (Colo. Ct. App. 1988)
(refusing to find material breach when
"the objection raised was a mere
’afterthought’ used improperly to
’bootstrap’ a technical defect into a
meritless claim for rescission"); T.
Ferguson Constr. v. Sealaska Corp., 820
P.2d 1058, 1063-64 (Alaska 1991)
(Matthews, J., dissenting).
We perceive no clear error with the
district court’s ruling that Ocean
Atlantic’s failure to meet the January
25, 2001 closing deadline--after the
closing deadline was extended on three
occasions, the Sellers declared that no
further delays would be tolerated, the
Buyers filed and dismissed a suit for
specific performance, the Sellers filed
and dismissed a suit for declaratory
judgment, and both parties entered into a
settlement agreement granting Ocean
Atlantic one final chance to purchase the
property--was a material breach.
Therefore, the Sellers were entitled to
terminate the contract. To the extent
that enforcement of the deadline results
in a forfeiture, we hold that the court’s
decision to effectuate the forfeiture
clause was proper. First Nat’l Bank &
Trust Co. of Evanston v. First Nat’l Bank
of Skokie, 178 Ill. App. 3d 180 (1st Dist.
1988).
B. Attorney’s Fees
The final matter before us is the
Sellers’ request for an award of
attorney’s fees and costs in pursuing
this appeal. (Br. at 44.) Paragraph 17 of
the settlement agreement provides: "In
any action brought to enforce this
Settlement Agreement, the prevailing
party shall be entitled to reimbursement
from the losing party for all reasonable
attorney’s fees and costs associated with
that legal action." This provision is
enforceable despite Ocean Atlantic’s
material breach, and so pursuant to the
settlement agreement, the Sellers are
entitled to their fees and costs arising
out of this civil action. Rissman v.
Rissman, 229 F.3d 586 (7th Cir. 2000).
Within twenty days, the Sellers shall
present us with an itemized list of all
the expenses they incurred by defending
against this appeal. The Sellers also may
apply directly to the district court,
which has retained jurisdiction over this
matter, if they wish to recover their
fees and costs below. Id. at 589.
V. CONCLUSION
"Never put off until tomorrow what you
can do today."/9
Although contract law allows parties to
choose the reasonable extent of their
duties and obligations towards one
another, neither law nor equity
guarantees that a party may specifically
enforce a contract if it fails to perform
its material obligations thereunder. A
reasonable factfinder concluded that
Ocean Atlantic treated the material, bar
gained-for deadlines in this agreement as
if they were trivial details that could
be flouted with impunity. As a result,
Ocean Atlantic has lost any and all
rights to purchase the Sellers’ farmland.
The judgment of the district court is
AFFIRMED.
FOOTNOTES
/1 Taking our cue from the parties, we alternatively
refer to the clause as a "time-essence" clause,
a "drop-dead" clause, or "paragraph 15 of the
settlement agreement."
/2 Spears v. City of Indianapolis, 74 F.3d 153, 154
(7th Cir. 1996) (quoting Dinah Washington, What
a Diff’rence a Day Makes! (Mercury Records
1959)). Id. at 158 (affirming trial court’s
decision to deny motion for one-day extension in
filing evidentiary materials, strike untimely-
filed materials, and grant summary judgment on
basis of properly filed record).
/3 Argoudelis’ direct examination contains the
following testimony concerning Ocean Atlantic’s
conduct:
Q: Did Mr. Ferraguto, in November of 1999, ever
make a threat about litigation and how long he
could tie you up in litigation?
A: Yes. At the October 1999 meeting at my office
. . . they had told us that there is a moratori-
um, that we’re going to need more time to close,
and this could take another two years, and a lot
of this and that. And I told him, "Either you
close by November 30, 1999, or we will terminate
the contract. There will be no other options."
And I was very clear about that, because we were
very upset with the new delay they were coming up
with. And he responded, "Well, that would be
stupid, because we’ll tie you up in litigation
for years."
/4 Sahadi holds that the factfinder should also
consider whether the provision is considered
material in light of relevant extrinsic evidence
such as: the parties’ negotiations over the
contract, their course of performance, their
prior course of dealing, and the usage of trade
in the relevant industry. Such evidence is rele-
vant primarily to an understanding of the par-
ties’ intent, rather than the effect of the
breach ex post. Therefore, it must be considered
at the first stage of the materiality inquiry, as
we explain more fully in Part IV.A.1 of this
opinion.
/5 The magistrate judge stated at one point that he
was considering the "prior dealings of the par-
ties," 132 F. Supp. 2d at 673, but it is apparent
that he was relying, in fact, upon the statements
and actions of the parties during their negotiat-
ing sessions and their course of performance
prior to January 26, 2001. Id. at 665-67. A
prior-course-of-dealings analysis is based on the
assumption that the parties intend to repeat
their established pattern of behavior in future
situations. See, e.g., Capitol Converting Equip.
v. LEP Transp., 965 F.2d 391 (7th Cir. 1992); 5
Corbin on Contracts sec. 24.17 (2000). In this
case, because the plaintiffs extended the closing
dates on each prior occasion, we cannot agree
that the parties’ prior dealings showed "that a
final ’drop-dead’ closing date was the most
essential priority for Plaintiffs." 132 F.
Supp.2d at 673. However, as explained in this
section and ante at 7-10, the parties’ intent to
adhere strictly to the January 25, 2001 drop-dead
date was made perfectly clear by the statements
and actions of the parties during their negotiat-
ing sessions and their course of performance
prior to January 26, 2001. Thus, it is unneces-
sary to remand for further factfinding. See
Bishop v. Gainer, 272 F.3d 1009, 1019 (7th Cir.
2001); United States v. One Bell Jet Ranger II
Helicopter, 943 F.2d 1121, 1127 (9th Cir. 1991).
/6 Any doubts about the importance of the drop-dead
clause are dispelled by Argoudelis’s testimony,
which the trial judge found to be "entirely
credible." Argoudelis stated, in pertinent part,
as follows:
Q: In your mind, was there any single, non-nego-
tiable term that had to be part of any settle-
ment?
A: First, we were not inclined to settle at all,
but if we were going to settle, it had to be one
closing and it had to be a date that could not be
violated. Either they closed or they completely
had no rights whatsoever to the property thereaf-
ter.
. . . .
Q: Mr. Argoudelis, would you have entered into
this settlement agreement if the terms of Para-
graph 15 were not included in the contract?
A: Never. . . . Because the whole idea, and that
all ties into, perhaps, Paragraph 15, that we
wanted finality. We wanted a date whereby our
relationship with Ocean Atlantic would end, one
way or the other.
. . . .
Q: Now, why didn’t you accept the money [on Janu-
ary 26, 2001]?
A: Because the contract had terminated prior to
that time.
Q: Are you suggesting that you felt like you
didn’t have the right to take the money on
January 26?
A: . . . I don’t know what our rights were after
that date. I know our contract was terminated,
and that was our agreement, and we intended to
live by the settlement agreement. Either the
contract terminates or the closing occurred prior
to January 25. When the closing didn’t occur
prior to January 25th, the contract was terminat-
ed, and our relationship with Ocean Atlantic was
severed, one way or another, as we had always
intended, pursuant to the settlement agreement.
/7 In so holding, we necessarily reject Ocean
Atlantic’s related argument that the trial judge
should have given any weight--much less signifi-
cant weight--to the testimony of Ocean Atlantic
President Michael Ferraguto, who stated that it
is unusual for time-essence clauses to be strict-
ly enforced in complex real estate transactions
like the one before us. (Br. at 28.) Even assum-
ing that parties customarily disregard delays in
performance involving several days or less,
nothing in this record indicates that the Sellers
relied upon such a custom or practice when they
negotiated this particular drop-dead clause.
Thus, the judge properly concluded that Ocean
Atlantic’s evidence on this point was irrelevant.
Hart, 106 Ill.App.3d at 807.
/8 Between January 19 and January 24, Ocean Atlantic
sent the Sellers several letters stating that the
Sellers were obligated to pay an additional
$680,000 in annexation fees. This demand had
never been raised at any prior point in the
parties’ 3-year history and obviously was either
a gimmick or a bad faith attempt to extort nearly
10 percent of the contract’s purchase price on
the eve of closing. 132 F. Supp. 2d at 668 n.12.
Argoudelis states that Ocean Atlantic abandoned
its claim only after, "in very harsh language,"
he "told them that they better get themselves to
the closing on the 24th because we would be there
and we would close pursuant to the terms of the
settlement agreement and they’d better do like-
wise."
/9 Popular Sayings and Proverbs 246 (Gregory Y.
Titelman, ed. 1996).