Ricardo Abellan v. Lavelo Property Management, LL

United States Court of Appeals
For the Seventh Circuit
____________________
No. 18-3695
RICARDO H. ABELLAN, Trustee
of the Abellan Family Trust,
Plaintiff-Appellee,
v.
LAVELO PROPERTY MANAGEMENT, LLC,
Defendant-Appellant.
____________________
Appeal from the United States District Court for the
Central District of Illinois.
No. 1:16-cv-01037-MMM-JEH — Michael M. Mihm, Judge.
____________________
ARGUED SEPTEMBER 4, 2019 — DECIDED JANUARY 24, 2020
____________________
Before WOOD, Chief Judge, and BAUER and HAMILTON, Cir-
cuit Judges.
HAMILTON, Circuit Judge. A New York owner of a fast-food
property in Illinois, which was rented by an Arizona tenant,
sold the property to buyers in California. Just after the sale,
however, the tenant declared bankruptcy and never paid a
nickel in rent to its new landlord.
2 No. 18-3695
This lawsuit followed. A jury found the purchase agree-
ment rescindable for mutual mistake and the sellers liable for
fraud and breach of contract. The buyer, plaintiff-appellee Ri-
cardo Abellan, as trustee of a family trust, took his remedy in
damages for a judgment of more than $2 million against de-
fendant-appellant Lavelo Property Management, LLC. “It
takes a lot to set aside a jury verdict,” Valdivia v. Twp. High
School Dist. 214, 942 F.3d 395, 396 (7th Cir. 2019), and this ap-
peal by Lavelo falls well short. We affirm.
I. Factual and Procedural Background
We state the facts in the light most favorable to the jury’s
verdict. In March 2015, Abellan and his wife Trini, of Califor-
nia, as trustees of their family trust, wanted to buy a commer-
cial rental property with a “triple-net” lease, meaning the ten-
ant would be responsible for paying property taxes, insur-
ance, and maintenance costs in addition to rent. In their retire-
ment, the Abellans’ “ideal” was to “just sit” while their tenant
would send rent checks.
On the other side of the country in New York, defendant
Leonid Chernoy was trying to offload a fast-food property he
owned in Le Roy, a small town in central Illinois. Chernoy
was the managing member of defendant Lavelo Property
Management, a limited liability company formed as an invest-
ment vehicle for his family and its trusts. Lavelo in turn was
the sole member of defendant HRDS Le Roy IL, a limited lia-
bility company formed for the single purpose of holding the
Le Roy property. (We focus on Lavelo here because it was a
party to the purchase agreement described below and the
only defendant against which judgment was entered.)
No. 18-3695 3
HRDS had purchased the property from JC123 Holdings,
a limited liability company owned by Jason and Carl LeVecke
of Arizona (grandsons of Carl Karcher, founder of the Carl’s
Jr. chain of fast-food restaurants), under a sale-leaseback ar-
rangement. That means JC123 sold the property to HRDS and
HRDS then leased it back to the LeVeckes, specifically to a
limited liability company called MIH Star HD, whose manag-
ing member was Jason LeVecke.
In April 2013 the LeVeckes purchased the Le Roy property,
formerly the site of a restaurant but vacant at the time, for
$325,000. Three months later, in July 2013, they sold the still-
vacant property to HRDS for $1,100,000. HRDS and MIH Star
then executed a twenty-year, triple-net lease of the property,
beginning July 2013, “for the operation” by MIH Star of either
a Carl’s Jr. or a Hardee’s restaurant (another fast-food chain
owned by the same corporate parent). Chernoy understood
the LeVeckes would require up to a year to remodel, or in the
parlance of commercial real estate, “re-image” the vacant
property as a Carl’s Jr. or a Hardee’s.
The re-imaging did not proceed on schedule. At the end of
August 2013, Jason LeVecke told Chernoy the property would
be open for business by the end of the year. It was not. Cher-
noy was later told the property would open in May 2014. It
did not. A local contractor hired by the LeVeckes began gut-
ting the property in May 2014 but was ordered to stop in June
and filed a nearly $50,000 mechanic’s lien against the property
in August. Chernoy received notice of the lien in late August.
In early September 2014, he decided to sell the property, still
vacant and now gutted.
On September 6, 2014, Jason LeVecke told Chernoy the
property would open in sixty days. On September 23, it was
4 No. 18-3695
going to be the end of the year. On October 15, it was “Decem-
ber/January.” On December 15, it was “I will get back to you.”
On January 7, 2015 it was “I … will update you soon.” On
January 27, it was going to be the end of April. On April 6, it
was June. On May 20, having come full circle, it was again
sixty days.
On June 9, 2015, plaintiff Abellan bought the property
from HRDS. As noted above, Lavelo was also party to the pur-
chase agreement. The purchase agreement provided for a
price of $1.55 million for the property, assignment of the
LeVeckes’ lease, and their personal guaranties of the lease ob-
ligations. But the LeVeckes never paid any rent to Abellan,
and they, along with most of their companies, declared bank-
ruptcy soon after Abellan bought the property. MIH Star did
not declare bankruptcy but simply “ceased to exist.” HRDS
was dissolved on July 10, 2015. Abellan was left holding a va-
cant and gutted property, assessed for tax purposes at
$321,000, with outstanding property tax bills and, most im-
portant, with no tenant and no solvent guarantor of the lease.
Abellan filed this lawsuit in the Central District of Illinois
under the district court’s diversity jurisdiction. See 28 U.S.C.
§ 1332. The case was tried against defendants HRDS, Lavelo,
and Chernoy on Abellan’s claims for mutual mistake, fraud,
and breach of contract. The jury returned a verdict in Abel-
lan’s favor on each claim, though it awarded no damages for
fraud and the judge denied rescission as a matter of equity.
After the court decided post-trial motions from both sides, the
final judgment ordered Lavelo to pay Abellan $1,289,341.72 in
damages for breach of contract, $164,079.98 in prejudgment
interest, $627,702.15 in attorney fees, and $29,061.28 in costs.
No. 18-3695 5
Lavelo is the only appellant. We have jurisdiction under 28
U.S.C. § 1291.
II. Analysis
Lavelo appeals the denial of its motions for judgment as a
matter of law, for a new trial, and for amendment of the judg-
ment, as well as the awards of prejudgment interest and attor-
ney fees. We address each challenge in turn. The parties agree,
with only one exception discussed below, that Illinois sub-
stantive law applies, so we apply Illinois law. Wood v. Mid-
Valley Inc., 942 F.2d 425, 427 (7th Cir. 1991).
A. Judgment as a Matter of Law
Abellan asserted that the sellers breached the parties’ pur-
chase agreement in two ways: first by falsely warranting that
MIH Star was not in default of the lease while knowing that
MIH had not “continuously operated” its business as the lease
required; and second by failing to deliver to Abellan certain
notices received from MIH Star that related to the lease.
Lavelo maintains that after all the evidence was in, it could
not as a matter of law be held liable for breaching either the
no-default warranty or the notice-delivery provision con-
tained in the purchase agreement.
We review de novo a district court’s denial of a motion un-
der Federal Rule of Civil Procedure 50(b) for judgment as a
matter of law, affirming if any reasonable jury could have
found for the non-movant. Wallace v. McGlothan, 606 F.3d 410,
418 (7th Cir. 2010), citing Tammi v. Porsche Cars North America,
Inc., 536 F.3d 702, 707 (7th Cir. 2008). Because a post-verdict
Rule 50(b) motion is “only a renewal” of a pre-verdict Rule
50(a) motion, a Rule 50(b) motion may be granted “only on
grounds advanced in the preverdict motion.” Id., quoting Fed.
6 No. 18-3695
R. Civ. P. 50(b) advisory committee’s note to 2006 amend-
ment.
Though a non-movant may waive or forfeit these require-
ments, id. at 419, citing Collins v. Illinois, 830 F.2d 692, 698 (7th
Cir. 1987), Abellan insisted on their observance in the district
court and the court observed them scrupulously. Accord-
ingly, as did the district court, we limit our review to the
grounds for judgment advanced by Lavelo in its Rule 50(a)
motion. We limit our review further, as did the district court,
to Lavelo’s arguments on the no-default warranty, as a gen-
eral verdict in a civil case may be affirmed on any legally suf-
ficient theory submitted to the jury. Kossman v. Northeast Ill.
Reg’l Commuter R.R. Corp., 211 F.3d 1031, 1037 (7th Cir. 2000);
Freislinger v. Emro Propane Co., 99 F.3d 1412, 1418 (7th Cir.
1996); Culli v. Marathon Petroleum Co., 862 F.2d 119, 123 (7th
Cir. 1988).
The purchase agreement contained a no-default warranty.
The sellers warranted to buyer Abellan that there was “no de-
fault by Seller, or to Seller’s knowledge, by MIH Star HD, LLC
under the Lease.” A critical provision of the lease required the
tenant to operate its restaurant business continuously. The
lease provided that it would constitute an “Event of Default”:
If Tenant fails to continuously operate its busi-
ness within the Premises except for temporary
periods of closure caused by casualty, or tempo-
rary and reasonable periods of remodeling, not
to exceed ninety (90) days in any Lease Year
without first obtaining Landlord’s written ap-
proval which approval shall not be unreasona-
bly withheld, so long as Tenant is diligently pur-
suing re-opening of the Premises.
No. 18-3695 7
Lavelo has preserved two arguments why it should not be
held liable for breach of the no-default warranty by MIH
Star’s (the LeVeckes’) default of the continuous-operations
provision. First, Lavelo’s Chernoy testified that he under-
stood the continuous-operations provision to lie dormant un-
til a restaurant began to operate on the property but none ever
did. If that had been his understanding, then the warranty of
no default “to Seller’s knowledge” arguably would not have
been breached. Second, even if MIH Star breached the contin-
uous-operations provision by failing ever to operate a restau-
rant under the lease, Lavelo contends that it and HRDS acqui-
esced in and waived the default. Lavelo thus argues that the
warranty of “no default” was not breached. Neither argument
is persuasive.
1. Knowledge of Default?
We begin with the axiomatic. As everyone is presumed to
know the law, Lyon Fin. Servs., Inc. v. Illinois Paper and Copier
Co., 732 F.3d 755, 765 (7th Cir. 2013), so Chernoy is presumed
to know the meaning of the contracts he executed. Paper Ex-
press, Ltd. v. Pfankuch Maschinen GmbH, 972 F.2d 753, 757 (7th
Cir. 1992). Put differently, everyone is presumed to know that
contracts, like laws, will be judicially interpreted, and must
bear the risk of adverse interpretation. That goes double for
warrantors of legal compliance. See, e.g., Pantry, Inc. v. Stop-
N-Go Foods, Inc., 796 F. Supp. 1171, 1172, 1175–80 (S.D. Ind.
1992) (Tinder, J.) (interpreting statute to determine that war-
ranty of compliance with environmental laws “to the best of
Seller’s knowledge” was breached), order vacated on other
grounds, 934 F. Supp. 295 (1994). Lavelo’s novel qualified-im-
munity-style defense that the meaning of the lease was not
clearly established at the time of the warranty thus cannot
8 No. 18-3695
avoid liability for breach of the warranty any more than if
Chernoy were blind or illiterate, or if the contracts were in
German. Paper Express, 972 F.2d at 757.
Still, Chernoy’s understanding of the lease became rele-
vant at trial. There is no doubt that Chernoy knew that MIH
Star had “failed to continuously operate its business” for a pe-
riod “exceeding ninety days” “without first obtaining,” or
even seeking, “Landlord’s written approval.” That might be
the end of the matter. Not so, argues Lavelo, because the con-
tinuous-operation provision also referred to the tenant’s “dil-
igently pursuing re-opening of the Premises,” and as Chernoy
testified and Lavelo argues here, “in order for something to
re-open, it would first have to open.” That’s true enough, but
it does not help Lavelo if the lease otherwise required an open
and operating restaurant on the property at any time more
than ninety days before Chernoy warranted “no default” to
Abellan in June 2015.
Chernoy maintained at trial that he understood the lease
to contain no such requirement at its inception in July 2013.
He testified that, “if we were to interpret this the way the
plaintiff wants to interpret it, then as of day one, the tenant
would already be in default” for failing to operate. That could
not be right, according to Chernoy, because he and Jason
LeVecke “both knew that they were going to take from 9
months to 12 months to do their remodeling, re-imaging,
whatever they call it.” “That was the exact agreement with the
LeVeckes,” Chernoy insisted, that the property “would be re-
modeled and be operating [a] restaurant[] from 9 to 12
months after [they] closed on [it].” “I don’t have it in writing,”
he conceded, “but that’s what we discussed.”
No. 18-3695 9
Ordinarily, parties to an integrated written contract can-
not vary or supplement its terms with evidence of other pur-
ported terms extrinsic to the writing. Air Safety, Inc. v. Teachers
Realty Corp., 706 N.E.2d 882, 884–85 (Ill. 1999). But extrinsic
evidence may illuminate an ambiguous writing, id. at 884, or
one that is silent on a material term. Barnes v. Michalski, 925
N.E.2d 323, 336 (Ill. App. 2010); Restatement (Second) of Con-
tracts § 204 cmt. e (Am. Law Inst. 1981). The court determines
whether such extrinsic evidence should be received, and the
jury determines its import. Fidelity and Deposit Co. of Md. v.
Rotec Indus., Inc., 392 F.3d 944, 949 (7th Cir. 2004); Air Safety,
706 N.E.2d at 884.
Without objection, the jury in this case was never told by
the district court what the writings in suit meant as a matter
of law. Instead, the jury received only the unvarnished con-
tractual language, and both sides repeatedly invited the jury
to interpret the purchase agreement and the lease. We take
that as a tacit agreement among the district judge and the par-
ties that the matter required fact-finding. On appeal, Lavelo
will not, therefore, be heard to argue from the “unambigu-
ous” language of these writings here, and that tacit agreement
distinguishes this case from Dual Mfg. & Eng’g, Inc. v. Burris
Indus., Inc., 619 F.2d 660, 661–63 (7th Cir. 1980) (en banc),
where we held that appellants had preserved for review a
question of law (patent obviousness) where the trial court er-
roneously submitted it to the jury as question of fact; appel-
lants’ tender and approval of jury instructions after the trial
court made its intentions clear did not waive the legal issue.
In any event, this framing of the issues for trial was rea-
sonable, and we are confident it did not unfairly prejudice the
defendants. Read as a whole, see Dowling v. Chicago Options
10 No. 18-3695
Assocs., Inc., 875 N.E.2d 1012, 1023 (Ill. 2007), the lease in nu-
merous provisions contemplated that a restaurant would
eventually operate on the property but was ambiguous or si-
lent as to when it would start. When a contract does not spec-
ify a deadline for performance, a reasonable time will be im-
plied. Bowens v. Quinn, 561 F.3d 671, 675 (7th Cir. 2009), citing
among others Rose v. Mavrakis, 799 N.E.2d 469, 475 (Ill. App.
2003), and Restatement (Second) of Contracts § 204 cmt. d.
The trier of fact may determine what is reasonable based on
the evidence. Barnes, 925 N.E.2d at 336 (plaintiff “testified he
told defendant she could begin paying him back when she got
on top of her debts”).
Chernoy’s “9 to 12 month” testimony thus put the defense
between Scylla and Charybdis. If the jury found that Chernoy
and the LeVeckes intended restaurant operations to begin at
the property at the lease’s inception, then Chernoy knew MIH
Star was in default of the continuous-operation provision on
day 91 of the lease term. If, on the other hand, the jury credited
Chernoy’s “9 to 12 month” testimony, then he knew MIH Star
was in default of the continuous-operation provision on day
91 of the lease term plus one year, or from October 2014 on—
still eight months before Lavelo, HRDS, and Chernoy gave
Abellan the no-default warranty upon the purchase in June
2015. Either way, the jury had sufficient evidence to find
breach of the no-default warranty “to Seller’s knowledge.”
The district court did not err in refusing to disturb its finding.
2. Waiver of Default?
Lavelo argues in the alternative that, even if MIH Star was
in default of the lease for failing to operate continuously,
HRDS had waived the default by accepting MIH Star’s rent
payments. See In re Krueger, 192 F.3d 733, 738–39 (7th Cir.
No. 18-3695 11
1999), citing among others Barker v. Leonard, 635 N.E.2d 846,
848 (Ill. App. 1994). On that theory, there was no breach of the
lease and the no-default warranty to buyer Abellan was not
breached. The district court, distinguishing a case cited by
Lavelo, Midland Management Co. v. Helgason, 630 N.E.2d 836
(Ill. 1994), held that Lavelo’s waiver theory was “inapposite”
and “misapplied” here because HRDS “did not attempt to ter-
minate its lease Agreement” with MIH Star “due to the ten-
ant’s breach.” We agree.
In a contractual setting like this, “Waiver is defined as the
intentional relinquishment of a known right,” Krueger, 192
F.3d at 739, quoting Ryder v. Bank of Hickory Hills, 585 N.E.2d
46, 49 (Ill. 1991), not as the undoing of what gave rise to the
right that was relinquished. Waiver excuses, not erases, an ad-
mitted breach by the legal, not metaphysical, effect of defeat-
ing a remedy for it. See Krueger, 192 F.3d at 740; Midland
Mgmt., 630 N.E.2d at 839. This can be seen, among other ways,
from the fact that waiver is an affirmative rather than a nega-
tive defense; it admits the alleged breach but can defeat a rem-
edy. See Fed. R. Civ. P. 8(c)(1); Hahn v. County of Kane, 991
N.E.2d 373, 378 (Ill. App. 2013). A defense of waiver is a plea
of confession and avoidance that deprives “the admitted facts
of an adverse legal effect.” Confession and Avoidance, Black’s
Law Dictionary (11th ed. 2019); see also, e.g., Reed v. Columbia
St. Mary’s Hospital, 915 F.3d 473, 477 n.1 (7th Cir. 2019).
More practically, in a deal like this one, where the lease
and its guaranties were vital elements of the sale, the sellers’
no-default warranty to the buyer must be interpreted from the
perspective of a reasonable person in the buyer’s position. See
Newman v. Metro. Life Ins. Co., 885 F.3d 992, 998 (7th Cir. 2018),
citing Gillen v. State Farm Mut. Auto. Ins. Co., 830 N.E.2d 575,
12 No. 18-3695
582 (Ill. 2005). The no-default warranty would have been
worthless if it meant only that the seller-lessor had chosen not
to enforce its rights against a breaching tenant. What matters
to a buyer who receives such a warranty is what he actually
receives: here, whether Abellan was buying a lessor’s rights
vis-à-vis a tenant who had performed and was continuing to
perform under the lease. Chernoy (on behalf of sellers HRDS
and Lavelo) had shown remarkable tolerance for heel-drag-
ging and evasion by the LeVeckes. That was his and their right
as a landlord, but his tolerance was not and could not be the
reasonable measure of the sellers’ warranty in the sale to
Abellan. The district court correctly denied Lavelo’s motion
for judgment as a matter of law.
B. New Trial
We review denial of a motion for a new trial under Federal
Rule of Civil Procedure 59(a) for abuse of the district court’s
discretion. Pickett v. Sheridan Health Care Ctr., 610 F.3d 434, 440
(7th Cir. 2010). “[W]e reverse only if ‘the verdict is against the
weight of the evidence, the damages are excessive, or if for
other reasons the trial was not fair to the moving party.’” Id.,
quoting Emmel v. Coca-Cola Bottling Co., 95 F.3d 627, 636 (7th
Cir. 1996).
In this case, Lavelo framed its motion for a new trial so
that the district court believed it sought a ruling only if the
court first granted its Rule 50(b) motion. See Fed. R. Civ. P.
50(c), not cited by Lavelo to the district court. With that un-
derstanding, because the court denied the Rule 50(b) motion,
it denied the 59(a) motion as “moot.” If that was not Lavelo’s
intent, it ought to have said so more clearly by way of a mo-
tion for reconsideration in the district court. In any event, the
No. 18-3695 13
court elsewhere addressed much of the substance of Lavelo’s
Rule 59(a) motion. We find no grounds for reversal.
1. Enforcement of Final Pretrial Order
Lavelo objected at trial to evidence relating to the purchase
agreement’s notice-delivery provision. A claim for breach of
that provision, Lavelo argued, was not within the scope of the
final pretrial order under Fed. R. Civ. P. 16(e). Enforcement or
modification of a final pretrial order is within the district
court’s sound discretion. Gorlikowski v. Tolbert, 52 F.3d 1439,
1444 (7th Cir. 1995). “If reasonable persons could differ, no
abuse of discretion can be found.” Id., quoting Durr v. Inter-
county Title Co. of Ill., 14 F.3d 1183, 1187 (7th Cir. 1994).
Reading the broad language of the operative complaint
and the final pretrial order, a reasonable judge could conclude
that Lavelo was on adequate notice of a claim for breach of the
notice-delivery provision by Chernoy’s failure to deliver to
Abellan emails describing the LeVeckes’ failure to pay real es-
tate taxes on the property, which is a critical element of a tri-
ple-net lease. And any prejudice to Lavelo caused by late no-
tice of the theory was minimal. The factual bases of the theory
were not disputed, and Lavelo received and used fair oppor-
tunities to contest the meaning of the notice-delivery provi-
sion before both the judge and the jury. There was no abuse
of discretion.
2. Weight of the Evidence
Lavelo contends the jury’s findings on damages and reli-
ance were contrary to the weight of the evidence. “A motion
for a new trial can be granted when the district court—in its
own assessment of the evidence presented—believes that the
verdict went against [its] manifest weight.” Mejia v. Cook
14 No. 18-3695
County, 650 F.3d 631, 634 (7th Cir. 2011). Lavelo did not
properly preserve these issues as grounds for judgment as a
matter of law, but it did present them properly as grounds for
a new trial. The district court addressed the damages issue
under the JMOL rubric but did not have a prior opportunity
to address reliance because Lavelo raised it neither in its Rule
50(a) motion nor, fatally as we explain, at the pretrial instruc-
tions conference.
The difference between the Rule 50(b) and Rule 59(a)
standards, see Mejia, 650 F.3d at 634, citing Smart Mktg. Grp.
v. Publications Int’l Ltd., 624 F.3d 824, 832 (7th Cir. 2010), and
the absence of an express application of the latter to these is-
sues, do not warrant reversal in this case. Lavelo’s arguments
were almost purely legal and are defeated by clear-cut legal
rules. They did not engage the district court’s special power
under Rule 59(a) “to get a general sense of the weight of the
evidence, assessing the credibility of the witnesses and the
comparative strength of the facts … .” Id. at 633. The judge
clearly viewed the trial as having been fair to the defense and
the verdict well-supported by the evidence. We agree with
that assessment. We are convinced that remand for express
application of Rule 59(a) would not produce a different out-
come. Cf. id. at 635 (“Maybe … the district court would grant
the motion for a new trial under the proper standard, and
maybe not. The outcome in this case is not certain.”).
a. Damages
Abellan’s damages for breach of contract totaled
$1,289,341.72, which was the difference between his purchase
price ($1,550,000) and the tax assessed value of the property
in 2016 ($321,000), plus property taxes and related legal ex-
penses paid following the LeVeckes’ abandonment of the
No. 18-3695 15
lease ($60,341.72). Lavelo argues these damages were proxi-
mately caused by the LeVeckes, not by the sellers’ breach of
the purchase agreement’s no-default warranty. We are not
persuaded. The purpose of the no-default warranty was to re-
duce the risk to Abellan of just such breaches of the lease by
the tenant.
“When a contract is breached, the injured party is entitled
to be placed in the position he would have been in had the
contract been performed.” Kirkpatrick v. Strosberg, 894 N.E.2d
781, 792 (Ill. App. 2008), citing Wilson v. DiCosola, 815 N.E.2d
975, 978 (Ill. App. 2004). Recoverable damages are restricted
to “those which were reasonably foreseeable and were within
the contemplation of the parties at the time the contract was
executed.” A. Kush & Assocs., Ltd. v. Am. States Ins. Co., 927
F.2d 929, 938 (7th Cir. 1991), quoting Kalal v. Goldblatt Bros.,
Inc., 368 N.E.2d 671, 674 (Ill. App. 1977); see also Wilson, 815
N.E.2d at 978. Ordinarily in an action for breach of a real es-
tate sales contract, damages are measured by “the difference
between the fair market value of the real estate on the day of
the breach and the sale price contracted for by the purchas-
ers,” Kirkpatrick, 894 N.E.2d at 792, citing Lakshman v. Vec-
chione, 430 N.E.2d 199, 203 (Ill. App. 1981), “including reason-
able costs and attorney’s fees.” Lakshman, 430 N.E.2d at 203.
In this case, setting aside costs and fees, the evidence
showed that Abellan paid $1,550,000 for a property with a
commercial tenant that was fulfilling its obligations under a
twenty-year triple-net lease. He received a property worth
$321,000 with a worthless lease—a loss of $1,229,000. It was
not against the manifest weight of the evidence for the jury to
conclude that, if the sellers had not falsely warranted that the
tenant was not in default, Abellan would not have suffered
16 No. 18-3695
the loss. He would not have closed on the purchase without
an open and operating, or at the very least, soon-to-be reo-
pened and operating, tenant. The same goes for the jury’s con-
clusion that the loss of the tenant’s future performance under
the lease was a “direct and natural result” of the sellers falsely
warranting the tenant’s past performance. Lavelo was not en-
titled to a new trial on this ground.
b. Reasonable Reliance?
Lavelo argues next it was contrary to the weight of the ev-
idence for the jury to have found that Abellan reasonably re-
lied on the purchase agreement’s no-default warranty. The
jury was never instructed that Abellan had to prove reason-
able reliance to prove his breach of contract claim, so this ar-
gument asserts in effect an instructional error. The problem
for Lavelo is that a party asserting instructional error as
grounds for a new trial must first preserve the error by spe-
cific and timely objection. Fed. R. Civ. P. 51(c); Schobert v. Illi-
nois Dep’t of Transp., 304 F.3d 725, 729–30 (7th Cir. 2002).
Lavelo did not object to the instructions on this point, so its
reliance arguments are waived.
Waiver notwithstanding, an instruction requiring reason-
able reliance on the express warranty would have been incor-
rect as a matter of Illinois contract law. “The general rule … is
that a party to a contract can enforce an express warranty even
if he should believe or even does believe that the mishap war-
ranted against will occur.” Vigortone AG Prods., Inc. v. PM AG
Prods., Inc., 316 F.3d 641, 649 (7th Cir. 2002), citing among oth-
ers Indeck N. Am. Power Fund, L.P. v. Norweb plc, 735 N.E.2d
649, 658–59 (Ill. App. 2000) (applying both Illinois and New
York law), in turn citing among others CBS, Inc. v. Ziff-Davis
Publ’g Co., 553 N.E.2d 997, 1001 (N.Y. 1990). The warranty “is
No. 18-3695 17
intended precisely to relieve the promisee of any duty to as-
certain the fact for himself.” Metropolitan Coal Co. v. Howard,
155 F.2d 780, 784 (2d Cir. 1946) (L. Hand, J.), cited by Vigortone,
316 F.3d at 648, and Ziff-Davis, 553 N.E.2d at 1000.
As part of a “shift in perspective” in American law “from
warranty as tort to warranty as contract,” Lyon Fin. Servs., Inc.
v. Illinois Paper and Copier Co., 732 F.3d 755, 762 (7th Cir. 2013),
Illinois courts began dispensing with reasonable reliance in
actions for breach of express warranties and requiring only
“actual reliance,” Regopoulos v. Waukegan P’ship, 608 N.E.2d
457, 461 (Ill. App. 1992) (citing cases), which is shown by proof
“that the warranty was part of the bargained-for agreement.”
Lyon, 732 F.3d at 762, citing among others Ziff-Davis, 553
N.E.2d at 1002 n.5. “The question of whether the promisee ‘re-
lied’ on the warranty, then, is whether he believed he was pur-
chasing the promise.” Ainger v. Mich. Gen. Corp., 476 F. Supp.
1209, 1225 (S.D.N.Y. 1979), cited by Ziff-Davis, 553 N.E.2d at
1001.
The logical relevance of this “basis of the bargain” rule is
limited “to the question of whether an express warranty has
been created”; it is “not applicable to situations where the war-
ranties are clear and express.” Wikoff v. Vanderveld, 897 F.2d
232, 241 (7th Cir. 1990) (applying Illinois law). The warranty
sued on here was part of the parties’ agreement, so the plain-
tiff did not need to prove further reliance. To give a contrary
instruction would have been error. Lavelo was also not enti-
tled to a new trial on this ground.
C. Second Amended Judgment
Upon considering both sides’ motions to alter or amend
the judgment under Federal Rule of Civil Procedure 59(e) and
18 No. 18-3695
Abellan’s motion for attorney fees under Rule 54(d) and his
bill of costs, the district court entered a second amended judg-
ment awarding damages, prejudgment interest, and attorney
fees, and taxing costs. Lavelo challenges all but the costs. We
review the grant or denial of a Rule 59(e) motion for abuse of
the district court’s discretion, LB Credit Corp. v. Resolution
Trust Corp., 49 F.3d 1263, 1267 (7th Cir. 1995), and likewise the
grant of a motion for attorney fees. Gastineau v. Wright, 592
F.3d 747, 748 (7th Cir. 2010). We find no legal error or abuse
of discretion here.
1. Statutory Limitation of Liability?
Both sellers in this case, HRDS and Lavelo, were limited
liability companies formed under the laws of Wyoming.
Lavelo asked the district court to amend the judgment against
it so as to award no damages on the basis of a Wyoming stat-
ute, Wyo. Stat. § 17-29-704(d), which addresses claims against
dissolved limited liability companies.
We bypass arguments about whether Lavelo forfeited this
claim and whether the statute, which has not been the subject
of reported decisions, applies to plaintiff’s efforts to hold
Lavelo liable for his claims against HRDS. Lavelo’s liability in
this case is not only derivative of HRDS’s but also primary.
Along with HRDS, Lavelo itself was a party to the purchase
agreement with plaintiff and as a seller thus itself made the
no-default warranty to plaintiff. Under Illinois contract law,
where two parties make one promise under one contract
through one agent to their counterparty, as the evidence
shows here, their liability for breach is joint and several.
Pritchett v. Asbestos Claims Mgmt. Corp., 773 N.E.2d 1277, 1283
(Ill. App. 2002), citing 765 Ill. Comp. Stat. 1005/3 and Brokerage
Resources, Inc. v. Jordan, 400 N.E.2d 77, 80 (Ill. App. 1980). In
No. 18-3695 19
other words, Lavelo was properly held liable for its own
breach of the purchase agreement. Lavelo was not entitled to
amendment of the judgment on the basis of the Wyoming
statute.
2 Prejudgment Interest
By his Rule 59(e) motion, Abellan sought and obtained an
award of prejudgment interest. The availability and amount
of prejudgment interest are substantive for Erie Railroad pur-
poses, so we look again to state law. Medcom Holding Co. v.
Baxter Travenol Labs., Inc., 106 F.3d 1388, 1405 (7th Cir. 1997).
“Illinois law permits the recovery of prejudgment interest …
if the amount is a fixed amount or easily computed. If any of
these prerequisites are met, then the decision to allow statu-
tory interest lies within the sound discretion of the district
court.” Id., citing 815 Ill. Comp. Stat. 205/2 and Bank of Chicago
v. Park Nat’l Bank, 640 N.E.2d 1288, 1296 (Ill. App. 1994).
Where damages are measured by the difference between
contract price and market value, ordinarily “they are suffi-
ciently ascertainable to justify an award of prejudgment inter-
est.” Farwell Constr. Co. v. Ticktin, 405 N.E.2d 1051, 1065 (Ill.
App. 1980) (breach of warranty in real estate sales contract),
citing Keystone Steel & Wire Co. v. Price Iron & Steel Co., 103
N.E.2d 143, 148 (Ill. App. 1952). A claim for interest is not de-
feated by a need for legal ascertainment of damages, id., citing
Martin v. Orvis Bros. & Co., 323 N.E.2d 73, 83 (Ill. App. 1974),
nor by reasonable disputes between the parties as to liability,
id., citing Martin, 323 N.E.2d at 83, nor by the existence of a
good-faith defense. Santa’s Best Craft, LLC v. St. Paul Fire and
Marine Ins. Co., 611 F.3d 339, 355 (7th Cir. 2010); First Nat’l
Bank Co. of Clinton v. Ins. Co. of N. Am., 606 F.2d 760, 769 (7th
Cir. 1979).
20 No. 18-3695
In this case, the contract price was indisputable and the
market value as assessed by the county tax assessor was not
contested and was a matter of public record. Compare Farwell
Constr., 405 N.E.2d at 1065 (denial of interest was not abuse of
discretion where “contract price was sharply disputed” and
market value “was also disputable”). The difference between
the two values was the measure of Abellan’s damages, as ex-
plained above. The damages were thus sufficiently ascertain-
able to support an interest award under Illinois law.
To avoid this conclusion, Lavelo cites General Dynamics
Corp. v. Zion State Bank & Trust Co., 427 N.E.2d 131, 140 (Ill.
1981), for the proposition that good faith disputes over liabil-
ity preclude interest awards. That case, however, addressed a
different statutory provision that applies to interest “on
money withheld by an unreasonable and vexatious delay of
payment.” 427 N.E.2d at 133, quoting 815 Ill. Comp. Stat.
205/2, cl. 5. Under that statutory language, a good faith dis-
pute about liability necessarily defeats a claim for interest. In
this case, however, the court applied the statutory provision
for interest on money due under an “instrument of writing”
like the purchase agreement. 815 Ill. Comp. Stat. 205/2, cl. 1;
see Stone v. City of Arcola, 536 N.E.2d 1329, 1341 (Ill. App. 1989)
(distinguishing General Dynamics on this ground); Farwell
Constr., 405 N.E.2d at 1064 (real estate sales contract qualifies
as “instrument of writing” under statute, so interest may be
awarded if damages could be determined with sufficient pre-
cision).
Lavelo also contends that the district court erred in calcu-
lating interest from the date this lawsuit was filed rather than
from the filing date of the fourth amended complaint, in
which Abellan first alleged breach of contract. In fact, the
No. 18-3695 21
district court might have been justified in calculating interest
from the even earlier date of the sale in June 2015, when the
sellers breached the purchase agreement by falsely warrant-
ing the tenant was not in default. See 815 Ill. Comp. Stat. 205/2
(providing for interest on “all moneys after they become
due”); Santa’s Best Craft, 611 F.3d at 355 (interest begins to ac-
crue when amount becomes “due and capable of exact com-
putation”); First Nat’l Bank, 606 F.2d at 770 (“interest from the
dates of the proofs of loss was properly awarded under Illi-
nois law”). The district court did not err by awarding Abellan
prejudgment interest.
3. Attorney Fees
By his Rule 54(d) motion, Abellan sought and obtained an
award of attorney fees under the terms of the purchase agree-
ment. We turn one final time to state law to assess the availa-
bility and amount of that award. Taco Bell Corp. v. Continental
Cas. Co., 388 F.3d 1069, 1077 (7th Cir. 2004). “Provisions in
contracts for awards of attorney fees are an exception to the
general rule that the unsuccessful litigant in a civil action is
not responsible for the payment of the opponent’s fees.” Kai-
ser v. MEPC Am. Props., Inc., 518 N.E.2d 424, 427 (Ill. App.
1987). Only a reasonable fee may be recovered, which means
“reasonable charges for reasonable services.” Id. In determin-
ing whether a fee is reasonable, in addition to hours expended
and hourly rates charged, a court should consider the skill of
the lawyers, the difficulty and importance of the case, usual
charges for similar services, the benefit to the client, and
“whether there is a reasonable connection between the fees
and the amount involved in the litigation.” Id. at 427–28.
The purchase agreement in this case provided: “In any lit-
igation … which may arise between any of the parties hereto,
22 No. 18-3695
the prevailing party shall be entitled to recover … reasonable
attorney’s fees … .” “A party can be considered a ‘prevailing
party’ for the purposes of awarding fees when he is successful
on any significant issue in the action and achieves some ben-
efit in bringing suit, receives a judgment in his favor or by ob-
taining an affirmative recovery.” Timan v. Ourada, 972 N.E.2d
744, 752 (Ill. App. 2012), quoting Grossinger Motorcorp, Inc. v.
American Nat’l Bank & Tr. Co., 607 N.E.2d 1337, 1348 (Ill. App.
1992).
Three counts of the complaint were dismissed on the de-
fendants’ motions to dismiss and for summary judgment, but
in the end, Abellan won favorable verdicts on each of the three
counts submitted to the jury: mutual mistake, fraud by HRDS
and by Chernoy personally, and breach of contract, with sub-
stantial damages awarded against Lavelo on the contract the-
ory. This was success on significant issues in the case achiev-
ing meaningful relief. The district court did not abuse its dis-
cretion in finding Abellan was the prevailing party.
Lavelo points out that Abellan recovered damages on only
one of his theories, and against only one of several defend-
ants. Lavelo argued in the district court that either no fees
should be awarded or that fees should be limited to less than
15 percent of the fees plaintiff actually incurred. On appeal,
Lavelo suggests plaintiff be limited to about 25 percent of his
fees.
The arguments based on less-than-100-percent success
raise one of the perennial problems in fee awards. Plaintiff’s
fee request indicated that he had already eliminated substan-
tial attorney time from his request, and the district court could
reasonably find that all of the theories that were pursued were
so interrelated as to make further reductions inappropriate.
No. 18-3695 23
Also, as Judge Easterbrook has written, “Blind alleys are an
ordinary part of litigation … .” Bohen v. City of East Chicago,
666 F. Supp. 154, 158 (N.D. Ind. 1987) (Easterbrook, J., sitting
by designation) (allowing fees for time spent with an expert
witness who was not called and for time discussing case with
several others). Plaintiff raised multiple theories but ulti-
mately won complete success against Lavelo. (At least to the
extent that the judgment against Lavelo is collectible. The dis-
trict court docket reflects extensive post-judgment litigation
to collect the judgment.) Given the deferential standard of re-
view, the difficulty in drawing sharp lines, the broad lan-
guage of the purchase agreement’s fee-shifting provision, the
interrelated nature of all of plaintiff’s theories, and his com-
plete relief against Lavelo, we find no abuse of discretion in
the fee award.
Lavelo does not challenge the specifics of Abellan’s attor-
neys’ hours expended or hourly rates. The overall fee award
is approximately half the damages award, a ratio Illinois tol-
erates. See Timan, 972 N.E.2d at 750, 753. The district court did
not abuse its discretion in awarding Abellan attorney fees.
Conclusion
We have presented the facts here in the light most favora-
ble to the jury’s verdict. The defense had evidence that sup-
ported its view of the case, as well. The case was tried well by
counsel from both sides before a capable and experienced trial
judge. After a fair trial, a jury rendered a reasonable verdict.
As Judge Mihm said after the trial, the case was decided by
people from the community with no ax to grind after listening
to the evidence, the argument, and the instruction and he
added: “It doesn’t get any better than that, as far as I’m con-
cerned.” The judgment of the district court is AFFIRMED.