Smart Oil, LLC v. DW Mazel, LLC

SMART OIL, LLC, Plaintiff, v. DW MAZEL, LLC, Defendant.

Case No. 15 C 8146

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

July 10, 2019

Judge Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Plaintiff Smart Oil, LLC moved for and won summary judgment against Defendant DW Mazel, LLC ("DWM") as to Count I of the Complaint: breach of contract. (Dkt. No. 85.) Having prevailed on this claim, Smart Oil now moves for damages, pre-judgment interest, attorneys' fees, and costs. For the reasons stated herein, Smart Oil's Motion (Dkt. No. 98) is granted in part and denied in part.

I. BACKGROUND

The Court has already granted summary judgment in Smart Oil's favor regarding DWM's breach of contract. See Smart Oil, LLC v. DW Mazel, LLC, No. 15 C 8146, 2019 WL 354977 (N.D. Ill. Jan. 29, 2019). That ruling sets out the facts of this case in detail and the Court need not reiterate them here. But to provide a quick overview: this lawsuit arose out of a contractual dispute between a buyer, DWM, and a seller, Smart Oil, concerning a November 2, 2014, Purchase and Sale Agreement and Joint Escrow Instructions (the "November Agreement" or "Agreement"). The purpose of the November Agreement was to sell thirty parcels of real property, including gas stations and convenience stores. The Agreement required DWM to pay an initial deposit of $300,000.00 to the Initial Escrow Holder, Jeffrey Zwick & Associates ("Zwick"), and required Zwick in turn to transfer the initial deposit to the Title Company Escrow Holder, First American Title Insurance Company ("FATICO"). The November Agreement also required DWM to pay a subsequent deposit of $450,000.00 to FATICO at the close of the Due Diligence Period on November 30, 2014. As it turns out, DWM never paid the initial deposit or the subsequent deposit (collectively the "Earnest Money Deposit"), which led Smart Oil to bring the instant action for breach of contract. Smart Oil seeks to enforce its right to the deposits in the total amount of $750,000.00.

Smart Oil filed this action on September 16, 2015, alleging two counts: (1) breach of contract against DWM (Count I); and (2) declaratory judgment against Zwick (Count II). Smart Oil and Zwick resolved their disputes, settled, and agreed to dismiss Zwick from this action. (See Stipulation of Dismissal, Dkt. No. 64.) Accordingly, the Court dismissed Count II of Smart Oil's Complaint as moot. Smart Oil and DWM proceeded to litigate Count I. In its January 29, 2019, Memorandum Opinion and Order ("Opinion"), this Court granted summary judgment in Smart Oil's favor, finding thatDWM breached the November Agreement by failing to pay the required Earnest Money Deposit. Smart Oil, LLC, 2019 WL 354977, at *10.

Now Smart Oil moves this Court for a final judgment against DWM awarding Smart Oil $750,000.00 in damages, $169,043.11 in pre-judgment interest, $140,340.00 in attorneys' fees, and $3,689.05 in costs.

II. ANALYSIS

DWM raises various arguments against Smart Oil's petition for fees, including: (1) Smart Oil is not entitled to a $750,000.00 judgment; (2) alternatively, DWM is entitled to a setoff from any amount awarded to Smart Oil; (3) Smart Oil is not entitled to an award for pre-judgment interest; and (4) Smart Oil is not entitled to the entirety of the attorneys' fees that it seeks. Each argument will be discussed separately and in detail below.

A. Judgment of $750,000.00 (Earnest Money Deposit)

Smart Oil seeks $750,000.00 in damages, which represents the combined total of the Earnest Money Deposit. DWM contends, however, that Smart Oil is not entitled to that amount because the money was never placed in escrow. DWM raises various arguments and cites to several cases to support its proposition, all of which were included initially in its motion for summary judgment and, most recently, in its motion for reconsideration of this Court's January 29, 2019, Opinion. (See Def.'s Mot. for Summ. J., Dkt. No. 74; Def.'s Mot. for Reconsideration, Dkt. No. 103.) The Courtalready considered DWM's argument in its Opinion and rejected it, see Smart Oil, LLC, 2019 WL 354977, at *8, as well as denied DWM's motion for reconsideration on the matter (see 5/28/19 Order, Dkt. No. 106). In its Opinion, the Court emphasized that "the fact that there are no escrow funds to recover does not preclude Smart Oil from receiving liquidated damages." Smart Oil, LLC, 2019 WL 354977, at *8. The Court explained:

DWM primarily relies on Cutielletta v. Griffin, No. 113429-U (Ill. App. Ct. 2012), which the Court notes was filed under Illinois Supreme Court Rule 23. That rule prohibits citing such orders as precedent. Regardless, the reasoning in that case is also inapplicable here. In Cutielletta, the court refused to award the plaintiffs the earnest money, which was never deposited in escrow, because "the contract did not contain any language which explained that the escrowee was to pay the seller if the final earnest money was not deposited in escrow when the buyers defaulted by terminating the contract." Id. at ¶ 60. Here, however, the liquidated damages provision explicitly states that "Seller shall receive the entire Ernest Money Deposit and all accrued interest thereon as complete liquidated damages." (November Agreement at 14-15.) The terms of the contract itself determine the result. DWM's argument thus fails.

Id. Apparently, this analysis was not enough for DWM, as it later filed a motion for reconsideration, arguing that the Court failed to provide a discussion of two other cases it cited: Brown v. Real Estate Res. Mgmt., LLC, 388 B.R. 338 (Bankr. N.D. Ill. 2008), and Newcastle Properties, Inc. v. Shalowitz, 221 Ill. App. 3d 716 (1st Dist. 2012). A Court need not explain to a party why every case itstring cites misses the mark. Nevertheless, in a hearing before the Court on May 28, 2019, the Court denied DWM's motion for reconsideration, explaining why the cited cases were distinguishable. (See 5/28/19 Court Transcripts.) The Court need not address DWM's argument for a third time. Smart Oil is entitled to $750,000.00 for the Earnest Money Deposit.

B. Judgment Setoff

DWM contends that even if Smart Oil is entitled to the $750,000.00 for the Earnest Money Deposit, DWM is entitled to a setoff. Smart Oil and Zwick entered into a settlement agreement, and on May 21, 2018, filed a joint stipulation dismissing Zwick from this action. The specifics of the settlement agreement are confidential and under seal, but the parties acknowledge that Zwick agreed to make a settlement payment to Smart Oil. This payment, DWM argues, must be deducted from the $750,000.00 it owes for the Earnest Money Deposit. The Court agrees, as does Smart Oil. In its May 28, 2019, Minute Order, the Court directed Smart Oil and DWM to file position papers on the matter. (See 5/28/19 Minute Order.) On June 7, 2019, the parties filed a joint position paper, acknowledging that DWM is entitled to a setoff and providing the amount for the setoff therein. Accordingly, the Court finds that DWM is entitled to that setoff amount, which will be deducted from the overall judgment entered.

C. Pre-judgment Interest

The parties dispute whether Smart Oil is entitled to an award of pre-judgment interest on the $750,000.00 and, if so, how much that interest should be. The Illinois Interest Act (the "Act") provides that "a creditor shall be awarded interest at the rate of 5% per year for all moneys after they become due on any 'instrument of writing.'" PPM Fin., Inc. v. Norandal USA, Inc., 392 F.3d 889, 895 (7th Cir. 2004) (citing 815 ILCS 205/2 (2002); Sna Nut Co. v. Haagen-Dazs Co., 302 F.3 725, 734 (7th Cir. 2002).) Granting pre-judgment interest allows the Court "to make a deprived plaintiff whole." Jahn v. Kinderman, 814 N.E. 2d 116, 122 (Ill. App. Ct. 2004) (citation omitted). To demonstrate debt on an instrument of writing, a creditor must establish three elements: "(1) a written instrument that establishes indebtedness; (2) a specific or inherent due date; and (3) that the indebtedness is subject to easy calculation." PPM Fin., Inc., 392 F.3d at 895 (citation omitted).

DWM first argues that the Act is inapplicable and Smart Oil is not entitled to pre-judgment interest because "no funds were ever deposited into an escrow account" and thus, "no amount ever became due on the parties' contract." (Def.'s Resp. to Pl.'s Mot. for Interest, Fees, and Costs at 7, Dkt. No. 102.) In other words, DWM contends that the November Agreement does not establish indebtedness. (See Purchase and Sale Agreement and Joint EscrowInstructions ("November Agreement"), Ex. 1 to Pl.'s Mot. for Interest, Fees, and Costs, Dkt. No. 98-1.) The Court disagrees. As it made clear in its January 29, 2019, Opinion, "the liquidated damages provision [of the Agreement] provided for the payment of $750,000.00 to Smart Oil in the event of a breach by DWM." Smart Oil, LLC, 2019 WL 354977, at *7. Moreover, "DWM's obligation to pay the Earnest Money Deposit remained intact." Id. at *5. This Court has already found that the November Agreement constitutes a written instrument that establishes DWM's indebtedness—its obligation to pay the Earnest Money Deposit in the amount of $750,000.00. DWM's argument fails.

DWM next argues that the Act is inapplicable because there was no specific or inherent due date to pay the Earnest Money Deposit. The November Agreement unambiguously provided that on November 30, 2014, the Due Diligence Period closed. (November Agreement at 4.) However, DWM asserts that Smart Oil extended that deadline well into May of 2014, so that DWM could continue to conduct due diligence investigations and contract negotiations. In support of this, DWM references emails it attached to its Rule 56.1(a)(3) Statement of Material Facts. (See Emails, Ex. 6 to Def.'s Stmt. of Material Facts, Dkt. No. 75-6.) The Court is familiar with DWM's argument and has addressed it once before. In its January 29, 2019 Opinion, the Court already...