Carollo v. Irwin, 2011 IL App (1st) 102765

Plaintiff Donna Carollo settled sexual harassment and partnership-dissolution claims with Lawrence Irwin and DL Realty Partnership in 2007, including a $30,000 conditional payment if River Oaks did not sell by 12/31/2008.
River Oaks property was listed for sale at $4.2 million; settlement required seller to pay the additional amount within seven days after the sale closing or the 12/31/2008 deadline, whichever occurred earlier.
On 12/31/2008, defendants delivered articles of agreement for deed listing Cal City Apartments, LLC (an Illinois LLC yet to be formed) as buyer, signed by Irwin for the partnership and Scott Mason for the unformed LLC; no LLC formation occurred thereafter.
Articles contemplated an initial closing 12/31/2008 and a final closing when the mortgage liability was paid; title would transfer only at final closing, and there were conditions precedent including a June 30, 2009 installment and continued performance.
No payments were ever made, no closing occurred, and DL Realty’s attorney held the title in trust; Cal City Apartments, LLC never formed, never paid, and never ratified the contract.
The circuit court granted summary judgment for plaintiff, concluding no sale occurred and awarding the $30,000 plus costs; defendants appeal.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Was there a sale of the River Oaks property?	There was no sale because the contract was executory and not a transfer of title.	Execution of the articles of agreement for deed constituted a sale, with equitable title transferred at contract formation.	No sale; contract was executory and no title transferred; no closing or payment occurred.
Is the contract enforceable given the buyer was an unformed LLC and Scott Mason’s authority?	The LLC never formed or ratified; Mason lacked authority; thus no enforceable buyer.	Cal City Apartments, LLC was intended to be the buyer and the contract bound it or Mason personally.	Unformed LLC could not be bound; Mason lacked authority; contract unenforceable against the LLC or Mason.
Could Mason be personally liable despite LLC protections?	LLC protections bar personal liability; the contract binds the LLC or none.	Promoter-turned-buyer might bind the individual personally.	Mason cannot be personally liable under the Limited Liability Company Act; LLC protections apply.
If there was no sale, does plaintiff still get the $30,000 under the settlement?	The settlement unconditionally entitles $30,000 if River Oaks did not sell.	No sale means no entitlement only if the contract is unenforceable or void.	Plaintiff entitled to $30,000; there was no sale and the contract was unenforceable for the identified reasons.

930 South Harlem, Ltd. v. Moore, 77 Ill. 2d 212 (1979) (distinguishes sale of land from contract to sell; title transfer required for sale)
In re Estate of Martinek, 140 Ill. App. 3d 621 (1986) (contract to sell vs. sale; executory contract does not transfer title)
Catholic Charities of the Archdiocese of Chicago v. Thorpe, 318 Ill. App. 3d 304 (2000) (conditions precedent and formation/formation of contracts in real estate)
Regency Commercial Associates, LLC v. Lopax, Inc., 373 Ill. App. 3d 270 (2007) (strict compliance with express conditions precedent in contracts)
Fox v. Ryan, 240 Ill. 391 (1909) (broker's commission context; contract binding effects on sale)
McAnelly v. Graves, 126 Ill. App. 3d 532 (1984) (conditions precedent to performance vs. contract formation)
H.F. Philipsborn & Co. v. Suson, 59 Ill. 2d 465 (1974) (pre-formation liability where corporation ratifies contract later)
Tin Cup Pass Ltd. Partnership v. Daniels, 195 Ill. App. 3d 847 (1990) (corporation ratification after formation preserves contract validity)
Estate of Plepel, 115 Ill. App. 3d 803 (1983) (estates liability where no intention to bind corporation shown)
Puleo v. Topel, 368 Ill. App. 3d 63 (2006) (LLC members shielded from personal liability in unauthorized acts)