Jacqueline Goldberg v. 401 N. Wabash Venture, L.L.C.
755 F.3d 456
7th Cir.2014Background
- Trump Tower Chicago is a 92-story building with hotel condo units and shared hotel facilities (common elements) and separately owned residential condos; plaintiff Goldberg bought two hotel condo units in 2006 for about $2.2 million as an investment.
- Purchase agreement included a change clause reserving TrumpOrg's discretion to modify Condominium Documents, with notice/approval provisions as required by law.
- TrumpOrg made multiple changes to the common elements, including a Fourth Amendment that curtailed owners' rights; Goldberg refused to close and TrumpOrg kept her $516,000 earnest money in escrow.
- Plaintiff sued in Illinois state court; removal to federal court occurred; claims included Illinois contract/consumer-fraud acts and the Illinois Securities Law, with the Land Act claim abandoned on appeal.
- Jury trial addressed deception; the court also ruled on contract/condo act claims; the district court granted summary judgment on securities claim and dismissed the unfairness claim; the jury verdict was for defendant on fraud and Land Act claims; the judge ruled for defendant on contract and Condo Act claims; final judgment affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Bait-and-switch deception under Illinois law | Goldberg claims deceptive bait-and-switch; TrumpOrg promised broad hotel-element rights but planned to reduce them | Change clause warned of potential changes; not deceptive given upfront reservation | Jury rejected deception; no reversal on this issue |
| Whether the change clause defeats deception or contract claims | Change clause cannot bar all consumer-fraud claims; misrepresentation evident | Change clause and disclosure plan limit remedies; no deception proven | Deception rejected; contract and condo acts not proven on this record |
| Whether the Illinois Securities Law claim is timely or a securities contract | Purchase was an investment contract; time-bar defense disputed | Contract not an investment contract; no common enterprise; statute barred | Time-bar; no common enterprise; securities claim fails |
| Remedy for 75% approval violation under Condo Act and implication of private rights | Failure to obtain 75% approval breach; private damages implied | No explicit or implied private damages remedy; statutory framework narrow | No private damages remedy implied; public remedy absent; certification declined |
Key Cases Cited
- Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. 525 (1958) (jury findings binding in bench trial when mixed issues arise)
- In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir. 1995) (jury findings govern bench trial if valid)
- Silverman v. Chicago Ramada Inn, Inc., 211 N.E.2d 596 (Ill. App. 1965) (statutory limitations and misrepresentation principles in IL context)
- Doll v. Bernard, 578 N.E.2d 1053 (Ill. App. 1991) (limitations begin at date of sale; installment payments do not restart)
- Frantzve v. Joseph, 502 N.E.2d 396 (Ill. App. 1986) (limitations and investment contract analysis in Illinois context)
- Wals v. Fox Hill Development Corp., 24 F.3d 1016 (7th Cir. 1994) (property ownership structure; securities analysis relevance)
- SEC v. W.J. Howey Co., 328 U.S. 293 (1946) (classic common enterprise/profit expectation test for securities)