CBA Record January-February 2024

YOUNG LAWYERS SECTION

Instead, the Village made these repeated demands to accommodate its ever-chang ing plans for a new municipal campus. The developer continued to send revised plans to accommodate the Village. When no grading permit was forthcoming, the developer filed a mandamus petition seek ing an order that would require the Vil lage to issue a permit to the developer and for breach of contract based on the Village’s new plans for the property. The Village counterclaimed and alleged that the developer breached the agreement by failing to pay property taxes, failing to reconstruct the road on the property, and failing to fund the drawdown account, which had been depleted. Both parties continued working under their agreement throughout the litigation. After a bench trial, the circuit court found that although both parties breached their agreement, the Village did so first. So, according to the circuit court, the Village’s initial breach excused the devel oper’s later beaches, and the developer was entitled to damages.

Both parties appealed the circuit court’s decision. The Second District Appellate Court affirmed the circuit court’s holding that the Village breached first. However, the Appellate Court held that the Village’s breach did not automatically excuse the developer from its obligations to perform under the agreement. Both parties peti tioned for leave to appeal. The Illinois Supreme Court affirmed the circuit court’s judgment in favor of the developer but reversed the circuit court’s judgment on the Village’s counterclaims. In doing so, the PML Development deci sion stands for the proposition that where both parties materially breach their con tract yet both continue performing, each party remains liable for its own material breaches of the contract terms. Partial Breach Doctrine in Practice As the concurrence in PML Development points out, the nonbreaching party has two options if a material breach occurs: repudiate the parties’ agreement or con tinue performing and sue for damages.

The concurrence characterized the partial breach doctrine as an election of remedies. The analysis noted that contract breaches are either minor or material. In a material breach, the injured party is faced with two options: either to (1) repudiate the con tract in full and sue for damages; or (2) continue the contract and sue for dam ages, while risking its own liability for failure to perform. The critical takeaway from PML Development is that one party’s allegation that the other side breached first doesn’t fully protect or discharge that party from breach of contract counterclaims involv ing the same contract. Lawyers advis ing clients on breach of contract matters should carefully discuss with their clients and carefully analyze the timeline of per formance issues and breach issues on all sides of the contract.

J. Kopczyk is an associate attorney with Lat imer LeVay Fyock LLC and focuses on com plex commercial and construction litigation.

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