Goldberg v. 401 North Wabash Venture LLC et al

Filing 368

MEMORANDUM Opinion and Order Signed by the Honorable Amy J. St. Eve on 5/31/2013:Mailed notice(kef, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JACQUELINE GOLDBERG,
Plaintiff,
v.
401 NORTH WABASH VENTURE LLC and
TRUMP CHICAGO MANAGING
MEMBER LLC,
Defendants.

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Case No. 09 C 6455

MEMORANDUM OPINION AND ORDER
AMY J. ST. EVE, District Court Judge:
Plaintiff Jacqueline Goldberg (“Ms. Goldberg”) filed a five-count Amended Complaint
against Defendants 401 North Wabash Venture LLC and Trump Chicago Managing Member,
LLC (collectively, “Defendants” or “Trump Defendants”). (R. 48, Amend. Compl.) In her
Amended Complaint, Ms. Goldberg alleged the following: violation of the Illinois Condominium
Act, 765 ILCS 605/1 et seq. (Count I); violation of the Illinois Consumer Fraud and Deceptive
Business Practices Act, 815 ILCS 505/1 et seq. (Count II); violation of the Federal Interstate
Land Sales Full Disclosure Act, 15 U.S.C. §§ 1701 et. seq. (Count III); violation of the Illinois
Securities Law (Count IV); and breach of contract (Count V). (R. 48.) On October 16, 2012, the
Court granted summary judgment in favor of Defendants on Count IV. (R. 170.) The Court
granted Defendants’ motions to strike Ms. Goldberg’s jury demand as to Count I and Count V.
(R. 201; R. 298.) The Court, therefore, presided over a jury trial on Counts II and III from May
13, 2013 through May 22, 2013. On May 23, 2013, the jury returned a verdict in favor of
Defendants on both Count II and Count III. The Court now addresses Counts I and V based
1

upon the evidence presented during the trial. For the following reasons, the Court finds in favor
of Defendants on both Counts I and V.
BACKGROUND
In August of 2006, Ms. Goldberg entered into two agreements with Defendant 401 North
Wabash Venture LLC to purchase two hotel condominium units (“HCUs”) – Units 2238 and
2240 – in the Trump International Hotel & Tower Chicago (“Trump Tower”). At that time,
Defendants had not yet built the Trump Tower HCUs. The first agreement, dated August 2,
2006, related to Unit 2238 and had a total purchase price of $1,239,500.00. The second
agreement, dated August 8, 2006, related to Unit 2240 and had a total purchase price of
$971,687.00. Each purchase agreement contained materially identical provisions, and the Court
will refer to the agreements collectively as the “Purchase Agreements.”
At the time Ms. Goldberg signed her Purchase Agreements, she received certain
documents related to the HCUs, including the Property Report, which included the Declaration,1
and amendments to the Property Report. The Declaration contained a definition of the Common
Elements – the areas and facilities in which the HCU owners would share an interest. When Ms.
Goldberg signed her Purchase Agreements in August 2006, the definition of Common Elements
included ballrooms, meeting rooms, function rooms and laundry facilities. Based on this

1

Under the Illinois Condominium Act, “[a] condominium comes into being by the recording of a declaration[,
which] is prepared and recorded by either the developer or association.” Bd. of Dirs. of 175 E. Delaware Pl.
Homeowners Ass’n v. Hinojosa , 287 Ill. App. 3d 886, 889, 223 Ill. Dec. 222, 679 N.E.2d 407 (Ill. App. Ct. 1997)
(citing 765 ILCS 605/2(a) (defining the declaration as the “instrument by which the property is submitted to the
provisions of [the] Act”)). The “primary function” of the declaration “is to provide a constitution for the
condominium. . . . The declaration contains the property’s legal description, defines the units and common elements,
provides the percentage of ownership interests, establishes the rights and obligations of owners, and contains
restrictions on the use of the property.” Hinojosa, 287 Ill. App. 3d at 889 (emphasis added); see also Wolinsky v.
Kadison, 114 Ill. App. 3d 527, 70 Ill. Dec. 277, 449 N.E.2d 151 (Ill. App. Ct. 1983). For further discussion of the
types of documents at issue in this case, see the Court’s summary judgment ruling. (R. 170.)

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definition of Common Elements, Ms. Goldberg would own a certain percentage – determined by
the relative size of her HCUs – of those facilities.
The definition of Common Elements changed when Defendants issued the Fourth
Amendment to the Property Report in October 2007, before Ms. Goldberg closed on the HCUs
but after she had paid $516,457.40 in earnest money deposits. Specifically, in the Fourth
Amendment Defendants removed the ballrooms, meeting rooms, and function rooms from the
Common Elements. Sometime in 2009, Ms. Goldberg decided not to close on her HCUs,
allegedly based on the removal of these facilities from the Common Elements. Ms. Goldberg
bases her claims on a theory that, in August of 2006 when she signed her Purchase Agreements,
Defendants knew that they ultimately would remove these facilities from the Common Elements,
yet included them in the Common Elements temporarily to induce her to sign her Purchase
Agreements. Notably, the Purchase Agreements included a provision – Section 4(a) – which
gave Defendants the “the right, in [their] sole and absolute discretion, to modify” the Property
Report, Declaration, and other documents relating to the HCUs. (Defs.’ Exs. 539 & 540, Pls.’
Ex. 60(A) & 60(B), Purchase Agreements at § 4(a).)
The jury trial lasted approximately one and a half weeks. During the trial, each party
admitted numerous exhibits, including the Purchase Agreements, the Property Report, and the
First, Second, Third, and Fourth Amendments to the Property Report. Additionally, the
following witnesses testified:


Charles Reiss – former Executive Vice President for Development for the Trump
Organization



Donald Trump, Sr. – Chairman and President of the Trump Organization

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

Robert Shearer – a real estate agent representing the Trump Organization in selling
HCUs in the Trump Tower



Andrew Weiss (via deposition designations) – Executive Vice President of Construction
for the Trump Organization



James Petrus – Chief Operating Officer of the Trump Organization’s hotel collection



Jill Cremer – former Vice President of Development for the Trump Organization



Robert Levin – Ms. Goldberg’s expert



Jacqueline Goldberg – the Plaintiff



Terry Vogue – Ms. Goldberg’s real estate broker



Robert Brenton Howie – Defendants’ expert

The Court carefully evaluated the demeanor and credibility of each witness who testified during
the trial, including body language, tone of voice, facial expressions, mannerisms, and other
indicative factors.
ANALYSIS
I.

Illinois Condominium Act (Count I)
Ms. Goldberg alleges that the Defendants violated Section 22 of the Illinois

Condominium Act by “fail[ing] to make full disclosure of the information contained in the
October 2007 Property Reports and the Declaration of Condominium before Goldberg executed
the Purchase Agreements.” (Amend. Compl. ¶ 79.)
Under Section 22 of the Illinois Condominium Act (“Condo Act”):
In relation to the initial sale or offering for sale of any condominium unit, the seller must
make full disclosure of, and provide copies to the prospective buyer of, the following
information relative to the condominium project:
(a) the Declaration;
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(b) the Bylaws of the association;
(c) a projected operating budget for the condominium unit to be sold to the prospective
buyer, including full details concerning the estimated monthly payments for the
condominium unit, estimated monthly charges for maintenance or management of the
condominium property, and monthly charges for the use of recreational facilities; and
(d) a floor plan of the apartment to be purchased by the prospective buyer and the street
address of the unit, if any, and if the unit has no unique street address, the street address
of the project.
765 ILCS 605/22. This disclosure requirement seeks “to prevent prospective purchasers from
buying a unit without being fully informed and satisfied with the financial stability of the
condominium as well as the management and rules and regulations which affect the unit.’”
Mikulecky v. Bart, 355 Ill. App. 3d 1006, 1012, 292 Ill. Dec. 10, 825 N.E.2d 266 (Ill. App. Ct.
2004) (quoting Nikolopulos v. Balourdos, 245 Ill. App. 3d 71, 77, 185 Ill. Dec. 278, 614 N.E.2d
412 (Ill. App. Ct. 1993)). “Failure on the part of the seller to make full disclosure as required by
[the Condo Act] shall entitle the buyer to rescind the contract for sale at any time before the
closing of the contract and to receive a refund of all deposit moneys paid with interest thereon at
the rate then in effect for interest on judgments.” 765 ILCS 605/22.
The Condo Act only requires a seller to provide “information . . . which is available at the
time.” 765 ILCS 605/22. “[I]f this information is not available at the time the contract for sale
is executed, then the contract is voidable at the option of the buyer up until five days after the last
item of required information is furnished to the prospective buyer, or until the closing of the sale,
whichever is earlier.” Borys v. Josada Builders, Inc., 110 Ill. App. 3d 29, 30-31, 65 Ill. Dec.
749, 441 N.E.2d 1263 (Ill. App. Ct. 1982). Here, Ms. Goldberg received the Fourth Amendment
to the Property Report in October of 2007. Under the Condo Act, if the information was “not
available” to Defendants for disclosure in August of 2006 when she signed her Purchase
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Agreements, she could have voided the contract within five days of receiving the Fourth
Amendment. 765 ILCS 605/22. She, however, did not attempt to exercise this right. Rather,
she and Defendants reached an agreement on approximately June 3, 2009 not to proceed with the
closings on her HCUs. (Amend. Compl. ¶ 74; Trial Tr. at 1549 lns. 15-25.) Ms. Goldberg,
therefore, only prevails on her Condo Act claim if she has proven, by a preponderance of the
evidence, that certain required information was available to Defendants before she signed her
Purchase Agreements in August 2006 and yet Defendants did not disclose it at that time.
Significantly, Ms. Goldberg does not allege, and has not proven, that Defendants failed to
provide her with the specific documents which the Condo Act requires a seller to disclose – the
Declaration, the Bylaws, a projected operating budget, or a floor plan of the units she planned to
purchased. 765 ILCS 605/22. Indeed, in entering into the Purchase Agreements, Plaintiff
“acknowledge[d] that Seller delivered to [her] prior to [her] execution of this Purchase
Agreement a copy of . . . all other items required by Section 22 of the [Condo] Act. . . . [She]
acknowledges that [she] has had the opportunity to review [them].” (Purchase Agreements at §
4(a).) Instead, she argues that Defendants violated the Act by failing to make a “full disclosure
of the information contained in the October 2007 Property Reports,” known as the Fourth
Amendment. (Amend. Compl. ¶ 79.) The Condo Act, however, does not reach this type of
conduct.
The Condo Act does not require the documents and information provided to a purchaser
to be final. Rather, the Condo Act anticipates that a seller may change and amend the
Declaration and other documents. The Condo Act’s definition of “Declaration,” for example,
specifically states that the term includes amendments to the Declaration that occur from time to
time. 765 ILCS 605/2(a) (defining Declaration as “the instrument by which the property is
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submitted to the provisions of this Act, as hereinafter provided, and such declaration as from
time to time amended”). The Condo Act also sets forth how amendments to declarations and
bylaws become effective. 765 ILCS 605/17. Section 22 also only requires a “projected”
operating budget containing “estimated” monthly payments and charges. 765 ILCS 605/22.
Moreover, Section 22 itself contemplates that changes will be made to the documents a seller
must disclose. Indeed, rather than forbidding changes, Section 22 sets forth requirements for
how a seller may make changes which “would materially affect the rights of the buyer or the
value of the unit.” 765 ILCS 605/22. Specifically, Section 22 requires that the seller “obtain[]
the approval of at least 75% of the buyers then owning interest in the condominium” before
making a material change. Id. Ms. Goldberg’s allegations here are not that Defendants failed to
obtain sufficient approval to amend the Property Report and Declaration.1 Rather, she claims
that, at the time she signed her Purchase Agreements in August 2006, Defendants knew that they
planned to remove certain facilities from the Common Elements, and, therefore, did not make the
full disclosures required by Section 22 by stating otherwise.
The language of Section 22, however, does not reach the fraudulent-type conduct which
Ms. Goldberg alleges. First, Section 22 requires “full disclosure” and does not include any
conventional fraud language such as conceal, omit, or misrepresent. Second, Section 22
specifically identifies the “information” which a seller must disclose by listing four documents:
(a) the Declaration;
(b) the Bylaws of the association;
1

In Ms. Goldberg’s initial complaint, she attempted to assert a claim under the Condo Act based on Defendants’
alleged failure to obtain approval from 75% of the HCU owners before amending the Property Report. The Court,
however, dismissed this claim in part because “there is no statutory remedy for failing to obtain approval for the
amendment from 75% of the HCU owners.” Goldberg v. 401 North Wabash Venture LLC, No. 09 C 6455, 2010
WL 1655089, at *6 (N.D. Ill. Apr. 22, 2010). Ms. Goldberg dropped these allegations in her Amended Complaint.

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(c) a projected operating budget for the condominium unit to be sold to the prospective
buyer, including full details concerning the estimated monthly payments for the
condominium unit, estimated monthly charges for maintenance or management of the
condominium property, and monthly charges for the use of recreational facilities; and
(d) a floor plan of the apartment to be purchased by the prospective buyer and the street
address of the unit, if any, and if the unit has no unique street address, the street address
of the project.
765 ILCS 605/22. Section 22 does not state what a seller must include in these documents.
Section 4 of the Condo Act, however, explicitly states what the Declaration must contain. 765
ILCS 605/4. There is no indication from the plain language of the Condo Act – in Section 4,
Section 22, or elsewhere – that the Declaration must alert the purchaser of whether the
representations contained within it are final or if the seller contemplates any particular changes.
Rather, as discussed above, the Condo Act anticipates that the Declaration may be amended and
the budgets are merely estimates. Section 22, therefore, seems to require that sellers provide
certain documents to a purchaser in time for her to make an informed decision and to provide the
purchaser with a remedy if the seller fails to produce these documents. See, e.g., Mikulecky v.
Bart, 355 Ill. App. 3d 1006, 1011, 292 Ill. Dec. 10, 825 N.E.2d 266 (Ill. App. Ct. 2004) (stating
that “Section 22 was designed to alleviate [certain] practices by requiring . . . the seller provide
certain descriptive documents relative to the condominium”). The Court will not broadly
interpret Section 22 as targeting the type of disclosure failures and misrepresentations which Ms.
Goldberg alleges, relating to representations in the Declaration which Defendants allegedly
planned to change, when there is no support in the language of the statute for such an
interpretation. Indeed, other laws, such as the Illinois Consumer Fraud Act (815 ILCS 505/2),
the Interstate Land Sales Full Disclosure Act (15 U.S.C. 1701 et seq.), and the tort of negligent

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misrepresentation specifically target misrepresentations made to purchasers or other consumers.
Ms. Goldberg’s Condo Act claim, therefore, fails as a matter of law.
Even assuming that Section 22’s “full disclosure” requirement prohibits a seller from
disclosing information that it plans to subsequently change, as discussed below in Section
2(C)(3), Ms. Goldberg did not sufficiently adduce evidence at trial to prove, by a preponderance
of the evidence, that Defendants knew in August 2006 that they would ultimately make the
changes to the Common Elements reflected in the Fourth Amendment. The Court, therefore,
finds in favor of Defendants on Count I.
II.

Breach of Contract (Count V)
In Count V, Ms. Goldberg alleges that Defendant 401 North Wabash Venture LLC2

breached the Purchase Agreements by failing to deliver her HCUs in the manner described in the
version of the Property Report existing at the time she signed the Purchase Agreements.
Specifically, she alleges that the Fourth Amendment to the Property Report, which Defendants
issued over a year after she signed her Purchase Agreements, stripped her of a percentage
ownership in the building’s meeting/function rooms, ballrooms, storage areas and laundry
facilities, and a full health club membership. The Court will address whether Defendants (1)
breached the terms of the contract and/or (2) breached an implied covenant of good faith and fair
dealing.

2

Ms. Goldberg asserts her breach of contract claim only against 401 North Wabash because Trump Chicago
Managing Member LLC was not a party to the Purchase Agreements. The parties agreed, however, that for
purposes of this case, there is no distinction between the two Defendants. For ease and consistency, the Court will
therefore continue to refer to the Defendants collectively when analyzing the breach of contract claim.

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A.

Legal Standard

Under Illinois law, a breach of contract claim requires the plaintiff to prove the following
elements by a preponderance of the evidence: “‘(1) the existence of a valid and enforceable
contract; (2) substantial performance by the plaintiff; (3) a breach by the defendant; and (4)
resultant damages.’” Reger Dev., LLC v. Nat’l City Bank, 592 F.3d 759, 764 (7th Cir. 2010)
(quoting W.W. Vincent & Co. v. First Colony Life Ins. Co., 351 Ill. App. 3d 752, 286 Ill. Dec.
734, 814 N.E.2d 960, 967 (Ill. App. Ct. 2004)); see also Wigod v. Wells Fargo Bank, N.A., 673
F.3d 547, 560 (7th Cir. 2012) (citing Assoc. Benefit Serv. v. Caremark RX, Inc., 493 F.3d 841,
849 (7th Cir. 2007); MC Baldwin Fin. Co. v. DiMaggio, Rosario & Veraja, LLC, 364 Ill. App. 3d
6, 30, 300 Ill. Dec. 601, 845 N.E.2d 22, 30 (Ill. App. Ct. 2006)). Courts “do not look at any one
contract provision in isolation; instead [they] read the document as a whole.” Reger Dev., 592
F.3d at 764 (citing Martindell v. Lake Shore Nat’l Bank, 15 Ill.2d 272, 154 N.E.2d 683, 689 (Ill.
1958)).
B.

Alleged Breach of the Terms of the Contract

As a threshold matter, the contracts at issue here are two Purchase Agreements which Ms.
Goldberg signed for two different HCUs. The two Purchase Agreements are substantively
identical, though relate to different units. The Court, therefore, need not address each
independently.
1.

The Terms of the Purchase Agreements

In Section 2(a) of the Purchase Agreements, Ms. Goldberg agreed to purchase from
Defendants and Defendants agreed to convey to her, the following:
(a)

Unit No. [2238/2240] (“Purchased Unit”) in the [Condominium];

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(b)

the undivided percentage interest attributable to such unit as a tenant-incommon in the Common Elements (as defined in the [Illinois Condo Act])
of the Condominium;

(c)

the Personal Property[2]; and

(d)

the FF&E[3].

(Purchase Agreements at § 2(a).) Ms. Goldberg’s breach of contract allegations relate to the
conveyance of “the undivided interest . . . in the Common Elements.”
The Common Elements are areas or facilities which the HCU owners own jointly – each
owning a percentage corresponding with the relative size of their HCU. The Purchase
Agreements obligated Defendants to convey “an undivided percentage interest” in these jointlyowned areas or facilities. The Purchase Agreements, however, did not include a definition of
what areas or facilities comprised the Common Elements. Rather, the Purchase Agreements
stated that the Condo Act defines the term “Common Elements.” (Purchase Agreements at §
2(a).)
The Condo Act defines “Common Elements” as “all portions of the property except the
units, including limited common elements unless otherwise specified.” 765 ILCS 605/2(e). The
Condo Act defines “property” as “all the land, property and space comprising the parcel, all
improvements and structures erected, constructed or contained therein or thereon, including the
building and all easements, rights and appurtenances belonging thereto, and all fixtures and
equipment intended for the mutual use, benefit or enjoyment of the unit owners, submitted to the

2

The Purchase Agreements defined the “Personal Property” as “appliances,” “finishes” and the “FF&E” described
in attached schedules. (Purchase Agreements at § 2(a).)

3

The Purchase Agreements defined the “FF&E” as “all furniture, fixtures, window treatments and all other
furnishings, decor and accents,” including “towels, lines, dishes, glassware, utensils, cookware” and other items, for
the Purchased Unit. (Id. at § 2(c).)

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provisions of this Act.” 765 ILCS 605/2(c). Property is “submitted to the provisions of this Act”
by means of the Declaration. 765 ILCS 605/2(a).
The Property Report which Ms. Goldberg received before she signed her Purchase
Agreements included the Declaration as an exhibit, pursuant to Section 22 of the Condo Act.
The Declaration included the Bylaws as well as provisions outlining various features of the
condominium, including the Common Elements. The definition of “Common Elements”
contained in the Declaration was “All portions of the Property except the Units, more
specifically described in Section 3.1 hereof.” (Pl.’s Ex. 1B, Property Report, Ex. A, Declaration,
at 8.) The Declaration defined “Property,” in relevant part, as “All the land, property and space
comprising the Parcel . . . The Property does not include any portions of the Residential
Condominium Property, the Office Property the Retail Property, the Public Garage Property or
any other portion of the Project which is not submitted to the Act pursuant to this Declaration or
any amendment hereto.” (Id. at 4.) As a result, the Common Elements, for Ms. Goldberg’s
purposes, related only to “land, property and space” contained in the Hotel Condominium parcel
of the Trump Tower, not anything which Defendants assigned to the “Residential Condominium
Property, the Office Property the Retail Property, the Public Garage Property or any other
portion of” the building.3 Per the definition of “Declaration”, Section 3.1 of the Declaration
described the contents of the Common Elements. As explained by former Trump executive
Charles Reiss, who helped prepare the Property Report and some amendments to the Property
Report, a purchaser would need to look to the Declaration to determine whether any particular

3

Defendants divided the Trump Tower into multiple “parcels,” which each contained different portions of the
Tower. Unlike a traditional residential condominium where spaces constitute either the units or the common
elements, Defendants had to specifically decide whether to allocate any particular area to the Hotel Condominium
Parcel, the Hotel, the Residential Condominium or another parcel.

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facility was in the Common Elements as opposed to another portion of the Property, like the
Residential Condominium or Hotel. (Trial Tr. at 314 lns. 3-9.)
2.

The Changes to the Common Elements Definition

In the original Property Report issued in September 2003, Section 3.1 of the Declaration
provided in part as follows:
The Common Elements shall consist of all portions of the property, except the Units, . . .
unless otherwise expressly specified herein. The Common Elements include, without
limitation and if applicable, any of the following items located at the Property: the walls,
roofs, hallways . . . housekeeping closets on each floor of the Condominium containing
Units, laundry facilities, lobby facilities, the Health Club, the Meeting Rooms, Storage
Areas, mail boxes, if any, cable television system (whether leased or owned), if any, fire
escapes . . . and all other portions of the Property except the individual Units. . . .
(Property Report, Ex. A, Declaration at 8.) The Property Report further stated that each owner
“shall be a member of the Health Club for so long as such Unit Owner owns a Unit, and, as such,
both the Unit Owner and their respective Occupants . . . shall have the right to use the basic
Health Club amenities . . . without any supplemental charge[.]” (Id. at 22.)
On or about February 25, 2004, Defendants prepared and publicly issued the
First Amendment to the Property Report. The amendment modified the description of the
“common elements” by (1) expanding “Meeting Rooms” to “Meeting/Function Rooms”; (2)
adding “Ballrooms”; (3) adding “the executive lounge”; and (4) removing “the Health Club.”
(Pl.’s Ex. 2, First Amend. at 12-13.) The First Amendment did not otherwise modify the
statements in the Property Report regarding Health Club membership.
On or about August 18, 2004, Defendants prepared and issued the Second
Amendment to the Property Report. (Pl.’s Ex. 4 Sec. Amend.) On or about January 10, 2005,
Defendants prepared and issued the Third Amendment. (Pl.’s Ex. 7, Third Amend.) This was
the last property report which Ms. Goldberg received before she signed her Purchase Agreements
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in August 2006. There were no changes made to the definition of Common Elements in Section
3.1 of the Declaration in the Second or Third Amendments relevant to Ms. Goldberg’s claims.
There were also no changes made regarding the Health Club membership.
Defendants prepared and issued the Fourth Amendment to the Property
Report on or about October 1, 2007. (Pl.’s Ex. 25B, Fourth Amend.) The Fourth Amendment
changed (1) membership policies for the Health Club; (2) the description of the common
elements; and (3) the projected operating budget.
First, the Fourth Amendment modified the description of common elements by (1)
removing “concierge area”; (2) removing “laundry facilities”; (3) removing “Meeting/Function
Rooms and Ballrooms”; (4) removing “Storage Areas”; (5) removing “the executive lounge”; (6)
removing “mail boxes, if any,” and (7) adding “telephone systems.” (Fourth Amend., Ex. A,
Decl. at 9.) Additionally, the Fourth Amendment stated that the “Meeting/Function Rooms and
Ballrooms are located within the Commercial Property,” rather than the Common Elements.
(Id.)
Second, the Fourth Amendment modified membership terms with respect to the Health
Club. Under the Fourth Amendment:
Each Unit Owner . . . , without having to pay a basic membership fee, shall be a member
of the Health Club for so long as such Unit Owner owns and occupies a Unit . . .
(Fourth Amend., Ex. A, Decl. at 25 (emphasis added).) The addition of the words “and
occupies” meant that the HCU owners could no longer use the Health Club when they were not
occupying their HCUs.

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3.

The Alleged Breach

According to Ms. Goldberg, Defendants breached the Purchase Agreements by changing
Ms. Goldberg’s ownership interest and Health Club Membership benefits via the Fourth
Amendment after she signed her Purchase Agreement. Specifically, Ms. Goldberg argues that
the changes indicated by the Fourth Amendment meant that Defendants would not convey to her
the HCUs in the manner described by the Property Report and amendments that she received
prior to signing her Purchase Agreements. This theory, however, ignores the fact that the
Purchase Agreements do not specifically obligate Defendants to convey ownership interest in
any particular areas or facilities of the building. As explained above, “Common Elements” was
not a fixed term in the Purchase Agreements. Instead, the Purchase Agreements merely
obligated Defendants to convey a percentage ownership of the “Common Elements,” as defined
in the Declaration. There is no evidence that Defendants were not fully prepared and willing to
convey to Ms. Goldberg exactly what was described as constituting Common Elements in the
Declaration contained in the Fourth Amendment. Ms. Goldberg, however, wanted Defendants to
instead convey to her a percent ownership interest in the Common Elements as defined in the
First Amendment to the Property Report.
This position is legally untenable, however, because nothing in the Purchase Agreements
required Defendants to convey the property in the manner Ms. Goldberg wishes. To the
contrary, the Purchase Agreements gave Defendants the authority and discretion to make
changes to the Property Report and Declaration. Specifically, Section 4(a) of the Purchase
Agreements provided, in relevant part:
The Condominium Declaration, By-Laws, Budget, Floor Plans and such other
documents required by Chapter 13-72 of the Municipal Code of Chicago and
Section 22 of the [Illinois Condo Act], as amended from time to time, are
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collectively called the “Condominium Documents.” Purchaser acknowledges that
Purchaser has had the opportunity to review the Condominium Documents. Seller
reserves the right, in its sole and absolute discretion, to modify the Condominium
Documents, together with the Articles of Incorporation of the Association and the
Statement of Record required by the Interstate Land Sales Full Disclosure Act
(the “HUD Report”), provided that Seller shall notify Purchaser or obtain the
Purchaser’s approval of any changes in the Condominium Documents, the HUD
Report and any such other documents, as the case may be, when and if such
notice or approval is required by law. Purchaser agrees, from and after closing, to
comply with the provisions of and perform all obligations imposed on Purchaser
as a unit owner by the Act, the Condominium Declaration and the By Laws.
(Purchase Agreements at § 4(a) (emphasis added).) The Purchase Agreements, therefore, gave
Defendants “sole and absolute discretion” to modify the Common Elements definition and
Health Club membership terms contained in the Declaration. (Id.) Additionally, Exhibit K to
the First Amendment – Conceptual Description of Material Terms of Declaration of Covenants,
Conditions, Restrictions and Easements for the 401 North Wabash Avenue Building – explicitly
stated that the “Declaration is, and at all times shall remain, subject to change by the developer,
and the material terms of the Declaration identified in this summary are likewise subject to
change by the developer, from time to time.” (Defs.’ Ex. 601 at SJ000083.)
According to Section 4(a), Defendants did not need to notify Ms. Goldberg or obtain her
approval before making any change to the Declaration unless “such notice or approval is
required by law.” (Purchase Agreements at § 4(a).) No law required Defendants to notify Ms.
Goldberg or seek her approval for the changes at issue here. At most, the Condo Act required
Defendants to seek approval of 75% of the HCUs owners before making any changes to the
Declaration which “would materially affect the rights of the buyer or the value of the unit4.” 765
ILCS 605/22. The Condo Act “does not, however, require a developer to obtain any particular
4

The Seventh Circuit recently noted that it is unclear whether a private right of action exists under the
Condominium Act “when a buyer alleges that the developer made a material change without 75% approval.” Burke
v. 401 N. Wabash Venture, LLC, 714 F.3d 501 (7th Cir. 2013).

16

purchaser’s agreement before changing the [Declaration].” Burke v. 401 N. Wabash Venture,
LLC, No. 08 C 5330, 2011 WL 2565896, at *4 (N.D. Ill. June 28, 2011) (“Because plaintiff has
failed to point to a law that required defendant to obtain plaintiff's permission before making
changes to the Property Report, plaintiff’s breach of contract claims fail to state a claim”).
Notably, Ms. Goldberg did not base her breach of contract claim on Defendants’ failure
to obtain approval from 75% of unit owners. Ms. Goldberg initially asserted such a theory in her
initial Complaint, yet removed these allegations from her Amended Complaint. (R. 1-1, Compl.
¶¶ 110-111.) She also did not present evidence at trial establishing whether a vote did or did not
occur. Rather, Ms. Goldberg attempted to prove that Defendants breached the Purchase
Agreements by making changes, which she deemed material, from the Third Amendment to the
Fourth Amendment. As discussed above, however, the Purchase Agreements did not promise to
convey to Ms. Goldberg any specific property as Common Elements because Common Elements
was a non-fixed term which Defendants could change based on the authority expressly delegated
to them by Section 4(a) of the Purchase Agreements. Section 4(a) also gave Defendants the
authority to change the Health Club membership rules contained in the Declaration.
The Court will not “alter, change or modify existing terms of a contract, or add new
terms or conditions to which the parties do not appear to have assented.” Thompson v.
Gordon 241 Ill. 2d 428, 449, 349 Ill. Dec. 936, 948 N.E.2d 39 (Ill. 2011) (citing Gallagher v.
Lenart, 367 Ill. App. 3d 293, 301, 305 Ill. Dec. 208, 854 N.E.2d 800 (Ill. 2006)). Because
Defendants had no obligation to convey the property as described in the Third Amendment, or
any prior property report, rather than the Fourth Amendment, and in fact had the authority to
make changes to the Property Report without notice or approval, Ms. Goldberg has not proven
that Defendants breached the express terms of the Purchase Agreements.
17

C.

Alleged Breach of the Implied Covenant of Good Faith and Fair Dealing

“Every contract contains an implied covenant of good faith and fair dealing.” Northern
Trust Co. v. VIII South Michigan Assocs., 276 Ill. App. 3d 355, 367, 212 Ill. Dec. 750, 657
N.E.2d 1095 (Ill. App. Ct. 1995). “In Illinois, courts have imputed an implied promise of good
faith and fair dealing in real estate purchase agreements.” Burke v. 401 N. Wabash Venture,
LLC, 714 F.3d 501, 2013 WL 1442280 at *5 (7th Cir. 2013) (citing Schwinder v. Austin Bank of
Chi., 348 Ill. App. 3d 461, 475, 284 Ill. Dec. 58, 809 N.E.2d 180 (Ill. App. Ct. 2004)). The
covenant of good faith and fair dealing “exists to ensure that parties vested with contractual
discretion exercise that discretion reasonably, not arbitrarily, capriciously, or in a manner
inconsistent with the reasonable expectations of the parties.” Vara v. Polatsek, No. 1-11-2504,
2012 WL 6962887, at *8 (Ill. App. Ct. Oct. 5, 2012) (internal quotation omitted). Here, as
discussed above, the Purchase Agreements gave Defendants “sole and absolute discretion” to
make changes to the Property Report and Declaration. (Purchase Agreements at § 4(a).) Ms.
Goldberg, therefore, prevails on her breach of contract claim if she has proven that Defendants
made the changes at issue arbitrarily, capriciously, or in a manner inconsistent with the
reasonable expectations of the parties. She has failed to prove her claim.
The fact that Defendants made even allegedly material or significant changes to the
Common Elements does not in and of itself violate the implied covenant of good faith and fair
dealing. Indeed, the Seventh Circuit has explained that:
Good faith is a compact reference to an implied undertaking not to take
opportunistic advantage in a way that could not have been contemplated at the
time of drafting, and which therefore was not resolved explicitly by the parties.
When the contract is silent, principles of good faith . . . fill the gap. They do not
block use of terms that actually appear in the contract.

18

F.D.I.C. v. Rayman, 117 F.3d 994, 1000 (7th Cir. 1997) (quoting Kham & Nate’s Shoes No. 2,
Inc. v. First Bank of Whiting, 908 F.2d 1351, 1357 (7th Cir. 1990)); see also Cromeens,
Holloman, Sibert, Inc v. AB Volvo, 349 F.3d 376, 395-96 (7th Cir. 2003) (“Illinois law holds that
parties to a contract are entitled to enforce the terms to the letter and an implied covenant of good
faith cannot overrule or modify the express terms of a contract.”). As discussed above, the terms
of the Purchase Agreements allowed Defendants to make changes of any kind. The Purchase
Agreements did not include any limitations on the type of changes, gravity of the changes, or
timing of the changes permitted. See, e.g., Cromeens, 349 F.3d at 395-96 (finding no breach of
the implied covenant when defendant terminated the contract without cause because the terms of
the contract gave the party the right to terminate without cause upon sixty days’ notice);
Heartland Bank and Trust Co. v. Goers, No. 3-11-0030, 2012 WL 7005595, at *10 (Ill. App. Ct.
Mar. 26, 2012) (finding that plaintiff’s argument that the defendant bank broke its duty of good
faith and fair dealing by terminating the line of credit without giving him prior notice failed
because the “plain terms of the Note” stated that he had waived his right to be notified). The
covenant of good faith and fair dealing does not void Section 4(a)’s grant of discretion.
As explained in the Court’s summary judgment opinion, “[a]lthough Plaintiff agreed to
permit Defendant to make changes in its ‘sole and absolute discretion,’ she never agreed . . . that
Defendant would conceal, fail to disclose and/or misrepresent information material to the
Purchase Agreements.” Goldberg v. 401 North Wabash Venture LLC, — F. Supp.2d —, No. 09
C 6455, 2012 WL 4932653, at *27 (N.D. Ill. Oct. 16, 2012). Plaintiff, however, did not adduce
sufficient evidence at trial to establish that Defendants abused their discretion by making
changes beyond the reasonable expectations of the parties by intentionally concealing material
information to induce Ms. Goldberg to sign the Purchase Agreements.
19

1.

Ms. Goldberg Was a Sophisticated Purchaser Aware of the Provision
Giving Defendants the “Sole and Exclusive” Authority to Make
Changes

The evidence at trial showed that Ms. Goldberg was a sophisticated purchaser who was
aware of Defendants’ authority to make changes, including to the Common Elements. Ms.
Goldberg was sharp and articulate throughout her testimony. Ms. Goldberg, although in her
eighties at the time she signed her Purchase Agreements, was an active real estate investor. In
addition to the HCUs in this case, she has purchased seven condominiums since 1995. (Trial Tr.
at 1326 lns. 7-13.) In total, she has paid more than $11 million – in cash – for condominium
properties. (Trial Tr. at 1450 ln. 19 – 1451 ln. 1.) She also has significant financial expertise, as
she has a master’s degree in accounting, is a certified public accountant, started her own
financial planning business, and manages multiple charitable trusts. (Id. at 1323-25.) According
to Ms. Goldberg, she has performed tax accounting and financial planning services for almost
thirty years and has invested in real estate for approximately fifteen years. (Id. at 1448 lns. 1117; 1449 at lns. 4-16.) In fact, Ms. Goldberg’s real estate broker, Terry Vogue, testified that she
left all of the number-crunching and analysis to Ms. Goldberg because of her specialized skill
and interest. (Id. at 1692 lns. 15-25.) In addition to her significant personal experience, when
purchasing her HCUs, Ms. Goldberg consulted with her real estate agent, Ms. Vogue, who had
worked with Ms. Goldberg for over twenty years, and her lawyer, Judy DeAngelis, who had
worked with Ms. Goldberg for over eleven years prior to assisting her with the Trump HCU deal.
(Id. at 1683 lns. 10-11; 1486 ln. 10 - 1487 ln. 8.)
When Ms. Goldberg first received the relevant condominium documents in August 2006,
she personally reviewed the original Property Report, the First Amendment, the Second
Amendment and the Third Amendment. (Trial Tr. at 1340 lns. 10-21; 1342 ln. 19 – 1343 ln. 11.)
20

She testified that she looked at the differences in each version of the Property Report, noting that
the Third Amendment would have been the most updated report. (Id.) Notably, her testimony
indicated that she paid significant attention to these documents. Specifically, even seven years
later, she could recall that the estimated budgets had decreased in the Second Amendment and
then had risen again in the Third Amendment. (Id. at 1472 lns. 2-12.) She also noted that the
version of the Property Report which her counsel showed her on the stand was missing certain
aerial photographs of the building which she recalled being part of the materials. (Id. at 1345
lns. 2-22.)
Based on her review of the Property Report and First, Second, and Third Amendments,
Ms. Goldberg would have seen that Defendants had already made changes to the Common
Elements – adding some and removing others. In the First Amendment, for example, Defendants
added ballrooms, function rooms, and meeting rooms to the Common Elements. (First Amend.
at 9; see also Trial Tr. at 1483 lns. 3-9; 1485 lns. 2-25.) The First Amendment also revealed that
Defendants removed the Health Club from the Common Elements. (Id.) Notably, Defendants
indicated these changes in the First Amendment by denoting all additions in bold and underlined
text and striking a line through all text which they had removed. As Mr. Petrus explained, there
was no ambiguity in the amendments to the Property Reports, but rather “any sensible buyer –
any unit owner that was investing in this type of money – that picked up the document and read
the detail of the information that was shared in a forthright manner” would have understood the
information without “a lot of time and a lot of effort.” (Trial Tr. at 909 lns. 6-15.)
Not only would the Property Report and amendments have notified Ms. Goldberg that
Defendants had previously made changes to the Common Elements, she was aware that
Defendants had the authority to make any changes they desired. When Ms. Goldberg signed her
21

Purchase Agreements, she had a ten-day period during which she and her attorney could review
the Agreements and negotiate the terms of the Agreements with Defendants. (Pl.’s Ex. 60A,
Purchase Agreement, Attorney Approval Rider at ECF 27; Pl.’s Ex. 60B, Attorney Approval
Rider at ECF 24.) Ms. Goldberg had the absolute right to walk away from the deal at any point
before the close of that ten-day period, and receive her earnest money deposit back, if she and
Defendants could not mutually accept any term or modification in the Agreements. During this
ten-day review period, Ms. Goldberg, through her lawyer, proposed twenty changes to the
Purchase Agreements. (Defs.’ Ex. 522.) Ms. Goldberg specifically sought to change Section
4(a), which gave Defendants the “sole and exclusive” authority to make changes to the Property
Report and Declaration – which would include changes to the definition of Common Elements –
as well as other provisions. (Id. ¶ 9.) Specifically, Ms. Goldberg attempted to amend Section
4(a) to require Defendants to seek her approval to changes, thereby removing their “sole and
absolute” authority to make changes. (Id.)
Defendants, as was their right, opted not to accept some of Ms. Goldberg’s proposed
amendments, including her proposed amendments to Section 4(a). Ms. Goldberg discussed her
disappointment and concern about Defendants’ refusal to accept her amendments. Ms. Vogue
testified that she told Ms. Goldberg that she did not have to close on the deal and could walk
away if she was not uncomfortable. (Trial Tr. at 1717 ln. 18 – 1718 ln. 9.) Ms. Goldberg did
not, however, opt to exercise her right to terminate the deal and receive her earnest money
deposits back. Instead, she moved forward with the deal, accepting the risks associated with the
unfettered discretion which Section 4(a) provided Defendants. According to Ms. Vogue,
however, Ms. Goldberg opted not to proceed with the purchase of a third HCU, after losing some

22

confidence in the Trump Defendants when she unsuccessfully tried to negotiate different terms
for the Purchase Agreements. (Id. at 1722-23.)
Notably, Ms. Goldberg did not even seek to void the Purchase Agreements when she
received or reviewed the Fourth Amendment, which contained the changes at issue. It was not
until a year after discovering Defendants’ alleged fraud that Ms. Goldberg informed Defendants
that she sought to back out of the deal. Indeed, although the evidence did not show precisely
when Ms. Goldberg reviewed the Fourth Amendment, which Defendants issued in October 2007,
Ms. Goldberg was aware of the changes contained in the Fourth Amendment at least as early as
February 14, 2008 because she had a discussion with Ms. Vogue about these changes, via email,
on that date. (Defs.’ Exs. 591 & 592 ; see also Trial Tr. 1417 lns. 9-25.) According to Ms.
Goldberg, she knew in February of 2008 that she did not want to be in business with Defendants
any longer. (Trial Tr. at 1549 lns. 4-12.) She did not seek to rescind the Purchase Agreements,
however, until 2009. (Amend. Compl. ¶ 73; Trial Tr. at 1549 lns. 15-25.)
Ms. Goldberg’s lack of urgency to revoke the Purchase Agreements after Defendants
made the changes to the Common Elements undercuts her argument that the changes were such
an outrageous surprise. Indeed, her decision ultimately not to follow through with the closing
scheduled for June of 2009 may have been based on other factors, such as the volatility of the
real estate market because of the recession. The implied covenant of good faith and fair dealing
does not serve as an escape-hatch for parties who sign an agreement, which contains discretion
and creates risk, when the deal does not turn out as expected. Even if Ms. Goldberg failed to
sufficiently consider the full repercussions of signing a Purchase Agreement with a discretionary
provision like Section 4(a), her failure does not establish a breach on the part of Defendants,
particularly in light of Ms. Goldberg’s sophistication, awareness of the provision, and awareness
23

that Defendants had made changes to the common elements since issuing the initial Property
Report. See, e.g., Cromeens, 349 F.3d at 376 (finding that the defendant “cannot be held to have
breached the covenant of good faith and fair dealing for simply enforcing the contracts as
written.”). Furthermore, Ms. Goldberg had the advice and representation of counsel during the
process.
2.

Defendants Offered a Reasonable and Credible Explanation for the
Changes

Not only did Defendants have the sole and exclusive authority to make the changes at
issue, they made the changes for understandable reasons. When Ms. Goldberg signed her
Purchase Agreements in August of 2006, Defendants had not yet built the Trump Tower. In fact,
Defendants did not complete Trump Tower until 2009. The plan for the building, therefore, was
a moving target at the time when Ms. Goldberg signed her Purchase Agreements. Mr. Donald
Trump testified that “until [they] came up with a final plan . . . [they] had a lot of different
concepts that ultimately ended up in what [they] built.” (Trial Tr. at 480 lns. 1-4.) In fact, even
after Defendants made the changes at issue here by issuing the Fourth Amendment, they issued
three additional amendments to the Property Report. (Id. at 1131 ln. 19 – 1132 ln. 3.)
Moreover, the evidence did not show any plan to add the revenue-producing facilities to
the Common Elements temporarily, only to remove them later. Indeed, one set of executives –
Charles Reiss and Russell Flicker – recommended the addition of these facilities to the Common
Elements, and a different executive – James Petrus, who did not even work for the Trump
Organization when that original decision was made, recommended the removal of the facilities.
As detailed below, Mr. Reiss and Mr. Petrus both testified credibly and took ownership for their
decisions. Each stated that he came up with the idea to remove/add the facilities and made a
24

recommendation to Donald Trump Sr., who authorized them to proceed rather than initiating the
changes himself.
It is also credible that Defendants changed the plan for the building because they lacked
experience at the time with hotel condominium developments, which are highly specialized types
of developments, before developing Trump Tower. Defendants learned by trial-and-error as the
Trump Tower project progressed and needed to make changes to the plans as they learned more
about the potential risks and pitfalls associated with allocating certain facilities to HCU owners.
The evidence, therefore, showed that Defendants made changes to the Common Elements as part
of an evolving plan to develop, build, and own an expansive hotel condominium for the first
time.
a.

Mr. Reiss Made a Reasonable Decision to Initially Put the
Revenue-Producing Facilities in the Common Elements

The initial decision to add the ballrooms, meeting rooms, and function rooms to the
Common Elements via the First Amendment resulted from a major change in the design of the
building. Specifically, Mr. Reiss, a former Trump executive, and Mr. Trump testified that
Defendants originally planned to include over 350,000 square feet of office space in the building.
Defendants, however, struggled to rent the office space and, therefore, decided, based on a
recommendation from Mr. Reiss, to turn that space into additional residential and hotel
condominiums and ballrooms. (Trial Tr. at 242 lns. 4-8; 245 ln. 7 – 246 ln. 10; 247 at lns. 1119.) According to both Mr. Trump and Mr. Reiss, it was Mr. Reiss’ idea, along with Russell
Flicker, to create a ballroom in the space instead, and to subsequently add the ballroom to the
Common Elements for the hotel condominium. (See, e.g., id. at 226 ln. 9-14; 250 lns. 4-20; 3318
lns. 15-19; 332 lns. 13-20; 333 lns. 11-18; 606 ln. 20 – 607 ln. 5.) Mr. Trump was the ultimate
25

authority on the decision to eliminate the office space, which he agreed to do based on Mr.
Reiss’ recommendation. (See, e.g., id. at 606 ln. 20 – 607 ln. 5; 245 ln. 23 – 246 ln. 10.) Mr.
Reiss, however, did not need to consult with Mr. Trump before including the ballroom, meeting
rooms, and function rooms in the Common Elements. (Id. at 314 ln. 10-14; 606 ln. 20 – 607 ln.
5.) Indeed, Mr. Reiss testified that he could not recall Mr. Trump ever discussing with him what
they should include in the Common Elements. (Id. at 314 ln. 25 – 315 ln. 4.) He informed Mr.
Trump of his decision to add these facilities to the Common Elements, nonetheless, even though
he did not need Mr. Trump’s approval for this type of decision. (Id. at 501 ln. 18 – 502 ln. 7;
333 lns. 11-18.)
Mr. Reiss made his recommendation to Mr. Trump regarding the removal of the office
space and the addition of the ballroom, meeting rooms and function rooms to the Common
Elements based on his previous hotel experience and after having the architect evaluate what the
building would look like without the office component. (Trial Tr. at 245 ln 15 – 246 ln. 10.) Mr.
Reiss, however, only had limited experience working with hotel condominium issues. He
previously had worked on the Trump Tower in New York, which technically became a hotel
condominium, but which did not have the type of ballrooms, meeting rooms, function rooms, and
revenue-producing facilities present in the much larger Trump Tower Chicago. He had no other
prior experience with hotel condominium developments. Mr. Reiss stands by his decision to add
these facilities to the Common Elements, however, testifying that, based on the facts known to
him when he made the decision, he would make the same decision again today. (Id. at 347 lns.
2-8.)
Between the time Mr. Reiss added the revenue-producing facilities to the Common
Elements and Defendants issued the Fourth Amendment which removed them from the Common
26

Elements, Mr. Reiss left the Trump Organization to work for a competitor. When Mr. Reiss left
the Trump Organization he was not on “happy terms with Mr. Trump.” (Id. at 287 lns. 4-5.)
Given this departure and the fact that Mr. Reiss currently does not work for the Trump
Organization, Mr. Reiss had no motivation to fabricate his testimony to assist his former
employer. Furthermore, his testimony was credible and consistent with the other evidence
presented at trial.
b.

Mr. Petrus Reasonably Decided, Based on His Hotel
Condominium Expertise, that Defendants Should Remove the
Revenue-Producing Facilities from the Common Elements

Mr. Petrus, the Chief Operating Officer for the Trump Organization’s hotel collection,
testified regarding the reasons Defendants removed the revenue-producing facilities from the
Common Elements with the Fourth Amendment in October 2007, and admitted that it was his
idea to remove them. Notably, Mr. Petrus testified over three different days and was extremely
credible. He patiently answered all of counsel’s questions in a forthright manner, offering
reasoned, thoughtful responses and explanations of difficult concepts – such as the differences
between various budgets which Ms. Goldberg’s lawyer repeatedly conflated and attempted to
confuse.
Mr. Petrus explained that he felt that Defendants should remove the revenue-producing
facilities from the Common Elements and replace them with a yearly fee which Defendants
would pay to the unit owners. Mr. Petrus believed having a “static”, “predictable” stream of
income every year from a set payment would be a “safer” and “smarter” move for the HCU
owners so that they would not have to risk a loss or cope with significant swings in revenue each
year. (Trail Tr. at 873 ln. 12 – 875 ln. 2.) Mr. Petrus explained that he went back and looked at
the assumptions that the executives previously had made during the earlier stages of the project
27

and determined that “the appropriate thing to do was to make a modification to the budget that
would give the unit owners greater protection in the event that -- any type of fluctuations in
revenues and expenses tied to that area.” (Id. at 1003 lns. 7-10.)
Mr. Petrus consistently and credibly testified that it was his idea, which he developed on
his own, to remove the revenue-producing facilities from the Common Elements. (See, e.g.,
Trial Tr. at 1073 lns. 3-12; 1002 lns. 20-23.) He believed that it was important for the sake of the
building, the Trump Organization, and the unit owners for Defendants to own the Common
Elements. He explained that there is significant risk involved when a condominium association
owns meeting rooms, ballrooms and function rooms because they may not run them properly.
Mr. Petrus also explained that it could be possible, for example, for the condominium
association, if the HCU owners owned the Common Elements, to allow “Burger King” to operate
the ballroom, which would not be good for the Trump brand and would not help generate
revenue for the HCU owners. (Id. at 1004 lns. 8-13.)
Notably, Mr. Trump repeatedly testified that, contrary to Ms. Goldberg’s theory, he was
not aware when he developed the Trump Tower in 2003 of the significant risk involved in
relinquishing ownership of the ballrooms to the HCU owners. (Trial Tr. at 426 ln. 21 – 427 ln.
8; 531 lns. 8-19; 531 ln. 21 – 532 ln. 1; 535 lns. 22 – 536 ln. 8; 537 lns. 3-11; 538 lns. 1-9; 561
ln. 18 – 562 ln. 4; 569 ln. 15 – 570 ln. 2.) It was not until Mr. Petrus expressed his serious
concerns about the condominium owners failing to run the facilities properly, including firing the
Trump Organization as the operator, that Mr. Trump focused on this issue. (Id; 633 lns. 10-23.)
Indeed, Mr. Petrus testified that Mr. Trump never told him what should or should not be included
in the Common Elements. (Id. at 1144 lns. 9-13.) In fact, Mr. Petrus was not aware of anything
mentioning the possibility of removing the meeting and ballroom facilities from the Common
28

Elements. (Id. at 1144 lns. 4-8.) He credibly and consistently took complete ownership over the
idea to remove these facilities from the Common Elements.
Mr. Petrus also explained that neither Mr. Trump nor anyone else at the Trump
Organization previously had decided to remove the revenue-producing facilities from the
Common Elements, and that it took approximately nine months to obtain approval for his idea.
(Trial Tr. at 1011 lns. 13-18; 991-993.) Mr. Petrus had personally reached the conclusion that
Defendants should remove the ballroom and meeting room facilities from the Common Elements
in May 2007. (Id. at 1107 lns. 2-9.) He recalled first broaching the idea with Mr. Trump in May.
(Id. at 1108 lns. 1-11.) Defendants issued the Fourth Amendment in October 2007, after
accepting Mr. Petrus’ recommendation and concluding that Defendants would give the HCU
owners $500,000 a year – adjusted each year for inflation – to replace the removed Common
Elements. As discussed above, Defendants had the sole and exclusive authority to make changes
to the Common Elements, and therefore did not need to compensate HCU owners for this
change.
c.

Changes to the Building Plan and Facility Allocation Were
Understandable and Not Arbitrary Because Defendants
Lacked Expertise in Developing Hotel Condominiums

When Defendants began developing Trump Tower, they lacked experience with hotel
condominiums and therefore needed to alter their plan as development progressed. As explained
by multiple witnesses, including Mr. Reiss and Defendants’ expert Robert Brenton Howie, a
hotel condominium is a “highly specialized” area of development that differs from other kinds of
developments. (Trial Tr. at 306 lns. 16-18; 1842 lns. 6-12.) In fact, at the time that Defendants
decided to build the Trump Tower – and even when Defendants opened the sales office in 2003
and when Ms. Goldberg signed her Purchase Agreements in 2006 – hotel condominiums were
29

still in their infancy as a type of development. Mr. Reiss explained that there were a “flurry” of
hotel condominiums built in Florida in the 1980s which ceased operating because of “a lot of
structural and legal problems with the way they were done.” (Id. at 173 lns. 3-17.) According to
Mr. Trump, “[h]otel condominiums were few and far between, and have become not a very
favored source of investment for people over the years.” (Id. at 412 lns. 1-10.) He explained
that it was not until the last five to ten years that developers have started investing in hotel
condominium type properties. (Id. at 412 lns. 10-13.)
When Mr. Trump first considered building a hotel condominium as part of Trump
Towers he had Mr. Reiss research the hotel condominiums in existence at that time because the
Trump Organization lacked institutional knowledge. (Trial Tr. at 174-75.) Before building
Trump Tower, Defendants only had previously developed and built one other hotel
condominium – the Trump International Hotel and Tower in New York City. The New York
City project differed significantly from the Trump Tower in Chicago, however, as it was much
smaller and did not contain the expansive ballrooms and meeting rooms which the Trump Tower
Chicago eventually included. Indeed, Mr. Reiss testified that “there were very few common
elements in the New York property. It was very much a condominium with – a heavier role of
condominium than actually hotel. And it was seen as a rooms-only kind of hotel.” (Id. at 298
lns. 15-18.) Mr. Reiss further explained that, until Trump Tower Chicago, Mr. Trump “had
never run or been responsible for or developed a hotel condominium in which there was
banqueting facilities.” (Id. at 371 lns. 19-25.)
One of the significant differences between a hotel condominium and a traditional
condominium or hotel is that there are “three different stakeholders in a condominium hotel” –
the condominium association, unit owners, and commercial components. (Trial Tr. at 1838 ln.
30

21 – 1839 ln. 4.) By comparison, in a residential condominium, a developer must only make one
determination – whether a certain area is part of the unit or not. (Id. at 1862 ln. 23 – 1863 ln. 6.)
If a certain area or facility is not part of the unit, then it is part of the common elements by
default. (Id.) In a hotel condominium like Trump Tower, the developer must make specific
determinations regarding which stakeholder owns each particular facility or area. As explained
further below, because Defendants lacked experience with hotel condominiums they were not
familiar with the challenges of deciding where to allocate various facilities. They, therefore, did
not decide to remove the revenue-producing facilities from the Common Elements until Mr.
Petrus raised his concerns based on his experience with hotel condominium projects.
d.

There Was No Evidence that Defendants Acted Outside the
Bounds of the Customs and Practices Within the Hotel
Condominium Industry

Although Ms. Goldberg attempted to depict the changes Defendants made as highly
significant, alleging that they stripped away the features of HCU ownership which had the most
interest to her,5 Ms. Goldberg failed to establish by a preponderance of evidence that Defendants
did anything outside the bounds of custom and practice. Ms. Goldberg submitted Mr. Robert
Levin as an expert to testify about the industry customs and practices. (Trial Tr. at 1274 lns. 28.) Mr. Levin, however, admitted that, while he has thirty years of experience working in the
residential condominium business, he has no experience with hotel condominiums. (Id. at 1295
ln. 5 – 1296 ln. 2.) He has no experience reviewing, analyzing, or drafting hotel condominium
documents and has never managed or assisted a developer with a hotel condominium. (Id. at
1295 ln. 19 – 1297 ln. 3.) In fact, he admitted that he was not an expert with respect to hotel

5

Ms. Goldberg would have owned less than half a percent interest – with her interest from both her HCUs combined
– in the Common Elements of Trump Tower. (Trial Tr. at 1475 ln. 2-5.)

31

condominium documents. (Id. at 1299 lns. 10-12; 1305 lns. 17-20.) He also testified that he was
only familiar with property reports for between 100 and 150 of the approximately 5,000
condominium buildings in Chicago, and had no familiarity with any hotel condominium’s
documents. (Id. at 1308 lns. 1-19.) He acknowledged that he had never reviewed property
reports where revenue-producing facilities, like those at issue here, had been included in the
common elements, or were part of the property. (Id. at 1300 ln. 23 – 1301 ln. 4; 1304 lns. 1420.) He, therefore, could not offer any opinion regarding the propriety of a developer adding and
removing facilities from the common elements, via amendments to the property reports. (See,
e.g., id. at 1309 ln. 23 – 1311 ln. 18.)
By contrast, Defendants’ expert, Mr. Howie, has worked with hotel condominium
developers. Mr. Howie has experience helping hotel condominium developers “map” their
property, meaning that he assists them in separating out which facilities of the hotel
condominium will be part of the common elements. (Trial Tr. at 1818 lns. 20-25.) Mr. Howie
testified that, although he has never seen a hotel condominium developer remove multiple
facilities from the common elements, he works with the developers from the start of the
development and therefore assists them in properly “mapping” the facilities from the project’s
inception. (Id. at 1824 ln. 17 – 1825 ln. 18; 1191 lns. 12-17.)
According to Mr. Howie, developers should not include ballrooms, function rooms, and
meeting rooms in the common elements of a hotel condominium in part because those facilities
predominately support the operations of the developer or affiliate operator and therefore that
entity should maintain responsibility for the facility. (Trial Tr. at 1848 ln. 23 – 1850 ln. 2.) He
also testified, based on his significant experience, that developers of other products, such as
residential condominiums, are unaware of the issues related to mapping, including that they need
32

to make sure that the commercial components of a condominium hotel are not part of the
common elements. (Id. at 1850 ln. 18 – 1851 ln. 1; 1862 lns. 15-19.) His experience and
opinion, therefore, further support Defendants’ credible explanation that they originally put these
facilities in the Common Elements and removed them only at the recommendation of Mr. Petrus,
who had more hotel condominium experience than Mr. Reiss or Mr. Trump. In fact, Mr. Howie
opined that even sophisticated developers would not be aware of the importance of mapping
essential hotel facilities in the commercial areas of the building. (Id. at 1858 ln. 14 – 1859 ln. 2;
1894 ln. 24 – 1895 ln. 2.) Mr. Howie explained that he only learned the importance of
“mapping,” and of separating out the revenue-producing facilities from the common elements,
over time, after seeing the complications and difficulties which can arise from these areas being
common elements. (Id. at 1857 ln. 16 – 1858 ln 5. )
Notably, even Ms. Goldberg’s real estate agent told Ms. Goldberg, via email, that she
thought it was a “valid point” that Defendants “wanted to have complete control of the decisions
and the responsibility for the maintenance and management of those areas of the hotel and not
leave the decisions or authority in the hands of the hotel board.” (Defs.’ Ex. 592.) She also told
Ms. Goldberg that she could “understand [Mr. Trump] wanting to retain the ownership rights to
ensure his standard and will would prevail.” (Id.) Although Ms. Vogue attempted to downplay
these statements on the stand by claiming that she was being sarcastic, there was no sarcasm
present in the plain language of the email and her testimony appeared biased based on her long,
close relationship with Ms. Goldberg. (Trial Tr. at 1753 lns. 9-11.)

33

3.

The Evidence Did Not Establish That Defendants Knew in August
2006 That They Would Eventually Make the Changes at Issue

There was no evidence that Defendants knew, in August 2006 when Ms. Goldberg signed
her Purchase Agreements, that they ultimately would remove the ballroom, meeting rooms, and
function rooms from the Common Elements. Additionally, not a single Trump employee or
former employee testified to having any knowledge, either at the time that Ms. Goldberg signed
her Purchase Agreements or later, that anyone at the Defendant corporations had added the
facilities at issue to the Common Elements with the intent to remove them later. Indeed, Donald
Trump, whom Ms. Goldberg attempted to depict as the ultimate authority at the Defendant
corporations, specifically stated that he never had any such plan or intention. Mr. Trump
testified that he did not allow the meeting rooms, ballrooms, related food and beverage and other
operations to be put into the Common Elements knowing that he would later take them out.
(Trial Tr. at 666 lns. 2-3.) Mr. Trump also testified that he did not include those facilities in the
Common Elements intending to later take them back. (Id. at 666 lns. 12-23.) He further testified
that he did not know, at the time Ms. Goldberg signed her Purchase Agreements, that he was
going to take back the meeting rooms, ballrooms, and related food and beverage operations. (Id.
at 667 lns. 7-10.)
Regardless of how “braggadocios”6 Mr. Trump may or may not have been about the
Trump Organization, four former and current Trump executives corroborated his testimony about
the issues relevant to Ms. Goldberg’s case. The other evidence in the case, as discussed above,
also supports Mr. Trump’s testimony. Specifically, Mr. Reiss, and Ms. Cremer, who no longer

6

Mr. Trump testified that he “[did not] want to be braggadocios” but that he is “very proud of the fact that [they]
build great buildings.” (Trial Tr. at 407 lns. 20-23.)

34

work for Defendants and have no apparent ongoing loyalty to Defendants, and Mr. Petrus
testified credibly and consistently regarding the decisions to add the revenue-producing facilities
to the Common Elements and to remove them from the Common Elements. As discussed above,
each of these witnesses substantiated Mr. Trump’s testimony that Mr. Reiss and Mr. Flicker
initially decided to add the revenue-producing facilities to the common elements, and that Mr.
Petrus had the idea to remove them, which he did after obtaining Mr. Trump’s approval. None
of these witnesses were aware of any “bait and switch” plan, or any intent or plan in August
2006 to eventually remove the revenue-producing facilities from the Common Elements.
Mr. Reiss, for example, who left the Trump Organization on unfavorable terms (Trial Tr.
at 287 lns. 4-5), testified as follows:
Q.

Mr. Reiss, as of the day you left the Trump Organization,
was it your understanding that the plan for the hotel
condominium was to include the meeting room and ballroom
facilities in the common elements?

A.

Yes, it was.

Q.

In all of the time that you worked there -- for the Trump
organization -- did anyone in the organization ever tell you
that they thought the meeting room and ballroom facilities
should be removed from the common elements?

A.

No.

Q.

In all the time that you worked at the Trump Organization,
did you have any reason to believe that anybody associated
with the Trump Organization was even considering removing the
meeting and ballroom facilities from the common elements?

A.

No, I did not.

(Id. at 345 lns. 6-20.)

35

Ms. Cremer, who worked for Defendants when they issued the original Property Report
and the First, Second, Third and Fourth Amendments but who now works on the World Trade
Center development, stated the following:
Q.

Based on everything you know, Ms. Cremer, from every
meeting you ever participated in and were present for, do you
have any reason to believe that anyone affiliated with the
Trump Organization tried to fool potential buyers by making
false statements about their plans for the project?
...

A.

No.

(Trial Tr. at 1050 ln. 19 – 1051 ln. 6.) She further testified as follows:
Q.

Based on your experience and your knowledge, based on your
presence at all the meetings at which the subject was
discussed, do you have any reason to believe that the plans
for the project as represented in the property reports were
true statements?

A.

Absolutely.

Q.

And what is that belief based on?

A.

It was based on the facts at the time.

(Id. at 1052 lns. 1-8.) Based on their demeanor while testifying and their status as former
employees, neither Mr. Reiss or Ms. Cremer had any apparent bias or motive to fabricate. To the
contrary, each testified consistently and credibly, even in the face of overly aggressive, repetitive
questioning.
Additionally, as discussed above, Mr. Petrus credibly testified that he was not aware of
any long-standing plan to remove the revenue-producing facilities from the Common Elements.
Rather, it was an idea he personally had in 2007 and which he recommended to Mr. Trump. He
specifically testified as follows:
36

Q.

To your knowledge, before you suggested removing the
meeting and ballroom facilities from the common elements,
nobody else at the Trump Organization had even mentioned to
you the possibility of that happening, right?

A.

That is correct.

Q.

Mr. Trump certainly never came to you with his own
suggestions about what should or should not be in the hotel
condominium common elements, right?

A.

Never.

(Trial Tr. at 1144 lns. 5-13.)
For Ms. Goldberg’s theory to ring true, Mr. Trump, Ms. Cremer, Mr. Weiss, Mr. Reiss
and Mr. Petrus all must have lied on the stand. For her theory to succeed, they must have lied
about who made the decisions to add and remove the revenue-producing facilities, whether Mr.
Trump directed them to add or remove the facilities, or whether they knew of anyone at the
Trump Organization having knowledge, prior to 2007, that they would ultimately remove the
facilities from the Common Elements. Alternatively, Ms. Goldberg’s theory would require Mr.
Trump to have lied about having a master plan, and to have kept all of his executives in the dark
about his plan while convincing Mr. Reiss and Mr. Petrus to add/remove the facilities, somehow
thinking it was their own idea rather than his. The Court finds both of these alternatives
implausible, especially in light of the highly credible testimony given by the former and current
Trump executives, particularly Mr. Petrus. The evidence, therefore, does not support Ms.
Goldberg’s allegations that Defendants knew, prior to August 2006, that they would remove the
revenue-producing facilities from the Common Elements at a later date.7

7

Although Ms. Goldberg does not fully articulate her theory regarding laundry facilities in her Amended Complaint,
during trial she attempted to show that Defendants knowingly made misrepresentations in the initial Property Report
and first three amendments by including “laundry facilities” in the Common Elements when there was never any

37

CONCLUSION
For the foregoing reasons, the Court finds in favor of Defendants on Counts I and V.
DATED: May 31, 2013
ENTERED

___________________________________
AMY J. ST. EVE
United States District Court Judge

plan for any laundry facility. Section 3.1 of the Declaration stated that the Common Elements included “without
limitation and if applicable, any of the following items . . .”. (Property Report, Ex. A, Declaration at 8.) As Mr.
Reiss explained, this paragraph meant that anything included in the list would be in the Common Elements if it was
included in the actual building, but the paragraph does not mean that all items in the list would be part of the
building. (Trial Tr. at 328 ln. 24 – 329 ln. 4.) Not only did Ms. Goldberg fail to show, by a preponderance of the
evidence, that there was never any plan to include “laundry facilities” of any kind, but, if Trump Tower did not
contain any laundry facilities then the Declaration did not require Defendants to convey any such facilities. Ms.
Goldberg’s claims regarding laundry facilities, therefore, also fail.

38