Karimi v. 401 North Wabash Venture

Farid Karimi and Mahmobah Kashani (buyers, plaintiffs) contracted to buy a $2.2 million condo and three parking spaces at Trump International Hotel and Tower from 401 North Wabash Venture (defendant), paying a 15% earnest-money deposit of about $330,000. The contract entitled the seller to liquidated damages equal to the buyers' deposit plus any other amounts paid toward the price if the buyers defaulted, capped at that sum regardless of the seller's actual losses. After the buyers couldn't secure financing, the closing date was pushed from October 2008 to May 2009, and when the buyers still failed to close, the seller terminated the contract and kept the $330,000 as liquidated damages; the seller then resold the unit plus two parking spaces for $2.5 million just months later. The buyers sued, arguing the liquidated-damages clause was unenforceable both because it set an uncertain sum and because it functioned as a penalty, particularly since the seller ended up with no actual losses at all. The trial court dismissed the buyers' complaint, and they appealed.