Where a breach of contract has occurred, and the plaintiff files suit, the statute of limitations for the suit begins tolling at the moment of breach, not at the moment the plaintiff suffers injury due to the breach.

The 1st District Appellate Court affirmed the decision of Cook County Circuit Judge Anna H. Demacopoulos.

In November 2004, Reza Toulabi executed an agreement to purchase several condominium units in Polo Tower on North Marine Drive in Chicago. In January 2005, Toulabi assigned his interest, rights and obligations from that agreement to Robert Yassan.

Toulabi also agreed to secure a $3 million loan for Yassan, although this was not in the text of the agreement. Yassan, for his part, would pay $1 million to Toulabi and give up possession and title to one condominium unit and a parking space, owned by My II LLC, a company owned by Yassan and his wife, Dorothy.

Yassan tendered the check for $1 million on Dec. 1, 2005, asking for Toulabi to wait one year for actual payment. Each year for the next five years, he asked for another extension on the $1 million payment, until on Dec. 9, 2011, eight days after the final granted extension, an attorney for Toulabi sent Yassan a letter demanding payment. Yassan refused.

In February 2012, Dorothy, Yassan’s wife, changed the lock on the condominium unit without warning. Toulabi, suddenly unable to access the unit, looked for legal remedies and discovered that, although he had been given possession of the unit, he had never received its legal title, as agreed upon in the original contract.

Toulabi filed suit, seeking both specific performance in the conveyance of the title to the condominium unit and parking space as well as $1 million plus interest that he was owed by Yassan.

Yassan moved to dismiss, citing the five-year statute of limitations and noting that Toulabi failed to file suit until 2012, seven years after the agreement. The trial court agreed, dismissing the charge. Toulabi appealed.

On appeal, Toulabi argued that the statute of limitations did not begin to toll until he was injured, which happened when he was deprived of possession of the unit in February 2012.

Toulabi did not challenge the five-year statute of limitations on his claim, but simply asserted that it had not begun to toll until he was locked out of the unit.

Yassan contended that Toulabi’s cause of action was available any time after the January 2005 closing, when Yassan gained title to the condominiums from Toulabi and Toulabi did not receive title to the single condominium unit from him.

The appellate court agreed with Yassan, noting that “a cause of action for breach of contract accrues at the time of the breach, not when the suing party sustains damages.” Toulabi claimed that the breach did not occur until he was locked out, but the appellate court noted that Toulabi could have availed himself of the court system to remedy Yassan’s failure to comply with the agreement by releasing the title, and chose not to.

Toulabi, therefore, filed his complaint seven years after the breach, more than two years after the expiration of the statute of limitations.

As a result, the appellate court affirmed the trial court’s dismissal of Toulabi’s complaint.

Reza Toulabi v. Robert Yassan, et al.

2017 IL App (1st) 161081

Writing for the court: Justice Aurelia Pucinski

Concurring: Justices James Fitzgerald Smith and Terrence J. Lavin

Released: June 21, 2017