CCP Golden/7470 LLC v. Breslin: Joint-and-Several Guarantors, Diversity Jurisdiction, and Limits on Rent Acceleration and Liquidated Damages

Introduction

CCP Golden/7470 LLC v. Breslin (7th Cir. Dec. 3, 2025) is a significant decision at the intersection of federal civil procedure and Illinois contract remedies. The Seventh Circuit addresses two clusters of issues:

• Jurisdictional / procedural: Whether a nondiverse co-guarantor on a lease is a “required” and “indispensable” party under Federal Rule of Civil Procedure 19, such that his dismissal under Rule 21 to preserve diversity jurisdiction was improper.
• Damages / substantive: Under Illinois law, the extent to which landlords can recover:
  • Diminution-in-value damages when nursing facilities lose their licenses;
  • Accelerated rent under lease provisions functioning as liquidated damages; and
  • Liquidated damages under a failed real estate purchase option agreement.

The plaintiffs were four Delaware LLCs that owned nursing home properties in Wisconsin. Defendant Kevin Breslin, through his entity KBWB Operations, LLC, operated four skilled nursing facilities on those properties. Breslin and several co-guarantors executed two guaranties: one for a lease of the Chilton property, and one for a master lease covering properties in Appleton, Neenah, and Weston.

When the tenants defaulted on rent and failed to close on a purchase option for the properties, the landlords sued Breslin and his co-guarantors in the Northern District of Illinois under diversity jurisdiction. After filing, plaintiffs discovered that one co-guarantor (William G. “Burris III”) was a California citizen, like plaintiffs, destroying complete diversity. Plaintiffs moved under Rule 21 to drop Burris III. The district court granted the motion without opposition from Breslin, preserved diversity, and later entered summary judgment for plaintiffs for almost $22 million.

On appeal, Breslin:

• Attacked subject-matter jurisdiction, arguing that Burris III was a necessary and indispensable party who could not be dropped; and
• Challenged the size and components of the damages award, though not his liability.

The Seventh Circuit (Judge Kolar, joined by Judges Rovner and Scudder) rejected the jurisdictional challenge, largely upheld the damages methodology, but vacated and remanded two portions of the award: (1) accelerated rent attributable to the Chilton lease, and (2) liquidated damages under the purchase option agreement.

The opinion is particularly important for:

• Reaffirming that joint-and-several guarantors are ordinarily not indispensable parties and may be dropped under Rule 21 to cure diversity defects; and
• Clarifying, under Illinois law, the limits on enforcing rent-acceleration and liquidated damages clauses in commercial real estate and leasing contexts, especially where other compensatory damages have been awarded.

Summary of the Opinion

The Seventh Circuit’s key holdings can be summarized as follows:

• Jurisdiction preserved: The dismissal of nondiverse co-guarantor Burris III under Rule 21 was proper. Co-guarantors who are jointly and severally liable are not “indispensable” under Rule 19(b). Complete diversity was therefore maintained, and federal jurisdiction was secure.
• Mitigation and diminution-in-value damages affirmed:
  • Plaintiffs reasonably mitigated damages by hiring brokers, marketing the properties, and ultimately selling at a loss.
  • The $10.3 million diminution-in-value award—based on capitalization of expected rent, discounted to present value, minus the actual sale price plus costs—was adequately supported and not speculative.
• Accelerated rent partly vacated:
  • Rent-acceleration provisions function as liquidated damages and must meet Illinois’ three-part test (intent, reasonable forecast at time of contracting, and difficulty of proving actual damages).
  • The master lease’s acceleration clause included an offset for amounts mitigating the landlord’s damages and was generally enforceable.
  • The Chilton lease’s acceleration clause lacked any offset and, on this record, might operate as an unenforceable penalty. The court vacated the part of the award attributable to accelerated Chilton rent and remanded for further consideration.
• Purchase-option liquidated damages vacated:
  • The $1.09 million liquidated damages award for failure to close under the Purchase Option Exercise Agreement was reversed.
  • Under Illinois law, such liquidated damages must substitute for, not supplement, actual damages and are invalid where actual damages are not especially uncertain or difficult to prove. Here, plaintiffs had in fact proved actual damages (particularly diminution in value from the distressed sale), so the liquidated damages were a penalty.
• Scope of remand: The case is remanded only to:
  1. Re-examine (and possibly eliminate) the portion of accelerated-rent damages attributable to the Chilton lease; and
  2. Remove the purchase-option liquidated damages from the judgment.
  All other aspects of the district court’s judgment are affirmed.

Detailed Analysis

I. Factual and Procedural Background

A. The underlying leases and guaranties

Plaintiffs are four property-specific LLCs, all ultimately owned and controlled through Sabra Health Care Limited Partnership and Sabra Health Care REIT, Inc. They leased Wisconsin properties in Chilton, Appleton, Neenah, and Weston to tenant entities operating skilled nursing facilities.

The structure:

• Chilton lease (2003 / amended 2014):
  • One plaintiff landlord leased its Chilton property to a tenant entity.
  • In 2014, a Breslin-affiliated LLC acquired the tenant’s equity.
  • As a condition of consent, plaintiffs required individual guaranties.
  • In December 2014, Breslin and his co-guarantors executed the “Chilton Individual Guaranty,” unconditionally guaranteeing all tenant obligations under the lease, on a joint-and-several basis.
• Master lease (Appleton, Neenah, Weston):
  • Three plaintiffs leased three other properties to three tenant entities under a master lease.
  • In December 2015, Breslin and co-guarantors executed the “Master Lease Individual Guaranty,” again guaranteeing all obligations under the master lease, jointly and severally.

Both leases:

• Required continuous operation as licensed skilled nursing facilities;
• Provided that failure to pay minimum rent within five days of the due date constituted a default; and
• Included tenant purchase options for the properties.

B. Defaults and receivership

By late 2018, the tenants stopped paying rent (August 2018 for the master lease; September 2018 for Chilton). An unrelated lender sued the tenants in Wisconsin state court. A receiver was appointed to operate the facilities, soon relocated residents, and, as a result, the facilities lost their licenses and operating permits.

Because the leases required continuous use as skilled nursing facilities, the loss of licenses and cessation of that use constituted additional lease defaults, beyond nonpayment of rent.

C. The Purchase Option Exercise Agreement

In April 2017—before the rent defaults—tenants entered into a Purchase Option Exercise Agreement to exercise their purchase options:

• The agreement provided for liquidated damages if the tenants failed to close (i.e., a default under the purchase agreement).
• Liquidated damages were defined as the earnest money deposit amounts set in the leases, minus a $105,278 reduction for the master lease.
• Breslin and co-guarantors reaffirmed both the master and Chilton guaranties and agreed to the liquidated damages obligation as a monetary obligation of the tenants.

The closing was extended to March 2019. The tenants failed to close. This triggered:

• Default under the Purchase Option Exercise Agreement;
• The agreed liquidated damages; and
• Left plaintiffs with distressed, non-operational facilities, which they eventually sold in December 2019 for $1 million total, far below their expected economic potential as licensed nursing homes.

D. Federal suit and the diversity problem

Plaintiffs sued Breslin, KBWB Operations, and co-guarantors in July 2021 in the Northern District of Illinois for breach of the two guaranties. They alleged diversity jurisdiction under 28 U.S.C. § 1332, asserting that all defendants were citizens of New York or New Jersey, while plaintiffs were citizens of Maryland and California (through their LLC/LP ownership chain).

During service, plaintiffs discovered that co-guarantor William G. Burris III was in fact a citizen of California, not New Jersey. Because plaintiffs were also citizens of California, his presence destroyed complete diversity.

In January 2022, plaintiffs moved under Rule 21 to dismiss Burris III without prejudice to cure the defect. They argued:

• Each guarantor was jointly and severally liable; and
• Burris III was not a necessary or indispensable party under Rule 19.

Breslin did not oppose this motion. The district court granted it, dismissed Burris III, and retained the case.

E. Summary judgment and Breslin’s Fifth Amendment invocation

After discovery, plaintiffs moved for summary judgment on liability and damages. They sought nearly $22 million for unpaid and accelerated rent, diminution in property value, real estate taxes, late fees, utilities/maintenance, and liquidated damages under the purchase option agreement.

Key features of Breslin’s response:

• He did not genuinely contest liability under the guaranties.
• He invoked the Fifth Amendment in response to all of plaintiffs’ Local Rule 56.1 factual statements, citing a pending criminal indictment related to his operation of health-care facilities.
• He offered no counter-evidence on damages and no alternative damages calculations. His only substantive argument was that plaintiffs allegedly failed to mitigate their damages.

The district court rejected Breslin’s Rule 56(d) request (for more time due to his criminal case), accepted plaintiffs’ unrebutted damages evidence, and entered judgment for $21,941,829.35, allocated as:

• $7,324,881.59 – unpaid and accelerated rent;
• $10,305,302.24 – diminution in property value;
• $340,811.85 – real estate and property taxes;
• $1,098,670.93 – liquidated damages for failure to close on the purchase option;
• $2,611,938.17 – late fees and interest; and
• $260,224.57 – utilities and maintenance.

Breslin appealed, raising:

1. A jurisdictional attack based on Rule 19 (mandatory joinder / indispensable party) and diversity; and
2. Challenges to the calculation and legal validity of several damage components.

II. Diversity Jurisdiction, Rule 19, and the Status of Joint-and-Several Guarantors

A. Diversity jurisdiction and curing a defect by dropping a party

Federal diversity jurisdiction requires complete diversity: no plaintiff can share citizenship with any defendant. For unincorporated entities (LLCs, partnerships), citizenship is that of each member or partner. The court cites Qin v. Deslongchamps, 31 F.4th 576, 579 (7th Cir. 2022) for this rule.

Ordinarily, diversity is measured at the time of filing. But the Supreme Court has long recognized that a jurisdictional defect may be cured post-filing by dismissing a nondiverse party if that party is not indispensable. The court relies on:

• Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 572 (2004) (citing Horn v. Lockhart, 84 U.S. 570 (1873)): allowing dismissal of dispensable nondiverse parties to preserve jurisdiction.
• Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 838 (1989): expressly approving dropping a nondiverse guarantor who was jointly and severally liable, holding such a party is not indispensable.

Thus, the validity of the district court’s decision to dismiss Burris III under Rule 21 turns on whether he was “required” and “indispensable” within the meaning of Rule 19.

B. Rule 19 framework: “necessary” vs. “indispensable”

Rule 19 analysis has two steps:

1. Rule 19(a) – Required (sometimes called “necessary”) parties
   • Is the absent party someone who should be joined if feasible?
   • This is the case if:
     • In the party’s absence, the court cannot accord complete relief among existing parties; or
     • The absent party claims an interest that may, as a practical matter, be impaired or expose an existing party to inconsistent obligations.
2. Rule 19(b) – Indispensable parties
   • If joinder is not feasible (e.g., would destroy diversity), the court decides whether, “in equity and good conscience,” it should dismiss the action or proceed without the absent party.
   • The court balances four factors:
     1. Prejudice to the absent person or those already parties;
     2. Possibility of lessening prejudice;
     3. Adequacy of the judgment in the person’s absence; and
     4. Whether plaintiff would have an adequate remedy if the action were dismissed.
   • If it is impossible to structure relief protecting both the absent party and present parties, the absent party is “indispensable” and the action must be dismissed.

As the Supreme Court emphasized in Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 118 (1968), whether a party is “indispensable” is highly context-dependent and cannot be resolved by per se rules.

C. Are jointly and severally liable co-guarantors “necessary” under Rule 19(a)?

The Seventh Circuit expresses skepticism that Burris III is even a “necessary” party:

• Complete relief among existing parties: Because all guarantors are jointly and severally liable, the landlords can obtain complete relief from any one guarantor, including Breslin. Rule 19(a)(1)(A) is not triggered.
• Impairment of absent party’s interests:
  • As a non-party, Burris III would not be bound by issue preclusion (collateral estoppel) based on a judgment against Breslin: he had no full and fair opportunity to litigate.
  • Illinois law on collateral estoppel (citing People v. Pawlaczyk, 189 Ill. 2d 177 (2000)) and Taylor v. Sturgell, 553 U.S. 880, 891 n.4 (2008), supports this.
• “Conclusive” judgment clause in the guaranties: The guaranties stated that co-guarantors would be “conclusively bound” by any judgment in plaintiffs’ favor, whether or not they were parties.
  • The court treats this not as a source of legal preclusion, but as a contractual device. It may create an additional contractual remedy in a later suit against Burris III, but it does not transform the federal judgment into an estoppel against him for Rule 19 purposes.

The panel ultimately finds it unnecessary to decide the 19(a) question definitively. Even assuming arguendo that Burris III is “necessary,” the court holds he is not indispensable under Rule 19(b).

D. Rule 19(b): co-guarantors are not indispensable

On indispensability, the Seventh Circuit’s reasoning is anchored in:

• Supreme Court – Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 (1989)
  • The Court held that a nondiverse co-guarantor, jointly and severally liable, was not indispensable and could be dropped by the court of appeals to preserve diversity.
  • This case is directly on point: the same type of contractual relationship (joint and several guarantors on a debt) and the same procedural question (dropping a nondiverse party).
• Seventh Circuit precedent – Bio-Analytical Services, Inc. v. Edgewater Hospital, Inc., 565 F.2d 450 (7th Cir. 1977)
  • Recognized that joint obligors are not indispensable parties under Rule 19(b).
• Sister circuits – e.g., In re Olympic Mills Corp., 477 F.3d 1, 10 (1st Cir. 2007)
  • Contract co-obligors are generally not indispensable in suits that do not seek to invalidate or rescind the contract as a whole.

The court emphasizes that joint-and-several liability means the injured party can sue any one of multiple obligors for the entire debt. Under standard principles:

• A plaintiff is not required to sue all wrongdoers—whether in contract or tort—to obtain full relief. The opinion cites Rhone-Poulenc Inc. v. International Insurance Co., 71 F.3d 1299, 1301 (7th Cir. 1995).
• The possibility that the absent co-obligor may be sued later is not “prejudice” of the sort that makes him indispensable; it is simply the normal exposure joint obligors face.

The panel also quotes Wright & Miller’s Federal Practice and Procedure § 1613, noting that modern practice generally leaves joinder of obligors to plaintiffs’ discretion without compelling dismissal for nonjoinder.

Against this backdrop, the Rule 19(b) factors weigh strongly in favor of allowing the case to proceed without Burris III:

• Any prejudice to Burris III is limited and speculative; he faces, at most, a later suit where he can fully litigate.
• The judgment among the existing parties is adequate; plaintiffs can collect in full from Breslin and other remaining guarantors.
• Dismissing the case would deprive plaintiffs of their chosen federal forum—something the Seventh Circuit cautions courts to avoid absent compelling reasons (citing Askew v. Sheriff of Cook County, 568 F.3d 632, 634 (7th Cir. 2009)).

E. Rejecting a per se rule that all contracting parties are indispensable

Breslin heavily relied on language in Davis Companies v. Emerald Casino, Inc., 268 F.3d 477, 484 (7th Cir. 2001), calling a contracting party “the paradigm of an indispensable party.”

The Seventh Circuit sharply limits this dictum:

• Context-specificity: Rule 19 indispensability must be evaluated “in the context of particular litigation” (Provident Tradesmens), not by categorical rules.
• Dictum in Davis: The statement in Davis was not necessary to the decision and was itself quoting earlier language from United States ex rel. Hall v. Tribal Development Corp., 100 F.3d 476 (7th Cir. 1996), a case about voiding contracts with a tribe—a far cry from enforcing a guaranty for money damages.
• Consistency with Newman-Green and Bio-Analytical: Any broad reading of Davis must yield to earlier and more specific holdings that joint-and-several guarantors are not indispensable.

The court also approvingly cites the Sixth Circuit’s recent observation in Estate of Plott v. Department of Health & Human Services, 151 F.4th 848, 854 (6th Cir. 2025), that parties to a contract are not per se necessary and indispensable.

F. Jurisdictional conclusion

Because Burris III was not an indispensable party, the district court acted properly in dismissing him under Rule 21 to cure the diversity defect. The court explicitly recognizes that the issue can be raised for the first time on appeal, because if he were indispensable, subject-matter jurisdiction would be lacking altogether (citing International Travelers Cheque Co. v. BankAmerica Corp., 660 F.2d 215, 225 (7th Cir. 1981), and Republic of Philippines v. Pimentel, 553 U.S. 851 (2008)).

Having secured its jurisdiction, the court proceeds to the damages analysis.

III. Damages Under Illinois Law

A. General principles of Illinois contract damages

Because the case is in federal court on diversity, Illinois substantive law governs the contract issues. The Seventh Circuit recites several core principles:

• Expectation damages: The “overarching goal” is to place the nonbreaching party in the position it would have occupied had the contract been fully performed. See Union Tank Car Co. v. NuDevco Partners Holdings, LLC, 2019 IL App (1st) 172858, ¶ 44.
• Reasonable certainty, not mathematical precision:
  • The plaintiff must prove damages to a “reasonable degree of certainty.” Evidence cannot be remote, speculative, or conjectural. Doornbos Heating & Air Conditioning, Inc. v. Schlenker, 403 Ill. App. 3d 468, 485 (1st Dist. 2010).
  • Absolute precision is not required; there simply must be an “adequate basis in the record” for the court’s determination. First Nat’l Bank & Trust Co. of Evanston v. J.P. Schermerhorn & Co., 192 Ill. App. 3d 1057, 1062 (1st Dist. 1989).

The Seventh Circuit reviews:

• Legal issues and methodology de novo; but
• The actual amount for clear error. See Rexam Beverage Can Co. v. Bolger, 620 F.3d 718, 727 (7th Cir. 2010).

An important procedural overlay: although Breslin did virtually nothing to contest damages at summary judgment, the court still independently verifies that plaintiffs’ unrebutted evidence legally justifies the award, citing LaSalle Bank Lake View v. Seguban, 54 F.3d 387, 391–92 (7th Cir. 1995).

B. Mitigation of damages

Under Illinois law, a party cannot passively allow damages to accumulate and then charge them entirely to the breaching party. The injured party must make reasonable efforts to mitigate, as stated in cases like Nancy’s Home of the Stuffed Pizza, Inc. v. Cirrincione, 144 Ill. App. 3d 934, 941 (1st Dist. 1986).

Here, plaintiffs presented:

• A sworn declaration from Sabra’s Executive Vice President of Asset Management; and
• A “deal tracker” spreadsheet documenting efforts to market and sell or lease the facilities.

These materials showed that, beginning in October 2018 (shortly after the defaults and receivership):

• They engaged a marketing agent and broker;
• Prepared an offering memorandum and performed underwriting; and
• Marketed the properties to over a hundred prospects.

After the facilities lost their licenses and could no longer operate as nursing homes, plaintiffs ultimately accepted the best available offer, selling all four properties for $1 million in December 2019.

Breslin:

• Invoked the Fifth Amendment and refused to respond to damages facts;
• Offered no contrary evidence; and
• Provided only bare assertions that plaintiffs had not fully mitigated their losses.

The Seventh Circuit holds that the unrebutted evidence shows reasonable mitigation efforts. The opinion briefly notes that each guaranty also contained a waiver-of-defenses clause that might itself bar a mitigation defense (citing its own decision in WEC 98C-3 LLC v. SFA Holdings Inc., 99 F.4th 961 (7th Cir.), cert. denied, 145 S. Ct. 287 (2024), and Illinois’ Takiff Properties Group Ltd. #2 v. GTI Life, Inc., 2018 IL App (1st) 171477), but declines to rely on that basis because plaintiffs never made that argument below and the mitigation proof was sufficient on its own.

C. Diminution in property value

The district court awarded $10,305,302.24 for the diminution in value of the properties. This was premised on the loss of value caused by:

• The tenants’ defaults;
• Receivership; and
• Permanent loss of nursing home licenses and operating permits, which made the properties less valuable and altered potential uses.

The calculation method:

1. Estimate the annual market rent the properties could have generated if operated as licensed skilled nursing facilities for the remainder of the lease term.
2. Apply a capitalization rate of 9.5% to derive a capitalized value based on that income stream.
3. Apply an 8% discount rate to determine the net present value of that capitalized amount.
4. Subtract the actual $1,000,000 sales price received in December 2019.
5. Add transaction costs associated with the sale.

This yields the $10.3 million diminution-in-value figure. Breslin:

• Did not challenge the conceptual entitlement to expectation damages;
• Did not dispute the chosen capitalization or discount rates; and
• Offered no expert or factual evidence to undermine the calculations.

The Seventh Circuit affirms. It finds that:

• The damages naturally and foreseeably flow from the tenants’ failure to maintain operations and pay rent, making them recoverable under Midland Hotel Corp. v. Reuben H. Donnelley Corp., 118 Ill. 2d 306, 318 (1987).
• The methodology is consistent with standard commercial valuation approaches and not speculative.
• Without countervailing evidence, the district court’s findings are not clearly erroneous. See Hanover Ins. Co. v. Northern Building Co., 751 F.3d 788, 795 (7th Cir. 2014).

D. Accelerated rent: liquidated damages vs. penalties

The district court awarded $7,324,881.59 in unpaid rent, composed of:

• $1,528,614.55 in unpaid rent through December 2019; and
• $5,796,267.04 in accelerated rent for rent that would have accrued through January 2026 (the end of the lease term).

Illinois law does not recognize an inherent right to future unearned rent upon lease termination. A landlord can recover future rent only if the lease contains a valid rent-acceleration clause, typically treated as a liquidated damages provision. The court cites:

• Union Tank Car, 2019 IL App (1st) 172858, ¶ 44;
• 2460–68 Clark, LLC v. Chopo Chicken, LLC, 2022 IL App (1st) 210119; and
• Slyce Coal Fired Pizza Co. v. Metropolitan Square Plaza, LLC, 2025 IL App (1st) 221279.

Illinois follows a familiar three-part test for liquidated damages (citing Smart Oil, LLC v. DW Mazel, LLC, 970 F.3d 856, 863 (7th Cir. 2020), applying Illinois law, and Karimi v. 401 N. Wabash Venture, 2011 IL App (1st) 102670):

1. The parties intended to agree in advance on damages for breach;
2. The amount was reasonable at the time of contracting as a forecast of probable damages; and
3. Actual damages would be uncertain and difficult to prove.

If these criteria are not met, the clause is an unenforceable penalty.

1. Conceptual validity: rent acceleration and double recovery

The court agrees that some measure of accelerated rent is appropriate in principle:

• The diminution-in-value award captures the loss in terminal value of the properties from the licensing and operational disruptions.
• It does not, by itself, fully compensate for the lost rental income over the remaining lease term.
• Had there been no breach, plaintiffs would have received both (a) rent through 2026 and (b) the higher sale price for operational facilities.

The plaintiffs also discounted accelerated rent at 8% to calculate its present value, a reasonable step to avoid overcompensation from time-value-of-money effects.

Breslin, however, argued that accelerated rent must account for the fair rental value of the premises, i.e., the landlord’s ability to relet the space, to avoid double recovery. He relied in part on the logic of Slyce Coal Fired Pizza and 2336 North Clark, LLC v. Hair Fairies, Inc., 2022 IL App (1st) 211597-U, where accelerated rent clauses lacking any offset for re-letting or mitigation were deemed punitive.

2. The master lease vs. the Chilton lease

The Seventh Circuit treats the two leases differently:

• Master lease:
  • Its acceleration clause expressly reduced accelerated rent by “any net amounts that Landlord has received that mitigate Landlord’s damages.”
  • This built-in offset made the clause reasonable ex ante, recognizing that plaintiffs could—and, under law, must—relet or otherwise monetize the property, with such amounts credited against the accelerated rent.
  • This structure fits comfortably within Illinois’ liquidated-damages framework and reflects a fair estimate of likely damage at the time of contracting.
• Chilton lease:
  • Its acceleration clause allowed the landlord to collect “the acceleration of all minimum rent which would have accrued after [the lease’s] termination” upon any event of default.
  • It contained no offset language and did not limit acceleration to serious or incurable breaches.

The court notes that Illinois appellate decisions have lately diverged on whether acceleration clauses must include an offset to be enforceable:

• Slyce Coal Fired Pizza, 2025 IL App (1st) 221279, ¶ 185:
  • Holds that an acceleration provision demanding all remaining rent “without accounting for the landlord’s ability to relet” the premises is a penalty.
• Chopo Chicken, 2022 IL App (1st) 210119, ¶¶ 29, 33:
  • Enforces an acceleration clause without explicit offset language as a valid liquidated damages provision.

Rather than choose between these lines of authority, the Seventh Circuit focuses on the record and clause language before it.

3. Chilton acceleration: potential penalty and remand

The court emphasizes that reasonableness must be assessed “at the time of contracting, not after the fact” (citing Karimi, 2011 IL App (1st) 102670, ¶ 24). The Chilton clause allowed full acceleration of all future rent for any event of default, regardless of:

• The seriousness of the breach;
• When during the 20-plus-year lease term the breach occurred; or
• The landlord’s actual opportunity to relet or otherwise mitigate.

Crucially, there is no evidence in the record showing that the parties reasonably contemplated that:

• Upon any default, however minor, the landlord could not relet the Chilton property for the entire remaining term; or
• Actual damages from such a breach would be so unpredictable that full acceleration without offset was a fair approximation.

This resembles clauses that Illinois courts have found to be penalties, such as:

• GK Development, Inc. v. Iowa Malls Financing Corp., 2013 IL App (1st) 112802, ¶ 54 (liquidated damages equal to the “entire present-day value of [a] 20-year lease” for delay in obtaining permits found not a reasonable prediction of damages); and
• Hair Fairies, 2022 IL App (1st) 211597-U, ¶ 31 (similar concerns).

By contrast, in Penske Truck Leasing Co., L.P. v. Chemetco, Inc., 311 Ill. App. 3d 447 (5th Dist. 2000), a liquidated damages clause was upheld where the damages formula clearly tracked the actual costs associated with breach.

Given the lack of specific evidence that the Chilton clause was a reasonable ex ante forecast, the Seventh Circuit:

• Vacates the portion of the accelerated-rent award attributable to the Chilton lease; and
• Remands for the district court to:
  • Reconsider whether that clause is enforceable as a valid liquidated damages provision; and
  • If not, recalculate damages to exclude Chilton accelerated rent (while preserving other components).

The panel explicitly leaves to the district court whether additional evidence or briefing is needed on remand or whether the record already compels exclusion of the Chilton acceleration amount.

E. Liquidated damages for breach of the Purchase Option Exercise Agreement

The district court also awarded $1,098,670.93 in liquidated damages for the tenants’ failure to close on the agreed purchase of the properties. As with the rent acceleration, this provision must satisfy Illinois’ liquidated damages test.

Here, the Seventh Circuit focuses particularly on the third element: whether actual damages from the breach would be “uncertain in amount and difficult to prove.” It concludes they were not.

Key points:

• Nature of the breach: Failure to close on a real estate purchase at an agreed price by an agreed date.
• Usual measure of damages: The difference between the contract price and the fair market value at the time of breach (often evidenced by the price obtained on resale), plus foreseeable consequential damages and transaction costs.
• Plaintiffs in fact proved actual damages: Through their diminution-in-value evidence and documentation of the distressed 2019 sale and associated costs.

Illinois decisions like Hickox v. Bell, 195 Ill. App. 3d 976, 988 (5th Dist. 1990), teach that liquidated damages are invalid when actual damages are reasonably ascertainable. Moreover, the panel cites Morris v. Flores, 174 Ill. App. 3d 504, 506 (2d Dist. 1988), to emphasize a distinct principle in the real estate context:

• Liquidated damages must substitute for, not supplement, actual damages.
• A vendor cannot both collect liquidated damages (e.g., forfeited earnest money) and pursue additional money-damages remedies arising from the same breach, absent clear contractual language to the contrary that itself might render the clause suspect as punitive.

In this case:

• Several major categories of actual damages (especially diminution in value) are directly tied to the failed sale and the distressed eventual disposition of the properties.
• Those damages are not unduly uncertain or speculative and have already been awarded.
• Allowing plaintiffs to also recover the option liquidated damages would overcompensate them for the same economic injury.

The Seventh Circuit therefore holds the purchase-option liquidated damages clause unenforceable as a matter of law and reverses that portion of the award in full. It notes that plaintiffs’ counsel essentially conceded at oral argument that such a provision should not operate in addition to full compensatory damages for the same breach.

IV. Complex Concepts Simplified

1. Diversity jurisdiction and unincorporated entities

For federal diversity jurisdiction:

• Individuals: citizenship is the state of domicile.
• Corporations: citizenship is both state of incorporation and principal place of business.
• LLCs and partnerships: citizenship is that of all members/partners, not the state where the entity was formed or does business.

Here, because the plaintiff LLCs were ultimately owned by a Maryland-incorporated REIT headquartered in California, they were citizens of both Maryland and California. When plaintiffs discovered that co-guarantor Burris III was also a California citizen, his presence destroyed complete diversity until he was dismissed.

2. Joint and several liability and guaranties

In a joint and several guaranty:

• Each guarantor is liable for the entire obligation, not just a proportional share.
• The creditor may sue one, some, or all guarantors, and collect in full from any one of them (subject to any internal rights of contribution between guarantors).
• Because of this, joint-and-several co-guarantors generally are not indispensable under Rule 19.

A “conclusive judgment” clause in a guaranty purports to treat judgments against one guarantor as binding proof against others in later suits. Courts treat such clauses as enhancing contractual remedies, but they do not override basic due-process limits on non-party preclusion.

3. Rule 19 “necessary” vs. “indispensable” parties

• Necessary/required party (Rule 19(a)): Someone whose absence makes it harder to grant complete relief, or whose interests might be impaired, or whose absence may expose existing parties to inconsistent obligations.
• Indispensable party (Rule 19(b)): A necessary party who cannot be joined (e.g., destroys diversity), and whose absence makes it impossible to structure a fair judgment. If indispensable, the case must be dismissed.
• Joint co-obligors under a contract are usually not indispensable because the plaintiff can get complete relief from those who are present.

4. Liquidated damages vs. penalties

A liquidated damages clause is an agreed sum to be paid upon breach. It is enforceable if:

1. The parties intended it as a genuine pre-estimate of damages;
2. The amount was reasonable at the time of contracting, bearing some relationship to the anticipated loss; and
3. Actual damages are uncertain or difficult to measure.

If a clause is grossly disproportionate to likely harm or actual damages are readily provable, courts treat it as an unenforceable penalty—a punishment rather than compensation—which contract law generally forbids.

5. Rent-acceleration clauses

A rent-acceleration clause typically states that upon tenant default:

• All remaining rent for the rest of the lease term becomes immediately due and payable.

Because future rent is not yet “earned,” Illinois treats such clauses as a form of liquidated damages. Potential issues:

• Double recovery: If the landlord accelerates all rent and also relets the premises, it might receive more than its actual loss unless the clause requires credits for re-letting income.
• Overbreadth: A clause that accelerates all rent even for trivial breaches or where re-letting is feasible can be considered punitive and invalid.

An acceleration provision is more likely to be enforced when:

• It explicitly requires the landlord to credit net rents from re-letting or other mitigation;
• It applies only to serious breaches; and
• It is supported by evidence that damages from such breaches are hard to predict and prove.

6. Diminution in value

“Diminution in value” measures how much less valuable a property (or business) is because of the breach compared to what its value would have been if the contract had been performed. In leasing contexts, this can arise when:

• A tenant’s breach causes physical damage;
• The property loses a lucrative use or license (as here, a nursing-home license); or
• The landlord is forced to sell at a distressed price rather than at stabilized market value.

Courts often measure this using:

• Capitalization of expected income streams at a specified rate; and
• Discounting to present value.

7. Mitigation of damages

An injured party must take reasonable steps to minimize further loss. For landlords, this can include:

• Attempting to relet or sell the property;
• Working with brokers to market the property; and
• Accepting reasonable offers.

Mitigation does not require heroic efforts or acceptance of unreasonably low offers, but it does demand that the injured party not “sit still” and allow avoidable losses to pile up.

V. Broader Impact and Future Litigation

A. Federal jurisdiction and strategic party dismissal

The opinion strengthens and clarifies a key procedural principle: joint-and-several obligors, including co-guarantors, are not indispensable parties under Rule 19(b) in standard suits to enforce a contract obligation. This has several consequences:

• Preserving diversity jurisdiction: Plaintiffs can safely drop nondiverse co-guarantors under Rule 21 to preserve or create federal diversity jurisdiction, consistent with Newman-Green.
• No per se indispensability of contracting parties: The court definitively rejects readings of Davis Companies that suggest all contracting parties are indispensably required in any suit involving the contract.
• Litigation strategy: Defendants cannot easily defeat diversity by invoking Rule 19 to force joinder of co-guarantors or co-obligors whose absence does not prevent full relief between the existing parties.

B. Drafting and enforcing guaranties

For transactional lawyers, the case confirms:

• Joint-and-several guaranties will often allow lenders/landlords to choose which guarantors to sue and in what forum, without risking dismissal for nonjoinder.
• Provisions purporting to make nonparty guarantors “conclusively bound” by judgments may strengthen the creditor’s contractual position in later suits but do not convert those guarantors into indispensable parties for Rule 19 purposes.
• Waiver-of-defenses provisions in guaranties—like waiver of mitigation defenses—may be enforceable under Illinois law (per WEC 98C-3 and Takiff), but counsel should explicitly raise and develop such arguments; courts are unlikely to reach them sua sponte.

C. Rent acceleration and liquidated damages in Illinois leases

For landlords and tenants in Illinois (and those drafting leases governed by Illinois law), the opinion underscores several practical points:

• Include offsets in acceleration clauses:
  • Acceleration provisions should expressly deduct “net rents” or other amounts received upon re-letting or sale.
  • This not only aligns with mitigation principles but also strengthens the clause’s status as a reasonable ex ante forecast of damages.
• Explain difficulty of proving actual damages:
  • Leases can recite that in the event of early termination, actual damages (lost rent, costs of re-letting, downtime, etc.) will be complex and uncertain to calculate, helping satisfy the third prong of the liquidated damages test.
• Beware of sweeping, unconditional acceleration:
  • Clauses that accelerate all remaining rent for any breach, without regard to severity or mitigation, are vulnerable to being characterized as penalties.
  • The Chilton clause here is a cautionary example.

D. Real estate purchase options and double recovery

The decision sends a clear signal about liquidated damages in real estate purchase agreements:

• Such clauses are more likely to be sustained when they are the exclusive remedy for failure to close and are reasonably related to anticipated harms (e.g., loss of marketing time, unique opportunity costs) that are genuinely difficult to quantify.
• When a seller also seeks major categories of actual damages arising from the same failed transaction (e.g., difference between contract price and eventual sale price, holding and carrying costs), courts will be reluctant to enforce additional liquidated damages without clear evidence they were intended to replace those actual damages.
• Transactional drafters should consider forcing an election of remedies—either liquidated damages or actual damages—to avoid arguments that the clause is a penalty or leads to double recovery.

E. Proving damages at summary judgment

The case also illustrates that:

• At summary judgment, a defendant who provides no evidence on damages, invoking the Fifth Amendment or otherwise, runs a significant risk that the plaintiff’s supported damages case will be accepted wholesale, subject only to legal scrutiny.
• Even so, courts have an independent obligation to ensure damages meet the governing legal standards, as reflected in the Seventh Circuit’s partial vacatur of accelerated rent and purchase-option liquidated damages.

F. Health-care facilities, licensing, and property value

Substantively, the decision confirms that:

• The loss of a facility’s operating licenses and change of use (from licensed nursing facility to something else) can be a compensable element of contract damages, measured through diminution in value.
• In highly regulated industries like skilled nursing, the link between contractual obligations (to maintain operations and pay rent) and regulatory status (licenses, permits) can be central to damages analysis.

Conclusion

CCP Golden/7470 LLC v. Breslin is an instructive decision on both civil procedure and contract remedies. Procedurally, it reinforces the principle that joint-and-several guarantors are not indispensable parties, enabling federal courts to preserve diversity jurisdiction by dismissing nondiverse co-guarantors under Rule 21. It also clarifies that there is no per se rule that every contracting party must be present in every suit involving that contract; indispensability remains a context-specific inquiry.

Substantively, the decision provides a careful application of Illinois damages law in a complex commercial leasing and health-care setting. The Seventh Circuit:

• Affirms a substantial diminution-in-value award based on reasonable capitalization and discounting methods;
• Upholds the landlords’ mitigation efforts;
• Critically examines rent-acceleration clauses as liquidated damages, distinguishing between those that incorporate mitigation and those that do not; and
• Declares unenforceable a real estate purchase-option liquidated damages clause where actual damages were neither uncertain nor difficult to prove, and where the clause would operate as an unwarranted supplement to full compensatory damages.

For litigators, drafters, and commercial parties, the case highlights the importance of:

• Thoughtful design of guaranties, acceleration clauses, and liquidated damages provisions;
• Developing a robust evidentiary record on the reasonableness of such clauses at the time of contracting; and
• Separating truly uncertain, hard-to-quantify losses (appropriate for liquidated damages) from those that can be measured and proved as actual compensatory damages.

In short, Breslin refines the law governing when and how landlords and creditors may recover high-stakes commercial damages in federal diversity actions, while ensuring adherence to both procedural fairness and substantive limits on punitive contractual remedies.