1002 E. 87th St. LLC v. Midway Broad. Corp.

• Citation: 107 N.E.3d 868,2018 IL App (1st) 171691
• Decision Date: 05 June 2018
• Docket Number: No. 1–17–1691,1–17–1691
• Parties: 1002 E. 87TH STREET LLC, Plaintiff–Appellant, v. MIDWAY BROADCASTING CORPORATION, Melody Spann Cooper, and Pierre Cooper, Defendants–Appellees.
• Court: United States Appellate Court of Illinois

2018 IL App (1st) 171691
107 N.E.3d 868

1002 E. 87TH STREET LLC, Plaintiff–Appellant,
v.
MIDWAY BROADCASTING CORPORATION, Melody Spann Cooper, and Pierre Cooper, Defendants–Appellees.

No. 1–17–1691

Appellate Court of Illinois, First District, Second Division.

Opinion filed June 5, 2018

Charles G. Albert, of Albert, Whitehead, P.C., of Chicago, for appellant.

Linda C. Chatman, of Chatman Law Offices, LLC, of Chicago, for appellees.

JUSTICE HYMAN delivered the judgment of the court, with opinion.

¶ 1 Does a new landlord have standing to sue a tenant for rent that accrued before purchasing the property?

¶ 2 Plaintiff, 1002 E. 87th Street, LLC (87th Street), filed a verified complaint, seeking to evict defendant, Midway Broadcasting Corporation (Midway), for unpaid rent. 87th Street also sought to collect on the guaranty signed by Melody Spann Cooper and Pierre Cooper. The trial court dismissed 87th Street's complaint, finding that 87th Street lacked standing to recover rent that accrued before it owned the property. Under the terms of the lease, the trial court granted Midway attorney's fees and denied 87th Street attorney's fees.

¶ 3 87th Street argues the trial court erred in dismissing the verified complaint because (i) the trial court failed to follow the appropriate legal standard on the motion to dismiss, (ii) the lease established 87th Street's standing, (iii) Midway filed counterclaims against 87th Street on the basis of 87th Street's "standing," and (iv) the trial court had no legal support for its decision. 87th Street also contends the trial

107 N.E.3d 871

court should not have awarded attorney's fees to Midway or to the guarantors and instead, should have awarded it attorney's fees as the prevailing party to Midway's counterclaims. Lastly, 87th Street asserts the trial court should have modified the agreed order on use and occupancy payments to match the lease's terms.

¶ 4 We affirm the trial court's dismissal of 87th Street's complaint for lack of standing. Under the lease, 87th Street is not entitled to bring suit for rent that accrued before it owned the property. We affirm the award of attorney's fees to Midway and the denial of 87th Street's attorney's fees, as 87th Street was not a prevailing party. And we affirm the trial court's decision not to modify the agreed order for use and occupancy payments because 87th Street failed to provide a sufficiently complete record.

¶ 5 Background

¶ 6 The facts are relatively simple. Midway operated a radio station at 1002 E. 87th Street, Chicago, leasing the space from Jeff BV Commercial, LLC (Jeff BV). Melody Spann–Cooper and Pierre Cooper signed the lease as guarantors. Jeff BV sold the property to Glass Management Services, Inc., which then sold it to 1002 E. 87th Street, LLC. The lease provides that Midway will pay rent "without abatement, demand, deduction or offset whatsoever * * *." The lease also indicates that the landlord "shall include the party named as such in the first paragraph thereof, its representatives, assigns and successors in title to the Premises." When an original owner conveys the property, the "[t]enant agrees to attorn to such new owner." This section further specifies that, when the original landlord conveys the property, all liabilities and obligations "accrued thereafter are terminated" and all liabilities and obligations of the original landlord "shall be binding upon the new owner." Finally, the lease provides that the prevailing party in enforcing the lease "shall be entitled to recover from the nonprevailing party any costs, expenses and reasonable attorney's fees incurred."

¶ 7 In January 2015, after Jeff BV sold the property, Midway sent two checks to Chicago Real Estate Resources (CRER), the property agent, paid to "Glass Management" for January rent. CRER returned the checks and demanded $72,810, the amount in past due rent it claimed Midway owed Jeff BV before Jeff BV sold the property. Midway denied that it owed past due rent, claiming that Jeff BV failed to maintain the property and that 87th Street was not the owner of the property when the past due rent allegedly accrued.

¶ 8 Later that month, 87th Street filed its verified complaint for eviction and possession of the property. The trial court entered an agreed order on use and occupancy payments. Midway counterclaimed, alleging that 87th Street stood in the shoes of Jeff BV, and was now liable for breach of contract for failing to maintain the property. The counterclaim also alleged civil conspiracy against Midway, tortious interference with contract, and tortious interference with a prospective financial advantage.

¶ 9 Two years later, Midway filed a motion to dismiss the complaint under section 2–619 of the Code of Civil Procedure (Code) ( 735 ILCS 5/2–619 (West 2014) ), claiming 87th Street lacked standing to claim the past due rent. At the same time, 87th Street moved for summary judgment under section 2–1005 of the Code (id. § 2–1005), alleging that Midway could not dispute failing to pay rent to Jeff BV and, accordingly, defaulted under the lease. The trial court granted Midway's motion to dismiss and denied 87th Street's motion for summary judgment.

¶ 10 The trial court also awarded attorney's fees to Midway as the prevailing

107 N.E.3d 872

party and denied 87th Street's request for attorney's fees. Midway then filed a second motion to modify the agreed order on use and occupancy payments, arguing that it should be modified to reflect the annual rent adjustments under the lease. The trial court denied the motion.

¶ 11 Analysis

¶ 12 Standard of Review

¶ 13 A motion to dismiss a claim based on section 2–619 of the Code (id. § 2–619 ) admits the legal sufficiency of the plaintiff's allegations but asserts affirmative matter that avoids or defeats the claim. DeLuna v. Burciaga , 223 Ill. 2d 49, 59, 306 Ill.Dec. 136, 857 N.E.2d 229 (2006). On review, we accept well-pled facts as true and construe the facts in the light most favorable to the nonmoving party. Krozel v. Court of Claims , 2017 IL App (1st) 162068, ¶ 13, 413 Ill.Dec. 358, 77 N.E.3d 1165. We review a trial court's section 2–619 dismissal de novo . Grady v. Illinois Department of Healthcare & Family Services , 2016 IL App (1st) 152402, ¶ 9, 409 Ill.Dec. 145, 67 N.E.3d 357. De novo review requires us to perform the same type of analysis as the trial court. A.M. Realty Western L.L.C. v. MSMC Realty, L.L.C. , 2012 IL App (1st) 121183, ¶ 37, 367 Ill.Dec. 354, 981 N.E.2d 1082.

¶ 14 Standing

¶ 15 87th Street contends the lease established its standing. 87th Street claims the lease entitles it to demand strict compliance with the past due rent provision. 87th Street also claims rent accrual is a chose in action and, thus, freely assignable. Midway counters that 87th Street only has standing to sue for rent that comes due after it became the landlord, and not for past due rent that accrued before then. Additionally, Midway counters that rent in arrears is a chose in action that is not assignable to a new property owner.

¶ 16 A lack of standing is considered an affirmative defense under section 2–619(a)(9) of the Code. In re Estate of Schlenker , 209 Ill. 2d 456, 461, 283 Ill.Dec. 707, 808 N.E.2d 995 (2004) ; 735 ILCS 5/2–619(a)(9) (West 2014). Standing requires a plaintiff to have an interest in the action and its potential outcome. Unifund CCR Partners v. Shah , 407 Ill. App. 3d 737, 740, 349 Ill.Dec. 389, 946 N.E.2d 885 (2011). Usually, the defendant has the burden to prove the affirmative defense of lack of standing. Noyola v. Board of Education of the City of Chicago , 227 Ill. App. 3d 429, 433, 169 Ill.Dec. 678, 592 N.E.2d 165 (1992).

¶ 17 In general, a landlord has standing to sue for unpaid rent. 735 ILCS 5/9–209 (West 2014) ; American Management Consultant, LLC v. Carter , 392 Ill. App. 3d 39, 44, 333 Ill.Dec. 605, 915 N.E.2d 411 (2009). If a landlord conveys property by warranty deed without reserving any rights, he or she also conveys the leases for the property, as well as the right to receive unaccrued rent. Pros Corporate Management Services, Inc. v. Ashley S. Rose, Ltd. , 228 Ill. App. 3d 573, 580, 170 Ill.Dec. 173, 592 N.E.2d 609 (1992). If a tenant fails to pay rent that becomes due, the new landlord has standing to sue for it. Id. at 580–81, 170 Ill.Dec. 173, 592 N.E.2d 609 ; American Management Consultant, LLC , 392 Ill. App. 3d at 44, 333 Ill.Dec. 605, 915 N.E.2d 411 ; Dasenbrock v. Interstate Restaurant Corp. , 7 Ill. App. 3d 295, 298, 287 N.E.2d 151 (1972). But the new landlord does not have a right to recover rent due from before it owned the property. Lipschultz v. Robertson , 407 Ill. 470, 474, 95 N.E.2d 357 (1950) (conveyed lease gives right to receive unaccrued rents). The original landlord retains any right to recover past due rent. Dasenbrock , 7 Ill. App. 3d at 302, 287 N.E.2d 151.

107 N.E.3d 873

¶ 18 87th Street contends that it has standing to sue under the provision in the lease providing, "[n]o failure of landlord to exercise any power * * * or to insist upon strict compliance * * * and no custom or practice of the parties * * * shall constitute a waiver of Landlord's right to demand exact compliance with the terms * * *." 87th Street believes that, as landlord, it can...