St. Louis North Joint Venture v. P & L Enterprises, Inc.

• Decision Date: 19 June 1997
• Docket Number: No. 96-3388,96-3388
• Citation: 116 F.3d 262
• Parties: ST. LOUIS NORTH JOINT VENTURE, an Ohio partnership, Plaintiff-Appellee, v. P & L ENTERPRISES, INC., an Illinois corporation, Patrick Newman, Cheryl L. Newman, Leonard Gall, and Lucinda Gall, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 262

116 F.3d 262

ST. LOUIS NORTH JOINT VENTURE, an Ohio partnership, Plaintiff-Appellee, v. P & L ENTERPRISES, INC., an Illinois corporation, Patrick Newman, Cheryl L. Newman, Leonard Gall, and Lucinda Gall, Defendants-Appellants.

No. 96-3388.

United States Court of Appeals, Seventh Circuit.

Argued April 11, 1997.

Decided June 19, 1997.

John B. Alsterda, Gini S. Marziani (argued), Davis, Mannix & McGrath, Chicago, IL, for plaintiff-appellee.

Francis J. Giganti (argued), Huntley & Giganti, Springfield, IL, for defendants-appellants.

Before CUDAHY, FLAUM and ROVNER, Circuit Judges.

FLAUM, Circuit Judge.

Defendant-appellant P & L Enterprises, Inc., operator of a "Mr. Bulky's" franchise, a retailer of bulk candy products and related novelty items, entered into a ten-year commercial lease in June of 1990 with plaintiff-appellee St. Louis North Joint Venture for space in the Jamestown Mall. St. Louis brought the present action after P & L, without prior notice, closed Mr. Bulky's and vacated the premises in October of 1992. St. Louis sought damages for breach of the lease from P & L, as well as from the four individual defendants, Patrick Newman, Cheryl L. Newman, Leonard Gall and Lucinda Gall, joint and several guarantors of P & L's performance under the lease. ¹ Alleging that it was constructively evicted, P & L counterclaimed. The district court granted summary judgment for St. Louis. We affirm.

I.

Having chosen the Jamestown Mall as the future site of its Mr. Bulky's franchise, P & L entered into a ten-year lease in July of 1990 with St. Louis, the landlord of the Jamestown shopping center. One of the reasons P & L selected this location was the proposed expansion of the Jamestown Mall. Anticipating "a great economic boom" from the planned renovations and the addition of two "anchor" stores and forty-five specialty shops, Mr. Bulky's opened its doors in November of 1991. Although the proposed mall expansion project began in April of 1992, the economic boom predicted by the defendants did not materialize.

In business from November 1991 until October 1992, Mr. Bulky's never realized a profit. From the beginning of its lease, P & L failed to pay real estate taxes owed to the plaintiff, and, as of June 1992, stopped paying rent altogether. P & L attributes Mr. Bulky's poor performance to reduced traffic to the Mall resulting from the construction. Specifically, it claims that the closure of the east parking lot, the area in the closest proximity to the store, from April 1992 until November 1992 and the intermittent closure of the east mall entrance reduced customer traffic to the store by approximately forty percent. According to P & L, when it closed the store and vacated the premises in October of 1992, it had already been constructively evicted.

St. Louis argues that no reasonable jury could conclude that the changes necessitated by the construction operated as a constructive eviction. It is uncontested that the construction did not interfere with the ability of Mr. Bulky's customers or employees to enter or leave the store itself. The closed east entrance was one of five entrances to the Jamestown Mall, so that direct access to the mall's common areas remained possible through a west entrance and a northeast entrance, as well as through the Dillards and Sears department stores. Further, St. Louis points to the declining sales of another Mr. Bulky's store operated by P & L in the St. Louis area as evidence that Mr. Bulky's poor performance cannot be attributed to the mall's renovation. The Mr. Bulky's operated by defendants in South County Mall similarly experienced a thirty-seven percent decrease in sales during the same period, though there was no construction at that shopping center.

After Mr. Bulky's ceased operations, St. Louis' leasing agent, David Stec, took steps to relet the premises. Stec placed advertisements in national shopping center trade publications, identified prospective tenants, and contacted national tenants at other shopping centers, as well as local retailers, to suggest the location to them. Stec also personally contacted several companies, including The Limited, Petri, Women's World, Maurice, Kenny Shoes and U.S. Shoes. Negotiations began with a prospective tenant, Pandora's Canvas, in February 1993, culminating in the execution of a lease in September 1993.

The district court concluded that no reasonable jury could find that P & L had been constructively evicted, and granted summary judgment for St. Louis. The court also found that St. Louis had taken reasonable steps to mitigate its damages. P & L appeals both of these determinations.

II.

We first address defendants' contention that the district court erred in granting summary judgment for St. Louis on the breach of contract claim. We review the district court's grant of summary judgment de novo, reading the record in the light most favorable to the non-moving party. Geier v. Medtronic, Inc., 99 F.3d 238, 240 (7th Cir.1996); Testerman v. EDS Technical Products Corp., 98 F.3d 297, 301 (7th Cir.1996). "[S]ummary judgment is appropriate only if there remains no issue of material fact and the moving party is entitled to judgment as a matter of law." Testerman, 98 F.3d at 301.

Under Illinois law, "constructive eviction requires that the landlord have done something of a grave and permanent character with the intention of depriving the tenant of the enjoyment of the premises." Metropolitan Life Ins. Co. v. Nauss, 226 Ill.App.3d 1014, 168 Ill.Dec. 887, 891, 590 N.E.2d 524, 528 (1992); Advertising Checking Bureau, Inc. v. Canal-Randolph Assoc., 101 Ill.App.3d 140, 56 Ill.Dec. 634, 639, 427 N.E.2d 1039, 1044 (1981). "Where premises leased are rendered useless to the tenant or the tenant is deprived, in whole or in part, of the possession and enjoyment thereof as the result of the wrongful act of the landlord, there is a constructive eviction." Metropolitan Life Ins., 168 Ill.Dec. at 891, 590 N.E.2d at 528.

Viewing the facts of this case in the light most favorable to P & L, we nevertheless agree with the district court that no rational trier of fact could find in P & L's favor. The mall entrance nearest Mr. Bulky's, closed only sporadically, was one of five entrances to the mall, and it is undisputed that customers and employees had access to the store through these entrances at all times during construction. The parking lot nearest Mr. Bulky's was closed for only six months and reopened shortly after P & L abandoned the premises. ² The inconveniences necessitated by the construction cannot be considered "grave and permanent," nor could St. Louis' actions be considered "wrongful" or to have been done "with the intention of depriving [P & L] of enjoyment of the premises." See Metropolitan Life Ins., 168 Ill.Dec. at 891, 590 N.E.2d at 528. The renovation and expansion of the mall was contemplated by both parties prior to their entering into the lease. It was, in fact, according to defendants' own testimony, a motivating factor in their selection of the Jamestown Mall location. P & L could not reasonably have believed that this expansion project would be undertaken without construction and some accompanying...