St. George Chicago, Inc. v. George J. Murges & Associates, Ltd.

Decision Date08 May 1998
Docket NumberNo. 1-96-3417,1-96-3417
Citation695 N.E.2d 503,296 Ill.App.3d 285,230 Ill.Dec. 1013
Parties, 230 Ill.Dec. 1013 ST. GEORGE CHICAGO, INC. and St. George International, Inc., Plaintiffs-Appellants, v. GEORGE J. MURGES & ASSOCIATES, LTD., George J. Murges, Lane A. Corday, and John T. Bowman, Defendants-Appellees. First District, Fifth Division
CourtUnited States Appellate Court of Illinois

Michael P. Siavelis, Johnson & Bell, Ltd., Chicago, for George J. Murges & Associates, Ltd. and George J. Murges.

Kevin S. Besetzny, David A. Novoselsky & Associates, Chicago, for Lane A. Corday and John T. Bowman.

Justice HOURIHANE delivered the opinion of the court:

Plaintiff, St. George International, Inc., leased office space to the law firm of Murges, Bowman & Corday, Ltd. (MBC). Following the firm's abandonment of the premises, plaintiff sued MBC for damages under the lease. The matter was tried to a jury, which entered a general verdict in favor of plaintiff and awarded damages of $171,553. The trial court found that the verdict was inconsistent with the jury's answers to three special interrogatories, which indicated that plaintiff had failed to mitigate damages, and entered judgment on the special interrogatories in favor of defendants. Plaintiff appeals.

We reverse and remand for a new trial.

BACKGROUND

Plaintiff leased 3,755 square feet of office space to MBC in plaintiff's building located at 33 North Dearborn Street in Chicago. Defendants George J. Murges, Lane A. Corday, and John T. Bowman each guaranteed MBC's lease obligations. Under the ten-year lease, which commenced October 1, 1988, MBC was entitled to a rent abatement for the first 33 months. During this period, MBC paid only its pro rata share of taxes and operating expenses.

In January 1992, Bowman and Corday left MBC and established a law firm at another location. Murges remained in the MBC suite at 33 North Dearborn, but was unable to satisfy MBC's lease obligations. In April 1992, Murges vacated the leased premises.

On May 12, 1992, plaintiff served MBC with a landlord's five-day notice, and on August 4, 1992, plaintiff terminated the lease for non-payment of rent, reserving its right to sue for damages under the lease. Plaintiff subsequently filed suit for breach of contract against MBC (now known as George J. Murges & Associates, Ltd.) and the individual lease guarantors. Defendants asserted several affirmative defenses, including the failure to mitigate damages.

Prior to trial, plaintiff moved, pursuant to section 2-1005(d) of the Code of Civil Procedure (Code) (735 ILCS 5/2-1005(d) (West 1996)), for a summary determination that the damages formula in section 21.06 of the lease satisfied its duty to mitigate damages. Section 21.06 states:

"In the event of the termination of this Lease by Landlord as provided for by subparagraph (a) of Section 21.02 or otherwise, Landlord shall be entitled to recover from Tenant all Monthly Base Rent and Operating Expense Adjustments accrued and unpaid for the period up to and including such termination date, as well as all other additional sums payable by Tenant hereunder. In addition, Landlord shall be entitled to recover as damages for loss of the bargain and not as a penalty the sum of (x) the unamortized cost to Landlord, computed and determined in accordance with generally accepted accounting principles, of any tenant improvements, provided by Landlord at its expense, (y) the aggregate sum which at the time of such termination represents the excess if any of the present value of the aggregate Monthly Base Rent and Operating Expense Adjustments at the same annual rate for the remainder of the Term as then in effect over the then present value of the then aggregate fair rental value of the Premises for the balance of the Term, immediately prior to such termination, such present worth to be computed in each case on the basis of a three percent (3%) per annum discount from the respective dates upon which rentals would have been payable hereunder had the Term not been terminated and (z) any damages in addition thereto, including reasonable attorneys' fees and court costs, which Landlord shall have sustained by reason of the breach of any of the covenants of this Lease other than for the payment of Rent." (Emphasis added.)

The trial court denied plaintiff's motion for summary determination, finding in part that section 21.06 is ambiguous and must be construed against plaintiff.

At trial, plaintiff sought to recover $340,264.64 in damages: $33,069.72 for unpaid rent for April through July 1992; $78,712.92 for unamortized tenant improvements; and $228,482 for the "rent differential" pursuant to section 21.06 of the lease.

The jury returned a verdict in favor of plaintiff, awarding damages only on plaintiff's rent differential claim in the amount of $171,553. The jury also answered three special interrogatories, each indicating that plaintiff had failed to mitigate damages. The trial court granted defendants' motion for judgment on the special interrogatories and denied plaintiff's subsequent motion for judgment notwithstanding the judgment entered on the special interrogatories or in the alternative for a new trial. Plaintiff appeals. 155 Ill.2d R. 301.

ANALYSIS

Preliminarily, we consider the motion of defendants Bowman and Corday to strike plaintiff's statement of facts as not in conformity with Supreme Court Rule "341(6)". 155 Ill.2d R. 341(e)(6). Defendants do not elaborate in what respect the statement of facts is improper or specify the offending portions. Accordingly, the motion will be denied. To the extent plaintiff has failed to provide adequate record citations or engaged in improper argument, such statements will be disregarded. See Rockford Metropolitan Exposition Auditorium & Office Building Authority v. Illinois State Labor Relations Board, 224 Ill.App.3d 1007, 1012, 167 Ill.Dec. 89, 586 N.E.2d 1361 (1992).

Plaintiff requests that the judgment be reversed and the cause remanded for entry of judgment in favor of plaintiff for the full amount of its damages. Alternatively, plaintiff asks that the jury verdict be reinstated, or that the judgment be vacated and the case remanded for a new trial. Although plaintiff claims numerous errors by the trial court, the gravamen of its appeal is that the trial court erred when it ruled that the provisions of section 21.06 of the lease did not, as a matter of law, satisfy plaintiff's duty to mitigate damages. We agree.

Because the case was tried under an incorrect theory of law, the appropriate action is to reverse and remand for a new trial, which we do. Sparling v. Peabody Coal Co., 59 Ill.2d 491, 496, 322 N.E.2d 5 (1974); Gilbert's Ethan Allen Gallery v. Ethan Allen, Inc., 251 Ill.App.3d 17, 29-30, 190 Ill.Dec. 88, 620 N.E.2d 1349 (1993).

A.

Section 9-213.1 of the Code provides that "a landlord or his or her agent shall take reasonable measures to mitigate the damages recoverable against a defaulting lessee." 735 ILCS 5/9-213.1 (West 1996).

Plaintiff argues that the damages calculation under section 21.06 of the lease satisfies its statutory duty to mitigate damages because it assumes that a replacement tenant took possession of the premises immediately upon termination of the lease, and at a rent equal to the then prevailing market rate. Thus, plaintiff maintains that section 21.06 removes any risk that despite reasonable efforts to mitigate, plaintiff will be unable to relet the premises. According to plaintiff, because section 21.06 credits the tenant with the maximum amount of mitigation possible, plaintiff's actual efforts to relet the premises are irrelevant. Defendants maintain that the trial court properly rejected this argument.

Preliminarily, and without regard to whether section 21.06 satisfies plaintiff's duty to mitigate, we consider whether, as the trial court determined, section 21.06 is ambiguous. A contract will be deemed ambiguous if its language is susceptible of more than one reasonable interpretation. Farm Credit Bank of St. Louis v. Whitlock, 144 Ill.2d 440, 447, 163 Ill.Dec. 510, 581 N.E.2d 664 (1991); United States Fidelity & Guaranty Co. v Wilkin Insulation Co., 144 Ill.2d 64, 74, 161 Ill.Dec. 280, 578 N.E.2d 926 (1991). A contract is not "ambiguous" merely because the parties disagree as to its meaning. Ford v. Dovenmuehle Mortgage, Inc., 273 Ill.App.3d 240, 244, 209 Ill.Dec. 573, 651 N.E.2d 751 (1995). On appeal, this court considers the issue de novo, and makes an independent review of the contract to determine whether there is only one fair and reasonable interpretation. Ford, 273 Ill.App.3d at 244-45, 209 Ill.Dec. 573, 651 N.E.2d 751.

Section 21.06 provides that upon termination of a defaulting tenant's lease, plaintiff is entitled to recover the following amounts: (1) unpaid rent and operating expenses through the date of termination of the lease; (2) unamortized cost of tenant improvements; (3) an amount which plaintiff has termed "rent differential"; and (4) attorney fees and courts costs.

It is the third component of damages, the so-called "rent differential", that is at issue. This component of damages is described in the lease as:

"[T]he aggregate sum which at the time of such termination represents the excess if any of the present value of the aggregate Monthly Base Rent and Operating Expense Adjustments at the same annual rate for the remainder of the Term as then in effect over the then present value of the then aggregate fair rental value of the Premises for the balance of the Term, immediately prior to such termination, such present worth to be computed in each case on the basis of a three percent (3%) per annum discount from the respective dates upon which rentals would have been payable hereunder had the...

To continue reading

Request your trial
35 cases
  • DW Data, Inc. v. C. Coakley Relocation Sys., Inc.
    • United States
    • U.S. District Court — Northern District of Illinois
    • June 25, 2013
    ...Mills, 252 N.Y. 347, 358, 169 N.E. 605 (1930) (Cardozo, C.J., concurring); St. George Chicago, Inc. v. George J. Murges & Assoc., 296 Ill.App.3d 285, 293, 230 Ill.Dec. 1013, 695 N.E.2d 503 (1st Dist.1998.). 15. Despite the defendant's knowledge of the circumstances of Ms. Wright's acquisiti......
  • Ner Tamid Congregation of N. Town v. Krivoruchko
    • United States
    • U.S. District Court — Northern District of Illinois
    • July 7, 2009
    ...252 N.Y. 347, 358, 169 N.E. 605, 609 (1930) (Cardozo, C.J., concurring); St. George Chicago, Inc. v. George J. Murges & Associates, Ltd., 296 Ill.App.3d 285, 293, 230 Ill.Dec. 1013, 695 N.E.2d 503, 509 (1st Dist.1998); Restatement (Second) of Contracts § 350, Comment b. To sustain the defen......
  • Boyer v. Buol Props.
    • United States
    • United States Appellate Court of Illinois
    • November 20, 2014
    ...simply cannot recover for that portion of losses which she could have avoided. St. George Chicago, Inc. v. George J. Murges & Associates, Ltd., 296 Ill.App.3d 285, 293, 230 Ill.Dec. 1013, 695 N.E.2d 503 (1998). In other words, where an injured party permits her loss to be unnecessarily enha......
  • Guerrant v. Roth
    • United States
    • United States Appellate Court of Illinois
    • September 13, 2002
    ... ... Corporation; and McCoy Real Estate Services, Inc., an Illinois Corporation, Defendants (D'Ancona & ... N.E.2d 500 D'Ancona & Pflaum, L.L.C., Chicago (Paul E. Freehling, of counsel), for Appellant ... 303, 736 N.E.2d 145, 153 (2000) ; St. George Chicago, Inc. v. George J. Murges & Associates, ... Dowd & Dowd, Ltd. v. Gleason, 181 Ill.2d 460, 230 Ill.Dec. 229, ... ...
  • Request a trial to view additional results
1 firm's commentaries
  • Mitigation Of Damages In Commercial Lease Disputes ' IL
    • United States
    • Mondaq United States
    • May 25, 2023
    ...mitigate damages was raised as an affirmative defense by the tenant. St. George Chicago, Inc. v. George J. Murges & Associates, Ltd., 296 Ill.App.3d 285, 695 N.E.2d 503, 508 - 509, 230 Ill.Dec. 1013 (1st Dist. 1998); Snyder v. Ambrose, 266 Ill.App.3d 163, 639 N.E.2d 639, 640 - 641, 203 Ill.......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT