Bank of Am., N.A. v. Cannonball LLC
Decision Date | 29 May 2014 |
Docket Number | No. 2–13–0858.,2–13–0858. |
Citation | 12 N.E.3d 841 |
Parties | BANK OF AMERICA, N.A., as Successor by Merger to LaSalle Bank National Association, Individually and as Authorized Agent, Plaintiff and Counterdefendant–Appellee, v. CANNONBALL LLC; David Bossy; Target Corporation; Kohl's Illinois, Inc.; Unknown Owners; and Nonrecord Claimants, Defendants (Home Depot U.S.A., Inc., Defendant and Counterplaintiff–Appellant). |
Court | United States Appellate Court of Illinois |
John D. Silk and Michael J. Wall, both of Rothschild, Barry & Myers LLP, of Chicago, for appellant.
Jeffrey D. Ganz and Philip J. Block, both of Riemer & Braunstein, LLP, of Chicago, for appellee.
delivered the judgment of the court, with opinion.
¶ 1 Bank of America, as successor by merger to LaSalle Bank National Association (LaSalle Bank), filed a mortgage foreclosure complaint against Home Depot U.S.A. (Home Depot), et al., to enforce various lending agreements that Bank of America had with Cannonball LLC (Cannonball), in connection with the development of the Kendall Marketplace shopping center (shopping center), a multibuilding, multitenant commercial development in Yorkville, Illinois. Home Depot's counterclaim sought, inter alia, a declaration that, pursuant to its agreements with Cannonball, it had certain covenants that ran with the land and were binding against Bank of America. Bank of America and Home Depot filed cross-motions for summary judgment. The trial court determined that the covenants at issue did not run with the land, granted summary judgment in favor of Bank of America, and denied Home Depot's motion for summary judgment. Subsequently, the trial court entered an order confirming the sale of the property at issue.
¶ 2 On appeal, Home Depot argues that summary judgment should have been granted in its favor and denied to Bank of America. Home Depot argues that the covenants run with the land and bind Bank of America pursuant to the explicit terms of the pertinent recorded documents and the sequence of recording those documents. We agree and reverse and remand.
¶ 4 In the spring of 2007, Cannonball entered into various agreements leading to the development of the shopping center. LaSalle Bank and Cannonball entered into a construction loan agreement for the purpose of acquiring real property and constructing the shopping center. Around this time, Cannonball sold certain tracts (anchor tracts) within the shopping center to Home Depot, Target Corporation (Target), and Kohl's Illinois, Inc. (Kohl's) (collectively, the anchor stores). Cannonball retained the central and remaining outlying portions of the shopping center for sale or lease to other retailers, and it retained roads, driveways, sidewalks, and parking areas that were not part of the anchor tracts. The construction loan agreement was secured by a mortgage in favor of LaSalle Bank and granting a lien on Cannonball's property (the mortgaged property), consisting of the shopping center except for the anchor tracts.
¶ 5 Also around this time, Cannonball and the anchor stores together entered into an operation and easement agreement (OEA) that granted nonexclusive easements to, inter alia, parking, driveway, and sidewalk areas of each party's tract and the “Common Drive.” Section 6.7 of the OEA provides:
“The terms of this OEA and all easements granted hereunder shall constitute covenants running with the land and shall bind the Parcels described therein and inure to the benefit of and be binding upon each Party.”
¶ 6 In addition, Yorkville issued and sold bonds to provide money to assist in the development of the shopping center with on-and off-site improvements. To recover the money, Yorkville imposed against all tracts within the shopping center a special tax that was called the “Special Service Area Tax” or the “SSA tax.”
¶ 7 Cannonball and the anchor stores entered into separate purchase agreements. In March 2007, Home Depot and Cannonball entered into a “Real Property Purchase Agreement” (purchase agreement) under which Home Depot purchased from Cannonball approximately 10 half-acres of land in the shopping center. Paragraph 20(l ) of the purchase agreement provides:
¶ 8 Pursuant to the purchase agreement, Cannonball agreed to reimburse Home Depot for part of the SSA tax Home Depot paid (reimbursement right). Paragraph 22(h) of the purchase agreement provides:
(Emphasis added.)
¶ 9 Cannonball and Home Depot entered into a development agreement, dated May 15, 2007. Section 7.8(c) of the development agreement provides in relevant part:
The development agreement also provides:
¶ 10 Cannonball, Home Depot, and LaSalle Bank entered into a payment and priority agreement, dated May 15, 2007, that provides, in relevant part:
“Lender shall have no obligations to the City or any of the Anchors under the Development agreements unless Lender expressly assumes Developer's obligations thereunder in writing.”
¶ 11 On May 24, 2007, and in the following order, the following documents were recorded with the office of the Kendall County recorder: the OEA; a “Memorandum of Agreement” regarding the purchase agreement between Cannonball and Home Depot; a “Memorandum of Development Agreement” regarding the development agreement between Cannonball and Home Depot; and the LaSalle Bank mortgage. The recorded memorandum regarding the purchase agreement provides, in part:
¶ 12 After Cannonball defaulted under the construction loan agreement, Bank of America filed a four-count amended complaint. Counts I through III, against Cannonball and David Bossy (Cannonball's loan guarantor), alleged breach of contract and sought money damages. Count IV, against Cannonball, Bossy, Home Depot, Target, and Kohl's, sought the foreclosure of the mortgaged property. Regarding Home Depot, Bank of America alleged only the following:
“The recorded and unrecorded claims and interests of this Defendant, if any, including but not limited to any actual or potential rights to record liens or exercise any other rights against the Property, pursuant to the Home Depot Purchase Agreement, the Home Depot [development agreement] or any other agreements, are subordinate and inferior to the lien and interest of Agent.”
¶ 13 Home Depot filed an answer to Bank of America's amended complaint, denying that its rights were inferior to those of Bank of America. Home Depot also asserted affirmative defenses...
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