Castellano v. Wal-Mart Stores, Inc.
| Decision Date | 24 June 2004 |
| Docket Number | No. 03-2953.,03-2953. |
| Citation | 373 F.3d 817 |
| Parties | Roberta CASTELLANO and Marion Castellano, Plaintiffs-Appellants, v. WAL-MART STORES, INCORPORATED, a Delaware corporation, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Alfred E. Sanders, Jr. (argued), Carbondale, IL, for Plaintiffs-Appellants.
William J. Niehoff (argued), Mathis, Marifian, Richter & Grandy, Belleville, IL, for Defendant-Appellee.
Before FLAUM, Chief Judge, and BAUER and MANION, Circuit Judges.
Plaintiffs brought this action in the district court, charging breach of contract, invalidity of a lease amendment, breach of implied covenant of good faith and fair dealing, and two counts of fraud. The district court resolved all issues against the Plaintiffs through summary judgment and judgment as a matter of law. We review both summary judgment and judgment as a matter of law de novo. Juarez v. Menard, Inc., 366 F.3d 479, 481 (7th Cir.2004); Fillmore v. Page, 358 F.3d 496, 505 (7th Cir.2004).
In 1977 RJLC-1 Land Trust (RJLC) entered into a contract with Wal-Mart for the construction and lease of a commercial property in Marion, Illinois. RJLC then gave a mortgage to Republic Mortgage (Republic) and assigned the lease with Wal-Mart to Republic. Wal-Mart moved into the newly constructed retail space in 1979. Shortly thereafter, RJLC sold the property to Lancaster Trust and took back a second mortgage and assignment of rents.1 Sometime later, RJLC ceased to exist and the mortgage and assignment it held ultimately went to Roberta Castellano, Marion Castellano's wife. A tornado struck the building in 1982 and caused substantial damage, particularly to the roof. Wal-Mart undertook the necessary repairs under the emergency provisions of the lease.
By 1985 Lancaster had sold the property to Alan Sagner, who, in turn, sold the property to Marion Partners (no relation to Plaintiff Marion Castellano). In 1985, Wal-Mart added to the building by constructing an addition on neighboring property and removing one wall of the leased premises to join the addition to the original building. Then, in 1987 Wal-Mart negotiated a third amended lease with Marion Partners.
By 1990 the roof had begun to leak and continued to do so for a number of years. On May 5, 1997, Wal-Mart sent a letter to Marion Partners which purported to terminate the lease for Marion Partners' failure, or, more to the point, financial inability to fix the leaks. The lease was not terminated at that time. Marion Partners, however, had had enough and transferred the property to VistaCorp. Roberta Castellano then declared the mortgage she held in breach for wrongful transfer. VistaCorp ended up transferring the property to VP Land Trust — the legal beneficiary of which was J.D. Castellano, son of Roberta and Marion Castellano. Title was later transferred from VP Land Trust to Marion Castellano. Wal-Mart ultimately terminated the lease, moved out, and ceased paying rent.
When Wal-Mart moved out, the building was left in post-addition condition, i.e. it was missing one wall where it was attached to the adjoining property. Castellano sued for breach of contract, alleging that Wal-Mart had breached its duty to restore the common wall between the buildings.
In October 1998, a pair of letters were exchanged between the attorneys for Wal-Mart and Castellano. Castellano argued below that these letters constituted a partial settlement agreement wherein Wal-Mart would deed the building to Castellano in exchange for a release from the duty to restore the common wall. Castellano, after receiving the letter from Wal-Mart, began negotiations to sell the property to Rural King. Wal-Mart did not deliver the deed until April 6, 1999. This was after Castellano's attorney sent another letter to Wal-Mart's attorney, dated March 8, 1999, which memorialized an oral settlement agreement. The settlement agreement disposed of all outstanding issues except claims for roof repairs, past and future rents, removal of carpeting, and repair of tile. Castellano's third amended complaint included claims for breach of contract and fraud. The court disposed of the suit entering summary judgment in favor of Defendant on some of the claims and directing a verdict against the Plaintiffs on the remaining claims. Plaintiffs appeal.
Castellano argues that the October 1998 letters constituted a binding settlement agreement that Wal-Mart fraudulently refused to honor because it knew that Castellano was in a dire financial situation. These financial woes led Castellano to enter into the March 1999 settlement agreement — a situation he says constitutes economic duress. Illinois law is clear that duress "does not exist merely where consent to an agreement is secured because of hard bargaining positions or the pressure of financial circumstances." Cont'l Illinois Nat'l Bank and Trust Co. v. Stanley, 606 F.Supp. 558, 562 (N.D.Ill.1985). Furthermore, it is clear that Castellano had options — accept the March 1999 settlement offer or compel Wal-Mart to honor the October 1998 "agreement" by legal action. Castellano chose the former and accepted the benefits of the March 1999 settlement agreement. This is not duress. Moreover, entering into an agreement and accepting the benefits of that agreement ends the inquiry as to the validity of the settlement agreement. Joyce v. Year Investments, Inc., 45 Ill.App.2d 310, 196 N.E.2d 24, 26-7 (1964).
Since the March 1999 settlement agreement was binding and enforceable, then by its own terms, the only issues left in the case deal with "roof decking issues, roof repair issues, removal of carpeting from the tile floor, and rents due for the past and future, less any mitigation." This is true despite Plaintiffs' protestations to the contrary.
The Castellanos argue that the settlement letter's language stating, "the only remaining damage issues in this case ..." is ambiguous. It is not. The very same letter refers to the case by docket number. By referring to the case's docket number, the agreement unambiguously refers to the entire case.
Plaintiffs argue that the third amended lease is invalid and unenforceable due to the fact that the lessor and lessee of the property did not get the written consent of the mortgagees before amending the lease, as required under the assignments of rents. We disagree.
The facts show that Marion Partners, who originally executed the third amended lease, was a predecessor in interest to Marion Castellano. Being the successor in interest, Marion Castellano is bound by the terms of the third amended lease. Sweeting v. Campbell, 2 Ill.2d 491, 119 N.E.2d 237, 240 (1954). For the sake of fairness, we note that there is nothing to indicate that Marion Castellano did not know of the third amended lease when he acquired the property. In fact, the lease was discussed in a case between J.D. Castellano, Marion and Roberta Castellano's son, and Marion Partners which was decided in 1990. Castellano v. Marion Partners, 1990 WL 357916, at *5-6 (S.D.Ill.1990). It should also be noted that the original complaint and the first and second amended complaints named J.D. Castellano, as sole beneficiary of the V.P. Land Trust, as a Plaintiff. And, as Plaintiffs themselves note, "from an equitable standpoint, it would have been unjust for someone directly responsible for signing the document to now claim that the signature was ineffective." We agree. And since Marion Castellano is a successor in interest, he is, legally speaking, directly responsible for signing the third amended lease. Sweeting, 119 N.E.2d 237, 2...
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