Chicago Transit v. Clear Channel Outdoor

• Decision Date: 17 May 2006
• Docket Number: No. 1-04-2589.,1-04-2589.
• Citation: 851 N.E.2d 171
• Parties: CHICAGO TRANSIT AUTHORITY, a Municipal Corporation, Plaintiff-Appellee and Counterdefendant-Appellee, v. CLEAR CHANNEL OUTDOOR, INC., an Illinois Corporation, and Eller Media Company, a Delaware Corporation, Defendants-Appellants, Clear Channel Outdoor, Inc., an Illinois Corporation, Counterplaintiff-Appellant.
• Court: United States Appellate Court of Illinois

851 N.E.2d 171

CHICAGO TRANSIT AUTHORITY, a Municipal Corporation, Plaintiff-Appellee and Counterdefendant-Appellee, v. CLEAR CHANNEL OUTDOOR, INC., an Illinois Corporation, and Eller Media Company, a Delaware Corporation, Defendants-Appellants Clear Channel Outdoor, Inc., an Illinois Corporation, Counterplaintiff-Appellant.

No. 1-04-2589.

Appellate Court of Illinois, First District, Third Division.

May 17, 2006.

Darka Papushkewych, General Counsel, Chicago (Ellen Partridge, Deputy General Counsel and Stephen L. Wood, Chief Attorney), for Appellee.

Rock Fusco, LLC, Chicago (Philip J. Rock, Kevin W. Horan and Adam R. Moreland, of counsel), for Appellants.

Justice ERICKSON delivered the opinion of the court:

This case involves a dispute concerning approximately 50 advertising sign structures or billboards located on property belonging to the Chicago Transit Authority (CTA). The billboards are the subject of five agreements between the CTA and Clear Channel Outdoor, Inc. (CCO), and its various predecessors-in-interest, including Eller Media Company (Eller). The CTA filed a six-count complaint in the circuit court of Cook County against CCO, seeking, inter alia, a declaration that it properly terminated the five agreements and was entitled to possession of the billboards. This appeal arises on the parties' motions for partial summary judgment as to counts I through III of the CTA's complaint. The circuit court granted the CTA's motion and denied CCO's cross-motion. CCO appeals, challenging both the circuit court's denial of its cross-motion for partial summary judgment and the grant of that filed by the CTA.

BACKGROUND

As this case arises from the parties' motions for summary judgment, the factual background is based on the parties' pleadings, depositions, affidavits, admissions, and exhibits. As best as can be determined from the record provided to this court, the CTA and CCO (or its predecessors-in-interest) entered into five agreements concerning the placement of billboard advertisements on CTA property. In August 2002, the CTA sought to terminate those agreements effective September 30, 2002, in order to solicit bids for a new advertising contract. The CTA solicited bids and although CCO participated in that bid process, it was not awarded the contract. Although it is the CTA's position that the five agreements with CCO were properly terminated, CCO has continued to place advertisements on those structures and has formally challenged the CTA's bid process. The CTA wants CCO off its property.

Agreements 1 and 2

Agreement 1 is dated August 29, 1975, and was entered into between the CTA and Foster & Kleiser, a division of Metromedia, Inc. (F & K), a predecessor-in-interest of CCO. It granted F & K a license to enter specific CTA property located at 5222-34 South Cicero Avenue "for the purpose of maintenance of one painted sign-board facing south." It also provided that the license was to commence on September 1, 1975, and continued "subject to cancellation by either party upon five (5) days written notice."

Agreement 2 was similar to Agreement 1 and provided a license to F & K for the purpose of "maintaining a painted signboard" located at the "southeast portion of the Archer-Neva Bus Terminal." Agreement 2 commenced on November 1, 1975, and, like Agreement 1, was subject to cancellation by either party upon five days' written notice.

Agreements 3 and 4

Agreement 3, dated December 31, 1983, was entered into by the CTA and F & K. It granted F & K "the right to install and maintain [F & K's] signboards" on specific portions of CTA property, and was to remain in effect from January 1 through December 31, 1984, unless terminated by the CTA upon 30 days' written notice. It also provided that F & K "shall remain the owner of all of said advertising signs, structures and improvements * * * notwithstanding the fact that the same constitute real estate fixtures." The agreement was extended twice; once on December 31, 1984, and once on December 31, 1985.

Agreement 4, dated February 28, 1986, was entered into by the CTA and Gateway Outdoor Advertising Company (Gateway), another predecessor-in-interest of CCO, and granted Gateway the right to "install and maintain [Gateway's] signboards" on specific CTA property, and was to remain in effect from March 1, 1986, through February 28, 1987, unless terminated by the CTA upon 30 days' written notice. Like Agreement 3, Agreement 4 provided that Gateway "shall remain the owner of all of said advertising signs, structures and improvements * * * notwithstanding the fact that the same constitute real estate fixtures."

Agreement 5

Agreement 5 was a more detailed agreement than the other four. It was entered into on March 1, 1996, by the CTA and Eller, which merged into CCO's parent company in February 1997, and was to remain in effect for an "initial term of five (5) years" until February 28, 2001. Agreement 5 was an extension or renewal of a previous five-year agreement executed on March 1, 1991, between the CTA and Patrick Media, another of CCO's predecessors-in-interest.

Relevant provisions of Agreement 5 include section 1.1, which granted Eller "the sole and exclusive rights and privileges [ ] to place and handle advertising by means of displays on outdoor advertising structures (as hereinafter defined) only upon the [CTA's] elevated structures which are listed on the attached Exhibit A." Section 1.2(a) indicated "[t]he locations covered by this Agreement shall include only those existing locations listed on the attached Exhibit A, which are already equipped with outdoor advertising structures." Section 1.2(b) stated "[t]he Chairman of the Board of the [CTA] * * * may from time to time designate and consent to the use of a location or locations for advertising purposes as characterized in Article I herein, in addition to those set forth in Exhibit A."

Article 2 of the agreement, entitled "Installation Maintenance and Operation," provided in section 2.1 that "[a]ll outdoor advertising structures installed by [Eller] shall be furnished, erected and installed at sole cost to [Eller] without hampering the operations of the [CTA] or discommoding its passengers." Section 2.1 also provided that Eller bore the cost of modifying "existing [CTA] structures," and relocating cables and other items, and that "[p]rior to beginning of work by [Eller] at any specific location, complete plans and specifications for the installation shall be submitted to the [CTA] for review and approval." That section also provided:

"[Eller] reserves the right to erect, furnish or install such outdoor advertising structures using its own materials and employees or may elect to employ third parties or contractors (subject to the [CTA's] approval, as may be necessary) to erect, furnish and install same. Title to such outdoor advertising structures erected, furnished or installed by or for [Eller] as aforesaid shall be and remain at all times during the term hereof the property of [Eller] and it shall have sole responsibility thereafter."

Section 9.3 indicated the agreement could be terminated at any time upon the written consent of Eller and the Chicago Transit Board.

Section 9.4(b) provided in part:

"At the expiration or other termination of this agreement or any extension or renewal thereof, all outdoor advertising structures erected by [Eller] hereunder shall, at the option of the [CTA] become the property of the [CTA] and the [CTA] may require [Eller], at [its] sole cost and expense, to remove such of the outdoor advertising structures as the [CTA] may elect upon notice."

Communication Between the Parties

On October 17, 2000, CCO sent a letter to the CTA seeking at least a five-year extension upon the expiration of Agreement 5 and making several other proposals. On February 8, 2002, CCO sent the CTA a letter stating that "[a]lthough [Agreement 5] does not contain a specific renewal or extension provision, the Agreement recognizes the parties['] contemplation of entering into an extension." CCO requested a 10-year extension and stated that it was willing to assign all structures and permits to the CTA.

Because the CTA felt it to be in its best interest to put a contract for outdoor billboard advertising out for bid in order to better reflect market rates, the CTA, on March 25, 2002, sent a letter to CCO terminating all five agreements. In the letter the CTA rejected CCO's offer for a 10-year extension and additionally stated it was: (1) terminating Agreement 5 effective April 30, 2002, and intending to exercise its option under section 9.4 of that agreement to have all outdoor advertising structures covered thereunder become its property; and (2) terminating Agreements 1 through 4 effective May 31, 2002. Because CCO refused to assign and transfer title to the structures covered by those agreements, the CTA requested that CCO remove the structures by May 31, 2002. The CTA further stated "[i]n the event CCO fails to remove the structures by the May 31, 2002 termination date, the CTA will deem the structures to be abandoned with ownership reverting to the CTA and CCO will have forfeited any right to remove the structures after the termination date."

In a letter dated April 8, 2002, CCO indicated to the CTA that because of various amendments to the City of Chicago zoning and sign ordinances, CCO would be the "sole source" that could provide advertising services to the CTA because it owned the necessary permits, and due to changes in the law, no other party would be able to obtain the necessary permits.

On April 24, 2002, CCO wrote to the CTA and indicated its intention to participate in the advertising bidding process. CCO also stated that "a temporary extension of the existing agreements might be in order, rather than abrupt termination."

On April 29, 2002, the CTA wrote to CCO and rescinded its March 25, 2002 termination notice. The CTA indicated that its intention "still is [ ] to...