IK Corp. v. One Financial Place Partnership

• Decision Date: 14 March 1983
• Citation: 146 Ill.Dec. 198,558 N.E.2d 161,200 Ill.App.3d 802
• Parties: , 146 Ill.Dec. 198 IK CORPORATION, an Illinois corporation, Plaintiff-Appellant, v. ONE FINANCIAL PLACE PARTNERSHIP, an Illinois general partnership; Financial Place Corporation, as Agent for the beneficiary of American National Bank and Trust Company of Chicago, as Trustee under Trust Agreement dated
• Court: United States Appellate Court of Illinois

Page 161

558 N.E.2d 161

200 Ill.App.3d 802, 146 Ill.Dec. 198

IK CORPORATION, an Illinois corporation, Plaintiff-Appellant, v. ONE FINANCIAL PLACE PARTNERSHIP, an Illinois general partnership; Financial Place Corporation, as Agent for the beneficiary of American National Bank and Trust Company of Chicago, as Trustee under Trust Agreement dated March 14 1983, and known as Trust No. 57320; U.S. Equities Realty Inc.; First Options of Chicago, Inc., a Delaware corporation; Robert A. Wislow; and Janet Burch Defendants-Appellees.

No. 1-88-1095.

Appellate Court of Illinois First District, Fifth Division.

June 15, 1990.

Rehearing Denied July 25, 1990.

Keevan D. Morgan, Morgan & Bley, Ltd. and William J. Harte, William J. Harte, Ltd., Chicago, for plaintiff-appellant.

Stephen P. Bedell, Gardner, Carton & Douglas, Chicago, for defendant-appellee, First Options of Chicago, Inc.

Gerald L. Angst, Maripat Flood, Sidley & Austin, Chicago, for defendants-appellees, One Financial Place Partnership, Financial Place Corp., U.S. Equities Realty, Inc., Robert A. Wislow and Janet Burch.

Justice MURRAY delivered the opinion of the court:

Plaintiff, IK Corporation (IK), appeals from the decision and order of the trial court dismissing with prejudice, plaintiff's seven-count complaint for failure to state a cause of action, when plaintiff failed to plead the essential formation elements of a commercial real estate contract. Plaintiff filed a seven-count amended complaint against One Financial Place Partnership (lessor), Robert Wislow, a managing partner of the lessor, U.S. Equities Realty, Inc., an exclusive leasing agent for the lessor, One Financial Place Corporation, an authorized agent of the lessor, Janet Burch, an agent and inside real estate broker for the lessor, and First Options of Chicago, Inc., the lessor's second largest tenant. The defendant's filed a motion to dismiss. The trial court granted the motion with prejudice. This appeal followed. For the following reasons we affirm.

The hearing on defendants motions to dismiss plaintiff's first amended complaint revealed the following:

On September 23, 1983, defendant First Options of Chicago, lessor's second largest tenant, leased floors 15 through 18 of the One Financial Place Building and obtained the right to lease additional space on the 19th floor. On February 21, 1986, First Options also leased space on the 14th floor to accommodate its expanding operations. In July 1986, First Options purchased a controlling interest of H.A. Brandt & Associates' capital stock (First Options-Brandt), and as part of the transaction, Brandt assigned its lease of the 28th floor to defendant First Options. Thus, as of July 1986, defendant First Options had a leasehold interest in floors 14 through 18 and the 28th floor of One Financial Place. First Options also had the right to lease the 19th floor upon the expiration of the current tenant's lease term.

First Options sought to keep its lease space in the One Financial Building to contiguous floors, so in August 1986, it requested the cancellation of its lease to the 28th floor and the relocation of the First Options-Brandt offices to the 19th floor. On August 12, 1986, defendant lessor agreed but made the agreement contingent on its ability to lease the 28th floor to Union Mutual Life Insurance Company. In October 1986, defendant lessor leased part of the 28th floor to Union Mutual for a term of five years beginning February 1, 1987, and began discussing the relocation of the current 19th floor tenants when plaintiff inquired about leasing the 28th floor.

On October 14, 1986, Irving Kessler, president of plaintiff IK Corporation, met with defendant Janet Burch, a real estate broker for defendant lessor, to discuss leasing space on the 28th floor. Kessler alleges that during the meeting, Burch informed him that neither the First Options nor First Options-Brandt had a lease to the 28th floor after December 12, 1986. Kessler further alleges that Burch stated that although Union Mutual Insurance Company had a leasehold interest to a small portion of the 28th floor, it was lessor's intention to relocate Union Mutual to the 36th floor so that plaintiff could lease the 28th floor.

On October 15, 1986, Janet Burch sent an introductory letter and a proposal memorandum to Mr. Kessler. The letter and proposal memorandum listed with some degree of specificity, the terms upon which plaintiff could lease the 28th floor. The proposal memorandum described the areas to be leased, the duration of the lease, the rental price of the areas to be leased, and the time and manner of payment. Pertinent provisions of the introductory letter and proposal memorandum state as follows:

"The information in this booklet is designed to introduce you to One Financial Place, a new 40 story office tower on LaSalle Street.

1. Area. We will provide approximately 25,000 leasable square feet on the 28th floor of the mid-rise elevator bank for I.K. Corporation (I.K.). This floor offers unobstructed views in all directions, including the entire downtown business district and lakefront.

2. Lease Term. We will provide a six (6) year lease term commencing January 1, 1987.

3. Base Rent and Rental Abatement. * * * Our mid-size floors lease at a net rate of $23,000; we have developed a special net rental structure for I.K. to control the entire 25,000 square feet on the 28th floor while paying a substantially reduced rent on only 17,000 square feet. * * *."

Also included in the proposal memorandum were terms intended to make the 28th floor an attractive and cost-effective leasehold for plaintiff. Such terms included: an option to renew the lease at the current market price: a $60,000 allowance for renovating the 28th floor; a savings of $30,000 on cable installation; five parking spaces in the garage at the current monthly rate; year long access to the building; around the clock security and surveillance cameras; smoke detectors and standby medical mobile treatment units; a combination of amenities that are unmatched by any other downtown office complex; and the prestige of being located in the same building with some of the reputable investment banking firms. The last paragraph of the proposal memorandum however, stated as follows: "15. Proposal Subject to prior leasing. This proposal is subject to prior leasing, prior acceptance and lender approval."

On October 16, 1986, Kessler met with Wislow, a managing partner of lessor. Kessler alleges that Wislow reiterated statements that had been made by Burch, namely that neither First Options nor First Options-Brandt would have an interest in the 28th floor after December 1, 1986, and lessor was free to lease the 28th floor to plaintiff for a term beginning December 1, 1986.

On October 22, 1986, the day in which plaintiff alleges that the contract was formed, Kessler met with Fabian, the Vice-President of defendant U.S. Equities & Realty Inc., and defendants Wislow and Burch. Plaintiff alleges that during the meeting, it offered and promised to enter into a lease on the "exact same terms" as was proposed by lessor in the proposal memorandum. Plaintiff further alleges that its offer differed from the proposal memorandum in only one respect, namely, lessor would pay one half of the cost of cancelling plaintiff's current lease. Plaintiff also alleges that after it had offered and promised to enter into the lease, Wislow, on behalf of lessor, accepted plaintiff's offer and promised to enter into a lease with plaintiff for the 28th floor.

On October 23, 1986, Fabian met with Schroeder, plaintiff's agent. Plaintiff alleges that during the meeting, Fabian stated that Union Mutual would be relocated to the 36th floor to make room for plaintiff; that First Options-Brandt would be moving to the 19th floor on December 1, 1986; and that most of the smaller tenants of the 19th floor had already been relocated in order to create space for First Option-Brandt's relocation.

An initial draft lease was presented to plaintiff during the October 23, 1986, meeting. Plaintiff alleges that the initial draft lease contained terms that were identical to the terms in the proposal memorandum with the exception that plaintiff's term of years in the building would change from a six-year term to a five-year and eleven-month term, and that plaintiff's operating and tax expenses would increase. Plaintiff alleges that it agreed to a lease term of five years and eleven months but disagreed with paying certain operating expenses and taxes. The initial draft lease however, provided in paragraph 27(e) that "(t)he instrument does not become effective as a lease or otherwise until executed and delivered by both Landlord and Tenant."

On October 31, 1986, Fabian and Schroeder again met to discuss the unresolved terms of the first draft lease. A second draft lease was prepared and the second draft lease also contained a paragraph 27(e), which provided that "(t)he instrument does not become effective as a lease or otherwise until executed and delivered by both Landlord and Tenant." Plaintiff alleges that on November 3, 1986, Fabian signed and delivered certain correspondences and a "complete revised lease." On November 5, 1986, Schroeder picked up a copy of the current revised lease from lessor. Neither plaintiff nor lessor signed any of the draft leases or revised draft leases.

While plaintiff and lessor were discussing and revising draft leases to the 28th floor, First Options informed lessor, on November 7, 1986, that its current lease to floors 14 through 19 in the One Financial Building would not accommodate its expanding operations and therefore, it was necessary to retain its lease to the 28th floor.

Plaintiff was therefore unable to obtain a lease to the 28th floor of the One Financial Place Building.

Plaintiff filed a complaint on December 15, 1986, to which the defendants answered by filing section 2-615 motions for judgment on the...