Lakeview Collection Inc. v. Bank of Am., N.A.
| Decision Date | 29 April 2013 |
| Docket Number | No. 09 C 3933.,09 C 3933. |
| Citation | 942 F.Supp.2d 830 |
| Parties | LAKEVIEW COLLECTION INC., Plaintiff, v. BANK OF AMERICA, N.A., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
OPINION TEXT STARTS HERE
Steven Joseph Roeder, Jordan Douglas Shea, Williams Montgomery & John Ltd., Chicago, IL, for Plaintiff.
Lawrence Mitchell Benjamin, Eric Y. Choi, John Joseph Scharkey, III, Neal, Gerber & Eisenberg, Chicago, IL, for Defendant.
Plaintiff Lakeview Collection Inc. (“Lakeview”) and defendant Bank of America, N.A. (“Bank”),1 executed three separate agreements related to a real estate development project. Lakeview purchased property from the Bank intending to redevelop it into a mixed-use complex where the Bank would then operate a bank branch. This sale was memorialized as the Purchase Agreement. Contemporaneously with this purchase, the Bank agreed to lease the property back from Lakeview until development began, continuing to operate bank facilities at that location. The leaseback agreement was memorialized as the Existing Space Lease Agreement. And finally, in connection with the two aforementioned agreements, the Bank agreed that upon termination of the Existing Space Lease, it would continue to lease one of the parcels of property on which it intended to operate its drive-through facility until it could take possession of lease space in the newly developed complex. This agreement was memorialized as the Temporary Space Lease Agreement. For some time thereafter, the Bank operated its banking facilities on the property and paid the carrying costs of that property or “rent” to Lakeview pursuant to the Existing Space Lease. Lakeview meanwhile pursued redevelopment and pre-construction activities. Lakeview did not begin construction on the property because of difficult credit markets, and the Bank subsequently vacated that property and eventually stopped paying rent.
Lakeview filed suit against the Bank in the Circuit Court of Cook County, Illinois. The Bank removed the case to federal court pursuant to 28 U.S.C. §§ 1332(a), 1441(a). R. 1. Lakeview alleges three counts in the governing complaint. R. 62. Count I seeks a declaratory judgment that the Existing Space Lease has not terminated and that the Bank remains liable for rent and real estate taxes. Count II, pled in the alternative to Count I, alleges a breach of contract based on the Bank's failure to pay rent due under the Temporary Space Lease. Count III alleges that the Bank breached the Existing Space Lease by failing to pay rent, thereby causing Lakeview to default on its mortgage with its lender. The Bank now moves for partial summary judgment on counts I and III of Lakeview's amended complaint. R. 237, 256. Also before the Court are: (1) the Bank's Motion to Strike Lakeview's Supplemental Answer to Interrogatory No. 6 and Statements of Facts Based on Those Facts, R. 282; (2) the Bank's motion regarding the recent sale of the property to Target, R. 297; (3) Lakeview's motion for leave to take a Rule 30(b)(6) deposition of the Bank regarding its commercial lending practices, R. 304; and (4) Lakeview's motion to take limited discovery regarding witnesses recently identified in the Bank's untimely witness disclosures, R. 306. For the reasons below, the Bank's motions to strike and for partial summary judgment are denied. The remaining motions are also denied.
The facts and evidence set forth below are construed as favorably to Lakeview as the record and Local Rule 56.1 require. See Hanners v. Trent, 674 F.3d 683, 691 (7th Cir.2012). In considering the Bank's summary judgment motions, the Court gives Lakeview the “benefit of conflicts in the admissible evidence and favorable inferences from that evidence” but does not vouch for them. Smith v. Bray, 681 F.3d 888, 892 (7th Cir.2012).
In 2005, LaSalle Bank, N.A. (“LaSalle”) owned property at 3201 North Ashland Avenue (the “Main Parcel”) and at 3301 North Ashland Avenue (the “Drive–Up Parcel”), both located in Chicago, Illinois. R. 273, Pl. Statement of Additional Facts (“PSAF”) ¶ 1. LaSalle operated a branch bank on the Main Parcel and a drive-through ATM facility on the Drive–Up Parcel. PSAF ¶ 1; R. 241, Def. Statement of Facts (“DSOF”) ¶¶ 6, 7. LaSalle also had an option to purchase another property located at 3225 North Ashland Avenue in Chicago, Illinois (the “Option Parcel”). PSAF ¶ 1. Other tenants occupied the building space at the Option Parcel. DSOF ¶ 7.
LaSalle wanted to sell the Main Parcel and the Drive–Up Parcel before the end of 2005. PSAF ¶ 2. To achieve this goal, LaSalle negotiated with Lakeview on a deal where Lakeview would purchase the properties from LaSalle and redevelop them. DSOF ¶¶ 8, 14. Lakeview then intended to demolish the buildings on the Main and Option Parcels, construct new buildings, and redevelop the properties into a “mixed-use complex” (“Complex”), consisting of retail facilities, underground parking, and a residential condominium building on top of the retail facilities. DSOF ¶ 14. Also included in the new Complex would be a new branch bank for LaSalle. DSOF ¶ 15. While construction and development was occurring on the Main Parcel to develop it into the Complex, LaSalle anticipated that its branch currently on the Main Parcel would be relocated to a temporary location until development and construction was complete, at which time LaSalle would then occupy a space in the new Complex. DSOF ¶ 15. Although LaSalle wished to close the deal by the end of 2005 to show a “substantial profit on its 2005 results,” that was sooner than Lakeview could begin development. PSAF ¶ 5. To accommodate LaSalle's desire to close by the end of 2005, Lakeview agreed to purchase the property “early.” PSAF ¶ 5. As part of this agreement, LaSalle would pay the “carry costs” of these parcels, in the form of rent, while Lakeview completed the process necessary to begin demolition and construction. PSAF ¶¶ 9, 12.
On December 29, 2005, LaSalle and Lakeview executed three separate agreements regarding the sale of the property: (1) the Purchase Agreement; (2) the Existing Space Lease Agreement; and (3) the Temporary Space Lease Agreement. R. 242–2, Exh. 2, Purchase Agreement; R. 242–8, Exh. 6, Existing Space Lease Agreement; R. 242–8, Exh. 7, Temporary Space Lease Agreement. At the time these agreements were executed, there was a “rather robust market of development activity.” PSAF ¶ 18.
The Purchase Agreement governed the sale of the property, providing that Lakeview would purchase the Drive–Up Parcel from LaSalle for $5,455,000; the Option Parcel for $1,375,000; and the Main Parcel for $13,273,000. R. 242–2 at 2. The purchase price of the three properties plus closing costs totaled $20,250,750. DSOF ¶ 8. The Rider to the Purchase Agreement made the sale contingent on the entry of the Existing Space Lease Agreement, the Temporary Space Lease Agreement, and a Branch Lease for space in the newly constructed Complex. R. 242–2 at 4–6, Purchase Agreement § R–3(a)–(c). It further memorialized Lakeview's plan to redevelop the properties into a mixed-use complex.
Under section 9(c) of the Rider:
Upon Closing, Purchaser shall endeavor to obtain zoning and access approvals from applicable governmental authorities (“Approvals”), prepare the Final Redevelopment Plans, and commence and complete construction of the Complex, in accordance with the time-line agreed to by the parties set forth below (“Redevelopment Time–Line”), subject in the case of each deadline (except for the “Outside Date” hereinafter defined), to Force Majeure. For purposes hereof, “Force Majeure” shall mean any failure to comply or delay in complying with any obligations under this Agreement if such failure or delay is due to acts of God, the acts of Seller, the Option Parcel owner or their respective affiliates, strikes or other labor disturbances, lockouts, the reasonably unforeseeable inability to obtain materials, future governmental restrictions, reasonably unforeseen interpretations of existing governmental restrictions, delays in receiving permits not due to the actions of Purchaser, enemy actions, civil commotion, fire, unavoidable casualty, adverse weather conditions or other similar causes beyond Purchaser's reasonable control and not reasonably foreseeable, but not including delays caused by lack of funds.
R. 242–2 at 11, § R–9(c). The redevelopment timeline also provided, among other things, that Lakeview would: (1) “diligently pursue” all zoning approval relating to the Complex and receive those approvals by October 1, 2006; (2) “diligently proceed” with demolition of the existing structures on the Main and Option Parcels and to complete that demolition no later than February 28, 2007; (3) “diligently pursue” all building permits relating to the construction of the Complex and endeavor to receive such building permits by April 2, 2007; and (4) commence construction of the improvements and site work for the Complex no later than 20 business days after receipt of the building permits. DSOF ¶ 25; R. 242–2 at 11, § R–9(a), (c)(i), (iii)-(v).
Section 9(d) of the Rider then sets out deadlines for obtaining building permits, construction contracts, and zoning amendments and dates by which Lakeview was to have completed demolition and commenced construction of the Complex:
No later than Monday, June 30, 2008 (“Outside Date”), Purchaser shall have (i) obtained all Building Permits required for the construction of the Complex; (ii) obtained all amendments, special use permits, variances, approvals or other changes to the zoning and/or other use ordinances and restrictions affecting the Complex, (iii) obtained signed construction contracts in connection with the construction of the Complex, (iv) completed the demolition of existing structures on the Main Parcel and the Option Parcel and site clearing, and (v) commenced...
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