Luminall Paints, Inc. v. La Salle Nat. Bank

• Citation: 581 N.E.2d 191,220 Ill.App.3d 796,163 Ill.Dec. 240
• Decision Date: 10 April 1959
• Docket Number: No. 20929,20929
• Parties: , 163 Ill.Dec. 240 LUMINALL PAINTS, INC., Plaintiff-Appellant, v. The La SALLE NATIONAL BANK, as Trustee under Trust Agreementdated
• Court: United States Appellate Court of Illinois

Page 191

581 N.E.2d 191

220 Ill.App.3d 796, 163 Ill.Dec. 240

LUMINALL PAINTS, INC., Plaintiff-Appellant, v. The La SALLE NATIONAL BANK, as Trustee under Trust Agreement

No. 20929 dated April 10, 1959, Defendant-Appellee.

No. 1-90-1516.

Appellate Court of Illinois,

First District, First Division.

Sept. 30, 1991.

Cherry & Flynn, Chicago (Myron M. Cherry and Peter Flynn, of counsel), for plaintiff-appellant.

Gould & Ratner, Chicago (Robert A. Carson, Karin T. O'Connell, of counsel), for defendant-appellee.

Justice BUCKLEY delivered the opinion of the court:

Luminall Paints, Inc.'s (Luminall) original complaint was filed on August 7, 1986, against The La Salle National Bank (Bank). After various motions and dismissals, Luminall filed its second-amended complaint alleging breach of contract, fraud and breach of fiduciary duty. The trial court dismissed this complaint pursuant to the Illinois Code of Civil Procedure section 2-619(a)(5) on the grounds that it was barred by the applicable statutes of limitations. (Ill.Rev.Stat.1983, ch. 110, par. 2-619(a)(5).) Luminall now appeals that order.

Luminall and Bank entered into a lease on September 1, 1964 (Master Lease), covering the premises at 12555 West Higgins Road in Chicago and a one-story building to be erected on those premises (the premises) by Bank. The Master Lease had a 25-year term with two successive options to extend the term for five years each, beginning when Bank completed the one-story building. On November 25, 1966, Luminall and Bank entered into an amendment to the Master Lease (the Amendment). The Amendment extended the lease term to March 31, 1994, with options for two additional five-year terms. The Amendment also changed the base rent.

On April 1, 1974, Luminall and Bank entered into a letter agreement to terminate the Master Lease and the Amendment (the Termination Agreement). Under the Termination Agreement, Luminall agreed to complete at its expense certain clean-up of the premises in preparation of a new tenant, including removing the equipment, acid etching and refinishing the existing floor slab and removing paint debris from the walls and ceiling of the "paint making area" and removing tanks, piping, motor control center and acid etching and resealing the floor of the "tank room" (the work) prior to May 10, 1974. Luminall also agreed to execute a promissory note for $14,039.20 in favor of Bank and pay certain percentages of the real estate taxes for 1973, 1978 and 1979. In return, Bank agreed that during the period beginning April 1, 1974 through March 31, 1994, Bank or its successors or assigns would pay Luminall, an amount equal to 35% of all rentals actually received by Bank from any lessee of the premises in excess of the respective amount of rent which would have been payable under the provisions of the Master Lease.

At approximately the same time the Termination Agreement was executed, Bank leased the premises to Chemtron (New Lease). Luminall was headquartered in Los Angeles County, California without direct access to the premises. Bank did not readily inform Luminall that its work under the Termination Agreement had been unsatisfactory nor did it inform Luminall of the amounts of rent Chemtron was required to pay under the New Lease. Bank was entitled to retain Luminall's 35% of the excess rent for some time after the New Lease commenced due to certain expense set-offs.

On August 7, 1986, Luminall filed its original complaint against Bank in Chancery Court seeking a declaratory judgment and an accounting. That complaint was dismissed on April 25, 1987, for want of prosecution. Upon Luminall's motion, the order dismissing the complaint for want of prosecution was vacated on May 10, 1988. The trial court transferred the case to the Law Division.

Bank, on November 10, 1988, moved to strike and dismiss the first-amended complaint and further moved for sanctions. The motions were set for December 28, 1988. On December 27, 1988, Luminall filed its second-amended complaint without leave of court. On December 28, 1988, a briefing schedule was set for Bank's motions and the hearing was continued until March 23, 1989.

On March 23, 1989, the trial court granted Bank's motion to dismiss the first-amended complaint and gave Luminall leave to file a second-amended complaint by April 20, 1989. Luminall eventually filed another second-amended complaint on May 3, 1989, alleging breach of contract, fraud and breach of fiduciary duty. Again, Bank moved to dismiss the second-amended complaint on the ground that it was barred by the applicable statutes of limitations.

On July 28, 1989, the parties agreed that Luminall would file its response to Bank's motion to dismiss by August 11, 1989, and that the motion would be heard on September 21, 1989. Luminall failed to file a response and also failed to appear for argument on the motion to dismiss. The trial court ordered that written response to the motion be barred and set the hearing for November 8, 1989. By agreement of the parties, the hearing was continued to February 1, 1990, and then again until April 18, 1990. Luminall failed to appear for the hearing on April 18, 1990, due to an office docketing error. After a hearing on the merits, the trial judge granted Bank's motion and dismissed the complaint with prejudice. Luminall then filed a motion for reconsideration which was denied. Luminall now appeals the April 18 order dismissing the complaint.

The second-amended complaint contains three counts against Bank for breach of contract, fraud and breach of fiduciary duty in connection with the Termination Agreement. The second-amended complaint alleges that about September 22, 1976, Bank initially informed Luminall that its work to the premises under the Termination Agreement was unsatisfactory. Luminall states that it was unable to inspect the premises to verify this or to ascertain the extent of the problem or to take any corrective action to cure the alleged defective work or to take appropriate legal action against the salvager hired to perform the work. Chemtron, as evidenced in Mr. Kostak's affidavit, claimed it had expended $15,129 to rectify the unsatisfactory work.

Luminall also alleged that Bank failed to timely notify it of the amounts of the 1978 and 1979 real estate taxes even though Bank paid these taxes and did not request reimbursement from Luminall. Luminall alleged that Bank's actions indicated that either Luminall's share of the excess rents was sufficient to cover the tax amounts or that Bank's actions were a deliberate attempt to deprive Luminall of its rights under the Termination Agreement. Luminall further alleged that it requested Bank in January 1981 to send it all leases for the premises along with an accounting of the rents paid on the premises. Bank, however, stated that it was ignoring Luminall's request.

Luminall claims Bank did not inform it until August 1982 that Bank was claiming that an aggregate $144,399 was owed to Bank by Luminall which included $15,129 for rectifying the work, $3,436 for maintenance and $61,974 for Luminall's share of the 1978 and 1979 real estate taxes. Thereafter, Bank agreed to provide Luminall with a full accounting, supported by documents of the amounts Luminall allegedly owed to Bank. Bank continued to refuse to pay Luminall any portion of the excess rents or to provide Luminall copies of any of the leases on the premises.

More specifically, in its breach of contract count Luminall alleges that Bank breached the Termination Agreement in the following manner by failing to (1) provide Luminall with copies of all the leases on the premises, (2) pay Luminall 35% of excess rents received for the premises beginning April 1, 1974, (3) provide Luminall with a proper accounting of rents collected and amounts due to Luminall's set-offs and expenses, (4) timely notify Luminall of the real estate taxes due on the premises, (5) timely notify Luminall of alleged defects in the work in order to allow Luminall an opportunity to cure, and (6) by knowingly and systematically withholding information from Luminall and preventing Luminall's performance under the Termination Agreement.

In Luminall's breach of fiduciary duty count, it alleges that (1) in its capacity as agent for Luminall, Bank deliberately and fraudulently deprived Luminall of 35% of the excess rents on the premises, (2) after Luminall vacated the premises and had no means to determine the condition of the premises, Bank was aware of the condition and knew Luminall was relying upon communications from Bank in connection with its rights under the Termination Agreement, (3) Bank failed to timely notify Luminall of alleged defects in the work, of the real estate taxes for 1978 and 1979 and failed to provide an accounting and leases on the premises, (4) Bank acted with the intent that Luminall rely to its detriment on Bank's omission, (5) Luminall justifiably relied to its detriment on Bank's omission, and (6) as a direct consequence, Luminall was prevented from inspecting the premises, verifying the existence and extent of the alleged defects and from attempting to cure the defects and was further damaged.

The fraud count in the second-amended complaint alleges that (1) Bank concealed and omitted the items in the first and second count, (2) Luminall justifiably relied to its detriment, and (3) as a direct and proximate result of Bank's conduct, Luminall was damaged.

The inquiry on appeal from an order granting a motion to dismiss pursuant to section 2-619 of the Illinois Code of Civil Procedure is limited to accepting as true, all well-pled facts and reasonable inferences that can be drawn therefrom and to examining whether a cause of action was stated. (Moreno v. Joe Perillo Pontiac, Inc. (1983), 112 Ill.App.3d 670, 68 Ill.Dec. 331, 445 N.E.2d 1184.) Conclusions of law, however, are not admitted. Outlaw v. O'Leary (1987), 161 Ill.App.3d 218, 220, 112 Ill.Dec. 742,...