A.M. Realty W. L.L.C. v. MSMC Realty, L.L.C.

• Decision Date: 31 March 2016
• Docket Number: No. 1–15–1087.,1–15–1087.
• Citation: 52 N.E.3d 602,402 Ill.Dec. 681
• Parties: A.M. REALTY WESTERN L.L.C., Plaintiff–Appellant, v. MSMC REALTY, L.L.C., Defendant–Appellee.
• Court: United States Appellate Court of Illinois

52 N.E.3d 602

402 Ill.Dec. 681

A.M. REALTY WESTERN L.L.C., Plaintiff–Appellant

v.MSMC REALTY, L.L.C., Defendant–Appellee.

No. 1–15–1087.

Appellate Court of Illinois, First District, Fifth Division.

Filed March 31, 2016.

Rehearing Denied May 11, 2016.

Aleksandra E. Fremderman, of AEF Legal, P.C., Chicago, for appellant.

Christopher W. Carmichael and Darren H. Goodson, both of Holland & Knight LLP, Chicago, for appellee.

OPINION

Justice GORDON

delivered the judgment of the court, with opinion.

¶ 1 Plaintiff A.M. Realty Western L.L.C. sued a former tenant, defendant MSMC Realty, L.L.C., to collect monthly payments that the former tenant had agreed to pay, in addition to rent, for certain building improvements.

¶ 2 This case was previously before us on appeal, when we considered the trial court's dismissal for lack of standing. Defendant had moved to dismiss on the ground that plaintiff lacked standing to collect under the prior lease because plaintiff had since sold the building. On November 17, 2011, the trial court granted defendant's motion and dismissed the complaint with prejudice. On November 30, 2012, we reversed and remanded for further proceedings on the merits. A.M. Realty Western L.L.C. v. MSMC Realty, L.L.C., 2012 IL App (1st) 121183, ¶ 52, 367 Ill.Dec. 354, 981 N.E.2d 1082

. Those further proceedings were to include a determination by the trial court whether plaintiff had fully performed its HVAC obligations under the lease. Infra ¶ 41.

¶ 3 Pursuant to our prior opinion, proceedings continued and, on December 19, 2014, the trial court entered summary judgment in favor of defendant. It is this order which is now before us on appeal. For the following reasons, we reverse and remand for further proceedings consistent with this opinion.

¶ 4 BACKGROUND

¶ 5 I. Complaint and Lease

¶ 6 On August 10, 2010, plaintiff filed a verified complaint, in which it alleged that SSM Regional Health Services (SSM), defendant's predecessor in interest, had signed a store lease on January 12, 2004, in which SSM agreed to rent commercial space from plaintiff.

¶ 7 The lease was attached to the complaint as “Exhibit A,” and the lease stated that it was for the second floor of “12940 S. Western,” in Blue Island, Illinois, and that the tenant, SSM, was a not-for-profit corporation that owned and operated St. Francis Hospital and that SSM's principal office was in Evanston, Illinois.

¶ 8 Section 3.02(a) of the lease provided, in relevant part, that:

“3.02(a) Landlord shall provide, at Tenant's expense:

(i) Heating, ventilation, and air conditioning equipment (HVAC) for the Premises * * *

(iii) All improvements required in the leased space other than the bathrooms provided by Landlord shall be initially paid by Landlord upon occupancy of the Tenant and then billed back to the Tenant over a 5 year amortization schedule in addition to the rent (other than HVAC which shall be billed on a 15 year amortization schedule )[.]” (Emphasis added.)

In its complaint, plaintiff alleged that it made HVAC improvements and had complied with all its obligations under the lease.

¶ 9 Plaintiff alleged that, on July 8, 2008, with plaintiff's consent, SSM assigned its interest and obligations under the lease to defendant. A letter, dated July 8, 2008, and requesting the landlord's consent was attached to the complaint as “Exhibit B.”¹ This letter is entitled “Consent to Assignment of Lease” from SSM to defendant, and is signed by both SSM and defendant. The letter states that an “Assignment of Landlord Leases” is attached to the letter, but this assignment was not included as an exhibit to the complaint.

¶ 10 Plaintiff alleged that defendant vacated the premises at the end of the lease term which, according to the lease, was on April 30, 2009. Plaintiff alleged that it sent, on March 22, 2010, a final notice to defendant demanding $96,403.15 owed for improvements and that, in response, defendant had sent a payment for only $31,941.68. Defendant's payment excluded $64,401.47, which was the amount allegedly owed for HVAC improvements. Plaintiff alleged that, on May 10, 2010, it mailed a letter to defendant demanding the $64,401.47 still allegedly owed and that, on May 21, 2010, it received a response stating that defendant had no intention of paying the remaining amount. Although the complaint states that defendant's May 21, 2010, letter is attached as “Exhibit C,” it was not. As we note later, plaintiff subsequently filed an amended complaint in order to attach this missing document.

¶ 11 Plaintiff's complaint, which was filed on August 10, 2010, alleged two counts: count I, for breach of contract; and count II, for anticipation of breach. Count I alleged that section 3.02 of the lease required defendant to pay $1,611.54 per month for the HVAC improvements, and that defendant failed to make the 17 payments due between April 2009 through August 2010 which totaled $27,396.18. Count II alleged that plaintiff had already stated that it had no intention of paying for the HVAC improvements and that, between the day the complaint was filed and April 2014, defendant would owe an additional $37,065.29. Thus, the complaint sought a total of $64,461.47, plus costs and other relief that may be just.

¶ 12 II. Defendant's First Motion to Dismiss

¶ 13 On October 27, 2010, plaintiff filed a motion for a default judgment which alleged that defendant had failed to file an appearance or other pleading. On November 8, 2010, the trial court ordered defendant to file its appearance or answer or otherwise plead within 30 days. On November 15, 2010, defendant filed an appearance; and, on December 6, 2010, defendant filed a combined section 2–615 and section 2–619 motion to dismiss with prejudice (735 ILCS 5/2–615

, 2–619 (West 2010)).

¶ 14 In its motion, defendant sought to dismiss (1) pursuant to section 2–615

on the ground that the lease allegedly barred plaintiff's claims; and (2) pursuant to section 2–619 on the ground that plaintiff's claims arose prior to the assignment of the lease by SSM to defendant and that defendant had not assumed these claims.

¶ 15 In its motion, defendant acknowledged that plaintiff had entered into a five-year lease with SSM and that SSM later assigned this lease to defendant with plaintiff's consent. Defendant acknowledged that, upon assuming the lease and during the remaining term of the lease, defendant paid both the rent and the monthly payment for the HVAC improvements. However, defendant claimed that it was not obligated to pay the remaining cost of the HVAC improvements after the lease terminated.

¶ 16 In the alternative, defendant argued that the HVAC improvements were made prior to the assignment, and that defendant was liable only for those obligations which arose after the assignment.

¶ 17 Defendant attached as an exhibit to its motion a document entitled “Consent of Landlord to Assignment” (Consent), which appears to be signed by plaintiff landlord only. (This document is a different document from the July 8, 2008, letter which requested the landlord's consent and which was attached to the complaint and described above.) This Consent states that an “Assignment of Landlord Leases” is attached as “Exhibit A,” but this “Exhibit A” is not attached to the Consent in the appellate record. The Consent states: “Landlord acknowledges that [defendant] MSMC will be liable for those obligations under the Lease arising from and after the Assignment becomes effective.” The immediately preceding line was crossed out by pen and the deletion was initialed. The deleted line stated that the landlord agreed “to release SSM from all of the lease obligations on and effective after the date of the Assignment.”

¶ 18 On February 28, 2011, the trial court granted, without prejudice, defendant's 2–615 motion to dismiss count II, the anticipatory breach count. The trial court dismissed this count on the ground that, although the complaint stated that plaintiff had attached defendant's letter declaring defendant's intent not to pay, the letter was not actually attached to the complaint. Plaintiff was also granted 21 days to replead. The trial court also denied defendant's section 2–619 motion, finding that “a question of fact exists as to the obligations under the lease and assignment.”

¶ 19 On March 10, 2011, plaintiff filed its amended verified complaint for the purpose of attaching “Exhibit C” which is defendant's May 21, 2010, letter which stated: “MSMC does not owe and will not pay the $64,461.47 you are demanding.” Plaintiff's amended complaint also asked for costs and “such other relief as may be just and proper.”

¶ 20 III. Defendant's Answer

¶ 21 On March 31, 2011, defendant filed its answer in which it admitted that plaintiff and SSM had entered into a commercial lease; that a copy of that lease was attached to plaintiff's complaint as exhibit A; that plaintiff had made HVAC improvements to the leased premises; that the lease was later assigned to defendant; that “a true and correct copy of the assignment is attached as Exhibit B” to the complaint; that plaintiff sent a demand letter “on or around March 22, 2010[,] seeking $96,403.15”; that defendant then “made a payment to [p]laintiff of rent”; that plaintiff sent another demand letter “on or around May 10, 2010[,] seeking $64,461.47”; and that on May 21, 2010, defendant sent plaintiff a letter claiming that “under the terms of the Lease no further payments were owed.”

¶ 22 In its answer, defendant also admitted that on “July 8, 2008, [defendant] MSMC assumed SSM's obligations under the Lease arising on or after the date of the assignment” and that it agreed to “make monthly rent payments, and make certain payments in addition to the rent.” Defendant also admitted that “Section 3.02 [of the lease] requires, in addition to rent, certain payments for the HVAC improvements from the effective date of the assignment.”

¶ 23 Defendant specifically asked that “it be awarded its attorneys' fees and costs incurred in this action.”

¶ 24 De...