A.M. Realty W. L.L.C. v. MSMC Realty, L.L.C.
| Decision Date | 30 November 2012 |
| Docket Number | Docket No. 1–12–1183. |
| Citation | 367 Ill.Dec. 354,2012 IL App (1st) 121183,981 N.E.2d 1082 |
| 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 |
OPINION TEXT STARTS HERE
Alex Pirogovsky and Aleksandra E. Fremderman, both of Pirogovsky Fremderman, Ltd., of Northbrook, for appellant.
Christopher Carmichael and Anna Z. Krasinski, both of Holland & Knight, LLP, of Chicago, for appellee.
[367 Ill.Dec. 355]¶ 1 Plaintiff A.M. Realty Western L.L.C. (AM Realty) sued a former tenant, defendant MSMC Realty, L.L.C. (MSMC), to collect monthly payments that the former tenant had agreed to pay, in addition to rent, for certain building improvements. Defendant moved to dismiss on the ground that plaintiff no longer had 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. For the following reasons, we reverse.
¶ 3 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.
¶ 4 The lease was attached to the complaint, 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. The lease also stated that SSM's principal office was in Evanston, Illinois.
¶ 5 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) [.]”
In its complaint, plaintiff alleged that it made improvements to the heating, ventilation and air conditioning (HVAC) equipment, and had complied with all its obligations under the lease.
¶ 6 Plaintiff alleged that, on July 8, 2008, with plaintiff's consent, SSM assigned its interest and obligations under the lease to defendant. A letter requesting the landlord's consent was attached to the complaint. The letter also states that an “Assignment of Landlord Leases” is attached to the letter, but this assignment was not included as an exhibit to the complaint.
¶ 7 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 $64,461.47, which was the amount allegedly owed for HVAC improvements. Plaintiff alleged that on May 10, 2010, it mailed a letter to defendant demanding the $64,461.47 still allegedly owed under the lease 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 explain later, plaintiff subsequently filed an amended complaint in order to attach this missing document.
¶ 8 Plaintiff's complaint, which was filed on August 10, 2010, alleged two counts: count I, for breach of contract; and count II, for anticipatory 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.
¶ 9 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, answer or otherwise plead within 30 days. On November 15, 2010, defendant filed an appearance; and on December 6, 2010, defendant filed a combined motion, under section 2–615 and section 2–619 of the Code of Civil Procedure to dismiss with prejudice (735 ILCS 5/2–615, 2–619 (West 2010)).
¶ 10 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.
[367 Ill.Dec. 357]¶ 11 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 ended.
¶ 12 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.
¶ 13 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 Consent states that an “Assignment of Landlord Leases” is attached as “Exhibit A,” but this “Exhibit A” is not included 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.”
¶ 14 On February 28, 2011, the trial court granted, without prejudice, defendant's section 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.”
¶ 15 On March 10, 2011, plaintiff filed its amended verified complaint in order to attach as “Exhibit C” defendant's May 21, 2010, letter which stated: “MSMC does not owe and will not pay the $64, 461.47 you are demanding.”
¶ 16 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.”
¶ 17 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.”
¶ 18 Defendant's answer also contained three affirmative defenses: (1) failure to mitigate damages; (2) a prior release or discharge contained in the assignment which released defendant from obligations arising prior to the assignment; and (3) a “no meeting of the minds/mistake” defense.
¶ 19 In plaintiff's answer to defendant's interrogatories, filed August 4, 2011, plaintiff stated that “[t]he property was sold and to the best of [p]laintiff's knowledge, is vacant.”
¶ 20 On October 3, 2010, defendant filed a motion to dismiss for lack of standing. In its motion, defendant stated that, although plaintiff sought payments that it claims were due between April 2009 and April 2014, plaintiff sold the property on March 26, 2011, to the Board of Trustees of Community College District No. 524 (the community college). Defendant claimed that plaintiff had conveyed its entire interest in the property and thus had no standing to bring an action for breach of lease. Defendant also observed that plaintiff had specifically retained the right to collect amounts from another lessee, namely, Kaleidoscope, Inc., but did not do so with respect to defendant.
¶ 21 On October 3...
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