Property Management, Ltd. v. Howasa, Inc.
| Decision Date | 21 September 1973 |
| Docket Number | No. 58648,58648 |
| Citation | 302 N.E.2d 754,14 Ill.App.3d 536 |
| Parties | PROPERTY MANAGEMENT, LTD., a corporation, Plaintiff-Appellant, v. HOWASA, INC., et al., Defendants-Appellees. |
| Court | United States Appellate Court of Illinois |
David P. List, Frederic J. Artwick, Chicago, for plaintiff-appellant; Sidley & Austin, Chicago, Jerome C. Eisenberg, Clapp & Eisenberg, Newark, N.J., of counsel.
Kirkland & Ellis, Chicago, for defendants-appellees; Steven L. Bashwiner, Steven P. Handler, Chicago, of counsel.
Plaintiff Property Management, Ltd., a Bahamian corporation, having its principal place of business in France, filed in the circuit court of Cook County a complaint in tort for interference with prospective economic advantage against Compagnie Internationale des Wagons-Lits et du Tourisme ('Wagons-Lits'), a Belgian corporation, and Wagons-Lits subsidiary Howasa, Inc. ('Howasa Chicago'), a Delaware corporation having its principal place of business in Illinois. The economic advantage defendants were alleged to have interfered with related to a lease plaintiff had entered into with another subsidiary of Wagons-Lits, Howasa, S.A. ('Howasa Spain'), a Spanish corporation which is not a party to this action, in which Howasa Spain agreed to manage a commercial hotel property in Torremolinos, Spain, known as 'Playamar' and whereby plaintiff was to receive a percentage of the gross operating profit. The complaint sought an accounting, damages, and injunction enjoining defendants from interfering with plaintiff's economic advantage. Following a general appearance on behalf of Wagons-Lits, defendants filed a motion to compel arbitration of the dispute under the provisions of the lease and to stay the proceedings pending arbitration. After examining memoranda regarding the issues, the trial court granted defendants' motion. Plaintiff subsequently filed a motion that the court reconsider the matter and a motion to modify its previous order and allow discovery. The trial court denied plaintiff's motions and plaintiff appeals.
On appeal, plaintiff contends: 1) that plaintiff cannot compel or be compelled to arbitrate with parties not signatories to the arbitration agreement, 2) that the dispute is not covered by the terms of the arbitration clause in the lease, and 3) that plaintiff, alleging interference with contractual relationship, has an election of remedies in tort, in contract, or both and is free to proceed in different forums.
The complaint, after identifying the parties and the lease, alleged that Wagons-Lits caused its subsidiary Howasa Spain (plaintiff's lessee) to enter an exclusive sales agency agreement for the United States with a subsidiary it created, Howasa Chicago, whereby Howasa Chicago was authorized to fix room rates at Playamar which Howasa Spain would be bound to accept and Howasa Chicago would receive a 15% Commission on all such business; that Howasa Chicago and Wagons-Lits both having knowledge of the terms of the plaintiff's lease with Howasa Spain, fixed the room rates at Playamar at levels which, it was known, would not produce an operating profit to Playamar and hence no rental income to plaintiff; and that had Howasa Chicago fixed the rentals of Playamar in good faith at a proper rate Playamar's profits would have exceeded $50,000 and plaintiff would have been entitled to a percentage of that profit as rent. The complaint further alleged that Howasa Chicago retained deposits for groups which did not appear and received additional funds for porterage and the like, all of which should properly have been credited by it to Howasa Spain. Plaintiff alleged that defendants' actions interfered with plaintiff's prospective economic advantage and sought injunctions against defendants, an accounting, and damages.
Wagons-Lits filed a motion questioning jurisdiction of the court, which was denied, and then both defendants filed a motion to compel arbitration and to stay proceedings pending arbitration. Defendants argued in their memorandum that the instant dispute was actually one involving the terms of plaintiff's lease with Howasa Spain and that the lease required such matters to be arbitrated with the International Chamber of Commerce in Paris, France. In support of their position, defendants attached a letter from plaintiff to Howasa Spain. The letter purported to terminate the lease with Howasa Spain for seventeen reasons which included some statements similar to allegations made in its complaint. Defendants also attached copies of correspondence, although not in English, between Howasa Spain and the International Chamber of Commerce before which Howasa Spain had commenced arbitration of its dispute with plaintiff.
Defendants also attached to their motion a copy of the lease agreement. The lease provided that Howasa Spain was to manage for plaintiff a commercial hotel property in Torremolinos, Spain, known as Playamar. The rental payable by Howasa Spain to plaintiff, was to be 70% Of the annual gross operating profit of Playamar up to $100,000 and 75% Of the amount in excess of $100,000. The lease made extensive provision for what was and what was not to be included in annual gross income and provided that the lessee alone would bear any loss. The lease also provided that Howasa Spain was to have discretion to manage the property in the best interests of the property but in order to decrease the number of personnel on the property and to achieve more favorable results for the property was to provide a central administrative office or other organization inside or outside of Spain to deal with public relations, reservations, and other matters. The lease made frequent mention of Howasa Spain's parent corporation and subsidiaries, including in Article III, Section 1, reference to travel agencies. Article XVII of the lease provided the following regarding arbitration:
All disputes arising in connection with the present contract shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more...
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