Stonegate Props., Inc. v. Piccolo

• Decision Date: 20 January 2016
• Docket Number: No. 1-15-0182,1-15-0182
• Citation: 2016 IL App (1st) 150182
• Parties: STONEGATE PROPERTIES, INC., Plaintiff-Appellant, v. WANDA J. PICCOLO, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

2016 IL App (1st) 150182

STONEGATE PROPERTIES, INC., Plaintiff-Appellant, v. WANDA J. PICCOLO, Defendant-Appellee.

No. 1-15-0182

APPELLATE COURT OF ILLINOIS FIRST JUDICIAL DISTRICT THIRD DIVISION

January 20, 2016

NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).

Appeal from the Circuit Court of Cook County.

No. 14 L 001591

The Honorable Patrick Sherlock, Judge Presiding.

JUSTICE PUCINSKI delivered the judgment of the court.

Justices Fitzgerald Smith and Lavin concurred in the judgment.

ORDER

¶ 1 Held: A lease addendum modifying a lease with a corporate lessee released the individual corporate officer defendant from her individual personal guaranty in the original lease where the modification was material because it by added additional properties and nearly tripled the rental amount and there was no language in the personal guaranty that defendant gave her consent to continue the guaranty for such material modifications of the lease.

¶ 2 BACKGROUND

¶ 3 This lawsuit was brought to enforce the guarantee provision of a commercial lease agreement. Appellant, Stonegate Properties, Inc., was a lessor of commercial property, at Suites 1550 and 1555 located at 2401 West Hassel Road, Hoffman Estates, Illinois. An original commercial lease agreement was entered between plaintiff and B&F Technical Code Services, Inc. (B&F) on April 4, 2001. Defendant, Wanda J. Piccolo, is the Chief Executive Officer (CEO) of B&F. Defendant signed the lease agreement on behalf of B&F. The original lease was for a five-year term, from July 1, 2001 through June 30, 2006, with rent payable in equal monthly installments each year and an increase in rent every year. The monthly rent for the first year was $1,035.65, increasing each year to $1,150.90 per month for the fifth year. The lease also provided that any and all riders executed by the parties would be incorporated by reference into the original lease. The lease further provided that in the event of default, plaintiff would be entitled to "recover damages in an amount equal to the then present value of the rent *** for the residue of the stated term thereof, less the fair rental value of the premises for the residue of the stated term."

¶ 4 As part of this original lease agreement, defendant also signed a personal guaranty in her individual capacity. The language of the guaranty agreement, in relevant part, is as follows:

"In consideration of the making of the above lease by Lessor with the Lessee at the request of the undersigned and in reliance on this guaranty, the undersigned hereby guarantees the payment of the rent to be paid by the Lessee and the performance by the Lessee of all the terms, conditions covenants and agreements of the Lease, and the undersigned promises to pay all the Lessor's expenses, including reasonable attorney's fees, incurred by the Lessor in enforcing all obligations of the Lessee under the lease or insured by the Lessor in enforcing this guaranty. The undersigned further agrees to all terms and conditions of the confession of judgement [sic] against the undersigned to the extent and set forth in the body of this lease. The Lessor's [sic] consents to any assignment or assignments, and successive assignments by the Lessee and Lessee'sassigns, of this lease, made either with or without notice to the undersigned, or changed or different use of the demised premises, or Lessor's forbearance, delays extensions of time or any other reason whether similar to or different from the foregoing, shall in no wise manner release the undersigned from liability as guarantor."

¶ 5 Defendant signed this guaranty provision personally and individually.

¶ 6 Paragraph 43 of the lease provided for automatic renewal for successive terms of equal length, as follows:

"43. TERM: The term of this Lease shall be as stated in Paragraph #1. The Lease shall be automatically renewed for an additional term equal in length to the term stated in Paragraph 1 and shall renew for successive and continuous terms of equal length ("Renewal Terms"), unless either party notifies the other in writing in accordance with Paragraph 16 herein. If Lessee elects not to renew this Lease, Lessee shall give Lessor at least sixty (60) days written notice prior to the end of the original term or any succeeding Renewal Terms. All of the terms and conditions of this Lease shall apply during the Renewal Terms, except:

i.) Rent shall increase on the commencement date of each Renewal Term and on the first day following each succeeding Rent payment for the immediately preceding twelve (12) month period by the percentage increase in the National Consumer Price Index ("CPI") over the period measured from the last month prior to the immediately preceding twelve (12) month period to the last month of the immediately preceding twelve (12) month period. The increase in Rent shall, in no event, be less than five percent (5%) of the Rent at the end of the immediately preceding twelve (12) month period. If the National Consumer Price Index is discontinued or is unavailable, Lessorwill substitute a comparable index reflecting changes in the cost of living or purchasing power of the consumer dollar that is published by any other governmental agency, bank or financial institution.

ii.) The additional taxes described in Paragraph 32 herein for the fractional year from January 1 of the last calendar year of the final Renewal Term to the termination date shall be computed on the basis of the Ownership Taxes for the calendar year last ended."

¶ 7 On May 29, 2009, B&F and plaintiff executed Addendum IV to the lease, which provided that all other conditions were to remain the same as the original lease dated April 4, 2001.

¶ 8 B&F continued to occupy the premises and pay rent according the terms of the original lease through the end of the lease on June 30, 2006. Thereafter, plaintiff and B&F failed to renew Addendum IV or to execute any further written agreement to lease the property.

¶ 9 Several years later, on April 4, 2009, about three years after the original five-year lease term end date, plaintiff requested B&F to execute a document entitled, "Addendum IV To Lease Agreement, Dated April 4, 2001, Between B&F Technical Code Services, Inc., and Stonegate Properties, Inc." (Addendum IV).¹ The very first provision of Addendum IV provided: "All conditions to remain the same as original lease dated April 4, 2001." Addendum IV covered a time period through April 2014, and was for a rental price of $33,049.20 per year, $2,754.10 per month, almost three times the original lease rental price. The leased property under AddendumIV included not only Suites 1550 and 1555 located at 2401 West Hassel Road, Hoffman Estates, Illinois, previously leased under the original lease agreement, but also Suites 1560, 1565, and 1570, as well as three additional addresses. Defendant signed in her capacity as CEO of B&F, and not in her individual capacity.

¶ 10 B&F filed for bankruptcy in the United States Bankruptcy Court for the Northern District of Illinois on October 28, 2013. According to plaintiff, the declaration of bankruptcy constituted a default under the terms of the original lease.

¶ 11 B&F failed to pay rent. On January 20, 2014, demand was made upon defendant to pay the amounts due, but defendant refused.

¶ 12 Plaintiff filed a complaint to enforce the guaranty against defendant. Defendant filed a motion to dismiss pursuant to section 2-615 and section 2-606 of the Illinois Code of Civil Procedure (735 ILDS 5/2-615, 2-606 (West 2014)). Plaintiff attached a copy of the original lease agreement and personal guaranty. Plaintiff also attached a demand letter. However, plaintiff did not attach a copy of Addendum IV.

¶ 13 Defendant filed a motion to dismiss. The circuit court granted the motion to dismiss pursuant to section 2-615 for failure to state a claim. The court instructed plaintiff that mere conjecture was not sufficient to sustain a cause of action for breach of contract, and that no written guaranty agreement actually existed to subject defendant to any personal liability. The court also found that the guaranty agreement attached to the complaint did not constitute a contract binding defendant to Addendum IV. The court granted plaintiff's request to file an amended complaint and advised it to plead more than conjecture, speculation, and conclusions of law, or attach a contract that would bind defendant.

¶ 14 Plaintiff then filed an amended verified complaint seeking judgment in the amount $1,369,832.75, plus interest and late charges. The original lease agreement, personal guaranty and Addendum IV were all attached to the amended complaint. The amended complaint alleged that defendant signed Addendum IV in her corporate capacity and that defendant did not object to the Addendum or her "continuing obligations" under the guaranty in the original lease agreement. The amended complaint alleged that the leased premises were occupied by B&F from April of 2001 through January 20, 2014. The amended complaint alleged that "B&F failed to pay the rent for the residue of the Lease term."

¶ 15 Defendant filed a motion to dismiss, pursuant to section 2-615 and section 2-606 of the Illinois Code of Civil Procedure (735 ILDS 5/2-615, 2-606 (West 2014)). The circuit court granted defendant's motion pursuant to section 2-615 for failure to state a claim and dismissed the amended verified complaint with prejudice.

¶ 16 Plaintiff filed a motion to reconsider, which the court denied. Plaintiff did not move to again amend the complaint. Plaintiff timely appealed.

¶ 17 ANALYSIS

¶ 18 I. Motion to Dismiss.

¶ 19 Plaintiff argues that the court erred in dismissing its amended complaint and in denying its motion for reconsideration where the amended complaint indeed states a cause of action for breach of contract.

¶ 20 A. Standard Applied to the 2-615 Motion to Dismiss.

¶ 21 As a...