Suburban Auto v. Associated Tile Dealers

• Decision Date: 10 February 2009
• Docket Number: No. 1-08-0185.,No. 1-07-3531.,No. 1-08-0293.,1-07-3531.,1-08-0185.,1-08-0293.
• Citation: 902 N.E.2d 1178
• Parties: SUBURBAN AUTO REBUILDERS, INC., Plaintiff-Appellant/Cross-Appellee, v. ASSOCIATED TILE DEALERS WAREHOUSE, INC., Defendant-Appellee/Cross-Appellant.
• Court: United States Appellate Court of Illinois

902 N.E.2d 1178

SUBURBAN AUTO REBUILDERS, INC., Plaintiff-Appellant/Cross-Appellee, v. ASSOCIATED TILE DEALERS WAREHOUSE, INC., Defendant-Appellee/Cross-Appellant.

No. 1-07-3531.

No. 1-08-0185.

No. 1-08-0293.

Appellate Court of Illinois, First District, Second Division.

February 10, 2009.

DeGrand & Wolfe, P.C. (Luke DeGrand, Tracy L. Wolfe and Teresa F. Frisbie, of counsel), Chicago, for Appellant.

Barone & Jenkins, P.C. (Anthony G. Barone and David M. Jenkins, of counsel), Oakbrook Terrace, for Appellee.

Justice HOFFMAN delivered the opinion of the court:

The plaintiff, Suburban Auto Rebuilders, Inc. (Suburban), appeals from orders of the circuit court (1) granting summary judgment in favor of the defendant, Associated Tile Dealers Warehouse, Inc. (Associated), on count IV of Suburban's amended complaint and (2) denying Suburban's motion for leave to file a second amended complaint seeking recovery for rents previously paid to Associated pursuant to a lease. Associated has cross-appealed the circuit court's striking of its postjudgment petition for attorney fees. For the reasons that follow, we reverse each of these rulings and remand the cause to the circuit court for further proceedings.

The pleadings, depositions, admissions, and affidavits contained in the record reflect the following relevant facts. The claims underlying this litigation are premised on a lease executed on April 16, 1993, by Associated, as owner and lessor, and Suburban, as tenant. The leased property consisted of a parcel of commercial real estate located at 8444 Niles Center Road, Skokie, Illinois (the premises). Since the execution of the lease, Suburban has operated a family-owned, automobile-restoration business on the premises.

The lease contained a right of first refusal, which provided that "Landlord [Associated] will give Tenant [Suburban] First Right of Refusal if Landlord intends to sell the property. Landlord will give Tenant 30 day[s] notice of intent and 48 hours to accept or decline any written offer Landlord may have."

Paragraph 19 of the lease sets forth the manner in which notices were to be given and stated as follows:

"Notices shall be in writing. The time of mailing shall be the time of notice.

(a) Notices shall be effectively served by Landlord [Associated] upon Tenant [Suburban] by forwarding through certified or registered mail, postage prepaid, to Tenant at the premises.

(b) Notice shall be effectively served by Tenant [Suburban] upon Landlord [Associated] when addressed to Landlord and served by forwarding through certified or registered mail, postage prepaid, to Landlord at 3232 Elston Ave., Chicago, Il. 60618 or if notified of another address by Landlord, at such latter address."

Paragraph six of the rider attached to the lease provided that the prevailing party in any dispute arising under the lease shall recover all costs and expenses, including reasonable attorney fees, from the non-prevailing party.

In February 2000, Suburban received a letter from Evelyn Allen, one of the principals of Associated. This letter, which was dated February 11, 2000, was printed on stationery bearing the letterhead of Evelyn Allen Realty with the address of 187 N. Marion, Oak Park, Illinois, and was addressed to Larry Chachko, a principal of Suburban, at 8025 Skokie Blvd., Skokie, Illinois. The letter stated, in its entirety, as follows:

"We have accepted a contract to purchase the above reference[d] property [8444 Niles Center Road, Skokie, Il.] for $600,000 without contingencies, except for a mortgage. You have 48 hours from [the] date and time of the delivery of this letter to match the offer or waive your right."

The letter did not indicate that a copy of the third-party contract was enclosed, and Suburban alleged that no such copy was included with the letter.

Suburban's attorney responded to this notice in a letter directed to Evelyn Allen at 187 N. Marion in Oak Park, stating as follows:

"Dear Mr. [sic] Allen:

As you know, the undersigned represents the Chachko[s] and Suburban Auto Rebuilders, Inc. My clients are in receipt of a contract [sic] wherein you purport to notify my clients of an acceptance of a contract on the property at 8444 Niles Center Road, Skokie[,] Illinois.

My clients are hereby exercising their right of first refusal under their lease, however my clients must receive a copy of the offer and allow me to review the offer to determine the legitimacy of the offer. My client[s] will notify you of their decision of whether they choose to exercise their right of first refusal within 48 hours of my receipt of the written offer."

Although this letter bore a date of February 12, 2000, the printed notation at the top of the page indicated that it was sent by fax on February 28, 2000.

On February 29, 2000, Suburban's attorney directed another letter to Evelyn Allen at the Oak Park address, stating, in relevant part, as follows:

"I previously wrote to you on February 12, 2000[,] requesting a copy of the contract to purchase the property located at 8444 Niles Center Road, Skokie[,] Illinois as well as notifying you that my clients were exercising their right of first refusal under their lease. To date, I have yet to hear from you. I can only surmise that there was no legitimate offer to purchase the property, because I do have proof that you received my correspondence of February 12, 2000.

Please forward a copy of the contract to purchase the property immediately."

Also on February 29, 2000, J & K Construction, the third-party purchaser, declared its contract to purchase the property from Associated to be null and void.¹

A subsequent letter from Evelyn Allen, dated March 2, 2000, notified Suburban that Associated had accepted a new contract for the sale of the premises at a price of $670,000 without contingencies except for the purchaser's ability to secure a mortgage equal to 50% of the purchase price. The letter also indicated that a copy of the tendered contract was enclosed and that Suburban had 48 hours from its delivery to match the offer or to waive its right of first refusal. As with the prior notification, this letter was printed on letterhead for Evelyn Allen Realty in Oak Park, Illinois, and was directed to Larry Chachko at 8025 Skokie Blvd. in Skokie, Illinois. That same day, Suburban's attorney responded to this notification by stating that Suburban had exercised its right of first refusal on February 12, 2000, and, as a consequence, had a binding agreement to purchase the property for $600,000.

On March 23, 2000, Associated informed Suburban that, as of April 1, 2000, rent payments and taxes were to be mailed to Associated at 187 N. Marion Street in Oak Park, Illinois. This letter made no reference to any change of address for notices required under the lease.

Suburban's attorney subsequently sent a letter, dated March 27, 2000, to Robert Andrew, counsel for Associated, again asserting that Suburban had exercised its right of first refusal on February 12, 2000, and had a binding agreement to purchase the property for $600,000 but had not received a contract.

On March 31, 2000, at 6:41 p.m., Associated's attorney faxed a letter to Suburban's attorney in which he stated that Suburban had previously failed to properly exercise its right of first refusal in the manner and within the time period set forth in the parties' lease. According to the letter, Suburban's purported exercise of its right of first refusal was ineffective because it was untimely and was sent by fax rather than by certified or registered mail, as required under the lease.

The letter stated that, despite these circumstances, Associated was still willing to sell the property to Suburban at a price of $600,000 and "pursuant to the terms of the contract that was signed by the potential buyers." This letter was accompanied by a copy of the J & K contract, which was executed by J & K Construction, as the purchaser, on February 9, 2000, and accepted by Associated, as the seller, on February 10, 2000.²

The letter further stated that "[i]n order for your clients to properly exercise their right of first refusal, your client must match the third party's offer exactly. * * * If your acceptance does not, in every respect, meet and correspond to the terms proposed under the enclosed contract, my client will not consider it an effective exercise of your option under the lease[,] and no contract to purchase will be created between you and my client." In addition, the letter stated that, "[p]ursuant to the lease," Suburban had "48 hours to accept or decline the enclosed contract." This letter also stated that, without regard to the provisions of the J & K contract to the contrary, there would be no financing, inspection, or attorney approval contingencies in an agreement between the parties. The March 31, 2000, letter specifically referenced the notice provision of the lease, which required that notices to Associated were to be sent by certified or registered mail to 3232 Elston Avenue in Chicago, Illinois.

On April 5, 2000, Suburban's attorney sent by certified mail a letter addressed to Associated at 3232 N. Elston in Chicago, with a copy to Associated's attorney. This letter acknowledged receipt of the March 31, 2000, letter and the copy of the J & K contract. In his letter, Suburban's attorney stated that his clients "remain[ed] ready, willing and able to exercise their right of first refusal to purchase the property" and that his clients "will meet in every respect, the terms of the [J & K] contract."

Approximately five weeks later, counsel for Suburban sent another letter to Associated's attorney, again stating that his clients intended to exercise their right of first refusal to purchase the property and requesting that an executed contract be forwarded. On September 21, 2000, Suburban's attorney sent to Associated's counsel a written offer to purchase the property for $600,000 and a check for $1,000 as an...