Uncle Tom's, Inc. v. Lynn Plaza, LLC
| Docket Number | 1-20-0205 |
| Decision Date | 21 May 2021 |
| Citation | 2021 IL App (1st) 200205,196 N.E.3d 1034 |
| Parties | UNCLE TOM'S, INC., n/k/a Market Square Restaurant, Inc., Plaintiff-Appellant and Cross-Appellee, v. LYNN PLAZA, LLC, Defendant-Appellee and Cross-Appellant. |
| Court | United States Appellate Court of Illinois |
Gary A. Weintraub, of Gary A. Weintraub, P.C., of Northfield, and David A. Epstein, of D.A.E. Law Office, of Chicago, for appellant.
Mark C. Gross, of Gross & Boyle, LLC, of Hinsdale, for appellee.
¶ 1 This landlord and tenant dispute comes to us on appeal from judgments entered in favor of the defendant landlord on the parties’ various cross-motions for summary judgment and following a trial on the two remaining counts. The plaintiff, Uncle Tom's, Inc. (Tom's),1 has for many years operated the Market Square Restaurant, located in a strip mall owned by the defendant, Lynn Plaza, LLC (Lynn Plaza).2 The relationship, which appears to have been an amicable one for many years, began to deteriorate as the parties’ 35-year lease was set to expire and they found themselves unable to agree on the terms of a 15-year extension. Tom's sued for a declaration resolving that issue and, at the same time, challenged certain categories of the common area maintenance (CAM) costs it had been paying for a number of years under the parties’ lease. While this litigation was pending, Lynn Plaza filed a forcible entry and detainer action alleging that Tom's was in violation of the lease for offering video gaming, which had recently been legalized in Illinois. That action was stayed, and Tom's was granted leave to include additional counts for declaratory relief on whether video gaming violated the lease in this case.
¶ 2 The issues before us on the parties’ appeal and cross-appeal are (1) the propriety of the challenged CAM charges, (2) whether video gaming violates the parties’ lease, and (3) whether Lynn Plaza is entitled to attorney fees as a prevailing party in this litigation.
¶ 5 On March 2, 1978, Tom's, as lessee, entered into a 35-year ground lease with the original lessor, Amalgamated Trust & Savings Bank (as trustee under Trust No. 2213), for a parcel of unimproved land at the corner of a strip mall known as the Lynn Plaza Shopping Center, located at 600 W. Dundee Road in Wheeling, Illinois. A year later, Tom's erected a structure on the property that it has since operated as the Market Square Restaurant. A number of the provisions of the original lease are relevant to the parties’ dispute and to this appeal.
¶ 6 Section 1, titled "Demised Description and Use of Premises" and referred to by the parties as the lease's "purpose clause," stated that the property was leased "for the purposes of conducting thereon a restaurant and liquor lounge business and for no other purpose." Section 12 further contemplated that a one-story "restaurant and cocktail lounge building" would be constructed on the premises that would "seat approximately 210 people." Section 5, titled "Waste and Nuisance Prohibited," required Tom's to both "comply with all applicable laws affecting the demised premises" and refrain from "commit[ting] or suffer[ing] to be committed any waste on the demised premises or any nuisance." Section 8 forbade Tom's from subletting the premises or assigning or transferring any of its interest in the leasehold without Lynn Plaza's prior written consent.
¶ 7 Section 32 of the lease obligated Tom's to pay, "as additional rent," a 10% pro rata share of CAM costs—defined as the "cost of maintaining and operating all areas and facilities *** provided and designated by [Lynn Plaza] for the general use and convenience of [Tom's] and tenants of the Shopping Center." Common areas included a portion of the shopping center's parking lot located beneath power lines owned by Commonwealth Edison (ComEd) that the center leased from ComEd; "ingress and egress to the said Shopping Center and to the demised premises; [and] driveways and walkways." The CAM costs associated with such areas were to "include, but not be limited to, labor, supplies, equipment, and all expenses of repairing, leasing cleaning [sic ], sweeping, snow removal, painting of parking lines and signs, public liability insurance, policing, lighting, landscaping and decorating the common facilities, and of removing trash, garbage, and other waste therefrom." Section 32(c) of the lease also provided that "[u]nder no circumstances [could Lynn Plaza] charge [Tom's], its customers and employees any fees for parking" and made clear that Lynn Plaza "shall not be entitled to any fee or expense for the management of the common area funds."
¶ 8 Lynn Plaza only began including property management fees in the CAM costs it charged to Tom's in 1997. The CAM statement for that year, issued in early 1998, included a $15,698 charge for management fees, accompanied by the following note: "Property management is an expense allowed under the common area provision of your lease which previously has not been included in your CAM charges."
¶ 9 The record reflects that charges associated with Lynn Plaza's rental of an easement from ComEd for the shopping center's parking lot was included in CAM statements sent to Tom's since at least 1989.
¶ 10 In connection with a loan sought by Lynn Plaza, in or about July 1998, Tom's was asked to execute a "Tenant Estoppel Certificate" representing to the proposed lender that rent had been "paid through July 1998" and that there were "no defenses to or offsets against the enforcement of the Lease or any provision thereof by the Landlord." The certificate was executed by Tom's principal, Tom Pappas.
¶ 12 In 2009, the General Assembly enacted the Video Gaming Act (Act) ( 230 ILCS 40/1 et seq. (West 2018)), which legalized the use of video gaming terminals within certain licensed establishments, including bars, fraternal and veterans’ establishments, and truck stops. A video gaming terminal is defined under the Act as "any electronic video game machine that, upon insertion of cash, electronic cards or vouchers, or any combination thereof, is available to play or simulate the play of a video game, including but not limited to video poker, line up, and blackjack," and through which a player "may receive free games or credits that can be redeemed for cash." Id. § 5. A licensed establishment under the Act is "any licensed retail establishment where alcoholic liquor is drawn, poured, mixed, or otherwise served for consumption on the premises, whether the establishment operates on a nonprofit or for-profit basis." Id.
¶ 13 The Act places numerous restrictions on the operation of video gaming terminals in licensed establishments. Terminals must be approved by the Illinois Gaming Board (Board) and are subject to ongoing testing by licensed third parties. Id. § 15. They must conform to an approved model, meet a lengthy list of criteria governing their construction and operation, include accounting software that keeps electronic records, and be linked by a central communications system for auditing purposes. Id. The Act specifies the form and method of dispensing payouts, the cost of credits, and maximum wagers. Id. § 20. It requires licensed establishments to post the odds of winning on or near each terminal, limits play to the legal hours of operation allowed for the consumption of alcoholic beverages, and restricts play to users who are over the age of 21. Id. §§ 35, 40. For most of the relevant time period, the maximum number of video gaming terminals allowed in a licensed establishment was five. Id. § 25(e). In 2019, the maximum number was raised to 6, except for larger truck stops, which may have 10 terminals. Pub. Act 101-31, § 35-60 (eff. June 28, 2019) ( 230 ILCS 40/25 ); 230 ILCS 40/25(e) (West Supp. 2019).
¶ 14 Every entity involved in the process of manufacturing, distributing, operating, hosting, and servicing video gaming terminals must be licensed by the Board and is prohibited from possessing multiple types of licenses under the Act. 230 ILCS 40/25, 30 (West 2018). A licensed establishment must enter into a written use agreement with a licensed operator for the placement of terminals in its facilities. Id. § 25(e). The operation of video gaming terminals outside the parameters established by the Act is considered a violation of section 28-3 of the Criminal Code of 2012, which, subject to exceptions, generally prohibits gambling within the state ( 720 ILCS 5/28-3 (West 2018) ). 230 ILCS 40/35(a) (West 2018).
¶ 15 Pursuant to the Act, the Board has adopted regulations that, among other things, outline the duties and obligations of video gaming terminal operators and video gaming locations ( 11 Ill. Adm. Code 1800.250 (2019); 11 Ill. Adm. Code 1800.270 (2016) ) and control the location and placement of video gaming terminals ( 11 Ill. Adm. Code 1800.810 (2018) ). Pursuant to these regulations, licensed establishments serving patrons under the age of 21 must place video gaming terminals in a designated area that is within view of the establishment's employees and cordoned off by a "short partition, gate or rope or other means of separation." Id.
¶ 16 Except where prohibited by a local municipality, the Board began issuing video gaming licenses to licensed liquor establishments in October 2012. Tom's was approved for a license, and in March 2014, five video gaming terminals were placed in the Market Square Restaurant by licensed video gaming operator Leisure Time Gaming and Amusement, Inc. (Leisure Time).
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