Vill. of Palatine, Corp. v. Palatine Assocs., LLC

• Decision Date: 16 March 2012
• Docket Number: No. 1–10–2707.,1–10–2707.
• Citation: 966 N.E.2d 1174
• Parties: The VILLAGE OF PALATINE, a Municipal Corporation, Plaintiff–Appellee, v. PALATINE ASSOCIATES, LLC, an Illinois Limited Liability Corporation, Sears Roebuck and Company, a New York Corporation, and All American Title Agency, LLC, an Illinois Limited Liability Company, Defendants (All American Title Agency, LLC, an Illinois Limited Liability Company, Defendant–Appellant; Palatine Associates, LLC, an Illinois Limited Liability Corporation, Defendant–Appellee).
• Court: United States Appellate Court of Illinois

966 N.E.2d 1174

The VILLAGE OF PALATINE, a Municipal Corporation, Plaintiff–Appellee,

v.PALATINE ASSOCIATES, LLC, an Illinois Limited Liability Corporation, Sears Roebuck and Company, a New York Corporation, and All American Title Agency, LLC, an Illinois Limited Liability Company, Defendants (All American Title Agency, LLC, an Illinois Limited Liability Company, Defendant–Appellant; Palatine Associates, LLC, an Illinois Limited Liability Corporation, Defendant–Appellee).

No. 1–10–2707.

Appellate Court of Illinois, First District, Sixth Division.

March 16, 2012.

Strecker, Jepson & Associates, Lake Zurich (Paul H. Strecker, Christy J. Jepson, of counsel), for Appellant.

Ryan & Ryan, Chicago (William E. Ryan, Timothy J. Ryan, Michael W. Ryan, Lauren E. Ryan, of counsel), for Appellee.

Presiding Justice R. GORDON delivered the judgment of the court, with opinion.

¶ 1 This appeal arises from a condemnation proceeding brought by the Village of Palatine¹ (Village), seeking to acquire real property in Palatine, Illinois, that was being used for a shopping center. The Village intends to acquire the property to be used as a police facility, with other municipal uses. The Village paid over $6 million to the owner, defendant Palatine Associates, LLC (Palatine Associates), in just compensation, and any claims of tenants was to be apportioned from the money received. Palatine Associates filed a motion requesting the trial court to find that appellant All American Title Agency, LLC (All American), had no interest in the final award of just compensation because its leases had terminated prior to the entry of the award. The court agreed and All American appeals, arguing that its leases were not terminated prior to the entry of the final award of just compensation. We affirm.

¶ 2 BACKGROUND

¶ 3 I. Leases

¶ 4 Palatine Associates was the owner of the property at issue in this case (subject property), which consisted of a shopping center with a number of tenants, including Sears and All American. All American was a tenant for two spaces and had entered into two written leases in 2005. The first lease, dated April 28, 2005, was for "approximately 7500 square feet" at 601 North Hicks Road (the 601 lease), for a lease term beginning June 1, 2005, and ending on May 31, 2015, with the option for All American to extend the lease for two additional option periods of five years each. The second lease, dated October 28, 2005, was for "approximately 2500 square feet" at 565 North Hicks Road (the 565 lease), for a lease term from November 1, 2005, through May 31, 2015, with the option for All American to extend the lease for two additional option periods of five years each. Both leases contained similar terms.

¶ 5 Article 2 of each lease provided:

"Tenant acknowledges that the premises are being accepted ‘as is' and subject to the Landlord's obligations set forth in Exhibit B attached hereto. Landlord has not agreed to make any changes, additions or alterations in or to the Leased Premises or to perform any work therein, all of which shall be the sole obligation of Tenant and at Tenant's sole cost and expense, except as provided in Exhibit B."

¶ 6 The leases required All American to pay a fixed base rent, as well as "additional rent," defined as "Real Estate Taxes and CAM Charges ^{[2 ]} based upon Tenant's pro-rata share[ ] (capped at $3.00 per square foot through [the] initial lease term)." Article 4 of the leases stated that "Tenant shall pay to Landlord, * * * as ‘Fixed Base Rent’ for the Premises during the term of this Lease without any deduction or setoff, except as expressly provided in this lease, the amount set forth in Section 1.1, in equal monthly installments, in advance, on the first day of each calendar month."

¶ 7 Article 5 of the 565 lease explained how to calculate taxes:

"Commencing on the Commencement Date TENANT shall pay, as additional rent, TENANT'S proportionate share of all real estate taxes and assessments* * * for each calendar year during the term hereof[.] * * * For purposes of this Lease, TENANT'S proportionate share shall be deemed 1.50%. (2500 out of 167,142 sq. ft.)

During the term of this Lease, TENANT shall pay to LANDLORD, monthly in advance, an amount equal to one-twelfth (1/12th) of TENANT'S proportionate share of real estate taxes and assessments for the current year, as reasonably estimated by LANDLORD. Such amount is currently estimated to be $2.00 per square foot. If TENANT'S proportionate share of taxes with respect of any tax year is less than the total amount theretofore paid by TENANT for such period, the excess shall be credited against the rent next becoming due or promptly refunded if no rent remains due. If TENANT'S proportionate share of taxes for any year promptly exceeds the total amount theretofore paid by TENANT for such period, TENANT shall, within 30 days after receipt of invoices from LANDLORD and a copy of real estate tax bill, pay the difference between the actual amount paid by TENANT and TENANT'S proportionate share of real estate taxes and assessments."

Article 5 of the 601 lease is identical except that the 601 lease deemed All American's proportionate share of taxes to be 4.49%. Article 6 of the leases provided that "the additional rent for real estate taxes and CAM shall not exceed $3.00 per square foot. Tenant shall not be responsible for payment of any real estate taxes or CAM, incurred or paid prior to December 1, 2006. CAM and Taxes shall be capped at $3.00 per foot during the original lease term." Article 6 further provided:

"During the 60–day period immediately following Landlord's delivery of any annual statement to taxes or CAM Charges, Tenant shall have the right to inspect Landlord's accounting records relating to Taxes or CAM Charges (as applicable to the statement delivered) at Landlord's or its agent's office, upon reasonable prior notice. Unless Tenant shall take written exception to any item in any such statement within said 60–day period, such statement shall be considered final and accepted by Tenant. Any payment due to Landlord or credit or payment due to Tenant as shown on any such statement shall be paid or applied in the manner and within the time period described herein, whether or not written exception is taken thereto, provided that such payment or application shall be without prejudice to any such written exception."

¶ 8 Article 12 of the leases provided the following concerning repairs by Palatine Associates:

"Landlord[ ] shall keep the foundations, roof, parking areas, Common Areas and structural portions of the walls of the Premises in good condition and repair, except for repairs required thereto by reason of the acts or omissions of Tenant, Tenant's employees, agents, invitees, licensees, or contractors. Tenant shall reimburse Landlord for such repairs, replacement and maintenance as described in Article 6 of this Lease provided in no event shall Tenant be responsible for any repair or replacement costs for the foundations, structural portions of the walls, load bearing items, plumbing, utility lines, pipes and conduits inside or outside the Premises and/or common areas unless the repair or replacement is caused by Tenant, its employees, customers or invitees. Tenant shall give Landlord written notice of the necessity for repairs coming to the attention of Tenant following which Landlord shall have a reasonable time to undertake and complete such repairs. The provisions of this Paragraph shall not apply in the case of damage or destruction by fire or other casualty or by eminent domain, in which event the obligations of Landlord shall be controlled by either Article 14 or Article 16 hereof. If [Landlord] fails to make the required repairs under the lease within a reasonable time, then Tenant may make said repairs and offset against rent."

¶ 9 Article 16 of the leases referred to eminent domain proceedings and provided that "Tenant shall share in any condemnation award for the difference between MV ^{[3 ]} of the space and rent being paid for remaining term of the lease." Article 17 applied to any default by the lessee:

"If Tenant defaults in the payment of Fixed Base Rent or other charges or in the performance of any other of Tenant's obligations hereunder, and fails to remedy such default within five (5) days after written notice from Landlord * * * then and in any such instance, without further notice to Tenant, except to the extent required by law, Landlord may enter upon the Premises and terminate this Lease. In the event of such termination the obligations of Landlord hereunder shall cease without prejudice, however, to the right of Landlord to recover from Tenant any sums due Landlord for rent or otherwise to the date of such entry * * *."

¶ 10 Article 24 of the leases concerns breach of the leases by Palatine Associates:

"If Landlord shall fail to perform any covenant, term or condition of this Lease upon Landlord's part to be performed and, as a consequence of such default, Tenant shall recover a money judgment against Landlord, such judgment shall be satisfied only out of the proceeds of sale received upon execution of such judgment and levy thereon against the right, title and interest of Landlord in the Shopping Center as the same may then be encumbered and neither Landlord nor if Landlord be a partnership, any of the partners comprising such partnership shall be liable for any deficiency. Tenant may also offset its judgment against rents."

¶ 11 Article 26 of the leases set forth various miscellaneous provisions:

"(a) Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the rental or other charges herein stipulated shall be deemed to be other than on account of the earliest stipulated rent nor shall any endorsement or statement on any check or any letter accompanying such check or payment as rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right

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