Fitzwilliam v. 1220 Iroquois Venture

Citations: 598 N.E.2d 1003; 233 Ill. App. 3d 221; 174 Ill. Dec. 371; 1992 Ill. App. LEXIS 1337Docket: 2-91-1083

Court: Appellate Court of Illinois; August 25, 1992; Illinois; State Appellate Court

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F. John Fitzwilliam and Alice Fitzwilliam, as plaintiffs, filed a lawsuit against 1220 Iroquois Venture, represented by Walter J. O'Brien II, seeking injunctive and declaratory relief for constructive eviction and wrongful property tax proration assessments. The defendant counterclaimed for attorney fees and costs. Both parties sought summary judgment, with the trial court ruling in favor of the defendant on all counts, including the counterclaim.

On appeal, the plaintiffs raised several issues: 1) the ambiguity of paragraph 9 of their lease, which allowed the defendant to enter the premises for repairs, 2) that the defendant’s entry constituted constructive eviction, 3) that the court erred in allowing the defendant to retain real estate tax prorations, and 4) that the award of attorney fees to the defendant was incorrect.

The plaintiffs operated a business acquiring commercial office space and leasing it to their wholly-owned corporation, Business Link, Inc. They leased property at 1220 Iroquois Drive until December 31, 1989, with an option to extend for four additional one-year terms, which they did not exercise. Instead, they requested lease renegotiation through a letter in May 1988, which was rejected by the defendant's management. Subsequently, Business Link Naperville, Inc. entered a lease with Upland Industries Corporation for new space in February 1989, and the defendant's property manager expressed disappointment over the plaintiffs’ decision to vacate without prior notice. The defendant later requested acknowledgment from the plaintiffs of their waiver to extend the lease, enabling advertising of the property for future tenants.

On October 9, 1989, the plaintiffs' attorney notified the defendant of the plaintiffs' intention to retain possession of the leased premises until December 31, 1989, asserting that any failure to occupy the space or conduct business should not be interpreted as abandonment. On November 1, 1989, the sublessees of Business Link, Inc. moved to a new location, yet some furniture remained at the old premises. Minimal occupancy occurred from November 2 to November 20, when two women were present to answer phones and direct deliveries. According to the lease, rent was due monthly, and while the November rent of $17,695.84 was paid on November 10, no rent was paid for December. On November 17, workmen entered the premises to redecorate, as permitted by the lease, which allowed the landlord to make improvements without constituting eviction and ensured rent would not abate during such activities. Kay Porsche, involved in scheduling the improvements, acknowledged the lease's expiration date and the intention of a new tenant to occupy the premises starting January 1, 1990.

On December 4, 1989, F. John Fitzwilliam, representing the plaintiffs, informed Walter O'Brien, the general partner of the defendant, that the presence of the defendant's workmen on the leased premises constituted a constructive eviction, prompting the plaintiffs to abandon the premises as of November 17. Fitzwilliam requested a prorated refund of November rent, confirmation of no liability for December rent, and release of a $35,000 security deposit. On the same day, the plaintiffs filed a complaint seeking injunctive and declaratory relief, including a temporary restraining order (TRO) against the defendant's draw on the security letter of credit. An emergency motion for a TRO was presented on December 7 but was denied after a hearing. A subsequent motion for rehearing was also denied, leading to an interlocutory appeal that was dismissed on December 28, 1989. On December 18, 1989, the defendant drew $27,539.01 from the letter of credit for unpaid rent and taxes. On February 20, 1990, the defendant filed a counterclaim for attorney fees related to the plaintiffs' action. The plaintiffs amended their complaint and moved to dismiss the counterclaim, which was denied on May 23, 1990. Cross-motions for summary judgment were filed, resulting in the court granting the defendant's motion for attorney fees and denying the plaintiffs' motion on July 2, 1991. The defendant later sought to increase the awarded attorney fees. The plaintiffs' motion for reconsideration was denied on September 11, 1991, while the request for increased fees was granted. The plaintiffs appealed the trial court's decisions, arguing that a provision in the lease regarding the defendant's access for repairs was ambiguous, a claim the defendant contested, asserting that no ambiguity existed.

Paragraph 9 of the lease outlines the rights of the landlord to enter the leased premises to install and maintain infrastructure such as pipes and wiring, conduct inspections, and perform cleaning, repairs, alterations, or improvements without causing an eviction of the tenant or affecting rent obligations, except as noted in Section 10. The landlord can enter the premises using a master key or by force if necessary, provided that reasonable care is taken with the tenant's property. The landlord's actions on November 17, 1989, which included painting and replacing carpeting, were deemed authorized under this provision. The plaintiffs argued that the landlord could not both possess the premises and collect rent, but the lease explicitly grants the landlord entry rights for improvements without affecting tenant obligations. The plaintiffs further contended that the lease should restrict the purpose of the landlord's work or require tenant consent, but the lease contains no such limitations. The trial court noted that the plaintiffs, represented by an attorney, had agreed to the lease terms and that the plaintiffs understood them, as confirmed by plaintiff F. John Fitzwilliam’s deposition. The court observed that the fairness of the lease terms is not a legal issue unless coercion, fraud, or significant economic disparity is present, which was not the case here. The court affirmed that both parties were sophisticated business individuals, and mere dissatisfaction with the terms does not render the agreement unreasonable. The contract's ambiguity is a legal question and is not established solely by differing interpretations from the parties.

Where no ambiguity is present in a lease agreement, the parties' intent is determined solely from the agreement's language. In this case, paragraph 9 clearly allows the landlord to enter the tenants' premises for redecorating without consent, and such entry does not equate to constructive eviction or permit rent abatement, even if business operations were interrupted. Plaintiffs had vacated the premises entirely by November 1, leaving only minimal presence behind, and the landlord's workers entered 17 days post-move. The lease explicitly states that the landlord's entry for improvements does not constitute eviction. Furthermore, for a constructive eviction claim to succeed, it must be shown that the premises were rendered unusable due to the landlord's wrongful actions, which was not established here. The plaintiffs, engaged in leasing commercial space, had moved their operations to a new location as planned. Therefore, the court concluded that the terms of the lease, particularly paragraph 9, must be enforced as written, denying the plaintiffs' claims of constructive eviction.

Fitzwilliam confirmed that all telephone equipment was removed on October 31, and other equipment was removed on November 1, which was also communicated to the post office as the effective date for the plaintiffs' new address. A letter from Fitzwilliam to a realty agency on November 6, 1989, indicated the move was completed and both plaintiffs and their tenants were satisfied with the new location. Consequently, the plaintiffs could not demonstrate that the defendant’s actions on the premises were intended to deprive them of enjoyment since their authorized activities under the lease had ceased prior to the defendant's entry. The court concluded that the defendant's actions were permitted under the lease terms. Even absent this authority, the evidence was insufficient to support claims of constructive eviction.

Regarding real estate tax prorations for 1990, the trial court found in favor of the defendant. The lease stated that plaintiffs were liable for a pro rata share of real estate taxes, but plaintiffs contended that they should only be responsible for taxes during the lease term, which ended December 31, 1989. The court agreed, interpreting the lease to mean that taxes attributable to 1989 were based on the 1988 assessment figures. This was supported by testimony from the defendant's managing agent, Kay Porsche, who acknowledged that tenants paid taxes in 1989 based on the prior year's assessment. However, Porsche also indicated that tenants could be charged additional prorations based on the current year’s tax bill, a procedure not substantiated by evidence other than a letter sent after the plaintiffs filed suit. Fitzwilliam's response to this letter affirmed that plaintiffs were responsible only for taxes paid in 1989, based on the 1988 assessment, and not for any taxes due in 1990 after the lease termination.

Porsche acknowledged inconsistencies in its handling of tax liabilities under the lease, specifically that the tenant's tax liability for 1989 should have been based on the 1988 tax bill, with 1989 real estate taxes payable in 1990. The 1989 tax assessment confirmed that payment was due in 1990. Plaintiff Fitzwilliam testified that real estate tax prorations were included in the monthly rent, which was $17,695.84 in November 1989, rather than the lease-stipulated $16,254.66. This discrepancy indicates that the monthly payments incorporated tax prorations for the 1988 taxes due in 1989. Fitzwilliam further clarified that each year he was notified of tax proration increases affecting the monthly rent. The lease must be enforced as written, and the court cannot compel actions beyond those agreed upon. The evidence shows plaintiffs were only obligated to pay prorations based on 1988 taxes in 1989, leading to the conclusion that the trial court erred in ordering a payment based on 1989 taxes, warranting a reversal of that order and a remand for determining repayable tax amounts.

Additionally, the trial court awarded attorney fees to the defendant based on paragraph 18(h) of the lease, which requires the tenant to cover the landlord's costs incurred due to tenant obligations. Plaintiffs contested this, arguing their good-faith claim negated the landlord's entitlement to fees, but this interpretation contradicts the lease's explicit language. The fees incurred were a direct result of actions initiated by the plaintiffs against the defendant, leading the court to deny the plaintiffs' motion for summary judgment and grant it in favor of the defendant on all counts.

Defendant was not found at fault in the litigation initiated by plaintiffs and is entitled to recover substantial attorney fees incurred during the defense. The trial court determined that, under paragraph 18(h), plaintiffs, as sophisticated business individuals, agreed to the terms without evidence of coercion or misrepresentation. Plaintiffs argued that the trial court erred by not conducting an evidentiary hearing on the reasonableness of the attorney fees awarded to defendant, claiming the lack of expert testimony was detrimental. However, the court noted that while expert testimony is appropriate, it is not legally required. The burden to demonstrate the reasonableness of the fees lies with the party seeking them.

Defendant provided detailed time records, which included specific entries of services performed, ensuring transparency beyond mere hourly calculations. The trial court scrutinized these records, deducting four items from the fee claim, indicating careful consideration and reliance on the judge's own experience in evaluating the fees. The court's discretion in awarding attorney fees will not be overturned unless an abuse of discretion is shown. Since the judge had been involved in the case for an extended period, it was reasonable to rely on his assessment of the fees. Plaintiffs' argument regarding the distinction between costs incurred by defendant and those incurred by attorney O'Brien, who is also a general partner, was dismissed due to a lack of supporting legal authority.

Plaintiffs' final argument is deemed waived due to their failure to provide supporting authority. The only cited case is an abstract, rendering it unreliable. The trial court's decision to award attorney fees to the defendant is upheld. Contract interpretation, where no factual disputes exist, is a legal matter suitable for summary judgment. The court evaluates whether the trial court correctly determined that no genuine issues of material fact existed and if the judgment favored the moving party as a matter of law. This court can independently interpret the contract. Summary judgment was found appropriate, with the trial court correctly ruling in favor of the defendant based on the lease agreement, except concerning the interpretation of paragraph (2)(1) related to tax prorations. The Du Page County circuit court's judgment is affirmed in part, reversed in part, and remanded for further proceedings.