Douglas Theater Corp. v. Chicago Title & Trust Co.

Citations: 569 N.E.2d 88; 210 Ill. App. 3d 301; 155 Ill. Dec. 88; 1991 Ill. App. LEXIS 255Docket: 1-88-1859,1-89-1365 cons.

Court: Appellate Court of Illinois; February 22, 1991; Illinois; State Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Douglas Theater Corporation filed a lawsuit for specific performance against multiple defendants, including Chicago Title & Trust Company, Harold Binstein, Gold Standard Enterprises, and Chalet Internationale, concerning real property in Chicago. The case involves two appeals and a cross-appeal stemming from a lease agreement related to the property historically known for the Ivanhoe Theater and Restaurant, which sustained significant fire damage. 

American National Bank, as trustee, originally held title to the property under Trust Agreement No. 32967. On May 22, 1978, American National leased a portion of this property to Gold Standard Enterprises, owned by Binstein, under a 24-page lease. The lease stipulated that the premises, located at 3000 N. Clark Street, encompassed specific lots and included the clause that Gold Standard accepted the property "as is," with the obligation to restore the fire-damaged building for commercial use, specifically as a retail space for liquor and related products. The lease was set to continue until September 30, 2003, and renovations were to be approved by both parties. Subsequently, Gold Standard Liquors, Inc., also controlled by Binstein, operated a liquor store on the premises, while Chalet Internationale, Inc. may also have a stake in the property.

On March 15, 1982, American National entered into a lease agreement with Douglas Theater Corporation for a parcel of land adjacent to property leased to Gold Standard, identified as 750 W. Wellington, Chicago. The 85-page lease detailed the legal description of the property, including specific lots and an adjacent public alley, which was approximately 218 feet long. It acknowledged potential irregularities in the property's easterly line but stipulated that the interior would remain as currently divided. The lease required a precise legal description to be prepared by a licensed Illinois land surveyor within 45 days of possession.

The lease included all structures and improvements on the parcel and any rights pertaining to the public alley, as the existing fire-damaged building encroached on the alley. Fixtures and furnishings termed 'equipment' were demised but not relevant to the appeal. A specific provision excluded the 'Bar Area Basement' from the lease, ensuring that Douglas would have no obligations regarding this area, while still allowing for its inclusion in a future purchase option. The Bar Area Basement was also to be described in a survey to be completed within the same 45-day timeframe.

The property was leased 'as is,' with renovations requiring approved architectural plans for theater operations. The lease term was set to expire on June 30, 1987, unless terminated earlier by Douglas exercising the purchase option. A required plat of survey was completed on April 2, 1982, by Christian H. Froemke following an on-site inspection.

A liquor store was already established on an adjacent property, while the surveyed property, termed 'the theater area', remained in a burned-out state. Mr. Froemke, tasked with conducting a survey of the property subject to a lease agreement, was not provided with the lease but was instructed by real estate agent Mr. Jack Frigo on the survey's parameters. The property was divided into two parcels: Parcel 1 included lots 5, 6, and 7 of Dam and Warner's Subdivision, with its eastern boundary defined by the basement walls. Parcel 2 encompassed portions of lots 3, 4, and 5, delineated by the first-floor interior walls, and marked 'not included' was a portion of the public alley encroached by the building.

On August 8, 1983, Harold Binstein purchased the property, subject to existing leases and options, with title held by Chicago Title as Trustee for Trust No. 1083978. In December 1986, Douglas attempted to exercise a purchase option from the 1982 lease, leading to a dispute over the property’s legal description versus the lease terms, particularly concerning the basement under Parcel 2 and the northern half of the vacated public alley. Douglas closed the sale with a reservation of rights and subsequently filed a complaint for specific performance on September 23, 1987, seeking to enforce the purchase option.

By January 28, 1988, Douglas moved for partial summary judgment regarding the alley issue. The defendants filed a cross-motion, but on May 15, 1988, the court ruled in favor of Douglas, directing Chicago Title and Binstein to convey the disputed property as described, specifically the north section of the vacated alley adjacent to lots 5, 6, and 7 and part of lot 4 in the subdivision.

Judgment was entered in favor of Douglas regarding his complaint for specific performance, directing defendants to convey specified portions of property, including a section of Lot 4 and a portion of Parcel 2, both detailed in a January 21, 1988, survey. The order binds both parties to a Party Wall Agreement related to the party wall. Douglas' request for attorney fees and costs was denied, but the issue of damages remains unresolved pending appeals. Defendants have appealed the May 19, 1988, order and the March 9, 1989, order, while Douglas cross-appealed the denial of attorney fees. 

In addressing the defendants' contention that summary judgment should not have been granted in Douglas' favor concerning the conveyance of the public alley, they argue that the lease and survey indicate the alley was excluded from the transaction. They also claim that ambiguities in the documents warrant further proceedings. The court acknowledged the cautious application of summary judgment but upheld the trial court’s decision, stating that the evidence presented did not demonstrate a genuine issue of material fact. The court emphasized that merely alleging a material fact does not prevent the granting of summary judgment.

The case involves a dispute regarding the interpretation of a lease and option contract, with no contention over its validity. Legal precedent establishes that the interpretation of a lease is a question of law when its terms are clear and unambiguous. An ambiguity arises only when the language permits multiple reasonable interpretations, not simply from a lack of agreement between parties. The trial court determined that the lease in question contained no ambiguity, a finding supported by the clear language of the Douglas lease, which explicitly included the owner's existing and future rights to the entire alley north of the leased property.

The defendants attempted to argue ambiguity by referencing an April 1982 survey that marked a portion of the public alley as "not included." However, this effort was deemed unconvincing, as the surveyor testified he was instructed to exclude the alley based on information from the realtor, without having access to the lease itself. The inclusion of "not included" on the survey was considered speculative and contradicted the express terms of the lease. 

The lease defined the premises based on an outdated 1974 survey, acknowledged by both parties as imprecise due to subsequent changes from a 1978 lease. Nonetheless, nothing in the lease indicated that the updated survey was meant to change the lease's substantive terms. Exhibit A of the lease clearly stated that all of the Lessor's rights in the public alley were included in the demise. The only limitation on the Lessor's ability to convey rights to the alley stemmed from its status as public property, which was owned by the City of Chicago, not the Lessor.

The term "not included" in the survey is clarified, indicating that American National was required, as per Exhibit F of the lease, to make best efforts to vacate a public alley if the theater building interfered with Douglas' enjoyment of the property. Following the exercise of Douglas' purchase option on December 22, 1986, the alley was vacated by a Chicago City Council Ordinance on May 13, 1987. Douglas, upon exercising the option, acquired equitable title to the property, defined as "the Premises" and "the Equipment," along with any rights to the vacated public alley. The statutory provisions dictated that title to the vacated alley vested in Douglas as the abutting property owner. Consequently, Douglas gained title to the southern half of the alley, while Chicago Title as Trustee maintained record title, subject to Douglas' lease and purchase option. By the closing date of July 10, 1987, Douglas secured full rights to the alley. The trial court's grant of partial summary judgment favoring Douglas regarding the alley was confirmed as correct.

On the basement issue, the trial court ruled in favor of Douglas, ordering Chicago Title to convey certain land parcels, including a basement area under parcel 2. Defendants argued on appeal that the ruling was erroneous, claiming that the option to purchase limited the conveyance to the property explicitly described in the April 2, 1982 plat of survey, excluding the basement area. They also contended that specific performance was unwarranted due to the lack of clarity in the lease and option terms. Additionally, the defendants claimed that the trial court erred in vacating part of its previous order requiring Douglas to reconvey a specific land area to Chicago Title. Lastly, the defendants asserted that the court's decision to reserve ruling on damages was erroneous since Douglas had not previously sought to sever liability and damages issues, nor provided evidence on damages at trial. In response, Douglas cross-appealed, arguing that the trial court incorrectly denied them attorney fees and costs. The availability of specific performance is at the trial court's discretion, which should not be overturned unless it contradicts the evidence's manifest weight, with requirements that the contract for land sale be clear and definite.

A sufficient description of land is validated if it allows for identification, even with some ambiguity, as established in Bliss v. Rhodes. The Douglas lease agreement clearly outlines an irrevocable purchase option for the property "AS IS." The term "Property" encompasses both "Premises" and "Equipment," with "Premises" specifically defined by a parcel described in an exhibit that was to be replaced with a precise survey. The April 2, 1982, survey provided a more accurate description, dividing the land into two parcels: Parcel 1, with no elevation limitations, and Parcel 2, which excluded the area below 22.29 feet Chicago city datum.

The lease specifies that a basement area, termed the "Bar Area Basement," was excluded from the lease but included in the purchase option, to be detailed in a forthcoming survey. While the survey did not explicitly define the Bar Area Basement, the overall context suggests that the excluded area in Parcel 2 corresponds to this basement, which was utilized by Gold Standard under its own lease and inaccessible to Douglas during the lease term. The trial court supported this interpretation, ruling that the Bar Area Basement was adequately described and that Douglas was entitled to specific performance.

The court ordered the defendants to convey Parcel 2 in its entirety, subject to Gold Standard's occupancy rights. Douglas is entitled to an assignment of rights regarding the Bar Area Basement lease with Gold Standard, or the lessor may choose to build a wall or credit Douglas $1,500. This indicates that the lessor has options to manage the boundary and occupancy rights while ensuring Douglas’s interests are protected.

On April 27, 1989, the trial court reversed its March 9, 1989 order, vacating and striking paragraph 2, which mandated the plaintiff to convey a portion of real estate to Chicago Title and Trust as trustee. The defendants contended that this paragraph was correct and should not have been removed; however, they inaccurately claimed that it required Douglas to reconvey 248.8 square feet of property east of a '15-foot line'. The court examined the related leases—the Gold Standard lease and the Douglas lease—both of which referenced a 1974 plat of survey. Notably, the '15-foot line' was not depicted on a 1982 survey and was only added in a 1986 survey at the request of Gold Standard’s attorney, indicating it had no practical significance. The court established that the actual boundaries of the Gold Standard lease were determined by the physical walls of the liquor store, which extended beyond the '15-foot line'. Additionally, the Douglas lease acknowledged inaccuracies in the legal description and intended to include parcel 2 as part of its property, accommodating necessary extensions beyond the '15-foot line.' The inclusion of a Party Wall Agreement further supported the intention to define the property based on existing structures. Consequently, the trial court's decision to vacate paragraph 2 was upheld, as it would have improperly required Douglas to convey property not rightfully entitled to Chicago Title.

The trial court did not err in reserving judgment on damages pending appeal in a case involving specific performance. While a party can seek equitable compensation due to delays in contract performance, such compensation is not considered legal damages but rather an 'accounting' that can only be awarded after a final decision on the specific performance claim. Thus, the trial court's decision to reserve judgment was not an abuse of discretion. 

In Douglas' cross-appeal regarding attorney fees and costs, Illinois law generally holds that each party bears its own litigation expenses unless a statute or agreement specifies otherwise. Douglas contended that the lease agreement allowed for attorney fees in case of default, referencing section 21(i) of the lease. However, the court found that section 21 must be read in context, indicating that the attorney fees remedy is limited to specific defaults listed in that section. Additionally, section 10 of the lease clarifies the remedies available upon default in the option contract, which does not explicitly include attorney fees. Therefore, the trial court's denial of Douglas' request for attorney fees and costs was not an abuse of discretion. The court affirmed the trial court's orders, noting that Douglas' right to occupy a specific area depends on the exercise of an option by Gold Standard.