THIRD DI VISI ON MAY 28, 2008

Nos. 1-07-2782, 1-07-3076 consolidated GENESCO, INC., ) Appeal from the ) Circuit Court of Plaintiff -Appella nt, ) Co ok Co un ty. ) v. ) No. 07 CH 12660 ) 33 NORTH LASAL

LE PARTNERS, L.P., ) The Hono rable ) Nancy J. Arnold, Defendant-Appellee. ) Judge Presi ding.

JUSTICE GREI MAN deliv ered the

opinion of

the cour t: Plaintiff Genesco, Inc., a

ppeals from the order of the circuit court g ranting summary judgment in favor of defendant 33 North L aSalle Partners, L.P. I

n so doing, the circuit court determined that plaintiff failed to comply with the terms of the parties’ lease termination option and further concluded that plaintiff was not entitled to equitable relief . On appeal, plaintiff contends that, despite its failure to strictly c omply with the lease termination requirements, the circuit court erred in failing to gr ant equitable relief where plaintiff g ave timely, oral notice ; plaintiff ’s noncom

pliance was trivi al and not

intentiona

l; plaintif f will suff er undue hardship as a result of the court’s order; and defendant ha s not suffered harm as a result of plaintiff’s noncompliance. The underlying

facts are not in dispute. In June 2004, plaintiff entered into a sublease, which expired on February 28, 2008, with Credit Suisse First Boston, USA, Inc. (Credit Suisse), for retail space located at 33 North L aSalle Street, Chicago, I

llinois. At that time, the retail and office bui ld in g ho usi ng t he s pac e at is sue was own ed b y Thi rty- Thr ee A ss oci ate s, LLC1-07-2782, 1-07-3076 (cons.)

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(Associates). Accordingly , the sublease defined Credit Suisse as plaintiff’s "L andlord” and Associates as plaintiff’s "Overlandlord.” Simultaneous therewith, plaintiff entered a prospective six-y ear lease with Associates commencing upon the expiration of the sublease. According to its terms, plaintiff was required to operate a Johnston & Murphy me n’s shoe store and was prohibited from assigning or subletting the space without prior written consent from the landlord. The " Landlord,” however , could not unreasonably

withhold, delay or condition its consent to assign or sublet, so long as the intended use of the space remained a " high-end, full price” retail establishment, excluding food and clothing stores and travel age ncies. The base rent for the life of the lea se totaled approximately $800,000. The lease further provided plaintiff with an option to terminate, the subject of which forms the basis of this appeal. In orde r to exercise the termination option, plaintiff was required to provide

written n otice to th

e "L andlord”

no later than Fe bruary 28, 2007 a

nd simultan

eously pay $7,500 of the $30,000 ter mination fee, "time being of the essence .” In a separa te provision, the lease detailed the notice requirements, such that notice w ould be "deemed given and delivered, whether or not received, on the date when personally

delivered by ove

rnight courier service *** or two day s following the date when deposited in the United States Mail *** and properl y a ddresse d”as inst

ructed, "To L andord: c

/o Golub &

Company , Suite 2000 , 625 Nort h Michigan Avenue, Chicago, I llinois 60611, Attention: Vice President/Commercial Properties, or such other address as La

ndlord shall designate by

written notice.” Plaintiff additionally entered a n agreement with Credit Suisse and Associates reg arding1-07-2782, 1-07-3076 (cons.)

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the sublease. This related agree ment expressly provided Associates’ consent for the sublease and referenced plaintiff and Associate s’ prospective lease. I n addition, the related agreement noted that plaintiff could exercise a termination option provided it gave written notice to the "Landlord,” whe

re "Landlord”

was not defined. According to defendant, on July 30, 2004, it purchased 33 North LaSalle building and succeeded Associates as landlord under the le ase. Defendant, however, did not notify plaintiff of its succession in interest before February 27, 2008, the closing date of plaintiff’s termination option. As a result, defendant agreed, by way of stipulation, that it would not arg ue that notice sent to Associates was defective. In late January

2007, plaintiff’s agent and defendant’s a gent attempted to renegotiate the base rent rate. At that time, plaintiff’s agent or ally informed def

endant’s agent that plaintiff would exercise its termination option if the negotiations proved unsuccessful. Then, on Fe bruary 27, 2007, plaintiff’s agent orally notified defendant’s agent that plaintiff wished to exercise the termination option and that written notice indicating such along with the termination fee was forthco ming. On

Februa ry 27, 2007, p laintiff

errone ously

sent notic e and a check for $7,500 to Credit Suisse and copied the notice to Associates, care of Golub & Company, at 625 N. Michig an Avenue, Suite 200 instead of Suite 2000. On March 7, 2007, Credit Suisse returned the chec k and, in response, plaintiff contacted Golub & Company to determine where to direct the terminat ion fee a nd to obtain a W-9 tax fo rm. Plainti ff subse quently receiv ed a W-9 ta

x form via facsimil e from Ma

inland Pro

perties a nd therefore issu ed a sec ond chec k pay able to both Associates and Mainland Properties at the corresponding address on the facsimile. Associates1-07-2782, 1-07-3076 (cons.)

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later re turned the check . As a re sult, plain tiff file d a claim f

or decla ratory judgmen t and both parties filed cross-motions for summary judgment. This timely appea l follows the circuit court’s order g ranting summary judgmen t in favor of defe ndant. Summary judgment should be g ranted only if the ple adings, depositions, admissions and affidavits, construed liberally and in favor of the nonmoving party , demonstrate that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. 735 I LCS 5/2 -1005(c ) (West 200 6); Tho ms on Le arn in g, In c. v . Ol ympi a Pr ope rti es, LLC , 365 I ll. App. 3d 62 1, 626 (20 06). We re view the t rial cou rt’s leg al decis ions de novo

. Thomson Learning, I

nc. , 365 I ll. App. 3d

at 627. Ho wever, to the exten t that the t

rial cou rt exerci sed its discretion in determining that equitable relief was not proper , we believe that the trial court’s decision is entitled to deference and will consider it for an a buse of discretion. See Seymour v. Harris Trust & Savi ngs Bank of Chi cago , 264 Ill. App. 3d 583, 595, 604 (1994) (although the court reviewed de novo the trial court’s order granting summary judgme

nt, the issue of whether the trial court properly

exercised its equitable powers in deciding whether to g rant injunctive relief was reviewed for an a buse of discretion); see also Krusinksi Construction Co. v. Northbrook Property &

Casualty I

nsurance Co. , 326 I

ll. App. 3d

210, 218 ( 2001) (w

hether t o grant apportionment was an equity matter to be reviewed for an abuse of discretion). In a seminal decision, the suprem e court a nnounce d the ge

neral r ule that a lessee mu st strictly comply

with the terms of an option to extend a lease. Dikeman v. Sunday Cree k Coal Co. , 184 Ill. 546, 550-51 (1900). Over 100 y ears ago, the Dikeman court stated: "In a cour t of law the time for the performance of a n act is as essential as any other part of1-07-2782, 1-07-3076 (cons.)

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the contract. The time passed, and, not having bee n waived, the option was lost, so that there could be no defense made in the action at law. Equity maintains a somewhat different rule, - that time is not necessarily of the essence of a contract; and if it is not of the essence of an agreement, and a party has acted in good faith in a meritorious cause, equity may

grant relief. Parties have a r ight, however, to make their own contracts, a nd, if they intend that time shall be of the e ssence of the contract, either by the express form of their a greem ent or be cause th

e subjec t matter ma

kes it so, a

court of equity will trea t it

as of th e e ss en ce an d h ol d t he pa rt ie s t o t he ir ag re em en t. A c ou rt of eq ui ty i s b ou nd by a contract as the parties have made it, and has no a uthority to substitute for it another and different agreement, a

nd particular language

is not necessary

to make the time of performance essential, if right and justice in the individual case demand it. An agreement must be co mplied with

as made u

nless some

stipulatio n is waive d or ther e is a just e

xcuse for non-compliance.” Dikeman , 184 Ill. at 550-51. Courts hav e since a

dditionall y a pplied tha t gener al rule to require strict co mpliance

with an option to terminate a lease. See Thomson Learning, I nc. , 365 I ll. App. 3d

at 627; se e also Gold Standard Enterprises, Inc. v. U nited Investors Manag ement Co. , 182 Ill. App. 3d 840, 844 (1989). The rationale behind the rule is that a lessee should be strictly held to the agreed-upon terms of the parties’ contract where the parties to commercial leases are g enerally sophisticated and the lessor typica

lly receive s no consideration for agreeing to the option. Thoms on Learni ng, Inc. , 365 I

ll. App. 3d

at 629-30 ; Linn Corp. v. LaSalle National Bank , 98 Ill. App. 3d 480, 484 (1981).1-07-2782, 1-07-3076 (cons.)

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In the case at ba

r, there is no question that plaintiff failed to strictly comply with the termination option. In order to exercise that option, plaintiff was re quired to mail its written

no ti ce to th e d es ig na te d l an dl or d a lo ng wi th a p or ti on of th e t er mi na ti on fe e a t l ea st tw o d ays prior to February

28, 2007. Plaintiff concedes that written notice was not mailed until February 27, 2007 and the termination fee was improperly executed. The parties’ termination option expressly provided that time was of the e ssence and courts are bound to interpret the contr act as written. See Dikeman , 184 Ill. at 550-51. Accordingly, plaintiff failed to exercise the termination option. Pl ai nt if f, ho we ve r, co nt en ds th at it s f ai lu re sh ou ld be ex cu se d w he re it pr ov id ed ti me ly, oral notic e of its int

ent to exer

cise the terminat ion option. Accord

ing to pla intiff, because it s agent verbally

notified defendant’s agent of its intent one day prior to the date written notice was due, it sub stantivel

y c omplied with the notic e requir ement. We

decline plaintiff ’s invitat ion to adopt a per se actual notice rule and find no reason to treat ca ncellation options different than extension options; instead, we agree with the trial court and the Thomson Learning, I nc. court that actu al, verb al notice

"is just a nother w ay

of highl ighting Tenant’ s failure

to strictly

comply with the Cancellation Option.” Thomson Learning, I nc. , 365 I ll. App. 3d

at 633; cf

. Vole, Inc. v. Georgacopoulos , 181 Ill. App. 3d 1012, 1019 (1989) (where court held that, in the context of a lease violation, timely written notice wa s sufficient despite a technical error that it was not sent via registered mail). Neverth eless, pl aintiff c ontends th at this cou rt should e

xercise it s equitab le power s to excuse pla

intiff’snoncompli ance ba sed on the fact tha t plaintif f provided actual , oral not ice; its1-07-2782, 1-07-3076 (cons.)

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mistake was trivial; its noncompliance was not intentional, but rather neglige nt; it will suffer serious harm if not excused from the lease; and defendant wa s not harmed by plaintiff’s noncompliance. As previously stated, t

he supreme court in Dikeman explained that "[a]n

agree ment mustbe complied with as made unless some stipulation is waived or there is just excuse for noncompliance.” Dikeman , 184 Ill. at 551. A number of courts have since interpreted Dikeman to mean that a court may

exercise its equitable powers to excuse strict performance of a n extension or termination option. We are troubled by the fact that these cases extending and apply ing the narrow, express language of fered in Dikeman offer no basis in law upon which courts are purportedly empowe

red with a blanket ability to provide equitable relief. See Gold Standard Enterprises, Inc. , 182 Ill. App. 3d at 845 (rely ing on Dikeman and a concoction of secondary sources, namely , 30 C.J.S. Equity 546 (1965) ; 3 J. Pomeroy, Equity Jurisprudence §§823, 824 (5th ed. 1941); and 7 Ill. L . & Prac. Chancery §55 (1954) , to support

the propo sition that

equity may relieve strict pe rforman ce wher e failur e to compl

y isan "ac cident” ); Ceres Terminals Inc. v. Chicago City B ank & Trust Co. , 117 Ill. App. 3d 399, 405 (1983) (comparing the facts of that case to those in Dikeman and Linn Corp. to presumptively determine that the pla intiff had "not established the degree of specia l circumstances necessary to warrant equitable relief”); Providence Insuranc e Co. v. La Salle National Bank , 118 I ll. App. 3d

720, 723- 24 (1983) (solely relying on Linn Corp. and Dikeman to presumptively conclude tha t, where the facts were " even stronger” than Linn Corp. , the cour t could excuse stric t perfor mance) ; Linn Corp. , 98 Ill. App. 3d at 483 -84 (d isti nguis hing Dikeman and finding suppo rt in case s outside th

e jurisdiction to1-07-2782, 1-07-3076 (cons.)

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presumptively conclude

that a court could exercise "its equitable powers” to excuse strict compliance). These cases provide an unsuppor ted theory of equitable power and, relying thereup on, plaint

iff conc lusively

states tha t we have the inher ent autho rity to gran t relief when it is "fair and just.”None of t

hese ca ses, howe

ver, re cognize

that Dikeman , sitting at a time when courts of equity existed, stated that equitable r elief may only

be granted where time is not of the essence in the agreement a nd "a party

has acted in good faith in a meritorious cause.” Dikeman , 184 Ill. at 550. Therefore , even assuming, arguendo , we had the power to grant equitable r elief in any and all ca ses, according to Dikeman , the instant case would not be afforded such relief where the parties’ termination option clearly stated that time was of the essence. Moreover, the instant case suffers from the same malady as that dismissed by the court in Dikeman , in that: "[t]here was no fr aud, ac cident, o

r mistake on account of whic

h complainant neglected to avail itself of the option, and it assigns no explanation or excuse for the delay except the negligence of its own ag ent. It lost its legal right by failing to comply with the c ondition precedent, and we do not see how equity can relieve against mere f orgetfulness.” Dikeman , 184 Ill. at 551. Notwithsta

nding, th e only case cited which

providesrecog nizable su pport for the abilit y to gran t equitab le relief and a te st for whe n equitab le relief is prope r is Thomson Learning, I

nc . In Thomson Learning, I

nc. , the Second District provided: "To be e ntitled to equitable

relief, a lessee

that fail s to strict

ly c omply with an op tion to cancel or extend a

commerc ial lease

must at a minimum esta

blish: (1) the dela

y in strictly comply

ing was slight; (2) the lessee would suffer undue hardship if strict1-07-2782, 1-07-3076 (cons.)

1 The lease provided that service was consider ed complete five day s after mailing or upon receipt, whichever was ear lier. Providence Insuranc e Co. , 118 Ill. App. 3d at 722.

-9- compliance were not excused; and (3) the lessor would not suffe r prejudice if strict compliance were excused.” Thomson Learning, I nc. , 36 5 I ll. A pp. 3d a t 63 3, c iting 1 J

. Perillo, Corbin on Contracts §2.15, at 203 (rev. ed. 1993). Consequently, despite our conc erns, we analyze whether the trial court may have provided "equitable relief” for plaintiff’s fa ilure to strictly comply

with the terms of the termination provision pursuant to the Thomson Learning, I nc. test. Primarily, we conc lude that plaintiff’s errors do not rise to the level of "just excuse” as initially stated in Dikeman and appli ed in var ious formsin its prog eny . Unlike th e lessee s in Providence Insuranc e Co. and Gold Standard , the insta nt plaintif f cannot demonstr

ate that i ts noncompliance resulted from its minor carelessness or negligence in combination with that of another. In Providence Insuranc e Co. , t he le ss ee ma il ed th e r eq ui si te wr it te n n ot ic e t wo da ys prior to the final option date, which fell on a Saturday , yet the lessor did not actua lly pick up the

no ti ce fr om th e p os t o ff

ic e u nt il th e fol lo wi ng Mo nd ay. 1 Providence Insuranc e Co. , 118 Ill. App. 3d at 722. There, the trial court excused the lessee’s strict noncompliance on the basis that there was no way to know the

precise day

on which the notice was deposited in the lessor’s post office box and the one-day dela y did not harm the lessor in any manner. Providence Insuranc e Co. , 118 Ill. App. 3d at 723-24. Morever, in Gold Standard , the lessee mailed the requisite notice several day s prior to the due date and it was delivered the next day ; however, the postage affixed by the lessee was1-07-2782, 1-07-3076 (cons.)

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insufficient and thus the lessor never formally received the notice. Gold Standard , 182 Ill. App. 3d at 845-46. The Gold Standard court excused the lessee’s noncompliance as an ac cident on the basis that the lessee had sent previous letters with the same postage and they we

re received without incident. Gold Standard , 182 Ill. App. 3d at 846 (in making its determination, the cour t additionally considered the fact that the lessor was not harmed by the delay). Contrarily, in the case

at bar, plaintiff solely ma de a series of errors resulting in the initial delay, which w ere then exacerbated in its attempted cure. More specifically, pla

intiff’s agent failed to contact its legal advisors in executing the termination option and compounded tha t error by failing to r

ead the parties’ lease. I

nstead, resting on unrelated experience, plaintiff’ s agent mailed the notice one day prior to its due date, instead of two day s prior as required by the agreed terms of t he lease . Moreove

r, plainti ff’s ag ent maile d the notic e and exec uted the l ease termination fee to the landlord under the sublease as opposed to the landlord na med in the parties’ lease. Plaintiff attempts to justify this err or by aver ring that a copy

of the notice was sent to defendant’s predecessor in interest, Associate s, and that its agent was confused reg arding the appropriate landlord because of the lang uage in the parties’ related a greement refere

ncing the termination option in the lease. We are not persuaded. The fact remains that plaintiff was exercising an option under the lease; therefore , any confusion regarding the appropriate ste ps necessary to exercise that option should have been resolved by consulting the actual lease, which plaintiff’s agent admittedly did not do despite the fact that she directly quoted the language of the lease’s termination option in the prepared notice. Further compounding its errors, when Credit Suisse returned plaintiff’s check for the1-07-2782, 1-07-3076 (cons.)

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terminat ion fee, plaintiff

’s age nt contacted defe

ndant’s p roperty manage r at a dif ferent location to ascert ain the a ppropria te name a nd addre ss of the la

ndlord. T he prope rty manage r subsequ ently sent plaintiff a requested tax document via facsimile and plaintiff assumed that the cor responding address was the appropriate landlord. Ag ain we cannot excuse plaintiff’s failure to consult the actual lease to resolve any confusion. Accordingly , although defendant was given or al notice within the

prescr ibed time p eriod, pl aintiff h as not dem onstrate d that its su

bsequen t carele ssness or negligence in attempting to c omply with the terms of the lease should be justly excused. Plaintiff further argue s that this c ourt shoul d equitab ly e xcuse its no ncomplia

nce bec ause it will suff

er undue hardship if the lea se rema

ins in eff ect. Prima

rily , plaintif

f attempt s to convince this cour t that it will suffer

losses of over $1 mi llion if the

lease is not forfe

ited. Simply stated, plaintiff is incorrect because, to endure suc h a loss, plaintiff would be required to lease the premisesat issue f

or the lif e of the l ease and presume s that plaintiff would continu e to oper ate the store with the e

xpected e arning s’ loss. Pla intiff, ho wever, fails to a

cknowle dge the

fact tha t it could breach the lease and abandon the store, thereby

forcing defendant to mitigate its damag es. See 735 IL

CS 5/9-213.1 (West 2006). In that situation, plaintiff’s potential loss could not exceed the balance of the agreed rent for the lease, namely , approximately $800,000. Still more appealing, plaintiff could attempt to sublease or assign the lea se to another party so long

as it complied with the relevant terms of the lease, namely , finding a high-end, nonfood, nonclothing or no ntravel agent r etail ten ant. Plain

tiff’s a ttempt to a

rgue th at a subtenan t or assignee woul d be requ ired to op erate a

Johnston & M

urphy shoe stor e is plainl y inaccurate where the terms of the le ase require plaintiff to operate that business, ye t provides1-07-2782, 1-07-3076 (cons.)

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parame ters for potentia l subtena nts or ass ignees

. We are f urther n ot convinc ed by

plaintiff ’s argument tha

t no actio n would el

iminate its undue ha rdship be cause th

e rent f or the le ased spa

ce was w ell above

market. Plaintiff

is a sophisticated commercial retail lessee that negotiate d and agreed with the terms of the lea se. The fact tha t it gambl ed on the market a nd enter ed the le ase four

ye ars prio

r to its com

menceme nt is not a basis upon which we will grant equitable relief simply because plaintiff lost its gamble. Plaintiff ’s purpor ted hard ship is distinguisha ble from t he “special circumstance s” resulting in equitable relief in Linn . In g ranting relief d espite the lessee’ s failure

to strictly comply with the terms of a r enewal option, the Linn

court he avily

relied o n the fact that the l ease required the lessee to make substantial improvements to the subject property in exchange for the option. Linn , 98 Ill. App. 3d at 483-84. The Linn court dis tinguished its facts from tho se in Dikeman on the basis that they did “not prese nt the kind of case in which the option to renew [was] merely a privileg e with no corresponding right or privileg e of the lessor.” Linn , 98 I ll. App. 3d at 484. Rather, the lessors in Linn “alleg edly

receiv ed an extr

emely valuable consider ation for granting the o

ptions - the

right to have the improveme

nts made a

nd the rig ht to keep all such improvements at the conclusion of the lease term or a ny extension thereof.” Linn , 98 Ill. App. 3d at 484. In the case at bar, pla intiff ca nnot demon strate th at it will suffer undue hard ship as a result of “valuable consideration” given to de fendant in exchange for providing the te rmination option. We are not persuaded by plaintiff’s attempt to compare the $30,000 termination fee require d under th

e partie s’ lease

to the $200 ,000 in pro

perty improveme

nts made b y the lessee

in1-07-2782, 1-07-3076 (cons.)

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Linn . In addition to the fact that the termination fee does not equate to “valuable consideration” in our opinion, the situations are vastly differ ent in that the instant plaintiff was charged that fee presumably for

the convenience of opting out of a six-y ear lease and requiring de fendant to take all the necessary

steps to find a tenant to fulfill that vacancy , whereas the lessee in Linn was require d to make s ubstantia l improvem

ents to the

leased s pace wh

ile only benefit ting fr om those improvements for approximately two y ears. Linn , 98 Ill. App. 3d at 484. I nstead, the instant case more closely

resembles the facts of Ceres Terminals, Inc. , where the court concluded that any losses suffe

red by the lessee represented “nothing more than nor mal business costs which could be alleged as losses by any lessee

who has failed to exercise properly a lease option.” Ceres Terminals, Inc. , 117 I ll. App. 3d

at 405. Ac cordingly, we conc lude that plaintiff failed to establish that it should be equitably excused from failing to strictly comply

with the terms of the termination option because it will endure undue hardship. Finally, we a

re not persuaded by

plaintiff’s argument that equitable relief is proper where defendant did not suffer harm as a result of the de layed notice. B ased on the fact that defendant has not established just excuse or undue hardship, we need not consider whether defendant would suffer prejudice if we provided equitable r elief. Thomson Learning, I nc. , 365 Ill. App. 3d at 633 (a lessee must minimally establish all three requirements to be entitled to equitable relief). Rather, “it is plainti ff’s bur den to est ablish the degree of special circumstance s necess ary to invoke the equitable powers of the court before any balancing of equities occurs.” Ceres Terminals, Inc. , 117 Ill. App. 3d at 406

. Ac co rd in gl y, w e a ff

ir m t he ju dg me nt of

th e c ir cu it co ur t o f C oo k C ou nt y.1-07-278 2 & 1-07- 3076 cons

.

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Affirmed. QUI NN, P.J. concurs. THEI S, J. specia

lly c oncurs.

JUS TICE THE IS, spec iall y concurri ng: In this case, the majority

finds that equity should not excuse plaintiff from strict compliance with th

e terms of the termi nation opt

ion of its le ase. I

agree with the ma

jority = s reasoning and holding, but write separa tely to explain the equitable relief tha t plaintiff requests. I will also explain why these equitable principles do not aid plaintiff in this case

. It is well settled that a court may exercise its equitable powers to relieve a party of strict compliance with the requirements of exercising an option in a lea se agreement where the re has been an unavoidable accident, fra ud, surprise, or mistake. 2 J. Pomeroy, Equity Jurisprudence

' 451, at 28 3; ' 453b, at 2 96-97 (5t h ed. 1941 ); F.B. Fountain Co . v. Stein , 97 Conn. 619, 624, 118 A. 47, 49 (1922); see also Dikeman v. Sunday Cree k Coal Co. , 184 Ill. 546, 551, 56 N.E.864, 865 (1900). For example, a court would exercise its equitable powers to re lieve strict compliance where a party has made an honest effort to comply with the requirements of a contract and there was a miscarr iage of the mail. See 2 J. Pomeroy , Equity Jurisprudence ' 453, at 292 (5th ed. 1941) (discussing mistake and accident in the conte xt of forfeitures arising from the failure to pay

rent); see also Gold Standard Enterprises, Inc. v. U nited Investors Manag ement Co. , 182 Ill. App. 3d 840, 845-46, 538 N.E.2d 636, 639-40 (1989) (post off ice failed to deliver letter because, unbeknownst to party mailing letter to exercise option, it lacked sufficient1-07-278 2 & 1-07- 3076 cons

.

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postage); Providence Insuranc e Co. v. La Salle National Bank , 118 Ill. App. 3d 720, 723, 455 N.E.2d 238, 240-41 (1983) (although letter may have been in lessor =

s post office box on the Sa tu rd ay d ue da te , t he le ss or di d n ot pi ck up th e l et te r f ro m t he po st of

fi ce bo x u nt il Mo nd ay, which was first business day following the due date). It is a lso well- settled th at a cour t will not exe

rcise itsequitabl e power s to relieve a par ty of gross or willful negligenc e in failing to timely and pr operly exercise a

n option to renew or terminate a lease. 2 J. Pomeroy, Equity Jurisprudence ' 453b, at 2 96-97 (5t h ed. 1941 ); F.B. Fountain , 97 Conn. at 624, 118 A. at 49. However, jurisdictions across the country are split over whether a court may

exercise its equita ble powe rs to reli eve a pa

rty = s mere c areles sness, forgetfulness, or ordinary negligence in failing to pr operly exercise a

n option. Thomson Lear ni ng, Inc. v. O lymp ia P rop ert ies , LLC , 365 Ill. App. 3d 621, 633 n.4, 850 N.E.2d 314, 325 n.4 (2006 ) (and c ases cited therein); Andrews v. Blake , 205 Ariz. 236, 244-45, 69 P.3d 7, 15-16 nn 4-5 (2003) (and cases cited therein). More than 100 ye ars ago, in Dikeman v. Sunday Cree k Coal Co. , 184 Ill. 546, 551, 56 N.E.864, 865 (1900), our supreme court held that a court must enforc e an agreement as written unless A some stipulation [has been] waived or there is a just excuse for non-compliance. @ The court then went on to explain that in that case, there was no A fraud, accident or mistake on account of which complainant neglected to avail itself of the option, and it assign[ed] no explanatio n or excuse

for the d elay except the

neglig ence of

its own ag ent. @ Dikeman , 184 Ill. at 551, 56 N.E.2d at 865. Absent a A just excuse @

such as A fraud, accident, or mistake, @ the court thus declined to exercise its equitable powers to A relieve agains t mere fo

rgetf ulness. @ Dikeman ,1-07-278 2 & 1-07- 3076 cons

.

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184 Ill. at 551, 56 N.E.2d at 865; see also Moore v. Kriebel , 742 So. 2d 139, 145-46 (Miss. App. 1999) (interpreting and rely ing upon Dikeman to reach this same holding). Thus, I llinois sided with those jurisdictions maintaining that equity will never r elieve A mere negligence a s by forge tfulness @ in failing to timely and prope rly exercise an option in a lea se agreement. See F.B. Fountain , 97 Conn. at 625, 118 A. at 49; see also Thomson Learning , 365 Ill. App. 3d at 633 n.4, 850 N.E.2d at 325 n.4 (and cases cited therein). Howeve r, numer ous other jurisdict ions have relied o n the equi

table maxim

that A equity abhors forfeiture @

to reach a diffe

rent re sult. 15 R. L

ord, Willisto n on Contra

cts ' 46.11, at 437- 38 (4th ed. 2000); see also Andrews , 205 Ariz. at 244-45, 69 P.3d at 16 n.4 (citing cases from jurisdict ions allow ing equitable int erventi ons for neglige

nt or inad vertent failure s to strict

ly comply with the terms of an option). The rationale behind this position is that equity abhors fo rf ei tu re so mu ch so th at eq ui ty w ou ld al lo w a pa rt y ti me be yon d t he ti me es ta bl is he d b y a contract to perform in order to save that party from an egregious for

feiture. 15 R. Lord, Williston on Contra cts ' 46.11, at 437-38 (4th ed. 2000). However, not all potential forfeiture s warrant equitabl e relief

. 15 R. L ord, Willisto n on Contra

cts ' 46.11, at 439-41 (4th ed. 2000). To determine what de gree o f forfe iture would prompt a

court to equitably

interve ne, the c ourt must weigh the delay

and culpability of the dela ying pa rty ag ainst the degree of the potential forfe iture. 15 R. Lord, Willisto n on Contra cts ' 46.11, at 440-41 (4th ed. 2000). Where there has been no forfeiture, equity

may also act to pre

vent another unconscionable result. 1 J. Perillo, Corbin on Contract s ' 2.15, at 202 (1993). Courts ac ross the c ountry

have ap plied a th ree-pa rt test to d

etermine when equ

ity s hould1-07-278 2 & 1-07- 3076 cons

.

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relieve strict co mpliance

in order to preve nt a forf eiture o r other u nconscio nable re sult. 15 R. Lord , Williston on

Contract s ' 46.12, at

461-62 (4th ed. 200 0); 1 J. Perillo, Corbin o n Contrac ts

' 2.15, at 203 (1993). According to Corbin on Contracts, strict compliance with the ter ms of the option may be excused wher e: (1) the delay

in notice was slight; (2) the delay did not prejudice the other party

by a cha nge in position; and (3) the failure to grant re lief would result in such hardship as to make literal enforcement of the re newal provision unconscionable. 1 J. Perillo, Corbin on Co ntracts ' 2.15, at 203 (1993). The Corbin test was first articulated in F.B. Fountain , 97 Conn. At 627, 118 A. at 50. The court in F.B. Fountain explained that this test applied where a party wa s neglectful, but not willfully or grossly ne gligent. F.B. Fountain , 97 Conn. at 627, 118 A. at 50. Further, the court in F.B. Fountain explained

that the th

ree-pa rt test doe s not apply where an independent ground for equity to relieve a

party of strict c ompliance exists, such as accident, fraud, surprise, or mistake A free from culpable neglig ence. @ F.B. Fountain , 97 Conn. at 626, 118 A. at 49-50. Other va riations o f this three-part

test also e

xist. The Sec ond Distri ct of this c ourt in Thomson Learing

applied a variation of the Corbin test, which the majority applies here. Thomson Learning , 365 I ll. App. 3d

at 633, 85 0 N.E.2d a

t 324. Willisto n on Contra cts articulates ye

t another version of the test, under which the late exercise of a n option may be excused where: (1) the failure is caused by inadvertence or oversight; (2) the othe r party ha s not substantially chang ed position in reliance on the failure to timely exercise the option; and (3) the application of the general rule that time is of the esse nce would work an unconscionable result or a forfe iture. 15 R. Lor

d, Williston o n Contrac ts ' 46.12, at 461-62 (4th ed. 2000).1-07-278 2 & 1-07- 3076 cons

.

-18-

Although our supreme court has never ove rruled its holding in Dikeman , this cour t in Linn Corp. v. LaSalle National Bank , 98 Ill. App. 3d 480, 424 N.E.2d 676 (1981), rever sed the grant o f a motion t

o dismiss, f

inding th at the cir

cuit cour t could exe

rcise itsequitabl e power s to relieve a party = s negligent failure to properlyexercise an option based on the factors in the threepart test. There, the court found that strict compliance with a one -year written notice to renew requirement could be excused where strict enfor cement would have resulted in the forfeiture of some $200,000 worth of improvements to a premises and where the fa ilure to exercise strict compliance did not cause the lessor any undue hardship because the lessee had ora lly notified the lessor of the intention to renew before the deadline. Linn , 98 Ill. App. 3d at 484, 424 N.E.2d at 679. In so holding, the Linn court erroneously

cited Dikeman for the p

roposition

that it could simply excuse strict compliance with the terms of a n option where A

right and justice @

so require. Linn , 98 Ill. App. 3d at 483, 424 N.E.2d at 678. The Linn court failed to recognize that what Dikeman considered to be A just excuse for noncompliance @ included only fra

ud, accident, or nonnegligent mistake, which are tra ditional grounds for equitable intervention. Dikeman , 184 Ill. at 551, 56 N. E. at 865; F.B. Fountain , 97 Conn. a t 624, 118 A . at 49; se e also 2 J. Pom eroy , Equity Jurisprudence ' 453b, at 296 (5th ed. 1941). Since Linn , the I

llinois App ellate Court has c ontinued t o use the t

hree-p art test in determining whether to excuse strict compliance with the terms of a n option. See, e.g. , Thomson Learning , 365 I

ll. App. 3d

at 633, 85 0 N.E.2d a

t 324; Ceres Terminals, Inc. v. Chica go City Ba

nk & Trust Co. , 117 Ill. App. 3d 399, 404-05, 453 N.E.2d 735, 738 (1983); see a lso Providence Insurance , 118 Ill. App. 3d at 723, 455 N.E.2d at 240 (not apply ing the three-part test, but citing1-07-278 2 & 1-07- 3076 cons

.

-19-

Linn for the proposition that strict compliance may be excused under A

proper circumstances @ even where the failure to provide the stipulated notice is due solely to the lessee =

s negligence). There has been no I

llinois Supreme Court decision on this point since Dikeman . Thus, the holding of Dikeman , that Illinois courts will never exercise their equitable pow ers to relieve neglig ent or ca

reless f ailures t o timely and prop erly

comply with the te

rms of an option, is s till the law. Here, p laintiff

conced es that it neglig ently

failed to properl y e xercise it s option to terminate the lease in question. Further, plaintiff has not asserted a traditional grounds for equitable relief, such as fraud, mistake, duress, or a ccident. Therefore, beca

use Dikeman is still the law, the court should not excuse plaintiff = s negligent noncompliance. However, even if the three-pa rt test were adopted, I

would reach the same conclusion. Under either the Williston or Corbin version of the three-part test, it is clear that there must be a risk of forfeiture or other unconscionable re sult before the court will relieve a party of strict compliance. 15 R. L

ord, Willisto n on Contra

cts ' 46.12, at 461-62 (4th ed. 2000); 1 J. Perillo, Corbin on Co ntracts ' 2.15, at 203 (1993). Consistent with this requirement, this court in Ceres Termina ls , 117 I ll. App. 3d

at 405, 45 3 N.E.2d a

t 738, did not excuse a

party = s failure to timely exercise an option w

here tha t party would hav e suffe

red nothing more

than normal busine ss costs as a result of its failure. Here, p laintiff

has not cl aimed tha

t it will suf

fer a f orfeitur e or othe r unconscionable result if strict compliance were not excused. Rather, as in Ceres Te rminals , plaintif

f will only suffer the norma

l business costs tha t would be

suffer ed by any lessee th at has fa

iled to pro

perly1-07-278 2 & 1-07- 3076 cons

.

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exercise a lease option. See Ceres Te rminals , 117 Ill. App. 3d at 405, 453 N.E.2d at 739. Therefore, under either the Williston or Corbin version of the three- part test, plaintiff should not be relieved of strict compliance with the requireme nts of the option contract. Accordingly , I agree with the ma

jority = s conclus ion affir

ming the judgmen t of the c ircuit co

urt.