No. 2--05--0766 filed 6/2/06

______________________________________________________________________

________ IN THE APPELLATE COURT OF ILLINOIS SECOND DISTRICT

______________________________________________________________________

________ THOMSON LEARNING, INC., ) A ppeal from the Circuit Court ) of Du Page County. Plaintiff-Appellee, ) ) v. ) No. 04--MR--1351 ) OLYMPIA PROPERTIES, LLC, ) Honorable ) Bonnie M. Wheaton, Defendant-Appellant. ) Judge, Presiding.

_________________________________________________________________________

_____ JUSTICE McLAREN delivered the opinion of the court: In the present case, the trial court concluded th at a lessee's partial co mpliance with the terms of an option to cancel a commercial lease was su fficient to exercise that option. Having so concluded, the trial court granted summary judgment for plaintiff, Thomson Learning, Inc. (Tenant). Defendant, Olympia Properties, LLC (Landlord), appeals that decision. We reverse and remand. I. BACKGROUND The facts are somewhat involved. Tenant leased space in a Naperville office building pursuant to a lease that granted Tenant an option to cancel prior to the lease's scheduled end in December 2009 (Cancellation Option). Specifically, if Tenant exercised the Cancellation Option, the lease would end August 31, 2005. Under the terms of the Cancellation Option, Tenant had to do two things to exercise the option. First, Tenant had to pay a cancellation fee. Second, Tenant had toNo. 2--05--0766

- 2 - give Landlord written notice of cancellation. The Cancellation Option required that Tenant do both of these things by September 1, 2004. The Cancellati on Option expressly stated that "time [was] of the essence." Tenant decided to take advantage of the Cancellation Option. To this end, in April 2004, Tenant called Landlord and advised Landlord that Te nant was considering relocating. That June, in an effort to convince Tenant to stay, Landlor d offered new lease terms, under which, among other things, Landlord said it would forg ive payment of money Tenant already owed. In response, Tenant asked Landlord to specify the amount of the cancella tion fee. Landlord informed Tenant that it was $1,136,475. 1

1 Under the terms of the Cancellation Option, the cancellation fee was equal to "the sum of (i) $472, 620.54 and (ii) the unamortized portion as of August 31, 2005 of any construction allowance and brokerage fees paid or provided by Landlord fo r" a certain type of space, if any, "leased by Tenant after September 1, 1995."No. 2--05--0766

- 3 - A few days before the September 1 deadline for exercising the Cancellation Option, Tenant called Landlord and said that Tenant intended to exercise that option. 2 At the time, Tenant did not say that it had already sent written notice of its inte nt. However, Tenant did request instructions for paying the cancellation fee. Landlord provided t hose instructions, and the cancellation fee was wired to Landlord. The next day, August 31, Landlor d confirmed receipt of the cancellation fee. But, according to Landlord, it received no written notice of cancellation by the September 1 deadline for exercising the Cancellation Option. On September 9, 2004, just over a week after that deadline had passed, Landlord notified Tenant that, although Landlord had received the can cellation fee, Landlord had not received written notice of cancellation. Because, under the terms of the Cancellation Option, Tenant had been required to provide such notice by September 1, La ndlord told Tenant that the Cancellation Option

2 In the "Statement of Facts" s ection of its appellate brief, Tenant repeatedly refers to the "fact" that it "exercised" the Cancellation Option. But Tenant's exercise of the Cancellation Option is not a fact. On the contrary, it is the very issue to be decided in this case. Under our supreme court rules, a party may not submit a statement of facts in which disputed issues are disguised as facts. See Official Reports Advance Sheet No. 21 (O ctober 17, 2001), R. 341(e)(6), eff. October 1, 2001 (requiring that the facts in party's statement of facts be "stated accurately and fairly without argument"). Thus, we have ignored Tenant's stat ements that it exercised the Cancellation Option. See Hamilton v. Conley , 356 Ill. App. 3d 1048, 1052-53 (2005) (disregarding portions of statement of facts that failed to conform to supreme court rule s). And we caution Tenant's counsel to adhere to our supreme court rules in the future.No. 2--05--0766

- 4 - had not been effectively exercised. Therefore, Landlord said the option had expired and the lease would continue. Landlord said it would return the cancellation fee that Tenant had wired. Tenant called Landlord and said that Tenant had complied with the Cancellation Option. As to the written notice requirement, Tenant said that it had provided written notice about a week before it had called and asked for instructions regard ing payment of the cancellation fee (although, during that call, Tenant had not mentioned that it had a llegedly already sent written notice of cancellation). Tenant said that it had sent written notice by Federal Express on August 19. According to Tenant, during this call, it informed Landlord that the noti ce had been sent with a letter regarding a power outage that had occurred at the leased premises in July. But according to Landlord, Tenant said nothing during this call about sending notice along with a letter about a power outage. A few days later, on September 13, Tenant sent a letter to Landlord, reiterating that Tenant had complied with the Cancellation Option. In support of its assertion, Tenant attached a copy of the written notice that Tenant alleged it had sent on August 19. That notice was dated August 16. Tenant also attached a copy of a Federal Express receipt that indicated that Landlord had received from Tenant a Federal Express envelope on Augus t 20. The receipt did not say that a cancellation notice was in the envelope. Landlord replied that the Federal Expre ss envelope it received on August 20 had not contained written notice of cancellation. Instead, Landlord said, the envelope contained only the letter regarding the July power outage. Landlord said that it was "puzzled" when it received this letter, because the issues that the letter raised had been addressed weeks before Landlord received the letter. In any event, Landlord said the envelope had not containe d notice of Tenant's intention to exercise the Cancellation Option. Therefore, La ndlord reiterated that the Cancellation Option had not been effectively exercised by the September 1 d eadline, that the lease would continue in effectNo. 2--05--0766

- 5 - until its scheduled termination in 2009, and that Te nant was entitled to a refund of its cancellation fee. Landlord provided Tenant with that refund. In response, Tenant insisted that it had provided written notice, which was received by Landlord on August 20. However, Tenant said, ev en if it had not provide d written notice on August 20, it had done so on September 13 when it gave La ndlord a copy of the notice that was allegedly sent earlier. Therefore, Tenant said, it had exerci sed the Cancellation Option. Tenant sent back to Landlord the cancellation fee that Landlord had refunde d to Tenant. And Tenant said that it would treat as a default under the lease any further refu sal by Landlord to accept Tenant's claim that it had exercised the Cancellation Option. Tenant said if litigation resulted it would seek to recover expenses and attorney fees from Landlord. Shortly thereafter, Tenant sued Landlord. Tena nt filed a complaint for declaratory judgment, seeking a determination that it had effectively ex ercised the Cancellation Option and that, per the terms of that option, the Lease would expire on August 31, 2005. Then, Tenant moved for summary judgment. In support of its motion, Tenant att ached, among other things, affidavits and deposition transcripts in which Tenant's employees swore to Tena nt's version of events. That is, they swore that written notice had been sent by Federal Express on August 19, that this notice had been sent along with the power outage letter, and that, after Landl ord said that it had not received written notice at that time, Landlord was told that Tenant had sent the notice, along with th e power outage letter. Tenant acknowledged, however, that Landlord denied receiving timely written notice of cancellation. Nevertheless, Tenant argued, notwith standing that the Cancellation Option required that Tenant provide timely written notice, Tenant had exercised the Cance llation Option, because (1) Landlord knew that Tenant intended to exercise th e Cancellation Option and (2) Tenant had paid a cancellation fee.No. 2--05--0766

- 6 - Alternatively, Tenant argued that, even if it had not legally exercised the Cancellation Option, Tenant was entitled to summary judgment based on equitable considerations. These considerations included (1) the fact that Landl ord knew that Tenant intended to exercise the Cancellation Option and (2) the fact that Tenant ha d paid a cancellation fee. These considerations also included the fact that Landlord had admitte dly received written notice two weeks after the time for exercising the Cancellation Option had passed a nd the fact that Landlord had not claimed any prejudice from this delay. These considerations did not include an allegation that Tenant would suffer any hardship if it were held to the terms of the Cancellation Option contained in the lease it had signed. In all events, Tenant argued, it was entitled to summary judgment. In response, Landlord stated that Tenant ha d not sent Landlord timely written notice. In support of this assertion, Landlord attached, among ot her things, affidavits from its employees who swore to Landlord's version of events. That is, they swore that no notice of cancellation had been contained in the Federal Express envelope r eceived on August 20 and that, when Tenant was informed that it had failed to timely comply with the written-notice requirement, Tenant did not say that it had sent written notice along with the power outage letter in the Federal Express envelope, although Tenant did say it had sent written notice in that envelope. Landlord argued that, in light of this factual dispute, summary judgment was inappropriate. Specifically, Landlord argued that, under Illinois law, a Tenant seeking to exercise an option to extend or cancel a commercial lease must strictly comply with the terms of that option. Landlord argued that, if, as Landlord claimed, Tenant had not provided timely written notice, then Tenant had not strictly complied with the terms of the Can cellation Option. Thus, Landl ord argued that Tenant was not entitled to summary judgment on legal gr ounds. Moreover, Landlord argued that Tenant was not entitled to summary judgment on equitable gr ounds either. In the fi rst place, Landlord said,No. 2--05--0766

- 7 - the doctrine of unclean hands barred equitable relief. This was because, according to Landlord, Tenant had made up the story about sending timely written notice. Therefore, Landlord said, Tenant was acting in bad faith and lying to both Landlord and the court. In the second place, Landlord argued that, unclean hands aside, Tenant had not established suffici ent "special circumstances" to entitle Tenant to equitable relief. In all events, Landlord argued, Tenant was not entitled to summary judgment. In reply, Tenant reiterated that, legally, it had complied with the Cancellation Option. Moreover, Tenant reiterated that, even if it had not, it was entitled to summary judgment on equitable grounds. With regard to Landlord's a ssertion that Tenant had lied about sending timely written notice, and that, as a result, the doctrine of unclean hands barred equitable relief, Tenant stated only: "[Landlord] seeks to draw [Tenant] into a cr edibility battle by accusing [Tenant's] witnesses of lying, and suggesting that [Tenant] has been 'waylaid by a conspiracy of mendacious property managers.' [Tenant] will not, however, en ter that fray because it is irrelevant and obviously designed to avoid the only issue before the Court." The trial court granted Tenant's motion for summa ry judgment. In doing so, the court stated that it would assume that, if the case went to trial, Tenant's witnesses would testify that Tenant had timely mailed written notice, and Landlord's witnesse s would testify that Landlord had not received timely written notice. That is, the court recognized a factual dispute on the issue of timely written notice. The court further recognized that, under the terms of the Cancellation Option, Tenant was required to give timely written notice. Nevertheless, the court stated that it would grant the motion for summary judgment, because Landlord had "actua l notice of the exercise " of the Cancellation Option and because Landlord had received the cance llation fee. Thus, because the CancellationNo. 2--05--0766

- 8 - Option required timely written notice, the court imp licitly rejected Landlord's argument that strict compliance was required to effectively exercise an option to extend or cancel a commercial lease. Having concluded that "actual notice" was legally sufficient to comply with the Cancellation Option, the court did not reach Tenant's alternative argum ent that Tenant was entitled to judgment based on equitable grounds. Because it did not reach the equ itable claim, the court did not reach Landlord's affirmative defense to that claim, that the doctr ine of unclean hands prohibited equitable relief. Landlord timely appeals. II. DISCUSSION We begin with the standard of review. Summary judgment is appropria te only if the pleadings,

depositions, admissions, and affidavits on file establish th at there is no genuine issue of material fact and that the
moving party is entitled to judgment as a matter of law. General Casualty Insurance Co. v. Lacey , 199 Ill. 2d 281, 284 (2002); Duncan v. Peterson , 359 Ill. App. 3d 1034, 1043 (2005). "Because summary judgment is a drasti c means of disposing of litigation, a court must exercise extraordinary
diligence in reviewing the record so as not to preempt a party's right to fully present the factual basis for its claim." Northern Illinois Emergency Physic ians v. Landau, Omahana & Kopka, Ltd. , 216 Ill. 2d 294, 305-06 (2005); see also Somoye v. Klein , 349 Ill. App. 3d 209, 212 (2004), quoting Bier v. Leanna Lakeside Property Ass'n , 305 Ill. App. 3d 45, 50 (1999)
(noting that " '[s]ummary judgment is a drastic means of reso lving litigation' "). In r uling on a motion for summary
judgment, the court must construe the ev idence liberally in favor of the nonmovi ng party and strictly against the moving party. Chatham Foot Specialist s, P.C. v. Health Care Service Corp. , 216 Ill. 2d 366, 376 (2005); Crestview Builders, Inc. v. Noggle Family Ltd. Partnership , 352 Ill. App. 3d 1182, 1184 (2004). Summary judgment should be granted only if the right of the moving party is clear and free from doubt. Morris v. Margulis , 197 Ill. 2d 28, 35 (2001); Kurczak v. Cornwell ,No. 2--05--0766

- 9 - 359 Ill. App. 3d 1051, 1059 (2005). We review de novo the trial court's decision on a motion for summary judgment. Big Sky Excavating, Inc. v. Illinois Bell Telephone Co. , 217 Ill. 2d 221, 234 (2005); Buffa v. Haideri , 362 Ill. App. 3d 532, 537 (2005). Here, Tenant raises two alternative bases for summary judgment. First, Tenant argues that, although the Cancellation Option required time ly written notice, and although there was a factual dispute as to whether Tenant had provided timely written notice, Tenant exerc ised the Cancellation Option . Second, Tenant argues

that, even if it did not exercise th e Cancellation Option, it is entitled to summary judgment on equitable grounds. We take these points in turn. Tenant first argues that it exe rcised the Cancellation Option. As noted, the Cancellation Option required Tenant to (1) give written notice of cancellation; and (2) pay a cancellation fee. Additionally, the Cancellation Option required that Tenant do both of these things by September 1, 2004. And the Cancellation Option stated that time was of the essence. Tenant acknowledges that there is a dispute as to whether Tenant ga ve written notice by September 1. Tenant also acknowledges that, for purposes of summary judgment, we must assume that Tenant failed to give written notice by September 1. See Krautsack v. Anderson , 329 Ill. App. 3d 666, 674 (2002) ("In ruling on a motion for summary judgment, the *** court should not resolve disputed factual

matters"). Nevertheless, Tenant argue s that, because it paid the cancellation fee by September 1, and because Landlord actually knew by that date that Tenant intended to exercise the Cancellation Option, Tenant effectively exercised that option.

The problem with this argument is that it assu mes that something less than strict compliance with the terms of an option to cancel or extend a commercial lease is sufficient to exercise that option. It is not. On the contrary, for more than 100 years, Illinois courts have held that a lesseeNo. 2--05--0766

- 10 - seeking to exercise an option to cancel or extend a commercial lease must strictly comply with the terms of that option. See, e.g. , Dikeman v. Sunday Creek Coal Co. , 184 Ill. 546, 551 (1900) (stating
that "[a]n agreement must be complied with as made") ; T.C.T. Building Partnership v. Tandy Corp. , 323 Ill. App. 3d 114, 119-20 (2001) (stating that a lease provision that requires a lessee to give written notice of its

intent to extend the lease is subject to the rule of strict compliance ); MXL Industries, Inc. v. Mulder , 252 Ill. App. 3d 18, 28 (1993) ( stating that the doctrine of substantial pe rformance has no application to an option

to cancel a commercial lease for a term of years and because plaintiff conceded th at it did not literally or strictly
comply with the option requirements, th e option was not effectively exercised) ; La Salle National Bank v. Graham , 119 Ill. App. 3d 85, 86 (1983) (stating that "an option to rene w or extend a lease must be exercised
in accordance with the agreement of the parties") ; see also Suckle v. United States Shoe Corp. , No. 88--C- -974 (N.D. Ill. 1988), slip op. at ___ (applying Illinois law) (stating that "under Illinois law, an option to

renew or extend a lease must be exercised in stri ct accordance with the parties' agreement") . The same is true in other jurisdictions. See, e.g. , Andrews v. Blake , 205 Ariz. 236, 243, 69 P.3d 7, 14 (Ariz. 2003) (stating that "Arizona courts have strictly construed options in lease agreements because such provisions allow

the optionee freedom to exercise or not exercise the option, whereas the option or is bound by the option") ; Dyer v. Ryder Student Transportation Services, Inc. , 765 A.2d 858, 860 (R.I. 2001) (stating that
"[t]o effectively exercise an option to renew, the tenant must strictly compl y with the notice provisions of [the]

option"); Utah Coal & Lumber Restaurant, Inc. v. Outdoor Endeavors Unlimited , 40 P.3d 581, 583 (Utah 2001) (stating that "in order to exercise an option to renew a lease, a lessee must strictly comply with the

terms of the lease's option renewal provisions") . Commentators, too, recognize this requirement. See,
e.g. , 2 M. Freedman, Friedman on Leases ' 21:1, at 1312 (4th ed. 1997) ("Te nant's notice of election *** to cancel ha[s] been held a condition precedent, with which strict compliance is required"); W. Farber, Residential Tenancies: Termination, Modification, and Renewal , 2 Illinois Real PropertyNo. 2--05--0766

- 11 - ' 13:10, at ___ (West 2006) ("tenant[s] must strictly comply with [lease] renewal provisions. The tenant must accordingly give notice at the time and in the manner specified in the lease"). Here, to strictly comply with the Cancellati on Option, Tenant was required to give Landlord written notice by September 1. The record reflects an issue of material fact that precludes a determination that Tenant gave such notice. Thus , Tenant has not established strict compliance with the Cancellation Option, and, consequently, Tenant's exercise of that option has not been established for purposes of granting summary judgment. In an effort to get around this conclusion, Tenant relies on cases that do not involve a lessee's attempt to exercise an option to cancel or extend a commercial lease. Specifically, Tenant relies on cases involving: curtailment of electricity unde r a contract with an electric company (Bloom Township High School v. Illinois Commerce Comm'n , 309 Ill. App. 3d 163 (1999)); an attorney approval clause in a residential real estate sales contract (Denis F. McKenna Co. v. Smith , 302 Ill. App. 3d 28 (1998)); a mortgage contingency in a resi dential real estate sales contract (Rogers v. Balsley , 240 Ill. App. 3d 1005 (1993)); a lessee's default fo r failure to comply with lease provisions regarding parking and signage (Vole, Inc. v. Georgacopoulos , 181 Ill. App. 3d 1012 (1989)); and breach of a franchise agreement (Dunkin' Donuts, Inc. v. Towns Family, Inc. , No. 95--C--3666, slip op. at ___ (N.D. Ill. 1995)). As Tenant points out, in each of these cases there was a question of whether notice that did not strictly adhere to c ontractual requirements was nevertheless sufficient. In each of these cases the court he ld that, because the notice apprised the party to be notified, it was sufficient. See Bloom Township High School , 309 Ill. App. 3d at 180; Denis F. McKenna Co. , 302 Ill. App. 3d at 33; Rogers , 240 Ill. App. 3d at 1011; Vole , 181 Ill. App. 3d at 1019; Dunkin' Donuts , No. 95--C--3666, slip op. at ___. But Tenant does not explain how these holdings permit us to set aside more than 100 years of Illinois law on the issu e at hand, that is, the exercise of an option toNo. 2--05--0766

- 12 - renew or cancel a commercial lease. Nor does Tena nt explain how these cases permit us to ignore the precedent of our supreme court (Dikeman , 184 Ill. at 550-51), to say nothing of our own precedent (MXL Industries , 252 Ill. App. 3d at 28). Certainly none of the cases Tenant cites is precedential. Indeed, they do not involve options to renew or cancel a commercial lease. Tenant's reliance on these cases is therefore wholly misplaced. In addition to being required by precedent, the rule of strict compliance makes sense based on both fairness and the realities of commercial trans actions. First, as to fairness, a lessee that receives from a lessor an option to extend or cancel a commercial lease receives something of great value. A. Arnold & J. O'Neill, Option to Renew, Extend, or Cancel Lease , 1 Real Estate Leasing Practice Manual ' 3:1, at ____ (West 2006) ("From the vi ewpoint of the lessee, *** an option to
renew is a valuable right") . For example, in the case of an option to extend, a commercial lessee can avoid costs associated with moving, including "the need to refurnish the ne w premises, pay moving costs,
print new stationery, and incur a variety of other expenses. " A. Arnold & J. O'Neill, Option to Renew, Extend, or Cancel Lease , 1 Real Estate Leasing Practice Manual ' 3:1, at ____ (West 2006). In

the case of an option to cancel, th e lessee can avoid the adverse effects of a downturn in local economic

conditions. In the case of either an option to cancel or one to extend, the lessor generally receives no consideration for agreeing to be bound by the lessee' s exercise of that option. See Linn Corp. v. LaSalle National Bank , 98 Ill. App. 3d 480, 483 (1981). Therefore, at the very least, the lessor ought to be able to demand that, when the parties ha ve agreed on how the opti on will be exercised, the lessee will be held to that agreement. Second, as to the realities of commercial trans actions, the rule of strict compliance is consistent with the fact that the parties to commercial leases tend to be sophisticated business people. See MXL Industries , 252 Ill. App. 3d at 28; J. Glen, Options to Renew Commercial Leases:No. 2--05--0766

- 13 - Should N.Y. Join the Majority? , 4 N.Y. L.J. ___, ___ (2006). Unlike the courts, the parties are well versed in the needs of their business. When that business involves leasing commercial space, and the lessor gives the lessee an option to cancel the lease, the lessor may reasonably decide that it wants that option to be exer cised in writing, if it is to be exercised at all. The lessor may insist on this because it believes that a writing promotes certainty, which may be particularly important to the lessor in light of the money it may have to spend to find a new tenant. Along the same lines, the lessor may insist on a writing in the case of an option to renew, because, if the lessee exercises that option, the lessor must forgo other opportunities to lease the space. A. Arnold & J. O'Neill, Option to Renew, Extend, or Cancel Lease , 1 Real Estate Leasing Practice Manual ' 3:1, at ____ (West 2006) ( "An option to renew deprives th e lessor of the power to *** choose

another lessee in place of the present one") . In either case, if the lessee feels that a writing requirement is too onerous, the lessee is free to ne gotiate a different arrangement. But when the lessee agrees to the writing requirement and then fails to live up to it, the lessee should not be permitted to demand that the law protect the lessee from its failure to co mply with the contract it negotiated. As one commentator recently explained: "Whether or not to grant a comme rcial tenant a right to extend [or cancel] a lease, and under what
terms, is generally the product of hard bargaining an d careful drafting. In a volatile real estate market,
the length of the lease term, and the right to exten d [or cancel] it, is often the single most important economic aspect of the commercial tenancy negotiation. To relieve parties of their obligations in this area
***, while occasionally appealing ***, is *** disruptive to legitimate commercial expectations." J. Glen, Options to Renew Commercial Leases , 4 N.Y. L.J. at ___. We recognized as much not too long ago in MXL Industries . In that case, the plaintiff lessee and

the defendant lessor entered in a commerci al lease, which granted the plaintiff the option to cancel the lease priorNo. 2--05--0766

- 14 - to its scheduled termina tion. MXL Industries , 252 Ill. App. 3d at 20-21. To exercise the option,
the plaintiff had to pay all sums then due under the lease, as well as an addi tional sum equal to four months' rent. Instead of strictly complying with these requirements, the plaintiff paid only some of the money the defendant

claimed it was owed, and the plaintiff also demanded th at the defendant sign a release. MXL Industries , 252 Ill. App. 3d at 21. The defendant said the plaint iff had failed to effectively exercise the option, and litigation ensued. In those proceedings, the plaintiff claimed that it had " 's ubstantially' " compli ed with the option

requirements, and, therefore, that it had effe ctively exercised the option. MXL Industries , 252 Ill. App. 3d at 25. We disagreed. We held that, in order to effectively exercise an option to cancel a commercial
lease, a lessee must strictly com ply with the terms of that option. See MXL Industries , 252 Ill. App. 3d at 28. We recognized that, alt hough strict compliance might at first blush seem a harsh rule, the
requirement has great value in promoting security in commercial transactions, and it is particularly appropriate
where both parties are commercially sophisticated, the option benefits only the less ee, and there is no claim of unfair dealing. We stated: "Because plaintiff's argument necessa rily concedes that it did not li terally or strictly comply with the

option requirements, we must conclude that the option was not effectively exercised. While we recognize

that a rule of strict compliance mi ght lead to harsh results, such a rule tends to 'enforce[] commercial certainty.' [Citation.] Moreover, the parties he re are sophisticated busine ss people, the right to

cancel was for the plaintiff's sole benefit, and there was no evidence in the re cord to suggest that the
option language resulted from overreaching or an unfair inequality in bargaining power." MXL Industries , 252 Ill. App. 3d at 28. Here, again, we are faced with an option to cancel a commercial lease. Both parties are sophisticated business entities, the option was for Tenant's sole benefit, and there is no evidence of unfair dealing. Thus, weNo. 2--05--0766

- 15 - conclude that Tenant was required to strictly comply with th at option and that there is an issue of material fact as

to such compliance. Tenant attempts to undermine the relevance of MXL Industries by factually distinguishing that case from the present one. Tenant correctly argues that, unlike the present case, MXL Industries did not involve the issue of notice. But MXL Industries did involve the issue of compliance with the terms of an option to cancel a commercial lease. And it held that what is required is strict complia nce. See MXL Industries , 252 Ill. App. 3d at 28. Moreover, based on the reasoning discussed above, it had a commercially sound reason for doing so. Tenant offers no reason why the r equirement of strict complianc e should apply with less force when the option contains a notice provision. Nor do we think such a conclusion would be consistent with the host of Illinois cases requiring strict compliance with the notice provision of an option to extend a commercial lease. See, e.g. , Dikeman , 184 Ill. at 550-51; Graham , 119 Ill. App. 3d at 86. One of these option-to-extend cases is pa rticularly persuasive here. In Graham , the defendant lessee

and the plaintiff lessor entered into a commercial lease, whi ch contained an option to ex tend. To exercise the
option, the lessee was required to give written notice to the lessor six months prior to the end of the then-current lease term. Graham , 119 Ill. App. 3d at 86. The lessee gave the lessor timely oral notice of its intent to
exercise the option, but failed to gi ve timely written notice. The court noted the long-standing rule of strict

compliance and found the lessee's attempt to exercise the option ineffective. Graham , 119 Ill. App. 3d at 87. Likewise, in the pres ent case, Tenant gave Landlord timely oral notice of its intent to exercise the Cancellation Option, but failed to establish that it gave timely written notice for pu rposes of summary judgment. Thus, here, as in Graham , Tenant failed to establish strict compl iance with the Cancellation Option. Consequently, Tenant's attempt to exercise that option was not effective. 3

3 Tenant attempts to distinguish Graham on the ground that there, unlike here, the lessor disputed receiving timely oral notice. However, because Graham involved a motion for summaryNo. 2--05--0766

- 16 - To sum up, well-settled Illinois law r equires that a lessee seeking to exercise an option to extend or
cancel a commercial lease strictly compl y with the terms of that option. This requirement is consistent with the

approach taken in other jurisdiction s, as well as the views of commentat ors. Here, the Cancellation Option
judgment filed by the lessor, the court necessarily assumed for purposes of its decision that the lessee had provided timely oral notice. See Graham , 119 Ill. App. 3d at 86 (noting that "it is undisputed that the [lessee] did not notify the [lessor] in writing " by the option deadline) (emphasis added); see also Majca v. Beekil , 183 Ill. 2d 407, 416 (1998) (noting that, for purposes of summary judgment, court would "assume the truth of all well- pleaded factual allegations "). Thus, Tenant has pointed out a distinction without a difference.No. 2--05--0766

- 17 - required that written notice be given by a certain date, and Tenant conceded, for purp oses of summary judgment, that it did not provide written notice by that date. In other words, Tenant conceded that it did not strictly comply with the Cancellation Option. Accordingly, Tenant failed to effectively exercise that option. Tenant next argues that its failure to exercise the Cancellation Option should be excused on equitable grounds. As noted, the trial court did not reach Tenant's equitable argument. Howeve r, we may affirm on any
ground called for by the record, regardless of whether the tr ial court relied on that ground. Haupt v. Sharkey , 358 Ill. App. 3d 212, 219 (2005). We have revi ewed the equitable argument to determine if we may affirm on this basis, and we determine that we may not. This is so for two important reasons.

First, Tenant has failed to plead sufficient facts from which we could determine that Tenant is entitled to equitable relief. To be entitled to equit able relief, a lessee that fails to strict ly comply with an option to cancel or

extend a commercial lease must at a mini mum establish: (1) the delay in strictly complying was slight; (2) the

lessee would suffer undue hardship if strict compliance were not excused; and (3) the lessor would not suffer
prejudice if strict compliance were excu sed. 1 A. Corbin, Corbin on Contracts ' 2.15, at 203 (J. Perillo ed. 1993). Here, Tenant alleges in support of its equitable argument that: (1) the delay, if any, in sending written notice was slight; (2) Tenant timely paid the cancellation fee; (3) Landlord had "actual notice" of Tenant's decision to exercise the Cancellation Option; and (4) Landlord suffered no prejudice as a result of the delay, if any. As to Landlord's "actual notice," this is irrelevant; it is just another way of highlighting Tenant's failure to strictly comply with the Cancellation Option. The same is true of Tenant's timely payment of the cancellation fee, that is, Tenant's timely compliance wi th only one of the two requirements of the Cancellation Option. Finally, and most importantl y, once we cut through the irrelevant facts that Tenant has alleged, we see that Tenant has failed to allege one of the elements necessary to establish that it is en titled to equitable relief.No. 2--05--0766

- 18 - Specifically, Tenant has failed to allege undue hardship. 4 Second, even if Tenant were to allege sufficient facts to entitle it to equitable relief, Tenant would not necessari ly be entitled to equitable relief in this case. This is because Tenant has not yet even attempted to defeat Land lord's affirmative defense of unclean hands. The

doctrine of unclean hands bars equitable relief when the party seeking that relief is guilty of misconduct in
connection with the subject matter of the litigation. Wolfram Partnership, Ltd. v. LaSalle National Bank
, 328 Ill. App. 3d 207, 221-22 (2001). For the doct rine to apply, the party's misconduct must

4 Courts and commentators are split over whether equity can relieve the lessee from negligently failing to strictly comply with a lease option or whether equity may step in only in case of fraud, estoppel, nonnegligent mistake, or nonnegligent accident. Compare Andrews , 205 Ariz. at 247, 69 P.3d at 18 (finding that equ ity will not relieve mere negligence), and Utah Coal & Lumber Restaurant , 40 P.3d at 584 (same), with Aickin v. Ocean View Investments Co., Inc. , 84 Haw. 447, 455, 935 P.2d 992, 1000 (1997) (finding that equity w ill relieve mere negligence), and Fleming Companies, Inc. v. Equitable Life Insurance Co. of Iowa , 16 Kan. App. 2d 77, 87, 818 P.2d 813, 820 (1991) (same); compare L. Sharp, Untimely Exerci se of Option Under Commercial Lease May Not Always Be Fatal , 47-Mar. Advoc. 21, 22 (____) (suppor ting excusing negligence), with J. Glen, Options to Renew Commercial Leases , 4 N.Y. L.J. at ___ (opposing excusing negligence) . Illinois has allowed equity to excuse negligence (see, e.g. , Providence Insurance Co. v. La Salle National Bank , 118 Ill. App. 3d 720, 723 (1983); Ceres Terminals, Inc. v. Chicago City Bank & Trust Co. , 117 Ill. App. 3d 399, 402 (1983)). However, even if Tenant establishes undue hardship, Tenant has not yet explained the reason for its failure to strictly comply with the written notice requirement. Therefore, we make no further comment as to whether that failu re, if negligent, would be subject to equitable relief.No. 2--05--0766

- 19 - rise to the level of fraud or bad faith. Beitner v. Marzahl , 354 Ill. App. 3d 142, 150 (2004). The doctrine is intended to prevent a party from taki ng advantage of its own wron g. Regnery v. Meyers , 345 Ill. App. 3d 678, 685 (2003). To determine whether a party acted with unclean hands, the
court must look to the intent of that party. See Schivarelli v. Chicago Transit Authority , 355 Ill. App. 3d 93, 103 (2005). Here, Landlord alleges that Tenant lied about send ing timely written notice. In support of this assertion, Landlord points out that, when Tenant c alled Landlord to request instructions for paying the cancellation fee, Tenant did not mention having earlier se nt written notice. Additionally, Landlord points out that, when Landlord informed Tenant that Landlord had no t received written notice, Tenant did not tell Landlord that Tenant had sent written notice along with a powe r outage letter. Instead, Tenant said this only after Landlord informed Tenant that the Federal Express enve lope received on August 20 contained the power outage letter. Finally, Landlord points out th at it did not receive timely written notice. ( We must assume that these allegations are true for purposes of d eciding Tenant's summary judgment motion. See Krautsack , 329 Ill. App. 3d at 676.) Thus, Landlord concludes that Tenant lied about sending timely written notice. Consequently, Landlord argues, Tenan t has acted with unclean ha nds and is not entitled to

equitable relief. Based on the particular circumstances of this case, th e above factual allegations are sufficient to set out a claim of unclean hands. First, if Tenant lied about sending the written notice, Tenant clearly engaged in misconduct amounting to fraud or bad faith. Beitner , 354 Ill. App. 3d at 150. Second, because Tenant
allegedly engaged in this misconduct in an attempt to establish that it had exercised the Cancellation Option, and

because the exercise of that option is the very thing at issue in this cas e, Tenant's alleged misconduct is obviously

related to the subject matter of the litigation. Wolfram Partnership , 328 Ill. App. 3d at 221-22. Third, although Tenant insists that no ev idence supports Landlord's allegation s, Tenant has never in fact deniedNo. 2--05--0766

- 20 - those allegations. Moreover, as this ca se comes to us at the summary judgment stage, it is hard to imagine what other evidence Landlord could p roduce to support its allegations. Surely, to survive summary judgment, Landlord is not required to provide an affidavit from one of Tenant's employees admitting that he or she

fabricated, or worked with others who fabricated, the written notice story. See Northern Illinois Emergency Physicians , 216 Ill. 2d at 306 (noting that, "[a]t the summar y judgment stage, [nonmoving parties] are not

required to prove their cases"). It is possible that neither Landlord nor Tenant is corre ct here. It is possible that written notice was never sent, but that Tenant honestly believes that it wa s. It is possible that Tenant made a mistake and that Tenant never intended to deceive Landlord. But as we have repeatedly pointed out, matters of intent are
generally inappropriate for resolution at the summary judgment stage. See, e.g. , Farmers Automobile Insurance Ass'n v. Williams , 321 Ill. App. 3d 310, 314 (2001), quoting Raprager v. Allstate Insurance Co. , 183 Ill. App. 3d 847, 859 (1989) (notin g that " 'summary judgment is particularly

inappropriate where the inferences which the parties seek to have drawn deal with qu estions of motive, intent and
subjective feelings and reactions' " ); Rumford v. Countrywide Funding Corp. , 287 Ill. App. 3d 330, 335 (1997), quoting Giannetti v. Angiuli , 263 Ill. App. 3d 305, 313 (1994) (noting that "
'[s]ummary judgment is particularly inapp ropriate where *** the parties seek to draw inferences on questions of intent' "); Lynge v. Kunstmann , 94 Ill. App. 3d 689, 694 (1981) (n oting that "[i]t has been held
that questions of intent are particularly inappropria te for summary judgment"). Here, a trier of fact could reasonably infer that Tenant's hands are unclean. Thus , even if Tenant could properly allege grounds for equitable relief, we believe Landlord's affirmative defense of uncl ean hands is sufficient to raise an issue of material fact
and preclude summary judgment on equitable grounds. In summation the entry of summary judgment was error. There were and are issues of material fact regarding whether Tenant is entitled to judgment in either law or equity.No. 2--05--0766

- 21 - III. CONCLUSION For the reasons stated, the judgment of the circuit court of Du Page County is reversed and the cause
remanded for further proceedings consistent with this opinion. Reversed and remanded. GROMETER, P.J., and KAPALA, J., concur.