In the

United States Court of Appeals

For the Seventh Circuit ____________

Nos. 01-1371, 01-1538 & 01-2909

JUDITH ALTER KALLMAN,

Plaintiff-Appellee

Cross-Appellant,

v.

RADIOSHACK CORPORATION, F/K/A

TANDY CORPORATION,

Defendant-Appellant

Cross-Appellee.

____________

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 99 C 490—Matthew F. Kennelly, Judge.

____________

ARGUED FEBRUARY 21, 2002—DECIDED DECEMBER 19, 2002

____________

Before FLAUM, Chief Judge, and HARLINGTON WOOD, JR.

and WILLIAMS, Circuit Judges.

WILLIAMS, Circuit Judge. In this breach of lease action,

the district court ruled that Radioshack was liable for

damages stemming from its guaranty of a lease between

one of Judith Kallman’s companies and Color Tile. In

this appeal, Radioshack challenges the district court’s

ruling that Radioshack is liable for Color Tile’s breach, that

it is responsible for the cost of repairs to the property, and

that it must pay attorneys’ fees. Kallman cross-appeals,
2 Nos. 01-1371, 01-1538 & 01-2909

attacking the district court’s ruling that she did not mitigate her damages. We affirm the decision of the district

court.

I. BACKGROUND

A. Lease interests in the property

This case concerns Color Tile’s abandonment of commercial property at 1224-26 Ogden Avenue in Downers

Grove, Illinois, and Radioshack’s guaranty of Color Tile’s

lease. An understanding of the history of the series of

leases controlling the property is central to resolving

Radioshack’s claims. In 1959, All-States Ohio, Inc. leased

the property to Robert Hall Clothes, Inc. In 1964, Morgan

Trust Company gained title to the property, and the Robert Hall lease continued. In 1973, Robert Hall subleased

the property to Parknat Properties, Inc., which was controlled by Irwin Kallman. A year later, Parknat subsubleased the property to Color Tile, Inc. Color Tile in

turn leased 3,200 square feet of the 8,500-square-foot

building to T.J.’s Restaurant and Pancake House, Ltd.

Color Tile’s sub-sublease with Parknat, dated February

5, 1974, was for a term of 15 years with the option to renew for a ten-year term. At the time it terminated its

lease, Color Tile paid $9.85 per square foot monthly to

lease the property. Radioshack guarantied all of Color

Tile’s obligations to Parknat under the lease.

In 1977, Robert Hall, the original lessee, filed for bankruptcy. As a result, Robert Hall’s parent company entered into an agreement with all of the owners and subtenants of property leased by Robert Hall. The agreement,

dated October 14, 1977, cancelled the Robert Hall lease

and transferred Robert Hall’s interests to Morgan, the

owner of the property, subject to the rights of all the

subtenants. Under the agreement, the subtenants (in-
Nos. 01-1371, 01-1538 & 01-2909 3

1 In 1986, both Parkvan and Parknat assigned their interests

in their respective leases to Irwin Kallman. Mr. Kallman, in turn,

transferred these interests to his wife Judith Kallman, who

became the owner of the property in 1988 when she received

a quitclaim deed to the property.

cluding Parknat) would release Morgan and Robert Hall

of their obligations under the subleases if Morgan entered into a new lease with the subtenants. Morgan

then entered into a lease with Parkvan Properties, Inc.,

Parknat’s sister company. (It did not enter into a new

lease with Parknat.) Notwithstanding the substitution

of Parkvan for Robert Hall, Color Tile continued to occupy the premises under the Parknat sub-sublease. In

1988, ten years after Robert Hall declared bankruptcy,

Color Tile exercised its option to renew the lease for a

term that was to end on April 30, 1999.

In February of 1996, more than three years before its

lease was to expire, Color Tile filed for bankruptcy, abandoned the premises, and stopped paying rent. T.J.’s Restaurant remained in possession of its premises when

Color Tile defaulted. Judith Kallman1

 took over possession of the Color Tile property through her agent and

management company, Win Properties, Inc.

B. Kallman’s actions to lease the property after Color

Tile vacated

Win learned of Color Tile’s abandonment of the property on February 15, 1996. In March, Win entered into

a month-to-month lease with T.J.’s for its portion of the

property. Win also sought the assistance of a real estate

broker, Nick Peters, to lease the Color Tile property. In

March of 1996, Peters sent Win a marketing proposal that

included a review of the property and an analysis of the

market conditions. In the proposal Peters suggested a
4 Nos. 01-1371, 01-1538 & 01-2909

general cleanup and repair of the property and noted

that in the property’s current unimproved state it would

likely rent for between $8-$9 per square foot. In spite

of first receiving a marketing proposal from Peters in

March, Win did not return the finalized Listing Agreement until July 17, 1996, more than five months after

Color Tile vacated the property. Prior to finalizing the

agreement, Win’s internal leasing department mailed

advertisements for the property to 500 brokers and prospective tenants and advertised the property in a national retail housing publication, but no sign was posted

on the property and Win did nothing to list the property

locally.

After the listing agreement was finalized, Peters put

up a sign on the property, sent a brochure to prospective tenants and other brokers, and showed the vacant

property to prospective tenants. Among other issues, negotiations with potential tenants focused on the condition

of the property and the lease price. In spite of Peters’s

advice, Win’s agreement with Peters instructed him to

seek $12 per square foot for the property. Win also decided it would not perform repair work on the property,

but would negotiate these and other improvements with

prospective tenants along with rent and the lease term

as part of general contract negotiations. On October 15,

1998, more than two years after Color Tile abandoned

the property, Win finalized a lease with a company named

Happiness is Pets for $11 per square foot.

In order to close lease negotiations with Happiness is

Pets and finalize a new lease term with T.J.’s, Win made

several repairs to the Ogden property. Among other repairs, Win hired contractors to replace the roof, resurface

the parking lot, and replace two deteriorated heating,

ventilation, and air conditioning (HVAC) units.
Nos. 01-1371, 01-1538 & 01-2909 5

C. District court proceedings

Kallman timely initiated this suit against Radioshack

as Color Tile’s guarantor for costs associated with Color

Tile’s breach of the lease agreement. Kallman sought

damages for lost rent and real estate taxes due under

Color Tile’s lease obligations and costs for replacement of

the roof, HVAC units, and parking lot allegedly neglected

by Color Tile in violation of the lease. Both Kallman and

Radioshack moved for summary judgment in the district

court.

In an opinion and order dated March 9, 2000, the district court granted summary judgment in favor of Kallman on the issue of liability, concluding that the cancellation of the Robert Hall lease did not affect Parkvan’s

interest and Radioshack’s guaranty still covered the Color

Tile lease. The district court denied Kallman’s motion with

respect to damages, reserving for trial the issues of whether repairs made to structures on the property were chargeable to Radioshack and whether Kallman had satisfied

her duty to mitigate damages. Kallman v. Tandy Corp.,

No. 99 C 490, 2000 WL 283074, at *6-8 (N.D. Ill. Mar. 9,

2000).

After completing a five and one-half day bench trial, the

district court found Kallman was entitled to the costs of

repairing the roof, HVAC units, and parking lot. Kallman

v. Tandy Corp. and Radio Shack Corp., No. 99 C 490, slip

op. at 16-20 (N.D. Ill. Jan. 16, 2001). The court found Kallman was not entitled to these damages as mitigation costs,

as the repairs were undertaken more than two years after Color Tile’s breach, but was instead entitled to them

because they were caused by Color Tile’s failure to keep the

items in good repair as required by the lease. The court

further ordered Radioshack to pay damages for rent and

other expenses unpaid by Color Tile, but reduced that

amount after finding that Kallman failed to adequately
6 Nos. 01-1371, 01-1538 & 01-2909

mitigate her damages. Specifically, the court pointed to

the delay in hiring a realtor, Win’s refusal to improve

the property, and the asking price of the property as evidence of her failure to take reasonable measures to mitigate her damages. Finally, the court awarded Kallman

attorneys’ fees under the terms of the Color Tile-Parknat

lease.

On appeal, both parties challenge the district court’s

findings. Radioshack claims that it is not liable for Color

Tile’s breach, that the repairs to the property were not

Color Tile’s responsibility under the lease, and that the

attorneys’ fees awarded were unreasonable. Kallman

appeals the district court’s reduction of damages based

on her failure to mitigate damages.

II. ANALYSIS

A. Radioshack’s liability for Color Tile’s breach

We review de novo the district court’s grant of summary

judgment for Kallman. Bristol-Myers Squibb Co. v. Ikon

Office Solutions, Inc., 295 F.3d 680, 683 (7th Cir. 2002). We

note that interpretation of the terms of an unambiguous

contract is traditionally a question of law and is particularly suited to disposition on summary judgment. Church

v. General Motors Corp., 74 F.3d 795, 799 (7th Cir. 1996);

Bechtold v. Physicians Health Plan of N. Ind., Inc., 19

F.3d 322, 325 (7th Cir. 1994). In this diversity action, both

parties agree that Illinois law governs their claims.

Radioshack argues that under the 1977 agreement, when

the lease between Morgan and Robert Hall terminated,

the sub-sublease between Parknat and Color Tile terminated as well, thus relinquishing Radioshack from any

responsibilities as guarantor. The district court found

that under the terms of the agreement, Parknat’s interest

in the property remained, thereby preserving Radioshack’s

guaranty. We agree with the district court.
Nos. 01-1371, 01-1538 & 01-2909 7

Radioshack’s claim is misplaced in light of the language

in the 1977 agreement preserving the interests of the

subtenants, including Parknat and Color Tile. Under

Illinois law, resolution of issues of contract dispute starts

with an analysis of the terms of the contract. See, e.g.,

Omnitrus Merging Corp. v. Illinois Tool Works, Inc., 628

N.E.2d 1165, 1168 (Ill. App. Ct. 1994). “If the language

[of the contract] unambiguously answers the question at

issue, the inquiry is over.” Church, 74 F.3d at 799.

Two paragraphs of the 1977 agreement plainly indicate

that when the Robert Hall lease was cancelled, the rights of

the subtenants were to be preserved. First, paragraph two

of the agreement states that the agreement was made

“subject to” the rights of the subtenants:

Each Tenant shall release, relinquish and surrender all of its right, title and interest in and to its

Lease and shall surrender vacant possession of its

Premises (except the Subleased Premises) to Morgan or the respective Landlord within seven days

after the date when Tenant shall have regained

possession of said Premises from any persons now

occupying such Premises, but in no event earlier

than the closing date to be determined in accordance with Article 9 of this Agreement. . . . Possession of the Subleased Premises shall be delivered subject to any rights of the Subtenants. (emphasis added)

Under Illinois law, we give clear and unambiguous contract terms their plain meaning. Srivastava v. Russell’s

Barbecue, Inc., 523 N.E.2d 30, 33 (Ill. App. Ct. 1988). Here,

the term “subject to” is not ambiguous. Englestein v.

Mintz, 177 N.E. 746, 752 (Ill. 1931) (finding the term

“subject to” was not ambiguous and noting that the term

ordinarily means “subordinate to” or “limited by”). This

section clearly indicates that the purpose of the agree-
8 Nos. 01-1371, 01-1538 & 01-2909

ment was to preserve the status quo while removing Robert Hall from the chain of leases. See Omnitrus, 628 N.E.

2d at 1168 (courts must determine the intention of the

parties from the plain language of a clear and unambiguous

contract).

Paragraph thirteen of the agreement further supports

this understanding. It states that cancellation of the subtenants’ rights under the lease was conditioned on Morgan’s

execution of new leases with various subtenants—a condition that did not occur:

Subtenants, upon the condition hereinafter set

forth having been satisfied, consent to the Cancellation of the Leases covering the Subleased Premises . . . provided, however, that such consent and

release by the Subtenants shall be and become

effective only if prior to the closing the following

condition is satisfied: that the various Subtenants

and Morgan and such Landlords shall have entered

into new leases in respect of each of the Premises

on terms and conditions satisfactory to such Subtenants and Morgan and such Landlords. . . . If

the condition is not satisfied prior to the Closing . . .

the foregoing consent and release shall be of no

force or effect, the Subtenants in such events reserving any and all rights and remedys [sic] which any

such Subtenant may have at law or in equity. . . .

(emphasis added)

Under this paragraph, subtenants would agree that their

leases were cancelled provided that prior to the closing

of the agreement, the existing subtenants entered into a

new agreement with Morgan. Morgan entered into a new

lease with Parkvan, not Parknat, and the condition of

paragraph thirteen was not fulfilled. Thus, the agreement

provides that the rights of the subtenants were unaffected. Nothing in the agreement suggests that any of the

subtenants agreed to give up their rights if Morgan leased
Nos. 01-1371, 01-1538 & 01-2909 9

the properties to some other subtenant. Both sections of

the agreement relevant to the Parknat-Color Tile lease,

paragraph two and paragraph thirteen, clearly preserve

the status of the subtenants under the unambiguous

terms of the contract.

That Morgan executed a new lease with Parkvan rather

than Parknat did not eliminate Parknat’s interest in the

property. Parknat, after all, was a subtenant under the

agreement and, as discussed above, the termination of

the lease agreement between Morgan and Robert Hall

was subject to the preservation of Parknat and Color Tile’s

sublease. Therefore, the cancellation of the Robert Hall

lease and substitution with Parkvan did nothing to affect Parknat’s interest in the property. Nothing in the

agreement indicates that the parties were trying to do

anything more than to excise Robert Hall from the chain

in the agreement; all of the references in the agreement

to subtenants point to a careful and unambiguous preservation of their rights. Because Parknat’s interest in the

property remained the same, Radioshack’s responsibilities as guarantor were preserved.

In order to counter the plain language of the contract,

Radioshack seeks to use Irwin Kallman’s deposition testimony to show that the parties intended to cancel the

existing subleases when they entered into the 1977 agreement. Where, as here, the terms of the contract are not

ambiguous, its construction is to be determined from the

four corners of the agreement. See Englestein, 177 N.E. at

752 (“[B]efore a court may look at the surrounding circumstances there must be ambiguity in the language of

the instrument.”). Consideration of any statements made

by Irwin Kallman as to the intent of the parties making

the agreement is squarely prohibited by the parol evidence rule. See, e.g., Air Safety, Inc. v. Teachers Realty

Corp., 706 N.E.2d 882, 884 (Ill. 1999).

Radioshack also argues that the termination of the

Morgan-Robert Hall lease cancelled the Parknat-Color
10 Nos. 01-1371, 01-1538 & 01-2909

Tile lease as a matter of law. It points to Illinois cases

holding that if a lease is cancelled, then any subleases

are deemed cancelled by operation of law. Arendt v. Lake

View Courts Assocs., 366 N.E.2d 1096, 1097-98 (Ill. App. Ct.

1977). But the present case is easily distinguished from

those cited by Radioshack, where no effort was made

when cancelling the leases to preserve the rights of subtenants. Here the parties have specifically included language in the contract to preserve those rights. See Consol.

Coal Co. v. Savitz, 1894 WL 3048, at *4 (Ill. App. Ct. 1894)

(language of lease controls notwithstanding general rule

of law as to appurtenances). Similarly, the 1977 agreement

did not cause an express surrender or surrender by operation of law. Parkvan took no actions to threaten Parknat’s

right to continue to sub-sublease the property, and no

legal principle prevents Parkvan from permitting the

Parknat-Color Tile sublease to remain in effect. See Williams v. Vanderbilt, 34 N.E. 476, 477 (Ill. 1893) (listing

ways lease can be surrendered). Accordingly, we affirm

the district court’s granting of partial summary judgment in favor of Kallman finding Radioshack liable for

damages resulting from Color Tile’s breach of the Parknat

sub-sublease.

B. Damages for failure to maintain the property

Radioshack also claims that the district court erred in

awarding damages to Kallman for the cost of replacing

the roof, repaving the parking lot, and replacing two

HVAC units. The district court found that the amounts

spent to repair the property were due under the terms of

the lease. Under Illinois law, we review the district court’s

construction of the lease terms de novo, Anest v. Bellino,

503 N.E.2d 576, 578 (Ill. App. Ct. 1987), and its award

of damages for clear error. See Pioneer Trust and Sav. Bank

v. Zonta, 421 N.E.2d 239, 245 (Ill. App. Ct. 1981).
Nos. 01-1371, 01-1538 & 01-2909 11

Radioshack proposes that the Color Tile-Parknat lease

includes only a general covenant to repair on behalf of

Color Tile and that the repair and replacement of the

roof, parking lot, and HVAC units does not fall within

the terms of the lease. This argument is belied by the

unambiguous terms of the lease, which place responsibility to make structural repairs, including to the roof, on

Color Tile. Color Tile’s responsibility for the roof is explicitly listed in Section 5:01 of the Color Tile-Parknat lease:

Lessee shall, at its own expense, keep all buildings

or improvements now or hereafter placed on the

demised premises during the lease term in good

order and repair; Lessee shall be liable for repair to

the roof and for any structural failure of the building. . . . Lessee shall pay all costs of any alterations

and additions. . . . (emphasis added)

Further, the requirements that Color Tile keep the building and “improvements placed on the demised premises”

in good repair and shoulder the burden for “structural

failures” encompass repairs to the parking lot and heating and cooling units. Hollywood Bldg. Corp. v. Greenview

Amusement Co., 43 N.E.2d 566, 568 (Ill. App. Ct. 1940)

(finding that a lease requiring the lessee to make repairs,

“structural or otherwise,” bound the lessee to pay costs

for significant changes to outside of building). Both the

parking lot and the HVAC units are part of the premises leased by Color Tile, and both are either physically

attached or connected to the building itself. Under the

clear and unambiguous terms of the lease the responsibility for the repair to these structures fell on Color Tile.

Hardy v. Montgomery Ward & Co., 267 N.E.2d 748, 751 (Ill.

App. Ct. 1971) (“Where the parties to a lease of real property have expressly covenanted as to repairs, the express

covenant . . . becomes the measure of liability of the respec-
12 Nos. 01-1371, 01-1538 & 01-2909

2 Radioshack argues that the order of the district court dated

March 9, 2000, is inconsistent with its final ruling finding

Radioshack liable for the damages. In this order, entered before

the bench trial, the court did not rule that these damages were

not covered by the lease. Rather, the court properly reserved

judgment on this issue until it was able to hear the evidence

at trial.

tive parties.”).2 We need look no further than the terms

of the contract to determine that Radioshack is properly

liable for damages caused by poor upkeep of the roof,

parking lot, and HVAC units, as none of these are beyond

its responsibility for “structural failures” or the upkeep

of the premises.

Comparison to Illinois case law regarding covenants of

good repair only strengthens our reading of the Color TileParknat lease. Under Illinois law, a general covenant

to repair does not require a lessee to make repairs involving structural changes. See, e.g., Hardy, 267 N.E.2d at

751. Radioshack points in particular to Sandelman v.

Buckeye Realty, Inc., 576 N.E.2d 1038 (Ill. App. Ct. 1991)

as support for its argument that repairs in this case are

not covered under the lease. In Sandelman, the court

found a landlord liable for repair to a roof when the lease

imposed a general covenant to repair on the tenant. Id.

at 1040. However, Sandelman, like the rest of the cases

regarding general covenants to repair, is readily distinguished from this case. The Sandelman court noted the

absence of any language pertaining to the roof in that case

and stated that “[i]n order to shift to the tenant a burden

which would naturally fall on the landlord, the warrant

for the change should be plainly discoverable in the lease.”

Id. The language requiring that burden be placed upon

the lessee is plainly discoverable in the lease in this case.

Given the language in the contract, the costs of repairing

and replacing the roof were not unforeseen to Color Tile
Nos. 01-1371, 01-1538 & 01-2909 13

3 Radioshack claims that replacement of the roof, parking lot,

and HVAC units are more properly considered “capital improvements” and are not covered by the duty to repair of Section 5:01.

The only support offered by Radioshack for this characterization is that Win’s ledgers for the Ogden Avenue property recorded the expenses as capitalized for purposes of Win’s federal

income tax returns. Despite Win’s possible 1998 accounting, the

nature of the repairs and the terms of the lease convince us

that these repairs were Color Tile’s responsibility.

at the time it signed the lease.3 Koenigshofer v. Shumate,

216 N.E.2d 195, 196 (Ill. App. Ct. 1966) (finding that

the classification of repairs as “structural” depends more

on the foreseeability of the repairs than their physical

characteristics).

Next, Radioshack argues that the terms of the lease

require Color Tile only to repair, not replace, structures

such as the roof. However, this argument misstates the

reason for its liability. Color Tile’s breach of its duty to

repair caused the structures to deteriorate to the degree that required replacement. As the district court

noted, because the need to replace the roof stemmed

directly from Color Tile’s breach, the damages recoverable

by Kallman include the cost of replacing the roof. Similarly,

the district court found that Color Tile’s failure to properly repair the parking lot and HVAC units caused them

to deteriorate to a level that required replacement. Under the terms of the lease, Kallman may properly recover

for this breach. Barnhart v. Boyce, 1902 WL 1900, at *7

(Ill. App. Ct. 1902) (finding that lease terms obligated

lessee to make repairs during the lease term that would

prevent premises from deteriorating in value).

Finally, Radioshack argues that the evidence presented during the bench trial did not support the district

court’s finding that Color Tile’s failure to maintain the

property caused the poor conditions that necessitated
14 Nos. 01-1371, 01-1538 & 01-2909

4 Further, Section 19:02 of the lease states, “[T]he Lessee represents that it has examined the premises and is fully satisfied

with the physical condition thereof; and that the taking of possession of the demised premises by the Lessee shall be conclusive evidence that Lessee accepts same ‘as is.’ ”

repair. To recover, Kallman must show both breach of the

lease agreement requiring repair and resultant damages.

First Nat. Bank of Des Plaines v. Shape Magnetronics, Inc.,

481 N.E.2d 953, 955 (Ill. App. Ct. 1985). Color Tile leased

the property beginning in 1974, and Radioshack has made

no argument that the damages pre-dated the beginning

of the Color Tile lease.4

 Further, sufficient evidence existed regarding the neglect of each of the structures to

support the court’s ruling that Color Tile was responsible

for their repair.

At trial, Kallman presented testimony regarding the

condition of the roof. According to the roofing contractor,

repairs made to the roof during the Color Tile tenancy

were inadequate and accelerated the deterioration of the

roof. Patches upon patches (sometimes up to seven thick)

were placed on the roof, exacerbating weather damage

and leaving Kallman little choice but to replace the roof.

The court credited the testimony of the roofing contractor,

who testified that it would take at least five to ten years

for the roof to deteriorate to such a state.

Next, the parking lot contractor testified that it would

have taken five years for the parking lot to reach the

state of disrepair it was in when Color Tile abandoned the

property. Problems with the parking lot included numerous potholes, significant cracking, and drainage problems. Although Radioshack points to a higher 1998 repair estimate to argue that the poor condition of the

parking lot may have been exacerbated by the two years it

lay vacant, Kallman claims a 1996 estimate relied on by
Nos. 01-1371, 01-1538 & 01-2909 15

5 Radioshack proposes that Section 13:01 of the lease, which

requires Color Tile to surrender the property in the same condition as it was in when Color Tile took possession with reasonable wear and tear excepted, means that damage to the roof,

parking lot, and HVAC units is exempted under the lease. The

district court found that the extensive damage and poor condition of the roof, parking lot, and HVAC units did not constitute

“reasonable wear and tear,” and we agree.

Radioshack does not adequately reflect the level of repair needed. We will not disturb the district court’s evaluation of this possibly conflicting evidence.

Finally, the HVAC contractor’s 1996 estimate reported

that the HVAC units had not be serviced in three to

five years, that they had rusted heat exchangers and pilots, and that they could not be repaired feasibly. The

district court had sufficient evidence to link the poor

condition of these units to Color Tile’s tenancy.5

 Therefore we affirm the district court’s finding of damages for

the replacement of the roof, HVAC units, and parking lot.

C. Kallman’s failure to mitigate damages

Illinois law requires a landlord to “take reasonable

measures to mitigate the damages recoverable against

a defaulting lessee.” 735 Ill. Comp. Stat. 5/9-213.1 (1992).

Kallman argues that she made reasonable efforts to

relet the property, which is all that is required, and that

the district court erred when it found otherwise. Radioshack counters that the district court’s finding was correct

in light of the evidence indicating that Kallman’s asking

rental rate combined with the condition of the property

frustrated the effort to find a replacement tenant.

As an initial matter, we note the deference with which we

review the district court’s finding that Kallman did not
16 Nos. 01-1371, 01-1538 & 01-2909

6 A “vanilla box” is a term used in the real estate business to

describe a property that has drywall walls that are sanded and

ready to be primed, a drop ceiling with lighting, a concrete

slab floor ready to be finished, a restroom with fixtures, electrical

lines, and rooftop HVAC units. Kallman v. Tandy Corp. and

Radio Shack Corp., No. 99 C 490, slip op. at 14 (N.D. Ill. Jan. 16,

2001).

act reasonably. Etter v. J. Pease Constr. Co., 963 F.2d

1005, 1008 (7th Cir. 1992) (noting that deferential review

of mixed questions of law and fact is warranted when

the district court is better positioned than the circuit

court to decide the issue in question). Based on the evidence presented at trial, the court concluded that essentially three factors contributed to the two and one-half

year delay in leasing the property: (1) Win took almost

five months to conclude a listing agreement with a realtor;

(2) Win delayed improvements to the property and insisted they be negotiated as terms of a new lease; and

(3) Win, contrary to the advice of its realtor, bargained for

rental rates higher than Color Tile was paying for the

unimproved property. We find no clear error by the district

court in its holding that these factors, along with the

resulting two and one-half year delay in leasing the property, did not constitute reasonable measures to mitigate

damages.

The district court found that Win’s decision not to

place the property in a “vanilla box” condition,6

 in combination with its target of a higher rental range, deterred

potential tenants from entering into a new lease. Win’s

real estate agent, Nick Peters, recommended making improvements to the property, noting in a March 19, 1996

marketing proposal that “a general clean up and repair

should be conducted throughout the vacant portion of the

property.” Kallman, No. 99 C 490, slip op. at 6. Peters

specifically noted that these improvements would “enhance
Nos. 01-1371, 01-1538 & 01-2909 17

the leasibility of the property.” Id. Win chose not to complete these repairs, instead insisting on negotiating improvements to the property, along with other lease terms,

with perspective tenants. Although the rule of mitigation

does not require a landlord to create the best letting

conditions possible, a landlord must take reasonable

steps to re-lease the property after breach. MILTON R.

FRIEDMAN, FRIEDMAN ON LEASES, §16.303 (4th ed. 1997)

(a landlord when reletting to minimize his damages does

not have the same freedom of choice that is available to

him when he selects a tenant for his own account). We do

not find that, as a matter of law, lessors must “vanilla

box” or make extensive repairs to property in order to

satisfy their duty to mitigate. But in this case, where

the parties have offered conflicting evidence as to the effect of the lack of “vanilla box” work on the interior of

the property, we will not disturb the district court’s factual finding that poor conditions of the property contributed to the delay in finding a new tenant.

The district court also found that Kallman disregarded

the advice of her broker and solicited rental rates higher

than those paid by Color Tile. Win’s contract with Peters

directed him to seek a rental rate of $12 per square foot,

despite Peters’s recommendation that, based on market

conditions and the condition of the property, he expected

the property in its unimproved state to rent for $8-$9 per

square foot. The district court did not find the statement

of Win’s representative that it was willing to come down

to the price range recommended by Peters to be credible

given the evidence of Win’s tough and far-sighted bargaining tactics. “When it obtained reasonable proposals from

realistic prospects, Win’s strategy was to negotiate in an

effort to maximize Kallman’s long term return, both by

having as high a starting rental rate as possible, and by

securing a lease for a term extending well beyond the

term of Color Tile’s lease.” Kallman, 99 C 490, slip op. at
18 Nos. 01-1371, 01-1538 & 01-2909

7 Kallman argues that the district court erred when it compared the rental rates sought by Win to those paid by Color Tile

because the new rates were “gross” figures and did not include

the benefits to Win of the “triple net” lease terms held by Color

Tile. Win seems to imply that if the benefits to Win of Color

Tile’s lease terms were factored into the rental rates offered to

prospective replacement tenants, those rates would be effectively

lower or comparable to Color Tile’s rates. But this argument is

a red herring; Kallman’s explanatory calculations showing the

benefits offered to prospective tenants include discounts for expenses claimed by Kallman here, including the cost of repairing

the roof and the parking lot. Kallman cannot recover twice for

these damages. Further, Kallman’s actions taken together—not

a term-by-term comparison of prospective lease terms—resulted

in a two and one-half year delay in renting the property

and justify the district court’s finding that Kallman failed to

mitigate her damages.

14. Win’s attempt to obtain higher rent at the expense of

reletting the property is strong, although not conclusive,

evidence that its efforts were not reasonable. MBC, Inc.

v. Space Ctr. Minn., 532 N.E.2d 255, 261 (Ill. App. Ct.

1988) (landlord failed to mitigate damages because it

attempted to re-rent the premises at significantly higher

rates than it had been charging the previous tenant).7

Again, we do not find that attempts by a landlord to

maximize the amount of rent collected from a new tenant

per se indicate unreasonable efforts to mitigate damages,

but in this case, given the poor condition of the property,

delay in engaging a broker, and other restrictive terms of

the lease, it was not clear error for the district court to

find the efforts unreasonable here. The district court’s

finding that it was unreasonable for Kallman to take

more than five months to execute a standard agreement

with a real estate agent, although by itself insufficient

to find a failure to mitigate damages, further supports its

ruling that Kallman’s efforts, when taken as a whole, were
Nos. 01-1371, 01-1538 & 01-2909 19

8 Section 18:06 of the lease provides that: “[i]f, on account of

any breach by the parties hereto of their obligations hereunder, it

shall become necessary for either party to employ an attorney

to enforce or defend any of its rights or remedies hereunder,

and should such party prevail, it shall be entitled to any reasonable attorney’s fees incurred in such connection.”

unreasonable. We affirm the district court’s ruling that

Kallman failed to mitigate her damages and affirm the

resulting limitation of her damages.

D. Attorneys’ fees and costs

Finally, Radioshack claims that the costs and fees

awarded to Kallman were unreasonable. Radioshack claims

that an award of costs was improper because Section 18:06

of the Color Tile-Parknat lease only provides for reimbursement of attorneys’ fees.8

 However, even if Section

18:06 may not be read to include costs, they were properly awarded under Section 14:01(C) of the agreement,

which provides for reimbursement for “[a]ny other amount

necessary to compensate the Lessor for all the detriment

proximately caused by the Lessee’s failure to perform its

obligations under the lease or which in the ordinary course

of things would be likely to result therefrom.” See Medcom

Holding Co. v. Baxter Travenol Labs., Inc., 200 F.3d 518,

520 (7th Cir. 1999). Further, despite Radioshack’s argument that counsel’s bills were insufficiently itemized,

there is no evidence that these bills were unreasonable.

Kallman incurred the expense for her counsel’s services

and paid their bill. This is strong evidence of commercial

reasonableness, which is all that is required under an

indemnity clause such as the one at issue here. Id.; Balcor

Real Estate Holdings, Inc. v. Walentas-Phoenix Corp., 73

F.3d 150, 153 (7th Cir. 1996). The district court’s award of

fees and costs is affirmed.
20 Nos. 01-1371, 01-1538 & 01-2909

III. CONCLUSION

For the foregoing reasons, the district court’s rulings

on the issues of liability, damages, and attorneys’ fees

are AFFIRMED.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—12-19-02