Opinion ID: 173965
Heading Depth: 3
Heading Rank: 1

Heading: Lease Provisions

Text: The district court determined that two lease provisions authorized the award of fees to Bolger. The first, an exceptionally long sentence denoted Article 9(a), reads: Indemnification by Lessee. Lessee agrees to indemnify and save harmless Lessor, its successors and assigns, against and from any and all liabilities, losses, damages, costs, expenses, causes of action, suits, judgments and claims by or in behalf of any person, firm, corporation or governmental authority arising from the occupation, use, possession, conduct or management of or from any work, improvement, demolition or thing whatsoever done in or about the Premises or any building or structure thereon or the equipment thereof during any term of this Lease, or arising during said term from any condition of the Premises or of any street, parking lot or sidewalk adjoining thereto or of any vaults, passageways or space therein or appurtenant thereto, or arising from any act of negligence of Lessee, or any of the agents, contractors, or employees of Lessee, or arising from any accident, injury or damage whatsoever, however caused, to any person or to the property of any person or corporation, occurring during said term on, in or about the Premises, or upon or under the sidewalks or streets adjoining thereto, and from and against all costs, reasonable counsel fees, expenses and liabilities incurred in or about any such claim or any action or proceeding brought thereon, and against all liabilities, losses, damages, costs, expenses, causes of action, suits, judgments and claims arising from any failure by Lessee to perform any of the agreements, terms, covenants or conditions of this Lease on Lessee's part to be performed, other than those occasioned by any tortious or negligent act on the part of Lessor, its agents or employees (in no event shall Lessee, its agents, contractors or employees be considered agents or employees of Lessor). Rexam reads this language to require only that it indemnify Bolger against claims by third parties. For support, it relies not on case law but rather on Articles 9(b) and 10 of the lease, in light of which we must interpret Article 9(a). See Gallagher, 314 Ill.Dec. 133, 874 N.E.2d at 58. Rexam asserts that Article 9(b), Liability Insurance, confirms the third-party orientation of Article 9(a) with its language requiring Rexam to maintain as to the Premises general liability insurance insuring Lessee, Lessor, and Lessor's mortgagee as their interests shall appear. . . . And it claims that if Article 9(a) were to reach breach of lease claims by Bolger, Article 10, Defaults by Lessee, would be rendered redundant. We fail to see any language in Article 9(a) that restricts its application to claims by third parties. See Balcor Real Estate Holdings, Inc. v. Walentas-Phoenix Corp., 73 F.3d 150, 153 (7th Cir.1996) (interpreting a similarly prolix indemnity provision). Under Illinois law, we give clear and unambiguous contract terms their plain meaning, Kallman, 315 F.3d at 736, and indemnify means [t]o reimburse (another) for a loss suffered because of a third party's or one's own act or default, Black's Law Dictionary 837 (9th ed. 2009) (emphasis added); see also Balcor, 73 F.3d at 153 (discussing and defining indemnify). Article 9(a) plainly requires Rexam to reimburse Bolger for reasonable counsel fees he incurs in pursuit of any such claim or any action or proceeding he brings in relation to any condition of the Premises. Even construing the language strictly, as we must do, see Downs v. Rosenthal Collins Group, LLC, 385 Ill.App.3d 47, 324 Ill.Dec. 342, 895 N.E.2d 1057, 1059 (2008) (Illinois cases have established that attorney fees are only recoverable pursuant to an indemnity contract if such terms are specifically provided for within the contract.); Powers, 260 Ill.Dec. 393, 761 N.E.2d at 241, there is no doubt that Bolger may seek attorneys' fees incurred in disputes over property conditions like the ill repair of the roof. Indeed, we have noted, in a diversity case applying Illinois law, that indemnity clauses are designed to make the wronged party wholeto put it in the same position it would have occupied had the other side kept its promise. Medcom Holding Co. v. Baxter Travenol Labs., Inc., 200 F.3d 518, 519 (7th Cir. 1999). Here, if Rexam had repaired the roof and other items it agreed to repair, Bolger would not have had to incur attorneys' fees and legal costs associated with pursuing the breach of contract (counter)claim. It is also true that if Rexam had not held over, Bolger would not have had to incur legal costs associated with getting Rexam to leave and seeking a penalty against it under the Holdover Statute. Yet Article 9(a) does not stretch so far as to require Rexam to reimburse Bolger for those attorneys' fees as well. The provision protects Bolger from attorneys' fees he incurs resulting from occupation . . . of. . . the Premises, but only during any term of this Lease. The occupation he challenged occurred after the expiration of the lease, not while it was in force; it was for that reason that the Holdover Statute was relevant and a forcible entry action was arguably needed. The final portion of Article 9(a) is no more helpful to Bolger in this respect. It conditions Rexam's indemnification liability on its failure to perform any of the agreements, terms, covenants or conditions of this Lease. The lease does not require Rexam to vacate the premises upon its expiration. Lessees have a common law duty to timely vacate premises after a lease has terminated, see Perry v. Evanston Young Men's Christian Ass'n, 92 Ill.App.3d 820, 48 Ill. Dec. 309, 416 N.E.2d 340, 345 (1981), but a common law duty is not synonymous with a contractual one. Thus, we conclude that Article 9(a) permits Bolger to recover attorneys' fees associated with his repair claims but not his claims related to Rexam's holdover. The other contractual articles to which Rexam points do not change our view. Article 9(b) does nothing more that outline Rexam's obligation to insure the premises, to deliver the policies to Bolger, and to ensure that the policies cannot be changed without Bolger's written consent. It operates to shield both Bolger and Rexam against claims by third parties, but does not remove from Rexam the extensive indemnity obligations of Article 9(a). Article 10, which governs the consequences of any Events of Default by Rexam and in its view is the only article that plainly address[es] lessor-lessee disputes, is not rendered redundant in light of our reading of Article 9(a). There are no conditions precedent to the application of Article 9(a). But Article 10 is only invoked if Rexam engages in one of six specified Events of Default during the term of the lease. The provisions may overlap in some cases, but they complement rather than displace one another. Cf. Outboard Marine Corp., v. Liberty Mut. Ins. Co., 154 Ill.2d 90, 180 Ill.Dec. 691, 607 N.E.2d 1204, 1220 (1992) (noting that insurance policies are filled with words which overlap and complement one another, and that such words add contours to general concepts in the policy). Indeed, a portion of Article 10-10(d), Performance by Lessoris the second provision under which the district court found Rexam liable for Bolger's attorneys' fees. It provides: Performance by Lessor. In the event of the happening of an Event of Default other than the nonpayment of rent, Lessor shall have the right at its election, after not less than 30 days' written notice to Lessee, to perform the same for the account of and at the expense of Lessee and if Lessor at any time is required to pay, or elects to pay, any sum of money, by reason of such Event of Default, or if Lessor is required or elects to incur any expense, including reasonable counsel fees, in instituting, prosecuting or defending any action or proceeding instituted by reason thereof, the sum or sums so paid or incurred by Lessor, together with interest at the rate of 6% per annum shall be due and payable by Lessee to Lessor as additional rent (in addition to other rents specified in this Lease) upon demand. Rexam, after acknowledging that Article 10(d) is the only part of Article 10 that mentions attorneys' fees, asserts that it is inapplicable here because Bolger failed to establish that Rexam engaged in one of the six Events of Default. It also claims that Bolger did not demonstrate his compliance with Article 10(d)'s written notice requirement. The Events of Default are defined in Article 10(a) of the lease. Rexam is correct that most of the Events did not happen here. Rexam did not file for bankruptcy, Article 10(a)(i), it did not have a receiver appointed, Article 10(a)(ii), it did not sell its interest in the premises, Article 10(a)(iv), it paid its rent without fail even after expiration of the lease, Article 10(a)(v), and no liquidation or reorganization of it was proposed, Article 10(a)(iii). The catchall Event, Article 10(a)(vi), which reaches any failure to perform or observe any other requirement, or breach any other covenant or agreement of this Lease for thirty days after notice of it, however, could reach at least some of Bolger's repair claims. It is undisputed that Bolger notified Rexam that some repairs were needed in February 2006. Additionally, on July 27, 2007, Bolger sent a fax to Rexam's Clancy, noting that the roof was leaking as of June 2007 and expressing hope that Rexam has cured of [sic] all the repairs and maintenance issues. When Rexam vacated the property on August 31, 2007more than thirty days after the July 2007 letter and well over a year after the February 2006 lettersthe repairs remained undone. By reason thereof these incomplete repairs, Bolger elect[ed] to incur . . . counsel fees, placing him within the parameters of Article 10(d). Again, however, costs Bolger incurred in contesting Rexam's holdover are not reimbursable; the catchall Event of Default cannot reach them because Rexam was not required to vacate by any terms of the lease itself. We affirm the district court's conclusion that Articles 9(a) and 10(d) of the lease provide a basis for Bolger to recover reasonable attorneys' fees and costs associated with litigating the repair issues.