Court Opinion

ID: 4315298
Source: CourtListenerOpinion
Date Created: 2018-09-25 23:08:40.239375+00
Date Added: 2024-06-11T14:44:43.588372
License: Public Domain

2018 IL App (1st) 161704

                                                                               FIRST DIVISION

                                         No. 1-16-1704

OAK FOREST PROPERTIES, LLC,                                 )      Appeal from the Circuit
                                                            )      Court of Cook County,
       Plaintiff and Counterdefendant-Appellee,             )      Municipal Department.
                                                            )
v.                                                          )      No. 11 M6 3809
                                                            )
RER FINANCIAL, INC. and MAURICE RODGERS,                    )      Honorable
                                                            )      Robert J. Clifford
       Defendants and Counterplaintiffs-Appellants.         )      Judge presiding.

       JUSTICE GRIFFIN delivered the judgment of the court, with opinion.
       Presiding Justice Mikva and Justice Pierce concurred in the judgment and opinion.

                                           OPINION

¶1     Plaintiff Oak Forest Properties, LLC and RER Financial, Inc. (RER Financial) entered

into a commercial lease agreement. Plaintiff agreed to divide one of its building units into two

spaces and RER Financial agreed to lease one of the two spaces once the unit was divided. After

multiple modifications to the lease agreement and disputes over delays in construction and

inspection, the parties’ contractual relationship broke down. Defendant exercised its option to

terminate the lease agreement and the parties sued each other in the circuit court of Cook

County.

¶2        Plaintiff filed a complaint against defendants RER Financial and Maurice Rodgers for

breach of contract, breach of guaranty and unjust enrichment. Defendants filed a two-count

counterclaim for breach of contract alleging that plaintiff failed to timely divide the commercial
No. 1-16-1704

unit and leased another commercial unit in the same strip mall to a competing business.

Defendants also sought the return of RER Financial’s security deposit. Both parties asked the

trial court to award attorney fees to the “prevailing party” as provided by the lease agreement.

¶3      Following a two week bench trial, the trial court ordered plaintiff to return RER

Financial’s security deposit and denied all of the parties’ remaining claims. The trial court ruled

that each party was responsible for its own attorney fees because neither party had prevailed in

the litigation. We affirm.

¶4                                          BACKGROUND

¶5      Plaintiff, a landlord that operates a strip mall in Oak Forest, Illinois, and RER Financial, a

franchisee of a consumer tax preparation business, entered into a commercial lease agreement.

Plaintiff agreed to divide one of its building units into two spaces and to bear its own

construction costs. RER financial agreed to lease one of the two spaces and accepted

responsibility for the interior construction of its space, once the unit was divided.

¶6      The lease agreement required plaintiff to finish construction before RER Financial started

its interior build-out, but the parties discarded the requirement and combined their efforts to both

divide the unit and build-out the interior space. The parties agreed to use the same contractor and

a single building permit for all of the construction work. The parties’ contractual relationship

broke down. Following multiple modifications to the lease agreement and disputes over delays in

construction and inspection, RER Financial exercised its option to terminate the lease agreement

if plaintiff failed to deliver possession of the property by a date certain.

¶7      Plaintiff filed a complaint in the circuit court of Cook County against RER Financial and

individual defendant Maurice Rodgers, who had personally guaranteed the lease agreement. The

complaint pleaded three causes of action: breach of contract, breach of guaranty and unjust

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No. 1-16-1704

enrichment. Plaintiff sought damages in an amount of $167,385. Defendants filed a two count

counterclaim for breach of contract. In count I, defendants alleged that plaintiff’s failure to

timely divide the unit interrupted their business operations and caused them to suffer lost

revenue. Defendants sought $120,827 in damages. In count II, defendants alleged that plaintiff

leased a unit to a competing tax preparation business and sought damages in an amount to be

determined at trial. Defendants also sought the return of RER Financial’s security deposit

($3403.60). Both parties asked the trial court to award attorney fees and costs to the prevailing

party. Unable to settle the case, the parties proceeded to trial.

¶8     Following a two week bench trial, the trial court ruled that both parties had succeeded in

defeating each other’s claims: RER Financial had properly exercised its option to terminate the

lease agreement and plaintiff had not breached the lease agreement. The trial court described the

parties’ contractual relationship as “a rather hellacious scenario” and denied all but one of their

claims: the security deposit claim. The trial court ordered plaintiff to return RER Financial’s

security deposit because “the contract [called] for the return of the security deposit” and despite

two weeks of lay and expert testimony, the parties’ offered “absolutely no evidence about any

damage to the unit that would warrant the keeping of the security deposit.” The trial court ruled

that both parties were responsible for their own attorney fees:

       “I don’t see simply the return of the security deposit under these particular

       circumstances as the defendant necessarily prevailing to the extent that he should

       be awarded attorney’s fees *** [i]t simply is not substantial enough to make that ­

       - or warrant an award of attorney’s fees *** each party is responsible for their

       own fees.”

Defendants appeal this ruling.

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No. 1-16-1704

¶9                                        ANALYSIS

¶ 10   The issue on appeal is whether the trial court erred when it ruled that each party was

responsible for its own attorney fees because no party prevailed in the case.

¶ 11   The parties dispute the applicable standard of review. Defendant argues that we review

the trial court’s decision de novo, while plaintiff contends that the applicable standard of review

is an abuse of discretion. Mirar Development, Inc. v. Kroner, 308 Ill. App. 3d 483, 485 (1999)

(whether the trial court properly applied the law when it denied attorney fees presented a legal

question that the appellate court reviewed de novo); Peleton, Inc. v. McGivern's Inc., 375 Ill.

App. 3d 222, 226 (2007) (whether a party prevailed in the trial court involves an application of

the facts to the law). Because the trial court applied the terms of the lease agreement to the facts,

we review the trial court’s ruling for an abuse of discretion. Peleton, 375 Ill. App. 3d at 226.

¶ 12   Illinois follows the “American rule,” which prohibits a prevailing party from recovering

its attorney fees from the losing party absent an express statutory or contractual provision. Forest

Preserve District of Cook County v. Continental Community Bank & Trust Company, 2017 IL

App (1st) 170680, ¶ 31. Accordingly, contracts that provide for an award of attorney fees to the

prevailing party are in derogation of common law and must be strictly construed. Id. The lease

agreement here contained a provision allowing the “prevailing party” in a lawsuit to recover

reasonable attorney fees and costs.

¶ 13   A prevailing party is one that is successful on a significant issue and achieves some

benefit in bringing suit. Peleton, 375 Ill. App. 3d 227; Powers v. Rockford Stop-N-Go, Inc., 326
Ill. App. 3d 511, 518 (2001) (plaintiff did not prevail where the issue was not significant relative

to either the value of the remaining claims, their complexity, or the time devoted to the other

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No. 1-16-1704

issues at trial). Where, as here, a dispute involves multiple claims and both parties have won and

lost on different claims, it may be inappropriate to find that either party is the prevailing party.”

Timan v. Ourada, 2012 IL App (2d) 100834, ¶ 29 citing Powers, 326 Ill App. 3d at 518.

¶ 14   Defendants argue that the trial court improperly inserted a “magnitude test” into the

Lease Agreement’s attorney fees provision and incorrectly applied that test because the

successful return of a security deposit is a per se significant issue. Defendants cite Naperville

South Commons, LLC v. Nguyen, 2013 IL App (3d) 120382 in support of their argument that the

trial court erred in denying their request for attorney fees.

¶ 15   We hold that the trial court did not err when it ruled that the return of RER Financial’s

security deposit was not significant in relation to the parties’ unsuccessful claims. The case was a

draw and the return of the security deposit was not a significant issue. Powers, 326 Ill. App. 3d at

515 citing Raffel v. Medallion Kitchens of Minnesota, Inc., 139 F.3d 1142, 1147 (7th Cir. 1998)

(trial court did not abuse its discretion in deciding not to award attorney fees where the case was

essentially a draw). In terms of the relative value, complexity and time devoted to the issues at

trial, the security deposit issue simply did not compare to the parties’ breach of contract issues.

Powers, 326 Ill. App. 3d at 518.

¶ 16   Plaintiff and defendants asked the trial court to award damages in the amounts of

$167,385 and $120,827, respectively. The value of the security deposit was $3403.60. While the

complex breach of contract issues were litigated over the course of a two week bench trial that

included expert testimony, the security deposit issue was simplistic and the trial court returned

the security deposit because it had “no evidence whatsoever about any damage to the unit ***

that would warrant keeping the security deposit.” The record clearly indicates that the parties

focused their time and efforts on proving and defending their respective breach of contract

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claims, not the security deposit claim.

¶ 17   We reject defendants’ argument that the trial court improperly included a new term or

“magnitude test” into the attorney fees provision of the lease agreement. The significant issue

test is the means by which Illinois courts determine whether a party prevailed in a case and is

entitled to attorney fees. Peleton, 375 Ill. App. 3d at 227. We also reject defendant’s invitation to

hold that the return of a security deposit is a significant issue per se. In a case involving multiple

claims for relief, the significant issue test is a comparative analysis: significance is determined

by weighing the relative value and complexity of the issues presented and the amount of time the

parties devoted to each issue. No single claim is significant in and of itself.

¶ 18   We also find that defendants’ reliance on Naperville is misplaced. That case involved a

landlord that lost its forcible entry and detainer action because “the tenant owed nothing at the

time of the five-day notice.” Naperville, 2013 IL 120382, ¶ 17. The trial court awarded attorney

fees to the tenant as the prevailing party. Naperville makes no mention of a security deposit and

involved the landlord’s single unsuccessful claim for unpaid rent. We have no such situation

here, where the parties filed multiple competing claims and lost all but one.

¶ 19   Accordingly, the trial court did not err when it determined that an award of attorney fees

in favor of either party was not warranted.

¶ 20                                       CONCLUSION

¶ 21   We affirm the judgment of the circuit court of Cook County.

¶ 22   Affirmed.

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