Court Opinion

ID: 4394673
Source: CourtListenerOpinion
Date Created: 2019-05-07 22:04:17.307451+00
Date Added: 2024-06-11T07:49:51.687054
License: Public Domain

2019 IL App (1st) 181699

                                                                                FIRST DISTRICT
                                                                              SECOND DIVISION
                                                                                    May 7, 2019

     No. 1-18-1699

     THE DEPARTMENT OF TRANSPORTATION                         )       Appeal from the
     for and on Behalf of the People of the State             )       Circuit Court of
     of Illinois,                                             )       Cook County
                                                              )
            Plaintiff,                                        )
                                                              )
     v.                                                       )       No. 16 L 50044
                                                              )
     600 WEST DUNDEE, LLC; ONE WEST BANK;                     )       The Honorable
     WESTERN EQUIPMENT FINANCE, INC.,                         )       Daniel J. Kubasiak,
     a North Dakota Corporation; BEN KRUPPA;                  )       Judge Presiding.
     LC BUFFALO GROVE, LLC, an Illinois Limited               )
     Liability Company; FIRST MIDWEST BANK;                   )
     MARKET SQUARE RESTAURANT, INC.;                          )
     UNKNOWN OWNERS; and NONRECORD                            )
     CLAIMANTS,                                               )
                                                              )
            Defendants.                                       )
                                                              )
     (600 West Dundee, LLC, Defendant-Appellee;               )
     Market Square Restaurant, Inc., Defendant-Appellant).    )

            PRESIDING JUSTICE MASON delivered the judgment of the court, with opinion.
            Justices Lavin and Pucinski concurred in the judgment and opinion.

                                           OPINION

¶1          Tenant, defendant-appellant Market Square Restaurant, Inc. (Market Square), appeals the

     trial court’s finding that it was not entitled to any portion of a condemnation award that its

     landlord, defendant-appellee 600 West Dundee, LLC (600 West Dundee), received relating to
     No. 1-18-1699

     the Illinois Department of Transportation’s (IDOT) partial taking of the leased premises. 1 We

     affirm the trial court’s finding that under the plain language of the lease’s condemnation clause,

     Market Square was entitled to a rent adjustment relating to the portion of the premises partially

     taken, but not a portion of the condemnation award.

¶2           On March 2, 1978, Market Square (f/k/a Uncle Tom’s, Inc.) and 600 West Dundee’s

     predecessor-in-interest 2 executed a 35-year ground lease, commencing on September 1, 1978,

     and ending on August 31, 2013, on unimproved real estate (an out-lot) located at 600 West

     Dundee Road in Wheeling, Illinois, at the southwest corner of the Lynn Plaza Shopping Center.

     The leased premises totaled 15,594 square feet. On the leased premises, Market Square

     constructed a restaurant/lounge building. Pursuant to the lease’s terms, Market Square exercised

     a one-time option to extend the lease for a period of 15 years, commencing on September 1,

     2013 and expiring on August 31, 2028. Beginning on December 5, 2013, Market Square paid

     $5500 a month as agreed use and occupancy. 3

¶3           Section 26 of Market Square’s lease addressed the “Effect of Eminent Domain,” and

     states in relevant part:

                     “(b) Effect of Partial Condemnation. *** In the event of partial taking and Lessee

             1
                600 West Dundee initiated two proceedings against Market Square years before the
     condemnation proceedings commenced. In the first action, 600 West Dundee asserted that Market Square
     breached the lease by using a portion of the premises for video gambling (case No. 11-CH-39924). In the
     other action, 600 West Dundee brought a forcible entry and detainer action seeking to evict Market
     Square based on its improper use of the premises (case No. 2014-M1-709886).
              On January 13, 2017, the trial court ruled that Market Square’s operation of video gaming
     terminals on the premises was not consistent with the stated purpose of the lease to operate a
     restaurant/lounge. The forcible entry and detainer action remained pending at the time of this appeal.
              2
                Amalgamated Trust and Savings Bank Trust No. 2213 (Trust No. 2213) originally executed the
     lease as the ground lessor and Lynn Plaza LLC was the successor-in-interest to Trust No. 2213. In
     February 2014, the premises was conveyed to 600 West Dundee.
              3
                On December 5, 2013, the trial court entered an agreed use and occupancy order setting monthly
     rent at $5500, without prejudice as to the final determination of rent for the 15-year option term. Under
     section 35 of the lease, the “fair rent” that Market Square was to pay during the extended option term
     would be determined by arbitration. At the time of this appeal, the amount of fair rent remained
     undetermined.

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     No. 1-18-1699

                     does not terminate this lease, then this lease shall continue in full force and effect

                     as to the part not taken, and the rental to be paid by Lessee during the remainder

                     of the term shall be subject to adjustment based upon provisions set forth

                     hereinafter.”

     There is no dispute that although section 26(b) referenced “provisions set forth hereinafter,” the

     lease did not include a provision detailing the formula to use or factors to consider in computing

     the rent adjustment.

¶4          IDOT planned to improve and widen the intersection of Dundee Road and

     Wheeling/McHenry Road. On January 26, 2016, as part of that improvement project, IDOT filed

     a complaint for condemnation under the Eminent Domain Act (Act) (735 ILCS 30/1-1-1 et seq.

     (West 2016)) to acquire (i) full fee simple absolute title to approximately 1220 net square feet of

     land (designated as Parcel No. 0KJ0009 (Parcel 1)) and (ii) a temporary easement for

     construction purposes for five years (expiring in 2021) or upon completion of construction,

     whichever occurred first, 4 in, over, and across approximately 915 square feet of land (designated

     as Parcel No. 0KJ0009TE (Parcel 2)). At the time of condemnation, approximately 12 years

     remained in the lease term.

¶5          Ultimately, the trial court vested IDOT with the full fee simple absolute title to Parcel 1

     and the temporary easement over Parcel 2 and fixed the preliminary and final just compensation

     award (final condemnation award) for IDOT’s partial taking at $215,000, allocated as follows:

                            Parcel 1 (fee simple title)           $ 41,625

                            Parcel 2 (temporary easement)           36,625

                            Damages to the remainder               136,750

                            Total                                $215,000

            4
             Market Square represents that IDOT’s construction project has been completed.

                                                          3
     No. 1-18-1699

     Market Square objected to 600 West Dundee’s entitlement to the preliminary and final

     condemnation awards. Specifically, Market Square filed a motion for apportionment of the final

     condemnation award, claiming that as lessee under the long-term ground lease, it was entitled to

     $156,744 of the final condemnation award as compensation for (i) IDOT’s temporary easement

     over the leased premises ($36,625), (ii) estimated damages it would incur to restore the premises

     after IDOT completed the construction project ($26,433), and (iii) the present value of the rent

     adjustment provided for under section 26(b) ($93,686). The trial court ruled against Market

     Square, finding that, under the lease, Market Square was entitled to a rent adjustment as to the

     part of the premises taken 5 but not to anything other than the lease’s continuation as to the part of

     the premises not taken. Dissatisfied with the trial court’s ruling denying it any portion of the final

     condemnation award, Market Square now appeals.

¶6           Market Square renews its claim that it was entitled to $156,744 of the final compensation

     award, arguing that its leasehold interest in the property partially taken was directly affected and

     nothing in the lease limited its remedy for the partial taking only to the rent adjustment. We

     disagree.

¶7           Although the Act generally provides interested parties with the authority to petition for

     withdrawal of all or part of a condemnation award according to the fair value of their legal or

     equitable interests (735 ILCS 30/10-5-90 (West 2016)), parties to a lease are free to include a

     provision governing their rights in the event of a condemnation proceeding (Village of Palatine

     v. Palatine Associates, LLC, 406 Ill. App. 3d 973, 981 (2010)). The lease here included such a

     provision and dictates Market Square’s rights relating to the partial taking. See id. (language of

             5
               Since the trial court’s order granting 600 West Dundee’s motion to withdraw the preliminary
     compensation award, Market Square and 600 West Dundee have been participating in ongoing settlement
     conferences to compute the rent adjustment referenced in section 26(b). Nothing in the record reveals that
     the parties have reached an agreement regarding the proper rent adjustment amount.

                                                         4
     No. 1-18-1699

     the lease governed whether the lessee had any rights to the condemnation award). Like any other

     contract, we review a trial court’s interpretation of the provisions included in a lease de novo.

     Benford v. Everett Commons, LLC, 2014 IL App (1st) 131231, ¶ 14.

¶8          We find that the lease Market Square agreed to and executed contained definite and

     precise language that a rent adjustment was Market Square’s remedy in the event of a partial

     taking that did not result in the termination of the lease. See Clarendon America Insurance Co. v.

     Prime Group Realty Services, Inc., 389 Ill. App. 3d 724, 729 (2009) (a lease containing definite

     and precise language speaks for itself); see also Midway Park Saver v. Sarco Putty Co., 2012 IL

     App (1st) 110849, ¶ 13 (a lease is a contract and normal principles of contract interpretation

     apply). The fact that the lease was silent regarding the method of computing the rent adjustment

     has no bearing on Market Square’s agreed to remedy in the event of a partial taking nor does it

     justify ignoring the rent adjustment remedy provided for in the condemnation clause.

     Importantly, the absence of the provision to compute the rent adjustment referenced in section

     26(b) would have been equally obvious to Market Square and 600 West Dundee at the time the

     lease was executed. And had the lease included a provision detailing the method of computing

     the rent adjustment in the event of a partial taking, Market Square would have had no basis to

     claim entitlement to any portion of the final compensation award, which would have been

     distributable to 600 West Dundee. Likewise, delaying distribution of the final compensation

     award was not warranted merely because the parties had not yet agreed upon the proper

     computation of the rent adjustment.

¶9          Many of Market Square’s claims address the factors that should be considered in

     computing the rent adjustment, e.g., the temporary easement prohibited use of the designated

     premises and actual costs incurred to restore the premises, but those considerations do not alter

     Market Square’s agreement to a rent adjustment as its remedy in the event of a partial taking.

                                                     5
       No. 1-18-1699

       Leonard v. Autocar Sales & Service Co., 325 Ill. App. 375 (1945), provides no support for

       Market Square’s position that the temporary easement granted to IDOT entitled it to a portion of

       the final compensation award. The tenant in Leonard was entitled to the compensation award

       because, unlike Market Square, it remained obligated to pay the rent in full even though it could

       not use its premises during the temporary easement period. Id. at 391; see also Department of

       Public Works & Buildings v. Metropolitan Life Insurance Co., 42 Ill. App. 2d 378, 384 (1963)

       (reciting the rule that a tenant is not entitled to an abatement or apportionment of rent in a partial

       taking and must pay the rent in full but is entitled to the just compensation award). Leonard does

       not stand for the proposition that a tenant is entitled to a portion of the compensation award in

       addition to a rent adjustment.

¶ 10          Market Square points to nothing in the lease’s condemnation clause entitling it to an

       apportionment of the final compensation award where, as here, a partial taking has occurred and

       the lease does not terminate. Under section 26(b), the lease continues in full force and effect and

       Market Square is entitled to a rent adjustment for the remainder of the lease term. Because

       Market Square and 600 West Dundee agreed in the lease to alter the rights of interested parties

       under the Eminent Domain Act, Market Square was not entitled to any portion of the final

       compensation award under the lease. Given this conclusion, we need not address its claims

       regarding the applicability of the fair valuation rule or the proper allocation of the final

       condemnation award.

¶ 11          Affirmed.

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