The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Plaintiff Meridian Homes Corporation ("Meridian") has moved
for partial summary judgment on the issue of its right to
terminate the joint venture relating to the Hampton Park
Terrace Shopping Center property (the "Venture") in
Romeoville, Illinois. In opposition to that motion and in
support of its own cross-motion for summary judgment,
defendant Nicholas W. Prassas & Company ("Prassas") asserts
(1) Meridian never became a member of the
Venture and therefore has no right to dissolve it
or seek a decree of dissolution.
(2) In any event, the Venture was not
terminable at will.
For the reasons stated in this memorandum opinion and order,
Meridian's motion for partial summary judgment is granted in
part and denied in part and Prassas' cross-motion for summary
judgment is denied.
Financial arrangements regarding the Venture were
straight-forward as such ventures go. After improvement of the
property the net cash flow was divided equally between the
venturers, with Alexander "to the extent permissible under the
Internal Revenue Code, [to] have the benefit of the entire
depreciation deduction available to the joint venture"
(Agreement ¶ 5). Upon sale of the real estate, the net proceeds
of sale after payment of mortgage and other indebtedness would
first be paid to Alexander to the extent of the agreed value of
the land and all funds advanced by Alexander, with any surplus
then to be divided equally between the venturers.
It is agreed that First Party may develop Project
No. 1 in separate stages consistent with economic
operation and the terms and conditions of this
agreement shall apply separately to each stage
until the property in Project No. 1 shall have
been fully developed.
Agreement ¶ 7 gave Alexander an option to acquire Prassas'
joint venture interest within "ninety days after completion and
opening for business of a minimum of 500 front feet of store
units constituting the entire planned portion of Project No.
1. . . ." It went on to provide:
In the event this option is not exercised, the
joint venture shall continue and the parties
agree that thereafter they shall offer the
property for sale and [Prassas] shall be the sole
designated agent to offer the property for sale.
Agreement ¶ 8 required that "[i]n the event that the property
is sold as vacant, both parties must be in agreement. . . ."
Except for the provisions just quoted and summarized, the
Agreement was silent on the subjects of its term or its
Initial development of the property involved a small
shopping center (about 31,000 square feet of store area, with
a Jewel store of 15,000 square feet as the major tenant)
occupying about five of the nine acres, begun and completed
promptly after entry into the Agreement. No other development
took place until after 1970, when Prassas negotiated a new
Jewel lease calling for remodeling of the existing store and
a 25,000 square foot addition. Because that deal would have
required an estimated additional $300,000 capital contribution
by Alexander over and above the added mortgage financing
obtainable by Prassas, the affidavit submitted by Nicholas W.
Prassas ("Nicholas") with the current Prassas motion states:
Alexander initially objected to this second phase
of the development of Project 1 and proposed that
Prassas Company buy Alexander's interest in the
Prassas rejected that offer, Alexander ultimately proceeded
(with a somewhat smaller capital contribution) and the
addition was built in 1972. No other development has taken
place or is now planned, and now Meridian (which claims to be
the present successor to the Alexander joint venture interest)
Initial development of the property in 1961 comprised
approximately 281 front feet of store units. Another 175 front
feet were involved in the 1972 addition. Thus the development
to date aggregates 456 front feet, and the point (500 front
feet) that Agreement ¶ 7 called "the entire planned portion of
Project No. 1" and that would trigger the option under that
Paragraph has never been reached.
From the time of its incorporation in 1972 (just prior to
its transaction with Alexander) Allister was a wholly-owned
subsidiary of Meridian.*fn1 In connection with a 1977
transaction in which certain Allister employees were acquiring
a stock interest in that corporation (to give them an equity
participation in another real estate project), Meridian
required Allister to transfer to Meridian all of its ...