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Pioneer Trust & Savings Bk. v. Zonta

OPINION FILED MAY 7, 1981.

PIONEER TRUST AND SAVINGS BANK ET AL., PLAINTIFFS-APPELLANTS,

v.

ANGELO ZONTA ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. JAMES TRAINA, Judge, presiding.

MR. JUSTICE JIGANTI DELIVERED THE OPINION OF THE COURT:

The essential factual setting giving rise to the issues in this appeal is that the defendants, Angelo Zonta and Mike Gentile, breached a lease agreement with the plaintiffs, Pioneer Trust and Savings Bank, individually and as trustee of a land trust, and Louis Seidman, the beneficial owner of the trust. The plaintiffs procured a new lessee who was to pay more in rent over the period of the breached lease than the defendants would have paid. However, it is the plaintiffs' contention that they suffered damages far in excess of the $6987 awarded by the trial court because the terms of the mitigating lease were not as favorable as those of the breached lease. The fact that the lease was breached was determined by this court in Pioneer Trust & Savings Bank v. Zonta (1979), 74 Ill. App.3d 614, 393 N.E.2d 548. The plaintiffs also contend that the $8001.60 award for attorneys' fees was inadequate. The defendants do not appeal the award of damages or the award of fees.

On April 21, 1975, the parties entered into a lease agreement under which the defendant Zonta was to lease a building owned by the plaintiffs from April 1975 until May 31, 1980. The defendants were to pay $2600 per month. Gentile signed the lease as Zonta's guarantor. Although the defendants did not take possession of the premises or pay any rent, they did begin preliminary remodeling work.

In September 1975, the plaintiffs brought an action against the defendants for breach of the lease. The plaintiffs alleged in that action that as a result of the defendants' breach the premises remained vacant from June 1, 1975, until February 29, 1976, and that the plaintiffs therefore lost $23,400 in rent. They alleged also that it cost them $4000 to repair damage caused by the defendants' remodeling work. In addition, the plaintiffs sought to recover attorneys' fees and the cost of title insurance for the property.

The trial court found that the lease was not binding on the parties and denied the plaintiffs' claim for payment of rent and attorneys' fees under the lease. Nevertheless the court found that the plaintiffs could recover for damages incurred when the parties were negotiating the lease. Accordingly, the trial court entered judgment in favor of the plaintiffs in the amount of $1500 for damage caused to the building by the defendants, $300 in attorneys' fees, and $145 for title insurance. The total judgment amount was $1945 plus costs.

The plaintiffs appealed that judgment. In Pioneer Trust & Savings Bank v. Zonta this court affirmed that part of the trial court's order which granted damages to the plaintiffs for the period during the negotiation of the lease but reversed the trial court's determination that the lease was not binding on the parties. We wrote:

"Based on the discussion above, we reverse that part of the order of the trial court which denied Pioneer Trust and Seidman adequate damages. Pioneer Trust and Seidman are entitled to the payment of rent owed to them under the lease and the expenses they incurred because of the breach of the lease. The expenses should include the cost for any property damage, the title insurance payment and reasonable attorneys' fees" [under the attorneys' fees clause of the lease]. (Pioneer Trust & Savings Bank v. Zonta (1979), 74 Ill. App.3d 614, 618, 393 N.E.2d 548, 552.)

The cause was remanded "for proceedings not inconsistent with this opinion."

Upon remand, the plaintiffs filed a motion for entry of judgment and a petition requesting a hearing on the issue of additional attorneys' fees. The defendants moved for a post-mandate hearing on the issue of damages. Specifically, the defendants sought to establish that in November 1975 the plaintiffs entered into a lease with the State of Illinois and that under the terms of this mitigating lease the plaintiffs were to receive more money as rent than they would have received under the breached lease. The defendants sought to establish that the plaintiffs therefore suffered no damages from their breach. The plaintiffs objected, claiming that our mandate in the first appeal required that the trial judge enter judgment on the damages as proven in the earlier proceeding. The trial court granted the defendants' motion and conducted a post-mandate hearing on the issue of damages.

The breached lease provided for rents of $2600 per month for 60 months between June 1, 1975, and May 31, 1980, for a total of $156,000. The mitigating lease provided for rents of $3802.08 per month. It was in effect for 51 of the 60 months covered by the breached lease, that is, March 1, 1976, to May 31, 1980. Rentals under the mitigating lease over the period covered by the breached lease total $193,906.08. Thus, the mitigating lease provides for $37,906 more in total rents than does the breached lease.

However, the plaintiffs claim that they suffered $174,508 in damages because of costs incurred in obtaining the mitigating lease and because the terms of that lease are less favorable to them than were the terms of the breached lease. Of the expenses claimed, $35,223 are not in dispute. For example, it is not disputed that the plaintiffs suffered out-of-pocket losses of approximately $1092 during the period between the leases and that this loss is attributable to the defendants' breach. It is also agreed that the plaintiffs paid $18,593 for tax increases which would have been the defendants' responsibility under the terms of the breached lease. Similarly, it is agreed that under the mitigating lease the landlord is responsible for water, gas and snow removal, while these expenses would have been the tenant's responsibility under the breached lease. This additional responsibility, which it is agreed is attributable to the defendants' breach, caused an out-of-pocket loss to the plaintiffs of $9669. These expenses, projected over the five remaining months covered by both leases, total $1522. The defendants agree they owe $3957 for maintenance expenses and $390 for maintenance expenses which are projected to be incurred over the remaining five months covered by both leases.

Of the $174,508 in damages claimed by the plaintiffs, $139,285 are in dispute. An expert witness, testifying for the plaintiffs, compared the option provision of the breached lease and the option provision of the mitigating lease and opined that the value of the mitigating lease option, if exercised by the tenant, was $62,693 less than the value of the breached lease option, if exercised by the tenant. Another expert testifying for the plaintiffs stated that the theoretical cost to the plaintiffs of expending their own money to complete the remodeling required by the mitigating tenant was $12,154. Also in dispute are the following: $25,571 claimed as damages by the plaintiffs as the cost of remodeling required by the mitigating tenant; $2030 paid in legal fees; $1000 paid to an accounting firm; $3387 paid for insurance; and $24,101 claimed as damages for time allegedly expended by Seidman and by laborers employed in his upholstery business. This time was expended in connection with obtaining a mitigating tenant, maintenance, and remodeling. Further, while the defendants admit that the plaintiffs suffered damages because "maintenance" was the tenant's responsibility under the breached lease but is the landlord's responsibility under the mitigating lease, they dispute $7600 of the $11,557 claimed by the plaintiffs as damages under the "maintenance" category. The plaintiffs' maintenance figure projected over the five remaining months covered by the breached lease is $1139. The defendants' figure projected over the five remaining months is $390. Thus, $749 of the $1139 claimed for maintenance as projected over the five remaining months is in dispute.

The plaintiffs claimed hundreds of different items as damages. For purposes of this appeal, we have categorized these items and characterized the position of the parties in the following chart. Many minor disputes as to amounts are resolved in the plaintiffs' favor.

Not Claimed Disputed Disputed

Damages incurred prior to the mitigating lease $ 1,092 0 $ 1,092

Property Tax increases (including projected costs) 18,593 0 18,593

Utilities and snow removal (including projected costs) 11,191 ...


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