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MAY'S FAMILY CENTERS, INC. v. GOODMAN'S

September 19, 1983

MAY'S FAMILY CENTERS, INC., PLAINTIFF,
v.
GOODMAN'S, INC., DEFENDANT.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER*fn*

May's Family Centers, Inc. ("May's") has sued Goodman's, Inc. ("Goodman's") for (1) breach of contract and (2) tortious interference with a business relationship between May's and Zayre Corp. ("Zayre").*fn1 Goodman's moves under Fed.R.Civ.P. ("Rule") 12(b)(6) to dismiss May's six-count Amended Complaint (the "Complaint")*fn2 for failure to state a claim upon which relief can be granted. For the reasons stated in this memorandum opinion and order, each component of Goodman's motion is denied.

Facts*fn3

Central National Bank of Chicago ("CNB"), legal titleholder to the Premises,*fn4 leased them to Goodman's in December 1964. Then in November 1971 Goodman's and CNB, as lessors, leased the premises to Kankakee Bell Discount Department Store, Inc. ("Kankakee"), which later assigned that lease as amended (the "Main Lease") to Belscot Department Stores of Illinois, Inc. ("Belscot of Illinois").*fn5

On June 22, 1978 Belscot of Illinois in turn demised the Premises to May's (under the "Sublease") with Goodman's consent. Sublease ¶ 10 provides:

    INCORPORATION BY REFERENCE: The provisions of the
    Main Lease are incorporated herein and made part of
    this Sublease with the same force and effect as if
    set forth at length herein, and this Sublease is
    subject and subordinate to all of the terms,
    provisions, covenants, undertakings, agreements,
    obligations and conditions contained herein.

However, because Goodman's consent had been given in advance by a June 15 letter,*fn6 there is nothing in the record to show Goodman's had any knowledge of Paragraph 10.

On January 21, 1981 May's (with Belscot's agreement) entered into an agreement with Zayre (the "Agreement") to assign the Main Lease to Zayre for $500,000. Almost exactly a year later May's asked Goodman's to consent to the assignment pursuant to Main Lease § 6.01 ("Section 6.01"):

    Lessee will not assign this Lease in whole or in
    part, nor sublet all or any part of the leased
    premises, without the prior written consent of
    Lessor in each instance, which consent shall not be
    unreasonably withheld. It shall not be deemed to be
    unreasonable for Lessor to refuse consent to a
    proposed assignee which does not have a net worth
    equal to Belscot's net worth as of the date of the
    assignment and which does not have a history of
    operating retail discount or department stores in a
    manner similar to that of Lessee. The consent by
    Lessor to any assignment or subletting shall not
    constitute a waiver of the necessity for such
    consent to any subsequent assignment or subletting.
    This prohibition against assigning or subletting
    shall be construed to include a prohibition against
    any assignment or subletting by operation of law. If
    this Lease be assigned, or if the leased premises or
    any part thereof be underlet or occupied by anybody
    other than Lessee, or its permitted licensees and
    concessionaires, Lessor may collect rent from the
    assignee, under-tenant or occupant, and apply the
    net amount collected to the rent herein reserved,
    but no such assignment, underletting, occupancy or
    collection shall be deemed a waiver of this
    covenant, or the acceptance of the assignee,
    under-tenant or occupant as tenant, or a release of
    Lessee or any Guarantor from the further performance
    by Lessee or any Guarantor of covenants on the part
    of Lessee herein contained. Notwithstanding any
    assignment or sublease, Lessee or any Guarantor
    shall remain fully liable on this Lease and shall
    not be released from performing any of the terms,
    covenants and conditions of this lease unless Lessor
    has consented to said sublease as herein provided.
    Nothing contained herein shall prevent Lessee from
    granting sublicenses or concessions for the conduct
    of any department within Lessee's store as long as
    said department is operated as part of Lessee's
    store and its gross sales are reported as part of
    Lessee's herein.

Goodman's refused such consent even after May's told Goodman's (1) the Agreement would expire February 6, 1982*fn7 and (2) May's needed the $500,000 to carry on its retail business.

After the Agreement had already expired, Goodman's did belatedly consent to May's proposed assignment to Zayre. May's then asked Zayre to renew its offer. Zayre agreed to do so if May's would deliver Goodman's consent before April 2, 1982. Some time before April 2 Goodman's communicated directly with Zayre and led it to believe Goodman's would not consent. Zayre then refused to negotiate further with May's.

Each of the six counts in the Complaint is premised on that series of events but alleges a different theory or different damages:

      1. Count I alleges breach of the Main Lease,
    causing the loss of Zayre's $500,000.
      2. Count II asserts $10 million in consequential
    damages resulted from that breach (because May's
    lost its entire retail business for want of the
    $500,000).
      3. Count III is like Count I, except that May's
    advances the claim as Belscot's agent as well as on
    its own behalf.
      4. Count IV asserts the same agent-and-principal
    theory as Count III and the same $10 million
    ...

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