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Tishman Mid. Mgt. v. Wayne Jarvis

OPINION FILED JULY 21, 1986.

TISHMAN MIDWEST MANAGEMENT CORPORATION, PLAINTIFF AND COUNTERDEFENDANT-APPELLEE,

v.

WAYNE JARVIS, LTD., DEFENDANT AND COUNTERPLAINTIFF-APPELLANT.



Appeal from the Circuit Court of Cook County; the Hon. Alan E. Morrill, Judge, presiding.

PRESIDING JUSTICE QUINLAN DELIVERED THE OPINION OF THE COURT:

Rehearing denied September 3, 1986.

Plaintiff, Tishman Midwest Management Corporation (Tishman), is the managing agent for the landlord of an office building located in downtown Chicago at 55 East Monroe Street and known as Mid-Continental Plaza (Mid-Continental). Defendant, Wayne Jarvis, is an attorney who practices law in Chicago under the corporate structure of Wayne Jarvis, Ltd. (Jarvis), and is a former tenant of the building.

In June 1983, Tishman sued Jarvis for breach of its lease at Mid-Continental. In response, Jarvis filed an answer and a two-count class action counterclaim seeking approximately $8 million from Tishman. On Tishman's motion, the trial court dismissed both counts of the class action counterclaim. Jarvis has appealed only the court's dismissal of count II of its counterclaim.

Beginning in 1977, Jarvis practiced law from office space as a tenant at Mid-Continental. On June 7, 1982, Jarvis entered into a seventh amendment to its lease, substantially reducing the size of its premises and decreasing its rent from $124,836.03 annually to $34,722.91 annually. Under the provisions of the seventh amendment, Jarvis' tenancy was to continue until April 30, 1987. The lease provided that the rent paid by Jarvis was comprised of base rent, real estate taxes, operating expenses, and tenant charges. Wayne Jarvis, who personally negotiated the lease with Tishman, executed a guaranty of the obligation of Wayne Jarvis, Ltd., under its lease.

On September 23, 1982, Jarvis, with almost five years remaining on its lease, vacated its office space at Mid-Continental. In a two-count amended complaint, as stated above, Tishman sought to recover damages for breach of the lease and to enforce the personal guaranty of Wayne Jarvis.

In answer to the complaint, Jarvis admitted that it entered into the lease, that it vacated the premises and that it stopped paying rent. Along with its answer, Jarvis filed a two-count class action counterclaim against Tishman, seeking recovery of approximately $8 million from Tishman on behalf of a class purportedly consisting of all tenants at Mid-Continental.

In count I of the class action counterclaim, Jarvis alleged that Tishman overcharged the tenants at Mid-Continental for real estate taxes because the taxes paid by Tishman on the parcels of real estate on which the building sat were less than the taxes passed along to the tenants.

In count II of the counterclaim, Jarvis alleged that Tishman improperly reimbursed itself for attorney fees it allegedly incurred in obtaining real estate tax savings for Mid-Continental prior to passing the tax savings along to the tenants. This resulted, Jarvis argues, in higher rental charges than authorized in the lease.

Count II is based on an interpretation of paragraph 27(b) of the lease which provided as follows:

"The term `Ownership Taxes' shall mean all taxes and assessments, of every kind and nature, special or otherwise, levied upon or with respect to the Property, including without limitation general real property taxes, imposed by federal, state or local governments (excluding income, franchise, capital stock, federal and state estate and inheritance taxes, and taxes based upon receipt of rentals) and any personal property taxes imposed upon fixtures, machinery, apparatus systems and appurtenances in, upon or used in connection with the Building for the operation thereof.

General real property taxes for the Base Year shall be determined by multiplying the equalized assessed valuation (i.e., the value to which the applicable tax rate is applied in finally determining the actual amount of the general real property taxes for such year) of the Property on January 1, 1976, (subject to such reduction as may be obtained, if any) by the aggregate tax rate last published prior to the date hereof provided, that if partial completion or partial occupancy has been taken into account in determining any of the factors used in calculating equalized assessed valuation of the Property, then the amount of the equalized assessed valuation of the Property will be equitably adjusted to the amount that it would have been had the Building been fully completed and occupied during all of the Base Year. In the event there shall be a subsequent increase or reduction in the equalized assessed valuation of the Property, for any reason whatsoever, which affects the determination of the Ownership Taxes for the Base Year, or any Comparison Year, which would result in a rent increase or decrease hereunder, the Ownership Taxes for the Base Year or such Comparison Year shall be recalculated taking into account the revised equalized assessed valuation, and any resulting increase or decrease in the Rental, as the case may be, less the expenses incurred in effecting any such reduction, shall be paid simultaneously with or applied as a credit against the Rental next becoming due." (Emphasis added.)

Jarvis contends that paragraph 27(b) provided that the lessor's expenses should be deducted if and only if it obtains a reduction in the equalized assessed valuation which results in a rent decrease. Jarvis maintains that there was neither a reduction nor a decrease in rent for the tax years at issue, and that Tishman improperly added rather than deducted its legal expenses for each of those years.

Tishman moved to dismiss count I pursuant to section 2-619(a)(9) of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-619(a)(9)), because count I was based on the fact that Mid-continental sat on only three parcels, when it in fact sat on four. Attached to the motion to dismiss count I was an affidavit along with documentary evidence establishing that Mid-Continental sat on four parcels, not three. The motion established the fact that, by adding the fourth parcel omitted by Jarvis, ...


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