Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Vranas & Assoc. v. Fam. Pride Fin. Foods





Appeal from the Circuit Court of Du Page County; the Hon. John Teschner, Judge, presiding.


Rehearing denied October 27, 1986.

Plaintiff brought this action to recover allegedly unpaid rent and expenses arising out of defendant's alleged abandonment of a commercial lease. Defendant counterclaimed for damages arising out of plaintiff's unreasonable refusal to consent to an assignment of the lease to a third party. The court, in a bench trial, found against plaintiff on its complaint and for defendant on its counterclaim for lost profits on the sale of its business. Plaintiff timely appealed.

Villa Park Plaza Associates, through its general partner, Vranas & Associates, Inc. (Vranas), and Family Pride Finer Foods, Inc. (Family Pride), entered into a commercial lease on June 19, 1980. This lease was subsequently extended for a five-year term ending on July 1, 1987.

Family Pride, the lessee, was owned equally by Barry Laub and Charles Marthaler. They formed Family Pride as an Illinois corporation shortly after the lease agreement was executed. Family Pride was initially capitalized by Mr. Laub and Mr. Marthaler with $10,000 in capital stock and with $26,000 in additional loans. The record indicates that Mr. Laub was a certified public accountant, and that he had no grocery store management experience. Mr. Marthaler had considerable experience in the management of grocery stores, although he had been unemployed for at least three months prior to June 1980. Vranas did not require Family Pride to provide any financial statements. The lease did not require that either Mr. Laub or Mr. Marthaler be employed by Family Pride. Personal guarantees had been discussed by the parties, but Mr. Laub or Mr. Marthaler refused to execute any. Family Pride did tender a $5,000 security deposit along with a security interest in all of the fixtures and equipment at the store.

During the summer of 1983 Mr. Laub contacted William Vranas, the property manager for the Villa Park Plaza shopping center, and advised him that Family Pride was about to be placed on the market for sale. Mr. Laub testified that he and Mr. Marthaler had decided to sell the store because they had established another business closer to their homes.

Two lease provisions relevant to this development were the following:

"Section 6.01 Tenant shall not assign or encumber its interest in this Lease or sublease the demised premises, or any part thereof, without the written consent of Landlord first had and received, which consent Landlord agrees not to unreasonably withhold or delay, provided such assignment or sublease shall not release Tenant from its obligations under this Lease.

Section 6.02 If at any time during the term of this Lease, any part or all of the corporate shares shall be transferred by sale, assignment or other disposition so as to result in a change in the present ownership of said corporation, Landlord may serve notice upon Tenant, electing to treat such transfer of corporate shares as a violation of the terms of this Lease, and in the event of failure of Tenant to cure such default within ten days from the date of said notice, Landlord may terminate this Lease and the demised term by giving Tenant sixty days prior written notice of such termination. * * *"

In August 1983 Mr. Laub and Mr. Marthaler received a tender offer from Abel Issa to purchase the business. A sales contract was executed on September 29, 1983, for $45,000 for the fixtures and inventory, plus a $5,000 security deposit which was tendered by Mr. Issa as earnest money. Mr. Laub then contacted Mr. Vranas and informed him that the purchaser was Abel Issa, a businessman who would be forming a new corporation. Mr. Laub suggested, and Mr. Vranas agreed, that Mr. Issa should contact Mr. Vranas directly to discuss the proposed assignment of the lease.

In October 1983 Mr. Issa contacted Mr. Vranas by phone and advised him of his background and qualifications for running a retail business. Mr. Issa had managed stores which had retail sales ranging from $500,000 to $25 million. He had held the position of merchandising manager for Zayre Department Store and Baskin clothing. In addition, he had been a store manager for Bond's clothing store, and an assistant buyer, operations manager and merchandising manager for Carson Pirie Scott. Mr. Vranas gave a favorable response to Mr. Issa's qualifications. Mr. Issa advised Mr. Vranas that the newly formed corporation, Green Valley Finer Foods, Inc. (Green Valley), would be financed with a $200,000 SBA-guaranteed loan from the Union National Bank of Joliet and he would be investing another $50,000. At the end of the call, Mr. Vranas told Mr. Issa that he saw no reason why he would not get the lease assignment.

Shortly after this, Mr. Issa's attorney, William Washburn, Jr., telephoned Mr. Vranas to discuss the terms of the lease assignment. Mr. Vranas requested that all issues should be placed in writing. Mr. Washburn wrote to Mr. Vranas on October 20, 1983, requesting that the current rent rate be reduced, that the lease term be extended with a renewal option, and that the lien held by the landlord on the store fixtures and equipment be subordinated to the SBA-guaranteed loan. Mr. Vranas responded in writing on November 4, 1983: "Please be advised that ownership has not accepted your offer of a unilateral reduction of the terms in its lease agreement * * *."

On December 5, 1983, Mr. Washburn advised Mr. Vranas in writing that the SBA-guaranteed loan had been approved. He also renewed his request that the landlord waive its first lien on the fixtures and equipment and that the lease be assigned to his client without the existing collateral security agreement. Included with this correspondence was a copy of Mr. Issa's financial statement which had been earlier requested. This statement reflected total assets in the amount of $469,238 and total liabilities in the amount of $156,732, leaving a net worth of $312,506. Also included with the correspondence was the SBA's Lender's application for guarantee or participation, reflecting that the SBA and the Union National Bank of Joliet were making a loan in the amount of $200,000 to Green Valley.

On December 7, 1983, Mr. Vranas wrote to Mr. Washburn: "[The] ownership of the Villa Park Plaza will not assign the existing lease to your client without the security agreement as presently attached thereto. This decision was based on your client's lack of equity available as substitute security."

Mr. Washburn contacted the attorney for Family Pride, Charles Stone, and advised him that the transaction would not be able to close prior to the Christmas holidays due to the security-interest problem, but that he would continue to negotiate with the bank in an attempt to eliminate its collateral security requirement. In late December 1983 Mr. Washburn informed Mr. Stone that the SBA had withdrawn its collateral security requirement, that all conditions raised by the lessor had been met, and that Mr. Issa had terminated his employment. He requested that the closing occur as soon as possible.

In early January 1984 Mr. Stone contacted Mr. Vranas and advised him of the imminent closing and the need for the assignment of the lease. Mr. Vranas requested that he be notified when the closing was to occur. On January 12 Mr. Stone again contacted Mr. Vranas to make final closing arrangements and to discuss the preparation and submission of the lease assignment. Mr. Vranas requested that Mr. Stone prepare ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.