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02/03/87 Thomas M. Klucznik Et Al., v. Tommy Nikitopoulos

February 3, 1987

THOMAS M. KLUCZNIK ET AL., PLAINTIFFS-APPELLANTS

v.

TOMMY NIKITOPOULOS, DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

503 N.E.2d 1147, 152 Ill. App. 3d 323, 105 Ill. Dec. 141 1987.IL.118

Appeal from the Circuit Court of De Kalb County; the Hon. John A. Leifheit, Judge, presiding.

APPELLATE Judges:

JUSTICE UNVERZAGT delivered the opinion of the court. HOPF and INGLIS, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE UNVERZAGT

Plaintiffs appeal from the judgment of the circuit court of De Kalb County denying them certain requested relief and awarding defendant damages on a counterclaim.

Plaintiffs filed a three-count complaint against the defendant on July 31, 1984. Count I alleged that defendant had breached a warranty contained in a restaurant lease and requested compensatory damages. Count II alleged fraud and requested punitive damages. Count III also alleged fraud and asked that plaintiffs be permitted to rescind the contract. Defendant filed a three-count counterclaim, count I of which requested payment for food products delivered to plaintiffs. Counts II and III of the counterclaim are not involved in this appeal.

The relevant facts are as follows. Defendant, Tom Nikitopoulos, leased a portion of his building to William Iwans and Ted Yanik for use as a restaurant. The contract provided that Yanik and Iwans would lease the restaurant for five years beginning November 1, 1983. A rider drafted by Iwans' attorney was attached to the lease and provided that the lessor warranted that the heat and cooling systems were in good working order. Defendant apparently read the rider as he changed and initialed several other provisions contained in it. Plaintiffs, Thomas and Marcella Klucznik and Stanley and Charlotte Yanik, had an ownership interest in the restaurant, Rosati's Pizza, from its opening in November 1983, but only Mrs. Klucznik was personally involved in managing the restaurant at that time. Iwans left the business shortly after execution of the contract because he believed the business was undercapitalized. Yanik, who is Mrs. Klucznik's brother and Stanley and Charlotte Yanik's son, left the business in April 1984 at which time plaintiffs took over the lease. There was no formal assignment of the lease, but plaintiffs signed it in defendant's presence, and defendant then initialed it and thereafter recognized plaintiffs as his tenants.

The heat and air conditioning in the restaurant operate on a unified system. The heat was repaired in November 1983 at Rosati's expense, at which time no complaint or request for reimbursement was made to defendant. Although the heating system was later discovered to have been only partially functional during the winter of 1983-84, Mrs. Klucznik noticed no lack of heat at that time. She testified at the trial that shortly after taking over the lease in April 1984, she had a conversation with defendant during which he told her he didn't use air conditioning and that there was no air conditioning but he indicated that perhaps she could turn Rosati's air conditioning on in the back of the building. She called a repairman to check the air conditioning in June 1984 at which time the repairman told her that the heat and air conditioning operated on a single system consisting of three units, none of which was functioning. He gave her four possible repair approaches and an estimate for each, the minimum being $1,600. It is unclear whether any one approach alone would have sufficiently cooled and heated the restaurant. Mrs. Klucznik approached the defendant with the estimates, but he refused even to discuss them. No repair was made. The restaurant became very hot during the summer of 1984, driving customers away and causing plaintiffs to close down for two months. Plaintiffs reopened at the end of August, but their business continued to suffer due to the lack of air conditioning and, later, lack of heat. In response to plaintiffs' complaints to the city of De Kalb, the city closed the restaurant in January 1985 for having insufficient heat.

Defendant testified at trial that he told Ted Yanik and William Iwans that the heat and cooling systems were not functioning when they executed the contract and that the parties agreed to reduce the monthly rent accordingly. He stated that he had no intention of deceiving anyone and that the rider's inclusion of a warranty provision was a mutual mistake by the parties.

The court found that defendant was obligated to provide heat and air conditioning and awarded plaintiffs $4,118.06 plus costs of their breach-of-warranty claim. The amount represented rent for January 1985 and the two month period in 1984 during which the restaurant was closed and reimbursement for the cost of repairing a freezer. The court refused to award lost profits, finding that such an award would be speculative. It also refused to grant rescission of the contract or to award punitive damages on the fraud counts. It concluded, however, that the lease had terminated without fault by plaintiffs in January 1985. The court then awarded defendant $394.43 on his counterclaim for food products delivered to plaintiffs.

Plaintiffs raise four arguments on appeal: (1) the trial court erred in refusing to grant rescission of the contract; (2) the court erred in failing to award plaintiffs lost profits or to reimburse them for amounts borrowed to keep the restaurant operating; (3) plaintiffs were entitled to punitive damages; and (4) the court erred in awarding damages to defendant. I

Plaintiffs first contend that the trial court erred in ruling that plaintiffs' continued occupancy of the premises and other unspecified acts constituted an election against rescission. Rescission is an equitable remedy, the application of which is left largely to the discretion of the trial court. (Luciani v. Bestor (1982), 106 Ill. App. 3d 878, 882.) A reviewing court will not disturb that decision unless it clearly resulted from an abuse of discretion. 106 Ill. App. 3d 878, 882.

We summarily reject plaintiffs' initial argument that no election against rescission is made simply because a plaintiff claims inconsistent or alternative remedies (see Pinelli v. Alpine Development Corp. (1979), 70 Ill. App. 3d 980, 1005; Bozeman v. Sheriff (1976), 42 Ill. App. 3d 228, 233), because the court's Conclusion was clearly based on the ...


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