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03/16/88 Rnr Realty, Inc., v. Burlington Coat Factory

March 16, 1988

RNR REALTY, INC., PLAINTIFF-APPELLEE

v.

BURLINGTON COAT FACTORY WAREHOUSE OF CICERO, INC., ET AL., DEFENDANTS-APPELLANTS



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

522 N.E.2d 679, 168 Ill. App. 3d 210, 119 Ill. Dec. 17 1988.IL.358

Appeal from the Circuit Court of Cook County; the Hon. Charles E. Freeman and the Hon. Sophia H. Hall, Judges, presiding.

APPELLATE Judges:

JUSTICE McNAMARA delivered the opinion of the court. WHITE, P.J., and RIZZI, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MCNAMARA

Plaintiff RNR Realty, Inc., the landlord, filed suit against its tenant, defendant Burlington Coat Factory Warehouse of Cicero, Inc. (Burlington), and its parent company, Burlington Coat Factory Warehouse Corporation, alleging breach of a lease for commercial property. Following a bench trial, the trial court entered judgment in favor of plaintiff, and against defendants on both the complaint and on defendants' countercomplaint.

Defendants appeal, contending that the trial court erred as a matter of law in holding that plaintiff fulfilled its lease obligations; that the trial court erred as a matter of law in holding that Burlington breached the lease when it stopped paying the full rent and later abandoned the property without having suffered a constructive eviction; that the trial court erred as a matter of law in finding the parent company liable under the lease guaranty; and that the trial court abused its discretion in denying defendants' motion for a continuance.

In July 1984, the parties negotiated to lease plaintiff's commercial property located at 8101 South Cicero Avenue in Chicago. The property covers approximately 93,000 square feet. Burlington rented 90% of the premises, and an appliance store rented the remaining 10%. The lease stated that plaintiff was to provide Burlington with three areas of parking. First, 127 spaces were available in the lot adjacent to the Burlington store. Second, 102 spaces were initially available in the Century Supply Company lot just south of the leased premises. Third, 100 spaces were initially available in the Scottsdale Shopping Center lot located just north of the leased premises and separated from the property by 81st Street.

In the summer of 1984, plaintiff believed the Century Supply lot was accessible under a cross-easement agreement. On October 31, 1984, two week after Burlington opened, Century Supply erected concrete barriers which prevented vehicular access between its lot and the Burlington lot. Plaintiff, with Burlington's cooperation, sued Century Supply. Plaintiff's request for injunctive relief was denied by the court in that action. Sheldon Harris, a vice-president for plaintiff, testified that when plaintiff lost the suit to Century Supply the parties here began discussing the construction of a parking garage. Ronald L. Boorstein, an attorney for plaintiff, testified that in September or October of 1985 he and Harris observed that the barricades had been pushed aside. Dave Miletic, Burlington's store manager, testified that to his knowledge the barriers had never been moved.

In August 1984, plaintiff obtained an oral option to use 100 spaces in the Scottsdale lot for the 20-year lease term. A written lease agreement with Scottsdale was drafted but not executed by plaintiff. The rent was to be approximately $18,000 per year for 15 years. After several months, the Scottsdale managers denied Burlington the use of the Scottsdale lot and had Burlington remove the signs directing its customers to that lot. David Katz, an owner of the Scottsdale shopping center, testified for Burlington that permission to use the 100 parking spaces was withdrawn when plaintiff failed to pursue the matter.

Harris and Boorstein testified for plaintiff that Burlington repeatedly indicated that it was not interested in using any parking space in the Scottsdale lot for its customers or employees. Burlington's witnesses denied making such statements.

In addition, plaintiff alleged that Burlington failed to maintain the roof and ceiling of the building. Burlington negotiated the lease and the parent company agreed to certain guaranties of the subsidiary's rent, and the subsidiary agreed to maintain the premises, including the roof.

Robert Lee, a roofing contractor, testified for plaintiff that in July he inspected the roof and found water damage inside. Plastic had been put on the ceiling to keep the water from getting on the merchandise. In September 1986 he inspected the outside of the roof. Lee found severe deterioration. He recommended a complete new roof at an estimated cost of $149,348.

In April 1985, due to inadequate parking, Burlington began partially abating its rent payments by $5,000 per month. In November 1985, Burlington increased the abatement to $10,000 per month. On March 26, 1986, Burlington informed plaintiff that as lessor it was in default because of the inadequate parking. On July 31, 1986, Burlington moved to 8320 South Cicero Avenue. This smaller store was purchased by the parent company.

Roy Evans testified for Burlington as an architect and engineer. He stated that a building the size of the Cicero Avenue store, 94,000 square feet, was required under the Chicago zoning ordinance to have 225 parking spaces. His clients generally require 4 1/2 to 5 parking spaces per thousand feet. Moreover, it is best to have the parking visible from the street. Here, parking was inadequate even when the lease was originally signed. Belmonte, Burlington's regional manager, also testified that the parking was inadequate at all times. Miletic testified that the parking was adequate when all three lots were available.

Robert Grapski, general regional manager for Burlington, testified as to the sales and square footage for the six Chicagoland stores from 1980 through 1986. Grapski calculated Burlington's losses on the basis of the sales per square foot. At the five other Chicago area stores, the average sales were $141.68 per square foot. At the 8101 south Cicero store, sales were $90.93 per square foot. Grapski concluded that Burlington lost $345,000 in revenues in 1985 and $287,000 in the first nine months of 1986 partly as a direct result of the parking problems.

From April 1985 through December 1986, Burlington withheld $287,198.87 in rent payments. In addition, Burlington did not pay its 90% share of the actual out-of-pocket expenses, $52,225.94, that plaintiff incurred during the occupancy, and withheld its share of real estate taxes.

Plaintiff filed suit against defendants, seeking an injunction requiring Burlington to perform its obligations under the lease; an injunction preventing Burlington from occupying its new premises; a declaratory judgment that the lease is in full force and effect and requiring Burlington to continue to pay rent until the property was released; damages for all past-due rent; damages for all tenant expenses under the lease, including the cost of a new roof; plaintiff's costs and attorney fees; and the parent company's liability under the guaranty., Defendants filed a counterclaim seeking damages, alleging that plaintiff had constructively evicted Burlington and breached the lease.

The trial court held that defendants were liable for rent only through April 1987, which permitted a time reasonable for plaintiff to relet the premises. Plaintiff was awarded $333,862.54 for rent and other expenses which the tenant was required to pay under the lease. The court denied plaintiff's claim that defendants should pay $149,348 for roof repairs, and denied its claim that defendants were obligated for the remainder of the 20-year lease term. The trial court held further that plaintiff did not refinance the property so as to trigger the five-year guaranty provision. The parent corporation, however, was liable for six months' rent under an additional ...


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