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10/26/88 La Salle National Bank, As v. Union Oil Company of

October 26, 1988

LA SALLE NATIONAL BANK, AS TRUSTEE, PLAINTIFF AND APPELLANT AND COUNTERDEFENDANT-APPELLANT

v.

UNION OIL COMPANY OF CALIFORNIA ET AL., DEFENDANTS AND, APPELLEES AND COUNTERPLAINTIFFS-APPELLEES



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

532 N.E.2d 277, 177 Ill. App. 3d 259, 126 Ill. Dec. 592 1988.IL.1568

Appeal from the Circuit Court of Cook County; the Hon. Charles E. Freeman, Judge, presiding.

APPELLATE Judges:

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

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE RIZZI

Plaintiff, La Salle National Bank (La Salle), appeals from a judgment of the circuit court of Cook County awarding attorney fees to defendants Union Oil Company of California (Union Oil) and Allen Ehrlich. On appeal, La Salle argues that under section 2-611 of the Illinois Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-611), attorney fees and expenses may not be allowed (1) in the absence of any finding that an allegation of fact or denial thereof in plaintiff's pleadings is untrue or made without reasonable cause; (2) in the absence of a motion filed within 30 days of the entry of judgment; and (3) without specification or identification in the record of an allegation of fact or denial thereof in plaintiff's pleadings claimed by defendants to have been found untrue. La Salle also argues that there must be a reasonable relationship between the amount allowed and the offense committed by the party against whom the allowance is made. (Ill. Rev. Stat. 1985, ch. 110, par. 2-611.) We reverse.

This dispute involves a lease agreement originally entered into between Clark-Erie Building Corporation (Clark-Erie) and Pure Oil Company, a division of Union Oil. The lease provided that Clark-Erie would convey to Pure Oil Company (Union Oil) a parcel of land in Chicago, Illinois. The leasehold term commenced on February 1, 1968, and was to end on May 31, 1983. The lease also granted Union Oil an option to extend the term of the lease for an additional 10 years. However, to exercise this option, Union Oil was required to give Clark-Erie written notice of such at least 180 days before the original lease term expired on May 31, 1983.

In addition to the monthly rent, Union Oil was to pay Clark-Erie an annual "Gallonage Rental." This "Gallonage Rental" represented a fixed amount determined by the quantity of motor fuel delivered to the conveyed parcel of land. Union Oil was to deliver to Clark-Erie a sworn statement of the quantity of fuel delivered during the calendar year by January 30 of each year. Finally, the lease provided that if Union Oil failed to perform any covenant of the lease other than the payment of rent, Clark-Erie could terminate the lease if the default continued for more than a reasonable time after notice by Clark-Erie.

All notices between Clark-Erie and Union Oil were to be in writing. Unless otherwise designated, all notices were to be delivered personally or by certified mail to Clark-Erie in care of Hoffman & Davis of 33 South Clark Street, Chicago.

Five years following the inception of this lease, La Salle succeeded to the title of the conveyed parcel of land. Shortly thereafter, a dispute arose between Union Oil and La Salle as to a provision in the lease. From 1969 to 1982, Union Oil did not deliver the sworn statements to cover the "Gallonage Rental." Following the delivery of one sworn statement to cover the 12-month period from June 1, 1982, to May 31, 1983, La Salle advised Union Oil that this statement did not conform with the lease provision.

On November 30, 1982, Union Oil sent a letter by certified mail to La Salle expressing its intent to exercise the option to extend its lease for an additional 10 years. No notice was sent to Hoffman & Davis at the 33 South Clark Street address listed in the lease.

After receiving this letter from Union Oil, La Salle filed an action for a declaratory judgment that Union Oil's notice to exercise its option was ineffective because Union Oil failed (1) to deliver notice to Hoffman & Davis as delineated in the lease and (2) to deliver to La Salle annual sworn statements with respect to the "Gallonage Rental" from 1969 to 1982. Union Oil and Allen Ehrlich, who was a subtenant of Union Oil's, filed a counterclaim for declaratory judgment, specific performance and an injunction. Union Oil and Ehrlich also sought punitive damages, attorney fees and expenses for litigation.

On October 17, 1983, Union Oil and Ehrlich joined in a motion for summary judgment. Union Oil and Ehrlich sought a determination that the notice given to La Salle was sufficient to constitute a valid exercise of the option to extend its lease for 10 additional years. In its supporting brief, Union Oil and Ehrlich argued that "La Salle Bank, in initiating, pursuing and in the manner of conducting this case should be ordered to pay attorney fees, costs and damages to each defendant."

On November 3, 1983, the circuit court granted summary judgment in favor of Union Oil and Ehrlich. The circuit court found, inter alia, that Union Oil's exercise of the option to extend the lease was valid and that because La Salle had never given the required written notice to Union Oil regarding the gallonage rental, any issues relating thereto were moot. No finding was made that any allegations of fact in La Salle's pleadings were untrue or made without reasonable cause. The circuit court reserved jurisdiction ...


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