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Infinity Broadcasting Corp. v. Prudential Insurance Co.

decided: March 9, 1989.

INFINITY BROADCASTING CORPORATION OF ILLINOIS, PLAINTIFF-APPELLANT,
v.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, DEFENDANT-APPELLEE



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 86 C 4207 -- John A. Nordberg, Judge.

Cudahy, Easterbrook, and Manion, Circuit Judges. Cudahy, Circuit Judge, dissenting.

Author: Manion

MANION, Circuit Judge.

Infinity Broadcasting Corporation of Illinois (Infinity) sued its landlord, the Prudential Insurance Company of America (Prudential) for declaratory relief. Infinity claimed that Prudential's construction of a 64-story building next to the building in which Infinity was a tenant would distort and destroy a significant amount of Infinity's radio transmissions, and that such action constitutes (1) a breach of the implied covenant of quiet enjoyment, and thus a breach of Infinity's lease and license; (2) constructive eviction; and (3) an anticipatory repudiation of the lease and license. The district court dismissed Infinity's complaint and amended complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief could be granted. Infinity appeals these dismissals, and we affirm.*fn1

I.

Prudential owns a 41-story office building named Prudential Plaza. In 1971 Plough Broadcasting Company obtained a lease for space on the fortieth floor of the building, and a license to install and use a broadcast antenna on the tower of the building. In 1981 Plough exercised its right for a ten-year extension, and in 1984 assigned that lease and license to Infinity. The lease extended through May 31, 1991, exclusively for the operation of a radio broadcast station.

Prudential announced in March of 1985 that it would build a 55-story office building, named Two Prudential Plaza, next to the original Prudential Plaza. It later increased Two Prudential Plaza's planned height to 64 stories. Infinity informed Prudential that the building would block its radio frequencies, distorting reception for some listeners and preventing reception for some others.*fn2 After some delay, Prudential denied any obligation to protect the broadcast signals, but stated a willingness to meet with Infinity to discuss the problem. Although the parties did meet, they were unable to resolve their differences, and Infinity filed this action.*fn3

On February 5, 1987, Judge Nordberg, in a well-considered opinion, dismissed Infinity's original complaint pursuant to Fed. R. Civ. P. 12(b)(6). On July 16, 1987, Judge Nordberg dismissed Infinity's amended complaint on the same basis. On appeal, Infinity presents the same three claims it raised to the district court: (1) breach of the covenant of quiet enjoyment; (2) constructive eviction; and (3) anticipatory repudiation.

Prudential initially challenges Infinity's standing to sue. Since Prudential's original contract was with Plough, and since Prudential did not consent to Plough's assignment to Infinity, Prudential alleges that Infinity lacks standing. We disagree. Even though the lease provision required such consent, Infinity still has a basis to file suit. As the district court found, the lease does not absolutely prohibit all assignments, and Prudential did not object to the assignment. Indeed, Prudential has accepted rental payments of at least $24,000 per year from Infinity and treated Infinity as a tenant since that assignment. Prudential therefore cannot now claim Infinity lacks standing to sue under the lease. Woods v. North Pier Terminal Company, 131 Ill. App. 3d 21, 475 N.E.2d 568, 570, 86 Ill. Dec. 354 (1st Dist. 1985) (if landlord does not treat assigned leasehold as void, restrictions on assignment are deemed waived); Kaybill Corporation, Inc. v. Cherne, 24 Ill. App. 3d 309, 320 N.E.2d 598, 607 (1st Dist. 1974) (landlord waived his right to prohibit assignment, and gave implied consent, by accepting rent from assignee).

After determining that Infinity had standing, the district court concluded that there was no cause of action under any of Infinity's three theories which would constitute a real controversy warranting declaratory relief, and therefore granted Prudential's motion to dismiss. When reviewing a trial court's dismissal of a claim under Fed. R. Civ. P. 12(b)(6), we assume the well-pleaded allegations of the complaint are true. First Interstate Bank of Nevada v. Chapman & Cutler, 837 F.2d 775, 776 (7th Cir. 1988). A plaintiff fails to state a claim under Rule 12(b)(6) only if he "can prove no set of facts upon which relief may be granted." Id. (citing Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957)). All reasonable inferences must be drawn in the light most favorable to the plaintiff. Gomez v. Illinois State Board of Education, 811 F.2d 1030, 1039 (7th Cir. 1987).

Granting a declaratory judgment is within the district court's sound discretion. Cunningham Brothers, Inc. v. Bail, 407 F.2d 1165, 1169 n.3 (7th Cir.), cert. denied, 395 U.S. 959, 89 S. Ct. 2100, 23 L. Ed. 2d 745 (1969). We may only substitute our own judgment if the exercise of that discretion in denying the declaratory relief was "erroneous." Id. A plaintiff will have raised a cause of action for a declaratory judgment if "the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Preiser v. Newkirk, 422 U.S. 395, 402, 45 L. Ed. 2d 272, 95 S. Ct. 2330 (1975) (quoting Maryland Casualty Company v. Pacific Coal and Oil Company, 312 U.S. 270, 273, 85 L. Ed. 826, 61 S. Ct. 510 (1941)).

II.

A. Covenant of Quiet Enjoyment

The primary issue in this case is whether the interference with Infinity's radio waves from the construction of Two Prudential Plaza constitutes a breach of the covenant of quiet enjoyment. Such a covenant is implied in all leases in Illinois. Blue Cross Association v. 666 North Lake Shore Drive Associates, 100 Ill. App. 3d 647, 652, 427 N.E.2d 270, 273, 56 Ill. Dec. 190 (1st Dist. 1981). The covenant is ...


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