APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. HONORABLE JOHN HOURIHANE, JUDGE PRESIDING.
Petition for Leave to Appeal Denied December 6, 1995.
The Honorable Justice Rizzi delivered the opinion of court: Greiman, P.j., and Tully, J., concur.
The opinion of the court was delivered by: Rizzi
JUSTICE RIZZI delivered the opinion of the court:
Plaintiff, Bond Drug Company of Illinois (Bond), filed a declaratory judgment action against defendant, Amoco Oil Company (Amoco), seeking a judgment that the contract between the parties is valid, specific performance of the contract and other relief. Amoco filed a counterclaim seeking rescission of the contract and a judgment that it be excused from performance of the contract because of unconscionability. The trial court granted Amoco's motion for summary judgment and denied Bond's motion for summary judgment. Bond has appealed. We reverse the summary judgment in favor of Amoco; reverse the denial of Bond's motion for summary judgment; and remand the case for another hearing and reconsideration of Bond's motion for summary judgment and for further proceedings.
Amoco owned a parcel of real estate at the corner of Fairbanks and Ohio streets (the Premises) in Chicago. The Premises was occupied by an Amoco gas station pursuant to an Amoco lease arrangement. As a result, there were underground gasoline storage tanks on the Premises. On December 21, 1984, Amoco entered into a contract (Exchange Agreement) with Bond concerning the Premises. Bond is a subsidiary and real estate arm of Walgreen Company (Walgreen). Bond wanted to acquire the Premises as a site for a Walgreen drug store.
The Exchange Agreement provides, in part, that Bond is to deposit the purchase price of $1,175,000 into an escrow account; Amoco is to designate a tract or tract of lands it desires to acquire in exchange for the Premises; the exchange tract or tracts shall have an aggregate value of approximately $1,175,000; Bond is to purchase the exchange tract or tracts with the funds deposited in the escrow account, and then convey the tract or tracts to Amoco; the final closing under the Exchange Agreement is to take place two years after Bond deposits the $1,175,000 in the escrow account; and at the final closing Amoco will convey title to the Premises to Bond, and Amoco will receive any amount of money remaining in the escrow account. Paragraph 17 of the Exchange Agreement provides that if zoning, building, fire or health code violations are found to exist on the Premises prior to Bond taking title and possession, Amoco shall correct them.
After executing the Exchange Agreement, in 1985 Bond paid an additional $100,000 to Amoco's gasoline station lessee of the Premises for a waiver of the lessee's right of first refusal on any sale of the Premises by Amoco. On October 7, 1985, Bond deposited the $1,175,000 into the escrow account. In 1986, Amoco designated the exchange tract of land it desired in Wauwatosa, Wisconsin, which was purchased by Bond for Amoco with funds from the escrow account. Amoco has since had use and possession of that tract for a gas station.
In September 1987, shortly before the final closing under the Exchange Agreement, an Amoco lawyer charged with closing the transaction, notified Bond that Amoco wanted to test the Premises for groundwater contamination that might have been caused by leaking underground gasoline storage tanks. Thereafter, because of Amoco's requests the final closing was repeatedly deferred. On May 27, 1988, Amoco found that there was environmental contamination on the Premises that would have to be corrected. On April 17, 1989, pursuant to the Illinois Environmental Protection Act (EPA), the Illinois Environmental Protection Agency sent Amoco a notice of discharge or release of petroleum into the environment at the Premises caused by leaking underground gasoline storage tanks. The EPA requires Amoco to correct the EPA violations existing on the Premises. See 415 ILCS 5/22.18 (West 1992).
Amoco has spent $532,000 to clean up the Premises contamination and surmises that it could cost as much as an additional $500,000 to complete the job. The record suggests, however, that the Premises has appreciated in value between the execution of the Exchange Agreement and the discovery of the Premises contamination; and the record suggests a possibility that if the Exchange Agreement is nullified, Amoco could either develop the site with an office building and sell it to a third party or sell the Premises to a third party who would erect an office building on the site.
On November 17, 1989, Amoco advised Bond that it would not convey the Premises to Bond as provided in the Exchange Agreement and that it considered the Exchange Agreement terminated because of the unexpected cost of having to correct the Premises contamination. Attempts by Bond to persuade Amoco to fulfill the terms of the Exchange Agreement failed and this case ensued. The $1,175,000 that Bond put into the escrow account remains in the account except for the money Bond used to acquire the Wauwatosa tract for Amoco. Bond has fully performed its obligations under the Exchange Agreement and desires to go ahead with the final closing of the Exchange Agreement.
The first issue that must be addressed on appeal is whether paragraph 17 of the Exchange Agreement is applicable to the dispute between the parties. Paragraph 17 provides:
AMOCO warrants that AMOCO has received no notices from any city, village or other governmental authority of zoning, building, fire or health code violations in respect to the PREMISES that have not been heretofore corrected and if any violations occur or notices are received as to the same prior to the time BOND takes title and possession, AMOCO shall promptly advise BOND of same and AMOCO shall correct same, unless same is due to BOND's fault. If same is due to BOND's fault, BOND shall promptly cause the violations to be corrected at its expense.
In entering summary judgment in favor of Amoco, the trial court found that paragraph 17 of the Exchange Agreement did not obligate Amoco to correct the EPA violations on the ...