December 31, 1994," the Tuckers agreed to enter into a Master Lease with respect to the WS Mall. If they failed to do so, § 5.15(f) was triggered, whereby the defendants "became . . . personally obligated." The Tuckers do not dispute that the WS Mall loan remains unpaid or that a Master Lease was never executed.
"Conditions precedent . . . are not favored by Illinois courts, and contract will not be construed as having conditions precedent unless required to do so by plain, unambiguous language." Boulevard Bank Nat'l Ass'n v. Philips Med. Sys. Int'l B.V., 811 F. Supp. 357, 365 (N.D. Ill. 1993), amended on other grounds, 827 F. Supp. 510 (N.D. Ill. 1993), aff'd, 15 F.3d 1419 (7th Cir. 1994). Therefore, the Tuckers' argument that the condition precedent is "implicit in § 5.15(e)" is to no avail.
(Defs.' Resp. to Pl.'s Mot. for Summ. J. at 26.) Having failed to create a factual issue with respect to the existence of a condition precedent, let alone its failure, the Tuckers cannot withstand GECC's summary judgment motion as to this defense.
G. Statute of Frauds
First, the defendants claim that since the Master Lease, provided for under § 5.15(a), does not exist, it violates the Statute of Frauds and is unenforceable. This may be a sound argument, except that GECC is not seeking to enforce the Master Lease, but the Tuckers' personal obligation set forth in § 5.15(f) of the Master Loan Agreement. There is no dispute that the Agreement itself is in full compliance with the Statute of Frauds.
Second, the defendants argue that § 5.15 is an executory "agreement to agree," i.e., an agreement to lease in the future. They further assert that an agreement to lease is invalid under the Statute of Frauds in the absence of a written lease. Thus, they conclude, § 5.15 is invalid. The authority the Tuckers cite in support of this syllogism, Libby-Broadway Drive-In, Inc. v. McDonald's Sys., Inc., 72 Ill. App. 3d 806, 391 N.E.2d 1, 3, 28 Ill. Dec. 802 (1979), is inapposite. In McDonald's Sys., the defendants orally promised that if the plaintiffs relinquished an option on one restaurant and sold another, the defendants would grant the plaintiffs comparable franchises. 391 N.E.2d at 2. The court held that the defendants' oral promise was unenforceable under the Statute of Frauds, reasoning that there was no difference between enforcing an oral lease and an oral promise to enter into a lease. Id. at 4. The instant case is distinguishable from McDonald's Sys. because, as argued above, GECC is not seeking to enforce the Tuckers' promise to enter into a Master Lease, embodied in § 5.15(a), but their promise to assume personal liability in the absence of a Master Lease, under § 5.15(f).
Thus, there is no genuine issue of fact that the enforcement of § 5.15(f) is barred by the Statute of Frauds, entitling GECC to summary judgment.
H. Unclean Hands
The unclean hands defense is not available in an action at law. American Nat'l Bank & Trust Co. v. Levy, 83 Ill. App. 3d 933, 404 N.E.2d 946, 948-49, 39 Ill. Dec. 355 (1980). GECC's declaratory judgment claim is an action at law since the underlying claim is a breach of contact. See Moretrench Am. Corp. v. S.J. Groves & Sons Co., 839 F.2d 1284, 1286 (7th Cir. 1988). Moreover, the unclean hands doctrine requires a showing of "misconduct [on behalf of the plaintiff] in connection with the very transaction at issue." Ellis v. Photo Am. Corp., 113 Ill. App. 3d 493, 447 N.E.2d 852, 856, 69 Ill. Dec. 417 (1983). To show GECC's misconduct, the Tuckers reargue the economic duress and commercial frustration defenses, on which I have granted summary judgment. See supra. For these reasons, I do the same with respect to the unclean hands defense.
I. Failure to Mitigate Damages
The Tuckers assert that "GECC has the affirmative duty to mitigate whatever damages it claims" and repeatedly state that "GECC offers no evidence whatsoever to support its burden of proof on this issue. (Defs.' Resp. to Pl.'s Mot. for Summ. J. at 28, 30.) The defendants misunderstand the allocation of burdens. Failure to mitigate damages is an affirmative defense on which the Tuckers have the burden of proof. Rozny v. Marnul, 43 Ill. 2d 54, 250 N.E.2d 656, 666 (1969). Mitigating damages means avoiding damages through the exercise of "reasonable effort without undue risk, expense, or humiliation." Pioneer Bank & Trust Co. v. Seiko Sporting Goods, 184 Ill. App. 3d 783, 540 N.E.2d 808, 812, 132 Ill. Dec. 886 (1989). Thus, it is the Tuckers' task to create a genuine issue of material fact that GECC failed to mitigate, i.e., failed to exercise reasonable effort.
The defendants state that GECC did not insist that the receiver appointed to run the WS Mall "do anything to improve WS Mall's financial performance or minimize the foreclosure period." (Defs.' Resp. to Pl.'s Mot. for Summ. J. at 29.) Their evidence is their expert's opinion that "there has been complete abandonment of the plan to improve, expand and develop WSM to maximize its income, competitive position, and overall value." (Marling Supp. Rep., Opinion 7.) However, the defendants do not argue and do not point to evidence showing that GECC's conduct was a failure to exercise reasonable effort under the circumstances.
The Tuckers further claim that since foreclosure, GECC has not implemented "any comprehensive leasing plan or anything else to maximize the income or value of WS Mall." (Defs.' Resp. to Pl.'s Mot. for Summ. J. at 29.) The defendants' evidence for this assertion is their expert's statement that "there's a lot of vacancy [in the WS Mall], a lot of boarded up stores." (Marling Dep. at 159.) Not only is this testimony woefully inadequate to substantiate the Tuckers' argument, it sheds no light on the issue at hand, whether GECC failed to exercise reasonable effort under the circumstances.
"The duty to mitigate may not be invoked by one who has breached a contract as grounds for hypercritical examination of the injured party's conduct, or as evidence that the injured party might have taken steps which seemed wiser or would have been more advantageous to the breaching party." Pioneer Bank & Trust Co., 540 N.E.2d at 813. Accordingly, since the Tuckers have failed to present sufficient evidence from which a reasonable factfinder could conclude that GECC failed to mitigate its damages, plaintiff's motion for summary judgment on this issue is granted.
J. The Claims are Premature and Speculative
The contention that GECC's damages are premature and speculative amounts to a restatement of arguments I have already rejected, most importantly the meaning of the phrase "all rents which would become due under such a WS Mall Master Lease as provided in Subsection (a) above less amounts received by GECC from occupancy tenants" under 5.15(f) of the Master Loan Agreement.
What remains to be addressed is the Tuckers' Motion to Strike Declaration of Lawrence S. Teter. The plaintiff uses the Declaration as evidence that its damages are not speculative. The Tuckers argue that Mr. Teter's Declaration does not comply with Fed. R. Civ. P. 56(e). The rule requires that the affidavits in support of a motion for summary judgment "be made on personal knowledge;" it does not mandate, as the Tuckers imply, that the affidavits " state that they are made on personal knowledge." Moreover, for the purposes of a summary judgment motion, I can consider evidence if it is admissible at trial. Northlake Mktg. & Supply, Inc. v. Glaverbel S.A., 861 F. Supp. 653, 656 (N.D. Ill. 1994). Mr. Teter has been GECC's Investment Manager for six years. The major import of Mr. Teter's Declaration is the calculation of damages. The Declaration details the method he employed and is supported by the Management Summary for the WS Mall, Month Ending December 31, 1995, to which Mr. Teter refers in making his calculation. The Management Summary is admissible as a business record. Fed. R. Evid. 803(6).
Consequently, were Mr. Teter to give testimony identical to the substance of the Declaration, such testimony would be admissible at trial.
The Tuckers also argue that the Declaration must be struck and GECC, sanctioned, because, in violation of Fed. R. Civ. P. 26(a)(1) and 26(e), the plaintiff never disclosed to the Tuckers the damages computation method, the evidentiary support for the method and the figures, and the fact that Mr. Teter would be a witness at trial. The Tuckers claim that this failure to disclose "irreparably prejudiced" them because discovery is closed and they cannot depose Mr. Teter. (Defs.' Mot. to Strike at 9.)
Underlying the Tuckers' prejudice argument is the notion that Mr. Teter's Declaration unfairly surprised them. This cannot be the case. Mr. Teter's Declaration relies on a formula which GECC has maintained to be the interpretation of § 5.15(f) from the outset of this suit. The formula utilizes data which, GECC claims, it produced to the Tuckers months ago.
The Tuckers had the opportunity to challenge these figures, but have not done so.
The Tuckers have not explained what deposition of Mr. Teter would accomplish that the defendants could not have accomplished previously.
Accordingly, I deny the Tuckers' Motion to Strike Declaration of Lawrence S. Teter.
For the reasons stated above, the defendants' motion for summary judgment is denied and the plaintiff's motion for summary judgment is granted.
Plaintiff is given until October 17, 1997 to provide a statement of damages supported by affidavit as well as a proposed form of judgment. Defendants will have until November 14, 1997 to file a response. Status is set for November 21, 1997, at 10:00 a.m.
Elaine E. Bucklo
United States District Judge
Dated: September 23, 1997