the Lease on the part of [Lifecare] to be performed." In accordance with the lease, Lifecare delivered notice and a copy of the assignment to PNP. At the time of assignment, Lifecare still had not made any payments pursuant to the lease amendment.
In December 1995, PNP received the first rental payment since the lease was first executed in December 1992. M & T delivered a check in the amount of $ 347.58, although more than $ 29,000.00 was owed at the time. For the following sixteen months, M & T submitted monthly checks substantially less than what was owed under the lease amendment. In fact, by March 1997, M & T had paid PNP a total of $ 39,262.57. However, more than $ 340,000.00 was still due. Thus, on February 29, 1996, PNP sent Lifecare notice of default. On March 25, 1996, PNP filed a two count complaint against Lifecare for breach of the lease and guarantee agreement.
On March 21, 1997, PNP moved for summary judgment. In its motion, PNP claims that Lifecare is contractually bound by the lease and guarantee agreement to pay monthly rental charges. Lifecare in its cross-motion for summary judgment, claims that it does not owe any sums of money because its duty to pay rent was extinguished when M & T became assignee. Furthermore, Lifecare claims that PNP breached the lease by failing to maintain Northgate Plaza in a manner compatible with a children's daycare center.
Federal Rule of Civil Procedure 56(c) provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Salima v. Scherwood South, Inc., 38 F.3d 929, 931 (7th Cir. 1994). "One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims and defenses." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).
When considering all the evidence presented in a motion for summary judgment, a court cannot make credibility determinations nor can it choose between competing possible inferences. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). The court views the record, and resolves all reasonable inferences drawn from the record, in the light most favorable to the non-moving party. Plair v. E.J. Brach & Sons, Inc., 105 F.3d 343, 346 (7th Cir. 1997). Accordingly, if the evidence presented by the parties is subject to conflicting interpretations, or if reasonable minds could differ as to its significance, summary judgment must not be granted. See O'Connor v. Chicago Transit Auth, 985 F.2d 1362, 1366 (7th Cir. 1993).
Yet, the standard does nothing to alter the burden of proof. "If the non-moving party bears the burden of proof on an issue, . . . that party may not rest on the pleadings and must instead show that there is a genuine issue of material fact." Sample v. Aldi, Inc., 61 F.3d 544, 547 (7th Cir. 1995). The non-moving party, therefore, will not survive summary judgment with merely a scintilla of evidence supporting its position. Essex v. United Parcel Serv. Inc., 111 F.3d 1304, 1308 (7th Cir. 1997). Instead, "the question is whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. Finally, "summary judgment is appropriate in a matter of contract interpretation when no issues of fact exist because the language of the contract is unambiguous." Grundstad v. Ritt, 106 F.3d 201, 205 (7th Cir. 1997).
The threshold issue in this case is one of contract interpretation: whether PNP is liable for rental payments under the lease and guarantee agreement after assigning the lease to its franchisee. Neither party disputes the existence of the documents or their mutual assent to be bound at the time of execution. Rather, Lifecare claims that the subsequent assignment of all liability to the franchisee extinguished its duty to pay any rental fees. The court concludes that this argument lacks merit.
Where contract terms are clear and unambiguous on their face, courts must give those terms their plain and ordinary meaning. Emergency Med. Care, Inc. v. Marion Mem'l Hosp., 94 F.3d 1059, 1061 (7th Cir. 1996); GCIU Employer Retirement Fund v. Chicago Tribune Co., 66 F.3d 862, 864 (7th Cir. 1995) ("extrinsic evidence should not be used where the contract is unambiguous"); Gross Common Carrier, Inc. v. Baxter Healthcare Corp., 51 F.3d 703, 709 (7th Cir. 1995) ("If pertinent provisions of a contract are unambiguous, a court need not examine extrinsic evidence to determine the contract's meaning."). Additionally, courts generally enforce contract clauses which continue to hold assignors liable on a contract even after a valid assignment. See e.g., Strauss v. Stratojac, 810 F.2d 679, 684 (7th Cir. 1987) ("an assignor of a contract remains liable on the contract after an assignment").
Lifecare correctly notes that Section 16.4 of the lease grants the right to assign the lease to a franchisee without prior approval by PNP. However, as a condition of assignment, Lifecare may not "assign away" its ultimate liability. Section 16.4 expressly states that Lifecare, as lessee and guarantor, "shall continue to remain liable on this Lease for all terms, including but not limited to payment of Rental . . . ." Therefore, Lifecare is liable to PNP pursuant to the plain language of the lease and guarantee agreement. Were the court to adopt Lifecare's position, it would permit a lessee and guarantor to escape years of liability by simply executing an assignment agreement which the secured party did not approve. Fundamental principals of contract law do not support such a result. Overseas Dev. Disc Corp. v. Sangamo Constr. Co., Inc., 686 F.2d 498, 504 (7th Cir. 1982) (assignment not effective toward obligor unless accepted by obligor); Contemporary Mission, Inc. v. Famous Music Corp., 557 F.2d 918, 924 (7th Cir. 1977) ("No one can assign his liabilities under a contract without the consent of the party to whom he is liable."); Gen. Elec. Railcar Leasing Serv. Corp. v. Carlson Mktg. Group Inc., 1992 U.S. Dist. LEXIS 501, 1992 WL 14175, at *3 (N.D. Ill. Jan. 16, 1992) ("It is axiomatic that a party cannot by its own act, without the consent of the other party, relieve itself from its contractual liability.").
Nevertheless, Lifecare raises several grounds to avoid liability on the lease and guarantee agreement. First, Lifecare suggests that PNP's failure to object to the assignment and subsequent submission of inadequate rental payments, constitute a waiver of its right to complain. Notwithstanding the fact that Lifecare cites no relevant authority for its argument, PNP's failure to object is entirely consistent with the lease terms.
As discussed above, section 16.4 of the lease expressly states that Lifecare will remain liable as lessee and guarantor after an assignment. Thus, PNP knew that if the franchisee defaulted, it could look to Lifecare for payment. To protest an assignment in the face of clear contract language protecting PNP's interests would have been unnecessary. Additionally, with regard to PNP accepting rental checks in a lesser amount than what was actually owed, section 5.6 of the lease provides:
The acceptance by [PNP] of a check for a lesser amount with an endorsement or statement thereon, or upon any letter accompanying such check, that such lesser amount is payment in full, shall be given no effect, and [PNP] may accept such check without prejudice to any other rights or remedies which [PNP] may have against [Lifecare].
Therefore, Lifecare's waiver arguments are without merit.
Second, Lifecare argues that its Cross-Motion for Summary Judgment should be granted because PNP failed to follow the proper default notification procedures outlined in "Exhibit A" to the lease. Exhibit A, entitled Assignment and Assumption Agreement, was included as part of the original lease agreement and intended for Lifecare's use when assigning the lease to a franchisee. However, Lifecare's reliance on Exhibit A is misplaced.
It is undisputed that Lifecare did not use Exhibit A when it assigned the lease to its franchisee. Rather, Lifecare and the franchisee executed their own version of an assignment and assumption agreement.
Therefore, Lifecare will not be heard to complain that PNP failed to follow the default procedure established in Exhibit A when Lifecare itself disregarded that document by entering into its own assignment agreement.
Moreover, section 16.4 of the lease agreement governs the default procedure PNP was obligated to follow:
In the event of any default under this Lease by the assignee of the original Tenant . . . landlord will not terminate this Lease or take any action to enforce any claim . . . without giving Lifecare at least fifteen (15) days prior written notice and the right to cure such default within said fifteen (15) day period.