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BEST BUY CO., INC. v. HARLEM-IRVING COMPANIES

June 3, 1999

BEST BUY CO., INC. A MINNESOTA CORPORATION, AND BEST BUY STORES, L.P., A DELAWARE LIMITED PARTNERSHIP, PLAINTIFFS,
v.
THE HARLEM-IRVING COMPANIES, INC., AN ILLINOIS CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Levin, United States Magistrate Judge.

    MEMORANDUM OPINION AND ORDER

Pending is Defendant The Harlem-Irving Companies, Inc's. ("Harlem-Irving") Motion for Summary Judgment, which requests a finding of partial non-liability under Federal Rule of Civil Procedure 56(d). For the reasons set forth below, the Motion is denied, with the exception of an accord and satisfaction issue discussed herein.

FACTUAL BACKGROUND*fn1

Defendant Harlem-Irving operates an enclosed shopping mall in the Chicagoland area. Best Buy Company, Inc. ("Best Buy") is one of the tenants in that shopping mall. Best Buy is a leading retailer of consumer electronics, home appliances, computer software, music and video products. In late 1992, the parties signed a lease, and a rider/addendum. The lease required Harlem-Irving to deliver possession to Best Buy on or before December 15, 1992. However, the term of the lease did not begin until March 1, 1993. The lease term expires on February 29, 2008.*fn2

Under the lease, Best Buy is required to pay a proportionate share of common area maintenance ("CAM") charges. CAM charges are the costs associated with maintaining those portions of the mall which are not under the exclusive possession of any particular tenant (i.e. common areas). Examples of common areas include (internal or external) courtyards, parking lots, driveways, walkways, lobbies and landscape. Harlem-Irving assesses a monthly charge for additional rent against Best Buy and other tenants based on estimated CAM expenses, and each month, Best Buy pays one-twelfth of its estimated proportionate share of CAM expenses, subject to reconciliation of overpayments or underpayments after the end of the calendar year. Of a total of 540,596 square feet of gross leasable area, Best Buy leases 30,656 square feet. Best Buy's proportionate share of CAM charges is therefore about 6%. The lease excludes from Best Buy's share of CAM charges "office overhead, wages and salaries." Harlem-Irving attempted to charge Best Buy for all non-office wages and salaries, including management personnel. Best Buy objected and announced its view of the "office overhead, wages and salaries" exclusion clause as excluding from CAM not merely office wages and office salaries, but rather all wages and all salaries. Harlem-Irving's position is that the exclusion for "office overhead, wages and salaries" is an exclusion only for "office overhead, [office] wages and [office] salaries."

The lease also requires Best Buy to pay Harlem-Irving an additional administrative fee equal to seven (7%) percent of CAM charges. The lease, however, provides that Harlem-Irving should not assess the 7% fee against "real estate taxes and insurance." Best Buy reads this clause as an exclusion not merely for real estate insurance, but rather for all insurance. Harlem-Irving's position is that the exclusion pertains to "real estate taxes and [real estate] insurance."

Under the lease, repair of the parking lot is a CAM charge beginning in the sixth year after the rent commencement date. Repair of the roof is not a CAM charge, but is the sole responsibility of Harlem-Irving. Part of the surface of the parking deck also serves as part of the roof of the shopping mall. Best Buy has challenged charges for repair of the spalling parking deck.*fn3

Best Buy is challenging too, Harlem-Irving's assessment of CAM charges for training expenses, licenses and permits.

On July 26, 1995, Best Buy issued a protest letter disputing a variety of CAM charges. In pertinent part, the letter stated that management salaries should not be included in CAM charges because the lease "specifically excludes `. . . wages and salaries. . . .'" The letter also complained about parking ramp expansion joint replacement, accounting fees, security/maintenance office supplies and overhead, engineering and architectural fees, snow-melting machine, deck repair and reconstruction and audit rights. This letter did not complain about licenses, training expenses, permits or the inclusion of workers' compensation insurance premiums. By August 7, 1995, the parties reached a compromise agreement on the categories which Best Buy had protested. The agreement was for the amounts due in 1993, and it was entered into without prejudice to Best Buy's rights under the lease. The parties continue to be at odds over CAM charges assessed by Harlem-Irving for all years after the compromise.

ANALYSIS

I. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). See also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has produced evidence to show that it is entitled to summary judgment, the party seeking to avoid such judgment must affirmatively demonstrate that a genuine issue of material fact remains for trial. LINC Fin. Corp. v. Onwuteaka, 129 F.3d 917, 920 (7th Cir. 1997).

In deciding a motion for summary judgment, a court must "review the record in the light most favorable to the nonmoving party and to draw all reasonable inferences in that party's favor." Vanasco v. National-Louis Univ., 137 F.3d 962, 1998 WL 81458, at *2 (7th Cir. Feb.27, 1998). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Nevertheless, the nonmovant may not rest upon mere allegations but "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). See also LINC, 129 F.3d at 920. A genuine issue of material fact is not shown by the mere existence of "some alleged factual dispute between the parties," Anderson, 477 U.S. at 247, 106 S.Ct. 2505, or by "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Rather, a genuine issue of material fact exists only if "a fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented." Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

  II. AMBIGUOUS LANGUAGE IN THE LEASE AND THE DOCTRINE OF
    EJUSDEM GENERIS

The main disputed clause in the lease excludes from CAM "office overhead, wages and salaries." That phrase was inserted by Best Buy's attorney James Istas pursuant to negotiations between counsel for both sides. Because both sides participated to an apparently equal degree in the final drafting of the lease, its language will not be construed strictly against either party. Meade v. Kubinski, 277 Ill. App.3d 1014, 1020, 214 Ill.Dec. 733, 661 N.E.2d 1178, 1183 (1996).

Harlem-Irving relies on the doctrine of ejusdem generis to persuade this court to, as a matter of law, read the exclusionary phrase "office overhead, wages and salaries" as "office overhead, [office] wages and [office] salaries." Under the same doctrine, Harlem-Irving argues that the exclusionary phrase "real estate taxes and insurance" means "real estate taxes and [real estate] insurance." Best Buy disagrees with such an interpretation.

"The rule of ejusdem generis, while firmly established, is only an instrumentality for ascertaining the correct meaning of words when there is an uncertainty." Gooch v. United States, 297 U.S. 124, 128, 56 S.Ct. 395, 397, 80 L.Ed. 522 (1936). "Under the principle of ejusdem generis, when a general term follows a specific one, the general term should be understood as a reference to subjects akin to the one with specific enumeration." Norfolk & Western Railway Co. v. American Train Dipatchers, 499 U.S. 117, 129, 111 S.Ct. 1156, 1163, 113 L.Ed.2d 95 (1991).

Best Buy has presented two arguments as to why the doctrine of ejusdem generis does not apply to the lease language in issue. First of all, Best Buy argues that the complete list of CAM exclusions in the subject lease is much longer, including the following items: capital improvements or replacements, ground rent, interest, debt service, insurance, depreciation, amortization, real estate taxes or assessments, office overhead, wages and salaries. Best Buy argues that each item on this list is separate and distinct, such that there is no textual basis to assume that wages and salaries are not distinct items, equal in importance to all of the other enumerated items. (See Pl.Resp. at 10.) Second, Best Buy argues, somewhat aside from the particulars of ejusdem generis, that it is a basic rule of punctuation that commas are used to set off items in a series, with or without a comma before the conjunction preceding the last item on the list. (Id. at 10.) Thus, Best Buy maintains, under ordinary rules of punctuation, the phrase "office overhead," "wages" and "salaries" identifies each item as separate ...


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