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Coleman v. Madison Two Associates

September 10, 1999


The opinion of the court was delivered by: Justice Hartman

Appeal from the Circuit Court of Cook County. Honorable Lester D. Foreman, Judge Presiding.

Plaintiff Robert F. Coleman sought a declaratory judgment against, and monetary damages from, the following defendants: Madison Two Associates (Madison Two), the owner of the building in which plaintiff's law firm subleased office space; Hines Chicago Associates (Hines), Madison Two's managing partner; and NCNB National Bank, NationsBank and Nationbanc Services (collectively, NCNB), the prime leaseholder and plaintiff's sublessor. Plaintiff appeals the dismissal of his amended complaint, as amended, claiming that (1) NCNB breached its sublease with him in failing to give him proper notice of early termination of its "Underlying Lease" with Madison Two, its lessor; (2) the sublease and its consents to sublease required that Madison Two demand attornment as a condition precedent to termination of the sublease; and, alternatively, (3) Madison Two's letter proposing a new lease term was a demand for attornment which plaintiff accepted.

The record reflects that on June 30, 1986, NCNB leased space on the 56th floor of the building known as "Three First National Plaza" (Building) from Madison Associates, then owner of the Building. On March 19, 1990 and on June 20, 1990, Madison Two, as successor in interest to Madison Associates, and NCNB executed two amendments to the Underlying Lease. The first amendment added property located on the 20th floor of the Building to the Underlying Lease and then substituted the original property on the 56th and 20th floors with property located on the 53rd floor. The second amendment stated, "[t]he New Premises [on the 53rd floor] shall be substituted for the Original Premises [on the 56th and 20th floors] and all references in the Lease to the term 'leased premises' shall be deemed to be to the New Premises." The second amendment further provided:

"Either Landlord or Tenant may elect to terminate the Lease effective as of May 1, 1998 ("Early Termination Date") by giving not less than twelve (12) months' prior written notice to the other, in which case the Lease shall terminate on the Early Termination Date."

On February 15, 1991, NCNB sublet office space on the 53rd floor of the building to plaintiff, that term to commence on March 1, 1991, and end on September 30, 2000, "or on such earlier date upon which said term may expire or be canceled or terminated pursuant to any of the conditions or covenants of this Sublease or the Underlying Lease or pursuant to law." The sublease also provided that it would "be subject and subordinate to all of the terms, covenants, conditions and provisions of the Underlying Lease. Copies of the Underlying Lease have been delivered to and examined by Sublessee and made part of this Sublease Agreement." (Emphasis in original.) Pursuant to the terms of the sublease, communications and notices between NCNB and plaintiff were required to "be in writing and by phone facsimile simultaneously and shall be given or made by registered or certified mail." The sublease further provided that "Sublessor shall, no later than three (3) days after receipt thereof, give to Sublessee a copy of each notice and demand received from the Underlying Landlord concerning the Subleased premises and shall within such time give to the Underlying Landlord a copy, or the substance of, each notice and demand received from Sublessee concerning the Subleased Premises."

Madison Two (through Hines), NCNB and plaintiff then entered into an agreement entitled "Consent to Sublease." *fn1 On January 3, 1995, NCNB and plaintiff amended the sublease, adding additional space adjacent to the original premises, extending the term of the sublease through February 28, 2001, and also providing that "[e]xcept as hereto amended, the Sublease will continue in full force and effect in accordance with its terms. This Amendment shall not affect or limit Sublessor's early termination rights under the Underlying Lease." Plaintiff, NCNB and Madison Two (through Hines) executed a second "Consent to Sublease" which contained virtually the same language as the first "Consent to Sublease."

On January 15, 1997, NCNB notified Madison Two of its intention to "exercise[] its right to an early termination to be effective May 1, 1998," reminding Madison Two that it was "currently subleasing this space to [plaintiff] and, via a copy of this letter, [were] notifying him of [its] intention to proceed with this early termination." Notwithstanding the letter's statement that a copy was sent to plaintiff, he alleges that he never received notice of NCNB's intent to terminate early the Underlying Lease with Madison Two.

Several months later, in the Spring of 1997, plaintiff met with representatives of Hines to discuss leasing from Madison Two additional space on the 53rd floor. Hines agreed to present the additional space, which was leased to another, when, and if, it became available. At this time, Hines did not inform plaintiff that NCNB had opted for early termination of the Underlying Lease. Rather, Hines suggested that, should the additional space become available, Madison Two might be interested in restructuring plaintiff's sublease as a direct lease covering both the subleased premises and the additional space for a five-year term.

Plaintiff claims that it was not until about September 15, 1997, that he first learned of NCNB's intention to end the Underlying Lease on the early termination date, information which came from Theodore J. Minorini, Hines' representative. Minorini gave plaintiff a copy of NCNB's January 15, 1997 letter. On September 16, 1997, in a letter to plaintiff signed by Minorini, Hines submitted a "lease proposal." The letter continued, "[a]s you have requested I have given you two options with the [first] being subject to an existing tenant's rights." The "lease proposal," which was attached to the letter, set forth the two "options": the first option covered leased premises currently occupied by another tenant and was contingent on that tenant "not electing to renew its current lease"; the second option was for the premises already occupied by plaintiff. The "lease proposal" further specified a term for "[f]ive (5) years commencing May 1, 1998." Hines' "proposal" also contained the following "qualifications": it was "non-binding," valid for only thirty days, could be withdrawn at any time without notice by Madison Two, and was not "legally" binding "until such time as both parties formally execute and deliver a lease document."

On about October 8, 1997, plaintiff notified Minorini that he accepted Hines' offer without qualification or modification; however, Minorini telephoned plaintiff on October 17, 1997, advising him that Madison Two had decided to lease the premises occupied by plaintiff to another tenant, a financial institution, currently leasing space on the 53rd floor contiguous to plaintiff's premises. In an October 28, 1997 letter, Hines responded to plaintiff that its "lease proposal" was not a "demand" for attornment; and notified plaintiff that it "had not made such election or demand" to attorn. Nevertheless, Hines' letter reminded plaintiff that it had "suggested alternative space in the building to suit [plaintiff's] needs" and indicated its willingness to discuss that alternative. Hines also suggested that any issues concerning the sublease should be directed to NCNB, plaintiff's sublessor.

On November 5, 1997, plaintiff filed suit against the several defendants, alleging five grounds for declaratory relief: (1) the early termination clause contained in NCNB's Underlying Lease with Madison Two did not cover the premises on the 53rd floor; (2) NCNB's notice of early termination was from an entity entitled "NationsBank Services" and therefore did not comport with the Underlying Lease requirements; (3) Hines' September 16, 1997 letter containing the "lease proposal" was, in reality, a demand to attorn which plaintiff accepted; (4) alternatively, if the letter was not a demand to attorn, both "consent to sublease" agreements required that plaintiff be given the opportunity to attorn before the sublease could terminate early; and (5) alternatively, if Madison Two had discretion to demand attornment from plaintiff, it breached its covenant of "good faith and fair dealing" by exercising that discretion arbitrarily and capriciously." Plaintiff's complaint sought only declaratory relief to prevent the termination of his sublease.

Thereafter, Madison Two and NCNB both moved to dismiss plaintiff's complaint. On January 17, 1998, the circuit court granted both motions without prejudice, with leave to file an amended complaint. On February 17, 1998, plaintiff filed his amended complaint, which was substantially the same as his original complaint, adding only a second count which sought damages from NCNB for "failing to give plaintiff prior notice of early termination when it gave notice to the prime landlord," thereby breaching its "obligation to 'use its best efforts * * * to assist in relations with the Underlying Landlord.'" After filing his amended complaint, plaintiff also was granted leave to amend by including a request for damages in excess of the minimum jurisdictional amount. Following argument, the court dismissed plaintiff's amended complaint, as amended, for failure to state a cause of action, from which plaintiff appeals. *fn2

Under section 2-615, no action should be dismissed on a motion for failure to state a cause of action unless it clearly appears that no set of facts can be proved under the pleadings which will entitle plaintiff to relief. 735 ILCS 5/2-615 (West 1996); People ex rel. Daley v. Datacom Systems Corp., 146 Ill. 2d 1, 11, 585 N.E.2d 51 (1991). For the purpose of such a motion, all well-pleaded facts in the complaint are admitted as true, together with all reasonable inferences which may be drawn from them. Peter J. Hartmann Co. v. Capital Bank & Trust Co., 296 Ill. App. 3d 593, 600, 694 N.E.2d 1108 (1998); Barille v. Sears Roebuck & Co., 289 Ill. App. 3d 171, 174, 682 N.E.2d 118 (1997). The dismissal of a complaint with prejudice under section 2-615 involves a question of law as to whether the complaint sets forth facts ...

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