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Chicago Transparent Products, Inc. v. American Natioanl Bank and Trust Company of Chicago

November 19, 2002


Appeal from the Circuit Court of Cook County, Chancery Division. 90 CH 9069 93 CH 8699 The Honorable Thomas A. Hett Bernetta D. Bush Judges Presiding.

The opinion of the court was delivered by: Justice Cerda


In this appeal, defendant, American National Bank and Trust Company of Chicago, as trustee under trust number 25628, dated December 29, 1967 (the Land Trust), contends that the trial court erred in: (1) finding plaintiff, Chicago Transparent Products, Inc. (CTP), did not breach its sublease; (2) denying the Land Trust's motion for substitution of judge or, in the alternative, in granting summary judgment in favor of CTP; and (3) denying the Land Trust's motion to reconsider and modify the court-ordered escrow agreement. In its cross-appeal, CTP contends that the court erroneously permitted the Land Trust to participate in the appraisal process after granting CTP's motion for summary judgment. We affirm in part and reverse and remand in part.


In 1972, Sara Lee Corporation (Sara Lee) entered into a lease for property located at 2700 North Paulina Street in Chicago. The property was a manufacturing and warehouse complex consisting of a main building and three connected buildings. The main building was owned by the Land Trust, while the connected buildings were owned by another trust and are not involved in these proceedings.

Sara Lee's lease for the main building contained an alterations provision, which provided in part:

"(b) Alterations. Lessee shall not make or cause to be made any alterations, additions or improvements to the demised premises of a cost of $50,000 or more without the prior written consent of Lessor."

The lease further required Sara Lee to keep the property in good repair and provided an expiration date of April 30, 1992, with an option to extend until April 20, 2002.

In a separate document, Sara Lee was given the option to purchase the property for its fair market value. The option agreement required that the property be valued by each party selecting an appraiser, who would then select a third appraiser.

In 1978, Sara Lee subleased the main building to CTP. The sublease was subject to all of the terms and conditions enumerated in the lease between Sara Lee and the Land Trust, including the alterations provision. However, the sublease contained its own option to extend the original lease for an additional five years. Sara Lee's option to purchase was also assigned to CTP.

1990 Option to Purchase Litigation

In early 1990, CTP initiated the appraisal process as required by the option to purchase agreement. The appraisers agreed to a fair market value of $775,000, and on April 3, 1990, CTP notified the Land Trust of its desire to exercise its option to purchase the property.

On September 17, 1990, prior to closing, CTP filed a complaint against the Land Trust alleging the existence of an environmental hazard on the property. In response, the Land Trust demanded fulfillment of CTP's contractual obligations under the option to purchase. After CTP refused to close without performance of an environmental study, the Land Trust filed a counterclaim seeking a declaratory judgment that the option to purchase agreement was null and void due to CTP's breach. The 1990 option to purchase litigation remained unresolved.

Alterations Provision Litigation

On September 24, 1993, the Land Trust filed a complaint against CTP and Sara Lee, alleging they breached the alterations provision contained in the lease. The complaint alleged that CTP made alterations to the main building totaling $77,293.19. The Land Trust requested possession of the building, damages to restore the building, attorney's fees, and costs. On November 19, 1993, the 1990 option to purchase litigation was consolidated with the litigation over the alterations provision. 1997 Option to Purchase Litigation

On October 9, 1997, CTP informed the Land Trust that it again wished to initiate the appraisal process as defined by the option to purchase agreement. On October 31, 1997, the Land Trust informed CTP that, due to pending litigation regarding CTP's 1990 breach of the option agreement, it believed CTP no longer had a legal right to purchase the property. CTP responded that the option to purchase was still valid and requested the Land Trust's participation in the appraisal process. The Land Trust did not obtain an appraisal of the property.

On March 17, 1998, CTP filed a second amended complaint, adding count VI. Count VI requested a declaratory judgment that CTP had properly exercised its option to purchase in 1997, and was entitled to purchase the property at the value established by its appraiser. In response, the Land Trust raised two affirmative defenses: (1) that CTP had breached the lease by violating the alterations provision; and (2) that CTP had breached the option to purchase provision by failing to close on the property after exercising the option in 1990.

The 1997 option to purchase action was consolidated with the alterations provision cause of action, and the parties filed cross- motions for summary judgment on the issue of alterations. In denying the motions, trial court Judge Thomas Hett stated he could not make a decision without hearing evidence on the issue. He further stated that bricking up the loading dock and putting in a new employee entrance sounded like alterations, but he was "worried about how much of the electrical was for replacing whatever was there because it was burned out and what was an addition to that [sic] service they had." The judge proceeded with a bench trial on the alterations issue on August 11, 1999.

At trial, invoices attached to a stipulation established that in late-1989, CTP hired Taylor Electric to install 2,000 amp electrical service and an 800 amp feeder to an existing electrical distribution panel. Taylor Electric also cleaned and tightened the existing electrical switchgear. The cost of labor and materials associated with this project totaled $47,742. The invoice specifically itemized $1,350 for the cost of cleaning and tightening the existing switchgear.

Also in late-1989, CTP hired Old Chicago Construction Company to brick up the loading dock in the main building, install a concrete walkway, install a gate, and repair damaged walls. CTP paid Old Chicago $26,900 for its services.

Alan Edelstein, an electrical contractor, testified as an expert witness for the Land Trust. Edelstein stated that he saw two electrical services on the property -- an older 1,600 amp service and a newer 2,000 amp service. He further stated that the cleaning and tightening work, for which Taylor Electric charged $1,350, was probably necessitated by the electrical project. Edelstein estimated that it would cost about $10,000 to restore the electrical system to its previous condition.

Marilyn Cooper, an agent of the Land Trust, testified that in 1988, Stanley Manne, the owner of CTP, contacted her and requested permission to install additional electric power for CTP's equipment. She did not grant permission.

Paul Rosenberg, an electrician/electrical contractor, testified as an expert for CTP. He stated CTP needed additional electrical service to run its operations, and had to brick over the loading dock to install the new switchboard next to the old system. Rosenberg stated that the cleaning and tightening work was routine maintenance and was not associated with the electrical project. He further stated that only $3,340 of Old Chicago's bill was for work related to the new electrical system.

Stanley Manne testified that in 1989, CTP acquired new business, which required the expansion of the electrical system. He stated that the work done by Old Chicago was done in all four buildings, not just the main building. The repair of walls occurred in one of the connected buildings and Manne estimated the cost to be from $5,000 to $7,000. Manne further testified that the Old Chicago bill included repair of the rear loading dock, which was not in the main building, and some general maintenance, such as securing loose floor tiles and repairing ceilings. Manne said he never discussed the electrical work with Cooper because he considered it an addition of equipment, not a building modification.

On cross-examination, Manne testified that Old Chicago built a concrete sidewalk and a new employee entrance, put in fencing, removed the overhead loading dock door, bricked over the loading dock, and built a wall and a concrete ...

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