United States District Court, N.D. Illinois
July 2, 2003
THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.), Plaintiffs,
MASCON INFORMATION TECHNOLOGIES LIMITED, Defendants.
The opinion of the court was delivered by: ARLANDER KEYS, United States Magistrate Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, The Manufacturers Life Insurance Company (U.S.A.)
("Manulife"), moves this Court for Summary Judgment, pursuant to Rule 56
of the Federal Rules of Civil Procedure. Manulife alleges that
Defendant, Mascon Information Technologies Limited ("Mascon"), breached a
lease agreement with Manulife for the rental of commercial real property
and is liable to Manulife for damages. For the reasons set forth below,
the Court grants Plaintiff's Motion for Summary Judgment with respect to
liability, but denies Plaintiff's Motion with respect to damages,
attorneys' fees, and costs.
[270 F. Supp.2d
Manulife is a corporation incorporated under the laws of the State of
Michigan, with its principal place of business in Boston, Massachusetts.
(Manulife's Statement of Material Facts (hereinafter "Manulife's
Statement") ¶ 1.) Mascon is a corporation incorporated under the laws
of the State of Delaware, with its principal place of business in
Schaumburg, Illinois.*fn1 (Mascon's Answer to Second Amended Complaint
(hereinafter "Mascon's Answer"), at 1.)
On August 25, 1997, Manulife, as landlord, and Mascon, as tenant,
entered into a lease for the premises located at 1515 Woodfield Road,
Suite 450, Schaumburg, Illinois. (Mascon's Answer, at 2.) The parties
amended the lease on November 5, 1998, by executing the Amendment to
Lease Agreement (collectively, the "Lease"). (Plaintiff's Statement
¶ 7.) The term of the lease ran from January 1, 1998 to December 31,
2002. (Id. ¶ 8.)
Mascon initially ceased making rent payments due under the lease in
November 2001. (Manulife's Second Amended Complaint (hereinafter
"Manulife's Complaint") ¶ 8.) In January 2002, as a result of
Mascon's failure to pay rent, Manulife filed a forcible detainer action
in the Circuit Court of Cook County for eviction and rent for the period
of November 2001 through January 31, 2002. (Id.) The Circuit Court of
Cook County entered judgment in favor of Manulife and ordered Mascon to
pay the amount of $51,738.36, representing the amount of rent due for the
months of November 2001, December 2001, and January 2002. (Id. ¶ 9.)
Mascon paid the judgment to Manulife and subsequently paid rent to
Manulife for February 2002 and part of March 2002. (Id.)
In March 2002, Mascon once again ceased making rent payments to
Manulife. (Id.) In addition to failing to pay base rent, Mascon failed to
pay real estate taxes and other charges due under the lease for the
remainder of March 2002, and for the months of April 2002 through
December 2002. (Mascon's Answer, at 3.) Mascon admits to breaching the
lease with Manulife by failing to perform its obligations as required by
the lease. (Id.)
On September 11, 2002, Manulife filed this lawsuit to recover damages
resulting from Mascon's breach of contract. The case was initially
assigned to Judge Rebecca Pallmeyer, but on December 20, 2002, both
parties consented to proceed before this Court.
Manulife then filed a Motion for Summary Judgment, alleging that
Manulife should be awarded damages as a result of Mascon's failure to
perform its obligations as defined by the lease as a matter of law.
(Plaintiff's Motion for Summary Judgment, at 1.) Manulife alleges that
the total amount owed by Mascon is $163,147.72. (Marino Aff. ¶ 13.)
STANDARD OF REVIEW
The Court will grant summary judgment only if the pleadings and
supporting documents show that there is no genuine issue of material fact
and that the moving party is entitled to a judgment as a matter of law.
Fed.R.Civ.P. 56(c) (2003). A genuine issue of material fact exists if the
evidence is such that a reasonable jury could return a verdict for the
nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). In determining whether a genuine issue of material fact exists,
the Court views the facts in the light most favorable
[270 F. Supp.2d
to the nonmoving
party and draws all reasonable inferences in the nonmoving party's favor.
Shank v. William R. Hague, Inc., 192 F.3d 675, 681 (7th Cir. 1999).
The moving party in a motion for summary judgment bears the initial
burden of demonstrating that no genuine issue of material fact exists.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party's
burden is met, then the nonmoving party must set forth specific facts
showing that there is a genuine issue for trial in order to survive
summary judgment. Schacht v. Wisconsin Dep't of Corrs., 175 F.3d 497, 504
(7th Cir. 1999). In a summary judgment proceeding, the Court will
disregard all facts not properly supported by the record. Brasic v.
Heinemann's Inc., 121 F.3d 281, 284 (7th Cir. 1997).
Furthermore, pursuant to Local Rule 56.1(a)(3), the party moving for
summary judgment must provide a statement of material facts, asserting
that there are no genuine issues of material fact in dispute. The
statement must be structured in the form of numbered paragraphs. Loc. R.
56.1(a). The opposing party must respond to each paragraph by either
admitting or denying the allegations and specifically citing to
supporting materials showing the existence of a genuine factual dispute.
Loc. R 56.1(b)(3)(A).
Once properly supported, "all material facts set forth in the statement
required of the moving party will be deemed admitted unless controverted
by the statement of the opposing party." Loc. R. 56.1(b)(3)(B).
Similarly, all material facts properly supported in the opposing party's
Rule 56.1(b)(3)(B) statement "will be deemed admitted unless controverted
by the (reply) statement of the moving party." Loc. R 56.1(a). Failing to
support one's statement with a citation to the record is equivalent to an
admission of the others party's factual assertions. Garrison v. Burke,
165 F.3d 565, 567 (7th Cir. 1999).
In the instant case, Mascon did not file a Response Brief to the Motion
for Summary Judgment or a Rule 56.1 Statement in Response to Plaintiff's
Statement of Material Facts. By letter, dated April 29, 2003, Mascon's
counsel acknowledged that Mascon had not responded to the instant
motion, because it could not contest the motion. The Court finds that
Mascon's failure to respond results in its admission of all facts
asserted in, and properly supported by, Manulife's Rule 56.1 Statements
of Material Facts.
Having determined that Mascon has admitted all of the material facts
set forth in Manulife's Rule 56.1 Statement of Material Facts, the Court
turns to Manulife's substantive arguments. Manulife argues that the Court
should grant Manulife's Motion for Summary Judgment, because Mascon
breached the lease agreement by failing to pay base rent, real estate
taxes, and other charges for the time period required by the lease.
A. Illinois Law Applies
The law that governs a case based on diversity jurisdiction is
determined by looking to the conflict-of-law rules of the state in which
the federal court sits. Jean v. Dugan, 20 F.3d 255, 261 (7th Cir 1994)
(citing Klaxon Co. v. Sentor Electric Mfg. Co., 313 U.S. 487, 496
(1943)). In Illinois, "[a] lease is an agreement which gives rise to the
relationship of landlord and tenant. It is essentially a type of contract
and, as such, it is governed by the rules which govern contracts
generally." Williams v. Chicago Housing Auth., 144 F.3d 544, 547 (7th
Cir. 1998) quoting Midland Mgmt. Co. v. Helgason,
[270 F. Supp.2d
158 Ill.2d 98, 103,
630 N.E.2d 836, 839 (1994) (citations omitted). In breach of contract
cases, the Illinois Supreme Court applies the "most significant contacts"
test of the Restatement (Second) of Conflicts of Law. Bradley v. TNT
Skypack, Inc., 983 F. Supp. 1147, 1149 (N.D.Ill. 1997). The contacts
relevant to a choice-of-law decision include the place of contracting,
negotiation, performance, location of the subject matter of the contract
and the domicile, residence, place of incorporation, and business of the
In the present case, the subject property is located in Schaumburg,
Illinois, and Mascon's principal place of business is in Schaumburg,
Illinois. (Mascon's Answer, at 1-2.) Neither party has suggested that any
other jurisdiction has more significant contacts in this matter than
Illinois. Therefore, the Court finds that Illinois law governs the claims
in this case.
B. Breach of Contract
Manulife argues that the Court should grant its Motion for Summary
Judgment, because Mascon breached its contract with Manulife. Under
Illinois law, to state a cause of action for breach of contract, a
plaintiff must show: (1) the existence of a valid contract; (2) the
performance of the contract by plaintiff; (3) the breach of the contract
by defendant; and (4) a resulting injury to the plaintiff. Priebe v.
Autobarn Ltd., 240 F.3d 584, 587 (7th Cir. 2001).
In the instant case, the lease between Manulife and Mascon formed a
valid contract between the two parties, and Mascon's failure to pay base
rent, real estate taxes, and other obligations under the contract
constituted a material breach. MAN Roland Inc. v. Quantum Color Corp.,
57 F. Supp.2d 568, 570 (N.D.Ill. 1999) (a material breach occurs when a
party to the contract "fails to perform an element of the agreement
without which the contract would not have been made."). Notably, Mascon
admits to breaching the contract and does not allege that Manulife failed
to perform its obligations under the lease. And there is no dispute that
Manulife was injured by the breach. Therefore, the Court grants
Manulife's Motion for Summary Judgment with respect to liability.
Although Manulife appears to have satisfactorily performed all of its
obligations as required by the lease, it is not clear whether Manulife
satisfactorily performed all of its obligations as required by Illinois
law. Manulife fails to present any evidence that it took reasonable
measures to mitigate the damages caused by Mascon's breach. Under
Illinois law, "a landlord or his agent shall take reasonable measures to
mitigate the damages recoverable against a defaulting lessee." 735 ILCS
5/9-213.1 (West 1996). Furthermore, in Illinois, the landlord has the
burden of proving mitigation of damages. St. George Chicago, Inc. v.
George J. Murges & Associates, Ltd., 296 Ill. App.3d 285, 292,
695 N.E.2d 503, 508 (1st Dist. 1998); St. Louis North Joint Venture v. P
& L Enterprises, Inc., 116 F.3d 262, 265 (7th Cir. 1997) (applying
There is currently a split amongst the Illinois appellate courts
regarding whether a landlord's failure to present evidence of mitigation
bars the landlord from recovering against the tenant. Snyder v. Ambrose,
266 Ill. App.3d 163, 167, 639 N.E.2d 639, 641 (2nd Dist. 1994)
(establishing a burden upon the landlord to prove mitigation of damages
as a "prerequisite" to recovery); St. George Chicago, Inc., 296
Ill. App.3d at 293, 695 N.E.2d at 509 (1st Dist. 1998) (holding that a
landlord's failure to mitigate damages will not bar recovery, but will
cause otherwise recoverable damages to be reduced).
[270 F. Supp.2d
To date, the Illinois Supreme Court has not ruled on this issue.
Accordingly, this Court may look to intermediate appellate court
decisions as helpful, but not binding, evidence of what the Illinois
Supreme Court would do in this situation. Green v. J.C. Penney Auto
Insurance Co., Inc., 806 F.2d 759, 761 (7th Cir. 1986). The Court finds
the reasoning of the St. George court to be the more persuasive, and
finds that, although the landlord has the burden of presenting evidence
that it took reasonable measures to mitigate, a failure to do so will not
completely bar recovery. See Amcor Trust Co. v. Minnesota Diversified
Prods., Inc., No. 97 C 0614, 1998 WL 433770, at *5 (N.D.Ill. July 29,
1998) (applying Illinois law and finding that the landlord's failure to
mitigate damages is not an automatic and absolute bar to recovery).
In the instant case, a genuine issue of material fact exists as to
whether Manulife took reasonable measures to mitigate the damages caused
by Mascon's breach. Manulife's Rule 56 Statement of Material Facts does
not alleged that it attempted to mitigate its damages, nor has Manulife
directed the Court's attention to any evidence supporting such a
conclusion. "A determination as to whether a landlord took reasonable
measures to mitigate damages is generally a question of fact to be
determined by the trier of fact upon evaluation of all of the evidence in
the case." Amcor Trust Co., 1998 WL 433770, at *6. Because there is a
material fact in dispute, Manulife's Motion for Summary Judgment with
respect to damages is denied.
As noted previously, Manulife has the burden of presenting evidence to
show that it took reasonable measures to mitigate the damages caused by
Mascon's breach. Inexplicably, Manulife's attorneys failed to mention
mitigation in any of their filings. If Manulife's own research had failed
to reveal the importance of the mitigation issue under Illinois law,
Defendant Mascon's (albeit passing) reference to Manulife's lack of
mitigation in its Answer to the Second Amended Complaint should have
alerted Manulife that its mitigation measures (or lack thereof) needed to
be addressed. Perhaps counsel remained silent because he knew that his
client had not mitigated*fn2. Perhaps the oversight was just that
an oversight. But it is not within this Court's province to
resolve the speculation in the absence of evidence on mitigation.
Instead, absent a stipulation on the mitigation issue, the parties will
now be obligated to participate in further proceedings, prior to the
Court being able to determine damages an expense that could have
been easily avoided by properly documented summary judgment briefs.*fn3
D. Attorneys' Fees
Manulife further argues that Mascon is liable for Manulife's attorneys'
fees and costs as agreed to in the lease agreement.*fn4 The general rule
in Illinois is that,
[270 F. Supp.2d
in the absence of a statute or an agreement, the
successful litigant in a civil action may not recover attorneys' fees or
the ordinary expenses of litigation from his adversary. Losurdo Bros. v.
Arkin Distrib. Co., 125 Ill. App.3d 267, 274, 465 N.E.2d 139, 144
(1984). Provisions in contracts for awards of attorneys' fees and costs
are an exception to this rule. Id. at 275; Fox v. Fox Valley Trotting
Club, 8 Ill.2d 571, 579, 134 N.E.2d 806, 810-11 (1956) (holding that a
defendant who breached a lease was liable for attorneys' fees because the
defendant agreed to pay the fees in the lease).
Although Section 10(D)(c) of the lease between Manulife and Mascon
contains a provision for awarding fees to Manulife in the event of
Mascon's breach, Manulife has not yet presented evidence indicating the
total amount of hours expended, counsel's reasonable hourly rate, or the
costs associated with enforcing Mascon's contractual obligations. Losurdo
Bros., 125 Ill. App.3d at 275, 465 N.E.2d at 145 (holding that the
foundation for an award of attorneys' fees is the amount of time spent by
the lawyer on a case, the lawyer's ability, and the complexity of the
work). A party requesting fees must specify the amount of time expended
and describe the work performed. Id. Because Manulife's attorneys have
not presented detailed billing records indicating their time spent on
this matter, the Court will postpone deciding the issue of attorneys'
fees and costs until the Court is presented with time records and other
IT IS THEREFORE ORDERED that Plaintiff's Motion for Summary Judgment
be, and the same hereby is, GRANTED with respect to liability and DENIED
with respect to damages, attorneys' fees, and costs.