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GARLAND OFFICE L.L.C. v. SYMS CORPORATION

August 28, 2003

GARLAND OFFICE L.L.C., PLAINTIFF, VS. SYMS CORPORATION, DEFENDANT


The opinion of the court was delivered by: Joan H. Lefkow, District Judge

MEMORANDOM OPINION AND ORDER

Before the court is the first amended complaint of plaintiff, Garland Office L.L.C. ("Garland"), against defendant, Syms Corporation ("Syms"), seeking to recover rent owed by Syms to Garland. Garland also seeks a declaratory judgment that Syms is obligated to honor all financial obligations pursuant to the terms of a lease agreed to by the parties. Syms has moved under Rule 12(b)(6), Fed.R. Civ. P., to dismiss Garland's first amended complaint for failure to state a claim upon which relief may be granted. Garland is an Illinois limited liability company. Its members are citizens of Illinois, Wisconsin, Connecticut and North Carolina. Syms is a New Jersey corporation with its principal place of business in Secaucus, New Jersey. The amount in controversy exceeds $75,000. The court, therefore, has jurisdiction over the claims under 28 U.S.C. § 1332(a)(1). For the reasons set forth below, the motion is denied.

MOTION TO DISMISS STANDARDS

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the complaint for failure to state a claim upon which relief may be granted. General Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). [ Page 2]

Dismissal is appropriate only if it appears beyond a doubt that the plaintiff can prove no facts in support of its claim that would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Kennedy v. Nat'l Juvenile Det. Assoc., 187 F.3d 690, 695 (7th Cir. 1999). In ruling on the motion, the court accepts as true all well-pleaded facts alleged in the complaint, and it draws all reasonable inferences from those facts in the plaintiffs favor. Dixon v. Page, 291 F.3d 485, 486 (7th Cir, 2002); Jackson v. EJ. Brack Corp., 176 F.3d 971, 977 (7th Cir. 1999).

ALLEGATIONS OF THE COMPLAINT

According to Garland's first amended complaint, which is taken as true for purposes of this motion, in September 2002 Syms abandoned property at Ill North Wabash Avenue in Chicago, Illinois prior to the expiration of a lease entered into between the parties. The lease was executed on July 13, 1998, and was due to run from September 1, 1998, through December 31, 2011. (Am. Compl, ¶¶ 1, 6.) Garland alleges that Syms has not paid rent since September 2002 and owes $424,397 in unpaid rent and actual and estimated real estate taxes. (Id.)

Section 21 of the lease provides that Syms's failure to pay rent or any amounts due under the lease within 10 days after they become due constitutes default. (Am Compl. Ex. A, § 21.01(c).) Moreover, under Section 18 of the lease, abandonment of the premises also constitutes default. (Id. at § 18.) Garland alleges that based on Section 21, Syms is in default under the lease and has breached the contract between the parties due to both its failure to pay rent and its abandonment of the premises. (Am. Compl. ¶ 11.) [ Page 3]

DISCUSSION

Syms argues that Garland's first amended complaint should be dismissed because Garland (1) sued under an improper provision of the lease; (2) failed to plead mitigation of damages; and (3) improperly seeks a declaratory judgment.

A. Improper Provision of the Lease

Syms argues that Count I is inconsistent with Section 21.06 of the lease, what Syms characterizes as the applicable lease provision.*fn1 In support of its argument, Syms cites to St. George Chicago, Inc. v. George J. Murges & Assocs., 296 Ill App.3d 285, 288, 695 N.E.2d 503, 505 (1998). As the court noted in St. George, Illinois law requires that "a landlord or his or her agent. . . take reasonable measures to mitigate the damages recoverable against a defaulting lessee." Id. at 290, 695 N.E.2d 506, quoting 735 ILCS 5/9-213.1. The court in St. George examined a lease provision virtually identical to Section 21.06 of the lease in this case (which was also called Section 21.06 of the lease in St. George). The court found that Section 21.06 [ Page 4]

satisfied the plaintiffs statutory duty to mitigate damages because it "limit[s] plaintiffs claim for lost rent to the excess, if any, of the lease rate over the market rate for the unexpired lease term." Id. at 291,695 N.E.2d at 507. Thus, the provision accomplished the statutory purpose of mitigation of damages and plaintiffs actual mitigation efforts were "irrelevant and should not have been at issue at trial." Id. at 291, 695 N.E.2d at 508. The court specifically found Section 21.06 applicable when "the landlord has terminated the lease following the tenant's abandonment of the premises." Id.

Even though the procedural posture of this case as compared to St. George is entirely different,*fn2 Syms argues that Section 21.06 is applicable here and the failure to plead in conformity with the reasoning of St. George necessitates dismissal. Syms asserts that Garland "has failed to plead any of the elements required by Section 21.06 of the Lease," although it does not identify ...


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