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Chicago Exhibitors Corp. v. Jeepers! of Illinois

August 30, 2007

CHICAGO EXHIBITORS CORPORATION, PLAINTIFF-APPELLEE,
v.
JEEPERS! OF ILLINOIS, INC, JEEPERS! INC., HARVEY SWENTO AND CHERRY SWENTO, DEFENDANTS-APPELLANTS.
(HARVEY SWENTO AND CHERRY SWENTO, CROSS-PLAINTIFFS;
JEEPERS! OF ILLINOIS, INC., AND JEEPERS! INC., CROSS-DEFENDANTS).



Appeal from the Circuit Court Of Cook County. Honorable Ronald F. Bartkowicz Judge Presiding.

The opinion of the court was delivered by: Presiding Justice Quinn

Published opinion

This case arises out of a personal guaranty executed by defendants Harvey and Cherry Swento (the Swentos) in favor of plaintiff Chicago Exhibitors Corporation (CEC). Pursuant to the personal guaranty, the Swentos agreed to guaranty the payment of rent and other obligations owed to CEC by a certain tenant. After the tenant failed to pay rent and make other payments, CEC filed a complaint against the tenant and the Swentos as guarantors. The circuit court granted plaintiff's motion in limine to exclude the Swentos from presenting evidence relating to an alleged increase in the risk assumed by the Swentos. The court subsequently granted a directed verdict on liability against the Swentos and the matter proceeded to trial on the issue of damages. The jury found CEC's damages to be $246,588.33 and a verdict in that amount was entered against the Swentos. The court subsequently awarded CEC attorney fees and costs.

The Swentos appeal from the circuit court's order granting plaintiff's motion in limine to bar the Swentos from presenting evidence relating to an alleged increase in the risk they had assumed under the personal guaranty and from the circuit court's order awarding CEC attorney fees and costs. On appeal, the Swentos contend that: (1) the circuit court erred in granting plaintiff's motion in limine where the subsequent agreement between plaintiff and the tenant presented material changes under the lease which should have discharged the Swentos from their obligations as guarantors; (2) the circuit court erred in granting a directed verdict, which denied the Swentos their opportunity to present their affirmative defense of estoppel by waiver; and (3) the circuit court should have found it unconscionable to hold the Swentos liable under an agreement to which they were not a party. For the following reasons, we affirm.

I. Background

CEC is the owner of a shopping center in Des Plaines, Illinois, and leases spaces in the shopping center to commercial tenants. On July 8, 1991, CEC's predecessor, Rubloff, Inc. (Rubloff), as agent for the beneficiary of American National Bank and Trust Company of Chicago Trust No. 14834 (Land Trust), entered into a lease agreement (the lease) as landlord with Swento & Company, Inc., as tenant of "Space 13" at the shopping center. Swento & Company, Inc., which was owned and operated by the Swentos, was in the business of family fun entertainment as a franchise business that included an indoor amusement park which specialized in holding birthday parties with rides, games and a restaurant. The lease term was for 129 months from the date of the lease and the lease contained a financing contingency period that expired on August 8, 1991.

Contemporaneous to the execution of the lease, to induce the landlord to enter into the lease with Swento & Company, Inc., the Swentos executed a personal guaranty that provided for their joint and several liability for all of the tenant's obligations under the lease. The personal guaranty provided that the Swentos guaranteed "the payment of all Rent and other charges to be paid by Tenant and the performance by Tenant of all the terms, conditions, covenants and agreements of the said Lease and the [Swentos] promis[e] to pay all the Landlord's expenses, including reasonable attorneys' fees and costs, incurred by the Landlord in enforcing all obligations of Tenant under the Lease or incurred by Landlord in enforcing this guaranty."

The personal guaranty also provided:

"This guaranty is irrevocable, absolute, present, continuing and unconditional, and the obligation of [the Swentos] shall not be released or affected by (a) any extensions of time, indulgences or modifications which Landlord may extend with Tenant in the performance of said Lease; (b) any failure of Landlord to enforce any of the conditions of said Lease; (c) any assignment of the Lease by Tenant; or (d) any consent which Landlord may give to such assignment."

In addition, the personal guaranty provided that the "guaranty shall also inure to the benefit of Landlord's successors, assigns, and legal representatives."

On August 7, 1991, the parties executed a "First Amendment to Lease," in which the financing contingency period was extended to October 1, 1991. Pursuant to the amendment, all other terms of the lease remained the same. The amendment also provided:

"Harvey Swento and Cherry L. Swento have executed this First Amendment to Lease to reaffirm their obligations under that certain Personal Guaranty dated as of July 8, 1991, in favor of Landlord."

On January 24, 1992, the parties executed a "Second Amendment to Lease," which changed the total square footage of the leased space by reducing the size of the rented area. The amendment also reduced the fixed minimum rent, annualized gross sales base, initial monthly estimated "CAM" payments, initial monthly estimated tax payment, and tenant's proportionate share, as defined in the lease. Pursuant to the amendment, all other terms of the lease remained the same. The second amendment also contained the same paragraph as the first amendment, in which the Swentos "reaffirmed their obligation under that certain Personal Guaranty dated as of July 8, 1991, in favor of Landlord."

Also on January 24, 1992, the Swentos transferred all interest in their business, Swento & Company, Inc., to a new entity also operated by them, Family Fun Enterprises, Ltd. (Family Fun). Family Fun, as assignee, assumed all obligations under the lease of Swento & Company, Inc., as assignor. Harvey Swento executed the assignment on behalf of both Swento & Company, Inc., and Family Fun. Under the assignment, all terms of the lease remained the same.

On February 24, 1992, the parties executed a "Third Amendment to Lease," which extended the dates for the commencement and completion of tenant's work and provided for tenant's electrical service modification. Under the amendment, the new opening date for Family Fun was extended to April 7, 1992, and all other terms of the lease remained the same. The amendment also provided:

"Harvey Swento and Cherry L. Swento have executed this Third Amendment to Lease solely as guarantors of the Lease and not as parties to the Lease to reaffirm their obligations under that certain Personal Guaranty dated as of July 8, 1991 in favor of Landlord."

In 1996, title to the property in which the leased space was located was conveyed from the Land Trust to plaintiff CEC, together with all rights, title, and interest of the Land Trust under the lease.

On February 18, 1997, the Swentos assigned and transferred all of their rights, title and interest as the limited partners in Family Fun to another company, Jeepers! of Illinois, Inc. (Jeepers Illinois). Also, on February 18, 1997, Jeepers! Inc. (Jeepers), as parent company to Jeepers Illinois, entered into an indemnification agreement. Under the indemnification agreement, Jeepers agreed to ...


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