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Laminet Cover Co. v. Home Depot USA

July 20, 2009

LAMINET COVER COMPANY, PLAINTIFF,
v.
HOME DEPOT USA, INC., DEFENDANT.



The opinion of the court was delivered by: Judge John A. Nordberg

MEMORANDUM OPINION AND ORDER

In early 2001, Home Depot was looking for a suitable location in Chicago to open a new store. It was working with Rick Filler, a real estate broker who helped Home Depot find properties in the past. Filler found one near the intersection of Armitage and Cicero, and Home Depot entered into a contract with the owner to buy the property. However, a tenant had a lease that ran through June 30, 2002. The tenant was Laminet Cover Company, the plaintiff here. Because Home Depot wanted to open its store before the lease expired, it sought to buy out the lease from Laminet.

To induce Laminet to move out early, Home Depot offered to pay Laminet a little over $300,000 if it agreed to move out by July 1, 2001 -- a year before the scheduled termination of the lease. This offer was set forth in two written lease amendments entered into in March 2001. For unknown reasons, Laminet did not find a suitable property by July 1, 2001 and did not move out. Additional discussions between the parties re-started in the fall. Then, on November 4, 2001, Laminet's president, Michael Lieber, emailed Filler, offering to move out by January 31, 2002 for a payment of $195,000. Two days later, Filler emailed back stating that Home Depot was only willing to pay $140,000.

At this point, the parties dispute what happened. Lieber claims that he and Filler had a phone conversation a week later, on November 14, 2001, and they agreed on a price of $165,000. It is undisputed that there is no writing documenting this alleged oral agreement. Filler in his deposition, taken almost six years later, could not remember making a $165,000 offer after the exchange of emails. But whatever offers may have been made during this general period, Filler was adamant that Laminet never accepted any of them. He is likewise certain that everyone knew that Home Depot would not enter into an oral agreement.

In January 2002, Laminet moved out. It claims that it moved out early to fulfill its part of the November 14th oral agreement. Home Depot responds that it was not aware of any oral agreement and concluded that Laminet had abandoned the property when it moved out. Home Depot then took over the property and began fixing it up in preparation for the new store.

In 2006, Laminet filed this lawsuit, asserting four counts. Count I is a claim for breach of the oral contract allegedly entered into on November 14th. The remaining three counts are quasi-contractual claims -- promissory estoppel (Count II), promissory fraud (Count III), and unjust enrichment (Count IV). These claims are based on the same oral promise and allege that Laminet relied on that promise to buy a new property for its business. Home Depot later filed two counterclaims seeking unpaid rent for the five-month period after Laminet moved out and until the end of the lease in June 2002.

Before the court are cross-motions for summary judgment. Home Depot's motion only seeks judgment on Laminet's four claims. Laminet's motion seek judgment in its favor on both its claims and on Home Depot's counterclaims. For the reasons set forth below, we grant Home Depot's motion for summary judgment on Laminet's four claims and grant Laminet's cross-motion with regard to the counterclaims.

FACTUAL BACKGROUND

Laminet is a family-owned business with 15 to 25 employees. Michael Lieber is an owner and the president, and he was the only person from Laminet involved in the events in this lawsuit. Lieber graduated from law school in 1987. Although he has never practiced as a litigator, earlier in his career, he worked for two years as an associate at Rudnick & Wolfe doing franchise, real estate, zoning, contract, corporate, and environmental law.

In this case, and on other earlier occasions, Home Depot used Rick Filler to help find properties for new stores. Filler is a real estate developer who works for the Harlem Irving Company. He is not an employee of Home Depot. As discussed below, the parties dispute whether, and to what extent, he was acting as an agent for Home Depot in the series of negotiations regarding the relocation agreements.

On March 1, 2001, after Home Depot had entered into a contract to buy the property, it entered into a Second Amendment to the lease with Laminet. The thrust of this agreement was that, once Home Depot became the owner of the property and assumed the lease, it would agree to pay Laminet $309,130 (plus other fees) if Laminet moved out by June 1, 2001. A few weeks later, the parties executed another lease amendment, entitled Third Amendment To Lease, extending the move-out date back a month to July 1, 2001. Under these two lease amendments, Laminet had several months to find a new property to relocate its business and then move out of the leased property in return for a payment of $309,130.

Although these agreements are not the subject of the current breach of contract claim, they nevertheless set forth the context and expectation of the parties. Several points are worth noting here. First, both agreements are signed by Lieber on behalf of Laminet and by Randall Stephens on behalf of Home Depot. Stephens is listed as "Senior Corporate Counsel - Real Estate." Second, these agreements were drafted by lawyers, a point evidenced directly by Lieber's testimony that he hired a large law firm to negotiate for Laminet. Third, echoing the previous point, these agreements are complex and sophisticated agreements with elaborate procedures for triggering and documenting the sequence of events needed to carry out the planned early termination of the lease.

The Second Lease Amendment, in particular, is a detailed agreement. It has a lengthy cast of defined terms -- e.g. Tenant Execution Date, Outside Closing Date, Closing Notice, Landlord's Cancellation Fee, Relocation Condition, Tenant's Waiver Notice, Termination Date, Vacation Obligation. (Ex. E.) These capitalized terms are woven into a legal choreography of duties -- giving notice, placing funds in escrow, surrendering the premises, paying fees, and many other actions. To cite one example, Section 4(b) provides that the tenant should give the Landlord and Escrow Agent notice by providing an affidavit, defined as the "Vacation/Surrender Affidavit," that is signed by the Tenant's president, that expressly states that Tenant has in fact vacated the premises, and that is delivered personally to the Landlord's or the Landlord's counsel's office only at the specific locations set forth in Section 12 of the agreement. It is clear from this provision and others that the parties took great care to think through contingencies and to prevent any misunderstanding about their intentions.

Laminet apparently was not able to find a suitable property or was not yet willing to move, and so the early lease termination did not go into effect. (It is not clear whether Laminet was obligated to move out by the July 1st date or merely had an option to do so.) Even though Laminet did not move out and did not receive the $309,130 early termination fee, it did keep $75,000 Landlord's Cancellation Fee.

It appears that further discussions about a possible early termination took place over the summer and early fall, although neither side has provided much detail about them. Of course, as each month passed, the value to Home Depot of an early lease termination decreased as the lease would eventually expire on its own terms. Then, as noted above, on November 4, 2001, Lieber sent an email to Filler. It stated:

Rick:

Thanks for getting back to me. However, I don't understand your number. Based on what you offered me the last time, which was solely based on the "carry" of the property, you are significantly less. Anyway, you asked for a counter, and my counter is 195. Please accept this. I need to coordinate a number of things to make the move happen, and I would hope to put your deal behind me and get it to the Lawyers while I am out of the office this week. Please advise ASAP.

Michael

(Ex. ...


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