The opinion of the court was delivered by: Judge Ronald A. Guzmán
MEMORANDUM OPINION AND ORDER
JPMorgan Chase Bank, N.A., has sued defendants for breach of contract, money wrongfully had and received and a declaration that it is not liable to defendants for certain expenses associated with its lease of property from defendants. The case is before the Court on the parties' cross-motions for partial summary judgment pursuant to Federal Rule of Civil Procedure ("Rule") 56. For the reasons set forth below, the Court denies plaintiff's motion and grants in part and denies in part defendants' motion.
JPMorgan Chase Bank N.A. is the successor to Bank One, which was the successor to First National, (collectively, "the Bank") and is a national banking association with a principal place of business in New York. (Pl.'s Resp. Defs.' Stmt. Uncontested Facts ¶ 1.) Alecta Real Estate North Michigan, Inc., formerly known as SPP Real Estate (North Michigan), Inc., was a Delaware corporation with its principal place of business in Connecticut. (Id. ¶ 2.) Alecta Real Estate USA, Inc. was a Delaware corporation with its principal place of business in California. (Id. ¶ 3.) Alecta pensionsförsäkring, ömsesidigt ("Alecta Sweden"), is a Swedish company with its principal place of business in Sweden. (Id. ¶ 4.) Alecta Real Estate USA, LLC, is a Delaware limited liability company, the only member of which is Alecta Sweden. (Id. ¶ 5.)
Formerly, the Bank owned the building at 605 North Michigan Avenue in Chicago, part of which it occupied. (Id. ¶ 7.) In May 1998, the Bank sold the building to defendants in a transaction that also required defendants to lease back to the Bank the space it occupied in the building. (Id. ¶¶ 8-9.) The parties executed the sale and purchase agreement, which required their subsequent execution of a lease, on May 18, 1998. (See Pl.'s Stmt. Uncontested Facts, Ex. BB, Sale & Purchase Agreement § 15(a)(xiv).) The parties executed the lease, from which this suit arises, on May 29, 1998. (Pl.'s Resp. Defs.' Stmt. Uncontested Facts ¶ 10; Compl. ¶ 10; id., Ex. 1, Lease; Answer ¶ 10.)
Section three of the lease, entitled "Additional Charges," states: "Tenant shall pay as 'Additional Charges' the amounts determined pursuant to subparagraphs B through D of this Section 3." (Compl., Ex. 1, Lease § 3.) Subparagraph A defines six terms used in subparagraphs B through D, including "Operating Expenses" and "Taxes." (Id. § 3A(i)-(vi).) "Operating Expenses" is defined as "all expenses, costs and disbursements actually paid by Landlord and properly chargeable for the applicable Lease Year in connection with the management, operation, insurance, maintenance and repair of the office or retail portion of the Building as the case may be, and Land," except for, among other things, "Taxes." (Id. § 3A (ii)(a)-(u).) The lease defines "Taxes" as "real estate taxes and assessments, both general and special, assessed or imposed with respect to the Land or the Building becoming due and payable during the Term" and states that "Landlord shall make an equitable allocation of Taxes between the office and retail portions of the Building." (Id. § 3A(iv).) Subparagraph B, entitled "Expense Adjustment" contains six parts, the first of which states:
Tenant shall pay to Landlord . . . as Additional charges [sic], an amount ("Expense Amount") equal to (i) Tenant's Retail Percentage of the amount of Operating Expenses incurred with respect to the retail portion of the Building for each Lease Year plus (ii) Tenant's Office Percentage of the amount of Operating Expenses incurred with respect to the office portion of the Building for each Lease Year. (Id. § 3B(i).) The sixth part states: "Landlord agrees to pay taxes when due . . . . If Landlord is successful in contesting any Taxes and obtains a refund, such refund shall be applied to reduce Taxes for the year in which the amount is received by Landlord." (Id. § 3B(vi).)
Since the sale-lease back transaction was executed, ownership of the building has been transferred to and among various Alecta entities. (Pl.'s Resp. Defs.' Stmt. Undisputed Facts ¶ 13.) The building is currently owned by Alecta Real Estate USA, LLC. (Id.)
The Bank has sued defendants for a declaration that the lease does not require it to pay real estate taxes or certain other expenses and breach of contract or, alternatively, recovery of money wrongfully had and received. Defendants say the Bank is entitled to no relief and ask the Court to reform the lease to conform to the parties' intent.
To prevail on a summary judgment motion, "the pleadings, the discovery and disclosure materials on file, and any affidavits [must] show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2). At this stage, we do not weigh evidence or determine the truth of the matters asserted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). We view all evidence and draw all inferences in favor of the non-moving party. Michas v. Health Cost Controls of Ill., Inc., 209 F.3d 687, 692 (7th Cir. 2000). Summary judgment is appropriate only when the record as a whole establishes that no reasonable jury could find for the non-moving party. Id.
Both parties move for summary judgment on the Bank's claim for a declaration that the lease does not require it to pay real estate taxes. To resolve these motions, the Court must interpret the lease, a question of law appropriate for summary judgment. Premier Title Co. v. Donahue, 765 N.E.2d 513, 516 (Ill. App. Ct. 2002). The goal of contract interpretation "is to give effect to the intent of the parties." Id. If the contract is unambiguous, that intent is derived solely from its language, which is "given its plain and ordinary meaning." Id.
Such is the case here, the Bank asserts, because the lease requires it to pay certain operating expenses, a term that is explicitly defined to exclude taxes. In the Bank's view, the provisions requiring defendants to apportion taxes between the retail and office portions of the building and to apply tax refunds to the year in which they are received do not render the lease ambiguous. Rather, the Bank argues that any conflict between those provisions and the tax exclusion can be resolved by ordinary principles of contract interpretation.
The Bank cites a number of cases to support its position, including AM International v. Graphic Management Associates, Inc. and Grevas v. U.S. Fidelity & Guaranty Co., neither of which involved the interpretation of conflicting contract provisions. See AM, 836 F. Supp. 487, 489-90 (N.D. Ill. 1993)(refusing to interpret clear, consistent provisions as including a contingency not addressed by them), aff'd, 44 F.3d 527 (7th Cir. 1995); Grevas, 604 N.E.2d 942, 944 (Ill. 1992) (applying the more specific of two, non-conflicting contract provisions). Conflicting provisions were at issue in Lima Lake Drainage District of Adams County v. Hunt Drainage District of Hancock County, but the court held that they rendered the contract ambiguous and used extrinsic evidence to determine the parties' intent. 561 N.E.2d 1351, 1354 (Ill. App. Ct. 1990). The contract in McDonald's Corp. v. Butler Co. also had conflicting terms, but the court was able to reconcile them and give effect to both. 511 N.E.2d 912, 917-18 (Ill. App. Ct. 1987) (interpreting a contract with a provision allowing only retail development for five years and another permitting residential development without any time limitations as allowing residential development after five years).
The only case that seems to support the Bank's argument is Abt v. Mazda American Credit, 25 F. Supp. 2d 860 (N.D. Ill. 1998). The contract in that case was a car lease with one provision that said the total of "Other Charges" due the lessor was $0.00 and another that said the lessee was required to pay a disposition fee of $350.00 at the end of the lease. Id. at 862. The court said the question was "whether the term 'Other Charges' in paragraph 9 . . . include[s] the disposition fee [in paragraph 20]," and held that the answer was "yes." Id. The court did not, however, view the resulting conflict as one between two "other charges" provisions. Rather, the court said its interpretation resulted in a conflict between "an implied disposition fee of $0.00 (paragraph 9) and an express disposition fee of $350.00 (paragraph 20)." Id. at 863. The court held that the latter should be "given its full effect because the term 'disposition fee' is more specific than 'Other Charges.'" Id.
The Court respectfully disagrees with the Abt court's analysis. The conflict yielded by the court's interpretation of "Other Charges" was between an express "other charges" term of $0.00 and an implied "other charges" term of $350.00. Thus, the specific provision was the express term of $0.00, not the implied term of $350.00.
In any event, the provisions at issue in Abt were in two different sections of the contract, one addressing the lessee's liabilities and the other setting forth the conditions for terminating the lease. Here, however, the conflicting provisions appear in a single section that purports to describe a single liability -- "Additional Charges." (See Compl., Ex. 1, Lease, § 3.) Yet, the section is fraught with contradictions, requiring defendants to allocate taxes, for which the Bank is not liable, between the building's office and retail space, and instructing them to reduce the Bank's non-existent tax liability for any lease year by the amount of any tax refund defendants obtain. (Id. § 3A (ii)(a), (iv), 3B(i), (vi).)
The Bank contends that the inconsistency can be resolved by applying a contract-interpretation principle described this way by the McDonald's court:
Where one intention is expressed in one clause of an instrument and a different, conflicting intention appears in another clause of the same instrument, full effect should be given to the clause which is the more principal and specific, and the general clause should be subjected to such modification or qualification as the specific clause makes necessary. 511 N.E.2d at 917. Because the definition of operating expenses specifically excludes taxes and the ...