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Penn-Daniels, LLC. v. Daniels

January 28, 2010

PENN-DANIELS, LLC., PLAINTIFF,
v.
WILLIAM D. DANIELS, NANCY JANE DANIELS, AND DAVID P. DANIELS, DEFENDANTS.



The opinion of the court was delivered by: Michael M. Mihm United States District Judge

ORDER

This matter is before the Court on Plaintiff's Motion for Reconsideration of the portion of the Court's Order granting summary judgment sua sponte in favor of Defendants on the claim to compel specific performance under the applicable agreements. For the reasons set forth below, the Motion [#29] is GRANTED IN PART and DENIED IN PART.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332, as the parties are of diverse citizenship and the amount in controversy exceeds $75,000.00.

BACKGROUND

Plaintiff, Penn-Daniels, LLC, ("P-D") is a Delaware limited liability company and successor in interest to Penn-Daniels Incorporated, a Delaware corporation. Defendants William D. Daniels, Nancy Jane Daniels, and David P. Daniels (collectively referred to as the "Daniels") own the property located at 888 S. Lake Storey Road, Galesburg, Illinois (the "Property"). William Daniels is the agent and manager of the Property. In 1997, ShopKo acquired P-D from Defendants, and since then, P-D has been a subsidiary of ShopKo.

On December 18, 1997, P-D and the Daniels entered into an Amended and Restated Lease Agreement (the "Lease"), pursuant to which P-D leased the Property from the Daniels. Section 7 of the Lease provides in relevant part:

Tenant agrees that during the term of this Restated Lease Tenant will, at its own expense, (i) keep the Project in as reasonably safe condition as its operations shall permit and (ii) keep all buildings and other improvements forming a part of the Project in good repair and in good operating condition, making from time to time all necessary repairs thereto and renewals and replacements thereof. . . .

The procedure for giving notice of an event of default by P-D as a result of a failure to fulfill any condition of the Lease is set forth in Section 13. Section 22 of the Lease grants P-D the right to exercise an option to purchase the Property.

Unless there is then existing an uncured event of default by Tenant, in which case, Tenant shall have no right or option to purchase the Project as described herein, on . . . January 1, 2007 . . . or at the end of the Term of this Restated Lease, Tenant shall have the option to purchase from Landlords the Project herein demised, with the purchase price thereof to be the fair market value of the Project's real estate, buildings and improvements thereon . . . The option on the part of the Tenant shall be exercised by the Tenant giving Landlords written notice of the exercise of such option within thirty (30) days of the applicable January 1 or the terminating event, as the case may be. . . .

P-D has not operated a store on the premises of the Property since 2001. During 2005, P-D advised the Daniels that it was interested in exercising its purchase option during the course of negotiations attempting to obtain an early exit from the Lease.

On November 16, 2006, the Daniels sent P-D a letter advising of maintenance and repair conditions that they believed to constitute a default under the terms of the Lease. P-D gave proper notice to the Daniels of its intent to purchase the Property by letter dated January 3, 2007. On January 10, 2007, the Daniels sent a letter to P-D asserting that it was in default under the terms of the Lease and refusing the attempt to exercise the purchase option. This action followed, with P-D asking the Court to order specific performance under the Lease, namely that the Daniels be compelled to accept and honor P-D's attempt to exercise its purchase option pursuant to § 22 of the Lease.

P-D moved for the entry of summary judgment and the Daniels responded. In resolving the Motion, the Court concluded that no reasonable jury could find in favor of P-D on the question of whether there was an uncured event of default under the lease. The portion of P-D's Motion seeking summary judgment on its claim for specific performance was denied, and judgment was entered in favor of the Daniels on that claim. The portion of P-D's Motion seeking summary judgment on the Daniels' counterclaim for damages resulted in the dismissal of the counterclaim as premature. P-D now seeks ...


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