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The Village of Palatine, A Municipal Corporation v. Palatine Associates

December 17, 2010


Appeal from the Circuit Court of Cook County. No. 06 L 51257 Honorable Alexander P. White, Judge Presiding.

The opinion of the court was delivered by: Justice Robert E. Gordon

JUSTICE ROBERT E. GORDON delivered the judgment of the court, with opinion. Presiding Justice Garcia and Justice McBride concurred in the judgment and opinion.


This appeal arises from a condemnation proceeding brought by the Village of Palatine (the Village), seeking to acquire property in Palatine, Illinois, that was being used for a shopping center. The Village paid over $6 million to defendant Palatine Associates, LLC (Palatine Associates), the owner of the property, in just compensation, from which any claims of the tenants was to be apportioned. Appellant One Hour Cleaners filed a petition seeking compensation for its trade fixtures, which was denied by the trial court on Palatine Associates' motion to dismiss the petition*fn1 , based on a finding that One Hour did not have an interest in the condemnation award. One Hour Cleaners appeals, arguing that it had an interest in the condemnation award. We affirm.


Palatine Associates was the owner of the property at issue in this case (subject property), which contains a shopping center with a number of tenants, including Sears and One Hour Cleaners. One Hour Cleaners was a tenant on the subject property pursuant to a lease assignment entered into on December 20, 1982. In the assignment, One Hour Cleaners agreed to "assume and perform all duties and obligations required by the terms of the lease" of the former lessee and acknowledged and agreed it was "liable for all the terms, covenants and conditions of the said lease and underst[ood] specifically the provisions of Article X."

Section 8.1 of the lease contained affirmative covenants made by the tenant:

"Section 8.1 Affirmative Covenants. Tenant covenants at its expense at all times during the Lease Term and such further time as Tenant occupies the Leased Premises or any part thereof, M. To remove, at the termination of this Lease, provided Tenant is not in default, such of Tenant's moveable trade fixtures, and other personal property, as are not permanently affixed to the Leased Premises; to remove such of the alterations and additions and signs made by Tenant as Landlord may request; to repair any damage caused by such removal; and peaceably to yield up the Leased Premises and all alterations and additions thereto (except such as Landlord has requested Tenant to remove) and all fixtures, furnishings, floor coverings and equipment which are permanently affixed to the Leased Premises, including carpet, which, for the purpose of this Lease shall be deemed to be permanently affixed to the Leased Premises, which shall thereupon become the property of the Landlord, in clean and good order, repair and condition, damage by fire or other unavoidable casualty excepted. Any personal property of Tenant not removed within five (5) days following such termination shall, at Landlord's option, become the property of the Landlord."

Article IX of the lease contained a section concerning the effect of a taking of the subject property by eminent domain:

"Section 9.2 Eminent Domain. If the whole of the Leased Premises shall be taken by any public authority under the power of eminent domain, the Lease Term shall cease as of the day possession shall be taken by such public authority, and Tenant shall pay rent up to that date with an appropriate refund by Landlord of such rent as may have been paid in advance for any period subsequent to the date possession is taken. *** All compensation awarded for any taking under the power of eminent domain, whether for the whole or a part of the Leased Premises, shall be the property of Landlord, whether such damages shall be awarded as compensation for diminution in the value of the leasehold or to the fee of the Leased Premises or otherwise and Tenant hereby assigns to Landlord all of the Tenant's rights, title and interest in and to any and all such compensation; provided, however, that Landlord shall not be entitled to any award specifically made to Tenant for the taking of Tenant's trade fixtures, furniture or leasehold improvements to the extent of the cost to tenant of said improvements (exclusive of Landlord's contribution), less depreciation computed from the date of said improvements to the expiration of the original term of this Lease."

Article X contained a provision concerning the tenant's continued occupation after termination of the lease:

"Section 10.10 Holdover by Tenant. In the event Tenant remains in possession of the Leased Premises after the expiration of the tenancy created hereunder, and without the execution of a new lease, Tenant, at the option of Landlord, shall be deemed to be occupying the Leased Premises as a tenant from month to month, at twice the Fixed Minimum Rent and percentage rent, subject to all the other conditions, provisions and obligations of this Lease in so far as the same are applicable to a month-to-month tenancy."

There was also a provision in the lease stating that "[a]ny notice or demand from Landlord to Tenant or from Tenant to Landlord shall be mailed by registered or certified mail."

The lease was amended several times to extend the date of the termination of the lease and to adjust the amount of the rent. After the last amendment, the termination date of the lease was January 31, 2004, and the rent was $11,250 annually, or $937.50 per month. One Hour Cleaners remained on the subject property and paid rent of $937.50 through April 2009; its payments for March 2009 and April 2009 were for less than the balance due. After April 2009, One Hour Cleaners stopped making ...

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