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Schultz Bros. Co., An Illinois Corporation v. Osram Sylvania Products

September 30, 2011

SCHULTZ BROS. CO., AN ILLINOIS CORPORATION, PLAINTIFF,
v.
OSRAM SYLVANIA PRODUCTS, INC., A DELAWARE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge:

MEMORANDUM OPINION AND ORDER

On May 14, 2010, Defendant Osram Sylvania Products, Inc. ("Osram") removed this action from the Circuit Court for the 19th Judicial Circuit in Lake County, Illinois pursuant to the Court's diversity jurisdiction. See 28 U.S.C. §§ 1332(a), 1441. In its Complaint, Plaintiff Schultz Bros. Co. ("SBC") alleges that Osram breached a lease pertaining to real property at 800 North Church Street, Lake Zurich, Illinois. Before the Court are Osram's and SBC's cross-motions for partial summary judgment pursuant to Federal Rule of Civil Procedure 56. For the following reasons, the Court grants SBC's motion and denies Osram's motion.

BACKGROUND

SBC is an Illinois corporation and is the owner and landlord of certain improved real property containing approximately 116,925 square feet of space located at 800 North Church Street in Lake Zurich, Illinois ("Warehouse"). (R. 47, Def.'s Rule 56.1 Stmt. Facts ¶ 1; R. 54, Pl.'s Rule 56.1 Stmt Facts ¶ 1.) Osram is a Delaware corporation with its headquarters in Massachusetts. (Def.'s Stmt. Facts ¶ 2; Pl.'s Stmt. Facts ¶ 2.) Osram is a former tenant of the Warehouse pursuant to a lease that expired on October 31, 2009. (Def.'s Stmt. Facts ¶¶ 5, 11; Pl.'s Stmt. Facts ¶¶ 5, 12.)

On October 4, 1995, SBC and Motorola, Inc. ("Motorola") entered into a lease for the Warehouse ("Original Lease"). (Def.'s Stmt. Facts ¶ 7; Pl.'s Stmt. Facts ¶ 8.) On November 19, 1998, SBC and Motorola executed an amendment to the Original Lease ("Amendment"). (Def.'s Stmt Facts ¶ 8; Pl.'s Stmt. Facts ¶ 9.) Motorola assigned the lease to Osram on February 29, 2000 pursuant to an Assignment and Assumption Agreement ("Assignment"). (Def.'s Stmt. Facts ¶ 10; Pl.'s Stmt. Facts ¶ 10.) The Original Lease, the Amendment, and the Assignment comprise all of the terms of SBC's and Motorola's/Osram's contract for the lease of the Warehouse ("Lease"). (Pl.'s Stmt. Facts ¶ 11.)

Prior to the end of Osram's tenancy at the Warehouse, SBC determined that the roof, the parking lot, and eight heating units were no longer reparable and needed to be replaced. (Id. ¶¶ 24, 33, 38, 39.) Thereafter, SBC requested that Osram replace the roof in 2006, the parking lot in 2007, 2008, and 2009, and the heating units in 2009 pursuant to the Lease. (Id. ¶¶ 25, 33, 40.) Despite SBC's requests, Osram did not replace the roof, parking lot, and heating units because Osram contends that the terms of the Lease do not require it to replace major components of the Warehouse. In the meantime, SBC replaced the roof in 2006 and replaced the heating units in 2009. (Id. ¶¶ 27, 42.) To date, Osram has not paid or reimbursed SBC for the roof or the heating units nor has Osram replaced the parking lot. (Id. ¶¶ 29, 36, 43.)

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A genuine dispute as to any material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). In determining summary judgment motions, "facts must be viewed in the light most favorable to the nonmoving party only if there is a 'genuine' dispute as to those facts." Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). The party seeking summary judgment has the burden of establishing that there is no genuine dispute as to any material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L.Ed.2d 265 (1986). After "a properly supported motion for summary judgment is made, the adverse party 'must set forth specific facts showing that there is a genuine issue for trial.'" Anderson, 477 U.S. at 255 (quotation omitted).

ANALYSIS

At issue in the parties' cross-motions for partial summary judgment is whether the maintenance, repair, and replacement provision in the Lease requires SBC, as the landlord, or Osram, as the tenant, to bear the cost of the new roof, parking lot, and heating units for the Warehouse.*fn1 The parties agree that Illinois law governs the present dispute. Under Illinois law, courts "construe contracts by giving their unambiguous terms clear and ordinary meaning, in an effort to determine the parties' intent." Reger Dev., LLC v. National City Bank, 592 F.3d 759, 764 (7th Cir. 2010) (internal citation omitted); see also Kim v. Carter's Inc., 598 F.3d 362, 364 (7th Cir. 2010). In construing contracts under Illinois law, courts look to the contract as a whole. See Reger, 592 F.3d at 764; Curia v. Nelson, 587 F.3d 824, 829 (7th Cir. 2009). As the Seventh Circuit teaches, if the lease's "language is unambiguous, that is, not susceptible to more than one meaning, we confine our analysis to the language of the lease, and we read that language according to its ordinary meaning." Rexam Beverage Can Co. v. Bolger 620 F.3d 718, 724 (7th Cir. 2010) (applying Illinois law) (internal citation omitted).

The relevant maintenance provision is found in Article XII of the Lease, and is entitled Maintenance, Repairs, and/or Replacements:

The Lessee shall at all times, at its own cost and expense, keep the interior and/or exterior, structural and/or nonstructural of the Leased Premises, including but not limited to all, whether ordinary or extraordinary, plumbing, electrical, building fixtures, walls, ceilings, floors, lighting, roof, doors, windows, foundations, downspouts, gutters, heating, air conditioning and any and all other building systems, in good order, condition and repair.

At all times all such maintenance, repairs and/or replacements shall be performed in a good and workmanlike manner employing new materials of high quality.

If Lessee fails to maintain and repair or replace portions of the Leased Premises requiring same promptly and properly, and if such failure is not cured within thirty (30) days after receipt by Lessee of written notice thereof from Lessor, Lessor may at its option perform such maintenance, repairs and/or replacements on behalf of Lessee, and Lessee, will, within thirty (30) days of receipt by Lessee of written evidence of the cost and payment thereof by Lessor, pay to Lessor the cost thereof plus ten percent (10%) of same, as "additional rental" due hereunder. Lessor's liability with respect to any defects, repairs or maintenance for which Lessor is responsible under any of the provisions of this Lease shall be limited to the cost of such repairs or maintenance or the curing of such defect. (Pl.'s Rule 56.1 Ex. A, Original Lease at 11.) (emphasis added). Paragraph 9 of the Amendment further provides: "Article III of the lease is modified in that lessee shall at its sole ...


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