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Mck Millenium Centre v. Central Parking System

May 29, 2012

MCK MILLENIUM CENTRE PARKING, LLC, PLAINTIFF,
v.
CENTRAL PARKING SYSTEM, INC., DEFENDANT.



The opinion of the court was delivered by: Magistrate Judge Geraldine Soat Brown

MEMORANDUM OPINION AND ORDER

This case is currently before the court on plaintiff MCK Millenium Centre Parking, LLC's ("MCK") motion for partial summary judgment. [Dkt 54.] MCK moves for summary judgment on Count V of its Supplemental Complaint, in which it seeks damages for breach of a parking garage lease agreement between MCK and defendant Central Parking System, Inc. ("CPS"). For the reasons set forth below, MCK's motion is granted in part and denied in part.

Background

MCK claims that CPS failed to perform under a November 9, 2006 Lease Agreement between the parties. (Suppl. Compl.) [Dkt 35.] MCK alleges the following counts: specific performance, declaratory judgment, constructive trust, request for an accounting, and breach of contract. (Id.)*fn1 In the present motion, MCK seeks summary judgment on the breach of contract count only (Count V).

CPS filed an answer raising several affirmative defenses, including setoff and recoupment. [Dkt 9, 92.] CPS also brought a counterclaim against MCK and a third party complaint against The Residences at Millennium Centre Condominium Association ("Condo Association"), asking for a declaratory judgment of the parties' rights and obligations under the Lease Agreement. [Dkt 9.] The Condo Association has since been dismissed from this action following a partial settlement agreement between it, CPS, and MCK, which is discussed further below. [Dkt 89.]

Parties and the leased property

MCK is an Illinois limited liability company with its principal place of business in Cook County, Illinois; its members consist of an individual who is domiciled in Illinois and two other Illinois limited liability companies whose members are domiciled in Illinois. (Def.'s 56.1 Resp. ¶ 1 [dkt 102]; Suppl. Jurisdictional Decl. of Joseph Khoshabe [dkt 90].) CPS is a Tennessee corporation with its principal place of business in Davidson County, Tennessee. (Def.'s 56.1 Resp. ¶ 2.)*fn2

The Millennium Centre Tower is a high-rise multi-use building located in Chicago that includes residential condominiums, retail businesses, and a parking garage. (Id. ¶¶ 5, 7.) The building is divided into four separate parcels that include a "Garage Parcel," a "Condominium Parcel," a retail parcel, and a chiller parcel. (Id.) MCK owns the "Garage Parcel" of the building. (Id. ¶ 6.) The Condo Association owns the "Condominium Parcel," which includes the condo units as well as the Condominium Parking Property ("Parking Property"). (Id.) Where the Condominium Parking Property is located relative to the Garage Parcel is not clear from the parties' presentation, but the parties collectively refer to the Parking Property and the Garage Parcel as the "garage." (See id. ¶ 6.)*fn3

MCK's Operation Agreement with the other building Owners

On July 11, 2003, MCK, the Condo Association, and the owners of the retail parcel and the chiller parcel entered into an Operation and Reciprocal Easement Agreement ("Operation Agreement") to govern how they would handle shared spaces and payment of common expenses. (Id. ¶¶ 7-12; Pl.'s Mot., Aff. of Joseph Khoshabe, Ex. 3 ("Op. Agrmt.").) [Dkt 60-70.] Confusingly, MCK calls this the "Operating Agreement" while CPS calls it the "REA." This opinion will call it the "Operation Agreement." The portions of the Operation Agreement relevant to this case are as follows.

The owners agreed that a Facilities Manager would be hired to provide maintenance for the "Shared Facilities" (areas used by more than one owner) of the building. (Op. Agrmt. §§ 1.50, 1.91, 6.1.) The owners agreed to pay the Facilities Manager a Facilities Management Fee as consideration for its services, and to pay for Facilities Management Expenses incurred by the Facilities Manager. (Id. §§ 6.3, 6.4.) To effectuate payment of the Facilities Management Expenses, the Facilities Manager was to bill each owner an allotted share of a Monthly Facilities Assessment, and any Supplemental Assessment required by an owner's greater than anticipated use of the Shared Facilities. (Id. § 6.3.) The Facilities Manager could also bill for an Annual Reserve Assessment. (Id.)

The Operation Agreement further provided that MCK would be responsible for maintenance and repair on most of the shared Garage Property and Condominium Parking Property. (Id. § 10.1(b).) The costs and expenses so incurred by MCK (hereinafter referred to as "operating expenses") were to be shared by MCK and the Condo Association according to an allocation set out in Schedule 10.1(b)(2) entitled "Garage Cost Allocation," attached to the Operation Agreement, or, if not provided for therein, were to be reasonably apportioned based upon the benefit derived. (Id.) MCK was to create a yearly Garage Budget, which could include retaining a Garage Operator to perform MCK's services. (Id.) MCK (or the Garage Operator, if retained) was to bill the Condo Association monthly for the Condo Association's share of the operating expenses, and the Condo Association was to pay MCK (or the Garage Operator) within ten days of billing. (Id. § 10.1(b).) MCK or the Garage Operator was to prepare an annual operating statement and reconcile and adjust all assessments paid by each Owner. (Id.)

Lease Agreement between MCK and CPS

On November 9, 2006, MCK entered into a five-year Lease Agreement with CPS whereby MCK leased the Garage Property to CPS for the purpose of operating a parking garage. (Def.'s 56.1 Resp. ¶¶ 13-17; Khoshabe Aff., Ex. 2 ("Lease Agrmt.").) [Dkt 58.] By its terms, the Lease Agreement expired on November 30, 2011. (Id.)

CPS denies that it became the "Garage Operator" as defined in Article X of the Operation Agreement. (Def.'s 56.1 Resp. ¶¶ 12, 13, 32.) The Lease Agreement does not expressly incorporate that term from the Operation Agreement, nor does it expressly provide that CPS would perform all of MCK's obligations under Article X of the Operation Agreement.

The central dispute in this case involves paragraph 4 of the Lease Agreement, which provides that CPS was to pay MCK a monthly Base Rent that increased each year, as well as a portion of the parking revenue CPS made operating the garage. Paragraph 4 also contains the following provision, hereinafter referred to as the "disputed clause":

[1] Lessor has represented to Lessee that it has entered into a Reciprocal Easement Agreement, which shall be attached to this Lease as Exhibit B for reference purposes.

[2] Lessee agrees to pay Lessor's proportionate share of Facilities Management Expenses and Assessments as described in Articles ...


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