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Northbrook Plic, LLC, Northbrook Vnbp, LLC, and Northbrook Sub, LLC v. Cvs Pharmacy

June 5, 2012

NORTHBROOK PLIC, LLC, NORTHBROOK VNBP, LLC, AND NORTHBROOK SUB, LLC, PLAINTIFFS,
v.
CVS PHARMACY, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Joan B. Gottschall

MEMORANDUM OPINION & ORDER

On February 17, 2012, the court granted in part the Plaintiffs' (collectively, "Northbrook") motion for summary judgment against CVS Pharmacy, Inc. ("CVS"). Northbrook had sought summary judgment with regard to all issues of liability on their claims against CVS, indicating that once liability was determined, discovery could be taken regarding the nature and extent of damages. The court granted Northbrook's motion in part, concluding that CVS was not liable for damages after July 31, 2008, the date that Northbrook entered into a new lease with the third-party defendant. Northbrook asks the court to reconsider this limited portion of its ruling.

I. Factual Background

In 1994, Northbrook entered into a fifteen-year lease ("1994 lease") with Northbrook L.T., Inc. ("LT")*fn1 for the use of commercial space. The 1994 lease specified that a tenant default occurred when the tenant fails to pay rent and does not cure that default within 10 days after receipt of notice of the failure to pay rent from the landlord. (See Lease, ECF 76-2, ¶ 18.01(a)). The 1994 lease provided Northbrook with several remedies to cure a tenant's default, including termination of the lease. (See id.). In addition, the 1994 lease contained a "survival clause." (See id., ¶ 18.01(b)). The survival clause provided that upon expiration or termination of the lease pursuant to tenant's default, the landlord's repossession of the premises did not "relieve tenant of its liabilities and obligations hereunder, all of which shall survive such expiration, termination, or repossession . . . ." (See id.).

CVS served as the guarantor for LNT. The guaranty between Northbrook and CVS provided that CVS's guaranty terminates "at such time as all of tenant's obligations under the lease . . . have been satisfied and released." (See Guaranty, ECF No. 76-1, ¶ 6).

Several years into the lease, LNT assigned its tenancy to Garden Fresh Northbrook, Inc. ("Garden Fresh"). Under the assignment, Garden Fresh agreed to pay rent to LNT, though its payment covered only a portion of LNT's rent obligation to Northbrook. For approximately five years, LNT continued to pay rent directly to Northbrook, using the rent that Garden Fresh paid to it to offset its obligation to Northbrook. In May 2008, LNT filed for bankruptcy. Although Garden Fresh paid rent to LNT under the assignment in both May and June of 2008, LNT did not forward the rent paid by Garden Fresh to Northbrook or otherwise pay Northbrook any rent after it declared bankruptcy.

During the pendency of LNT's bankruptcy proceedings, Northbrook entered into a ten-year lease ("Garden Fresh lease") with Garden Fresh. A rider to the Garden Fresh lease between Northbrook and Garden Fresh expressed Northbrook's intent to terminate the 1994 lease between Northbrook and LNT. (Rider to Lease, ECF No. 52-3, Ex. A, Tab 4, at GF 1704). It reads, in full:

Termination of Prior Lease: Landlord and Tenant hereby acknowledge that Tenant occupies the Premises pursuant to that certain Lease dated September 21, 1994 (the "Prior Lease"). The Prior Lease was assigned from Linens N Things ("LNT") to Tenant. To the parties' knowledge, LNT declared bankruptcy, rejected the Prior Lease, and has no rights in or to the Prior Lease. Subject to the conditions set forth in this Section 2, Landlord and Tenant hereby terminate the Prior Lease effective as of the Commencement Date of this Lease, it being the intention of the parties hereto that this Lease supersede and replace the Prior Lease and no further documents or instructions shall be necessary to evidence such termination of the Prior Lease, but Tenant agrees to execute, acknowledge and deliver such other documents and instruments as may be reasonably necessary or desirable to confirm the foregoing. Landlord and Tenant each agree to release the other from all liability and claims under the Prior Lease, except that Tenant shall remain liable to Landlord for any third party claims in tort and any items of Base Rent, Additional rent and/or other amounts due and payable under the Prior Lease for periods through the termination thereof, including such amounts which are not yet ascertainable and/or billed.

Northbrook moved for summary judgment, arguing that LNT's failure to pay rent beginning in May 2008 constituted a default under the terms of the 1994 lease and triggered CVS's obligation under the guaranty. In the motion, Northbrook stated that they sought "Partial Summary Judgment on all of their allegations of liability as stated against defendant [CVS]." Northbrook anticipated CVS's argument that the rider to the Garden Fresh lease terminated LNT's obligations under the 1994 lease and argued that the survival clause preserved LNT's obligations after the 1994 lease had been terminated.

In the prior summary judgment ruling, the court determined that LNT defaulted on the 1994 lease in May and June 2008 when it declared bankruptcy and failed to pay rent to Northbrook. The court further rejected CVS's argument that Northbrook's failure to give notice excused LNT's default because CVS waived any such claim in the guaranty.*fn2 The court concluded that the guaranty survived the termination of the lease and that CVS was liable for LNT's obligations under that lease. The court, however, interpreted the language of the rider to relieve LNT of any obligations it had under the 1994 lease between Northbrook and LNT. Consequently, the court held that CVS was not liable for damages after July 31, 2008, when Northbrook and Garden Fresh executed the Garden Fresh lease. Northbrook asks the court to revisit this position.

II. Standard of Review

A motion to reconsider serves a limited purpose in federal civil litigation. A motion to reconsider is not a vehicle to rehash an argument the court has already rejected or to present legal arguments that were not presented earlier. Schilke v. Wachovia Mortg., FSB, 758 F. Supp. 2d 549, 554 (N.D. Ill. 2010). Rather, a motion to reconsider allows a party to bring the court's attention to manifest errors of fact or law, a significant change in the law or facts, a court's misunderstanding of a party's argument, or a court's decision on an issue that was not properly before it. United States v. Ligas, 549 F.3d 497, 501 (7th Cir. 2008); Neal v. Newspaper Holdings, Inc., 349 F.3d 363, 368 (7th Cir. 2003).

III. Analysis

In resolving the motion for partial summary judgment, it was necessary for the court to evaluate the impact of the Garden Fresh lease. The court, however, erred in concluding that the termination clause in the rider to the Garden Fresh lease ...


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