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Kozonis v. Tamburello

Court of Appeals of Illinois, First District, First Division

December 19, 2016

DEMETRIOS KOZONIS, as Sole Beneficiary With Power of Direction of Parkway Bank And Trust Company, as Trustee u/t/a, Plaintiff-Appellant,
GIACOMO TAMBURELLO, Defendant-Appellee,

         Appeal from the Circuit Court of Cook County, No. 14 L 2828 Honorable Brigid Mary McGrath, Judge Presiding.

          JUSTICE MIKVA delivered the judgment of the court, with opinion. Justices Harris and Simon concurred in the judgment and opinion.



         ¶ 1 This is a suit to enforce a guaranty on a lease. The lessor, Parkway Bank and Trust Company, rented space to Euro Cappuccino from January 2000 through December 2002. By a separate written guaranty, defendant Giacomo Tamburello, who is the president of Euro Cappuccino, personally guarantied Euro Cappuccino's obligations under that lease. Euro Cappuccino continued to occupy the premises after the expiration of the original lease term until November 2005, when the parties signed a document titled "Lease Extension" that was to be effective from January 2006 until December 2010. In February 2010, Euro Cappuccino stopped making its full rental payments under the agreement and the lessor filed suit against Mr. Tamburello, seeking recovery pursuant to the guaranty. The lessor appeals from the dismissal of the complaint to enforce the personal guaranty. The sole issue on appeal is whether the November 1999 personal guaranty remained in effect with respect to the 2005 "Lease Extension" and the month-to-month holdover that followed that lease extension. For the following reasons, we hold that it did not, and therefore, we affirm the circuit court's dismissal of the suit.

         ¶ 2 BACKGROUND

         ¶ 3 The original lease was for a term of three years, from January 1, 2000, through December 31, 2002 ("original lease"). It was signed by Mr. Tamburello, as the president of Euro Cappuccino, and Demetrios Kozonis, as an agent for Parkway Bank ("lessor"). The original lease provided a rent schedule with the rent payments increasing from $1145 per month in the first year of the lease term to $1175 per month in the second year and $1200 per month in the third year. Of further relevance to the present appeal, section 22.01 of the lease provided:

"Any holding over after the expiration of the term hereof, if with or without the consent of the Lessor, shall be construed to be a tenancy from month to month, at one and a half (11/2) times the rents herein specified (pro-rated on a monthly basis) and shall otherwise be on the terms and conditions herein specified so far as applicable."

         ¶ 4 Section 27.01(a) of the original lease stated: "Provided that Tenant is not then in default under any of the terms, and provisions of the Lease, *** Tenant shall have the option to extend the terms and provisions of this Lease for an additional three (3) year term." The section further provided that, in order to exercise this option for an extension, Euro Cappuccino was required to notify the lessor in writing "no later than one hundred twenty (120) days prior to the expiration of the third (3rd) Lease Year of the Lease Term." No other extensions were provided for in the original lease.

         ¶ 5 The guaranty, signed by Mr. Tamburello, referenced the original lease and guarantied to the lessor:

"[T]he full and faithful performance by the said Tenant of all obligations, covenants, promises and agreements *** of the said Tenant under said Lease from the commencement date of this Lease, and I will pay all of the Lessor's expenses, including court costs and attorney's fees, incurred in enforcing said Tenant's obligations, or incurred in enforcing this, and I hereby waive notice of any default by the Tenant under the terms of said Lease and consent to any extension of time for the payment of money due under said Lease or to any other indulgences granted thereunder to said Tenant by the Lessor. Should any of Tenant's obligations be outstanding at the expiration of said Lease, the terms and provisions of this shall continue and survive until such outstanding obligations have been satisfied."

         ¶ 6 Although Euro Cappuccino did not provide written notice to the lessor that it intended to exercise the option to extend the lease, it remained on the premises at the end of the original lease period, from January 1, 2003, through December 31, 2005 ("option period"). Euro Cappuccino continued to pay rent; however, the record is unclear regarding the exact rental amounts paid during this time period.

         ¶ 7 On November 4, 2005, Euro Cappuccino and the lessor signed a one-page document titled "Lease Extension, " which stated that it was effective from January 1, 2006, through December 31, 2010. The "Lease Extension" provided a new rent schedule with the following payment amounts: $1483 per month in the first year, $1542 per month in the second year, $1604 per month in the third year, $1668 per month in the fourth year, and $1735 per month in the fifth year. The only other provision in the "Lease Extension" stated that "[a]ll other terms and conditions set forth in the Lease except as amended herein shall remain unchanged." The "Lease Extension" was again signed by Mr. Tamburello as the president of Euro Cappuccino and Mr. Kozonis as an agent of Parkway Bank. No new guaranty was signed with the "Lease Extension."

         ¶ 8 In a June 2015 amended verified complaint, the lessor alleged that Euro Cappuccino had remained on the premises after the "Lease Extension" term had ceased but had failed to pay the full monthly rent beginning in February 2010, thereby breaching the "Lease Extension." According to the lessor, it filed an action in June 2013 for possession and rent against Euro Cappuccino and Mr. Tamburello based on this breach. Although Mr. Tamburello was non-suited in the action, a judgment in the amount of $36, 800 was entered against Euro Cappuccino and the lease was terminated pursuant to that judgment. The lessor further alleged that, "[a]s material inducement for" it to enter into the lease, Mr. Tamburello had signed the written guaranty on the same day the original lease was signed, November 13, 1999, "under which [he] unconditionally guarantied payment and performance of [Euro Cappuccino's] obligations and liabilities" according to the lease. However, despite "multiple demands" upon both Euro Cappuccino and Mr. Tamburello to pay the debt owed under the lease, Mr. Tamburello refused to pay. The lessor concluded by alleging that, as a result of Mr. Tamburello's breach of the guaranty, it had sustained damages in the amount of $40, 907, "which continue[d] to accrue under the terms of the lease, " and asked that a judgment in that amount be entered against Mr. Tamburello. The lessor attached to its amended verified complaint the original lease, the guaranty, the "Lease Extension, " a balance sheet showing the rent amount paid by Euro Cappuccino beginning in January 2010 with a balance due in the amount of $40, 907 and the circuit court's June 2013 order for possession entered against Euro Cappuccino.

         ¶ 9 On July 21, 2016, Mr. Tamburello filed a motion to dismiss the amended verified complaint pursuant to section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 2014)). He argued that the original lease "terminated by its own terms on December 31, 200[2], " because the option to extend was never exercised by Euro Cappuccino in writing. Mr. Tamburello further argued that the guaranty he signed was, by its own terms, only ...

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