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Devco v. T10 Meltel, LLC

United States District Court, N.D. Illinois, Eastern Division

February 27, 2017

ARLINGTON DEVCO, Plaintiff,
v.
T10 MELTEL, LLC, f/k/a T10 UNISON SITE MGMT, LLC Defendant.

          MEMORANDUM OPINION AND ORDER

          Jeffrey Cole Magistrate Judge.

         In June 2011, the plaintiff purchased a building, which was formerly a hotel, in Arlington Heights, Illinois. Its plan was to transform the hotel into an apartment building. At the time of the purchase, there were a number of cellular carrier “tenants” - T Mobile, U.S. Cellular, and Nextel are specified - operating their cellular equipment on the building's roof pursuant to leases. [Dkt. # 1-1, Page 10-79/116]. After its purchase of the property, the plaintiff entered into negotiations to sell the cellular leases and roof easement to the defendant. The plaintiff had plans for reconstructing the roof and adding a number of amenities. Because the cellular equipment was scattered all over the roof, the parties' negotiations included the plaintiff moving the equipment to a single location, and removing any outdated and abandoned equipment. The parties set up an incentive for the work to be done by the plaintiff by a certain date, with the defendant holding back $300, 000 of the purchase price of the easement, which would then go to the plaintiff if its relocation work was completed on time.

         The plaintiff didn't meet the deadline or even the agreed upon three-month extension of that deadline. Nonetheless, the plaintiff continued the relocation work, ultimately completing it a year late. The defendant retained the $300, 000 being held in escrow. The plaintiff then sued the defendant, claiming breach of contract regarding another holdback and unjust enrichment regarding the relocation of the equipment. Both sides have moved for summary judgment on the plaintiff's unjust enrichment claim. As the plaintiff sees it, even though it failed to meet the agreed-upon contractual deadline and complete its work within that time or in the three additional months the defendant granted it, the defendant still received the benefit of the plaintiff's work and thus, the theory goes, the plaintiff has been unjustly enriched by $300, 000.[1]

         As the defendant sees it, plaintiff contractually agreed to a deadline for moving the equipment and receiving the $300, 000 payment. (The plaintiff had already been paid $1 million by the defendant for the leases). Plaintiff missed the deadline for moving the towers and can't skirt the contract and still be awarded the $300, 000 through an unjust enrichment claim.[2]

         Overlooked by the parties is the Supreme Court's decision in US Airways, Inc. v. McCutchen, ___U.S.___, 133 S.Ct. 1537, 1546-47 (2013). Quoting the Restatement (Third) of Restitution and Unjust Enrichment (2011), the Court said: “‘A valid contract defines the obligations of the parties as to matters within its scope, displacing to that extent any inquiry into unjust enrichment.'” As we discuss below, in those circumstances, adhering to the parties' arrangement yields “appropriate” as well as “equitable” relief.

         ANALYSIS

         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); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)(emphasis supplied); Bordelon v. Bd. of Educ. of the City of Chicago, 811 F.3d 984, 989 (7th Cir. 2016). This requires that “there be no genuine issue of material fact, ” and “the mere existence of some alleged factual dispute” will not defeat summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Bordelon, 811 F.3d at 989. The moving party bears the initial burden of production, and must inform the district court why a trial is not necessary. Celotex Corp., 477 U.S. at 325; Sterk v. Redbox Automated Retail, LLC, 770 F.3d 618, 627 (7th Cir. 2014). The party opposing summary judgment must go beyond the pleadings to show that there is a genuine issue of fact that must be resolved with a trial. Hassebrock v. Bernhoft, 815 F.3d 334, 342 (7th Cir. 2016). “When, as here, cross-motions for summary judgment are filed, we look to the burden of proof that each party would bear on an issue of trial; we then require that party to go beyond the pleadings and affirmatively to establish a genuine issue of material fact.” Diaz v. Prudential Ins. Co. of Am., 499 F.3d 640, 643 (7th Cir. 2007).[3]

         The party claiming unjust enrichment has the burden of establishing the elements of its unjust enrichment claim. Under Illinois law, in order to sustain a claim of unjust enrichment, the complaining party has to show that the other party has “unjustly retained a benefit” “to [its] detriment, and that [the]...retention of the benefit violates the fundamental principles of justice, equity, and good conscience.” Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., 831 F.3d 815, 832 (7th Cir. 2016). Indeed, “[i]t is now universally recognized that the principle central to all restitution awards is the principle against unjust enrichment....” Dan B. Dobbs, Remedies, 222-229 (West Publishing Co. 1973). The American Law Institute notes in Restatement Third, Restitution and Unjust Enrichment § 1(b) (2011): states: “[u]njust enrichment” is a term of art. The substantive part of the law of restitution is concerned with identifying those forms of enrichment that the law treats as ‘unjust' for the purposes of imposing liability.... Unjust [ ] enrichment is enrichment that lacks an adequate legal basis. Unjust enrichment is a necessary element or precondition of the larger claim of restitution. The restitutionary claim affirmatively seeks the return of the benefit for which it would be unconscionable for the defendant to retain.” Roy L. Brooks, Postconflict Justice in the Aftermath of Modern Slavery, 46 Geo. Wash. Int'l L. Rev. 243 (2014).

         After reviewing the record the parties have complied, and the arguments they have advanced, it is clear that the plaintiff has not met its burden of proof, and that the defendant is entitled to summary judgment on Count II of the Complaint.

         A.

         As has been said, as part of their agreement for the sale of an easement to the roof of the building the plaintiff purchased, and given the plaintiff's plans for the roof, the parties' contract provided for the relocation of the cellular equipment. The parties staggered their negotiations into three agreements. They began with a “Terms of Agreement” dated May 8, 2012, which the parties acknowledged were “the business terms upon which this transaction will be completed . . . However, the terms are subject to due diligence and final Underwriting by [defendant], and receipt by [defendant] of all required documentation.” [Dkt. #1-1, at 80]. Although it purportedly covered payments four years in the future, the contract was nevertheless set to expire in 6 months - November 2012 - unless extended by mutual consent. [Dkt. #1-1, at 80]. Under the “Terms of Agreement, ” the purchase price the defendant would pay for the 50-year easement was about $1.3 million. [Dkt. #1-1, at 80].

         The payment was subject to deductions, holdbacks, and other closing conditions, [Dkt. #1-1, at 80], including a relocation holdback:

In the event any one the [sic] Tenants agree to relocate but does not agree to pay for the move, Site Owner will pay for the relocation of each applicable Tenant, at a cost not to exceed $150, 000.00/Tenant (noting Clearwire and Nextel for purposes of this provision are deemed one tenant) (the "Holdback Amount”). Since the Closing shall take place in advance of the proposed relocation, the Holdback Amount shall be withheld from the Purchase Price for all Tenants at closing and shall be remitted to the Site Owner upon the completion of the relocation for each Tenant. A Holdback letter agreement shall be signed at closing confirming the conditions for remittance of up to $150, 000 per each cellular company that agreed to relocate their equipment but did not pay for the move.

[Dkt. #1-1, at 81].

         Two months later, in July 2012, the defendant wrote to plaintiff [Dkt. #39, ¶ 17], saying its letter would “serve as a record of [the parties'] mutual agreement” that defendant would fund escrow accounts to cover two holdbacks: a $362, 822.40 Nextel Holdback and a $300, 000 Relocation Holdback. The terms of the holdback at issue here, the Relocation Holdback, were as follows:

2. Relocation Holdback Amount. For a period not to exceed 12 months from the Closing Date, $300, 000.00 ($130, 000.00 for U.S. Cellular, and $85, 000.00 each for T-Mobile and Nextel (US Cellular, T-Mobile and Nextel, singularly, the “Tenant, ” collectively, the “Tenants”) to be credited toward relocation costs in the event any one of the Tenants agree to relocate but do not agree to pay for the move.” [Dkt. #1-1, Page 92/116]. Plaintiff's representative signed the letter agreement on July 19, 2012.

[Dkt. #1-1, at Page 97/116]. If the relocation wasn't timely completed, defendant could close the escrow and retain the $300, 000 within 48 hours of the deadline. [Dkt. #1-1, Page 93/116].

         That same day, the parties executed a “Wireless Communication Easement and Assignment Agreement.” [Dkt. #1-1, Pages 99-116/116]. This Easement Agreement included details regarding the relocation of the cellular equipment - to be installed on the roof of the plaintiff's planned penthouse - and, again, indicated that the work would be done in twelve months. [Dkt. #1-1, Page 11-112/116]. The agreement included a provision stating that it “constitute[d] the entire agreement and understanding of [the parties] with respect to the ...


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