IN THE CIRCUIT COU& COUNTY DEPAR~e, THE CITY OF CHICAGO, a Municipal Corporation, .

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CdUNTY, ILLINOIS f5I~P-1¥fPIVISION
CLEm~ cROWN

DOROTH

v.
THE CHICAGO PARK DISTRICT, MILLENNIUM PARK JOINT VENTURE, LLC, and MILLENNIUM PARK MANAGEMENT VENTURE,LLC, Defendants.

No. 11 CH 41075

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MILLENNIUM PARK JOINT VENTURE, LLC and MILLENNIUM PARK MANAGEMENT VENTURE, LLC, Counter- Plaintiffs,

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v.
THE CITY OF CHICAGO, a Municipal Corporation, and THE CHICAGO PARK DISTRICT, Counter- Defendants.

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PARK GRILL PARTIES' MOTION FOR PRELIMINARY INJUNCTION AND EXPEDITED DISCOVERY
Defendants Millennium Park Joint Venture LLC ("MPJV") and Millennium Park

Management Venture ("MPMV")

(collectively, "Park Grill Parties"), by and through their

attorneys, Miller Shakman & Beem, LLP, move pursuant to 735 ILCS 5/11-102 for a preliminary injunction, for expedited discovery in advance of a hearing regarding this request, and to set a

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date for the preliminary injunction hearing. The Park Grill Parties seek a preliminary injunction providing the following relief: A. Enjoining counter-defendant City of Chicago ("City") from interfering with the contractual relationship between the Park Grill Parties and counter-defendant Chicago Park District ("Park District") under a Concession Permit Agreement ("Concession Agreement") (dated 2/11/03 and attached to the Complaint as Ex. 4) by threatening the Park District and preventing it from granting consent pursuant to the Concession Agreement to the sale of membership interests of MPMV (the manager of the Park Grill) to Levy Premium Foodservice Limited Partnership ("Levy Restaurants") (the "Levy Transaction"), or otherwise interfering with the Concession Permit Agreement or Levy Transaction. B. Enjoining counter-defendant Park District from withholding its consent to the

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transfer of control of MPMV to the Levy Restaurants due to interference by the City regarding the Concession Agreement. C. Because the Park District has already indicated that it has no reasonable objection to the Levy Transaction (and no reasonable basis for objection exists), directing the Park District to provide its formal consent to the Levy Transaction. Because the Park District has not provided its consent to the Levy Transaction as required under the Concession Agreement, Levy Restaurants can terminate the deal at any time. To date it has not done so, but this transaction hangs in the balance as long as the Park District unreasonably withholds its consent. Accordingly, the Court should expedite discovery and

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schedule a preliminary injunction hearing at the first available date in January.

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In support of this Motion, the Park Grill Parties incorporate their Verified Counterclaims Against the City of Chicago and the Chicago Park District for Declaratory and Injunctive Relief and Damages ("Counterclaim"), and further advise the Court of the following: Introduction 1. As set forth in the Counterclaim, the City claims rights it does not have in the

Concession Agreement between the Park District and MPN. The City seeks a multi-million dollar windfall to which it is not entitled based on its non-existent rights. It demands this

payment by holding hostage the Park District's formal consent to the transfer of management rights to the Park Grill restaurant in Millennium Park from the present managers to Levy Restaurants. It thereby endangers a multi-million dollar transaction between MPMV and Levy

Restaurants, and exposes the City and the Park District, and ultimately the taxpayers, to multimillion dollar damages if the Levy Transaction is blocked. Indeed, even if the City's position were correct, it would severely harm the taxpayers. It would mean that the Park District entered into a Concession Agreement to transfer rights it did not possess, upon which MPJV and its affiliates relied to their detriment by raising and expending millions of dollars. District would have liabilities estimated to exceed $15 million. 2. The Park Grill restaurant, operated by MPJV, rests on Chicago Park District land. The Park

The Park District had full authority to enter into the 2003 Concession Agreement with MPJV that granted it the right to build and operate the Park Grill. The Concession Agreement states that the management of the Park Grill may be transferred to a third party subject to Park District consent, which shall not be unreasonably withheld. The Park District has stated in writing that it has no serious objection to the transfer of management to Levy Restaurants (Complaint Ex. 7), but has withheld formal approval due to the City's claims.

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3.

The City claims that it, not the Park District, owns and controls all rights related

to the Park District land on which the Park Grill operates - although it is willing to consent to the Levy Transaction if it gets a significant part of the alleged "several million" dollars of "proceeds that the MPMV owners would receive from the transfer to Levy." (Complaint ~~ 47, 52). 4. The City bases its claim on an Easement Agreement of December 2001

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(Complaint Ex. 3) by which the Park District granted the City certain specific rights, on a nonexclusive basis, to facilitate the development of Millennium Park. The Easement Agreement expressly referred to the development of a restaurant on Park District land and made clear that the restaurant was not part of the non-exclusive easement rights granted to the City. At the time the Easement Agreement was executed, the principals of MPJV already had been selected by a joint City-Park District committee to build and operate the restaurant, and the future Park Grill was understood to be the restaurant referred to in the Easement Agreement. 5. The City's current claim to preeminent rights over the land on which the Park Gill

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is located is wrong because the Easement Agreement does not grant such rights. The City's claim is equally foreclosed because the City had been intimately involved since 2001 in the selection of MP JV as the operator for the restaurant in Millennium Park. The City approved the selection and all the ensuing steps to build and operate the Park Grill, including by actions of the Mayor, the City Council and dozens of other City personnel from department heads to building inspectors. Grill. Indeed, Mayor Richard M. Daley was present at the opening of the Park

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He was aware that it was constructed on Park District land and stated that the City See ~ 12

intended the Park District to be the party that entered into the Concession Agreement.

below. His presence at the opening of the Park Grill is evidenced by the photo below (a larger

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version of which is attached as Exhibit A, hereto).

Also pictured are Chicago Park District

Superintendent David Doig, Alderman Burton Natarus, and MPJV principals James Horan and Matthew O'Malley.

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As this photo reflects, even if the City's consent to the Concession Agreement

were required (it clearly is not), the City has consented and approved of the Concession Agreement and of the development and operation of the Park Grill. Its conduct constitutes its consent to and ratification of the Concession Agreement. Its conduct also estops it from

complaining of the Concession Agreement or seeking to block the Levy Transaction on the basis of purported rights it does not have. 7. Contrary to the allegations of the Complaint, the Concession Agreement was no It was negotiated in the

"sweetheart" deal and was not obtained through political influence.

shadow of the September 11, 2001 attack on the World Trade Center and the Pentagon, when few experienced restaurant operators were willing to take the risk of investing millions of

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dollars of their own funds ($7 million in the case of the Park Grill) to build a year-round restaurant in a park that had never supported such a venture, and that was viewed as a potential target for terrorist attacks. 8. When MPJV was selected and the Concession Agreement signed, nobody knew

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whether Millennium Park would be a success, or whether a year-round restaurant in the park could succeed. Many predicted it would be a gigantic failure. 9. Unlike standard restaurant deals, the Concession Agreement required MPJV to

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construct the entire restaurant infrastructure from scratch with its own funds and no build-out allowance. By entering into the Concession Agreement, the Park Grill Parties took great risks and spent over $7 million of their own funds.. The terms, negotiated by the Park District's

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outside consultants and outside attorneys, were commercially reasonable in light of these and other facts. 10. After Millennium Park became successful, the City sought, and continues to seek, The City's motivations - a

to grab a larger share of the value the Park Grill Parties created.

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public relations gambit and a money grab, not an assertion of bona fide legal rights - were clearly expressed in the City's first notice to MPJV of its present position. On February 9,

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2005, then-City Corporation Counsel Mara Georges wrote a letter to the Park Grill's managers (Complaint Ex. 5) seeking to renegotiate the Concession Agreement within days after the City was threatened with unfavorable (and inaccurate) press coverage suggesting that the Concession Agreement was a bad deal and the result of clout. The Mayor's press officer told the media that the City would renegotiate the Park Grill deal, with no regard for the fact that the Park Grill had been built with $7 million of private funding raised in reliance on the terms of the Concession Agreement to which the City was not even a party.

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11.

A Chicago Sun-Times article dated February 11, 2005 stated: On Thursday, after inquiries by the Sun-Times, the Daley administration announced it would force the key players at Park Grill to renegotiate their deal with the Park District.

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According to the Sun-Times, Jacquelyn Heard, Mayor Daley's press secretary, stated the reason why the City was seeking to redo a done deal: "There's nothing illegal. We're not saying there's the existence of clout and influence, but there's an impression of it." 12. Contrary to its present claims, a Sun-Times article dated February 17, 2005

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quoted Mayor Daley as stating that the City was aware of the Concession Agreement and that the City had authorized the Park District to enter into it. Mayor Daley was quoted as stating that the City consciously decided that the Park District would enter into the Concession Agreement (instead of the City) because "[t]hey needed the money." pressed ahead with its public statements that it would redo the Agreement. 13. To support the City's public relations gambit that it would renegotiate the deal, Nonetheless, the City

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Ms. Georges and the City legal department concocted the City's easement argument and threatened to terminate the Concession Agreement if it could not be renegotiated to the City's liking. The Corporation Counsel's letter frankly admitted the City's motives and their

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unprincipled and unfair goal: The City's preliminary review has found that some of the Concession Agreement's terms need to be renegotiated in light of the success that the Park Grill Facilities have had in its first full year of operation. The City recognizes that the Concession Agreement was negotiated at a time shortly after September 11, 2001, when the entire restaurant industry was suffering a downswing. The City further recognizes that the opening date of Millennium Park was uncertain at the time of contract negotiation which lent additional uncertainty to the operations of the Park Grill Facilities. Unquestionably, however, the Park Grill Facilities have been successful, and as a result, the City wishes to engage in discussions with you to renegotiate various terms of the Concession Agreement. (Emphasis added)

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14.

The City's present Complaint adopts and asserts Ms. Georges' overreaching

position that despite the fact that the Park Grill Parties raised all the funds and took all the risks in reliance upon an arm-length deal and with the City's knowledge, that deal should be undone because Millennium Park has proven to be successful, and because the City says so. Complaint ~9 ("the new Corporation Counsel ... confirmed the City'S position ... ")). 15. In 2011, the Park Grill Parties informed the Park District of the Levy Transaction (See

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and sought consent to substitute Levy Restaurants for MPMV as manager of the Park Grill. Under the Concession Agreement, such Park District consent "shall not be unreasonably withheld." The Park District responded that it had no objection to Levy Restaurants as

replacement manager, but nonetheless refused to provide its formal consent absent City approval, in light of the City'S baseless challenge to the Concession Agreement. 16. The City refuses to allow the Park District to consent, absent concessions from the

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Park Grill Parties that include paying the City nearly half of the proceeds due MPMV under the Levy Transaction and renegotiating the Concession Agreement on terms more favorable to the City. 17. irrelevant. Whether in hindsight the Concession Agreement was a good deal or a bad one is In fact, it was a fair deal. But a deal is a deal. The Concession Agreement is valid

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and enforceable, and the City is not entitled to redo it or threaten to undo it to extract money to which it is not entitled. 18. The City is unreasonably and unlawfully preventing the Park District from

consenting to transfer of management of the Park Grill to Levy Restaurants, a world-class restaurant management firm. The City is claiming rights it does not have, in order to hold the Levy Transaction hostage in the hope of extracting a ransom payment. Declaratory and

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injunctive relief are clearly warranted to confirm the City's lack of legal rights and to permit the Levy Transaction to proceed. Argument 19. The Park Grill Parties clearly meet the elements for preliminary injunctive relief.

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"The purpose of a preliminary injunction is to preserve the status quo pending a decision on the merits of a cause." Hartlein v. Illinois Power Co., 151 Ill. 2d 142, 156, 601 N.E.2d 720, 726 (1992). Normally, a party is entitled to a preliminary injunction if it shows: a clearly ascertained right in need of protection exists; (2) irreparable harm will occur without the injunction; (3) there is no adequate remedy at law for the injury; and (4) success on the merits is likely. (Citation omitted.) Id.; see also McArdle v. Rodriguez, 277 Ill. App. 3d 365, 372, 659 N.E.2d 1356, 1362 (1st Dist. 1995). I. The Park Grill Parties Have Clear Rights in Need of Protection 20. The Park Grill Parties have clearly ascertained rights in need of protection. MPN

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has clear contractual rights under the Concession Permit Agreement, pursuant to which it raised and spent more than $7 million to build, open and operate the Park Grill restaurant and related facilities. Its rights include the right to substitute one manager for another by replacing the two individuals (Matthew O'Malley and James Horan) who are defined in the Concession Agreement as "Key Men." Article VI of the Concession Agreement identifies Messrs. O'Malley and Horan as "Key Men," and provides that MPJV may request substitution of different key men. It

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provides that "the Park District's approval shall not be unreasonably withheld for any proposed substitution of an Alternate Key Man with an effective date five years or more after the date of this Agreement."

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21.

The Levy Transaction proposes to substitute "alternate key men" for O'Malley

and Horan, and was proposed more than five years after the effective date of the Concession Agreement. 22. The Park District is required to grant consent. The Park District stated in a letter

dated June 2, 2011 (Ex. 7 to the Complaint), that it "does not have any strong objection to the substitution of Levy Restaurants as 'Key Men' under the permit agreement [but] cannot grant its unlimited consent due to the ongoing discussions with the City of Chicago related to the Park District's authority to grant the concession ... "

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The law is clear that a "withhold consent" clause cannot be used as a "stick-up" or

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as leverage to renegotiate a lease or contract or otherwise extract extra-contractual concessions from the party seeking the consent. See Chanslor- W. Oil & Dev. Co. v. Metro. Sanitary Dist. of Greater Chicago, 131 Ill. App. 2d 527,530,266 N.E.2d 405,408 (1st Dist. 1970) (municipal

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corporation could not withhold consent to sublease based on its desire to take advantage of current, more favorable market rates: "we hold that defendant's withholding of consent on the condition of reappraisal and establishment of a new rent schedule is arbitrary and

unreasonable").

As a federal court described it: A lessor acts unreasonably when he seeks to improve his economic position by withholding his consent to obtain a benefit not reflected in the terms of the original lease. For example, a landlord may not withhold his consent to a sublease in order to extract a higher rent. This point is repeated in one of Defendant's key cases: "[I]t is unreasonable for a landlord to withhold consent to a sublease solely to extract an economic concession or to improve its economic position."

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Toys "R" Us, Inc. v. NBD Trust Co. of Ill., 88 C 10349, 1995 WL 591459, at *38 (N.D. Ill. Oct. 4, 1995) (Nordberg, J.) (internal citations omitted) (attached hereto as Exhibit B); see also Jung v. Zemel, 189 Ill. App. 3d 191, 197-99, 545 N.E.2d 242, 246-47 (1st Dist. 1989) (landlord

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waived sublease consent clause where subtenant was commercially reasonable and landlord "thought that he was entitled to profit from the situation, far beyond the terms of the lease or the expectations of the parties"); Chern. Petroleum Exch., Inc. v. Metro. Sanitary Dist. of Greater Chicago, 81 Ill. App. 3d 1005, 1011, 401 N.E.2d 1203, 1207 (1st Dist. 1980) (municipal
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corporation could not compel lessee to renegotiate rent simply to get more money for the public, because a "municipal corporation must comply with its contractual obligations"); Florida

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Panthers Hockey Club, Ltd. v. Miami Sports & Exhibition Auth., 939 F. Supp. 855, 859 (S.D. Fla. 1996) (municipal authority enjoined to accept license agreement pursuant to "unreasonable withhold consent clause" where no term was materially adverse to the authority) (attached hereto as Exhibit C). 24. MPJV's right to the Park District's consent is even clearer than the rights in the

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foregoing cases, since the party here seeking to use the "consent clause" as a hold-up (the City) is a stranger to the contract, while the party holding the consent right (the Park District) has indicated its willingness to grant that consent but for the City's objection. The principle stated in these cases - that it is unreasonable renegotiationprotection. 25. It is also indisputable that once the City's meritless position is rejected, no to withhold consent in order to force a contract

applies fully here and underscores that the Park Grill Parties' clear rights need

reasonable basis exists for the Park District to withhold its consent to the substitution of Levy Restaurants as the manager. The Park District already has granted concession rights to a Levy affiliate at the Oak Street Beach in Chicago. Levy Restaurants is a highly successful, large, and capable manager of restaurant and catering operations, with restaurants and concessions at such well-known locations as Spiaggia, Fulton's on the River, Ravinia, Wrigley Field, US Cellular

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Park, the United Center, the Staples Center and Dodgers Stadium in Los Angeles, and Larnbeau Field in Green Bay. In addition, a joint venture formed by Levy and US Equities, known as Park Concessions Management, has replaced Urban Concessions as the firm that oversees all

concession agreements for the Chicago Park District. successor to Horan and O'Malley.

It is hard to imagine a more qualified

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As such, it is no surprise that the Park District has no

objection to Levy Restaurants and would have no colorable basis to raise such an objection. 26. It is appropriate to enter injunctive relief to enforce contractual rights. "A court

may use a preliminary injunction to compel compliance with a contract, especially where the 'plaintiff seeks merely a continuation of the contract..., relationship." not a creation of a new contractual

Travelport, LP v. American Airlines, Inc., 2011 IL App (1st) 111,761 at ~ 33 Co., 196 Ill. App. 3d 425, 432,553 N.E.2d 404 (1st Dist.

(quoting Gold v. ZiffCommunications

1989)); see also Florida Panthers, 939 F. Supp. at 860 (granting preliminary injunction to enjoin a municipal authority from refusing to provide consent to a license agreement). 27. As shown below, the Park Grill Parties are entitled to a preliminary injunction.

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Park Grill Parties Are Likely to Succeed on the Merits of Their Equitable Claims 28. The Park Grill Parties' Counterclaims and the documents that the City attached to

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its Complaint are more than sufficient to establish the Park Grill Parties' right to a preliminary injunction. A plaintiff ... is not required to make out a case which in all events will warrant relief after a final hearing. All that is required of the petitioning party at the preliminary injunction stage of the proceeding is that he raise a fair question as to the existence of the right claimed and demonstrate that he probably will be entitled to the relief prayed for if the proof should sustain the allegations. Gannett Outdoor of Chicago v. Baise, 163 Ill. App. 3d 717, 723,516 N.E.2d 915, 919-20 (lst Dist. 1987) (emphasis added) (citation omitted). Likewise, the "granting of a preliminary

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injunction shows only that a sufficient case has been presented to preserve the property or rights in issue in status quo until a final hearing upon the merits can be held." Gold, 196 Ill. App. 3d at 431,553 N.E.2d at 408. The Park Grill Parties have clearly "raised a fair question," and met the threshold standards for likelihood of success. The discussion in the preceding section regarding

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the Park District's contractual obligation to consent to the Levy Transaction also demonstrates a likelihood of success on the Park Grill Parties' breach of contract claim. The City's purportedly superior rights rest on its assertion that the Easement Agreement gives it exclusive rights regarding Parcel 4 and deprived the Park District of authority to enter into the Concession Agreement. The Easement Agreement does no such thing and, in any event, the Park Grill

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Parties are likely to show that the City's position is foreclosed by doctrines of estoppel,

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ratification, and laches. A. 29. Easements are presumed to be non-exclusive The City'S rights under the Easement are non-exclusive. When the Park District

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granted the Easement, it did not deprive itself of authority to enter into the Concession Agreement. 30. Under Illinois law, easements are presumed to be non-exclusive. Easements are

presumed to provide for concurrent use. Courts interpret easements as concurrent unless there is clear evidence of the parties' intent to create an exclusive easement. Village of Round Lake v. Amann, 311 Ill. App. 3d 705,718,725
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N.E.2d 35, 47 (2d Dist. 2000); Roketa v. Hoyer, 327 Ill.

App. 3d 374, 379, 763 N.E.2d 417, 421 (5th Dist 2000) ("With regard to the use of easements, there is a principle of concurrent use, rather than exclusive use."); McMahon v. Hines, 298 Ill. App. 3d 231,239,697 N.E. 2d 1199, 1206 (2d Dist. 1998) ("A principle of concurrent, rather

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than exclusive, use underlies the law concerning easements."); Professional Exec. Ctr. v. LaSalle

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Bank, 211 Ill. App. 3d 368, 379, 570 N.E.2d 366, 373 (1st Dist. 1991) ("Use of an

easement by one cannot preclude use by the other, but rather use by both must be permitted in accordance with their interests."). 31. Applying that law here, the Park District's actions in entering into the Concession

Agreement and according MPJV rights to operate the Park Grill and related food services clearly were permitted under the "concurrent use doctrine." Therefore, the easement is presumed to be non-exclusive. B. 32. The language of the easement proves it is non-exclusive The terms of the Easement Agreement confirm that the Park District did not grant

the City an exclusive easement. Pursuant to the Easement Agreement, the Park District granted the City a perpetual easement "solely for the purposes of the installation, construction, use, inspection, maintenance, repair, rehabilitation, replacement and removal of the facilities

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described in Exhibit B." (Complaint Ex. 3, emphasis added). The Easement Agreement stated that the City would only have "exclusive" rights "to name all improvements and facilities that are part of the Millennium Park Facilities." (emphasis added). 33. Exhibit B to the Easement Agreement, titled "Millennium Project Facilities," is a It lists six "Park

map showing the north-south arc dividing City from Park District property.

Elements," each of which is on the surface level of the future Park. Element 4 is "Ameritech Plaza," which contains the "Bean." The note on the map next to "Element 4" states "restaurant below," which is the location of the future Park Grill, located below the surface of the Plaza. Likewise, Element 5, labeled "North and South Galleries," identifies next to the South Gallery "storage room below," which is the storage and tunnel area used by Park Grill Parties pursuant to the Concession Agreement.

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34.

This Exhibit B map, which paragraph 1 of the Easement Agreement defines as the

scope of the City's easement, confirms that the restaurant and storage room were not part of the "Millennium Project Facilities" subject to the easement, but rather were two future areas that were located below the easement area that the City was constructing. 35. This reading is supported by two other portions of the Easement Agreement.

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First, as previously stated, the qualifier "solely" in paragraph 1 shows that the City's easement rights are limited and are not exclusive. The City's claim to exclusive control of the restaurant concession effectively reads the term "solely" out of the Agreement, contrary to the principle of construction that the Agreement be read to give each term meaning. See,~, Boise Cascade

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Home & Land Corp. v. Utilities, Inc., 127 Ill. App. 3d 4, 10, 468 N.E.2d 442, 447 (1st Dist. 1984) (Illinois follows "well-established rules that a contract must be construed to give meaning to each term and that words are inserted purposefully and deliberately to indicate the parties' intent."). 36. Second, paragraph 5 of the Easement Agreement reserves certain rights to the

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Park District, including "[t]he right to use the sub-surface areas of the Easement Area for any reason and in such manner as the Park District shall deem proper, in its sole discretion." ~5(a}.

This is the Park Grill's location. The term "below" on the Exhibit B map indicates that the future restaurant and storage room were "sub-surface" areas reserved fully to the Park District (which is, of course, entirely consistent with the fact that the Park District-City joint committee had awarded the contract to MPJV just a few weeks before the Easement). 37. The fact that the City did not obtain any exclusive rights regarding the future

restaurant area is clinched by the fact that the easement provides only one respect in which the City would have "exclusive" rights: "to name all improvements and facilities that are part of the Millennium Park Facilities ... " par. 1. That the City received an express exclusive power only to name facilities, not to install them, own them, license them or approve them, confirms that the Easement Agreement did not grant any such exclusive powers to the City.

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38.

Parol evidence confirms that the easement is non-exclusive
Even if the Court were to conclude that the Easement Agreement is ambiguous

regarding the rights to develop the restaurant and license the concession to the Park Grill Parties, parol evidence overwhelmingly confirms the City and Park District's mutual intent that the Park District retained the rights to that portion of the park and to enter into a concession agreement for restaurant and food service operations with the Park Grill Parties.

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39.

At the time the Easement was executed and recorded (late December 2001), the

joint Park District-City committee only recently had concluded the open and public RFQ and RFP process begun in February 2001 to screen potential restaurant operators. It had selected the Park Grill Parties the previous month and was proceeding to negotiation of the Concession Agreement. The City not only was aware of these efforts, but City representatives, including the

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Commissioner of the Mayor's Office for Special Events, had participated as members of the Selection Committee that conducted the RFP process in the fallof2001. As discussed above,

City representatives and other members of the Selection Committee chose the Park Grill Parties as the restaurant operator that would be allowed to contract with the Park District to operate the restaurant and provide food services in Millennium Park. 40. The selection of the Park Grill Parties was reported in November 2001 in the local

press. In the Winter of2001-02, the City published the "Millennium Park News." It described the "300-seat restaurant" at the location of the Park Grill as one of the anticipated amenities in the park. (See Exhibit D attached hereto). 41. While these facts suffice to establish that the City and Park District mutually

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understood and intended that the Park District retained the right to enter into a concession agreement with the Park Grill Parties to develop and operate the restaurant, it is also relevant that the Easement Agreement was essentially an after-thought. It was hastily drafted and entered into at the suggestion of bond counsel who was concerned that the City was planning to further finance the construction of facilities on property over which the City had no formal, recorded legal rights. The Easement Agreement papered over this issue so that financing could proceed. 42. Moreover, the 1998 quitclaim of "Parcel 2" from the Park District to the City

further undercuts the City'S easement theory. (See Complaint ~ 20). If the Park District really

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revoking erroneously issued permit for a billboard because company, acting in reliance on the permit, expended $50,000 to construct the billboard). 45. MPJV relied on the many affirmative acts, formal and informal, of Mayor Daley,

the City Council, City Department heads, and many other employees and agent of the City affirming the validity of the Concession Agreement and supporting and implementing MPN's rights to operate the restaurant and provide food services in Millennium Park, as described above. These acts include: (i) the open RFP and RFQ process; (ii) the repeated involvement and encouragement of the City's chief executive officer and department heads; (iii) the passage of legislation by the City Council permitting liquor sales critical to the restaurant's operations; and (v) the issuance of numerous permits and licenses. Counterclaim. These facts are described in detail in the

(See Counterclaim ~~ 22-62). They overwhelmingly show that the City knew and

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approved of the operation of the Park Grill and of the fact that it was located on Park District land pursuant to a Concession Agreement between the Park District and MPJV. In reliance on

those and other acts, MPJV raised and spent approximately $7 million of private investment on capital improvements, fixtures, equipment and other start-up costs for the restaurant and related facilities. 46. It is hard to imagine a stronger case for estoppel. Two estoppel cases are

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particularly pertinent. Patrick Engineering, Inc. v. City of Naperville, 2011 IL App (2d) 100,695 at ~ 43,955 N.E.2d 1273, 1288 (2d Dist. 2011) (appeal allowed), provides a thorough analysis of estoppel law against municipalities. The Appellate Court held that equitable estoppel may result

from actions by individual city officials and is not limited to cases where the "act causing the detrimental reliance was accomplished through legislation or by the members of the

municipality's governing body." Here, we have both numerous acts by individual city officials,

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from inspectors, to Department heads, to the Mayor, and legislative action.

(See the detailed

facts recited in the Counterclaim at ~~ 46-50,55 (acts by Mayor and Mayor's office), ~~ 29,31, 49-53, 56 (acts by department heads), ~ 55 (acts by the City Council)). 47. The Court should also follow Monat v. County of Cook, 322 Ill. App. 3d 499, 511,

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750 N.E.2d 260 (lst Dist. 2001), in which the court held that Cook County was estopped from issuing a stop-work order against a property owner after affirmatively granting him a zoning variance to build a horse stable. 48. Under these facts and the law cited above, the Park Grill Parties are very likely to

I I

succeed on their claim that the City is estopped from contesting the validity of the Concession Permit Agreement and interfering with the Levy Transaction. E. 49. The City ratified the Concession Agreement The doctrine of ratification applies to municipal and other public bodies. Athanas

v. City of Lake Forest, 276 Ill. App. 3d 48, 56-57, 657 N.E.2d 1031, 1037-38 (2d Dist. 1995)

i I I I

(holding that City Council's acquiescence in the application of the roll call policy by its failure to repudiate or rescind that policy constituted ratification of the policy). A principal, including a city, "can ratify the actions of its agent by not repudiating the agent's actions once it has knowledge of the actions, or by accepting the benefits of the actions. Ratification may also be inferred from surrounding circumstances, including long-term acquiescence, after notice, in the benefits of an unauthorized transaction." Id. (citing City of Burbank v. Ill. State Labor Relations Bd., 185 Ill. App. 3d 997, 1003,541 N.E.2d 1259, 1264 (1st Dist. 1989)). 50. Here, the City took many steps inconsistent with its current claims prior to first Those steps reflected its knowing acquiescence to the Concession

asserting them in 2005.

Agreement, detailed above. It also reaped benefits from the transaction before raising objections.

20

Among the benefits were the public opening of the restaurant before Millennium Park opened, as specifically requested by the City (Counterclaim ~ 49) .: The Park Grill provided an amenity that was important for the success of Millennium Park. The City received permit fees and sales and liquor tax revenue from the Park Grill for over a year prior to raising objections to the transaction. 51. (Counterclaim ~~ 54, 57). Additionally, the City ratified the Concession Agreement yet again when it

induced the Assessor in 2005 to attempt to tax the Concession Agreement as a taxable leasehold. The City'S position necessarily affirmed that the Concession Agreement is a binding and enforceable contract; if it were not, the Park Grill Parties would have had no property interest to tax. The City also benefitted by trying to use its position to try to force the Park Grill Parties to renegotiate the Concession Agreement, and sought to generate tax revenues based on the validity of that Agreement. F. 52. The City's position is barred by laches The Park Grill Parties are also likely to succeed in this case because the position

the City asserts in its declaratory judgment complaint is barred by laches. While a mere delay in asserting a right does not constitute laches, if the defendant has relied on the circumstances complained of to his detriment and the delay has been unreasonable, it would be inequitable and unjust to grant relief to the plaintiff. Laches may be asserted against the State in proper circumstances to defeat the State's fee interests .... The defense of laches may also be asserted against a municipal corporation. City of Rochelle v. Suski, 206 Ill. App. 3d 497, 501-02, 564 N.E.2d 933, 936 (2d Dist. 1990) (internal citations omitted) (city's forcible entry and detainer action against a trailer park may be barred by laches where defendant relied on city's issuance of building permits for the trailers and therefore was on notice that some of the trailers may have encroached on city land).

II

11

I

o o o

21

o o
n
[j

53.

While laches against a municipality cannot be based on mere inaction, it may

apply "if the government officials initiated an affirmative act that induced the opposing party to act, making it inequitable to permit the government entity to retract what the government officials have done." Wabash County v. Illinois Mun. Ret. Fund, 408 Ill. App. 3d 924, 933-34, 946 N.E.2d 907, 918 (2d Dist. 2011) (citation omitted); see also City of Marengo v. Pollack, 335 Ill. App. 3d 981,989, 782 N.E.2d 913,919 (2d Dist. 2002) (same). 54. Here, there was unreasonable delay, many affirmative acts and reliance galore.

[/

Q

I I U

The City delayed asserting its present position from the 2001 award of the contract to the Park Grill Parties until February 2005, when it was embarrassed by bad press. Its delay was patently unreasonable. It engaged in literally dozens of affirmative legislative and executive acts, as And MPJV relied on these affirmative acts and the

discussed above and in the Counterclaim.

failure of the City to assert the rights it now asserts. The Park Grill Parties are very likely to show laches. G. 55. Activities not located on Parcel 4 The foregoing sections establish the Park Grill Parties' likelihood of success

regarding their rights to continue to operate the restaurant and use the other "Premises" under the Concession Agreement, all of which lie on Parcel 4, to which the Park District holds title. Additionally, the Park Grill Parties are likely to succeed regarding the rights to operate certain food service concessions and catering activities in the Park in areas other than Parcel 4. 56.
(

The same doctrines of estoppel, ratification and laches apply to the other areas.

L

With acquiescence in and full knowledge and active facilitation of the Concession Agreement, the $7 million investment of the Park Grill Parties and the operations of the restaurant and related

[

U
f_t
22

I I I I I I I I I

food services, the City cannot now attack the validity of the Concession Agreement regarding such activities. III. Park Grill Parties are Also Likely to Succeed on their Tortious Interference 57. Claims

While the discussion above more than amply shows likelihood of success, the

Park Grill Parties are also likely to show that the City has tortiously interfered with the Concession Agreement, and that both the City and Park District have tortiously interfered with their prospective economic advantage by preventing the Levy Transaction from closing. 58. The City tortiously interfered with MPJV's contractual rights by causing the Park

District to withhold consent to the Levy Transaction and therefore breach the Concession Agreement. 59. Tortious interference with contract requires: (1) the existence of a valid contract;

I

(2) the defendants' awareness of the contract; (3) the intentional inducement of a contract breach; (4) an actual breach of the contract; and (5) damages. Roy v. Coyne, 259 Ill. App. 3d 269, 275, 630 N.E.2d 1024, 1028 (1st Dist. 1994). 60. Elements (1) and (2) are plainly met here, as is "inducement" under element (3).

i
I I I I

The breach of contract (element 4) is also clear. As shown above, there is no reasonable basis for the Park District to withhold consent of the Levy Transaction, and the City's baseless legal position provides no ground for interfering with the Park District's grant of consent. Thus, injury and damages are apparent from the failure of MPJV to receive the benefits of a new, highly qualified manager, as well as the other injuries discussed in the next section. 61. Additionally, the Park Grill Parties are likely to show that both the Park District

and the City are tortiously precluding them from closing the Levy Transaction. The elements of such a claim are: "(1) a reasonable expectancy of entering into a valid business relationship, (2)

23

the defendant's knowledge of the expectancy, (3) an intentional and unjustified interference by the defendant that induced or caused a breach or termination of the expectancy, and (4) damage to the plaintiff resulting from the defendant's interference." Ill. 2d 288,300-01,751 Voyles v. Sandia Mortg. Corp., 196

N.E.2d 1126,1133 (2001) (quoting Anderson v. Vanden Dorpel, 172 Ill. It is likely that only the third of these four

2d 399, 406-07, 667 N.E.2d 1296, 1299 (1996)). elements will be disputed. 62. "The element of 'purposeful'

or 'intentional'

interference

refers to some

impropriety committed by the defendant in interfering with the plaintiff's expectancy of entering into a valid business relationship with an identifiable third party." Romanek v. Connelly, 324 Ill. App. 3d 393, 406, 753 N.E.2d 1062, 1073 (1st Dist. 2001) (quoting Dowd & Dowd, Ltd. V. Gleason, 181 Ill. 2d, 460, 485, 693 N.E.2d 358, 371 (1998)). 63. The City's impropriety abounds here. As discussed above, it asserted its

i I I I

purported rights only due to public embarrassment and with clear knowledge that, while Park Grill Parties assumed the risk, the City wanted to grab the benefit of the Concession Agreement. It attached Ms. Georges' baseless February 2005 letter to its Complaint as Ex. 5, and alleges that the City reviewed and adopted the positions she asserted. (See Complaint ~9 (the new City

Administration "confirmed the City's position ... ")). The assertion of bogus easement rights in order to demand 40% of the Levy Transaction proceeds is patently improper. Assessor to assert frivolous tax claims as leverage is also patently improper. Fomenting the Finally, it also is

improper for the Park District spinelessly to withhold consent to the Levy Transaction under pressure from the City.

24

I I I I I I I I I I i I I I I

IV.

There is Irreparable 64.

Injury and No Adequate Remedy at Law

Irreparable injury often overlaps with the element of an inadequate remedy at law.

"For the purposes of a permanent injunction, an inadequate remedy can be the threat of irreparable harm or other harm that cannot be adequately corrected by the payment of monetary damages." 1990). 65. and business. Irreparable harm is established where a party faces a threat of losing customers Falcon. Ltd. V. Corr's Natural Beverages. Inc., 165 Ill. App. 3d 815, 821, 520 Petrzilka v. Gorscak, 199 Ill. App. 3d 120, 124, 556 N.E.2d 1265, 1268 (2d Dist.

N.E.2d 831, 835 (1st Dist. 1987) ("The loss of sales and customers as well as the threat of continuation of such losses to a legitimate business interest, as alleged by plaintiffs in the present case, have been held sufficient to constitute irreparable injury."); Gold, 196 Ill. App. 3d at 434-35 (irreparable harm shown by inability to advertise at contractual discounted rates). 66. Here, the City'S assertion of its putative rights and the Park District's withholding

of consent have inflicted and threaten to continue to inflict clear irreparable injury that cannot be adequately remedied at law. Among these injuries are the following; (1) the City's taking

hostage the Park District's grant of consent to try to extract future, increased rental payments from the Park Grill Parties threatens to inflict injury in an unknown amount; (2) the City's bogus assertions that the Concession Agreement is invalid threatens to deprive the Park Grill Parties of their contractual rights, including the twelve years left in the Agreement (with possibly an additional ten years beyond that), that MPJV realized only through taking great risk following 9/11 and investing $7 million in construction and start-up costs; (3) blocking the Levy Transaction is depriving the Park Grill Parties of long-term management stability, with

i

concomitant benefits that cannot be measured in dollars, including economies of scale and

25

I I I E I I I I I I i I I I I

purchasing and staffing power that Levy Restaurants enjoys and current management does not; and (4) the City's public assertions of its purported rights have cast a doubt on the Park Grill's business, affecting the willingness of customers to book parties and events, affecting the Park Grill Parties' ability to hire new staff, and causing anxiety and uncertainty among the existing staff. (See Counterclaim ~~97-99). V. The Requested Relief Preserves the Status Ouo 67. The Park Grill Parties are entitled to a preliminary injunction to avoid these

irreparable harms. 68. A "preliminary injunction is designed to prevent a threatened wrong or the further

perpetration of an injurious act." Kalbfleisch v. Columbia Comm. Sch'l Dist., 396 Ill. App. 3d
11 OS, 1118, 920 N.E.2d 651, 662 (5th Dist. 2009) (internal citation and quotation marks

omitted). "Often this is done by keeping all actions at rest, but sometimes it happens that the status quo is not a condition of rest but, rather, is one of action and the condition of rest is exactly what will inflict the irreparable harm." Id. "A probable violation of law should never be the status quo." Id. at 1119 (affirming preliminary injunction ordering school district to permit autistic child to bring service dog to school pursuant to state service animal statute, even though the child had not attended school with his dog prior to the injunction). 69. "The function of a preliminary injunction is not merely to contain ongoing

damage but to prevent prospective damage." County of Du Page v. Gavrilos, 359 Ill. App. 3d 629, 638, 834 N.E.2d 643, 652 (2d Dist. 2005) (affirming injunction shutting down adult business for zoning violations, although the status quo immediately prior to the injunction was that the business was operating).

26

I I I I I I I I I I i I I I

70.

For example, Brooks v. LaSalle National Bank, 11 Ill. App. 3d 791, 799, 298

N.E.2d 262, 268 (1st Dist. 1973), held that a court of equity may issue a mandatory preliminary injunction with respect to real property where the defendants have merely "interrupted" the property rights of the plaintiff. There, a landlord resorted to self-help by locking a tenant out of his apartment for unpaid rent. The tenant sought and obtained a preliminary injunction restoring him to possession of the apartment. The Appellate Court held that a mandatory injunction was

proper, although it changed the literal status quo immediately prior to the order, because "the last actual peaceable uncontested status was that of the plaintiff in possession of his apartment." at 799. 71. Here, the "last peaceable uncontested status" - before the City'S bogus assertion Id.

of its claimed property rights under the Easement - was that the Park Grill Parties were in full, unencumbered possession of all the rights afforded under the Concession Agreement, including the right to transfer their management interest to Levy Restaurants (or another 'key man') without the Park District unreasonably withholding its consent. entitled to an injunction returning them to that status quo. 72. In 2005, the City upset the status quo by raising (but not actually pursuing) the The Park Grill Parties are

specter of its allegedly "superior" rights to Parcel 4 and causing the Assessor to issue a false tax assessment, thus placing a cloud on the Park Grill's business and, ultimately, holding up the Levy Transaction. That state of uncertainty between 2005 and the present has not been a "peaceable"

status quo, but rather reflects the City's ongoing attempts wrongfully to hold the Park Grill Parties hostage and attempt to force a renegotiation of the Concession Agreement. principles Under the

articulated in Brooks and similar cases, the Court should issue an injunction

27

I I I ! I I I I I I i I I I

prohibiting the City from further interference and restoring the Park Grill Parties to their rights under the Concession Agreement, i.e., the pre-2005 status quo. 73. A preliminary injunction will not disturb the status quo for an additional reason.

The requested injunction would permit Levy Restaurants to assume management of the Park Grill. As discussed below in connection with the "balance of harms" issue, from the perspective of the City or Park District little if anything would change if the substitution were to occur. Either way, the Park Grill would keep operating in its current space under professional, wellqualified management, as it has operated for over eight years. VI. The "Balance of Hardships" Decisively Favors Park Grill Parties 74. In issuing a preliminary injunction, the court also should find that the "balance of

hardships" favors the Park Grill Parties. See Kalbfleisch, 396 Ill. App. 3d at 1119. 75. The City and the Park District will suffer absolutely no harm if the Park District is

ordered to consent to the Levy Transaction. The Park District, through the letter from Ms. Garcia dated June 2, 2011, has indicated that it "does not have any strong objection to the substitution of Levy Restaurants as 'Key Men' under the permit agreement..." (Complaint Ex. 7). As detailed

above, Levy Restaurants is a well-qualified restaurant management organization that already operates concessions on another Park District property and jointly manages concessions for the Park District in general. The Park District has no valid reason to withhold its consent to a management change. 76. If the Park District is ordered to consent and the Levy Transaction is closed, then

the Park Grill will continue to operate under the new management and - it is anticipated experience increased operating efficiencies and savings that could benefit all parties. If the Levy Ttransaction does not end up closing, the Park Grill will continue to operate under its present

28

I I I I I I I I I I i I I I

management.

Either way, the Park Grill will continue to operate and the City and the Park

District will not be prejudiced. 77. In fact, an injunction would benefit the Park District, as it will support its

contractual and ownership rights from the City's challenge and (when confirmed by a permanent injunction) protect against potentially massive damage claims against it. Counts VI and VII). 78. Balanced against those factors is the irreparable harm that the Park Grill Parties (See Counterclaim

are likely to suffer if a preliminary injunction is not granted in their favor, as detailed above

(,-r,-r_ 60-62).

The balance of harms clearly favors an injunction preventing the City from

interfering with the Park Grill Parties' contractual rights and compelling the Park District to grant its consent to the Levy Transaction. VII. Expedited Discovery and Scheduling Are Necessary 79. The Park Grill Parties request that the Court schedule a preliminary injunction

hearing at the earliest available date in January. 80. To prepare for that hearing, the Park Grill Parties seek to accelerate discovery

under Illinois Supreme Court Rule 201 (d). Immediate discovery is needed, inter alia, to allow the Park Grill Parties to obtain documents and depose witnesses evidencing the extensive involvement of the City in developing the Park Grill, which will establish the likelihood of success regarding issues such as estoppel, waiver, ratification and bad faith. 81. In order to prepare for a prompt preliminary injunction hearing, the Park Grill

Parties request that written discovery be returnable within three days and that depositions be taken on five-days notice.

29

I I I I I I I I I I i I I I I

WHEREFORE, the Park Grill Parties request that the Court allow accelerated discovery as described above, conduct a preliminary injunction hearing on or before February 1,2012, and enter preliminary injunctive relief as described in this motion and the Park Grill Parties' Counterclaim.

Respectfully submitted,
MILLENNIUM PARK JOINT VENTURE LLC AND MILLENNIUM PARK MANAGEMENT VENTURE LLC

Dated: December 15, 2011

By:

Michael L. Shakman Edward W. Feldman Daniel M. Feeney Alexandra K. Block
MILLER SHAKMAN & BEEM LLP

(Atty No. 90236)

180 N. LaSalle St., Suite 3600 Chicago, IL 60601 Tel: 312.263.3700

1/

11
30

EXHIBIT A

I I I I

EXHIBITB

I

Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

1995 WL 591459 Only the Westlaw citation is currently available. United States District Court, N.D. Illinois, Eastern Division. TOYS "R" US, INC., a Delaware corporation, v. NBD TRUST COMPANY OF ILLINOIS, a successor Plaintiff,

Dr. Franklin Perk ills Sell. v. Freeman, 741 F.2d 1503. 1515 T1. 19 (7th Cir.I<J85); see also //1 rc !fa/ia//(III, 936 F.2d 1490, 1502 & T1. 6 (7th ('ir.1991 ) (citing Freeman as reciting Illinois law). The lease here in dispute governs property in Illinois and apparently was negotiated and executed in Illinois. The Defendant's principal place of business is in Illinois. Therefore, the Court holds that Illinois
(llI.App.Ct.]993);

law governs this case.

I

B. Prior Proceedings On December 8, 1988, Plaintiff Toys "R" Us, Inc. ("Toys") filed a five count Complaint" against the Defendant, a nondiscretionary land trust (the "Trust") controlled by Larry M. Klairmont ("Klairmont") and his son Alfred ("Alfred"). The Plaintiff also sued Klairmont individually and Imperial Realty Company ("Imperial"), the company through which the Klairmonts managed real estate. Counts I, II, and III of the Complaint made claims against the Trust; the counts sought a declaratory judgment, damages for breach of contract, and injunctive relief. Counts IV and V of the Complaint made claims against Klairmont and Imperial; they sought damages for tortious interference with contract and tortious interference with prospective business opportunity. The case was placed on the docket of Judge Conlon, who after an evidentiary hearing, entered judgment for the Defendants on all counts. See Toys "R" Us, Inc. v. First Nat'l Bank of Highland Park, No. 88-C-I0349, Findings of Fact & Conclusions of Law (N.D.!II. March 7, 1989). Toys, as lessee, sought damages and injunctive relief for Klairmont's refusal, on behalf of the Trust, as lessor, to consent to Toys's proposed sublease of unused retail space to Famous Footwear ("Famous"). Toys, which became lessee on an assignment from the K-Mart Corporation C'K-Mart"), claimed that the Defendants breached their lease agreement and interfered with Toys's contractual relations with Famous. In response, the Defendants argued, inter alia, that under Klairmont's letter consenting to K-Mart's assignment to Toys, Klairmont had the right to refuse to the Famous Sublease because of the use to which the subleased space would be put, i.e. the sales of shoes. In addition, the Defendants argued that paragraph 11 of the assigned lease permitted Klairmont absolute control over exterior alterations to the Toys storefront and that, as a result, Klairmont could reject any subtenancy requiring such alterations. In granting judgment for the Defendants, Judge Conlon accepted both of these arguments. See Toys "R" Us, Inc. v. First Nat'l Bank of Highland Park, No. 88-C-l0349, Findings of Fact

I I I

Trustee to NBD Highland Park Bank, N.A. f/n/ a The First National Bank of Highland Park, as Trustee under Trust Agreement dated January 9,1981 and known as Trust No. :3119, Defendant. No. 88 C 10349. Opinion MEMORANDUM OPINION AND ORDER

I

Oct. 4, 1995.

I. INTRODUCTION NORDBERG, District Judge.

i I I I

* 1 The parties to this lease dispute tried this case before the Court in a bench trial on October 26-29, November 1,2,4,5 and 8, December 21, 1993, and January II, 1994. Each of the parties submitted a post-trial brief and proposed findings of fact and law. On May 13,17, and 19,1994, the Court heard closing arguments. In reaching its conclusions, the Court has addressed a number of motions made by the parties during the course of the trial and after the trial. After first summarizing the case and then addressing the outstanding motions, the Court then makes its findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil
Procedure.

A. Jurisdiction and Applicable Law The Court has diversity jurisdiction over this case pursuant to 28 USc. § 1332 (]988). In a diversity suit, a federal court must apply the substantive law of the state in which it sits, including the forum state's choice of law principles. Klaxon CO. I'. Stentor Dec .. \{liz. Co" 313 U.S. 487. 496 97 (1941). In Illinois, state courts now apply the "most significant contacts" test to contracts disputes. See Diamond Stare Ius. Co. v. Chester Jensen Co.. 61 1 N. E .2d 1083, 1093

I I I I I I I I I I i I I I I I I I I

Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

& Conclusions appealed Seventh Circuit.

of Law, Conclusions States Court

of Law

'I~ 7-9.

Toys On remand, to Seventh decision the case was reassigned Circuit Counts to this Court pursuant III, IV, and Toys abandoned V of the Count III, The only Rule 36. As a result of Judge Conlon's

to the United

of Appeals

for the

and the appeal,

*2 The Seventh
Appeals between obligated

Circuit

reversed

in part. The Court

of

Complaint

need not be addressed.

held that, under paragraph the Trust and K-Mart to consent, or the "Master

16 of the original lease
Lease"), Klairmont was

its request for injunctive Defendant

relief, at oral argument on appeal. Id.

(which was later assigned to basis, to a sublease

at 1175 n. 4, Counts I and II remain to be resolved, left in the case is the Trust.

Toys) (the "Lease"

on a reasonable

by Toys to some third party. In reaching the argument letter modified Appeals remanded that conclusion, that paragraph Toys's right

Till'S "R" Us, Inc, r. NBD Trust Co. ofIllinois, 904 F.2dl 172, 1176-77 (7th Cir.19(0).

C. Remaining Evidentiary and Procedural Issues 1. The Plaintiff has filed a Motion for Leave to Correct its
Post-Trial Brief. The motion is granted. has also filed a Motion for Leave to The motion is

the Seventh to sublet. decision

Circuit

rejected consent of

2(d) of Klairmont's

Id. The Court

reversed Judge Conlon's the case for resolution

on this issue and relating to consent decision

*3 2, The Plaintiff
granted. 3. The Defendant

of two questions refusal

Correct the Record from Closing Argument.

to the sublease: unreasonable; information

(1) was Klairmont's

and, (2) was Klairmont about Famous

given enough financial

to make an informed

has filed a Motion to Amend the Pleadings defense offailure to mitigate

about the sublease, The Seventh Circuit also addressed Klairmont had an obligation premises the decision of the demised 78, Reversing Circuit equally advocated Klairmont The second plain," the question of whether

to Conform to the Proof. Defendant seeks to amend its answer in this case to add the affirmative damages. The motion is granted. to consent to exterior alterations 11. Id. at 1177of the trial court, the Seventh

under paragraph

Federal Rule of Civil Procedure not raised by the pleadings

15(b) states that when "issues
or implied 15(b), of

are tried by express

held that paragraph by Defendants

11 had "two plausible meanings,
was that and accepted by Judge Conlon: consent. Id. but

consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings." Plaintiff damages a written correctly Fed.R.Civ.P, points out that, at trial, the mitigation

Id. at 1178, The first meaning

had no obligation to consent to exterior alterations could "unreasonably" meaning withhold was that argued by Toys: Klairmont alterations, on a reasonable that "We cannot us and must or other leaves three evidence

issue was not tried by the consent objection to certain deposition issue,
(see

of the parties. relating

and therefore

Plaintiff orally objected to the mitigation accounts

at trial, (see Tr. at 18-19), and filed testimony Pl.'s Obj.Def.'s Submission

had an obligation basis. resolve remand issues

to consent to nonexterior Circuit concluded of extrinsic

could withhold consent to exterior alterations Id. The Seventh this ambiguity on the record before

Dep. Test. Jeffrey I. Handler

& Gayle Aertker.),

Rule 15(b)

for such circumstances:

for the consideration fact finding," relating to paragraph

If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, allow the pleadings when the presentation court that the admission the party in maintaining the merits. to be amended the Court may and shall do so freely

appropriate

Id. This conclusion

11 for this Court to decide: (1) one of the reasons for alterations refusal to

were concerns Klairmont's so, is Klairmont on a reasonable consent Finally,

over exterior alterations obligated

of the merits of the action will be of such evidence would prejudice the party's action or defense upon

refusal to consent to the Famous Sublease; (2) if to consent to exterior basis; (3) if so, was Klairmont's

sub served thereby and the objecting party fails to satisfy the

reasonable. the Seventh Circuit upheld Judge Conlon's entry tortious

Fed,R.Civ.P.15(b).
At trial, Defendant submitted evidence with regard consists to of

of judgment interference Klairmont, at 1178-79.

for the Defendants as an individual,

on the Complaint's

counts, Counts IV and V, eliminating and Imperial

Defendants

whether Toys's decision constituted Handler certain Deposition and Gayle

not to expand into the vacant space This evidence of Toys's executives In the opinion Jeffrey I.

from the case. Id.

a failure to mitigate. testimony Aertker.

of the Court,

I I I

Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

I
I I I I

Toys is not prejudiced by the admission of the depositions of Handler and Aertker. The Court has, on several occasions, raised the issue of mitigation of damages. See, e.g. Toys 'R" Us, Inc. v. NBD Trust Co. of Illinois, No. 88-C-I0349, minute order (N.D.IlI. June 18, 1993) (granting Defendant's motion to compel discovery on the reasons why Toys failed to expand into the vacant space); (Tr. at 18-19.) In addition, Handler and Aertker are two witnesses who are favorable to Toys. Neither's testimony appears to link Toys's decision not to expand to this litigation. Toys is not prejudiced by this evidence. With respect to the issues of whether Toys failed to mitigate by failing to find another tenant or will have a double recovery, the Court, in its discretion, will permit the filing of supplemental evidentiary affidavits and legal authority. Should either party request the right of cross-examination, the Court will set a hearing. Therefore, the Plaintiff is not prejudiced by the permitted amendment. Accordingly, Defendant is granted leave to amend its Answer to include the affirmative defense of failure to mitigate. 4. Plaintiff has filed a motion to strike certain evidence presented at trial. *4 a. Plaintiff first moves to strike Defendant's Exhibits Nos. 33-39. These exhibits are seven different leases between K-Mart and various landlords in Ohio, Pennsylvania, and Michigan (the "Extrinsic Leases"). These seven leases, the Lease here in issue, (Pl.'s Ex. 2), and an additional lease not submitted in evidence were the subject matter of a large transaction between Toys and K-Mart wherein Toys purchased K-Mart's rights in the nine leases, (see Def.'s Ex. 32).3 At trial, the Court admitted the Extrinsic Leases subject to its ruling on a motion to strike. (See Tr, at 1059.) Defendant contends that the leases are admissible for three reasons: (I) they are relevant parol evidence helpful in interpreting paragraph II of the Master Lease; (2) they are relevant to determining which party drafted the Master Lease; and (3) they impeach testimony of Mark Keschl and Marc Campbell. Defendant's first argument is that the leases are relevant to interpreting paragraph 11 of the Lease, (PI.'s Ex. 2.). This paragraph, which will be discussed several times in this Memorandum Opinion and Order, in relevant part, says: Tenant may, at its own expense, from time to time make such alterations, additions or changes, structural or otherwise, in and to the Demised Premises as it may deem necessary or suitable; provided, however, Tenant shall

obtain Landlord's prior written consent to drawings and specifications for such alterations, additions or changes, which consent shall not unreasonably be withheld and provided that Landlord shall not withhold its consent thereto if the structural integrity of the Building, the market value of the Building and the use of the Building as a retail facility will not be impaired by such work nor ifsuch alterations or changes are not to the exterior of the Demised Premises or [sic] the Building. (PI.'s Ex. 2 ~ 11.) Some discussion of this paragraph is necessary to explain the Court's ruling on Plaintiffs motion. For immediate purposes, the paragraph may be divided into six parts: (I) the "alterations clause", which permits "alterations, additions or changes" of a nature "structural or otherwise" and which may be made "in and to" the Premises; (2) a reasonable consent clause; (3) a "structural integrity" clause; (4) a "market value" clause; (5) a "retail facility" clause; and (6) a "not to the exterior" clause. As will be made apparent below, the debate about paragraph 11 is whether the reasonable consent clause applies to clauses three through six, particularly the "not to the exterior clause." Defendant contends that the reasonable consent clause applies only to the alterations clause. In contrast, Plaintiff argues that the reasonable consent clause applies to each of the others, including the "not to the exterior" clause. In the opinion of the Court, a single conclusion can be reached from the Extrinsic Leases: each lease was separately negotiated. The terms of each lease's equivalent to paragraph II of the Master Lease are different. None of the leases is identical to the one here in issue. Exhibits 33, 35, 36, 37, and 39 do not contain a reasonable consent clause. Exhibits 36, 37, and 39 contain only a structural integrity clause; they do not contain a "retail facility", "market value", or a "not to the exterior" clause. Exhibits 33 and 35 contain a structural integrity clause and a "retail facility" clause but not the others. And, of the two leases having reasonable consent clauses, Exhibits 34 and 38, one lease favors the Defendant's position, the other favors the Plaintiffs. Exhibit 34 appears to give the landlord "exclusive discretion" over exterior changes. Exhibit 38 appears to require that a landlord's consent to any structural change be subject to a reasonableness requirement. Not one of the leases contains all six clauses noted above. *5 The Extrinsic Leases do not paint a clear picture of KMart's intent with respect to paragraph II of the Lease. Some exhibits appear to support Defendant's position, others appear to support the Plaintiffs, others might support either position. Because these leases support both parties' positions, were

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Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

independently negotiated, and are subject to the law of three jurisdictions other than Illinois, the Court finds that they are not relevant to interpreting paragraph II or admissible for that purpose. At trial, Defendant contended that the Extrinsic Leases impeached the testimony of Mark Keschl. Defendant has apparently abandoned that argument. Instead, Defendant now argues that the Extrinsic Leases impeach the testimony of Marc Campbell. Campbell was a real estate representative for K-Mart and for Designer Depot. (Campbell Dep. at 8-9.) Among other duties, Campbell negotiated leases. (Campbell Dep. at 10-11.) Campbell was involved in the negotiation and drafting of the Lease here at issue but has no memory of his

Marc Campbell testified that the Lease in this case appears to have been based on a K-Mart form. (Campbell Dep. at 22, 36-37.) *6 Accordingly, with respect to Exhibits 33-39, Plaintiffs Motion to Strike is granted in part and denied in part. Those exhibits are admissible for the limited purposes noted. b. Second, Toys moves to strike certain deposition testimony of Jeffrey I. Handler and Gayle Aertker. For the reasons indicated in the discussion of Defendant's motion to amend the pleadings, the Court will consider Defendant's mitigation of damages argument on its merits. The Handler and Aertker depositions are relevant to that inquiry. Therefore, with respect to the depositions of Handler and Aertker, Plaintiffs Motion to Strike is denied. ~ c. Third, Toys moves to strike certain portions of the trial testimony of one of the Trust's experts, Albert C. Hanna. Toys argues that Hanna's testimony as to Klairmont's reasonableness, the restoration issue, and the percentage rent issue should be stricken. i. Klairmont offered Hanna's testimony in this case to show that Klairmont acted reasonably in withholding consent to the Famous Sublease. Klairmont contends that his lender, Provident National Assurance Company ("Provident"), would not have approved the sublease to Famous. In support of this argument, Klairmont offers the testimony of Hanna, who stated that he would have recommended that Provident not approve the sublease to Famous because it did not contain a restoration clause. While Toys points out several difficulties with Hanna's testimony, including concerns over his credibility, these arguments go to the weight to be given Hanna's testimony, not its admissibility. With respect to his hypothetical recommendation to Provident, Hanna's testimony is admissible, although not necessarily reliable. ii. Toys requests the Court to strike Hanna's testimony with respect to the costs of restoration. Motion denied. Toys claims that Hanna was not qualified to give opinions on restoration. At trial, the Court twice rejected that argument. (See Tr. at 1522-23, 1529.) Hanna was subject to cross-examination at trial. In addition, his direct examination revealed his "limited experience" in this subject matter. (Tr. at 1528-29.) The Court can evaluate Hanna's restoration testimony with the appropriate weight.

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participation. (Campbell Dep. at 14-20.) -1 Campbell testified that he did not know of any lease in which K-Mart gave the landlord an absolute right to reject alterations to the exterior. (Campbell Dep. at 36.) The Extrinsic Leases do not impeach Campbell's testimony. He stated that he had no recollection ofK-Mart's giving a landlord absolute control of the exterior; he did not state that K-Mart never did so. Although they do not impeach either Keschl or Campbell, the exhibits 34 and 36 are, respectively, admissible for the very limited purposes of showing that, on occasion, K-Mart was willing to sign a lease giving a landlord sole discretion over exterior changes, (Ex. 34), and over "any alterations, additions or improvements", (Ex. 36). Finally, Defendant argues that the Extrinsic Leases "taken as a group" follow a "uniform format and form" consistent with the Lease, (Pl.'s Ex. 2), and therefore support the argument that the Lease at issue was negotiated starting from a K-Mart form. Defendant contends that such a conclusion would preclude the Court from construing the Lease against Defendant just because the Defendant was the Lease's drafter. See, e.g., Firs! Nat'l Balik o]' Elgill 1'. Cl.M.P, 499 N.E.2d 1039. 1042 (1lI.App.O.19x6). The Court agrees. The Court's review of the Extrinsic Leases compels the conclusion that the Lease was at least based on a form commonly used by K-Mart. The forms are too similar in format, although not necessarily content, to support a contrary conclusion. Toys might argue that K-Mart copied a Lease prepared by Klairmont. Klairmont has admitted that the Lease in this case was prepared by his lawyers at his direction. (Tr. 102-06; 210-11.) In the opinion of the Court, however, there was insufficient evidence submitted at trial to support the conclusion that K-Mart liked Klairmont's lease so much that it became a model for K-Mart's other leases. To the contrary,

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Toys "R" Us, Inc. v, NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

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iii. Third, Toys requests the Court to strike Hanna's testimony regarding percentage rent. Hanna was asked, at his deposition, what opinions he had come to in this lawsuit. (Tr. at 1496, 1500.) At trial, Hanna acknowledged that he never used "the terms or the phrase or the concept of percentage rent" at his deposition. (Tr. at 1555.) Thus, at his deposition, Hanna never gave an opinion on percentage rent. There is no evidence that he was asked about that issue. There is no evidence as to what Hanna stated in his expert's report, if he gave such a report. However, Defendant contends that Hanna gave interrogatory answers which indicated that he would testify as to the "negative effect" the proposed sublet would have on the landlord's premises. (Tr. at 1499-1500.) In the opinion of the Court, the record is unclear as to what signals the defense gave regarding what Hanna's testimony would be. In its discretion, however, the Court will consider Hanna's percentage rent testimony. With respect to this testimony, Plaintiffs motion is denied. *7 5. Like the Plaintiff, the Defendant has also moved to strike certain evidence. a. Defendant first moves to strike "improper" interpretations of the K-Mart Lease, (PL's Ex. 2), and of Klairmont's consent letter, (PL's Ex. 4). For example, Plaintiff has offered the testimony of several individuals who have given their opinion as to the meaning of paragraph I 1 of the Lease. Defendant contends that only individuals having knowledge about the negotiations of the Lease are competent to give extrinsic evidence regarding the meaning of paragraph 11. Excepting statements regarding a party's policy regarding the debated section, evidence of industry custom and practice, and party admissions, the Court agrees. The Court addresses the purportedly objectionable evidence. i. Toys has offered the testimony of Mark Keschl as to the meaning of paragraph 11. Keschl was not a party to the lease negotiations. His opinion regarding the meaning ofparagraph 1I is irrelevant and is hereby stricken. ii. Toys has also offered the testimony of Keschl regarding Klairmont's consent letter, (PL's Ex. 4). Keschl did not negotiate or draft the letter. Moreover, there is no contention that this letter is ambiguous. Extrinsic evidence of its meaning is therefore inadmissible. With respect to this testimony, Defendant's motion is granted.
i

indication that paragraph 10 is ambiguous or that Taxman played a role in its drafting or negotiation. With respect to such "interpretive" testimony, Defendant's motion is granted. Otherwise, the motion is denied. Taxman may testify as to the effects of various provisions of the Lease, as did Defendant's experts. For example, to the extent that Taxman testified to explain that paragraph 10 was a hedge against inflation, the testimony is admissible. iv. At his deposition, Alfred Klairmont admitted that under the K-Mart Lease, the tenant may make alterations to the exterior of the premises subject to the landlord's reasonable consent. (See Tr. at 741-44.) At trial, the Court admitted that testimony as an admission of a party, given that Alfred Klairmont was in a position of control over the Trust. Defendant argues that Alfred's interpretation of the Lease is irrelevant because he had no knowledge of the negotiations or drafting of the Lease and because he did not participate in his father's decision not to approve the sublet. The Court disagrees. The fact that a party's admission is opnuon or is based on hearsay goes to its weight and credibility, not to its admissibility. Mel Comnnmications Corp. I'. American Tel. & Tel. Co.. 70~ F.2d 1081, 1143 (7th Cir.), cert. denied, 464 U.S. 891 (l9X3). According to respected authority, "firsthand knowledge is not required of admissions." 2 John W. Strong, McCormick on Evidence 144-45 (4th ed. 1992); see also Fed.R.Evid. 801 (d)(2) Notes of Advisory Committee on 1972 Proposed Rules (making the same point). *8 Accordingly, with respect to the admission of Alfred Klairmont, Defendant's motion to strike is denied. v. The Trust seeks to strike the trial testimony, on crossexamination, of Michael Blonstein, one of its own witnesses. Blonstein reluctantly testified that, in 1983, K-Mart had a policy with respect to exterior alterations on its leases. (Tr. at 1742.) He further testified that the K-Mart policy included a landlord's consent. (Tr, at 1743.) He was then asked: "Would that consent be his reasonable consent as to exterior alterations?" (Tr. at 1743.) Blonstein responded: "That's usually the wording I would see in these leases." (Tr. at 1743.) In the opinion of the Court, given the fact that Blonstein was one of Defendant's witnesses, his testimony is admissible as a statement of K-Mart's policy regarding exterior leases. The fact that Blonstein said that such was "usually the wording" goes to weight and credibility, not admissibility. The context of Plaintiffs counsel's questions clearly indicated that he sought testimony regarding K-Mart

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iii. Toys has offered the testimony of Seymour Taxman regarding paragraph 10 of the Lease. Paragraph 10 governs repairs and maintenance under the Lease. There is no

Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

c

policy. The Court has consistently held that such policy statements are admissible. On this subject matter, Defendant's motion to strike is denied. b. Next, Defendant has moved to strike certain evidence related to the calculation of damages. i. The Trust seeks to strike testimony by Mark Keschl and supporting exhibits, (Pl.'s Exs. 54, 55, & 56), relating to future and present values and projected real estate and common area maintenance ("CAM") payments. Defendant contends that this evidence was "never made available for discovery, or made known to defendants through the pretrial order procedure." (Def.'s Post-trial Mots. Strike at 5.) In addition, at trial, the Court stated that present and future value analysis was preferably done by an expert. (Tr. at 468.) Plaintiff, however, has cited three cases for the proposition that expert economic testimony is not required before an award of future damages may be discounted to present value. See Heater )I, Chesapcuk« & 0. Hr. Co.. 497 F.2d 1243. J249 (71h Cir,), cert. denied. 419 U.S. 1013 (1974); Brown I', Chicago & NIV Transp. Co., 516 N.E.2d 320. 33D (1II.App,Ct. I()X7); Crabtrce v. St, Louis-San Francisco NI'. ('0 .. 411 N,E.2d 19,22 (IlI.App.Ct.19S0). In addition, Plaintiff has provided the Court with authority indicating that the necessity to discount to present value is not an issue that must be raised in the pretrial order. Mctz I', United Technologies Corp" 754 F,2d h3, 66 (2d Cir.19~5). Based on these authorities, the fact that Defendant has not provided the Court with a single authority, and the clear rule of Illinois law that future damages must be reduced to present value, the Court will permit Keschl's testimony. The fact that Keschl was not qualified as an expert goes to the weight and credibility to be afforded his calculations. Moreover, the Defendant is not prejudiced because the Court has permitted supplemental filings on these issues, as indicated below. *9 ii. Next, Defendant seeks to strike the testimony of Alfred Klairmont regarding future real estate taxes and common area maintenance payments. Alfred testified that he expected established trends in real estate and CAM to continue. (Tr. at 436-39.) Toys based its projected real estate and CAM payments on Alfred's testimony. These projections contemplate 4.2 percent growth in CAM and 11.47 percent growth in real estate taxes. Defendant accurately points out the Court's concern with respect to the second of these figures. Nevertheless, the Court adheres to its previous ruling that Alfred Klairmont's testimony on this subject is admissible. The weight to be given such predictions is another matter.

D. Summary of the Court's Findings At trial, the Court heard testimony from Larry M. Klairmont, Mark Keschl, David Bossy, Alfred Klairmont, three experts for the Plaintiff, Edo Belli, Seymour Taxman and Harold E. Eisenberg, and two experts for the Defendant, Albert Hanna and Michael Blonstein. In addition, the parties submitted portions of the deposition testimony of Ronald Lombardi, James M. Roe, () Marc C. Campbell, Jeffrey Handler, and Gayle Aertker. The Court has reviewed the memoranda and arguments of counsel, the testimony of the witnesses, the depositions of absent witnesses, the exhibits received into evidence, the trial transcript, and detailed notes taken by the Court at trial. The Court has taken care to appraise each witness's credibility and to determine the weight to be accorded his or her testimony. In so doing, the Court considered the witnesses' intelligence, ability, and opportunity to observe; their age, memory and manner while testifying; any interest, bias, or prejudice they may have had; and the reasonableness of their testimony in light of all the evidence presented in the case. The Court recorded its impressions of the witnesses in its notes. In reaching its conclusion in this case, the Court has sought to draw reasonable inferences from the evidence, and has considered the parties' legal arguments. In the opinion of the Court, the evidence submitted at trial requires judgment for Plaintiff. The Court now makes its findings of fact and conclusions of law pursuant to Fed.R,C'ivY. 52(a). II. FINDINGS OF FACT A. The Parties 1. Toys is a Delaware Corporation having its principal place of business in New Jersey. Toys operates retail stores which sell toys and related merchandise. Through its Kids "R" Us division ("Kids"), Toys sells clothing and related items for infants and other children. (Agreed Statement Uncontested Facts ~ I; Tr. at 351.) Toys is the assignee of the interest ofKMart in the lease here in dispute. (ld. ~ 4.) K-Mart had been, and Toys is now, the lessee under that' lease. 2. NBD Trust Company of Illinois, successor Trustee to NBD Highland Park, N.A., formerly known as The First National Bank of Highland Park, as Trustee under Trust Agreement dated January 9, 1981 and known as Trust No. 3119 (the

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Toys "R" Us, Inc. v, NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

"Trust"), of business

is a national in Highland

banking

association

organized

under place

the typical tenant's space be longer than usual and have less frontage space than usual. Frontage space is more valuable to make than rear space and tenants tend to prefer as much frontage space as they can get. (Tr. at 224, 685). Therefore, needed to find a way to reduce the building's eliminating its frontage. was responsible for determining how the the Treasury building suitable for multiple tenants, Klairmont depth without

the laws of the United States and having its principal non-discretionary (,"Klairmont" ("Alfred"), and is controlled or "Larry")

Park, Illinois. (Id. ~ 2.) The Trust is by Larry M. Klairmont Klairmont of the Trust, (Tr. this Memorandum and his son Alfred

both of whom are beneficiaries or the "Trust" throughout

at 76.) For convenience, as "Klairmont" Opinion and Order.

the Court refers to the Defendant

6. Klairmont

Treasury building space would be laid out and how it would

*10 3. Larry and Alfred Klairmont
estate engaged developers. in thousands For example,

are sophisticated 1983, they

real have

be presented to the market. (Tr. at 218.) 7. He attempted to solve the problem created by the building's depth by creating store ("Venture") a "throat" for the May Department The "throat" consisted Store of a rear Company ("May"). May agreed to operate a Venture discount in the building.

since

of real estate leases, (Tr. at 102), and more than three million square feet of metropolitan area,

they have controlled retail commercial ("Imperial").

space in the Chicagoland

(Tr, at 263). They own and operate Imperial Realty Company

"T" configuration
of frontage

in which Venture took a minimum

amount

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fl,

space and occupied

much of the building's

4. Imperial is an lllinois corporation

having its principal place

space. (Tr. at 222.) This permitted

Klairmont to create several

of business in Chicago, Illinois. Imperial develops, manages, brokers, and invests in real estate. (Id. ~ 3.) Prior to August 9, 1988, when it was incorporated, an assumed (Tr. at 77). (Pl.'s Ex. 52), Imperial was for business purposes,

stores having only 80 feet of depth. (Id.) 8. In January store became 1982, Klairmont leased approximately Plaza's anchor. 100,069 (Tr, at

name used by Klairmont

square feet of space to Venture. (Tr, at 87-88.) the Golf-Milwaukee

The Venture

222.) To the west of the Venture entrance was approximately

B. The Premises
I. On the northeast Avenue property in Niles, corner of Golf Road and Milwaukee Illinois is located certain commercial Inc. ("J.e. known lease J.C. Penney Property,

17,767 square feet of space for rental to several small tenants. (Pl.'s Ex. 20; Tr. at 88-98, entrance entrance, was approximately 222.) To the east of the Venture 52,691 square feet of space.

(Pl.'s Ex. 20.) Some of this space, that closest to the Venture was leased to small tenants. (See Pl.'s Exs. 21, 22; Further to the east remained approximately Tr. at 88-98.)

(the "Property").

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Penney")

built the primary building on the Property, with its owner, Ms. Florence

as the Treasury building, after entering into a long-term of the Property "Ground Lease"). (See Def.'s Ex. 12.) purchased the Treasury building

40,400 square feet of space (the "Premises").

B. Vinci (the

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*11 9. Like the Treasury building itself, the Premises was
335 feet deep. (Tr. at 385.) Also like the Treasury building, (Tr, the Premises had a "very large difficult at 222.) Given its depth, the Premises amount of frontage." (Tr. at 385.) approximately a year to lease the configuration."

2. The Trust

from J.C. Lease").

Penney in 1981. At approximately
(See Def.'s Ex. 12; Tr. at 75, 221.)

the same time, the Trust

had a "very limited

took a sublease of the Ground Lease (the "Subground

10. It took Klairmont Klairmont sought Premises. (Tr. at 230.)

3. After purchasing to develop

the Treasury building, Plaza.

it into the multiple

tenant shopping

center now

known as the Golf-Milwaukee

C. The K-Mart Lease
been designed for

4. The Treasury
occupancy

building

had originally

by a single large-space experienced

user. (Tr. at 567.) in converting the

I. On June 27, 1983, the Trust leased the Premises to K-Mart. (PI. Ex. 2.)
2. The final draft of this lease, referred to as the "Lease," "K-Mart Klairmont Lease", or the "Master 210-11.) Lease" was negotiated the by

5. Klairmont building measured

great difficulty

into one for use by multiple

tenants. (Tr, at 221depth, which

22.) The principal

problem was the building's

and was prepared by his lawyers at his direction. However, the negotiations started

335 feet. (Tr, at 221, 567). That depth required that

(See Tr. 102-06;

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Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

with a form commonly at 22. 36-37; Ex. 2.). According difficult. 3. K-Mart

used by K-Mart.

(See Campbell

Dep. none were

provided thereto

that Landlord if the structural facility

shall

not withhold

its consent the

I

compare Def.'s Exs. 33-35, 37-39. with Pl.'s
to Klairmont, who can remember the negotiations

integrity

of the Building,

market value of the Building as a retail nor if such alterations of the Demised

and the use of the Building by such work In the event any are not to the exterior or disapprove

of the details of the lease negotiations. (Tr. at 240.) agreed to open a "Designer

will not be impaired or changes or the Building.

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Premises

Depot" retail store on

Landlord

shall have failed to approve

the Premises.

(PI.Ex. 2 ~ 2.) 7 Designer Depot was K-Mart's market. (Tr. at 568.) That type of store (Tr. at 335, 568.) When

such plans of Tenant within ten (10) days of Landlord's receipt thereof, Landlord shall be deemed to have approved such plans. with Tenant authorizations permitted Landlord, in securing required at Tenant's building cost, shall cooperate and other by Tenant. permits or

attempt to compete with stores like Marshalls and TJ Maxx in the discount clothing K-Mart was a brand new concept for K-Mart. Depot had no past performance 4. The Lease permitted of the Designer However. if K-Mart Premises. Mart was not obligated discontinued K-Mart

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and the Trust entered into the Master Lease, Designer record. (Tr. at 335.) to discontinue its operations

from time to time for any work

hereunder

or installations

*12 (PI.'s Ex. 2 ~ I I.) 9. Rent payable under the Lease was governed 3,4. by paragraphs 3, Kto the

Depot store. (Pl.'s Ex. 2 ~ 2.) In fact, Kto operate any store on the Premises. the lease to do the use of more than fifty percent of the to collect its rent whether and 9. (PI.'s Ex. 2 ~~ 3, 4, 9.) All rent was to be made

the Trust retained the right to terminate

payable to Imperial. (PI.'s Ex. 2 ~ 3.) Under paragraph the first ten years of the Lease. Should exercise its first option. under paragraph base rent of $226,400 K-Mart

(PI. Ex. 2 ~ 17.) The Trust was not obligated it was entitled

Mart was obligated to pay a yearly base rent of $ I90,000 for choose

so, however; at 258.)

tenant's store was in operation

or not. (PI.Ex. 2 ~ 17; see Tr.

9, it would pay a
9, a base

for the next five years. Exercising

second option would require, also under paragraph

5. The second paragraph of the Lease provides that the Lease
lasts for ten years. (PI.'s Ex. 2 ~ 2.)

rent payment of $244,600

for the last five years of the Lease. under paragraph gross 4,

10. In addition to its base rent payment, 6. Although the original lease term lasted for ten years, K-Mart referred exceeded was obligated to pay "Additional rent", the Tenant retained two options to extend the term of the to as "percentage

Rent", commonly sales K-

if its annual

Lease. (Pl.'s Ex. 2 ~ 9.) Each option allowed for an additional

seven million dollars.

(Pl.'s Ex. 2 ~ 4.) For every rent in an amount equal the break point. point" would in

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five year period. (PI.Ex. 2 ~ 9.) As the original term of the Lease commenced the tenant's options 1998. Therefore, from August in 1983 and lasted until 1993, the first of was exercisable in 1993, the second in and K-Mart if the Lease was not terminated

year the seven million dollar "break point" was reached. Mart was obligated to pay additional (ld) Based on 40,000 to one percent of the gross sales exceeding

square feet the "break

exercised all of its options, the Lease would last twenty-years, 1983 to August 2003. 16 of the Lease, K-Mart retained the

be reached when the tenant's gross sales reached an average of $175 per square foot. However, use any effort to generate Premises there is no provision the Lease requiring the tenant to generate percentage rent, to

7. Under paragraph subject to Klairmont's unreasonably 8. Paragraph Tenant

percentage

rent, or to sublet the rent.

right to sublet or assign the Premises. withheld.

in whole or in part,

so as to generate percentage

consent, which consent was not to be (Pl.'s Ex. 2 ~ 16.) I I. In addition to rental payments, for "occupancy K-Mart was responsible area maintenance (Tr. at 246). (PI.'s charges." These payments included K -Mart's in the industry,

II of the lease states: at its own expense, from time to time or

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share of real estate taxes and common expenses. Ex. 2 ~ 5.) 12. K-Mart opened a Designer called "CAM"

may,

make such alterations, otherwise, necessary obtain which or suitable;

additions provided,

or changes, structural however, additions Tenant

in and to the Demised Premises as it may deem shall and and prior written consent to drawings be withheld

Depot store in the premises. in reaching the seven million

The store "failed miserably" dollar percentage

Landlord's consent

rent break point. (Tr. at 334-35; see also Tr.

specifications

for such alterations,

or changes,

at 261.) In fact, the whole Designer Depot concept failed and

shall not unreasonably

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Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

K-Mart closed its entire operation often stores, including the one operated at the premises. (Tr, at 259.) 13. Designer Depot vacated the Golf-Milwaukee Plaza in 1986, leaving the Premises totally dark and unoccupied. (See Tr. at 134,259.) However, K-Mart was still obligated under the Lease to pay minimum rent, CAM, and taxes. (Tr. at 258; PI.'s Ex. 2 ~ 17.) 14. Although Klainnont had the right, under paragraph 17, to terminate the K-Mart Lease, he did not do so. (Pl.'s Ex. 2 ~ 17.) 15. There was insufficient evidence, if any, (see Tr. at 11719), submitted at trial to indicate that K-Mart breached its lease, even after the Designer Depot store went dark. The evidence at trial indicated that K-Mart only sought to "get out" of the lease by assigning it to Toys. The Court thus finds that even after K-Mart vacated the Premises, K-Mart continued to pay, and Imperial continued to collect, some portion, but not necessarily all, of the $190,000 base rent and K-Mart's occupancy charges. (See Pl.'s Ex. 4 ~ 4; see also Tr. at 261 (indicating that Klairmont received nothing in addition to the minimum rent he received from K-Mart).) D. Agreements With the Lender *13 I. On May I, 1985, Provident National Insurance Co. ("Provident") and the Trust entered into a Mortgage and Security Agreement under which Provident lent the Trust $7,900,000.00 and took a mortgage on the Trust's Subground . ~ lease, among other interests, as collateral. (Def.'s Ex. 12.) Part of that document states: 1.03 Maintenance and Repair. Mortgagor shall keep the Premises in good operating order, repair and condition and shall not commit or permit any waste thereof. Mortgagor shall make all repairs, replacements, renewals, additions and improvements and complete and restore promptly and in good workmanlike manner any buildings or improvements which may be constructed, damaged or destroyed thereon, and pay when due all costs incurred therefor. Mortgagor shall not remove from the Premises or demolish any of the property conveyed hereby, or make any material alterations in the Premises, or alter the use of the Premises or any part thereof without the prior written consent of Mortgagee, which consent shall not be unreasonably withheld. Mortgagor shall permit Mortgagee or its agents the opportunity
S

to inspect the Premises, including the interior of any structures, at any reasonable time. (Def.'s Ex. 12 ~ 1.03.) 2. Also on May I, 1985, the Trust executed an assignment of rents to Provident. (Def.'s Ex. 48.) Part of that document states: "Provident, at its option, shall have the right to approve all tenants and/or leases to the Property." (Def.'s Ex. 48 ~ 15(c).) It also states: Assignor will not consent to an assignment or sublease of any tenant's interest in the Leases which will relieve the tenant of liability for the payment of rent and/or the performance ofthe terms and conditions of the Leases, and/ or will violate any of the exclusive or restrictive covenants contained in any other lease assigned to Provident as additional security for the note. (Def.'s Ex. 48 ~ 15(e).) 3. About a week earlier, on April 23, 1985, K-Mart entered into an agreement with Provident wherein K-Mart agreed to subordinate its leasehold interest to Provident's mortgage in exchange for Provident's recognition of K-Mart's right to possession (the "Subordination Agreement"). (Def.'s Ex. II.) E. The Assignment to Toys
I. On February 6, 1987, Toys and K-Mart entered into an agreement in which Toys purchased K-Mart's rights in nine Designer Depot locations from K-Mart. (Tr. at 353-54; Def.'s

It fil

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£1\1,

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Ex. 32.) 10 The Designer Depot at the Golf-Milwaukee Plaza was one such location. (Tr, at 353-54.) 2. In preparation for that deal, at the end of 1986, KMart sought to assign the Premises to Toys. (See, e.g., PI.'s Ex. 6 (showing that as of December 31, 1986, Toys was already communicating with Klairmont about taking over the Designer Depot space).) Toys sought to use the Premises as a Kids retail store. 3. Under paragraph 16 of the Lease, Klairmont retained the right to reject Toys as tenant, on a reasonable basis. Toys thus consulted with Klairmont to convince him to agree to an assignment of the Premises. In determining whether to accept Toys as a tenant, Klairmont dealt with Daniel L. Abel, a director of real estate for Toys. (See Tr. at 127; PI.'s Ex. 6.) *14 4. Klairmont eventually consented to the assignment. The deal was reached through several agreements. K-Mart

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Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

and Toys each agreed to the terms of an agreement, February Lease 6, 1987, entitled Assignment (the "Assignment" or, the "K-Mart K-Mart's

dated of

feet of the building,

forming what is understandably

called a

and Assumption Assignment"). for $650,000,

"bowling alley", (Tr. at 911). Then, along the back wall of the building, going east from the bowling alley, lay a considerable portion of the vacant space, much of it behind space used by Toys. (See Post-Trial Brief ofNBD Trust Co. Ex. 2.)

(PI.'s Ex. 3.) Under the Assignment, sold, and Toys purchased, Depot at the Golf-Milwaukee C.)

K-Mart

rights in the Designer

Plaza. (See Def.'s Ex. 32, Ex.

6. Toys laid out the Kids space with any eye toward subletting
its unused space. Toys tried to balance According its own needs for space frontage space with the desire to make the remaining marketable. marketable

5. The Trust consented to the assignment,
in an undated the assignment first numbered modifications (the "Consent paragraph Letter").

without objection, (Pl.'s Ex. 4.) The "The Lease or

letter sent to Toys on or near the date of of that letter states:

to Mark Keschl, a Toys Regional Real

Estate Manager: "We made every effort to make that space as as possible given the minimal amount of frontage for the 40,400 square feet." (Tr. at 365.) at the time had 98 feet of Kids has about 85 the Kids prototype that was available For example,

is in full force and effect, and there are no amendments thereto." (Pl.'s Ex. 4 ~ I.)

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frontage, (Tr. at 365); the Golf-Milwaukee

F. The Kids Store
I. Toys square opened a standard size Kids Store on 25,000

feet of frontage, (Tr. at 366).

*15 7. Shortly after opening its Kids store in the Premises,
Toys started searching 215,369, for a subtenant for the vacant space. (Tr. at in this task from Mark Keschl was responsible for finding a subtenant.

feet of the premises

in the Spring of 1987, leaving

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o

approximately 2. Klairmont, "footprint"

15,000 square feet vacant (the "vacant space"). from discussions with Abel, knew Toys's Pl.'s

38{}-81.) Keschl sought assistance

others. He hired David Bossy, the President of Mid American Real Estate Corp. ("Mid America"), represents transactions, and he requested (Tr, at 369), a firm that help, (PI.'s Ex. 7 landlords and national retail chain stores in leasing Imperial's

was 25,000 square feet and knew that Toys would

not use the entire Premises. (See. Tr. at 128-31,1126-28; Ex. 6.)
II

At his deposition,

Klairmont

admitted

that Toys

never misled him as to its intention to use only 25,000 square feet. He indicated that he was informed by Dan Abel that (See Toys would only be using 25,000 square feet and would not be using the entire 40,400 square feet of the premises. Tr. at 128-31.) 3. Before Klairmont agreed to the assignment, Toys sent him

(letter to Alfred Klairmontj). 8. Bossy put a "For Rent" sign in the window of the vacant space. (Pl.'s Exs. 8,37,38.) 9. After the assignment, to the Famous Sublease, space were obvious. was mentioned but prior to Toys's request for consent Toys's attempts to sublet its vacant 1987, the issue From April to August

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a letter, and an attached floor plan, in which Toys indicated that it expected to leave approximately Pl.'s Ex. 6 with Pl.'s Exs. 3 & 4.) 12 4. Klairmont did not object to Toys's proposed use of space. 47 feet of frontage for an adjacent tenant. (Pl.'s Ex. 6; Tr. at 135,367-68;

in five letters between Toys and Imperial. (See of Toys paying Imperial a brokerage fee

compare

Pl.'s Exs. 7, 8, 37, 38; Def.'s Ex. 3.) Several of these letters raise the possibility for finding a subtenant. In the first of these letters, dated April 21, 1987. from Keschl to Alfred Klairmont, Keschl noted: "p.s. If you can come in our surplus space please call. to our mutual his "mutual to pay to Keschl, across any tenants interested benefit."

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(See Tr. at 1129.) Knowing what he did about Toys's intended use of the space, Klairmont must have known that it sought to sublease the vacant space. (See Tr. at 131-32.) Famous questions, Sublease, Klairmont ever expressed There was no any concerns, to use less evidence at trial that, prior to Toys's request for consent to the or objections about Toys's intentions

I am sure you and I can work out something (PI.'s Ex. 7.) According commission

benefit" reference was meant to indicate a willingness a brokerage to Imperial. (Tr. at 376-77.)

than the entire Premises or about any intention to sublease the vacant space. 13 5. The vacant space was oddly configured. all the way back to the building's The furthest west In a letter dated May 22, 1987, Klairmont regarding surplus added: "At your convenience space wrote to Keschl the the Kids store sign. At the end of the letter, he please call me regarding discuss a method so that we may that is

o

o

part of that space ran from the front of the Treasury building back wall, the full 335

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Toys "R" Us, Inc. v, NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

satisfactory to both of us to lease out this space." (Def.'s Ex.
3.)

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In a letter dated August II, 1987, Klairmont wrote Keschl to object to Bossy's "For Rent" sign. He stated: Please see that the sign is removed immediately and if you wish to pursue a sublet or assignment on this space, I would be glad to pursue it with you. (Pl.'s Ex. 8.) Both Klairmont's May 22 and August 11 letters appear to seek brokerage fees for assistance in subletting the vacant space. (See Tr. at 149-56.) Imperial was in the business of real estate brokerage. And, in his May 22 letter, Klairmont expressly states his concern that Bossy's sign was upsetting his "in-house" brokers. (Pl.'s Ex. 8.) Despite Klairmont's representations that Imperial would like to be employed to lease the vacant space, Keschl was somewhat tightfisted about paying Klairmont a brokerage fee. In a letter to Klairmont dated August 14, 1987, he stated that it was in Toys's and Imperial's "mutual interest to obtain a tenant for the surplus space we have available." (Pl.'s Ex. 37.) He continued: "I presume your interest in marketing the space is for the benefit of the center and not to make a brokerage commission. (fd.) Contrary to Keschl's trial contention that his August 14 remarks were "tongue-in-cheek" and that he fully expected to pay a commission to Klairmont, (Tr, at 379-80), Klairmont did not take lightly the prospect of working without a fee. In a letter dated August 20, 1987, he responded: "I wish to advise that we are a for-profit organization and we are very much involved in the brokerage business; therefore, if we were to lease this space for you, naturally we would want commission." (Pl.'s Ex. 38.) Again, Klairmont's interest is in receiving a commission. *16 10. Despite the fact that Toys's desire to sublet was expressly discussed in five letters from April 1987 to August 1987, Klairmont never told Toys they could not sublet. (Tr. at 380.) He never even raised an objection. He made no mention of the use to which the subletting space would be put, no mention of the possibility of percentage rent, no mention of exterior alterations or restoration costs, and no mention of seeking the lender's approval. Throughout this entire period, Klairmont had one indicated concern: getting a brokerage fee. It was only after a subtenant was found, without Imperial's help and without the payment of a fee, that Klairmont raised any objection to a sublease.

II. Keschl had intended to sublease the entire 15,000 square feet of space. (Tr. at 380.) Despite the efforts of Keschl and Bossy, Toys could not find any potential subtenant interested in subleasing the entire vacant space, due to that space's "difficult configuration." (Tr. at 275-80, 380, & 911.) G. The Proposed Sublet to Famous
I. A single company, Famous Footwear ("Famous"), was interested in subleasing seven thousand square feet of space from the front of the building going back down the bowling alley. (Tr. at 592, 593; Post-Trial Brief of NBD Trust Co., Ex. 2.)

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2. Famous is a division of the Wohl Shoe Company ("Wohl"). (Tr. at 593.) Wohl is owned by the Brown Group, an entity having net worth "well in excess of a hundred million dollars." (Tr. at 593.) At the time Toys sought a sublessee, the Brown Group enjoyed a "predominant role in the metropolitan Chicago retail market" for family shoes. (Tr. at 593.) 3. Keschl negotiated with James Roe at Famous. (Tr. at 381.) Keschl originally tried to get Famous to lease the entire 15,000 square feet, but Famous was only interested in 7,000. (Tr. at 381.) 4. Wohl and Toys agreed that Famous would sublease the 7,000 square feet. They eventually signed a sublease dated October I, 1988 (the "Famous Sublease"). (Pl.'s Ex. 5.) 5. Under the proposed sublet to Famous, the back 8,000 square feet of the vacant space would remain vacant. (See Tr. at 280-81.) 6. Under the Famous Sublease, Famous would lease the 7,000 square feet for a term of approximately five years plus two five year options. (Tr. at 382.) The options were consistent with the options afforded Toys under the K-Mart lease and were contingent upon Toys exercising its options. 7. Famous was to pay approximately $10 per square foot in rent, or $70,000 a year for the first term of the sublease. (Tr. at 386; Pl.'s Ex. 5.) If Toys and Famous each exercised its first option, Famous would pay $80,000 a year. (Pl.'s Ex. 5.) If each exercised its second option, Famous would pay $95,000. (ld.)

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Toys "R" Us, Inc. v, NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

8. Famous planned to alter the exterior of its subleased space by constructing a new door and storefront. (Agreed Statement Uncontested Facts ~ 12; r-. at 178.) H. Klairmont's Refusal to Consent to the Sublease

regarding that information. There was no evidence that Klairmont sought such information from any source. In fact, Klairmont admitted at trial that during the entire period Toys tried to convince him to approve the sublet, he never asked for detailed plans of what Famous intended to do in the vacant space. (Tr. at 745.) 6. In his December 18 letter, Klairmont raised a single objection to the sublease: under the terms of the Consent Letter, Kids was limited to operating the Premises as a Kids store and therefore could not use it for another purpose. (See Pl.'s Ex. 10.) Without expressly mentioning Toys's request for his consent, Klairmont stated: This will acknowledge your letter of December 15, 1987. I am sure you have forgotten, but permit me to remind you that under the terms of my consent to the assignment of the Designer Depot lease to Kid [sic] 'R' Us, you are limited to operating the store premises as a Kids 'R' Us store. *18 (Pl.'s Ex. 10.) 7. The December 18 letter also contained the following proposal from Klairmont: Since you apparently determined that you do not need all of the space, and as an accommodation to you, I will agree to modify your lease by deleting from your demised space the portion that you wish to sublet. In this manner, I will be able to control the exterior of the storefront, as well as the permitted use. (Pl.'s Ex. 10.) Klairmont thus offered to take back the space that would have been sublet to Famous. 8. Klairmont's December 18 letter indicates that, despite his later contention to the contrary, (Tr. at 170-76), Klairmont did not think that he had the power "to control the exterior of the storefront" without first modifying the Lease. 9. Keschl did not give up. In a letter dated January 6, 1988 sent to Klairmont by DHL Courier Express, Keschl wrote: "Please find enclosed a floor plan of the old Designer Depot space indicating the Kids "R" Us now utilizes, the space Famous Footwear would occupy and the area leftover. Please call if you have any questions on the plan." (Pl.'s Ex. 39; Tr. at 366, 390.) Then, in a letter dated January 19, 1988, Keschl wrote to Klairmont: Please find enclosed a plan detailing the storefront sign Famous Footwear desires. It is in conformity with the sign

* 17 I. Before Toys signed a sublease with Famous, Keschl
sent a letter, dated December 15, 1987, requesting that Klairmont consent to Toys subletting "the remaining space in the old Designer Depot space" to Famous Footwear, described by Keschl as a "fine national tenant." (PI.'s Ex. 9.) The letter makes no mention of the fact that Famous sought only 7,000 square feet.

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2. According to Klairmont's own admission and the evidence submitted at trial, the Court finds that Famous Footwear was a "ready, willing, and able" subtenant, was commercially reasonable, and was not potentially problematic. (See Tr. at 161, 191, 192-93, 196 & 744-45.) This conclusion is further supported by the testimony of several witnesses at triaL According to Mark Keschl, Famous "operates on a national basis, they have a good reputation, they operate a clean store, do a lot of promotional advertising, things of that nature." (Tr. at 385.) Harold Eisenberg, one of Toys's experts, testified that Famous Footwear coexists well with stores such as Venture and Kids. (Tr. at 694.) Eisenberg thought that Famous Footwear would have increased Toys's sales. (Tr. at 695.) Another expert witness for Toys, Seymour Taxman, testified that Famous Footwear was a commercially viable tenant, that it had a strong credit rating, that it was wellreceived in the community, and that it had a strong market base. (Tr. at 598.) 3. Klairmont decided to refuse to consent to the Famous Sublease after he received Keschl's letter, but before sending a response letter. (Tr. at 158-60.) 4. Klairmont refused to consent to the sublease in a letter dated December 18, 1987. (Tr. at 1181-82.) Within three days of receiving Keschl's December 15 letter, Klairmont sent Keschl a letter, dated December 18, 1987 and signed for Klairmont by his son, indicating that Klairmont would not consent to the sublease. (PI.'s Ex. 10.) 5. Klairmont initially refused to consent without any knowledge about the amount of space to be taken by Famous, the location of that space, Famous's projected sales, gross income, or income per square foot. There was no evidence that Klairmont talked to Keschl or anyone else at Famous

I

Toys "R" Us, Inc. v, NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

specifications in the lease and substantially smaller in size than what is allowed under the lease. Please call me when you have had a chance to review the plan. (Pl.'s Ex. II; see PI.'s Ex. 40; Tr. at 389-91.) 10. Klairmont never directly commented about the plans sent by Keschl. (Tr. at 390.) II. Due to Klairmont's silence on the plans he had already sent, Keschl hesitated to send Klairmont formal blueprints. At trial, Keschl stated: "Those are very expensive to do, and until we would be at a point that we would have Mr. Klairmont's consent, it didn't make sense to spend the money to produce those." (Tr. at 390-91.) 12. After he must have received Keschl's letter of January 6, but probably before receiving the letter of January 19, Klairmont wrote Keschl a letter, dated January 20, 1988. (Pl.'s Ex. 12.) This letter is an important piece of evidence in this case. The Court quotes it in full: Dear Mark: I wish to respond to your January 16, 1988 letter, which just arrived since it was shipped regular mail.

distribution, new store front and other tenant improvements with your cooperation to provide an additional rear exit corridor, which would be required. We would also like to point out to you that in our original deal with Designer Depot the break point where the percentage would kick in was based on an operation utilizing approximately 40,000 sq. ft. Since you are operating Kids "'R" Us with only 25.000 sq. ft, it would reduce our possibilities 0/ enjoying percentage rent due to less squarefootage being operated. Please contact me at your convenience regarding this matter. Sincerely, Larry M. Klairmont (Pl.'s Ex. 12.) (emphasis added.) 13. Several important observations and conclusions arise out of Klairmont's January 20 letter. a. There is no evidence that Keschl sent a letter dated January 16. As the January 20 letter is the first correspondence sent by Klairmont after Keschl sent his letters of the 6th and 19th, Klairmont's letter may have been intended as a response to one of those letters. However, Klairmont's letter indicates that the letter to which he was responding arrived by regular mail. The January 6 letter was sent by courier. Keschl's letter dated January 19 was apparently sent by regular mail but makes no mention of the subject matter discussed by Klairmont. Perhaps one of the letters contains a typographical error. Perhaps Keschl sent a third letter on the 16th. The record is unclear on this issue. Keschl did state, through several January phone conversations with Klairmont, that "the only thing we would consider is if he would take back the whole 15,000 square feet." (Tr, at 391,393.) Thus, Klairmont may have been responding to those phone conversations. b. Klairmont acknowledges that the 15,000 square feet is "virtually non-leasable." He blames this fact on Toys's configuration, a configuration he knew about and about which he had not raised an objection before then. c. As in his letter of December 18, 1987, Klairmont again proposes that Imperial take back the 7,000 square feet. According to Keschl, Klairmont had never offered to take back 7000 square feet prior to Toys's finding Famous. (Tr. at 389.)

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We have reviewed the surplus space of the Kids "R" Us location at Niles. You have requested releasing the demised portion of approximately 15,000 sq. ft. from your lease obligation according to the drawing submitted. Mark, as you can readily understand, we feel that the footprint of the surplus space is virtually non-leasable because of the configuration which you cut out for the existing Kids "R" Us store. In order to assist you in reducing your rental obligation, we would be agreeable to releasing you from approximately 7,000 sq. ft. of space, which is now being negotiated by you to another tenant. We would accept this space of 7,000 sq. ft. and release you from rental obligation of $4.50 per sq. ft. less your prorated share of taxes and cam. *19 We realize that this is not what you had hoped for; however, I think that this gives both of us an opportunity to improve our situation namely, you reduce your annual rental expenses and we in turn can pick up some additional income by leasing out this space. We would also accept this space as is and do the necessary improvements of HVAC

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Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

d. Klairmont admits that he seeks to improve his situation by picking up "some additional income by leasing out this space." Klairmont must have intended to rent out the space to Famous. Famous had been the only potential tenant that had expressed any willingness to sublease in the vacant space. e. He expresses complete willingness to make all the improvements to the 7,000 square feet necessary to secure the sublessee, so long as he, and not Toys, receives the rental income. Klairmont thus had no independent aversion to putting in a door leading to the 7,000 square feet. *20 f. For the first and only time prior to the filing of this lawsuit, Klairmont mentions percentage rent. However, this reference is not a complaint about the Famous Sublease. The reference has nothing to do with the sublease. Instead, Klairmont complains about Toys's use of only 25,000 square feet. According to Klairmont, Toys's failure to use all 40,000 square feet of the Premises is to blame for his reduced "possibilities of enjoying percentage rent." g. Klairmont does not mention the 8,000 square feet left vacant by the sublease. 14. Keschl and Klairmont continued to communicate regarding the vacant space through April I, 1988. Keschl wrote Klairmont a letter dated March 31, 1988. (Pl.'s Ex. 41.) He stated that Klairmont's proposal to take back the 7,000 square feet to be leased to Famous was unacceptable "since it would leave [Toys] 8,000 square feet in the rear which we could never lease or utilize." (Id.) Keschl again requested that Klairmont consent to the Famous Footwear lease and addressed the single objection that had been raised by Klairmont, the use to which the Premises could be put. Keschl argued that under paragraph 16 of the Lease, the Premises could be used for a shoe store. (Id.) Noting that Klairmont might wish to review the plans of the Famous Footwear Sublease, Keschl stated: "As soon as their [Famous's] preliminary plans are finished we will forward them to you for review." (Pl.'s Ex. 41.) 15. One day later, Klairmont responded: This letter will acknowledge your communication to us of March 31 via DHL Courier Express.
It would seem that we are back to square one with regard to your request for our consent to sublet to Famous Footwear 7,000 square feet. We believe that under paragraph 16 of your assignment from Designer Depot the use of the

premises is for a Kids 'R' Us operation and not for a shoe store. We want to reiterate that we absolutely do not consent to your assignment of 7,000 square feet to a shoe store but affirm our offer to you as outlined in my proposal to you last month whereby we agree to take back the 7,000 square feet and pay for any capital improvements.

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(Pl.'s Ex. 18, 1987, Sublease: use of the

42.) In this letter, as in his letter of December Klairmont raises a single objection to the Famous the Lease (and the Consent Letter) prohibited the Premises as a shoe store.

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16. Despite his frequent communications with Keschl, Klairmont never gave Keschl a list of objections explaining why he was withholding his consent. I... never asked about He Famous's sales volume or potential sales, (Tr. at 394-95). He never mentioned restoration. (Tr, at 397.) Klairmont never requested financial information from Toys. (Tr. at 398.) In fact, Klairmont's trial testimony is void of any statement raising an objection to anyone at Toys. He did not testify, for example, that he orally raised the issues of percentage rent, exterior alterations, restoration, or the lender's concerns. Percentage rent is mentioned in a single document. (Pl.'s Ex. 12.) The other issues are not mentioned in any of the prelawsuit documents in evidence.
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*21 17. In addition to Keschl's efforts to convince Klairmont to consent to the sublease, Bossy also spoke with him. 18. Klairmont told Bossy that "under no circumstances" would he consent to the sublet as presented by Toys because "there was absolutely nothing in it for us." (Tr. at 1139.)
16

19. Klairmont also told Bossy that, although Klairmont had a problem with the sublease, "if he got something for it, he might consent." (See Tr. at 913.)
17

20. Even after rejecting the Famous Footwear Sublease, Klairmont explored with Bossy the idea of getting Famous to lease other space Klairmont expected to have available in a new annex development at the Golf-Milwaukee Plaza. (Tr. at 910,914.) 21. There was no evidence submitted at trial indicating that Toys ever sought to be released from its obligations to pay rent for the full 40,400 square feet under Lease. To the contrary, the evidence indicated that Klairmont was aware

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Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

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that Toys was obligated under the Lease whether the sublease was approved or not. (Tr. at 188; see also Pl.'s Ex. 2 ~~ 16,23.)

4. Defendants did not file an amendment or supplement to this answer.

I. This Lawsuit I. Toys tiled this action on December 8, 1988. 2. The Defendants filed their Answer on January 3, 1989. 3. During discovery, Plaintiff requested the Defendants to answer the following interrogatory: State the basis for the Defendants' refusal to consent to the Sublease. (Pl.'s Ex. 57.) Defendants response, quoted in full, was: ANSWER: a. The square footage presently leased by Toys approximates 40,400 feet, of this amount approximately 15,000 feet are not actively used of which amount Toys wants to sublease 7,000 square feet to The Wohl Shoe Company, Inc. (hereinafter referred to as "Wohl"), leaving approximately 8,000 feet. The arrangement proposed by Toys, with respect to the Trust, would adversely affect the percentage rental provisions of the Lease; b. That the approximate 8,000 square feet that would remain unused if the Wohl Lease went into effect would be interior space without any proper means of ingress or egress; c. The space that would be alloted [sic] to Wohl appears not to have sufficient emergency exits; d. That the intended Sub-Lease to Wohl would require alterations to the exterior oft he premises contrary to paragraph numbered II of the Lease dated June 27, 1983 between the Trustee and K-Mart Corporation, Tenant, which was provisionally assigned to Toys and a copy of which is attached to the Complaint as Exhibit A; e. That the intended Sub-Lease to Wohl would change the exterior of the storefront as indicated by Klairmont letter to Toys under date of December 18, 1987; f. The signage on the shopping center would be changed in a manner unnacceptable [sic] to the owners; g. That the intended Sub-Lease would be contrary to the provisions of the Trustee's consent on or about February 2, 1987, of K-Mart's interest in the Lease to the assignment by K-Mart to Toys.

J. Proffered Reasons for Klairmont's Refusal to Consent *22 I. Prior to the filing ofthis lawsuit, Klairmont expressed a single reason for refusing to consent to the sublease: he objected to the use of the space as a shoe store. (Pl.'s Exs. 10, 41,42.) 2. In discovery, Klairmont added several other reasons, (see Pl.'s Ex. 57), several of which he has now abandoned. 3. After the Seventh Circuit rejected his "use" objection on Appeal, Klairmont expressed three other objections at trial: reduction in future percentage rent, restoration costs, and exterior alterations. (Tr. at 1183-85.) 4. At trial, Klairmont could not recall whether or not he came up with some of his reasons for withholding consent after the filing of this lawsuit. (Tr. at 1194.) 5. After trial, in his post-trial brief, Klairmont added an additional reason for his refusal to consent: the lender would not have approved the sublet. This objection was based solely on the testimony, at trial, of Defendant's catch-all witness: Albert C. Hanna. 5. Plaintiff, in contrast, has consistently contended that Klairmont refused to consent to the sublease because he wanted to improve his situation under the K-Mart Lease by directly leasing the space to Famous. 6. Given the applicable legal standards, as discussed below, the Court must determine why Klairmont refused to consent to the sublease at the time he did so. As the Court stated at trial, what matters is "what was in his mind at the time that he dealt with the request for subletting because that's what is relevant. What he thinks about something today is not relevant to what happened back then." (Tr. at 298-99.)

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K. Klairmont's Reason for Withholding His Consent
I. After weighing all of the evidence on this issue, the Court finds, as a matter of fact, that Klairmont withheld his consent in order to improve his situation under the Lease by renting directly to Famous.

a. The evidence submitted at trial showed that on at least two occasions, Larry Klairmont expressly stated that he sought

I I

Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

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to improve his situation under the lease. (Pl.'s Ex. 12; Tr. at 1139.) On at least three occasions, each in apparent response to Toys's request for consent, Klairmont sought to "persuade" Toys to let Klairmont take back the 7,000 square feet. (Pl.'s Ex. 10, 12,42.) And, on two occasions, Klairmont expressed his desire to rent space to Famous, either the 7,000 square feet, (Pl.'s Ex. 12), or other space he had available, (Tr. at 910,914.) None of these intentions, seeking to renegotiate the Lease, seeking to purchase back the 7,000 square feet, and seeking to lease directly to Famous, is necessarily a breach of the Lease. Klairmont may not, however, withhold his consent to the sublease as a means of strengthening his bargaining position in reaching these goals. That was what Klairmont did, as is indicated by the circumstances in which he withheld consent and his means of doing so. b. Prior to Toys's request for a sublease, Klairmont had never raised the possibility of renegotiating the lease or taking back any of the vacant space, nor had he raised a single objection to Toys's configuration or use of space. *23 c. When Toys first requested Klairmont's consent to the Famous Sublease, Klairmont refused to consent without any knowledge about the space to be used or the finances of the potential subtenant. d. Mark Keschl sent at least four letters to Imperial either directly requesting consent to the sublease or sending Klairmont plans for the sublease. (Pl.'s Exs. 9, II, 39, 41.) Klairmont only directly responded to the last letter, actually stating that he did not consent, the first time he had expressly done so by letter. (Pl.'s Ex. 42.) Each of Keschl's other letters met with a clear indication that Klairmont did not consent, but without any express discussion of that issue or of the plans that had been sent. (See Pl.'s Exs. 10, 12.) e. To use one of Klairmont's expressions, "only a fool doesn't listen." Klairmont's responses to Keschl's requests indicated that consent would not be given without some compensation. In fact, according to the testimony of David Bossy, which the Court credits, Klairmont told Bossy that his consent could be purchased. (See Tr. at 913.) f. Finally, Klairmont's intentions In withholding consent are brought to light by the only reason Klairmont actually gave, that the space would be used for a shoe store. The evidence submitted at trial revealed no practical reason for this objection. Klairmont raised it without ever inquiring into the financial effects that Famous would have on the GolfMilwaukee Plaza. Klairmont apparently thought that he had a sound bargaining chip, section 2(d) of the Consent Letter, to

use to negotiate himself an improved situation under the lease. Klairmont used the objection to try to improve his situation under the lease; he had no actual concern about Famous as a tenant. g. By leasing directly to Famous, Klairmont would have made $10 per square foot, $5.30 more per square foot than the $4.70 (based on 40,400 square feet) he was receiving from Toys. 2. The Court also concludes, as a matter of fact, that each of the other objections now raised by Klairmont is pretextual. The Court addresses these objections in the following sections.

L. Klairmont's Objection to Use
I. Klairmont did not reasonably withhold his consent on the basis of Toys's use of the "vacant space."

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i I I I

2. The evidence showed that Klairmont had no concern about Famous's financial impact on the Golf-Milwaukee Plaza. To the contrary, Klairmont himself wanted to rent directly to Famous. 3. Klairmont's use objection, raised before trial but now abandoned, was a pretextual means by which Klairmont sought to strengthen his negotiating position with Toys so to improve his financial status under the Lease.
4. Even if it were not pretextual, Klairmont's use objection

would be a breach of paragraph 16 of the Lease.

IR

M. Percentage Rent I. Klairmont did not reasonably withhold his consent on the basis of diminished prospects of percentage rent. 2. The percentage rent issue is pretextual because Klairmont refused to consent to the Famous Sublease before he ever knew how much space Famous would use. (See P1.'s Exs. 9, 10; Tr. at 157.) *24 3. Much of the trial and the parties memoranda have been devoted to the percentage rent issue. Although the Court addresses the facts and law related to that issue below, the Court notes that whatever Klairmont's expectations of percentage rent, he did not properly raise the issue with Toys. a. The Court finds, as a matter of fact, that Klairmont did not raise the issue of percentage rent as a basis for his refusal to consent to the sublease. The record contains no evidence

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Toys "R" Us, Inc. v, NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

that Klairmont expressly stated to anyone at Toys that his diminished expectations of percentage rent, to be caused by the proposed sublet, formed the basis for his refusal to consent. Klairmont did not testify that he told anyone about that concern, and it is not contained in any of the documents submitted into evidence. b. Despite the fact that Toys has repeatedly raised the argument that percentage rent had not properly been raised by Klairmont, the Trust devotes but a one sentence footnote to that issue. It states: "Moreover, Toys cannot contest that percentage rent and locked out space have always been an issue. (PXI2) (PX 57, Answers I(a) and (b))." The Defendant cites to Klairmont's letter of January 20, 1988, (Pl.'s Ex. 12), and Defendants' answers to Plaintiffs interrogatories, (Pl.'s Ex. 57). Contrary to Defendant's argument, neither document shows that Klairmont raised percentage rent, or locked out space, to Toys. i. As the Court notes above, Klairmont mentions percentage rent in his letter of January 20. However, the issue is raised as a complaint regarding Toys's use of only 25,000 square feet of space. It is not raised as an objection to the Famous Sublease. The 8,000 square feet of "locked out" space are not mentioned anywhere in the January 20 letter, or in any of Klairmont's other letters. ii. Plaintiffs Exhibit 57, Defendants' answers to interrogatories posed in this lawsuit's discovery, contains Defendants' express objections to the Famous Sublease based on percentage rent and 8,000 square feet oflocked out space. (See Pl.'s Ex. 57.) These objections, however, were made well after this lawsuit commenced. There is no evidence that they were raised during the relevant time period, the time period during which Toys sought Klairmont's consent to the Famous Sublease. iii. Defendant has also intimated that Klairmont's handwritten notes on his unsigned copy of his April I, 1988 letter to Keschl, (compare Pl.'s Ex. 13 with Pl.'s Ex. 42), shows his concern about percentage rent. There is no reliable evidence as to when these notes were written and the record is clear that they were not sent to Keschl. Moreover, the notes do not support the percentage rent argument. The notes, in part, state: "gross sales 40M vs 25M." This is an apparent reference to the gross footage occupied by Toys. Had Klairmont been concerned about the percentage rent effect of Famous, he would have included the space subleased to Famous in his calculation. The notes would have read: "gross sales 40M vs

32M", the "32M" representing the 25,000 square feet held by Toys plus the 7,000 square feet to be held by Famous. *25 4. Klairmont premises his percentage rent argument on his view that the Famous Sublease would have "locked out" the back 8,000 square feet of space from ever being used for sales and the generation of percentage rent. (Tr. at 1141.) 5. The evidence submitted at trial showed that the Famous Sublease would not have demonstrably reduced Klairmont's expectations of percentage rent. a. When Klairmont entered into the Lease with Ks-Mart he negotiated for himself the percentage rent clause as a hedge against inflation. He testified that this was an important consideration for him. (Tr. at 239.) A percentage rent clause works as a hedge against inflation by increasing a landlord's rent, above a break point, based on increased gross dollar sales on retail space, some of which may be caused by inflation. (See Tr. at 257.) The circumstances under which that agreement was reached, the other provisions of the Lease, and Klairmont's conduct after the Lease was signed indicate that the percentage rent clause was not an essential or central part of Klairmont's bargain, despite Klairmont's testimony. i. When K-Mart and Klairmont agreed to a percentage rent clause, neither party had any reasonable expectation as to whether or not the Designer Depot would generate sales sufficient to reach the $7,000,000 break point. Designer Depot had no track record whatsoever. Moreover, Designer Depot was leasing space in a building that had a very difficult configuration and which lacked sufficient frontage space given its depth. ii. Other provisions in the lease indicate that the parties did not expect percentage rent to be regularly generated. For example, under the Lease, the Tenant did not have to use any of the space, (~ 2), operate continuously, (~ 2), generate percentage rent, (see ~~ 3, 4, 9), or sublease or assign the space based on percentage rent (see ~ 16). In addition, the express terms of the Lease permit a tenant to operate on just over fifty percent of the Lease and keep the rest of the space dark, without any recourse to the landlord. (~ 17.) iii. The percentage rent clause was not the only hedge on inflation contained in the Lease. K-Mart refused to include a cost/price index adjustment term in the lease. (Tr. at 240, 25 I.) However, the provisions relating to CAM and real estate taxes, (~ 5), repairs and maintenance, (~ 10), and options to

I
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Toys "R" Us, Inc. v, NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

extend the lease, (~ 9), all reduce the landlord's inflationary risk by shifting increased costs onto the tenant. iv. For the years that it operated at Golf-Milwaukee Plaza, the Designer Depot never generated percentage rent. It performed so poorly that K-Mart closed its operation and went dark. Instead of cancelling the lease and seeking a new tenant that could generate percentage rent, as was his right under paragraph 17 of the lease, Klairmont continued to accept minimum rent from K-Mart.

The second example is similarly not supported by the evidence. There was no evidence that the Kids store was anywhere near going dark in 1987. In fact, the Kids store exercised its lease option in 1993. Moreover, even if the Kids store did go dark, the proposed sublease would have had no effect on Klairmont's percentage rent expectations. Had Kids gone dark, Klairmont could have terminated its lease and thereby terminated the Famous Sublease, which was dependent upon Kids's lease. The third example forms the basis for Klairmont's percentage rent argument. Given that, in 1993, Toys contemplated installing a Superstore occupying 35,000 square feet and hoped to generate $7,500,000 in sales, (see Def.'s Ex. 41), the example is realistic, or at least no less realistic than Toys's 1993 expectations. (The Superstore concept was not adopted.) ii. Klairmont's percentage rent argument is not supported by the possibility of Toys leasing all of the 15,000 square feet to one or more tenants. Klairmont stated that such a possibility was "impossible." (Tr at 188-89.)
19

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v. Klairmont consented to the Assignment to Toys despite the fact that he knew that Toys would occupy only 25,000 square feet and would leave vacant 15,000 square feet of space which Klairmont himself classified as "virtually nonleasable." (See Pl.'s Ex. 12.) At the time he consented to the assignment to Toys, Klairmont also knew that his anchor tenant, Venture, had never paid percentage rent. (See Tr. at 334-46.) By permitting the space to be let to Toys in _ this fashion, Klairmont demonstrated that he had little expectation of receiving percentage rent in the future. *26 b. Prior to Toys's request to sublet 7,000 square feet to Famous, Klairmont never raised a concern about Toys finding a tenant that could generate percentage rent, despite the fact that Toys's efforts to sublease the vacant space were obvious. c. At the time that Toys sought his request for consent to 'the Famous Sublease, Klairmont's only realistic expectation of percentage rent depended on Toys expanding, either into the entire 15,000 square feet, or some part thereof i. At trial, Klairmont testified to three possible scenarios under which he could reasonably have expected to generate percentage rent: (a) if a retailer took over the 7,000 square feet of space and did "an unbelievable volume of dollars", (b) if Toys went dark and Imperial could have leased to another tenant, and (c) "if Toys expanded into the entire space, or possibly took a portion of the entire space." (Tr. at 296-97.) Of these examples, the first is contrary to the evidence: Famous was the only potential tenant that showed any interest at all in the "bowling alley" that made up the vacant space. Moreover, given that Toys had generated gross sales of $3,595,649 over 25,000 square feet in 1987, or $144 per square foot, the contemplated super-retailer, to hit the break point, would have had to generate over $3.4 million in sales over 7,000 square feet, or $486 per square foot. There was no evidence that such a retailer existed.

i

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iii. Klairmont's percentage rent argument is not supported by any assertion that Famous could not generate the requisite level of sales or that such those sales would not count toward percentage rent. The evidence showed that Klairmont refused to consent to the Famous Sublease without relying on information regarding its gross sales and despite the fact that he considered Famous a desirable tenant. At trial, Klairmont testified that based on national figures, his own tenants, and other developers, he knew that shoe companies generated between 123, 135, and 150 dollars a square foot. (Tr, at 29~91.) In fact, Famous's projections make these figures look optimistic. (See Def.'s Ex. 8.) Nevertheless, Klairmont lacked any specifics as to Famous when he made his objection and never complained about Famous's ability to generate percentage rent. And, at his deposition, Klairmont admitted that "as far as percentage rent is concerned", he was better having Famous as a sublessor rather than leaving the space vacant. (Tr. at 197-98.) *27 Paragraph 4 of the Lease provides that the sales of the tenant, or any "occupant" count toward percentage rent. (Pl.'s Ex. 2 ~ 4.) Thus, a subtenant's sales are added to overtenant's sales for purposes of percentage rent. (Tr. at 182-85, 197-98, 254--55.) iv. Together, the above conclusions show that Klairmont's percentage rent argument depends on an expectation that Toys would expand into all or some of the vacant space. No

I

Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

other possibility is supported by both Klainnont's testimony regarding his expectations and the evidence.
20

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d. At the time of both the K-Mart Assignment and the request for consent to the Famous Sublease, Klainnont had no reasonable expectation that Toys would expand. Whatever expectation, or hope, Klainnont had about Toys expanding was not diminished by the proposed Famous Sublease. There was no evidence submitted at trial to show that Toys was more likely to expand into all of the 15,000 square feet than it was to expand into just the 8,000 square feet to be left vacant by Famous. To determine if Klainnont's expectation of percentage rent was diminished, two scenarios must be compared. Under the tirst scenario, Toys expands into all of the 15,000 square feet. Under the second scenario, which actually is consistent with Klainnont's testimony that he might have achieved percentage rent if Toys moved into a "portion" of the vacant space, (see Tr. at 296), Famous is permitted to sublet and Toy expands into the 8,000 square teet left vacant. The evidence submitted at trial failed to show that either scenario was more likely or that Klainnont was more likely to receive percentage rent under one rather than the other.
21

over the $7,000,000 break point in their first year of operation. (Def.'s Ex. 41; Handler Dep. at 184.) Although these facts show that percentage rent for the entire 40,000 square feet was possible, they do not bear on Klainnont's reasonable expectations in 1987 and 1988. At that time, Toys had yet to develop the super store concept and was no more likely to expand into 40,000 square feet than it was to expand into 33,000 square feet (25,000 + 8,000).
N. Restoration

*28 I. Klainnont did not reasonably withhold his consent on the basis of expected restoration costs. 2. The restoration cost argument raised at trial is pretextual because Klainnont neither raised the issue with Toys before trial nor included it among his answers to interrogatories. (See Pl.'s Ex. 57.) To the contrary, at his deposition, Klainnont testified that he was not objecting to interior changes. (Tr. at 176.) 3. It is unlikely that restoration costs were a significant concern for Klainnont. In his January 20, 1988 letter to Keschl selling his proposal to take back the 7,000 square feet, Klainnont volunteered to do "all the necessary improvements" to the space. (Pl.'s Ex. 12.) Klainnont thus had no independent objection to improving the 7,000 square feet and then having to reintegrate that space with the 25,000 used by Toys. Restoration apparently only became a concern to Klainnont after he had refused to consent to Famous, after this case was tiled, and after he answered the Plaintiffs interrogatories. 4. Klainnont does not address his failure to raise this issue in a timely fashion. However, he claims that restoration is a legitimate concern because he would have incurred substantial expenses in "reintegrating" the 7,000 square feet used by Famous once Famous had altered the space to meet its needs. 5. It would have cost approximately $50,000 for Famous to build out its space in the Premises. (See Tr. at 508-09.) 6. To build the Famous store, several systems would have to be replaced or isolated. These systems include the heating ventilation and air conditioning ("HV AC"), electrical, ceilings, alarm systems, sprinklers, and plumbing. (Tr. at 1147-69.) Famous also would have had to put in a door and sign and demising walls.

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6. The Trust has also contended that Klainnont did not receive enough information to make a decision regarding Famous's ability to generate percentage rent. This argument fails in light of the Court's findings that Klainnont made a prompt decision refusing to consent to Famous without considering available information, that Famous was a desirable tenant, that Klainnont himself wanted to rent to Famous, that Klainnont never directly responded to plans made available to him, and that Klainnont never raised any percentage rent concerns. The Court thus finds, as a matter of fact, that Klainnont had all the information he wanted regarding Famous and that had Klainnont wanted more information, Toys would have attempted to provide it. 7. The Trust seeks a finding that Klainnont had little hope of receiving percentage rent after the Famous Sublease was in place. The Court agrees. However, Klainnont also had little hope of receiving percentage rent after he approved the KMart Assignment and at the time he entered into the Master Lease. 8. The Trust also points out that Toys recently considered expanding its Kids operation to the entire Premises into a Kids super store. (Def.'s Ex. 40.) Although Toys has now decided against expansion, Toys's projections would have put Toys

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intended to grant the City ownership and exclusive control over Parcel 4, on which the Park Grill is located, the Park District would have given the City a quitclaim deed. The fact that the Park District did not do so confirms that it was not conveying to the City exclusive use of Parcel 4 with respect to the restaurant. 43. The post-contractual conduct of the City and Park District is relevant to

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construing the intent of the parties. Chicago & N.W. Ry. Co. v. Peoria & Pekin Union Ry. Co., 46 Ill. App. 3d 95, 101,360 N.E.2d 404,407 (3d Dist. 1977) ("The partiesto an agreement are in the best position to know what they meant, and their action under the contract is often the strongest evidence of their intended meaning."). That conduct, discussed below in connection

with the estoppel and related issues, shows that both the City and the Park District understood that the Park District retained full rights to enter into the Concession Agreement and the City repeatedly took steps that approved, validated and actively implemented the Concession

Agreement and the rights of the Park Grill Parties under it. D. 44. The City is estopped from asserting its position Courts will estop a municipality from taking a position that would hinder or

I I

destroy a party's rights in property if the party has relied in good faith on an affirmative act of the municipality to make substantial improvements or extensive expenditures on the property. Gregory v. City of Wheaton, 23 Ill. 2d 402, 407-08, 178 N.E.2d 358, 361 (1961). Even where the affirmative act of a public employee was mistaken or unauthorized, estoppel applies if the party adversely affected acted in good faith and would suffer substantial loss if the government were allowed to abandon its prior position. Drury Displays, Inc. v. Brown, 306 Ill. App. 3d 1160, 1165, 715 N.E.2d 1230, 1234 (5th Dist. 1999) (Department of Transportation estopped from

18

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Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

7. At the point in time, if ever, in which the 7,000 square feet would have to be "reintegrated" with the remainder of the Demised Premises, the demising walls would have to be demolished, the store front altered, and the systems reconfigured with those used in the remainder of the space. 8. The amount of these restoration costs would depend on many factors including: (I) whether or not Toys exercised its options to extend its lease and (2) whether or not Klairmont released the space to a single user. a. If Toys exercised both of its options to extend its lease, the restoration costs attributable to the sublease would have declined. By the end of the twenty-year period of the twice extended lease, all of the systems would have required replacement, meaning that the marginal cost of replacing the systems of the sublease would be low.
22

ii. Given the difficult configuration of the Premises, Klairmont had a diminished expectation of leasing the space out to a single user. e. Klairmont failed to inform Toys of any concern of his regarding restoration costs. 9. Ifrestoration costs were a legitimate concern for Klairmont, he acted unreasonably by not raising that problem to Toys. a. Had there been a dispute over restoration costs, each side might have pointed to a provision in the lease to support the view that the other was responsible for restoration. Toys might have said that under paragraph 36 of the lease, it was only obligated to return the space "together with alterations, additions and improvements then a part thereof in good order and condition." (Pl.'s Ex. 2 ~ 36.) Klairmont might have responded that under paragraph 23 of the Lease, the tenant must indemnify him against "all claims, actions, damages, liability and expense of whatsoever nature arising out of the use or occupancy of the Demised Premises ...." (ld. ~ 23.) By not raising any concern about restoration cost, Klairmont avoided an opportunity to have the matter resolved before the space was to be used. b. Klairmont cannot claim to have acted reasonably with regard to any restoration cost concerns by keeping them to himself. Toys cannot be required to have guessed why Klairmont was withholding consent. If Klairmont had expressed legitimate concerns on the issue, the parties may have been able to work out a mutually agreeable solution. c. IfKlairmont had thought that restoration would have been a concern for the lender, as discussed below, he would have been unreasonable to withhold that information from Toys without giving Toys an opportunity to satisfy the lender. O. Changes to the Exterior

b. In contrast, if Toys were not to exercise its 1993 option and if Klairmont would have needed to reconfigure the Demised Premises, he would likely have incurred substantial restoration costs. He approximated these costs at $15 to $20 per square foot, or $105,000 to $140,000. (Tr, at 282-83, 300.) c. In the opinion of the Court, it was unreasonable for Klairmont to believe, in 1988, that Toys would not renew its first option. There was no evidence that, as of that time, that Toys would seek to leave its newly leased space after just six years. Toys had a favorable rent and a successful store. Klairmont's purported assumption that he would have to restore the 7,000 square feet in 1993 does not square with his purported assumption that he would be locked out of percentage rent for sixteen years. Klairmont either expected that Toys would occupy the Premises for sixteen years or expected that they would not; he cannot now claim to have expected both. *29 d. In the opinion of the Court, it was not reasonable for Klairmont to assume that, when Toys left the Premises, the Premises would necessarily be let to a single user. i. In 1989, Klairmont built a 50,000 square foot addition to the Treasury building. (Tr. at 946.) Instead of attempting to lease that space to a large tenant, Klairmont divided it up and leased it out to several small tenants, none of which took more than 16,000 square feet of space. (Tr. at 163.)

I. Klairmont did not reasonably withhold his consent on the basis of expected changes to the Treasury building's exterior. 2. The exterior changes issue is pretextual because Klairmont failed to raise sufficiently any concern about the storefront to Toys. 3. Paragraph II of the Lease requires Klairmont to act reasonably in withholding his consent to an exterior change.

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Toys "R" Us, Inc. v: NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

presentation. The Court therefore accepts Plaintiff's payment assumptions. II. For purposes of calculating the present value of Plaintiff's future damages, the Court finds that the interest rate proven at trial was the 8.6 percentage rate testified to by Mark Keschl. Toys argues for the use of a six percent or two percent rate. Keschl stated that the 8.6 percent rate was more accurate, or "more appropriate", than the 6 percent rate. (Tr. at 498.) No evidence was introduced at trial regarding the 2 percent rate . 12. Although Toys may be entitled to prejudgment interest in the amount of 5%, the Court will permit the parties to provide additional authority on this issue, as indicated below. At minimum, however, Toys's proposed calculation of statutory interest is flawed. Toys's calculation takes 5 percent of the present value of Toys's past damages. Toys is only entitled to 5 percent of the past value of its damages. 13. Toys decided not to expand into the vacant 15,000 square feet for business reasons. a. On March 3, 1993, Toys told the Trust that it intended to expand into the 15,000 square feet. (Def.'s Ex. 40.) b. Toys's plans for expansion were based on a new concept, tirst developed in January of 1993, the "super store." (Handler Dep. at 13-16, 32.) The super store concept was based on the idea of selling merchandise at a "much lower margin" to "generate a greater volume of sales." (Aertker Dep. at 17; Handler Dep. at 13-16.) Kids had set up a "super store committee" to test the viability of super stores. (Handler Dep. at 43.) Jeffrey Handler, director of marketing for Kids, and Gayle Aertker, a vice-president of real estate for Toys, were both involved with that committee. (Handler Dep. at 45-46.) *36 c. Handler testified that Toys decided to expand contingent on a knock-off analysis. (Handler Dep. at 61-67.) According to Handler, a knock-off analysis is a study of the degree to which a new store would take sales from existing stores. (Handler Dep. at 76.) d. According to Gayle Aertker, this litigation was discussed by the "super store" committee only with regard to concerns about getting consent for the "super store." (Aertker Dep. at 24--29; see also Handler Dep. at 120-22.) e. According to Handler, this litigation had no bearing on the decision not to expand at the Golf-Milwaukee Plaza. (Handler Dep. at 124.)

f. In late March 1993, Toys decided not to expand because a Toys super store at the Golf-Milwaukee Plaza would have had too large of an adverse effect on other Toys stores. (Def.'s Ex. 41; Aertker Dep. at 33; Handler Dep. at 89-90, 9394, 101-03, 151-56, 184--90.) Toys made this decision after reviewing the knock-off analysis upon which the decision to expand was conditioned. The analysis showed that the proposed super store would take too much sales away from other Toys stores. g. The Defendant requests the Court to draw the inference that Toys's decision not to expand was due to this litigation rather than based on business reasons. This argument apparently is premised on Toys's decision, after deciding to expand on January 22, 1993, to switch positions within three weeks of telling the Trust of its decision to expand. h. The uncontradicted evidence in this case shows that Toys had legitimate business reasons for not expanding into the vacant space. There is no evidence that the super store committee reconsidered its decision based on this litigation. Defendant's argument is based on sheer speculation. 14. The Defendant failed to prove that the vacant space has residual value. Toys used reasonable means and effort to lease all or part of the 15,000 square feet. However, the Court cannot determine if the space has any residual value. This parties may submit additional evidentiary and legal authority on this issue, including the evidentiary affidavits of expert witnesses. The following evidence is helpful in that inquiry. a. There is no evidence that any potential tenant but Famous was willing to take any of the vacant space in 1988, when the market for small tenants was much better than now and when Toys had more, in terms oflease options, to offer. b. Toys's chances of now finding a tenant to sublet either the 7,000 square feet or the 15,000 square feet are very limited. According to Defendant's expert, Blonstein, the bottom dropped out ofthe small tenant market in 1988. (Tr. at 1718.) In 1993, landlords did not want to be stuck with small space. (Tr. at 1697.) c. While the vacant space may have some value as a possible cite for Toys's future expansion, Defendant has failed to provide the Court with any evidence regarding the possibility of Toys's future expansion or a means of placing a value on that possibility.
28

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The Defendant bears the burden of doing

so in its supplemental memorandum.

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Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

financial responsibility, *37 15. With the above conclusions as to Toys's damages, damages amounting value the Court finds that Toys has incurred to lost rent, CAM payments, Plaintiffs interest, damages must be decreased

the type of business to be conducted
Vranas (\' As.\'o('s. FWI1i(V

on the premises, and whether the business competes with that of the lessor or another lessee.
I'.

and real estate tax payments. by the residual for statutory The parties with present

Pride, 498 N.F.2d 333, 339 (III.App.Ct. 505 N.E.2d 363 (111,1987); Losurdo Co., 465 N.F.2d 139. 143 (Ill.App.Ct,

1(86), appeal denied,
Bros. I(84).
\1.

Arkin Distrih,

of the vacant space, if any, and then adjusted if any, and present as of October value calculations. are directed to file renewed damage calculations,

a. Here, Toys has proven that Famous was a ready, willing, and able subtenant by reasonable b. The Seventh Circuit Tovs "R" commercial standards. of law,

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values

I, 1995, based on the Court's findings

in this decision. rejected, as a matter Klainnont's objection to the type of business to be conducted U,', Inc. v. NBD Trust Co. o(

III. CONCLUSIONS OF LAW A. Standard for Reasonable Consent
I. Where a lease forbids any sublease or assignment withhold CO.
I'.

on the premises.

Illinois, 904 F,2d 1172, 1176-77 (7thCir.1990). *38 c. Although Venture eventually without a possible competitor of Famous's, in the record to show that Klainnont that fact. Klainnont directly to Famous. concerned He therefore leased to Payless shoes, there was no evidence was concerned about

the consent of the landlord, the landlord cannot unreasonably his consent Evening to a sublease. Golf
Mallugcmcllf

was willing to rent the 7,000 square feet cannot claim that he was with Pay less,

Tides Watcrbeds.
l'.

51'2 N.E.2d

1000, 1003

(Ill.App.Ct.),

appeal denied, 580 N. E.2d I Ll (l1l.1991); Jack

about Famous competing subtenant

Frost Sales, Inc. of whether landlord's

! iarris Trust & Savings Bunk. 433 N. E.2d
is true regardless regarding the Walter E. Heller contains a provision
P.

(J41. 949 \ 1I1App,Ct.19~2). This conclusion the lease reasonableness. See Arrington

4. Even if a proposed and able by reasonable reasonably bargained-for

or assignee is ready, willing, standards, a landlord may 333

commercial

refuse a sublet if the sublet will interfere with a right contained in the lease. See Arrington. 5859. when he seeks to improve his consent to obtain of the original lease.

//1('1 Corp., 333 N .F.2d 50, 58 (IlI.App.C,'t.I975). a. Here, paragraph the landlord's a sublease. Premises, 16 of the K-Mart lease expressly requires to

N.E.2d
consent

at

reasonableness

when withholding states: "Tenant landlord's

5. A lessor acts unreasonably his economic a benefit Economy America, example, position not reflected Rentals, Inc.

That paragraph

may not assign consent thereto, (Pl.'s Ex.

by withholding in the terms
I'.

this Lease or sublet the whole or any part of the Demised without first obtaining which consent shall not unreasonably be withheld."

Garcia,

819 P,2d

1306, 1317

(N. M .19(1);

I ()I (I POfOm{fC (lsSlics. +85 A.2d may

v. GmcC/J' Mfrs. (O,C.1984). his consent

0/
For

2 ~ 16.)
b. Therefore, paragraph unreasonably Sublease. 2. To prove that its landlord unreasonably to a sublease, and who, standards." Bismarck who was "ready, willing, refused to consent Toys proves that Klainnont has breached acted to the Famous

Inc..

199, 2()X-IO not withhold

a landlord

to a

sublease in order to extract a higher rent. Kendal/ v. Ernest Pestana, lnc., 709 P,2d 837. 845 (('aI.1985) (citing cases); Sanitary Chanslor-Wcstcrn (affirming judgment Oil & Del'. Co. v, Metropolitan concluding that defendant consent and a new

16 of the Lease if it proves that Klainnont in withholding his consent

Dist, of Greater Chicaeo. unreasonably land had been payments Defendant's to withhold economic

266 N. F.2d 405 (I1l.App,Ct.1970)
lessor acted until of rent to sublease schedule

by withholding reappraised

a tenant must prove that it tendered a subtenant and able to take over the lease met reasonable commercial least,

was established). consent

This point is repeated in one of for a landlord to extract an position." solely

at the very Evening Hotel CO.

key cases: "[I]t is unreasonable to a sublease or to improve (quoting concession

Tides Waterbeds,
I',

Sutherland,

572 N.E,2d at 10(B; 529 N.E.2d 1091, 1097

its economic

(lILApp.Ct.l9S8),

appeal denied, 535 N.F.2d 912 (111.1989);

IForcester-rat/l/.lck

Square CVS v. Kaplan, 601 N.E.2d 485, lOj() Potomac AssocI', v. lnc., 485 A.2d at 20(210).

Jack Frost Sales, Inc., 433 N.E.2d at 949. 3. A landlord's evaluation of "reasonable commercial

489 (Mass.App,Ct.1992)
Grocer» Mfrs. ofAmerica,

standards"

may include the consideration

of the subtenant's

I I I

Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

consent,

noting that the lessor should have an opportunity its other reasons "in an effort to show that [the acceptable." Id. at n. 6.

B. Burden of Proof
7. Here, the Plaintiff bears the burden of demonstrating Klairmont Arrington 50. 56-58 (reversing acted unreasonably
v,

to explain

assignee] was not commercially that The Indiana proposition Farm Bureau

in withholding
[Ilt'/

his consent. 333
v,

decision

does not stand for the

Waller

E. Heller
vj

Corp.,
NC1VIIILIII

N.E.2d Hlukv

that a landlord may justify his refusal to consent

(Ill.App.Ct.l

S); see also

to a sublease based on reasons he did not actually have at the time, nor does the case permit a landlord to rely on reasons that were not objectively reasonable. Inc. v. Garcia,

Diukv Omaha-Lincoln,

S12 N. W .2d 410 (Ncb.Ct.App.1994) burden of proof to the landlord). case: "The burden of persuading of whether to have consent has been

trial court decision finding landlord unreasonable

where trial court assigned

b.

£'('0110111.1'

Rentals,

819

P.2l!

1306

I I I

As stated in the Arrington the trier of fact on issues unreasonably alleging .lrrington. the withheld withholding

(N. M .1991), supports Economy

the foregoing

conclusions

of law. In refused to

Rentals, the Supreme Court of New Mexico upheld sublease. its consent The lessor claimed and the Supreme However, the

in lease cases, falls upon the party been unreasonable."

the trial court's finding that a lessor unreasonably consent to a lessee's proposed many reasons for withholding Court accepted the premise a reasonable Supreme

333 N. E.2d at 58. C. The Economy Rentals Case

that at least one of them was consent.

basis for withholding

Court refused to disturb the trial court's decision, behind [the lessor's] refusal; the real or primary was the forbidden the lease. one of increasing it was the economic unreasonable." As such, pretextual even when

8. When evaluating
refusal true See to consent, motivation Ecouomv and

the reasonableness discard Inc.

of the landlord's the landlord's motivations.

because the proffered reason "was not the real or predominant motivation motivation benefit Economy consent

the Court must ascertain any pretextual

Rentals, A refusal

v. Garcia,
116::21i

X 19

P.2d

1306
if

from

tN. M. 1991).
I'.

to consent

is only

reasonable

Rentals, X19 P.2d at 1317. The case stands for the reasons for withholding reasonable, do or predominant As stated another case: is merely of that to a sublease, that decision for withholding if otherwise the actual

based on objective Quinn, landlord's subjective Rl!a/tv

grounds.

East 67th Sf. Assoc.\·.

principle that a landlord's not justify motivation

SIX N.Y.S.2d
to demonstrate

302, 304 (N'y'Civ.Ct.1987).
and personal desires 567. reasonableness. 515 N.Y.S.2d

A
are

concerns
('(//'1'.,

i I I I
~
I .

insufficient v. Hclaso!

See Ontel Corp. 567-68 v. Grocerv

consent is unreasonable.

by the Economy Rentals panel in describing [I]f a claimed reason for refusing

(N. Y .App, Div.1987);

11110 Potomac /1.\'.1'0(,.1'. vlfrs. oj Atnerica, lnc., 4X5 1\,2d at 209 n. 14.
*39 a. The Trust has asserted that a landlord's to a sublease need not be articulated
1'.

consent

pretextual, the court will look through the asserted reason
reasons for the Economy Rentals, X19 P.2d at 1314. 9. Under judgment. Klairmont's Economy The Court Rentals, found, the Plaintiff is entitled of fact, to that his his to the true motivation motivation and assess the reasonableness refusing by the landlord in light of the facts in the case.

at the "time of reference." Dist .. 552 F.Supp.

In support of this argument,

Trust cites Indiana Farm Bureau

Chicago Regional Post In that

270. 275 n. 6- (N.D.l11.l982).

case, the district court refused to grant summary judgment to a plaintiff claiming that the defendant refused to consent to the plaintiffs party. In refusing to consent a letter justifying The plaintiff decision. remained lessor unreasonably to a third lease assignment

as a matter

primary, if not only, reason for withholding consent to strengthen

to the lease the lessor wrote basis for withholding consent. by its

consent was to improve his status under the Lease and rent directly to Famous. By withholding acted unreasonably. In the opinion hand in seeking the return of the 7,000 square feet, Klairmont of the Court, the other reasons proffered at trial were after the fact and pretextual.

its actions with a reason that later turned

out to be an unreasonable its letter from asserting

argued that the lessor should be estopped any other arguments to justify

The district court denied this request because there a genuine issue of material fact regarding whether assignee was commercially reasonable.

*40 10. Although further discussion on the issues ofliability
is unnecessary Rentals, record. the remainder to support the Court's decision, see Economy the

the proposed consider

lei.

at to

XI.9 P.2d at 1317 n. 8, the Court briefly addresses
of the legal issues in this case to complete

275. The court rejected the plaintiffs the lessor's other asserted

estoppel

argument

reasons for withholding

Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

o

D. Principles of Construction I. Where a lease contains provisions giving further meaning to a reasonableness clause, the standard of reasonableness varies according to the provisions in the lease. ,.jrrillgr(ll/ v. IhJlrer E. I letter 11It'1 Corp., .133 N. E.2d 50, 58 (111.App.CI. J 975). For example, where a reasonableness clause is accompanied by provision 'limiting subleases to competitors, a landlord may reasonably reject a sublease to a competitor. Id. 2. When interpreting the Lease to ascertain the parties' intent, the Court must interpret and construe the Lease as a whole because "it will be presumed that everything in a lease was inserted deliberately and for a purpose." Id. 3. The Court may look to the contemporaneous and subsequent conduct of the parties in determining their intent regarding the contract provision at issue. Continental Casuultv Co. v. Polk Bros., lnc., 457 N.E.2d 1271. 1274 UII./\pp.C:t.1 ')83). 4. Provisions restricting subletting are to be strongly construed against the lessor. Clumslor-Wcstcrn Oil & Del'.
Co. v.. I/erropoli/(//l Saniturv
J

c·ir.19X9); Corter I'. SU/CH'o}, Stores, /IIC., 744 P.2d 458, 459 61 (Ariz.Ct.App.1987);./(I/IIl/[ogul/ Enters .. Inc. I'. Kel/(Igg. 231 Cul.Rptr. 711. 713 (CaI.C·t.App.I9X6); Mere'IIIT //11'. CO. F. F IV Woolworth Co .. 706 P.2d 523, 53134 (Okla. I()ti5); Haack v. Great Atlantic & Pacific Tea Co" (,03 S.W.2d 645, 650 (Mo.Ct.App.1980); Jones \'. Andv Griffith Prods., lnc., 141 S.E.2d 140, 143 (N.C.O.App.1 (78); Williams I'. SaleH'u)' Stores. ltu: .. 4241'.2<1541.54951 (Kan.1967); see also Mu/If'1' 0/ Goldblatt Bros .. 1111'.• 766 F.2d 1136, I J 3840 (7th Cir.1 ()85); Rowe I'. Grellt Atlantic &, Pacijic r-: Co., 385 N.E.2d 566, 57072 (N.Y.1978). *41 3. The cases in this subject matter area might be divided, as the Defendant suggests, into two categories: cases in which the landlord seeks to enforce an express right to object to an assignment or sublease, see Newman, Kaplan, B.MB., Kellogg, Haack, Jones, and cases in which the landlord seeks to enforce an implied right to object to an assignment, sublease, or other act by the tenant, see Carter, Mercury Investment Co., Goldblatt Bros., Williams, Rowe. In the latter set of cases, the implied covenant cases, the courts have been reluctant to permit a landlord to raise an objection to his tenant's conduct when the basis for the objection is not contained in the lease. None of those cases find the landlord's objection reasonable. In the former set of cases, the express covenant cases, the courts have consistently found that the landlord's conduct was reasonable if the landlord objected to a sublease or assignment which would fail to produce rental income equivalent to that consistently being paid by the prior lessee or reasonably contemplated by the original lease. See B. MR .. 869 F.2d at 868 fl. 2. 4. From the express covenant cases, the Defendant presses for a strict rule: whenever the landlord negotiates for himself a express reasonable consent clause, he acts reasonably in withholding consent, on the basis of his percentage rent clause, no matter how remote his prospects of percentage rent and no matter what the importance of the percentage rent clause was to his original bargain. In the opinion of the Court, that is not a correct statement of the law applicable to this case. 5. None of the express covenant cases appears to adopt the rule professed by the Defendant. In each case, the deciding court relies heavily on two factors: (I) the original lease negotiated by the parties, and (2) the facts of the case. In every single case, the key inquiry is whether or not the landlord would receive total rental payments equivalent to those that could reasonably be expected under his lease, where "reasonably expected" appeared to tum on the importance of

I I
tJ

n.

Dist. (70).

11/ Greater

Chicago.

266

N.E.2d 405, 40X (1II.App.Ct.

i I

E. Percentage Rent I. The Defendant's primary justification, at trial, for his refusal to grant consent to the Famous Sublease was his view that it would impair his expectation of future percentage rent. (NBD Trust Co.'s Proposed Findings of Fact & Conclusions of Law at 26, ~ 14.) This argument is defeated by three of the Court's fact findings above. 2<) For the purposes of completing the record for any appeal, however, the Court assumes that the Famous Sublease did "impair" a subjective expectation Klairmont had of receiving percentage rent. 2. In the opinion of the Court, the percentage rent cases together stand for the principle that a landlord acts commercially reasonably when he refuses to consent to a sublet or assignment which will not generate the amount of rent the landlord might reasonably expect, measured objectively, to receive under the original lease. See Newman r. Hiukv Diukv Omaha-Lincoln, 512 N.W.2d 410, 415· 17 (Neb.C.'t.App.19'J4); Worcester-Tamuck: Square C/~) I'. Kaplan, 601 N.E.2d 485. 489 (Mass.App.Ct.Ivsz): B.MB. Corp. I', MeMahan's Va/ler Stores, 869 F.2d R65, 868 n. 2 (Sth

I
(I,

L;

rr
'-'

I

Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

I I I I I
i I I I

the percentage rent clause to the parties' original bargain. See ,\1':11'111(//1, 512 N.W.2d at 417 (stating that the "percentage rent provision was the primary inducement" for the landlord's willingness to renegotiate the lease at issue); Kaplan, 601 N. F.2d at 489 (stating that landlord's expectation over time of receiving percentage rent was "essential" to the original bargain); Kellogg, 231 Cal.Rptr. at 713 (stating that a landlord acts commercially reasonably in rejecting an assignment "which would prevent [the] landlord from receiving at least the same rental income as if the lessee were to continue operation. "); Haack, 603 S.W.2d at 650 (stating that both of the parties to the original lease "expected the volume of business to generate percentage rentals" because the landlord agreed to a lower base rent than previously collected); .JOI1(,s. 241 S.E.2d at 143 (quoting trial court statement that the proposed use of the space "could not reasonably have been expected to yield as great a return on plaintiffs investment as could be expected from the [original agreed use]."); see also R.M.B., 869 F.2d at 868 n. 2 (reading Kellogg and Haack to permit a landlord to object to an assignment where the "proposed assignee admits that it never would generate gross sales sufficient to produce percentage rental income equivalent to that consistently being paid by the prior lessee."); Medinvest Co. v. Methodist l losp .. 359 N.W.2d 714,717 (Minn.Ct.App.l vb-l) (reading Haack and .Jones to hold that a landlord may withhold consent when a proposed subtenancy would defeat a "specific and primary purpose for a lease, albeit economic"). *42 6. Three of the express covenant cases stress that the landlord may not attempt to extract rental payments that were ( I) higher than those historically received, or (2) greater than what might reasonably be expected under the lease. See Kellogg, 231 Cal.Rptr, at 713 (stating: "Here, Lessor did not attempt to extract a higher rent than historically received or than Lessee would have been expected to pay ifit fulfilled the lease terms for its remainder."); Kaplan. 601 N.E.2d at 489 (noting that landlord was entitled to insist that the subtenant generate "at least a reasonable amount of percentage rent. "); 8.,11,8 .. 1<69F.2d at 868 n. 1\ (noting that proposed sublease did not preclude the generation of percentage rent at prior levels). 7. In the opinion of the Court, the Court cannot ignore the particular facts and the parties' reasonable expectations under the Lease agreement, nor can the Court ignore, as Defendant suggests, the persuasive authority provided by the implied covenant cases. See Newman. 512 N.W.2d at 41617 (stating, in an express covenant case, that Rowe, an implied covenant case, was "most helpful to our analysis") 30.

8. Here, Klairmont acted unreasonably by refusing to consent to a sublease that neither decreased the rental payments he had historically received nor deprived him of rental payments he could reasonably expect to receive under the original Lease. a. Klairmont had never received percentage rent under the Lease and, at the time he refused to consent to the Famous Sublease, had dim prospects of ever receiving percentage rent. Compare Kellogg. B.MB .. and Haack. b. At the time he negotiated the K-Mart Lease, Klairmont could not have reasonably expected to receive percentage rent. He was contracting with a business having no known track record, and he permitted several provisions to be included in the Lease that reduce the possibilities of receiving percentage rent. The percentage rent clause was not an "essential", "vital" or "primary" part of Klairmont's bargain. Compare Newman. Kaplan. and Rowe. c. Klairmont cites the case of Fahrenwald v. Lallonte. 653 P.2d 806 (Idaho Ct.App.1(82), for the proposition that a mistaken concern about a remote infraction of the landlord's bargain is sufficient to demonstrate commercial reasonableness. In the opinion of the Court, the Fahrenwald case does not apply here. In Fahrenwald, the landlord was requested to consent to an assignment over a short period of time. The landlord contended that he was uncertain about the effects of the assignment on his lessee's continued liability under the lease and therefore withheld consent. The trial court found that the landlord acted reasonably and the Idaho Court of Appeals affirmed. The Fahrenwald decision makes several questionable statements, particularly the inference that a reasonable mistake about a contract justifies its breach. Nevertheless, Fahrenwald is distinguishable on its facts. There, the landlord was asked to consent over a period of four days. Here, the landlord quickly refused to consent, without any time pressure, and had several other opportunities to consent. There, the sophistication of the landlord is questionable. Here, it cannot be doubted that Klairmont was very sophisticated and knowledgeable as a landlord. And, there, the landlord was concerned about a central part of his agreement, getting paid if the assignee failed. Here, no such concern existed. *43 9. Finally, the Court rejects Klairmont's contention that he need only consider his subjective expectations under the Lease to act reasonably. Klairmont correctly argues that he need only consider his interests when acting reasonably. However, his interests are tempered by the law and what he has negotiated for himself in the Lease. In considering

I

Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

II I

what he has negotiated for himself, he must be objectively reasonable. In the opinion of the Court, given the provisions contained in the entire Lease, the facts at the time the Lease was signed, the facts at the time Klairmont consented to . the assignment to Toys, and the facts at the time Klairmont withheld his consent, Klairmont would not have been objectively reasonable in concluding that he could withhold consent based on the percentage rent clause contained in the Lease. F. Restoration Costs I. Klairmont may have been reasonable had he actually determined the restoration costs he might have faced and their likelihood, and then communicated this reason for rejection. 2. However, the purported restoration issue is clearly pretextual, as indicated above. The Economy Rentals case governs this issue. There is no proof that restoration costs were considered at the time of the rejection or were ever a true reason for Klairmont's withholding consent. G. Exterior Changes I. The Economy Rentals case also governs the issue of exterior costs. As indicated in the Court's finding of facts, there is no proof that exterior changes were a true reason for Klairmont's withholding consent. 2. In addition, the Court finds that, as a matter of law, paragraph II required Klairmont's reasonable consent to exterior changes and Klairmont unreasonably withheld his consent. 3. As indicated in the Court's findings of fact, the other Lease provisions, particularly paragraph 16, support the conclusion that paragraph II required Klairmont's reasonable consent. (PI.'s Ex. 2 ~ 11.) As the Court must interpret the lease as a whole, the Court finds that the parties did not intend paragraph 11 to grant Klairmont more power to prevent subleases than the express "reasonable consent" provision in paragraph 16 agreed to by the parties. 4. Also as indicated in the Court's findings of fact, the parol evidence in this case supports the conclusion that paragraph II required Klairmont's reasonable consent. (PI.'s Ex. 2 ~ 11.) 5. To the extent that he withheld his consent to the Famous Sublease based on exterior changes, Klairmont acted unreasonably by failing to determine the actual costs and

changes involved and to properly address the issue to Toys, as well as by not accepting Toys's proposed alterations when he had no independent basis for rejecting them. 6. Klairmont breached paragraph II of the Lease by not specifically accepting or rejecting Toys's tendered plans within ten days. (PI.'s Ex. 2 ~ 11.) 7. Paragraph 6 of the Consent Letter did not provide Klairmont with the absolute right to prohibit exterior alterations. (PI.'s Ex. 4 ~ 6.) *44 a. This argument was rejected by the Seventh Circuit in Toys I with respect to Klairmont's use objection. 004 F.2d at 1176-77. The same analysis applies to Klairmont's exterior changes objection. b. Paragraph 48 of the Lease requires that the party to be bound by a modification of the Lease must have signed the modification. Toys did not sign the Consent Letter. (PI.'s Ex. 2 ~ 48.) c. Paragraph 1 of the Consent Letter states that: "The Lease is in full force and effect, and there are no amendments or modifications thereto." (PI.'s Ex. 4 ~ 1.) 8. Finally, Illinois law imposes on landlords a duty of reasonable consent to subleases or assignments even if the contract does not contain a reasonableness provision. Arrington v. Willter E. Heller Jill'! Corp .. 333 N.E.2d 50, Sf! (lII.App.Ct.l97S). In the opinion of the Court, the same reasonableness standard may be applied to other consent provisions, like paragraph 11, in a lease. If, as in Arrington. Illinois law will impose a reasonableness requirement on consent to sublease clauses, the same requirement applies to consent to exterior changes clauses. Illinois law requires "good faith", or reasonableness, in the exercise of all consent provisions.

I I

i I I I

H. Lender Consent I. The Economy Rentals case also governs the Defendant's lender consent argument. This argument was only added during the Defendant's case at trial. It was presented through an interested and biased witness and was not even supported by the testimony of Larry Klairmont. It is pretextual. 2. The Court holds that the Trust had a duty to seek Provident's reasonable consent to any changes in the use ofthe Premises. (Def.'s Ex. 12 ~ 1.03.)

I

Toys "R" Us, Inc. v, NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

to his concealed a. Toys contends Provident's Rents, which that Klainnont Provident was not obligated the option to seek of all 8. The Famous Assignment or assignment b. Toys has failed, however, to demonstrate to a change how paragraph of use in the I5.(c) releases Klainnont the obtain Premises. Provident's from his duty, under the mortgage, consent reasonable. reasonable gives consent based on the Assignment of approving property.

concerns.

Such conduct is not commercially

Sublease

satisfied

the requirements

of the 15.

tenants and leases to the mortgaged ~ 15.(c).)

(Def. 's Ex. 48

of Leases and Rents, particularly

paragraph

(e), which prohibited the lessor from consenting Lease. (Def.'s Ex. 48 ~ I5.(e).) liable under the Famous Sublease.

to a sublease

which relieved the tenant of liability under the Toys would have remained

11

II

(Def.'s Ex. 12 ~ 1.03.) 31 of the Court, within on Ass
'II,

L Defendant's Good Faith Defense
if Klainnont rights, would had sought objected been \'. Klainnont's have 1. The Defendant to have breached argues that, even if he is now deemed not be held liable believing that he

I I I

3. In the opinion to the sublease refusal to "commercially (finding transfer concerns).

the lender's consent and the lender had reasonably its contractual that basis consent

his lease, he should himself subjectively This argument fault

because he conducted was acting reasonably. 2. Under whether Graphics, Illinois or not Inc.
l'.

reasonable."

See Esplc/ldido refusal to consent when based

Apartments

is rejected. in determining breached. Album 1041,

.vletro. Condominium

778 P.2d 1221. 1225 (Ariz. 1(89) to a property on a lender's

law,

is irrelevant has been

that a landlord's

a contract Beatrice

was not unreasonable

Food,'

CII .. 408 N.E.2d

1050 (I1LApp.Ct.1980)).

The Illinois Appellate

Court for the

4. Toys had no duty to seek the lender's consent.

Fourth District has succinctly Whether one intentionally,

stated this conclusion: carelessly, or innocently

5. Any failure to seek the lender's consent was a breach of the Mortgage agreement by Klainnont, not Toys. were not in of

breaches a contract, he is still considered

in breach of that

II

contract, and will be liable to the extent that the other party must be placed in the position he would have been in absent the breach. Wait r. First Midwest Bank/Danville, lacked is (IILApp.Ct.1986) 3. Defendant 49 J N.E.2d 7<>5, 802

6. So long as Toys and any of its sublessee's the Premises. (Def.'s Ex. II ~ 2.)

i I I I

default under the Lease, they were entitled to possession

*45 7. The Defendant
sufficient rejected. a. The regarding assignment. tenant bears information

has argued that Klainnont

(citing Album Graphics).
r. Mclaughlin.

to make a decision about Famous or to

present the Famous Sublease to the lender. This argument

cites Halpern

2 J.2 N .E.2d 122,

125 (I11.App.Ct.I965), contract reasonably

for its position.

The case, however,

stands for the proposition the burden lessor to consent of furnishing to a sublease sufficient or an 1253 to the whether for the lessor's determination

that when one party enters into a another way, the That is
I'.

seeing the contract one way and the other at its inception. As such, there was no contract.

information

party does the same, but sees the contract contract was ambiguous no meeting of the minds and therefor

See D'Ow

v. Delfakis,

636 P.2d J 252.

(Ariz.Ct.App.f

vx l ). Id.
had all the

not our case. See RafJles v. Wichelhaus,

2 H & C 906, 159
Local lnt'! Union, the famous between basis for RafJles caused by the

Eng.Rep, 375 (Ex. 1864); see Colfax Envelope CoW
b. The lessor need not seek such information, c. In the opinion information of the Court, Klainnont No. ')58-3M, Chicago G/'Up/de Communications 20 F.3d 750, 75255 RafJles v. Wichelhaus (7th Cir.1(94) (explaining case and the difficulty

he needed and desired to make a decision about showed that Toys was willing, ifnot with any additional information available his as

Famous. The evidence

expression "meeting of the minds. "), The differences the contract's rescission, nor is there "no sensible

eager, to provide Klainnont to seek information, information

the parties in this case does not go so deep so as to require choosing between" the parties' "conflicting understandings."

requested about the sublease. Although a landlord has no duty a landlord may not disregard he has expressed, as to concerns conceal

See Colfax Envelope Corp .. 20 F.3d at 753. Therefore, and Halpern do not apply here.

actual concerns, and then assert that he lacked information

foys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

*46

4. To the extent that Defendant v. Labonte. its position, the argument

relies on language is rejected.

in

b. Plaintiff mathematical

is not required

to prove

its damages
I'.

with

Faltrenwald to support

653 P.20 ~06 (Idaho Ct.App, [(82),
The Court principle to reject the established

does not read Fahrenwald that fault is irrelevant

Ltd. Corp. oj.llI/erica, 971 F.2d 1332. 1345 nth Hannigan. 410 F.2d at 293.
certainty. Havaco ofAmerica. c. The certainty of damages requirement

Sumitomo

C'ir.19(2);

in alleged contract breaches. does not permit a where his the precise Casting» CO. (quoting defendant "to complain of the resulting uncertainty

J. Damages I. Having determined
support damages a finding that the facts and law of this case on the Defendant's part, the

wrongdoing
I'.

caused the difficulty 754 F.2d 1363.

in ascertaining
{j.e

extent of actual damages." Knight, Hannigan. 410 F.2d at 2(3). the Defendant

Id.; see also

of liability

1374 (7th Cir.1(85)

Court now turns to resolve several of the issues relating to the that the Plaintiff may recover in this case.

d. However.

is entitled

to insist certainty.

that the
1I(II'(}('o

I I

2. The purpose of contract law is to put the plaintiff in as good a position Here. space. Plaintiff as he would have been in had the defendant breach Plaintiffs essentially damages denied Plaintiff kept the as if by his contract. See Hawkins v. McGee, 140 A. 641 (1'1.11.1929). Defendant's Therefore. opportunity to serve as a landlord for a portion of its leased are calculated

Plaintiff prove its damages.

Toys must show that its future
at 1345. Detailed

damages can be estimated with reasonable

ofAmerica, Ltd .. 971 F.2d
is not necessary. (1974).

or direct proof

Vcncin Co. v. Stoner.

321 N .E.2d

I. 13

cert. denied, 420 U.S. 975 (1974); 111 re 1I11I/ulla/1, The plaintiff need only "with a fair degree of of damages. Id.; which establishes,

936 F.2d 1496. 1502 (I1h Cir.19(1). present evidence probability".

were a landlord denied rent and other payments

a tenant for a period of time. Plaintiff and other payments
1111'. I'.

is entitled to the rent

a basis for the assessment

it would have received. See Speedee Mart

Schatz \'.. 1"holt Laboratories.

281 N. E.2d 323 (I II. 1(72).

Stovall, 6M S. \V.2d 174. 1777X (Tex.Ct.App, 19X3);
v,

Lee Dcv. Co.

Papp. S03 P.2d 464. 471 (i\z.Ct./\pp.[<)90).

*47 e. In the opinion of the Court. Toys presented sufficient evidence to show that had Klairmont consented to the Famous Sublease within a reasonable have opened rent prior to the October Famous Sublease. is reasonable, the assumption period of time. Famous would and started paying on the based on within 1. 1988 date contained its doors in the Premises

But see Reid v. Mutual (Utah 1989) (rejecting

0/

Omaha,

/11.1' .•

776 P.2d 896. <)08 as too speculative, Toys is therefore

Speedee approach as an alternative).

i I I I

using retained jurisdiction entitled payments

to the amount of the rent, CAM. and real estate tax it would have received from Famous had Klairmont

(Pl.'s Ex. 5.) The proposed

May 13 date

within a fair degree of probability. that Klairmont its build-out

kept his contract. 32 In the opinion accurately damage necessary citations unresolved issues of the Court. Plaintiffs remain unresolved. exhibits. damages cannot be Some the

would have consented in the Premises

thirty days had he acted reasonably. have completed calculated information. based on the evidence submitted. In order evidentiary the Court requests 120 days thereafter, 4. The applicable standards

and that Famous would approximately

to have

that the parties affidavits. in support of the

require that Plaintiffs

damages

file supplemental

evidence,

be calculated based on the assumption and Famous Sublease, respectively.

that Toys and Famous

to the record, and legal authority

both would have exercised their lease options under the Lease

issues in this case, which are indicated below. standards permit Plaintiffs damages to

3. The applicable be calculated opened

a. Generally, when construing or extensions

provisions

relating to renewals the

with the assumption

that Famous would have and started paying rent to

of leases, where there is any uncertainty,

its doors in the Premises

tenant is ordinarily favored, and not the landlord. Taco N acho, Inc. v. Hasty House Restaurants,
}I/('"

Toys on May 13, 1988. a. Damages Hannigan
('j1'.I969).

436 So.2d 403. 406

(Fla.Dist.Ct.App.19X3
may not be uncertain, remote or speculative. v. Sears, Roebuck & Co" 410 F.2d 285. 293 (7th cert. denied, 396 U.S. 902 ( [9(9).

).
damages based on a Tibbetts
j;

b. A plaintiff may recover contractual lease option only if the Court concludes

that it is reasonably Taco

likely that the relevant lease option will be exercised. v. Nichols, 57S So.:~d 17. 19 (Fla.Dist.Ct.App.Ivvl

Toys "R" Us, Inc. v, NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

Nacho, Inc .. 436 So.2J

at 406; see also AtcKcl1:::ie

1'.

Carte. trial a. Future payments are discounted to present value to give a safely, will grow O'Shea
I'.

385 S. \V .2d 520,524-25 in "reasonable

(Tex.Civ.App.I964) his lease option).

(reflecting

court's factual finding that the plaintiff would have exercised, probability",

plaintiff a sum of money, which, invested Riverwav

to a sum equal to the sum of the future payments.

Towing Co .. 677 F.2d 1194. 1199 (7th Cir.1 482). prime rate testified to by Marc In

c. Using these standards, would have exercised the Famous Sublease. 5. Under the applicable its requested evidence

the Court has found, as matters of b. The 8.6 percent historical Keschl is the discount Gorenstcin rate supported the Seventh by the evidence. Circuit recommended interest rate. The Court ascertainable rough estimate plaintiffs figure of the

fact, that Toys exercised its first option under the Lease, that it its second option under the Lease, and that Famous would have exercised both of its options under

Enters .. Inc. r. Q1IlIIirv Carc-USA.

Inc .. 874 F.2d

431, 436 (7th Cir.1(89), standards, Plaintiffhas failed to prove

that its district courts use the prime rate to fix prejudgment interest where there is no statutory which provides a reasonable although increases in CAM and real estate taxes. Further stated that the prime rate is "a readily interest rate necessary to compensate

is requested to determine the amount ofthe increase. that it would have received from Famous. "with a

not only for

I I

a. The Plaintiff has demonstrated CAM and real estate tax payments b. However, will increase

the loss of the use of their money default." 874 F.2d at 436. Similarly,
fill'.

but also for the risk of the prime rate has been to present value. ajj'd. 834 interest News Network. Inc ..

the Plaintiff has failed to demonstrate, at respective

used to discount streams of future payments King World Prods .. 660 F.Supp.
v, Financial

fair degree of probability",

that CAM and real estate taxes rates of 4.2 and 11.47 percent the Court finds that it is not

l3~jJ. 1388 n. 14 (S.D.N.Y.1987),

o

F.2d 267 (2.1 C:ir.1(87). rate in bankruptcy

The prime rate plus a "risk factor" a cramdown 167 B.R. 842. 1146)

per year. B In particular, believable compounded,

is often used as a means of calculating (Bankr.E.D.Tex.1944).

that taxes will increase greater than 130 percent, over the next twelve years. Plaintiffs argument that a future

cases. See In re Collins,

c. While the Court acknowledges party may lay a foundation trends from historical insufficient historical make a projection "historical "historical trends" evidence, evidence

The Lease provides that overdue payments Ex. 2 ~ 4 at 4.) The evidence presented

for rent, CAM and at trial suggest that

for damages by projecting

real estate taxes should bear interest at the prime rate. (PI.'s Toys borrowed at the prime rate. (Tr. at 495.) i. The Plaintiff rate. Plaintiffs proposed both the six percent prime rate prime

i I I

the Court finds that there is in this case from which to Even that testimony

within a "fair degree of probability." would continue, which

if the Court were to accept Alfred Klairmont's

it does not, the

near the date of trial and an 8.6 percent

historical

trends" in this case are based on five years of data from which to draw the requested

own witness, Marc Keschl, stated that the 8.6

for CAM and real estate taxes. In the opinion of the Court, this is too small of a sampling conclusion. *48 estate d. Although taxes it might be assumed Plaintiff evidence that CAM and real to provide In light including

percent rate was the better rate. (Tr, at 498-99.) ii. Plaintiff discounted also proposed that its future damages be

at a risk-free rate of two percent,

based on a one
I'.

to three percent risk free interest rate range. See O'Shea v. Riverway Daniel. Towing Co., 677 F.ld at 1199; Marcillg lnc., 1126 F.Supp. 1128. 1138 n. that the Plaintiffs
<)

will increase, regarding

has failed

1"11101'
a two for

the Court with sufficient conclusion

for the Court to reach a

(N.D.1lI.t9931. have been

the extent of such increases.

Plaintiff offered no evidence percent rate assumes adjusted for inflation.

on this rate. Moreover, damages
34

of the fact that other damage issues are reopened, the mitigation appropriate on which submitted. of damages

issue, the Court finds that the and additional argument may be

Here, they have not been adjusted

increases in CAM and real estate taxes are issues new evidence

inflation. See O'Shea, 677 F.2d at t 199-1200. *49 c. Although

the issue of present value was not raised in has not been prejudiced. present
l'.

6. Under Illinois law, an award of future damages
Plaintiff must be reduced to present-day v. Smith, S02 F.2d 256, 258 nth Cir.19X6).

the pretrial order and Plaintiff did not offer expert testimony to the on the subject, the Defendant i. According

cash value. Fcnolio to the Second Circuit, value need not be raised in the pretrial order. Met: United Technologies

I I

Toys "R" Us, Inc. v, NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

Corp .. 754 calculations includes ii. Which selection

F.2d

63, 66

(2d.

Cir.19~5).

Present

value However, the Court decides one issue at this time. Defendant accurately "future" the is 825 is entitled points out that Toys is not entitled to projected values of its past damages. to a single adjustment, In other words, if any, Toys for the time

must be expected

when a clear part of the case

the possibility

of future damages. of proof regarding

party bears the burden of a proper discount the present

rate and the method to apply value of future damages

value of money to its past damages, Toys indicates that its prejudgment was calculated to the present recovery by applying

not two adjustments. statutory rate

the rate to establish an unresolved F.Supp.

interest on past damages (Pl.'s Post-Trial The purpose of that a

legal issue. See Cella r. [in ired States, argument

the 5 percent

1383, 1408 n. 3 (N.D.lnd.1991),

aff'd, 998 F.2d
can be made for in damages mitigation offered no

value of its past damages. of by the Defendants.

418 (7th Cir.1(93). A reasonable

Brief at 89.) This is incorrect complained the statutory 5 percent adjustment rate to a sum already increased

and is the type of doubleis to compensate a plaintiff

putting this burden on the defendant.

While the plaintiff has like damage Having

I I I

the burden of proving its damages, due to present value, benefits somewhat requirements, evidence

the reduction

for the loss of the value of money over time. Applying penalty on the Defendant. would have been due.

the defendant.

to present value imposes

regarding

an appropriate

discount

rate when doing to the

The statutory rate must be applied,

so could legitimately Defendant, Keschl.

be its requirement,

the Defendant cannot

if at all, to past damages at their value when they were due or

object to the Court's reliance on the most favorable,

rate in evidence, the 8.6 percent rate preferred by

*50

8. Plaintiffs
its exhibits

proposed that payments

damage

models

in

its

memoranda, 7. With respect to the issue of prejudgment requests additional argument law, S.H.A. 815 ILC'S 205/2 A lease is an "instrument interest, the Court Under Illinois in writing." Ward I); and authority.

at trial, and the testimony

of Mark period. It the

Keschl all assume therefore Defendant appears

made under the contract has assumed a payments

would be made on the last day of the relevant that Plaintiff schedule that is favorable accepts that assumption. to the Defendant. Therefore,

n (93),

a creditor is entitled to 5
MOlllgomcn;

percent interest on money due on an "instrument in writing."

At minimum,

has not objected.

the Court therefore

(~ Co.

v.

Wet::e!. 423 N.E.2d 11.70, 1176 (lII.App.Ct.l98

.Vo/iol/ol rea Co. v. Rvan Aviation

CO/p .. 578 F.Sllpp. 291. 9. The Defendant argues that Plaintiff is not entitled to future rent payments accrues
COIp.
I'.

i I I I

290 (N.D.llI.1981).

The money due must either be liquidated See North Shore Marine, Inc.

or subject to easy computation.
I'.

due from Famous because Atlanta

an action for rent Development 908, Corp. case

EI7:Scl. 40 I N.E.2d 269 (1lI.App.Ct.lC)IiO).
the Plaintiffs requested payments, for The

when

the rent is due. See General

Wilbur-Rogers

Curp .. 273 N.F.2tl

At issue is whether Defendant's

()10 t Oh.App.Ct. J ')71 ). The General Development recognizes that the breach of an installment an acceleration however.

breach of the lease satisfies these standards.

contract without contract, an

Plaintiff argues that does and the Defendant the contrary in its memoranda.

does not argue to

clause is not a complete breach of the contract. has proven damages that Klairrnont breached

This case is not about the breach of an installment Plaintiff interest issue Tea Company v. entire and indivisible to its entire prospective

In the opinion of the Court, this prejudgment here is analogous to the one raise in National Ryan Aviation recovered Corporation.

contract, the Lease. Plaintiff is entitled resulting from that breach. in a breach of contract the plaintiffs Portable Arguments failure to Bldg. Corp., regarding

There, a lessor sued its sublesee 9. Under Illinois law, the defendant suit bears the burden mitigate damages. of proving Morgan
Call'S r.

for failure to return leased space in good repair. The lessor $85,000 in damages. The sublesee, was awarded interest, in turn, sued the $85,000 the Court its assignee, which had been responsible the space. The sublesee prevailed in damages, holding, assignment plus statutory were instruments under Montgomery prejudgment in writing. other issues and has yet to hear interest until after the parties have submissions. for the condition of

780 F.2d 683. 688 17th Cir.1985). double recoveries arguments. See. e.g., :'v/cGce Steel

are similar in nature to failure to mitigate Co. )'. Stare tor mitigated
(/1'('

Ward. that the lease and the

& Benefit of Mclionald (Alaska 1986) (stating mitigation of proving arguments,

Indus. Alaska, 723 P.2e! 611, 616
that if the plaintiff the Defendant his As with part. Cf

As the Court has reopened Defendant's on statutory prejudgment made their supplemental

damages, he could not have had a double recovery). any double recovery on the Plaintiffs

position on this issue, the Court will defer ruling

must bear the burden

o o o
I I

Toys "R" Us, Inc. v . NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

Boyett

l'.

Keene Corp., 815 F.Supp. 204. 209 (E.D.Tex. J <)<)3)

(indicating that burden of proving a double recovery rests on the party seeking a credit); In rc ,\[('\1'/11011, 64 B.R. 125, 127 (Baukr. W.D.l\:lo.19R6) (stating that burden of proving a double recovery barred by the bankruptcy code rests with the defendant seeking to show that the debt was recovered from another party). 10. Although the Defendant has failed to present evidence regarding the residual value of the 15,000 square feet, the Court is not convinced that the space has no value whatsoever. Accordingly, in its discretion, the Court will permit the filing of supplemental evidentiary materials on this issue, the Defendant having the burden of proof.
II. Paragraph 20 of the Lease provides that the prevailing

versions of appropriate damages calculations, based on this opinion, consistent with the briefing schedule set out below. IV. CONCLUSION *51 The Court finds for the Plaintiff on the issue ofliability. The parties are directed to file supplemental evidence and evidentiary affidavits, if necessary, and legal authority on the following issues: (I) the appropriate increases in CAM and real estate taxes for the 7,000 square feet for the remainder of the Lease; (2) the residual value of that space; (3) the propriety of prejudment interest; (4) the proper damage calculations, including appropriate present value calculations as of October I, 1995, in accordance with the issues resolved in this decision and supported by any supplemental evidence; (5) Plaintiffs attorneys' fee request. Supplemental authority shall be presented on the following schedule. Plaintiffshall file its memorandum within three weeks of the date of this order. Defendant shall respond three weeks thereafter. Plaintiff shall reply two weeks thereafter. The Court will rule on the remaining issues by mail as soon as possible. However, if appropriate, should either party request the right of crossexamination of the other's affiants, the Court will set this down for a supplemental evidentiary hearing.

o

party in the litigation is entitled to attorneys' fees. This issue has been reserved. (Tr. at 8-9.) Now that the issue of liability has been resolved in the Plaintiffs favor, the Court will accept Plaintiffs request for an award of attorneys' fees. Plaintiff shall file a detailed and documented request with its supplemental memoranda, supported by a detailed evidentiary affidavit. 12. As further evidence and legal authority is necessary to compute damages, the parties are directed to file their Footnotes

o
i I

The parties appear to agree with this conclusion. The choice of law issue has not been briefed to the Court. The Complaint is actually titled: "Complaint for Declaratory Judgment. Breach of Lease. Tortious Interference with Contract, Tortious Interference with Prospective Business Opportunity and Injunctive Relief. (See Compl.) The nine leases purchased are summarized as follows: Ex. No. Location Pl.'s Ex. 2. Niles.IL Def.'s Ex. 33. South Hills. PA Eastgate,OH Def.'s Ex. 34. Pittsburgh. PA Def.'s Ex. 35. Oak Brook, MI Def.s Ex. 36. Military Crossing. VA Def.'s Ex. 37. Great Northern. OH Def.'s Ex. 38. Def.'s Ex. 39. Saginaw. MI not submitted Florence. KY (See Def.'s Ex. 32. Ex. A; Def.'s Exs. 33-39; PI.'s Ex. 2.)

.,
.)

I

o
r

Formation Date June 27. 1983 September 29. 1983 May II. 1984 September 29. 1983 March 14, 1984 May 28.1986 July 21. 1983 October 25. 1984 August 3, 1984

On the issue of the admissibility of Campbell's opinion as to the meaning of paragraph II of the Lease, the Court has already twice ruled such testimony inadmissible. See Toys "R" Us. Inc. v. NBD Trust Co. of Illinois, No. 88-C-10349. slip op. at 7-9 (N.D. III. Sept. 21, 1993); (TT.at 67-70 (denying motion to reconsider the September 21 decision).)

5
6

Similarly, Plaintiffs previous filed objection to this testimony is also denied. (See Pl.'s Obj. Def.s Submission of Dep.Test. Jeffrey I. Handler & Gayle Aertker.) Roe was not on Plaintiffs witness list in the Final Pretrial Order. However. the Court granted Plaintiffs motion to add Roe to that list. IfK-Mart did not open a Designer Depot store before December 31. 1983, the Trust was permitted to terminate the Lease. without other recourse. thirty days thereafter. (PI.'s Ex. 2 ~ 2.) However. if the store was opened within that time period, the Lease could not be terminated. (See id.)

7

I I

Toys "R" Us, Inc. v. NBD Trust Co. of Illinois, Not Reported

in F.Supp.

(1995)

8 9

Klainnont testified at his deposition that K-Mart was not behind in its rent but he thought it was behind in paying its CAM. (See Tr. at 117.) It appears that the second page of the copy of the Mortgage and Security Agreement submitted to the Court is missing. (See Def.'s Ex. 12.) The first numbered page is # 3, and the lettered subparagraphs on that page start with "(c)". There are no subparagraphs lettered (a) and (b) on the previous page. Throughout the trial, several witnesses testified that Ks-Mart assigned either nine or ten leases to Toys. Based on Defendant's Exhibit 32, the Court assumes the accurate number is nine. (Def.'s Ex. 32.) Much of Larry Klainnont's accepted testimony in this case is based on his deposition, taken in 1989. At that time, six years after the signing of the Ke-Mart lease, Klainnont could not recall all the details of the transactions at issue. His memory at trial, another four plus years later, was even more cloudy. Klainnont's deposition statements come into evidence as admissions. The actual floor plan sent to Klainnont is not in evidence. It apparently was not located in discovery. Nevertheless, it is specifically referred to in Plaintiffs Exhibit 6 and there is no evidence that it was not sent. Klainnont testified that he had no reason to believe that the plan was not sent. (Tr. at 135-36.) Klainnont testified that he was not in any way responsible for Toys's decision to use only 25,000 square feet, (Tr, at 278), and that he was not in any way responsible for the difficult configuration used by Toys, (id.), and that he was not responsible for the surplus space configuration, (id.). This testimony neglects the uncontradicted evidence that Klainnont knew about Toys's intentions in advance of his consent to the K-Mart assignment. If the configuration was so much to Klainnont's dislike, or if he felt that it interfered with his contract rights, he could have objected to it.

I0 II

I I I I I I i I I I

12
13

I4

At trial, Keschl was asked: Q. Did he [Klairrnont) ever give you a list of objections as to why he was withholding his consent? A. Only the one that he--only the one that he wanted to take the space back; nothing as to Famous Footwear, their floor plan or their signage. (Tr. at 393.)

I5

Plaintiffs Ex. 13 is a copy of Plaintiffs Ex. 42. The latter was sent to Keschl on April I, 1988. The former contains some notes written by Klairrnont to himself; it was not sent to Toys. It is unclear when the notes were made or if the notes on Plaintiffs Ex. 13 are intended to be reasons for denying consent. However, the letter was faxed by Imperial, in Illinois, to Klainnont, in Florida, on December 22, 1988, two weeks after this lawsuit was filed. One explanation for the notes may be that they were made by Klainnont, in Florida, after receiving the facsimile. (See Tr. at 1804.) As no foundation was laid for these notes, the Court does not consider them probative evidence.

16

This testimony was brought out by Defense counsel: Q. Will you testify, Mr. Klairmont, as to what was said in that conversation between you and Mr. Bossy concerning his effort to get your consent to the proposed sublet? A. Well, I don't recall the exact words, but I do recall that I told him under no circumstances would I consent to the sublet as it was presented to us. There was absolutely nothing in it/or us. Q. Is there anything else that you said to Mr. Bossy about that proposed sublet, as to why you would not consent to it one way or the other? A. Yes, I told him it precluded any possibility of us of ever improving our situation there.
(Tr, at 1139 (emphasis added).)

17

This testimony was brought out by Klainnont's counsel on cross-examination. Defense counsel stated: Q. Do you recall that in this conversation you had with Mr. Klainnont he told you that although he had a problem with the sublet, ifhe got something for it, he might consent; is that correct? A. I have a vague recollection that that is true. (Tr. at 913.)

18 19

Klainnont has failed to explain how his use objection, which is facially a breach of paragraph 16 of the Lease, is not what it purports to be. Klainnont contradicted his prior testimony on this point. (Tr. at 188-89.) In the opinion of the Court, on this point, Klainnont's trial testimony is more credible. The Trust has argued that Toys could have reconfigured its space, leased the 15,000 at a lower rent, or assigned the space altogether. (See NBD Trust Co.'s Proposed Findings of Fact & Conclusions of Law at II, ~ 37.) KIainnont did not testify that either of the first two of these examples met with his expectations of percentage rent. He did testify that leasing all of the "virtually unleasable" 15,000 square feet was "impossible." The possibility of assignment was unlikely given the facts presented.

20

Toys "R" Us, Inc. v, NBD Trust Co. of Illinois, Not Reported in F.Supp. (1995)

21

The evidence was clear that, as of Toys's first request for consent, neither Toys nor Klainnont thought Toys would expand. Therefore, it was "unlikely" that Toys would expand into or otherwise use the 8,000 square feet Keschlused that argument in his March 31, 1988 letter to Klainnont rejecting Klainnont's proposal to take back 7,000 square feet Keschl states: We have considered your proposal to take back 7,000 square feet of space in the old Designer Depot space and find this unacceptable since it would leave us 8,000 square feet in the rear which we could never lease or utilize. (PL's Ex. 41 (emphasis added).) At trial, Keschl stated that Toys "could always expand into it" (Tr, at 520; see also 538, 551.) He admitted that he told Klainnont the contrary because Toys did not plan on using the space. (Id) At trial, Klainnont acknowledged that Toys could have expanded into the back 8,000 square feet (Tr, at 185-86.) The key is that Klainnont had no reason to believe that Toys would expand into either the 15,000 square feet or the 8,000 square feet That is, Toys was no more likely to expand into the former than the latter. Klainnont's expressed concern was that the 8,000 square feet would be locked-out from rental to

I I I

22

third parties, not that it would be locked-out from a possible Toys expansion. Defendant argues that 'The reintegration costs associated with getting the space back with the Famous store build out would likely be substantially more than getting the space back with the Kids store built out" (NBD Trust Co.'s Proposed Findings of Fact & Conclusions of Law at 12, ~ 44.) Presumably, this argument, which is supported by the testimony of Defense "expert" Albert Hanna, is based on a 1993 restoration. Otherwise, the Court discredits the argument entirely, particularly since it is based solely on Hanna's testimony. As the Court has indicated elsewhere, Hanna's testimony on various points was not entitled to much weight. The Court has already ruled that such testimony is admissible. See Toys "R" Us. Inc. v. NBD Trust Co. ofIllinois, No. 88--C-l 0349, slip op. at 8-9 (N.D.lll. Sept 21, 1993). It is evidence of what was K-Mart's policy.

24 .2 5 26 .2 7 28

Toys may have been entitled to percentage rent under the Famous Sublease. It did not seek such damages, however. Defendant's objection to this testimony is overruled. The Court accepts the testimony as evidence of Famous's policy. Defendant's objection to Roe's testimony on this issue as speculation is overruled. The Plaintiff may seek to prove when Famous would have opened its doors. Roe is competent to testify regarding that issue . There were sixteen more days in December, thirty-one in January and March, twenty-nine in February of 1988, a leap year, thirty in April, and thirteen in May. Those figures total one-hundred and fifty. Toys has also indicated that it will give Klainnont back the 15,000 square feet, under certain circumstances including a judgment in its favor and Klainnont's agreement to release Toys from its contractual obligations for the space. The Court does not consider this statement as evidence or as a means of demonstrating the lack of residual value in the space . The Court found: (I) that concerns over percentage rent were not what motivated Klainnont, (2) that Klainnont failed to express his concerns over percentage rent, and (3) based on Klainnont's testimony, the Famous Sublease did not actually impair his expectation of percentage rent. The Court accepts the Defendant's argument that the standard in implied covenant cases is higher than that in express covenant cases. However, the implied covenant cases are helpful in determining what were the landlord's reasonable expectations. Neither party has briefed to the Court the issues arising out of the relationship of these two documents. Toys does not seek compensation for possible percentage rent it might have received from Famous. (See PI.'s Ex. 5 § 5.) Even if the Court were to accept Plaintiff's CAM projection of a 4.2 percent increase, the evidence submitted by Plaintiff in this regard is unreliable. It appears that the figures provided by Plaintiff rely on a 4.62 percent increase, not a 4.2 percent increase. For example, Exhibit A to Plaintiff's Post-trial brief posits CAM at $6,179.82 for 1999. For the year 2000, the same exhibit posits CAM at $6,465.32, an increase of 4.62 percent Similarly, the model posits CAM for the year 200 I at $6764.0 I, an increase of 4.62 percent.

.2 9

i I I I

30 31

34

The O'Shea case requires that the discounting interest rate and a plaintiff's future damages award be treated the same with respect to inflation. Inflation is either calculated into both or calculated out of both. Here, inflation is implicitly calculated into the fixed rental rates agreed to by Famous and Toys. While it might be argued that such rates reflect an inflation free rental payment because the Famous Sublease also contains a percentage rent clause, the Court finds that Toys accepted an inflation risk in its rent payments due to the fact that no percentage rent was guaranteed. A stronger argument of this nature might have been made if the Famous Sublease had included a CPI. In such a case, based on O'Shea. the Court could either exclude evidence regarding increases in rent based on the CPI and then use the 2% rate, or accept evidence with respect to the CPI and use that same evidence to adjust the discount rate.

End of Document

EXHIBIT C

I I

Florida Panthers Hockey Club, Ltd. By and Through

Florida ...• 939 F.Supp. 855 (1996)

Party moving

for preliminary of establishing of evidence.

injunctive

relief by

939 F.Supp. 855 United States District Court, S.D. Florida, Miami Division. 4 FLORIDA PANTHERS HOCKEY CLUB,

carries burden preponderance

each element

Injunction
,,'=

Public Officers. Boards and Municipalities;
hockey injunction team was entitled to

Schools and Colleges Professional preliminary license with

I I I I I i I I I

LTD., a Florida limited partnership,

By

and Through its general partner, FLORIDA PANTHERS HOCKEY CLUB, INC., Plaintiff,
v.

to compel

city to accept negotiated to enter

agreement

for use of arena contractor withhold retained

independent

MIAl\H SPORTS AND EXHIBITION AUTHORITY and the City of Miami, Defendants. NO.96-2168-CIV-MOORE.' Aug. 23, 1996.
declaration to enter

agreements agreement

for use of arena; city was obligated consent, negotiated different from to to city, loss of use damage with league, economic economic was neither materially

to not unreasonably prior agreement

nor adverse

of arena could result Major league hockey team brought suit seeking of its rights under license agreement negotiated agreements amended Granted. West Headuotes (8) with independent to use arena. agreement, The District contractor for use of city arena retained Court, withheld
1(,

in irreparable to its own provided

fan loyalty and team's relationship city's disapproval and was lease disadvantage,

Michael
to relief.

benefit to public.

;\100re, 1., held that city unreasonably

consent

warranting preliminary

injunctive

5

Injunction ?" Municipalities General
Contracts

and Municipal Officers in

Injuncrion
.;= Discretion of Court Although remedy, preliminary injunction is extraordinary to

Specific Performance
j=

for Personal Services or Ads in to license agreement permitting

General Amendment professional

it is within district court's discretion injunctive relief.

grant preliminary

hockey league to use city arena was a subject to specific performance, services by contract or that could specific injunction

lease agreement not be

rather than personal enforced

2

Injunction >= Grounds and Objections
To prevail on motion for preliminary moving party must prove: substantial of success irreparable outweighs defendant; on the merits; harm; threatened harm injunction substantial injury may injunction, likelihood threat cause of to

performance. I Cases that cite this headnote

Injunction
0"

to plaintiff would not

Contracts

for Personal Services

and granting of injunction

Specific Performance
J=

disserve public interest.

Contracts

for Personal Services or Acts in

General
Personal services contract cannot be enforced injunction or specific performance. by

:2 Cases that cite this headnote

J

lnjuncnon

Evidence and Affidavits

~ ,'I

... 1

I I I I I I I I

Florida Panthers Hockey Club, ltd. By and Through Florida ..., 939 F.Supp. 855 (1996)

7

Specific

Performance >. Certainty

Specific performance is available only if it appears from agreement that rights and obligations of parties with respect to terms and conditions of contract and actions to be taken by parties are clear, definite and certain.

On August 7, 1996, Plaintiff The Florida Panthers Hockey Club, Ltd. (the "Panthers") commenced this action against Defendants Miami Sports and Exhibition Authority ("MSEA") and the City of Miami (the "City"). Count I of the Panthers' complaint seeks a declaration of its rights under a license agreement between the Panthers and nonparty Leisure Management International. Counts II through IV seek injunctive relief and damages arising out of alleged violations of Section 2 of the Shennan Act, 15 U.S.C.

* 2. I

8

Injunction

Nature and Extent of Injury; Irreparable Injury
r

*857 II. FINDINGS OF FACT The Panthers is a franchise of the National Hockey League ("NHL"). MSEA is an independent and autonomous authority of the City. MSEA owns the Miami Arena, and the City owns the land upon which the Miami Arena is situated. On October 10, 1986, MSEA. Decoma Miami Associates, Ltd. ("DMAL") and the City entered into a Land Lease Agreement for the construction of the Miami Arena. Plaintiffs Exhibit ("PI.Exh.") 2. On October 19. 1986, MSEA and DMAL executed a contract entitled "Miami Arena Contract" which set forth the rights and obligations of the parties in connection with the operation of the Miami Arena. PI. Exh. 1. On December 13, 1990, MSEA and DMAL entered into the First Amendment to the Miami Arena Contract. PI. Exh. 4. The Miami Arena Contract and the First Amendment will be referred to collectively as "the Miami Arena Contract." On October 19, 1986. DMAL hired Leisure Management International+ ("LMI") as an independent contractor to discharge some of DMAL's responsibilities, including the responsibility for entering into agreements for the use of the Miami Arena. PI. Exh. 3. On April 2, 1993, LMI, on DMAL's behalf, entered into a license agreement with the South Florida Hockey Club, Ltd., the predecessor to the Panthers. PI. Exh. 5. On June 21, 1993, LMI and the Panthers entered into a First Amendment to the Panthers License. PI. Exh, 7. The Panthers License and the First Amendment will be referred to collectively as "the Panthers License." The Panthers License provided for an initial term of two hockey seasons but gave the Panthers, at its sole discretion, four one-year options to extend the Panthers License. See Panthers License, Section 3.01. Under the Panthers License, the Panthers had to exercise its option to renew for the 1996- 1997 hockey season on or before August 1. 1995. See id. at Section 3.03(b). The Panthers elected not to exercise its option for the 1996-1997 season

Possibility that adequate compensatory or other corrective relief will be available at later date, in ordinary course of litigation, weighs heavily against claim of irreparable harm required for preliminary injunctive relief.

Attorneys and Law Firms *856 Stanley Wakshlag, Steven Hartz, Akerman, Senterfitt & Eidson, Miami, FL, for plaintiff. Jonathan Cohen, Shutts & Bowen, Miami, FL, Thomas Scott, and Laura Besvinick, Davis, Scott, Weber & Edwards, P.c., Miami. FL, for defendants.

I I I I I I I

Opinion

ORDER GRANTING PLAINTIFF'S EMERGENCY MOTION FOR PRELIMINARY INJUNCTION K. MICHAEL l\100RE, District Judge.

THIS CAUSE came before the Court upon Plaintiffs Emergency Motion for Preliminary Injunction (filed August 7, 1996). THE COURT has considered the Motion. responses, and the pertinent portions of the record. The Court heard this case as an emergency matter and held a hearing on August 22, 1996. For the reasons set forth below, the Court GRANTS the Plaintiffs motion for preliminary injunction. I. BACKGROUND

I I I I I I I I I

Florida Panthers Hockey Club, Ltd. By and Through Florida ..., 939 F.Supp. 855 (1996)

and advised MSEA to that effect by letter dated May 31, 1995. Defendant Panthers MSEA's Exhibit ("D.Exh.") unfavorable economic

(2) there is a substantial may cause to defendant; would not disserve

threat of irreparable

harm; (3) the

I. In that letter, the
terms of the License the second one-year for the Miami Arena to those economic team, in the Miami Arena

threatened injury to plaintiff outweighs the harm an injunction and (4) the granting of the injunction interest.

advised MSEA, "This is to advise you that because we don't wish to exercise Agreement

of the extremely Agreement, terms

option (for the 1996-1997 of a new License

season). However, if the economic

Teper I'. Miller, 82 F.3d 989,992-93 n. 3 (.11til Cir.1996); Levi Strauss (i[. Co. v. Sunrise lilt'! Trading. Inc.. 51 F.3d 982 (II th Cir.1995).
the public

could be obtained which were comparable terms presently we would seriously consider remaining for that subsequent John on a and new Blaisdell, DMAL's DMAL license season." president agreement. of LMI, On

3

..

The moving party carries the burden of establishing relief by a preponderance of Cafe ::07. Inc.
I'.

granted to the Miami Heat basketball

the four elements for injunctive the evidence.

St. John's Countv. 9W) F.2d

1136, 1137 ( II th Cir, 1(93). If the movant fails to prove one of the four elements, an injunction should not issue. Id. Bearing
this standard demonstrated in mind, the Court finds that the Plaintiff has by a preponderance relief. of Success on the Merits has a substantial claim not to License obligation of the evidence that it is

testified began 30,

that 1996,

LMI, LMI

behalf, entered

and the Panthers May into an agreement testified further that

negotiating "Second License of the MSEA changes

entitled to injunctive A. Substantial The question likelihood focuses on

entitled the terms to favor

Amendment Amendment"). Panthers License tremendously.

to License Agreement" Blaisdell Blaisdell Amendment

(the "Panthers

Likelihood of whether whether withhold

License

continued testified

the Plaintiff has an

that the Panthers

of success

on the merits MSEA consent

for the contract

Amendment

did not include

any material substantially

from the Panthers License; to the Panthers contrary. License.

rather, the terms and conditions conformed to the No evidence was offered

unreasonably Amendment. obligation.

of the Panthers

of the Panthers License Amendment

The Court finds that MSEA does have such an

I
i I I I I I I

The Plaintiff contends that the Panthers License Amendment rejected the Second that the of our that the contains substantially similar terms and conditions therefore, as the Panthers License and continues Plaintiff argues that MSEA, withhold consent that a preliminary injunction MSEA to be a boon for MSEA. The cannot unreasonably and License Amendment

By letter dated June 7, 1996, MSEA Amendment letter, MSEA proposed MSEA public proposed to the License Agreement. indicated

PI. Exh. 10. In that interests of

that " ... we do not believe are in the best economic with the accomplishment it is our conclusion necessary

amendments

of the Panthers

nor [sic] consistent purpose. In addition,

is required to compel approval. that the Panthers License

5

6

7

counters

terms are not reasonably

to the operation *858 on August By letter dated

Amendment is not subject personal

is a "personal

services"

contract performance.

and, thus, While a

of the Miami Arena. Instead, we believe that MSEA will be better served by a license which commences I, 1996, and expires on July 31, 2006. We reject paragraphs

to a suit for specific

services contract

cannot be enforced

by injunction

3, 4, 5 and 6 of the proposed amendments."
Arena by July 15, 1996. PI. Exh. II.

July 9, 1996, MSEA directed the Panthers to vacate the Miami

see Burger King Gnp. F. :lgad, 91 I F.Supp. 1499, 1500 (S.D.Fla.1995); Montaner v. Big Show Productions, S.A .. 620 So.2d 246, 248 (FI.Dist.Ct.App. I 993),
or specific performance, the Panthers License Amendment is not such a contract. is a lease agreement and performance. The Panthers License Amendment such an agreement

III. CONCLUSIONS 2
remedy, 697 court's F.2d
I'.

OF LAW
injunction is an extraordinary

may be subject to specific

Although a preliminary

Share! Corp. v. Mao Tu l.umber & Yacht Carn., 1352. 1354 (l lth Cir.1983), it is within the
to grant preliminary injunctive 1142, relief. 1145

The Court, performance

therefore, finds that the remedy of specific is available. Certainly, specific performance is that the rights of the parties with respect to the terms and and certain.

only available ifit appears from the agreement and obligations conditions
v,

discretion

Rev

Gannett Publishing Co.. 766 F.Supp.
(citations injunction, omitted). To prevail of success

of the contract and the actions to be taken by the

(S.D.pa.1991) for preliminary there

on a motion on the merits;

parties are clear, definite omitted).

See generally Drost
(citations

the moving party must prove: (I)

Hill. 639 So.leI 105. 106 (F1.Dist.Ct.App.1994)

is a substantial

likelihood

I I I I I I I I I i I I I

Florida Panthers Hockey Club, Ltd. By and Through Florida ..., 939 F.Supp. 855 (1996)

MSEA also counters that. since the Panthers failed to exercise its option to renew the Panthers License. the agreement was effectively cancelled. Further. MSEA argues that cancellation of the Panthers License meant that the Panthers could not enter into a new license agreement. The Court finds MSEA's argument misleading insofar as MSEA delegated to OMAL the "full and exclusive" power and authority to "negotiate. execute. and perform" contracts including licenses. See Section 0.7.4 ofthe Miami Arena Contract. Therefore. even if the Panthers License was cancelled upon the Plaintiffs failure to exercise its option. OMALILMI could enter into a new agreement with the Panthers or any other party who desired to use the Miami Arena. OMAL's power and authority to enter into contracts for the use of the Miami Arena is limited if the contract involves an Owner Affiliate or "schedulejs] events or performances *859 in the Arena for more than 20 days during anyone Operating Year." See id. In those instances. MSEA's approval of the contract is required. However. the standard for MSEA approval is clearly defined in and limited under the Miami Arena Contract. Section 7.4 of the Miami Arena Contract provides. in pertinent part: Such Owner approval shall (i) be given by the Chairman of Owner or his designees. (ii) not be unreasonably withheld and (iii) be subject to the standards for Owner review and approval set forth in Exhibit 0.6.4. The relevant portions of Exhibit 0.6.4 provides: Upon receipt of any matter submitted by Operator for review and approval ... Owner shall review the same and shall promptly (but in any event with ten (10) calendar days after such receipt) give Operator notice of Owner's approval or disapproval. setting forth in detail all reasons for any disapproval. Owner's right to disapprove any such matter submitted shall be limited to the elements thereof (i) which do not conform substantially to matters previously approved. or in the case of contracts. which contain material provisions less favorable to Owner and Operator than were contained in drafts previously approved by Owner, (ii) which are new elements not previously presented and Operator is unable to demonstrate, in the reasonable judgment of the Owner that such new element is reasonably necessary for performance of the Work. or (iii) which depict matters that are violations of this Contract or applicable Legal Requirements. (Emphasis added).

MSEA argues that provision 0.6.4 is inapplicable to the situation and that MSEA had an unfettered right to disapprove the Panthers License Amendment. The Court rejects this argument. Provision 0.7.4 incorporates the standard set forth in 0.6.4 for Owner approval. and 0.6.4 clearly places limits on an Owner's right to disapprove a contract. MSEA. therefore. may not unconditionally choose not to follow these standards. MSEA also argues that it should be allowed to disapprove the Panthers License Amendment because it was negotiated by entities that are owned. in whole or in part. by the same person. H. Wayne Huizenga. It should be noted that the Miami Arena Contract expressly contemplates that OMAL will enter into contracts with its affiliates. In those instances in which OMAL enters into a contract with its affiliates, MSEA is required to approve the contract pursuant to the standards set forth in 0.6.4 and 0.7.4 of the Miami Arena Contract. Accordingly, MSEA cannot now argue that such a contract is impermissible. MSEA also argues that this dispute is simply a matter of contract negotiations and. accordingly. the Court should not get involved in negotiations between these parties. The Court finds that. once OMALILMI and the Panthers submitted the Panthers License Amendment for approval. MSEA's rights and obligations to be a part of the negotiations and to approve the Panthers License Amendment became fixed. Since MSEA is unable to identify any term or condition which is materially different or adverse to MSEA. the Court finds that MSEA's withholding approval of the Panthers License Amendment is unreasonable. Therefore, based on the foregoing, the Court finds that the Plaintiff has established a substantial likelihood of success on the merits. B. Substantial Threat of Irreparable Harm 8 MSEA argues that the harm to the Panthers is economic in nature. MSEA relies on United States l' Jefferson COl/ill)'. 720 F.2d 1511,1520 (Llth Cir.1(83) (citation omitted) for the proposition that: "[rnjere injuries, however substantial. in terms of money, time and energy necessarily expended in the absence of a stay are not enough. The possibility that adequate compensatory or other corrective relief will be available at a later date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm." The Court, however. disagrees with MSEA that the irreparable harm is merely economic in nature and that money damages can adequately compensate the Panthers should it

I I I I I I I I I i I I I I

Florida Panthers Hockey Club, Ltd. By and Through Florida ..., 939 F.Supp. 855 (1996)

*860 ultimately succeed on the merits. The overwhelming evidence presented establishes that the Panthers' existence and success rests, in large part, on the interest and loyalty of the fans. As William Torrey and Brian Burke testified, the potential harm to the Panthers is incalculable and extends beyond the financial injury. If the Panthers cannot play in the Miami Arena, it may lose home game advantage and may lose goodwill among its fans. Further. the Panthers' relationship with the NHL may be adversely affected. C. Balancing the Harm The inquiry under the third prong of a preliminary injunction motion requires the Court to determine whether the threatened injury to the movant outweighs the harm that an injunction may cause to the non-movant. The Court is satisfied that the Plaintiff has demonstrated its potential injury outweighs any harm the injunction may cause to MSEA. Indeed, the Panthers License Amendment, in all likelihood, will extend for only two years and will allow MSEA to collect substantial revenues from the use of the Miami Arena which otherwise would be lost ifMSEA did not approve the Panthers License Amendment. Whatever other inexplicable reasons MSEA may have for failing to approve the Panthers License Amendment, it is abundantly clear to the Court the MSEA's dissapproval is to its own economic disadvantage. D. The Public Interest

The Court finds that an injunction would not disserve the public. Indeed, professional sports serves the public interest and, in this particular instance, the Panthers Lease Amendment provides economic benefits to the public. III. CONCLUSION Based on the foregoing, it is ORDERED AND ADJUDGED as follows: I. Plaintiffs Emergency Motion for Preliminary Injunction is GRANTED. 2. Defendant MSEA is hereby enjoined from preventing the Panthers from utilizing the Miami Arena in accordance with the terms and conditions set forth in the Panthers License Amendment dated May 30, 1996. 3. Plaintiff is directed to deposit a bond in the sum of Ten Thousand Dollars ($10,000.00) with sureties to be approved by the Court. Said bond shall be deposited with the Clerk of Court no later than 10 a.m. on August 26, 1996. 4. Copies of this Order may be served by the Panthers, its employees, or its agents upon any individual or corporate entity that may be subject to this Order. 5. The Court retains jurisdiction of this matter for all purposes including the enforcement of this Order, should enforcement prove necessary.

Footnotes
MSEA has filed a motion to dismiss the Panthers' antitrust counts on the basis of antitrust immunity. The City informed the Court during the hearing that it also would file a motion to dismiss the antitrust counts. Accordingly, the Court reserves ruling on the antitrust counts until the City has had an opportunity to file its motion to dismiss.

2

Facility Management and Marketing d/b/a Leisure International ("FMM") was the original party to the October 19, 1986 agreement. In 1987. FMM assigned its interest in the agreement to Leisure Management Miami ("LMM"). LMM then reorganized into LMI.

End of Document

:'-;::1'1

EXHIBITD

MAYOR DALEY, McCORMICK TRIBUNE EXECUTIVES CUT RIBBON ON SPECTACULAR SKATING RINK AT MILLENNIUM PARK

:_J; GRANO

OPENING CELEBRATION MARKS FIRST IN SERIES OF AT New WORLD-CLASS DeSTINATION
It is expected to become the second lar~Jest destination, rivaled only by Navy Pier.
l!riW:tl!jlNII

UNIQUE AnRACTIONS

The first attraction of Chicago's new, world-class Millennium Park openfltJ to cheering crowds in a star-studded celehranon 011 December 20, 2001. The outdoor ice rink, rivaled only by New York's Rockefeller Cp.Ilif:r fink, is tile first of many major new attractions pli!llfHJ(1 for the nearly 25-acre park. The rink faces Michigan AVP.lllJ8 between Washington and Madison streets and is
tfl~n \0 me public.

About three million people Visit the Museum Campus f~;Jch year. Navy Pier drew more than nina million visitors Iasi year. local and internarional visitors spent mnre thilP S9 billion in the city in 1999. In another mark uf progress. the nBW Millr.nniwil Pnt'\\ underground purking garage, with 2,181 spaces, 1)(:I;uIlH! fully operational in January, reachinq its full canacuv. Tlus major expansion of downtown pMkrng will benefit locni residents, employees, and visitors to Millennium Purh. Grant Park, the Art Institute and othnr nearby ilW,·JI:tIOI'l:;. The ice rink, 200 feet long ami SO teet Wide, totals 15.910 square feet of skating surface. Its construction was flHHJCCl hya grant trom thn Hobert R. McCormick Tribune F')"l1dtitJ~)il But even as these initial components are cOI11DI~led, thev only hint at the full splendor that will he Millennu-m Park .

Milyor Bichard M. Dalev was joined in the celebration by ,John W. Madiqan, Chairman of the Board of Directors of the rJ1::Cnrlllick Tribune Foundation; John Bryan, head of the I;IW(lI(: uonor WOlfP [hat has raised more than $100 million for the park: actress Bonnie Hunt; and a variety of local r.nll:na:lllm; and spurts celebrities.
When completen, wnrlil-r.i(Jss

Millennium Park wifl bl~ Chicago's newest tor families, tourists and convention l)!)(~rS, c1lunyslde the lakefront museums and Navy Pier.
riestination

.t..ccufll:ny

{O Arthur Andersen, Millennium Park should qellr:ratp. belwp.ell two and three million additional tourist visits to Chicago per year. Even at a modest $50 estimated expf!!1r1itlIf8 per visit, tilis would translate into $100--$150 !liillioll of new tourist revenues per year in Chicago.

As originally conceived, the park was limited to a lew
features. Since then, the vision of the park has (!Volvp.<i. both in response to community thinking and to In:lke rff,! facility a more important family and tourist destination in irs own right, Given the new amenities, construcnon is on tlflJl': and on burlget. Over the next three years, the park wili give nse i1) "II 'i~;i:J!I' ishing iOO-toot-high bandshell desiqnad by Flililk (:;(!!"Y,idif: nf the greatest architecrs of our time; a ,/(;[11-10;]:'<1 ;ll",:wm· ing arts center for music ilr.d dance; t, massiv« Gurdon: sculpture by world-renowned 6r;tisll ;::n:,( t"'Ii:i;\ 1(,;\1[;(;,': ;) fountain desiqned b'l fanwd ::;("111l$li :iculjJllj{ ~I"l"iif:: P1Uii..,j. a spectacular year-round giF(Jen: a commuter !llcVcIi, ;;i';Ii,(~r complete with showering facililies; anri ll1ucl~ more.

All of the special

fl'Be (1['(1'3\-11,),1:; ai Ivlillen;1ili:]! PinK wd: t;(; iunded by private donations tota:in\J IIlon, til" l' ;<;100",ii!,,;;.

-

__ -_. -_

...

_ ..... _-_._._-_._

....

---'--_ r·---------'··----~
_____ J l

I ?';Rl(

HISTORY

--J

I

I MillenniuJ1l Park first was cone eived in 1997to create 16 j acres or new parkland in Grant Park by building a landi scape-covererl bridge over the unsightly Metra railroad tracks iJflO parking lots.
· Underneath would be a new downtown parking garage, the : revenue tram which would help pay tor the park's construe· ticn. and tile final leg of a dedicated bus route connecting Randolph Street to McCormick Place alongside the railroad
[18:;;{S.

· F;ilJate donors were to raise $22 million toward the cost of [:,:~ 118W park and another $8 million in endowments from tounrianons. individuals and corporations. TI,e new park also was to have a generic bandshell facing a '?rge expanse of lawn, some modest sculptures and other 'li;';P, hut unexceptional decorations. Soon afrer construction began, however, it became evident that Miilenlliull1 Park could be much more than originally planned : due to the unexpectsdlv high interest of private donors. · One of the first proposed additions was a Music and Dance • Theater, a I ,500-seat performance space serving a dozen of Cnicaqo's most accomplished non-profit arts groups. At me same time, private dOIl~rs were exploring the possitill!,! of having Frank Gehrv, winner of the Pritzker Prize in , .1\r hitecture and the National Medal of Art, design the c b,mr!shell as a far more elaborate and impressive structure, .... - .... - -.._. _._---_. __ .._------------ ---with a special sound system stretching ou: across tile audience areas. Also, the separate need to rebuild the crumulinq Grant hi! i: North underground parking garage provider! an opportunnv to expand the size of Millennium Park iJ1/ exrending it beyond the railroad span all (he way to Michiqoll Avenus. cornpletelv redesigning the parkland atop the garage. With the further addition of the Kapoor sculpture. tile P!,;llsa fountain, the McCormick Tribune Ice Rink and other major features, Millennium Park is destined [0 become one uf rile most magnificent parks in the world, a new Chicago destrnation certain to attract millions of Chicagoans and visitors from across the globe.

r------------------.-.-----------

,-----_._._---------------_._-----

I•, I , I, I
~ ~ ~ ~

:h<'::1I\:; to n major fl!ndraising effort

by the private-secror committee headed by John H. Bryan, Millennium Pdt J.: '"vili he one million square feet packed with aston;s,ling srrvctures and designs, including the:

reflect the park itself. the city's skyline ilnd evervtninq else that comes into its view from any angle. Peristyle. a nearfv full-sized replica of tile curving row that originally graced liH! nortnwest corner of Grant Park near Michiqan tlnd Randolph between 1917 and 1953.
of paired Greek columns

Outdoor Music Pavilion, the park's main bandshell
N:rh ;} staqe similar in sile to The Symphony Center Halt) and abie to accommodate an orchesi~f ',jf 120 musicians and a chorus of 150 singers.
IOic-heslra

Fil"?d seatinq for 4,000 and a :J5.[;OO-sqll:Jfe-foot lawn area will _,(::-··ll) a combined audience of 'Ifl;':i i,hall 11,000 people, with .;XCf)I!:~Pl sound quaiity provided llllllll\jll iI stare-of-the-art trellis ,',p.LJ'Jor\<(If speakers-me first of .ts k!!~d in the world-that will rival ['-19 cancer; sounds of Ravinia. 'llh!le the b:'lnrlshell itself will 1)1:,~hOllt 60 tee[ high, it will be Oler.orareci with unique steel
.iobcns that burst outward part of Gehry's -nother 35-(0-40 feet high like the petals of a tlower. dasiqn. All me Gehrv elements of

A gift from the William Wrigley Jr. Company, the sc:mi-cl,'cie of Doric-style columns will rise to a height of nearly 40 teet, restoring a classical elegance to t!lill section of Grant Park while commeinorating all of the Millennium Park donors in perpetuity . Shoulder Garden. a 2.5-ar.re landscaped marvel on the southeast corner of the park, its design the object of an international cumpeti
tion. Screened from the rest of tt1€ park by tall scurpred tleclg~s and

bisected by a graceful wooden pedestrian footbrtdge over sltaliow water, the year-round garden Will feature an imaginative panorama of sunny and shaded areas. Benches, a meeting grove of fioW8f' ing trees, seasonal plancings and dramatic iinhting will provide ditferent types of spaces for different purposes. Where one portion 01 the garden is expected ro become a popular gathering spot, another '-'viii be perfect for quiet contemplation,

th8 ba,ldshell are being privately !,jnilnr;,
:Jusic
,~11J
(lQzr::n

and Dance Theater, seararts (;rOUOS offering

by a ballet iinri (Irlie;' dance styles; classical, chamber, opera and folk music; ,wc .nanv other types of enter!aillIll811f.

,.500 for per10rmallces

Public Fountain, the

deSICJI1

of Ij\tlll<::l

Th, s[:.1ue .,fld seatinq wiil face :]!JIj[Jsiw tile bandshetl, Iluilt into t;',,-" .awsr ';,vel of Rallclolph down ro i\!J re8t below that street; also ::ICi'iIHi wlli be an upper-level paved terrace and lawn ':!,,;,' i)"iliiid "ilil theater entrance. :':.i71~.:ih::·chPlaza, .]a:lIi~d fOi irs corporste donor and ;F~"i,::,:n9 an incredible sculpture by world-renowned Mist ;:,I:! ;il /::F~o\,r, his frst public work in~tailed in the US.

1.. ",,,,,· S"";'iI""

is still conceptual, but what a concepr a large rectangular highlV reflective pool of very shallow water with I?rqv~ glass blocks at either encl. ::!3Ctl perhaps 50 teer teli, witli warer

cascading from the top.
Feasibility studies are underwav
lO

determine

~;:acllv

what can be done, but Spanish sculptor .iaume Pi8J;~;JI:; hopin!] ,he transparent twin blocks will flO ali:8 '[I) (h;plr;V 11 variety of onoto images ranging from natur. scenes ,,'! tvpical Chicago races whicn will connnualtv '-;i1[l19';; Fnis Imiql!p. public fountain will be located '1JfHt corner or the pa.k.
ill:

th,~ :;,),1':1',-

! ')! NEWLY ENVISIONED MILLENNIUM PARK IS ON TIME AND ON BUDGET
rila cost and schedule of the newly envisioned Millennium Park are the result of a deliberate decision by city officials to take advantage of an unprecedented opportunity that arose only after construction already had begun. . When first announced in early 1998,.Millennium Park was described as a S150 million project that would be completed by the summer of 2000. However, the special features of the park were relatively
. modest: an outdoor stage to replace the Petrillo Band Shell;

major public fountain; an elaborate year-round gardell;.2_ ~~~_f.Q.!11QSI!l:il!lS,!!.l~jE~.!int replica of the Greek-columned peristyle. and the

As monetary pledges continued to rise, the size of the park also increased to the space betwE!~nMl)[ifiiiili:m~Pa~k:s-~:' orig"lnaj·wesferI160-un1~iy.iQ~·~MI£big~~ry.~Y!H1Y~,,-section a otexisting park·r:lpe for re-design due to the unrelated need to rebuild the underground Grant Park North Garage.

>

a retlscrinq pool that would become an ice rink during winier: a small Outdoor amphitheater; and some gardens, sculptures and vendor stalls. Other than those amenities, most of the original Millennium Park was going to be a large swath of grass racing the band shell. But after the plans were drawn and construction began, the effort to mise private donations exploded beyond even the 1ll0ST optimistic expectations. City officials were faced with the opportunity to obtain incredible. world-class additions to the park, including a much more elaborate band shell designed by internationally renowned architect Frank Gehry; and a monumental outdoor sculpture by famed British artist Anish Kapoor. Also offered were a pedestrian bridge to cover the eightlane Columhus Drive; a large Music and Dance Theater; a

The changes promised to be an astonishing showpiece for Chicago. a bona fide wonder equal to the most beautiful find interesting parks anywhere in the world. The newly envisioned Millennium Park is both 011 time ami on budget. The city's contribution now stands at an estimated $270 million, to be funded by the garage parking revenues and TIF (tax increment financing) funds dedicated to downtown improvements. No neighborhood property tax dollars are being used for this park. Meanwhile, private donors are on track to raise more than S100 million for the special attractions. City officials remain convinced that the results will be truly spectacular for the people of Chicago and a world-class destination that will attract millions of visitors to our great city every year.

Ie

IL

I I I I E I I I I I I I I I

CERTIFICATE OF SERVICE
The undersigned attorney, upon oath, hereby certifies that a copy of the foregoing Park

Grill Parties' Motion for Preliminary Injunction and Expedited Discovery was served upon
the named parties listed below via messenger service at or before the hour of 5:00 p.m. on the

15th day of December, 2011.
Steven R. Patton Corporation Counsel CITY OF CHICAGO - CITY HALL 121 North LaSalle Street Suite 600 Chicago,IL 60601 Maria G. Garcia Chief Legal Officer CHICAGO PARK DISTRICT 541 North Fairbanks Court Chicago, IL 60611 Mardell Nereim Rebecca Hirsch William Aguiar CITY OF CHICAGO DEPARTMENT OF LAW Constitutional and Commercial Litigation Division 30 North LaSalle Street Suite 1230 Chicago, IL 60602

ALEXANDRA K. BLOCK Michael L. Shakman Daniel M. Feeney Edward W. Feldman Alexandra K. Block MILLER SHAKMAN & BEEM LLP 180 North La Salle Street Suite 3600 Chicago, IL 60601 (312) 263-3700 Firm ID #90236

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