Dep't of Transp. For ex rel. People v. 600 W. Dundee, LLC

2019 IL App (1st) 181699

129 N.E.3d 654

432 Ill.Dec. 436

The DEPARTMENT OF TRANSPORTATION FOR and on Behalf of the PEOPLE of the State of Illinois, Plaintiff,

v.600 WEST DUNDEE, LLC; One West Bank; Western Equipment Finance, Inc., a North Dakota Corporation; Ben Kruppa; LC Buffalo Grove, LLC, an Illinois Limited Liability Company; First Midwest Bank; Market Square Restaurant, Inc.; Unknown Owners; and Nonrecord Claimants, Defendants.

(600 West Dundee, LLC, Defendant-Appellee; Market Square Restaurant, Inc., Defendant-Appellant).

No. 1-18-1699

Appellate Court of Illinois, First District, SECOND DIVISION.

Filed May 7, 2019

David A. Epstein, of D.A.E. Law Office, of Chicago, and Gary A. Weintraub, of Gary A. Weintraub, P.C., of Northfield, for appellant.

William E. Ryan, Timothy J. Ryan, Michael W. Ryan, and Lauren E. Ryan, of Ryan and Ryan, of Rosemont, for appellee.

PRESIDING JUSTICE MASON delivered the judgment of the court, with opinion.

¶ 1 Tenant, defendant-appellant Market Square Restaurant, Inc. (Market Square), appeals the trial court's finding that it was not entitled to any portion of a condemnation award that its landlord, defendant-appellee 600 West Dundee, LLC (600 West Dundee), received relating to the Illinois Department of Transportation's (IDOT) partial taking of the leased premises.¹ We affirm the trial court's finding that under the plain language of the lease's condemnation clause, Market Square was entitled to a rent adjustment relating to the portion of the premises partially taken, but not a portion of the condemnation award.

¶ 2 On March 2, 1978, Market Square (f/k/a Uncle Tom's, Inc.) and 600 West Dundee's predecessor-in-interest² executed a 35-year ground lease, commencing on September 1, 1978, and ending on August 31, 2013, on unimproved real estate (an out-lot) located at 600 West Dundee Road in Wheeling, Illinois, at the southwest corner of the Lynn Plaza Shopping Center. The leased premises totaled 15,594 square feet. On the leased premises, Market Square constructed a restaurant/lounge building. Pursuant to the lease's terms, Market Square exercised a one-time option to extend the lease for a period of 15 years, commencing on September 1, 2013 and expiring on August 31, 2028. Beginning on December 5, 2013, Market Square paid $ 5500 a month as agreed use and occupancy.³

¶ 3 Section 26 of Market Square's lease addressed the "Effect of Eminent Domain," and states in relevant part:

"(b) Effect of Partial Condemnation . * * * In the event of partial taking and Lessee does not terminate this lease, then this lease shall continue in full force and effect as to the part not taken, and the rental to be paid by Lessee during the remainder of the term shall be subject to adjustment based upon provisions set forth hereinafter."

There is no dispute that although section 26(b) referenced "provisions set forth hereinafter," the lease did not include a provision detailing the formula to use or factors to consider in computing the rent adjustment.

¶ 4 IDOT planned to improve and widen the intersection of Dundee Road and Wheeling/McHenry Road. On January 26, 2016, as part of that improvement project, IDOT filed a complaint for condemnation under the Eminent Domain Act (Act) ( 735 ILCS 30/1-1-1 et seq. (West 2016)) to acquire (i) full fee simple absolute title to approximately 1220 net square feet of land (designated as Parcel No. 0KJ0009 (Parcel 1)) and (ii) a temporary easement for construction purposes for five years (expiring in 2021) or upon completion of construction, whichever occurred first,⁴ in, over, and across approximately 915 square feet of land (designated as Parcel No. 0KJ0009TE (Parcel 2)). At the time of condemnation, approximately 12 years remained in the lease term.

¶ 5 Ultimately, the trial court vested IDOT with the full fee simple absolute title to Parcel 1 and the temporary easement over Parcel 2 and fixed the preliminary and final just compensation award (final condemnation award) for IDOT's partial taking at $ 215,000, allocated as follows:

  Parcel 1 (fee simple title)      $ 41,625
  Parcel 2 (temporary easement)      36,625
  Damages to the remainder          136,750
                                   ________
  Total                            $215,000

Market Square objected to 600 West Dundee's entitlement to the preliminary and final condemnation awards. Specifically, Market Square filed a motion for apportionment of the final condemnation award, claiming that as lessee under the long-term ground lease, it was entitled to $ 156,744 of the final condemnation award as compensation for (i) IDOT's temporary easement over the leased premises ($ 36,625), (ii) estimated damages it would incur to restore the premises after IDOT completed the construction project ($ 26,433), and (iii) the present value of the rent adjustment provided for under section 26(b) ($ 93,686). The trial court ruled against Market Square, finding that, under the lease, Market Square was entitled to a rent adjustment as to the part of the premises taken⁵ but not to anything other than the lease's continuation as to the part of the premises not taken. Dissatisfied with the trial court's ruling denying it any portion of the final condemnation award, Market Square now appeals.

¶ 6 Market Square renews its claim that it was entitled to $ 156,744 of the final compensation award, arguing that its leasehold interest in the property partially taken was directly affected and nothing in the lease limited its remedy for the partial taking only to the rent adjustment. We disagree.

¶ 7 Although the Act generally provides interested parties with the authority to petition for withdrawal of all or part of a condemnation award according to the fair value of their legal or equitable interests (735 ILCS 30/10-5-90 (West 2016)), parties to a lease are free to include a provision governing their rights in the event of a condemnation proceeding ( Village of Palatine v. Palatine Associates, LLC , 406 Ill. App. 3d 973, 981, 347 Ill.Dec. 177, 942 N.E.2d 10 (2010) ). The lease here included such a provision and dictates Market Square's rights relating to the partial taking. See id. (language of the lease governed whether the lessee had any rights to the condemnation award). Like any other contract, we review a trial court's interpretation of the provisions included in a lease de novo . Benford v. Everett Commons, LLC , 2014 IL App (1st) 131231, ¶ 14, 381 Ill.Dec. 282, 10 N.E.3d 367.

¶ 8 We find that the lease Market Square agreed to and executed contained definite and precise language that a rent adjustment was Market Square's remedy in the event of a partial taking that did not result in the termination of the lease. See Clarendon America Insurance Co. v. Prime Group Realty Services, Inc. , 389 Ill. App. 3d 724, 729, 329 Ill.Dec. 687, 907 N.E.2d 6 (2009) (a lease containing definite and precise language speaks for itself); see also Midway Park Saver v. Sarco Putty Co. , 2012 IL App (1st) 110849, ¶ 13, 364 Ill.Dec. 500, 976 N.E.2d 1063 (a lease is a contract and normal principles of contract interpretation apply). The fact that the lease was silent regarding the method of computing the rent adjustment has no bearing on Market Square's agreed to remedy in the...