Gen. Auto Serv. Station, LLC v. Garrett

50 N.E.3d 1144

401 Ill.Dec. 662

GENERAL AUTO SERVICE STATION, LLC, Plaintiff–Appellant

v.Monah Conner GARRETT, Defendant–Appellee.

No. 1–15–1924.

Appellate Court of Illinois, First District, Third Division.

March 2, 2016.

Grey, Grey & Baltz, P.C., of Chicago (Thomas E. Baltz, of counsel), for appellant.

Stephen Levy & Associates, of Chicago (Stephen Levy, of counsel), for appellee.

OPINION

Presiding Justice MASON delivered the judgment of the court, with opinion:

¶ 1 This breach of contract action arises from decedent Mark Garrett's breach of his personal guaranty of a commercial lease between BAH Properties, the lessor, and his company, Mark Galleries, Ltd., d/b/a Garrett Galleries, Ltd., the lessee. BAH Properties successfully litigated a forcible entry and detainer action against Mark Galleries following the latter's breach of the lease in August 2003, but took no action to collect the judgment or enforce Mark's guaranty until January 2013. By then, BAH Properties had been acquired by plaintiff General Auto Service Station, LLC.

¶ 2 Shortly after General Auto brought suit, Mark passed away, and his widow, Monah Conner Garrett, was substituted as defendant in this action. General Auto then moved for summary judgment, and Monah responded arguing that the doctrine of laches barred General Auto's suit, and further, that the Dead–Man's Act (735 ILCS 5/8–201 (West 2012) ) operated to exclude the affidavit of General Auto's vice president regarding the terms of the lease. The trial court denied General Auto's motion and granted Monah's cross-motion for summary judgment, dismissing General Auto's claim. We find that both defenses raised are inapplicable and, therefore, we reverse.

¶ 3 BACKGROUND

¶ 4 Mark Galleries and BAH Properties entered into a three-year lease beginning on August 1, 1998, for commercial property located at 1155 North State Street in Chicago. Mark, as the president of Mark Galleries, executed a personal guaranty securing “the payment of the Rent to be paid by the Lessee and the performance by the Lessee of all the terms, conditions, covenants and agreements of the lease,” and promising to “pay all the Lessor's expenses, including reasonable attorney's fees, incurred by the Lessor in enforcing all obligations of the Lessee under the lease or incurred by the Lessor in enforcing this guaranty.”

¶ 5 The lease was twice extended with the last term expiring July 31, 2004. Mark renewed his guaranty in connection with each extension. The terms of the “Second Acknowledgment of Continuing Guaranty” included a provision that Mark “is and shall be jointly and severally liable with Lessee under the Second Amended Lease as though he were a co-lessee under the Second Amended Lease.”

¶ 6 In August 2003, the final year of the second extended lease term, Mark Galleries ceased paying rent and vacated the premises. On September 20, 2003 BAH Properties commenced a forcible entry and detainer suit against Mark Galleries, seeking possession of the property and recovery of unpaid rent.

¶ 7 On January 2, 2004, the trial court entered an ex parte order of possession in favor of BAH Properties. The court also entered judgment for BAH Properties in the amount of $18,250, representing the unpaid rent from August 2003 through December 2003, and court costs of $360.10.

¶ 8 Following entry of the court's judgment, BAH Properties took possession of the property and retained a real estate brokerage firm in an effort to relet the property and mitigate its damages. However, BAH Properties was unable to locate a tenant until August 2004, after the expiration of Mark Galleries' lease term.

¶ 9 In 2011, BAH Properties merged with General Auto, and on January 23, 2013, General Auto filed suit against Mark to enforce the guaranty. General Auto sought to recover the 2004 judgment amount, along with (1) the unpaid rent from January 2004 through July 2004, (2) the pre- and post-judgment late charges, (3) interest on unpaid rent at 15% per annum, and (4) attorney fees and costs incurred in both this action and the forcible detainer action.

¶ 10 Mark's responsive pleading was due on April 11, 2013, but Mark passed away on April 4. Thereafter, Mark's widow, Monah Conner Garrett, was substituted as the defendant.

¶ 11 General Auto moved for summary judgment alleging that there was no question of fact as to Mark's liability for unpaid rent as the guarantor of the lease. Attached to General Auto's summary judgment motion was the affidavit of Jordan A. Grey, an attorney who represented BAH Properties in connection with its lease with Mark Galleries. Grey averred that he was a vice president of BAH Properties prior to its merger with General Auto and now serves as a vice president of General Auto. He has never held an equity or ownership interest in either entity. In 2008, in the process of discarding old files, Grey's law firm purged the file containing the original lease, guaranty and the two extensions between BAH Properties and Mark Galleries; however, the firm retained the file concerning the 2003 forcible detainer action, which contained copies of the lease, guaranty, and extensions. Grey averred that Mark personally delivered the signed original lease, guaranty and extensions to him, and further stated that the documents in the 2003 file were true and correct copies of those original documents.

¶ 12 In her response to General Auto's motion, Monah asked the court to enter judgment in her favor on two grounds: first, she argued that the doctrine of laches barred General Auto's action to enforce this guaranty; second, she invoked the Dead–Man's Act (735 ILCS 5/8–201 (West 2012) ) to bar Grey's affidavit attesting to the authenticity of the copied lease documents.

¶ 13 On May 28, 2015, the trial court entered an order denying General Auto's motion for summary judgment, and on June 5, 2015, the court granted what it deemed Monah's cross-motion for summary judgment. The court held that while the doctrine of laches is traditionally available only in actions sounding in equity, it applied to the instant case because the passage of time and Mark's death impaired Monah's ability to defend against General Auto's claim. The court further held that the Dead–Man's Act barred Grey's affidavit, as he was an officer of General Auto and therefore an interested party.

¶ 14 ANALYSIS

¶ 15 Summary judgment is proper when the pleadings, depositions, and affidavits demonstrate that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2–1005(c) (West 2012); State Farm Mutual Automobile Insurance Co. v. Coe, 367 Ill.App.3d 604, 607, 305 Ill.Dec. 282, 855 N.E.2d 173 (2006). In making this determination, the record materials must be viewed in the light most favorable to the nonmovant. Federal Insurance Co. v. Lexington Insurance Co., 406 Ill.App.3d 895, 897, 347 Ill.Dec. 127, 941 N.E.2d 996 (2011). We review de novo an order granting summary judgment. Hall v. Henn, 208 Ill.2d 325, 328, 280 Ill.Dec. 546, 802 N.E.2d 797 (2003).

¶ 16 Initially, General Auto contends that the court erred in granting summary judgment in favor of Monah based on the doctrine of laches. We agree. Laches is an equitable doctrine that bars an action where an unreasonable delay in bringing suit causes prejudice to the opposing party, who has taken a course of action different from what it otherwise would have taken. Osler Institute, Inc. v. Miller, 2015 IL App (1st) 133899, ¶ 23, 388 Ill.Dec. 699, 24 N.E.3d 1272. It is the equitable counterpart to defenses based on the statute of limitations; statutes of limitations generally apply to actions at law, while the doctrine of laches applies to actions in equity. Sundance Homes, Inc. v. County of Du Page, 195 Ill.2d 257, 270, 253 Ill.Dec. 806, 746 N.E.2d 254 (2001).

¶ 17 To be sure, the general rule limiting the application of laches solely to equitable actions is no longer mechanically applied; for example, the doctrine of laches has been extended to “equity-like” actions, such as mandamus, as well as suits seeking both legal and equitable remedies. Mo v. Hergan,

2012 IL App (1st) 113179, ¶ 35, 367 Ill.Dec. 755, 982 N.E.2d 905 (collecting cases). However, a disagreement continues to exist as to whether an action solely for money damages can be subject to a laches defense. Id. (quoting Valdovinos v. Tomita, 394 Ill.App.3d 14, 18, 333 Ill.Dec. 14, 914 N.E.2d 221 (2009) ). The cases seeking money damages to which courts have extended the application of laches have been limited to those in which public sector employees sue their employers for backpay. See, e.g.,

Bill v. Board of Education of Cicero School District 99, 351 Ill.App.3d 47, 57, 285 Ill.Dec. 784, 812 N.E.2d 604 (2004) ; Summers v. Village of Durand, 267 Ill.App.3d 767, 771, 205 Ill.Dec. 321, 643 N.E.2d 272 (1994). No court has applied laches to a breach of contract action between private parties where the relief sought was limited to money damages. Indeed, the Seventh Circuit, applying Illinois law, expressly declined to do so. Nature Conservancy v. Wilder Corp. of Delaware, 656 F.3d 646, 650 (7th Cir.2011).

¶ 18 We, too, see no reason to extend what has historically been an equitable doctrine to a claim sounding wholly in law. We have no difficulty concluding that had he lived, Mark would have been unable to invoke this defense. There is no suggestion in the record that BAH properties, or, later, General Auto, did anything to lead Mark to believe that his personal guaranty would not be enforced. Mark's death, standing alone, does not change this analysis or give rise to a defense available to Monah that Mark himself could not have asserted.

¶ 19 Our decision finds support in Sundance Homes. There, our supreme court rejected the plaintiff's attempt to cloak a legal action in “the attire of equity” in order to take advantage of laches and avoid a statute of limitations bar. Sundance Homes, Inc., 195 Ill.2d at 270, 282, 253 Ill.Dec. 806, ...