Goodrich Cicero Strip LLC v. PLS Fin. Sols. of Ill.

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GOODRICH CICERO STRIP LLC, Plaintiff, v. PLS FINANCIAL SOLUTIONS OF ILLINOIS, INC., Defendant.

No. 21-cv-05917

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

September 25, 2024

MEMORANDUM OPINION AND ORDER

Andrea R. Wood United States District Judge

Plaintiff Goodrich Cicero Strip LLC (“Goodrich”) leased retail space to Defendant PLS Financial Solutions of Illinois, Inc. (“PLS”) in accordance with a lease agreement (“Lease”). When PLS terminated the Lease approximately three years before its expiration date Goodrich sued PLS for breach of contract. The parties have now filed cross-motions for summary judgment. Goodrich seeks summary judgment on its breach-of-contract claim as well as PLS's affirmative defense based on Goodrich's purported failure to mitigate its damages, while PLS seeks summary judgment only Goodrich's breach-of-contract claim. For the reasons stated below, Goodrich's motion (Dkt. No. 36) is granted, with one caveat regarding damages and PLS's motion (Dkt. No. 39) is denied.

BACKGROUND

The following summary of the material facts is drawn from the parties' submissions pursuant to Local Rule 56.1. (Pl.'s Resp. to Def.'s Statement of Materials Facts (“PRDSF”), Dkt. No. 45; Def.'s Resp. to Pl.'s Statement of Material Facts (“DRPSF”) Dkt. No. 42; Def.'s Resp. to Pl.'s Statement of Additional Material Facts (“DRPSAF”), Dkt. No 47.) Despite objecting that certain assertions in these filings violate this District's Local Rules-for example because they state legal conclusions or are irrelevant-for the most part, the parties agree on the material facts underlying this dispute. To the extent the filings contain some improper assertions, they do not impede the Court's analysis of the record. See Judson Atkinson Candies, Inc. v. Latini-Hohberger Dhimantec, 529 F.3d 371, 382 n.2 (7th Cir. 2008) (“[A] district court has broad discretion to require strict compliance with Local Rule 56.1.”).

In 1998, Goodrich began leasing a retail space at its shopping center in Burbank, Illinois, to PLS's predecessor. (PRDSF ¶¶ 1-2; DRPSF ¶ 1.) This arrangement was governed by the Lease, which the parties amended at several points over the ensuing years. (PRDSF ¶ 3; DRPSF ¶ 3; see also Pl.'s Statement of Material Facts, Attachment 1 (“Lease”), Dkt. No. 38-3.) The most recent amendment, which was executed in September 2020, provides for an expiration date of May 31, 2024, “unless sooner terminated as in the Lease provided.” (Pl.'s Statement of Material Facts, Attachment 6 (“September 2020 Amendment”) ¶ 1, Dkt. No. 38-8.)

To that end, an earlier amendment to the Lease includes a “Termination Provision” that gives PLS the right to “terminate [the] Lease upon not less than 120 days prior written notice,” if PLS “is prohibited by any federal, state, local or municipal statute, law, court order, ordinance, regulation, rule, agency or order of any government, quasi-governmental agency or municipal agency having jurisdiction over the Premises, from conducting business at the Premises in accordance with the use provision of the Lease.” (Pl.'s Statement of Material Facts, Attachment 4 (“May 2012 Amendment”) ¶ 13, Dkt. No. 38-6.) In its original form, the referenced “Use Provision” allowed PLS to use the leased space exclusively “for the administration of short term loans and for money wire services.” (Lease ¶ 2.) And PLS accordingly offered payday loans and title loans until 2021. (DRPSF ¶ 14.) Later, the parties amended the Use Provision “to include the following permitted uses for [PLS]: Auto, home, and life insurance.” (Pl.'s Statement of Material Facts, Attachment 5 (“June 2017 Amendment”) ¶ 6, Dkt. No. 38-7.) There is no evidence PLS ever offered wire services or insurance products, however. (DRPSF ¶ 14; PRDSF ¶ 14.)

On January 19, 2021, PLS informed Goodrich that it planned to invoke the Termination Provision to terminate the Lease, citing the impending passage of the Predatory Loan Prevention Act (“PLPA”), 815 ILCS 123/15-1-1 et seq. (PRDSF ¶ 20; see also Def.'s Statement of Material Facts, Ex. D (“January 29, 2021, Letter”), Dkt. No. 41-4.) PLS had been offering payday loans pursuant to the Payday Loan Reform Act (“PLRA”), 815 ILCS 122/1-1 et seq. (DRPSF ¶ 15.)^[1]The PLRA had previously defined a “‘[p]ayday loan' or ‘loan,'” in relevant part, as “a loan with a finance charge exceeding an annual percentage rate of 36%.” 815 ILCS 122/1-10 (2011). But the PLPA capped the rate of interest lenders could charge for loans under the PLRA, providing that “a lender shall not contract for or receive charges exceeding a 36% annual percentage rate on the unpaid balance of the amount financed for a loan.” 815 ILCS 123/15-5-5; see also 815 ILCS 122/2-5(e-5) (reflecting this change). The PLPA took effect on March 23, 2021. (DRPSF ¶ 17.) Three days later, PLS notified Goodrich that it had vacated the leased space. (PRDSF ¶ 21.) In fact, after the PLPA was passed, PLS “shut down its business operations in Illinois.” (Id. ¶ 19.)

Goodrich has not relet the retail space since PLS vacated it. (PRDSF ¶ 22.) On that front, the Lease provides that Goodrich “may,” upon its repossession, “relet the Premises or any part or parts thereof, either in the name of [Goodrich] or otherwise, for a term or terms which may at [Goodrich's] option be less than or exceed the period which would otherwise have constituted the balance of the Term and may grant concessions or free rent.” (Lease ¶ 24(C)(2).)

On November 4, 2021, Goodrich sued PLS for breach of contract, seeking to recover unpaid rent through the Lease's contemplated expiration date of May 31, 2024, along with other amounts. (Compl, Dkt. No. 1.) PLS denies liability. It further asserts via affirmative defense that Goodrich has failed to mitigate its damages due to the vacancy at the retail space. (Answer and Affirmative Defense, Dkt. No. 9.) Both parties now seek summary judgment. (Dkt. Nos. 36, 39.) DISCUSSION

“Summary judgment is appropriate ‘if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'” Thompson Corrugated Sys., Inc. v. Engico, S.R.L., 111 F.4th 747, 751 (7th Cir. 2024) (quoting Fed.R.Civ.P. 56(a))). “When both parties move for summary judgment, [courts] take the motions one at a time, viewing the facts and drawing all reasonable inferences in favor of the party against whom the motion under consideration was made.” Ellison v. U.S. Postal Serv., 84 F.4th 750, 755 (7th Cir. 2023). Here, Goodrich and PLS each request summary judgment with respect to the breach-of-contract claim, so the Court begins there. The Court then turns to Goodrich's argument that it is entitled to summary judgment on PLS's failure-to-mitigate affirmative defense.

I. Breach of Contract

Goodrich contends that PLS breached the Lease when it vacated the premises before the expiration date. The parties agree that Illinois law governs their dispute. See Bandag, Inc. v. Nat'l Acceptance Co. of Am., 855 F.2d 491, 493 n.1 (7th Cir. 1988) (“When the parties agree on choice of law, we need not address the issue further.”). Under Illinois law, a claim for breach of contract has four elements: “(1) the existence of a valid and enforceable contract; (2) performance by the plaintiff; (3) breach of contract by the defendant; and (4) resultant injury to the plaintiff.” PNC Bank, Nat'l Ass'n v. Boytor, 109 F.4th 495, 506 (7th Cir. 2024) (internal quotation marks omitted). In this case, the parties dispute the third requirement-specifically, whether PLS breached the Lease or properly invoked the Termination Provision in connection with the passage of the PLPA.

Illinois law treats leases the same as other contracts. E.g., Phila. Indem. Ins. Co. v. Gonzalez, No. 1-23-0833, 2024 WL 3909055, at *3 (Ill.App. Ct., Aug. 23, 2024). The first step in interpreting a contract governed by Illinois law is to assess “the plain and ordinary meaning of the contract language.” Beach Forwarders, Inc. v. Serv. By Air, Inc., 76 F.4th 610, 613 (7th Cir. 2023) (internal quotation marks omitted). In so doing, courts must consider “the contract as a whole, viewing each part in light of the others.” Id. (internal quotation marks omitted). The ultimate “goal” is to “ascertain the parties' intent.” Selective Ins. Co. of S.C. v. Target Corp., 845 F.3d 263, 267 (7th Cir. 2016), as amended (Jan. 25, 2017). When the terms of the contract are unambiguous, resort to parol evidence is improper. In re Duckworth, 776 F.3d 453, 456 (7th Cir. 2014). And the meaning of an unambiguous contract poses a question of law. E.g., Cent. Nat'l Gottesman, Inc. v. J.S. Paluch Co., No. 19-CV-06997, 2021 WL 2939968, at *3 (N.D. Ill. July 12, 2021).

Goodrich and PLS both contend the Lease is unambiguous-although they disagree on the unambiguous meaning. Goodrich focuses on language from the Termination Provision concerning laws that “prohibit” PLS “from conducting business . . in accordance with the” Use Provision. (May 2012 Amendment ¶ 13.) According to Goodrich, the PLPA does not prohibit “the administration of short term loans,” which is one of the uses permitted under the Use Provision. (Lease ¶ 2.) To “prohibit” an activity means to render it “forbidden” or “prevented”- a more extreme measure than simply “limit[ing]” the activity. Alley 64, Inc. v. Soc'y Ins., 206 N.E.3d 1109, 1133 (Ill.App. Ct.), appeal denied, 197 N.E.3d 1082 (Ill. 2022). Accordingly, the PLPA does not “prohibit” the issuance of short-term loans; rather, it merely caps the interest a lender may charge on those loans at 36%. 815 ILCS 123/15-5-5. Because PLS could have continued offering short-term loans after the passage of the PLPA, Goodrich argues, PLS breached the Lease by invoking the Termination...