Radiant Star Enters., L.L.C. v. Metropolis Condo. Ass'n

2018 IL App (1st) 171844

107 N.E.3d 877

RADIANT STAR ENTERPRISES, L.L.C., Plaintiff–Appellee,

v.METROPOLIS CONDOMINIUM ASSOCIATION, Defendant–Appellant.

No. 1–17–1844

Appellate Court of Illinois, First District, Fourth Division.

June 7, 2018

Carrie A. Durkin and James R. Branit, of Litchfield Cavo LLP, of Chicago, for appellant.

Marcos Reilly and Stephen R. Swofford, of Hinshaw & Culbertson LLP, of Chicago, for appellee.

JUSTICE GORDON delivered the judgment of the court, with opinion.

¶ 1 The instant appeal arises from cross-motions for summary judgment filed by plaintiff Radiant Star Enterprises, L.L.C., and defendant Metropolis Condominium Association and involves a single question: if a party has allegedly breached an arbitration clause with respect to one dispute, may that same party nevertheless demand arbitration on a different, unrelated, dispute? The trial court determined that it could under the language of the parties' arbitration agreement, granting summary judgment in favor of plaintiff and denying defendant's cross-motion for summary judgment. For the reasons that follow, we affirm the trial court's judgment.

¶ 2 BACKGROUND

¶ 3 I. Complaint

¶ 4 On October 19, 2015, plaintiff filed a complaint for declaratory judgment to enforce an arbitration clause, seeking a ruling that defendant was required to arbitrate a particular dispute between plaintiff and defendant. The complaint alleges that plaintiff and defendant were owners of portions of the building located at 8 West Monroe Street¹ in Chicago. The building was divided into three zones—the "Residential Parcel," the "Retail Parcel," and the "Office Parcel." Plaintiff owned the Office Parcel, while defendant represented the owners of the Residential Parcel, which was comprised of condominium units.² The Retail Parcel consisted of the first two floors of the building, the Office Parcel consisted of the third floor, and the Residential Parcel consisted of all floors from the fourth floor to the top of the building. The relationship between the respective owners was governed by a document entitled the "Reciprocal Easement and Operating Agreement" (REA). The complaint alleges that "[t]he Retail Owner and the Office Owner own their respective portions of the Building, but they are not members of the Defendant. Because it owns a large majority of the Building and controls most of the common elements and building systems, as a practical matter the Residential Owner, embodied in and represented by the Defendant, has more power and more responsibilities pursuant to the REA." The complaint alleges that plaintiff began its efforts to build out the Office Parcel for its business use in January 2013 and that the dispute between the parties was the result of defendant's interference with deliveries of mail, packages, and materials to the Office Parcel; access to the building's utilities and systems; and electronic access to the building's elevator systems.

¶ 5 The complaint alleges that the REA required mandatory arbitration to resolve disputes between the parties, and on July 27, 2015, plaintiff made a formal demand for arbitration. However, on August 12, 2015, defendant responded, stating that it "reject[ed]" plaintiff's demand for arbitration. The sole count of the complaint was for declaratory judgment and sought a finding that the parties were bound by the terms of the REA and that defendant was obligated to arbitrate the dispute.

¶ 6 Attached to the complaint were excerpts from the REA, including article 13, which was entitled "Arbitration." Section 13.1 was entitled "Disputes Subject to Arbitration" and provided:

"Each of the questions, differences, disputes, claims or controversies arising among or between Owners under this Agreement which shall not be resolved within forty five (45) days after it shall arise (or other such shorter or longer time period expressly provided herein), shall be submitted for arbitration (including, without limitation, any matter expressly made an Arbitrable Dispute or subject to arbitration under this ARTICLE 13 by the terms of this Agreement). Notwithstanding anything to the contrary herein, in no event shall any arbitration under this ARTICLE 13 result in the change in the respective cost sharing percentages set forth in this Agreement."

¶ 7 Section 13.2 was entitled "Arbitration Procedure" and set forth the procedure for arbitration proceedings. Under this section, "[i]n the event of an Arbitrable Dispute, any Owner involved in the Arbitrable Dispute shall have the right to commence arbitration by written notice to the other Owners." Within seven days of the delivery of the notice, each of the owners involved in the arbitration was required to appoint one attorney to represent the owner in connection with the dispute; the two owner attorneys then collectively appointed one independent attorney and the three appointed attorneys comprised the arbitration panel. Within 30 days of the appointment of the third attorney, the arbitration panel was required to render its decision regarding the dispute. Section 13.2 also provided that "Owners may not seek injunctive relief in the arbitration." More importantly, section 13.2(f) provided:

"The decision of the Panel, and any award of the Panel, shall be final, binding upon the Owners and unappealable, and judgment thereon shall be entered by any court of competent jurisdiction. Failure to comply with the decision of the Panel shall be deemed a default under this Agreement. Any award including payment of delinquent amounts shall include interest on such delinquent accounts at the rate set forth in Section 12.4 ."

¶ 8 Also attached to the complaint was a letter dated July 27, 2015, from plaintiff to defendant, exercising plaintiff's right to arbitration with respect to disputes concerning access to utilities, mail and package delivery, and elevator access. The letter also contained a copy of an airbill from FedEx, showing that the letter had been sent via overnight delivery on July 27, 2015.

¶ 9 II. Motion to Dismiss

¶ 10 On November 16, 2015, defendant filed a motion to dismiss the complaint pursuant to section 2–619(a)(9) of the Code of Civil Procedure (Code) ( 735 ILCS 5/2–619(a)(9) (West 2014) ), arguing that plaintiff had forfeited its right to rely on the REA's arbitration provision because plaintiff had failed to comply with a recent arbitration award, thereby expressly breaching the arbitration provision. Defendant argued that "[plaintiff's] breach constitutes a repudiation and default of that provision. As a result, [plaintiff] cannot enforce the arbitration provision of the REA to compel arbitration of a new dispute. Therefore, its complaint to compel arbitration should be dismissed."

¶ 11 Defendant claimed that plaintiff and defendant had engaged in arbitration in March 2015 with respect to disputes concerning plaintiff's buildout of the Office Parcel and that an arbitration award had been entered on April 8, 2015. According to defendant, while defendant complied with the award, plaintiff did not. Instead, plaintiff filed a petition to vacate the award in federal district court and, when the district court confirmed the award, plaintiff filed an appeal to the Seventh Circuit Court of Appeals. When plaintiff sent a demand to arbitrate the new disputes, defendant advised plaintiff that plaintiff's refusal to comply with the earlier arbitration award was a breach of the arbitration provision and that defendant would not participate in any further arbitration proceedings until plaintiff complied with the earlier award.

¶ 12 Attached to the motion to dismiss was a copy of an arbitration award, dated April 6, 2015.³ The award indicated that the panel considered four categories of potential breaches: (1) the sewer pipes; (2) the heating, ventilation, and air conditioning (HVAC) system; (3) the third-floor windows; and (4) ingress/egress. With respect to the issue of sewer pipes, the panel ordered that defendant was to obtain "a complete survey of all the ceiling pipes existing on the third floor, at [defendant's] own expense, and to provide the same to [plaintiff]. Then [defendant] must pay for the cost of any necessary repairs." With respect to the issue of the HVAC system, the panel found that defendant had no obligation to supply the Office Parcel with an HVAC system and that the cost of improvements to the Office Parcel belonged exclusively to plaintiff.

¶ 13 With respect to the issue of the windows, the panel noted that the REA "is not a drafting masterpiece" but that, pursuant to its terms, plaintiff bore the cost of repairing and replacing the windows and "the evidence is undisputed that the remaining not yet replaced third floor windows are hazardous and must be immediately replaced." Finally, with respect to the issue of ingress and egress, the panel found that defendant "failed to reasonably cooperate with [plaintiff] in developing an appropriate scaffolding and Traffic Plan, as required by both Articles 16.1(b)(viii) and 16.1(b)(ix) and Article 3.3. [Defendant] was obligated to cooperate pursuant to the REA as well as under the common law doctrine of good faith and fair dealing implied in any contract." The panel continued: "The panel thus orders that Metropolis Exhibit 24 is to be executed by both parties within seven (7) calendar days, from the date of the entry of this Award, and will be the Traffic Plan adopted for the remainder of the construction of the project."⁴

¶ 14 The panel also ordered defendant to "immediately send notice to the Alderman that [defendant] withdraws its objections to any of [plaintiff's] permits." Finally, the panel ordered that plaintiff "must commence to immediately thereafter, construct scaffolding on Monroe Street and then, replace the third floor windows, to provide safety to the public, as well as residents of the [building] and workers and delivery persons to this building. If [plaintiff] fails, for any reason, to complete this replacement of the...