Takiff Props. Grp. Ltd. v. Gti Life, Inc.

2018 IL App (1st) 171477

124 N.E.3d 11

429 Ill.Dec. 242

The TAKIFF PROPERTIES GROUP LTD. #2, Plaintiff-Appellee,

v.GTI LIFE, INC., and Guy Iantoni, Defendants-Appellants.

No. 1-17-1477

Appellate Court of Illinois, First District.

Opinion filed on December 26, 2018

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

¶ 1 The Takiff Properties Group Ltd. # 2, the plaintiff-landlord in this dispute, entered into a commercial lease with GTI Life, Inc., the defendant-tenant. Defendant Guy Iantoni served as tenant's guarantor.¹ Following a bench trial, the court entered judgment in landlord's favor with respect to its claim that tenant, which had abandoned the property, owed overdue rent. The court also found that the lease contractually waived landlord's obligation to mitigate damages under section 9-213.1 of the Code of Civil Procedure ( 735 ILCS 5/9-213.1 (West 2014) ). On appeal, tenant asserts that the trial court should have entered judgment in its favor because parties cannot contractually negate section 9-213.1 and, even if they can, landlord waived its right to assert any contractual waiver. Tenant also contends landlord failed to present evidence that it attempted to mitigate its damages. For the following reasons, we affirm the trial court's judgment.

¶ 2 I. Background

¶ 3 In 2008, landlord leased to tenant the property located at 633 Skokie Boulevard, Suite 250, Northbrook, Illinois. Although the lease was initially for one year, it was extended through October 31, 2014, with an eventual increase in rent to $2167 per month. The lease contained several cumulative remedies benefitting landlord, including the following:

"If the Lessee abandons the premises or otherwise entitles the Lessor so to elect, and the Lessor elects to terminate the Lessee's right to possession only, without terminating the lease, the Lessor may, at the Lessor's option enter into the premises,* * * and take and hold possession thereof. * * * Upon and after entry into possession without termination of the lease, the Lessor may, but need not, relet the premises or any part thereof for the account of the Lessee to any person, firm or corporation other than the Lessee for such rent, for such time and upon such terms as the Lessor in the Lessor's sole discretion shall determine, and the Lessor shall not be required to accept any Lessee offered by the Lessee or to observe any instructions given by the Lessee about such reletting."² (Emphases added.)

¶ 4 On June 25, 2015, landlord filed a complaint alleging that tenant owed $18,309.97 in unpaid rent as well as attorney fees and costs. Ultimately, tenant filed an answer admitting that "a certain amount of money" had not been paid but denying that the amount due was $18,309.97. As an affirmative defense, tenant alleged that landlord failed to exercise reasonable diligence to mitigate its damages. Specifically, landlord knew or should have known that tenant no longer possessed the premises after March 2014. Yet, landlord made no effort to relet the premises until approximately the summer of 2014. Tenant alleged that because landlord failed to mitigate damages, it was not entitled to any unpaid rent. Landlord did not file a response to the defense raised.

¶ 5 The matter proceeded to trial on February 15, 2017. No court reporter was present but the parties submitted bystander reports for the trial court's approval. According to landlord's proposed bystander's report, Steve Freeman testified on landlord's behalf that it relet the premises on August 1, 2014, prior to the lease expiration, and did not charge tenant rent for the remaining period. On cross-examination, "Freeman testified that he had no personal knowledge of the specific steps that [landlord] took to relet the Premises but that he believed the Premises were listed." Landlord's bystander report further stated that Iantoni testified, on tenant's behalf, that certain personal property left on the premises was not returned.

¶ 6 The bystander's report submitted by landlord concluded that after hearing argument and considering the testimony as well as the documents admitted into evidence, the court entered judgment in landlord's favor for $21,616.30. In addition, "[t]he court found that [tenant] had contractually waived [landlord's] duty to mitigate," and the court rejected the suggestion that such duty could not be contractually waived. The trial court subsequently certified landlord's bystander's report, to the exclusion of the report submitted by tenant, and added that tenant "provided no legal authority for [its] position that the waiver of mitigation in the lease is unenforceable."

¶ 7 Tenant moved for the court to reconsider, arguing that Freeman admitted he had no knowledge of any actions taken to mitigate landlord's damages and that parties could not contract away landlord's "statutory duty to mitigate damages." See id. They argued that landlord attempted to contract itself out of its statutory duty through the lease's language stating that the landlord could, but was not required to, relet the premises. Tenant did not, however, identify any case stating that a statutory duty, let alone, this statutory duty, could not be contractually waived. According to the proposed bystander's report certified by the court, the trial court denied the motion reconsider, finding that tenant had not pled that landlord had a statutory duty to mitigate, as opposed to a common law duty.

¶ 8 II. Analysis

¶ 9 On appeal, tenant asserts that (1) landlord failed to present evidence of mitigation, (2) landlord waived its right to assert the contractual provision excusing it from reletting the premises, and (3) the parties could not have contracted away landlord's statutory duty to mitigate damages. We first examine the nature of section 9-213.1.

¶ 10 A. Section 9-213.1: Duty or Defense

¶ 11 "After January 1, 1984, a landlord or his or her agent shall take reasonable measures to mitigate the damages recoverable against a defaulting lessee." Id. The doctrine of mitigation is often characterized as imposing a "duty" on an injured party, but this characterization is inaccurate. St. George Chicago, Inc. v. George J. Murges & Associates, LTD. , 296 Ill. App. 3d 285, 293, 230 Ill.Dec. 1013, 695 N.E.2d 503 (1998) ; Timothy J. Patenode & William J. Dorsey, Tenant Defaults and Landlord Remedies , in Commercial Landlord-Tenant Practice § 8.23, at 8-19 (Ill. Inst. for Cont. Legal Educ. 2015) (stating that "the duty to mitigate is not correctly spoken of as a duty"). The injured party incurs no liability for failing to act; rather, his recovery is reduced by the amount of loss he could have avoided incurring. St. George Chicago, Inc. , 296 Ill. App. 3d at 293, 230 Ill.Dec. 1013, 695 N.E.2d 503 (citing Restatement (Second) of Contracts § 350, cmt. b, at 127 (1981) ). This confusion is reflected in the parties' pleadings, which refer to section 9-213.1 both as a duty and as an affirmative defense.

¶ 12 Moreover, as this court has previously observed, section 9-213.1 left out many details. Snyder v. Ambrose , 266 Ill. App. 3d 163, 166, 203 Ill.Dec. 319, 639 N.E.2d 639 (1994). More than 30 years after the statute was enacted, many details are still wanting. The statute's language does not identify where the burden lies, although our appellate court has determined it lies with the landlord. See id. Pertinent to this appeal, the statute does not clearly indicate whether the legislature intended to eliminate contracting parties' ability to excuse a landlord from attempting to mitigate damages. Cf. City of Evanston v. Create, Inc. , 85 Ill. 2d 101, 106, 114-15, 51 Ill.Dec. 688, 421 N.E.2d 196 (1981) (where the parties apparently did not dispute that an ordinance, requiring landlords to "make a good faith effort to rent [property] at a fair rental," intended to foreclose contractual waiver of such duty, the supreme court rejected the landlord's assertion that the ordinance impermissibly interfered with the right to contract (Internal quotation marks omitted.) ).

¶ 13 Tenant contends that as a categorical rule, parties cannot waive statutory requirements. Our supreme court, however, has held that they can. Smith v. Freeman , 232 Ill. 2d 218, 228, 327 Ill.Dec. 683, 902 N.E.2d 1069 (2009). Generally, individuals may waive statutory rights, so long as the waiver is voluntary, knowing, and intentional. Elsener v. Brown , 2013 IL App (2d) 120209, ¶ 83, 374 Ill.Dec. 637, 996 N.E.2d 84 ; see also State of Illinois Department of Central Management Services v. State of Illinois Labor Relations Board, State Panel , 373 Ill. App. 3d 242, 255, 311 Ill.Dec. 600, 869 N.E.2d 274 (2007) (stating that a labor agreement can contain a contractual waiver of a statutory right if the waiver is unmistakable and clear). That being said, the State can adopt statutes impinging on private parties' ability to contract. City of Evanston , 85 Ill. 2d at 114, 51 Ill.Dec. 688, 421 N.E.2d 196. The question is whether the legislature intended to do so here.

¶ 14 Given that section 9-213.1 is riddled with ambiguities, we now consider the legislative history of this statute, something that the handful of cases addressing this statute have not previously done. See Commonwealth Edison Co. v. Illinois Commerce Comm'n , 2014 IL App (1st) 132011, ¶ 33, 384 Ill.Dec. 408, 16 N.E.3d 801 (stating that a statute is ambiguous where its meaning cannot be interpreted from the statute's plain language). As our supreme court has stated, legislative history and debates constitute "[v]aluable construction aids in interpreting an ambiguous statute." (Internal quotation marks omitted.) Nowak v. City of Country Club Hills , 2011 IL 111838, ¶ 15, 354 Ill.Dec. 825, 958 N.E.2d 1021 (citing Advincula v. United Blood Services , 176 Ill. 2d 1, 19, 223 Ill.Dec. 1, 678 N.E.2d 1009 (1996) ). We begin with the state of the law prior to the statute's enactment.

¶ 15 Pursuant to the common-law doctrine of mitigation of damages, a plaintiff...