One Way Apostolic Church v. Extra Space Storage Inc. ( 2019 )

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted November 13, 2019*
Decided December 2, 2019
Before
WILLIAM J. BAUER, Circuit Judge
MICHAEL B. BRENNAN, Circuit Judge
MICHAEL Y. SCUDDER, Circuit Judge
No. 18‐3512
ONE WAY APOSTOLIC CHURCH, Appeal from the United States District
Plaintiff‐Appellant, Court for the Northern District of
Illinois, Eastern Division
v.
No. 16 C 1132
EXTRA SPACE STORAGE INC. and
JOHN DOE, Maria G. Valdez,
Defendants‐Appellees. Magistrate Judge.
ORDER
One Way Apostolic Church agreed to rent storage lockers but failed to pay rent
for three months and ignored notices about its deficiency. As a result, Extra Space
Storage foreclosed its contractual lien by auctioning the contents of the lockers. One
Way responded with this suit against Extra Space for breach of contract and conversion.
* We previously granted One Way Apostolic Church’s motion to waive oral argument
because the briefs and record adequately present the facts and legal arguments, and oral
argument would not significantly aid the court. FED. R. APP. P. 34(a)(2)(C).
No. 18‐3512 Page 2
The district court entered judgment for Extra Space. Because Extra Space complied with
the contract by giving agreed‐upon notice to One Way of the rent deficiency before
foreclosing its contractual lien, we affirm.
Background
In 2013, on behalf of One Way Apostolic Church, Pastor Noah Nicholson signed
contracts to store his church’s equipment. He rented three storage units, and rent was
due monthly. Extra Space had a lien on the stored property under the Illinois Self
Storage Facility Act. 770 Ill. Comp. Stat. §§ 95/1‐95/7.10. If One Way defaulted on its rent
payments, Extra Space could “enforce its lien by selling or otherwise disposing of the
personal property stored in the space.”
Two years later, One Way fell behind in rent, prompting mailed notices from
Extra Space about an impeding lien foreclosure. Extra Space sent nine letters entitled
“Notice of Lien and Foreclosure” to One Way. These letters demanded payment within
15 days, detailed the upcoming foreclosure, and warned in bold that “if the total
amount owed was not paid within fifteen days then a lien will be imposed, and the
property will be sold at auction to satisfy the lien.”
Under the contracts, One Way agreed to notify Extra Space “of any change in
[its] address,” but it failed to do so. As a result, six out of the nine letters were returned
as undeliverable. Extra Space found Nicholson’s new address, and three of the letters
were sent to that new address. Those letters were not returned as undeliverable.
The contracts also specified that payments for units in foreclosure status must be
made by “certified check, cashier’s check, money order or cash.” In October 2015,
Nicholson mailed a check to the storage facility, but because the check was not in the
required form of payment and was only a partial payment, Extra Space rejected it. One
Way made no attempt to pay the next month’s rent.
While foreclosure efforts proceeded, Extra Space tried again to reach One Way.
In early November, Extra Space twice advertised in a local paper that lien‐foreclosure
auctions would occur on November 18. It also phoned Nicholson six times between
October 10 and November 16, twice leaving messages for him. In the second, left five
days before the auction, Extra Space said, “It is very important that you get back to us
as soon as possible. This is a very urgent matter.”
No. 18‐3512 Page 3
Nicholson did not respond to the phone calls because he “thought the phone call
was [] what they always are, just to be reminded that the payment is late and you need
to make it. They make them constantly on a regular basis.” Extra Space also attempted
to email Nicholson, but because Nicholson had changed his email address without
notifying Extra Space, the emails were returned as undeliverable.
After the auctions, Nicholson sued Extra Space for breach of contract, based on
its alleged failure to deliver notice of the foreclosure, and for conversion. The parties
consented to proceed before a magistrate judge. (One Way also sued a “John Doe”
defendant who was never served, so we say nothing further about him.) During a
pretrial deposition, when questioning Nicholson on whether he had received mailed
notice of the foreclosure, his lawyer asked, “[t]o the best of your knowledge, you never
received this mail, is that correct?” Nicholson answered, “Correct.” Because of this
denial, the judge held a bench trial on whether Nicholson had received notice. At trial,
counsel phrased the question differently, asking if Nicholson recalled receiving notice.
Nicholson responded that he did not. After the trial, the judge granted Extra Space a
“directed verdict” because Nicholson’s lack of recall was not a denial of receipt. She
added, “we also have the testimony from him that he would routinely ignore the phone
calls because, you know, he knew he was late, he knew he was in arrears, and he didn’t
want to deal with the phone calls.” She ruled that the Illinois Self Storage Facility Act
governed the notices required under the contract, and because Extra Space complied
with that law by delivering notice to One Way, it received judgment in its favor.
Analysis
1. The claim for breach of contract
One Way contends that the district court wrongly entered judgment on the
breach‐of‐contract claim. We begin with the standard of review. One Way argues that
because the district court used the term “directed verdict,” our review is de novo, see
Fed.R.Civ.P. 50, with all factual inferences drawn in favor of One Way. Extra Space
responds that the district court’s order is actually a judgment on partial factual findings,
see FED.R.CIV.P. 52(c), which we may reverse only if “clearly erroneous.”
Extra Space is correct. Although the judge used the term “directed verdict,” the
context of the bench trial means that Rule 52 applies. Rule 50 applies exclusively to jury
trials, and when a district court cites Rule 50 during a bench trial, we construe the
verdict under Rule 52. Gaffney v. Riverboat Services of Indiana, Inc., 451 F.3d 424, 451 n. 29
No. 18‐3512 Page 4
(7th Cir. 2006). Moreover, the judge’s justifications convey that she made factual
findings under Rule 52 because she “determine[d] witness credibility.” Wilborn v. Ealey,
881 F.3d 998, 1008 (7th Cir. 2018). She found Nicholson not credible on the issue of
notice because he admitted that he ignored calls about the storage units, as he knew he
was in arrears. Thus, we uphold the judge’s findings.
One Way raises two arguments to contest the district court’s finding that Extra
Space properly notified One Way of the foreclosure auction. One Way first argues that
Nicholson’s testimony that he did not “recall” receiving notice is the same as a denial
that he received notice, so the judge committed reversible error by not treating his
testimony as a denial of receipt. Second, One Way adds, if the judge thought his
testimony insufficient to contest receipt, she should have asked Nicholson to amplify it.
Neither argument persuades us. First, not recalling something is not the same as
denying it. See, e.g., Chavez v. Ill. State Police, 251 F.3d 612, 634 (7th Cir. 2001). Second,
the judge had broad discretion to control the presentation of testimony, see
FED.R.EVID. 611, and she did not abuse it by not recalling Nicholson to the stand. See
United States v. Bozovich, 782 F.3d 814, 816 (7th Cir. 2015). The parties knew that receipt
of notice was a key issue, so both sides had the chance to make their cases. When
Nicholson’s trial testimony differed from his deposition testimony, the judge had
reason to doubt Nicholson’s credibility, not to offer him another chance to testify. See,
e.g., Mathin v. Kerry, 782 F.3d 804, 810–11 (7th Cir. 2015); Montaño v. City of Chicago,
535 F.3d 558, 565 (7th Cir. 2008).
One Way next argues that, even if at trial Nicholson failed to deny receipt of
notice, Extra Space did not prove that it complied with the notice provision of the
Illinois Self‐Service Storage Act. The Act requires that notice be “delivered,” 770 ILCS
95/4(B); and delivery may be presumed as follows:
Any notice made pursuant to this Section shall be presumed
delivered when it is deposited with the United States Postal
Service, and properly addressed with postage prepaid or sent by
electronic mail and the owner receives a receipt of delivery to the
occupantʹs last known address, except if the owner does not receive
a receipt of delivery for the notice sent by electronic mail, the notice
is presumed delivered when it is sent to the occupant by verified
mail to the occupantʹs last known mailing address.
770 ILCS 95/4(D)
No. 18‐3512 Page 5
No cases have construed this provision, but under any reasonable interpretation
of it, the district court did not clearly err in finding that Extra Space delivered notice to
One Way. First, Extra Space complied with this provision because, as the first three lines
require, Extra Space mailed the notice with proper postage to One Way’s address.
Second, under the renter‐friendly interpretation that the judge used at summary
judgment—where the court shall presume delivery of notice if the owner has a receipt
of delivery—Extra Space wins because it did not need to rely on the presumption. As
plaintiff, One Way bore the burden of persuasion that Extra Space failed to notify it
(and therefore breached the contract), so One Way needed to offer at trial some evidence
that it did not receive notice, but it never did. Third, the statute provides a safe harbor
in the final clause: If the owner attempts delivery by electronic mail—as Extra Space
did—and does not receive “receipt” of delivery, “the notice is presumed delivered
when it is sent to the occupant by verified mail to the occupantʹs last known mailing
address.” 770 ILCS 95/4(D). Because Extra Space complied with this requirement, it did
not breach the notice provision of the contract.
2. The conversion claim
One Way hitched its conversion claim to its contention that Extra Space did not
give notice of the lien enforcement. Without such notice, One Way contends, Extra
Space never acquired lawful ownership. But because the notice argument fails, so too
does the conversion claim.
AFFIRMED.