Villa Oaks, LLC v. Rubina Hospitality, LLC , 2022 IL App (2d) 210707-U ( 2022 )

2022 IL App (2d) 210707-UNo. 2-21-0707
Order filed September 7, 2022
NOTICE: This order was filed under Supreme Court Rule 23(b) and is not precedent
except in the limited circumstances allowed under Rule 23(e)(1).
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
______________________________________________________________________________
VILLA OAKS, LLC, ) Appeal from the Circuit Court
) of Du Page County.
Plaintiff and Counterdefendant- )
Appellee, )
v. ) No. 16-L-622
)
RUBINA HOSPITALITY, LLC and )
SOHAIL SHAKIR, )
) Honorable
Defendants and Counterplaintiffs- ) Bonnie Wheaton,
Appellants. ) Judge, Presiding. Border
______________________________________________________________________________
JUSTICE SCHOSTOK delivered the judgment of the court.
Justices Jorgensen and Birkett concurred in the judgment.
ORDER
¶1 Held: Trial court erred in granting summary judgment but cured its error. It also erred in
awarding certain damages.
¶2 This litigation arises out of a failed effort to build a banquet hall at a shopping center. After
a bench trial, the circuit court of Du Page County entered judgment in the amount of $5,012,147.14
plus costs in favor of the plaintiff and counterdefendant, Villa Oaks, LLC. The defendants and
counterplaintiffs, Rubina Hospitality, LLC (Rubina), and Sohail Shakir, appeal both that judgment
and the trial court’s prior entry of summary judgment on one of their counterclaims. We granted
2022 IL App (2d) 210707-UVilla Oaks’ motion to dismiss the appeal as to Rubina on the grounds that it was untimely, but
permitted the appeal to proceed as to Shakir. See Villa Oaks, LLC, v. Rubina Hospitality, LLC,
No. 2-21-0707 (unpublished order dated Aug. 9, 2022). We now affirm in part and vacate in part,
and remand for further proceedings.
¶3 I. BACKGROUND
¶4 Villa Oaks owns a shopping center on Roosevelt Road in Villa Park. Villa Oaks is owned
by Farhad Nikanjam, who also owns and operates several other shopping centers and commercial
properties. Rubina is owned by Shakir and his wife. Shakir is a developer who has financed, built,
operated, and sold multiple commercial properties including gas stations and hotels in the last few
decades.
¶5 In 2012, Shakir met with Nikanjam regarding the possibility of developing a banquet hall
in the shopping center. Through their respective LLCs, they eventually entered into a ground lease
(2012 Lease) for a space in between two of the existing buildings in the shopping center. A ground
lease permits the lessee to improve the property in specified ways but the lessor retains ownership
of the property as well as any improvements. The 2012 Lease permitted Rubina to construct a
30,000-square-foot banquet hall and related improvements on the space. Rent of $10,000 would
commence after the building was constructed and passed inspection, and Rubina had the option to
purchase the property within the first two years after that. Villa Oaks agreed to lend up to $1
million to help finance the construction costs. Shakir guaranteed the lease.
¶6 Shakir was unable to obtain financing. At trial, he testified that this was because banks
typically would look to the Small Business Administration (SBA) to provide additional financing,
and the SBA would not finance projects without a secured interest in the underlying property. The
2012 Lease terminated due to the lack of financing.
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2022 IL App (2d) 210707-U¶7 On May 7, 2013, the parties entered into a second agreement, a commercial real estate
purchase agreement (Purchase Agreement) under which Rubina would purchase the property for
$1.7 million. The purchase was contingent on Rubina obtaining financing to construct a banquet
hall on the property. Villa Oaks again agreed to lend up to $1 million toward construction costs.
¶8 Both parties began taking steps to fulfill their duties under the Purchase Agreement. Villa
Oaks relocated tenants and demolished two adjacent spaces to provide room for the project, and
rebuilt exterior walls. Shakir hired an architect and a construction manager and made trips to
Pakistan and China where he bought restaurant equipment and supplies for the banquet hall, which
he stored in a vacant store in the mall. He also bought a large LED sign that he intended to use for
the banquet hall. In November 2013, a bank issued a letter conditionally approving a loan to
Shakir. In January 2014, Shakir erected a construction fence around the property.
¶9 Although the parties disputed the circumstances surrounding this event, it is undisputed
that, in February 2014, the parties signed another agreement, a new ground lease for the property
(2014 Lease). Similar to the two previous agreements, the 2014 Lease permitted, but did not
require, Rubina to construct a banquet hall on the property:
“[T]he Lessee may construct on the Premises a footprint of a structure as identified in the
Site Plan (Exhibit B). Such construction shall be at Lessee’s sole cost and expense and
shall be performed in a good and workmanlike manner, free and clear of mechanics’ and
materialmen’s liens. In the event Lessee is unable to obtain all permits and approvals
required for such construction and for operation of its business on the Premises within the
time period provided for in Article 23 of this Lease, Lessee shall have the option to
terminate this Lease.”
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2022 IL App (2d) 210707-UAs with the 2012 Lease, the 2014 Lease provided that any improvements to the property except
for certain fixtures would become the property of Villa Oaks whenever the lease terminated or
expired, although Rubina had an option to purchase the property throughout the term of the lease.
The term of the 2014 Lease was defined as 20 years from the day after “the improved premises”
passed final inspection and was approved for occupancy, with options to renew. Rent was $15,000
per month. Somewhat confusingly, the provision on rent stated that it was due each month during
the term of the lease (that term being defined above as starting upon occupancy approval), and also
that rent would become due on the earlier of 18 months after Rubina took possession of the
property or 4 months after the occupancy approval.
¶ 10 The 2014 Lease set out two possible remedies for default by the lessee, each depending on
the type of default. For a failure to pay rent, Villa Oaks’ sole remedy was to notify Rubina in
writing of the default and then, if it were not cured within 45 days after receipt of the notice, declare
“the forfeiture” of the lease by sending another written notice. Thirty days after receipt of the
second notice, the lease would expire and terminate completely, and “all rights of Lessee, including
occupancy***, shall expire and Lessee shall be relieved of all liability for any future rent or any
other sums otherwise due from the date of such termination.” For any other kind of default by
Rubina, Villa Oaks could notify Rubina of the default and, if not cured within 30 days, could cure
the default itself and charge Rubina for the expense of doing so, but no termination of the lease
would result.
¶ 11 Among the conditions subsequent identified in the 2014 Lease were the relocations and
demolitions already performed by Villa Oaks and the condition that Rubina obtain all necessary
licenses, permits, and approvals for the construction and operation of the banquet hall and sign.
The 2014 Lease contained an integration clause, stating that “[t]his Lease merges all prior
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2022 IL App (2d) 210707-Unegotiations and understandings between the parties and constitutes their complete agreement.”
As he had with the 2012 Lease, Shakir personally guaranteed the “full, prompt, complete and
faithful performance *** by the Lessee of all the obligations, covenants and conditions of the
Lease.”
¶ 12 Despite obtaining a conditional loan approval from a bank, Shakir was never able to get
the permits he needed or financing for the project. In August 2014, the project architect recorded
a mechanics’ lien against the property for work performed between 2012 and 2014, stating that,
although Shakir had paid him more than $329,000, Shakir still owed him over $70,000 more.
¶ 13 On May 24, 2016, Villa Oaks’ lawyers sent Rubina and Shakir a letter and a “5 Day Notice
to Quit.” The letter stated that Rubina had defaulted on the 2014 Lease by permitting the recording
of the mechanics’ lien and advised that, if the default were not cured within 30 days, Villa Oaks
would discharge the lien and charge Rubina for its expenses to do so, including attorney fees. The
five-day notice stated that rent had begun accruing on September 15, 2015, and as of the date of
the notice, $245,539.72, was due and owing. The notice further stated that failure to pay the rent
in full and to vacate the premises “will result in forfeiture of the Lease and will permit the Landlord
to institute legal proceedings against you to recover rent, damages, and possession” of the
premises. The five-day notice also reserved “all the rights and remedies provided under the rental
agreement.” Rubina did not remove the lien and did not pay the rent.
¶ 14 On July 12, 2016, Villa Oaks filed a two-count complaint against Rubina and Shakir.
Count I alleged breaches of the 2014 Lease including the defaults noted in the May 2016 letter and
five-day notice and also alleged that Rubina “failed to commence construction of the planned
Banquet Hall at the Premises or to notify the Plaintiff timely of its intentions with respect to same.”
It sought from Rubina possession and damages including the past-due rent, all future rent and other
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2022 IL App (2d) 210707-Uexpenses accruing through the date when it was able to relet the premises, an amount sufficient to
cure the mechanics’ lien, plus interest and costs including attorney fees. Count II sought the same
damages from Shakir as guarantor. On August 15, 2016, the trial court entered an order granting
Villa Oaks possession of the property and reserving the issue of damages.
¶ 15 The defendants filed a counterclaim asserting that the 2014 Lease was a sham, signed at
Nikanjam’s request, based on his representations that he needed evidence of a leasehold in order
to refinance the shopping center, and that the operative agreement between the parties was the
Purchase Agreement. In its final amended form, the counterclaim alleged claims of breach of the
Purchase Agreement (count I) as well as conversion (count II) arising from allegations that the
restaurant equipment stored at Villa Oaks had disappeared and Villa Oaks was using, for its own
purposes and without permission, the LED sign.
¶ 16 Villa Oaks moved for summary judgment on count I of the counterclaim, arguing that the
integration clause of the 2014 Lease conclusively established that it was the operative agreement
between the parties. The defendants’ response attached an affidavit from Shakir averring that
Nikanjam had told him that the 2014 Lease was needed for refinancing purposes but was not
intended to affect the Purchase Agreement, which was still the operative agreement. The trial
court agreed with Villa Oaks’ argument that the affidavit was parol evidence that could not be
considered. It further found that, under the integration clause, the 2014 Lease was the operative
agreement between the parties and granted summary judgment in Villa Oaks’ favor on the
counterclaim for breach of the Purchase Agreement.
¶ 17 The remaining issues went to trial in November 2016. Nikanjam testified regarding the
parties’ various agreements. He acknowledged that the reason that the parties entered into the
Purchase Agreement in 2013 was that the SBA would not loan Rubina the money for the banquet
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2022 IL App (2d) 210707-Uhall project unless Rubina owned the land, and agreed that both Villa Oaks and Rubina fulfilled
many of the requirements of the Purchase Agreement prior to entering into the 2014 Lease (which
listed those same requirements). He denied ever telling Shakir that the 2014 Lease would not
affect the prior Purchase Agreement or that it was simply a sham agreement needed for his own
refinancing of the shopping center. He presented evidence that he and Shakir met with his bank
in November 2013, and Shakir and his wife signed a subordination agreement confirming that
Rubina’s interest in the Purchase Agreement was subordinate to the bank’s interest in the shopping
center. Asked if the 2014 Lease were not doomed by the same unavailability of financing for
ground leases that doomed the 2012 Lease, Nikanjam asserted that Shakir was wealthy enough to
have financed construction of the banquet hall himself if he had chosen. He agreed that Shakir
had told him that Shakir could not get financing for the project despite the conditional approval
letter from the bank.
¶ 18 Regarding the conversion counterclaim, Nikanjam agreed that he was using the LED sign,
but said that he thought the sign had become the property of a third party, Indus Kitchens, that
Shakir had invested in, which operated a restaurant at the shopping center and allowed the
shopping center to use the sign. As for the restaurant equipment, Nikanjam said that he had
required it to be moved when a tenant had rented the space where it was stored, but he did not
know anything about its ultimate disposition.
¶ 19 Villa Oaks also presented the testimony of Matthew Smetana, a retail real estate broker,
regarding efforts to relet the property. He began searching for tenants for the property in late 2015.
He was not able to secure a tenant until May 2019, when Ross Dress for Less signed a 10-year
lease of the space for $19,250-$20,166 per month. Bruce Sterling, a general contractor with
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2022 IL App (2d) 210707-Uexperience in preparing commercial construction bids, testified regarding his estimate that it would
cost about $3.5 million to build out the space at issue for Ross Dress for Less.
¶ 20 Shakir testified regarding the 2014 Lease, asserting vigorously that Nikanjam had
repeatedly pestered him to sign it, that he had signed it only as a favor to Nikanjam, and that both
parties always regarded it as a sham. Confronted with a February 2014 email from himself to
Nikanjam in which he asked Nikanjam to sign the 2014 Lease, Shakir testified that it meant only
that, as Nikanjam was the one pushing the 2014 Lease, Shakir wanted him to sign it first. However,
Shakir also verified emails reflecting his attorney’s statements about the terms that would be
acceptable to Shakir, indicating that Shakir was involved in negotiating the 2014 Lease. Shakir
also identified emails sent to his architect in March 2015 regarding pulling permits, indicating that
at that point he was still actively pursuing the project but did not have financing.
¶ 21 On his counterclaim for conversion, Shakir testified regarding the value of the restaurant
equipment and stated that Nikanjam had given him permission to store it in an unused space in the
shopping center. When he later asked a Villa Oaks employee to open the space so he could retrieve
it, the employee told him that there was nothing in the space. Shakir admitted, however, that he
did not know who had access to the space while the items were stored there and did not know what
had happened to them. Further, he had opened a different restaurant around that time. Lastly, he
testified as to the value of the LED sign and said he had not given anyone permission to take or
use the sign.
¶ 22 In closing, Villa Oaks argued that Rubina had breached the 2014 Lease by failing to pay
rent and not curing the mechanics’ lien, and that they had proven their damages, while Rubina had
not proven any damages on the counterclaim. As for the cost of constructing a new building, that
should be considered part of the mitigation damages. The defendants argued that the five-day
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2022 IL App (2d) 210707-Unotice stated that the 2014 Lease was terminated if the past-due rent was not paid, and as that rent
was not paid, under the lease no further rent was due and owing after that point. They also argued
that they had proved their counterclaim for conversion and those damages.
¶ 23 The trial court ruled in favor of Villa Oaks on its breach of contract claim. As part of that,
the trial court confirmed its earlier ruling that the 2014 Lease was the operative agreement between
the parties, saying that Shakir’s testimony that it was a sham lease was contradicted by the timeline
of the Villa Oaks refinancing, which had closed prior to the signing of the lease, and was not
credible. The trial court also found that, despite the language of the 2014 Lease regarding default
for nonpayment of rent and the language of the five-day notice regarding forfeiture of the lease,
the lease had not terminated, and Villa Oaks could recover the future rent due under the 2014 Lease
minus the value of the new lease (a net of $1,198,632.90) plus the cost of mitigating those damages
($132,000).
¶ 24 The trial court then continued:
“Under the terms of the 2014 ground lease, ownership of the building had it been
built would have reverted to Villa Oaks at the end of the lease term of 20 years. The
testimony was that the defendant Rubina was intending to finance $4.5 million for the
construction of the purchase of the land and the construction of the building, and $1 million
for the equipment and outfitting of the restaurant or the banquet hall.
Although it is difficult to determine what the value of a 20-year old building would
be 20 years in the future, I think it’s not unreasonable to believe that even with depreciation,
when you factor in depreciation plus inflation, that it would be about the same as the
construction cost would be today, so I think the value of the building, which would enure
[sic] to the benefit of the plaintiff at the end of the 20-year period, would be equivalent to
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2022 IL App (2d) 210707-Uthe $3.5 million figure, and the—there is necessity, of course, of retaining an architect as
well, so I think that that architectural element of damages is not unreasonable.”
The trial court entered a judgment of $5,012,147.14 plus costs against Rubina and Shakir jointly
and severally, and of $144,580.42 in interest against Shakir only. As for the counterclaim, the trial
court found that Rubina had not proven that Villa Oaks, rather than someone else, converted the
restaurant equipment, but the evidence showed Villa Oaks’ conversion of the LED sign. It
therefore awarded Rubina $129,000 in damages on the counterclaim. This appeal followed.
¶ 25 II. ANALYSIS
¶ 26 A. Finding That the 2014 Lease Was the Operative Agreement
¶ 27 Shakir first argues that the trial court erred in determining that the 2014 Lease was the
operative agreement between the parties and granting summary judgment on his counterclaim for
breach of the Purchase Agreement, because his affidavit was admissible evidence demonstrating
a substantial factual dispute over whether the parties ever intended that the 2014 Lease become
effective. He notes that “[t]he parol evidence rule presupposes the existence of a written contract;
thus, if the offered evidence attacks the validity or existence of the contract, the evidence is not
proscribed.” Houck v. Martin, 82 Ill. App. 3d 205, 212 (1980). Further, the existence of a contract
is a question of fact that ordinarily is inappropriate for resolution by summary judgment unless the
facts are undisputed. “The existence of a contract, its terms, and the parties’ intent are questions
of fact to be determined by a trier of fact. [Citation.] Only when no factual dispute exists does the
issue of a contract’s existence become a question of law for the court.” Arbogast v. Chicago Cubs
Baseball Club, LLC, 2021 IL App (1st) 210526, ¶ 19. Villa Oaks argues that accepting this
argument would vitiate the parol evidence rule by allowing parties to disclaim duly signed
contracts simply by averring that they did not intend those contracts to be binding.
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2022 IL App (2d) 210707-U¶ 28 Shakir is correct that the issue of whether a valid contract was formed is an issue of fact,
not of law, and there was conflicting evidence on that issue. Thus, the trial court erred in entering
summary judgment. The trial court cured its own error, however, by effectively reconsidering its
ruling through its actions at trial. It permitted the parties to introduce evidence on this issue,
weighed the evidence, and ultimately resolved the issue as the finder of fact. The record does not
reflect that the trial court restricted the parties’ abilities to present evidence on this issue in any
way, and Shakir has not identified any evidence that he would have presented at trial but for the
grant of summary judgment. Thus, this issue was in fact resolved following an evidentiary trial,
not through the entry of summary judgment. We note that, although the trial court referred to its
earlier ruling granting summary judgment, it expressly supported its continued adherence to that
ruling by finding that the evidence at trial, including its credibility assessment of the various
parties’ testimony, showed that the 2014 Lease was not intended to be a sham. Because the trial
court determined this issue based on the evidence presented at trial despite its earlier grant of
summary judgment, that summary judgment was effectively vacated, merging into the final
judgment. See In re Estate of Funk, 221 Ill. 2d 30, 85 (2006) (where summary judgment order
was arguably erroneous but “the circuit court proceeded to finally resolve the case based on all the
evidence which had been presented,” “[a]ny error thereupon merged into the final judgment
rendered by the court”).
¶ 29 In this court, Shakir argues only that the trial court should not have disposed of this issue
via summary judgment, not that its ultimate factual finding was against the manifest weight of the
evidence. Thus, he has forfeited any review of the trial court’s finding itself. Even if he had not,
however, the evidence in the record—including the fact that Nikanjam’s refinancing had closed
before the 2014 Lease was signed, that Shakir was involved in the negotiation of that lease, and
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2022 IL App (2d) 210707-Uthe trial court’s assessment, based on its observations at trial, that Shakir’s testimony on this issue
was not credible—amply supports the trial court’s finding. See Samour, Inc. v. Board of Election
Commissioners of the City of Chicago, 224 Ill. 2d 530, 544 (2007) (courts will not reverse the
judgment in a bench trial unless it is against the manifest weight of the evidence; that is, unless
“the opposite conclusion is clearly evident or the [factual] finding is arbitrary, unreasonable, or
not based in evidence”). We therefore affirm the trial court’s ruling that the 2014 Lease was the
operative agreement between the parties.
¶ 30 B. Damages Obtainable Under the 2014 Lease
¶ 31 Anticipating that we might affirm the trial court’s conclusion that the 2014 Lease governed
the parties’ obligations to each other, Shakir raises several arguments about the scope of damages
available under that contract, arguing that the trial court erred as a matter of law in interpreting its
terms. We address each argument in turn.
¶ 32 1. Future Rent
¶ 33 In announcing its judgment from the bench, the trial court found “as a matter of law” that
the 2014 Lease had not been terminated, and thus Villa Oaks was entitled to the entire rent that
would have accrued during the 20-year term of the lease (less mitigation). The trial court justified
its ruling by noting that, under Illinois law, a landlord “always has the option of pursuing a forcible
entry and detainer action,” which was what had occurred here. Shakir argues that the trial court
erred and that its finding rested on a misreading of the terms of the lease. The construction of a
contract is an issue of law, which we review de novo. Gallagher v. Lenart, 226 Ill. 2d 208, 219
(2007). “The primary objective in construing a contract is to give effect to the intent of the parties.”
Id. at 232. The language of a contract is the best indication of the parties’ intent. Id. at 233. If
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2022 IL App (2d) 210707-Uthat language is clear and unambiguous, it must be given its plain and ordinary meaning, without
extrinsic aids of interpretation. Thompson v. Gordon, 241 Ill. 2d 428, 441 (2011).
¶ 34 We begin with the trial court’s explanation of its ruling, which rests on an error of law.
Although the trial court was correct that a landlord may sue to recover possession and rent under
the applicable statutes, that legal right does not mean that it may proceed contrary to the valid
terms of the underlying lease. Spanish Court Two Condominium Ass’n v. Carlson, 2014 IL
115342, ¶ 20 (although aspects of the landlord-tenant relationship may be governed by state and
local laws, the relationship is created through the agreement of the parties and is contractual in
nature). Nor may a landlord pursue eviction, thereby terminating the leasehold, and simultaneously
seek damages for rent not yet due—at least, not without a contractual right to do so.
¶ 35 Villa Oaks contends that, because the five-day notice reserved “all rights and remedies”
provided under the lease and no such rights were waived, the notice did not terminate the lease.
Shakir rejoins that this language only preserved Villa Oaks’ preexisting rights under the lease, but
that lease provided only one option in the event that Rubina defaulted by failing to pay rent: Villa
Oaks could notify Rubina of the default and demand payment, and if payment were not made,
terminate the lease. The lease further expressly provided that Rubina would “be relieved of all
liability for any future rent or any other sums otherwise due” after the date of such termination.
Shakir argues that this is just what Villa Oaks did: it notified Rubina of a default by sending the
five-day notice demanding payment of past-due rent, and when Rubina did not pay within the
specified time period,1 the lease terminated. In addition, the five-day notice itself advised that
1
The language of the five-day notice, granting only five days for payment in full, conflicts
with the terms of the lease, which gave Rubina 45 days to make such payment. However, as it is
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2022 IL App (2d) 210707-URubina’s failure to pay in full within the specified period “will result in forfeiture of the lease.”
(Emphasis added.) Thus, he argues, neither he nor Rubina is liable for any rent or other amounts
that accrued after that.
¶ 36 Villa Oaks argues that the lease required it to send two notices of default before termination
would occur, but it only sent one. Thus, it argues, the lease did not terminate. But Villa Oaks did
not simply send a notice here, it sued to evict Rubina and was awarded possession of the premises
on August 15, 2016. It is well settled that “when a landlord successfully litigates its forcible action,
the landlord-tenant relationship ceases and, except for any money judgment for past due rent, the
tenant’s rental obligation terminates.” Id. ¶ 22.
¶ 37 Villa Oaks also argues that it was entitled to the benefit of its bargain, which included the
payment of rent for 20 years. But as we discuss in greater detail below, the lease was replete with
provisions allowing Rubina to terminate it at any point regardless of any breach. (The lease also
permitted Rubina to purchase the property at any point during the lease, which would similarly
have cut off rent payments.) Thus, the amount eventually to be collected under the lease was
uncertain. And although the parties could have included a provision in the lease that would have
preserved Villa Oaks’ right to collect this future rent even after terminating Rubina’s tenancy and
regaining possession of the premises (see, e.g., Elliott v. LRSL Enterprises, Inc., 226 Ill. App. 3d
724, 729-730 (1992)), they did not do so. To the contrary, they included a provision explicitly
cutting off the obligation to pay future rent once the lease was terminated.
undisputed that Rubina did not pay within either period, and as the eviction was filed more than
45 days after the notice, this conflict has no legal significance.
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2022 IL App (2d) 210707-U¶ 38 Thus, Rubina’s obligations under the lease terminated on August 15, 2016, when Villa
Oaks obtained possession of the property. The trial court’s award of damages for future rent
accruing after that point must be vacated.
¶ 39 2. Cost to Construct a Building
¶ 40 In addition to awarding damages for rent that accrued after the termination of the lease, the
trial court also awarded the costs of building out the space where the banquet hall would have
been, reasoning that Villa Oaks eventually would have taken possession of a building if Rubina
had not breached the lease. Shakir argues that this award is clearly contrary to the terms of the
lease.
¶ 41 Villa Oaks first contends that Shakir should not be permitted to raise this argument on
appeal because he did not raise it in the trial court. That is not quite the full story of how things
proceeded in the trial court, however. In its complaint, Villa Oaks sought damages for breach of
contract that included back rent, future rent until it could relet the premises, the cost of removing
the mechanics’ lien from the property, interest and attorney fees. It did not list the cost of a building
as an element of damages it was seeking. At some point, however, Villa Oaks apparently decided
to seek such damages, hoping to pass on to Rubina the cost of building out the space for its new
tenant, Ross Dress for Less. Villa Oaks characterized these construction costs as part of its
“mitigation of damages,” asserting that it was a necessary expense to relet the property. But this
characterization overlooks the fact that the property to be “relet” was (just as it was when Rubina
leased it) vacant property, unimproved with a building. Villa Oaks could not, under the guise of
“mitigation,” charge Rubina with the cost of constructing a building so that it could lease out an
improved site rather than an unimproved one. Villa Oaks has tacitly admitted as much by failing
to cite a single authority that would justify such an approach.
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2022 IL App (2d) 210707-U¶ 42 And indeed, the trial court did not accept Villa Oaks’ argument that this construction cost
should be imposed as part of “damages mitigation.” Instead, the trial court misread the 2014 Lease
to impose on Rubina the obligation to construct a building, and then awarded the cost of doing so
as part of the consequential damages flowing from Rubina’s breach. Rubina had no opportunity
to argue against this misreading in the trial court because it could not have anticipated that the trial
court would misread the lease in this way. Accordingly, we decline to find Rubina’s argument
forfeited. See People v. Jackson, 2020 IL 124112, ¶ 118 (rules of forfeiture bind the parties, not
the court, which may overlook them in the interests of maintaining a sound body of precedent).
¶ 43 The trial court’s award of construction costs was based on a misreading of the terms of the
lease. Despite the goal, expressed in multiple provisions of the lease, that the project would result
in the building of a successful banquet hall, the lease also contains multiple provisions showing
that the parties clearly understood that construction was contingent upon a host of factors,
including Rubina obtaining the necessary financing, permits, and other requirements for
construction.
¶ 44 To begin with, paragraph 3 of the contract states clearly that Rubina was permitted but not
required to construct a building on the site, saying that “the Lessee may construct” (emphasis
added) such a building, not that it “will” or “shall” or “must” do so. This language, which is clear
and unambiguous, must be given its plain and ordinary meaning. Thompson, 241 Ill. 2d at 441.
This plain meaning is supported by a provision of the same paragraph, stating that if Rubina was
“unable to obtain all permits and approvals required for such construction and for operation of its
business” on the premises, it had “the option to terminate this Lease.”
¶ 45 Paragraph 22 of the lease required Villa Oaks to lend Rubina up to $1 million toward its
construction costs, but only if Rubina had first “obtained adequate finance to complete the balance
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2022 IL App (2d) 210707-Uof construction” and the building’s roof was on. Paragraph 23 listed a host of conditions
subsequent including Rubina’s securing of all required licenses, permits, and approvals to
construct and operate the building, and stated that, if the conditions were not timely completed,
“then this Lease may be terminated” after written notice. Paragraph 23 further provided that if,
using reasonable business judgment, Rubina determined that there was a reasonable likelihood that
one or more of the conditions subsequent would not be satisfied, or that the permitting for the
construction or operation of the banquet hall would be economically impractical, Rubina could
terminate the lease at any time.
¶ 46 All of these provisions reflect the parties’ understanding that the banquet hall might never
be built and that Rubina could terminate the agreement and walk away at any point. Villa Oaks
protests that reading the lease to allow but not require the construction of a building would be
absurd and unfair, given that it undertook substantial costs and the demolition and reconstruction
of surrounding stores in furtherance of the project. But the record is clear that the lease placed all
of the construction costs on Rubina and that Rubina also made substantial outlays in pursuit of the
project’s success. It is neither unconscionable nor absurd to give effect to the plain language of
the parties’ agreement, which did not require Rubina to construct a building.
¶ 47 Because the 2014 Lease did not impose any obligation on Rubina to construct and deliver
a building to Villa Oaks, Rubina’s failure to do so cannot result in any damages. “A court has no
authority to compel a party to do something different from what he agreed to do by contract.”
Young v. Kowske, 402 Ill. 114, 117 (1949). The award of damages for construction costs or the
value of a building must be vacated.
¶ 48 3. Past Due Rent
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2022 IL App (2d) 210707-U¶ 49 In a final attempt to reduce damages, Shakir argues that the obligation to pay rent never
commenced because the term of that rent obligation, as defined in the lease, had not yet occurred
when this suit was filed. We reject this argument.
¶ 50 Shakir’s argument rests on the fact that the lease contains several contradictory-seeming
provisions about when the “term” of the lease began. Paragraph 4 states that “[u]nless sooner
terminated or extended as herein provided, the term of this Lease shall be twenty (20) years (the
‘Term’) commencing on the first day after the improved Premises has passed final inspection and
is approved for occupancy (the ‘Term Commencement Date’).” The next paragraph of the lease
adopts this same definition, stating that Rubina will pay to Villa Oaks rent of $15,000 “per month
for each and every month during the Term.” These two provisions indicate that Rubina’s
obligation to pay rent would commence only once the building had been constructed and had
obtained an occupancy permit, i.e., once operations could commence. However, paragraph 5 also
defined a new term, the “Rent Commencement Date,” which was the earlier of 18 months after the
premises were delivered to Rubina (that is, Rubina was given access to the property under the
lease) or four months after final inspection and occupancy approval of the building. This provision
identified two new possible dates when Rubina’s rent obligation would commence, neither of
which was the same as the “Term Commencement Date” identified in paragraph 4.
¶ 51 These seemingly conflicting provisions make the terms of the lease ambiguous. See West
Bend Mutual Ins. Co. v. Talton, 2013 IL App (2d) 120814, ¶ 19 (“if the language of a contract is
susceptible to more than one meaning, it is ambiguous”). Nevertheless, Villa Oaks points out that
courts attempt to give effect to every provision, if possible, because it must be assumed that every
provision was intended to serve a purpose. Valley Forge Insurance Co. v. Swiderski Electronics,
Inc., 223 Ill. 2d 352, 362 (2006). Conflicting provisions should be reconciled and harmonized if
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2022 IL App (2d) 210707-Upossible so as to give effect to all of the contract’s provisions. Coe v. BDO Seidman, LLP, 2015
IL App (1st) 142215, ¶ 27. “Generally, if contractual provisions conflict or create an ambiguity,
the more specific provision controls.” Id.¶ 52 Here, the definition of the lease’s “Term” in paragraph 4 is the more general provision,
having application to contractual obligations beyond the obligation to pay rent. By contrast, the
definition of the “Rent Commencement Date” in paragraph 5 is specific to that rent obligation.
Moreover, it has a more narrow purpose: to set an outer limit on the period before rent would
become due, as evidenced by the requirement that rent payments commence on the earlier of the
two dates given. Under these circumstances, we read the more specific provision as controlling.
Rubina’s obligation commenced 18 months after the contract was signed, on September 15, 2015.
(This is the date both parties have used as the 18-month deadline, and thus we adopt it as the
relevant date.)
¶ 53 Although the trial court did not err in awarding damages for the rent due and owing between
September 15, 2015, and August 15, 2016 (the date on which the lease terminated and Rubina’s
rent obligation ceased), that amount does not appear separately in the record. We therefore remand
for a proper calculation of the back rent owed by Rubina for that period.
¶ 54 III. CONCLUSION
¶ 55 For the reasons stated, the judgment of the circuit court of Du Page County is affirmed as
to the trial court’s ruling that the 2014 Lease was the operative agreement between the parties and
its finding that Rubina breached the lease, vacated as to the trial court’s calculation of damages,
and remanded for the recalculation of damages in a manner consistent with this decision.
¶ 56 Affirmed in part and vacated in part; remanded.
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