L.D.S. v. Southern Cross Food
2011 IL App (1st) 102379
Ill. App. Ct.2011Background
- L.D.S. LLC leased to Southern Cross Food, Ltd. on March 31, 2006, with Skehan signing as president of Southern Cross.
- Six days after the lease, Skehan executed a rider to the lease containing a personal guaranty of the rent and other obligations.
- Southern Cross failed to pay rent; L.D.S. relet the premises to Dunkin Donuts in July 2008 and began collecting rent from them in November 2008.
- L.D.S. filed suit for breach of the lease and the guaranty; a default judgment was entered against Southern Cross and Skehan earlier.
- Skehan moved to dismiss the second amended complaint under section 2-615, arguing lack of new consideration for the guaranty because the guaranty was executed after the lease.
- The trial court dismissed the verified second amended complaint with prejudice; on appeal, the Illinois Appellate Court reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does an integration clause bar a contemporaneity claim? | The clause covers only prior agreements between the parties and does not bar contemporaneous guaranty assertions. | The integration clause precludes considering extrinsic contemporaneous agreements not within the lease. | Integration clause does not preclude alleging contemporaneous guaranty. |
| Do the second amended and amended complaints contradict each other? | The second amended complaint is consistent with the amended complaint and adds details without contradiction. | The two pleadings contain inconsistent theories about the transaction. | The allegations are not contradictory and should be considered together. |
| Does the second amended complaint adequately allege consideration for the guaranty? | Guaranty was contemporaneous with the lease; no new consideration needed. | Consideration must be provided for a post-lease guaranty unless contemporaneity is shown. | The complaint sufficiently alleges contemporaneous execution and thus no new consideration is required. |
Key Cases Cited
- Air Safety, Inc. v. Teachers Realty Corp., 185 Ill. 2d 457 (Ill. 1999) (integration clause interpreted by contract language; extrinsic evidence excluded)
- Vaughn v. Commissary Realty, Inc., 30 Ill. App. 2d 296 (Ill. App. Ct. 1961) (six-day gap between lease and guaranty execution insufficient to negate contemporaneity)
- Tower Investors, LLC v. 111 East Chestnut Consultants, Inc., 371 Ill. App. 3d 1019 (Ill. App. 2d Dist. 2007) (contemporaneous execution rule for guaranties)
- Continental National Bank of Fort Worth v. Schiller, 89 Ill. App. 3d 216 (Ill. App. Ct. 1980) (contemporaneous guaranty may be supported by original consideration)
- Farwell Construction Co. v. Ticktin, 59 Ill. App. 3d 954 (Ill. App. Ct. 1978) (sworn pleadings as binding; judicial admissions in verified pleadings)