LDS, LLC v. Southern Cross Food, Ltd.
954 N.E.2d 696
Ill. App. Ct.2011Background
- L.D.S. and Southern Cross entered into a March 31, 2006 lease for a Quizno's in Chicago; Skehan signed as president of Southern Cross.
- On July 20, 2006, the lease was executed; six days later Skehan signed a rider personal guaranty of the rent and obligations.
- Southern Cross defaulted on rent; L.D.S. reletted to Dunkin Donuts in July 2008 and began receiving rent in November 2008.
- L.D.S. sued Southern Cross and Skehan for breach of lease and guaranty; default judgment entered against Southern Cross in Feb. 2009.
- L.D.S. amended its complaint twice; Skehan moved to dismiss under section 2-615 arguing lack of new consideration for the post-lease guaranty.
- The trial court dismissed the verified second amended complaint with prejudice; L.D.S. appealed seeking reversal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the integration clause bars the guaranty claim | Integration clause applies only to prior agreements between the parties. | Integration clause precludes considering the guaranty as a contemporaneous part of the lease. | Integration clause does not preclude contemporaneous guaranty claim. |
| Whether second amended complaint contradicts amended complaint | Second amended pleadings are consistent with the earlier pleadings and add enhancing facts. | Second amended pleadings contradict the earlier version by separating two transactions. | Second amended complaint is not contradictory and can be read consistently with the amended complaint. |
| Whether the second amended complaint states valid consideration for the guaranty | Guaranty can be contemporaneous with the lease; no new consideration needed. | There was a separate post-lease consideration referenced (signage) that may require new consideration. | Allegations support that the guaranty was contemporaneous with the lease, constituting no new consideration required. |
| Whether the trial court properly dismissed the second amended complaint with prejudice | Court should consider pleading universe; dismissal was premature and improper. | Pleadings failed to cure defects; counts were barred by integration clause and lack of consideration. | Court erred in dismissing; reverse and remand on the basis that the second amended complaint states a cognizable claim. |
Key Cases Cited
- Air Safety, Inc. v. Teachers Realty Corp., 185 Ill.2d 457 (1999) (integration clause limits consideration to contract language)
- Vaughn v. Commissary Realty, Inc., 30 Ill.App.2d 296 (1961) (contemporaneous execution of lease and guaranty; multi-day gap insignificant)
- Continental National Bank of Fort Worth v. Schiller, 89 Ill.App.3d 216 (1980) (consideration rule for guaranties linked to contemporaneity)
- Pedott v. Dorman, 192 Ill.App.3d 85 (1989) (contemporaneous execution analyzed for consideration)
- Wakulich v. Mraz, 203 Ill.2d 223 (2003) (de novo review of 2-615 dismissal; sufficiency of pleadings)