Wendy and William Spatz Charitable Foundation v. 2263 North Lincoln Corporation
998 N.E.2d 909
Ill. App. Ct.2013Background
- Lincoln (tenant) occupied bar/restaurant space under a lease (1994) with Victory Gardens Theater (VGT) that included a right-of-first-offer provision requiring VGT to offer the property to Lincoln at a stated price "in 'as is' condition" with 90 days to elect and close.
- VGT entered a contract to sell the property to the Spatz foundation for $2,250,000 and sent Lincoln an offer letter under the lease (April 2008) with the contract terms; Lincoln responded seeking to purchase for the price but rejecting certain post-closing use restrictions and requested a meeting.
- Spatz closed on the property (around August 2008). Lincoln continued occupancy after its lease expired May 31, 2009; Spatz served a 30-day notice to vacate (May 19, 2009) and filed forcible entry and detainer July 6, 2009.
- At trial Lincoln argued it validly accepted VGT’s offer and became a vendee in possession (defense to eviction); Spatz argued Lincoln’s response was a counteroffer and, in any event, Lincoln failed to close within 90 days or tender payment.
- Trial court awarded possession to Spatz (stayed 90 days on condition of use-and-occupancy payments), awarded attorney fees to Spatz but reduced plaintiff’s requested fees; trial court declined to award double rent under the holdover statute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Lincoln validly exercise the purchase option/right of first offer so as to be a vendee in possession (defense to eviction)? | Lincoln’s response was a counteroffer; it did not accept restrictions and thus did not form a binding sale; Lincoln failed to close within 90 days, so Spatz’s possession stands. | Lincoln effectively accepted the offer by agreeing to pay $2,250,000 "as is" and rejecting improper title restrictions; VGT/Spatz obstructed closing, so Lincoln is vendee in possession. | Court: Affirmed possession for Spatz. Lincoln’s response and failure to close/tender payment meant no effective exercise of option. |
| Was Spatz’s 30-day notice to vacate invalid or premature, or did Spatz create a month-to-month tenancy by accepting payments after lease expiration? | Notice complied with section 9-207 and clearly informed Lincoln to quit; acceptance of payments and efforts to regain possession show no intent to extend lease. | Notice gave two dates and arguably required giving through month-end; acceptance of rent created month-to-month tenancy. | Court: Notice was sufficient; no holdover tenancy created. Spatz timely filed forcible entry and detainer. |
| Was awarding attorney fees to Spatz proper though lease had expired, and was the reduction to $50,000 justified? | Fees recoverable because action enforced lease obligations (surrender/possession); trial court did not abuse discretion in awarding fees but must justify reductions. | If Lincoln became vendee, lease extinguished so fees not recoverable; additionally many billed items unrelated to enforcing the lease. | Court: Fees award affirmed in principle (enforcement of lease). Reduction to $50,000 lacked adequate justification; remanded for further fee proceedings. |
| Should Spatz recover double rent under 735 ILCS 5/9-202 (holdover statute)? | Lincoln should be liable unless it took legal action to protect alleged rights before landlord sued; Lincoln knew claim was improper. | Lincoln had colorable, bona fide dispute (claimed right to purchase), so not "willfully" holding over to trigger double rent. | Court: Denied double-rent relief. Because defendants had a bona fide dispute, double rent not appropriate. |
Key Cases Cited
- Dodds v. Giachini, 84 Ill. 2d 284 (supreme court) (failure to tender payment by option expiration can cause option to lapse)
- Wolfram Partnership, Ltd. v. LaSalle Nat’l Bank, 328 Ill. App. 3d 207 (lessee who validly exercises purchase option becomes vendee; must strictly comply with option terms)
- J.M. Beals Enters., Inc. v. Industrial Hard Chrome, Ltd., 271 Ill. App. 3d 257 (tenant not liable for double rent under holdover statute when possession is retained for colorably justifiable reasons)
- Richardson v. Haddon, 375 Ill. App. 3d 312 (trial court has broad discretion in fee awards and must explain reductions)