2025 IL App (1st) 242043-U Order filed: September 24, 2025
FIRST DISTRICT THIRD DIVISION
No. 1-24-2043
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1). ______________________________________________________________________________
IN THE APPELLATE COURT OF ILLINOIS FIRST JUDICIAL DISTRICT ______________________________________________________________________________
MICHIGAN 180 LLC, ) Appeal from the ) Circuit Court of Plaintiff-Appellee, ) Cook County ) v. ) No. 21 L 10243 ) TRAFFIC TECH, INC., ) Honorable ) Daniel J. Kubasiak, Defendant-Appellant. ) Judge, presiding. _________________________________________________________________________
JUSTICE ROCHFORD delivered the judgment of the court. Presiding Justice Martin and Justice Reyes concurred in the judgment.
ORDER
¶1 Held: We reversed the judgment in favor of plaintiff on its breach of contract claim, holding that the parties never entered into a binding contract because they never agreed on certain material terms. We entered judgment in favor of defendant.
¶2 Plaintiff, Michigan 180 LLC, filed a breach of contract action against defendant, Traffic
Tech, Inc., alleging that the parties entered into a contract whereby plaintiff would build out office
space in the building at 180 North Michigan Avenue (Building) and then lease that space to
defendant for a five-year term. Defendant subsequently determined that the agreement was null
and void and never moved into the office space or paid rent thereon. Plaintiff sought damages for
unpaid rent, real estate taxes, operating expenses, and mitigation costs. Following a bench trial,
the court entered judgment in favor of plaintiff and awarded it $593,893.06 in damages. Defendant No. 1-24-2043
appeals, arguing that the parties never entered into a binding contract obligating it to lease the
office space in the Building. We reverse the judgment for plaintiff and enter judgment for
defendant.
¶3 In its amended complaint for breach of contract, plaintiff alleged that it was the owner of
the Building and that on December 22, 2010, the parties entered into a lease for defendant to rent
office space on the 12th floor. Defendant moved into the 12th-floor offices. On December 18,
2014, the parties entered into a fourth amendment to the lease (Fourth Amendment), which stated
that plaintiff would build out office space on the seventh floor (Suite 700) at a cost of $39,900 “in
substantial conformity with a Space Plan to be mutually approved by Landlord and Tenant.” Any
extra buildout costs in excess of $39,900 would be borne by defendant. After the buildout,
defendant would relocate and rent the office space in Suite 700 on or about February 1, 2015, for
a term ending on January 31, 2021.
¶4 The Fourth Amendment further stated that plaintiff also would build out office space on
the eighth floor (Suite 800) at a cost of $81,970 “in substantial conformity with a Space Plan to be
mutually approved by Landlord and Tenant.” Any extra buildout costs in excess of $81,970 would
be borne by defendant. After the buildout, defendant would rent the office space in Suite 800 (in
addition to Suite 700) on February 1, 2016, for a five-year term ending on January 31, 2021.
¶5 In accordance with the Fourth Amendment, plaintiff built out the office space in Suite 700
pursuant to a mutually agreed-upon space plan and defendant relocated there. However, the parties
never mutually agreed to a space plan and buildout for the office space in Suite 800 because
defendant decided that Suite 800 would not provide it with enough space for its employees.
Instead, defendant informed plaintiff it wanted to lease the entire eighth floor, consisting of Suites
800 and 810.
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¶6 Plaintiff notified defendant that it already had a tenant in Suite 810, but that it would
attempt to relocate that tenant to accommodate defendant’s request for the entire eighth floor.
Plaintiff warned defendant that the relocation of the other tenant could delay the move to the eighth
floor until after June 2016. Defendant acquiesced in the delay “because it wanted the entire floor.”
¶7 On January 11, 2016, plaintiff delivered a space plan for the buildout of the entire eighth
floor to defendant for its approval. On February 18, 2016, defendant approved and signed off on
the January 11 space plan. Plaintiff thereafter obtained construction bids from contractors.
Defendant subsequently expressed unhappiness with the projected costs of the eighth-floor
buildout and requested that plaintiff increase the amount of the costs which it would cover.
Between August 2016 and October 2016, plaintiff repeatedly made changes to the space plan to
try and reduce the costs. However, on October 27, 2016, defendant sent plaintiff a letter stating
that it was ending the negotiations regarding the eighth-floor buildout, explaining:
“Pursuant to the Fourth Amendment to Lease, dated December 18, 2014, [defendant] was
supposed to have taken possession of the 8th floor by February 1, 2016. Due to the buildout
of the 8th floor being delayed for close to nine months, [defendant] was forced to expand
in other markets outside of Chicago. Consequently, [defendant] no longer wishes to occupy
the 8th floor at this time, and believes the expansion clause in the current lease to be null
and void.”
¶8 On November 7, 2016, plaintiff responded to defendant’s October 27 letter, denying that it
caused any delays in the buildout and stating that defendant was in breach of the Fourth
Amendment, which had contractually committed defendant to leasing the office space in Suite 800
for five years. Plaintiff notified defendant that it immediately would begin to market Suite 800 to
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mitigate its damages and it ultimately was able to build out and lease Suite 800 to other tenants
and receive a total of $445,729 in rent from them.
¶9 In its amended complaint for breach of contract, plaintiff alleged that after mitigation and
application of the security deposit, defendant still owed it $473,999 in rent and it sought damages
in that amount. Plaintiff also sought an award for its proportionate share of the real estate taxes
and operating expenses, plus the expenses incurred in preparing Suite 800 for the mitigating
tenants.
¶ 10 A bench trial was held on plaintiff’s amended complaint. The evidence at trial established
that plaintiff owns the Building, which is managed by Marc Realty, LLC. Defendant is a
commercial entity headquartered in Chicago which moves freight for customers via multiple
platforms, including railroads, ships, trucks, and airplanes. On December 22, 2010, the parties
executed a lease pursuant to which defendant rented Suite 1210 of the Building. In July 2011 and
February 2014, the lease was amended to allow defendant to rent Suites 1220 and 2010.
¶ 11 Defendant subsequently determined that it needed more space in the Building. In late 2014,
Mark Schiele, defendant’s president, spoke with Anthony Crotty, the asset manager for the
Building, about moving to the seventh and eighth floors and renting Suites 700 and 800. At the
time, the seventh floor needed to be built out to office specifications. The relevant space for Suite
800 was in raw condition, with no interior walls or hallways or offices, and needed to be
completely built out. A second suite on the eighth floor, Suite 810, already was occupied by
another tenant.
¶ 12 Crotty testified that in a typical “build-and-lease” agreement, plaintiff’s design team
prepares a space plan for the proposed unit, which plans out the configuration of the unit and
improvements thereto pursuant to the tenant’s specifications. When the tenant approves the space
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plan, the design team forwards it to the project management team, which then invites contractors
to bid on the project. After bids are obtained and a contractor is chosen, Crotty informs the tenant
of the cost, scope and timeline for completing the project. Once the tenant gives final approval, he
makes a 50% deposit and then plaintiff proceeds to construction. When construction is completed,
the tenant leases the completed unit.
¶ 13 In the instant case, Crotty emailed defendant’s chief financial officer, David Valela, a
proposed Fourth Amendment to the lease which provided that plaintiff would build out the office
space in Suites 700 and 800 “in substantial conformity with a Space Plan to be mutually approved”
by plaintiff and defendant. Plaintiff would spend a specific amount for each buildout (a “landlord
allowance”). The landlord allowance was $39,900 for the buildout of Suite 700 and $81,970 for
the buildout of Suite 800. Any excess costs were to be borne by defendant. Upon the completion
of the buildouts, defendant would lease Suite 700 beginning on February 1, 2015, and it would
lease Suite 800 beginning February 1, 2016. The lease term for Suites 700 and 800 would expire
on January 31, 2021. Except as so amended, the lease otherwise remained in full force and effect,
including its provision that if the suites were not ready for occupancy at the commencement of the
term, rent would be abated in full until they were made ready for occupancy. The Fourth
Amendment further provided that “[n]o amendment, alteration or other change of this agreement
shall be enforceable unless set forth in a writing signed by the parties hereto.”
¶ 14 Valela signed the Fourth Amendment on December 23, 2014. With respect to Suite 700,
the parties proceeded to engage in the typical build-and-lease process whereby they mutually
agreed on a space plan, after which plaintiff solicited bids from contractors and defendant agreed
on the cost, scope, and timeline. Defendant paid the 50% deposit, plaintiff completed the buildout
and defendant moved into Suite 700.
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¶ 15 The buildout and leasing of Suite 800 never occurred, though, because prior to receiving
or agreeing on a space plan specific to Suite 800, defendant’s president, Mark Schiele, and its vice
president of sales, Murray Bannerman, began expressing interest in leasing Suite 810 in addition
to Suite 800 so that defendant would have possession of the entire eighth floor. Crotty responded
that plaintiff already had a tenant, Measurement Inc., in Suite 810 who would need to be relocated
to accommodate defendant’s request for the entire eighth floor. Measurement Inc. subsequently
was relocated to another floor of the Building.
¶ 16 Plaintiff’s designer, Kasia Niechcial, prepared a space plan for the eighth floor of the
Building based on defendant’s input and specifications, which was emailed to Bannerman on
January 11, 2016. On February 18, 2016, Bannerman initialed the eighth-floor space plan,
signaling defendant’s approval thereof. Plaintiff solicited construction bids for the project.
¶ 17 Approximately six months later, on August 1, 2016, Crotty sent Schiele an email stating
that the total costs of building out the entire eighth floor was $469,453. Crotty explained that “the
scope of work planned for the 8th floor is much greater and very different than the scope of the
7th floor project and the bids have come in significantly higher.” Crotty provided no breakdown
of the individual costs. Schiele testified that he was shocked at the price quoted in the August 1
email, as it was double the costs of what plaintiff had paid for the seventh-floor buildout, and that
he spoke with defendant’s owner, Brian Arnott, about those high costs. Schiele was impeached
with his deposition testimony in which he stated that the costs quoted to him in the August 1 email
were not a concern to him and that he did not speak of them with Arnott.
¶ 18 In the same August 1 email, Crotty attached a proposed Fifth Amendment to the lease
expressly providing for the buildout and lease of Suite 810 in addition to Suite 800 and increasing
the landlord allowance to $100,470 (meaning defendant was responsible for costs exceeding that
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amount). Crotty testified that the Fifth Amendment was necessary because “the Fourth
Amendment didn’t include [Suite] 810” and the oral agreement to build out and lease Suite 810
“is not going to be binding on the parties unless it’s put in writing.” However, neither Schiele nor
Bannerman signed the Fifth Amendment because they never agreed on the costs for the eighth-
floor buildout.
¶ 19 After receiving the August 1 cost appraisal, Schiele asked defendant’s new chief operating
officer, Jared Palmer, to take over the negotiations with plaintiff and Marc Realty for the buildout
of the eighth floor. Schiele testified that he told Palmer to “get it done” because defendant was
running out of room on the seventh floor and needed the extra space for its employees.
¶ 20 On August 10, Palmer sent an email to Crotty expressing concerns over the cost appraisal
for the eighth floor, as well as the six-month delay in providing the appraisal. Palmer met with
plaintiff’s design team during the second week of August 2016 and then sent Crotty an email on
August 22 asking for a breakdown on materials, labor and other costs and complaining again about
plaintiff’s delays in providing such information. Palmer also asked Crotty to increase plaintiff’s
landlord allowance to cover more of the costs of the buildout. Crotty responded that he would seek
a revised design plan of the eighth floor from its designer, Kasia, along with revised costs from
the contractors.
¶ 21 On August 25, Kasia sent the revised design plans to Richard Krueger, a project manager
and staff architect for Marc Realty, and asked him to reprice the job. On August 29, Palmer sent
Crotty another email stating that he was “still waiting for a breakdown on the costs from our first
meeting and the revised cost breakdown on these new plans” and that he also needed “to have the
costs broken down by labor, parts/materials, permits, etc., specifically the lighting costs, doors,
glass.” Palmer stated that he had “requested this information already” and was “doing so again
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now.” On September 1, Crotty received the revised costs from Krueger and sent them to Schiele.
Crotty informed Schiele that once defendant agreed to the costs and provided the 50% deposit,
construction on the eighth-floor buildout would commence.
¶ 22 Plaintiff did not receive defendant’s approval of the costs or its 50% deposit. Instead,
Schiele sent Crotty an email on September 8 asking for an “update” on the eighth floor and
complaining that time was wasting. Crotty sent Schiele an email the next day, September 9,
explaining again that he already had sent the revised costs and that construction would begin as
soon as he received the 50% deposit. Schiele testified that Crotty still was providing lump sum
numbers on the total cost of the buildout and that defendant was looking for further breakdowns
of individual costs.
¶ 23 On September 14, Crotty and Schiele met to try to figure out how to expedite the process.
The meeting did not result in defendant’s approval of the revised costs. Instead, Schiele proposed
further revisions to the eighth-floor space plan. Based on the proposed revisions to the space plan,
Crotty sought and received further revised costs from the contractors and relayed those costs to
Palmer. On October 7, Palmer sent Crotty an email stating that the costs still were too high, that
defendant’s owner and chief financial officer would not “sign off” on them, and that the only way
to move forward was for plaintiff to increase the landlord allowance. On October 21, Crotty sent
an email refusing to increase the landlord allowance allotted in the Fourth Amendment for the
buildout of Suite 800, but noting that the proposed Fifth Amendment increased the allowance for
the buildout of Suite 810. On October 25, Schiele sent Crotty an email stating that defendant still
was prepared to go forward with the buildout and lease of the eighth floor as soon as it received
the “amended costs.” Later that day, Crotty sent revised pricing on light fixtures for the eighth
floor. Schiele responded with an email stating that the costs of the eighth-floor buildout still were
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“significantly higher” than the costs of the seventh-floor buildout. On October 27, defendant’s
counsel sent a letter to Crotty stating that due to all the delays in the buildout, defendant no longer
wanted to occupy the eighth floor and that it “believes the expansion clause and the current lease
to be null and void.”
¶ 24 During closing arguments, plaintiff argued that the Fourth Amendment was a binding and
enforceable lease of Suite 800, which defendant breached when it refused to agree to the costs of
the buildout and failed to take possession thereof. Defendant argued in rebuttal that plaintiff failed
to perform certain conditions precedent to the leasing of Suite 800, specifically, it failed to provide
a space plan for just Suite 800 and failed to complete the buildout for Suite 800 prior to the move-
in date.
¶ 25 In its judgment order, the trial court agreed with plaintiff that the Fourth Amendment
contained all the essential terms of a lease for Suite 800 and was contractually binding and
enforceable. The court acknowledged defendant’s arguments that plaintiff failed to provide a space
plan for Suite 800 and failed to complete the buildout for Suite 800 by the February 1, 2016, move-
in date, which were conditions precedent to defendant’s performance. However, the court found
that the reason plaintiff failed to provide a space plan for Suite 800 and complete the buildout by
February 1, 2016, is because defendant inquired about leasing the entire eighth floor and, on its
own accord, provided specifications for a space plan for a buildout of the entire eighth floor, not
just Suite 800. When plaintiff solicited construction bids for the eighth-floor buildout, though,
defendant repeatedly objected to the costs and insisted that plaintiff increase the landlord
allowance. The court found that defendant acted in bad faith when it refused to give final approval
for the buildout because plaintiff would not increase the landlord allowance. Citing Catholic
Charities of the Archdiocese of Chicago v. Thorpe, 318 Ill. App. 3d 304, 310 (2000), which held
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that a party’s liability under a contract is not defeated when that party’s own conduct results in the
other party’s failure to perform a condition precedent, the court here ruled that it would not allow
defendant to take advantage of its bad-faith failure to approve of the buildout to defeat its liability
under the contract. The court found in favor of plaintiff and awarded it $593,893.06 in damages.
Defendant appeals.
¶ 26 Defendant argues that the trial court erred in ruling that the Fourth Amendment was a
binding lease requiring it to rent Suite 800. A lease is a contract between landlord and tenant, and
the rules of contract construction apply to the construction of leases. Steenes v. MAC Property
Management, LLC, 2014 IL App (1st) 120719, ¶ 18. The issue of whether the lease/contract exists,
its terms, and the parties’ intent are questions of fact. Arbogast v. Chicago Cubs Baseball Club,
LLC, 2021 IL App (1st) 210526, ¶ 19; Hedlund and Hanley, LLC v. Board of Trustees of
Community College District No. 508, 376 Ill. App. 3d 200, 205 (2007). On review of a bench trial,
we will not disturb the trial court’s factual findings unless they are against the manifest weight of
the evidence, meaning that the opposite conclusion is apparent or the findings of fact are
unreasonable, arbitrary, or not based on the evidence. Southwest Bank of St. Louis v. Poulokefalos,
401 Ill. App. 3d 884, 890 (2010).
¶ 27 In finding the Fourth Amendment to be a valid lease, the trial court cited in support
Chapman v. Brokaw, 225 Ill. App. 3d 662 (1992). Chapman held that four elements are required
for the creation of a valid lease: (1) a definite agreement describing the extent and bounds of the
leased property; (2) a definite and agreed length of time for which the property is rented; (3) a
definite agreement as to the amount of rent; and (4) the time and manner of payment. Id. at 665.
The trial court found that each of those elements are present in the Fourth Amendment.
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¶ 28 Defendant responds that Chapman is inapposite because it involved the lease of an existing
house for which no renovations were required, whereas here the Fourth Amendment was not a
purported lease of unaltered property but, rather, was a build-and-lease agreement requiring the
buildout of the office space in Suite 800 prior to the leasing thereof. The Fourth Amendment said
nothing about how the office space in Suite 800 would be configured or what it would look like
after completion of the buildout, or the types of improvements to be made; it left all of these details
subject to the parties’ further negotiations, stating only that the buildout must be “in substantial
conformity with a Space Plan to be mutually approved by Landlord and Tenant.” Defendant argues
that the buildout specifications missing from the Fourth Amendment are material and essential
terms, without which the Fourth Amendment cannot be enforced. See Academy Chicago
Publishers v. Cheever, 144 Ill. 2d 24, 29 (1991) (a valid contract is formed only when the offer is
so definite in its material terms or requires such definite terms in the acceptance that the promises
and performances to be rendered by each party are reasonably certain).
¶ 29 The following three cases are informative: Intaglio Service Corp. v. J.L. Williams & Co.,
95 Ill. App. 3d 708 (1981), Citadel Group Ltd. v. Washington Regional Medical Center, 692 F.3d
580 (7th Cir. 2012), and Abbell v. United States, 166 F. Supp. 602, 143 Ct. Cl. 556 (1958). In
Intaglio, 95 Ill. App. 3d at 709, 710-11, the parties entered into a build-and-lease agreement
whereby the defendant would design, build and lease to the plaintiff an office and brick
manufacturing building containing approximately 60,000 square feet. According to the agreement,
all work was to be done “in accordance with plans and specifications prepared by Thomas A.
Rambert, Architect, and approved and initialed by Lessor and Lessee.” Id. at 711. The plaintiff
subsequently took possession of the building but later brought suit claiming that the building did
not meet guarantees set forth in the specifications. Id. 713. The pertinent issue was whether the
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specifications were part of the contract. Id. We held that since the agreement referred to the plans
and specifications and required that the building be built in conformity with them, they were part
of the contract. Id. We further held:
“[I]t is doubtful whether there was an enforceable contract until the specifications were
drawn up. If a document parties agree to draft is to contain any material term that is not
already agreed upon, no contract is made until that term is agreed upon; in this case the
specifications constituted such a material term.” Id. at 713-14.
¶ 30 In Citadel Group, 692 F. 3d at 582, the parties entered into a build-and-lease agreement
whereby the plaintiff would develop, build and lease a medical office building to the defendant.
The plaintiff proceeded with pre-construction project development, which contemplated the
subsequent execution of ground and space leases. Id. at 582-83. However, the parties could not
agree on essential lease terms, most notably, rental rates, and the defendant informed the plaintiff
that it was terminating the agreement. Id. at 583-86. The plaintiff brought suit for breach of
contract. Id. at 586. The district court granted the defendant’s motion for summary judgment,
finding that the parties never entered into a binding contract to complete the lease-back
arrangement and instead still were negotiating key terms. Id. The appeals court affirmed, holding
that a preliminary writing that reflects a tentative agreement contingent on the successful
completion of ongoing negotiations does not amount to a binding contract. Id. at 587. The appeals
court further held:
“The [agreement] set the stage for further negotiations on lease terms necessary for
completion of the lease-back arrangement; the parties’ lack of agreement on those terms
constituted a failure of negotiation, not performance. The evidence in the record simply
does not support a finding that [the defendant] intended to be bound to complete the project
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with [the plaintiff] before the material terms of the leases had been hammered out and the
leases executed.” Id. at 588-89.
¶ 31 In Abbell, 166 F. Supp. at 603, the parties entered into a build-and-lease agreement
whereby the plaintiffs would complete repairs and alterations to a building and then lease it to the
defendant. The agreement provided that before the plaintiffs began remodeling the building, the
defendant would prepare preliminary floor plans and specifications and furnish it to the plaintiffs,
who would then employ an architect to prepare the final plans and specifications in accordance
with the defendant’s requirements. Id. The architect’s detailed plans and specifications would be
submitted to the defendant for review and final approval. Id. The architect’s plans ultimately
included three items not included in the defendant’s preliminary plans, namely, a truck bay and
fire alarm and sprinkler systems required by New York zoning ordinances. Id. at 604. The
defendant failed to approve the plans drawn by the architect, contending that the plaintiffs were
required under the agreement to pay for changes required by city ordinances. Id. at 604-05. The
plaintiffs brought suit alleging that the defendant’s failure to approve the architect’s plans or to
propose modifications that would lower the costs to its satisfaction constituted breach of contract.
Id. at 605. The court of claims ruled in favor of the defendant, stating:
“[H]ere the parties neither had arrived at a final agreement as to the alterations to be made
nor upon terms under which the law fixed responsibility upon defendant to prevent
damages to plaintiff [for] the failure of the parties to resolve the disagreement which arose.
*** For defendant to refuse to go forward when the situation as it developed left so much
unresolved by the negotiations was not so unreasonable as to constitute a breach of
agreement on its part.” Id.
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¶ 32 In the instant case, similar to Intaglio, Citadel Group, and Abbell, the parties’ Fourth
Amendment set forth a build-and-lease agreement for the office space in Suite 800, which
agreement was not complete in and of itself but set the stage for further negotiations. Specifically,
the Fourth Amendment provided that prior to the buildout, the parties must mutually agree on a
space plan for the configuration of the office space and improvements thereto pursuant to
defendant’s specifications. Intaglio, Citadel Group, and Abbell make clear that a writing reflecting
a tentative agreement contingent on the successful completion of ongoing negotiations as to
material terms does not constitute a binding contract; no contract is made until the material terms
are agreed upon. The configuration of Suite 800 and any improvements thereto are certainly
material terms to the agreement, given their significance to defendant’s expansion plans. See
Black’s Law Dictionary 991 (7th ed. 1999) (defining “material terms” as “Contractual provisions
dealing with significant issues such as subject matter, price, payment terms, quantity, quality,
duration, or the work to be done.”). In this case, then, there was no contract until the parties could
agree on the space plan for the configuration and improvements to Suite 800.
¶ 33 However, plaintiff never submitted a space plan solely for Suite 800, and the parties did
not agree on one. Instead, the parties orally agreed to build out and lease the entire eighth floor
instead of just Suite 800 and they subsequently prepared a space plan for the whole eighth floor,
incorporating buildouts of both Suite 800 and Suite 810. Crotty recognized, though, that the oral
agreement to build and lease the entire eighth floor effectively altered the Fourth Amendment,
which did not provide for the buildout and lease of Suite 810. Section 13(c) of the Fourth
Amendment states that no amendment or alteration thereto shall be enforceable unless set forth in
a writing signed by the parties. Accordingly, Crotty prepared a Fifth Amendment to the lease
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expressly providing for the buildout and lease of Suite 810 in addition to Suite 800. Defendant
never signed the Fifth Amendment.
¶ 34 As the Fifth Amendment never was signed by defendant, the Fourth Amendment is the
operative writing providing only for the buildout and lease of Suite 800, while leaving Suite 810
unaltered. As discussed, the Fourth Amendment stated that the buildout and lease of Suite 800 was
contingent on further negotiations and mutual agreement as to a space plan for the configuration
of the office space and any improvements. The parties never agreed on a space plan for the new
configuration of Suite 800 which would have left Suite 810 unaltered as required by the Fourth
Amendment, though, and thus no binding contract was made. Further, in the absence of such a
space plan, no contractor submitted bids for the buildout of Suite 800 and it was not made ready
for occupancy by the February 1, 2016, move-in date, thereby abating defendant’s rent obligation
pursuant to section 5 of the office lease, to which the Fourth Amendment was attached. Section 5
states, “In the event the Premises shall not be completed and ready for occupancy on the date fixed
for the commencement of the Term *** Rent shall abate in full until the Premises are ready for
occupancy.” The trial court’s findings to the contrary were against the manifest weight of the
evidence.
¶ 35 Plaintiff argues that we should adopt the trial court’s analysis and consider this case as one
in which defendant’s bad-faith conduct prevented plaintiff from performing a condition precedent
to the parties’ performance under the contract. Specifically, plaintiff argues that the contract
required it to provide a space plan for Suite 800 and complete the buildout by February 1, 2016,
which were conditions precedent to defendant’s performance. However, defendant subsequently
decided it wanted to lease the entire eighth floor and, on its own accord, provided specifications
for the buildout of both Suite 800 and Suite 810 and orally agreed to extend the move-in date to
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after June 2016. In accordance with defendant’s specifications, plaintiff removed the tenant in
Suite 810 and prepared the eighth-floor space plan, but defendant acted in bad faith by failing to
give final approval to the eighth-floor buildout because plaintiff refused to increase the landlord
allowance which previously had been agreed-upon. Plaintiff argues that the trial court correctly
ruled that defendant cannot claim that it is relieved of its obligations under the contract due to
plaintiff’s failure to perform certain conditions precedent, when it was defendant’s bad-faith
conduct which prevented plaintiff’s performance of those conditions.
¶ 36 Plaintiff’s argument that defendant’s bad-faith conduct prevented it from performing
conditions precedent under the contract is not persuasive because, as discussed, the Fourth
Amendment left certain material terms open for negotiation which were never agreed upon and
thus no contract was created in the first instance. Even addressing plaintiff’s claims of bad faith,
our result here would be the same. In finding that defendant acted in bad faith by failing to approve
the eighth-floor buildout, the trial court relied on two instances when its president, Schiele, was
impeached at trial. Schiele testified that the costs of the eighth-floor buildout provided by Crotty
on August 1, 2016, were concerning because they were twice the costs of the seventh-floor
buildout. However, Schiele was impeached with his prior deposition testimony, in which he stated
that the costs provided on August 1 were not a concern to him. Schiele also testified that he
discussed the costs provided on August 1 with defendant’s owner, Brian Arnott, but he again was
impeached with his deposition testimony that he did not discuss those costs with Arnott.
¶ 37 Based on these “clear impeachments on a significant issue in the case,” the trial court found
that “Schiele’s testimony lacks credibility.” The court then noted that following Schiele’s receipt
of the August 1 email, defendant demanded that plaintiff increase the landlord allowance so as to
cover more of the costs of the eighth-floor buildout. The court stated that defendant acted in bad
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faith by conditioning its approval of the buildout on an increase in the landlord allowance and that
defendant should not be allowed to take advantage of its bad-faith conduct to defeat its liability
under the contract.
¶ 38 The trial court’s finding that defendant acted in bad faith by refusing to approve the eighth-
floor buildout was against the manifest weight of the evidence. As discussed, the court premised
its finding of bad faith on Schiele’s lack of credibility when he testified that he was concerned
with the costs of the buildout. However, Schiele’s testimony was not the only evidence of
defendant’s cost concerns. Defendant’s chief operating officer, Palmer, expressed those same
concerns in a series of emails contained in the record, when he objected both to the costs provided
by Crotty as well as the delays in responding to his emails and stated that defendant’s owner and
chief financial officer also would not “sign off” on the buildout unless costs were reduced.
Palmer’s emails detail multiple meetings and negotiations between representatives of plaintiff and
defendant over the costs of the buildout and how to reduce them, to no avail. The trial court made
no finding that Palmer’s emails and stated concerns about costs and delays were incredible or that
the meetings and negotiations described therein were a sham. Palmer’s emails were consistent with
Schiele’s testimony and indicate that defendant’s requests to increase plaintiff’s landlord
allowance were in response to the higher-than-expected costs of the buildout and their inability to
come to an agreement to reduce those costs. On this record, we find no bad faith on the part of
defendant that would support a claim for breach of contract.
¶ 39 For all the foregoing reasons, we reverse the judgment in favor of plaintiff on its breach of
contract action. Pursuant to our authority under Illinois Supreme Court Rule 366(a)(5) (eff. Feb.
1, 1994), we enter judgment in favor of defendant. As a result of our disposition of this case, we
need not address the other arguments on appeal.
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¶ 40 Reversed; judgment entered.
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