FIRST DISTRICT SIXTH DIVISION DECEMBER 17, 2010
No. 1-10-1002 ) THE VILLAGE OF PALATINE, a Municipal Corporation, ) ) Plaintiff, ) ) v. ) ) Appeal from the PALATINE ASSOCIATES, LLC, SEARS ROEBUCK ) Circuit Court of AND COMPANY, and PROJECT BAY EXCHANGE, ) Cook County. ) Defendants. ) No. 06 L 51257 ) (One Hour Cleaners, ) Honorable Defendant-Appellant, ) Alexander P. White, ) Judge Presiding. v. ) ) Palatine Associates, LLC, ) Defendant-Appellee.) ) )
JUSTICE ROBERT E. GORDON delivered the judgment of the court, with opinion. Presiding Justice Garcia and Justice McBride concurred in the judgment and opinion.
OPINION
This appeal arises from a condemnation proceeding brought by the Village of Palatine (the
Village), seeking to acquire property in Palatine, Illinois, that was being used for a shopping
center. The Village paid over $6 million to defendant Palatine Associates, LLC (Palatine
Associates), the owner of the property, in just compensation, from which any claims of the tenants
was to be apportioned. Appellant One Hour Cleaners filed a petition seeking compensation for its
trade fixtures, which was denied by the trial court on Palatine Associates’ motion to dismiss the No. 1-10-1002
petition1, based on a finding that One Hour did not have an interest in the condemnation award.
One Hour Cleaners appeals, arguing that it had an interest in the condemnation award. We
affirm.
BACKGROUND
Palatine Associates was the owner of the property at issue in this case (subject property),
which contains a shopping center with a number of tenants, including Sears and One Hour
Cleaners. One Hour Cleaners was a tenant on the subject property pursuant to a lease assignment
entered into on December 20, 1982. In the assignment, One Hour Cleaners agreed to “assume
and perform all duties and obligations required by the terms of the lease” of the former lessee and
acknowledged and agreed it was “liable for all the terms, covenants and conditions of the said
lease and underst[ood] specifically the provisions of Article X.”
Section 8.1 of the lease contained affirmative covenants made by the tenant:
“Section 8.1 Affirmative Covenants. Tenant covenants at
its expense at all times during the Lease Term and such further time
as Tenant occupies the Leased Premises or any part thereof,
***
M. To remove, at the termination of this Lease, provided
Tenant is not in default, such of Tenant’s moveable trade fixtures,
and other personal property, as are not permanently affixed to the
1 Palatine Associates did not state the statutory basis for its motion to dismiss, but the
parties and the trial court treated the motion as a motion for summary judgment.
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Leased Premises; to remove such of the alterations and additions
and signs made by Tenant as Landlord may request; to repair any
damage caused by such removal; and peaceably to yield up the
Leased Premises and all alterations and additions thereto (except
such as Landlord has requested Tenant to remove) and all fixtures,
furnishings, floor coverings and equipment which are permanently
affixed to the Leased Premises, including carpet, which, for the
purpose of this Lease shall be deemed to be permanently affixed to
the Leased Premises, which shall thereupon become the property of
the Landlord, in clean and good order, repair and condition,
damage by fire or other unavoidable casualty excepted. Any
personal property of Tenant not removed within five (5) days
following such termination shall, at Landlord’s option, become the
property of the Landlord.”
Article IX of the lease contained a section concerning the effect of a taking of the subject
property by eminent domain:
“Section 9.2 Eminent Domain. If the whole of the Leased
Premises shall be taken by any public authority under the power of
eminent domain, the Lease Term shall cease as of the day
possession shall be taken by such public authority, and Tenant shall
pay rent up to that date with an appropriate refund by Landlord of
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such rent as may have been paid in advance for any period
subsequent to the date possession is taken. *** All compensation
awarded for any taking under the power of eminent domain,
whether for the whole or a part of the Leased Premises, shall be the
property of Landlord, whether such damages shall be awarded as
compensation for diminution in the value of the leasehold or to the
fee of the Leased Premises or otherwise and Tenant hereby assigns
to Landlord all of the Tenant’s rights, title and interest in and to any
and all such compensation; provided, however, that Landlord shall
not be entitled to any award specifically made to Tenant for the
taking of Tenant’s trade fixtures, furniture or leasehold
improvements to the extent of the cost to tenant of said
improvements (exclusive of Landlord’s contribution), less
depreciation computed from the date of said improvements to the
expiration of the original term of this Lease.”
Article X contained a provision concerning the tenant’s continued occupation after
termination of the lease:
“Section 10.10 Holdover by Tenant. In the event Tenant
remains in possession of the Leased Premises after the expiration of
the tenancy created hereunder, and without the execution of a new
lease, Tenant, at the option of Landlord, shall be deemed to be
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occupying the Leased Premises as a tenant from month to month, at
twice the Fixed Minimum Rent and percentage rent, subject to all
the other conditions, provisions and obligations of this Lease in so
far as the same are applicable to a month-to-month tenancy.”
There was also a provision in the lease stating that “[a]ny notice or demand from Landlord to
Tenant or from Tenant to Landlord shall be mailed by registered or certified mail.”
The lease was amended several times to extend the date of the termination of the lease and
to adjust the amount of the rent. After the last amendment, the termination date of the lease was
January 31, 2004, and the rent was $11,250 annually, or $937.50 per month. One Hour Cleaners
remained on the subject property and paid rent of $937.50 through April 2009; its payments for
March 2009 and April 2009 were for less than the balance due. After April 2009, One Hour
Cleaners stopped making payments to Palatine Associates; it is not clear from the record whether
One Hour Cleaners remained on the subject property.
On December 22, 2006, the Village filed a complaint to condemn the subject property so
that it could build a police station, among other municipal uses. In its complaint, the Village
sought “to acquire fee simple title in and to the real property, together with all improvements and
appurtenances attached to and part of said real estate” described in the legal description. In its
prayer for relief, the Village asked “[t]hat plaintiff, by this proceeding, acquire the ownership of
the said property in fee simple, free from all liens and claims whatsoever.” One Hour Cleaners
was named as a party defendant to the complaint and was served with process, and there is no
claim that it did not receive all required notices.
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On June 9, 2009, the trial court entered two agreed final judgment orders concerning the
Village’s condemnation action; however, One Hour Cleaners did not agree to the orders. One
provided just compensation to Sears for its leasehold in the amount of $3.25 million. The other
provided just compensation for “the fee simple title to real property described in [the Village’s]
complaint to condemn ***, subject only to the lease of Sears and excluding any interest of Sears”
for $6.15 million. The Village deposited the funds with the Cook County treasurer, and on July 9,
2009, the court allowed Palatine Associates to withdraw the bulk of the award of $6.15 million,
ordering $2 million to be retained by the Cook County treasurer pending certain tenants’ interest
in the award. On the same day, the court entered an order vesting title to the subject property in
the Village, subject to the lease of Sears and excluding any interest of Sears. The order also
authorized the Village to take immediate possession of the subject property other than that
portion occupied by Sears. Also on July 9, the trial court gave leave for One Hour Cleaners to
file its appearance instanter and to file its petition for apportionment by August 11, 2009.
On July 27, 2009, One Hour Cleaners filed its appearance and a motion to have a judicial
determination of its portion of just compensation, claiming to have a compensable interest in the
award to Palatine Associates because it had improved the property with “substantial cleaning
fixtures” that contributed to the value of the property. Palatine Associates moved to bar One
Hour Cleaners’ claim, and on September 9, 2009, One Hour Cleaners then filed an amended
petition for just compensation, claiming that it had a compensable interest in the award. It
included a statement that it “ha[d] been a tenant at the subject property since 1982 under a written
lease, said lease being renewed on numerous occasions the last being in 1998, expiring in 2003.
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The leasehold became a month to month tenancy.” One Hour Cleaners also attached an appraisal
of its trade fixtures to the amended petition, which suggested a fair market value of $76,850 for
the trade fixtures.
On October 8, 2009, Palatine Associates filed a motion to dismiss One Hour Cleaners’
claim for apportionment. In its motion, Palatine Associates made a number of arguments that
One Hour Cleaners was not entitled to compensation based on the provisions of the lease. In its
response, One Hour Cleaners stated that the motion to dismiss was “paramount to a petition for
summary judgment,” and argued that there were issues of fact to be determined. During oral
argument, Palatine Associates agreed that their motion was in the nature of a motion for summary
judgment, but argued that there were no questions of fact. The trial court issued its memorandum
decision and order on January 28, 2010, finding that One Hour Cleaners did not have any interest
in the final award, and denied its petition for compensation.
On February 5, 2010, One Hour Cleaners filed a motion to reconsider, which was denied
by the trial court on March 18, 2010. On April 7, 2010, the trial court entered a finding that there
was no just reason for delaying an appeal from its March 18, 2010, order.2 One Hour Cleaners
then filed the instant appeal.
ANALYSIS
On appeal, One Hour Cleaners argues that the trial court erred in finding in favor of
2 The trial court’s order included language from Supreme Court Rule 304(a) (134 Ill. 2d
R. 304(a)) indicating that there was no just reason for delaying an appeal, but did not include a
statement that the March 18, 2010, order was a final and appealable order.
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Palatine Associates, because it found as a matter of law that the lease was terminated and that
One Hour Cleaners did not have an interest in the condemnation award.3 We affirm.
The standard of review from the granting of summary judgment is de novo. Weather-Tite,
Inc. v. University of St. Francis, 233 Ill. 2d 385, 389 (2009) (“We review appeals from summary
judgment rulings de novo”). The Code of Civil Procedure (Code) permits a trial court to grant
summary judgment only “if the pleadings, depositions, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” 735 ILCS 5/2-1005(c) (West 2008).
“Summary judgment is a drastic measure and should only be granted if the movant’s right
to judgment is clear and free from doubt.” Outboard Marine Corp. v. Liberty Mutual Insurance
Co., 154 Ill. 2d 90, 102 (1992). However, “[m]ere speculation, conjecture, or guess is insufficient
to withstand summary judgment.” Sorce v. Naperville Jeep Eagle, Inc., 309 Ill. App. 3d 313, 328
(1999). A defendant moving for summary judgment bears the initial burden of proof. Nedzvekas
v. Fung, 374 Ill. App. 3d 618, 624 (2007). The defendant may meet his burden of proof either by
affirmatively showing that some element of the case must be resolved in his favor, or by
establishing “ ‘that there is an absence of evidence to support the nonmoving party’s case.’ ” Id.,
quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
“ ‘The purpose of summary judgment is not to try an issue of fact but *** to determine
whether a triable issue of fact exists.’ ” Schrager v. North Community Bank, 328 Ill. App. 3d
3 The trial court did not explain its holding, finding simply that “the Tenant does not have
an interest in the final award.”
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696, 708 (2002) (quoting Luu v. Kim, 323 Ill. App. 3d 946, 952 (2001)). “ ‘To withstand a
summary judgment motion, the nonmoving party need not prove his case at this preliminary stage
but must present some factual basis that would support his claim.’ ” Schrager, 328 Ill. App. 3d at
708 (quoting Luu, 323 Ill. App. 3d at 952). We may affirm on any basis appearing in the record,
whether or not the trial court relied on that basis or its reasoning was correct. Ray Dancer, Inc.
v. DMC Corp., 230 Ill. App. 3d 40, 50 (1992).
In addition, this case concerns the trial court's interpretation of a contract as a matter of
law. A contract construed as a matter of law by the trial court may be construed independently by
a reviewing court, unrestrained by the trial court's judgment. Fleet Business Credit, LLC v.
Enterasys Networks, Inc., 352 Ill. App. 3d 456, 469 (2004) (citing Lewis X. Cohen Insurance
Trust v. Stern, 297 Ill. App. 3d 220, 232 (1998)); Zale Construction Co. v. Hoffman, 145 Ill.
App. 3d 235, 240 (1986). Accordingly, our review from a trial court's interpretation of a contract
as a matter of law is de novo. Avery v. State Farm Mutual Automobile Insurance Co., 216 Ill. 2d
100, 129 (2005).
In the case at bar, One Hour Cleaners claims to have a compensable interest in certain
machinery and dry cleaning equipment because they are trade fixtures. A trade fixture is personal
property of the tenant that is affixed to the realty for purposes of carrying on the tenant’s
business. Southwest Bank of St. Louis v. Poulokefalos, 401 Ill. App. 3d 884, 889 (2010) (citing
Nokomis Quarry Co. v. Dietl, 333 Ill. App. 3d 480, 484 (2002)); see also Sword v. Low, 122 Ill.
487, 499-500 (1887). There is a rebuttable presumption that items installed by a tenant for the
purpose of carrying on a trade are trade fixtures. Griffiths v. Office of the State Fire Marshal,
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301 Ill. App. 3d 658, 661 (1998); Sword, 122 Ill. at 499-500. Courts also apply a three-part test
to determine whether a fixture is a trade fixture that considers “(1) the means by which the item
has been annexed to the real estate; (2) whether it is adapted to and necessary for the purpose to
which the premises is devoted; and (3) the intent of the parties.” Griffiths, 301 Ill. App. 3d at
661 (citing B. Kreisman & Co. v. First Arlington National Bank, 91 Ill. App. 3d 847, 852
(1980)). A trade fixture is the tenant’s property and may be removed by the tenant so long as the
removal does not damage the realty. Southwest Bank, 401 Ill. App. 3d at 889; see also Schreiber
v. Chicago & Evanston R.R. Co., 115 Ill. 340, 345-46 (1885). Thus, unlike a fixture, which
becomes part of the realty belonging to the landlord, a trade fixture remains the property of the
tenant and compensation for a trade fixture taken by eminent domain is owed to the tenant.
Empire Building Corp. v. Orput & Associates, Inc., 32 Ill. App. 3d 839, 841 (1975).
In the case at bar, One Hour Cleaners’ equipment and machinery are considered trade
fixtures. While One Hour Cleaners attempts to frame the status of the items as a question of fact,
Palatine Associates accepts their characterization as trade fixtures, as do we. Thus, as a general
matter, if the Village took One Hour Cleaners’ trade fixtures by eminent domain, One Hour
Cleaners would be entitled to a portion of the compensation award.
However, the terms of the lease between One Hour Cleaners and Palatine Associates
prevent One Hour Cleaners from being compensated for its trade fixtures. As an initial matter,
even though the lease expired in 2004, the terms of the lease still governed the dealings between
One Hour Cleaners and Palatine Associates. One Hour Cleaners continued to occupy the subject
property and pay rent through April 2009; after April 2009, One Hour Cleaners ceased paying
10 No. 1-10-1002
rent. Under the holdover provision in the lease, the lessee became a month-to-month tenant when
One Hour Cleaners continued to possess the subject property; One Hour Cleaners argues that it
was a holdover tenant and not a month-to-month tenant. We need not resolve this dispute since
under either kind of tenancy, the terms of the written lease continue to govern the conduct of the
parties. Roth v. Dillavou, 359 Ill. App. 3d 1023, 1027 (2005).
The lease’s condemnation clause, found in section 9.2 of the lease, provides:
“All compensation awarded for any taking under the power of
eminent domain, whether for the whole or a part of the Leased
Premises, shall be the property of Landlord, whether such damages
shall be awarded as compensation for diminution in the value of the
leasehold or to the fee of the Leased Premises or otherwise and
Tenant hereby assigns to Landlord all of the Tenant’s rights, title
and interest in and to any and all such compensation; provided,
however, that Landlord shall not be entitled to any award
specifically made to Tenant for the taking of Tenant’s trade
fixtures, furniture or leasehold improvements to the extent of the
cost to tenant of said improvements (exclusive of Landlord’s
contribution), less depreciation computed from the date of said
improvements to the expiration of the original term of this Lease.”
Thus, under the terms of the lease, One Hour Cleaners assigned all of its rights to compensation
to Palatine Associates except for “any award specifically made” to One Hour Cleaners for its
11 No. 1-10-1002
trade fixtures.
Parties can include a clause in a contract governing their rights to compensation in the
event of a condemnation proceeding. See, e.g., Corrigan v. City of Chicago, 144 Ill. 537, 549-
550 (1893); United States v. Petty Motor Co., 327 U.S. 372, 376 (1946); United States v. 1.357
Acres of Land, 308 F.2d 200, 203-04 (7th Cir. 1962); Select Lake City Theatre Operating Co. v.
Central National Bank in Chicago, 277 F.2d 814, 817 (7th Cir. 1960). One Hour Cleaners and
Palatine Associates included such a clause, agreeing that One Hour Cleaners was not entitled to
any compensation arising from its leasehold interest unless there was a specific award made for its
trade fixtures. There was no such specific award made. The condemnation award consists of
$6.15 million for “the fee simple title to real property described in [the Village’s] complaint to
condemn ***, subject only to the lease of Sears and excluding any interest of Sears.” There is no
reference to One Hour Cleaners or to trade fixtures. Thus, One Hour Cleaners is not entitled to
any portion of the compensation award.
One Hour Cleaners argues that there is no requirement that “all claims for apportionment
must be contained within the initial condemnation award as a matter of law.” One Hour Cleaners
misinterprets Palatine Associates’ argument. Palatine Associates is not arguing that as a matter of
law, all claims for apportionment must be included in the condemnation award. Instead, it argues,
and we agree, that given the language of the lease, in order for One Hour Cleaners to be entitled
to receive compensation, there must have been a specific award for its trade fixtures. Therefore,
upon our de novo review, One Hour Cleaners has no interest in the compensation award.
Additionally, as another basis, we also find that One Hour Cleaners was prevented from
12 No. 1-10-1002
claiming any portion of the compensation award because the lease terminated at the time the
Village took possession of the Subject Property. Under the lease, One Hour Cleaners’ trade
fixtures were divided into “moveable” and permanent trade fixtures. Under section 8.1(M) of the
lease, One Hour Cleaners was entitled to remove its moveable trade fixtures at the termination of
the lease, while its permanent trade fixtures became the property of Palatine Associates. We must
consider the status of each of these subcategories to determine whether One Hour Cleaners had
any interest in the compensation award.
Under the lease, One Hour Cleaners’ moveable trade fixtures included all trade fixtures
not permanently affixed to the property. As trade fixtures, the moveable trade fixtures remained
One Hour Cleaners’ property, and One Hour Cleaners could remove them. See Southwest Bank,
401 Ill. App. 3d at 889. In fact, under the lease, One Hour Cleaners was required to remove the
moveable trade fixtures at the termination of the lease; if One Hour Cleaners did not remove them
within five days, they could become Palatine Associates’ property at Palatine Associates’ option.
However, there is no indication that One Hour Cleaners actually removed its moveable trade
fixtures.
Despite One Hour Cleaners’ interest in its moveable trade fixtures, it was not entitled to
any compensation for them because they were not taken. One Hour Cleaners argues that there is
no requirement that the Village needed to specifically seek trade fixtures in its condemnation
complaint for them to be included in the condemnation award. However, the complaint is
required to contain a description of the property sought. 735 ILCS 30/10-5-10 (West 2008).
In the case at bar, the Village took a fee simple title in the real property described in the
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complaint but did not indicate that it was seeking any personal property, which would include the
moveable trade fixtures. “As a matter of common law, a taking of real estate or a leasehold does
not affect the ownership of personal property on, but not affixed to, the premises.” National R.R.
Passenger Corp. v. Faber Enterprises, Inc., 931 F.2d 438, 442 (7th Cir. 1991). Thus, we cannot
find that One Hour Cleaners should have been compensated for property that the Village did not
take and that One Hour Cleaners had the right to remove under the lease.
The other category of trade fixtures defined by the lease was the category of permanent
trade fixtures, which included trade fixtures permanently affixed to the property. Under the lease,
once the lease was terminated, permanent trade fixtures became the property of Palatine
Associates. Thus, if the lease was terminated, then One Hour Cleaners would not have had an
interest in any compensation award because it assigned its interest in its permanent trade fixtures
to Palatine Associates.
We find that the lease was terminated. Under the lease’s condemnation clause, “[i]f the
whole of the Leased Premises shall be taken by any public authority under the power of eminent
domain, the Lease Term shall cease as of the day possession shall be taken by such public
authority.” The Village deposited the condemnation award with the Cook County Treasurer on
July 7, 2009, and an order vesting title in the Village was entered on July 9, 2009, which allowed
the Village to take immediate possession of the Subject Property, except for the portion occupied
by Sears. Thus, the lease terminated on July 9, 2009.
One Hour Cleaners argues that the lease was not terminated on July 9, 2009, but was
terminated on November 4, 2009. On November 4, 2009, the Village filed an emergency motion
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for immediate possession because All American Title Agency, another one of Palatine Associates’
tenants, refused to vacate the subject property. We do not find that the lease terminated on
November 4, 2009, rather than on July 9, 2009. As of July 9, 2009, the Village had a right to
take immediate possession of the subject property; the fact that some tenants refused to allow the
Village to possess the property does not extend the term of the lease.
Additionally, One Hour Cleaners’ argument that it retained all of its rights under the lease
because it was granted leave to file a petition for apportionment prior to the entry of the July 9,
2009, order vesting title is unpersuasive. The terms of the lease governed the rights of the parties
to compensation, and the lease provided that it would terminate when the Village took the subject
property by eminent domain. Thus, the lease terminated on July 9, 2009, and Palatine Associates
had ownership of the permanent trade fixtures. “A lease provision granting ownership rights in
fixtures to the landlord*** prevents the tenant from recovering the value of any improvements.”
Faber, 931 F.2d at 441 (citing Select Lake, 277 F.2d at 817); see also Corrigan, 144 Ill. at 549-
50.. Therefore, the termination provision also prevented One Hour Cleaners from any interest in
the compensation award.4
Finally, One Hour Cleaners argues that the termination provision and the condemnation
clause create an ambiguity as to the ownership of property at the time of termination of the lease.
We do not find that argument persuasive. The termination provision provided that at the time of
4 Palatine Associates also raises issues with One Hour Cleaners’ method of valuation,
specifically with the appraisal submitted. However, since we have found that One Hour Cleaners
has no interest in the award, there is no need to consider this issue.
15 No. 1-10-1002
termination, One Hour Cleaners had ownership of its moveable trade fixtures, while Palatine
Associates had ownership of the permanent trade fixtures. The condemnation clause allowed One
Hour Cleaners to recover for an award specifically made for its trade fixtures. Thus, since One
Hour Cleaners only had an interest in its moveable trade fixtures, it would be entitled to an award
specifically made for the moveable trade fixtures. Since there was none, they are not entitled to
anything.
CONCLUSION
We find that One Hour Cleaners had no interest in the compensation award because (1)
there was no specific award made for its trade fixtures and (2) the moveable trade fixtures were
not taken and the termination clause gave ownership of the permanent trade fixtures to Palatine
Associates.
Affirmed.