Illinois Appellate Court Returns Contract Case to Trial Court Finding Ambiguous Language

The Illinois Appellate Court has reversed and remanded a decision by a circuit court judge regarding a contract.  Global Care S.C. was a medical services corporation that leased several office suites from K&K Holdings. The term of the leases was seven years.  The lease was to end on July 31, 2011.  The original leases were signed on July 30, 2004.

On Oct. 13, 2006, a rider was attached to the original lease, which terminated one of Global Care’s rental suites and added a new one. 

The rider removed Global Care’s ability to terminate the lease early, requiring six months’ notice and payment.  The payment schedule attached to the rider provided for rental payments through Oct. 31, 2013.  There was nothing in the addendum to the rider that extended the lease though October 2013. 

On May 11, 2010, Global Care claimed that it had entered into an oral agreement with K&K wherein Global Care would vacate the premises on Aug. 1, 2010 and pay rent through Oct. 31, 2010. K&K denied that any oral agreement took place.

Global Care contacted a representative of K&K to confirm the agreement, but the response was that in accordance with the rider, Global Care was not able to terminate its lease early and that the lease had been extended by the rider through October 2013.

Global Care sued K&K for declaratory judgment that the lease terminated on July 31, 2011 and that the addendum was void. The second count of the complaint was pleaded in the alternative claiming that K&K violated an oral agreement to allow Global Care to leave early and pay rent through October 2010. 

K&K argued that the contract did not allow Global Care to terminate the lease without prior written consent of K&K’s lender.  The trial court agreed and granted K&K’s motion to dismiss Count II, but not the first count as to declaratory judgment action.

Global Care then added another count, Count III, which asked the court to declare that Global Care retain the right to terminate the lease and to declare the addendum unenforceable as being null and void.

Global Care maintained that by removing its right to terminate the lease, the rider had essentially violated the lease which forbade modifications or amendments that “adversely affect . . . to any material extent the rights of the landlord or tenant.”  Global Care argued that K&K failed to get prior written consent from its lender for the rider, which would render it invalid and would make the disputed oral agreement invalid as well.  K&K contended that the rider did not adversely affect Global Care’s rights to any material extent and was therefore, enforceable and did not require the consent of K&K’s lender.

In June 2011, the trial judge found in favor of Global Care on Count III. K&K moved to reconsider, but that motion was denied. K&K then moved to dismiss Count I, the declaratory judgment action, since the court rendered it moot by deeming the rider unenforceable in Count III. This motion was granted as well. K&K appealed.

The appellate court agreed with K&K that genuine issues of material fact existed as to what degree Global Care was adversely affected by the provisions of the rider. The court noted that the word “material” required an examination of the significance of the removal of the early termination right.

Global Care may have been adversely affected, but the issue remained as one of fact as to whether the degree was “material.” The appellate court’s opinion was that it was wrong to make its decision when that fact had to be determined. The trial judge had dismissed the case just on the pleadings, pursuant to 2-615 (e) of the Illinois Code of Civil Procedure. Accordingly, the appellate court reversed and remanded the case back to the trial court for further disposition.

Global Care, S.C. v. K&K Holdings, LLC, No. 2013 IL App. (1st) 120691-U.

Kreisman Law Offices has been handling contract cases, business disputes and commercial litigation for businesses, individuals and families for more than 37 years in and around Chicago, Cook County and its surrounding areas, including Chicago (Andersonville, Edgewater, Chinatown, Irving Park, Marquette Park, Roscoe Village), Libertyville, Island Lake, Fox River Grove, Rolling Meadows, Hawthorne Woods, Roselle, Streamwood, Hoffman Estates, Oak Forest, Country Club Hills and Glen Ellyn, Ill.

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