Payless Shoesource, LLC, v. DiMucci Development Corporation of Cicero II

Filing 60

ENTER MEMORANDUM Opinion: Plaintiff's motion for partial summary judgment 48 is granted in the principal amount of $72,979.14, Signed by the Honorable Charles P. Kocoras on 11/18/2013. It is further ordered, the in Court ruling set for 12/12/2013 is stricken. Status hearing set for 12/12/2013 at 09:30 a.m. in Courtroom 2325. Mailed notice(yp, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

PAYLESS SHOESOURCE, INC.,
a Missouri corporation,
Plaintiff,
v.
DIMUCCI DEVELOPMENT
CORPORATION OF CICERO II,
Defendant.

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12 C 4159

MEMORANDUM OPINION
CHARLES P. KOCORAS, District Judge:
This matter comes before the Court on the motion of Plaintiff Payless
ShoeSource, Inc. (“Payless”) for partial summary judgment pursuant to Federal Rule
of Civil Procedure 56. For the following reasons, the motion is granted.
BACKGROUND
The following facts are derived from the parties’ respective statements and
exhibits filed pursuant to Northern District of Illinois Local Rule 56.1. The Court
reviews each Local Rule 56.1 statement and disregards any argument, conclusion, or
assertion unsupported by the evidence in the record. Payless, a Missouri corporation
with its principal place of business in Kansas, operates retail stores that sell shoes and
related accessories.

Defendant DiMucci Development Corporation of Cicero II

(“DiMucci”) is an Illinois corporation with its principal place of business in Illinois.
On October 27, 2003, Payless and DiMucci entered into a lease (the “Lease”) under
which Payless agreed to rent 4,000 square feet of space in the Cicero Marketplace
Shopping Center (the “Shopping Center”) in Cicero, Illinois.
In addition to the required rent payments, the Lease also calls for Payless to pay
a proportionate share of DiMucci’s expenses for: (i) common area maintenance
(“CAM”); (ii) real estate taxes (“Taxes”); and (iii) insurance (“Insurance”)
(collectively “Pass-Through Expenses”). Section 9.03 of the Lease (“Section 9.03”)
defines Payless’s obligation with respect to Taxes.

According to Section 9.03,

Payless will pay DiMucci monthly estimates of Taxes, and the two sides then will
reconcile any differences at the end of each year as specified in the lease (“Lease
Year”). Specifically, within ninety days of the end of each Lease Year, DiMucci is
required to submit an invoice containing the amount that Payless owes in Taxes, and
Payless must remit any unpaid Taxes within thirty days of receipt of the invoice. If
Payless has overpaid any Taxes, DiMucci must deduct this overpayment from future
charges for Taxes.
Payless is obligated to pay Taxes in a proportionate share, and this share is
determined pursuant to Section 7.02 of the Lease (“Section 7.02”). According to
Section 7.02, Payless’s proportionate share of Taxes consists of the space which it
leases (4,000 square feet) divided by the gross leasable floor area of the Shopping
Center (37,771 square feet) (approximately 10.59%). The proportionate share of
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Taxes is limited by a tax cap (the “Tax Cap”). According to the Tax Cap, the
proportionate share may not exceed the lesser of: (i) actual increases in the taxes; or
(ii) 105% of Payless’s proportionate share of Taxes for the preceding Lease Year.
The Tax Cap also limits Payless’s proportionate share to $20,000 during the first
Lease Year.
Payless has for several years disputed the proportionate share of Taxes charged
by DiMucci. When DiMucci threatened to commence eviction proceedings against
Payless for unpaid Taxes, Payless remitted under protest the amount that DiMucci
demanded. On May 30, 2012, Payless filed a two count first amended complaint
against DiMucci. Count I alleges breach of contract with respect to the Lease in that
DiMucci allegedly overcharged for Pass-Through Expenses.

Count II seeks a

declaratory judgment pursuant to 28 U.S.C. § 2201 pertaining to a provision of the
Lease that is unimportant for purposes of the instant motion. On June 19, 2013,
Payless filed a motion for partial summary judgment pursuant to Federal Rule of Civil
Procedure 56 regarding the breach of contract claim.

Payless does not seek

adjudication of issues regarding CAM or Insurance charges; rather, the instant motion
pertains solely to the Taxes. Payless seeks: (i) damages in the principal amount of
$72,979.14; (ii) prejudgment interest; (iii) costs; (iv) expenses; and (v) attorneys’ fees.
LEGAL STANDARD
Summary judgment is appropriate when the pleadings, discovery, disclosures,
and affidavits establish that there is no genuine issue of material fact, such that the
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movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The movant
bears the initial burden of showing that no genuine issue of material fact exists.
Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The burden then shifts to the nonmoving party to show through specific evidence that a triable issue of fact remains on
issues on which the movant bears the burden of proof at trial. Id. at 325. The nonmovant may not rest upon mere allegations in the pleadings or upon conclusory
statements in affidavits; it must go beyond the pleadings and support its contentions
with documentary evidence. Id. A genuine issue of material fact exists when, based
on the evidence, a reasonable jury could find in favor of the non-movant. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In considering a motion for summary
judgment, a court construes all facts and draws all reasonable inferences in favor of
the non-movant. United States v. King-Vassel, 728 F.3d 707, 711 (7th Cir. 2013).
DISCUSSION
Payless contends that DiMucci has breached the Lease according to its plain
language because DiMucci has charged Payless for Taxes in an amount that exceeds
that which is permitted by the Tax Cap. DiMucci does not dispute that the Lease is a
binding contract or that the Court can interpret the Lease as a matter of law. DiMucci
does, however, aver that it has not overcharged Payless but rather that it has
undercharged Payless in the amount of $9,901.87 since 2004, the first year that
Payless rented from DiMucci and incurred obligations with respect to payment of
Taxes.
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Payless calculated its alleged damages based upon the assumption that the
invoices submitted by DiMucci regarding the specific amount of Payless’s
proportionate share of the Taxes were correct. DiMucci now claims that it mistakenly
billed Payless for less in Taxes than Payless owed. The error arose, according to
DiMucci, because another tenant, OfficeMax, who leased a different part of the
Shopping Center paid 100% of the Taxes on its portion instead of a proportionate
share like Payless had agreed to pay. Thus, DiMucci claims that it erroneously
deducted the amount of Taxes paid by OfficeMax from the invoices that it sent to
Payless, and Payless was able to avoid paying the extra Taxes that Section 7.02
requires it to pay. This is because, according to DiMucci, Section 7.02 mandates that
Payless pay Taxes in a proportionate share, which is determined by the amount of
space that Payless leases divided by the gross amount of floor space in the Shopping
Center. It is immaterial, DiMucci posits, that OfficeMax agreed to pay its Taxes for
all of the floor space that it leased, as OfficeMax’s agreement did not alter the plain
language of the Lease regarding the manner of calculating the Taxes owed by Payless.
Furthermore, DiMucci asserts, no provision of the Lease prohibits it from seeking
Taxes that Payless owes, unlike a one-year limitation with respect to CAM charges
contained in the Lease.
Having carefully read the Lease, the Court must reject DiMucci’s arguments.
Section 9.03 requires that Payless reimburse DiMucci in a proportionate share for all
Taxes “paid by landlord.”

In its response to Payless’s interrogatories, DiMucci
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indicated that OfficeMax had paid the Taxes for its share of the Shopping Center and
not that DiMucci had paid the Taxes. In its response to the instant motion, DiMucci
has submitted the declaration of Lynn Kennedy (“Kennedy”), stating that DiMucci
paid the Taxes. The Court is unable to discern why there is a contradiction between
the declaration and the sworn answers to Payless’s interrogatories. The Court thus
accepts for the purposes of the instant motion DiMucci’s answers to Payless’s
interrogatories indicating that OfficeMax paid the Taxes. See Broaddus v. Shields,
665 F.3d 846, 855-56 (7th Cir. 2012) (later declaration cannot contradict prior sworn
deposition testimony without sufficient explanation). According to the plain language
of the Lease, therefore, the Taxes with respect to OfficeMax do not entitle DiMucci to
reimbursement because they were not “paid by [DiMucci].”
Even if the Court were to accept Kennedy’s declaration and DiMucci had
adopted its current position (that Payless must reimburse DiMucci for the Taxes that
OfficeMax ultimately paid) in the beginning of the instant litigation, the interpretation
of the Lease that DiMucci now propounds is an absurd one. “A contract should be
construed to avoid absurd results.” Bd. of Educ. v. Orbach, 991 N.E.2d 851, 857 (Ill.
App. Ct. 2013) (citation omitted). Were the Court to construe the Lease as DiMucci
suggests, DiMucci would receive reimbursement from Payless for Taxes for which
OfficeMax had already reimbursed DiMucci. It is unfathomable that a reasonable
party would enter into an agreement under which it would be required to reimburse

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another for costs for which the other party had already been reimbursed. The Court
must, therefore, reject DiMucci’s interpretation of the Lease.
DiMucci has not disputed Payless’s calculation of damages beyond the
arguments that the Court has already addressed.

DiMucci also offers no other

justification for its having charged in excess of the Tax Cap. As such, the Court
grants summary judgment to Payless with respect to its breach of contract claim in the
principal amount of $72,979.14.
CONCLUSION
For the foregoing reasons, Payless’s motion for partial summary judgment is
granted in the principal amount of $72,979.14.

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Charles P. Kocoras
United States District Judge
November 18, 2013
Dated: ______________________

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