One Way Apostolic Church v. Extra Space Storage Inc.

Filing 31

MEMORANDUM Opinion and Order - Signed by the Honorable Maria Valdez on 7/8/2016. [For further details see order] Mailed notice (np, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

ONE WAY APOSTOLIC CHURCH,
Plaintiff,
v.
EXTRA SPACE STORAGE, INC.;
and JOHN DOE,
Defendants.

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No. 16 C 1132
Magistrate Judge
Maria Valdez

MEMORANDUM OPINION AND ORDER
Plaintiff’s First Amended Complaint, premised on diversity jurisdiction,
alleges breach of contract against Defendant Extra Space Storage, Inc. (“Extra
Space”), and conversion against both defendants in relation to items Plaintiff had
stored in a unit at Extra Space that were later foreclosed on and sold by Extra
Space to John Doe. The matter is now before the Court on Defendant’s Motion to
Dismiss Plaintiff’s Amended Complaint Pursuant to Federal Rule of Civil Procedure
(“Rule”) 12(b)(6) [Doc. No. 21]. The parties have consented to the jurisdiction of the
United States Magistrate Judge pursuant to 28 U.S.C. ' 636(c). For the reasons
that follow, Defendant’s motion is denied.

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BACKGROUND
Plaintiff is a church that executed two separate contracts with Extra Space
to store Plaintiff’s furniture, ornaments, and equipment. (Am. Compl., Ex. A.)1 The
first contract was dated November 8, 2013 for a 45 by 20 foot unit at a monthly
rental rate of $771.00. The second contract was dated November 13, 2013 for a 10
by 30 foot unit at a monthly rental rate of $291.00. 2 Rent was due on the first day of
the month, in advance, and without demand. Each contract also included a late fee
of 20% of the monthly rent or $20, whichever was greater; a lien fee of $125; and a
lien foreclosure fee of $50; plus additional fees for a lock cut, returned check, and
cleaning. The contracts provided that the late fee, payable on demand, would be
applied if rent was received more than six days after it was due. An account thirty
or more days delinquent would be assessed the lien fee, and an account sixty or
more days delinquent would be assessed the lien foreclosure fee.
The contracts included a notice of lien on all property stored in the units
pursuant to the Self-Service Storage Facility Act, 770 Ill. Comp. Stat § 95/1 et seq.
The Act provides that an owner’s lien for a claim that has become due may be
satisfied after notice, which must include a demand for payment not less than
fourteen days after delivery of the notice. Id. § 95/4(C)(4). After the expiration of the
The contracts are attached as exhibits to the complaint and therefore are considered part
of the complaint. See Fed. R. Civ. P. 10(c); Cole v. Milwaukee Area Tech. College Dist., 634
F.3d 901, 903 (7th Cir. 2011).

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Plaintiff’s complaint alleges that it rented a total of four units, numbers 3429, 3008, and
3417 at a facility located at 5701 W. Ogden Ave., and number 912 at a facility located at
5525 W. Roosevelt Rd. The two contracts attached to the complaint reference only numbers
3429 (the $771.00 per month rental) and 3008 ($291.00), as those were the only units
subject to auction.

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time given in the notice, the lienholder is directed to publish an advertisement for
the sale or disposition of the property once a week for two consecutive weeks in a
newspaper of general circulation. Id. § 95/4(E). A unit’s occupant may redeem the
property by paying the amount necessary to satisfy the lien and all reasonable
expenses at any time before the sale or disposition of the property. Id. § 95/4(H).
Under the express terms of the contracts, acceptance of a partial rent payment to
cure default for non-payment of rent shall not delay or stop foreclosure on stored
property.
The complaint alleges that Plaintiff made all monthly payments on time and
states that its payments were up to date as of August 31, 2015. The Court accepts
as true that Plaintiff’s payments were up to date as of August 31, but not that it
made all monthly payments on time. As Extra Space’s motion points out, the
August 31 payment receipt attached to the complaint shows that the amount paid
by Plaintiff on that date included two months’ rent 3 and $125 lien fees on three
total units – Units 3429 and 3008, as well as a third unit not at issue, Unit 3417.
(Am. Compl., Ex. B); see Bogie v. Rosenberg, 705 F.3d 603, 609 (7th Cir. 2013)
(“When an exhibit incontrovertibly contradicts the allegations in the complaint, the
exhibit ordinarily controls, even when considering a motion to dismiss.”).
The complaint then skips to October 29, 2015, when Plaintiff alleges that it
sent by overnight mail a check $1,500.00 referencing Units 3427 and 3008, as well

The payment receipt reflects that as of August 31, 2015, the rent on Unit 3429 had
increased to $826.00, and Unit 3008 to $315.00. Rent on the third space, Unit 3417, was
$301.50. (Am. Compl., Ex. B.)
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as Unit 3417. (Am. Compl., Ex. C.) Plaintiff claims those payments were not cashed,
but Plaintiff was never informed of this fact. The pastor of the church, Noah
Nicholson, received a telephone message on November 13, 2015 from an Extra
Space employee stating that he needed to call about the storage, but he was not told
that the payment was not cashed or that Extra Space intended to auction off the
property in units 3429 and 3008. Nicholson did not discover that the property had
been sold until he went to the storage units on November 30, 2015. When Nicholson
questioned why he was not informed about the auction, an Extra Space employee
told him they did not have the correct address. The address listed on the August 31
payment receipt, however, was Nicholson’s correct address, and the check sent in
October listed had the church’s corporate address. In addition, Extra Space had
Nicholson’s current telephone number. Nicholson was informed on December 1,
2015 that the auction had taken place on November 18, 2015. Plaintiff further
alleges that lack of payment was a pretext to sell the property to John Doe, a buyer
already known to Extra Space, and Defendants colluded to seize the property, which
Plaintiff alleges to be valued at $367,500.00.
DISCUSSION
I.

LEGAL STANDARD
The purpose of a motion to dismiss under Rule 12(b)(6) is to test the

sufficiency of a complaint, not to decide the merits of a case. Gibson v. City of Chi.,
910 F.2d 1510, 1520 (7th Cir. 1990). In determining whether to grant a Rule
12(b)(6) motion to dismiss, the Court accepts all well-pleaded allegations in the

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complaint as true and draws all reasonable inferences in the light most favorable to
the plaintiff. Killingsworth v. HSBC Bank, 507 F.3d 614, 618 (7th Cir. 2007). The
complaint must contain Aa short and plain statement of the claim showing that the
pleader is entitled to relief.@ Fed. R. Civ. P. 8(a)(2). ASpecific facts are not necessary;
the statement need only >give the defendant fair notice of what the ... claim is and
the grounds upon which it rests.= @ Erickson v. Pardus, 551 U.S. 89, 93 (2007)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
However, Aa plaintiff's obligation to provide the grounds for entitlement to
relief requires more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.@ Twombly, 550 U.S. at 555. AFactual
allegations must be enough to raise a right to relief above the speculative level.@ Id.
The Seventh Circuit has read the Twombly decision as imposing Atwo easy-to-clear
hurdles. First, the complaint must describe the claim in sufficient detail to give the
defendant fair notice of what the claim is and the grounds upon which it rests.
Second, its allegations must plausibly suggest that the plaintiff has a right to relief,
raising that possibility above a speculative level; if they do not, the plaintiff pleads
itself out of court.@ E.E.O.C. v. Concerta Health Servs., Inc., 496 F.3d 773, 776 (7th
Cir. 2007) (internal citations and quotations omitted). In determining what
Aplausibly@ means, the Seventh Circuit has explained that Athe complaint must
establish a nonnegligible probability that the claim is valid; but the probability need
not be as great as such terms as >preponderance of the evidence= connote.@ In re Text
Messaging Antitrust Litig., 630 F.3d 622, 629 (7th Cir. 2010).

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II.

ANALYSIS
Extra Space’s motion argues: (1) the breach of contract claim should be

dismissed because Plaintiff materially breached the agreement by failing to pay
rent; (2) the conversion claim should be dismissed because Plaintiff’s right to the
stored property was not exclusive, given that it was behind on rent payments; and
(3) Plaintiff’s prayer for punitive damages should be stricken because Plaintiff’s
failure to pay rent shows that it cannot meet the standard under its conversion
claim that Extra Space acted in willful and wanton disregard of its rights.
Under Illinois law, the elements of a breach of contract claim are: “(1) the
existence of a valid and enforceable contract; (2) substantial performance by the
plaintiff; (3) breach of contract by the defendant; and (4) resultant injury to the
plaintiff.” Avila v. CiviMortgage, Inc., 801 F.3d 777, 786 (7th Cir. 2015); see also
Goldstein v. Lustig, 507 N.E.2d 164, 168 (Ill. App. Ct. 1987) (“A party who
materially breaches a contract cannot take advantage of the terms of the contract
which benefit him, nor can he recover damages from the other party to the
contract.”).
According to Extra Space, the exhibits to the complaint demonstrate that
Plaintiff was behind on its monthly rent payments at the time of the foreclosure
sale in November 2015, making it in material breach of the contracts and unable to
satisfy the element of substantial performance. Specifically, Extra Space argues
that Plaintiff did not make its September 1 or October 1 rent payments on the two

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units and owed a combined total of $2,282.00 in base rent, and therefore the alleged
October 29, 2015 payment was insufficient to cover the outstanding balance.
Extra Space’s argument disregards the fact that there were multiple separate
contracts at issue in this case; each auctioned unit was subject to a separate
contract, and the third unit (Unit 3417) included in the payment was presumably
subject to its own contract. As a result, the Court cannot say as a matter of law that
Plaintiff’s attempted payment was insufficient to redeem either unit from a
foreclosure sale. For example, the Unit 3008’s rent was $315.00 per month.
Assuming Plaintiff had failed to pay for two months, the contract suggests the total
amount due and owing as of October 29, 2015 was at most $845.00, and the amount
due on Unit 3429 would have been around $1867.00. 4 First, it is undisputed that as
of October 29, the property had not been disposed of, and thus it could have been
redeemed under the relevant statute. Second, it cannot be said at this stage of the
litigation that the amount paid could not have redeemed the property. The
complaint and attached exhibits do not demonstrate that there was any rent owed
on the third space, Unit 3417, nor does Extra Space’s motion argue that Unit 3417
was in arrears. Viewing all inferences in the light most favorable to Plaintiff, the
fact that its contents were apparently not auctioned in November suggests that it
was not. Without further information about the total amount owed for all three

The figures represents monthly rent times two months, plus $20 late fee times two
months, plus a $125 lien fee and a $50 lien foreclosure fee, which would have become due
and owing as of October 30, 2015, the date the check was purportedly received. However, it
is unclear from the terms of the contract whether the lien foreclosure fee would have been
due, as payment was allegedly received on the sixtieth day.

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units listed on the $1,500.00 check, it cannot be said that the amount was
insufficient as a matter of law to redeem at least one of the two units. 5
The Court also notes that even if Extra Space did have the contractual right
to foreclose on the property in the units, that does not mean that they did not
breach the contract’s terms regarding the foreclosure sale. Plaintiff alleges it did not
receive notice of the sale as required by the Self-Service Storage Facility Act, which
is expressly referred to in the contracts. Furthermore, the date of the auction
alleged in the complaint makes a colorable claim that Extra Space did not comply
with the Act’s terms. A lienholder is required first to provide notice with a demand
for payment not more than fourteen days after delivery of the notice, then “[a]fter
the expiration of the time given in the notice,” to publish an advertisement of the
sale for two consecutive weeks. 770 Ill. Comp. Stat. § 95/4(C)-(D). The auction is
alleged to have occurred less than three weeks after the sixty-day period of nonpayment triggering foreclosure proceedings. Plaintiff has therefore plausibly stated
a claim that it performed under the terms of at least one contract, and Extra Space
breached the contract by foreclosing the property and/or disposing of it. 6

The contract provides that if an occupant is renting more than one space, default on one
space operates as a default on all rented spaces. (Am. Compl. Ex. A, ¶ 5.) This provision,
however, relates to denial of access to the property in the unit, not to foreclosure.

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Extra Space’s other arguments are also premised on the notion that Plaintiff was behind
on its rent. Therefore, the motion to dismiss the conversion claim and the prayer for
punitive damages must also be denied.

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CONCLUSION
For the foregoing reasons, Defendant’s Motion to Dismiss Plaintiff’s Amended
Complaint Pursuant to Federal Rule of Civil Procedure 12(b)(6) [Doc. No. 21] is
denied.
SO ORDERED.

ENTERED:

DATE:

___________________________
HON. MARIA VALDEZ
United States Magistrate Judge

July 8, 2016

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