One Way Apostolic Church v. Extra Space Storage Inc.

Filing 76

MEMORANDUM Opinion and Order Signed by the Honorable Maria Valdez on 1/30/2018: Mailed notice (lp, )

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

ONE WAY APOSTOLIC CHURCH,
Plaintiff,
v.
EXTRA SPACE STORAGE, INC.,
Defendant.

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No. 16 C 1132
Magistrate Judge
Maria Valdez

MEMORANDUM OPINION AND ORDER
Plaintiff’s First Amended Complaint alleges breach of contract against
Defendant Extra Space Storage, Inc. (“Extra Space”) in relation to items kept in a
storage unit at Extra Space that were later foreclosed on and sold by Extra Space. 1
The matter is now before the Court on Defendant’s Motion for Partial Summary
Judgment on Damages [Doc. No. 59]. 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 granted.

Defendant’s earlier motion for summary judgment on the merits was granted as to
Plaintiff’s conversion claim and certain aspects of the breach of contract claim. The only
surviving triable issue of fact was whether Defendant breached the contract by failing to
give proper notice of the foreclosure sale. See One Way Apostolic Church v. Extra Space
Storage, Inc., No. 16 C 1132 2017 WL 2215021, at *8 (N.D. Ill. May 19, 2017).
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FACTS 2
Plaintiff One Way Apostolic Church was, at all relevant times, an Illinois notfor-profit corporation with its principal place of business in Chicago, Illinois. (LR
56.1(a)(3) ¶ 2.) Extra Space is a Maryland corporation with its principal place of
business in Utah. (Id. ¶ 3.)
In November 2013, Plaintiff’s pastor, Noah Nicholson, contracted for three
storage units at a Smart Stop facility on Ogden Avenue in Chicago. 3 He signed the
contracts in his capacity as pastor and president. (Id. ¶¶ 5-6, 9.) Paragraph 6 of the
contracts, entitled “Use of Storage Space,” includes the following statement in bold
type:
Occupant shall not store antiques, artworks, heirlooms, collectibles or
any property having special or sentimental value to Occupant.
Occupant waives any claim for emotional or sentimental attachment to
Occupant’s property.
(Id. ¶ 7.)
Paragraph 8, entitled “Limitation of Value,” is underlined and in bold type:
Occupant agrees not to store property with a total value in excess of
$5,000 without the written permission of the Owner or Manager and
Occupant has provided proof of insurance to Owner or Manager to
cover the value of the stored property. If such written permission is not
obtained, the value of Occupant’s property shall be deemed not to
exceed $5,000. Nothing herein shall constitute any agreement or
Unless otherwise noted, the following material facts are undisputed or are deemed
admitted due to a party’s failure to comply with Local Rule 56.1, which this Court strictly
enforces. Defendants LR 56.1 statement is limited to those facts necessary for ruling on the
present motion, and familiarity with other contextual facts in the case is presumed. See One
Way, 2017 WL 2215021.
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Extra Space took over the facility from Smart Stop on October 1, 2015, and continued to
honor the rental contracts in place at the time of the acquisition. (LR 56.1(a)(3) ¶ 16.)
Although three units were rented, only two were foreclosed on. The two foreclosed units are
the subject of the present litigation.
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admission by Owner or Manager that Occupant’s stored property has
any value, nor shall anything alter the release of Owner’s liability set
forth below.
(Id. ¶ 8.) Plaintiff has stipulated that Nicholson signed the contracts, the above
paragraphs were contained in the contracts, and he agreed to those terms. (Id. ¶
10.)
Plaintiff admits that Nicholson never received Defendant’s written
permission to store property in excess of $5,000 in value in any of the three rented
units. (Id. ¶ 11.) Nicholson did not remember providing Defendant with either a
certificate of insurance indicating that the property stored in the units was covered
by a State Farm insurance policy or a copy of the policy itself. 4 (Id. ¶¶ 12-13.) At the
time he signed the rental contracts, Nicholson purchased tenant insurance with a
limit of $5,000 for one unit and $2,000 for another. (Id. ¶ 14.) Plaintiff did not make
a claim on either of those tenant insurance policies after the units were foreclosed
on in November 2015. (Id. ¶ 15.)
DISCUSSION
I.

LEGAL STANDARD
Summary judgment is appropriate where “the pleadings, depositions,

answers to interrogatories, 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.” Fed. R. Civ. P. 56(c). The Court
The value of the State Farm coverage is unclear. Plaintiff’s response argues that it had a
$6 million policy, and Nicholson’s deposition also mentions that it was $6 million. (See Pl.’s
Resp. at 1, 4, 6; LR 56.1(b)(3)(C) ¶ 12.) But one paragraph later, Nicholson testified that
“we figured the $200,000 is more than enough adequate to cover those things.” (Id. ¶ 12.) In
any event, it is undisputed that the amount of coverage is significantly greater than $5,000.
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must draw all reasonable inferences in favor of the nonmovant. Bennington v.
Caterpillar Inc., 275 F.3d 654, 658 (7th Cir. 2001).
However, once the movant has carried its burden under Rule 56(c), “its
opponent must do more than simply show that there is some metaphysical doubt as
to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 586 (1986). The party opposing summary judgment must offer admissible
evidence in support of his version of events, and hearsay evidence does not create a
genuine issue of material fact. McKenzie v. Ill. Dep’t of Transp., 92 F.3d 473, 484
(7th Cir. 1996); see Larimer v. Dayton Hudson Corp., 137 F.3d 497, 500 (7th Cir.
1998) (“‘If the non-moving party bears the burden of proof on an issue, . . . that
party may not rest on the pleadings and must instead show that there is a genuine
issue of material fact.’”) (citation omitted). “The mere existence of an alleged factual
dispute is not sufficient to defeat a summary judgment motion. . . . The nonmovant
will successfully oppose summary judgment only when it presents ‘definite,
competent evidence to rebut the motion.’” Vukadinovich v. Bd. of Sch. Trs. of N.
Newton Sch. Corp., 278 F.3d 693, 699 (7th Cir. 2002) (citations omitted); see also
Hall v. Bodine Elec. Co., 276 F.3d 345, 354 (7th Cir. 2002) (“Conclusory allegations
and self-serving affidavits, without support in the record, do not create a triable
issue of fact.”).
“In considering a motion for summary judgment, this court is not required to
scour the record in search of evidence to defeat the motion; the nonmoving party
must identify with reasonable particularity the evidence upon which the party

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relies.” Pleniceanu v. Brown Printing Co., No. 05 C 5675, 2007 WL 781726, at *7
(N.D. Ill. Mar. 12, 2007) (citing Johnson v. Cambridge Indus., Inc., 325 F.3d 892,
898 (7th Cir. 2003)); see Estate of Moreland v. Dieter, 395 F.3d 747, 759 (7th Cir.
2005). Finally, the Court is “‘not required to draw every conceivable inference from
the record.”’ McCoy v. Harrison, 341 F.3d 600, 604 (7th Cir. 2003) (citation omitted).
II.

ANALYSIS
Defendant argues that summary judgment on the issue of damages on

Plaintiff’s remaining breach of contract claim is appropriate because Paragraph 8 of
contract limited the total damages to $5,000 per unit; Plaintiff did not invoke the
opt-out clause contained in that paragraph; and enforcement of that provision
would not be unconscionable.
Section 7.5 of the Illinois Self-Service Storage Facility Act (“Storage Act”)
provides, in relevant part:
If the rental agreement contains a limit on the value of property that
may be stored in the occupant’s space, this limit is deemed to be the
maximum value of the stored property, provided that this limit
provision must be printed in bold type or underlined in the rental
agreement in order to be enforceable.
770 Ill. Comp. Stat. § 95/7.5 (West 2011).
Paragraph 8 of the rental contracts Nicholson signed expressly limited the
value of property in each unit to $5,000 unless the occupant received written
permission from the owner. Plaintiff does not dispute that the limitation was in the
contracts or that Plaintiff and/or Nicholson did not obtain permission to store items
valued in excess of $5,000 in the units. Plaintiff’s only response is that the

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limitation of value provision is unenforceable because: (1) the provision did not
comply with the spirit of Section 7.5 of the Storage Act; (2) Defendant failed to give
proper notice of non-payment; and (3) enforcing the limitation would be
unconscionable.
A.

Section 7.5

Plaintiff contends that the legislative intent behind Section 7.5 of the Storage
Act “was to make the provision standout from the rest of the contract.” (Pl.’s Resp.
at 2.) According to Plaintiff, much of the rental agreement is in bold, underlined, or
includes capitalized letters, and thus the limitation of value is unenforceable
because it fails to stand out from the rest of the contract such that a reasonable
person would easily notice it. This argument fails for two reasons. First, the Storage
Act requires only that the limitation “be printed in bold type or underlined” in order
to be enforceable. 770 Ill. Comp. Stat. § 95/7.5 (West 2011). Nothing in the statute
specifies that the provision must be printed differently than any other words in the
contract or that it must stand out in any unique manner. And even assuming that
legislative history were relevant to interpreting the Storage Act, Plaintiff has failed
to cite to any history suggesting the legislature agrees with Plaintiff’s reading of the
statute. Second, Paragraph 8 is the only paragraph in the rental contract that is
both in bold and underlined, and thus the provision does stand out from the rest of
the contract. Hamilton v. O’Connor Chevrolet, Inc., 399 F. Supp. 2d 860, 867 (N.D.
Ill. 2005) (finding a disclaimer on the reverse side of a contract sufficiently
conspicuous where the disclaimer itself was in bold, and bold type on the front side

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directed the reader to read the back side of the page). The limitation of value
paragraph thus complied with Section 7.5 of the Storage Act.
B.

Improper Notice

Plaintiff next contends that in order for Defendant to apply the limitation, it
must have first complied with the section of the Storage Act related to the
enforcement of lien. Plaintiff’s argument is somewhat muddled, but it alleges that
because Defendant failed to satisfy the enforcement of lien requirement, it did not
have a lien, and thus could not have sold the property. Plaintiff further argues that
the legislature did not intend to allow storage facility owners to sell property
without notice and be liable for only $5,000 per unit.
As an initial matter, Plaintiff misreads this Court’s prior opinion denying in
part Extra Space’s motion for summary judgment. That order found an issue of fact
as to whether Plaintiff had received notice of the property auction as required by
the Storage Act, but it did not find that Defendant had no lien on the property. To
the contrary, the order cited the Storage Act’s provision establishing that an owner
of a self-storage facility has a lien on all stored property as a matter of law, and it
further determined that Plaintiff had breached the contract due to non-payment of
rent. See One Way Apostolic Church v. Extra Space Storage, Inc., No. 16 C 1132,
2017 WL 2215021, at *4-5 (N.D. Ill. May 19, 2017). The only issue left for the trier
of fact was whether proper notice was given to enforce the existing lien through a
foreclosure sale.

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Moreover, Plaintiff again relies heavily on phantom legislative history in
support of its argument. Plaintiff claims that in codifying the limitation of value,
the legislature intended to protect storage facility owners from having to obtain fire,
flood, or burglary insurance for all renters’ property, and “renters should be
responsible for obtaining their own insurance.” (Pl.’s Resp. at 4.) Plaintiff believes
that the statute thus was not meant to apply in the present situation, where
Plaintiff had $6 million worth of insurance on its property, and Defendant
intentionally sold the property without notice. No citation to this alleged legislative
history is given, and the Court cannot discern a reasonable argument whereby
Defendant’s failure to properly notify Plaintiff of a foreclosure auction would render
the limitation of value provision null and void.
Contrary to Plaintiff’s argument, allowing a storage facility to limit its
liability after a foreclosure auction would not “lead to an absurd result.” (Id. at 5.)
Plaintiff had the option under the contract to seek permission to store items of a
value greater than $5,000, but it did not do so. Indeed, a truly absurd result would
obtain if Plaintiff were allowed to reject the procedure to declare a property value of
over $5,000, fail to pay timely rent, and then claim after auction that the value
substantially exceeded the limitation.
C.

Unconscionability

Plaintiff argues that enforcing the limitation of value would be substantively
and procedurally unconscionable because: (1) the provision does not stand out from
the rest of the renter’s agreement; (2) there is no evidence that Nicholson read the

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agreement before he signed it, and he did not have his necessary reading glasses at
the time the contracts were presented to him; and (3) there is no evidence that
Nicholson was expressly told about the limitation.
First, as discussed above, the limitation of value provision in Paragraph 8
complied with Section 7.5 of the Storage Act because it was written in bold and
underlined. Plaintiff’s additional implication that Defendant had an affirmative
obligation to point out Paragraph 8 to Nicholson is not supported by either law or
argument.
Second, Plaintiff does not dispute that Nicholson did in fact sign the contracts
and that they included the limitation of value provision. Nicholson’s failure to read
the contracts before signing them does not make it unconscionable to enforce the
contracts against Plaintiff. 5 See U.S. v. Stump Home Specialties Mfg., Inc., 905 F.2d
1117, 1120 (7th Cir. 1990) (“Rights under a contract are not forfeited by the other
party’s failure to read it.”); see also Novitsky v. Am. Consulting Engineers, L.L.C.,
196 F.3d 699, 702 (7th Cir. 1999) (“People are free to sign legal documents without
reading them, but the documents are binding whether read or not.”); Murray v.
Little, No. 13 C 2496, 2015 WL 2128907, at *1 (N.D. Ill. May 5, 2015) (“Throughout
every area of the law, of course, a party’s choice to ignore a notice or not to read a
contract works against [it].”).

Throughout the litigation, Plaintiff has not disputed that the payment terms are
enforceable against it despite Nicholson’s alleged failure to read the agreements, and of
course Plaintiff seeks to enforce the contracts’ notice of sale provisions against Defendant.
Plaintiff’s brief makes no effort to explain why the limitation of value provision is the only
legally unenforceable paragraph in the contracts.

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Finally, the Court is not persuaded by Plaintiff’s suggestion that enforcement
of the limitation is unconscionable because the $6 million worth of insurance
allegedly obtained for the property does not cover Plaintiff’s losses caused by the
property sale. A contract cannot be deemed unconscionable merely because the
results of enforcement are unfortunate.
CONCLUSION
For the foregoing reasons, Defendant’s Motion for Partial Summary
Judgment on Damages [Doc. No. 59] is granted. Plaintiff’s recoverable damages are
limited to $10,000.00.
SO ORDERED.

ENTERED:

DATE:

___________________________
HON. MARIA VALDEZ
United States Magistrate Judge

January 30, 2018

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