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Sher-Jo, Inc. v. Town & Country Ctr., Inc - 2017 IL App (5th) 160095-U

Rule:

A lessee seeking to exercise an option to cancel or extend a commercial lease must strictly comply with the terms of that option.

Facts:

Town and Country is the owner of property located at 1135 Carbon Street, Marion, Illinois. Town and Country had a written lease agreement with Rax but Rax assigned all rights, title, and interest, as tenant, under the lease to Sher-Jo, Inc. (Sher-Jo). Sher-Jo executed a written sublease agreement with Fazoli's Restaurants. While the terms and conditions of the sublease were approved by Town and Country, Town and Country was not and never has been a party to this sublease. On May 31, 2013, Fazoli's sent correspondence to Sher-Jo stating that Fazoli's was exercising its option to renew the sublease. The communication between Fazoli's and Sher-Jo specifically noted that Sher-Jo should confirm to Fazoli's whether Sher-Jo exercised its respective option to extend the term of the lease with Town and Country. Sher-Jo faxed Fazoli's written notice to Town and Country twice. Town and Country, believing Sher-Jo failed to provide proper irrevocable written notice of its option to extend the commercial lease agreement, declined to accept the late notice and entered into a new lease agreement with Fazoli's directly. In response, Sher-Jo filed a complaint against Town and Country for specific performance of the amendment to the lease. Sher-Jo further requested a temporary restraining order and preliminary injunction enjoining Town and Country from leasing the property to anyone other than Sher-Jo or otherwise interfering with Sher-Jo's interest in the property. Town and Country filed a motion for summary judgment claiming that there was no manner in which liability could be imposed upon Town and Country given the relevant case law and the fact that Sher-Jo did not timely provide written notice of its intent to renew the master lease within the time specified. The court granted partial summary judgment in favor of Sher-Jo and denied Town and Country's motion for summary judgment after concluding that the only requirement was a timely written notice in some form which put Town and Country on notice of Sher­ Jo's intent to exercise said option. Town and Country appealed the denial of its motion for summary judgment.

Issue:

Did Sher-Jo give timely notice?

Answer:

No.

Conclusion:

The court concluded that Sher-Jo did not properly provide timely irrevocable written notice to Town and Country of Sher-Jo's election to exercise its option to extend the parties' master lease agreement as amended. In Illinois, a lessee seeking to exercise an option to cancel or extend a commercial lease must strictly comply with the terms of that option. Not only is the timeliness of notice to be strictly construed, but also the manner, the method and any other correlating conditions are to be strictly construed. Therefore, the trial court erred in granting summary judgment. The court reversed the trial court's decision and remanded the case with directions to deny the motion for partial summary judgment in favor of Sher-Jo and grant the motion for summary judgment in favor of Town and Country.

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