Bright Horizons Children's Centers v. Riverway Midwest II

SIXTH DIVISION
JUNE 25, 2010

No. 1-09-2719

IN THE
APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT

BRIGHT HORIZONS CHILDREN’S CENTERS, LLC, ) Appeal from the
) Circuit Court of
Plaintiff-Appellee, ) Cook County.
)
v. ) No. 08 CH 25512
)
RIVERWAY MIDWEST II, LLC, ) Honorable
) Mary Anne Mason,
Defendant-Appellant. ) Judge Presiding.

JUSTICE ROBERT E. GORDON delivered the opinion of the court:

Plaintiff-tenant Bright Horizons Children’s Centers, LLC (Bright Horizons), filed

a declaratory judgment action in the circuit court of Cook County seeking a

determination that its landlord’s, defendant Riverway Midwest II, LLC (Riverway),

invocation of the “relocation provision” in the parties’ written lease agreement was

ineffective because the alternative premises proposed by Riverway would cause Bright

Horizons to violate Illinois law. Bright Horizons moved for summary judgment in its

favor, which the trial court granted. Riverway appeals, and we affirm.

BACKGROUND

Bright Horizons owns and operates 31 child day care facilities in Illinois. On

March 30, 2007, Bright Horizons entered into a 10-year lease agreement with Riverway,

with respect to commercial space and an adjacent playground located on the ground floor
No. 1-09-2719

of the building commonly known as the Riverway Complex located at 6107 North River

Road in Rosemont, Illinois (leased premises).

According to the lease agreement the sole “permitted use” for the leased premises

is a “Child-care center for children.” Section 5.01 of the lease agreement states in

pertinent part:

“Section 5.01. Use. Tenant shall use the Leased Premises for the

Permitted Use and for no other purpose without the prior written consent

of Landlord, which shall not be unreasonably withheld, conditioned or

delayed. Tenant warrants and represents to Landlord that it will operate

the Child-Care Center in a ‘high quality’ manner. ‘High quality’ shall

mean that the Child-Care Center shall be a high quality and reputable

operation (i) licensed by the Illinois Department of Children and Family

Services [(DCFS)] to operate a child care center; (ii) providing an

atmosphere for children and parents that is caring, consistent, constructive

and challenging; and (iii) throughout the term of this Lease, providing a

minimum service level equal to or greater than 1) any material DCFS

regulations which are in effect during any Term of this Lease; and 2)

services that are substantially consistent with the Day Care Industry

Standards.”

Section 5.02(a) of the lease agreement states in pertinent part:

“(a) Tenant shall (i) use and maintain the Leased Premises and

conduct its business thereon in a safe, careful, reputable and lawful

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No. 1-09-2719

manner, (ii) comply with all covenants that encumber the Building and all

laws, rules, regulations, orders, ordinances, directions and requirements of

any governmental authority or agency, now in force or which may

hereafter be in force, including, without limitations, those which impose

upon Landlord or Tenant any duty with respect or triggered by a change in

the use or occupation of, or any improvement or alteration to, the Leased

Premises.”

1. The Relocation Provision

Article 14 of the lease agreement, entitled “Landlord’s Right to Relocate Tenant”

(Article 14), with which we are primarily concerned in this appeal, provides as follows:

“Landlord shall have the right upon at least one hundred eighty

(180) days’ prior written notice to Tenant to relocate Tenant and to

substitute for the Leased Premises other space in a building in the

Riverway Complex or in another building owned by Landlord, or an

affiliated entity of Landlord, in the vicinity containing at least as much

square footage as the Leased Premises, in a location and on such terms as

may be mutually satisfactory to Landlord and Tenant. Landlord shall

improve such substituted space, at its expense, with improvements at least

equal in quantity and quality to those in the Leased Premises as of the date

of the proposed relocation. Landlord shall reimburse Tenant for all

reasonable third party expenses incurred in connection with, and caused

by, such relocation. In no event shall Landlord be liable to Tenant for any

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No. 1-09-2719

consequential damages as a result of any such relocation, including, but

not limited to, loss of business income or opportunity. In the event that

Tenant and Landlord cannot mutually agree on the relocation space within

thirty (30) days after Landlord provides Tenant with notice of such

relocation, then Landlord shall have the right to terminate this Lease

effective upon the date that is one hundred eighty (180) days after

Landlord’s original notice. In consideration of Landlord’s right to

terminate this Lease, Landlord shall pay Tenant within thirty (30) days

after Tenant vacates the Leased Premises, One Hundred Twenty-Five

Thousand Dollars ($125,000.00).”

2. Default and Remedy Provision

Article 13 of the lease agreement, entitled “Default and Remedy,” contains the

following pertinent provisions. Section 13.06 of the lease agreement contains a fee-

shifting provision allowing for recovery of attorney fees which provides as follows:

“Section 13.06. Attorney fees. If either party defaults in the

performance or observance of any of the terms, conditions, covenants or

obligations contained in this Lease and the non-defaulting party obtains a

judgment against the defaulting party, then the defaulting party agrees to

reimburse the non-defaulting party for reasonable attorney fees incurred in

connection therewith *** . Neither party shall be liable to the other for

consequential, indirect, special or punitive damages.”

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No. 1-09-2719

Section 13.03 of the lease agreement provides for Riverway’s default under the lease

agreement and Bright Horizons’ remedies in the event of such default. Specifically

section 13.03 of the lease agreement provides:

“Section 13.03. Landlord’s Default and Tenant’s Remedies.

Landlord shall be in default if it fails to perform any term, condition,

covenant or obligation required under this Lease for a period of thirty (30)

days after written notice thereof from Tenant to Landlord; provided,

however, that if the term, condition, covenant or obligation to be

performed by Landlord is such that it cannot reasonably be performed

within thirty (30) days, such default shall be deemed to have been cured if

Landlord commences such performance within said thirty-day period and

thereafter diligently undertakes to complete the same. Upon occurrence of

any such default, Tenant may sue for injunctive relief or to recover

damages for any loss directly resulting from the breach.”

Section 13.01 of the lease agreement provides for Bright Horizons’ default under the

lease agreement and Riverway’s remedies in the event of such default. Section 13.01 of

the lease agreement provides in pertinent part:

“Section 13.01. Default. The occurrence of any of the following

shall be a ‘Default’:

***

(b) Tenant fails to perform or observe any other term, condition,

covenant or obligation required under this Lease for a period of thirty (30)

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No. 1-09-2719

days after written notice thereof from Landlord; provided, however, that if

the nature of Tenant’s default is such that more than thirty (30) days are

reasonably required to cure, then such default shall be deemed to have

been cured if Tenant commences such performance within said thirty (30)

day period and thereafter diligently completes the required action within a

reasonable time.”

Section 13.02 of the lease agreement provides Riverway’s “rights and remedies” in the

event of Bright Horizons’ default and includes a rent acceleration clause. Section 13.02

provides in relevant part:

“Section 13.02. Remedies. Upon the occurrence of any Default,

Landlord shall have the following rights and remedies, in addition to those

stated elsewhere in this Lease and those allowed by law or in equity, any

one or more of which may be exercised without further notice to Tenant:

(a) Landlord may re-enter the Leased Premises and cure any

Default of Tenant *** .

(b) Without terminating this Lease, Landlord may terminate

Tenant’s right to possession of the Leased Premises, and thereafter,

neither Tenant nor any person claiming under or through Tenant shall be

entitled to possession of the Leased Premises, and Tenant shall

immediately surrender the Leased Premises to Landlord, and Landlord

may re-enter the Leased Premises and dispossess Tenant and any other

occupants of the Leased Premises by any lawful means and may remove

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No. 1-09-2719

their effects, without prejudice to any other remedy that Landlord may

have. Upon termination of possession, Landlord may (i) re-let all or any

part thereof for a term different from that which would otherwise have

constituted the balance of the Lease Term and for rent and on terms and

conditions different from those contained herein, whereupon Tenant shall

be immediately obligated to pay to Landlord an amount equal to the

present value (discounted at the Prime Rate) or the difference between the

rent provided for herein and that provided for in any lease covering a

subsequent re-letting of the Leased Premises, for the period which would

otherwise have constituted the balance of the Lease Term (the

‘Accelerated Rent Difference’), or (ii) without re-letting, declare the

present value (discounted at the Prime Rate) of all rent which would have

been due under this Lease for the balance of the Lease Term to be

immediately due and payable as liquidated damages (the ‘Accelerated

Rent’). Upon termination of possession, Tenant shall be obligated to pay

to Landlord (A) the Accelerated Rent Difference or the Accelerated Rent,

whichever is applicable, (B) all loss or damage that Landlord may sustain

by reason of Tenant’s Default (‘Default Damages’), which shall include,

without limitation, expenses of preparing the Leased Premises for re-

letting, demolition, repairs, tenant finish improvements, brokers’

commissions and attorney fees, and (C) all unpaid Minimum Annual Rent

and Additional Rent that accrued prior to the date of termination of

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No. 1-09-2719

possession, plus any interest and late fees due hereunder (the ‘Prior

Obligations’).

Rent to be immediately due and payable, whereupon Tenant shall be

obligated to pay to Landlord (i) the Accelerated Rent, (ii) all of Landlord’s

Default Damages, and (iii) all Prior Obligations *** .

(d) Landlord and Tenant acknowledge and agree that the payment

of the Accelerated Rent Difference or the Accelerated Rent as set above

shall not be deemed a penalty, but merely shall constitute payment of

liquidated damages, it being understood that actual damages to Landlord

are extremely difficult, if not impossible, to ascertain *** .”

3. Integration Clause

Section 16.07 of the lease agreement contains an integration clause providing that

“This Lease represents the entire agreement between Landlord and Tenant covering

everything agreed upon or understood in this transaction. There are no oral promises,

conditions, representations, understandings, interpretations or terms of any kind as

conditions or inducements to the execution hereof or in effect between the parties.”

4. Licensing Requirements

At the time the parties in the case at bar entered into the lease agreement, section

7(a) of the Illinois Child Care Act of 1969 (Act) (225 ILCS 10/1 et seq. (West 2006))

provided that “[DCFS] must prescribe and publish minimum standards for licensing that

apply to the various types of facilities for child care defined in this Act.” 225 ILCS

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No. 1-09-2719

10/7(a) (West 2006). Section 7(a)(5) of the Act further provided that DCFS prescribe

and publish minimum standards relating to the “appropriateness, safety, cleanliness and

general adequacy of the premises, including maintenance of adequate fire prevention and

health standards conforming to State laws and municipal codes to provide for the

physical comfort, care and well-being of children received.” 225 ILCS 10/7(a)(5) (West

2006).

The DCFS “Licensing Standards for Day Care Centers” pertinent to this dispute

are contained at Title 89, section 407.370(c), of the Illinois Administrative Code, which

provides in relevant part:

“c) Infants and toddlers shall be housed and cared for at ground

level unless otherwise approved through the exception process below.

Travel distance between any point in a room used for infants and toddlers

and an exit discharging directly outside shall not exceed 150 feet. Only a

fire inspector from the Office of the State Fire Marshall or the Chicago

Fire Department’s Fire Prevention Bureau may grant an exception to the

requirement that infants and toddlers be housed and cared for at ground

level.” 89 Ill. Adm. Code §407.370(c).

Further, section 18 of the Act provides, “Any person, group of persons,

association or corporation who *** violates any other provision of this Act or any

reasonable rule or regulation adopted and published by [DCFS] for the enforcement of

the provisions of this Act, is guilty of a Class A misdemeanor.” 225 ILCS 10/18(7)

(West 2006).

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No. 1-09-2719

5. Riverway’s Invocation of the Relocation Provision

According to Riverway’s “Answer and Affirmative Defenses to [Bright

Horizons’] Complaint for Declaratory Judgment,” Riverway sent a letter to Bright

Horizons notifying Bright Horizons that it intended to exercise its right under Article 14

of the lease agreement to relocate Bright Horizons to a second-floor suite located at 1300

West Higgins Road, in Park Ridge, Illinois (First Alternative Proposed Premises). Bright

Horizons notified Riverway by letter dated November 12, 2007, that the First Alternative

Proposed Premises did not meet the requirements of the lease agreement, as those

premises were not located at ground level and did not have an adjacent playground space.

On December 3, 2007, Riverway notified Bright Horizons that it intended to

exercise its right under Article 14 of the lease agreement to relocate Bright Horizons to a

first-floor suite located at 1300 West Higgins Road in Park Ridge (Second Alternative

Proposed Premises). According to Riverway’s “Answer and Affirmative Defenses to

[Bright Horizons’] Complaint for Declaratory Judgment,” Bright Horizons “formally

accepted the Second Alternative Proposed Premises and began working with its local

operations team and architects to plan and renovate the new space.” Shortly after the

acceptance of the alternative space, Riverway withdrew its December 2007 notice and

Bright Horizons remained at the leased premises.

According to Riverway’s “Answer and Affirmative Defenses to [Bright

Horizons’] Complaint for Declaratory Judgment,” on May 27, 2008, Riverway, through

its attorney, sent another letter to Bright Horizons notifying Bright Horizons that it

intended to exercise its right under Article 14 of the lease agreement to relocate Bright

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No. 1-09-2719

Horizons to a second-floor suite located at 10255 West Higgins Road in Rosemont (Third

Alternative Proposed Premises). In the May 2008 notice, Riverway informed Bright

Horizons that if the parties were unable to agree on new space for the leased premises,

Riverway would have the right to terminate the lease “effective upon the date that is one

hundred eighty (180) days following the date of [Riverway’s] Relocation Notice.”

According to the affidavit of Dawn Ellis-Ferzacca, Bright Horizons’ Chicago area

regional manager, which was attached to Bright Horizons’ “Memorandum of Law in

Support of Motion for Summary Judgment,” Bright Horizons attempted to obtain an

exception to the ground-floor requirement of the DCFS licensing standards, so that

Bright Horizons might accept Riverway’s May 2008 demand without violating DCFS

regulations. Ellis-Ferzacca’s affidavit states that she contacted the Office of the Illinois

State Fire Marshall (Fire Marshall) to request an exception to the ground-floor

requirement contained at Title 89, section 407.370(c), of the Illinois Administrative

Code, to allow Bright Horizons to relocate to the Third Alternative Proposed Premises as

requested by Riverway. On June 11, 2008, the Fire Marshall’s office informed Ellis-

Ferzacca that it would not grant such an exception to Bright Horizons.

Bright Horizons notified Riverway that the Third Alternative Proposed Premises

did not meet the requirements of the DCFS licensing standards, which required Bright

Horizons to operate at ground level. On June 19, 2008, counsel for Riverway sent a letter

to Bright Horizons claiming that Bright Horizons was in “default” of the lease pursuant

to section 13.01(b) of the lease agreement. The June 19, 2008, letter also notified Bright

Horizons that Bright Horizons could cure its alleged “default” within 30 days by

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No. 1-09-2719

relocating to the Third Alternative Proposed Premises. The June 19, 2008, letter further

stated that if Bright Horizons did not cure the alleged “default” within 30 days, Riverway

would terminate the lease and enforce the accelerated rent provision in section 13.02(b)

of the lease agreement.

6. The Declaratory Judgment Action

On July 16, 2008, Bright Horizons filed its “Complaint for Declaratory

Judgment.” Bright Horizons requested that the trial court find that: (a) Riverway’s May

27, 2008, relocation notice was ineffective; (b) Bright Horizons was not in breach of the

lease agreement by reason of its rejection of the May 27, 2008, notice; (c) Riverway may

not terminate the lease; (d) in order to properly exercise any right to relocate under

Article 14 of the lease agreement, Riverway must offer alternative space that would be

“usable as a child care facility consistent with the only ‘permitted use’ ” of the leased

premises; and (e) Bright Horizons is entitled to its attorney fees and costs pursuant to

section 13.06 of the lease agreement.

On August 28, 2008, Riverway filed its “Answer and Counterclaim,” seeking a

declaration that: (a) the May 27, 2008, relocation notice was effective under the lease

agreement; (b) Bright Horizons’ refusal to comply with the relocation notice constituted

a default under the lease agreement; (c) Riverway is entitled to terminate the lease; (d)

Bright Horizons must surrender the leased premises; and (e) Riverway is entitled to its

attorney fees and costs.

On October 31, 2008, Bright Horizons filed its motion for summary judgment

requesting that the trial court declare the parties’ rights concerning Riverway’s request

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for relocation as a matter of law and enter judgment in favor of Bright Horizons. In

response to Bright Horizons’ motion for summary judgment, Riverway submitted an

affidavit pursuant to Illinois Supreme Court Rule 191(b) (210 Ill. 2d R. 191(b))1,

requesting that the trial court allow it to take limited discovery as to whether “any

requirement of a first floor location was the subject of discussion or negotiation prior to

the execution of the lease agreement between the parties.” On November 19, 2008, the

trial court entered and continued Bright Horizons’ motion for summary judgment subject

to the limited discovery requested by Riverway.

The parties subsequently exchanged written discovery. Riverway’s first

interrogatory requested as follows:

“Interrogatory No. 1: Prior to the parties [sic] signing of the lease

on March 30, 2007, was the issue of whether plaintiff’s business required

location on a ground floor or first floor ever the subject of discussion or

negotiation between the parties?”

In its verified answers to Riverway’s interrogatory, Bright Horizons stated:

“Bright Horizons does not recall the ground floor requirement

being discussed between the parties’ representatives. The parties did,

however, negotiate the Lease, which required compliance with all

applicable laws, rules, regulations, ordinances, directions and

requirements of any governmental authority or agency, and the ground

floor requirement is one such applicable requirement.”

1
The Rule 191(b) affidavit is not included in the record.

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No. 1-09-2719

Bright Horizons, in turn, propounded interrogatories on Riverway requesting it to

“Identify any and all communications between the Landlord and Bright Horizons

concerning Article 5 [incorporating the DCFS regulations].” In its verified answers,

Riverway stated, “See documents produced by defendant in response to plaintiff’s first

request for production.” Riverway produced an e-mail communication from Phil Prassas,

a Riverway employee, who apparently participated in lease negotiations with Bright

Horizons, wherein he states that “The termination/relocation was never really an issue.”

Prassas’ position with Riverway is not disclosed by the record.

In further response to Riverway’s written interrogatories, Bright Horizons

disclosed Stephen Dreier, Bright Horizons’ chief administrative officer, Antonette

Fernandez, senior legal counsel for Bright Horizons, and John Casagrande, whose

position with Bright Horizons is not disclosed by the record, as having participated in

lease negotiations on behalf of Bright Horizons. Riverway requested that Bright

Horizons produce those employees for their discovery depositions, but Bright Horizons

refused to do so, contending that its verified answers to Riverway’s interrogatories

demonstrated that the employees did not discuss a ground-floor requirement during lease

negotiations. Riverway then filed a “Motion to Compel [Bright Horizons’] Production of

Employee Witnesses for Their Discovery Depositions,” which the trial court denied on

February 5, 2009. On May 21, 2009, the trial court heard oral argument on Bright

Horizons’ motion for summary judgment.

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No. 1-09-2719

After receiving briefing from the parties and hearing oral argument, the trial court

granted summary judgment in favor of Bright Horizons. In doing so, the court found as

follows:

“I have read the materials. I don’t agree with [Riverway] that ***

Bright Horizons was obligated to not only specify ground floor space, but

also include every regulation that DCFS has for childcare facilities.

I looked at the subject matter of this lease. There is one permitted

use under the lease. The parties clearly agree that [Bright Horizons] was

going to operate a day care center, and incorporated and required [Bright

Horizons] to abide by all DCFS regulations applicable to day care centers.

That being the case, [Riverway’s] contention that [it did not] know

that a day care center servicing infants and toddlers had to be on the

ground floor *** doesn’t strike me as very persuasive.

I have, as far as I can tell before me, two sophisticated parties who

entered into a detailed lease. And they negotiated a provision that allowed

[Riverway] to proffer substitute space that was mutually satisfactory to the

parties. A space in which [Bright Horizons] cannot operate the one use

permitted under the lease, can’t as a matter of law be mutually

satisfactory. It just can’t. So I believe the lease is unambiguous,

incorporating as it does the DCFS regulations. And because the space

offered by the defendant is space that is not suitable for the only permitted

use under the lease, I’m going to rule in favor of [Bright Horizons] on

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No. 1-09-2719

summary judgment, declaring that the May 27, 2008, relocation notice

was ineffective under the lease. That [Bright Horizons] is not in breach of

the lease by reasons of its rejection of the *** notice.

And that [Riverway] may not terminate the lease under Article 14

as a result of Bright Horizons’ refusal to relocate pursuant to the ***

notice. I’m not going to declare what Riverway must do in the future. I

have declared the facts as they appear before me, and I’m not going to

assume that Riverway will continue to offer property at a substitute

location that is not suitable for the operation of a childcare facility, but

I’m not going to prospectively declare that they must do so.”

Following entry of summary judgment, the trial court requested briefing on

Bright Horizons’ request for attorney fees, based upon the fee-shifting provision at

section 13.06 of the lease agreement. Bright Horizons’ petition for attorney fees included

the affidavit of Bright Horizons’ trial counsel attesting to the time entries with regard to

his representation of Bright Horizons in the instant matter.

On September 10, 2009, after hearing oral argument on Bright Horizons’ petition

for attorney fees, the trial court found as follows:

“I have read the submissions of the parties. I’ve considered the

arguments of counsel. I believe section 13.06 of the lease applies under

the circumstances present here.

The landlord in this case defaulted in its fundamental obligation

under the lease to offer substitute space that was usable for the sole

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No. 1-09-2719

activity provided for in the lease, and that was the operation of a child care

center servicing infants and toddlers. The landlord after notice from

[Bright Horizons] persisted in offering space that was unusable for the

purpose. And I find that under a reasonable interpretation of section

13.06, that constitutes a default by the landlord in the performance or

observance of the terms, conditions, covenants, or obligations contained in

the lease.

***

I have examined the affidavit of [Bright Horizons’ counsel]

attached to the petition which itemizes the fees and expenses incurred in

this matter, and I find those fees and expenses are reasonable. And

therefore, I award [Bright Horizons] attorney fees in the amount of

$47,091, and *** costs in the amount of $379.”

This appeal follows.

ANALYSIS

On appeal, Riverway argues that: (1) the trial court erred by finding that the

relocation provision of the lease required that Bright Horizons be relocated to a ground-

floor space; (2) the trial court erred by denying Riverway the opportunity to take

discovery of Bright Horizon’s intention and understanding of the lease’s relocation

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No. 1-09-2719

provision at the time the parties entered into the lease agreement; and (3) the trial court

erred by awarding Bright Horizons its attorney fees and costs.

1. Standards of Review

The standard of review from the granting of summary judgment is de novo.

Weather-Tite, Inc. v. University of St. Francis, 233 Ill. 2d 385, 389 (2009) (“We review

appeals from summary judgment rulings de novo”). The Code of Civil Procedure (Code)

permits a trial court to grant summary judgment only “if the pleadings, depositions, 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.” 735 ILCS 5/2-1005(c) (West 2006).

In addition, this case concerns the trial court’s interpretation of a contract as a

matter of law. A contract construed as a matter of law by the trial court may be

construed independently by a reviewing court, unrestrained by the trial court’s judgment.

Fleet Business Credit, LLC v. Enterasys Networks, Inc., 352 Ill. App. 3d 456, 469 (2004),

citing Lewis X. Cohen Insurance Trust v. Stern, 297 Ill. App. 3d 220, 232 (1998); Zale

Construction Co. v. Hoffman, 145 Ill. App. 3d 235, 240 (1986). Accordingly, our review

from a trial court’s interpretation of a contract as a matter of law is de novo. Avery v.

State Farm Mutual Automobile Insurance Co., 216 Ill. 2d 100, 129 (2005).

Discovery rulings, in contrast, are within the trial court’s discretion and will not

be overturned absent an abuse of discretion. Redelman v. Claire-Sprayway, Inc., 375 Ill.

App. 3d 912, 927 (2007). Trial courts are vested with wide discretion in ruling on

discovery matters, and a reviewing court will not disturb a trial court’s discovery rulings

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absent an abuse of that discretion. Pemberton v. Tieman, 117 Ill. App. 3d 502, 504-05

(1983).

Finally, “[w]hether and in what amount to award attorney fees is within the

discretion of the trial court, and the decision will not be disturbed on appeal absent an

abuse of that discretion.” R.J. Management Co. v. SRLB Development Corp., 346 Ill.

App. 3d 957, 971 (2004).

2. The Trial Court Correctly Granted Bright Horizons’ Motion for Summary Judgment

Riverway first argues that the trial court erred by granting Bright Horizons’

motion for summary judgment because “the clear and unambiguous terms of the lease do

not require [Riverway] to provide [Bright Horizons] with an alternative ground floor

location.”

Summary judgment is appropriate when there are no genuine issues of material

fact and the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-

1005(c) (West 2006). A trial court may enter summary judgment in actions for

declaratory judgment brought pursuant to section 2-701 of the Code (735 ILCS 5/2-701

(West 2006)), where there are no questions of material fact and where the only question

for the trial court is one of legal interpretation of the parties’ contract. See Dixie Square

Thom McAn, Inc. v. Dixie Square Management Co., 55 Ill. App. 3d 619, 625 (1977)

(affirming the granting of summary judgment in favor of one party on a claim for

declaratory judgment, where no questions of material fact existed regarding execution of

lease and where the issue was one of legal interpretation).

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In granting summary judgment in favor of Bright Horizons, the trial court found

that, as a matter of law, “Bright Horizons was [not] obligated to *** specify ground floor

space [in the lease agreement’s relocation provision], [and] include every regulation that

DCFS has for childcare facilities [in the lease agreement].” The trial court found that

there was one permitted use of the leased premises under the lease agreement, namely,

the operation of a child day care center, and that the lease agreement unambiguously

incorporated and required Bright Horizons to comply with all DCFS regulations

applicable to child day care centers. Further, the trial court found unpersuasive

Riverway’s contention that it was not aware that Bright Horizons was servicing infants

and toddlers at the leased premises or that infants and toddlers were required to be

housed and cared for at ground level pursuant to DCFS licensing standards. Interpreting

the lease agreement as a matter of law, the trial court found that the parties negotiated a

provision in the lease agreement that allowed Riverway to proffer substitute space for

Bright Horizons’ relocation that was mutually satisfactory to the parties, and that the

second-floor space offered by Riverway pursuant to its May 2008 relocation notice could

not be mutually satisfactory as Bright Horizons’ relocation to the proposed space would

cause it to violate DCFS licensing standards and cause it to lose its license as a “Child-

care center.” Accordingly, the trial court found that the proposed space could not be

mutually satisfactory to the parties. After having found that the proposed space was not

mutually satisfactory as defined by the lease agreement’s relocation provision, the trial

court found that Bright Horizons was not in breach of the lease by rejecting Riverway’s

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May 2008 relocation notice, and that Riverway may not terminate the lease as a result of

Bright Horizons’ refusal to relocate pursuant to the May 2008 relocation notice.

The principal objective in construing a contract is to determine and give effect to

the intention of the parties at the time they entered into the contract. Fleet Business

Credit, 352 Ill. App. 3d at 469, citing Schweihs v. Davis, Friedman, Zavett, Kane &

MacRae, 344 Ill. App. 3d 493, 500 (2003); Zale Construction Co. v. Hoffman, 145 Ill.

App. 3d 235, 241 (1986); Ancraft Products Co. v. Universal Oil Products Co., 100 Ill.

App. 3d 694, 697 (1981). To determine the intent of the parties, the court must look to

the instrument itself, its purpose and the surrounding circumstances of its execution and

performance. Fleet Business Credit, 352 Ill. App. 3d at 469.

“When a dispute exists between the parties as to the meaning of a contract

provision, the threshold issue is whether the contract is ambiguous.” Fleet Business

Credit, 352 Ill. App. 3d at 469, citing Installco, Inc. v. Whiting Corp., 336 Ill. App. 3d

776, 783 (2002). “Contractual language is ambiguous when it is ‘ “susceptible to more

than one meaning [citation] or is obscure in meaning through indefiniteness of

expression.” ’ ” Fleet Business Credit, 352 Ill. App. 3d at 469, quoting Shields Pork

Plus, Inc. v. Swiss Valley Ag Service, 329 Ill. App. 3d 305, 310 (2002), quoting Wald v.

Chicago Shippers Ass’n , 175 Ill. App. 3d 607, 617 (1988). An ambiguity is not created

simply because the parties do not agree upon an interpretation. Fleet Business Credit,

352 Ill. App. 3d at 469, citing Groshek v. Frainey, 274 Ill. App. 3d 566, 569 (1995); Zale,

145 Ill. App. 3d at 241; Harlem-Irving Realty, Inc. v. Alesi, 99 Ill. App. 3d 932, 936

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(1981). Illinois courts follow the “four corners” rule when interpreting contracts, which

requires:

“ ‘ “An agreement, when reduced to writing, must be presumed to

speak the intentions of the parties who signed it. It speaks for itself, and

the intention with which it was executed must be determined from the

language used. It is not to be changed by extrinsic evidence.” ’ ” Fleet

Business Credit, 352 Ill. App. 3d at 469-70, quoting Air Safety, Inc. v.

Teachers Realty Corp., 185 Ill. 2d 457, 462 (1999), quoting Western

Illinois Oil Co. v. Thompson, 26 Ill. 2d 287, 291 (1962).

“A court may consider extrinsic evidence provisionally, however, for the limited purpose

of determining whether an ambiguity exists.” Fleet Business Credit, 352 Ill. App. 3d at

470, citing Air Safety, 185 Ill. 2d at 463; Economy Preferred Insurance Co. v. Jersey

County Construction, Inc., 246 Ill. App. 3d 387, 390 (1993). Specifically, negotiations

leading up to the lease can be considered to determine the intent of the parties in their use

of particular words and phrases. Arrington v. Walter E. Heller International Corp., 30

Ill. App. 3d 631, 637 (1975), citing Martindell v. Lake Shore National Bank, 15 Ill. 2d

272, 283 (1958); Chicago Auditorium Ass’n v. Corporation of the Fine Arts Building,

244 Ill. 532, 539 (1910). “Whether the contract is ambiguous is [a matter] of law.” Fleet

Business Credit, 352 Ill. App. 3d at 470, citing Installco, 336 Ill. App. 3d at 783; Ancraft,

100 Ill. App. 3d at 697.

Riverway argues that the trial court erred by finding that the lease agreement

required Riverway to proffer substitute space at ground level because a “ground floor”

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requirement is never stated in the lease agreement. Accordingly, Riverway argues that

relocation to a ground-floor space was not one of the limitations to Riverway’s exercise

of its “Right to Relocate [Bright Horizons],” and that if Bright Horizons intended that the

relocation provision should be subject to a ground-floor requirement, the requirement

should have been included in the lease agreement. Riverway also points to the

integration clause contained in section 16.07 of the lease agreement as further support of

its contention that the parties did not intend a ground-floor requirement when drafting the

lease agreement’s relocation provision. As noted, the integration clause provides that

“This Lease represents the entire agreement between Landlord and Tenant covering

everything agreed upon or understood in this transaction. There are no oral promises,

conditions, representations, understanding, interpretations or terms of any kind as

conditions or inducements to the execution hereof or in effect between the parties.”

Further, Riverway argues that the lease agreement does not incorporate DCFS

regulations, and that even if the lease agreement did incorporate DCFS regulations, the

lease agreement in no way requires Riverway to comply with those regulations. Stated

otherwise, Riverway argues that Bright Horizons is required to be “licensed by [DCFS]

to operate a child care center *** [and] provide a minimum service level equal to or

greater than any material DCFS regulations which are in effect during any Term of this

Lease,” but those requirements cannot be imputed to Riverway.

We agree with the trial court’s interpretation of the lease agreement and find

Riverway’s arguments to the contrary unpersuasive. The lease agreement at issue here

provides for one permitted use, namely, a “Child-care center for children.” Further,

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section 5.01 of the lease agreement provides that Bright Horizons operate a child-care

center for children which is licensed by DCFS and provide a “minimum service level

equal to or greater than *** any material DCFS regulations which are in effect” during

the term of the lease agreement. Further section 5.02(a) of the lease agreement states that

Bright Horizons “comply with all *** laws, rules, regulations, orders, ordinances,

directions and requirements of any governmental authority or agency, now in force or

which may hereafter be in force.”

At the time the parties in the case at bar entered into the lease agreement, section

407.370(c) of Title 89 of the Illinois Administrative Code, which contains the DCFS

licensing standards pertinent to this dispute, provided:

“c) Infants and toddlers shall be housed and cared for at ground

level unless otherwise approved through the exception process below. ***

Only a fire inspector from the Office of the State Fire Marshall or the

Chicago Fire Department’s Fire Prevention Bureau may grant an

exception to the requirement that infants and toddlers be housed and cared

for at ground level.” 89 Ill. Admin. Code §407.370(c).

Further, section 18 of the Act provides, “Any person, group of persons, association or

corporation who *** violates any other provision of this Act or any reasonable rule or

regulation adopted and published by [DCFS] for the enforcement of the provisions of this

Act, is guilty of a Class A misdemeanor.” 225 ILCS 10/18(7) (West 2006).

In its verified answers to Riverway’s supplemental interrogatories, which

Riverway attached as an exhibit to its response to Bright Horizons’ motion for summary

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judgment, Bright Horizons stated that “All 34 full service child care centers [that Bright

Horizons operates in Illinois] serve infants and toddlers in ground level or first floor

space” and attached a list of the names and addresses of such infants and toddlers,

including the infants and toddlers serviced at the leased premises. Further, the affidavit

of Ellis-Ferzacca, Bright Horizons’ Chicago area regional manager, evidences that Bright

Horizons services infants and toddlers at the leased premises. See Werckenthein v.

Bucher Petrochemical Co., 248 Ill. App. 3d 282, 288 (1993) (“ ‘where a party moving for

summary judgment files supporting affidavits containing well-pleaded facts and the party

opposing the motion files no counteraffidavits, the material facts set forth in the movant’s

affidavits stand as admitted’ ”), quoting Eastside Fire Protection District v. City of

Belleville, 221 Ill. App. 3d 654, 657 (1991).

The record in the case at bar demonstrates that Riverway first notified Bright

Horizons of its intention to exercise its right under Article 14 of the lease agreement to

relocate Bright Horizons in November 2007, only 5 months after the parties had entered

into the 10-year lease agreement. In that notice, Riverway sought to relocate Bright

Horizons to the First Alternative Proposed Premises, a second-floor suite with no

adjacent playground area. As noted, by letter dated November 12, 2007, Bright Horizons

notified Riverway that the First Alternative Proposed Premises did not meet the

requirements of section 5.01 of the lease agreement as those premises were not located at

ground level and did not have an adjacent playground area.

Riverway provided a second notice of its intention to relocate Bright Horizons

under Article 14 of the lease agreement on December 3, 2007, to the Second Alternative

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Proposed Premises, a first-floor suite with an adjacent playground area. Bright Horizons

accepted Riverways’ December 3, 2007, notice and made efforts to begin the relocation

process. Shortly after Bright Horizons’ acceptance of Riverway’s December 3, 2007,

notice, Riverway withdrew its notice and Bright Horizons remained at the leased

premises.

On May 27, 2008, Riverway, provided a third notice of its intention to relocate

Bright Horizons under Article 14 of the lease agreement, which is the notice at issue in

this appeal, to the Third Alternative Proposed Premises, a second-floor suite with a

playground area located on the ground floor. In its May 27, 2008, notice, Riverway also

informed Bright Horizons that if the parties were unable to agree on alternative space,

Riverway would have the right to terminate the lease “effective upon the date that is

[180] days following the date of [Riverway’s] Relocation Notice.” According to the

affidavit of Ellis-Ferzacca, after receiving Riverway’s third notice of intention to relocate

Bright Horizons, Bright Horizons attempted to obtain an exception to the ground-floor

requirement to DCFS’s licensing standards, so that Bright Horizons might accept

Riverway’s third notice of its intention to relocate Bright Horizons without violating

DCFS regulations. On June 11, 2008, the Fire Marshall denied Bright Horizons’

application for such an exception. Following the Fire Marshall’s denial of Bright

Horizons’ application for an exception to the ground-floor requirement, Bright Horizons

notified Riverway that the Third Alternative Proposed Premises did not meet the

requirements of the DCFS licensing standards. On June 19, 2008, Riverway, through its

legal counsel, sent a letter to Bright Horizons claiming that Bright Horizons was in

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“default” of the lease agreement. The June 19, 2008, letter further stated that if Bright

Horizons did not cure the alleged “default” within 30 days, Riverway would terminate

the lease and enforce the accelerated rent provision in section 13.02(b) of the lease

agreement. As noted, Bright Horizons filed this declaratory action on July 16, 2008.

Bright Horizons argues that Riverway’s use of the relocation provision shows

Riverway’s blatant attempt to terminate the lease prematurely without complying with its

obligations under the relocation provision. Namely, Bright Horizons argues that

Riverway is attempting to avoid its obligation to improve any alternative space at its

expense “with improvements at least equal in quantity and quality to those in the Leased

Premises [and to] reimburse [Bright Horizons] for all reasonable third party expenses

incurred in connection with, and caused by, such relocation.” In support of its argument,

Bright Horizons points to the fact that it accepted Riverway’s second notice of relocation

and that Riverway withdrew its notice shortly after such acceptance.

We observe that although the record does support Bright Horizons’ contention,

the record is not sufficient, as thus far developed, to determine conclusively whether

Riverway wrongfully exercised its rights under the relocation provision to attempt to

wrongfully terminate the lease without complying with its own obligations thereunder.

However, under the facts of the case at bar, Bright Horizons’ relocation to any space

other than a ground-floor space would violate section 407.370 of the DCFS licensing

standards and cause Bright Horizons to be in breach of the lease agreement because it

could not operate a child-care facility, the only permitted use under the lease agreement,

at the Third Alternative Proposed Premises. Accordingly, the trial court correctly

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determined that the Third Alternative Proposed Premises could not be mutually

satisfactory as required by the lease agreement’s relocation provision.

Riverway cites to Braeside Realty Trust v. Cimino, 133 Ill. App. 3d 1009 (1985),

in support of its argument that it was not required to proffer substitute ground-floor space

to Bright Horizons because relocation to a ground-floor space was not a requirement

under the relocation provision of the lease agreement. In Braeside, the parties negotiated

and entered into a written agreement for the lease of commercial property. During

negotiations and in the written agreement, the tenant’s obtaining of an occupancy permit

from the municipality for the operation of a catering business which included the storage

of catering trucks was not addressed by the parties or included in the written agreement.

Braeside, 133 Ill. App. 3d at 1012. Thereafter, the municipality’s building commissioner

informed the tenant that he would not be able to obtain the required occupancy permit

and the tenant failed to apply for the permit. Braeside, 133 Ill. App. 3d at 1011. The

tenant then informed the landlord that he could not perform under the lease, and the

landlord advertised the space and rented it to a new tenant a few months later. Braeside,

133 Ill. App. 3d at 1010.

The court in Braeside found the tenant to be in breach of the lease for failing to

pay rent. Braeside, 133 Ill. App. 3d at 1011-12. The court reasoned that the lease only

showed that the parties intended that the tenant lease space from the landlord. Braeside,

133 Ill. App. 3d at 1011. If the tenant intended that the operation of the lease depended

on obtaining an occupancy permit or some other license, the tenant could have inserted a

provision to that effect in the lease. Braeside, 133 Ill. App. 3d at 1012.

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Braeside is certainly distinguishable from the case at bar. The lease agreement in

the case at bar specifically requires Bright Horizons to be “(i) licensed by [DCFS] to

operate a child care center” and “comply with all laws, rules, regulations, orders,

ordinances, directions and requirements of any governmental authority or agency.” The

parties in the case at bar specifically incorporated the DCFS licensing standards in the

lease agreement and limited Riverway’s right to relocate Bright Horizons to an alternate

space that was mutually satisfactory to the parties. The trial court correctly found that

Bright Horizons’ relocation to the Third Alternative Proposed Premises would cause

Bright Horizons to violate DCFS licensing standards and cause its license to be revoked

so it could not operate a day care center. Accordingly, Bright Horizons’ refusal to accept

Riverway’s relocation to the Third Alternative Proposed Premises did not cause Bright

Horizons to be in default of the lease agreement.

3. The Trial Court Did Not Abuse Its Discretion When Entering Its Discovery Rulings

Riverway then argues that the trial court abused its discretion when denying

defendant’s request to take discovery on the issue of whether the ground-floor

requirement was discussed prior to the time the parties entered into the lease agreement.

This is not persuasive.

First, we observe that Riverway has failed to specify which of the trial court’s

discovery rulings were allegedly made in error in its appellant’s brief and only raises the

arguments in its reply brief. As a result the arguments are waived. 210 Ill. 2d R.

341(h)(7) (“Points not argued [in the appellant’s brief] are waived and shall not be raised

in the reply brief, in oral argument, or on petition for rehearing”). Even if Riverway’s

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No. 1-09-2719

arguments are not waived, the arguments raised in Riverway’s reply brief are also not

persuasive.

As noted, discovery rulings are within the trial court’s sound discretion and will

not be overturned absent an abuse of that discretion. Redelmann v. Claire-Sprayway,

Inc., 375 Ill. App. 3d 912, 927 (2007). Great latitude is allowed to the trial court in the

scope of the discovery it allows, and the concept of relevance is broader for discovery

purposes than for purposes of admitting evidence at trial. TTX Co. v. Whitley, 295 Ill.

App. 3d 548, 556 (1998), citing Leeson v. State Farm Mutual Automobile Insurance Co.,

190 Ill. App. 3d 359, 365 (1989). Relevance for discovery purposes includes not only

what is admissible at trial, but also that which leads to admissible evidence. Whitley, 295

Ill. App. 3d at 557, citing Pemberton, 117 Ill. App. 3d at 504-05. Discovery should be

denied, however, when there is insufficient evidence that the requested discovery is

relevant to the issues in the case. Whitley, 295 Ill. App. 3d at 557, citing Rokeby-Johnson

v. Derek Bryant Insurance Brokers, Ltd., 230 Ill. App. 3d 308, 317 (1992).

As noted, Bright Horizons filed its motion for summary judgment on October 31,

2008. On November 12, 2008, Riverway submitted an affidavit pursuant to Illinois

Supreme Court Rule 191(b) (210 Ill. 2d Rule 191(b)), requesting that the trial court allow

it to take limited discovery as to whether “any requirement of a first floor location was

the subject of discussion or negotiation prior to the entry of the lease agreement between

the parties.” On November 19, 2008, the trial court entered and continued Bright

Horizons’ motion for summary judgment and granted Riverway request to conduct

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No. 1-09-2719

limited discovery. The parties subsequently exchanged written discovery on that narrow

issue. Riverway’s first interrogatory was as follows: