Category Archives: Uncategorized

Commercial Leases, Consideration, Guarantees, Collection of Rent and Signage of Marks!

A recent case by the First District, illustrates the importance of properly drafting and negotiating commercial leases. The Appellate Court, reversed a decision to dismiss a second Amended Complaint filed by LDS (the “Landlord”).  LDS entered into a commercial lease with Southern Cross Food Ltd. (the “Tenant”), but did not include a properly drafted and executed personal guarantee.  Instead, the Landlord had the Tenant’s owner execute a personal guarantee at a later point in time.

Unfortunately, it was not clear that there was adequate consideration for the personal guarantee.  Thus, the Tenant was able to get the Landlord’s claim for rent in the amount of approximately $94,000 dismissed pursuant to a section 2-615 motion to dismiss the verified complaint.  Although the Landlord was able to rent the premises to a Dunkin Donuts franchise, it was not able to collect rental payments from the Tenant and enforce the guarantee against the Tenant’s owners.

On appeal, the First District, allowed the Landlord to file a third amended complaint to establish that there was consideration for the enforcement of the personal guarantee.  The Landlord attempted to claim that its agreement to permit signage for the Tenant should be sufficient consideration for the complaint. Although the Landlord, was able to get a third attempt to make a claim for enforcing the personal guarantee against the Tenant’s owners, there still is no guarantee that it will be able to collect any of the $94,000 of rent owed by the Tenant.

Many of these challenges and obstacles could have been avoided by properly drafting and negotiating the commercial lease and personal guaranty.  Having a Business Lawyer that understands litigation and transactional work can often help a business owner anticipate and mitigate these types of enforcement risks.  If you have any concerns or questions, regarding drafting, negotiating or enforcing a commercial lease or guarantee, then please feel free to contact us.

See: LDS v. Southern Food Case for more details.

Attorneys’ fee awards, Prevailing Parties and Reasonable Fee Awards!

Attorneys’ fees are often a huge point of contention in a lawsuit, especially, in consumer and employment law areas.  Often fee shifting provisions are utilized to negotiate concessions from opposing parties.  However, understanding how fee petitions are awarded by courts is crucial to litigating these disputes, advising business owners, individuals, employers, employees, collection agencies and consumers. 

A court will look at the following factors: 1) the nature of the law and the expertise required; 2) the local rates of attorneys specializing in that area of law; 3) the use of multiple attorneys; 3) the complexity of the task performed by the billing attorneys; 4) the amount of recovery obtained for the client; 5) the efficient use of paralegals or administrative staff; 6) the number of conferences and attorney meetings; and 7) the length of the litigation. 

In a recent opinion, the 7th Circuit, affirmed a district courts award of $6500 in fees, based on the following findings: 1) four attorneys were used, when one attorney with a billing $260 could have performed the work; 2) duplicative tasks were performed by attorneys with a billing rate of $425 and $375; 3) the lawsuit was resolved in a matter of months; 4) $6500 seemed roughly proportional to the amount recovered for the Plaintiffs under the Fair Debt Collections Practices Act (FDCPA); and 5) the courts determination that the proffered evidence did not justify the billing rates claims by Plaintiffs’ attorneys. 

See:  Fee_7th_Schlacher_0809.  If you have any concerns or questions regarding the attorneys’ fee matters, then please feel free to contact us.