In a case pertaining to the redevelopment of State Street, a recent Cook County Circuit Court decision found that a landlord, who never before had complained about the physical condition or maintenance of a building, could not suddenly terminate the tenant's lease based on its claim that the tenant had failed to maintain the property.

At issue was the former Woolworth Building, which wraps around the Reliance Building adjacent to Block 37 at the corner of State and Washington Streets. Mitchell Marinello, a partner in the Chicago-based litigation law firm of Novack and Macey, and Monte Mann, an associate in that firm, successfully represented Venator, the tenant, in a case entitled Magalia (U.S.A.), Ltd. v. Venator Group Specialty, Inc., f/k/a F. W. Woolworth Co., No. 99 MI 733275.

The four-story, L-shaped building was built by the F.W. Woolworth Company and housed its retail five and ten cents store from 1928 to 1997. In 1998, at the City's request, Venator evicted certain sub-tenants and opened the Champs store that now occupies part of the building's street level.

Weeks after Champs opened, the City expressed interest in buying the property. Soon afterward, representatives of the property's owner, Canadian-based Magalia (U.S.A.), Ltd., inspected the building to determine its value. But, as in the past, Magalia made no complaint to Venator about the condition or maintenance of the building, on which Venator had paid all rent, taxes and other expenses for the past 70 years.

"In March, 1999, the City made an offer to buy the property and stated that it would acquire the property through an eminent domain proceeding if the parties could not agree on a price," said Marinello. "About two weeks later, the landlord served Venator with a notice of default claiming for the first time that the property was not in good repair. The landlord refused to identify what it believed needed repair. The landlord then filed suit to terminate Venator's lease. If its suit had been successful, the landlord could have pocketed all the money the City pays for the property in the eminent domain case without sharing any of those funds with Venator."

The trial court ruled that Venator had maintained the property in accordance with its lease obligations and that the landlord's complaints were "minor" and "cosmetic" in nature. Accordingly, it refused to terminate Venator's lease. As a result, Venator can claim its rightful share of the sales proceeds in the eminent domain action.

"It is rewarding to see that justice prevailed," Marinello said. "The court recognized that the landlord's complaints were relatively minor and did not justify the drastic relief of terminating Venator's lease. Venator had dutifully paid the rent, taxes and expenses of running this building for years while State Street was in economic decline. The landlord, who purchased the building at a low price and collected a fair rent during this time, did not deserve a windfall."