Opinion
No. 88 C 8191.
April 4, 1990
MEMORANDUM OF DECISION AND JUDGMENT
This diversity case concerns unpaid rent under a lease for office space in Park Ridge, Illinois. Inland Property Management, Inc. contends that Rob R. McLallen is personally liable on the lease because the named lessee, "MDR Associates, Inc., an Illinois corporation," has never existed. Inland also makes the claim that McLallen defrauded it concerning the existence of the named lessee. McLallen denies both charges. The Court finds in favor of Inland on both of its claims and against McLallen on his counterclaim for reformation of the lease. It also denies the cross motions for directed verdict.
During trial, the Court reviewed the pleadings, heard opening statements by counsel for each party, observed and heard the testimony of each witness, took extensive and detailed contemporaneous trial notes of the testimony, and made specific contemporaneous determinations of the credibility and weight to be given the testimony of each witness. In so doing, the Court took into account the witness's age, memory, intelligence, ability and opportunity to observe, and the manner and appearance while testifying. The Court also considered any possible interest, bias or prejudice each witness might have, as well as the reasonableness of the testimony when considered in light of all of the evidence presented. All exhibits admitted into evidence have been carefully examined. The Court has drawn what it believes to be the correct reasonable inferences from this evidence, and it has reviewed and evaluated the applicable law.
The Court therefore makes its findings of fact and conclusions of law as required by Fed.R.Civ.P. 52(a), as follows:
I. FACTS
Many of the facts are undisputed. The Court finds the rest of the facts have been proven by clear and convincing evidence. The Court has jurisdiction of the case because Inland is an Illinois corporation with its principal place of business in Oak Brook, Illinois, McLallen is a resident of Virginia, and the claimed damages are well in excess of $10,000, the jurisdictional amount that was in effect when this lawsuit was filed. See 28 U.S.C. § 1332. The lease concerns premises located at 1480 Renaissance Drive, Suite 401, in Park Ridge. It names as tenant "MDR Associates, Inc., an Illinois corporation," and it is signed by McLallen as "president." There is not now nor has there ever been an Illinois corporation known as MDR Associates, Inc., though there was a Virginia corporation known as MDR Corporation, formed in 1982, and it apparently did business as MDR Associates. McLallen has extensive experience in the hospitality industry, having been graduated from the hotel school of Cornell University in 1958 and having worked for approximately thirteen years at the Drake Hotel in Chicago and held other positions in the industry.
The term of the lease is from December 1, 1986, to June 30, 1992. Rent was to be abated for the first seven months of the term. Thereafter, rent was to be $2,518.50 per month from July 1987 to November 1987, and $2,561.31 per month from December 1987 to June 1992. The tenant also was to pay taxes, administrative expenses, and other operating costs. Although the premises were occupied beginning in January 1987 pursuant to the lease, no rent has been paid for the month of August 1987 or any month afterward, despite Inland's demands.
Finally, it is agreed that McLallen first discussed the lease in person with Peter Woodworth, an employee of Inland, in October 1986. On or about October 30, 1986, Woodworth sent the lease (plus copies) to McLallen naming "MDR Associates, Inc., an Illinois corporation" as the tenant. McLallen crossed out the name of "MDR" and replaced it with the name "PDM Resources Corporation," which, though not yet incorporated, subsequently received a certificate of incorporation dated November 25, 1986. McLallen then signed and returned the lease. After Woodworth received the lease with the substitution made by McLallen, he sent this on to Donna DeAngeles for review. The proposed lease was rejected, and another lease with the original name was sent back to McLallen. A cover letter describing the change was dated December 2, 1986. McLallen then signed as president on the new lease which was in the original name of "MDR Associates, Inc., an Illinois Corporation" as the lessee, and returned this document to Inland, which then executed the document as well.
The parties agree about little else from this point on. Although McLallen admits signing the second document and writing in his title as president of MDR Associates, Inc., he denies knowing that the document named MDR Associates, Inc. as the lessee. Instead, he testified that he did not realize that MDR, rather than PDM, was named as lessee in the document until this lawsuit was threatened in summer 1987. McLallen's explanation is that his secretary placed the second document on his desk, he signed it without reading it carefully, and thus he never noticed that the second document no longer named PDM as lessee. McLallen testified that because of its poor financial condition, he never intended to bind MDR Corporation, the Virginia entity, which ultimately went into a liquidation proceeding under Chapter 7 of the Bankruptcy Code.
Having carefully examined McLallen during his testimony, and having carefully examined Inland's witnesses during their testimony, the Court does not believe McLallen's recollection of events. The Court finds that the testimony of the witnesses for Inland, confirmed by the documentary evidence presented, is a more plausible account of what happened.
To begin with, Woodworth credibly testified that McLallen first approached him about leasing office space in October 1986. According to Woodworth's testimony, McLallen represented that he was president of a firm called "MDR Associates," which was based in Virginia and acted as a consultant to companies in the hospitality industry. McLallen presented a business card confirming that identification. McLallen was accompanied by Frederick R. Hummert, who gave Woodworth a business card identifying him as "senior vice president" of MDR Associates, and Woodworth credibly testified that Hummert claimed to be in charge of the "Denver division." McLallen subsequently sent Woodworth a professional-appearing brochure describing "MDR Associates" and its impressive client roster of large companies. The cover letter to the brochure identified MDR Associates as "A Division of MDR Corporation" in fine print at the bottom of the page. Woodworth didn't notice it. The brochure does not directly identify MDR Associates as a corporation, but does list "MDR Corporate Management." McLallen had told Woodworth that MDR Associates wished to open an Illinois office, thus creating the need for an office in Park Ridge.
Woodworth testified that based upon his and McLallen's discussions, and after discussing the matter with his superior, Donna DeAngeles, he sent the initial lease documents naming MDR Associates as the lessee. In testimony which this Court credits, Woodworth stated that until he got the documents back naming "PDM" as the lessee, he had never heard of that entity. Woodworth forthrightly and credibly testified that he called McLallen and asked him about PDM; McLallen told Woodworth that it was a new wholly owned subsidiary of MDR Associates, which was to be incorporated in the near future.
Both Woodworth and DeAngeles testified that Woodworth told DeAngeles of McLallen's proposed substitution. DeAngeles, who the Court considers to have given credible and straightforward testimony, stated that she called McLallen (though she could not remember the exact day or date) to discuss the matter. McLallen does not deny that he and DeAngeles had a conversation concerning the lease, but testified that he could not recall it, though he admitted that his personal notes show that he returned a phone call from DeAngeles at about the time she claims to have called him. McLallen also stated that he did not have any notes concerning the content of their discussion, though that would have been his normal practice had the conversation actually been substantive.
Having considered all of the testimony on this point, the Court credits DeAngeles's recollection that she and McLallen discussed the lease. McLallen told her during this conversation that PDM was a newly forming subsidiary of MDR Associates and was to be incorporated in the near future. The Court further believes DeAngeles's testimony that she told McLallen PDM was unacceptable as the lessee, because Inland had a policy against doing business with new corporations, absent a personal guaranty from either an individual or the parent corporation. The Court notes that McLallen did not expressly contest this story, but testified only that he cannot recall the conversation. According to DeAngeles, McLallen agreed to have an entity he called "MDR Associates, Inc." named as the lessee, but requested that notices be sent in care of PDM. DeAngeles agreed, but only on the condition that MDR Associates, which she believed to be the parent of PDM, be liable on the lease. DeAngeles straightforwardly and credibly testified that she would never have approved the lease unless MDR Associates was liable under the lease. She also credibly testified that McLallen identified MDR Associates as a corporation.
Although the Court bases its conclusion in this regard on the relative credibility of the witnesses, as determined by the Court's observation of their demeanor during testimony, the Court also is convinced that DeAngeles's recollection is inherently far more plausible given the undisputed evidence concerning what happened next. DeAngeles testified, and the Court admitted into evidence documents confirming this testimony (Pl. Exs. 10A 10B), that following her conversation with McLallen, she sent Woodworth a memorandum recounting the conversation and directing Woodworth to redo the lease, once again naming MDR Associates, Inc. as the lessee. The memorandum is dated November 24, 1986, and recounted the essence of DeAngeles's conversation with McLallen.
Woodworth then sent the revised lease to McLallen with a cover letter dated December 2, 1986, notifying McLallen of the substitution of MDR Associates, Inc. as lessee and identifying the pages on which the changes were made (Pl. Ex. 11). This letter also referred to the conversation with DeAngeles. On or about December 17, 1986, McLallen received from Inland a copy of the fully executed lease, now naming MDR Associates, Inc. as tenant.
Furthermore, the typography of the second lease also makes McLallen's story not believable. The typewritten name "MDR Associates, Inc., an Illinois corporation" is set above the signature line. McLallen signed his name so that his signature cut through the typewritten name, and he wrote in by hand his title as "president" and dated the lease. The eye of the signer could not have missed the name of the corporation.
Within the first few months of the lease's signing, Inland sent two estoppel certificates for McLallen's signature (Pl. Exs. 2A 2B). Each prominently named MDR Associates as the lessee, both in the caption at the beginning and at the signature line. In each case, McLallen signed the documents as president of MDR Associates with his signature touching the typewritten identification of MDR located above the signature line. He also made editing changes in the body of the certificates. Again, the eye of the signer could not have missed the name of the corporation.
Finally, because of the nonpayment of rent, Inland filed a previous suit in order to regain the premises. By letter dated September 11, 1987 (Pl. Ex. 13), Martin J. Freed, a Chicago lawyer, stated that his client, MDR Associates, Inc., would have to leave the property "[d]ue to circumstances beyond its control." The letter does not assert the actual tenant to be PDM. The lawsuit for possession of the premises was filed in 1987, and on October 9, 1987, an agreed order for possession was entered into by defendant MDR Associates, Inc. with Freed acting as attorney.
McLallen admitted during trial that he saw MDR's name on the estoppel certificates, but offered the unconvincing explanation that he thought the name was put there in recognition that PDM was doing business as MDR. Besides the fact that this testimony conflicts with testimony that the Court found far more convincing, the testimony also does not explain PDM's failure to file under the Illinois assumed name statute to use MDR Associates as a trade name until after the premises were abandoned in September 1987. McLellan offered the unconvincing explanation that the filing was done belatedly because, though he thought it had been done when the company began doing business in Illinois, a lawyer he had retained to represent him in his dispute with Inland discovered that the filing had never been made.
Moreover, though payments actually made under the lease were drawn on the account of "PDM Resources Corp.," the Court credits DeAngeles's testimony that she believed this to be an accommodation to McLallen's companies for recordkeeping purposes. The Court notes that evidence indicates some of the trade accounts were actually carried under the name of MDR Associates.
Inland has made a reasonable effort to mitigate its damages. After showing the premises to a number of persons, it succeeded in leasing the premises from April 1, 1988, to September 14, 1989, to James T. Walesa, collecting a total of $25,844.02 in rent (the base monthly rental being $1,198). Inland paid a commission of $1,434.51 in connection with this lease.
Since then, Inland has been unable to find a tenant, despite having made what the Court finds to be reasonable efforts to do so. Inland has shown the premises to four prospective tenants over the course of approximately six months. Inland has run a weekly general advertisement in Crain's Chicago Business and a monthly general ad in the Sunday Chicago Tribune, it has posted a billboard along Interstate 294 near the Park Ridge Office Center, it has listed the space in the Office Listing Guide, and it has mailed flyers to financial institutions in the Chicago and Park Ridge areas. All ads were for all space for rent in the office complex. Moreover, the Court finds that Inland stands little chance of leasing the particular premises during the remainder of the lease term. Inland presented convincing evidence that there is a large amount of comparable unleased office space in this and other similar office complexes and buildings in the general area around Park Ridge and O'Hare Airport.
II. CONCLUSIONS
A. Inland's Theories of LiabilityAt trial, Inland put forward evidence to support two theories of liability. The first (Amended Complaint Count I) was that McLallen is liable personally for payments due under the lease because he signed the lease as president of a nonexistent corporation. The second (Count II) was that McLallen is liable in damages because he fraudulently misrepresented the existence of MDR Associates, Inc. as a corporation that was going to do business in Illinois. Having found that Inland proved the facts necessary to recover under each theory, the Court rules in Inland's favor on both, taking them in reverse order.
B. Fraud
The elements of fraud are well settled:
"(1) [a] false statement of material fact (2) known or believed to be false by the party making it; (3) intent to induce the other party to act; (4) action by the other party in [justifiable] reliance on the truth of the statement; and (5) damage to the other party resulting from such reliance.Gerill v. Jack L. Hargrove Builders, 538 N.E.2d 530, 536 (Ill.) (quoting Soules v. General Motors Corp., 402 N.E.2d 599, 599 (Ill. 1980)) (brackets in original), cert. denied, 110 S. Ct. 243 (1989). All of the elements must be proved by clear and convincing evidence. Price v. Highland Community Bank, 722 F. Supp. 454, 460 (N.D. Ill. 1989).
The Court's findings of fact show that each of the elements has been so proved. As detailed above, the Court disbelieves McLallen's recollection of events, finding instead that he falsely led Inland to believe that he was president of MDR Associates, Inc., a corporation, which did not in fact exist nor did it ever exist. Although it was Woodworth who wrongly assumed there to be an Illinois corporation named MDR Associates, Inc., McLallen fraudulently permitted Inland to enter into the lease agreement based upon this mistaken belief, which he himself had fostered through his various representations to Woodworth and DeAngeles. McLallen knew his representations to be false at the time that he made them. By making these representations, McLallen intended to induce Inland to enter into a lease with him on the mistaken belief that the lease was to be with the MDR Associates, Inc. that was described in the 1986 introductory brochure on MDR Associates which he mailed to Wordworth by letter dated October 20, 1986. Moreover, these false representations were of a material fact, because Inland would not otherwise have entered into the lease.
Inland also has established by clear and convincing evidence that it justifiably relied upon McLallen's representations. The first issue to be considered here is reliance, which is composed of two subparts. In order to have been relied upon, "fraud . . . must . . . be both believed (if it is not believed, it can hardly be described as fraud) and acted on." AMPAT/Midwest, Inc. v. Illinois Tool Works, Inc, Nos. 89-1437, 89-1473, slip op. at 11 (7th Cir. Feb. 16, 1990) [1990 U.S. App. LEXIS 2376]. The Court has carefully considered the evidence, evaluating the credibility of the witnesses, and believes the testimony of Woodworth and DeAngeles that McLallen represented the lease would be with MDR Associates, Inc., and that they further believed MDR Associates, Inc. to be a medium-size consulting company with an impressive list of clients. Moreover, the Court believes DeAngeles's testimony that she informed McLallen of Inland's refusal to accept the substitution of PDM as the tenant, and that McLallen agreed that MDR Associates, Inc. would be named as tenant in the lease. McLallen's representations thus were acted upon.
Furthermore, Inland's reliance was reasonable. McLallen presented a professional appearing brochure describing MDR Associates and its alleged clients; a phone call was made to Virginia, where an employee answered with the MDR name; McLallen himself appears to be a responsible businessman, and it is clear from his testimony that he has had extensive business experience. As the Seventh Circuit explained in AMPAT, "[U]nlike the victim of a nondeliberate tort, the victim of a fraud is not obliged to dig beneath apparently adequate assurances . . . merely because the circumstances might engender suspicion in the proverbial reasonable man." Id. at 15-16. "It is not ordinary prudence to assume that your seller is a liar." Id. at 17. Nor must a lessor assume that his prospective lessee is a liar. From the testimony which this Court has heard and the documentary evidence which this Court has examined, there is nothing to indicate that Inland's agents proceeded in the face of known risk or ignored a risk that was obvious. See id. at 14-15. Although McLallen argues that Inland should have done more to ascertain the legal existence of the entity named in the lease, the Court believes that this argument mistakenly imports a notion of contributory negligence into an intentional tort case. See id. at 12-15. Accordingly, the Court finds that Inland has established its justifiable reliance by clear and convincing evidence.
Finally, the Court finds that Inland has suffered damage as a result of McLallen's misrepresentations. Had McLallen not misrepresented the existence of MDR Associates, Inc. as a financially responsible corporation, Inland would never have agreed to the lease, and would not have readied the premises for McLallen's occupancy.
C. Personal Liability on the Lease
McLallen's personal liability on the lease is supported by two distinct doctrinal approaches. The first is the common law view that a person who signs a contract or lease on behalf of an incompetent (in this case, nonexistent) principal is himself personally liable for the obligation. The second is established by § 3.20 of the Illinois Business Corporation Act, Ill. Rev. Stat. ch. 32, para. 3.20, which provides that "[a]ll persons who assume to exercise corporate powers without authority so to do shall be jointly and severally liable for all debts and liabilities incurred or arising as a result thereof." See Richmond Wholesale Meat Co. v. Hughes, 625 F. Supp. 584, 587-90 (N.D. Ill. 1985); United States Fidelity Guarantee Corp. v. Putzy, 613 F. Supp. 594, 597-602 (N.D. Ill. 1985); H.F. Philipson Co. v. Suson, 322 N.E.2d 45, 48 (Ill. 1974). See generally 3A Fletcher Cyclopedia of Corporations § 1121, at 246 (1986) ("[P]ersons assuming to act as officers or agents of a purported corporation which has, in fact, no existence either de jure or de facto, will be personally liable ex delicto or ex contractu.").
The only real point of controversy here is the question of knowledge. There are decisions holding that officers of a corporation that has been dissolved cannot be liable unless it is shown they had knowledge of the corporation's dissolution at the time liabilities were incurred. See, e.g., Steve's Equipment Service, Inc. v. Riebrandt, 459 N.E.2d 21, 24 (Ill.App. 2d Dist. 1984). Accordingly, it can be argued that McLallen can only be held liable on the lease if he knew that he was signing it on behalf of a nonexistent corporation. As the Court's previous discussion indicates, the Court has already found the evidence clear and convincing that McLallen knowingly signed the lease as president of MDR Associates, Inc., knowing that no such corporation existed. The Court thus need not consider whether McLallen could have been held absolutely liable for signing on behalf of a nonexistent entity in the absence of actual knowledge. See Kessler Distributing Co. v. Neill, 317 N.W.2d 519, 522 (Iowa App. 1982).
McLallen, however, seeks to graft an additional requirement onto the test for liability, arguing that he can be held to the lease personally only if "the parties to the transaction intend[ed] that the defendant would be personally obligated for the debts incurred." Defendant's Trial Brief, at 7. He relies onEstate of Plepel v. Industrial Metals, Inc., 450 N.E.2d 1244 (Ill.App. 1st Dist. 1983). That case, however, dealt with a company that had been validly incorporated but which had lost its charter for a period due to nonpayment of franchise taxes and failure to file an annual report. Id. at 1245. To extendPlepel's rule to this situation would permit formation of contracts under which one side would be bound only if it chose to be bound. In this case, MDR Associates, Inc. could not be liable because there never was such a corporation; McLallen would not be liable because Inland, due to its belief in the corporate existence of MDR Associates, intended for MDR Associates to be liable, not McLallen. In short, the rule proposed by McLallen would be a powerful engine for the perpetration of fraud. The Court therefore does not accept it.
The Court adds, for sake of completeness, that McLallen has not argued that he signed the lease as president of "MDR Associates, Inc., an Illinois corporation" with the intent of making liable the Virginia entity known as "MDR Corporation." See William Brandenburg Co. v. Spitz, 263 Ill. App. 123 (1st Dist. 1931)
D. Damages
Inland initially sought to recover not only the amounts due it under the lease, but also consequential damages for fraud on an alternative rescission and restitution basis, measuring these alternative damages as the commission paid on the lease, the amount spent to ready the premises to McLallen's specifications, and the abated rent. During closing arguments, however, Inland's counsel made the election and stipulated to the Court that Inland seeks only those damages to which it is entitled under the lease. McLallen nevertheless has objections to the revised amounts claimed by Inland, and the Court will address these arguments below.
Initially, McLallen argues that Inland is not entitled to all of the rent due under the lease but not yet accrued. Illinois landlord-tenant law does not recognize the doctrine of anticipatory repudiation, Infinity Broadcasting v. Prudential Ins. Co., 869 F.2d 1073, 1078-79 (N.D. Ill. 1989), and therefore appears to retain the rule that rent may be recovered only after it has accrued, absent an acceleration clause. See Johnstowne Centre Partnership v. Chin, 442 N.E.2d 680, 683-84 (Ill.App. 4th Dist. 1982) (discussing Illinois Supreme Court cases and rejecting dicta to the contrary in Wanderer v. Plainfield Carton Corp., 351 N.E.2d 630 (Ill.App. 3d Dist. 1976)), rev'd on other grounds, 458 N.E.2d 480 (Ill. 1983). See generally 24 I.L.P. Landlord and Tenant § 444 (1980 Supp. 1989) ("[T]he failure to pay rent when it accrues does not accelerate the unpaid rent in the absence of a provision in the lease to that effect. . . ."). But Lease ¶ 19(b)(ii)(C) is such an acceleration clause. Inland thus is entitled to a judgment for the entire amount due it under the lease.
Under Illinois law, "the measure of damages when a lease [is] breached [is] the total unpaid rent for the remaining term of the lease, less what the landlord [can] obtain from reletting the premises for all or part of that term." Wanderer, supra, 351 N.E.2d at 635. The rent due as of the month of trial is $81,790.68. The rent due from April 1990 through June 1992, discounted at 8%, is $63,668.63. $81,790.68 + $63,668.63 = $145,459.31 total due under the lease. Inland has received these amounts totaling $30,348.01: (1) $2,518.50, security deposit; (2) $3,420, furniture sold; (3) $24,409.51, net amount under Walesa lease ($25,844.02 rental less $1,434.51 commission). Thus, Inland is entitled to a judgment of $115,111.30 in rental due.
Inland, however, makes two additional claims of damages that McLallen contests. The first is a claim of a 15% "service charge," computed annually without compounding, for each monthly rental payment that is overdue. See Lease ¶ 3(c). The amount sought is $16,212.64. The second claim is for attorneys fees in the amount of $16,835.70, not including trial time.
Regarding the service charge provision, McLallen argues that it imposes an unenforceable penalty, citing Lake River Corp. v. Carborundum Co., 769 F.2d 1284 (7th Cir. 1985), which stands for the general principle that penalty clauses are unenforceable, but does not address the question whether the service charge provided by Lease ¶ 3(c) is such a clause. For its part, Inland presents no cases on this issue. The lack of guidance from the parties is unfortunate, forLake River makes clear that the question is one of law, and the Court, of course, has limited time to find the law on behalf of the parties.
Nevertheless, the Court's own research discloses that Illinois permits the award of prejudgment interest on money due under lease agreements. Montgomery Ward Co., Inc. v. Wetzel, 423 N.E.2d 1170, 1176 (Ill.App. 1st Dist. 1981). The Illinois courts have held it error to impose the statutory rate where the parties have contracted for a higher rate. Bovinett v. Rollberg, 440 N.E.2d 210, 221 (Ill.App. 5th Dist. 1982). Cf. Michigan Avenue Nat'l Bank v. Evans, Inc., 531 N.E.2d 872, 881-82 (Ill.App. 1st Dist. 1988) (approving award of prejudgment interest at 10% pursuant to term of lease, rather than statutory rate of 9%). Although the Illinois usury law regulates the lawfulness of particular rates, it does not cover business loans, even when made to sole proprietors. Commercial Mortgage Finance Co. v. Life Savings of America, 541 N.E.2d 661, 663 (Ill. 1989). Specifically, an annual rate of 15% was upheld in one case, which, though not free of all ambiguity in its reasoning, appears to rely in part on the doctrine that business loans are not subject to the usury laws. See Northwest Federal Savings Loan Association of Chicago v. Weisberg, 422 N.E.2d 1101, 1104-05 (Ill.App. 1st Dist. 1981).
Because the "service charge" is in economic reality a form of interest, the Court concludes it is collectible under the foregoing cases. Moreover, Inland is entitled to an annual rate of 15% without compounding, since ¶ 3(c) of the lease states: "If any installment of Base Rent or additional rent provided for herein, including the Annual Rental Adjustment, or any part thereof, is not paid within ten (10) days after its due date, it shall be subject to a service charge of fifteen percent (15%) of the unpaid rent due for each month or fraction thereof, or such lesser amount as may be the maximum amount permitted by law, from such due date until paid." The claimed amount of $16,212.64 therefore is correct.
Regarding attorneys fees, McLallen argues that the amount claimed is excessive. Illinois law permits an award of fees and costs to a prevailing lessor when the lease contains a fees provision. Pennsylvania Truck Lines, Inc. v. Solar Equity Corp., 882 F.2d 221, 227-28 (7th Cir. 1989); Exchange Nat'l Bank of Chicago v. Sampson, 542 N.E.2d 1303, 1306-07 (Ill.App. 2d Dist. 1989). Lease ¶ 19(e) states that "[t]enant agrees to reimburse Landlord for the attorney's or collection agent's fees incurred thereby, whether or not suit is actually filed." Although the provision does not limit the award to a "reasonable" fee, the parties stipulated at the end of closing arguments that the Court may determine the reasonableness of the claimed fees without the taking of expert testimony on the point.
Inland has presented itemized time-sheets prepared by its lawyers. Having examined the time sheets, the Court determines the claimed fees to be reasonable. The Court notes specifically that the lawyers for Inland, who are with the Chicago law firm of Winston Strawn, delegated the great bulk of the work to the lowest-paid lawyer assigned to the case; her time was initially billed at $95 per hour and later at $115 per hour. The three more senior lawyers on the case billed at hourly rates of $150, $165 and $210. From the Court's experience, all of these rates are in keeping with the rates customarily charged by similarly situated lawyers in the Chicago area.
The Court also finds the time spent on this litigation to be reasonable. McLallen raises the specific objection that the time billed in the two weeks preceding trial for trial preparation exceeded the time spent on the trial itself. The trial preparation time totals 51.75 hours, for a claimed fee of $6,555, most of it spent in preparing witnesses and getting trial memoranda and exhibits ready. The Court finds this time reasonable considering the evidentiary and legal complexity of the trial.
Finally, the Court notes that the pretrial attorneys fees of $16,835.70 is roughly 13% of the total of $131,323.94 in rent and service charges (after credits to McLallen) claimed by Inland. The Court finds this a reasonable collection cost in light of the amount at stake.
CONCLUSION
The Court therefore finds in favor of Inland and against McLallen on Inland's claims of fraud and personal liability on the lease. The Court also finds in favor of Inland and against McLallen on McLallen's counterclaim for reformation. Accordingly, the Court finds that Inland is entitled to a judgment of $131,323.94 in rent and service charges, and $16,835.70 in pretrial attorneys fees. The Court grants Inland three weeks to submit a supplemental petition for attorneys fees incurred during trial; McLallen will be given an opportunity to file any objections he might have within three weeks of the filing of the petition. Thereafter, the Court will rule on such petition and enter final judgment in favor of Inland and against McLallen.