Fuller Family Holdings, LLC v. Northern Trust Company

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State: Illinois

Court: 1st District Appellate

Docket No: 1-06-1533 Rel

Case Date: 02/13/2007

Preview:SECOND DIVISION FILED: February 13, 2007

No. 1-06-1533 FULLER FAMILY HOLDINGS, LLC, Plaintiff-Appellant, v. THE NORTHERN TRUST COMPANY, Defendant-Appellee. ) ) ) ) ) ) ) ) ) APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY No. 04 L 014582 HONORABLE MARTIN S. AGRAN, RANDYE A. KOGAN, JUDGES PRESIDING.

JUSTICE HOFFMAN delivered the opinion of the court: The plaintiff, Fuller Family Holdings, LLC, (Fuller Holdings), as successor in interest to the William A. Fuller Indenture of Trust (Fuller Trust or the trust), appeals the dismissal of its action against the defendant, The Northern Trust Company (Northern), asserting claims for (1) breach of fiduciary duty, and (2) spoliation of evidence. For the reasons that follow, we reverse and remand for further proceedings. The allegations in the corrected complaint, the affidavit in support of the motion to dismiss, and their attached exhibits reveal the following relevant facts, which we must accept as true in reviewing the circuit court's dismissal pursuant to section 2-619 of the Code of Civil Procedure (the Code) (735 ILCS 5/2-619 (West 2004)). On February 28, 1918, William A. Fuller created the Fuller Trust and named Northern as trustee. Northern acted as trustee of the Fuller Trust from 1918 until 2002. The primary asset of the trust was a parcel of real property located at 30 North LaSalle Street in Chicago, Illinois, known as the Fuller Parcel.

No. 1-06-1533 In 1968, a plan was proposed to redevelop the land at 30 North LaSalle Street and to construct a high-rise building on the Fuller Parcel and adjacent properties, including a parcel of land owned by a LaSalle National Bank land trust (LaSalle Trust), known as the Civic Center Parcel. With approval from the Fuller Trust beneficiaries and the circuit court, Northern cancelled the existing ground lease on the Fuller Parcel and entered into a new lease with the LaSalle Trust, referred to as the Fuller Lease. The Fuller Lease contained several provisions concerning the construction of a new high-rise building and provided for the payment of three types of rent to the Fuller Trust: minimum ground rent, additional ground rent, and percentage rent. Additional ground rent would be due if the value of the land exceeded a certain amount after periodic reappraisals. Percentage rent would be due if the tenant's yearly income from the property exceeded the minimum ground rent and additional ground rent by a specified amount. Northern also entered into a supplemental agreement with the LaSalle Trust and the owner of a third adjacent parcel to jointly construct a new building on all of their properties. Pursuant to this agreement, a new high-rise office building, known as the 30 North LaSalle building, was constructed on the Fuller Parcel, the Civic Center Parcel, and the adjacent parcel. In or prior to 1972, the beneficial interest in the LaSalle Trust was assigned to the 30 North LaSalle Street Corporation. In addition, the LaSalle Trust's leasehold interest in the Fuller Lease was assigned to the American National Bank & Trust Company, as trustee under Trust No. 28985, (American National Trust), which became the new tenant/developer of the property. The American National Trust experienced difficulty securing mortgage financing for the new building and requested that Northern amend the Fuller Lease to facilitate such financing. After obtaining approval from the

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No. 1-06-1533 circuit court, Northern amended the Fuller Lease in August 1972 to accommodate the American National Trust in securing financing from its lender, Prudential Insurance Company (Prudential). Pursuant to the Fuller Lease amendments, the American National Trust was named the lessee, the amount of minimum ground rent was increased, and the amounts of additional ground rent and percentage rent were modified. Also, Northern agreed to subordinate the trust's right to collect the additional ground and percentage rents to the payments due from the American National Trust to Prudential on the leasehold mortgages. In particular, paragraph 13 of the August 23, 1972 lease amendment added a new section 3.4 to the lease, which provided as follows: "SUBORDINATION OF PERCENTAGE RENT AND ADDITIONAL GROUND RENT. The right of [the Fuller Trust] to collect or receive Percentage Rent shall always be subject and subordinate to the right of the owners and holders of the Original Leasehold Mortgages to collect and receive the indebtedness secured by said Original Leasehold Mortgages; and the right of [the Fuller Trust] to collect or receive Additional Ground Rent based upon appraisals made prior to January 1, 2000, shall also be subject and subordinate to the right of the owners and holders of the Original Leasehold Mortgages to collect and receive the indebtedness secured by said Original Leasehold Mortgages. If the holders of *** the Original Leasehold Mortgages *** shall foreclose said mortgage or shall accept a conveyance or assignment of the leasehold estate *** in lieu of foreclosure, *** then and in any such event, *** no Additional Ground Rent whatsoever shall be due or payable then or thereafter under this lease *** by the

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No. 1-06-1533 holders of either of the Original Leasehold Mortgages *** save and except Additional Ground Rent, if any, based upon appraisals made on and after January 1, 2000. Additional Ground Rent due on account of any reappraisals made as of January 1, 2000 and thereafter shall not be subordinated to the lien of any mortgage." In addition, paragraph 14 of the August 23, 1972 lease amendment added a new section 3.5 to the lease, which provided as follows: "TERMINATION OF PERCENTAGE RENT. If the holders of either of the Original Leasehold Mortgages *** shall foreclose said mortgage or shall accept a conveyance or assignment of the leasehold estate *** in lieu of foreclosure, *** then and in any such event, *** no Percentage Rent whatsoever shall be due or payable then or at any time thereafter during the term of this lease *** by the holders of either of the Original Leasehold Mortgages *** and the provisions of [section 2.1

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