author: PRESIDING JUSTICE JIGANTI

text:
    PHILLIP KLIKAS, Plaintiff-Appellant, v. HANOVER SQUARE CONDOMINIUM ASSOCIATION et al., Defendants-Appellees.
    First District (4th Division)
    No. 1 — 92—1410
    Opinion filed December 31, 1992.

      Aram A. Hartunian and Steven Paul Schneck, both of Aram A. Hartunian & Associates, and Steven Levin, of Pekin & Levin & Associates, both of Chicago, for appellant.
    Williams & Montgomery, Ltd., of Chicago (Barry L. Kroll, Nunzio C. Radogno, Thomas J. Popovich, and Lloyd E. Williams, Jr., of counsel), for appellees.
   PRESIDING JUSTICE JIGANTI

delivered the opinion of the court:

The plaintiff, Phillip Klikas, appeals from an order granting summary judgment for the defendants, Hanover Square Condominium Association and McGrath Management Company. Klikas’ negligence claim sought to recover for damages that he sustained after slipping on a snow-covered Hanover Park sidewalk adjacent to the Hanover Square Condominium complex. Klikas contends the court erred in granting summary judgment for the defendants because the defendants had a statutory duty to remove the snow and ice from the municipally owned sidewalk abutting their property. Klikas further contends that the defendants’ duty also arose from their contractual obligations to clear the ice and snow from the condominium common areas.

On December 18, 1987, at approximately 1:30 a.m., Klikas was returning home from work. After parking his car at a nearby shopping center, Klikas walked to his condominium unit by way of a village sidewalk. As nine inches of snow had fallen three days earlier, and the sidewalk had not been cleared, the snow reached Klikas’ mid-calf. Walking on areas of the sidewalk where other people’s footsteps had matted the snow, Klikas slipped on an icy path and fell forward, injuring his right knee.

Klikas’ fourth amended complaint against Hanover and McGrath alleged that the defendants had a duty to remove the snow and ice from the sidewalks abutting the condominium units and their negligent failure to do so proximately caused his injury. The plaintiff alleged that their duty arose from a Hanover Park municipal ordinance which mandates that within 24 hours after a snowfall of two inches or more, property owners are responsible for removing substantially all ice and snow from abutting sidewalks in order to provide a level, unobstructed walkway.

The defendants moved for summary judgment on this count claiming that the ordinance did not give rise to a duty because it was not designed to protect the public safety, but was rather for the benefit of the municipality. Thus, they were entitled to summary judgment, as a matter of law. The trial court granted summary judgment.

Summary judgment is proper where the pleadings, affidavits, depositions, and admissions on file establish that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. (Ill. Rev. Stat. 1987, ch. 110, par. 2— 1005.) The court must construe the documents most strictly against the movant and liberally in favor of the opponent. (Purtill v. Hess (1986), 111 Ill. 2d 229, 489 N.E.2d 867.) In determining whether there exists a genuine issue of material fact, the nonmovant may rely on reasonable inferences drawn from the materials considered. (Practical Offset, Inc. v. Davis (1980), 83 Ill. App. 3d 566, 404 N.E.2d 516.) Summary judgment is an extraordinary remedy and the movant’s right to summary judgment must be clear and free from doubt. Purtill, 111 Ill. 2d at 240, 489 N.E.2d at 871.

The first issue on appeal is whether the record establishes that the defendants owe a statutory duty of care to clear the snow and ice from a municipally owned, public sidewalk which abuts their property. The Hanover Park Village Code upon which the plaintiff relies reads as follows:

“Section 22 — 98. Except as provided hereafter, it shall be the responsibility of the owner or occupant of any premises abutting a sidewalk or sidewalks to remove from such walks, within twenty-four (24) hours after a snowfall of two (2) inches or more, substantially all ice or snow accumulated thereon so that such walk or walks are reasonably clear of snow or ice and provides [sic] a level, unobstructed walkway.” Hanover Park Village Code, art. VI, §22 — 98 (1987).

In order to state a cause of action based upon negligence, the plaintiff must allege sufficient facts to establish each of the necessary elements of negligence: the plaintiff must allege the existence of a duty, a breach of that duty, and that the plaintiff’s injury resulted from that breach. (Kirk v. Michael Reese Hospital & Medical Center (1987), 117 Ill. 2d 507, 513 N.E.2d 387.) A threshold consideration is whether a duty existed, since the existence of a duty is elemental to any recovery which is based upon negligence. (Puttman v. May Excavating Co. (1987), 118 Ill. 2d 107, 514 N.E.2d 188.) A plaintiff’s mere allegation of a duty is inadequate to support a negligence cause of action; the plaintiff must allege sufficient facts from which the law will raise a duty. (Swett v. Village of Algonquin (1988), 169 Ill. App. 3d 78, 523 N.E.2d 594.) If the plaintiff fails to establish the existence of a duty, he may not recover against a defendant as a matter of law. Swett, 169 Ill. App. 3d at 82, 523 N.E.2d at 597.

Both parties agree that, in general, a property owner has no duty to remove and is not liable for injuries caused by natural accumulations of snow and ice. (Harkins v. System Parking, Inc. (1989), 186 Ill. App. 3d 869, 542 N.E.2d 921; Smalling v. La Salle National Bank (1982), 104 Ill. App. 3d 894, 433 N.E.2d 713.) Moreover, municipalities also have no duty to remove natural accumulations of ice and snow and are not liable for injuries sustained therefrom. Strappelli v. City of Chicago (1939), 371 Ill. 72, 20 N.E.2d 43.

However, Klikas contends that the defendants have a duty to clear the ice and snow from the public sidewalks abutting their property because the municipal ordinance constitutes a public safety measure and the plaintiff is included in the class of persons that the ordinance was designed to protect. Klikas relies on Kalata v. Anheuser-Busch Cos. (1991), 144 Ill. 2d 425, 581 N.E.2d 656, for the proposition that the violation of a city ordinance constitutes prima facie evidence of negligence if the ordinance is intended to protect humans or property.

In Kalata, the plaintiff, an employee of the lessee of a warehouse, sustained personal injuries when he fell on a snow- and ice-covered stairway while exiting the warehouse which was owned by the defendant, the lessor. The stairwell on which the plaintiff fell did not have a second handrail, in violation of the Chicago Municipal Code. The court found that the violation of the city ordinance constituted prima facie evidence of negligence since the ordinance was a public safety measure and violation of the ordinance proximately caused the plaintiff’s injury. Further, the ordinance was intended to protect a class of persons to which the plaintiff belonged from the kind of injury he suffered. See also Barthel v. Illinois Central Gulf R.R. Co. (1978), 74 Ill. 2d 213, 384 N.E.2d 323; Ney v. Yellow Cab Co. (1954), 2 Ill. 2d 74, 117 N.E.2d 74.

The issue which is raised by this contention is whether the purpose of the Hanover Park ordinance is to ensure public safety, in which case violation of the ordinance could be considered evidence of negligence. Klikas’ assertion that the ordinance is intended for the public safety relies upon language from our supreme court opinion in City of Carbondale v. Brewster (1979), 78 Ill. 2d 111, 398 N.E.2d 829, in which the court held that an ordinance requiring that persons in control of property abutting sidewalks remove the snow and ice from such sidewalks was a reasonable exercise of police power. The court concluded that since keeping sidewalks free from snow and ice “is closely related to and in furtherance of the public’s welfare,” municipalities could pass ordinances which required that sidewalks be kept clear. City of Carbondale, 78 Ill. 2d at 117, 398 N.E.2d at 832.

The primary distinguishing factor between Brewster and the instant case is that the court in Brewster was not deciding whether violation of the ordinance imposed a tort duty on the property owner which would support a civil cause of action. The court was addressing whether such legislation could be upheld as a valid exercise of police power.

By contrast, the defendants argue that the ordinance is intended to benefit the municipality, and not the public. The defendant relies on a variety of appellate court cases which have held that no tort duty arises from ordinances which require adjoining property owners to maintain sidewalks because the ordinances are designed for the benefit of the municipality, and not the public. See Thiede v. Tambone (1990), 196 Ill. App. 3d 253, 553 N.E.2d 817; Summers v. City of Springfield (1975), 33 Ill. App. 3d 474, 337 N.E.2d 72.

Klikas contends that these cases are distinguishable because they involve the duty to repair sidewalks, which ultimately belongs to the city. Thus, ordinances which delegate that duty to third parties benefit the municipality. In the instant case, the city has no duty to clear the ice and snow from its streets and sidewalks. Therefore, Klikas concludes, an ordinance which delegates that duty to property owners is not for the benefit of the municipality.

We do not find Klikas’ distinction persuasive. While there is no common law duty for a municipality to clear ice and snow from its streets and sidewalks, a municipality may choose to clear sidewalks, not because it is liable in tort, but because it is a service to the public.

The Restatement (Second) of Torts characterizes certain legislative enactments as intended only for the purpose of imposing upon a third party the performance of a service which the state has undertaken on behalf of the public. As an example of the kinds of ordinances which fit this description, the Restatement specifies an example of an abutting property owner who fails to remove ice from a city sidewalk. When an individual slips on that ice and is injured, the ordinance “does not provide a standard of conduct” for the benefit of the individual. Restatement (Second) of Torts §288, Comment d, at 32 (1965).

Prosser & Keeton on Torts states:

“[Ojrdinances which require householders to keep sidewalks in repair, or to remove snow and ice from them, are considered to be intended only for the benefit of the municipality, and not for any individual who may suffer a fall.” W. Keeton, Prosser & Keeton on Torts §36, at 223 (5th ed. 1984).

We believe that whether an ordinance is considered a public safety measure is largely a matter of public policy. Unless a statute or ordinance specifies a civil remedy, courts interpret whether the intent of the legislature was to provide for tort liability. In their deliberations, courts decide whether the statute imposes a standard of conduct and whether a duty of conduct is created toward the plaintiff.

Applying a standard duty analysis, we evaluate the foreseeability of the injury, the likelihood of the injury, the magnitude of the burden of guarding against injury, and the consequence of putting the burden on the defendant. (Lance v. Senior (1967), 36 Ill. 2d 516, 224 N.E.2d 231.) While it may be reasonably foreseeable and likely that an individual would slip on uncleared snow and ice and sustain injuries, the magnitude of the burden of guarding against these kinds of injuries in this part of the country is great. Moreover, imposing a tort duty on property owners to remove all snow and ice from abutting public sidewalks within 24 hours of a snowfall would have unreasonable consequences. In balancing these considerations, we can only conclude that it is not consistent with public policy to impose a tort duty on a property owner to remove snow and ice from city streets.

For the foregoing reasons, we believe the trial court correctly granted summary judgment on this count of Klikas’ complaint as we find that the ordinance did not impose a duty on the defendants to clear the snow and ice and violation of the ordinance was not evidence of the defendants’ negligence.

Klikas also appeals from the summary judgment order on another count of his complaint alleging that the defendants breached their contractual duty to remove the snow and ice from the sidewalk where Klikas fell. Klikas points to the condominium declarations which state that the board of directors is responsible for the “maintenance, repair and replacement of the common elements.” Klikas further cites the agreement between Hanover and McGrath which provided that McGrath would maintain the “common area and facilities” and authorized McGrath to enter into contracts for snow plowing in “the development.”

Klikas relies on Schoondyke v. Heil, Heil, Smart & Golee, Inc. (1980), 89 Ill. App. 3d 640, 411 N.E.2d 1168, for the proposition that a condominium owner can assume a duty to clear snow by virtue of its declaration and bylaws. In Schoondyke, the plaintiff sustained injuries when she fell on a snow-covered sidewalk in the common area of a condominium complex. In their condominium declarations and bylaws, the defendants had agreed to remove the snow from common areas. The court held that the defendants had voluntarily assumed the duty of snow removal and, thus, their duty to the plaintiff arose from the breach of their contract.

The obvious distinction in the instant case is that Klikas fell on a village-owned sidewalk, and not on a common area of the condominium complex. Klikas argues that the fact that the defendants did not own the land on which Klikas fell is “beside the point” because the residents had a right to expect the association and its contractors to keep all of the sidewalks used for ingress and egress clear of snow and ice.

We find no merit to this contention. Various cases have held that a duty in tort arises from a contractual obligation to remove snow. (Tressler v. Winfield Village Cooperative, Inc. (1985), 134 Ill. App. 3d 578, 481 N.E.2d 75; Schoondyke v. Heil, Heil, Smart & Golee, Inc. (1980), 89 Ill. App. 3d 640, 411 N.E.2d 1168.) However, in these cases, the plaintiffs were injured on sidewalks which the defendants had specifically promised to clear. We find nothing in the respective contracts, declarations, bylaws, or depositions to indicate that either Hanover or McGrath contracted to clean the village sidewalk where Klikas fell. We do not believe the defendants were under any obligation to remove snow and ice from the municipally owned sidewalk. Thus, Hanover and McGrath had no duty arising in tort to remove the snow upon which Klikas fell.

For all of the aforementioned reasons, the order of the trial court granting summary judgment in the defendants’ favor is affirmed.

Affirmed.

JOHNSON and CAHILL, JJ., concur.


source: Caselaw Access Project

author: JUSTICE COUSINS

license: Public Domain

text:
    LIQUID AIR CORPORATION et al., Plaintiffs-Appellants, v. J. THOMAS JOHNSON, Indiv. and as Director, Department of Revenue, et al., Defendants-Appellees.
    First District (5th Division)
    No. 1 — 90—2988
    Opinion filed December 31, 1992.

      Schopf & Weiss, of Chicago (Steven A. Weiss and Bradley R Nelson, of counsel), for appellants.
    Roland W. Burris, Attorney General, of Springfield (Rosalyn B. Kaplan, Solicitor General, and John A. Morrissey, Assistant Attorney General, of Chicago, of counsel), for appellees.
   JUSTICE COUSINS

delivered the opinion of the court:

The resolution of this dispute turns on the proper construction of certain provisions of the Retailers’ Occupation Tax Act (ROTA) (Ill. Rev. Stat. 1989, ch. 120, par. 440 et seq.), which imposes a tax upon the gross receipts received by persons who sell tangible personal property at retail. The taxpayers, the Liquid Air Corporation and its subsidiary, the Cardox Corporation, brought this suit to challenge the Department of Revenue’s (the Department’s) taxation of customer fees collected for the use of storage equipment. The Department decided that the fees were taxable because they constituted an inseparable element of the taxpayers’ cost of selling its products. The taxpayers argued that these fees were bona fide rental payments which were exempt from taxation under the retailers’ occupation tax regulations. (86 Ill. Adm. Code §130.2010 (1986).) Agreeing with the Department of Revenue, the trial court held that the fees in question were taxable, granted summary judgment in favor of the Department, and denied the taxpayers’ motion for summary judgment.

We reverse.

Background

The taxpayers are in the business of selling industrial gases in liquid form to customers throughout the United States. Because they must be maintained at low temperatures and high pressure, these products cannot be stored in conventional vessels. Instead, the liquid gases are stored in large cryogenic tanks that can sustain the necessary temperature and pressure. Therefore, the taxpayers’ customers cannot accept delivery of the liquid gases unless they have the appropriate storage facilities on their premises.

Liquid Air and Cardox provide customers with the option of leasing storage facilities, but they do not require their customers to lease storage facilities exclusively from Liquid Air and Cardox. Customers are free to lease or purchase storage equipment from any vendor they choose. Approximately 25 customers purchase the taxpayers’ products without leasing any storage facilities from the taxpayers. A few other customers lease storage facilities from the taxpayers, but do not purchase any product from the taxpayers. Those customers who choose to lease storage facilities from the taxpayers are charged a monthly rental fee, in addition to the price charged for the amount of product purchased.

The price charged for product purchased and the amount of rent charged for the use of storage facilities are negotiated and set separately. The taxpayers’ salesmen negotiate the product price with the customer first. Product price is based upon the quality of product purchased, transportation expenses incurred in delivering the product to the customer’s location, and market competition. After a customer decides to purchase product from the taxpayers, the salesmen discuss storage facilities. Facility rental fees are calculated based on the cost of the tank, depreciation, maintenance, insurance and taxes.

The taxpayers bill their customers separately for the amount of product purchased and for the facility fees. The facility fee is a fixed amount per month; it is invoiced monthly, in advance. If customers have their own storage tanks, they are not charged a facility fee. Conversely, customers who lease storage tanks from the taxpayers, but purchase products from other suppliers, pay only a monthly facility fee.

In contrast to the monthly facility charge, the taxpayers often bill customers for the product purchased several times per month; product billing is based upon the frequency of product delivery. When no deliveries of product are made during a month, however, the customer must still pay the monthly facility rental fee for use of the storage tanks.

After conducting an audit of the taxpayers’ retailers’ occupation tax returns for the years 1982 through 1984, the Department of Revenue issued amended returns assessing a tax liability of $423,524 for the Liquid Air Corporation and $125,433 for the Cardox Corporation. Cardox paid $86,514 of this amount under protest (the amount attributed to tax on facility rental fees), and Liquid Air paid $312,280 under protest. Liquid Air and Cardox have paid additional amounts, under protest, covering retailers’ occupation tax on facility rental fees in 1986 and thereafter.

On June 10, 1986, the taxpayers filed a complaint against the defendants alleging, inter alia, that the Department of Revenue’s assessment of the retailers’ occupation tax on facility fees it collected for customer use of storage systems was improper. Both parties filed motions for summary judgment. On October 2, 1990, the circuit court granted the defendants’ motion for summary judgment and denied taxpayers’ motion.

The Department admitted in the circuit court that some of the facility fees received by the taxpayers should not have been taxed under the retailers’ occupation tax. The Department had imposed the tax on all facility rental fees, even on fees for storage of product where the sale of the stored product had not been taxed because of a resale certificate or other exemption. Defendants conceded below that the retailers’ occupation tax should not be imposed on facility fees when the purchase of the product is not taxed because of a resale certificate or other exemption. In its final judgment order, the circuit court ordered that these improperly assessed taxes be returned to the taxpayers.

Opinion

The facts are not in dispute. The sole issue before this court is the proper classification of the facility fees collected by Liquid Air and Cardox. If the facility fees are properly classified as a part of the expenses that the plaintiff must incur in order to sell industrial gases, the facility fees are taxable under the Retailers’ Occupation Tax Act. On the other hand, if the facility fees are bona fide lease payments, the fees are exempt from taxation under the ROTA.

The ROTA imposes a 5% tax upon the “gross receipts” obtained by persons engaged in the business of selling tangible personal property at retail. (Ill. Rev. Stat. 1985, ch. 120, par. 441.) A “sale at retail” is defined as “any transfer of the ownership of or title to tangible personal property to a purchaser, for the purpose of use or consumption.” (Ill. Rev. Stat. 1985, ch. 120, par. 440.) The “amount of sale” is the consideration received for the sale “without any deduction [for] the cost of the property sold, the cost of materials used, labor or service cost or any other expense whatsoever.” Ill. Rev. Stat. 1985, ch. 120, par. 440.

Rental fees and lease payments are expressly excluded from taxation under section 130.2010 of the retailers’ occupation tax regulations. Section 130.2010 provides that persons who, under bona fide agreements, rent or lease the use of tangible personal property to others are not engaged in the business of selling tangible personal property within the meaning of ROTA, and are not required to remit the retailers’ occupation tax on the gross receipts from such transactions. 86 Ill. Adm. Code §130.2010 (1986).

Recently, the fourth district addressed the application of the ROTA provisions to facility fees like the ones at issue here. (See Airco Industrial Gas Division, The BOC Group, Inc. v. Illinois Department of Revenue (1991), 223 Ill. App. 3d 386, 584 N.E.2d 1017.) In Airco, the court unanimously held that facility fees are not taxable under the ROTA where customers are not required to rent equipment from the industrial gas supplier, but, instead, are free to purchase and use their own equipment. (Airco, 223 Ill. App. 3d at 392-93, 584 N.E.2d at 1021.) We believe that Aireo is dispositive of the issue before the court.

The facts in Airco are virtually identical to those in the instant case. In fact, Airco is one of taxpayers’ competitors. In Aireo, as in the present case, the plaintiff was engaged in the business of selling industrial gases which were generally sold in liquid form. The plaintiff’s products would only remain in liquid form when stored at temperatures below zero degrees Fahrenheit. Therefore, in order for plaintiff’s customers to accept delivery of the liquid gases, they had to have insulated storage facilities on their premises.

Like the taxpayers, Airco gave its customers the option of purchasing their own storage system or renting one from Airco. If the customer rented storage equipment from Airco, it was charged a facility fee in addition to the cost of the liquid gases. Thus, the agreement between Airco and its customers, like the one between the taxpayers and their customers, contained two separately negotiated prices: one price for the purchase of liquid gases, and a separate price for the use of storage equipment.

The facts were not disputed in Airco; the sole issue on appeal was whether the facilities fees charged by Airco for the rental of storage equipment were subject to taxation under the ROTA. (Airco, 223 Ill. App. 3d at 387-88, 584 N.E.2d at 1018-19.) In Aireo, the Department of Revenue made essentially the same argument that it is making now on appeal. The Department asserted that facility fees were actually an inseparable element of Airco’s cost of selling industrial gases.

In support of its position in both Aireo and the case now before the court, the Department of Revenue relied upon Gapers, Inc. v. Department of Revenue (1973), 13 Ill. App. 3d 199, 300 N.E.2d 779. In Gapers, a caterer attempted to deduct the cost of transporting food and equipment to its customers’ homes from his gross receipts. The caterer asserted that because the transportation charges were contracted for separately from the cost of the food, the transportation charges should not be included in gross receipts subject to the retailers’ occupation tax. Gapers, 13 Ill. App. 3d at 202, 300 N.E.2d at 781.

The Gapers court held that the transportation charges were properly included in gross receipts. (Gapers, 13 Ill. App. 3d at 203, 300 N.E.2d at 782.) The court based its conclusion on the fact that the caterer agreed not only to prepare the food, but also to perform the contract at the customer’s home. The delivery was “an inseparable link in the chain of events leading to *** the sale of meals” and, therefore, subject to taxation under ROTA. Gapers, 13 Ill. App. 3d at 203, 300 N.E.2d at 782.

Gapers was distinguished, however, in Airco. The Gapers court had based its conclusion on the parties’ contract, which required the caterer to both prepare meals and perform the contract at the customer’s home. In contrast, the plaintiff in Airco agreed only to deliver liquid gas to its customers’ premises; it did not agree to provide the industrial gas in a form that was ready to use.

The Department of Revenue also relied upon Velde Ford Sales, Inc. v. Department of Revenue (1985), 136 Ill. App. 3d 589, 483 N.E.2d 721, in both Airco and the case at bar. In Velde, an automobile dealer provided its customers with the service of preparing and delivering the customer’s application for license plates and a title certificate to the Secretary of State. The customer had the option of preparing his own application or paying the automobile dealer a $25 fee for the service.

The Velde court observed that the automobile dealer was not attempting to deduct sales expenses from the sales price, as in Gapers. However, the court held that the service was substantially “an inseparable link in the chain of events” involved in the sale of automobiles, even though the service was provided after the sale of the automobiles was completed. (Velde, 136 Ill. App. 3d at 591, 483 N.E.2d at 723, quoting Gapers, 13 Ill. App. 3d at 203, 300 N.E.2d at 782.) Therefore, the service was taxable under the retailers’ occupation tax.

The Airco court also distinguished Velde. The Velde decision was based in part on certain sections of the Illinois Vehicle Code (Ill. Rev. Stat. 1979, ch. 95½, pars. 3 — 104(b), 3 — 113(a)), which required motor vehicle retailers to assist their customers with the application procedures for obtaining license plates and title certificates. Because the automobile dealer was required by law to provide these services, no automobile sales could take place unless the dealer made the services available. In contrast, the plaintiff in Aireo was not required to provide storage facilities for its customers. Airco, 223 Ill. App. 3d at 391, 393, 584 N.E.2d at 1020-21.

Finally, the Department of Revenue relied upon Keystone Consolidated Industries, Inc. v. Allphin (1977), 45 Ill. App. 3d 714, 359 N.E.2d 1202, in both Aireo and the present case. In Keystone, the plaintiff contracted with Chemetron to build a gas producing plant on Keystone’s premises. Chemetron agreed to sell only to Keystone. Keystone agreed to pay Chemetron $14,000 per month in facility fees, a $2,000 storage charge, and $.025 per 100 cubic feet of industrial gas. The Department of Revenue maintained that the facility and storage fees should be included in the selling price of the gas for purposes of determining Keystone’s use tax liability. (Keystone, 45 Ill. App. 3d at 718, 359 N.E.2d at 1205.) The Keystone court agreed, holding that the facility and storage charges served the purpose of compensating Chemetron for some of the costs of producing and storing the gases supplied to Keystone. Keystone, 45 Ill. App. 3d at 719, 359 N.E.2d at 1205.

The Airco court distinguished Keystone on its facts. Keystone did not involve a merchant customer like Airco (and the taxpayers), but instead involved an on-site customer. In addition, Chemetron, the supplier in Keystone, did not sell and deliver industrial gases to its customer, but produced and stored the gases on its customer’s property. See Airco, 223 Ill. App. 3d at 392, 584 N.E.2d at 1020-21.

In Airco, the plaintiff argued and the appellate court agreed that the situation presented was more analogous to those decisions where sales provided in connection with nontaxable services were deemed sufficiently independent of the nontaxable services to be taxed under the Act. For example, in Snite v. Department of Revenue (1947), 398 Ill. 41, 74 N.E.2d 877, the court concluded that the operator of a country club was engaged in the business of selling food and drink to its members, as well as providing social services. The business of selling food and drink was subject to the tax; the business of furnishing services was not. Snite, 398 Ill. at 46, 74 N.E.2d at 880.

Likewise, in Lake View Memorial Gardens, Inc. v. Department of Revenue (1984), 123 Ill. App. 3d 120, 462 N.E.2d 1000, the court found that the plaintiff, who primarily provided interment services, was also a retailer as to cement burial vaults. As in Airco, the plaintiff’s customers were not required to purchase vaults from the plaintiff in order to obtain the plaintiff’s services. (Lake View, 123 Ill. App. 3d at 126, 462 N.E.2d at 1005.) Because the plaintiff was willing to furnish services to its customers regardless of where they purchased their vaults, the court held that the sale of vaults was severable from the nontaxable interment services. (Lake View, 123 Ill. App. 3d at 126, 462 N.E.2d at 1005.) Therefore, the plaintiff was required to pay the retailers’ occupation taxes on the receipts from the sale of the vaults.

Aireo asserted that the best method to distinguish between a nontaxable service charge rendered in connection with the sale of tangible personal property and taxable services which are inseparable from the cost of selling the property is to ask, “Can the product that the customer has agreed to buy be sold to the customer without rendering the service?” If “yes,” then the service charge should not be included in the selling price of the tangible personal property. Airco, 223 Ill. App. 3d at 392, 584 N.E.2d at 1021.

The court agreed with Airco that the most important fact under the circumstances presented was that Aireo’s customers were not required to rent storage equipment from Airco, but could purchase their own if they so desired. (Airco, 223 Ill. App. 3d at 392, 584 N.E.2d at 1021.) Based on this fact, the court held that no “inseparable link” existed between the sale of the gas and the furnishing of the storage facilities. (Airco, 223 Ill. App. 3d at 392, 584 N.E.2d at 1021.) Therefore, the facility rental payments were not subject to tax under the ROTA.

The trial court below reached a decision contrary to the Aireo decision. Liquid Air and Cardox urge this court to reverse the trial court opinion and follow the Airco decision. The taxpayers correctly point out that both the factual and legal issues addressed in Aireo are identical to the ones at bar. Liquid Air and Cardox acknowledge that this court is not bound to follow the decisions of other districts of the Illinois Appellate Court, but urge that absent a compelling reason to disregard the decision in Airco, this court should follow that decision.

The law supports the taxpayers’ argument. (See Stec v. Oak Park Police Pension Board (1990), 204 Ill. App. 3d 556, 561 N.E.2d 1234.) Unless this court has made a determination of its own contrary to that of another district, or a split of authority exists among the districts, reason compels us to follow the decisions of appellate courts in other districts. (See Stec, 204 Ill. App. 3d at 563, 561 N.E.2d at 1238.) This court has not made any determination of its own and no split in authority exists.

The Department of Revenue argues, however, that this court should not follow Airco, because Airco was wrongly decided. The Department maintains that the Airco decision contradicts the ROTA because it allowed Aireo to deduct one of its expenses of doing business. However, the law does not support the Department’s position.

The retailers’ occupation tax regulations specifically exempt lease payments from taxation under the ROTA. (86 Ill. Adm. Code §130.2010 (1986).) The Department concedes that the rental agreements between the taxpayers and its customers who do not purchase product are bona fide lease agreements which are not subject to taxation under the ROTA. The Department takes the position, however, that when a customer purchases product at the same time it leases equipment, the lease is transformed into a cost of doing business and subject to taxation under ROTA. No authority is cited for this proposition.

The reasoning of the Airco decision is sound and the facts are squarely on point. Accordingly, this court chooses to follow Aireo. The facility fees at issue do not constitute an inseparable element of the “amount of sale” received, as defined by the ROTA, and the fees are not subject to taxation. The order granting summary judgment in favor of the Department of Revenue should be vacated, and summary judgment should be entered in favor of the taxpayers.

Reversed and remanded with directions.

McNULTY, P.J., and GORDON, J., concur.


text:
    RANDALL JOHNSON, Plaintiff-Appellee, v. DAVID NOBLE et al., Defendants-Appellants (First America Equities Corporation, Defendant).
    First District (4th Division)
    No. 1 — 91—3828
    Opinion filed December 31, 1992.

      Chris Averkiou, of Chicago, for appellants.
    Sidney C. Kleinman and Robert S. Hirschhorn, both of McBride, Baker & Coles, of Chicago, for appellee.
   PRESIDING JUSTICE JIGANTI

delivered the opinion of the court:

The defendants, David Noble and William Spight, filed a motion in the trial court to compel arbitration. The motion was denied. This interlocutory appeal is pursuant to Supreme Court Rule 307(a)(1), which provides for interlocutory appeals from orders “granting, modifying, refusing, dissolving, or refusing to dissolve or modify an injunction.” (134 Ill. 2d R. 307(a)(1).) This is an appealable order under both Federal and Illinois law. (Asset Allocation & Management Co. v. Western Employers Insurance Co. (7th Cir. 1989), 892 F.2d 566, 574; Cencula v. Keller (1987), 152 Ill. App. 3d 754, 756, 504 N.E.2d 997.) First America Equities Corporation (First America) was a party defendant in the trial court but is not a party to this appeal.

The complaint alleges that there were two contracts between the parties, one oral and the other written. Counts I and II emanated from the alleged oral agreement at a date stated to be prior to April 26, 1990. Count III emanated from the written contract dated May 20, 1990, which contained an arbitration clause. In addition to those two contracts that provide the foundation for the complaint in this case, there was another contract that preceded these and affects this proceeding, a contract between the plaintiff Randall Johnson and the firm of Donaldson, Lufkin & Jenrette (DLJ).

In the Johnson contract with DLJ, DLJ agreed to pay Johnson a finder’s fee for services Johnson rendered to DLJ. In turn Johnson entered into the oral agreement with Noble both personally and as vice-president of First America. Under this oral agreement, First America promised to accept the payments from DLJ in trust and to forward them to Johnson. In exchange for the promise, Johnson agreed to pay First America 5% of the finder’s fee Johnson had earned. The complaint alleges that both the contract between Johnson and DLJ and the oral agreement between Johnson and Noble were entered into prior to April 26, 1990.

On May 20, 1990, Johnson entered into a written contract with First America entitled “Registered Representative Agreement.” Under this written agreement, Johnson was authorized to offer and sell securities and solicit investment transactions on behalf of First America. It was specifically stated that Johnson was an independent contractor who was not required to attend meetings or work a set number of hours and was to pay his own expenses. He could pursue his own investment business and pursue other business opportunities. It was this contract that contained the arbitration provision which provides that “[a]ny claim or controversy arising out of or relating to this agreement *** shall *** be settled by arbitration in accordance with the rules of the National Association of Securities Dealers and judgment upon the award rendered by the arbitrator^) may be entered in any court having jurisdiction thereof. Arbitration shall be held in San Francisco, California.” Under section 8(a) of the National Association of Securities Dealers (NASD) Code of Arbitration Procedure:

“Any dispute, claim or controversy eligible for submission under Part 1 of this Code between or among members and/or associated persons, and/or certain others, arising in connection with the business of such member(s) or in connection with the activities of such associated person(s), shall be arbitrated under this Code, at the instance of:
***
(2) a member against a person associated with a member or a person associated with a member against a member *** >>

First America was a member of the NASD and Noble was an NASD associated person. Johnson was a person associated with an NASD member.

On July 19, 1990, after all of the agreements were entered into and in response to a request by Noble, DLJ issued a check for Johnson’s finder’s fee payable only to First America in the amount of $18,700. First America did not pay Johnson and count I of the complaint alleged that this was a breach of contract. Count II alleged that it was also a breach of a fiduciary duty. Count III of the complaint was brought under the Illinois Wage Payment and Collection Act (Act). (Ill. Rev. Stat. 1989, ch. 48, par. 39m — 1 et seq.) This count alleged that in July and August 1990, Johnson as a security salesperson earned over $6,000 in commissions which was not paid and that these commissions were wages and salary and that because defendants First America, Noble and Spight intended to deprive Johnson of his wages, salary and commissions, they were in violation of the Act.

First America failed to appear, and a default judgment was entered against it. Noble and Spight filed a motion to dismiss and, in the alternative, as required under the “Registered Representative Agreement,” a motion to compel arbitration under the Federal Arbitration Act. (9 U.S.C. §1 et seq. (1988).) The motion to compel arbitration was denied, and it is from that order that this appeal proceeds.

As to counts I and II, the breach of contract and fiduciary duty arising out of the oral contract prior to April 26, 1990, the Illinois Supreme Court case of Donaldson, Lufkin & Jenrette Futures, Inc. v. Barr (1988), 124 Ill. 2d 435, 530 N.E.2d 439, states the applicable law. The court there stated:

“Where the language of the arbitration agreement is clear, and it is apparent that the dispute sought to be arbitrated falls within the scope of the arbitration clause, the court should decide the arbitrability issue and compel arbitration. [Citations.] Similarly, if it is apparent that the issue sought to be arbitrated is not within the ambit of the arbitration clause, the court should decide the arbitrability issue in favor of the opposing party, because there is no agreement to arbitrate.” (Donaldson, 124 Ill. 2d at 445, 530 N.E.2d at 443.)

Arbitration is a matter of contract, and a party cannot be required to submit an issue to arbitration that he has not agreed to submit. (A T & T Technologies, Inc. v. Communications Workers of America (1986), 475 U.S. 643, 648, 89 L. Ed. 2d 648, 655, 106 S. Ct. 1415, 1418.) It is apparent here that the issue sought to be arbitrated in counts I and II is not within the ambit of the arbitration clause, and the trial court was correct in its ruling. The arbitration clause arose in a contract entered into between the same parties subsequent to the oral agreement and independent of it. The original agreement between these parties to act as a collecting agent for a finder’s fee that Johnson had earned from DLJ is distinct both in time and in subject matter from the subsequently entered into “Registered Representative Agreement” between these parties whereby Johnson was to offer and sell securities and solicit investment transactions. The trial court, therefore, was correct in denying the motion to refer counts I and II to an arbitrator.

As to count III, Johnson makes a number of arguments as to why it is not arbitrable. Johnson first contends that the Illinois Wage Payment and Collection Act expresses Illinois policy because it is contained in a statute that also has a penal provision. In the case of Perry v. Thomas (1987), 482 U.S. 483, 96 L. Ed. 2d 426, 107 S. Ct. 2520, this issue was determined in favor of the position advanced by Noble and Spight. Perry specifically holds that the Federal Arbitration Act preempts State law.

Johnson then contends that the Federal Arbitration Act is not applicable because he was an employee and the Act specifically states that “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. §1 (1988).

As Noble and Spight point out, the contract specifically states that Johnson is an independent contractor, not an employee. He has to provide his own office space and pay his own office expenses and any other costs and expenses of doing business. There is no indication of control over Johnson in the contract other than that he must conduct his business according to rules and regulations of the regulatory bodies. We find that Johnson is not an employee and is accordingly not exempt under this provision of the Federal Arbitration Act.

Johnson next contends that neither Noble nor Spight is a party to the agreement because the agreement that contains the arbitration clause was between First America Equities and Johnson. Noble and Spight respond that they are third-party beneficiaries. The third-party beneficiary doctrine applies to arbitration agreements. (McKinstry Co. v. Sheet Metal Workers International, Local Union No. 16 (9th Cir. 1988), 859 F.2d 1382, 1384.) Where it is shown that the signatories to the agreement intended that the non-signatories were to derive benefits from the agreement and where the arbitration clause itself is susceptible to this interpretation, then arbitration is proper. McKinstry, 859 F.2d at 1384-85.

Howells v. Hoffman (1991), 209 Ill. App. 3d 1004, 568 N.E.2d 934, in construing the language of the arbitration agreement which purported to limit itself to “controversies which may arise between us” held that the agreement protected the defendant as a disclosed employee of Merrill Lynch. (Howells, 209 Ill. App. 3d at 1009, 568 N.E.2d at 937.) Howells relied substantially on the reasoning of Nesslage v. York Securities, Inc. (8th Cir. 1987), 823 F.2d 231. In Nesslage, the agreement provided that “[a]ny controversy arising out of or relating to [the account] *** shall be settled by arbitration.” (Nesslage, 823 F.2d at 232.) The court held that the coverage of the arbitration clause benefitted Q & R Clearing Corporation, the signatory of the agreement, York Securities, the disclosed agent of Q & R Clearing Corporation, and Samson, the employee of York Securities that was handling the account. So, too, here, Noble and Spight as employees of First America and associated persons with a member under the NASD rules as stated in the agreement are third-party beneficiaries and parties to the agreement.

Johnson next contends that arbitration rights have been waived because neither Johnson nor First America requested arbitration. According to Johnson, it follows that Noble and Spight cannot have any greater rights as agents than their principal, First America. This argument fails because the matter does not proceed on the basis of agency, but rather on the basis that the parties are third-party beneficiaries. As such, they made a written demand for arbitration in this proceeding.

Johnson further argues that since First America is no longer a member of the National Association of Security Dealers, it could not avail itself of arbitration rights. Johnson provides no authority for his argument. He refers to the National Association of Security Dealers rules, which state that the Code provides for arbitration of any dispute between or among members. However, the nub of the matter is that if arbitration arises out of a contract and the contract specifically provides that it will be done under the National Association of Security Dealers rules, the contract providing for arbitration stands whether or not First America is still a member.

Finally, Johnson argues, again without authority, that because the circuit court ruled against First America on Johnson’s claim without any reference to arbitration, there is a possibility of conflicting decisions. As with the preceding argument, the parties have bargained for arbitration and Johnson and Spight are entitled to have their matter arbitrated pursuant to the contract that was entered into.

The trial court’s denial of the motion to refer counts I and II of the complaint to an arbitrator is affirmed. The court’s ruling as to count III is reversed.

Affirmed in part; reversed in part.

JOHNSON and LINN, JJ., concur.

       Justice Linn participated in this disposition prior to his retirement.


author: JUSTICE GORDON

text:
    GROSSINGER MOTORCORP, INC., Plaintiff-Appellant and Cross-Appellee, v. AMERICAN NATIONAL BANK AND TRUST COMPANY, Defendant (4545 Touhy Company, Defendant-Appellee and Cross-Appellant).
    First District (5th Division)
    No. 1 — 91—1376
    Opinion filed December 31, 1992.
    Rehearing denied February 5, 1993.

      Rudnick & Wolfe, of Chicago (Mark L. Shapiro and Richard S. Huszagh, of counsel), for appellant.
    Pretzel & Stouffer, Chartered, of Chicago (Robert Marc Chemers and Scott 0. Reed, of counsel), for appellee.
   JUSTICE GORDON

delivered the opinion of the court;

Plaintiff, an automobile dealership, entered into a contract to purchase a tract of land from defendant-appellee 4545 Touhy Company (hereinafter defendant) and pursuant to this contract deposited $100,000 earnest money into an escrow. The contract contained the condition that the property be rezoned for its use as an automobile dealership and imposed the duty of diligently pursuing such rezoning on plaintiff. After failing to obtain the rezoning within the allotted period of time, plaintiff notified defendant that it was exercising its right to terminate the contract and subsequently brought this action seeking return of the earnest money. After a bench trial, the trial court awarded defendant the earnest money as liquidated damages, pursuant to a clause in the contract, reasoning that plaintiff had breached the contract by failing to diligently pursue the rezoning of the property. The court also awarded attorney fees to defendant pursuant to a provision in the contract. Plaintiff appeals from the orders awarding defendant the earnest money and attorney fees. Defendant cross-appeals from the order awarding fees contending that the amount was inadequate.

FACTS

WRITTEN EVIDENCE

On October 16, 1987, plaintiff, Grossinger Motorcorp, Inc., and defendant, 4545 Touhy Co., entered into a contract for the sale of land located at 4545 W. Touhy Ave. in Lincolnwood, Illinois, for $4,750,000. Pursuant to the terms of the contract, plaintiff deposited $100,000 earnest money into an escrow. Plaintiff, a franchised motor vehicle dealer for Cadillac, Pontiac, GMC Truck, General Motors, Volvo and Suzuki, intended to use this property to consolidate some of its car dealerships, then at different locations, into an “autoplex” or automobile mall where customers could come and shop for cars from different manufacturers.

The contract contained several conditions which had to be met within specified time limits. The contract provided that by December 14, 1987, plaintiff had to receive a firm written commitment from Commonwealth Edison to lease it the strip of land adjacent to the subject property for parking on substantially the same terms and conditions as provided in Commonwealth Edison’s lease with defendant. The contract also provided that by February 15, 1988, the “real estate shall be lawfully zoned for conduct of a complete automobile sales, servicing and repairing business” and that the “Village of Lincolnwood and all other applicable governmental agencies shall have issued all necessary permits and approvals for the renovation and use of the real estate in accordance with Purchaser’s proposed plans therefore [sic].” Under the contract, plaintiff was required to “diligently pursue the satisfaction of each of the foregoing conditions.”

If these conditions were not satisfied within the allotted time, upon plaintiff’s notification to defendant, the contract would become null and void, requiring the return of plaintiff's earnest money. However, defendant had “the right *** to attempt to satisfy any of the conditions *** until the scheduled closing date of this transaction,” February 29, 1988, by sending written notice to plaintiff within 10 days of receiving plaintiff’s notification.

The contract further provided that if the termination was attributable to plaintiff, then “the earnest money shall be forfeited to the [defendant] to be retained by the [defendant] as liquidated damages, or at [defendant’s option, [defendant] may exercise any other remedy available at law.” Lastly, the contract provided that “[i]n the event of any litigation arising hereunder, the unsuccessful party shall pay the reasonable attorney’s fees of the prevailing party.”

Procedurally, in order to obtain rezoning, plaintiff first had to present its rezoning plan to the Plan Commission and Zoning Board of Appeals of the Village of Lincolnwood (Plan Commission), which would issue an advisory recommendation, and then to the Board of Trustees of the Village of Lincolnwood (Village Board), which would issue the final approval. Plaintiff filed its application for rezoning with the village on December 21, 1987. Plaintiff scheduled the presentation of its rezoning application before the Plan Commission for January 26, 1988. It could not proceed on that date upon discovering that proper notice of the hearing was not sent to affected residents by its counsel or by the village. As a result, the hearing was rescheduled for February 23,1988.

In a letter to defendant dated January 28, 1988, plaintiff requested a 30-day extension to satisfy the zoning conditions and a new closing date of March 31, 1988. On February 15, 1988, defendant extended the period of time for plaintiff to obtain the rezoning from February 15, 1988, to February 29, 1988. On February 23, 1988, plaintiff presented its plan before the Plan Commission and the hearing was then continued until March 1, 1988, in order to allow comments from the public. Plaintiff informed defendant by letter dated February 24, 1988, that during the normal course of events the ordinance would not be adopted until the April 7, 1988, meeting of the Village Board. In that letter, plaintiff stated that “[o]bviously, we intend to pursue every means available to us to persuade the Village Board to finalize its action at the March 17, 1988, meeting” (the next practicable date upon which the Village Board was routinely scheduled to meet).

On February 29, 1988, plaintiff notified defendant by letter that the zoning conditions would not be satisfied in the allotted period of time and that the contract was therefore null and void. On the same date, defendant extended the time to obtain rezoning from February 29, 1988, to March 4, 1988, and extended the closing date from February 29, 1988, to March 15, 1988. On March 1, 1988, plaintiff acknowledged receipt of defendant’s extension and revoked its notification of February 29, 1988, agreeing that the contract was in “full force and effect.”

On March 1, 1988, the Plan Commission approved the proposed rezoning plan with certain modifications to which plaintiff had previously acquiesced. The commission, however, also extended these modifications by eliminating a proposed exit from the rear of the building onto Kilboum Ave. and a used car sign in the front of the building. On March 4, 1988, plaintiff notified defendant that the zoning conditions had not been satisfied and therefore the contract was null and void.

On March 8, 1988, defendant sent a letter to plaintiff which stated that in view of the Plan Commission’s recommendation and its earlier letter from plaintiff in which plaintiff stated that it intended to pursue the matter at the March 17, 1988, board meeting, defendant expected plaintiff to request a further extension. The letter also stated that defendant thought the contract could be closed promptly if the plan were presented to the Village Board and asked for plaintiff’s cooperation in this effort. In a follow-up letter dated March 10, 1988, defendant specifically asked for plaintiff’s cooperation in providing the services of its architect, zoning attorney, and other personnel at the next board meeting because it would be impossible to make the presentation on March 17,1988, without such assistance.

In reply, by letter dated March 11, 1988, plaintiff reiterated the March 15, 1988, closing date and stated that it would continue to cooperate in good faith to the full extent required under the contract. In a letter dated March 14, 1988, defendant responded that it intended to exercise its right to satisfy the zoning conditions and requested plaintiff’s assistance at the forthcoming March 17, 1988, meeting. Defendant subsequently informed the chairman of the Plan Commission, Zave Gussin, that it would attempt to obtain the board’s approval at the March 17, 1988, meeting. Plaintiff’s zoning personnel did not attend the March 17,1988, meeting.

On March 16, 1988, plaintiff filed a complaint for declaratory and injunctive relief seeking the return of its earnest money and reasonable attorney fees pursuant to the provision in the contract. On April 4, 1988, defendant filed a counterclaim alleging that plaintiff had failed to act diligently and in a timely fashion to obtain rezoning and had failed to cooperate in good faith with defendant’s effort to obtain rezoning. In its prayer for relief, defendant asked in the alternative for the earnest money or “other remedies at law,” including the difference between the “value” and contract price of the property and all additional expenses which may result from a subsequent sale of the property.

On June 7, 1989, defendant filed an amended prayer for relief seeking only the liquidated damages and the attorney fees. It was subsequently learned that defendant had resold the subject property for $6 million, $1,250,000 more than plaintiff was to pay for the property.

TESTIMONIAL EVIDENCE

A bench trial was held in April of 1990. Plaintiff first called Irwin Grossinger, president of plaintiff corporation. He stated, among other things, that each of his dealership agreements contained specific guidelines in the areas of sales, customer parking, storage and service which had to be met before the franchises could be relocated.

Grossinger stated that after discussing the acquisition of defendant’s property in August 1987, he contacted his architect and retained Michael Downing, an experienced zoning attorney. On October 16, 1987, plaintiff and defendant entered into a contract for the sale of the land. Grossinger said that prior to the execution of this contract, the architect did some preliminary layouts and site plans.

Grossinger further testified that he was informed by the village after the execution of the contract that plaintiff would have to complete traffic impact, sewer and water engineering, and environmental studies. He stated that at this time he also retained a landscaping service and an engineering company for the sewer and water study. This process took longer than he expected. Grossinger obtained conditional approval from the various car manufacturers. He said that a minimum of 400 parking spots was needed, that he had attempted to obtain a five-year lease for an adjacent parking area from Commonwealth Edison and that the project was not viable without that lease.

The proposed plan was to be presented to the Plan Commission at its January 26, 1988, meeting, but there was a problem with the notice to the village residents. He testified that he attended the village meeting on February 23, 1988, and that the meeting had a “volatile atmosphere” and was “very, very hostile to say the least,” requiring police intervention.

According to Grossinger, the public’s reaction at the second Plan Commission meeting was also hostile. After hearing from the residents, the commission, with his prior acquiescence, recommended that no body or paint shop or fuel pump was to be operated on the premises; commercial carriers would not be used to pick up or deliver cars to the site; right turns be prohibited from Touhy onto Kilboum; and that the mall have only one entrance and one exit.

He then testified that without his prior acquiescence, the Plan Commission also amended the plan to allow only four advertising signs and to eliminate an exit at the back of the building. The commission’s recommendation was contingent upon obtaining the parking lease from Commonwealth Edison. Grossinger stated that given all of these restrictions, he determined that the project was no longer viable and instructed that the contract be terminated. He denied that he prohibited his experts from assisting defendant in obtaining the rezoning. He asserted that he spent over $77,000 in the attempt to gain rezoning.

On cross-examination, Grossinger admitted that he had reached an agreement with Commonwealth Edison regarding the requisite parking area. Grossinger conceded that he knew the Plan Commission’s recommendation was truly advisory. He also stated that he was told that it would normally take a couple of Plan Commission sessions and that then the Village Board would review the matter. He also conceded that he did nothing affirmatively after March 1, 1988, to assist defendant in satisfying the zoning conditions.

Plaintiff next called Lawrence Basil, Grossinger’s architect, who testified that he prepared preliminary plans and specifications and presented plaintiff’s proposal to the Plan Commission at the February 23, 1988, meeting. Basil stated that Grossinger expressed concern over the negative response of the community, which he felt would hurt his business and reputation. He said that Grossinger was also concerned with plaintiff’s inability to obtain a rear exit from the building. He received word from Grossinger on March 2, 1988, to stop working on the project.

Plaintiff next called Michael Downing, who testified that he was an attorney who had specialized in zoning and land use law since 1977. Downing testified that he was retained by Grossinger in September 1987 to handle the land use and zoning aspects of the development at 4545 Touhy Ave. He stated that he was to assemble the development application team and present plaintiff’s plan to the Plan Commission and then the Village Board. Downing filed the zoning application on December 21, 1987. He stated that he had no previous experience with the Village of Lincolnwood, but understood that the village would provide notice for those residents within 500 feet of the property. Downing stated that plaintiff was prepared to proceed at the January 26, 1988, meeting, but that the meeting was continued until February 23, 1988, because no notice had been sent to the residents.

Downing received a letter from Zave Gussin, head of the Plan Commission, which stated that plaintiff would be expected to produce evidence of the Commonwealth Edison lease for the adjacent parking area. Gussin told him that the parking area was essential for the approval of the development. Gussin then stated that the 90-day cancellation provision in the Commonwealth Edison agreement was unsatisfactory as far as the village was concerned.

Downing corroborated that the public’s reaction at the February 23, 1988, meeting was extremely hostile and that the March 1, 1988, meeting was less hostile although the residents remained opposed to the development. He related that after the meeting Grossinger told him that the restrictions placed on the development in the Plan Commission’s recommendations were onerous and that the development could not succeed with these restrictions. Gussin informed him that he would not be able to present the matter to the Village Board on March 3, 1988, the next scheduled meeting, because there was not enough time to prepare a report. Downing testified that Grossinger informed him on March 14, 1988, that he had elected to terminate the contract. He received a letter from defendant’s counsel on the same date asking him to attend the March 17, 1988, meeting. Upon asking Grossinger whether he should attend the meeting, Grossinger responded that he was not authorizing him to do so.

On cross-examination, Downing acknowledged that the Village Board was not bound by the recommendations of the Plan Commission. Downing testified that he had spoken to the mayor of Lincoln-wood about adopting the ordinance on its first reading, but admitted that he never sent a letter to the mayor requesting this. He forwarded plaintiff’s proposed lease with Commonwealth Edison to the village on February 15, 1988. Downing conceded that with respect to that lease, all the conditions required by the Plan Commission had been satisfied.

Downing told Grossinger that he thought that the Plan Commission’s recommendations would be adopted by the Village Board at its next meeting, but that Grossinger had told him to sit tight because the restrictions were too onerous. Following his discussion with Grossinger, Downing called all the members of plaintiff’s presentation team and told them that it was not necessary to appear at the March 17, 1988, board meeting. He also hand delivered a letter to the mayor of Lincolnwood informing him that Grossinger would not appear at that meeting. Plaintiff then rested.

Defendant called Zave Gussin, the chairman of the Plan Commission. Gussin testified that he prepared the commission report and issued it on March 14, 1988. Gussin stated that the 90-day cancellation provision in the Commonwealth Edison lease was acceptable to the village.

Defendant next called Morton Steinberg, who testified that he represented Grossinger in connection with the contract. He said that at the end of October 1987, he first noticed that Grossinger’s proposed lease with Commonwealth Edison contained a 90-day termination provision. He then compared it to the cancellation provision in the Commonwealth Edison lease with defendant and found them to be similar. Defendant rested.

In its rebuttal case, plaintiff called Steinberg, who testified that the March 15, 1988, closing date was set by defendant’s counsel. He stated that he asked for extensions numerous times, including a request to extend the closing until the end of March which was refused. On cross-examination, Steinberg testified that he knew when he agreed to the extension on February 29, 1988, that the Plan Commission would meet on March 1, 1988, and that the next Village Board meeting would probably be on March 17,1988.

TRIAL COURT FINDINGS

On June 8, 1990, the trial court issued an opinion in defendant’s favor. First, the court found that the liquidated damages provision was enforceable, stating that the earnest money amounted to only about 2% of the purchase price and that defendant had incurred substantial carrying costs pending the outcome of the zoning application.

The court further found that under the contract, the sale was subject to two contingencies: (1) obtaining rezoning of the property to accommodate plaintiff’s plan; and (2) that plaintiff succeed in leasing adjacent parking spaces from Commonwealth Edison on substantially the same terms as Commonwealth Edison’s lease with defendant. With respect to the Commonwealth Edison lease contingency, the court determined that although plaintiff’s rental under its lease was somewhat greater than the rental under Commonwealth Edison’s existing lease with defendant, the terms and provisions were otherwise substantially similar and satisfied that contingency provision under the contract.

In examining the rezoning contingency, the court found that the time for the purchaser’s performance was eventually extended until March 4, 1988, and that the date of closing was extended until March 15, 1988. The court stated that the intent of the parties was to obtain all the necessary permits and approvals by March 4 and to close on March 15. The trial court then looked at plaintiff’s letter of February 24, 1988, in which plaintiff communicated its intention to pursue every means to persuade the Village Board to act at the March 17, 1988, meeting. The court found that this letter reasonably led defendant to believe that plaintiff was requesting an extension from March 4, 1988, to March 17, 1988, and that the effect of this letter was in fact to extend the deadline until the Village Board meeting of March 17,1988, at the earliest.

The trial court went on to find that plaintiff’s attempted termination of the contract was ineffective for two reasons:

“1. Plaintiff did not diligently pursue the satisfaction of the zoning requirements by applying to the final zoning authority for approval or disapproval; and
2. Plaintiff did not afford Defendants the opportunity to present the rezoning petition to the Village Board and attempt to convince the Board to approve the petition as originally presented.”

In addition to this determination, the trial court noted that even prior to March 17, 1988, plaintiff’s conduct manifested “a rather casual attitude towards rezoning,” notwithstanding its preliminary expenses of more than $77,000. In this respect, the court commented that plaintiff first requested a comprehensive appraisal of the property on February 25, 1988, almost five months after the signing of the contract of sale. The trial court speculated that plaintiff’s lack of vigor could be attributed to its disappointment with the Commonwealth Edison lease and with the indication that its contemplated autoplex facility would provoke the animosity and ill will of its prospective neighbors.

On June 26, 1990, defendant filed a petition seeking attorney fees pursuant to the fee provision in the contract. On October 3, 1990, the trial court entered an order awarding attorney fees to defendant subject to future compilation. On April 22, 1991, after an evidentiary hearing, the trial court awarded defendant $49,161.99 in attorney fees.

Plaintiff filed a notice of appeal from the trial court’s order of June 8, 1990, which awarded defendant the earnest money, and from the orders of October 3, 1990, and April 22, 1991, awarding defendant attorney fees. Defendant subsequently filed a cross-appeal from the part of the April 22, 1991, judgment which awarded it only $49,161.99 in attorney fees, arguing that the trial court’s award was inadequate.

Opinion

On appeal, plaintiff attacks the trial court’s initial determination that the time for performance under the contract had been extended by the February 24, 1988, letter until March 17, 1988. Plaintiff argues that if the finding that the contract was extended until March 17, 1988, is erroneous, the trial court’s subsequent conclusion that plaintiff did not act diligently in failing to present its plan to the Village Board on March 17, 1988, or cooperate with defendant’s attempt to do so, must also fail as plaintiff would not be required to act after the expiration of the contract on March 15,1988.

Whether a breach of contract occurred is a question of fact. (Leazzo v. Dunham (1981), 95 Ill. App. 3d 847, 420 N.E.2d 851.) A reviewing court will not disturb the trier of fact’s determination unless the finding is against the manifest weight of the evidence. (Menicocci v. Archer National Bank (1978), 67 Ill. App. 3d 388, 385 N.E.2d 63; Executive Centers of America, Inc. v. Bannon (1978), 62 Ill. App. 3d 738, 379 N.E.2d 364.) Whether the terms of a written contract are modified by acts or conduct is a matter for the trier of fact and its determination will not be disturbed unless contrary to the manifest weight of the evidence. (Stonecipher v. Pillatsch (1975), 30 Ill. App. 3d 140, 332 N.E.2d 151.) A judgment is against the manifest weight of the evidence only when an opposite conclusion is clearly apparent. Valasquez v. Yellow Cab Co. (1975), 32 Ill. App. 3d 934, 337 N.E.2d 365.

Here, plaintiff contends, however, that the construction of the letters between the parties is capable of de novo review and is not subject to a manifest weight of the evidence standard of review. There is some support for this position since the determination of their content does not depend on demeanor or credibility of witnesses, but on the construction of the written word. (Schlobohm v. Police Board (1984), 122 Ill. App. 3d 541, 544, 461 N.E.2d 601 (when evidence is documentary in nature, “a reviewing court is not bound by the circuit court’s findings and may reach an independent decision on the facts”).) However, we need not resolve that issue here since the trial court’s determination that the letter of February 24, 1988, extended plaintiff’s duties under the contract until at least March 17, 1988, is without sufficient support under either standard of review.

The trial court’s finding that the letter of February 24, 1988, “reasonably led sellers to believe that purchasers requested an extension of the March 4, 1988, date to March, 17, 1988,” is of no consequence. The record is clear that whatever expectations may have been engendered by plaintiff’s February 24, 1988, letter concerning any extension of the contract period, it was never accepted by defendant and was, in fact, rejected by defendant and repudiated by plaintiff.

The record is clear that defendant never responded to plaintiff’s letter of February 24, 1988, which contained its extended offer to cooperate until March 17, 1988. Plaintiff’s letter of February 24, 1988, was superseded by its subsequent letter of February 29, 1988, in which it sought to terminate the contract. Thus, the unilateral offer contained in plaintiff’s February 24, 1988, letter was revoked in its subsequent letter of February 29, 1988, seeking to terminate the contract. (Restatement (Second) of Contracts §42, at 113 (1981) (“An offeree’s power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract”); see also Rothenbuecher v. Tockstein (1980), 88 Ill. App. 3d 968, 970, 411 N.E.2d 92 (“it is elementary that an offeree’s power to accept is terminated by *** revocation of the offer”); International Administrators, Inc. v. Life Insurance Co. (N.D. Ill. 1983), 564 F. Supp. 1247 (making and acceptance of a latter offer implicitly revoked earlier offer contained in letter during contract negotiations), aff’d (7th Cir. 1985), 753 F.2d 1373.) Moreover, even in the absence of any revocation, defendant’s letter of February 29, 1988, following plaintiff’s termination notification of the same date, explicitly rejected plaintiff’s offer to extend the contract to March 17, 1988, by limiting the extended dates of the contract to March 4, 1988, to satisfy the zoning conditions and to March 15, 1988, as the closing date. See Brooks v. Village of Wilmette (1979), 72 Ill. App. 3d 753, 391 N.E.2d 133 (contract cannot be unilaterally modified without consent of the other party); see also Leazzo, 95 Ill. App. 3d at 851-52 (sellers’ delay in closing and delivering possession of subject real estate could not be construed as an agreement by the buyers to generally extend the April 1, 1979, closing date when throughout the negotiations buyers maintained that closing would be extended only until April 12, 1979).

Defendant contends that the trial court’s decision that plaintiff breached the contract can also be upheld because the court made a finding that plaintiff failed to exercise diligence prior to March 15, 1988. However, reading the trial court’s opinion in its entirety, it is clear that the trial court based its determination that plaintiff did not comply with the diligence requirement in seeking to rezone solely on plaintiff’s failure to present its plan to the March 17, 1988, meeting or cooperate with defendant to do the same. The trial court addresses plaintiff's conduct prior to March 15, 1988, in a separate section of its memorandum opinion. In that section, the court explicitly refrained from making any finding that plaintiff’s pre-March 15, 1988, conduct resulted in a breach of the contractual conditions. While the trial court characterized plaintiff’s conduct prior to March 15, 1988, as reflecting “a rather casual attitude towards rezoning,” it notably refrained from making a determination that this conduct in and of itself constituted a breach and was sufficient to vitiate plaintiff’s effort to recover its earnest money. Instead, the trial court chose to premise its finding in favor of defendant upon plaintiff’s conduct with respect to the March 17,1988, hearing with which finding we disagree.

Even if we agreed with the trial court’s finding that plaintiff was in breach of its agreement, we would reverse the trial court’s ruling for defendant on the independent ground that the liquidated damages provision of the contract is unenforceable.

Section 356(1) of the Restatement (Second) of Contracts provides: “(1) Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty.” Restatement (Second) of Contracts §356 (1981).

The determination of whether a contractual provision for damages is a valid liquidated damages provision or a penalty clause is a question of law. (Hickox v. Bell (1990), 195 Ill. App. 3d 976, 552 N.E.2d 1133.) There is no fixed rule applicable to all liquidated damage agreements, and each one must be evaluated by its own facts and circumstances. (Likens v. Inland Real Estate Corp. (1989), 183 Ill. App. 3d 461, 539 N.E.2d 182.) However, in interpreting provisions which affix the amount of damages in the event of a breach, courts “lean toward a construction which excludes the idea of liquidated damages and permits the parties to recover only damages actually sustained.” Arco Bag Co. v. Facings, Inc. (1958), 18 Ill. App. 2d 110, 116, 151 N.E.2d 438; see also Donow v. Board of Trustees of Southern Illinois University (1974), 21 Ill. App. 3d 139, 314 N.E.2d 704.

In Illinois, courts will generally find a liquidated damages provision to be valid and enforceable in a real estate contract, when: (1) the parties intended to agree in advance to the settlement of damages that might arise from the breach; (2) the amount of liquidated damages was reasonable at the time of contracting, bearing some relation to the damages which might be sustained; and (3) actual damages would be uncertain in amount and difficult to prove. (Curtin v. Ogborn (1979), 75 Ill. App. 3d 549, 394 N.E.2d 598; Hayden v. Keep- per-Nagel, Inc. (1978), 62 Ill. App. 3d 828, 379 N.E.2d 116.) The damages must be a specified amount for a specific breach, not a penalty to punish for nonperformance or as a means to secure performance. Builder’s Concrete Co. v. Fred Faubel & Sons, Inc. (1978), 58 Ill. App. 3d 100, 373 N.E.2d 863.

Plaintiff’s primary challenge to the liquidated damages provision’s enforceability is that, under these circumstances, the provision’s optional nature constitutes a penalty. Plaintiff would contend that by reserving the option to seek compensatory damages, defendant intends for the liquidated damages option to operate only where it exceeds actual damages. In addition, plaintiff contends that this provision’s optional nature prevents enforcement as it evidences that there was no effort to really fix a “specific sum of damages at the time of contracting.” In opposition, defendant points out that the parties are commercially sophisticated and were represented by counsel in the drafting of the agreement and that the liquidated damages represented a relatively small percentage of the total purchase price.

We agree with plaintiff that this provision is unenforceable. As previously noted, the first consideration in determining whether a liquidated damages provision is enforceable is whether the parties intended to agree in advance to the settlement of damages that might arise from the breach. (Curtin, 75 Ill. App. 3d at 554.) On its face, the optional nature of the liquidated damages clause shows that the parties never intended to establish a specific sum to constitute damages in the event of a breach.

There is an apparent dearth of Illinois authority which discusses the enforceability of an optional liquidated damages provision. However, in the case of Morris v. Flores (1988), 174 Ill. App. 3d 504, 528 N.E.2d 1013, our second district upheld a liquidated damages provision where the contract allowed other remedies only after making a specific finding that the other remedies plaintiff had under the agreement were nonmonetary, stating:

“While the contract does provide that the seller may retain the liquidated damages without prejudice to his ‘other’ remedies, the ‘other’ remedies refers to rights of a kind and character other than money damages. [Citation.] It would be inconsistent to provide in the contract for liquidated damages and also allow a party to pursue other remedies for money damages. ***
*** As discussed above, the liquidated damages clause in this case did not prevent plaintiffs from seeking remedies other than money damages, such as injunctive relief. See Bauer v. Sawyer (1956), 8 Ill. 2d 351, 358, 134 N.E.2d 329.” Morris, 174 Ill. App. 3d at 507.

A recent decision by the Florida Supreme Court involved a clause similar to the one at issue here. By reasoning which we find persuasive, that court held unenforceable a provision in a real estate contract which allowed the seller of the property to retain earnest money as liquidated damages or, at the seller’s option, to proceed in law or equity to enforce his rights under the contract. (Lefemine v. Baron (Fla. 1991), 573 So. 2d 326.) The court stated that “the existence of the option reflects that the parties did not have the mutual intention to stipulate to a fixed amount as their liquidated damages in the event of a breach” and indicates “an intent to penalize the defaulting buyer.” (Lefemine, 573 So. 2d at 329.) The court explained:

“The buyer under a liquidated damages provision with such an option is always at risk for damages greater than the liquidated sum. On the other hand, if the actual damages are less than the liquidated sum, the buyer is nevertheless obligated by the liquidated damages clause because the seller will take the deposit under that clause. Because neither party intends the stipulated sum to be the agreed-upon measure of damages, the provision cannot be a valid liquidated damages clause.” Lefemine, 573 So. 2d at 329-30.

In essence, such an optional liquidated damages provision fixes a minimum which must be paid from the buyer to the seller, “but leaves the door wide open to him to prove actual damage in addition to the so-called liquidated damage. This is no settlement at all and it permits the [seller] to have his cake and eat it too.” (Dalston Construction Corp. v. Wallace (N.Y. Sup. Ct. 1960), 26 Misc. 2d 698, _, 214 N.Y.S.2d 191, 193; see also Stock Shop, Inc. v. Bozell & Jacobs, Inc. (N.Y. Sup. Ct. 1984), 126 Misc. 2d 95, 481 N.Y.S.2d 269; Jarro Building Industries Corp. v. Schwartz (N.Y. Sup. Ct. 1967), 54 Misc. 2d 13, _, 281 N.Y.S.2d 420, 426 (holding clause which provided for recovery of 25% of the total agreed contract price or actual damages was unenforceable as a penalty because it operated to “give appellant a minimum recovery regardless of actual damages and also affords him the option to disregard the liquidated damages specified if the actual damages exceeded the amount stipulated”); see generally J. Calamari & J. Perillo, The Law of Contracts §14 — 32, at 645 (3d ed. 1987) (commenting that provisions which fix damages in event of breach with an option to pursue actual damages “have been struck down as they do not involve a reasonable attempt definitively to estimate the loss”).) We believe the reasoning of these cases to be controlling. Consequently, the optional nature of the liquidated damages provision in this case which allows defendant to seek actual damages or alternatively to retain the earnest money as liquidated damages is unenforceable. In so holding, we note that if such an optional provision were enforceable, it would be invoked only as a penalty when the liquidated damages exceeded the actual damages. See Jarro Building Industries, 54 Misc. 2d at_, 281 N.Y.S.2d at 426.

In sum, we conclude that the liquidated damages provision is unenforceable and that consequently defendant is only allowed to recover actual damages resulting from the breach. (Hamming v. Murphy (1980), 83 Ill. App. 3d 1130, 1137, 404 N.E.2d 1026.) Here, the evidence is clear that defendant has sold the property for $1,250,000 more than it would have received from plaintiff and has already amended its complaint to seek only liquidated damages, implicitly conceding that it incurred no actual damages from the breach. (Cf. Feldstein v. Guinan (1986), 148 Ill. App. 3d 610, 499 N.E.2d 535; American National Bank & Trust Co. v. Erickson (1983), 115 Ill. App. 3d 1026, 452 N.E.2d 3 (the purpose of damages is to place the non-breaching party in a position he would have been in had the contract been performed, not to provide him with a windfall recovery).) Thus, even if plaintiff were in breach of its agreement, it would nevertheless be entitled to the return of the earnest money in full since the liquidated damages provision is unenforceable and defendant did not suffer any actual damages.

The remainder of plaintiff’s appeal and defendant’s entire cross-appeal concerns the issue of attorney fees. The trial court awarded defendant $49,161.99 in attorney fees pursuant to the following contract provision, “In the event of any litigation arising hereunder, the unsuccessful party shall pay the reasonable attorney’s fees of the prevailing party.” Plaintiff contends that the award of fees was erroneous because defendant’s original attorney was disqualified, necessitating duplicative effort by a second attorney. Defendant cross-appeals, alleging that the trial court’s award was inadequate.

An unsuccessful party in a lawsuit is generally not responsible for the other party’s attorney fees. (Abreu v. Unica Industrial Sales, Inc. (1991), 224 Ill. App. 3d 439, 586 N.E.2d 661; Community Consolidated School District No. 54 v. Illinois State Board of Education (1991), 216 Ill. App. 3d 90, 576 N.E.2d 250.) An exception to this rule is when a contract provides for the award of such fees, as is the case here. (Abdul-Karim v. First Federal Savings & Loan Association (1984), 101 Ill. 2d 400, 462 N.E.2d 488; Myers v. Popp Enterprises, Inc. (1991), 216 Ill. App. 3d 830, 576 N.E.2d 452.) In this instance, a reasonable amount of fees is recoverable. 17A Am. Jur. 2d Contracts §502 (1991).

When interpreting contracts, contractual provisions for attorney fees must be strictly construed and the court must determine the intention of the parties with respect to the payment of fees. (Helland v. Helland (1991), 214 Ill. App. 3d 275, 573 N.E.2d 357.) Here, the key terms are “prevailing party” and “unsuccessful party.” A party can be considered a “prevailing party” for the purposes of awarding fees when he is successful on any significant issue in the action and achieves some benefit in bringing suit (Dial Manufacturing International, Inc. v. McGraw-Edison Co. International (D. Ariz. 1987), 657 F. Supp. 248), receives a judgment in his favor (American Federal Savings & Loan Association v. McCaffrey (1986), 107 Wash. 2d 181, 728 P.2d 155) or by obtaining an affirmative recovery. (Owen Jones & Sons, Inc. v. C.R. Lewis Co. (Alaska 1972), 497 P.2d 312.) In light of our decision which returns the earnest money to plaintiff, plaintiff cannot be considered the “unsuccessful party” and defendant can no longer be considered the “prevailing party” under the contract. (See Rinker v. County of Napa (9th Cir. 1987), 831 F.2d 829 (party no longer considered “prevailing party” after reversal on appeal).) As such, the trial court’s award of fees to defendant is vacated. Consistent with our decision, we remand this case to the trial court for a determination as to the amount of reasonable attorney fees, if any, to which plaintiff is entitled under the terms of the agreement.

Judgment reversed and remanded.

McNULTY, P.J., and COUSINS, J., concur.

       Justice Murray heard oral arguments in this case, and following his recusal, Justice Cousins was substituted and he listened to the tapes of oral argument and read the briefs and the record.