Subway Restaurants v. Riggs
Annotate this Case
SECOND DIVISION
June 2, 1998
No. 1-97-1836
SUBWAY RESTAURANTS, INC., and ) Appeal from the
SUBWAY CENTRAL, INC., a/k/a ) Circuit Court of
SUBWAY RESTAURANTS, INC., ) Cook County.
)
Plaintiffs-Appellees, )
)
v. )
)
DENNIS W. RIGGS, ) Honorable
) Willie M. Whiting,
Defendant-Appellant. ) Judge Presiding.
PRESIDING JUSTICE McNULTY delivered the opinion of the court:
Plaintiffs, Subway Restaurants, Inc. and Subway Central, Inc.
(both referred to herein as SRI), brought an action for forcible
entry and detainer against defendant Dennis W. Riggs as a result of
a breach of a sublease between SRI and defendant resulting from
defendant s nonpayment of rent due for the premises where he
operated his Subway franchise. Defendant filed a motion to dismiss
SRI s amended complaint, claiming that SRI did not have legal
capacity to sue since it did not have a certificate of authority.
735 ILCS 5/2-619(a)(2) (West 1994). The trial court denied
defendant s motion. SRI then filed a motion for summary judgment.
Defendant responded to the summary judgment motion and also filed
a motion to stay the amended complaint. The trial court granted
SRI s motion for summary judgment and denied defendant s motion to
stay. Defendant appeals, claiming that the circuit court proceeding
should have been stayed and summary judgment in SRI's favor should
not have been granted since he was inequitably precluded from
prosecuting his defense of fraud in the inducement. Defendant also
claims on appeal that the trial should have granted his motion to
dismiss since plaintiff did not register as a foreign corporation.
We reverse and remand.
On March 9, 1994, defendant entered into the Subway franchise
agreement with Doctor s Associates, Inc. (DAI), a Florida
corporation. On that same date, defendant also entered into a
sublease for the premises located at 7740-7748 Milwaukee Avenue,
Niles, Illinois, with Subway Restaurants, Inc., a Connecticut
corporation, an affiliated company of DAI. The sublease requires
the franchisee to assume all of SRI s obligations under the master
lease, including payment of rent directly to the landlord who
leases the premises to SRI. SRI has the ultimate responsibility
for all rental payments due for the premises under the terms and
conditions of the master lease.
In 1996, defendant stopped paying rent and other charges due
under his sublease for the premises. On May 31, 1996, SRI filed
suit in the circuit court seeking to regain possession of the
premises and to recover back rent and related charges totaling
$10,313.79. On June 18, 1996, defendant and his corporation filed
a lawsuit in the United States District Court for the Northern
District of Illinois against DAI, Subway Restaurants, Subway
Central, and DAI s owners, Fredrick A. DeLuca and Peter H. Buck
(federal defendants), alleging fraud in the inducement and seeking
damages and rescission under the Illinois Franchise Disclosure Act
of 1987 (815 ILCS 705/26 (West 1994)), the Illinois Consumer Fraud
and Deceptive Business Practices Act (815 ILCS 505/1 (West 1994)),
and the common law of Illinois. The federal complaint also alleged
that DAI had waived its right to arbitrate by causing SRI to file
the eviction action.
DAI then filed in the United States District Court for the
District of Connecticut a petition to compel arbitration and a
motion to enjoin prosecution of the lawsuit in the northern
district of Illinois. On August 21, 1996, the Connecticut district
court compelled defendant to arbitrate and enjoined him until
further order of the Connecticut district court from commencing or
prosecuting or in any way acting in any action related to or
arising under any franchise agreement with DAI or any matter or
dispute that is or may be subject to the arbitration clause. The
district court of Connecticut rejected defendant s claim that he
had been fraudulently induced to arbitrate, that the arbitration
clause was an unconscionable contract of adhesion, and that DAI had
waived its right to arbitration. On June 10, 1997, the United
States Court of Appeals for the Second Circuit affirmed this order.
On July 15, 1996, in the circuit court of Cook County, SRI
filed its amended complaint for forcible entry and detainer, based
on defendant s failure to pay the rent required by the sublease.
Defendant moved to dismiss the case on the ground that SRI was not
registered to do business in Illinois. The circuit court denied
defendant s motion to dismiss.
On September 13, 1997, the owners of the premises (the
landlord) were allowed to intervene in the pending action and file
a third-party complaint for possession and rent against SRI as a
result of SRI s ultimate responsibility for rent due under the
master lease. On or about October 31, 1996, defendant vacated the
premises. At that time, $17,266.79 in rent and related charges was
due and owing the landlord. On November 4, 1996, SRI paid the
outstanding amounts in full by tendering a check for $17,266.79.
On November 4, 1996, the landlord dismissed its third-party
complaint against SRI.
On December 5, 1996, SRI moved for summary judgment against
defendant on its claim for unpaid rent and related charges. On
January 2, 1997, defendant moved either to stay or dismiss the
case. Defendant argued that the Connecticut district court s
August 21, 1996, injunction estopped or otherwise precluded the
circuit court from rendering judgment for SRI for defendant's
breach of the sublease. Defendant also claimed that the sublease,
assignment of sublease and franchise agreement are products of
fraud in the inducement and, accordingly, are unenforceable as a
matter of law.
On February 13, 1997, the circuit court denied the motion to
stay and the motion to dismiss and granted SRI s motion for summary
judgment in the amount of $17,266.79. The court entered and
continued the judgment until April 14, 1997.
On March, 18, 1997, defendant returned to the Connecticut
district court for a modification or clarification of the court's
injunctions. On April 2, 1997, the district court entered an order
denying defendant s motion to modify the injunction. The order
stated that the injunction does not pertain to factual legal
defenses related solely to the eviction action. However, the order
stated that if defendant seeks to inject into the eviction action
issues pertaining to the franchise agreement, the injunction is
applicable.
On April 14, 1997, defendant moved that the circuit court set
aside the order granting summary judgment and stay prosecution of
the amended complaint. The court denied the motion and entered
final judgment in favor of SRI.
Defendant claims on appeal that the trial court erred in
denying defendant's request for a stay and in granting SRI's motion
for summary judgment in its action for forcible entry and detainer.
Defendant claims that the circuit court's actions were improper
since defendant was precluded from asserting fraud in the
inducement against plaintiff because of the Connecticut district
court's injunction.
A forcible entry and detainer proceeding is a summary
statutory proceeding to adjudicate and restore rights of possession
and, as such, should not be burdened by matters unrelated to the
issue of possession. Sawyier v. Young, 198 Ill. App. 3d 1047, 556 N.E.2d 759 (1990). The only questions that are to be answered in
such a proceeding concern which party is entitled to immediate
possession and whether a defense that is germane to the distinctive
purpose of the action defeats plaintiff's asserted right to
possession. First Illinois Bank & Trust v. Galuska, 255 Ill. App.
3d 86, 627 N.E.2d 325 (1993). Claims that are germane to the issue
of possession generally fall into one of four categories: (1)
claims asserting a paramount right of possession; (2) claims
denying the breach of any agreement vesting possession in
plaintiff; (3) claims challenging the validity or enforceability of
the document upon which plaintiff's right to possession is based;
and (4) claims questioning a plaintiff's motivation for the
bringing of the forcible action. People ex rel. Department of
Transportation v. Walliser, 258 Ill. App. 3d 782, 629 N.E.2d 1189
(1994).
The defenses available in a forcible entry and detainer action
are limited to allow the issue of possession to be resolved
quickly. The instant case, however, is not the typical forcible
entry and detainer action since it does not concern the right to
possession of the property. The landlord of the property at issue
here has already been made whole. Defendant, the sublessee, has
vacated the premises, and SRI, the sublessor, has paid the landlord
the entire amount of back rent that the landlord was due. The
landlord is thus no longer involved in the forcible entry and
detainer action.
This case instead concerns a dispute between the sublessor and
sublessee, neither of which is in possession of the property.
Accordingly, there is no need to restrict defendant to only the
limited defenses deemed germane to the ordinary forcible entry and
detainer action.
The Connecticut district court determined that defendant could
not inject into the eviction action issues pertaining to the
franchise agreement and that any claims as to whether defendant was
fraudulently induced to enter into the franchise agreement must be
addressed in arbitration. In light of this conclusion, defendant
may not argue in this forcible entry and detainer action that he
was fraudulently induced to enter into the franchise agreement.
The district court of Connecticut's ruling likewise prevented
defendant from arguing he was fraudulently induced to enter into
the sublease. The record reveals that the franchise agreement and
sublease were entered into at the same time, and defendant was
required by the franchise agreement to enter into the sublease with
SRI. In Yates v. Doctor's Associates, Inc., 193 Ill. App. 3d 431,
549 N.E.2d 1010 (1990), the court considered the relationship
between DAI and Subway, Inc., a corporation that sublet premises to
a franchisee pursuant to a franchise agreement. The court in
Yates found that the sublease agreements served no purpose other
than providing a mechanism by which DAI could enforce the terms of
the franchise agreement. Moreover, the court noted that when
Subway, Inc., filed the forcible entry and detainer action, it was
as if DAI had brought the action in its own name. Yates, 193 Ill,
App. 3d at 441. The franchise agreement and the sublease are
essentially one document.
We thus find that the resolution of the fraudulent inducement
claim may be dispositive in the resolution of the instant forcible
entry and detainer action. Therefore, we believe that the circuit
court should have granted defendant s motion to stay the forcible
entry and detainer proceedings pending the conclusion of the
arbitration proceedings. Accordingly, we reverse and remand in
order for the circuit court to enter a stay until the conclusion of
the arbitration proceedings. If defendant prevails in the
arbitration proceedings and it is determined that he was
fraudulently induced to enter into the franchise agreement, the
trial court should lift the stay, vacate the judgment entered
against defendant and dismiss the forcible entry and detainer
action with prejudice. If, however, defendant does not prevail in
the arbitration proceedings and it is determined that he was not
fraudulently induced to enter into the franchise agreement, the
trial court should lift the stay of enforcement of the judgment.
Defendant also claims that the circuit court should have
granted his motion to dismiss on the basis that SRI was not
registered as a foreign corporation. The Illinois Business
Corporation Act of 1983 provides that "[n]o foreign corporation
transacting business in this State without a Certificate of
Authority is permitted to maintain a civil action in any Court of
this State,until the corporation obtains a certificate of
authority." 805 ILCS 5/13.70 (West 1994). A corporation engaged
in only occasional and isolated transactions in Illinois is not
required to obtain a certificate of authority. Wenige-Epperson,
Inc. v. Jet Lite Products, Inc., 28 Ill. App. 3d 320, 328 N.E.2d 665 (1975). Furthermore, a foreign corporation is not required to
obtain a certificate of authority if it is simply conducting
interstate commerce. Textile Fabrics Corp. v. Roundtree, 39 Ill. 2d 122, 233 N.E.2d 376 (1968). Defendant bears the burden of proof
on the issue of whether SRI was transacting business in Illinois in
violation of the Business Corporation Act. Mass Transfer Inc. v.
Vincent Construction Co., 223 Ill. App. 3d 746, 585 N.E.2d 1286
(1992).
The information provided in the record concerning the leasing
transactions leads us to find that defendant failed to sustain this
burden. Defendant has linked only 10 leasing transactions in
Illinois to SRI. These transactions do not constitute a
substantial amount of business in Illinois.
We therefore reverse and remand in order for the circuit court
to enter a stay of the forcible entry and detainer proceedings in
accordance with the directions set forth in this opinion.
Reversed and remanded.
RAKOWSKI, J., concurs.
COUSINS, J., dissents.
JUSTICE COUSINS, dissenting.
On July 15, 1996, SRI, the lessee, filed its amended
complaint for forcible entry and detainer against the defendant-
appellant, Dennis W. Riggs, the sublessee. The only basis for the
eviction was defendant's failure to pay the rent required by the
sublease. In the amended complaint, SRI did not assert breach of
the franchise agreement as a ground for the eviction. Defendant
did not deny liability or contend the dispute was arbitrable;
instead, on July 24, 1996, he moved to dismiss the case on the
ground that neither Subway Central, Inc. nor SRI, were registered
to do business in Illinois.
I agree with the part of the majority decision holding that
the trial court's refusal to dismiss on this ground was proper.
However, I dissent from the part of the majority decision that
reverses the trial court and remands this case for the trial
court to enter a stay of the forcible detainer proceeding.
In the instant case, after the forcible detainer proceeding
had been filed by the lessee, the owners of the subject premises
were allowed to intervene in the pending action and file a third-
party complaint for possession and rent against SRI because of
SRI's ultimate responsibility for rent due under the master
lease. On or about October 31, 1996, defendant vacated the
subject premises. At that time, $17,266.79 in rent and related
charges was due and owing the landlord. On November 4, 1996, SRI
paid the outstanding amounts in full by tendering the landlord a
check for $17,266.79. On November 4,1996, the landlord dismissed
its third-party complaint against SRI.
On December 5, 1996, SRI moved for summary judgment against
defendant on its claim for unpaid rent and related charges. On
January 2, 1997, defendant responded by moving in the alternative
to stay or dismiss the case. Defendant's counsel did not dispute
that his client owed the claimed amounts but argued for the first
time, that the Connecticut district court's August 21, 1996,
injunction somehow "estopped" or otherwise precluded the trial
court from rendering judgment for SRI for defendant's undisputed
breech of the sublease. Defendant also sought to relitigate the
fraudulent inducement claim that Judge Dorsey and the second
circuit had already rejected, by pleading:
"The Sublease, Assignment of Sublease to Dennis Riggs, and
Franchise Agreement are products of fraud in the inducement and,
accordingly, are unenforceable as a matter of law."
On February 13, 1997, the Circuit Court denied the motion to
stay or dismiss and granted SRI's motion for summary judgment in
the amount of $17,266.79. The court entered and continued the
judgment until April 14, 1997.
On March 18, 1997, defendant returned to the Connecticut
district court in order to obtain a modification of the
injunction that had been previously entered in that court by
Judge Dorsey. On April 2, 1997, Judge Dorsey entered an order
denying defendant's motion to modify the injunction. The order
sets forth that defendant was never barred from asserting legal
and factual defenses to the sublease defaults as long as he did
not raise issues that the district court had already decided or
that were arbitrable under the franchise agreement.
On April 14, 1997, without presenting any legal or factual
defenses to the rent claim, defendant moved that the circuit
court set aside the order granting summary judgment and stay
prosecution of the amended complaint. The circuit court denied
the motion and entered final judgment in favor of SRI. This
appeal followed.
On review, the majority has decided to reverse and remand
this case and has ordered the circuit court to enter a stay of
the forcible entry and detainer proceedings. The majority cites
no authority in support of its decision. In my view, the majority
errs.
The majority writes that "there is no need to restrict
defendant to only the limited defenses deemed germane to the
ordinary forcible entry and detainer action." However,
notwithstanding the majority view that this case is not an
ordinary forcible entry and detainer case, this case was
commenced as a forcible detainer action and remains so. This
case must be governed by the evidentiary rules applicable to
forcible detainer cases. Proceedings in the instant case have
already been unusually unrestricted.
A forcible entry and detainer action is a summary statutory
proceeding to adjudicate rights to possession, unimpeded by
questions of title and other collateral matters not directly
connected with the question of possession. Rosewood Corp. v.
Fisher, 46 Ill. 2d 249, 255, 263, N.E.2d 833 (1970). The
distinctive, limited purpose of the Forcible Entry and Detainer
Act is to supply a speedy remedy to permit persons entitled to
possession of lands to be restored thereto. Wall v. Goodenough,
16 Ill. 415 (1855), Rosewood Corp. v. Fisher, 46 Ill. 2d 249, 251,
263, N.E.2d 833 (1970).
Finally, the circuit court's denial of defendant's motion to
stay is comparable to a denial of a motion for a preliminary
injunction. Therefore, the review of the circuit court's decision
is limited to whether there was an abuse of discretion in denying
the stay. Chicago Park District v. City of Chicago, 127 Ill. App.
3d 215, 221, 468 N.E.2d 1261 (1984), affirmed, 111 Ill. 2d 7, 488 N.E.2d 968 (1986). The circuit court committed no abuse of
discretion. The judgment of the circuit should be affirmed.
June 2, 1998
No. 1-97-1836
SUBWAY RESTAURANTS, INC., and ) Appeal from the
SUBWAY CENTRAL, INC., a/k/a ) Circuit Court of
SUBWAY RESTAURANTS, INC., ) Cook County.
)
Plaintiffs-Appellees, )
)
v. )
)
DENNIS W. RIGGS, ) Honorable
) Willie M. Whiting,
Defendant-Appellant. ) Judge Presiding.
PRESIDING JUSTICE McNULTY delivered the opinion of the court:
Plaintiffs, Subway Restaurants, Inc. and Subway Central, Inc.
(both referred to herein as SRI), brought an action for forcible
entry and detainer against defendant Dennis W. Riggs as a result of
a breach of a sublease between SRI and defendant resulting from
defendant s nonpayment of rent due for the premises where he
operated his Subway franchise. Defendant filed a motion to dismiss
SRI s amended complaint, claiming that SRI did not have legal
capacity to sue since it did not have a certificate of authority.
735 ILCS 5/2-619(a)(2) (West 1994). The trial court denied
defendant s motion. SRI then filed a motion for summary judgment.
Defendant responded to the summary judgment motion and also filed
a motion to stay the amended complaint. The trial court granted
SRI s motion for summary judgment and denied defendant s motion to
stay. Defendant appeals, claiming that the circuit court proceeding
should have been stayed and summary judgment in SRI's favor should
not have been granted since he was inequitably precluded from
prosecuting his defense of fraud in the inducement. Defendant also
claims on appeal that the trial should have granted his motion to
dismiss since plaintiff did not register as a foreign corporation.
We reverse and remand.
On March 9, 1994, defendant entered into the Subway franchise
agreement with Doctor s Associates, Inc. (DAI), a Florida
corporation. On that same date, defendant also entered into a
sublease for the premises located at 7740-7748 Milwaukee Avenue,
Niles, Illinois, with Subway Restaurants, Inc., a Connecticut
corporation, an affiliated company of DAI. The sublease requires
the franchisee to assume all of SRI s obligations under the master
lease, including payment of rent directly to the landlord who
leases the premises to SRI. SRI has the ultimate responsibility
for all rental payments due for the premises under the terms and
conditions of the master lease.
In 1996, defendant stopped paying rent and other charges due
under his sublease for the premises. On May 31, 1996, SRI filed
suit in the circuit court seeking to regain possession of the
premises and to recover back rent and related charges totaling
$10,313.79. On June 18, 1996, defendant and his corporation filed
a lawsuit in the United States District Court for the Northern
District of Illinois against DAI, Subway Restaurants, Subway
Central, and DAI s owners, Fredrick A. DeLuca and Peter H. Buck
(federal defendants), alleging fraud in the inducement and seeking
damages and rescission under the Illinois Franchise Disclosure Act
of 1987 (815 ILCS 705/26 (West 1994)), the Illinois Consumer Fraud
and Deceptive Business Practices Act (815 ILCS 505/1 (West 1994)),
and the common law of Illinois. The federal complaint also alleged
that DAI had waived its right to arbitrate by causing SRI to file
the eviction action.
DAI then filed in the United States District Court for the
District of Connecticut a petition to compel arbitration and a
motion to enjoin prosecution of the lawsuit in the northern
district of Illinois. On August 21, 1996, the Connecticut district
court compelled defendant to arbitrate and enjoined him until
further order of the Connecticut district court from commencing or
prosecuting or in any way acting in any action related to or
arising under any franchise agreement with DAI or any matter or
dispute that is or may be subject to the arbitration clause. The
district court of Connecticut rejected defendant s claim that he
had been fraudulently induced to arbitrate, that the arbitration
clause was an unconscionable contract of adhesion, and that DAI had
waived its right to arbitration. On June 10, 1997, the United
States Court of Appeals for the Second Circuit affirmed this order.
On July 15, 1996, in the circuit court of Cook County, SRI
filed its amended complaint for forcible entry and detainer, based
on defendant s failure to pay the rent required by the sublease.
Defendant moved to dismiss the case on the ground that SRI was not
registered to do business in Illinois. The circuit court denied
defendant s motion to dismiss.
On September 13, 1997, the owners of the premises (the
landlord) were allowed to intervene in the pending action and file
a third-party complaint for possession and rent against SRI as a
result of SRI s ultimate responsibility for rent due under the
master lease. On or about October 31, 1996, defendant vacated the
premises. At that time, $17,266.79 in rent and related charges was
due and owing the landlord. On November 4, 1996, SRI paid the
outstanding amounts in full by tendering a check for $17,266.79.
On November 4, 1996, the landlord dismissed its third-party
complaint against SRI.
On December 5, 1996, SRI moved for summary judgment against
defendant on its claim for unpaid rent and related charges. On
January 2, 1997, defendant moved either to stay or dismiss the
case. Defendant argued that the Connecticut district court s
August 21, 1996, injunction estopped or otherwise precluded the
circuit court from rendering judgment for SRI for defendant's
breach of the sublease. Defendant also claimed that the sublease,
assignment of sublease and franchise agreement are products of
fraud in the inducement and, accordingly, are unenforceable as a
matter of law.
On February 13, 1997, the circuit court denied the motion to
stay and the motion to dismiss and granted SRI s motion for summary
judgment in the amount of $17,266.79. The court entered and
continued the judgment until April 14, 1997.
On March, 18, 1997, defendant returned to the Connecticut
district court for a modification or clarification of the court's
injunctions. On April 2, 1997, the district court entered an order
denying defendant s motion to modify the injunction. The order
stated that the injunction does not pertain to factual legal
defenses related solely to the eviction action. However, the order
stated that if defendant seeks to inject into the eviction action
issues pertaining to the franchise agreement, the injunction is
applicable.
On April 14, 1997, defendant moved that the circuit court set
aside the order granting summary judgment and stay prosecution of
the amended complaint. The court denied the motion and entered
final judgment in favor of SRI.
Defendant claims on appeal that the trial court erred in
denying defendant's request for a stay and in granting SRI's motion
for summary judgment in its action for forcible entry and detainer.
Defendant claims that the circuit court's actions were improper
since defendant was precluded from asserting fraud in the
inducement against plaintiff because of the Connecticut district
court's injunction.
A forcible entry and detainer proceeding is a summary
statutory proceeding to adjudicate and restore rights of possession
and, as such, should not be burdened by matters unrelated to the
issue of possession. Sawyier v. Young, 198 Ill. App. 3d 1047, 556 N.E.2d 759 (1990). The only questions that are to be answered in
such a proceeding concern which party is entitled to immediate
possession and whether a defense that is germane to the distinctive
purpose of the action defeats plaintiff's asserted right to
possession. First Illinois Bank & Trust v. Galuska, 255 Ill. App.
3d 86, 627 N.E.2d 325 (1993). Claims that are germane to the issue
of possession generally fall into one of four categories: (1)
claims asserting a paramount right of possession; (2) claims
denying the breach of any agreement vesting possession in
plaintiff; (3) claims challenging the validity or enforceability of
the document upon which plaintiff's right to possession is based;
and (4) claims questioning a plaintiff's motivation for the
bringing of the forcible action. People ex rel. Department of
Transportation v. Walliser, 258 Ill. App. 3d 782, 629 N.E.2d 1189
(1994).
The defenses available in a forcible entry and detainer action
are limited to allow the issue of possession to be resolved
quickly. The instant case, however, is not the typical forcible
entry and detainer action since it does not concern the right to
possession of the property. The landlord of the property at issue
here has already been made whole. Defendant, the sublessee, has
vacated the premises, and SRI, the sublessor, has paid the landlord
the entire amount of back rent that the landlord was due. The
landlord is thus no longer involved in the forcible entry and
detainer action.
This case instead concerns a dispute between the sublessor and
sublessee, neither of which is in possession of the property.
Accordingly, there is no need to restrict defendant to only the
limited defenses deemed germane to the ordinary forcible entry and
detainer action.
The Connecticut district court determined that defendant could
not inject into the eviction action issues pertaining to the
franchise agreement and that any claims as to whether defendant was
fraudulently induced to enter into the franchise agreement must be
addressed in arbitration. In light of this conclusion, defendant
may not argue in this forcible entry and detainer action that he
was fraudulently induced to enter into the franchise agreement.
The district court of Connecticut's ruling likewise prevented
defendant from arguing he was fraudulently induced to enter into
the sublease. The record reveals that the franchise agreement and
sublease were entered into at the same time, and defendant was
required by the franchise agreement to enter into the sublease with
SRI. In Yates v. Doctor's Associates, Inc., 193 Ill. App. 3d 431,
549 N.E.2d 1010 (1990), the court considered the relationship
between DAI and Subway, Inc., a corporation that sublet premises to
a franchisee pursuant to a franchise agreement. The court in
Yates found that the sublease agreements served no purpose other
than providing a mechanism by which DAI could enforce the terms of
the franchise agreement. Moreover, the court noted that when
Subway, Inc., filed the forcible entry and detainer action, it was
as if DAI had brought the action in its own name. Yates, 193 Ill,
App. 3d at 441. The franchise agreement and the sublease are
essentially one document.
We thus find that the resolution of the fraudulent inducement
claim may be dispositive in the resolution of the instant forcible
entry and detainer action. Therefore, we believe that the circuit
court should have granted defendant s motion to stay the forcible
entry and detainer proceedings pending the conclusion of the
arbitration proceedings. Accordingly, we reverse and remand in
order for the circuit court to enter a stay until the conclusion of
the arbitration proceedings. If defendant prevails in the
arbitration proceedings and it is determined that he was
fraudulently induced to enter into the franchise agreement, the
trial court should lift the stay, vacate the judgment entered
against defendant and dismiss the forcible entry and detainer
action with prejudice. If, however, defendant does not prevail in
the arbitration proceedings and it is determined that he was not
fraudulently induced to enter into the franchise agreement, the
trial court should lift the stay of enforcement of the judgment.
Defendant also claims that the circuit court should have
granted his motion to dismiss on the basis that SRI was not
registered as a foreign corporation. The Illinois Business
Corporation Act of 1983 provides that "[n]o foreign corporation
transacting business in this State without a Certificate of
Authority is permitted to maintain a civil action in any Court of
this State,until the corporation obtains a certificate of
authority." 805 ILCS 5/13.70 (West 1994). A corporation engaged
in only occasional and isolated transactions in Illinois is not
required to obtain a certificate of authority. Wenige-Epperson,
Inc. v. Jet Lite Products, Inc., 28 Ill. App. 3d 320, 328 N.E.2d 665 (1975). Furthermore, a foreign corporation is not required to
obtain a certificate of authority if it is simply conducting
interstate commerce. Textile Fabrics Corp. v. Roundtree, 39 Ill. 2d 122, 233 N.E.2d 376 (1968). Defendant bears the burden of proof
on the issue of whether SRI was transacting business in Illinois in
violation of the Business Corporation Act. Mass Transfer Inc. v.
Vincent Construction Co., 223 Ill. App. 3d 746, 585 N.E.2d 1286
(1992).
The information provided in the record concerning the leasing
transactions leads us to find that defendant failed to sustain this
burden. Defendant has linked only 10 leasing transactions in
Illinois to SRI. These transactions do not constitute a
substantial amount of business in Illinois.
We therefore reverse and remand in order for the circuit court
to enter a stay of the forcible entry and detainer proceedings in
accordance with the directions set forth in this opinion.
Reversed and remanded.
RAKOWSKI, J., concurs.
COUSINS, J., dissents.
JUSTICE COUSINS, dissenting.
On July 15, 1996, SRI, the lessee, filed its amended
complaint for forcible entry and detainer against the defendant-
appellant, Dennis W. Riggs, the sublessee. The only basis for the
eviction was defendant's failure to pay the rent required by the
sublease. In the amended complaint, SRI did not assert breach of
the franchise agreement as a ground for the eviction. Defendant
did not deny liability or contend the dispute was arbitrable;
instead, on July 24, 1996, he moved to dismiss the case on the
ground that neither Subway Central, Inc. nor SRI, were registered
to do business in Illinois.
I agree with the part of the majority decision holding that
the trial court's refusal to dismiss on this ground was proper.
However, I dissent from the part of the majority decision that
reverses the trial court and remands this case for the trial
court to enter a stay of the forcible detainer proceeding.
In the instant case, after the forcible detainer proceeding
had been filed by the lessee, the owners of the subject premises
were allowed to intervene in the pending action and file a third-
party complaint for possession and rent against SRI because of
SRI's ultimate responsibility for rent due under the master
lease. On or about October 31, 1996, defendant vacated the
subject premises. At that time, $17,266.79 in rent and related
charges was due and owing the landlord. On November 4, 1996, SRI
paid the outstanding amounts in full by tendering the landlord a
check for $17,266.79. On November 4,1996, the landlord dismissed
its third-party complaint against SRI.
On December 5, 1996, SRI moved for summary judgment against
defendant on its claim for unpaid rent and related charges. On
January 2, 1997, defendant responded by moving in the alternative
to stay or dismiss the case. Defendant's counsel did not dispute
that his client owed the claimed amounts but argued for the first
time, that the Connecticut district court's August 21, 1996,
injunction somehow "estopped" or otherwise precluded the trial
court from rendering judgment for SRI for defendant's undisputed
breech of the sublease. Defendant also sought to relitigate the
fraudulent inducement claim that Judge Dorsey and the second
circuit had already rejected, by pleading:
"The Sublease, Assignment of Sublease to Dennis Riggs, and
Franchise Agreement are products of fraud in the inducement and,
accordingly, are unenforceable as a matter of law."
On February 13, 1997, the Circuit Court denied the motion to
stay or dismiss and granted SRI's motion for summary judgment in
the amount of $17,266.79. The court entered and continued the
judgment until April 14, 1997.
On March 18, 1997, defendant returned to the Connecticut
district court in order to obtain a modification of the
injunction that had been previously entered in that court by
Judge Dorsey. On April 2, 1997, Judge Dorsey entered an order
denying defendant's motion to modify the injunction. The order
sets forth that defendant was never barred from asserting legal
and factual defenses to the sublease defaults as long as he did
not raise issues that the district court had already decided or
that were arbitrable under the franchise agreement.
On April 14, 1997, without presenting any legal or factual
defenses to the rent claim, defendant moved that the circuit
court set aside the order granting summary judgment and stay
prosecution of the amended complaint. The circuit court denied
the motion and entered final judgment in favor of SRI. This
appeal followed.
On review, the majority has decided to reverse and remand
this case and has ordered the circuit court to enter a stay of
the forcible entry and detainer proceedings. The majority cites
no authority in support of its decision. In my view, the majority
errs.
The majority writes that "there is no need to restrict
defendant to only the limited defenses deemed germane to the
ordinary forcible entry and detainer action." However,
notwithstanding the majority view that this case is not an
ordinary forcible entry and detainer case, this case was
commenced as a forcible detainer action and remains so. This
case must be governed by the evidentiary rules applicable to
forcible detainer cases. Proceedings in the instant case have
already been unusually unrestricted.
A forcible entry and detainer action is a summary statutory
proceeding to adjudicate rights to possession, unimpeded by
questions of title and other collateral matters not directly
connected with the question of possession. Rosewood Corp. v.
Fisher, 46 Ill. 2d 249, 255, 263, N.E.2d 833 (1970). The
distinctive, limited purpose of the Forcible Entry and Detainer
Act is to supply a speedy remedy to permit persons entitled to
possession of lands to be restored thereto. Wall v. Goodenough,
16 Ill. 415 (1855), Rosewood Corp. v. Fisher, 46 Ill. 2d 249, 251,
263, N.E.2d 833 (1970).
Finally, the circuit court's denial of defendant's motion to
stay is comparable to a denial of a motion for a preliminary
injunction. Therefore, the review of the circuit court's decision
is limited to whether there was an abuse of discretion in denying
the stay. Chicago Park District v. City of Chicago, 127 Ill. App.
3d 215, 221, 468 N.E.2d 1261 (1984), affirmed, 111 Ill. 2d 7, 488 N.E.2d 968 (1986). The circuit court committed no abuse of
discretion. The judgment of the circuit should be affirmed.
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