Case: 1:20-cv-04785 Document #: 1 Filed: 08/14/20 Page 1 of 9 PageID #:1

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

THE PRUDENTIAL INSURANCE

COMPANY OF AMERICA, a New Jersey
Corporation,

Plaintiff,

v. Case No.

WANXIANG STERLING STETSON Judge

OWNER, LLC, a Delaware Limited Liability
Company,

Defendant.

COMPLAINT

Plaintiff The Prudential Insurance Company of America (“Prudential”), by and through

its attorneys, for its Complaint against defendant Wanxiang Sterling Stetson Owner, LLC

(“Wanxiang”), states as follows:

Nature of Action

1. This breach of contract lawsuit arises out of a Signage Lease between Wanxiang

and Prudential pertaining to the Prudential Plaza located in Chicago, Illinois, which was entered

into twenty years ago. Pursuant to the Signage Lease, Prudential leases from Wanxiang space at

the property for the display of various signs incorporating some of Prudential’s famous and

distinctive trademark logos, including a large illuminated sign at the top of One Prudential Plaza.

Under the terms of the Signage Lease, Wanxiang voluntarily offered to buy-out Prudential’s

interest for the sum of $10 million dollars. Prudential accepted that offer, but Wanxiang has

failed to pay that sum and has not yet removed the Prudential Signs, which it is obligated to do.

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The Parties

2. Prudential is a New Jersey corporation with its principal place of business located

in New Jersey.

3. Wanxiang is a Delaware limited liability company. Upon information and belief,

WXSB Stetson Venture, LLC (“WXSB”) is a member of Wanxiang, is a Delaware limited

liability company, and no member of WXSB is a New Jersey citizen. Upon further information

and belief, no other member of Wanxiang is new Jersey citizen.

Jurisdiction and Venue

4. The Court has diversity jurisdiction under 28 U.S.C. § 1332(a) because this action

and controversy is between citizens of different states and exceeds the sum or value of

$75,000.00, exclusive of interest and costs.

5. This Court has personal jurisdiction over Wanxiang because it is the record owner

of real estate located in the City of Chicago. Wanxiang is also a party to the Signage Lease

(defined below), which is the subject of the instant lawsuit and states, at Section 21.2, that “each

of the parties hereto agree to submit to the jurisdiction of the applicable federal and state courts

located in [Illinois].”

6. Venue is proper in this judicial district under 28 U.S.C. § 1391(b) because a

substantial part of the events giving rise to Prudential’s claim occurred in this judicial district and

because the Signage Lease that is the subject of this action relates to property situated in this

judicial district.

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Background Allegations

The Signage Lease

7. On or about June 20, 2000, Prudential as Tenant, entered into a Signage Lease

Agreement (the “Signage Lease”) with SIP North Stetson Venture, LLC, as Owner (“SIP”), a

copy of which is attached hereto as Exhibit 1.

8. As of the date of the Signage Lease, SIP possessed fee title to the land, buildings,

and improvements commonly known as Prudential Plaza in Chicago, Illinois, including two

office towers commonly known as One Prudential Plaza and Two Prudential Plaza, and the

lobby connecting the buildings, which are collectively referred to in the Signage Lease as the

“Project.” (Signage Lease, Recital A at p. 1.)

9. Wanxiang is successor to SIP and succeeded to the interests of SIP under the

Signage Lease.

10. The Project has historically been identified with Prudential and has always borne

Prudential’s name. (Signage Lease, Recital C at p. 1.) The Project includes various signs

containing Prudential’s name and proprietary logo known as the “The Rock,” which refers to the

Rock of Gibraltar, including the “Tower Sign” located at the top of the south wall of One

Prudential Plaza, the “Logo Sign” located on the exterior of the building at One Prudential Plaza,

a commemorative plaque containing a piece of the Rock of Gibraltar, and stone plaques

embedded in various interior and exterior walls throughout the Project containing the words

“Prudential Plaza,” all of the foregoing of which are collectively referred to in the Signage Lease

and this Complaint as the “Signs.” (Signage Lease, Recital C at p. 1 and Exs. A and B).

11. Pursuant to the Signage Lease, Owner leases to Tenant the space within the

Project that encompasses the Signs, as well as the structures and supports for the Tower Sign.

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(Signage Lease, § 10 at p. 2.) (The executed copy of the Signage Lease confusingly lists

alternating section numbers, so Prudential includes citations to page numbers.)

12. Under Section 3.1 of the Signage Lease (also numbered Section 12.2 on the

executed copy), the “First Initial Term” of the Signage Lease was for 10 years, which was set to

expire on June 20, 2010. Prior to such expiration, however, that Term was extended for two

successive five year periods, such that the Signage Lease was set to expire on June 20, 2020.

(Signage Lease, at p. 3.)

13. Section 3.5 of the Signage Lease (also numbered Section 12.6 on the executed

copy) provides, in pertinent part, as follows:

12.6 Prior to the end of the Initial Term and each Extension Period,
Owner shall be entitled to make an election by which either (i) this
Agreement would terminate as of the end of the Initial Term or (ii) Tenant
would be required to pay an increased amount of rent for the Extension
Period, in accordance with the provisions of this Section 3.5

(a) An election by Owner under this Section shall be made (if at all) by
Owner giving a written notice to Tenant no earlier than one (1) year prior
to the expiration of the Initial Term or any Extension Period then in effect,
nor later than ninety (90) days prior to such expiration (an “Owner
Election Notice”), stating that Owner is making the election contemplated
by Section 3.5 of the Signage Lease Agreement and setting forth a specific
dollar amount that Owner is ready, willing, and able to pay to terminate
this Agreement as of the end of the Initial Term (the “Termination Price”).
An Owner Election Notice shall constitute a binding and irrevocable
offer to Tenant to pay to Tenant, no later than the last day of the Term,
the Termination Price (in immediately available funds in such manner
and place as Tenant reasonably may designate) in exchange for Tenant’s
agreement to terminate this Agreement as of the end of the Initial Term or
current Extension Period (as the case may be).

(Signage Lease, at p. 4) (emphasis added).

14. Section 3.5(b) of the Signage Lease (also numbered Section 12.6 on the executed

copy) provides, in pertinent part, as follows:

At any time within thirty (30) days following Tenant’s receipt of an

Owner Election Notice, Tenant shall be entitled to elect, by written notice

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to Owner (a “Tenant Election Notice”) either (a) to accept Owner’s offer

to terminate this Agreement as of the end of the Initial Term or current
Extension Period, as applicable (a “Termination Acceptance”) or (b) to
decline such offer and, instead, to pay to Owner, as rent for the next
succeeding Extension Period, a dollar amount equal to the Termination
Price (a “Termination Refusal”). Tenant shall be entitled to respond to an
Owner Election Notice only by giving either a Termination Acceptance or
a Termination Refusal, as set forth above. Failure by Tenant to respond to
an Owner Election Notice within the aforesaid 30-day period shall be
deemed a Termination Refusal. If Tenant responds to an Owner Election
Notice with a Tenant Election Notice that declines Owner’s offer to
terminate this Agreement, such notice shall constitute a Termination
Refusal and a binding, unconditional, and irrevocable agreement to pay
the Owner an amount equal to the Termination Price, as rent for the next
succeeding Extension Period, whether or not so stated in Tenant’s Election
Notice.

(Signage Lease, at pp. 4-5) (emphasis added).

15. Wanxiang had a choice whether to exercise its right to buy-out Prudential’s

interest in the Signage Lease by sending an Owner Election Notice and proposing a specific

price, i.e., the Termination Price. Nothing in the Signage Lease obligated Wanxiang to exercise

that choice. Its decision to do so was entirely voluntary.

16. In the event of Prudential’s acceptance of an Owner Election Notice, then, in

addition to the obligation to pay the Termination Price, Wanxiang is obligated to remove the

Signs.

17. Specifically, under Section 3.5(c) of the Signage Lease (also numbered Section

12.6 on the executed copy), “Owner shall remove the Signs from the Project, at Owner’s sole

cost and expense, as soon as reasonably practicable under the circumstances, but in all events

within one hundred twenty (120) days following such termination.”

Wanxiang Issues an Owner Election Notice to Buy-out

Prudential for the Sum of $10 Million, which Prudential Accepts

18. On March 16, 2020, Wanxiang delivered to Prudential an Owner Election Notice,

including via electronic mail delivery, a copy of which is attached hereto as Exhibit 2.

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19. The Owner Election Notice provides, in paragraph 3:

Pursuant to Section 3.5 of the Signage Lease Agreement (also numbered

Section 12.6 - please see page 4 of the enclosed copy of the Signage Lease
Agreement), this letter is the “Owner Election Notice” as defined therein.
Wanxiang Sterling Stetson Owner, LLC, as Owner, is ready, willing and
able to pay $10,000,000.00 (the “Termination Price” as such term is
defined in the Signage Lease Agreement) to Prudential no later than
June 20, 2020 to terminate the Signage Lease Agreement effective as of
June 20, 2020.

(Owner Election Notice, at p. 1) (emphasis added.)

20. In other words, Wanxiang (i) voluntarily exercised its right to buy-out

Prudential’s interest in the Signage Lease and (ii) unilaterally chose the $10 million Termination

Price. Again, nothing in the Signage Lease obligated Wanxiang to do so.

21. On April 9, 2020, well within the requisite thirty (30) day period for it to respond

to the Owner Election Notice, Prudential delivered to Wanxiang its written Termination

Acceptance of Owner’s Election Notice. Prudential sent the Termination Acceptance via

electronic mail in reply to the email received from Wanxiang delivering its Owner Election

Notice to Prudential, and consistent with the direction received from Wanxiang following its

acquisition of the property as to where notices should be sent. A copy of Prudential’s

Termination Acceptance is attached as Exhibit 3.

22. The Signage Lease did not mandate the exclusive means by which Prudential

could deliver the Termination Acceptance to Wanxiang.

23. Prior sending the Termination Acceptance, and within the requisite thirty (30) day

period for it to respond to the Owner Election Notice, Prudential was advised by Wanxiang

representatives that email delivery of the Termination Acceptance was sufficient, partially due to

the fact that the buildings comprising the Project were closed during the month of April 2020.

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24. Prudential’s Termination Acceptance was received by the Wanxiang

representatives to whom it was addressed.

25. Thereafter, Wanxiang representatives acknowledged actual receipt of Prudential’s

Termination Acceptance.

Wanxiang Fails to Pay the $10 Million Termination Price

26. Pursuant to the Termination Acceptance, and in accordance with Section 3.5 of

the Signage Lease, Wanxiang was required to pay Prudential the Termination Price by no later

than June 20, 2020.

27. Wanxiang failed to pay the Termination Price on or before June 20, 2020.

28. On June 23, 2020, Prudential sent a Notice of Default under the Signage Lease

due to Wanxiang’s failure to timely pay the Termination Price. A copy of Prudential’s Default

Notice is attached as Exhibit 4.

29. Prudential’s Notice of Default was received by the Wanxiang representatives to

whom it was addressed.

30. Pursuant to Section 15.1 of the Signage Lease, Wanxiang was afforded a thirty

(30) day period within which to cure and to pay the Termination Price, prior to an Event of

Default occurring under the Signage Lease. (Signage Lease, § 15.1 at p. 14.)

31. Wanxiang failed to timely cure by paying the Termination Price within such thirty

(30) day period, resulting in an Event of Default.

COUNT FOR BREACH OF CONTRACT

32. Prudential incorporates by reference the allegations in paragraphs 1 through 31 as

though fully set forth here.

33. The Signage Lease is valid, binding, and enforceable contract.

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34. Prudential has complied with all of its material obligations under the terms of the

Signage Lease and all conditions precedent have occurred and have been performed.

35. In breach of its obligations under the Signage Lease, Wanxiang has failed and

refused to pay the Termination Price. Wanxiang’s failure to do so constitutes a material breach

of the Signage Lease.

36. As a direct and proximate result of Wanxiang’s breach, Prudential has suffered

damages in an amount of $10,000,000, plus interest, and costs and expenses of this lawsuit.

WHEREFORE, Plaintiff The Prudential Insurance Company of America respectfully

requests that this Court enter an Order:

A. Entering judgment against Defendant Wanxiang Sterling Stetson Owner, LLC in

favor of Plaintiff The Prudential Insurance Company of America in the amount of

$10,000,000.00, plus prejudgment interest from June 20, 2020 until the date of

judgment;

B. Requiring Wainxiang to remove the Signs at its own cost and expense in

accordance with the Signage Lease;

C. Awarding Plaintiff The Prudential Insurance Company of America its costs and

expenses of this lawsuit; and

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D. Awarding Plaintiff The Prudential Insurance Company of America such other and

further relief as the Court may deem just and proper.

THE PRUDENTIAL INSURANCE COMPANY

OF AMERICA

By /s/ Mark L. Johnson

SEYFARTH SHAW LLP

Mark L. Johnson (#6204488)
Jerome F. Buch (#6182673)
Jasmine Stanzick (#6333403)
233 S. Wacker Drive
Suite 8000
Chicago, Illinois 60606
Telephone: (312) 460-5000
majohnson@seyfarth.com
jbuch@seyfarth.com
jstanzick@seyfarth.com

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