Gold Coast condo board approves
$500,000 assessment for legal expenses
Loop North News
By Steven Dahlman
26 Jul 2017
Half a million dollars for legal expenses will be paid by unit owners
at a Gold Coast condominium over the next two years.
State Parkway Condominium Association approved the special assessment
on Monday. The amount each owner pays will depend on percentage of
ownership. Payments can be spread over 24 months interest-free.
The expenses cannot be claimed on the 160-unit condo association’s
insurance policy because one policy is maxed out and the carrier that
sold them the second policy is refusing to pay.
Much of the legal expenses were incurred responding to complaints and
lawsuits filed by one unit owner who is deaf. Michael Novak has filed
complaints with the City of Chicago and battled his condo association
in Cook County Circuit Court, Illinois Circuit Court, and United States
District Court.
Novak believes more special assessments will be necessary
Novak believes more special assessments will be necessary. He says
State Parkway is responsible for a $10 million shortfall that unit
owners will have to make up for through increased assessments. He wants
a court-appointed custodian to manage State Parkway’s affairs and says
the 197-page memorandum of law he has filed in state court details
“massive fraud, including criminal federal and state tax evasion,
oppression, and misapplication or wasting of assets” of the condo
association.
His complaints to the Department of Business Affairs and Consumer
Protection resulted in three citations from the city against the
association.
Novak says condo board president Howard Robinson publicly offered him
$250,000 in June to settle his lawsuits so State Parkway would not have
to pay another $250,000 in legal fees.
Fees the result of law-breaking, says owner
State Parkway’s legal fees were incurred, says Novak, because the condo
board “intentionally disregarded federal, state, and local laws.”
“Unit owners should not be asked to pay legal fees when the board
engages in fraud and/or gross negligence,” said Novak.
According to Novak, State Parkway’s operating fund has current assets
of only $19,000 and current liabilities totaling $114,000 but “most
likely, the situation is much worse due to invoices being left in the
drawer and certain expenses improperly paid from reserves.”
State Parkway exhausted its $1 million insurance policy from Travelers
Indemnity Company that covered legal expenses. The condo association
had planned on using Great American Insurance Group as the excess
carrier but Great American has refused to pay and is now suing State
Parkway.
The lawsuit, filed in U.S. District Court on April 25 against State
Parkway Condominium Association, its property management company,
Lieberman Management Services, and its property manager, Donna Weber,
seeks a declaration that it owes “no insurance coverage obligations” to
any party.
Great American, based in Cincinnati, says it is not liable for a
variety of reasons, most notably because State Parkway expects coverage
for expenses incurred on a claim first filed with Travelers before the
Great American coverage period started.
“The [Great American] policy...only provides excess [directors and
officers] liability coverage for claims first made within the policy
period,” explained Senior Claim Specialist Jennifer Edmonds in a letter
to Lieberman Management Services. “Furthermore, claims based on or
arising out of the same ‘wrongful act’ or ‘related wrongful acts’ are
considered one ‘claim’ first made on the date of the first claim.”
Condo boards in Illinois do not need approval from unit owners to adopt
a special assessment unless it is for an addition or alteration to
common elements or to association-owned property not included in the
adopted annual budget. However, a special meeting of unit owners can be
called to vote on the special assessment if within 14 days owners
representing at least 20 percent of ownership sign a petition.
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