West Loop condo board sued—over its lawsuit
Crains Chicago Business
By Dennis Rodkin
17 February 2017

In this rendering of the Illume building underway on Peoria Street, the Monroe Manor building is visible at left.   Photo by LG Development Group

Board members of a West Loop condo association who have been suing to block a project going up next door are now themselves being sued, by a member who claims they're wasting the association's money on a dead issue.

directors being sued

The new lawsuit, filed by Dream Properties, which owns several of the commercial spaces in the Monroe Manor building, 841-849 W. Monroe St., alleges that board members are "placing their own individual interests ahead of those of the association" in pursuing legal action against the development one door south, at 111 S. Peoria.

The Peoria building, called Illume, is under construction on the former site of a surface parking lot. It has been contentious since mid-2015, when LG Development rolled out plans for a 13-story building there, immediately south of four-story Monroe Manor. LG later changed the plan to 10 stories of condos.

Monroe Manor sued to stop the project

In August, residents of Monroe Manor sued to stop the project, despite its having already been approved by the Chicago City Council. That suit is still pending, although construction is well underway. In the new suit, filed Feb. 15, Dream Properties alleges that members of the Monroe Manor board killed a pending settlement of the first suit in the fall.

The five defendants have breached their fiduciary duty

Five condo owners, who all own south-facing units and are all on the association's board, have been pushing opposition to the new building, according to the suit. The five defendants have breached their fiduciary duty to the board, the suit charges. The board has spent about $90,000 on the case and has said it could cost as much as $290,000, according to the complaint, although the building next door would affect "only a minority of members of the association," the suit says.

Defendants in the suit include board President Ken Scales, who did not respond to a request for comment; Debbie Schaffel, who said she had not yet seen the suit so she couldn't comment, and Richard Dees, who did not respond to a request for comment. Two other defendants, Julie Zerega and Siamak Saidi, could not be reached.

Dan Klapman of Chicago law firm Burke Warren MacKay & Serritella represents Dream Properties, which owns commercial spaces on the building's north side. As a space owner in the building, Dream Properties "is part of the association like the condo owners," Klapman said, "and feels its interests are not served" by attempting to block construction of a building on the south.

"The board made decisions to protect the views of the park and the skyline for those five units," Klapman said.

The owners of the five units, Klapman said, should have known when they bought that "there was a risk that somebody would build something next door."

Dream Properties filed on behalf of the entire condo association, which Klapman compared to a shareholder suing a corporate board on behalf of all shareholders. Klapman said no residential unit owners have signed onto the suit. Monroe Manor has about 40 residential units and 10 commercial spaces, of which Dream Properties owns at least four.

In the suit, Dream Properties' attorneys wrote that Illume will enhance the value of condos and commercial spaces in Monroe Manor by putting higher-priced units in the immediate neighborhood.

The suit asks the court to require the five defendants to repay the association the $90,000 that has been spent on opposing construction of Illume.

Brian Goldberg, a principal of LG, which is building Illume, said he did not know about the case and could comment only on construction of his project. The supporting caissons are in place, excavation has begun on the basement and "we have a lot of trucks on site today," he said this morning.

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