The Dirt Lawyer's Blog Archive

First it was Block 37. Now it is the Spire. According to this Tribune story , Shelbourne Development and Garrett Kelleher are counter-suing the bank for fraud, saying that the bank was deceptive in the terms of arranging its portion of the financing for the now-dormant project. B of A went after Kelleher on a $4.9 million guarantee previously, and this is the response. As with past cases, I haven't read the papers and am not planning to do so unless someone sends them to me and/or pays me. According to the story, the counterclaim says that Shelbourne should not be deemed in default because of the economy, in which B of A has taken billions of bailout money. That smacks of the Trump Tower force majeure defense and I think that will be a tough battle. In addition, and again according to the story, one of the allegations of fraud is based on this: "the bank took the proceeds of a certificate of deposit owned by Shelbourne for more than $3.5 million and applied it to the amou...

I've written here before about buyers and borrowers raising defenses of impossibility or impracticability of performance or even force majeure under contracts because of the global economic situation. One of those deals was at 180 North LaSalle, where Younan Properties put down $6 million in hard earnest money to buy the building from Prime Group Realty Trust. Younan could not close and sued to get back the deposit. Judge Maki in the Cook County Circuit Court has told Younan that it loses . “The purchase and sales agreement is a promise to purchase this property for a set price on a set date with no provision for any financing contingency,” Judge Maki said. “That cannot be overlooked or given less importance because of other circumstances that. . . .possibly developed here.”....“That was the deal,” says Robert Hermes, a partner at Chicago-based law firm Butler Rubin Saltarelli & Boyd LLP, which represented Prime Group. Mr. Younan “assumed the risk if he didn’t have the ...

Condemnation was a hot legal topic a while back, what with the awful (in my opinion) Kelo decision and all. So, I have to admit I like it when a private property owner is able to buck the system. It appears just that has happened in the south suburbs of Chicago. Here's the story. Anna Mae "Babe" Ahern is 101 years old. She's spent her whole life at the Evergreen Country Club in Evergreen Park, a 95 acre property her family has owned for eons. Before you start thinking it, ECC is not some exclusive private club. It appeals to the average Joe, and Ahern claims her course was one of the first to allow minorities to play. Its rates are affordable, and while I haven't played there, it looks like a nice enough track from the street. In 1999, Ahern offered to sell her "inheritance" to a developer back in 1999, who offered $25 million for the land so it could build a Home Depot and some housing. The village, however, nixed the idea by refusing to rezon...

Did anyone not see this one coming? From Crain's : Donald Trump and the lenders on his Chicago skyscraper have agreed to put their legal dispute on hold as the developer wraps up construction of the 92-story tower. Mr. Trump and Deutsche Bank Trust Co. Americas sued each other last fall over a past-due $640-million construction loan on the project. The developer claimed that the financial crisis gave him the legal right not to pay back the loan, while the bank demanded that Mr. Trump honor a $40-million personal guarantee he made on the loan. But the two sides have reached an agreement “that provides for the suspension of litigation between the parties as discussions move forward,” according to a news release issued Tuesday. “This agreement is evidence of the open and active dialogue that has continued between Deutsche Bank and The Trump Organization and of the parties’ combined interest in the success of this outstanding project,” Mr. Trump said in the release. A D...

Crain's moved a story this morning regarding a dispute over a tenant exclusive involving the InterContinental Hotel in Rosemont. As I understand it, Capital Grille occupied a standalone pad in the project under a lease that prohibited another “high-end steakhouse themed restaurant concepts serving liquor with price points above $22.00 per entrée” in the project. Apparently several types of competing restaurants were named. Apparently an Italian restaurant was supposed to go into the hotel but then blew out of the deal. Along came Wildfire, which was not listed among the competitors although it does sell steaks above $22.00 per entree and is a pretty classic supper club type atmosphere, though certainly noisier and more lively than Capital Grille, in my opinion. The developer's hand was forced because the franchisor declared a breach under its franchise agreement for not having a restaurant on site (and then granted an extension), although you wonder in this market if you...

DB is not laying down in the face of Donald Trump's force majeure lawsuit . It has filed an action in Manhattan against The Donald, saying since the SPE formed to do the Trump Tower deal has failed to pay the lenders back, Trump personally owes the bank $40 million. (H/T to the HuffPo .) Apparently, then, the loan had some partial recourse to Trump, who IIRC said he would not do recourse (or perhaps it was full recourse) deals anymore. The $40 MM, at least for him, seems to be a reasonable amount for recourse to me. The other question, which a NY lawyer would have to answer, is whether Trump's lawyer will be successful in having venue moved from Manhattan to Queens, where the force majeure case is pending. And if so, then that could be a good tactical victory for Donald by getting a case filed first. Kinda reminds me of spouses racing to the more favorable venue in a divorce -- not that anyone knows anything about that.

I had to chuckle at this story on arbitration in today's WSJ . Most franchise contracts once called for mandatory arbitration of issues, rather than going to court. But these days there is growing pressure -- from franchisees, judges, Congress and even some franchisers -- to rethink that longstanding arrangement. "The trend toward arbitration has pretty much ended," says Peter Lagarias, a franchisees' attorney in San Rafael, Calif. Among the concerns is that there is no guaranteed right of appeal. "You have to take what the arbitrator decides," says Joshua Becker, an in-house counsel for fast-food franchiser Kahala Corp. For that reason, he says, Kahala, whose brands include Blimpie submarine sandwiches and TacoTime, favors resolving issues with franchisees in court. Why am I laughing? Because my friend Charlie Berwanger (whose firm, I just noticed, recently opened a Chicago office) and I wrote an article titled "Arbitration in the 1990s - Absolute...

It was bound to happen. At least one of the so-called "friends and family" who bought condos in Trump Tower, only to have the contract canceled later pursuant to a developer "out" clause in the contract, is suing for, among other things, fraud and deceptive practices. I have not read the complaint, but fraud is a tough uphill battle in many instances. A deceptive practices count is less onerous to prove, however. While I don't really agree with it personally, in a sense I see Trump's point. He wanted the right to back out of deals because they were not money-makers. I have not read his contract, but I'm sure he has an iron-clad right to back out of the deal for any or no reason, and the developer may well win because of it. On the other hand, the developer got the benefit of being able to tout pre-sales that probably (and in my opinion) either pushed the construction loan forward or got them better loan terms. (It is not my money, so it is easy -...

I believe that is a Gore Vidal quote. Here's another reminder of why I'm glad to live in flyover country: mega-rich people arguing, agreeing and then reneging over what appears to be easement rights in the Hamptons . Good grief. Check out the German label in the post (hehehehe).