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City of Chicago v. Telegraph Properties Limited Partnership

December 10, 2003

THE CITY OF CHICAGO, A MUNICIPAL CORPORATION, PLAINTIFF-APPELLANT,
v.
TELEGRAPH PROPERTIES LIMITED PARTNERSHIP; TELEGRAPH PROPERTIES, INC.; ANDREW A. JAHELKA; RICHARD O. NICHOLS; AND LEON A. GREENBLATT III, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County Honorable Daniel J. Lynch, Judge Presiding.

The opinion of the court was delivered by: Justice Karnezis

UNPUBLISHED

In this interlocutory appeal, plaintiff, the City of Chicago (City), appeals from an order of the circuit court dismissing defendants Andrew A. Jahelka, Richard O. Nichols and Leon A. Greenblatt III from the cause of action. The question presented in this case is whether the allegations in the City's complaint were factually sufficient to state a cause of action against defendants. We affirm.

This cause of action arose as a result of the deteriorating exterior of a commercial building (the building) commonly known as 188-194 West Randolph Street and 151-169 North Wells Street in Chicago. *fn1 The building had numerous cracked windows and much of the exterior stone and terra cotta was in need of repair. As a result of the building's dangerous condition, the City erected a "canopy" to prevent pieces of the exterior from falling onto nearby sidewalks, streets and Chicago Transit Authority elevated tracks. The City filed suit to impose fines against the building's owners as well as to recover the costs of constructing the canopy, which totaled $3,200,667.

The City filed its third amended complaint on June 19, 2002, against defendants as well as the building's owner, Telegraph Properties Limited Partnership (TPLP) and TPLP's general partner, Telegraph Properties, Inc. (TPI). Shortly thereafter, TPI filed its suggestion of bankruptcy. The complaint alleged that defendants Jahelka, Nichols and Greenblatt III were, respectively, the president, treasurer and secretary of TPI, and each had a "substantial ownership interest" in both TPI and TPLP. The City alleged that because defendants were officers of TPI and were "substantial" owners in both TPI and TPLP, they could be held personally liable for the fines the City sought to impose and for the costs of constructing the canopy. The City's derivative theory of liability included allegations that defendants, as owners and officers of TPI, controlled the assets of TPI and TPLP, and through their control and management of those entities, deprived the building of the resources necessary to maintain it in a safe condition. The complaint also alleged various financial endeavors in which defendants engaged to show their "control" over the building's assets. Counts I through III of the four-count complaint alleged defendants were personally liable for the condition of the building pursuant to several sections of the Chicago Municipal Code. Count IV alleged defendants were personally liable under a theory of common law public nuisance.

Pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2000)), defendants moved to dismiss those allegations of the complaint that sought to hold them personally liable for the building's condition. *fn2 The circuit court granted the motion with prejudice, finding that the sections of the Chicago Municipal Code (Code) upon which the City relied did not impose liability on corporate individuals who were not directly responsible for the building code violations. The court noted that pursuant to the Code, liability could only be imposed upon owners, property managers, and those who were in possession or control of the property or those who collected rents for the building. The court further stated that because the complaint failed to allege that defendants owned the building or were responsible for the management or control of the building, the complaint failed to state a cause of action against defendants. The City now appeals from this ruling.

A motion to dismiss a complaint brought pursuant to section 2-615 of the Code of Civil Procedure tests the legal sufficiency of a pleading. Universal Scrap Metals, Inc. v. J. Sandman & Sons, Inc., 337 Ill. App. 3d 501, 504 (2003). The court accepts as true all well-pleaded facts and the inferences that can reasonably be drawn from those facts. Universal Scrap Metals, 337 Ill. App. 3d at 504. The relevant inquiry is whether, when viewed in the light most favorable to the plaintiff, the allegations are sufficient to state a cause of action upon which relief can be granted. Universal Scrap Metals, 337 Ill. App. 3d at 504. Our review on appeal is de novo. Neppl v. Murphy, 316 Ill. App. 3d 581, 583 (2000).

On appeal, the City first argues that Counts I and II of the complaint stated a cause of action against defendants because the Code provisions impose liability upon corporate officers for violations for which they are directly responsible.

Count I of the complaint alleged in part:

"Pursuant to sections 13-196-03[6] *fn3 , 13-196-031, 13-12-020 and 1-4-090 of the Code, [defendants] were jointly and severally liable for the Code violations * * * because they were at all relevant times owners and officers of TPI, beneficial owners of the premises, owner/agents of TPLP, and persons entitled to the control and direction of the management or disposition of the premises."

Count II alleged in part:

"Pursuant to Sections 13-196-03[6], 13-196-031, 13-12-020 and 1-4-090 of the Code, [defendants] are jointly and severally liable for the costs incurred by the City as a result of the Code violations * * * because they were at all relevant times owners and officers of TPI, beneficial owners of the premises, owner/agents of TPLP, and persons entitled to the control and direction of the management or disposition of the premises."

We set forth below the relevant Code sections. Section 13-196-036 of the Code provides in part:

"The owner/agent of any building which constitutes an imminent danger and hazard to the public shall take immediate action to have a critical examination performed upon such building and provide the ensuing report to the department of buildings. * * * Any costs incurred by any department of the city in taking emergency actions due to the dangerous and hazardous condition of an unsafe exterior wall * * * shall be a debt due and owing to the city and ...


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