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W/G Kristina 123 LLC v. Melena

August 11, 2009

W/G KRISTINA 123 LLC, W/C LCD, LLC, W/G SPI, LLC, AND MICHAEL SPARKS, ROBERT GURLEY, AND SUSAN BUCK, PLAINTIFFS,
v.
THOMAS MELENA, STEVEN WILLIAMS, UNKNOWN ROLLING MEADOWS POLICE OFFICERS AND THE CITY OF ROLLING MEADOWS, DEFENDANTS.



The opinion of the court was delivered by: Blanche M. Manning United States District Judge

MEMORANDUM AND ORDER

The owners of the 12 Oaks at Woodfield apartment complex in Rolling Meadows assert that the City of Rolling Meadows, by hook or by crook, is trying to ruin the reputation of the complex to prevent it from being converted to condominiums. According to the plaintiffs (the owners of the complex and two residents), Rolling Meadows' goal is to maximize the chance that the property will be converted to a mixed commercial and residential development that would provide a significant amount of additional tax revenues.

The court previously dismissed the prior version of the complaint with leave to replead. The defendants' motion to dismiss the second amended complaint is before the court. For the following reasons, the owners of the complex have failed to state a colorable due process or equal protection claim so these counts are dismissed and the court declines to exercise supplemental jurisdiction over the owners' state law claims. The Fourth Amendment claims brought by the residents shall proceed, and the court will exercise supplemental jurisdiction over the requests for indemnification and for relief under a respondeat superior theory as to these plaintiffs.

I. Background

The following facts are taken from the plaintiffs' complaint, and are deemed to be true for purposes of the motion to dismiss.

A. The Parties

Plaintiffs W/G Kristina 123 LLC, W/C LCD, LLC, and W/G SPI, LLC own an apartment complex known as 12 Oaks at Woodfield, and the managing member of each of these entities is plaintiff Michael Sparks. This court will adopt the parties' convention of referring to this group of plaintiffs as the "Sparks plaintiffs." Plaintiffs Robert Gurley and Susan Buck have resided at the 12 Oaks at Woodfield complex for approximately three years. Defendant Thomas Molina was the Rolling Meadows city manager until approximately December of 2008. Defendant Steven Williams is the Rolling Meadows police chief. The plaintiffs also filed suit against the City of Rolling Meadows and unknown police officers.

B. The 12 Oaks at Woodfield

Sparks has purchased many large apartment complexes and converted them into condominiums. He follows the convention of naming his conversions the "12 Oaks at [city name]," such as the 12 Oaks at Arlington Heights, or the 12 Oaks at Northbrook. In 2004, the plaintiff LLC entities controlled by Sparks purchased a large apartment complex in Rolling Meadows known as Woodfield Gardens, and Sparks renamed it the 12 Oaks at Woodfield. The complex contains 692 units in nineteen buildings spread out over approximately thirty-five acres, and has approximately 2,000 residents.

C. Plans to Convert the 12 Oaks at Woodfield

After Sparks' companies purchased the complex, defendant Melena (who was Rolling Meadows' city manager at the time) contacted Sparks, indicated that Rolling Meadows wanted the property to be converted to a mixed commercial and residential project to maximize tax revenues, and stated that the City of Rolling Meadows would make things very difficult for him if he carried out his plan of converting the apartment complex to condominiums. Sparks felt threatened and thus negotiated a contract to build a mixed use project containing retail space, a hotel, condominium units, and senior housing. Rolling Meadows sought to advance this project by formulating a land plan and attempting to develop a tax increment financing ("TIF") district, which was necessary to finance the project.

In the Fall of 2008, Sparks's redevelopment plan fell through when the prospective commercial developer pulled out due to the downturn in the real estate market. This caused Sparks to revisit his original concept of converting the apartment complex to condominiums. Rolling Meadows, on the other hand, remained optimistic that a mixed use redevelopment project could come to fruition once the economic climate improves. Since any conversion to condominiums would block the mixed use project, Rolling Meadows remained adamantly opposed to the idea of converting the apartments into condominiums.

According to the plaintiffs, the defendants responded by embarking on a plan of harassment, intimidation, and economic oppression to depress the value of the apartment complex and prevent Sparks from converting it to condominiums. To further this plan, the defendants began selectively enforcing the building code at 12 Oaks at Woodfield and issued numerous citations.*fn1 Rolling Meadows also passed an ordinance prohibiting parking on a nearby road that had historically been used to accommodate the parking needs of residents and guests and began to aggressively ticket cars parked on that road. In addition, Rolling Meadows passed ordinances requiring two parking spaces within 300 feet of any entrance to a building and requiring sprinkler retrofitting for new conversions.

In addition, the defendants set up barriers and police checkpoints at entrances into the complex and intimated to the media that this was necessary to address a crime wave. The defendants voluntarily removed the barriers after this suit was filed, but the defendant officers have told Sparks that the barriers may be replaced in the future. Moreover, the plaintiffs allege that the barriers created extensive negative publicity that harmed the reputation of the 12 Oaks communities and defamed Sparks.

Finally, Rolling Meadows imposed a localized property tax known as a special service area tax on the plaintiffs' property and three adjacent properties to fund road improvements. Pursuant to the special service area tax, the plaintiffs were liable for $612,000 in additional taxes for the 2008 tax year. The plaintiffs allege that Rolling Meadows did not in fact intend to make the improvements that were to be funded by the tax, and thus challenged the imposition of the ...


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