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Arlin-Golf, LLC v. Village of Arlington Heights

March 9, 2010

ARLIN-GOLF, LLC, AN ILLINOIS LIMITED LIABILITY CORPORATION; RONALD POPP, AS GENERAL PARTNER IN THE POPP-VALENTI PARTNERSHIP AND PRESIDENT OF ARLIN-GOLF LLC AND INDIVIDUALLY; VICTOR VALENTI, AS GENERAL PARTNER IN THE POPP-VALENTI PARTNERSHIP AND VICE PRESIDENT OF ARLIN-GOLF LLC AND INDIVIDUALLY, PLAINTIFFS,
v.
THE VILLAGE OF ARLINGTON HEIGHTS, AN ILLINOIS MUNICIPAL CORPORATION; ARLENE J. MULDER, AS MAYOR OF THE VILLAGE AND INDIVIDUALLY; WILLIAM V. ENRIGHT, AS VILLAGE PLANNER AND INDIVIDUALLY; BRIAN PROPERTIES, INC., AN ILLINOIS CORPORATION, AND INDIVIDUALLY; JACK B. WHISLER, AS AGENT OF THE VILLAGE AND D/B/A BRIAN PROPERTIES AND INDIVIDUALLY; VILLAGE BANK & TRUST, AN ILLINOIS BANKING CORP. AS AGENT OF THE VILLAGE AND INDIVIDUALLY; AND S. MICHAEL POLANSKI, CHAIRMAN AND CEO OF VILLAGE BANK & TRUST, ARLINGTON HEIGHTS, AND AS AGENT OF THE VILLAGE OF ARLINGTON HEIGHTS AND INDIVIDUALLY, DEFENDANTS.



The opinion of the court was delivered by: Honorable David H. Coar

MEMORANDUM OPINION AND ORDER

This lawsuit arises from a Tax Increment Financing District ("TIF") implemented by the Village of Arlington Heights. Starting in January 2002, the Village repeatedly announced that the Arlin-Golf Shopping Center would soon be condemned pursuant to the TIF, and Arlin-Golf's tenants swiftly began to relocate. Seven and a half years later, the property still had not been condemned, but Arlin-Golf LLC, and its general partners Ronald Popp and Victor Valenti, faced "financial ruin" from the lost rental income and the depressed value of their property. So they filed suit under 28 U.S.C. § 1983, alleging that the Village engaged in "sharp dealing" and "siege warfare" against their property, in violation of the Fifth and Fourteenth Amendments.

Specifically, Plaintiffs allege violations of the Equal Protection Clause (Count I), the Due Process Clause (Count II), the Takings Clause (Count III), as well as a § 1983 conspiracy (Count IV) and a claim against several defendants for "violations of well known rights" (Counts V). They also assert claims under the parallel provisions of the Illinois Constitution (Counts I-III) and supplemental state-law claims for interference with contract relations (Count VI), interference with economic expectancy (Count VII), civil conspiracy (Count VIII), breach of fiduciary duty (Count IX), and inducement of breach of fiduciary duty (Count X).

In addition to the Village, Plaintiffs have sued two Village officials, Mayor Arlene Mulder and Deputy Director of Planning and Community Development William Enright (together, the "Village Defendants"); a real estate agency by the name of Brian Properties and its principal Jack Whisler (together, the "Realtor Defendants"); and Village Bank & Trust, along with its CEO, S. Michael Polanski (together, the "Bank Defendants").

Defendants have filed three separate motions to dismiss the complaint. Plaintiffs, in turn, have filed three corresponding motions to strike Defendants' affirmative defenses of res judicata. For the reasons that follow, Plaintiffs' motions to strike are DENIED and Defendants' motions to dismiss are GRANTED. Counts I-V and X are dismissed with prejudice. Counts VI-IX are dismissed with prejudice as against the Village, and dismissed without prejudice as against all other Defendants.

FACTS

The relevant factual allegations in the complaint, which the court must accept as true for present purposes, are as follows: Ronald Popp and Victor Valenti are the general partners of Arlin-Golf L.L.C.. (Compl. ¶¶4-7.) On June 29, 2001, the partnership purchased the Arlin-Golf Shopping Center (located at the southeast corner of Golf Terrace and Arlington Heights Road in the Village of Arlington Heights, Illinois) directly from its previous owners. (Id. ¶14.) At the time, the eight-store shopping center was in disrepair, with poor leases, poor tenants, and weak management; Popp and Valenti's five-year business plan was to refurbish and modernize the entire center for new tenants. (Id. ¶17.) Within roughly seven months of their purchase, Popp and Valenti had fully refurbished the center, had leased six of the eight stores, and were in talks with twenty one prospective tenants for the remaining two stores. (Id. ¶18.)

On January 22, 2002, the Village of Arlington Heights announced the creation of a new Tax Increment Financing District ("TIF" No. 4). (Id. ¶ 19.) Since the Arlin-Golf Shopping Center was within the TIF's proposed redevelopment area, the Village announced that the center would be condemned, knocked down, and redeveloped in about six months. (Id. ¶¶19-20.) The TIF was implemented by ordinance in June 2002. (Id. ¶19.) At that time, the Village had no specific redevelopment plan for the center, and the first plan to be put on the table-opening a Super Target retail store in its place-fell through when Target cancelled its agreement with the Village. (Id. ¶21.) Subsequently, the TIF plan was "further altered" without any hearings being held. (Id.) Whatever the plan for redevelopment, the Village repeatedly announced that the center would be demolished within sixty to ninety days. (Id. ¶33.)

Arlin-Golf suffered financially from the announcement of the condemnation. All told, Popp and Valenti lost well in excess of five million dollars. (Id. ¶¶61-63.) As tenants began to lose business (id.), they abandoned the center by breaking their leases or failing to renew their leases. (Id. ¶22.) One tenant, Happiness is Pets, moved across the street to another location, paying double the rent it was paying to Arlin-Golf. (Id. ¶34.) Salon College Hairdressers was unable to attract more hairdressers, lost clientele, and eventually moved. (Id. ¶35.) The Village paid Bangkok Café, one of Arlin-Golf's tenants, $35,000 to move to downtown Arlington Heights, allegedly because it was the Mayor's favorite Thai restaurant. (Id. ¶22.) Arlin-Golf's losses were exacerbated by the escalation clauses for future rentals in these leases. (Id. ¶31.) And all twenty one prospective tenants lost interest in renting the remaining stores. (Id.)

However, the Village failed to follow through on the announced condemnation and demolition for seven and a half years. (Id. ¶36.) During that time, Arlin-Golf had to shoulder expenses of over $15,000/month to carry the center, which could not be rented, used, or sold while subject to the TIF. (Id. ¶¶36, 38-40.) By spreading "false information" that the center had been condemned and would soon be demolished-and by engaging in other "siege warfare"- the Village "dissuaded" and "discouraged" prospective tenants and "convinced" them to move elsewhere, leaving Arlin-Golf with heavy losses. (Id. ¶¶36, 41.)

On February 1, 2006, Popp received a letter from William Enright, Deputy Director of Planning and Community Development for the Village, informing him that a Redevelopment Agreement concerning the property would be signed with a developer within two weeks. (Id. ¶43.) Popp and Valenti asked to be considered in the redevelopment. (Id. ¶44.) Then in 2008, "facing personal and business financial ruin," they decided to try to sell the center through a commercial real estate broker. (Id. ¶45.) They contacted Brian Properties, Inc. and signed a realty listing agreement with agent Scott Whisler on June 6, 2008. (Id. ¶47.) The asking price for the property was $2,250,000, with a 5% sales-commission agreement. (Id.)

On July 3, 2008, Jack B. Whisler ("Whisler"), the owner of Brian Properties, presented a second listing agreement in which he listed himself as the broker for the property. (Id. ¶48.) Under the terms of the second agreement, Whisler would receive a 20% sales commission on any amount over $1,400,000 if the center was sold to the Village. (Id.) When Valenti refused to sign, Whisler insisted that Valenti be excluded from any negotiations. (Id.) Both agreements included "dual agency consent and disclosures." (Id.)

Around the same time, "in desperation," Arlin-Golf tried to rent a store in the center to Arlington Pet Clinic. (Id. ¶50). The Village denied the necessary permits and told the Clinic- again, falsely-that the Village already owned the property on which the center sits. (Id.)

Meanwhile, Arlin-Golf had obtained two appraisals of the property from real estate appraisers in summer 2005 and August 2007, for $1,950,000 and $2,000,000 respectively. (Id. ¶51.) The Village had obtained its own appraisal "for between $1,300,000 and $1,600,000" and expressed an interest in purchasing the center in mid-2008. (Id. ¶52.) This appraisal was not available to Arlin-Golf under FOIA, and the Village would not show it to them. (Id. ¶¶52-53.) However, Whisler met first with the Trustees of the ...


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