A South Loop apartment tenant who believes her landlords wrongly deprived her of interest on her security deposit, which she asserts is owed to her and other tenants under city ordinance, has brought a class action against her landlords, demanding they pay her and others like her double their money back, with interest.
Cheryl McPhearson filed the class-action complaint Nov. 25 in Cook County Circuit Court. Named defendants include 33 Management and 33 Realty, and executives of those firms, identified in the complaint as Andrew and Marta Millard, Eric Weber and Susan Beyler. The complaint also named Oaktree Capital Management and its executives Jay Wintrob, Bruce Karsh, Howard Marks, Stephan Kaplan and David Kirchheimer.
According to the complaint, holding a security deposit without paying interest to the tenant who supplied the deposit is a violation of the city of Chicago’s Residential Landlord and Tenant Ordinance. McPhearson, who seeks class certification and a jury trial, wants all class members to recover twice whatever amount they paid for a deposit, as well as interest, court costs and legal fees.
McPhearson’s specific complaint is tied to her time renting an apartment in the building in the South Loop at 50 E. 16th St., Chicago, known as “The Guild,” from Sept. 1, 2012, to July 15, 2015. She signed her lease Aug. 13, 2012, at which time she agreed to pay $1,525 per month and put down a security deposit of the same amount, the complaint stated. In December 2014, managing rights for McPhearson’s building transferred from 1555 Wabash to 33 Management and 33 Realty. Oaktree owned the building while she lived there.
Under the ordinance, landlords who hold the security deposit for more than six months are to pay interest to the tenant, either by cash or rental credit, within 30 days of the end of each 12-month rental period. McPhearson contended she should have received her first interest payment or credit on Oct. 1, 2013, yet has never received any such disbursement.
The request to be repaid double the paid deposit comes from the ordinance itself, which states that “If the landlord or landlord’s agent fails to comply with any provisions … the tenant shall be awarded damages in an amount equal to two times the security deposit plus interest.”
The complaint detailed the plaintiffs’ professional roles and presumed awareness of the city ordinance. Andrew Millard is founder and co-head of 33 Management and 33 Realty. Marta Millard also is a founding member; Weber is listed as the other co-head. Beyler is a principal of both firms.
Wintrob is the CEO and outside director of Oaktree. Karsh is Oaktree’s co-founder, chief investment officer, portfolio manager and co-chairman. Similarly, Marks is the co-founder,co-chairman and principal of Oaktree. Kaplan is a principal, group founder and portfolio manager, whereas Kirchheimer is a principal and chief financial officer.
According to its website, 33 Realty “manages properties throughout Chicago, Illinois suburbs, Indiana, Michigan and Wisconsin. (Its) management portfolio consists of multi-family, office, retail and industrial properties, as well as single-family homes and individual condominium units.”
At the moment, its least expensive property listed on its website is a $750-per-month one-bedroom apartment in Blue Island. On the other end of the spectrum, the company is advertising a three-bedroom Lincoln Park condo for $3,150 per month.
Oaktree is a global firm headquartered in Los Angeles. It is the largest shareholder in Tribune Publishing, owning 4.7 million shares — an 18 percent take it is preparing to sell, according to mid-November reports. According to the Chicago Tribune, “Oaktree manages $100 billion in assets including $26 billion of distressed debt as of Sept. 30.”
McPhearson’s attorneys are Andrew C. Ficzko and Ryan F. Stephan, of Stephan Zouras, of Chicago.