First District rules on long-running dispute over Lake Calumet property

By Jonathan Bilyk | Nov 21, 2013

After hearing the case for the fourth time in the last 15 years, an appellate court has agreed to recognize that a company that operated a warehouse along the harbor in Lake Calumet can keep its property and does not have an obligation to dredge its marine slip any deeper than 25 feet, despite claims to the contrary from the port district that runs the harbor.

On Nov. 12, a panel of the First District Appellate Court filed an unpublished order upholding the decision of Cook County Circuit Judge Sheldon C. Garber, who had granted summary judgment in favor of defendant Dockside Development Corp. in its long-running dispute with the local governmental entity now known as the Illinois International Port District.

The order  was delivered by Justice Mathias W. Delort, and Justices Maureen Connors and Thomas E. Hoffman concurred.

The circuit court judgment and subsequent appellate court order were based on the recent discovery of a document previously unknown to the court, approved by the port district’s board of directors in 1984, that essentially released Dockside from the obligations asserted by the port district.

The case dates back to 1998, when the port district, formerly known as the Chicago Regional Port District, first filed suit against Dockside to attempt to repossess Dockside’s property because the port district asserted that Dockside had violated the terms of its lease agreement when it did not dredge its marine slip to 27 feet.

From 1965 to 1969, Dockside and the Chicago Regional Port District entered into agreements granting Dockside three 65-year leases for three pieces of property along Lake Calumet Harbor in Chicago.

The properties were to be operated as a public port and terminal facility to allow barges and other vessels carrying various raw materials and other commodities to be loaded and unloaded, and their contents transferred to and from other modes of freight transportation.

In support of those operations, Dockside was required to build a 100,000-square-foot warehouse on one of the pieces of property, as well as a steel dock wall, and to dredge a 27-foot-deep boat slip to accommodate the kinds of marine traffic anticipated by the port district for the site.

Dockside would then pay annual rent to the port district, as well as transfer all dock fees, with the understanding that the slip would be maintained by the port district once the initial dredging and dock wall construction was completed.

Dockside would also be entitled to receive $750,000 in reimbursements to cover the dredging cost.

However, by 1969, Dockside had only dredged the boat slip to a depth of 25 feet. While Dockside was paid $718,000 for the work to that date, the district and company began to argue over the standards to be used to measure the proper depth.

In 1984, Dockside, while considering a sale of its warehouse, asked for and received modifications to its lease agreements with the port district essentially releasing it from its previous obligations and expressly declaring that the port district would  not consider Dockside in breach of contract for actions prior to 1984.

However, in 1989, Dockside requested the port district repair the boat slip, which had fallen into disrepair.  In 1995, Dockside asked the port district to dredge the boat slip to a depth of 27 feet.

The port district responded by noting that Dockside had not itself dredged the slip to that depth.

In 1998, Dockside sued. But, the 1984 document was not presented into evidence, and in two trips through the courts, judges ruled in favor of the port district’s contention, based on the original leases, that Dockside was in breach of contract for not dredging the slip to 27 feet.

However, after the two sides failed to negotiate a settlement, the case returned to court, and Dockside this time entered into evidence a 1984 letter and affidavits referencing and affirming the deal releasing it from its dredging obligations.

While a circuit judge granted summary judgment in favor of Dockside, on appeal, that judgment was overturned and the case remanded for further examination.

The  port district again reasserted its breach of contract claims against Dockside. The company in 2011 again requested summary judgment, based on newly-discovered documents, which this time included a countersigned version of a June 13, 1984, letter from Dockside to the port district, and other documentation supporting the release.

The port district in response argued that the release was not as all-encompassing as Dockside maintained, but applied only to one specific piece of property.

The circuit judge in 2012 ruled in favor of Dockside, noting he did not “know how it (the release) could be spelled out any clearer.”

The port district then appealed.

The appellate justices, however, shared the circuit judge’s confidence in the clarity of the language releasing Dockside from its dredging obligations, and noted that “the facts have substantially changed.”

“A clear trail of evidence supports the circuit court’s finding that the port district released Dockside from all its obligations under the three leases previously executed,” the justices held.


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