Peter Francis Geraci
Prominent Chicago bankruptcy lawyer Peter Francis Geraci and his wife have beaten back a Mexican mining magnate’s right-of-first-refusal suit, which tried to stop Geraci from buying a Magnificent Mile penthouse above the magnate’s floor.
The First District Appellate Court of Illinois ruled in the Geraci couple’s favor Nov. 30, overturning a Cook County Circuit Court decision that had gone against them.
In early June 2014, Geraci and his wife, Holly, submitted an offer to NM Project Company to pay $8.6 million for a 6,000-square-foot unit on the top floor of the 40-story Ritz-Carlson Residences, which stands at Michigan Avenue and Erie Street. Geraci also put down $862,300 in earnest money.
The owner of the unit on the 38th floor, First 38 LLC – the corporate front for Mexican mining billionaire German Larrea – had a right-of-first-refusal agreement in place. This agreement obliged NM Project, as the owner of the 40th and 39th floors, to notify Larrera of any purchase offers for either floor. Once notified, Larrea had one business day to match the offer and buy the unit. If such a matching offer was not made, the right of first refusal was surrendered.
As it played out, NM Project told Larrea of the offer and furnished a copy of the offer, but with the names of the prospective buyers – the Geraci couple – redacted. Larrea’s attorney replied Larrea wished to match the offer and buy the 40th floor unit. However, Larrea questioned the validity of the offer and wanted an unredacted copy and documentation the earnest money had been deposited, so he could determine whether the prospective buyer had the ability to close the sale.
NM Project replied the prospective buyer’s identity was confidential, per the right-of-first-refusal contract, and refused to divulge that information. Several days after the deadline allegedly elapsed for Larrea to make a matching offer, Larrea’s attorney told NM Project the right-of-first-refusal had not been triggered. Larrea claimed he had not been given proper notice, in that, chiefly, NM Project had not established the elements of a bona fide offer, because a bona fide offer would include the prospective buyer’s name and verification earnest money had been secured.
Larrea then went to Cook County Circuit Court on June 13, 2014 to seek an injunction to prevent the sale to a party he named “John Doe,” and to order NM Project to reveal John Doe’s name and prove Doe had deposited earnest money.
The Geracis came forward seeking their own injunction to block NM Project from selling to Larrea and to instead be ordered to sell to them. Preliminary injunctions were granted to Larrea and the Geracis, putting the sale on hold.
A two-day bench trial was conducted in July, with Judge Diane J. Larsen delivering a verdict Sept. 3 in favor of Larrea. The judge said the terms of the right-of-first-refusal agreement dictated NM Project turn over the Geracis’ names and proof of the earnest money deposit. The failure of NM Project to do so meant notice to Larrea of the Geracis’ offer was “deficient” and right of first refusal was not triggered, in Larsen’s view.
The Geracis then took their case to Illinois First District Appellate Court, where they found favor with Justices Laura Liu, Joy Cunningham and Sheldon Harris on Nov. 30.
Liu, who authored the appellate opinion, prefaced the opinion by saying Judge Larsen “adjudicated a difficult dispute in a thoughtful and indefatigable, yet prompt, manner.”
Liu then went on to declare Larsen’s adjudication wrong, noting the language in the right-of-first-refusal agreement is “unambiguous” that Larrea is only entitled to a redacted copy of the purchase offer and is not entitled to proof of a security deposit.
Elucidating on the agreement, Liu wrote it is NM Project’s prerogative, not Larrea’s, to decide if an offer is bona fide. Once NM Project determined an offer is acceptable, it then is to tell Larrea of the offer. Liu wrote the agreement does not require NM Project to verify to Larrea a prospective buyer has the “financial ability to close” the sale or has “commitment to the purchase.”
Liu concluded Larrea was given proper notice of the Geracis’ desire to buy the penthouse unit, but Larrea did not present a matching offer within the allotted time, so lost his right of first refusal.
The appellate court reversed Judge Larsen’s ruling and remanded the case back to circuit court. The appellate decision was filed under Supreme Court Rule 23, meaning it can only be cited as precedent under certain circumstances.
Larrea was represented by Tetzlaff Law Offices, of Chicago. The Geracis were represented in the case by Patterson Law Firm and attorney Jonathan D. Parker, all of Chicago.
"This is an important win for our client, Mr. Geraci, who is delighted to be able to purchase the unit he wanted," said attorney Jefferey O. Katz of the Patterson Law Firm. "I know that he will enjoy living there."
NM Project was represented by Freeborn & Peters, of Chicago.
Peter and Holly Geraci might be seeking new accommodations on the Magnificent Mile, because of legal tussles involving their condominium in the Union Square buildings in the 300 block of West Hubbard Street, on the Near North Side.
The Geraci couple took action in March in Chicago federal district court against the Union Square Condominium Association, alleging the association allows dogs to ride in their buildings’ elevators, to Holly’s distress. She said the dogs set off her post-traumatic stress disorder, which originated with a dog attack years earlier in the back seat of a car.
As a result of the suit, Holly claimed the association has stirred up residents against her and she has faced harassment, as well as physical attacks, from dog-owning residents and their dog walkers. The Geracis complaint in this case was dismissed with prejudice earlier this year, with the judge calling the allegations leveled by the Geracis against their neighbors "palpable nonsense."
In 2014, the Geracis also sued the association over what they alleged to be the association’s failure to quickly fix a defective parapet on the rooftop, which they said had prompted the association to close off access to the Geracis' rooftop deck.
"One would have to be criminally naive not to recognize that plaintiff (the Geracis) has an ax to grind against the (Union Square) Association and its board members," wrote Cook County Judge Patrick Sherlock, noting the Geracis' dog lawsuit particularly "has wasted countless hours of the court's time, not to mention the defendants' time and money."
Sherlock, however, also denied a request by one of the defendants in the action for sanctions against Holly Geraci.