The Chicago Housing Authority should not be allowed to continue with its lawsuit to recover money from an architecture and design firm the CHA blames for causing it to spend an additional $4.3 million to retrofit newly renovated apartments to comply with federal disability access laws, a state appeals panel has ruled.
On Dec. 11, a three-justice panel of the Illinois First District Appellate Court upheld the decision of Cook County Circuit Judge Ronald Bartkowicz, who had tossed the CHA’s breach of contract action against Chicago-based architecture firm DeStefano and Partners Ltd. over concerns the litigation was merely an attempt by the CHA to insulate itself from liability for failing to properly design some of the housing units it was renovating to comply with federal law. As a result, the CHA’s litigation under state law for breach of contract would be preempted by federal law and should be barred, the judge said.
The appellate opinion was authored by Justice Bertina E. Lampkin, with justices Jesse Reyes and Robert E. Gordon concurring.
The ruling comes as the latest steps in a legal quarrel dating back to 2009, when the CHA first brought a complaint against the DeStefano firm.
That lawsuit arose out of the so-called Plan for Transformation, a 10-year renovation project the CHA had undertaken beginning in 1999 to renovate or build new more than 25,000 housing units. According to the CHA, the plan was designed to be “the largest, most ambitious redevelopment effort of public housing in the United States,” with the goal of “transforming the culture and structure of public housing” to “seamlessly integrate the new developments into the surrounding neighborhoods.”
The plan, funded by the U.S. Department of Housing and Urban Development (HUD) included plans to build out about 5 percent of its units “to accommodate mobility impaired individuals” and another 2 percent to meet the needs of “individuals with sensory impairments” to comply with the federal Rehabilitation Act of 197s3, according to court documents
The CHA hired DeStefano in July 2000 for architecture and design services for a portion of the renovation and construcion project.
In 2004, however, HUD told the CHA a preliminary compliance review found “a range of deficiencies both major and minor” related to accessibility for people with disabilities in the renovated units.
Two years later, the CHA and HUD completed a “negotiated voluntary compliance agreement,” under which the CHA agreed to bring its new housing units into compliance with the Americans with Disabilities Act. The agreement included no findings of liability against the CHA and assessed no penalties.
However, the CHA said the additional work, which included hiring a new architecture and design firm, cost it an additional $4.3 million.
The CHA filed suit in 2009, demanding the DeStefano firm be made to repay that money, because the firm had “failed to provide accurate certifications that the project work … conformed” to the ADA and other applicable standards under federal law.
According to court documents, the CHA said its lawsuit was brought in an “attempt to enforce the parties’ contract … to hold defendant (DeStefano) accountable so that taxpayer money is not misused and disabled persons do not suffer discrimination.”
On appeal, however, the justices took a wrecking ball to the CHA’s claims, saying precedent – specifically, the findings of the U.S. Fourth Circuit Court of Appeals in the 2010 decision in Equal Rights Center vs. Niles Bolton Associates – established such breach of contract claims against contractors brought by property owners who ran afoul of federal regulators enforcing the ADA are barred by federal law.
Essentially, the justices said Judge Bartkowicz rightly found the “CHA could not contractually delegate its duty to comply with the federal accessibility standards.”
“Despite CHA's argument that its claim has an independent basis in the parties' contract, what the claim was predicated on and what it sought to recover was the cost of retrofitting the residential units in the seven buildings worked on by defendant as required by the voluntary compliance agreement that it negotiated with HUD,” the justices wrote. “If not for the voluntary compliance agreement, CHA would not have raised a claim.
“Allowing CHA to seek indemnification from defendant effectively would insulate it from liability.”
The CHA was represented in the action by the firm of Donohue Brown Matthewson & Smyth, of Chicago.
The DeStefano firm was defended by the firm of Vanek Vickers Masini P.C., of Chicago.