Chicago, Park Grill investors launch appeals, counter-appeals over rulings in Millennium Park restaurant deal fight

By Jonathan Bilyk | Dec 29, 2015

The legal fight over the fate of the Park Grill restaurant in Chicago’s Millennium Park will continue in the courts in 2016 and perhaps beyond, as the city of Chicago and the restaurant’s operators each prepare for appeals and counter-appeals of a Cook County judge’s decisions in a case over an allegedly crooked restaurant deal that has already cost taxpayers millions of dollars in legal fees and court costs.

In October, attorneys for the city of Chicago announced their intent to appeal the decision of Cook County Judge Moshe Jacobius rejecting the city’s lawsuit against the Park Grill’s operating group. They have asked the Illinois First District Appellate Court to reverse the judge’s decision.

The city’s appeal was followed in turn by counter-appeals from the Park Grill’s legal representatives in November and December. Despite their win against the city, the Park Grill investors are asking state appellate justices to undo some of the judge’s other decisions in the matter. Particularly, they are asking the appeals court to resurrect the group’s claims against the city for fraud and tortious interference.

Jacobius had dismissed those claims, which center on what the Park Grill group alleged was the suspect nature of the city’s lawsuit, which appeared to follow reports published by the Chicago Sun-Times on the Park Grill deal’s allegedly suspect terms - terms the city contended were highly favorable to investors at the expense of the city and taxpayers.

Jacobius, however, had dismissed the counterclaims because he said the city had immunity from such actions under the state’s Tort Immunity statute, which can exempt governments from contract disputes. Attorneys for Park Grill, however, contended the exemption should not apply in this case because the Park Grill deal was a business contract, and not an official governmental policy action.

Park Grill’s lawyers have also asked the appellate court to review Jacobius’ decisions to reject their requests for sanctions against the city for, among other things, deleting emails sent and received before 2004, which the Park Grill group believed should have been preserved as evidence when it became clear to the city’s Law Department that the city could pursue a legal action over the Park Grill deal.

The appeals have not yet been scheduled for arguments at the First District Appellate Court.

The appeals all stem from Jacobius decision in September to shoot down City Hall’s attempt to undo the deal cut by the Chicago Park District with a group of investors to bring a “white tablecloth” restaurant to Millennium Park.

That decision followed years of arguments in court, during which the city argued the court needed to act to protect city taxpayers from the “sweetheart deal” reached in 2002 under the administration of former Mayor Richard M. Daley to allow the Millennium Park Joint Venture – a group of investors led by caterer James Horan and restaurateur Matthew O’Malley, and which included a number of the former mayor’s friends, relatives, neighbors and associates – to open and operate Park Grill as Millennium Park’s concessionaire and lone restaurant.

The city contended Park Grill’s operating agreement included a number of “unconscionable” terms, including allowing the restaurant to pay fees to the city based on net revenue, rather than gross, to be exempt from property taxes, and to receive free water, natural gas and trash collection, among others. The city alleged these and other highly favorable terms came about, in large part, because of insider dealing between the restaurant group and the Chicago Park District, pointing particularly to an intimate relationship between O’Malley and Laura Foxgrover, a former Park District official who worked with those responsible for negotiating the concession agreement for Park Grill.

Echoing the Park Grill group’s contentions in some respects, Jacobius said he believed the city had waited too long to bring the lawsuit to lend credence to its assertions it had somehow been misled by the Park District acting allegedly without the knowledge or consent of City Hall.

According to public records obtained by the Cook County Record, from the time it was first filed until shortly after Jacobius’ ruling, the lawsuit had already cost Chicago taxpayers more than $6.6 million in legal fees paid to local law firms who represented the city and Park District in the court fight.

Barnes & Thornburg, of Chicago, represented the city in the action.

Reed Smith LLP, of Chicago, represented the Park District.

The Park Grill investment group was represented by the firm of Novack and Macey, of Chicago.

That firm has described Jacobius’ September ruling in the matter as a victory for all hard-working Chicagoans who do business with the City.”

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Organizations in this Story

Barnes & Thornburg LLP Chicago Park District Chicago Sun-Times City of Chicago Novack and Macey LLP Park Grill Reed Smith LLP

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