Cook County Record

Tuesday, August 20, 2019

Chicago Neighborhood Initiatives OK to pull plug on deal with developer over Pullman property: Panel

By Jonathan Bilyk | Jul 14, 2016

A state appeals panel has signed off on the decision by the Chicago Neighborhoods Initiative, an organization dedicated to encouraging economic activity by redeveloping properties in some of the city’s troubled neighborhoods, to cut a veteran of the Chicago real estate development sector out of a project to build a new food warehouse and distribution center in Chicago’s Pullman neighborhood.

On July 13, a three-justice panel of the Illinois First District Appellate Court sided with CNI in its dispute with Wendy Berger Shapiro, principal of Chicago-based industrial development company WBS Equities, and her affiliated corporate entity South Creek 12 LLC, over who should get to develop the parcel in the Pullman Park development on the city’s South Side.

The court’s decision came in an unpublished order issued under Supreme Court Rule 23, which limits its use as precedent. The order was authored by Justice Terrence J. Lavin, with justices Mary Anne Mason and James Fitzgerald Smith concurring.

The case had landed in Cook County court in October 2015, when Shapiro and South Creek 12 sued CNI, asking the court to compel the group to honor the deal she claimed CNI violated when it pulled the plug on South Creek 12’s participation in the development of the proposed distribution center.

According to court documents, CNI and Shapiro’s business entities had previously partnered on a project to bring a Mariano’s supermarket to Chicago’s Bronzeville neighborhood.

That was followed with an agreement reached in November 2014 under which CNI would sell South Creek 12 a parcel on E. 111th Street, just off the Bishop Ford Freeway (Interstate 94), should Shapiro’s group locate a food manufacturer or distributor willing to operate the desired warehouse and distribution center on the site.

In her complaint, Shapiro said she had lined up a tenant for the prospective building, a company identified in the complaint as PIG Investments LLC, a “multi-million dollar corporation that owns food, beverage and related companies.” Under that tenant deal, PIG would lease space in the new 150,000-square-foot food distribution building, with a parking lot for 200 cars.

The court documents did not specify the financial terms of either the land purchase or the lease.

Shapiro alleged South Creek 12 had notified CNI of the lease deal in August 2015, shortly before a deadline to complete such a deal.

However, CNI, in a counterclaim, said the so-called “user notice” it received was “defective,” as PIG was identified in the notice as “an entity to be formed” and rental rates were not clearly stipulated in the proposed agreement.

In December, a Cook County judge granted summary judgment to CNI, prompting Shapiro’s appeal.

However, appellate justices said the lower court was correct in ruling for CNI.

The justices said the purported notice South Creek 12 supplied did not live up to the terms specified in its deal with CNI. Specifically, the justices cited language in the contract which required South Creek 12 to deliver a “fully executed agreement with such agreement granting rights in and to the Property to a tenant or occupant for all or a portion of the Property..”

“Although South Creek 12 sent the purported User Notice to CNI on Aug. 28, 2015, before the deadline, the attached (agreement) granted PIG no rights to the Property whatsoever,” the justices wrote.

The justices also rejected South Creek 12’s contention they met the spirit of the contract by forwarding a user notice, even if CNI may have believed the notice was “inadequate.”

“Pursuant to South Creek 12's unreasonable suggestion that only the label matters, South Creek 12 could have avoided the termination of the Purchase Agreement by submitting anything, which would not have satisfied the parties' interest in seeing that the Property be put to beneficial use to revitalize the neighborhood,” the justices wrote.

In March, the city of Chicago and CNI announced Whole Foods had agreed to relocate its distribution center from northwest Indiana to Pullman Park.

South Creek 12 was represented in the action by the firm of Greenberg Traurig, of Chicago.

CNI was represented by the firm of DLA Piper.





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