TRANSMITTAL LETTER FOR BOARD MEETING OF DECEMBER 6, 2012
COMMITTEE ON JUDICIARY
Mr. David St. Pierre, Executive Director
Title
Authority to Settle MWRD v. Chicago Sweet Connections Group, LLC, et al., Case No. 11 L 9116 in the amount of $130,000.00 and to execute such documents as may be necessary to effectuate settlement
Body
Dear Sir:
Chicago Sweet Connection Group, LLC, d/b/a Chicago Sweet Connection Bakery ("CSC") is a Large Commercial Industrial User ("LCIU") subject to the Metropolitan Water Reclamation District of Greater Chicago's ("District's") User Charge Ordinance ("UCO"). CSC owns and operates a bakery at 5569 N. Northwest Highway, Chicago, Illinois. For the years 2008 through 2011, the District has billed CSC in the principal amount of $122,961.03, of which CSC has paid $4,091.81. Due to penalties and interest continuing to accrue on the unpaid principal amount, the total approximate due as of November 13, 2012 is $205,446.78. CSC is current on its estimated 2012 user charges payments.
Pursuant to the District's statutory authority, the District recorded liens in the Cook County Recorder of Deed's office against CSC's real property, in connection with CSC's outstanding user charge liability for the years 2008 through 2011.
On August 31, 2011, the District filed a Verified Complaint at Law ("Complaint") in the Circuit Court of Cook County ("Court"), seeking recovery of unpaid user charges from 2008 through 2011. CSC has vigorously defended against the lawsuit. CSC also claimed financial hardship and has represented that it may need to close its business, which it represents employs in excess of 100 people. The Finance Department reviewed CSC's financial statements and concluded that this company has a very difficult time meeting its monthly financial obligations. The Law Department verified that CSC's property is heavily encumbered with indebtedness such that if CSC were to close or file bankruptcy, the District would likely not recover any of the unpaid user charge balance.
On November 20, 2012, District staff, including the General Counsel, participated in an extensive settlement conference with the Court, counsel for CSC, and its principal, Tom Kailis. At the settlement conference, the parties presented their respective legal positions to the Court, with CSC primarily relying on financial hardship for its inability to pay the past-due user charges.
After hearing the District and CSC present their respective positions, the Court developed a non-technical settlement proposal for consideration wherein CSC would pay the District a total of $130,000.00 ("Settlement Amount"), with $30,000.00 of the Settlement Amount payable on or before December 15, 2012, $30,000.00 payable on or before March 15, 2013, and the remaining $70,000.00 payable in equal monthly installments, with 4% interest, over 36 months. In consideration of CSC's payment of the Settlement Amount, the District would dismiss the Complaint, release its liens as payments of the Settlement Amount warrant, and release any and all claims against CSC up to and including 2011. Should CSC default on any of the terms set forth above, the Court would enter a judgment against CSC for the total amount sought in the Complaint, plus penalties and interest hereinafter accruing, less payments received to date. Additionally, CSC must remain current in its estimated monthly user charge payments going forward along with its other requirements under the UCO, including timely filing its RD-925 Statement each year. If the Board of Commissioners approve this settlement agreement, CSC would pay a total of $138,491.81.
In view of the Court's recommendation and the myriad technical complexities involved in this case, coupled with the cost and uncertainty of the outcome of the litigation, the General Counsel finds the Court's proposed settlement to be reasonable and acceptable. The General Counsel does not believe that the District would obtain a better result by allowing this case to proceed to trial.
Therefore, the General Counsel recommends that the Board of Commissioners approve the settlement of Case Number 11 L 9116 in the total amount of $130,000.00, upon the terms and conditions generally set forth herein. Additionally, the General Counsel requests authority to execute such documents as may be necessary to effectuate settlement.
Requested, Ronald M. Hill, General Counsel, RMH:LLD:BO'C:jvs
Recommended David St. Pierre, Executive Director
Respectfully Submitted, Mariyana T. Spyropoulos, Vice-Chairman Committee on Judiciary
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for December 6, 2012