Kenneth Michaels, Jr., Bauch & Michaels, LLC, Chicago
312-588-5000 | Email Kenneth Michaels, Jr.
Dismissal of Claims Against Allegedly Predatory and Cruel Purchasers Upheld
The First District of the Appellate Court recently affirmed the dismissal of common-law claims for tortious interference with prospective economic advantage and defamation and statutory claims under the Real Estate License Act of 2000, 225 ILCS 454/1-1, et seq., against a real estate developer and two owners of a well-known residential and commercial real estate brokerage firm. 540 North Lake Shore Drive Condominium Ass’n v. MCZ Development Corp., 2025 IL App (1st) 230733. The last paragraph of the opinion really says it all as to the court’s frustration over the defendants’ alleged conduct.
Having found no error in the dismissal of all counts, we must affirm the judgment in all respects. We are aware that defendants' behavior here, as alleged (and much of which is not denied by defendants), constitutes capitalism at its most Darwinian — conduct that, if true, could best be described as predatory and even cruel. But given the unique circumstances in which it played out, plaintiff is unable to identify any actionable tort or statutory violation. By this ruling, we do not mean to countenance defendants' behavior, only to apply the law as we find it. 2025 IL App (1st) 230733 at ¶84.
To understand the facts in the case, it would be helpful to note that under §15 of the Illinois Condominium Property Act, 765 ILCS 605/1, et seq., all the condominium property within an association may be sold pursuant to approval of 75 percent of the unit owners (based up percentage ownership). In 2019, the City of Chicago increased the requisite approval to 85 percent of the unit ownership. Chicago Municipal Code §13-72-085. In this opinion the appellate court refers to 75 percent approval, which does not change the impact of any of the facts.
Facts
The plaintiff association administered a 149-unit, 7-story, condominium building in the Chicago neighborhood of Streeterville. 2025 IL App (1st) 230733 at ¶4. This meant that the condominium property was a prime candidate along Lake Shore Drive, amidst high-rise buildings, for redevelopment. Id. In 2016, the defendants allied together to purchase a sufficient number of units to prevent anyone else from being able to successfully purchase the condominium property through §15 of the Act. 2025 IL App (1st) 230733, ¶7. In 2017, the defendants began a campaign to contact unit owners in an effort to purchase other units within the building utilizing mass mailings, robo-calls, and disinformation to create an environment of panic and fear. 2025 IL App (1st) 230733 at ¶8. These tactics also included incentives such as paying sellers’ closing costs and then renting the units back to the sellers. Id. The defendants also allegedly spread disinformation about the building in the real estate brokerage community and threatened other interested developers. 2025 IL App (1st) 230733 at ¶9. According to the complaint, the defendants’ lies to third-parties included (1) representing that they owned 25 percent of the units at a time when they owned only 18 percent, and (2) representing that the association did not own the air rights above the building because they were owned by the first-floor commercial unit owner (which was not part of the condominium property). 2025 IL App (1st) 230733 at ¶10.
The association responded by voting to sell the condominium property and began efforts to market the property for sale. 2025 IL App (1st) 230733 at ¶12. According to the complaint, the defendants continued to increase their scare tactics and represented that they owned 25 percent of the condominium ownership so they could block any sale. 2025 IL App (1st) 230733 at ¶13. (At this time in 2018, the required percentage to approve a sale was still 75 percent.) The association adopted new rules regarding leasing units that were the subject of a separate lawsuit.
When the association’s broker advertised the building for sale in April 2018, Crain’s Chicago Business published an article quoting one of defendants’ lawyers to the effect that no sale would be possible given defendants’ ownership. The association alleged that this article essentially resulted from a call to a Crain’s reporter. 2025 IL App (1st) 230733, ¶¶15 –16. In June 2018, defendants indicated that they would offer $47 million for the condominium property, which according to the association was tens of millions less than its worth. 2025 IL App (1st) 230733 at ¶17. In September 2018, the defendants finally reached the 25-percent ownership threshold. Prior to this time, nine potential buyers expressed an interest with five touring the building. According to the association, all buyers were scared away by defendants’ disinformation campaign. 2025 IL App (1st) 230733 at ¶18.
In November 2018, the association received a $68 million offer, which defendants informed everyone that they would reject as the building was not for sale. 2025 IL App (1st) 230733 at ¶19. In April 2019, the association received a $72 million offer, which failed to meet approval with 41 percent of the unit ownership voting against the offer. 2025 IL App (1st) 230733 at ¶20. At that time, defendants owned about 27 percent of the condominium property.
In 2018, the association filed a complaint in chancery against the real estate developer and its owner and a land trust alleging tortious interference and conspiracy. The complaint was dismissed and then on reconsideration amended. In 2020, the association also filed a complaint in the law division against the same defendants alleging torts. The law division case was consolidated into the chancery case, and eventually the claims from the law division case were dismissed. More defendants were added upon the filing of a second amended complaint. In response to a motion to dismiss, the court allowed the association to file a third amended complaint, the eventual dismissal of which led to the appeal here. 2025 IL App (1st) 230733 at ¶¶21 – 23.
The trial judge was the third one assigned to this case. In hearing a motion to dismiss brought by the new parties added to the case, the judge dismissed all claims against all defendants in a succinct order. 2025 IL App (1st) 230733 at ¶¶25 – 26.
Analysis
The appellate court exercised de novo review on the §§2-615 and 2-619 motion to dismiss. 2025 IL App (1st) 230733 at ¶29. The older defendants in the case challenged appellate jurisdiction because some of the claims such as defamation, slander of title, and conspiracy had been dismissed previously and the dismissals were not appealed timely from those dismissal orders. 2025 IL App (1st) 230733 at ¶32. The appellate court observed that there are essentially two kinds of consolidations. Sometimes, the consolidated cases are consolidated for a limited purpose to preserve their distinct identity and may even keep separate dockets. In such cases, the time to appeal starts when a final and appealable order is entered in that case. 2025 IL App (1st) 230733 at ¶33. More commonly is the consolidation of both cases into one, as happened here. The consolidation order stated that the law division case was consolidated into the chancery case “for all purposes.” 2025 IL App (1st) 230733 at ¶35.
Regarding the tortious interference claim, the appellate court observed that “[i]n the context of real estate, this court has held that the potential of buying a home does not ripen into an actionable expectation when, as is usually the case, the seller is free to accept arms-length offers from any buyer it chooses.” 2025 IL App (1st) 230733 at ¶40, citing Stefani v. Baird & Warner, Inc., 157 Ill.App.3d 167, 510 N.E.2d 65, 71, 109 Ill.Dec. 444 (1st Dist. 1987). The court observed that courts are reluctant to enforce a party’s expectations to consummate a potential sale. This is because potential business relationships fall apart for any number of reasons, and courts should “loath to inject commitments into those relationships that the parties have not yet made themselves.” 2025 IL App (1st) 230733 at ¶41. A second reason the court found that the association did not have a reasonable expectation of entering into a valid business relationship is that there was no showing that absent the defendants’ ownership and veto, the remaining owners would have voted to accept any particular offer presented. 2025 IL App (1st) 230733 at ¶44. The court distinguished Stefani, in which at least some counter-offers had been exchanged by the parties. “We recognize that this is the Association’s point — that defendants scared off the bidders — but that does not make the possibility of a sale any more concrete.” 2025 IL App (1st) 230733 at ¶45. However, the court was not rejecting other potential situations when a tortious interference claim may lie arising from real estate negotiations. “To be clear, we do not hold, as a bright-line rule, that no sale of real estate could ever be the subject of a claim for tortious interference with prospective economic advantage. Every case will present its unique facts. But the expectation here was not sufficiently concrete to rise to an actionable one.” [Emphasis in original.] 2025 IL App (1st) 230733 at ¶46.
The association challenged the trial judge’s dismissal of claims previously not dismissed by a predecessor judge in the case, claims that some defendants had answered. The appellate court rejected this challenge. A trial judge may reverse any interlocutory order, even a final judgment before it becomes appealable. This power to review, modify, or vacate any interlocutory order includes orders entered by another trial judge in a case. 2025 IL App (1st) 230733 at ¶48.
Regarding the defamation claim the appellate court recognized the claim as one defamatory per quod. The alleged false statements were that the defendants owned 25 percent of the property when they did not and that the association did not own air rights. 2025 IL App (1st) 230733 at ¶¶52 – 53. As such, the association was required to plead special damages, that is, actual damage of a pecuniary nature. 2025 IL App (1st) 230733 at ¶¶53 – 58. Under these facts, the association could never plead actual pecuniary losses.
For the same reason, the association could not prove a claim for slander of title. 2025 IL App (1st) 230733 at ¶63. Also, given that the tort claims were dismissed, the association’s claim for conspiracy necessarily dismissed as nonexistent. 2025 IL App (1st) 230733 at ¶64.
The trial court held that the License Act did not create a private cause of action. 2025 IL App (1st) 230733 at ¶70. Regarding the association’s claims against two licensed real estate brokers under the Real Estate License Act of 2000 for making false statements. The allegations were that these statements violated §15-25(a) of the License Act, which provides that “[l]icensees shall treat all customers honestly and shall not negligently or knowingly give them false information.” 2025 IL App (1st) 230733 at ¶71. Regarding whether the statements as to ownership of 25 percent, the appellate court found that there could be no construction in which, assuming the brokers made these statements, the brokers were making these statements as licensees to their customers, and therefore no action would lie for violating the License Act. 2025 IL App (1st) 230733 at ¶¶72 – 76. As to statements allegedly made to unit owners to induce them to sell their units, the association would have no standing to assert such claims. 2025 IL App (1st) 230733 at ¶¶77 – 81. While the association has standing to represent unit owners, it has no standing to assert claims on behalf of former unit owners. 2025 IL App (1st) 230733 at ¶81.
The appellate court affirmed dismissal of the complaint.
For more information about condominium law, see CONDOMINIUM LAW: GOVERNANCE, AUTHORITY, AND CONTROLLING DOCUMENTS (IICLE®, 2024). Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.