July 1, 2009

About 5 years ago, one of our clients was operating a number of thrift stores in the Chicagoland area. One of its most profitable stores was located at 23rd and Kedzie in Chicago.

Unfortunately, for our client, the City of Chicago decided to use its eminent domain powers to condemn the property where the thrift store was located, together with adjoining properties, for a new fire station. Our client was a tenant in the building. The commencement of the eminent domain proceedings would mean that the client would have to vacate the premises once a jury decided the value of the property. In the interim, our client could remain as a tenant of the property.

The City of Chicago successfully settled with the adjoining property owners. Having gained title to the adjoining properties, the City of Chicago hired ACS, a demolition contractor, to tear down the adjoining buildings. All of the adjoining buildings were torn down except for the wall of one building which was about 31/2 feet from the back wall of the thrift store building. It appears that the demolition contractor in order to speed up demolition decided to tear down the wall with a backhoe. Previously it had removed other parts of the wall by hand demolition.

In the course of tearing down the remaining wall, it collapsed and fell into the cement block wall of the thrift store building. As a consequence, nearly one-half of the existing walls and roof collapsed. Heavy equipment was brought in to look for possible victims. Fortunately, no customers were injured, and three employees suffered very slight injuries.

It became immediately evident that in light of the pending condemnation action, that the building would not be rebuilt. Fixtures and inventory in the thrift store were a total loss. The cost of removing, cleaning, and returning the used clothes and racks to other thrift stores was greater than any anticipated sale price. The thrift store inventory consisted of used clothing and small appliances. The value of the inventory and store fixtures was relatively small. However, the thrift store was a profitable operation and it would be entitled to recover the lost profits that it would suffer through the date a judgment would be entered in the eminent domain proceedings. That took 3 1/2 years.

Shortly after the collapse of the building, it became apparent that a settlement of the thrift store’s claim in the near future was unlikely. Di Monte & Lizak was hired to file a lawsuit for damages. The demolition contractor, the City of Chicago Public Building Commission, and a subcontractor [Cotter] that was hired to do some supervision on the site were sued. Another subcontractor was sued by the supervising subcontractor. Many theories of recovery were alleged. The subcontractors argued that they should be dismissed because they did not have a sufficient degree of responsibility under their contracts with the City.

After many years of litigation, we decided to pursue only the demolition contractor and the City of Chicago. The reasons for that decision were that it was clear that the demolition contractor and the City of Chicago were liable for the damages caused and that they had sufficient insurance to cover a large judgment. We had secured a summary judgment on the issue of liability against the demolition contractor and the City of Chicago because Illinois law provides that demolition work is considered to be “ultra hazardous activity” if performed in an urban setting. Accordingly, we were able to convince the court to enter summary judgment on the issue of liability in favor of the thrift store and against the City of Chicago and the demolition contractor. However, the supervising subcontractors were not held to be strictly liable. Accordingly, their negligence would have to be established by evidence at trial. That would mean at least another year of depositions and other discovery practices for getting the case ready for trial.

We decided to voluntarily dismiss the supervising contractor and to dismiss the other claims. We would be proceeding on the strict liability claim where we had secured a summary judgment on liability. The jury would only have the responsibility of assessing the amount of damages.

Each side hired a forensic expert to prepare a report setting forth their opinion as to the amount of damages suffered by the thrift store owners. The thrift store’s expert concluded that the thrift store had lost profits of $1,287,901 along with damage to business property of $76,253 and miscellaneous costs in the amount of $113,409. Total damages claimed were $1,476,753.

The expert for the defendants placed a value of about $700,000 on lost profits, $50,807 for damage to business and personal property, and other costs of $8,147.

Shortly before trial, the defendants offered $250,000. The offer was rejected. No counteroffer was made in light of the fact that the initial offer to settle was grossly unrealistic. At trial, the defendants argued that the thrift store should only be entitled to about one year’s loss of profits because they should have found another location. However, they ignored the uncontradicted evidence presented by plaintiffs that they were engaged in an exhaustive search for a new location. However, an appropriate location could not be found in the same neighborhood. The neighborhood is mostly made up of small mom and pop stores.

The jury returned a verdict of $1,322,383. The substantial verdict is attributable to many factors including:

Chet Lizak and Margherita Albarello tried the case on behalf of the thrift store.