Oak Park settles lawsuit against Foley-Rice
Updated: December 30, 2012 6:12AM
OAK PARK — The Oak Park Village Board on Monday approved a legal settlement of its breach of contract lawsuit against former car dealership Foley-Rice Cadillac that would result in the village receiving $400,000.
The settlement ends a three-year legal battle over alleged violations of a Business Retention Agreement between the village and the owners of Foley-Rice, Steven X. Foley and Terrance B. Rice.
The 2005 business retention agreement was intended to keep the auto dealership operating on the 700 block of Madison Street and generating sales and real estate taxes, as well as fostering a strong retail environment in the area.
Under its terms, the village purchased a large parcel at 722 Madison from Foley-Rice for $1,156,500, then leased it back to the company for use as a vehicle lot.
The village also gave Foley-Rice $400,000 in tax increment finance revenue to help defray costs of improvements to the main dealership showroom building at 711 Madison. The village also agreed to deed ownership of a small section of the 700 block of South Wesley Avenue and an alley behind the dealership south of Madison to Foley-Rice.
However, in July 2007, following the discontinuance of its Oldsmobile line, General Motors Corp. terminated its franchise agreement with Foley-Rice and the dealership went out of business. Essex-Foley, LLC, which owns the property at 711 Madison, then rented the building to a health club. That, the village argued, violated terms of the business retention agreement.
In a lawsuit filed in October 2009, Oak Park demanded the repayment of the $400,000 in tax increment financing fund, the return of the $1,156,500 it paid for the 722 W. Madison St. property and the return of that property to Foley-Rice, and $200,000 to compensate the village for staff time and attorney’s fees.
Foley-Rice and Essex-Foley, LLC expressly deny the village’s allegations set forth in the lawsuit, according to the settlement.
Key to the legal settlement, though, was a desire by both sides to end the protracted and costly legal tussle and “to avoid the uncertainties, the cost and the demands on their time and resources arising from the litigation.”
Village President David Pope said Tuesday the settlement protected the interests of taxpayers and the village.
“We got some, we didn’t get everything,” Pope said. “We got what we could reasonably expect to get.”
Upon approval by a judge Nov. 28, Foley-Rice , Inc. and Essex-Foley, LLC will pay the village $400,000. Pope said the village will receive $350,000 by Dec. 31, 2012. The remaining $50,000 is due in increments by Dec. 31, 2013.
As for staff and attorney costs, Pope said rental fees received by the village from Foley-Rice on the 711 Madison property as part of the retention agreement “largely offset the legal fees associated with this lawsuit.”
As for the return of the 722 Madison property, Pope suggested the village was content to retain ownership. The village is seeking to redevelop it as part of a greater Madison Street redevelopment plan.
“The village acquired that parcel originally to help us create a property assemblage that would have a greater potential as a development site,” Pope said. “The acquisition of that parcel greatly enhanced the value of adjacent village owned properties.”
Pope also said he “understands” that Foley-Rice, Inc. and Essex-Foley are in “active conversations with prospective purchasers” regarding former Foley-Rice properties at 641-49 Madison.
Asked if the village was one of those interested parties, Pope replied, “No.”