Mulkanoor v. City of Harvey (In re Mulkanoor)

585 B.R. 526
CourtUnited States Bankruptcy Court, N.D. Illinois
DecidedMarch 29, 2018
DocketBankruptcy No. 17 BK 18799; Adversary No. 17 AP 00388
StatusPublished

This text of 585 B.R. 526 (Mulkanoor v. City of Harvey (In re Mulkanoor)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mulkanoor v. City of Harvey (In re Mulkanoor), 585 B.R. 526 (Ill. 2018).

Opinion

Jack B. Schmetterer, United States Bankruptcy Judge

Defendant, the City of Harvey, Illinois ("Defendant" or "the City") moved to dismiss the Second Amended Complaint filed by Plaintiff Premsagar Mulkanoor ("Plaintiff" or "Mulkanoor") pursuant to Fed. R. Civ. P. 12(b)(6), made applicable by Fed. R. Bankr. P. 7012(b).

For reasons discussed below, Defendant's Motion to Dismiss is granted as to each Count, with prejudice, by separate order entered this date, and judgment is entered for Defendant.

INTRODUCTION

Plaintiff is an individual debtor who has developed and owns several pieces of property, including the property underlying the subject adversary proceeding, a Marathon Gas Station and Minimart Convenience Store Facility located at 16643 S. Halsted *530Street, Harvey, Illinois 60426 ("Gas Station"). Plaintiff filed his petition for Chapter 11 bankruptcy relief on June 21, 2017. The instant adversary proceeding was filed on July 26, 2017.

Plaintiff alleges that he is owed $250,000.00, plus interest, costs, and attorney's fees on TIF reimbursement funds that were allegedly promised, but never issued to him by the City. In his Second Amended Complaint, Plaintiff pleads two counts. First, he seeks to enforce what he considers vested property rights. He states that in good faith reliance on certain ordinances, he developed his gas station and followed all instructions by the City to get his TIF reimbursement. He seeks to enforce a City Ordinance and its Resolution No. 1850 in order to receive the TIF payments allegedly due. Second, Debtor alternatively pleads equitable and promissory estoppel, arguing that he justifiably relied upon the Ordinance and Resolution and expended $750,000.00 in construction expenses. Again, Plaintiff also seeks to recover the $250,000.00 TIF reimbursement plus costs, interest, and attorney's fees.

BACKGROUND FACTS ALLEGED

On April 17, 1995, the City adopted and approved three ordinances, Ordinance No. 2923, Ordinance No. 2924 and Ordinance No. 2925, to implement a plan designating approximately 259 acres of Harvey as a "TIF District" or a "Redevelopment Project Area," using Tax Increment Allocation Financing. Sometime in March 1999, Plaintiff and his now-deceased wife applied for TIF financing from the City in order to construct a Gas Station. Plaintiff sent his TIF application and a check for $1,500.00 dated March 25, 1999 to the City. On March 26, 1999, J. David Dillner, then the Corporate Counsel for the City of Harvey, sent Plaintiff a letter acknowledging the receipt of his TIF application. On April 26, 1999 the City approved Resolution No. 1850, which states in relevant part:

"WHEREAS, MULKANOOR will only construct the building contingent on getting approval of the City of Harvey to approve tax increment financing assistance ..."

(Second Amended Complaint, Exh. D). The requisite approval was not received, but Plaintiff received a construction loan from Mutual Bank on September 10, 1999 for $350,000.00 and began construction on the Gas Station after receiving the loan.

On May 3, 2000, Corporate Counsel Dillner mailed Plaintiff a copy of a document titled "Redevelopment Agreement Pertaining to Redevelopment of Site No, 6," referencing the location of the proposed Gas Station ("Redevelopment Agreement" or "Agreement"). Plaintiff's attorney reviewed the document and mailed it to Plaintiff for approval on May 22, 2000. Plaintiff alleges that he approved the Agreement. He further alleges that in June 2000, the City Council and Mayor approved the Redevelopment Agreement. The City contests this allegation, asserting that Plaintiff never received the required City approval as evidenced by the fact that the Redevelopment Agreement attached to Plaintiff's Second Amended Complaint is unsigned by both parties. Plaintiff states that he expended $750,000.00 on the construction of the gas station, though he does not indicate when the project was completed.

Over thirteen years later, in the Spring of 2013, Plaintiff sent a request to the City requesting reimbursement based on the Redevelopment Agreement and his application for TIF funds. On April 30, 2013, LaTonya Rufus, Director of Planning for the City of Harvey, sent a letter to Plaintiff acknowledging that the Economic Development City Council Committee *531had reviewed his application for TIF reimbursement, but requested additional documents detailing construction costs, the total cost of the build out, development expenses, and any increments paid into TIF since beginning of the development. Plaintiff states that he timely tendered all of those requested documents.

On October 27, 2014, Plaintiff sent a letter repeating his request for TIF funds to Eric J. Kellogg, Mayor of the City of Harvey. Plaintiff states that shortly after sending this letter, he received notice from the City indicating that the new City administration "had nothing to do with his claim," and a request that he resubmit his TIF reimbursement package. He submitted the package but heard nothing thereafter from the City of Harvey.

Plaintiff retained counsel for a meeting with the City of Harvey on October 6, 2015. He met with Rufus and an attorney for the City wherein the City officials indicated that they had lost his TIF reimbursement package, and that the City could not confirm that Plaintiff had been involved in the TIF program because records from the previous administration could not be located. They requested that Plaintiff resubmit the TIF package for a third time. Plaintiff mailed the TIF reimbursement package to Rufus via US Postal Service Priority Mail Express on January 11, 2016, and Rufus signed for the package on January 22, 2016 at 11:00 a.m.

Plaintiff alleged that after a few weeks had gone by, he received a call from the City in which a representative stated that more time would be required to review his TIF package. The City and Plaintiff have not been in contact since that call. Subsequently, on July 26, 2017, Plaintiff filed his petition for Chapter 11 bankruptcy relief.

Plaintiff filed his original suit in an Illinois state court on July 26, 2017. That case was removed from state court to the bankruptcy court, and the Plaintiff's Amended Complaint accompanied the notice of removal. In the Amended Complaint, Plaintiff alleged that the City breached its contract with him and alternatively argued that a theory of quantum meruit, arguing that the City would be unjustly enriched if it were allowed to accept the Redevelopment Agreement without complying with its obligations under the document. The City filed its Answer to the Amended Complaint on September 4, 2017. The City denied that the Ordinance and Resolution No. 1850 by themselves allowed Plaintiff to receive TIF reimbursement, denied that the Redevelopment Agreement was ever executed by the parties, and denied that any unjust enrichment occurred pursuant to the Redevelopment Agreement.

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Cite This Page — Counsel Stack

Bluebook (online)
585 B.R. 526, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mulkanoor-v-city-of-harvey-in-re-mulkanoor-ilnb-2018.