Chicago Spire developer challenges dismissal of lawsuit against Irish banking agency
Loop North News

STREETERVILLE

(Above) Site of the failed Spire project along the Chicago River west of Lake Shore Drive. Work started on only the foundation and substructure, leaving a hole that is 104 feet in diameter and 78 feet deep. (Click on image to view larger version.)

12-Apr-19 – The Irish developer who tried to build the Chicago Spire is challenging dismissal of his $1.21 billion lawsuit against an Irish banking agency he says derailed the project in 2013.

Garrett Kelleher has filed a motion seeking relief from the March 14, 2019, order, citing federal rules of civil procedure that allow a court to alter a judgement upon finding of a “mistake, inadvertence, surprise, or excusable neglect.”

Judge Andrea Wood said United States District Court lacks the authority to hear the case of Kelleher’s company, Shelbourne North Water Street Corporation, against National Asset Management Agency, created in 2009 by the government of Ireland to acquire property development loans from Irish banks.

Her opinion, however, according to the motion, “contains manifest errors of law and mistakenly overlooks material allegations” of Kelleher’s complaint, which was filed in February 2018.

Filed on Thursday, the motion challenges the court’s conclusion that National Asset Management Agency is not subject to jurisdiction of the court, arguing that the agency’s commercial activities had a “direct effect” in the United States.

(Right) Kelleher next to model of Chicago Spire. Photo by William Zbaren.

Photo by William Zbaren

It funded payroll and operations of Shelbourne’s Chicago office, for one thing.

The motion also challenges the conclusion that National Asset Loan Management, a co-defendant in the lawsuit, is entitled to sovereign immunity. Such immunity would apply if the Dublin-based company was majority-owned by a foreign state, under provisions of the Foreign Sovereign Immunity Act.

But 51 percent of the company, Kelleher points out, is privately owned.

Attorneys for Kelleher had previously argued the agency waived immunity from the court because its foreign assets, per Irish law, are governed by foreign law, but Wood rejected the argument.

Interference by Irish agency doomed Chicago project

When the Chicago Spire project started in July 2006, it was hoped the 2,000-foot-tall tower, designed by architect Santiago Calatrava, would be the tallest residential building in the world. By early 2008, the project had a design, foundation, and substructure at a cost of $300 million.

Santiago Calatrava

Financing included a $90 million loan from Anglo Irish Bank Corporation that Kelleher had personally guaranteed. But with the worldwide financial crisis of 2008, Anglo was unable to continue funding the project, Shelbourne was unable to find alternate funding, and development of the Chicago Spire stalled.

After National Asset Management Agency acquired the Spire loan and site, according to Kelleher, it made inaccurate disclosures to potential bidders, resulting in a small number of low bids. A Chicago-based agent, in particular, made “misstatements” that “gravely adversely affected” investors’ willingness to bid.

If not for such “interference” by the agency, the Spire, says Kelleher, would have been completed and the loans would have been repaid.

(Left) 3D model of Chicago Spire.

Kelleher is asking the court to modify the opinion to conclude it has jurisdiction over National Asset Management Agency and that National Asset Loan Management is not entitled to sovereign immunity.

Lawyers representing Shelbourne include the Chicago office of Quinn Emanuel Urquhart & Sullivan.

In July 2013, the Spire loan and site were sold to RMW Acquisition Company, which does business as The Related Companies, for about $35 million. Related Midwest proposed building two slender towers on the site but the plan was rejected by 42nd Ward Alderman Brendan Reilly. On February 21, 2019, the city’s Plan Commission voted to extend the site’s zoning rights for another year, giving Related Midwest more time to revise its plan.

 Previous story: Judge dismisses lawsuit of former Spire developer against Irish banking agency

By Steven Dahlman | Loop North News | sdahlman@loopnorth.com

Published 12-Apr-19 2:23 AM

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