Settlement in condo records dispute

After a year of trying, unit owner to see some details of MTCA legal bills

26-Mar-09 – A settlement was reached on Thursday between the City of Chicago and Marina Towers Condominium Association, ending a year-long dispute over access to financial records.

MTCA and its property management company, Draper and Kramer, were issued notices last December of violating a city ordinance that requires a condominium association to allow unit owners to inspect financial books and records within three days of making a written request. The citations were issued by the city’s Department of Consumer Services after a unit owner, Mindy Verson, filed a consumer fraud complaint.

In exchange for the city dismissing its complaint against the condo association, MTCA tentatively agreed to allow Verson (left) access to some of the documents she has been trying to see.

It was not disclosed exactly which documents this includes but the case has focused on whether invoices from MTCA attorney Ellis Levin should be made available to unit owners at Marina City. MTCA claims this would violate attorney-client privilege, and invoices are not even a part of financial books and records. Verson has said she just wants to know “who was paid, on what legal matters, when and how much.”

The settlement agreement must be approved by the MTCA board of directors at its meeting on April 30. If approved, the documents would be made available to Verson the following week.

The agreement was reached after attorneys for MTCA and Draper & Kramer met with Verson and the city’s Corporation Counsel, Vera Elue, for about 90 minutes. The negotiations followed a four-hour hearing and came shortly before Administrative Law Officer Jacqueline Stanley Lustig was to make a decision.

Daniel Meyer, representing the respondents, told Lustig he had spoken with MTCA president Donna Leonard by telephone about the proposed settlement. He later told Marina City Online, “Ms. Leonard will support approval of the settlement before the board and I do not anticipate any significant problem obtaining that approval.”

A status hearing is scheduled for May 12.

Attorney-client privilege protects invoices, says MTCA attorney

While agreeing that amounts paid to attorneys are not necessarily confidential, MTCA and Draper & Kramer attorney Daniel Meyer said legal invoices are subject to attorney-client privilege. The city ordinance, he says, is “unconstitutionally vague” and conflicts with the Illinois Condominium Property Act.

Refusing to make legal invoices available to unit owners would expose a condo association to citations, but Meyer says showing the invoices would violate attorney-client privilege and deny due process.

“They are attempting to put my client in the position of choosing between the lesser of two evils,” Meyer said at an administrative hearing in January. On Thursday, he said the laws need to be harmonized. They can co-exist, he says, if attorney-client privilege is taken into consideration when the laws are made.

Daniel Meyer (left) is a partner with the Chicago law firm of O’Hagan Spencer LLC.

Vera Elue, the city’s Corporation Counsel, asked the judge to consider the wording and intent of the city council when it passed the ordinance, and that invoices and receipts are financial books and records that condo owners should be allowed to see. “It affects their financial interests and their well being.”

Property manager David Gantt testified that the legal invoices he reviews are “very detailed” and include “hints of what the strategy would be” by the attorney in a particular case. He told Lustig that he had heard Barbara Gressel, an attorney with Department of Consumer Services, say at an informal hearing in 2008 that attorney bills are protected by attorney-client privilege.

According to Verson’s attorney, Leo G. Aubel, an invoice for legal fees is “the last place you’d want to put privileged information.”

 Related story: Second continuance in condo records dispute