Prominent property investor David Ruttenberg is suing the founder of a Chicago real estate firm, claiming he failed to live up to a referral agreement governing the sale of a historic downtown building.
An LLC linked to Ruttenberg, managing partner at Ruttenberg Gordon Investments and principal at Marc Realty Capital, filed the suit against KM Real Estate Capital founder Daniel Knorps over a referral agreement that led to big business for Knorps.
Under the March 2017 agreement, Ruttenberg was to introduce Knorps to real estate developer Michael Cordaro. Knorps then agreed to split any commission from that partnership with Dream Town Realty, and Dream Town later agreed to assign all related claims to the LLC that is managed by Ruttenberg and his partner, Jonathan Gordon, according to the lawsuit.
After entering into the agreement, Knorps then advised Cordaro of the availability of the building at 17-19 South Wabash Avenue, the 130-year-old city landmark known as the Jewelers Building. Cordaro moved to buy the property though his company, Peerless Development, and hired Knorps to broker the deal, according to the suit.
The building sold to Cordaro in April 2018 for $7 million, and the developer has plans to turn it into a boutique hotel. Knorps was paid an $88,000 commission on the sale, and later was paid a $114,000 commission for brokering a commercial lease for the property, the lawsuit filed Aug. 24 claims.
Dream Town then requested Knorps pay half of his $202,000 commission to the brokerage as stipulated in the referral agreement, but Knorps has refused, according to the suit.
It is not clear why Dream Town was to receive the commission or why it assigned those claims to Ruttenberg. The lawsuit says Ruttenberg was acting on behalf of Dream Town in this matter.
A spokesman for Dream Town declined comment. Ruttenberg did not immediately comment and Knorps did not return requests to comment for this story.
The lawsuit also alleges the LLC connected to Ruttenberg and Gordon made a $5,000 loan to Knorps, but that Knorps has not made a single payment on it since they were slated to begin in June 2017.
The plaintiffs are seeking reimbursement for the loan as well as half of Knorps’ earned commission from the deal, according to the suit.