Attorneys for The Prime Group and its CEO Mike Reschke are calling investor Edward John opportunistic for attempting to sue the company for $45 million amid its high-profile redevelopment of the Thompson Center.
“His meandering and unsupported causes of action … demonstrate only a futile attempt by a disgruntled minority investor in one business to create claims against a variety of other uninterested entities in which he has no interest,” a legal filing from Prime’s attorneys reads.
The filing asked a judge to dismiss the case because the allegations have passed the statute of limitations or are insufficiently pleaded, among other defenses.
The dispute stems from two promissory notes that The Prime Group allegedly issued to John, an Arlington Heights-based orthodontist, in exchange for some of his shares in the company.
John sued The Prime Group and Reschke, in his capacity as CEO, in July claiming that the unpaid promissory notes now total $45 million with interest and late fees.
John alleged that the highly anticipated redevelopment of the Loop’s Thompson Center into Google’s Midwest headquarters, led by a joint venture of Prime and Quintin Primo’s Capri Investment Group, indicates that Prime is capable of paying those notes.
The legal drama has cast a shadow over the much-anticipated $300 million revamp of The Thompson Center, which many real estate professionals and politicians are hoping will spur a post-pandemic revitalization of the loop.
A prior statement from Prime stressed that the project will not be affected by the allegations, which the company describes as, “baseless, substantially false and legally without merit.”
“The lawsuit does not affect our leadership, our work, or any ongoing development, construction or property management activities,” the July statement read.
Reschke declined to comment further, and an attorney for John did not respond to a request for comment.
In his initial filing, John claimed that Reschke, in his capacity as CEO, intentionally diverted funds from The Prime Group to various subsidiaries in an attempt to keep funds away from the specific entity that issued the promissory notes, Prime Group Inc., and therefore limit its ability to pay the amount promised to John.
The LLCs named in the lawsuit appear to be subsidiaries created by Prime for specific projects, including the Thompson Center, which is a standard industry practice and likely required by lenders.
The Prime Group’s motion to dismiss, filed last week, claimed that John has not been denied any typical rights of a shareholder.
“He does not allege that he previously complained or at any previous occasion asserted his rights as a shareholder,” the motion reads. “John provides no factual allegations describing any specific instance where he expressed his commitment to participate as a shareholder and was denied or refused.”
While confirming the validity of two promissory notes totaling $16 million and $11 million issued to John in 2007, the motion denied the existence of a $1.1 million note John alleged he was issued in 2017.
Prime’s motion claimed it’s too late for John to sue the company over the 2007 notes because they had a 2010 maturity date, and that the dispute is subject to a 10-year statute of limitations under Illinois law. It also claims that John failed to provide evidence of an agreement with Prime that outlined exactly how the loans would be paid to John.