Elmhurst settles with Lucky Motors over tax agreement lawsuit

ELMHURST – In a 13-1 vote, the Elmhurst City Council opted for a settlement with Lucky Motors, a car dealership that had entered into a sales tax agreement with the city of Elmhurst in July 2010.

City attorney Don Storino said in a phone interview March 6 the alternative would be to go to trial. Instead, in the settlement, Lucky Motors would pay $77,000 to the city of Elmhurst and relinquish the $23,000 it had sought in a counterclaim following the city's lawsuit filed in 2015.

In the lawsuit, the city claimed the car dealership had breached their sales tax agreement. According to the agreement, Lucky Motors would receive 50 percent of the sales tax generated for a period of 10 years beginning in 2010. The rebate had an annual cap of $50,000 and a total cap of $500,000.

The lawsuit filed by the city states Lucky Motors developed the property at 817 N. Church Road per the sales tax rebate agreement, operated out of the location from 2010 to 2014 and received sales tax rebates over the four years. The city claims that in 2014, however, Lucky Motors closed the Elmhurst location and relocated to Villa Park.

In 2016, the city was seeking $144,635.16 from rebates made to Lucky Motors during the 2010 to 2014 period, citing a clause that states 100 percent of the sales tax rebate must be returned if the dealership relocates outside Elmhurst within five years of entering the agreement.

Lucky Motors responded to the lawsuit March 2, 2016, and filed a counterclaim stating the city had breached the contract before the dealership relocated to Villa Park, according to court documents.

The countersuit stated the dealership's business increased after entering into the agreement, and by summer 2013, it required more space to accommodate the growth. It also stated, however, that in March of the same year, Lucky Motors closed its first location in Addison.

The dealership sought the city's assistance to obtain the use of the property at 150 W. Grand Ave. to expand its operation, but according to the counterclaim, the city said it wanted the property to be developed for retail. In 2014, however, the city permitted Larry Roesch Chrysler-Jeep-Dodge LLC to expand its dealership operation to that location, which Lucky Motors claimed is a violation of the Mutual Assistance clause that states the parties "... agree to do all things practicable and reasonable to carry out the terms and provisions of this Agreement and to aid and assist each other in carrying out its terms ..."

Storino said he was unable to comment on the rationale for the amount of money exchanged or the city's decision to settle, citing attorney-client privilege.

Alderman Scott Levin said at the March 5 meeting the city takes clawback provisions seriously, and the attorneys advised them these are the best terms possible for the settlement.

"We do expect all of the people [with whom] we enter into these agreements to perform, and when they don't, we take appropriate legal action. ... I'm glad to put this behind us," Levin said.

Alderman Michael Bram, who voted against the settlement resolution, said he would have liked to see the city "continue to stand our ground."

Storino said the mutual release has been agreed to by both the city of Elmhurst and Lucky Motors.

Discussions took place regularly during the litigation, but they "probably bore some fruit or reached some conclusion" within the past month or two, Storino said.

He added once the city signs the agreement and delivers it to Lucky Motors, the dealership has five days to bring in a cashier's check for $77,000, and then the case will be dismissed before the court.

"We finally settled. ... Glad to put it behind us," Lucky Motors owner Chris Wright said in a phone interview March 8.