The Habitat Company, a property management and development firm that used to oversee 3,400 units of public housing for the Chicago Housing Authority, is suing CHA and two of its attorneys for an alleged breach of contract and legal malpractice over the agency’s handling of a lead poisoning lawsuit brought by two residents.
The lawsuit, filed Feb. 27 in the Circuit Court of Cook County, states that CHA failed to properly defend Habitat, including by neglecting to advise Habitat of a conflict of interest in CHA’s representation of the real estate firm, during the lead paint trial.
“As a result of the betrayal, Defendants reneged on an agreement to defend and indemnify Habitat and exposed Habitat to significant liability and forced it to incur significant attorney’s fees and costs,” the lawsuit states.
Habitat’s lawsuit follows a January jury decision that CHA must pay more than $24 million to two residents who sued over alleged lead paint poisoning of their two children. Habitat and property management company East Lake Management Group were also sued as a part of the lawsuit, as they had managed the residents’ CHA-owned property, but were found not liable for the children’s injuries.
The new suit comes at a time when CHA is undergoing what it calls “a significant transition,” as numerous executive leaders have left the agency in recent months, including one who was fired.
CHA spokesperson Matthew Aguilar told the Tribune the agency can’t comment on pending litigation. Ryan James Harrington and Sunil Kumar, the two CHA attorneys named in the lawsuit, both referred the Tribune to CHA’s communications staff.
A Habitat spokesperson declined to comment, citing the pending litigation, apart from saying, “the complaint speaks for itself.”
Habitat, which has worked in real estate in Chicago for more than 50 years, managed a CHA unit located at 7715 N. Marshfield Ave. in Rogers Park from 2015 to 2019, the suit states. The lawsuit says CHA had known the property had lead-based paint at least since 2001 and did not disclose that information before or during Habitat’s management of the property.
Habitat and CHA “had a custom and practice,” the suit states, that CHA’s insurance program for property managers — which allowed managers to request CHA’s legal defense for their companies — would cover claims from occupants, and this was the case in the recent lead paint litigation.
Habitat alleges that CHA called two witnesses that shared “damaging” testimonies to Habitat during the lead paint trial, with the housing authority using these testimonies to “protect its own interests at the expense of Habitat” while still representing Habitat. The lawsuit says these testimonies caused a conflict of interest between CHA and Habitat, as the testimonies shifted responsibility in the case from CHA to Habitat.
It was not until January 2024 that Harrington, the CHA attorney, informed the judge, without advanced notice to Habitat, of the conflict of interest and stated that Habitat and East Lake would need to retain separate legal counsel, the suit states.
Habitat ended its property management agreements with CHA after nearly 40 years of partnership in November 2024, with the new lawsuit citing CHA’s breach of contract and legal malpractice in the lead paint case as the reason for termination. Habitat earned approximately $1.8 million in annual revenue from these contracts, the lawsuit states, and has lost about $1.5 million of revenue due to the termination of the management agreements. Habitat states in the suit that it would have continued to manage these properties if not for CHA’s conduct in the lead paint case.
The lawsuit seeks to recover damages for Habitat’s attorney fees and costs.
