No Liability From Void Contract With Union

In May, 2008, Matthew Friedman, a manager of 1550 MP Road LLC ("MP Road"), must have been very pleased. He had just negotiated and signed a lucrative lease and purchase agreement ("LPA") with Teamsters Local Union No. 726 ("Local 726"). The LPA obligated Local 726 to occupy and pay rent on commercial property located at 1550 Mount Prospect Road in Des Plaines, Illinois (thus the name of the LLC). The monthly rent was $12,549 in the first year with gradual increases to $16,559 per month in year 15. Local 726 also had to pay operating expenses and real estate taxes.

It got even better. After five years, Local 726 was obligated to purchase the property for $2,145,371. If Local 726 failed to do so, it was required to pay MP Road 200% of the base rent for the remainder of the lease term (called a "double-rent penalty"). If this occurred, Local 726 would have to pay around $3,583,000 over 10 years without obtaining title to the property.