Habitat Sues Chicago Housing Authority Over Lead Poisoning Missteps

Fallout from the Chicago Housing Authority’s lead poisoning disaster isn’t over.

Chicago-based developer and multifamily landlord Habitat Company, which was formerly a property manager for the CHA, filed a lawsuit against the agency and two of its attorneys, alleging breach of contract and legal malpractice in how they handled the high-profile lead poisoning case, the Chicago Tribune reported.

Habitat claims the agency failed to disclose a conflict of interest but also called witnesses who gave “damaging” testimony against Habitat — despite CHA legally representing them at the time. The firm argues the agency acted in bad faith, ultimately leaving Habitat to fend for itself.

The developer’s lawsuit follows a Cook County judge ordering the CHA to pay over $24 million to the families of the poisoned children in January, resolving a separate case brought against the agency. Habitat managed the property at 7715 North Marshfield Avenue from 2016 to 2019, and East Lake Management Group from 2019 to 2022. Both were cleared of liability.

Habitat, which managed 3,400 public housing units for the CHA before severing ties last year, now says the agency’s mismanagement of the trial played a direct role in its decision to end its decades-long relationship with the housing authority. CHA was aware of the lead-based paint on the property since 2001 but failed to disclose its presence to Habitat before and during Habitat’s management, the new suit says.

The firm alleges CHA went back on an agreement to indemnify Habitat in the case, forcing it to take on costly legal fees and significant liability exposure. Habitat seeks damages to recover legal fees and other costs related to CHA’s alleged mishandling of the case.

The new lawsuit lands as CHA is undergoing a broader leadership shakeup and a commitment to “rebuild trust” made last week by its interim CEO Angela Hurlock. Several top executives have departed in recent months, including one termination. Employees complained about former general council Ellen Harris’ leadership, including alleged instances of public berating, burnout and inflexible work schedules.

Harris resigned in August, while CHA’s former senior director of asset management was terminated in September, according to internal documents retrieved by the newspaper. Hurlock was tapped as interim CEO in October, to replace former head Tracey Scott.

And CHA’s former chief operating officer Eric Garrett and former deputy chief of building operations Ellen Sargent both resigned Jan. 3. Former treasurer Shiwei Zhou resigned Dec. 31.

— Judah Duke