Former Irgens partners fight to keep case in circuit court

Irgens wants matter settled in arbitration

Mark Irgens

The two former partners who are now suing Irgens Partners LLC for breach of contract want the case heard in court.

Attorneys for Keith Redding and Kristine O’Meara argued Friday before Milwaukee County Circuit Court Judge John DiMotto that the case needs to be heard publicly, despite firm owner Mark Irgens’ request two weeks ago that it be settled in arbitration.

The Whole Foods building sold in December for $22.2 million.

In April, Redding and O’Meara, two of the four founding members of Milwaukee-based real estate development firm Irgens, filed a lawsuit against chief executive officer Mark Irgens and president Jaclynn Walsh.

The two are seeking $900,000 from the sale of the Whole Foods building on Milwaukee’s East Side. The building sold in December for $22.2 million

Redding and O’Meara are also alleging nine of the 17 operating agreements in which they have an ownership stake were changed in October 2016 without their knowledge and to their disadvantage.

Redding and O’Meara found out about two of the amendments in February, and the other seven on Thursday, said their attorney, C.J. Krawczyk.

“Imagine if you had a $1 million interest in a property and you found out your partners amended the agreements, awarded themselves a bunch of power and exposed you to risk. And then you found out about it eight months later,” Krawczyk said. “It’s a game of three-card Monte.”

Bret Roge, an attorney for Irgens, said Redding and O’Meara have known about all of the changes since February.

The amendments lowered the supermajority needed to make decisions about the properties and gave Irgens the ability to move money from one property to another.

When contacted by phone after the hearing, Mark Irgens said the changes to the operating agreements were made to benefit the business, not to treat anyone unfairly.

“We changed all of our LLCs equally,” Irgens said. “We treat everyone the same and we apply all the rules fairly. We all agree that a good deal should prop up a bad deal. That is what this is all about. They do not want to pay for a bad deal, but want the benefit of all of the good deals.”

Krawczyk said Irgens has offered to pay his clients the $900,000 from the Whole Foods sale, but cannot do it until a restraining order, put in place when the lawsuit was filed to prevent any further changes to operating agreements, is lifted.

John Kirtley, an attorney for Irgens, said what people fail to remember is Redding and O’Meara have already been paid millions of dollars and continue to earn money on the properties in which they have an ownership stake.

In 2006, Redding was forced to sell his interest in Irgens and leave the company after 15 years, according to the complaint filed in April. He signed a separation agreement worth $2.3 million. Through December 2016, he has made another $7 million to $8 million on the properties in which he has an ownership stake, according to Irgens attorneys.

O’Meara opted to retire early in 2012 because “she could no longer stand the working environment,” according to the complaint filed in April. She was paid $1.35 million and has made another $6 million through December 2016 on properties in which she has an ownership stake, according to Irgens attorneys.

Both signed separation agreements promising not to disparage the company and agreeing to arbitration. The original operating agreements specified that all disputes among Irgens partners would be handled in arbitration.

But the nine amended operating agreements specify disputes will be handled in circuit court.

Attorneys for O’Meara and Redding believe the amended agreements trump all previous agreements. Irgens’ attorneys are calling for arbitration.

DiMotto will decide July 13 whether the matter will be settled in arbitration or should head to court.

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