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Downtown Peoria hotel developers appeal dismissal of lawsuit filed against the city

A gavel rests on a judge's bench in a blurry courtroom. The text "WCBU Courts" sits on top of that photo.

The businessmen behind an often-maligned 2008 redevelopment deal aimed at reviving the Pere Marquette hotel and building an adjoining Marriott are appealing the dismissal of their lawsuit against the city of Peoria.

The city ultimately ended up losing $7 million it had loaned to the project when a bankruptcy court approved the sale of the hotels to their largest investor, union-owned real estate investment fund INDURE Build-to-Core, for $39 million.

Gary Matthews and Monte Brannan blame the city's meddling for tanking their refinancing efforts for the project, and ultimately forcing them into a foreclosure and bankruptcy process they claim also was ruined by then-Mayor Jim Ardis and the city council in 2018. They seek to recoup $9.3 million they claim is owed them by the city after the deal fell through, as well as an additional $1.4 million each for the plaintiff's shares in GEM Hospitality.

The 4th District Appellate Court in Springfield dismissed the developers' appeal last September, arguing they lacked jurisdiction barring a final judgment or order in circuit court. A new appeal was filed in January after a dismissal order was entered in Peoria County last November.

At a hearing last Friday, attorney Christopher Ryan argued his clients have standing to sue, and that the statute of limitations on two claims dismissed with prejudice had not actually expired before they filed suit in March 2019.

Speaking for the city, attorney Janaki Nair said the city's agreements weren't with Brannan and Matthews as individuals.

"The very fundamental first question, what contracts are we talking about? They're not parties to any of these contracts," she said.

But Ryan said the corporate debt was personally guaranteed by Matthews, and Brannan was roped in via a side letter agreement that Matthews signed. That agreement required them to file monthly compliance certificates with numerous provisions.

"They lost millions of dollars that they had invested in the hotel that was theirs. The city put them back in line and then when the deal blew up, they lost it completely. And I think that makes them a party," Ryan said.

Ryan claims the one-year clock on the statute of limitations for two tort claims didn't begin until Matthews and Brannan lost the hotel, but the city argues it started earlier, when YAM Capital revoked its refinancing offer in February 2018.

In the 2022 dismissal, the appellate court wrote that each of the four claims are "basically the identical claim in different legal packaging." It remains to be seen how that may factor into the decision-making on the new appeal.

Matthews and Brannan were indicted by a federal grand jury in 2020 on allegations they used hotel investment funds provided by the city and others to enrich themselves and their other business interests from 2008 through 2018. That case is set to go before a jury trial Oct. 16 in federal court in Peoria.

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Tim is the News Director at WCBU Peoria Public Radio.