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Gasthaus sues Elgin in federal court

The owner of a shuttered downtown Elgin bar has filed another lawsuit against the city - this time in federal court.

Marco Muscarello, who owns the former Gasthaus Zur Linde bar and filed the lawsuit under the business name North Grove Street Properties, claims the city retaliated and conspired against him and his son Charles Muscarello for speaking up against a plan to redevelop the Elgin Tower Building.

The lawsuit filed Friday in the Northern District of Illinois seeks a jury trial and at least $200,000 plus attorneys' fees, court costs and punitive damages.

Marco Muscarello declined to comment Monday. Muscarello's attorney, Ryan Van Osdol of Di Monte & Lizak in Park Ridge, did not return a call for comment.

"It's unbelievable," said Chicago-based developer Richard Souyoul, who is named in the lawsuit. "I haven't seen anything (paperwork-wise), so I can't give any opinion."

The Muscarellos objected to the city's approval of the redevelopment and in March filed a lawsuit in Kane County against the city. That lawsuit was dismissed by a judge and Muscarello filed an appeal pending before the Second District Appellate Court. A Kane County judge also dismissed a lawsuit filed by the Gasthaus in 2014 in fighting a liquor license violation.

The Gasthaus, at 15 N. Grove Ave., closed in September, about a month after Elgin denied Muscarello's request for an outdoor liquor permit. The city also changed the bar's liquor license from 3 a.m. to 2 a.m. on weekends and 1 a.m. weeknights, and changed the license requirements so the bar had to show at least 50 percent of its revenues came from food.

That turned into a death knell for the Gasthaus, whose receipts for 2014 and 2013 showed that more than 90 percent of sales came from alcohol.

City officials said they took action after police responded to multiple fights and disturbances late at night in or outside the bar since last year.

Muscarello's federal lawsuit claims the city acted in retaliation for the Muscarellos' opposition to the Tower Building project, and conspired with the developers to drive down the Gasthaus' market value when Muscarello refused to sell the building to them.

The federal lawsuit also names Elgin Corporation Counsel Bill Cogley, plus Mayor David Kaptain and Councilman Terry Gavin in their roles as members of the liquor control commission. Kaptain and Gavin declined to comment.

"The suit has no merit and we will defend it accordingly," Cogley said, declining further comment.

The project to redevelop the vacant Tower Building - which is adjacent to the Gasthaus - into 45 apartments is moving forward, said Souyoul, who has partnered with St. Louis-based Capstone Development Group. He expects the sale to be finalized and work to begin "momentarily," he said.

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