Lawsuit Against Minneapolis Landlords

27-CV-16-14225
Filed in Fourth Judicial District Court

9/23/2016 4:21:01 PM
Hennepin County, MN
STATE OF MINNESOTA
HENNEPIN COUNTY
Edain Altamirano Flores; Esperanza Herrera;

Lori Nicol; and Olutundun Arike Ogundipe;
on behalf of themselves and all others
similarly situated,
DISTRICT COURT
FOURTH JUDICIAL DISTRICT
CASE TYPE: CIVIL OTHER
Court File No.
Plaintiffs,
v.
Spiros Zorbalas; Stephen Frenz; Equity
Residential Holdings, LLC; National
Housing Fund, LLC; The Apartment Shop,
LLC; ERT, LLC; Quarters for Creativity,
LTD.; Emerald Square Properties, Inc.;
Hennepin Quarters, Inc.; Powderhorn
Quarters, Inc.; Hiawatha Quarters, Inc.; 25 &
3146 Properties, Inc.; Lahaha Holdings, Inc.;
Arts Avenue Properties, Inc.; SS Quarters,
Inc.; Berkeley Holdings, Inc.; 1801
Properties, Inc.; SZ112, Inc.; S1322, Inc.;
R110, Inc.; G121, Inc.; Alpha-Omega
Companies, Inc.; JAS Apartments, Inc.;
Jennifer Frenz; and Mary Brandt.
CLASS ACTION SUMMONS

JURY TRIAL DEMANDED
Defendants.
THIS SUMMONS IS DIRECTED TO THE ABOVE NAMED DEFENDANTS.

1. YOU ARE BEING SUED. The Plaintiffs have started a lawsuit against you. The
Plaintiffs Complaint against you is attached to this summons. Do not throw these papers away.
They are official papers that affect your rights. You must respond to this lawsuit even though it
may not yet be filed with the Court and there may be no court file number on this summons.
2. YOU MUST REPLY WITHIN 20 DAYS TO PROTECT YOUR RIGHTS. You
must give or mail to the person who signed this summons a written response called an Answer
within 20 days of the date on which you received this Summons. You must send a copy of your
Answer to the person who signed this summons located at 2200 Wells Fargo Center, 90 South
Seventh Street, Minneapolis, Minnesota 55402-3901.
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3. YOU MUST RESPOND TO EACH CLAIM. The Answer is your written response
to the Plaintiffs Complaint. In your Answer you must state whether you agree or disagree with
each paragraph of the Complaint. If you believe the Plaintiffs should not be given everything
asked for in the Complaint, you must say so in your Answer.
4. YOU WILL LOSE YOUR CASE IF YOU DO NOT SEND A WRITTEN
RESPONSE TO THE COMPLAINT TO THE PERSON WHO SIGNED THIS
SUMMONS. If you do not Answer within 20 days, you will lose this case. You will not get to
tell your side of the story, and the Court may decide against you and award the Plaintiffs
everything asked for in the Complaint. If you do not want to contest the claims stated in the
Complaint, you do not need to respond. A default judgment can then be entered against you for
the relief requested in the Complaint.
5. LEGAL ASSISTANCE. You may wish to get legal help from a lawyer. If you do not
have a lawyer, the Court Administrator may have information about places where you can get
legal assistance. Even if you cannot get legal help, you must still provide a written Answer to
protect your rights or you may lose the case.
6. ALTERNATIVE DISPUTE RESOLUTION. The parties may agree to or be
ordered to participate in an alternative dispute resolution process under Rule 114 of the
Minnesota General Rules of Practice. You must still send your written response to the
Complaint even if you expect to use alternative means of resolving this dispute.
s/ Michael F. Cockson
Plaintiffs attorneys signature
September 23, 2016

Dated
Michael F. Cockson, Faegre Baker Daniels LLP, 2200 Wells Fargo Center, 90 South Seventh
Street, Minneapolis, Minnesota 55402
Print or type plaintiffs attorneys name
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STATE OF MINNESOTA
DISTRICT COURT
HENNEPIN COUNTY
FOURTH JUDICIAL DISTRICT

CASE TYPE: CIVIL OTHER
Edain Altamirano Flores; Esperanza Herrera;

Lori Nicol; and Olutundun Arike Ogundipe;
on behalf of themselves and all others
similarly situated,
Court File No.
Plaintiffs,
v.
Spiros Zorbalas; Stephen Frenz; Equity
Residential Holdings, LLC; National
Housing Fund, LLC; The Apartment Shop,
LLC; ERT, LLC; Quarters for Creativity,
LTD.; Emerald Square Properties, Inc.;
Hennepin Quarters, Inc.; Powderhorn
Quarters, Inc.; Hiawatha Quarters, Inc.; 25 &
3146 Properties, Inc.; Lahaha Holdings, Inc.;
Arts Avenue Properties, Inc.; SS Quarters,
Inc.; Berkeley Holdings, Inc.; 1801
Properties, Inc.; SZ112, Inc.; S1322, Inc.;
R110, Inc.; G121, Inc.; Alpha-Omega
Companies, Inc.; JAS Apartments, Inc.;
Jennifer Frenz; and Mary Brandt.
CLASS ACTION COMPLAINT

JURY TRIAL DEMANDED
Defendants.
Plaintiffs Edain Altamirano Flores, Esperanza Herrera, Lori Nicol, and Olutundun Arike
Ogundipe allege as follows, on behalf of themselves and all others similarly situated:
INTRODUCTION
1.
Plaintiffs file this class action lawsuit to address egregious deceptive and
fraudulent business practices and statutory violations perpetrated by the Defendants against
Plaintiffs and thousands of other tenants in the City of Minneapolis. As described in this
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Complaint, Defendants illegal business practices have caused Plaintiffs and other tenants to pay
Defendants millions of dollars of rent for unsafe and improperly maintained housing.
2.
Defendants Spiros Zorbalas (Zorbalas) and Stephen Frenz (Frenz) have been
operating an illegal rental business in Minneapolis for years. Together with the other named
Defendants, Zorbalas and Frenz presently own and operate at least 62 residential rental
properties with more than 1,100 units in Minneapolis (the Zorbalas/Frenz Properties), making
them one of the largest rental enterprises in the City of Minneapolis (the City). The
Zorbalas/Frenz Properties are home to thousands of tenants, mostly families and low-income or
otherwise vulnerable people as defined by Minn. Stat. 325F.71, subd. 1.
3.
The Zorbalas/Frenz Properties are among the worst-maintained rental properties
in the City. The Zorbalas/Frenz Properties have received thousands of housing code violations,
reflecting Defendants systemic failures to meet their legal obligations to provide safe and
healthy housing for their tenants. In 2010, the problems at many of these properties became so
severe that the City took legal action against Zorbalas, ultimately banning Zorbalas from having
any interest in any rental properties in the City (the Citys Zorbalas Ban). Following a series
of appeals, the Citys Zorbalas Ban went into effect and remains in full force today.
4.
As detailed in this Complaint, Zorbalas and Frenz have maintained their illegal
rental business by committing enormous fraud on the City of Minneapolis and tenants of the
Zorbalas/Frenz Properties. To circumvent the Citys Zorbalas Ban, Zorbalas and Frenz engaged
in a sham sale of all Zorbalas rental properties to Frenz, using a network of shell corporations
to conceal Zorbalas continuing interest in the properties. When asked by the City to confirm
that Zorbalas no longer had an interest in the properties, Frenz affirmatively lied to the City to
secure rental licenses. Then, Zorbalas and Frenz used their rental business to collect millions of
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dollars in rent from thousands of tenants. Meanwhile, the Zorbalas/Frenz Properties have
remained in unsafe and unhealthy condition, reflecting a continuation of Zorbalas core business
plan of maximizing landlord profits by systematically failing to maintain the properties in
compliance with the health and safety laws of the State of Minnesota and the City of
Minneapolislaws that were enacted to protect tenants.
5.
The Hennepin County Housing Court recently addressed the unsafe and unhealthy
conditions of one apartment building in a separate legal proceeding. On September 13, 2016, the
Hennepin County Housing Court found that Frenz and two of his companiesDefendant The
Apartment Shop, LLC (The Apartment Shop) and Defendant Equity Residential Holdings,
LLC (Equity Residential)had engaged in widespread violations of Minneapolis Code of
Ordinances and the statutory covenants of habitability codified in Minn. Stat. 504B.161. See
IX of Powderhorn Park v. Stephen Frenz, The Apartment Shop LLC, and Equity Residential
Holdings LLC, Henn. Cty. Ct. No. 27-CV-HC-16-64 (the IX of Powderhorn Park action).
Among other property-wide violations, the Housing Court found that the apartment building
suffered persistent pest infestations [that] had a profoundly negative impact on the lives of the
tenants at the Property because Frenz and his staff exercised heavy-handed control over
deliberately inadequate pest control efforts that did not allow the pest control technicians to
address all the pests Property-wide in a systematic manner. The Housing Court also found that,
in the course of the litigation, Frenz and his co-defendant companies tried to hide and perpetuate
their violations of state and local health and safety laws by engaging in highly involved, wellorchestrated deception and deliberate and elaborate misrepresentation driven by knowing
and calculated business decisions designed to minimize Defendants expenses and potential
liability.
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In short, Zorbalas and Frenz have never stopped operating the illegal rental
business that the City of Minneapolis has described as an elaborate shell game designed to
avoid proper regulation by the City of Minneapolis for the health and safety of its citizens.
7.
The illegal rental business operated by Zorbalas and Frenz has involved the other
Defendants as described herein, including their spouses and a network of shell companies that
Zorbalas and Frenz have established separately and together.
JURISDICTION AND VENUE
8.
This is a civil case in which the Court has original jurisdiction under Minn. Stat.
484.01.
9.
The Court has personal jurisdiction over Defendants because Defendants maintain
their principal place of business in Minnesota, transact business here, or use real or personal
property situated in Minnesota. Minn. Stat. 543.19. Defendants have also used or possessed
real or personal property in Minnesota, have transacted business in Minnesota, and have
committed acts outside of Minnesota that have caused injury or property damage in Minnesota.
10.
Venue is proper in Hennepin County under Minn. Stat. 542.02 and 542.09
because Defendants have marketed and rented real property located in Hennepin County,
Minnesota.
11.
Plaintiffs have standing to assert the statutory claims recited herein under the
Minnesota Private Attorney General Statute, Minn. Stat. 8.31, Subd. 3(a).
PARTIES
Plaintiffs
12.
Plaintiff Edain Altamirano Flores (Altamirano) is a current tenant at 3141 22nd
Avenue South in Minneapolis, which is one of the Zorbalas/Frenz Properties. Altamirano has
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lived at 3141 22nd Avenue South with her husband and two young children from May 2014 to
the present.
13.
Plaintiff Esperanza Herrera (Herrera) is a former tenant of 3325 Nicollet
Avenue, which is one of the Zorbalas/Frenz Properties, who lived at the property during the
relevant time period. Herrera presently resides at 3027 Pleasant Avenue South in Minneapolis.
14.
Plaintiff Lori Nicol (Nicol) is a former tenant of 3146 Minnehaha Avenue
South in Minneapolis, which is one of the Zorbalas/Frenz Properties. Nicol lived at 3146
Minnehaha Avenue with her husband from June 2015 to May 2016. Nicol currently resides in
Saint Louis Park, Minnesota.
15.
Plaintiff Olutundun Arike Ogundipe (Ogundipe) is a current tenant at 1728 2nd
Avenue South in Minneapolis, which is one of the Zorbalas/Frenz Properties. Ogundipe has
lived at 1728 2nd Avenue South from August 2014 to the present.
Defendants: Individuals
16.
Defendant Spiros Zorbalas is an owner, shareholder, or member of the following
entities: Defendant SZ112, Inc.; Defendant S1322, Inc.; Defendant R110, Inc.; and Defendant
G121, Inc. Zorbalas is also an owner and controls Defendant Alpha-Omega Companies, Inc.
Zorbalas is the spouse of Defendant Mary Brandt. Zorbalas resides at 22 4th Ave S., Naples, FL
34102.
17.
Defendant Stephen Frenz is an owner, shareholder, or member of the following
entities: Defendant Equity Residential; Defendant ERT, LLC; Defendant Quarters for Creativity,
LTD.; Defendant Emerald Square Properties, Inc.; Defendant Hennepin Quarters, Inc.;
Defendant Powderhorn Quarters, Inc.; Defendant Hiawatha Quarters, Inc.; Defendant 25 & 3146
Properties, Inc.; Defendant Lahaha Holdings, Inc.; Defendant Arts Avenue Properties, Inc.;
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Defendant SS Quarters, Inc.; Defendant Berkeley Holdings, Inc.; Defendant 1801 Properties,
Inc.; Defendant JAS Apartments, Inc. Frenz is also a member of Defendant The Apartment
Shop, which is the property management company that operates the Zorbalas/Frenz Properties.
Frenz is the spouse of Defendant Jennifer Frenz. Frenz resides at 4521 Lake Harriet Blvd,
Minneapolis, MN 55419.
18.
Defendant Jennifer Frenz is a member of Equity Residential and the Vice
President of Marketing for The Apartment Shop. Jennifer Frenz is the spouse of Defendant
Stephen Frenz. Jennifer Frenz resides at 4521 Lake Harriet Blvd, Minneapolis, MN 55419.
19.
Defendant Mary Brandt is an owner, shareholder, or member of the following
entities: Defendant SZ112, Inc.; Defendant S1322, Inc.; Defendant R110, Inc.; and Defendant
G121, Inc. Brandt is the spouse of Defendant Spiros Zorbalas. Brandt resides at 22 4th Ave S.,
Naples, FL 34102.
Defendants: Entities
20.
Defendant Equity Residential is a limited liability company incorporated under
the laws of Delaware with its principal place of business in Minnesota.

21.
Defendant National Housing Fund, LLC (National Housing Fund) is a wholly
owned subsidiary of Equity Residential. National Housing Fund is a limited liability company
incorporated under the law of Delaware with its principal place of business in Minnesota.
22.
Defendant The Apartment Shop, LLC (The Apartment Shop) has contracted
with Equity Residential and National Housing Fund to manage the Zorbalas/Frenz Properties.
The Apartment Shop is a limited liability company incorporated under the laws of Minnesota
with its principal place of business in Minnesota.
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Defendant Alpha-Omega Companies, Inc. (Alpha-Omega Companies) is
wholly owned by Defendants Spiros Zorbalas and Mary Brandt. Alpha-Omega Companies is a
Florida corporation with its principal place of business in Florida.
24.
As used herein, the following four Defendant entities are collectively referred to
as The Original Zorbalas Shell Companies. The Original Zorbalas Shell Companies are each
wholly owned by Defendant Alpha-Omega Companies, Inc., and are each members of Defendant
Equity Residential.
a. Defendant SZ112, Inc. is a corporation incorporated under the laws of Florida
with its principal place of business in Florida.
b. Defendant S1322, Inc. is a corporation incorporated under the laws of Florida
with its principal place of business in Florida.
c. Defendant R110, Inc. is a corporation incorporated under the laws of Florida with
its principal place of business in Florida.
d. Defendant G121, Inc. is a corporation incorporated under the laws of Florida with
its principal place of business in Florida.
25.
As used herein, the following thirteen Defendant entities are collectively referred
to as The Original Frenz Shell Companies. The Original Frenz Shell Companies are each
wholly owned by Defendants Stephen Frenz and Jennifer Frenz, and are each members of
Defendant Equity Residential.
a. Defendant ERT, LLC is a limited liability company incorporated under the laws
of Minnesota with its principal place of business in Minnesota.
b. Defendant Quarters for Creativity, LTD. is a corporation incorporated under the
laws of Minnesota with its principal place of business in Minnesota.
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c. Defendant Emerald Square Properties, Inc. is a corporation incorporated under the

d. Defendant Hennepin Quarters, Inc. is a corporation incorporated under the laws of
Minnesota with its principal place of business in Minnesota.
e. Defendant Powderhorn Quarters, Inc. is a corporation incorporated under the laws
f. Defendant Hiawatha Quarters, Inc. is a corporation incorporated under the laws of
g. Defendant 25 & 3146 Properties, Inc. is a corporation incorporated under the laws
h. Defendant Lahaha Holdings, Inc. is a corporation incorporated under the laws of
i. Defendant Arts Avenue Properties, Inc. is a corporation incorporated under the
j. Defendant JAS Apartments, Inc. is a corporation incorporated under the laws of
k. Defendant SS Quarters, Inc. is a corporation incorporated under the laws of
l. Defendant Berkeley Holdings, Inc. is a corporation incorporated under the laws of
m. Defendant 1801 Properties, Inc. is a corporation incorporated under the laws of
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In summary, the following diagram depicts the current ownership/membership
structure between various defendant entities:
CLASS ALLEGATIONS
27.
Plaintiffs seek to represent a class defined as all tenants who currently reside or
have previously resided at any of the Zorbalas/Frenz Properties between November 13, 2012 and
the present. Plaintiffs estimate that this class includes thousands of individual tenants. Exhibit A
to this Complaint includes the list of properties currently believed to be owned and/or operated
by Defendants. Exhibit B to this Complaint is a map of the City of Minneapolis, depicting the
general locations of the Zorbalas/Frenz Properties.
28.
The class is so numerous that joinder of all members is impracticable.
29.
There are questions of law and/or fact common to the class, as set forth below.
30.
Plaintiffs claims are typical of the claims of the class as a whole.
31.
Plaintiffs will fairly and adequately represent the interest of the class. Plaintiffs
know of no conflicts of interest among members of the class.
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Plaintiffs are represented by attorneys who are qualified, experienced, and capable
of conducting the litigation and adequately representing the interests of the entire class.
33.
The prosecution of separate actions by or against individual members of the class
would create a risk of:

a. Inconsistent or varying adjudications with respect to individual members of the
class which would establish incompatible standards of conduct for the party
opposing the class, and
b. Adjudications with respect to individual members of the class which would as a
practical matter be dispositive of the interests of the other members not parties to
the adjudications or substantially impair or impede their ability to protect their
interests.
34.
Defendants acted or refused to act on grounds generally applicable to the class,
thereby making appropriate final injunctive relief or corresponding declaratory relief with
respect to the class as a whole.
35.
Questions of law or fact common to the members of the class predominate over
any questions affecting only individual members and a class action is superior to other available
methods for the fair and efficient adjudication of the controversy.
36.
A class action is appropriate in this case pursuant to Rule 23 of the Minnesota
Rules of Civil Procedure because:

a. Defendants have acted on grounds generally applicable to the class, making
appropriate injunctive or declaratory relief with respect to the class as a whole.
b. Questions of law and fact common to the class include:
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i. Whether Defendants actions described herein constitute a fraud, false

pretense, false promise, misrepresentation, misleading statement, or
deceptive practice within the Minnesota Prevention of Consumer Fraud
Act, Minn. Stat. 325F.68-70;
ii. Whether Defendants actions described herein constitute false advertising
under Minn. Stat. 325F.67;
iii. Whether Defendants actions described herein constitute deceptive trade
practices under Minn. Stat. 325D.43-48;
iv. Whether Defendants have unlawfully rented and are continuing to
unlawfully rent apartments to class tenants as part of an illegal rental
business that violates the Citys Zorbalas Ban;
v. Whether Defendants have engaged in a centrally controlled, deceptive,
and systematic failure to maintain the premises of the Zorbalas/Frenz
Properties in compliance with the health and safety laws of the State of
Minnesota and the City of Minneapolis, in violation of the statutory
covenants of Minn. Stat. 504B.161; and
vi. Whether Defendants entered into an illegal conspiracy to violate the
above-referenced laws.
c. This lawsuit benefits the public at large at least because:
i. Defendants have engaged in systematic and deceptive violations of state
and local laws specifically enacted to protect the health and safety of
tenants in Minnesota;
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ii. Defendants have and continue to systematically ignore and abuse the
judicial and administrative authority of the City of Minneapolis and
Minnesota courts to operate an illegal rental business;
iii. The City of Minneapolis lacks the necessary quantity of affordable
housing for its low-income citizens; and
iv. The Zorbalas/Frenz Properties are one of the largest sources of
unsubsidized affordable rental housing in Minneapolis.
FACTS
37.
Spiros Zorbalas and Stephen Frenz are wealthy businesspeople. Zorbalas has an
MBA from the University of Minnesota. Frenz has an MBA from the University of Chicago.
They have formed at least twenty corporate entities between them. According to public records,
Zorbalas primary residence is a beachfront home in Naples, Florida that was valued by county
assessors at over $8.3 million. According to public records, Frenzs primary residence is located
on Lake Harriet in Minneapolis, Minnesota, and was purchased for over $2.6 million.
38.
Zorbalas and Frenz have built their wealth by owning and operating low-income
residential rental housing in Minneapolis. Their business is rooted in unequal bargaining power
and their deliberate plan to unlawfully exploit that power against their tenants. While Zorbalas
and Frenz are wealthy and highly educated, their tenants are generally poor and vulnerable
families and individuals who have limited affordable housing options. The widely recognized
lack of affordable housing in the Twin Cities rental market puts low-income tenants into an even
more vulnerable situation. It is a widely known fact that affordable housing is scarce in the City
and, whatever may be available, is far less than could absorb thousands of tenants. Metropolitan
Council, Affordable Housing Facts, http://www.metrocouncil.org/About-
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Us/Facts/HousingF/FACTS-Affordable-Housing.aspx (last visited Sept. 23, 2016). Hennepin

County only offers 34 units of affordable housing for every 100 extremely low-income seekers
of rental housing. Minnesota Housing Partnership, A place to call home in Hennepin County,
http://mhponline.org/images//stories/docs/research/countyprofiles/2015_rev/Hennepin_Rev.pdf
(2015).
39.
The State of Minnesota and the City of Minneapolis have enacted numerous laws
to protect vulnerable tenants, including Minn. Stat. 325F.71 and Minn. Stat. 504B.161, which
set forth a number of non-waivable statutory covenants that every landlord must make and abide
by when it rents property to tenants. Critically, Minn. Stat. 504B.161, subd. 1 mandates,
among a number of covenants relevant to this case, that the landlord must covenant to the tenant
that it will maintain the premises in compliance with the applicable health and safety laws of the
state, and of the local units of government where the premises are located. Likewise,
recognizing the lack of affordable rental housing and the inequality of bargaining power
between residential landlords and tenants, particularly low and moderate income tenants,
Minnesota courts have previously applied the Minnesota Prevention of Consumer Fraud Act to
residential leases for purposes including to halt the use of deceptive landlord practices which
take advantage of an already unequal bargaining position. See Love v. Amsler, 441 N.W.2d
555, 559 (Minn. Ct. App. 1989).
40.
As described herein, Defendants have continuously and systematically violated
these statutes and ordinances as a centralized component of their illegal rental business, thus
denying their tenants the legal protections to which they are entitled.
41.
Defendants have deliberately and systematically engaged in the deceptive and
unlawful practices described herein even though (1) they have special legal obligations to their
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tenants imposed by state and local health and safety law, including without limitation Minn. Stat.
504B.161; (2) they have special knowledge of material facts regarding their deceptive conduct,
such as their scheme to operate an illegal rental business and their centrally controlled system to
fail to maintain the Property in compliance with health and safety laws, that are not available to
their tenants; and (3) they omitted material information about their actual conduct in leases and
representations to their tenants that make those representations, including the statutory covenants
that are imposed by Minn. Stat. 504B.161, deceptive and misleading.
42.
Spiros Zorbalas has a long and sordid history as a landlord in Minneapolis. In
2002, Spiros Zorbalas and his spouse Mary Brandtacting through The Original Zorbalas Shell
Companiespurchased a number of residential rental properties in Minneapolis. Within six
years, Zorbalas had received thousands of housing code violations at those properties. In
January 2008, City Pages described Zorbalas as The Slumlord of South Minneapolis, citing a
history of roach infestations, bedbug infestations, flaking lead paint, lack of heat, broken
windows, broken appliances, water damage, and structural damage at the properties. The
January 2008 City Pages article quoted Minneapolis Councilman Gary Schiff as stating that
Zorbalas had lowered the bar for slumlords.
43.
In 2010, the City of Minneapolis took legal action against Zorbalas, initiating
rental license revocation proceedings against the alter ego shell corporations that Zorbalas used
as the formal owners of his buildings. See In the Matter of the Rental Dwelling License held by
Spiros Zorbalas, Mary Brandt, SZ112, Inc. & R110, Inc. for the Premises at 905 Franklin
Avenue, 3725 Cedar Avenue and 1830 Stevens Avenue Minneapolis, Minnesota, City of
Minneapolis for the Department of Regulatory Services. Among other things, the City
concluded: [Zorbalas] testimony is rejected as not credible and not supported by the evidence.
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The evidence shows that the ownership scheme developed by Mr. Zorbalas is an elaborate shell
game designed to avoid proper regulation by the City of Minneapolis for the health and safety of
its citizens. The City specifically noted a pattern of unpermitted work at Zorbalas properties.
The City concluded that Zorbalas continually violated the housing maintenance code and
simply does what he wants at the properties and will only make corrections or obtain proper
permits after violations are discovered by [Minneapolis Department of Regulatory Services]
staff.
44.
Based on his egregious conduct toward tenants, the City of Minneapolis
determined on April 15, 2011 that Zorbalas and his spouse were ineligible to hold or have an
interest in a rental dwelling license for a period of five years (i.e., the Citys Zorbalas Ban).
The City stayed the ban while appeals were pending. Zorbalas appealed the decision, but it was
affirmed by the Minnesota Court of Appeals and the Minnesota Supreme Court denied review.
See In re Rental Dwelling License ex rel. Zorbalas, No. A11-892, 2012 WL 686095 (Minn. Ct.
App. Mar. 5, 2012). Zorbalas petitioned the United States Supreme Court to review the matter,
but certiorari was denied on November 13, 2012. Zorbalas v. City of Minneapolis, 133 S. Ct.
616 (2012). The Citys Zorbalas Ban was thus was completely and finally adjudicated on
November 13, 2012.
45.
At that point, Zorbalas had exhausted all legal means to continue to have an
interest in rental properties in the City of Minneapolis. But Zorbalas refused to relinquish his
interests in his rental properties. Instead, Zorbalas conspired with Frenz to defraud the City of
Minneapolis and their tenants into believing that Frenz was acting independently as the new
landlord for the Zorbalas/Frenz Properties, so that Zorbalas could secretly continue his lucrative
rental business. To execute this fraud, Zorbalas and Frenz used the same type of scheme that had
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been previously prohibited by the City of Minneapolis and the Minnesota Court of Appeals
they established more shell companies, which were used to hide Zorbalas involvement and to
pretend that there had been a change in the exploitative rental business model he represented.
46.
The conspiracy played out as described and depicted below:
47.
Prior to November 2012, Zorbalas and Frenz (and their respective spouses and
shell corporations) each owned multiple rental properties in the City of Minneapolis. On
information and belief, Zorbalas owned 35 residential rental properties, and Frenz owned 27
residential rental properties. In or around November 2012, Zorbalas and Frenz conspired to hide
Zorbalas continued interest in such rental properties, by pooling their properties together and
dividing the interests among themselves, their spouses, and their shell corporations.
48.
Zorbalas and Frenz executed the first steps of their scheme on November 27,
2012, only fourteen days after the United States Supreme Court declined to hear Zorbalas
appeal. On that date, Zorbalas and Frenz established a new shell corporation: National Housing
Fund. Then, two days later, on November 29, 2012, they formed another new shell corporation:
Equity Residential. National Housing Fund became a wholly owned subsidiary of Equity
Residential, as depicted below:
49.
Zorbalas and Frenz then transferred their respective rental properties to the newly-
formed Equity Residential. On December 18, 2012, The Original Zorbalas Shell Companies
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quitclaimed 35 properties to Equity Residential. 1 On the same day, The Original Frenz Shell
Companies quitclaimed 24 properties to Equity Residential. Thus, Equity Residential became a
holding company with 59 residential rental properties, as depicted below:
50.
Next, Zorbalas and Frenz split up the ownership of the 59 properties. Zorbalas
took a majority interest, and Frenz took a minority interest, using their collection of shell
companies. The Original Zorbalas Shell Companies became members of Equity Residential with
a collective 51-70% majority interest. The Original Frenz Shell Companies (plus Jennifer Frenz)
also became members of Equity Residential with a collective 30-49% minority interest.
On information and belief, one of the Zorbalas/Frenz Properties may remain in the name of
Spiros Zorbalas. Also, on information and belief, one of the Zorbalas/Frenz Properties may have
been transferred on December 17, 2012.
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Next, Zorbalas and Frenz turned to the newly formed National Housing Fund, the
wholly-owned subsidiary of Equity Residential. The 24 properties previously owned by The

Original Frenz Shell Companies, which had just been transferred to Equity Residential, were
transferred again to National Housing Fund on December 18, 2012, as depicted below.
52.
Thus, through these transactions, Zorbalas actually expanded the rental empire
that the City had banned him from operating. He maintained a majority interest in his 35 original
rental propertiesand he also acquired a majority interest in the 27 rental properties previously
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owned by Frenz, as depicted below. This scheme was in direct violation of the Citys Zorbalas
Ban.
53.
Zorbalas and Frenz arranged for Defendant The Apartment Shop (owned by
Frenz) to serve as the property manager for all of the Zorbalas/Frenz Properties.
54.
Zorbalas and Frenz did not disclose their fraudulent scheme to the City or their
tenants. To the contrary, in December 2012, Zorbalas and Frenz publicly announced the sale
of the 35 Zorbalas properties to Frenz. Zorbalas and Frenz publicly described the deal as
confidential and refused to disclose details of the transaction. Zorbalas and Frenz did not
disclose that Zorbalas had retained a majority interest in his rental properties, and had acquired a
majority interest in 24 additional rental properties. To the contrary, on or about January 23,
2013, Zorbalas told the Twin Cities Business Journal that out of nowhere, a big investment
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bank appeared to help finance the saleeven though such an investor did not actually exist. On
or about January 24, 2013, Zorbalas also told the Minneapolis Star Tribune the following: The
terms are confidential and the city has nothing to do with the lucrative deal for me. It was pure
economics and [City Councilman] Gary Schiff and his rhetoric made no difference whatsoever.
I am living on the beach in Naples and flying on my personal jet, not him.
55.
On direct questioning in court proceedings in late 2015 and 2016, Frenz
repeatedly gave false testimony in an effort to prevent Zorbalas continuing interest in the
Zorbalas/Frenz Properties from coming to light. For example, on December 14, 2015, in the trial
of Equity Residential LLC, et al. v. Jane Doe, Henn. Cty. Ct. No. 27-CV-HC-15-5665, Frenz
testified under oath:
Q: Who are the members of Equity Residential Holdings, LLC?
A: I cant answer that question. Theres 12 to 15 entities that are
members.
Q: How many of those entities do you have an interest in?
A: 100 percent of all of them between my wife and myself.
Q: So, if we were to ignore corporate formalities for a minute, in
terms of who effectively owns or controls the members of Equity
Residential Holdings, is it your testimony that it is some
combination of you and your wife?
A: Correct.
56.
Likewise, in his deposition in the IX of Powderhorn Park action on March 1,
2016, Frenz testified under oath:

Q: What year did you take the building [3057 14th Avenue South,
Minneapolis, MN 55407] over?
A: December 12th of December 18th of 2012.
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Q: And you have been either you directly or through companies

you own or control, the owner ever since?
A: Yes.
57.
Later, at trial in the IX of Powderhorn Park action on March 11, 2016, Frenz
testified under oath:

Q: Does Mr. Zorbalas, in your view, have any ownership interest
in the 3057 building? Either directly or through entities he owns or
controls?
A: No.
Q: So you[r] description on this record is that Mr. Zorbalas stands
solely in a lender relationship to you in various entities you own or
control?
A: Yes.
58.
These statements by Frenz were false.
59.
Equity Residential and National Housing Fund were created for a fraudulent
purpose, namely, allowing Zorbalas and his spouse to continue to have an interest in rental
property in the City of Minneapolis when the law forbade it. In this regard the Court should
pierce the corporate veils of all corporate-entity Defendants because, on information and belief,
they (a) were used for a fraudulent purpose or were the alter-egos of the non-corporate
defendants; (b) are insufficiently capitalized; (c) failed to observe corporate formalities; (d)
failed to pay dividends; (e) had non-functioning officers and directors; (f) have an absence of
corporate records; and/or (g) were merely a faade for individual dealings. Piercing the
corporate veils in this case is necessary to avoid injustice and fundamental unfairness.
60.
To operate as landlords for their rental properties, the landlords needed valid
rental licenses from the City of Minneapolis. In February of 2013, Frenz submitted a written
application for rental licenses on behalf of Equity Residential and National Housing Fund.
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a. Defendants operate and maintain an illegal rental business in violation of state and
local health and safety laws, including the Citys Zorbalas Ban and ordinances
regulating the licensing of landlords by the City of Minneapolis.
b. Defendants exercise control over centralized maintenance operations and training
for the Zorbalas/Frenz Properties that systemically fail to comply with critical
safety requirements, including various laws enacted to protect the health and
safety of tenants from lead and asbestos exposure when maintenance work is
performed by Defendants.
c. Defendants exercise control over centralized maintenance operations that
systemically fail to comply with laws enacted to protect the health and safety of
tenants from pest infestations.
69.
Defendants centrally controlled and systemic failure to maintain the
Zorbalas/Frenz Properties in compliance with state and local law has created unsafe and
unhealthy living conditions across the Properties for Plaintiffs and other tenants.
70.
Defendants have been cited by the City of Minneapolis for hundreds of violations
at the Zorbalas/Frenz Properties between November 2012 and the present. Exponentially more
violations have been uncited, either because the City lacked the necessary resources to re-inspect
and conduct more routine inspections or because Defendants fail to monitor their buildings or
record tenant complaints.
71.
Defendants were confronted with evidence of their deceptive and fraudulent
activity and egregious violations of the statutory covenants of habitability in connection with the
IX of Powderhorn Park action. During this other case, Frenz admitted under oath that Zorbalas
is the current majority owner of the Zorbalas/Frenz Properties and has check-writing authority
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As one example, earlier this month, the Hennepin County Housing Court found in
connection with the IX of Powderhorn Park action that Frenz, The Apartment Shop, and Equity
Residential had engaged in widespread violations of the Minneapolis Code of Ordinances and
Minn. Stat. 504B.161 at one of the Zorbalas/Frenz Properties by exercising heavy-handed
control over deliberately inadequate pest control efforts that did not allow the pest control
technicians to address all the pests Property-wide in a systematic manner. This centralized
system of inadequate pest control led to persistent pest infestations [that] had a profoundly
negative impact on the lives of the tenants at the Property.
65.
The Housing Court also made findings in the IX of Powderhorn Park action that
highlight another aspect of the illegal landlord business model of the Defendants in this case:
they endeavor to hide their widespread violation of laws protecting the health and safety of their
tenants through highly involved, well-orchestrated deception informed by calculated business
decisions designed to minimize Defendants expenses and potential liability.
66.
All of the Defendants are involved in this fraudulent scheme. Zorbalas and Frenz
used each of the other Defendants to own and/or operate the Zorbalas/Frenz Properties on their
behalf.
67.
In the IX of Powderhorn Park action, Defendant Jennifer Frenz, through her
counsel, stated that she would assert spousal privilege and refuse to testify if called as a witness
regarding her personal knowledge about the highly involved, well-orchestrated deception
perpetuated in the IX of Powderhorn Park action.
68.
Among the centrally controlled and systemic violations of statutory covenants and
state and local law that are common to all the Zorbalas/Frenz Properties, including each of the
properties where Plaintiffs have resided or currently reside:
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a. Defendants operate and maintain an illegal rental business in violation of state and
local health and safety laws, including the Citys Zorbalas Ban and ordinances
regulating the licensing of landlords by the City of Minneapolis.
b. Defendants exercise control over centralized maintenance operations and training
for the Zorbalas/Frenz Properties that systemically fail to comply with critical
safety requirements, including various laws enacted to protect the health and
safety of tenants from lead and asbestos exposure when maintenance work is
performed by Defendants.
c. Defendants exercise control over centralized maintenance operations that
systemically fail to comply with laws enacted to protect the health and safety of
tenants from pest infestations.
69.
Defendants centrally controlled and systemic failure to maintain the
Zorbalas/Frenz Properties in compliance with state and local law has created unsafe and
unhealthy living conditions across the Properties for Plaintiffs and other tenants.
70.
Defendants have been cited by the City of Minneapolis for hundreds of violations
at the Zorbalas/Frenz Properties between November 2012 and the present. Exponentially more
violations have been uncited, either because the City lacked the necessary resources to re-inspect
and conduct more routine inspections or because Defendants fail to monitor their buildings or
record tenant complaints.
71.
Defendants were confronted with evidence of their deceptive and fraudulent
activity and egregious violations of the statutory covenants of habitability in connection with the
IX of Powderhorn Park action. During this other case, Frenz admitted under oath that Zorbalas
is the current majority owner of the Zorbalas/Frenz Properties and has check-writing authority
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for the Zorbalas/Frenz Properties. Defendants have taken no steps to correct their fraudulent
statements and activities following these admissions. To the contrary, Defendants have
continued to use their illegal business to collect millions of dollars in rent and evict individuals
and families from their homes.
72.
Defendants advertise their rental properties as being properly licensed. Among
other things, Defendants post their fraudulently-obtained rental licenses in the common areas of
each of the Zorbalas/Frenz Properties.
73.
Defendants have affirmatively misrepresented to tenants and prospective tenants
their centrally controlled system for failing to maintain the Properties in compliance with state
and local health and safety laws. For example, The Apartment Shop has a website that advertises
the Properties with the motto that Were committed to the excellence of urban living and that
advertises a frequently asked questions page devoted to Maintenance FAQ. The Maintenance
FAQ makes repeated false representations to tenants and prospective tenants that Defendants are
committed to proactively and adequately maintaining the properties, stating for example that all
maintenance requests are important to us, that we do our best to respond as quickly as we can,
and We take pest control very seriously. The website also advertises Stephen Frenz as The
Owner. The Apartment Shop website contains no information about its actual maintenance
operation, which the Hennepin County Housing Court has described as exercising heavyhanded control over deliberately inadequate pest control efforts that did not allow the pest
control technicians to address all the pests Property-wide in a systematic manner and therefore
caused persistent pest infestations. The Apartment Shop website also contains no information
that Spiros Zorbalas continues have an interest in the Properties.
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From November 2012 to the present, Defendants have filed hundreds of actions
against tenants in the Hennepin County Housing Court, enforcing their fraudulently-obtained
rental licenses against tenants to collect rent, retain security deposits, and evict tenants from their
rental properties.
75.
Defendants have netted and continue to net hundreds of thousands of dollars
every month from their rental properties, totaling millions of dollars between November 13,
2012 and the present. Defendants could have used those significant funds to properly maintain
the Zorbalas/Frenz Propertiesbut instead, Defendants have used those funds for their own
personal benefit and enrichment. In the IX at Powderhorn Park action, Frenz testified under
oath on May 19, 2016 that the net operating income for at least some of the Zorbalas/Frenz
Properties is around 60% of rent collected.
76.
Plaintiffs and the other tenants paid rent money to the Defendants, who failed to
disclose the Citys Zorbalas Ban and otherwise made representations and covenants that the
properties were being leased as part of a legal rental business and that the rental properties were
being maintained in compliance with state and local law enacted to protect the health and safety
of Plaintiffs and other tenants. Defendants acted with deliberate disregard for the rights and
safety of Plaintiffs and other tenants at the Zorbalas/Frenz Properties. Defendants knew about
and intentionally disregarded the Citys Zorbalas Ban which forbade Zorbalas from having any
interest in rental property in the City of Minneapolis. Defendants knew about facts and
intentionally ignored facts that created a high probability of injury to the rights or safety of
Plaintiffs and other tenants at the Zorbalas/Frenz Properties. Defendants deliberately acted with
conscious disregard and with indifference to the high probability of injury to the rights and safety
of Plaintiffs and other tenants at the Zorbalas/Frenz Properties.
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Plaintiffs and other tenants suffered harm caused by Defendants misconduct.
Given the Defendants centrally controlled and systematic violations of state and local law, as
described herein, the market value of the rental units in the Zorbalas/Frenz Properties between
November 13, 2012 and the present has been and continues to be zero dollars because the rental
units are not legal.
78.
On September 16, 2016, Noah Schuchman, Director of Regulatory Services for
the City of Minneapolis, demanded on behalf of the City that Frenz disclose all partners,
shareholders or interest holdings in any partnership, corporation, limited liability company or
other business association which hold any ownership or equitable interest whatsoever in the
Zorbalas/Frenz Properties or the rental licenses issued for the Zorbalas/Frenz Properties. The
City further ordered Frenz to submit within the affidavit an explanation of any legal or equitable
interest that Spiros Zorbalas, or any entities or associations which he may have any interest in,
currently maintains or has ever maintained in any of the entities, associations, or corporations
that have any interest in the Zorbalas/Frenz Properties or the rental licenses issued for those
properties. The City stated to Frenz: You are hereby notified that should Mr. Zorbalas have any
such interest that the City of Minneapolis reserves the right to pursue any available enforcement
action or legal remedy, including but not limited to adverse license proceedings against such
rental dwelling licenses.
CLAIM ONE
Minnesota Prevention of Consumer Fraud Act: Illegal Rental Business
79.
Plaintiffs restate and reallege the foregoing paragraphs as if fully stated and
alleged herein.
80.
Defendants have continuously engaged in fraud, false and misleading statements,
and deceptive practices since November 2012 with respect to the Zorbalas/Frenz Properties. As
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described above, Defendants actively misrepresented and engaged in deceptive practices with
respect to Zorbalas illegal interest in the Zorbalas/Frenz Properties, including without limitation
misrepresentations and deceptive practices intended to cause Plaintiffs and other tenants at the
Zorbalas/Frenz Properties to incorrectly understand that Defendants (a) could lawfully rent
premises at the Zorbalas/Frenz Properties, (b) could lawfully collect rental payments from
tenants, (c) could lawfully require tenants to pay utility bills for the Zorbalas/Frenz Properties,
and (d) could lawfully engage in rent collection, eviction, and litigation actions against tenants of
the Zorbalas/Frenz Properties.
81.
Defendants intended that others rely on their fraud, false and misleading
statements, and deceptive practices in connection with leasing of residential rental properties.
82.
Defendants engaged in misconduct, including without limitation inducing
Plaintiffs and other tenants to rely on these deceptive practices when paying rent to Defendants
and responding to rent collection, eviction, and litigation actions by Defendants.
83.
Plaintiffs and other tenants were caused harm and actual damage by Defendants
fraud, false and misleading statements, and deceptive practices, including by paying rent for
illegal rental properties that had a market value of zero dollars.
CLAIM TWO
Minnesota Prevention of Consumer Fraud Act: Deceptive and Systemic Failure to
Maintain Properties in Compliance with Health and Safety Laws
84.
alleged herein.
85.
Defendants have continuously engaged in fraud, false and misleading statements,
and deceptive practices since November 2012 with respect to the Zorbalas/Frenz Properties. As
described above, Defendants actively misrepresented and engaged in deceptive practices with
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respect to their efforts to maintain the Zorbalas/Frenz Properties in compliance with the health
and safety laws of Minnesota and the City of Minneapolis, including without limitation
misrepresentations and deceptive practices intended to cause Plaintiffs and other tenants at the
Zorbalas/Frenz Properties to incorrectly understand that Defendants had centralized maintenance
operations for the Properties that would (a) protect tenants from exposure to lead and asbestos at
the Zorbalas/Frenz Properties as required by state and federal law, (b) protect tenants from
rodent and insect infestations at the Zorbalas/Frenz Properties as required by state and local law,
and (c) invest the money and resources required to adequately maintain the physical structures
and systems of the Zorbalas/Frenz Properties as required by state and local law to protect the
health and safety of tenants.
86.
Defendants intended that others rely on their fraud, false and misleading
statements, and deceptive practices in connection with leasing of residential rental properties.
87.
Defendants engaged in misconduct, including without limitation by inducing
88.
fraud, false and misleading statements, and deceptive practices, including without limitation by
paying rent for illegal rental properties that had a market value of zero dollars.
CLAIM THREE
Minnesota Deceptive Trade Practices Act: Illegal Rental Business
89.
alleged herein.
90.
As described above, Defendants have in the course of their rental business
activities continuously and systematically concealed and misrepresented the interests of the
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Defendants in the Zorbalas/Frenz Properties and the related validity of their rental licenses and
legality of their rental business, and thus have:
a. Passed off the Zorbalas/Frenz Properties as those of another;
b. Caused likelihood of confusion or of misunderstanding as to the source,
sponsorship, approval, or certification of the Zorbalas/Frenz Properties;
c. Caused likelihood of confusion or of misunderstanding as to affiliation,
connection, or association with, or certification by, another;
d. Represented that the Zorbalas/Frenz Properties have sponsorship, approval,
characteristics, ingredients, uses, benefits, or quantities that they do not have or
that the Defendants have a sponsorship, approval, status, affiliation, or connection
that the person does not have;
e. Advertised the Zorbalas/Frenz Properties with intent not to lease them as
advertised; and
f. Engaged in other conduct which similarly creates a likelihood of confusion or of
misunderstanding.
91.
92.
deceptive practices and false and misleading statements, including without limitation by paying
rent for illegal rental properties that had a market value of zero dollars.
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CLAIM FOUR
Minnesota Deceptive Trade Practices Act: Deceptive and Systemic Failure to
Maintain Properties in Compliance with Health and Safety Laws
93.
alleged herein.
94.
As described above, Defendants have in the course of their rental business
activities continuously and systematically concealed and misrepresented to their tenants that the
Zorbalas/Frenz Properties complied with their statutory covenants and legal obligations to
maintain the properties consistent with state and local laws enacted to protect the health and
safety of their tenants, and thus have:
a. Caused likelihood of confusion or of misunderstanding as to the source,
sponsorship, approval, or certification of the Zorbalas/Frenz Properties;
b. Caused likelihood of confusion or of misunderstanding as to affiliation,
connection, or association with or certification by, another;
c. Represented that the Zorbalas/Frenz Properties had sponsorship, approval,
characteristics, ingredients, uses, benefits, or quantities that they do not have or
that Defendants had a sponsorship, approval, status, affiliation, or connection that
Defendants do not have;
d. Represented that the Zorbalas/Frenz Properties are of a particular standard,
quality, or grade;
e. Advertised the Zorbalas/Frenz Properties with intent not to lease them as
advertised; and
f. Engaged in other conduct which similarly creates a likelihood of confusion or of
misunderstanding.
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96.
deceptive practices and false and misleading statements, including without limitation by paying
rent for illegal rental properties that had a market value of zero dollars.
CLAIM FIVE
Breach of Statutory Landlord Covenants Under Section 504B.161
97.
alleged herein.
98.
Defendants have continuously and systematically breached statutory landlord
covenants of Minn. Stat. Section 504B.161 with respect to the Zorbalas/Frenz Properties since at
least November 13, 2012.
99.
Defendants have systematically and continuously breached the statutory covenant
under Section 504B.161 to maintain the Properties in compliance with the health and safety laws
of Minnesota and the City of Minneapolis. Among other things, Defendants have (a) improperly
operated and maintained the Zorbalas/Frenz Properties as part of an illegal rental business in
violation of the Citys Zorbalas Ban and the Citys licensing ordinances; (b) employed
centralized maintenance operations that systemically failed to comply with laws protecting
tenants from exposure to lead and asbestos; and (c) employed centralized maintenance operations
that systemically failed to comply with laws protecting tenants from pest infestations.
100.
breaches of these statutory covenants, including by paying rent for illegal rental properties that
violated the statutory covenants under 504B.161 and that had a market value of zero dollars.
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REQUEST FOR RELIEF

Plaintiffs seek an order from the Court:
a. Certifying the case as a class action;
b. Finding Defendants liable jointly and severally liable for all of the claims asserted herein;
c. Granting preliminary and permanent injunctive relief enjoining Defendants from taking
further actions that will displace or harm Plaintiffs;
d. Granting preliminary and permanent injunctive relief appointing a receiver to manage the
Zorbalas/Frenz Properties;
e. Granting injunctive relief that disgorges from the Defendants and provides restitution to
the tenants of all rental, utility, and other payments paid by Plaintiffs and other tenants to
Defendants regarding the Zorbalas/Frenz Properties from November 13, 2012 to the
present;
f. Awarding damages to Plaintiffs and other tenants, including compensatory damages in
the form of all rent, utility, and other payments paid by Plaintiffs and other tenants to
present;
g. Awarding damages pursuant to Minn. Stat. 325F.71;
h. Awarding costs and attorney fees; and
i. Granting such further relief as the Court may deem just.
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Plaintiffs and the other tenants were caused harm and actual damage by the false advertising
because it induced them to continue living in substandard, unhealthy, and dangerous properties.
CLAIM SEVEN
Civil Conspiracy
108.
alleged herein.
109.
In violation of Minn. Stat. 609.175, Subd. 2, Defendants Spiros Zorbalas and
Stephen Frenz, together with the other Defendants, engaged in a civil conspiracy to defraud
Plaintiffs and their other tenants regarding the ownership of the Zorbalas/Frenz Properties, the
validity of their rental licenses, and the legality of their rental business.
110.
As described above, Zorbalas and Frenz entered into an agreement to commit
fraud upon the City of Minneapolis and their tenants to secure rental licenses for the
Zorbalas/Frenz Properties, by making false statements to the City of Minneapolis regarding the
illegal ownership of the Zorbalas/Frenz Properties by Zorbalas and his spouse. These false
statements comprised the misrepresentations and omissions described herein, including
Defendants affirmative misrepresentations and omissions about the true ownership of Equity
Residential when the City sought to confirm that Equity Residential was not owned in any way
by Zorbalas and his spouse.
111.
Plaintiffs and other tenants were caused harm and actual damage by this
conspiracy, at least because Defendants intentionally deceived Plaintiffs and their other tenants
into believing that the Zorbalas/Frenz Properties were lawfully owned, licensed, and operated,
causing Plaintiffs and other tenants to pay rent when the market value of the rental properties
was actually zero dollars. Plaintiffs and the other tenants were further hurt and/or damaged by
this conspiracy because it allowed Zorbalas to continue controlling the Zorbalas/Frenz
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Properties, after Zorbalas had been proven to be unable to maintain the properties in compliance
with the law. Thus, Plaintiffs and the other tenants were harmed by the conspiracy because
Defendants continued to subject them to substandard, unhealthy, and dangerous living
conditions.
CLAIM EIGHT
Injunction
112.
alleged herein.
113.
Due to the Citys Zorbalas Ban and Defendants concerted fraud to violate the
ban, Defendants have been and continue to be barred from operating the Zorbalas/Frenz
Properties as rental properties.
114.
Pursuant to Minneapolis Code of Ordinances 244.80, any person with standing
to sue may seek enforcement [of the Code of Ordinances] in any court of competent jurisdiction
by any appropriate form of civil action and may seek enjoinment of any continued violation
thereof and seek to compel obedience thereto by mandatory orders and writs.
115.
Plaintiffs hereby seek enjoinment of Defendants continued violation of the Citys
Zorbalas Ban and the appointment of a receiver to continue to operate the Zorbalas/Frenz
Properties.
116.
The nature of the parties relationship is one of landlord-tenant. It is simply a
matter of public record and undisputed fact that Defendants are operating an unlawful business
that should be shut down immediately because they lack the legal capacity to continue to operate
the business. But, because the risk to the tenants of being displaced is so great, Plaintiffs request
that the Court appoint a receiver to continue to operate and maintain the buildings, apply for a
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provisional rental license, and maintain the status quo during the pendency of this litigation and
any adverse action the City may take.
117.
The balance of harms militates for an injunction. The adverse impact on
thousands of displaced tenantsincluding families, low-income individuals, and other

vulnerable personsis an enormous harm that, on its own, supports the injunction. And the
injunction would also benefit Defendants. Rather than shutter Defendants operations, the
injunction would allow the buildings to continue to generate revenue. Even if that revenue will
be used for continued operations and to pay the receivers fees and other expenses, at least the
buildings will continue to generate revenue that can be held in escrow pending future
developments. Failure to appoint a receiver to continue to operate the buildings will cause
irreparable and serious harm to the tenants.
118.
Considering the preclusive effect of the Citys Zorbalas Ban and Defendants
collaborative fraud in operating an unlawful business, Plaintiffs likelihood of success is high

and warrants an injunction.
119.
The public has an unmistakable interest in ensuring that landlords obey state and
local lawsand court ordersenacted to protect the health and safety of tenants. The public
also has an unmistakable interest in ensuring that the legal system does not displace thousands of
tenants because of the fraudulent decisions made by unscrupulous landlords. This factor weighs
in favor of issuing an injunction.
120.
The burden of administering the injunction is minimal. There are countless
statutesas well as the inherent power of the Courtthat support the appointment of receivers
in appropriate situations like this one. Therefore, courts and parties are well accustomed to the
process.
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REQUEST FOR RELIEF

Plaintiffs seek an order from the Court:
a. Certifying the case as a class action;
b. Finding Defendants liable jointly and severally liable for all of the claims asserted herein;
c. Granting preliminary and permanent injunctive relief enjoining Defendants from taking
further actions that will displace or harm Plaintiffs;
d. Granting preliminary and permanent injunctive relief appointing a receiver to manage the
Zorbalas/Frenz Properties;
e. Granting injunctive relief that disgorges from the Defendants and provides restitution to
the tenants of all rental, utility, and other payments paid by Plaintiffs and other tenants to
present;
f. Awarding damages to Plaintiffs and other tenants, including compensatory damages in
the form of all rent, utility, and other payments paid by Plaintiffs and other tenants to
present;
g. Awarding damages pursuant to Minn. Stat. 325F.71;
h. Awarding costs and attorney fees; and
i. Granting such further relief as the Court may deem just.
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Dated: September 23, 2016

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Hennepin County, MN
FAEGRE BAKER DANIELS LLP

s/ Michael F. Cockson
Michael F. Cockson (# 0280549)
Michael.Cockson@FaegreBD.com
James W. Poradek (# 0290488)
James.Poradek@FaegreBD.com
Katherine S. Razavi (# 0388958)
Kate.Razavi@FaegreBD.com
Adam M. Nodler (# 0390131)
Adam.Nodler@FaegreBD.com
Patrick C. Bottini (# 0395278)
Patrick.Bottini@FaegreBD.com
Bryan K. Washburn (# 0397733)
Bryan.Washburn@FaegreBD.com
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-3901
Phone: 612.766.7000
Fax: 612.766.1600
Attorneys for Plaintiffs
38
040
27-CV-16-14225

9/23/2016 4:21:01 PM
Hennepin County, MN
23. 220 - 19th Street E., Minneapolis, MN 55403

24. 22-36 River Terrace Ct., Minneapolis, MN 55414
25. 2400 Lyndale Ave. S., Minneapolis, MN 55405
26. 2413 Girard Ave. S., Minneapolis, MN 55405
27. 2443 Nicollet Ave. (aka 6 E. 25th St.), Minneapolis, MN 55404
28. 25 East 25th Street, Minneapolis, MN 55404
29. 2500 Emerson Ave. S., Minneapolis, MN 55405
30. 2530 Dupont Ave. S., Minneapolis, MN 55405
33. 2742 Hennepin Ave. S., Minneapolis, MN 55408
34. 3013 Grand Ave., Minneapolis, MN 55408
35. 3018 - 30th Avenue S., Minneapolis, MN 55406
38. 3100 Bloomington Ave. S., Minneapolis, MN 55407
39. 3105 - 22nd Avenue S., Minneapolis, MN 55407
40. 3112 - 22nd Ave. S., Minneapolis, MN 55407
41. 3115 Cedar Ave. S., Minneapolis, MN 55407
43. 3121 Pleasant Ave. S., Minneapolis, MN 55408
45. 3140 Minnehaha Ave., Minneapolis, MN 55406
044
27-CV-16-14225
Filed in
in Fourth
Fourth Judicial District Court
4:21:01 PM
9/23/2016 4:21:01
Hennepin County,
County, MN
EXHIBIT
EXHIBIT A
042
042
27-CV-16-14225

9/23/2016 4:21:01 PM
Hennepin County, MN
EXHIBIT A: PROPERTY LIST

1. 1 River Terrace Ct., Minneapolis, MN 55414
4. 1308 & 1318 Powderhorn Terrace, Minneapolis, MN 55407
5. 1510 - 32nd Street W., Minneapolis, MN 55408
6. 1511 Lagoon Ave., Minneapolis, MN 55408
8. 1801 - 3rd Ave. S., Minneapolis, MN 55404
9. 1816 Stevens Ave., Minneapolis, MN 55403
13. 1935 -1939 Bryant Ave. S., Minneapolis, MN 55403
14. 1941 Aldrich Ave. (aka 712 W. Franklin Ave.), Minneapolis, MN 55403
15. 712 W. Franklin Ave., Minneapolis, MN 55405
18. 2101 E. River Terrace, Minneapolis, MN 55414
043
27-CV-16-14225

9/23/2016 4:21:01 PM
Hennepin County, MN

25. 2400 Lyndale Ave. S., Minneapolis, MN 55405
27. 2443 Nicollet Ave. (aka 6 E. 25th St.), Minneapolis, MN 55404
28. 25 East 25th Street, Minneapolis, MN 55404
33. 2742 Hennepin Ave. S., Minneapolis, MN 55408
34. 3013 Grand Ave., Minneapolis, MN 55408
38. 3100 Bloomington Ave. S., Minneapolis, MN 55407
43. 3121 Pleasant Ave. S., Minneapolis, MN 55408
044
27-CV-16-14225

9/23/2016 4:21:01 PM
Hennepin County, MN
46. 3141 22nd Ave. S., Minneapolis, MN 55407

48. 316 Oak Grove Street, Minneapolis, MN 55403
50. 3215 - 21st Ave. S., Minneapolis, MN 55407
51. 3312 Blaisdell Ave., Minneapolis, MN 55408
52. 3325 Nicollet Ave. S., Minneapolis, MN 55408
56. 3700 Grand Ave. S., Minneapolis, MN 55409
57. 3720 Minnehaha Ave. S., Minneapolis, MN 55406
59. 615 East 16th St., Minneapolis, MN 55404
60. 711 - 22nd Street W. (aka 2201 Aldrich Ave. S.), Minneapolis, MN 55405
61. 800-806 Franklin Ave. W., Minneapolis, MN 55405
62. 905-909 Franklin Ave. W., Minneapolis, MN 55405
045
27-CV-16-14225
Filed in
in Fourth
Fourth Judicial District Court
4:21:01 PM
9/23/2016 4:21:01
Hennepin County,
County, MN
EXHIBIT
EXHIBIT B
046
046
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Lawsuit Against Minneapolis Landlords

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Lawsuit Against Minneapolis Landlords

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27-CV-16-14225

Filed in Fourth Judicial District Court

Edain Altamirano Flores; Esperanza Herrera;

Court File No.

CLASS ACTION SUMMONS

THIS SUMMONS IS DIRECTED TO THE ABOVE NAMED DEFENDANTS.

Filed in Fourth Judicial District Court

September 23, 2016

Filed in Fourth Judicial District Court

FOURTH JUDICIAL DISTRICT

Edain Altamirano Flores; Esperanza Herrera;

Court File No.

CLASS ACTION COMPLAINT

Filed in Fourth Judicial District Court

The Zorbalas/Frenz Properties are among the worst-maintained rental properties

Filed in Fourth Judicial District Court

Filed in Fourth Judicial District Court

Plaintiff Edain Altamirano Flores (Altamirano) is a current tenant at 3141 22nd

Filed in Fourth Judicial District Court

Plaintiff Esperanza Herrera (Herrera) is a former tenant of 3325 Nicollet

Plaintiff Lori Nicol (Nicol) is a former tenant of 3146 Minnehaha Avenue

Plaintiff Olutundun Arike Ogundipe (Ogundipe) is a current tenant at 1728 2nd

Defendant Spiros Zorbalas is an owner, shareholder, or member of the following

Defendant Stephen Frenz is an owner, shareholder, or member of the following

Filed in Fourth Judicial District Court

Defendant Jennifer Frenz is a member of Equity Residential and the Vice

Defendant Mary Brandt is an owner, shareholder, or member of the following

Defendant Equity Residential is a limited liability company incorporated under

the laws of Delaware with its principal place of business in Minnesota.

Defendant National Housing Fund, LLC (National Housing Fund) is a wholly

Filed in Fourth Judicial District Court

Defendant Alpha-Omega Companies, Inc. (Alpha-Omega Companies) is

Filed in Fourth Judicial District Court

c. Defendant Emerald Square Properties, Inc. is a corporation incorporated under the

Filed in Fourth Judicial District Court

In summary, the following diagram depicts the current ownership/membership

structure between various defendant entities:

The class is so numerous that joinder of all members is impracticable.

Plaintiffs claims are typical of the claims of the class as a whole.

know of no conflicts of interest among members of the class.

Filed in Fourth Judicial District Court

The prosecution of separate actions by or against individual members of the class

would create a risk of:

Defendants acted or refused to act on grounds generally applicable to the class,

A class action is appropriate in this case pursuant to Rule 23 of the Minnesota

Rules of Civil Procedure because:

Filed in Fourth Judicial District Court

i. Whether Defendants actions described herein constitute a fraud, false

Filed in Fourth Judicial District Court

Filed in Fourth Judicial District Court

Us/Facts/HousingF/FACTS-Affordable-Housing.aspx (last visited Sept. 23, 2016). Hennepin

As described herein, Defendants have continuously and systematically violated

Defendants have deliberately and systematically engaged in the deceptive and

Filed in Fourth Judicial District Court

Spiros Zorbalas has a long and sordid history as a landlord in Minneapolis. In

Filed in Fourth Judicial District Court

Based on his egregious conduct toward tenants, the City of Minneapolis

Filed in Fourth Judicial District Court

The conspiracy played out as described and depicted below:

Filed in Fourth Judicial District Court

Filed in Fourth Judicial District Court

wholly-owned subsidiary of Equity Residential. The 24 properties previously owned by The

Filed in Fourth Judicial District Court

Filed in Fourth Judicial District Court