A real estate broker who allegedly made up a zoning classification to make the buyer of a storefront in a Chicago condo building think he could operate a grocery store in the residential building may be on the hook for damages, a state appeals panel has said.
According to court documents, Tom Edson spent $600,000 to buy a lower-level commercial space in the Plaza DeWitt, a condominium building at 260 E. Chestnut, in Chicago's Streeterville neighborhood, intending to lease the space to a grocer. The real estate broker listing the space, David Horwich, listed it with a B1-3 zoning, a Chicago zoning classification that does not exist.
Horwich took Edson on several visits to the space, which was formerly a grocery store, and told him it would be a great place for another grocer. It wasn’t until after Edson purchased the property that he learned it had been zoned residential. He sued Horwich and his employer, Prudential Rubloff LLC, on charges of fraud, negligent misrepresentation, and violating both the Consumer Fraud Act and the Real Estate License Act.
In Cook County Circuit Court, Judge Brigid M. McGrath granted Horwich summary judgment on all claims, concluding Edson should not have relied solely on Horwich’s misrepresentations.
Horwich claimed he checked a zoning map when developing the listing for the commercial space, but could not determine its zoning because the map only showed the zoning of the entire residential building. When creating the listing, Horwich said the property had a B1 commercial zoning classification and then added the “-3,” creating a classification that does not exist. After buying the space, the real estate broker for a potential business tenant told Edson the space was zoned DR-10 residential use.
In its order granting summary judgment, the trial court said the charges “all require that there be reasonable reliance.” Edson appealed, arguing that the Consumer Fraud Act and Real Estate License Act do not include an element of reliance and that there are triable issues of fact, not law, inherent in his other claims.
Horwich argued zoning claims are issues of law, not fact, because anybody could look up the true zoning.
But justices with the Illinois First District Appellate Court disagreed, Justice Michael B. Hyman, who authored the opinion of the appellate court.
“Horwich testified that he tried but was unable to determine the zoning by looking at the zoning map,” Hyman wrote. “Horwich knew that the zoning designation he assigned to the space did not exist. …Whether the plaintiff could have discovered the misrepresentation by a mere review of publicly available materials remained an unanswered material question of fact.”
The court also reversed the trial court’s order to bar 126 pieces of evidence building a case for damages. Edson had produced the list 59 days before trial, missing the deadline by one day. McGrath did not abuse her discretion in barring the evidence, the justices said, but in the interests of a fair trial, the appellate justices reversed the order.
Justices Terrence J. Lavin and Aurelia Pucinski joined Hyman in the opinion of the court. The case is now remanded back to the lower court.
According to Cook County court records, Edson has been represented by attorneys with the firm of Torshen, Slobig & Axel, of Chicago.
Horwich has been represented by the firm of Fuchs & Roselli Ltd., of Chicago.