2-Jun-19 – A condominium in Streeterville missed an opportunity for a grocery store in its building due to a zoning designation that was, at best, confusing and at worst, misstated in order to land the store – and now the focus of a lawsuit.

Tom Edson, a real estate investor and developer, is suing David Horwich and his former employer, Prudential Rubloff, accusing the broker of making up a non-existent zoning designation, B1-3, for a space he was selling at Plaza on DeWitt, a 407-unit condominium near East Chestnut Street & North Dewitt Place and less than a block from Lake Shore Drive.

Horwich says he tried to determine the zoning designation of the space but a Chicago zoning map he looked at only showed the designation “B1” for the entire building. In the MLS listing, he added “-3” to create a non-existent designation, “B1-3.”

Horwich allegedly told Edson the 5,000 square foot lower-level space, with its own entrance off Dewitt Place, was zoned for commercial use and would be “perfect” for a grocery store, medical clinic, fitness center, restaurant/bar, or office.

A Stop & Shop convenience store had been located there for more than 30 years. During a tour of the space, Edson saw refrigerators and other fixtures left by the store.

Edson wanted to buy the space and lease it to a grocery store and at one time had the owner of Bockwinkel’s interested. Jerry Bockwinkel said he would sign a lease with Edson if the condominium association at Plaza on DeWitt allowed him to install an elevator and signage. The condo association did not approve the items and the deal fell through.

Edson bought the space, paying $600,000, and had a dog grooming business interested in leasing until their broker found out the space was zoned for residential use only.

Now a unit owner in the condo association, Edson contacted his alderman’s office about rezoning the space and was advised the zoning could be changed if the condo association approved. When the association did not give its approval, Edson stopped paying assessments. The association foreclosed and Edson lost title to the space.

Lower court to decide if investor could have figured out zoning designation on his own

Edson’s lawsuit accused Horwich and Prudential Rubloff of fraud, negligent misrepresentation, violations of the Consumer Fraud Act, and violations of the Real Estate License Act. The case was dismissed, however, with Circuit Court Associate Judge Brigid McGrath saying Edson could have looked up the zoning designation himself and did not have to rely on what Horwich told him.

The Appellate Court of Illinois disagreed and on May 14 reversed McGrath’s decision.

In delivering the judgement of the court, Appellate Judge Michael Hyman said whether Edson could have figured out the zoning designation is still in dispute.

“Horwich testified that he tried but was unable to determine the zoning by looking at the zoning map,” wrote Hyman (left). “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 case is now remanded back to Circuit Court.