Legal Update 2020
Instructor: John Henderson
License Law-Based Civil Claim Doesn't Require Proof of Reliance
Edson v. Fogarty, 2019 IL App. (1st) 181135, 2019 Ill. App. LEXIS 335 (2019)
Appellate Court of Illinois, First District, Second Division
Facts: Real estate broker listed a below grade-level commercial unit in a condominium building. A convenience grocery had previously operated in the unit. The broker created advertising materials by looking at old MLS listings, which reflected “B1” zoning, and a Chicago zoning map. But the zoning map showed the zoning for the entire building, not the below grade-level unit. For his MLS listing, the broker added “-3” to the “B1” zoning, which was an allegedly “nonexistent, supposedly commercial classification.” The broker’s MLS listing included the notation “perfect for grocery ....” and other commercial uses. An investor allegedly told the broker that he wanted to purchase the space and rent to a grocer or other commercial tenant. During a property tour, the broker allegedly told the investor that the space would be “great for a grocery store.” After he purchased it, the investor learned that the unit was zoned for residential use. The investor sued on grounds including negligent misrepresentation, and violations of the Illinois Consumer Fraud Act and Real Estate Li- cense Act. A trial court granted summary judgment for the broker, concluding that the investor had no right to rely on the alleged misrepresentations.
Issue: Is proof of reliance required for claims based on misrepresentation, or the real estate license law and other consumer protection statutes?
Held: No. Judgment reversed and remanded. Under the real estate license law, licensees must treat all “customers” for whom they perform “ministerial acts” honestly, and must not negligently or knowingly give them false information. The civil complaint adequately stated a claim under the Illinois Real Estate License Act by alleging that the false information (i) did not come from the seller, (ii) was material to the buyer, and (iii) caused damages. Proof of reliance on the alleged zoning misrepresentation is not a requirement. Generally, where all parties have an equal ability to access and interpret the zoning of a property, misrepresentation claims regarding such information are not actionable. But there was no way to tell the correct zoning from the map, the broker represented that the space was suitable for a grocery, and the investor could not through ordinary prudence have discovered that the space was not zoned for commercial use. Therefor the alleged misrepresentations were actionable statements of fact, not law.