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Morgan Place of Chicago, An Illinois Corporation,D/B/A Jmc Development v. the City of Chicago

June 29, 2012

MORGAN PLACE OF CHICAGO, AN ILLINOIS CORPORATION,D/B/A JMC DEVELOPMENT;
; AND BAC.CC INC., AN ILLINOIS CORPORATION PLAINTIFFS AND COUNTERDEFENDANTS-APPELLANTS AND CROSS-APPELLEES,
v.
THE CITY OF CHICAGO, A MUNICIPAL CORPORATION,
DEFENDANT AND COUNTERPLAINTIFF-APPELLEE AND CROSS-APPELLANT, CHRISTOPHER BUSHNELL, INTERIM DIRECTOR, DEPARTMENT OF CONSTRUCTION AND PERMITS; JOHN DOE, COMMISSIONER OF THE DEPARTMENT OF BUILDINGS OF THE CITY OF CHICAGO; AND THOMAS P. SMITH, ZONING ADMINISTRATOR OF THE CITY OF CHICAGO, DEFENDANTS; ANTHONY CEDICCI,
COUNTERDEFENDANT).



APPEAL FROM THE CIRCUIT COURT OF JERRY JEROME CEDICCI COOK COUNTY No. 05 CH 11618 HONORABLE MARY ANNE MASON, JUDGE PRESIDING.

The opinion of the court was delivered by: Presiding Justice Steele

PRESIDING JUSTICE STEELE delivered the judgment of the court, with opinion. Justice Salone concurred in the judgment and opinion.

Justice Murphy specially concurred, with opinion.

OPINION

¶ 1 Following a bench trial in the circuit court of Cook County, the trial judge ruled defendant City of Chicago (City) was not equitably estopped from revoking a building permit issued to plaintiff Morgan Place of Chicago (Morgan Place), an Illinois corporation doing business as JMC Development (JMC), and that Morgan Place and plaintiffs Jerry Jerome Cedicci (Cedicci) and BAC.CC, Inc. (collectively plaintiffs), did not have vested rights in the issuance of the permit. The trial judge also entered judgment for the plaintiffs on the City's counterclaim, which alleged, in relevant part, that Cedicci and his brother, counterdefendant Anthony Cedicci (Anthony), violated local ordinances regarding gifts to City employees. The trial judge further denied plaintiffs' petition for costs and fees as a sanction against the City for asserting false and harassing counterclaims. Plaintiffs now appeal and the City cross-appeals.*fn1 For the following reasons, we affirm the judgment of the circuit court.

¶ 2 BACKGROUND

¶ 3 The record on appeal discloses the following facts. In 1993, Cedicci, a real estate developer, acquired the property at 373-75 North Morgan Place in Chicago, Illinois, as part of the Morgan Sangamon Partnership. The property, which consisted of two parcels, encompassed approximately two city blocks. The eastern part of the property had a warehouse; the western part was covered by a concrete slab.

¶ 4 At the time of the purchase, the property was zoned M-2, denoting light manufacturing under the City of Chicago Zoning Ordinance (See Chicago Municipal Code § 17-40-050 (1993)). Shortly after the purchase, at Cedicci's request, the property was rezoned C-2. The C-2 classification permits commercial ground-floor use with residential units above ground level.

¶ 5 The Morgan Sangamon Partnership opened an antiques market in the existing building on the property. The partnership also leased space to Cedicci's brother, Anthony, through the 72 East Walton Bakery, Inc. Anthony operated the La Boursa restaurant at the Morgan Place location. The lease was later amended to give Anthony the option to purchase the property.

¶ 6 Around 1996, Cedicci decided to develop the property for residential use. Cedicci hired an architect, Paul Moser, to prepare plans for constructing a 44-unit condominium building above a ground-floor warehouse.

¶ 7 On October 28, 1997, an ordinance was introduced in the Chicago city council to create a planned manufacturing district (PMD) for an area of the city in which the property is located. A PMD is an area set aside for manufacturing and commercial use to prevent residential encroachment. The purpose of a PMD is promote retention of industry and a diverse workforce in the city.

¶ 8 On February 4, 1998, the Chicago plan commission sent property owners of record within the proposed PMD notice of a public hearing on the rezoning ordinance. On February 15, 1998, the city council's committee on zoning sent notices to the same group about a public hearing on the ordinance. On March 12, 1998, the Chicago plan commission held a special hearing on the proposal and later recommended its approval. On April 1, 1998, the city council approved the creation of the PMD and an amendment to the Chicago Municipal Code changing the zoning within the PMD. See Chicago Municipal Code § 16-8-110 (amended April 1, 1998).

¶ 9 At trial, Cedicci denied knowledge of the creation of the PMD. Moser testified he was aware of the pending ordinance amendment. Moser recalled there was some urgency in getting a building permit application prior to its enactment.

¶ 10 On or about March 12, 1998, JMC Development, Inc., in which Cedicci had an ownership interest, submitted a permit application with the City's department of buildings to develop the property. Cedicci could not recall whether JMC was in fact incorporated at the time. The application was accompanied by the architectural plans for the mixed-use building.

¶ 11 Following the submission of the permit application, it was reviewed by a number of City departments. In most cases, the zoning department is the first to review a building permit application because the application will be rejected without further review if the proposed use is not a permitted use under the applicable zoning classification. Notwithstanding the April 1, 1998, rezoning of the property, Cedicci's application was stamped as approved on May 3, 1999.

¶ 12 On June 20, 2000, the City issued a building permit to JMC. The permit recites in part:

"Any changes in contractor or deviation from approved plans must be approved by the Department of Buildings. Permit may be revoked for violation of any of the above provisions or other applicable ordinance."

Cedicci paid $68,425 for issuance of the permit, including fees assessed only for residential projects. Although Cedicci had soil testing done in 2000, construction on the project did not commence immediately. ¶ 13 Meanwhile, the ownership of the property had changed. On February 24, 1998, Cedicci filed for bankruptcy, an event dissolving the Morgan Sangamon Partnership and reconstituting the partnership with the remaining partners. According to Cedicci, the bankruptcy was dismissed after his creditors were paid in full. In 2001, Anthony, as president of 72 East Walton Bakery, Inc., exercised the lease option to purchase the property. Following litigation, Anthony took title to the property on October 23, 2003. Anthony conveyed the property to Cedicci the same day by use of a pass-through arrangement under which Cedicci financed the $1.475 million purchase.

¶ 14 On April 28, 2004, Cedicci took out a $6 million construction loan from American Chartered Bank. Work commenced on the project. The warehouse and concrete pad were removed from the property, the site was excavated, a new water main was installed, and a foundation was poured. During construction of the building, Cedicci decided to use a less expensive structural system than that specified in the plans approved by the City.

¶ 15 In October 2004, a City inspector visited the property and issued a stop work order (SWO). On October 23, 2004, Raphael Hernandez, executive director of the City's department of construction and permits, issued a letter stating the permit was invalidated by a provision of the Chicago Building Code allowing revocation of permits for inactivity within six months of issuance (Chicago Municipal Code § 13-32-110 (2000)).

¶ 16 After receiving the SWO, Cedicci contacted John Quinn, who was then the City's chief of zoning inspectors. Quinn was terminated from that position in 2005. At the time of trial, Quinn was employed by Cedicci. However, in October 2004, Cedicci and Quinn had been social acquaintances for over a decade. The two men dined twice monthly on average, often at the Pine Caldo restaurant, which Anthony owned. When dining at Pine Caldo, Cedicci and his guests were not billed for their meals. When dining elsewhere, Quinn would buy meals for Cedicci.

¶ 17 After receiving Cedicci's telephone call, Quinn discussed the property with Hernandez, who said the construction was a "huge issue" in the area and that community groups and others were "up in arms" over it. According to Quinn, Hernandez said he would rely on the advice of the City's law department in deciding whether to reinstate the permit. Quinn advised Cedicci to hire an attorney.

¶ 18 Cedicci hired John Pikarski, an attorney specializing in zoning matters. On November 29, 2004, Pikarski wrote Hernandez, asserting a substantial amount of work had been performed on the property and there was no evidence JMC had abandoned the project. Pikarski also cited the funds expended in obtaining the permit, preparing the site, and partially constructing the building in reliance on the permit as reasons to reinstate the permit.

¶ 19 Pikarski's letter resulted in meetings involving various City departments, including zoning, construction and permits, industrial development, and the law department. The officials involved reviewed photographs of the current state of construction on the property taken by the building department under the direction of First Deputy Commissioner Kimberly Brown. Chief Assistant Corporation Counsel Mardell Nereim testified that she discussed the "vested rights" doctrine in these meetings, but did not make a recommendation on its applicability in this situation. Nereim stated the permit was reinstated to avoid litigation. Quinn testified that Nereim had opined the City could not win a "vested rights" case in this situation. Hernandez testified the direction to reinstate the permit came from the law department and he was not influenced by anyone else.

¶ 20 After the officials decided to reinstate the permit, the discussion turned to concessions the City could obtain from Cedicci related to the reinstatement. The City decided to ask Cedicci for more landscaping in his plans. The City also sought the inclusion of language in Cedicci's sales contracts disclosing they were purchasing property in a PMD and waiving future claims based nuisance or similar causes of action. On January 6, 2005, Cedicci (on JMC letterhead) agreed to include the disclosure and waiver language in its sales contracts. On January 10, 2005, Hernandez reinstated the permit.

ΒΆ 21 On March 27, 2005, a committee of organizations and individuals opposed to the project wrote to Hernandez and demanded the reasoning behind the reinstatement of the permit. On April 8, 2005, the same committee wrote the department of planning and development in opposition to any negotiated settlement to allow residential development on the property, stating industrial firms and property owners in the ...


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