Block 37 Woes Continue

By Marcus Gilmer in News on Mar 17, 2009 3:40PM

Things keep getting worse and worse for the Block 37 project. After money issues and the first tenant pulling out, now more retailers are trying to get out of their contracts. The first blow was an announcement from Apple that they would not be bringing a retail store to Block 37 as had been originally planned. While this was surely a disappointment for the powers that be behind Block 37, it's another store's subsequent pulling out that's causing even more headaches. Now Canada-based Lululemon Athletica Inc., sellers of Yoga wear, are suing to get out of their contract to open a store in Block 37 because they claim they signed the contract with the understanding they'd be next door to an Apple store. Further, Lululemon is claiming that the Block 37 project's developer, Chicago-based Joseph Freed & Associates LLC, committed fraud by telling them that Apple had signed a lease even though that never happened.

From Crain's:

The lawsuit, filed March 12, claims that an executive with Vancouver, Canada-based Lululemon was told by a “representative” of the developer sometime around December that Apple wouldn’t open a store at Block 37 and had never signed a lease.

“Defendant (a Freed venture called 108 N. State Retail LLC) represented to Lululemon that Apple would be opening for business at the shopping center, that Apple would be located immediately next to Lululemon, and that Apple had executed a lease,” the lawsuit says. “When defendant made these representations, defendant knew they were false and made them with the intent to deceive and defraud and induce Lululemon to execute the lease.”

The retailer seeks to have its lease terminated, and alleges one count of “fraudulent inducement” and claims that Freed violated the Illinois Consumer Fraud Act.

A spokeswoman for Chicago-based Freed, which took over the Block 37 development in spring 2007, says the company hasn’t yet seen the lawsuit and declined to comment.

When asked about the status of Apple, she says: “We have never said that Apple was going to be a tenant in this project. We never confirmed press reports that Apple was a potential tenant.”

The Trib notes the Lululemon lawsuit as claiming that the Apple co-tenancy was the basis for its original lease:

On Monday, Apple spokeswoman Amy Bessette said, "We haven't made any announcements about a store at that location."

...According to the lawsuit, Lululemon's letter of intent signed Nov. 7, 2007, "expressly states that Apple's co-tenancy at the shopping center is a condition of the lease" and that "without this express co-tenancy condition, Lululemon would never have considered moving into the premises."

Lululemon had signed a 10-year lease to occupy a 2,555-square-foot space on the first floor of the building.