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Illinois courts have held that statements concerning future intent or conduct are not actionable as fraud. Illinois Non-Profit Risk Management Ass'n v. Human Service Center of Southern Metro-East, 378 Ill.App.3d 713, 723 (4th Dist. 2008). In most cases, a defendant must make representations about past or existing facts in order to create actionable fraud. Illinois Jurisprudence, Personal Injury and Torts § 13:08. Generally, representations or predictions about intention or future conduct are not actionable as fraud. Id. Illinois courts have held that a promise to do something in the future, generally, will not constitute actionable fraud, even if made with the intention not to perform. Id.

However, there is an exception that exists where Illinois courts have found fraud in future promises. Chatham Surgicore, Ltd. v. Health Care Service Corp., 356 Ill.App.3d 795, 804 (1st Dist. 2005). A promise to perform an act in the future made by one who intends not to perform does not constitute actionable fraud, unless the false promise of future performance is part of a scheme or device to defraud another. Id. In order to comprise fraud, the promise must be part of a scheme to commit fraud, or a fraudulent device. Illinois Jurisprudence, Personal Injury and Torts § 13:08. Illinois courts warn that it is difficult to distinguish between a promise made with an intent not to perform, and one made as part of a pre-existing fraudulent scheme. Id. Proof of the fraud scheme exception to the general rule for future promises requires a statement made with an intent to induce reliance and actual reliance. Id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

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Posted In: Business Litigation , Fraud

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Generally, statements as to value do not constitute actionable fraud. Illinois Jurisprudence, Personal Injury and Torts § 13:07. Statements concerning value are ordinarily deemed as an opinion of the party making the representation. Id. While it may be true that a bare statement as to value is ordinarily deemed the opinion of the party making the representation, such a statement may be a positive affirmation of a fact, intended as such by the party making it, and reasonably regarded as such by the party to whom it is made. Id. Therefore, Illinois courts have held that the general rule for statements of value is that where a statement of value is part of a scheme to induce a plaintiff to act, a cause of action for fraud may exist. Id.

In addition, the Illinois First District Appellate Court has held that puffing cannot be the subject of an actionable fraud claim. Miller v. William Chevrolet/GEO, Inc., 326 Ill.App.3d 642, 649 (1st Dist. 2001). Illinois courts have defined “puffing” as a bare statement as to the value of a product. Id. However, statements of existing facts or comments that ascribe specific virtues to a product are not generally considered puffing and may be the subject of a fraud claim. Illinois Jurisprudence, Personal Injury and Torts § 13:07.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

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The Illinois First District Appellate Court held that negligent misrepresentation involves the breach of a duty to use care in obtaining and communicating information upon which others may reasonably be expected to rely in the conduct of their affairs. Cahill v. Eastern Ben. Systems, Inc., 236 Ill.App.3d 517, 521 (1st Dist. 1992). To sustain a cause of action for negligent misrepresentation, the plaintiff must prove that: (1) a duty existed owed by defendant to plaintiff; (2) a breach of that duty; and (3) an injury proximately resulting from the breach. Id. In addition, to sustain a cause of action for negligent misrepresentation the plaintiff is also required to prove actual reliance. Id. Moreover, negligent misrepresentation claims are generally limited to those in the business of supplying information to others. Illinois Jurisprudence, Personal Injury and Torts § 13:37.

In negligent misrepresentation actions, a plaintiff must prove that the defendant owes a duty to the plaintiff to communicate accurate information. Kopley Group V., L.P. v. Sheridan Edgewater Properties, Ltd., 376 Ill.App.3d 1006, 1017 (1st Dist. 2007). In Illinois, such a duty can be found in two instances where the defendant is in the business of supplying information to others for guidance in business transactions. Illinois Jurisprudence, Personal Injury and Torts § 13:38. Not everyone who furnishes information during the course of business will be considered to be in the business of furnishing information. Id. The information supplied must be for the purpose of guiding the plaintiff's business dealings with third parties. Id.

Furthermore, negligent misrepresentation involves the breach of a duty to use care in obtaining and communicating information upon which others may reasonably be expected to rely in the conduct of their affairs. Illinois Jurisprudence, Personal Injury and Torts § 13:37. The defendant need not know that the statement is false for a negligent misrepresentation claim to exist. Kopley Group V., L.P., 376 Ill.App.3d at 1017. Negligent misrepresentation requires that the defendant’s mental state need only be negligent in ascertaining the truth of the statement. Roe v. Jewish Children's Bureau of Chicago, 339 Ill.App.3d 119, 131 (1st Dist. 2003). A misrepresentation can result from the failure to provide adequate information when there is a duty to provide such information, as well as providing information which is false. Gallagher Corp. v. Russ, 309 Ill.App.3d 192, 201 (1st Dist. 1999).

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

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Posted In: Misrepresentation , Negligent Misrepresentation

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The Illinois First District Appellate Court has held that to state a cause of action for fraud, a plaintiff must prove the following elements: (1) a false statement of material fact; (2) defendant's knowledge that the statement was false; (3) defendant's intent that the statement induce the plaintiff to act; (4) plaintiff's reliance upon the truth of the statement; and (5) plaintiff's damages resulting from reliance on the statement. Fox v. Heimann, 375 Ill.App.3d 35, 47 (1st Dist. 2007). Essential to establishing a cause of action for fraud is intent by the defendant to deceive, to mislead, or to convey a false impression. Szajna v. General Motors Corp., 115 Ill.2d 294, 322 (1986).

The concept of fraud implies a wrongful intent, that is, an act or concealment which is calculated to deceive. Cokinis v. Maywood-Proviso State Bank, 81 Ill.App.3d 1057, 1063-1064 (1st Dist. 1980). The intent to deceive can be found from the fact that a person makes a statement knowing it to be false when the statement is made for the purpose of inducing the one to whom the statement is made to act. Szajna, 115 Ill.2d at 322-323. A statement is fraudulent when, to the knowledge or belief of its utterer, it is false in the sense in which it is intended to be understood by the recipient. Miller v. Lockport Realty Group, Inc., 377 Ill.App.3d 369, 377 (1 Dist. 2007). Also, Illinois courts generally have held that the intent to deceive is present when the statement is made without any belief that it is true or with a reckless disregard as to whether it is true or false. Szajna, 115 Ill.2d at 322-323.

Proof of intent to deceive will be found where a person knowingly makes a false statement for the purpose of inducing another to take action. Illinois Jurisprudence, Personal Injury and Torts § 13:15. The defendant need not have had a specific intent to cause a pecuniary loss in order to commit fraud. Id. The relevant issue is simply whether the defendant intended to induce reliance on the misrepresentation. Id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

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The Illinois First District Appellate Court has defined “constructive fraud” as any act, statement or omission which amounts to positive fraud or which is construed as fraud by the courts because of its detrimental effect upon public interests and public or private confidence. Small v. Sussman, 306 Ill.App.3d 639, 646 (1st Dist. 1999). Essentially, constructive fraud is a breach of a legal or an equitable duty which, irrespective of the moral guilt of the wrongdoer, Illinois courts declare as fraudulent because of its tendency to deceive others. Prodromos v. Everen Securities, Inc., 341 Ill.App.3d 718, 726 (1st Dist. 2003). A cause of action for constructive fraud requires neither actual dishonesty, nor intent to deceive. Cessna v. City of Danville, 296 Ill.App.3d 156, 168 (4th Dist. 1998). On the other hand, a cause of action for constructive fraud can be inferred from the circumstances regardless of any actual dishonesty of purpose. Id.

Constructive fraud can arise only if there is a confidential or fiduciary relationship between the parties. Prodromos, 341 Ill.App.3d at 726. In Illinois, a fiduciary relationship arises when one has influence over a person through the trust and confidence of that person, such as where a person solicits trust by holding himself or herself out as an expert. Illinois Jurisprudence, Personal Injury and Torts § 13:02. In a fiduciary relationship, where there is a breach of a legal or equitable duty, a presumption of fraud arises. Id. Where there has been a breach of a fiduciary duty, a cause of action can lie in constructive fraud. Id.

Once the party claiming constructive fraud has established the existence and breach of a confidential or fiduciary relationship between the parties, the burden of proof shifts to the opposing party to produce evidence to negate the existence and breach of a confidential or fiduciary relationship. Illinois Jurisprudence, Personal Injury and Torts § 13:36. If the opposing party is successful in negating the existence and breach of a confidential or fiduciary relationship, the cause of action for constructive fraud ceases to exist and the party claiming constructive fraud has the burden of proving fraud. Id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

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Posted In: Business Litigation , Fiduciary Duty , Fraud

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