Mitchell v. Norman James Construction Co.

FIFTH DIVISION
FILED: 8/22/97

1-96-1505
) APPEAL FROM THE
NETTIE MITCHELL, ) CIRCUIT COURT OF
) COOK COUNTY
Plaintiff-Appellant, )
)
v. )
)
NORMAN JAMES CONSTRUCTION CO., INC., )
and NORMAN JAMES and ST. PAUL FEDERAL ) HONORABLE
BANK FOR SAVINGS, ) RENE GOIER,
) JUDGE PRESIDING.
Defendants-Appellees. )

JUSTICE HOFFMAN delivered the opinion of the court:
The plaintiff, Nettie Mitchell, appeals from orders of the circuit court granting
judgment on the pleadings in favor of St. Paul Federal Bank for Savings (St. Paul)
on count V of her second-amended complaint, striking and dismissing counts II, III
and IV of that complaint which purported to allege actions against Norman James
Construction Co. (hereinafter "James Construction") and Norman James (hereinafter
"James"), and denying her leave to file a third-amended complaint. For the reasons
which follow, we affirm in part, reverse in part, vacate in part and remand this action
to the circuit court for further proceedings.
The plaintiff filed a verified six-count, second-amended complaint (hereinafter
"complaint") against James Construction; its president, James; St. Paul; and St.
Paul's employee, Carl Malone. The allegations underlying the complaint were as
follows.
The plaintiff operated a day-care center out of her residence in Oak Park. In
early 1992, the plaintiff decided to build an addition to her residence in order to
accommodate her expanding business. Seeking financing for the project, she went to
St. Paul and discussed a home improvement loan with a loan officer, Malone. During
the course of these discussions, Malone represented that he had special knowledge
regarding certain home improvement contractors, particularly James and James
Construction. Malone assured the plaintiff that he had recommended James
Construction and James to other homeowners who had been satisfied with their work.
According to the complaint, Malone knew or reasonably believed that each of these
statements and representations were false. In alleged reliance upon Malone's advice,
the plaintiff entered into a verbal construction contract with James Construction in
May 1992, agreeing to pay James $23,900 to build an addition to her home.
The plaintiff alleged that she performed under her contract with James
Construction until July 24, 1992, when, after a site inspection, an Oak Park building
inspector refused to approve the construction by reason of its noncompliance with the
architect's plans and the Oak Park building code. The complaint alleged that the
construction done was completely worthless, unsafe and unusable for its intended
purpose, and that it would have to be entirely removed and replaced.
Count I of the complaint charged James Construction with breach of contract;
count II charged James Construction and James, individually, with common law
fraud and misrepresentation; count III charged James Construction and James,
individually, with violations of the Consumer Fraud and Deceptive Business Practices
Act (815 ILCS 505/1 et seq. (West 1994)) and the Home Repair Fraud Act (815 ILCS
515/1 et seq. (West 1994)); and count IV sought the release of a contractor's lien
which James Construction had attached to the plaintiff's property on July 23, 1992.
Count V charged St. Paul with vicarious liability for Malone's fraud in recommending
James and James Construction, and with negligent failure to supervise Malone in the
performance of his duties. Finally, count VI was an action against Malone for
misrepresentation.
Count I was dismissed after the claim pleaded therein was discharged in a
bankruptcy proceeding filed by James Construction. Count VI against Malone was
voluntarily dismissed by the plaintiff pursuant to section 2-1009 of the Code of Civil
Procedure (Code) (735 ILCS 5/2-1009 (West 1994)). This appeal deals only with the
trial court's disposition of counts II, III, IV and V of the complaint, and its denial of
the plaintiff's motion for leave to file a third-amended complaint.
We will first address the trial court's order of June 13, 1995, which granted
judgment on the pleadings in favor of St. Paul on count V of the complaint. As to this
order, the plaintiff argues 1) that the trial court erred in granting judgment on the
pleadings in favor of a defendant that had never answered the complaint, and 2) that
count V stated good and sufficient causes of action against St. Paul.
Several times in her brief before this court, the plaintiff asserts that judgment
on the pleadings in favor of a defendant who has not answered a complaint is
procedurally inappropriate. We disagree.
Section 2-615(e) of the Code provides that "[a]ny party may seasonably move
for judgment on the pleadings." 735 ILCS 5/2-615(e) (West 1994). Unlike the Federal
Rules of Civil Procedure which provide that a party may move for judgment on the
pleadings after the pleadings are closed (Fed. R. Civ. P. 12(c)), section 2-615(e) of the
Code contemplates the consideration of a defendant's motion for judgment on the
pleadings on a complaint only, without the defendant having first filed an answer.
Pollack v. Marathon Oil Co., 34 Ill. App. 3d 861, 867, 341 N.E.2d 101 (1976).
Although a judgment on the pleadings is ordinarily considered by the court after the
parties are at issue, it may be appropriate in circumstances where no answer has
been filed and the only ground therefore is that the allegations of the complaint are
insufficient to state a cause of action. Mitchell v. Waddell, 189 Ill. App. 3d 179, 182,
544 N.E.2d 1261 (1989). The plaintiff's arguments to the contrary on this procedural
question are the same as those made to and rejected by this court in Pioneer Bank
& Trust Co. v. Austin Bank, 279 Ill. App. 3d 9, 13, 664 N.E.2d 182 (1996), and we
find no need to analyze the issue further. The procedural history of this case leading
up to the trial court's order of June 13, 1995, is, however, worthy of note.
On April 6, 1995, in lieu of an answer to count V of the complaint, St. Paul
apparently filed a motion to dismiss under section 2-615 of the Code (735 ILCS 5/2-
615 (West 1994)). We say apparently because a copy of that motion was not included
in the record on appeal. However, from a reading of the plaintiff's response to that
motion and from the entries set forth on the court's official docket (half-sheet), it is
clear that St. Paul moved to dismiss count V contending that the plaintiff had 1)
failed to properly allege a cause of action based upon the doctrine of respondeat
superior, and 2) failed to adequately plead a cause of action for misrepresentation
against its employee, Malone, whose conduct formed the basis of the plaintiff's claim
against St. Paul. The first mention of a judgment on the pleadings in favor of St.
Paul on count V of the complaint is found in the draft order entered by the trial court
on June 13, 1995. However, the seeming disparity in the relief requested by St. Paul,
dismissal of count V pursuant to section 2-615 of the Code for failure to state a cause
of action, and the relief granted by the trial court, judgment on the pleadings in favor
of St. Paul, forms no basis for reversal under the facts of this case.
When dismissal is sought pursuant to section 2-615 of the Code, the only issue
before the court is whether the complaint or a particular count thereof states a cause
of action upon which relief can be granted. Burdinie v. Village of Glendale Heights,
139 Ill. 2d 501, 565 N.E.2d 654 (1990). The very same inquiry is presented when a
motion for judgment on the pleadings is filed by a defendant prior to the filing of an
answer. Mitchell, 189 Ill. App. 3d at 181-82; Pollack, 34 Ill. App. 3d at 867.
Consequently, the granting of judgment on the pleadings in favor of a defendant who
has never answered the plaintiff's complaint is the functional equivalent of dismissing
the complaint for failure to state a cause of action against that defendant.
When the legal sufficiency of all or a part of a complaint is challenged, all well-
pleaded facts in the count of the complaint under attack are taken as true (Burdinie,
139 Ill. 2d at 505), and all reasonable inferences favorable to the plaintiff must be
drawn from those facts (Mt. Zion State Bank & Trust v. Consolidated
Communications, 169 Ill. 2d 110, 115, 660 N.E.2d 863 (1995)). In reviewing the
sufficiency of a complaint or a portion thereof, the court disregards all conclusions of
law or fact unsupported by specific factual allegations upon which such conclusions
rest. Burdinie, 139 Ill. 2d at 505. Guided by these standards, we have conducted a
de novo review of count V of the complaint (see Metrick v. Chatz, 266 Ill. App. 3d
649, 651-52, 639 N.E.2d 198 (1994)) to determine whether that count states a cause
of action against St. Paul.
It is well-settled that under the doctrine of respondeat superior, an employer
may be liable for the negligent, wilful, malicious, or even criminal acts of its
employees when such acts are committed in the course of employment and in
furtherance of the business of the employer. Randi F. v. High Ridge YMCA, 170 Ill.
App. 3d 962, 964, 524 N.E.2d 966 (1988). The employer is not liable, however, where
the acts were performed solely for the employee's benefit or were different from the
type of acts the employee was authorized to perform. Wright v. City of Danville, 174 Ill. 2d 391, 405, 675 N.E.2d 110 (1996), citing Restatement (Second) of Agency 228(2)
(1958); Randi F., 170 Ill. App. 3d at 964. The fact that the acts also may have been
beneficial to the employee does not automatically defeat a claim for vicarious liability;
the employer may be held liable if its employee's actions were prompted only in part
by a purpose to further the employer's business. Bryant v. Livigni, 250 Ill. App. 3d
303, 315, 619 N.E.2d 550 (1993); Sunseri v. Puccia, 97 Ill. App. 3d 488, 493, 422 N.E.2d 925 (1981). The foreseeability to the employer that the employee's duties
could give him occasion to act in the manner he did also is a relevant consideration.
See Rubin v. Yellow Cab Co., 154 Ill. App. 3d 336, 507 N.E.2d 114 (1987); Wilson v.
Clark Oil & Refining Corp., 134 Ill. App. 3d 1084, 481 N.E.2d 840 (1985).
Count V alleged that Malone's recommendation of James Construction occurred
during normal business hours, on the premises of St. Paul, and in the course of
several discussions between the plaintiff and Malone regarding her loan. See Giraldi
v. Lamson, 205 Ill. App. 3d 1025, 563 N.E.2d 956 (1990); Randi F., 170 Ill. App. 3d
at 965. However, the plaintiff failed to allege that Malone's conduct was in
furtherance of his duties as a loan officer. Additionally, she failed to set forth any
facts suggesting how Malone's recommendation of a construction contractor could in
any manner advance St. Paul's business as a lender. Count V does not state that the
plaintiff solicited Malone's advice or that she was in need of a "good price" in order
to go forward with the project. Nor does the complaint suggest that Malone's referral
had any bearing upon the plaintiff's decision to obtain the loan from St. Paul. Thus,
count V fails to allege facts which, if true, could support the inference that Malone's
representations and referral were in furtherance of St. Paul's business, rendering St.
Paul liable for Malone's conduct under the doctrine of respondeat superior. Our
finding on this issue is equally applicable to the plaintiff's argument that St. Paul
could be held vicariously liable for Malone's representations under an estoppel theory.
Alternatively, the plaintiff argues that count V of her complaint properly
alleges that St. Paul, through Malone, engaged in constructive fraud by
recommending James Construction. Constructive fraud is any act, statement or
omission which amounts to a positive fraud or is construed as such because of its
detrimental effect upon public interests and public or private confidence. In re
Gerard, 132 Ill. 2d 507, 528-29, 548 N.E.2d 1051 (1989), quoting In re Estate of
Neprozatis, 62 Ill. App. 3d 563, 568, 378 N.E.2d 1345 (1978). The plaintiff may
establish constructive fraud without showing actual dishonesty or an intent to
deceive. Gerard, 132 Ill. 2d at 528.
Most frequently, claims for constructive fraud arise where there has been a
breach of a fiduciary relationship. Kurti v. Fox Valley Radiologists, Ltd., 124 Ill. App.
3d 933, 464 N.E.2d 1219 (1984); see also Gerard, 132 Ill. 2d at 528-29. Although, as
the plaintiff points out, courts have found that an action may lie even in the absence
of a fiduciary relationship (see Neprozatis, 62 Ill App. 3d 563), the parties in such
situations must have engaged in more than a mere arm's length transaction. State
Security Insurance Co. v. Frank B. Hall & Co., 258 Ill. App. 3d 588, 630 N.E.2d 940
(1994). Rather, constructive fraud occurs where one party is clearly dominant,
"'either because of superior knowledge of the matter derived from *** overmastering
influence on the one side, or from weakness, dependence, or trust justifiably reposed
on the other side***.'" Neprozatis, 62 Ill. App. 3d at 569, quoting 17 Am. Jur. 2d
Contracts 154 (1964); see also Lagen v. Balcor Co., 274 Ill. App. 3d 11, 22-23, 653 N.E.2d 968 (1995); Singer v. Brookman, 217 Ill. App. 3d 870, 578 N.E.2d 1 (1991).
Factors to be considered in determining the existence of a confidential relationship
include the degree of kinship of the parties; any disparity in age, health, and mental
condition; differences in education and business experience between the parties; and
the extent to which the allegedly servient party entrusted the handling of her
business affairs to the dominant party, and whether the dominant party accepted
such entrustment. State Security, 258 Ill. App. 3d at 597-98; Santa Clause
Industries, Inc. v. First National Bank, 216 Ill. App. 3d 231, 238, 576 N.E.2d 326
(1991).
The complaint in this case fails to allege the existence of either a fiduciary or
confidential relationship between the plaintiff and St. Paul. As a matter of law, a
conventional mortgagor-mortgagee relationship standing alone does not give rise to
a fiduciary or confidential relationship. La Throp v. Bell Federal Savings & Loan
Ass'n, 68 Ill. 2d 375, 391, 370 N.E.2d 188 (1977); see also Mid-American National
Bank v. First Savings & Loan, 161 Ill. App. 3d 531, 515 N.E.2d 176 (1987).
Nonetheless, a confidential relationship may be found to exist where one party, due
to a close relationship, is alleged to have relied very heavily on the judgment of
another (Mid-American National Bank, 161 Ill. App. 3d at 538).
In a conclusory fashion, count V alleges that "by virtue of the relationship
between the plaintiff and St. Paul and *** the trust that the plaintiff reposed in
MALONE due to his position and his business experience and whereby MALONE
gained superiority and influence over the plaintiff, a fiduciary relationship existed
between the plaintiff and St. Paul," from which St. Paul benefitted. Count V fails to
allege facts indicating that the plaintiff, in a subservient position, reposed her trust
in St. Paul with regard to construction contractors, or that St. Paul accepted such
trust. Even accepting as true the plaintiff's conclusory allegation that she relied upon
Malone's recommendation based on his "position and business experience", she has
still failed to allege any facts to support the inference that Malone was acting for the
benefit of St. Paul when he recommended James Construction. Count V merely
alleges that the plaintiff went to St. Paul for the purpose of obtaining a home equity
loan, and while there, she was offered Malone's gratuitous recommendation regarding
a particular builder of whom he claimed to have knowledge. These allegations simply
do not raise an inference that St. Paul accepted the entrustment of the plaintiff's
decision as to which builder to engage, and therefore are insufficient to support a
cause of action for constructive fraud.
Next, the plaintiff argues that although she intended to plead an action against
St. Paul for constructive fraud based on the doctrine of respondeat superior, count V
also contained sufficient allegations to support causes of action for a "violation of the
Residential Mortgage License Act of 1987 and other portions of the Illinois Banking
and Finance statutes and negligent supervision of an employee." While we agree
with the plaintiff's contention that no complaint should be dismissed on the pleadings
which states a cause of action, even one not intended to be pleaded by the plaintiff
(City of North Chicago v. North Chicago News, Inc., 106 Ill. App. 3d 587, 594, 435 N.E.2d 887 (1982)), we disagree that count V adequately alleges any of the causes of
action suggested by the plaintiff.
The only allegation in count V in support of an action for negligent supervision
against St. Paul is the plaintiff's charge that "St. Paul knew or should have known"
that Malone had recommended James and James Construction to the plaintiff and
other homeowners seeking loans from St. Paul. However, conclusory allegations that
a defendant "knew or should have known" of a condition or an event, without
allegations of specific facts as to how or why a defendant knew or should have known,
are insufficient to state a claim for negligence. See, e.g., Lawson v. City of Chicago,
278 Ill. App. 3d 628, 662 N.E.2d 1377 (1996); Washington v. Chicago Board of
Education, 204 Ill. App. 3d 1091, 1094, 562 N.E.2d 541 (1990).
As to the plaintiff's argument that count V states a cause of action against St.
Paul for "violation of the Residential Mortgage License Act of 1987 and other portions
of the Illinois Banking and Finance statutes," we note that count V fails to reference
any such statutes. As a consequence, no breach of any statutory duty on the part of
St. Paul was alleged by the plaintiff, and no statutory cause of action was pleaded.
See 134 Ill. 2d R. 133(a); Ebert v. Thompson, 282 Ill. App. 3d 385, 668 N.E.2d 184
(1996).
Ordinarily, when faced with a plaintiff's attempt to state a cause of action
supported only by conclusory allegations, a court will strike the complaint or a
portion thereof and afford the plaintiff an opportunity to amend. See Mitchell, 189
Ill App. 3d at 183. In this case, however, count V of the complaint was the plaintiff's
second attempt to plead a cause of action against St. Paul. In response to a motion
filed by St. Paul to strike the plaintiff's prior complaint, she moved for and was
granted leave to amend, resulting in the filing of the complaint which is the subject
of this appeal. Further, after the trial court entered judgment in favor of St. Paul on
June 13, 1995, the plaintiff did not seek leave to again amend her complaint against
St. Paul, even though the June 13 order remained interlocutory until March 21, 1996,
when the last pending claim in this action was dismissed. We take the plaintiff's
failure in this regard to be an election to stand on count V of the complaint. See
Goldstein v. Lustig, 154 Ill. App. 3d 595, 507 N.E.2d 164 (1987).
In sum, we find that count V fails to allege sufficient facts to support a cause
of action against St. Paul on any theory suggested by the plaintiff. We accordingly
affirm the judgment entered on June 13, 1995, in favor of St. Paul.
We next address the propriety of the dismissal of counts II, III and IV of the
complaint on July 13, 1995, and the denial of the plaintiff's motion to file a third-
amended complaint on September 12, 1995.
On June 13, 1995, when the court entered judgment in favor of St. Paul on
count V of the complaint, counts I, II, III, IV, and VI remained pending and
undetermined. As stated earlier, count I was an action against James Construction
for breach of contract; count II was an action for fraud against James Construction
and James, individually; count III alleged that James Construction and James
violated the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1
et seq. (West 1994)) and the Home Repair Fraud Act (815 ILCS 515/1 et seq. (West
1994)); count IV was a quiet title action seeking the release of a contractor's lien
recorded by James Construction against and upon the title to the plaintiff's residence;
and count VI was an action against Malone for fraud. In addition to granting
judgment in favor of St. Paul, the order of June 13, 1995, set this matter for trial
against the remaining defendants on July 13, 1995.
On July 7, 1995, the plaintiff filed a motion for default against James
Construction and James for having failed to answer or otherwise plead to the
complaint. On July 10, 1995, the plaintiff filed a motion to voluntarily dismiss her
action against Malone pursuant to section 2-1009 of the Code (735 ILCS 5/2-1009
(West 1994)), and noticed her motion for hearing on July 13, 1995. On July 12, 1995,
James Construction and James filed an answer to counts I, II, III and IV of the
complaint. The record before us fails to reflect that the plaintiff's motion for default
against James Construction and James was ever noticed for hearing, or that these
defendants obtained leave of court to file their tardy answer on July 12.
When this matter came before the court on July 13, 1995, the court granted the
plaintiff's motion to voluntarily dismiss Malone. At that same hearing, the court was
advised that James Construction had filed for bankruptcy. Thereafter, the court and
counsel engaged in a discussion as to whether any portion of the case could proceed
to trial. The plaintiff's counsel pointed out that James Construction's bankruptcy
proceeding had no effect upon the claims pending against James personally. When
the court questioned the plaintiff's ability to establish personal liability on the part
of James for acts committed as an agent for James Construction, counsel for James
commented that the plaintiff's complaint was confusing. The record reflects that the
court examined the complaint and, sua sponte, struck counts II, III and IV, stating
"there is nothing in there but a sheer allegation of willful and wanton misbehavior".
The court also indicated that proceedings on count I would be stayed. When the
plaintiff's counsel noted that the court struck counts II, III and IV in the absence of
any motion by the defendants, the court responded that James's counsel had made
an oral motion, and that the counts were being stricken under section 2-615 of the
Code for failure to state a cause of action. The court's order of July 13, 1995, struck
and dismissed counts II, III and IV of the complaint.
The transcript of the proceedings before the trial court on July 13, 1995, fails
to reveal any oral motion on the part of James's counsel to dismiss the plaintiff's
complaint for failure to state a cause of action. To be sure, counsel did suggest that
the complaint was confusing and lacked clarity as to the theory under which the
plaintiff sought recovery from James personally, but that comment was made in the
context of a discussion relating to the propriety of proceeding to trial against James
while James Construction's bankruptcy was pending.
There is little question that a trial court has the authority, on its own motion,
to strike a complaint that is insufficient in substance or fails to sufficiently define the
issues, and order that other pleadings be prepared. See 735 ILCS 5/2-612(a) (West
1994). The trial court on its own motion also possesses the authority to dismiss any
claim that fails to state a cognizable cause of action. Rhodes v. Mill Race Inn, Inc.,
126 Ill. App. 3d 1024, 1028, 467 N.E.2d 915 (1984). In this case, the latter rule is
inapplicable, as counts II, III and IV do in fact assert claims recognized at law.
Our reading of counts II and III of the complaint reveals that they are
conclusory and lack the specificity required of claims sounding in fraud or a violation
of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 502/2 et seq.
(West 1994)). See Board of Education v. A, C and S, Inc., 131 Ill. 2d 428, 457, 546 N.E.2d 580 (1989); Saladino v. Team Chevrolet, Inc., 242 Ill. App. 3d 735, 611 N.E.2d 583 (1993). Both counts generally allege that James represented that the work
performed at the plaintiff's residence would conform to the architect's plans; that the
work that was done failed to so conform; that James "knowingly, intentionally,
willfully and maliciously concealed" that nonconformance; and that in reliance upon
James's representations, the plaintiff made periodic payments. What the plaintiff
failed to allege was the manner in which the construction performed at her residence
failed to conform to the architect's plans. The same deficiency existed in count IV,
the plaintiff's quiet title action against James Construction. However, if the trial
court determined, as we have, that counts II, III and IV were conclusory and
therefore substantively insufficient, it should have invoked its right under section 2-
612, struck the counts, and ordered the plaintiff to replead; the counts should not
have been dismissed on the court's own motion.
On August 14, 1995, while this action was still pending in the trial court and
the order of July 13, 1995, remained interlocutory, the plaintiff filed a motion for
leave to file her third-amended complaint against James Construction and James.
A copy of her proposed pleading was attached to the motion and is contained in the
record before us. On September 12, 1995, the trial court denied the plaintiff's motion
for leave to amend.
The plaintiff argues that the trial court erred in denying her motion for leave
to file her third-amended complaint, contending that any lack of specificity that may
have existed in the complaint was remedied by the detailed factual allegations of the
proposed third-amended complaint. We agree.
A trial court has broad discretion in determining whether to allow pleadings
to be amended, and its decision will not be disturbed on appeal absent an abuse of
that discretion. Schenker v. Chicago Title & Trust Co., 128 Ill. App. 3d 488, 470 N.E.2d 1264 (1984). Albeit in another context, the supreme court in Loyola Academy
v. S & S Roof Maintenance, Inc., 146 Ill. 2d 263, 586 N.E.2d 1211 (1992), set out four
factors that a trial court should examine in determining whether a party should be
granted leave to file an amended complaint. These factors are: "(1) whether the
proposed amendment would cure the defective pleading; (2) whether other parties
would sustain prejudice or surprise by virtue of the proposed amendment; (3) whether
the proposed amendment is timely; and (4) whether previous opportunities to amend
the pleading could be identified." Loyola Academy, 146 Ill. 2d at 273. Any doubt as
to whether a plaintiff should be granted leave to file an amended complaint should
be decided in favor of allowance of the amendment. Schenker, 128 Ill. App. 3d at 492.
The second and third factors for consideration identified in Loyola were easily
satisfied in this case. The plaintiff's proposed third-amended complaint pleaded the
same causes of action against James and James Construction as had been pleaded
in prior timely-filed complaints. Consequently, the defendants could not claim
surprise or prejudice if the plaintiff had been allowed to file her third-amended
complaint. Further, since the actions pleaded in plaintiff's proposed third-amended
complaint arose out of the same transaction or occurrence set up in her prior timely-
filed complaints, there can be no argument that her proposed amendment was
untimely. See 735 ILCS 5/2-616(b) (West 1994). As to the fourth factor for
consideration, whether previous opportunities to amend could be identified, suffice
it to say that the plaintiff filed her motion for leave to amend her complaint against
James and James Construction 32 days after she was first advised that her claims
against these defendants were in any way deficient. The only issue that requires a
detailed analysis under the facts of this case is whether the plaintiff's proposed third-
amended complaint cured the defects in her prior complaint, thus satisfying the first
factor for consideration.
As indicated earlier in our opinion, counts II and III of the plaintiff's complaint
were deficient by reason of her failure to allege facts in support of her claims against
James Construction and James with the specificity required in actions for fraud and
violations of the Consumer Fraud and Deceptive Business Practices Act. Count IV
also was deficient as it set forth mere conclusions that the work performed by James
Construction failed to comply with the parties' contract. By contrast, the plaintiff's
proposed third-amended complaint is very specific and alleges facts in support of each
element of the causes of action set out therein.
In order to state a claim for fraud, a plaintiff must allege with particularity (1)
that the defendant made an untrue statement of material fact; (2) that he knew or
believed the statement to be false; (3) that the statement was made to induce the
plaintiff to act; and (4) that the plaintiff acted in justifiable reliance upon the
statement. HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 131 Ill. 2d 145, 165, 545 N.E.2d 672 (1989); Redarowicz v. Ohlendorf, 92 Ill. 2d 171, 441 N.E.2d 324 (1982). Active concealment of a material fact can also support an action for
fraud. See Cotter v. Parrish, 166 Ill. App. 3d 836, 520 N.E.2d 1172 (1988). However,
a promise to perform an act in the future made by one who intends not to perform
is not actionable fraud, unless the false promise of future performance is part of a
scheme or device to defraud another of her property. HPI, 131 Ill. 2d at 168;
Steinberg v. Chicago Medical School, 69 Ill. 2d 320, 334, 371 N.E.2d 634 (1977); Roda
v. Berko, 401 Ill. 335, 338, 81 N.E.2d 912 (1948).
Count II of the plaintiff's proposed third-amended complaint alleges, inter alia,
that James, acting on behalf of James Construction, agreed to construct the addition
to the plaintiff's residence in accordance with a certain architect's plans, never
intending to perform as promised; that the addition was not constructed in
accordance with those plans; that James intentionally concealed the fact that the
construction did not comply with the plans, and failed to request that village
authorities inspect the work that was done, which inspections would have disclosed
that the work did not conform to the plans or the applicable village ordinances; that
James made his false representations, concealed defective work, and failed to
schedule required village inspections, all to induce the plaintiff to enter into the
contract in the first instance and to make periodic payments under the contract as
work progressed; and that, in reliance upon James's intentional misrepresentations
and wilful concealment, the plaintiff both entered into the contract with James
Construction and made periodic payments thereunder. Additionally, this count
details with specificity the manner in which the construction failed to conform to the
plans.
We believe that the factual allegations of count II of the plaintiff's proposed
third-amended complaint more than satisfied the specificity required in order to state
a cause of action for fraud, and adequately pleaded a scheme to defraud, rendering
James's alleged false promises of future performance actionable.
Having found that count II of the plaintiff's proposed third-amended complaint
adequately sets forth a cause of action for fraud against James Construction and
James, it follows that count III of that complaint, which incorporates all of the
allegations of count II and alleges the business relationship between the parties,
adequately states a cause of action against the defendants for a violation of the
Consumer Fraud and Deceptive Business Practices Act. Siegel v. Levy Organization
Development Co., 153 Ill. 2d 534, 543, 607 N.E.2d 194 (1992).
Count IV of the plaintiff's proposed third-amended complaint sets forth with
particularity the defects in workmanship claimed, and otherwise alleges facts which,
if true, support an inference that the lien recorded by James Construction constitutes
an invalid cloud on the title to the plaintiff's property. As such, the count states a
good and sufficient cause of action to quiet title. See generally, Yeates v. Daily, 13 Ill. 2d 510, 150 N.E.2d 159 (1958).
Our review of the plaintiff's proposed third-amended complaint leads us to
conclude that it cured any defects existing in counts II, III and IV of her complaint.
In light of the fact that the plaintiff's proposed third-amended complaint satisfied all
four factors for consideration outlined in Loyola Academy, 146 Ill. 2d 263, we find
that the trial court erred when it denied the plaintiff's motion for leave to amend on
September 12, 1995.
For the foregoing reasons, we: 1) affirm the order of June 13, 1995, granting
judgment in favor of St. Paul on count V of the complaint; 2) affirm that portion of
the order of July 13, 1995, which struck counts II, III and IV of the complaint; 3)
vacate that portion of the order of July 13, 1995, which dismissed counts II, III and
IV of the complaint; 4) reverse the order of September 12, 1995, denying the plaintiff
leave to file her proposed third-amended complaint; and 5) remand this case to the
circuit court for further proceedings, with directions to enter an order granting the
plaintiff leave to file counts II, III and IV of her proposed third-amended complaint.
Affirmed in part, reversed in part, and vacated in part; cause remanded with
directions.
HARTMAN, P.J., and SOUTH, J., concur.