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, a fiduciary duty
exists between shareholders of a closely held corporation, where the parties decided to embark in
a business venture together. In Kulp,

41 Ill. 2d at 217-18

242 N.E.2d at 230

, plaintiff and
defendant were each 50% shareholders of a corporation on the verge of bankruptcy, and they
decided that defendant would find a buyer for both parties’ shares of stock. The parties had also
been personal friends, had acquired the company together, and were its principal officers. Kulp,

41 Ill. 2d at 222

. Defendant negotiated a better deal for himself with the
prospective buyers, under which the shareholders would each receive $25,000 for their shares of
stock, but unbeknownst to plaintiff, defendant would also receive an employment contract and a
share of the company’s profit upon his termination. Kulp,

41 Ill. 2d at 220-21

242 N.E.2d at 232

. The court found that defendant’s employment contract and profit-sharing benefits upon
termination were part of the buyers’ consideration for his share of stock. Kulp,

41 Ill. 2d at

221-
22,

242 N.E.2d at 232-33

.
The supreme court noted that a fiduciary relationship exists in all cases in which a
confidential relationship has been acquired, and the origin of that confidence may be moral,
social, domestic or merely personal. Kulp,

41 Ill. 2d at 222

242 N.E.2d at

233 (citing Pfaff v.
Petrie,

396 Ill. 44

, 50,

71 N.E.2d 345

, 348 (1947)). The court then reasoned that “[t]heir
decision to form and operate as a corporation rather than a partnership does not change the fact
that they were embarking on a joint enterprise, and their mutual obligations were similar to those
of partners.” (Internal quotation marks omitted). Kulp,

41 Ill. 2d at 222

242 N.E.2d at

233
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(quoting Tilley v. Shippee,

12 Ill. 2d 616

, 624,

147 N.E.2d 347

, 352 (1958)). The court then held
that since the corporation’s only two shareholders did not acquire its stock independently from
each other and had a prior relationship, defendant stood in a fiduciary relationship with plaintiff.
Kulp,

41 Ill. 2d at 222-23

; see also Hagshenas v. Gaylord,

199 Ill. App. 3d 60

, 70,

557 N.E.2d 316

, 322 (1990) (where stock was held by three shareholders, and the court
held that “in a closely held corporation, the mere fact that a business is run as a corporation
rather than a partnership does not shield the business venturers from a fiduciary duty similar to
that of true partners”).
In this case, we recognize that the trial court made a finding that plaintiff had not proved
the existence of a fiduciary duty or a breach thereof. However, it would seem that that finding is
directed entirely at count II of the complaint, which, as previously noted, raises a claim of breach
of fiduciary duty against Yusuf based solely on his superior knowledge and experience. This
finding does not purport to be derived from the special relationship between them as
shareholders of a closely held corporation who embarked on a business venture together.
Nothing in count II of plaintiff’s complaint purports to assert the existence of a fiduciary
relationship premised on those facts. Although the parties did not explicitly seek to invoke a
fiduciary relationship on those grounds, either at trial or in this appeal, the underlying facts
indisputably exist and control. As fully discussed above, the existence of those facts
unquestionably creates a fiduciary relationship. Kulp,

41 Ill. 2d at 222-23

306 Ill. App. 3d at 127-28

.
Thus, the trial court’s finding that there was no fiduciary relationship predicated upon the
allegations of count II would not preclude a determination that a fiduciary relationship
nonetheless existed based on the undisputed evidence of their co-venture. Accordingly, a
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finding that a fiduciary relationship existed between plaintiff and Yusuf based upon their joint
business venture would not require that we reverse the trial court’s finding that no fiduciary
relationship existed, where it is apparent that the trial judge’s finding was predicated on the facts
pleaded in count II and where the trial judge was not made sufficiently aware that the fiduciary
relationship nonetheless existed by virtue of their joint business venture.
Even if the trial court’s finding that there was no fiduciary relationship were absolute,
there is sufficient evidence on the record to establish that such a finding would be against the
manifest weight of the evidence and therefore reversible given the fact that a fiduciary
relationship exists in all certainty based on their business venture together. Such result is
consistent with the general proposition that a reviewing court is free to sustain a decision of the
lower court, regardless of the fact that the lower court may have erred in disregarding those
reasons, and/or the facts upon which they were predicated. People v. Johnson,

208 Ill. 2d 118

,
129,

803 N.E.2d 442

, 448-49 (2003). Consequently, Yusuf’s omission that plaintiff would not
acquire an interest in the real estate amounts to a misrepresentation upon which plaintiff’s claim
of fraud may be based.
The evidence in this case giving rise to the conclusion that a fiduciary relationship
existed among the parties is overwhelming. As noted, there is no dispute among the parties that
they did enter into a joint venture to purchase the gas station; the only dispute is whether the
acquisition also included the underlying real estate. In fact, plaintiff testified, and defendants
admitted, that they agreed to purchase the Clark station together and that each would contribute
an equal amount as his initial investment. The parties’ testimony also indicates that they agreed
to split the Clark station’s profits, which is corroborated by Prime Petroleum’s tax returns, which
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show plaintiff and both defendants listed as shareholders of that corporation. Further, both
defendants admitted that plaintiff was an equal owner of the Clark station’s business, which was
held by Prime Petroleum. Moreover, there is no dispute that they shared the responsibility to
maintain the gas station, nor is there any dispute as to their prior familiarity before the business
was acquired, leading to the joint acquisition of the gas station. Although Yusuf denied having a
friendship relationship with plaintiff, the trial court found that testimony not credible, and the
parties do not dispute that they had known each other for more than 10 years before purchasing
the gas station together. Accordingly, any finding by the trial court, predicated upon these facts,
that no fiduciary relationship existed between plaintiff and Yusuf would be against the manifest
weight of the evidence and reversible. Thus, there is no implication in the trial court’s judgment
order to preclude a finding that there was fraud, even if that fraud could be predicated on
omission and concealment, rather than upon affirmative misrepresentation.
Having found that there is a sufficient basis to find a fiduciary relationship existed
between plaintiff and Yusuf, which would support a finding of fraud based on omissions alone,
we now turn to whether the evidence supports the trial court’s finding that Yusuf omitted the fact
that plaintiff would not acquire an interest in the real estate to induce plaintiff’s monetary
contribution. Where a fiduciary relationship exists and a transaction is entered into, the
defendant has the burden to show by clear and convincing evidence that the subject transaction
was equitable and just. Peskin v. Deutch,

134 Ill. App. 3d 48

, 55,

479 N.E.2d 1034

, 1039
(1985); Babray v. Carlino,

2 Ill. App. 3d 241

, 251-52,

276 N.E.2d 435

, 442-43 (1971).
Plaintiff testified that neither defendant ever told him that he would not acquire any
interest in the real estate. While defendants testified that they specifically told plaintiff that
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plaintiff’s investment would be for one-third of the business, but not the real estate, the trial
court found that their testimony was not as credible as plaintiff’s. In addition, plaintiff’s
testimony that Yusuf omitted the fact that plaintiff would not acquire an ownership interest in the
real estate was corroborated by the undisputed fact that under the parties’ agreement, they would
each contribute an equal amount, and take a loan for the remainder of the price, which would be
paid back with the proceeds of the business. Although the real estate always remained in Pak
Associates, which is owned only by defendants, plaintiff’s testimony indicates that he believed
that Pak Associates held the company’s assets for the benefit of all three parties, which is why he
deposited his contribution in that company’s bank account. Thus, the evidence on record is
sufficient to support the trial court’s finding that Yusuf omitted the fact that plaintiff would not
acquire the real estate of the Clark station in return for his monetary contribution. Accordingly,
we conclude that the evidence on record is insufficient to rebut the presumption of fraud against
Yusuf with clear and convincing evidence. In addition, based upon the overwhelming evidence
in the record that a fiduciary relationship existed, and based upon the ample evidence to
substantiate the fact that no disclosure was made to plaintiff to alert him that he would not
receive any interest in the realty, the trial court had sufficient freestanding support for its finding
of fraud by omission, without having to rely on that presumption against Yusuf.
We next note that the evidence of Yusuf’s misrepresentation implicates the issue of
whether a future promise to perform may amount to a misrepresentation that gives rise to a claim
of fraud. This issue was not raised by the parties, but acknowledged by the trial court in its
judgment. It is well established that a promise to perform an act accompanied by an intention
not to perform is a misrepresentation upon which fraud can be based "if the false promise or
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representation of future conduct is alleged to be the scheme employed to accomplish the fraud."
(Internal quotation marks omitted). HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc.,

131 Ill. 2d 145

, 168,

545 N.E.2d 672

, 682 (1989) (quoting Steinberg v. Chicago Medical School,

69 Ill. 2d 320

, 334,

371 N.E.2d 364

, 641 (1977)); see Steinberg,

69 Ill. 2d at 333-34

, 371 N.E.2d
at 641 (plaintiff established a cause of action for fraud against private medical school, based on
the misrepresentation that the prospective student would be evaluated according to certain
academic and personal criteria, which was allegedly part of a scheme to accomplish fraud); see
also Vance Pearson, Inc. v. Alexander,

86 Ill. App. 3d 1105

, 1112,

408 N.E.2d 782

, 787 (1980)
(plaintiff established fraud by defendant, who promised to finish installing trucks by a certain
date with no intent to keep the promise, but intending for plaintiff to rely on that promise).
In this case, the trial court found that Yusuf represented to plaintiff that his contribution
was for a one-third interest in the gas station, with real estate. It also found that at that time,
Yusuf did not intend to convey any interest in the real estate to plaintiff, but acted with the intent
to induce plaintiff to make a monetary contribution toward the acquisition of the Clark station.
The evidence on record supports the trial court’s conclusion. As noted above, the parties’
testimony show that they agreed to make the same contribution toward the purchase of the gas
station, and take a loan for the remainder of the price, which would be paid with the business’
proceeds. In addition, plaintiff testified that he was never told that he would not have an interest
in the real estate. Based upon the totality of the transaction, the trial court concluded that Yusuf
never intended to convey a one-third interest in the real estate to plaintiff, and in light of the
evidence on record, that is a plausible inference. Accordingly, the fact that Yusuf’s
misrepresentation, or breach of his duty to disclose, involved a future promise with the intent not
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to perform does not preclude our conclusion that the evidence on record sufficiently supports the
trial court’s finding that he committed fraud upon plaintiff.
Yusuf next contends that plaintiff did not establish by clear and convincing evidence that
he justifiably relied on Yusuf’s alleged misrepresentation that plaintiff would have an ownership
interest in the real estate. He argues that plaintiff was not justified in relying on Yusuf’s
representation that he would have an ownership interest in the real estate because he was an
educated and experienced man and knew that the real estate was owned by Pak Associates. In
addition, Yusuf argues that plaintiff’s reliance was not justified because his relationship with
Yusuf had not been as close for several years, and this was their first business venture together.
Yusuf also argues that plaintiff should have been alerted that he was not acquiring part of the
real estate because at closing, he had contributed only $70,300 to acquire a property for about
$800,000, and never signed any loan documents for any part of the purchase price. Yusuf
further maintains that plaintiff did not justifiably rely on such a representation because he made
mortgage payments on behalf of Pak Associates, a company solely owned by defendants because
plaintiff should have been alerted that he did not have an ownership interest in the real estate
because he held no interest in Pak Associates. In support of those contentions, Yusuf notes that
plaintiff did not participate in the bidding process or dealt with the realtor, and never saw the
purchase contract for the Clark station indicating that he had an ownership interest in the real
estate, which, Yusuf claims, should have been sufficient to apprise him or raise the question of
whether he was going to be an owner of the real estate under their agreement. Yusuf maintains
that in light of the foregoing, plaintiff’s reliance on his promise to have a one-third ownership in
the real estate was not justified. We disagree.
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In determining whether a party justifiably relied on another’s representations, courts
consider all of the circumstances surrounding the transaction, including the parties’ relative
knowledge of the facts available, opportunity to investigate the facts and prior business
experience. Luciani v. Bestor,

106 Ill. App. 3d 878

, 884,

436 N.E.2d 251

, 256 (1982). Although
reliance is generally not justified where the parties have equal knowledge or means of obtaining
knowledge of the misrepresented facts, plaintiff may justifiably rely where defendant has created
a false sense of security or blocked further inquiry, provided that the facts were not such as to
put a reasonable person on inquiry. Los Amigos Supermarket, Inc. v. Metropolitan Bank & Trust
Co.,

306 Ill. App. 3d 115

, 127-28,

713 N.E.2d 686

, 695 (1999). The trial court’s finding on a
count of fraud will not be disturbed unless it was against the manifest weight of the evidence.
Wright,

144 Ill. App. 3d at 457

494 N.E.2d at 1274

; Los Amigos Supermarket,

306 Ill. App. 3d at 128

713 N.E.2d at 695

.
In addition, it is well established that in the absence of circumstances putting a
reasonable person on inquiry, that person is justified in relying on a representation without
engaging in further inquiry, especially where the misrepresentation concerns matters which may
be assumed to be within the knowledge of the party making them. Keeshin v. Levin,

31 Ill. App. 3d 790

, 796-97,

224 N.E.2d 898

, 903 (1975). In Keeshin, 31 Ill. App. 3d at 795-97, 224 N.E.2d
at 902-03, where the parties were the two shareholders of a close corporation who entered into
an agreement for defendant to buy plaintiff’s shares, the court found that plaintiff justifiably
relied on defendant’s representation that they owed $100,000 to a third party. In doing so, the
court rejected defendant’s contention that plaintiff should have suspected that his partner was a
crook and investigated whether his representation was true. Keeshin, 31 Ill. App. 3d at 796, 224
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N.E.2d at 903. The court then reasoned that because plaintiff was not involved in the transaction
that supposedly gave rise to the purported debt, he had no information to suspect the fraud, and
was justified in relying on defendant’s representations. Keeshin, 31 Ill. App. 3d at 797, 224
N.E.2d at 903; see also Los Amigos Supermarket,

713 N.E.2d at 695

(plaintiff, who was an experienced business man, was justified in relying on defendant’s
representation that he would form a corporation with plaintiff as a part owner, where defendant
had been plaintiff’s attorney for 10 years and gave various excuses for not producing the
company’s financial records when plaintiff requested them).
In this case there is sufficient evidence in the record to support the trial court’s finding
that plaintiff was justified in relying on Yusuf’s misrepresentations without further inquiry or
investigations. Although plaintiff’s testimony indicates that he has an associate’s degree and
owns real estate of his own, his testimony also suggests that he was relatively new to this
country when he entered into a business transaction with Yusuf. In addition, plaintiff testified
that when he entered into the agreement to purchase the Clark station, he did not have experience
in managing a gas station, or operating a business, and that he knew that Yusuf had experience
owning and operating a gas station with Siddiqui. Further, while this was the parties’ first
business venture together, there is no dispute that Yusuf and plaintiff had known each other for
more than 10 years. While the relationship between plaintiff and Yusuf may not be as close as
plaintiff suggests, the record supports the trial court’s finding that the parties had a long-standing
friendship and plaintiff trusted defendant as such. Such evidence supports the trial court’s
finding that plaintiff had a long-standing relationship with, and trusted Yusuf, and that plaintiff
relied on Yusuf’s superior knowledge and business experience.
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In addition, although the record indicates that plaintiff had contributed a total of $70,300
at closing and the purchase price was about $800,000, the record also shows that, under the
parties’ agreement, the majority of the purchase price would be paid for with a loan, which the
parties would repay using revenue proceeds from the business. Additionally, nothing in the
record indicates that defendants contributed more in the purchase of the Clark station than
plaintiff, which supports the conclusion that plaintiff had no reason to suspect that his equity in
the station and the real estate would be less than that of defendants.
Further, while the record indicates that under the parties’ agreement, the Clark station
would pay the mortgage on the premises as rent to Pak Associates, that is of no consequence if
the trial court accepted plaintiff’s testimony that he believed that he had an interest in Pak
Associates and that using that company to acquire the Clark station was a formality. In addition,
plaintiff’s testimony suggests that under that agreement, Pak Associates would be the
corporation used to purchase the Clark station and the three parties would each own a one-third
interest in the station, which developed plaintiff’s notion that he was acquiring an interest in Pak
Associates. Thus, the evidence does not appear to suggest that plaintiff had a reason to suspect
that he may not have an ownership in the real estate because he paid the mortgage on behalf of
Pak Associates as a form of rent. Finally, the trial court was free to believe plaintiff’s testimony
that the reason why he did not participate in the bidding process, deal with the realtor, or see the
purchase contract is that Yusuf assured plaintiff that the transaction would be done under a
corporate name and he did not need to participate. Without a reason to suspect that he would not
acquire an interest in the real estate, plaintiff would be justified in relying on Yusuf’s
representations, especially since he appears to have had superior knowledge of how the
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transaction would take place. Keeshin, 31 Ill. App. 3d at 796-97, 224 N.E.2d at 903.
Accordingly, the trial court’s finding that plaintiff justifiably relied on Yusuf’s misrepresentation
was not against the manifest weigh of the evidence.
Defendants next contend that the proper remedy in this case is to enforce the contract
between the parties and the trial court improperly rescinded the agreement. They contend that
rescinding the contract was an abuse of discretion because plaintiff shared in the business’s
profits in 2003 and 2004 and did not seek any remedy from defendants until 2006, when the
business was suffering losses. However, that contention cannot prevail, because it is not clear
from the evidence on record when plaintiff became aware of Yusuf’s fraud in inducing the
contract or of defendants’ breach of their agreement, and it does not appear that plaintiff was
aware of those facts until after he stopped working at the gas station.
Rescission of a contract refers to cancellation of that contract, so as to restore the parties
to the status quo ante, the status before they entered into the contract. Newton v. Aitken,

260 Ill. App. 3d 717

, 719,

633 N.E.2d 213

, 215 (1994). " ‘Rescission is an equitable remedy, the
application of which is left largely to the discretion of the trial court.’ [Citation.]" Newton,

260 Ill. App. 3d at 719

633 N.E.2d at 215

. A court may award rescission of a contract where there
was material breach, fraud, or mutual agreement. Newton,

260 Ill. App. 3d at 719

633 N.E.2d at 216

. A reviewing court will not disturb the trial court’s decision granting or denying rescission
of a contract unless it resulted from an abuse of discretion. 23-25 Building Partnership v. Testa
Produce, Inc.,

381 Ill. App. 3d 751

, 757,

886 N.E.2d 1156

, 1163 (2008).
Accordingly, the innocent party may prevent enforcement of a contract induced by fraud
by seeking rescission. Testa, 381 Ill. App. 3d at 757,

886 N.E.2d at

1163 . However, a party
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seeking to rescind a contract on the ground of fraud or misrepresentation must elect to do so
promptly after learning of the fraud or misrepresentation. Illinois State Bar Ass’n Mutual
Insurance Co. v. Coregis Insurance Co.,

355 Ill. App. 3d 156

, 165,

821 N.E.2d 706

, 713 (2004).
It is well-established that an unreasonable delay in taking the necessary steps to set aside
a fraudulent agreement will have the effect of affirming it. Illinois State Bar Ass’n Mutual
Insurance Co.,

355 Ill. App. 3d at 165

821 N.E.2d at 713

. Notably, a party does not waive his
right to rescind a fraudulent contract if he informs the other party of his intention to rescind the
contract in a timely manner. Illinois State Bar Ass’n Mutual Insurance Co.,

355 Ill. App. 3d at 170-71

821 N.E.2d at

717-18 . In Illinois State Bar Ass’n Mutual Insurance Co.,

355 Ill. App. 3d at 160

821 N.E.2d at 710

, an attorney’s insurer waited more than one year before seeking a
declaratory judgment that his contract to defend that attorney was rescinded because of a
material misrepresentation. However, the court found that the insurer had not waived its right to
rescind the policy where it sent a letter notifying the attorney that it would not renew his policy
less than one month after learning of the misrepresentation. Illinois State Bar Ass’n Mutual
Insurance Co.,

355 Ill. App. 3d at 170-71

821 N.E.2d at

717-18 .
However, parties are not barred from rescission if they ask for that remedy years after the
fraud occurred, but within a reasonable period after becoming aware of the facts giving rise to
the fraud on which they base the complaint. Pinelli v. Alpine Development Corp.,

70 Ill. App. 3d 980

, 1004-05,

388 N.E.2d 943

, 960 (1979). In that case, plaintiffs were unaware of defendant’s
fraud and filed a complaint seeking a resulting trust against certain property, which had been
transferred to a company that plaintiffs had sold to defendant. Pinelli,

70 Ill. App. 3d at 984-85

388 N.E.2d at 946

. During trial, evidence showed that defendant had misrepresented to plaintiffs
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that he had a preexisting interest in that company when he bought plaintiffs’ shares in the
company, and plaintiffs filed a complaint for fraud six weeks thereafter. Pinelli,

70 Ill. App. 3d at 1001-05

388 N.E.2d at 958-960

.
Thus, the court in Pinelli found that although the fraud occurred some time before
August 1970, but plaintiffs did not request rescission until December 1973, they did not become
aware of the fraud until after close of the evidence, and were not barred from seeking rescission.
Pinelli,

70 Ill. App. 3d at 1004

388 N.E.2d at 960

; cf. Lipkin v. Burnstine & Chicago Raburn
Corp.,

18 Ill. App. 2d 509

, 518-19,

152 N.E.2d 745

, 750 (1958) (plaintiff barred from seeking
rescission 17 months after taking possession of certain property where nothing indicates that
defect was unascertainable by reasonable inspection).
Finally, if no evidence in the record suggests that a party seeking rescission had notice of
the facts justifying such rescission prior to the time he sought that remedy, the record cannot
support a finding that the party waived his right to rescind. YPI 180 N. LaSalle Owner, LLC v.
180 N. LaSalle II, LLC,

403 Ill. App. 3d 1

, 5-6,

933 N.E.2d 860

, 864 (2010). In that case, a third
party entered into a contract with defendant in August 2008, subsequently agreed to several
amendments to the contract, and later assigned its rights under the contract to plaintiff. YPI 180
N. LaSalle Owner, 403 Ill. App. 3d at 3,

933 N.E.2d at 862-63

. Plaintiff released $6 million in
earnest money to defendant, but subsequently failed to close on the transaction because it did not
obtain financing due to a global credit crisis that year. YPI 180 N. LaSalle Owner, 403 Ill. App.
3d at 4,

933 N.E.2d at

863 . Defendant retained the deposited earnest money as his sole remedy
for breach of contract, and plaintiff filed a complaint for rescission of contract based on
impossibility of performance. YPI 180 N. LaSalle Owner, 403 Ill. App. 3d at 4, 933 N.E.2d at
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863. Defendant argued, inter alia, that plaintiff did not have standing to seek rescission because
the third-party assignor waived its right to seek rescission because it already knew of the global
crisis when it assigned the contract and executed amendments to it, thereby affirming the
contract. YPI 180 N. LaSalle Owner, 403 Ill. App. 3d at 5,

933 N.E.2d at 864

. The court held
that plaintiff had standing to seek rescind the contract because there was nothing in the record to
suggest that at the time plaintiff or the third-party assignor executed amendments to the contract,
they possessed knowledge of the 2008 global credit crisis to justify rescission of the contract.
YPI 180 N. LaSalle Owner, 403 Ill. App. 3d at 6,

933 N.E.2d at 864

.
In this case, it is not clear from the evidence on record the exact time frame when
plaintiff could have become aware of Yusuf’s fraud, or defendants’ breach of their contract. The
parties’ testimony indicates that in September 2006, Siddiqui presented plaintiff with an
accounting of the business’s losses, and when plaintiff refused to contribute more capital, Yusuf
ordered plaintiff not to go back the station. The evidence on record appears to suggest that it
was not until that time that plaintiff stopped working at the Clark station and had a falling out
with defendants. Thus, it does not appear that at any point before that time, plaintiff had any
actionable indication that defendants had not given him any interest in the Clark station’s most
valuable asset, which was its real estate. The record also indicates that plaintiff filed his first
complaint against defendants on November 6, 2006, two months after he was ordered not to go
back to the gas station. This evidence supports the conclusion that the trial court did not abuse
its discretion in granting a rescission of the parties’ contract.
Although the record shows that plaintiff began asking Yusuf for proof of his ownership
in the Clark station in 2004, he did not specifically inquire as to the real estate. The parties’
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testimony suggests that Yusuf attempted to produce a set of minutes of Prime Petroleum’s
meeting of the board of directors, which purported to confirm plaintiff’s interest in the Clark
station, without mentioning plaintiff’s ownership interest in the real estate, or lack thereof. In
addition, plaintiff testified that the accountant who sent him that document averred that the
minutes of the meeting indicated that plaintiff was a shareholder of the business. If the trial
court accepted plaintiff’s testimony that the accountant assured him that the minutes produced
listed him as a shareholder of the business, which is all that plaintiff had asked for, the trial court
was free to conclude that the absence of any mention to the real estate in the minutes was not an
indicator that plaintiff was, or should have been, alerted to the fraud or breach of contract. In
addition, while the parties’ testimony indicates that plaintiff procured an attorney in 2005, the
trial court could have accepted plaintiff’s testimony that Yusuf told plaintiff that they could
resolve their concerns without an attorney and that plaintiff accepted Yusuf’s assurance and
remained unaware of the fact that he did not have an interest in the gas station’s real estate.
Accordingly, the evidence on the record is insufficient to find that the trial court abused its
discretion in granting a rescission of the parties’ contract.
Alternatively, defendants contend that even if awarding plaintiff rescission were correct,
awarding him one-third of the reduction in Pak Associates’ loan principal balance was not
proper because it is inconsistent with the remedy of rescission. We agree.
As previously indicated, the remedy of rescission contemplates voiding the contract as if
it had never existed, returning the parties to the status quo ante, their precontract status, and
generally requires each party to return to the other the benefits received under the contract.
Newton,

260 Ill. App. 3d at 719-20

633 N.E.2d at 216

. In addition, it is well established that a
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remedy based on rescission is inconsistent with a remedy of damages, which arises out of the
enforcement of the contract, and the award of both is, therefore, inappropriate. Newton,

633 N.E.2d at 216-17

. In that case, the trial court awarded rescission of a
contract to plaintiff, who had sued defendants for fraud, and denied defendants damages on their
countercomplaint for breach of contract. Newton,

260 Ill. App. 3d at 718

633 N.E.2d at 215

.
The reviewing court, in affirming that decision, found that the election of rescission, which is
the disaffirmance of the contract, requires the abandonment of an award of damages, which is
consistent with affirmance of the contract. Newton,

633 N.E.2d at 216

.
Thus, the court held that a simultaneous award of both remedies would be inappropriate, since
they are inconsistent. Newton,

633 N.E.2d at 216-17

.
In this case, plaintiff’s award includes the sum of $120,000, which he was induced to pay
to Pak Associates in exchange for his interest in the Clark station; the sum of $3,400, which he
was induced to pay for an air conditioning unit for the gas station; and the sum of $45,324.31,
which is one-third of the principal payments made on the Pak Associates mortgage. The record
indicates that the sum of $45,324.31, which was paid on the mortgage on the premises,
originated from the Clark station’s revenue proceeds. The trial court correctly notes that at least
one-third of the $135,972 reduction in Pak Associates’ loan principal balance from September
26, 2003, to December 21, 2006, was taken by defendants from plaintiff’s proportionate share of
the profits of the Clark station’s business. However, plaintiff’s right to one-third of the
business’s monthly profits is a benefit that arose under the contract. Thus, awarding him that
sum in damages is consistent with affirming his contract with defendants and inconsistent with
placing him in his precontract position. See Newton,

633 N.E.2d at

216-
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1-09-3606
17. Accordingly, we reverse the trial court’s award with respect to this sum, and pursuant to our
authority under Illinois Supreme Court Rule 366(a)(5) (eff. Feb. 1, 1994), we reduce the
judgment by $45,324.31.
Defendants further contend, and we agree, that they should have been awarded the return
of the profits that plaintiff received when the business was profitable. It is a well-established
principle that "[w]here rescission is awarded then, the proper measure of recovery is restitution
of the consideration and other benefits received by the parties under the contract." (Internal
quotation marks omitted.) (Emphasis omitted). Puskar v. Hughes,

179 Ill. App. 3d 522

, 528-29,

533 N.E.2d 962

, 967 (1989). This rule applies even where the party against whom rescission is
sought committed fraud. Puskar,

179 Ill. App. 3d at 528

533 N.E.2d at 966

. In that case,
counterplaintiff sought rescission of a contract to purchase a company based in part on the
seller’s misrepresentations of the value of its assets. Puskar,

179 Ill. App. 3d at 526

533 N.E.2d at 965

. In affirming the trial court’s award of rescission, the reviewing court held that the trial
court correctly ordered the counterplaintiff to return the rental value of the company’s premises
and equipment used, which were benefits he had received. Puskar,

179 Ill. App. 3d at 528

533 N.E.2d at 966

; see also Felde v. Chrysler Credit Corp.,

219 Ill. App. 3d 530

, 541-42,

580 N.E.2d 191

, 199-200 (1991) (reviewing court ordered a setoff against plaintiff’s award for the benefit of
driving the car purchased under the contract being rescinded).
In this case, Prime Petroleum’s tax returns report plaintiff’s share of the company’s
income in 2003 as 33.33% of $422, which is $141; and in 2004, plaintiff’s share is reported as
33.33% of $42,403, which is $14,133. Defendants correctly note that plaintiff received the
benefit of $14,274 during those years under the agreement with defendants, and plaintiff does
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not dispute that fact. Such evidence is sufficient to support the conclusion that the trial court
improperly denied defendants the return of the profits received by plaintiff in the amount of
$14,274. Puskar,

179 Ill. App. 3d at 528

533 N.E.2d at 966

. Accordingly, pursuant to our
authority under Illinois Supreme Court Rule 366(a)(5) (eff. Feb. 1, 1994), we further reduce the
judgment amount by $14,274. See Felde,

219 Ill. App. 3d at 542

, 580 N.E.2d at 200.
On cross-appeal, plaintiff contends that the trial court’s denial of leave to amend his
complaint to conform the pleadings to the proofs pursuant to section 2-616 of the Illinois Code
of Civil Procedure (735 ILCS 5/2-616 (West 2008)) was an abuse of discretion. Plaintiff’s
proposed amended complaint added Siddiqui as a defendant on count I, which was the court for
fraud. Plaintiff maintains the factual findings by the trial court supported a finding of fraud
against both defendants Yusuf and Siddiqui, and that judgment on count I was entered against
both defendants, even though only Yusuf was named a defendant on that count. Plaintiff’s
contention lacks merit because he had the opportunity to name Siddiqui as an additional
defendant for fraud before the court entered its final judgment.
The Illinois Code of Civil Procedure (Code) provides, in pertinent part:
"New parties may be added and parties misjoined may be dropped by order of the
court, at any stage of the cause, before or after judgment, as the ends of justice
may require and on terms which the court may fix." 735 ILCS 5/2-407 (West
2009).
In addition, after a final judgment, a party may amend pleadings only to conform the
pleadings to the proofs as provided under section 2-616 of the Code. Mandel v. Hernandez,

404 Ill. App. 3d 701

, 707,

936 N.E.2d 1079

, 1085 (2010). Under that provision,
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1-09-3606
"A pleading may be amended at any time, before or after judgment, to conform
the pleadings to the proofs, upon terms as to costs and continuances that may be
just." 735 ILCS 5/2-616(c) (West 2009).
While this court generally encourages a liberal construction of section 2-616 as applied to
prejudgment motions, it has recognized a separate discretionary standard for allowing
amendments after a final judgment. Mandel, 404 Ill. App. 3d at 707-08,

. In
that case, where plaintiff filed a motion to amend his complaint after judgment, the court noted
that courts consider certain factors in determining whether a court properly ruled on a motion to
amend, such as whether the amendment would cure the defective pleading, whether it would
cause prejudice to other parties, and whether it is timely. Mandel, 404 Ill. App. 3d at 708,

. However, the court then found that those factors are not applicable to motions
to amend filed after judgment, and that even if they were applicable, plaintiff would not prevail
where she had opportunities to amend her complaint prior to final judgment. Mandel, 404 Ill.
App. 3d at 708-09,

. The court reasoned that a motion under section 2-616(c)
is "improper where, after judgment, the moving party seeks to add claims or causes of action that
were available at the time of the original complaint." Mandel, 404 Ill. App. 3d at 708,