Gagnon v. Schickel

ILLINOIS OFFICIAL REPORTS
Appellate Court
Gagnon v. Schickel, 2012 IL App (1st) 120645Appellate Court MICHAEL J. GAGNON, Plaintiff-Appellant, v. DEBORAH
Caption SCHICKEL, Defendant-Appellee (Michael J. Laird and Mark Iles, Jr.,
Defendants).
District & No. First District, First Division
Docket No. 1-12-0645
Filed December 21, 2012
Held In an action arising from a joint venture between plaintiff and defendant
(Note: This syllabus in which they were allegedly “doing real estate together,” the trial court
constitutes no part of properly dismissed the counts seeking a declaratory judgment and
the opinion of the court specific performance and claiming unjust enrichment, since plaintiff’s
but has been prepared claims were contradicted by the gift letter he wrote to defendant, there
by the Reporter of was no written contract, and a claim for unjust enrichment could not be
Decisions for the based on an express oral agreement; however, the trial court’s rulings on
convenience of the the claim for unjust enrichment related to promises defendant allegedly
reader.)
made to plaintiff with respect to the second property purchased and on
claims for promissory fraud and for a constructive trust were reversed and
the cause was remanded.
Decision Under Appeal from the Circuit Court of Cook County, No. 08-CH-37052; the
Review Hon. Martin S. Agran, Judge, presiding.
Judgment Affirmed in part, reversed in part, and remanded with directions.
Counsel on Lavin & Waldon, P.C., of Chicago (Dennis C. Waldon, of counsel), for
Appeal appellant.
Kaplan Silverman LLC, of Chicago (Arnold Kaplan, of counsel), for
appellee.
Panel PRESIDING JUSTICE HOFFMAN delivered the judgment of the court,
with opinion.
Justices Cunningham and Delort concurred in the judgment and opinion.
OPINION
¶1 The plaintiff, Michael Gagnon, appeals from the trial court’s judgment finding in favor
of the appellee, Deborah Schickel, on several counts of his 15-count complaint against her
and two other defendants, Michael Laird and Mark Iles, Jr.1, who are not parties to this
appeal. On appeal, the plaintiff argues that the trial court erred in dismissing three of the
counts of his complaint prior to trial and in finding in favor of Schickel on three additional
counts following trial. For the reasons that follow, we affirm the trial court’s dismissal of the
first three counts of the plaintiff’s complaint, but we reverse the trial court’s rejection of
three additional claims following a trial. We remand the cause with directions for the trial
court to make further findings in accordance with the views expressed herein, and to order
damages as appropriate.
¶2 The plaintiff filed his amended complaint in May 2005. In that complaint, the plaintiff
alleged that he and Schickel agreed in 2004 to purchase a Tinley Park house together and to
share the attendant costs and profits. The plaintiff alleged that he contributed his portion of
the purchase price and that he thereafter paid for a portion of the utilities, taxes, and
improvements. However, despite her assurances that she would file a quitclaim deed
conferring upon him a one-half interest in the Tinley Park property, Schickel never filed that
deed; instead, she remained the sole record owner of the Tinley Park property. In December
2006, Schickel learned that the plaintiff intended to purchase investment property in
Bourbonnais. The complaint averred that she “demanded *** that she be put on the title as
a co-owner, because, in her words, ‘we are doing real estate together.’ ” Based on his belief
that the appellee had filed the quitclaim deed for the Tinley Park property naming him as a
co-owner, the plaintiff acceded to Schickel’s demand. The complaint alleged that, thereafter,
the plaintiff paid all of the expenses related to the Bourbonais property, including mortgage
payments, taxes, appliances, and improvements, and he received all of the rental income that
1
Iles’s filings in the circuit court indicate that his name is “Mark Iles,” not “Mark Iles, Jr.”
However, we use the spelling from the complaint.
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the property produced.
¶3 The complaint stated that, in 2008, the parties’ personal relationship soured, and Schickel
thereafter denied that the plaintiff had any interest in the Tinley Park property. It was only
then, the plaintiff alleged, that he learned that Schickel never conveyed a one-half interest
in the property to him.
¶4 Based on the above allegations, the plaintiff brought claims against Schickel seeking
recoupment of money he had contributed to the properties, an order compelling Schickel to
convey to him a one-half interest in the Tinley Park property, and an order compelling
Schickel to relinquish any interest in the Bourbonnais property. For the remedies relating to
the Tinley Park property, the plaintiff asserted claims for declaratory judgment (count I),
specific performance (count II), unjust enrichment (count III), breach of contract (count V),
breach of fiduciary duty (count VI), promissory estoppel (count VII), equitable estoppel
(count VIII), common law fraud (count IX), constructive trust (count X), and recission of his
gift (i.e., his contribution to the purchase price) to Schickel (count XI). With respect to the
Bourbonnais property, the plaintiff asserted a cause of action based on unjust enrichment
(count IV), contending that it would be unjust to allow Schickel to retain her interest in the
Bourbonnais property, because the plaintiff conveyed it to her, and paid all the expenses
related to the property, based on his belief that he shared ownership of the Tinley Park
property. The plaintiff also sought replevin of personal property left at the Tinley Park
residence (count XII). The remaining three counts of the complaint alleged malpractice or
negligence against Laird, an attorney involved in the transactions (counts XIII and XV), and
Iles, a mortgage broker involved in the transactions (count XIV). Those latter three counts
were dismissed before trial.
¶5 Count I, which asserted a claim for declaratory relief against Schickel, sought
declarations that (1) the parties had entered into a joint venture and oral agreement to
purchase the Tinley Park property together, to acquire a 50% interest in the property, and
share the associated costs of maintaining the property and the profits from the appreciation
of the property; (2) Schickel breached the terms of their oral agreement by failing to record
the quitclaim deed; and (3) Schickel is bound by the terms of the joint venture and the
agreement to sign the quitclaim deed, and have it recorded with the Cook County recorder
of deeds.
¶6 Count II sought a judgment requiring Schickel to specifically perform under the terms
of the oral agreement and joint venture with respect to the Tinley Park property. The
complaint requested that the circuit court order Schickel to sign the quitclaim deed and have
it recorded immediately with the Cook County recorder of deeds. In addition, the plaintiff
requested injunctive relief prohibiting respondent from acting inconsistently with the terms
of the agreement.
¶7 Count III alleged, in the alternative, that Schickel was unjustly enriched by the sole
ownership of the Tinley Park property. It asserted that during the closing of that property,
Schickel received a gift from the plaintiff in the amount of $147,250, which was conditioned
on her signing a quitclaim deed conveying 50% ownership of the Tinley Park property to the
plaintiff within 30 days of closing and recording it with the Cook County recorder of deeds.
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The plaintiff alleged that he paid for the gas and telephone bills related to the Tinley Park
property, as well as improvements and remodeling in excess of $37,000; one-half of the real
estate taxes, estimated at $5,300 annually; and that he spent more than 2,700 hours working
on the Tinley Park property improvements and remodeling. Count III further alleged that
Schickel obtained a $75,000 line of credit and used the Tinley Park property as collateral.
Moreover, the plaintiff claimed that the Tinley Park property is valued at least at $350,000
and that Schickel was unjustly enriched by retaining the benefits of the plaintiff’s
contributions, monetary and otherwise.
¶8 Pursuant to Schickel’s motion, the trial court dismissed counts I, II, III, V, VI, VIII, and
XI of the complaint. In dismissing count I, the trial court concluded that the plaintiff failed
to adequately plead the elements necessary to show the parties’ intent to form a joint venture.
The court further found that the gift letter, which was attached as an exhibit to the complaint,
directly contradicted, and therefore defeated, the plaintiff’s claim alleging that the $147,250
he gave to Schickel was a conditional gift.
¶9 With regard to count II, the trial court ruled that the plaintiff’s claim for specific
performance of the alleged oral contract must be dismissed because the statute of frauds
precludes enforcement of a contract for the sale of land without a signed, written contract.
The court also concluded, that even if the contract were enforceable, the plaintiff did not
satisfy his obligation under the contract, because the $147,250 was not given in exchange for
an ownership interest in the property or any obligation of repayment, as demonstrated by the
gift letter that was attached as an exhibit to the complaint.
¶ 10 Lastly, count III was dismissed based on the trial court’s determination that the theory
of unjust enrichment can apply only to a contract implied in law. Therefore, the court held
that the claim for unjust enrichment could not proceed where the plaintiff simultaneously
alleged the parties had an express oral agreement.
¶ 11 The circuit court also initially dismissed count IV, on the basis that an unjust enrichment
theory asserts the existence of a quasi-contractual relationship, which cannot exist where
there is an actual contract. The court reasoned that the mortgage and title documents
reflecting Schickel’s ownership constituted such an actual contract. However, in response
to Schickel’s motion to reconsider, the court conceded that the dismissal had been improper,
and it reinstated count IV. The cause proceeded to trial on counts IV, VII, IX, X, and XII.
¶ 12 In his trial testimony, the plaintiff explained that he contributed to the purchase of the
Tinley Park home with the expectation that Schickel would file a quitclaim deed conveying
a one-half interest to him. In fact, he testified, she agreed to do so, assured him after the
purchase that she would do so, but in actuality never did. He also described improvements
he had made to the Tinley Park residence. He further explained that he purchased the
Bourbonnais property with his own money, but allowed Schickel to have a one-half
ownership interest, because she told him that they were “doing real estate together.” He
stated that he paid all expenses relating to the Bourbonnais property. For her part, Schickel
testified that the plaintiff agreed to allow her to retain full ownership of the Tinley Park
property as a way to assuage her concern that joint ownership might complicate any breakup
of their volatile relationship. She also said that the parties reached an agreement to have the
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plaintiff pay for the Bourbonnais property but to share ownership.
¶ 13 In a memorandum decision following the trial, the circuit court granted the plaintiff a
judgment based on promissory estoppel (count VII), premised on a finding that the plaintiff
helped purchase the Tinley Park property in reliance on a promise that he would be given an
equal ownership share. The court found in Schickel’s favor on the plaintiff’s claims of unjust
enrichment (count IV) and common-law fraud (count IX), and it rejected the plaintiff’s
requests for a constructive trust (count X) or for replevin (count XII).
¶ 14 The court rejected the unjust enrichment claim for the same reasons it had initially
dismissed the claim: it reasoned that the existence of an actual contract (the mortgage and
deed relating to the Bourbonnais property) precluded a cause of action for unjust enrichment,
which is a quasi-contractual remedy. With respect to the common-law fraud claim, the court
concluded that promissory fraud “is not actionable in Illinois unless the promise is part of a
scheme to defraud.” The court found that Schickel “promised to quit claim one half of the
Tinley Park property to Plaintiff” but “never intended to do so,” and held that “[t]his meets
the definition of promissory fraud” and thus that the plaintiff could not succeed on his fraud
claim. The court rejected the plaintiff’s request for a constructive trust premised on the fraud
argument which the court had rejected.
¶ 15 Based on its promissory estoppel finding, the court awarded the plaintiff a refund of the
money he had contributed to the purchase of the Tinley Park property, plus one-half of the
property’s increase in value.
¶ 16 While a postjudgment motion remained pending, the plaintiff filed an appeal of the trial
court’s ruling, which we dismissed as premature. Gagnon v. Schickel, 2012 IL App (1st)
111421-U. The plaintiff thereafter obtained a final ruling on the pending motion and filed
this timely appeal.
¶ 17 The plaintiff’s first argument on appeal is that the trial court erred in dismissing the first
three counts of his complaint. A motion to dismiss a complaint may be brought under section
2-615 or section 2-619 of the Code of Civil Procedure. See 735 ILCS 5/2-615, 2-619 (West
2010). A section 2-615 motion to dismiss attacks the legal sufficiency of the complaint and
it must point, with specificity, to the alleged defects on the face of the complaint. See 735
ILCS 5/2-615 (West 2010). On review of a dismissal for failure to state a claim, the court
concerns itself only with the allegations of the complaint and whether they adequately state
the necessary elements for the cause of action alleged. Duncan v. Rzonca, 133 Ill. App. 3d
184, 190-91, 478 N.E.2d 603, 607 (1985). On the other hand, a section 2-619 motion to
dismiss does not attack the legal sufficiency of the claims, but rather attacks the complaint
by raising defenses or other affirmative matters, based on the allegations pleaded or outside
authority, which would defeat the plaintiff’s claims. Aurelius v. State Farm Fire & Casualty
Co., 384 Ill. App. 3d 969, 972-73, 894 N.E.2d 765, 769 (2008).
¶ 18 Pleadings must be construed liberally with the aim of “doing substantial justice between
the parties.” Wysocki v. Bedrosian, 124 Ill. App. 3d 158, 162, 463 N.E.2d 1339, 1343 (1984).
The reviewing court should interpret the assertions of the complaint in the light most
favorable to the plaintiff by accepting as true all well-pleaded facts and the reasonable
inferences that can be drawn from them. Id. at 162-63, 463 N.E.2d at 1343; see also Aurelius,
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384 Ill. App. 3d at 973, 894 N.E.2d at 769 (noting that this rule applies to motions to dismiss
brought under both sections 2-615 and 2-619). An exhibit attached to a complaint becomes
part of the pleading for every purpose, including the decision on a motion to dismiss.
Wysocki, 124 Ill. App. 3d at 162, 463 N.E.2d at 1343 (citing Ill. Rev. Stat. 1981, ch. 110, ¶ 2-
606); see also Brunette v. Vulcan Materials Co., 119 Ill. App. 2d 390, 395-96, 256 N.E.2d
44, 46 (1970) (affirming the dismissal of a complaint for specific performance where the
plaintiff failed to adequately plead the existence of an oral contract because exhibits to the
complaint showed that the parties intended to subsequently formalize their agreement in
writing, but did not do so). Where an exhibit contradicts the allegations in a complaint, the
exhibit controls. In re Estate of Casey, 222 Ill. App. 3d 12, 19, 583 N.E.2d 83, 88 (1991)
(citing Outboard Marine Corp. v. James Chisholm & Sons, Inc., 133 Ill. App. 3d 238, 478
N.E.2d 651 (1985)). A trial court’s dismissal pursuant to a section 2-615 or section 2-619
motion is reviewed de novo. Aurelius, 384 Ill. App. 3d at 973, 894 N.E.2d at 769.
¶ 19 Here, the plaintiff alleged that he and Schickel entered into an oral agreement, pursuant
to which he agreed to pay Schickel one-half the purchase price of the Tinley Park property
in exchange for her promise to convey a 50% interest to him after the closing. As such, the
essential nature of the agreement between the plaintiff and Schickel was for the purchase of
an interest in real property. Accordingly, the statute of frauds would prevent enforcement of
their alleged oral agreement. See 740 ILCS 80/2 (West 2010). The plaintiff attempts to
overcome this hurdle by alleging that he “fully performed all of his obligations pursuant to
the Joint Venture and the [a]greement” and, thus, that the performance exception to the
statute of frauds is applicable to permit enforcement of the alleged agreement despite the
absence of a written agreement. See Anson v. Haywood, 397 Ill. 370, 379, 74 N.E.2d 489,
493-94 (1947) (holding that oral contracts for the future conveyance of land are not barred
by the statute of frauds if one party has already fully performed his part of the agreement).
As his performance of the alleged agreement, the plaintiff points to: (1) his expenditures
related to the improvements and remodeling of the property; (2) his annual payment of 50%
of the property’s real estate tax; (3) the hours he dedicated to working on the improvements
and remodeling of the property; (4) his payments of all the gas and telephone bills related to
the property; and (5) his conditional gift to Schickel of 50% of the purchase price for the
property. However, we need not decide whether the statute of frauds bars the plaintiff’s
claim, because we find that he has failed to adequately plead the existence of an oral contract.
¶ 20 The plaintiff alleged, as a term of the oral contract, that he gave Schickel a “conditional
gift” consisting of one-half of the purchase price for the property. However, the gift letter that
was attached as an exhibit to the plaintiff’s complaint entirely refutes his allegations that his
monetary gift was conditioned on some subsequent action by Schickel. The gift letter clearly
states that it was “a bona fide gift with no obligation expected or implied, to repay this sum
at any time” and that the donor’s gift is not “being made available from any person or entity
with an interest in the sale of this property.”
¶ 21 The plaintiff attempts to explain the apparent discrepancy by arguing that a conveyance
of an interest in the property is not the equivalent of repayment, and, therefore, the exhibit
is not inconsistent with his claim that the amount tendered was a conditional gift. This
argument is unpersuasive. The later conveyance of an interest in the property is a form of
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repayment, expected or implied. Moreover, the plaintiff has clearly alleged in his complaint
that he had an interest in the sale of the property, i.e, acquiring an ownership interest in the
real estate. Accordingly, the gift letter the plaintiff attached to his complaint directly refutes
any allegation that he had a contract for the conveyance of property. As noted above, where
a complaint’s allegations and exhibits conflict, the exhibits control. See Estate of Casey, 222
Ill. App. 3d at 19, 583 N.E.2d at 88 (citing Outboard Marine, 133 Ill. App. 3d 238, 478
N.E.2d 651).
¶ 22 Because an exhibit to the complaint contradicts an essential term of the alleged oral
contract, he has failed to sufficiently allege an oral contract. Therefore, the plaintiff’s claim
for specific performance was properly dismissed for failure to adequately plead a cause of
action. See Intini v. Marino, 112 Ill. App. 3d 252, 256, 445 N.E.2d 460, 464 (1983)
(concluding that to enforce an oral agreement for the sale of land, “ ‘the court must find [in
part] that the terms of the contract are clear, definite, and unequivocal’ ” (quoting Blaise v.
Stein, 75 Ill. App. 3d 793, 796, 394 N.E.2d 836, 839 (1979))).
¶ 23 We next consider the propriety of the dismissal of the plaintiff’s claim for declaratory
relief. Declaratory judgment is a mode of relief which permits a court to consider a matter
after the dispute has developed, but “before steps are taken which give rise to claims for
damages or other relief.” (Internal quotation marks omitted.) Beahringer v. Page, 204 Ill. 2d
363, 373, 789 N.E.2d 1216, 1223 (2003) (quoting Kaske v. City of Rockford, 96 Ill. 2d 298,
306, 450 N.E.2d 314, 317-18 (1983)). Its purpose is to allow the parties to resolve the
disputes or aspects of the dispute before either party has changed their position in ways that
will irrevocably affect their rights. First of America Bank, Rockford, N.A. v. Netsch, 166 Ill.
2d 165, 174, 651 N.E.2d 1105, 1109 (1995). To successfully allege a cause of action for
declaratory judgment, the complaint must sufficiently state an actual and legal controversy
and a request for declaration of rights. Senese v. Climatemp, Inc., 222 Ill. App. 3d 302, 313,
582 N.E.2d 1180, 1187 (1991).
¶ 24 In this case, the plaintiff’s complaint sought declarations that the parties had entered into
a joint venture and an agreement to purchase the Tinley Park property, that Schickel breached
that agreement, that she was bound to perform her obligations under the agreement, and that
she is estopped from disputing the aforementioned declarations. The plaintiff’s allegations
rely on a determination that a valid, enforceable agreement existed between the parties.
However, for the reasons we have already discussed, the plaintiff has failed to allege the
existence of an enforceable agreement. Accordingly, we conclude that the plaintiff’s claim
for declaratory relief was properly dismissed.
¶ 25 We next address the plaintiff’s argument that the circuit court erred in dismissing his
claim for unjust enrichment relating to the Tinley Park property. To state a claim for unjust
enrichment, “a plaintiff must allege that the defendant has unjustly retained a benefit to the
plaintiff’s detriment, and that defendant’s retention of the benefit violates the fundamental
principles of justice, equity, and good conscience.” HPI Health Care Services, Inc. v. Mt.
Vernon Hospital, Inc., 131 Ill. 2d 145, 160, 545 N.E.2d 672, 679 (1989). Unjust enrichment
is not an independent cause of action. Martis v. Grinnell Mutual Reinsurance Co., 388 Ill.
App. 3d 1017, 1024, 905 N.E.2d 920, 928 (2009) (citing Mulligan v. QVC, Inc., 382 Ill. 2d
620, 631, 888 N.E.2d 1190, 1200 (1989)). Rather, “it is a condition that may be brought
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about by unlawful or improper conduct as defined by law, such as fraud, duress, or undue
influence” (internal quotation marks omitted) (Alliance Acceptance Co. v. Yale Insurance
Agency, Inc., 271 Ill. App. 3d 483, 492, 648 N.E.2d 971, 977 (1995)), or, alternatively, it may
be based on contracts which are implied in law (Perez v. Citicorp Mortgage, Inc., 301 Ill.
App. 3d 413, 425, 703 N.E.2d 518, 526 (1998)). This theory is inapplicable where an express
contract, oral or written, governs the parties’ relationship. Id. A plaintiff is permitted to plead
breach of contract claims in addition to unjust enrichment. See Bureau Service Co. v. King,
308 Ill. App. 3d 835, 721 N.E.2d 159 (1999) (a complaint may properly plead alternative
theories of recovery despite their apparent inconsistency). Thus, although a plaintiff may
plead claims alternatively based on express contract and an unjust enrichment, the unjust
enrichment claim cannot include allegations of an express contract. Guinn v. Hoskins
Chevrolet, 361 Ill. App. 3d 575, 604, 836 N.E.2d 681, 704 (2005).
¶ 26 Here, the basis of the plaintiff’s claim of unjust enrichment relating to the Tinley Park
property is that he and Schickel had a quasi-contractual agreement that obligated her to grant
him an interest in the property in exchange for his contribution to its purchase. However, as
with the first two counts of the complaint, this allegation is rebutted by the gift letter the
plaintiff attached to his complaint. See Sharkey v. Snow, 13 Ill. App. 3d 448, 451, 300
N.E.2d 279, 281 (1973) (“exhibits attached to [a] complaint [become] a part thereof for all
purposes [citation], and the factual matters contained in the exhibits which are inconsistent
with averments of the complaint serve to negate such averments”). Because the gift letter
contradicts and effectively nullifies the “conditional gift” assertion, the plaintiff cannot
sustain a claim for unjust enrichment. Accordingly, we affirm the dismissal of Count III of
the plaintiff’s complaint.
¶ 27 The plaintiff’s remaining arguments challenge the trial court’s judgment following trial.
The first of these arguments challenges the trial court’s rejection of the claim raised in count
IV of his complaint for unjust enrichment relating to the Bourbonais property. While count
III was premised on an agreement between the parties to transfer ownership in the Tinley
Park property in exchange for funds described in the gift letter, count IV is premised on a
different set of promises entirely. In count IV, the plaintiff alleged that his decision to grant
the plaintiff an interest in the Bourbonais property was induced by her assurances that she
had or would grant him an interest in the Tinley Park property. Thus, the gift letter does not
refute the plaintiff’s allegations on this point. Nonetheless, we conclude that the trial court
erred in rejecting count IV.
¶ 28 To reject the plaintiff’s unjust enrichment claim, the trial court cited Perez for the rule
that “[t]he theory of unjust enrichment is based on a contract implied in law and, therefore,
does not apply where there is a specific contract that governs the relationship of the parties.”
See Perez, 301 Ill. App. 3d at 425, 703 N.E.2d at 526. The trial court reasoned that, here, the
deed conveying the Bourbonais property to the parties in joint tenancy, and the mortgage and
loan documents on which their names appear, constitute the type of contracts between the
parties that preclude recovery for unjust enrichment. We disagree.
¶ 29 It is true that a party may not seek a quasi-contractual remedy such as unjust enrichment
where an actual contract governs their relationship. That is, “[t]he courts will not imply a
contract where there exists an express contract between the parties on the same subject
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matter.” University of Illinois v. Continental Casualty Co., 234 Ill. App. 3d 340, 353, 599
N.E.2d 1338, 1348 (1992). Indeed, this is the reason we uphold the trial court’s dismissal of
Count III of the complaint relating to the Tinley Park property. However, the deed and loan
documents relating to the Bourbonais property do not undercut the plaintiff’s Bourbonais-
related allegations in the same way the gift letter undercuts his Tinley Park-related
allegations. The deed defines the parties’ shared property rights, and the mortgage and loan
documents outline their shared debt obligation to their lender. None of these documents
define the parties’ obligations to each other. Further, none of the documents cover the same
subject matter as forms the basis of the plaintiff’s unjust enrichment claim. To support his
claim, the plaintiff alleged that Schickel was unjustly enriched because her fraudulent
conduct induced his agreement to share ownership of the Bourbonais property with her. The
deed recording the conveyance of that property, and the loan documents relating to the
conveyance, do not speak to the inducement on which the plaintiff bases his claim–they
memorialize the effect of the alleged inducement.
¶ 30 In her brief on appeal, the defendant asserts that the plaintiff cannot obtain a quasi-
contractual remedy because, under the doctrine of merger by deed, any agreements between
the parties are governed by the deed to the Bourbonais property. However, as the defendant
notes in her brief, the doctrine of merger by deed holds that “all prior agreements between
a buyer and a seller are merged in the deed upon its acceptance.” (Emphasis added.)
Czarobski v. Lata, 227 Ill. 2d 364, 369, 882 N.E.2d 536, 540 (2008). Here, the dispute does
not concern an arrangement between the buyer and seller of the Bourbonais property, but
between the co-buyers of the Bourbonais property. Thus, the doctrine of merger by deed does
not apply.
¶ 31 Accordingly, we agree with the plaintiff that the trial court erred in ruling that the deed
and loan documents constitute written contracts that preempt his unjust enrichment claim.
For that reason, we conclude that the trial court erred in its judgment as to count IV. That is
not to say, however, that the plaintiff must succeed on his unjust enrichment claim. The trial
court rejected his claim solely based on the theory that it was preempted as a matter of law
by the deed and loan documents. Thus, the court did not resolve any of the other factual or
legal issues relating to the claim. For that reason, we must reverse that portion of the trial
court’s ruling rejecting the plaintiff’s unjust enrichment claim on the Bourbonais property,
and remand for further proceedings consistent with this decision.
¶ 32 The plaintiff next argues that the trial court erred in rejecting his common-law fraud
claim on the basis that it constituted non-actionable promissory fraud. The promissory fraud
doctrine, a doctrine peculiar to Illinois law, holds that a plaintiff cannot maintain a fraud
action based on a fraudulent promise to perform a future act. See Michael J. Polelle & Bruce
L. Ottley, Illinois Tort Law § 9.04 (3d ed. 2001) (discussing the promissory fraud doctrine).
In 1909, the supreme court articulated the rationale supporting this doctrine as follows:
“If a promise is made to do something in the future and at the time it is not intended to
perform the promise, that fact does not constitute a fraud in the law. [Citations.] If an
intention not to perform constituted fraud, every transaction might be avoided where the
facts justified an inference that a party did not intend to pay the consideration or keep his
agreement. A mere breach of a contract does not amount to a fraud, and neither a
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knowledge of inability to perform, nor an intention not to do so, would make the
transaction fraudulent.” Miller v. Sutliff, 241 Ill. 521, 526-27, 89 N.E. 651, 652 (1909).
¶ 33 This promissory fraud doctrine is limited, however, by the rule that even such fraud is
actionable if it was part of a scheme or artifice to defraud. See Polelle & Ottley, supra,
§ 9.04; Doherty v. Kahn, 289 Ill. App. 3d 544, 562, 682 N.E.2d 163, 176 (1997) (abrogated
on other grounds by Byung Moo Soh v. Target Marketing Systems, Inc., 353 Ill. App. 3d 126,
817 N.E.2d 1105 (2004)). This “scheme to defraud” exception has been explained as follows:
“As a general rule, promissory fraud, based on future acts, is not actionable in Illinois
unless the promise is a part of a ‘scheme’ to defraud. [Citation.] The distinguishing
features of a ‘scheme,’ however, are not clear in Illinois case law, and the exception,
therefore, seems to engulf the general rule because, ‘[a]s fraud occurs when a
misrepresentation is made with intent to induce a victim to rely thereon and a victim is
deceived and relies thereon to his detriment, such misrepresentations are ordinarily the
schemes by which the victim is defrauded regardless of whether the misrepresentation
is as to the declarant’s future intent or otherwise.’ [Citatons.] ” General Electric Credit
Auto Lease, Inc. v. Jankuski, 177 Ill. App. 3d 380, 384, 532 N.E.2d 361, 364 (1988).
¶ 34 Based on this conception of a scheme to defraud, there can be no doubt that such a
scheme existed here. The trial court found that “[i]t is clear from the evidence that [Schickel]
promised to quit claim one half of the Tinley Park property to Plaintiff” but “never intended
to do so.” This intentional misrepresentation amounts to a scheme to defraud, so that her
promissory fraud is, in fact, actionable.
¶ 35 The trial court rejected the plaintiff’s fraud claim based solely on the above reasoning,
without reaching any of the additional factual or legal issues raised by the claim. Thus, we
reverse the trial court’s judgment on this claim and remand for further findings consistent
with this opinion.
¶ 36 In so doing, we observe that the defendant argues that there cannot have been any fraud
based on a promise to convey the Tinley Park property, because she could not have made
such a promise without violating the terms of her Tinley Park mortgage. This point, however,
does not preclude a finding that the defendant committed fraud against the plaintiff; it only
establishes that, if she did promise to convey ownership of the Tinley Park property to him,
she promised also to breach her mortgage agreement.
¶ 37 The plaintiff’s final argument on appeal is that the trial court erred in rejecting his claim
for a constructive trust on the Tinley Park property. The trial court’s sole reason for rejecting
the plaintiff’s constructive trust claim was that the claim was premised on the fraud claim
the court had already rejected. Because we hold that the trial court erred in rejecting the fraud
claim, we must also hold that the trial court erred in rejecting the claim for a constructive
trust.
¶ 38 For the foregoing reasons, we affirm the trial court’s dismissal of the first three counts
of the plaintiff’s complaint. On count IV, we reverse the trial court’s rejection of the
plaintiff’s unjust enrichment claim on the Bourbonais property and remand for further
proceedings consistent with this decision. Likewise, we reverse the trial court’s rulings on
counts IX and X. We remand the cause with directions for the trial court to make further
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findings in accordance with the views expressed above, and to order damages as appropriate.
In so directing, we note that the trial court has already granted the plaintiff relief–in the form
of half of the purchase price of the Tinley Park residence plus half of its appreciation–on his
promissory estoppel claim. Many of the plaintiff’s other prayers for relief are stated (or must
be considered) as alternatives to, rather than cumulative with, the relief already granted him.
Thus, we also instruct that, after it has reconsidered the vacated portions of its judgment, the
trial court should, to the extent necessary, reconsider the damages to be awarded the plaintiff
to ensure that the total relief granted to him is equitable and consistent. That is, the plaintiff
should be allowed to recover only once, whether by money damages or some other relief, for
any wrongful deprivation of rights relating to the Tinley Park property. Likewise, the
plaintiff’s claims relating to the Bourbonnais property assume that he was wrongfully denied
an interest in the Tinley Park property. If he is granted ownership of the Tinley Park property,
or the monetary equivalent, an award of further damages relating to the Bourbonnais property
would amount to a double recovery and would render the judgment inconsistent in its
totality.
¶ 39 Affirmed in part, reversed in part, and remanded with directions.
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