Illinois: the insured vehicles were garaged outside of Illinois,
the accidents occurred outside Illinois, the estimates were written
outside Illinois, the alleged deception took place outside Illinois
when these estimates failed to disclose the inferiority of certain
repair parts, the repairs took place outside Illinois, and the
damage occurred outside Illinois. Id. There was, furthermore, no
evidence that these plaint: ffs had ever been in contact with an
agent who worked in Illinois. Id. Likewise, in In re Sears,
Roebuck & Co., 2006 WL 1443737 (N.D. Til. May 17, 2006) and
Crichton v. Golden Rule Ins. Co., 2006 WL 2349961 (S.D. Ill.
Aug. 11, 2006), the courts socused on the fact that plaintiffs had
made no purchase in Illinois and had had no communications with the
defendant's Illinois employees when holding that the plaintiffs did
not have standing to sue. See In re Sears 2006 WL 1443737 at *3;
Crichton, 2006 WL 2349961 at *3.

This case is not as lop-sided as Avery, Sears, or Crichton.
Granted, Dent-A-Med, which is incorporated in Oklahoma and has its
principal offices in Arkansas, received the allegedly fraudulent
charge slips outside of Illinois and suffered damages outside
Illinois. The dental practice, however, is situated in Illinois.
All of the charge slips were prepared in Illinois and the work on
which they were based was performed (or not performed) in Illinois.
Dent-A-Med had contact with Ms. Weiner and Ms. Texter,

representatives of the dental practice who worked in Illinois.

-14-


Thus, this Court will disregard any statements in the affidavits
that contradict Ms. Weiner’s and Ms. Yanowsky’s depositions.
Dent-A-Med points to a series of “contradictory” statements in
Ms. Weiner’s affidavit. First, Dent-A-Med argues that Ms. Weiner’s
statements (“I do all of the accounting”) in transcripts of
telephone conversations admitted in her affidavit conflict with her
deposition (I “assisted my husband. . . with his bookkeeping”) and
should be ignored. These two statements mean essentially the same
thing. Second, Dent-A-Med argues that Ms. Weiner’s affidavit is
“internally inconsistent” because she claims both that she never
made any representations to Dent-A-Med and that she had telephone
conversations with Dent-A-Med (during which Dent-A-Med claims Ms.
Weiner made representations:. Dent-A-Med’s argument is beside the
point; it does not claim a discrepancy between Ms. Weiner’s
affidavit and her deposition. Dent-A-Med also argues that Ms.
Weiner’s statement that she never submitted any charge slips to
Dent-A-Med conflicts with Dent-A-Med’s complaint alleging that Ms.
Weiner was an alter ego of Lifetime Smiles, Inc., and the fact that
answers to interrogatories admit that charge slips were submitted
by Fred Weiner. The fact that Ms. Weiner’s affidavit conflicts
with the alter ego allegations in Dent-A-Med’s complaint is not a
proper ground for striking an affidavit. Lastly, Dent-A-Med argues
that the transcripts admitted in the affidavit include

conversations with Dent-A-Med employees, the content of which Daisy


in the evenings. She apparently had limited knowledge of the
dental practice’s day to day operations. Ms. Weiner had some
telephone conversations witn Dent-A-Med employees following up on
previously submitted charge slips.

Dent-A-Med claims that. Ms. Weiner is personally liable for
fraud because she made false representations “in her communications
to Dent-A-Med seeking payment on charge slips and delivery of an
NSF [insufficient funds] check to Dent-A-Med.” Dent-A-Med never
claims that Ms. Weiner’s representations induced it to do anything
it would not already have done - submit payments to the dental
practice on the basis of previously submitted charge slips.
Furthermore, Dent-A-Med’s complaint never mentions an NSF check or,
in fact, any check submitted by Ms. Weiner. A plaintiff may not
amend his complaint by argument in a brief in opposition to a
summary judgment motion. Griffen v. Potter, 356 F.3d 824, 830 (7th
Cir. 2004). Thus, Dent-A-Med’s new allegations regarding this
check are disregarded. Thus, this Court grants Defendants’ Summary
Judgment Motion as to Ms. Weiner’s personal liability.

b. Aiter-Ego Liability

Additionally, Dent-A-Med alleges that Ms. Weiner is liable for
the submission of charge slips by employees of the dental practice
on the basis of alter ego liability. Generally, a corporation is
a legal entity separate and distinct from its shareholders,

directors, and officers; however, the corporate entity will be

- 10 -


or managing agents, or other persons who consent to testify on its
behalf.” Fep. R. Civ. P. 30(b) (6). Defendants did not properly
notice a 30(b) (6) deposition. Defendants’ notice names Ms. Barnes
as the person or entity to be deposed, fails to specify the matters
on which examination is sought, and gives no indication that Ms.
Barnes is expected to testify on behalf of Dent-A-Med. Operative
Plasterers’ & Cement Masons’ Intl. Assoc. of the United States &
Canada ALF-CIO v. Benjamin, 144 F.R.D. 87, 90 (N.D. Ind. 1992).
Furthermore, Defendants’ notice does not allow Dent-A-Med to
designate a knowledgeable person to testify on its behalf. See id.
Defendants argue that Ms. 3arnes deposition was identified as a
30(b) deposition, and that Dent-A-Med did not object. The
deposition was identified as a Rule 30(b) deposition, but not a
Rule 30(b)(6) deposition (there are several types of Rule 30(b)
depositions). Dent-A-Med is correct that the deposition of Ms.
Barnes was not a Rule 30(b) (6) deposition.
Cc. Count I: Common Law Fraud

In order to establish fraudulent misrepresentation under
Illinois law, Dent-A-Med must show (1) a false statement of
material fact; (2) knowledge or belief of the falsity by the party
making it; (3) an intention to induce the other party to act; (4)
action by the other party in reliance on the statement’s truth; and
(5) damage to the other party resulting from such reliance.

Neurosurgery & Spine Surgery v. Goldman, 790 N.E.2d 925 (2003).


Weiner claimed not to recall in her deposition. Courts
consistently do not find affidavits contradictory where a lapse of
memory during the deposition causes the supposed “contradiction.”
See, e.g., Velez, 442 F.3d at 1049.

Next, Dent-A-Med argues that Ms. Yanowsky’s affidavit should
be disregarded because it contradicts her deposition. In her
deposition, Ms. Yanowsky stated that she performed Ms. Texter’s job
while Ms. Texter was on vacation, including the submission of
charge slips to Dent-A-Med. In her affidavit, Ms. Yanowsky stated
that she did not submit the charge slips attached to Dent-A-Med’s
complaint and did not assist in their preparation. These statements
are not contradictory; Ms. Yanowsky may very well have prepared
charge slips and submitted them to Dent-A-Med during Ms. Texter’s
vacation and still not have submitted any of the charge slips
attached to Dent-A-Med’s complaint. Because the affidavit does not
contradict the deposition, this court will not disregard it.

B. Shauna Barnes’ Deposition

Dent-A-Med also challenges Defendants’ characterization of the
deposition of Shauna Barnes (hereinafter, “Ms. Barnes”) as a
Rule 30(b) (6) deposition of a corporation. Rule 30(b) (6) permits
the deposition of an organization to be taken if a party notices a
deposition of the organization and “describe[s] with reasonable
particularity the matters o1 which examination is requested.” The

organization must then “designate one or more officers, directors,


Additionally, Ms. Yanowsky states in her deposition that when she
submitted charge slips, she signed them. In another section of its
brief, Dent-A-Med claims that Ms. Texter “testified that the charge
slips that do not bear her signature were submitted by Susan
Yanowsky”; this statement, however, grossly misrepresents the
record. Dent-A-Med’s provided citation is incorrect and, as Ms.
Texter admits submitting most of the unsigned charge slips and
merely speculates as to who might have submitted those she disavows
(this portion of Ms. Texter’s deposition was never cited by Dent-A-
Med), the statement makes little intuitive sense. As such, Dent-A~
Med cannot demonstrate a genuine issue of material fact as to
whether Ms. Yanowsky submitted charge slips and this Court thus
grants Summary Judgment as to Susan Yanowsky.
2. Daisy Weiner

Dent-A-Med alleges that Ms. Weiner is liable for fraud on the
basis of both her individual actions and as an alter ego for the
various corporations (Lifetime Smiles, Inc., Lifetime Smiles, P.C.,
White Oak Dental, P.C., and DW Management) that comprised the
dental practice.

a. Personal Liability

As is the case with Ms. Yanowsky, the parties do not dispute
the central facts to a claim of personal liability for fraud
against Ms. Weiner. Ms. Weiner submitted no charge slips to Dent-

A-Med, but rather served as the bookkeeper for the dental practice


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION F | L E D

DENT-A-MED, INC., d/b/a HC Noy
PROCESSING CENTER, oy , Do
_ JUDGE HARRY D, ENG. 7
Plaintiff, S. DISTRICT COURT subGe .
v. Case No 04 C 4780

LIFETIME SMILES, P.C.,
formerly known as WHITE OAK Hon. Harry D. Leinenweber
DENTAL, P.C., an Illinois
corporation; DW MANAGEMENT
COMPANY, formerly known as
LIFETIME SMILES, INC., an
Illinois corporation;

FRED S. WEINER, DAISY WEINER,
JOY A. TEXTER, and SUSAN

YANOWSKY,
Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiff Dent-A-Med, Inc., d/b/a HC Processing Center

(nereinafter, “Dent-A-Med”) brings this suit alleging common law
fraud, violation of the Illinois Consumer Fraud and Deceptive
Business Practices Act, breach of contract, and conversion against
Lifetime Smiles, P.C., DW Management Company (hereinafter, “DW
Management”), Fred S. Weiner, Daisy Weiner (hereinafter, “Ms.
Weiner”), Joy A. Texter (hereinafter, “Ms. Texter”), and Susan
Yanowsky (hereinafter, “Ms. Yanowsky”). Before this Court is Ms.
Weiner, Ms. Yanowsky, and DW Management’s Motion for Summary

Judgment on the common law fraud and Illinois Consumer Fraud


3. DW Management

Summary judgment is also sought in favor of DW Management,
Inc. because Dent-A-Med makes no allegations against it in the
Second Amended Complaint. In the Second Amended Complaint, Dent-A-
Med alleges that DW Management Company was formerly known as
Lifetime Smiles, Inc., that Daisy Weiner used DW Management Company
(along with other corporations) to facilitate the operation of the
dental practice, and that DW Management Company made a loan to
Daisy Weiner, its only shareholder, of $100,000. Dent-A-Med seeks
no damages from DW Management. Dent~A-Med argues that summary
judgment not be entered because “DW Management is only mentioned in
the last sentence of Defendants . . . Motion for Summary Judgment.”
Because Dent-A~Med’s complaint makes no allegations against DW
Management and seeks no damages from it, this Court grants
Defendants’ Motion for Summary Judgment as to DW Management.

D. Count II: Illinois Consumer
Fraud and Deceptive Business Practices Act

The Illinois Consumer Fraud and Deceptive Business Practices
Act (hereinafter, the “Act”) prohibits “fujnfair methods of
competition and unfair or deceptive acts or practices, including
but not limited to the use or employment of any deception, fraud,
false pretense, false promise, misrepresentation or the
concealment, suppression or omission of any material fact, with
intent that others rely upon the concealment, suppression or

omission of such material fact . . . in the conduct of any trade or

-12-


disregarded and the veil of limited liability pierced when two
requirements are met: (1) there is such unity of interest in
ownership that the separate personalities of the corporation and
the individual no longer exist and (2) circumstances are such that
adherence of the fiction of a separate corporate existence would
sanction a fraud or promote injustice. Van Dorn Co. v. Future
Chemical & Oil Corp., 753 F.2d 565, 569-570 (7th Cir. 1985).
Defendants contend that the alter ego allegations were not
pled with sufficient particularity to satisfy Rule 9(b), and thus
summary judgment ought to be granted. A party seeking to pierce
the corporate veil and hold an officer, director, or shareholder
liable for a corporation's fraud must plead its alter ego
allegations in accordance with Rule 9(b). New Freedom Mortgage
Corp. v. C & R Mortgage Corp., 2004 WL 783206 at *8 (N.D. Ill
Jan. 15, 2004). However, the proper remedy for failure to plead
fraud with particularity is not summary judgment. Molex Inc. Vv
Wyler, 365 F. Supp.2d 901, 912 (N.D. fll. 2005); Rash v. Minority
Intermodal Specialists, Inc., 2003 WL 1463476 (N.D. Ill. Mar. 20,
2003). Therefore, without determining whether Dent-A-Med pleads
sufficient facts to satisfy Rule 9(b), this Court declines to grant
summary judgment on this basis. Defendants make no other arguments

in favor of summary judgment on the alter ego claims.

- 11 -


Dent-A-Med alleges that Ms. Yanowsky and Ms. Weiner submitted
charge slips and made other representations regarding dental work
that they knew was either (1) not yet completed; (2) performed by
unlicensed employees of the dental practice; or (3) was provided in
a defective or substandard manner, and that it relied on these
representations when making payments to the dental practice.
1. Susan Yanowsky

The undisputed facts, viewed in the light most favorable to
the non-movant, show that Dent-A-Med cannot establish common law
fraud against Ms. Yanowsky because Dent-A-Med cannot show that Ms.
Yanowsky made any false statements of material fact. The parties
do not dispute the facts pertaining to the fraud allegations
against Susan Yanowsky: Ms. Yanowsky did not normally submit
charge slips to Dent-A-Med; she did so only when Ms. Texter was on
a one-week vacation (the dates of which are unknown); and all
charge slips at issue were either signed by Ms. Texter or supplied
no place for the signature of a dental practice employee. Ms.
Yanowsky apparently had no other contact with Dent-A-Med and could
have made no other representations upon which Dent-A-Med might have
relied. Dent-A-Med’s entize argument on this point is that “Ms.
Yanowsky submitted charge slips.” In short, the only possible
basis for Ms. Yanowsky’s liability is that she submitted “some”
charge slips at “some” time; however, Ms. Yanowsky states in her

affidavit that she did not submit the charge slips at issue.


Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The
court must view all the evidence and any reasonable inferences
therefrom in the light most favorable to the non-moving party. See
Miller v. Am. Family Mut. Ins. Co., 203 F.3d 997, 1003 (7th Cir.
2000).
III. DISCUSSION
A. Dent-A-Med’s Challenge to the Affidavits

Dent-A-Med challenges Defendants’ reliance on the affidavits
provided by Ms. Weiner and Ms. Yanowsky as a basis for some of
Defendants’ factual statements. A court will discount or disregard
an affidavit that is in conflict with a party’s deposition
testimony. See Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795,
806-07 (1999); Velez v. City of Chicago, 442 F.3d 1043, 1049 (7th
Cir. 2006); Barner v. City of Harvey, 1998 WL 664951 at *2 (N.D.
Ill. Sept. 18, 1998). Although this rule is applied more often in
the movant’s favor, courts have invoked it in cases where a movant
has offered a contradictory affidavit as a basis for factual
statements included in a 5€.1(a) statement. See Barner, 1998 WL
664951 at *2; Morgan v. Ponderosa, Inc., 1998 WL 325213 (N.D. Ill.
June 9, 1998). Where the two statements, however, are inconsistent
because the deposition statement was mistaken, “perhaps because the
question was phrased in a confusing manner or because a lapse of
memory is . . . a plausible explanation for the discrepancy,” a

court will not disregard the affidavit. Velez, 442 F.3d at 1049.


Payments by Dent-A-Med were made to the dental practice in
Illinois. Illinois, therefore, has more connection to the alleged
fraud than the mere hatchine of a scheme or creation of a corporate
policy. As such, Dent-A-Med has standing to sue.

Next, Defendants contend that the Consumer Fraud Count is
deficient because Dent~A-Med cannot show that the conduct alleged
implicates consumer protection concerns. Because the Consumer
Fraud Act is primarily concerned with the protection of consumers,
a plaintiff other than a “consumer” must prove that the alleged
conduct involves trade practices addressed to the market generally
or otherwise implicates consumer protection concerns. Ivanhoe
Fin., Inc. v. Highland Banc Corp., 2004 WL 2091997 (N.D. Ill.
Sept. 15, 2004). Dent-A-Med alleges that the various Defendants’
actions implicates consumer protection concerns because the frauds
affected the dental practice’s patients by charging them for serves
not provided - which could potentially “ruin the credit of these
patients.” Dent-A-Med has provided letters from the consumers
showing that the Defendants’ various actions have adversely
affected traditional consumers. As such, the Consumer Fraud Claim
can be maintained.

Lastly, Defendants argue that Dent-A-Med cannot establish that
any material misrepresentations were made by either Ms. Weiner or
Ms. Yanowsky because Dent-A-Med cannot show that either submitted

charge slips. The parties make essentially the same arguments as

- 15 -


practice’s office manager. Those slips that do not bear Ms.
Texter’s signature apparently do not require a signature by an
employee of the dental practice and have not been signed. Charge
slips were most often submitted by Ms. Texter. However, the
parties agree that during at least one week while Ms. Texter was on
vacation, Ms. Yanowsky signed and submitted charge slips. Neither
party specifies when this vacation occurred and this Court’s
perusal of the record provides no enlightenment. Ms. Texter
herself admits that she submitted most of the charge slips at
issue, but denies submitting three unsigned slips. Ms. Texter
speculates that Ms. Yanowsky “could have” submitted them, but Ms.
Yanowsky denies submitting them. Ms. Weiner (the dental practice’s
bookkeeper) did not prepare, submit, or sign any charge slips;
however, she had some telephone conversations with Dent-A-Med
employees regarding previously submitted charge slips.
II. LEGAL STANDARD

Summary judgment is appropriate if “the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” Fep. R. Civ. P. 56(c). A fact
is material if it could affect the suit’s outcome under governing
law, and a dispute is genuine where the evidence is such that a

reasonable jury could return a verdict for the non-moving party.


counts. For the reasons stated herein, this motion is granted in
part and denied in part.
I. BACKGROUND

Dent-A-Med provides financing to patients undergoing dental
procedures. In December 2002, Dent-A-Med and Fred S. Weiner’s
dental practice, White Oak Dental, purporting to do business as
Lifetime Smiles (hereinafter, “the dental practice”), entered into
an agreement by which Dent~A-Med would provide financing to the
dental practice’s patients. According to the Provider Agreement,
the dental practice would accept Dent-A-Med’s credit card as
payment for dental services and would submit a charge slip to Dent-
A-Med for each credit card sale.

Dent-A-Med alleges that between December 2002 and December
2003, the dental practice submitted charge slips for dental work
that had not yet been performed, was performed in a substandard
manner, and/or was never performed. Dent-A-Med alleges that it
relied on these charge slips and paid funds to the dental practice
as a result. The parties dispute these allegations as well as
whether Dent-A-Med had a policy that charges were to be submitted
only for services already provided and whether Dent-A-Med was aware
at all times that charge slips were being submitted for uncompleted
work.

Copies of the disputec slips were provided by Dent-A-Med with

its complaint; most bear the signature of Ms. Texter, the dental


commerce.” 815 Ill. Comp. Stat. 505/2 (2002); Pappas v. Pella

Corp., 844 N.E.2d 995, 998 (Ill. App. 2006). To succeed in a
cause of action under the Act, a plaintiff must prove: (1) a
deceptive act or practice sy the defendant; (2) the defendant’s

intent that the plaintiff rely on the deception; (3) the occurrence
of the deception in the course of conduct involving trade or
commerce; and (4) actual damage to the plaintiff (5) proximately
caused by the deception. Id.

As an initial matter, the Defendants argue that Dent-A-Med has
no standing to invoke the Act because it is an out-of-state
corporation. A non-resident plaintiff may sue under the Act only
if “the circumstances that relate to the disputed transaction occur
‘primarily and substantially’ within Illinois.” Avery v. State
Farm Mut. Auto. Ins. Co., 835 N.E.2d 801, 854 (Ill. 2005). The
mere fact that an alleged fraud scheme was “devised in and
disseminated from” Illinois is not sufficient to support a claim
under the Act. Id. at 854-855. In Avery, a case alleging the
deceptive failure to disclose the inferiority of certain
replacement auto parts by an insurance company, the Illinois
Supreme Court determined that some possible class plaintiffs were
not proper plaintiffs because the only circumstance of the alleged
deceptive practice that occurred in Illinois was the creation of
the insurance claims policies implemented elsewhere. Id. at 855.

Every other fact surrourding the claim occurred outside of

-13-


in the above fraudulent misrepresentation claims. For the same

reasons as stated above, this Court grants Defendants Summary

Judgment on the Illinois Consumer Fraud and Deceptive Business

Practices Act as to Ms. Yanowsky and Ms. Weiner’s personal

liability, but denies them as to Ms. Weiner’s alter ego liability.
Iv. CONCLUSION

For the reasons stated herein, Defendants’ Motion for Summary
Judgment is granted in part and denied in part, as follows:

1. The Court grants Defendants’ Motion for Summary Judgment
on both the fraud and Illinois Consumer Fraud claims as to Susan
Yanowsky and Daisy Weiner’s personal liability; and

2. The Court denies Defendants’ Motion for Summary Judgment

as to Ms. Weiner’s alter ego liability.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court

Dated: he