Court Opinion

ID: 9734179
Source: CourtListenerOpinion
Date Created: 2023-08-26 17:27:11.61458+00
Date Added: 2024-06-11T18:26:46.377711
License: Public Domain

JUSTICE STAMOS, dissenting: The majority holds that the actions of Roppolo prior to the demolition of the Rincker House amount to a fraud and a constructive fraud, and that therefore the trial court erred in refusing to impose a constructive trust on the property where the Rincker House once stood. However, the evidence which was adduced at trial, taken with the stipulations of the parties, is not sufficient to establish a fraud or a constructive fraud. Because plaintiffs did not make out their cause of action, I would hold that the trial court correctly refused to grant the relief that they sought. The majority holds that Roppolo is guilty of fraud in connection with the demolition of the Rincker House, stating that fraud is a generic term and quoting a general definition of fraud from People ex rel. Chicago Bar Association v. Gilmore (1931), 345 Ill. 28, 46, 177 N.E. 710. In Gilmore, the court was not required to determine if a cause of action for fraud had been proven by the party seeking relief. That case dealt only with the sanctions to be imposed on an attorney for professional misconduct, and the definition for fraud was given by the court while characterizing the pattern of deception, overreaching, and concealment which the respondent was found to have engaged in, and for which he was disbarred. However, when a plaintiff seeks legal or equitable relief from harm caused by actions of the defendant, it is not enough to characterize those actions as “fraudulent” in a generic sense. The plaintiff, rather, must prove the elements of a cause of action which will justify the court in granting the relief which is sought. The essential elements of a cause of action for fraudulent misrepresentation are that: (1) a statement of material fact was made; (2) the statement was untrue; (3) the party making the statement knew it was untrue or believed it to be so; (4) the person to whom the statement was made believed it and relied on it, and was justified in doing so; (5) the statement was made for the purpose of inducing the other party to act; and (6) the reliance on the statement by the person to whom it was made cause his injury. See Perlman v. Time, Inc. (1978), 64 Ill. App. 3d 190, 194-95, 380 N.E.2d 1040; Broberg v. Mann (1965), 66 Ill. App. 2d 134, 139, 213 N.E.2d 89. Fraud does not always consist of an affirmative statement of fact; fraud may also consist of the concealment of a material fact accompanied by scienter, deception, and injury. (Skidmore v. Johnson (1948), 334 Ill. App. 347, 360, 79 N.E.2d 762.) However, where a failure to disclose information is the basis of the cause of action, there must be a duty to speak on the part of the silent party, and an active concealment of the pertinent fact. (See Zanbetiz v. Trans World Airlines, Inc. (1966), 72 Ill. App. 2d 192, 200-01, 219 N.E.2d 98.) Additionally, the facts which are not disclosed must not only be known to the silent party, but must be “unknown to or beyond the reach of” the party relying on the silence. (See Lingsch v. Savage (1963), 213 Cal. App. 2d 729, 738, 29 Cal. Rptr. 201, 206; Prosser, Torts sec. 106, at 697-98 (4th ed. 1971).) Each element of the cause of action for fraud must be proven by clear and convincing evidence. National Republic Bank v. National Homes Construction Corp. (1978), 63 Ill. App. 3d 920, 924, 381 N.E.2d 15. Constructive fraud differs from actual or intentional fraud in that constructive fraud may be inferred from the facts and circumstances surrounding a transaction regardless of a lack of proof of any actual dishonesty of purpose. (See In re Estate of Neprozatis (1978), 62 Ill. App. 3d 563, 568, 378 N.E.2d 1345.) Constructive fraud is “often equated with a breach or abuse of a confidential or fiduciary relationship.” (Williams v. Estate of Cross (1980), 85 Ill. App. 3d 923, 926, 407 N.E.2d 704.) Where a fiduciary or confidential relationship does not arise as a matter of law, such a relationship must be shown to have existed by clear and convincing evidence. (Collins v. Nugent (1982), 110 Ill. App. 3d 1026, 1036, 443 N.E.2d 277.) No Illinois cases have made a finding of constructive fraud in the absence of a showing that the parties stood in a confidential relationship. (See, e.g., Neprozatis; Williams; Federal Life Insurance Co. v. Griffin (1912), 173 Ill. App. 5, 18.) On the contrary, the absence of a fiduciary or a confidential relationship precludes the imposition of liability for a constructive fraud. (See Gary-Wheaton Bank v. Burt (1982), 104 Ill. App. 3d 767, 774, 433 N.E.2d 315.) Before turning to the question of whether Roppolo is guilty of an actual fraud with regard to the demolition of the Rincker House, it need be noted only briefly that there is nothing in the record which would justify a conclusion that Roppolo stood in any type of confidential relationship with the city of Chicago, its employees, or its citizens, and therefore no constructive fraud can be inferred from the circumstances surrounding this case. The majority refers to several of the acts and omissions of defendants in support of its conclusion that Roppolo’s conduct meets the definition of fraud. The acts that the majority characterize as fraudulent are: (1) that Roppolo led Mrs. Cirrincione to believe that he was entitled to a demolition permit; (2) that Roppolo falsely induced the city to issue the permit; (3) that Roppolo, using Mrs. Cirrincione as an agent, omitted to advise the employees of the city of his agreement with the Planning Commission to restore the Rincker House; (4) that Roppolo had the duty to ensure that the Landmark Commission reviewed the application for the demolition permit, and that he failed to do so; and (5) that Mrs. Cirrincione, with the intent to mislead, failed to inform the city employees that the application was for a permit to demolish a landmark. For Roppolo to be guilty of intentional fraud, it must be shown that he made some statement with the intent to deceive, and that that statement was relied upon by the city, inducing it to issue the permit. In the alternative, it must be shown that there was a concealment of a material fact which Roppolo had a duty to disclose, that the fact was unknown to the city, and that the city had a right to rely on Roppolo’s silence. As was previously noted, each of the necessary elements must have been proven by clear and convincing evidence in order to justify a finding by this court that the verdict of the trial court was against the manifest weight of the evidence. It cannot be gainsaid that Roppolo, by engaging Mrs. Cirrincione to apply for the permit and by neglecting to tell her that the building was a landmark for which no demolition permit would be issued, set in motion a series of events which led to the unlawful destruction of the Rincker House. It likewise cannot be gainsaid that the circumstances surrounding this case are of the type that naturally raise grave suspicions. However, suspicion is not the standard of proof in any civil or criminal proceeding in our courts, and suspicion is not clear and convincing evidence. The first act that the majority characterizes as fraudulent is Roppolo’s failure to inform Mrs. Cirrincione that he was not entitled to a permit to demolish the Rincker House. This failure to speak may or may not amount to a fraud on Mrs. Cirrincione. She had made it clear to Roppolo, through Rizzi, that she would not go through the application process unless she had a contract to perform the actual demolítion. Had the permit been denied, Roppolo would have gained the benefit of Mrs. Cirrincione’s efforts on his behalf for the price of executing a contract which could never be performed. However, it is difficult to see how Roppolo’s lack of candor with Mrs. Cirrincione translates into a fraud on the city. It must be stressed that the fact that Roppolo made an application for the permit cannot be interpreted as a representation to the city that he was “entitled” to approval of the application. This is so because of the procedures which have been formulated by the city for dealing with properties which have been designated as landmarks. A designation of a property as a landmark imposes a financial burden on the landowner. The landowner can shift some or.all of that burden to the city by following the procedures set forth in chapter 21 section 21 — 64.1 of the Municipal Code of the City of Chicago. That section provides that when the Building Department receives an application for a permit to alter or demolish a designated landmark, it shall forward the application to the Landmark Commission. The Landmark Commission then considers the application and approves or disapproves it. A disapproval “shall not be deemed by the applicant for permit as a denial thereof.” The Landmark Commission forwards the disapproved application to the finance committee of the city council. The finance committee must give the application prompt consideration, after which it recommends grant or denial of the application. If the committee decides that the application should be denied, its recommendation on the matter to the full city council must include a report on the ways and means by which the city can arrange to lease or sublease the landmark property, contract with the owner for covenants designed to preserve the landmark, acquire the property by eminent domain, or take other action under section 11 — 48.2—2 of the Illinois Municipal Code (111. Rev. Stat. 1981, ch. 24, par. 11 — 48.2—2). Courses of action available to the city under that statute include the creation of transferable development rights in favor of the owner of the landmark. After receiving the recommendation of the finance committee, the city council must pass an ordinance either approving the issuance of the permit or denying the permit. If the permit is denied, the city council must take one of the actions recommended by the finance committee with respect to the property. In short, the city cannot deny a permit to demolish a landmark without also taking action which will result in some form of compensation to the landowner for the burden imposed on him by the landmark designation. The only way to acquire this compensation is to apply for a permit to demolish the landmark. Any owner of a landmark-designated property has the right to apply for a permit to demolish the landmark, and, as is obvious from the foregoing, he is well advised to do so. The mere act of applying for the permit cannot be construed as a representation to the city that the applicant is “entitled” to the issuance of the permit because the Municipal Code encourages him to make the application even if he knows to a certainty that it will be denied. Therefore, it cannot be concluded that Roppolo, by leading Mrs. Cirrincione to believe that he was entitled to a demolition permit, was making any representation which was calculated to deceive the city. It likewise cannot be concluded that Mrs. Cirrincione’s belief in that entitlement in any way induced the city to issue the permit, because she would have handled the application process in the same way had she known the true facts and had she been expressly engaged only to begin the process in order to get the application before the city council. The majority also holds that Roppolo, through Mrs. Cirrincione, falsely induced the city to issue the permit. In this regard, it must be stressed that Roppolo instructed Mrs. Cirrincione to use the 6366 address on the application despite Mrs. Cirrincione’s suggestion that that was not the correct street address. This fact was not adduced through testimony at trial, but was stipulated to by the parties. That stipulation is binding on this court, and no inference contrary to the stipulation can be drawn on appeal. (See Village of Schaumburg v. Franberg (1981), 99 Ill. App. 3d 1, 4, 424 N.E.2d 1239.) It was also stipulated that Roppolo had twice before applied for demolition permits using the 6366 address. Both of those applications were made before the landmark designation. One permit was denied and one was revoked. It can only be concluded that Roppolo knew that a third application using that address would be rejected, but that he caused the permit to bear that address rather than the correct address. The inducement which caused the issuance of the permit was, in fact, not a result of any act of Roppolo’s, but resulted from the changing of the address on the application at the direction of city employees. Roppolo’s affirmative statements on the face of the application were an inducement to reject rather than to approve the application. The stipulated facts of this case negate any inference that Roppolo attempted to use deception to induce the city’s actions. The majority also asserts that Roppolo agreed in the application for the permit that all work pursuant to the permit would conform to the Municipal Code, and that therefore he had the duty to secure the approval of the Landmark Commission before demolishing the Rincker House. While it is true that no permit to demolish a landmark can issue without the approval of the Landmark Commission, the Municipal Code does not impose on the applicant the duty of seeking the Commission’s review of an application for a permit to alter or demolish a landmark. Chapter 21, section 21 — 64.1(b) of the Municipal Code provides that “prior to issuing any permit [for the alteration or demolition of a landmark], the Building Department shall forward any application for such permit *** to the Commission on Chicago Historical and Architectural Landmarks within (7) days of the receipt thereof.” The Building Department clearly has the obligation under the code to process the application in this fashion, and a failure to ensure that the Building Department is doing its job properly can hardly be characterized as a breach of a promise by an applicant for a permit that the work will be performed in compliance with the Municipal Code. The Building Department, by forwarding the application to the Landmark Commission, begins the administrative process which ultimately ends with compensation being paid to the owner of a landmark-designated property. Once the application is made, the process is out of the hands of the applicant. If everyone is presumed to know the law, then it cannot be said that Roppolo acted fraudulently by failing to do something that he knew that the city, and not he, was obliged to do. The majority also characterizes two omissions of defendants as fraudulent. They are Roppolo’s failure to disclose through his agent (Mrs. Cirrincione) that he had an agreement with the Planning Commission to move and restore the Rincker House, and Mrs. Cirrincione’s failure to disclose to city employees at the permit control desk that the house was a designated landmark. As has been previously noted, silence can amount to a fraud only when the silent party has a duty to speak. It is difficult to say that such a duty existed with regard to Roppolo’s agreement with the Planning Commission. That agreement in no way affected Roppolo’s right under the Municipal Code to apply for the permit and receive whatever compensation he might be awarded after the permit was denied. It is significant to note that the agreement with the Planning Commission does not specifically state that Roppolo would pay for the costs of moving and restoring the Rincker House, although it does state that Roppolo’s company would perform the work. Therefore, an attempt by Roppolo to have the city assume part, if not all, of the expense of preserving the landmark is not only consistent with his rights under the Municipal Code, but is not in any way inconsistent with his agreement with the Planning Commission. The personnel at the permit control desk could not have refused to process the application had they known of that agreement. This is not to say that they might not have processed it with greater care; but the conclusion that a person would have acted differently if a certain fact were known to him is a conclusion that the fact was material. A conclusion that a fact is material is only one element which must be proven to establish fraud. Although the fact may be regarded as material, Roppolo had no duty to disclose it. Additionally, the fact had little relevance to the application process. It must be reiterated that Mrs. Cirrincione was going through the application process in the expectation that she would perform the demolition contract, and that Roppolo was less than candid with her when he avoided informing her that the house was a landmark which was not likely to be demolished, but rather was to be moved and restored. However, it cannot be concluded that those omissions were calculated to deceive the city. It was stipulated between the parties that Roppolo instructed Mrs. Cirrincione to use the 6366 address on the application. By that act, he was providing the city with all the information it needed to determine that the structure was a landmark and that no demolition permit should be issued. Having disclosed all the material facts which were necessary for the city to handle the application correctly, Roppolo was under no duty to disclose more. The foregoing discussion is equally applicable to the issue of whether Mrs. Cirrincione’s failure to tell the city employees that the Rincker House was a landmark was a fraudulent concealment which can be imputed to Roppolo. Additionally, that omission cannot be characterized as a fraudulent concealment because such a concealment must be of a fact which was not only known to the silent party, but which was also unknown or unavailable to the party which relied on the silence. It is evident from the stipulated facts that the city, through its computerized record keeping system, has far superior access to facts concerning the status of any particular piece of property than does the applicant for a building permit. Both the 6366 address and the 6384 address were conspicuously visible on the application, and it would have been a simple matter to enter both addresses in the computer. Indeed, it would have been prudent to do so because the presence of the two addresses should have indicated to a reasonable person that there was some confusion concerning the correct address of the structure to be demolished. Because the facts not expressly disclosed to the city by defendants were readily accessible to the city, the failure to disclose those facts cannot be characterized as a fraud. It is also questionable whether the employees of the city department which collects, stores, and retrieves the information which the city claims should have been disclosed to those employees could ever be said to have justifiably relied on the silence of an applicant for a permit. Therefore, it cannot be concluded that any of the omissions of defendants were of the type which support a finding that defendants perpetrated a fraud through their silence. This case presents a set of facts which demand a choice between a determination that a series of unlikely fortuitous accidents and errors occurred and a determination that the destruction of the Rincker House was the result of fraudulent calculation and deception. The latter conclusion would comport with the natural suspicions that any reasonable person would entertain when confronted with the circumstances of this case. Truly a determination that the destruction of the Rincker House was the result of inexplicable inadvertence rather than fraud seems naive at first blush. However, there is no alternative to that determination in the absence of clear and convincing evidence that a fraud was committed. No matter how suspicious the circumstances surrounding a transaction, the party complaining of the transaction is not released from the obligation to prove the elements of the cause of action. Therefore, I would affirm.