Benson v. Stafford
407 Ill. App. 3d 902
| Ill. App. Ct. | 2010Background
- Consolidated appeals involve two joint ventures for DPMs on the CBOE; plaintiffs allege fiduciary duty, fraud, including concealment, and affirmative fraud claims against defendant.
- Big Blue Trading, LLC and GPZ formed Big Blue DPM; Johnson, Inc. and JSS/GPZ formed Johnson DPM; GPZ and JSS had veto rights affecting sales.
- TD offered to purchase via TD Options; defendant planned to sell his interests and those of joint venture partners with TD via a structure including back-end payments.
- Defendant negotiated with TD while withholding full information from plaintiffs, who trusted him to negotiate best prices; plaintiffs allowed him to handle negotiations.
- Big Blue faced competing bids (SLK) and defendant used veto power; plaintiffs eventually accepted a TD-backed offer after improvements and back-end adjustments.
- SPAs and a TD Options master agreement contained nonreliance clauses and representations; district court granted summary judgment on fiduciary duty and fraudulent concealment; affirmative fraud claim was dismissed due to nonreliance clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was there a fiduciary in fact between plaintiffs and Stafford? | Plaintiffs claim dominance and trust created fiduciary duties. | No fiduciary relationship; parties were sophisticated and not dominantly controlled. | No fiduciary in fact existed. |
| Did Stafford owe a duty of fraudulent concealment to plaintiffs? | Trust and position of influence created a duty to disclose. | No fiduciary relation, no duty to disclose; concealment claim fails. | No duty to disclose under fiduciary theory; concealment not proven. |
| Can plaintiffs maintain an affirmative fraud claim given nonreliance clauses? | Nonreliance clauses do not bar all fraud claims. | Nonreliance clauses bar affirmative fraud as a matter of law. | Affirmative fraud claim barred by nonreliance clause. |
| Are there grounds for sanctions against plaintiffs and their counsel under Rule 137? | Sanctions not appropriate given litigation context. | Sanctions warranted for frivolous claims. | Trial court's denial of sanctions affirmed; no abuse of discretion. |
Key Cases Cited
- State Security Insurance Co. v. Frank B. Hall & Co., 258 Ill.App.3d 588 (1994) (factors for fiduciary relationships; dominance required)
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90 (1992) (summary judgment standard; draconian remedy requires no genuine issue)
- Adler v. William Blair & Co., 271 Ill.App.3d 117 (1995) (nonreliance considerations in fraud cases)
- Tirapelli v. Advanced Equities, Inc., 351 Ill.App.3d 450 (2004) (automatic nonreliance rule in presence of integration clause)
- Rissman v. Rissman, 213 F.3d 381 (7th Cir. 2000) (nonreliance clause precludes fraud based on prior oral representations)
- Kulp v. Illinois Rockford Corp., 41 Ill.2d 215 (1968) (closely held corporate fiduciary duties; dominance not shown here)
- Zimmerman v. Northfield Real Estate, Inc., 156 Ill.App.3d 154 (1986) (exculpatory clauses and fraud considerations; distinctions with nonreliance)