Dass v. Yale
3 N.E.3d 858
Ill. App. Ct.2014Background
- Plaintiffs (Dass and Garry) bought a garden condominium in 2006 from Wolcott LLC; Yale was the alleged manager of Wolcott. The unit flooded multiple times (2007, 2009) due to defective/old sewer lines contrary to representations in the property report.
- Property report represented new plumbing, CCTV sewer inspections, and repairs; those inspections/repairs were never performed and permitting/permits were misrepresented according to plaintiffs.
- Plaintiffs sued the seller-related entities for breach of warranty, common-law fraud, and Consumer Fraud Act violations; later amended complaints added Yale individually for fraud and statutory claims. Default judgment previously entered against contractor LDC; Wolcott removed from the case in later pleading stages.
- Yale moved to dismiss under 735 ILCS 5/2-619(a)(5) & (a)(9), arguing (1) LLC Act § 10‑10 shields members/managers from personal liability for company debts/ torts, and (2) Consumer Fraud Act claim was time-barred (and Yale was not a seller under that Act).
- Trial court granted Yale’s motion, concluding § 10‑10 insulated him from liability and the Consumer Fraud Act claim was barred by the limitations period. Plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LLC Act § 10‑10 permits personal liability for tort/fraud committed by a member/manager while acting for the LLC | Yale should be liable because he committed fraud; statutory immunity wasn’t meant to shield members/managers who commit fraud while acting in their corporate role | § 10‑10(a) plainly states members/managers are not personally liable for company debts/obligations arising in contract, tort, or otherwise; immunity applies unless subsection (d) conditions are met | Court held § 10‑10 shields Yale from personal liability for the alleged tort/fraud because plaintiffs did not invoke subsection (d) exceptions; dismissal affirmed |
| Whether plaintiffs’ Consumer Fraud Act claim is time‑barred | Plaintiffs contend they did not discover Yale’s role until later and thus limitations should not bar the claim (or equitable tolling/concealment applies) | Plaintiffs had actual or constructive notice of Wolcott’s misrepresentations in 2007 and signs of Yale’s involvement; they should have investigated earlier; the 3‑year limitations period expired | Court agreed with trial court that the Consumer Fraud Act claim was time‑barred (though affirmed primarily on § 10‑10 grounds) |
| Whether plaintiffs can hold Yale liable under the Consumer Fraud Act although sale was through Wolcott | Yale’s conduct equates to a seller/merchant liability under the Consumer Fraud Act | Yale argued he was not the seller/merchant and in any event shielded by § 10‑10 | Court did not reach a detailed ruling on this because § 10‑10 disposed of liability; dismissal stands |
| Whether prior case law or legislative history supports imposing personal liability for member/manager torts | Plaintiffs relied on a Uniform Act comment and argued the legislature didn’t intend immunity for fraudulent acts | Yale and court relied on the amended plain language of Illinois § 10‑10 and Illinois precedent interpreting that text to confer protection | Court rejected plaintiffs’ legislative‑history argument and followed the plain statutory text and precedent, affirming immunity |
Key Cases Cited
- DeLuna v. Burciaga, 223 Ill. 2d 49 (Illinois 2006) (describes nature of a section 2‑619 motion and that it admits legal sufficiency but raises affirmative defenses)
- Solaia Technology, LLC v. Specialty Publishing Co., 221 Ill. 2d 558 (Illinois 2006) (standard of review for section 2‑619 dismissals is de novo)
- Puleo v. Topel, 368 Ill. App. 3d 63 (Ill. App. 2006) (interpreting amended § 10‑10 to shield LLC members/managers from personal liability absent subsection (d) compliance)
- Carollo v. Irwin, 2011 IL App (1st) 102765 (Ill. App. 2011) (applies § 10‑10 to protect members/managers from post‑formation and pre‑formation liability under Illinois LLC Act)