DiCosola v. Ryan
44 N.E.3d 556
Ill. App. Ct.2016Background
- Plaintiff Michele DiCosola and Shawn Mahoney planned a used-car dealership and engaged Jane Ryan to finance the venture.
- The parties executed a Letter of Intent (LOI) on Sept. 19, 2013 outlining ownership, management roles, and a $1,000,000 start‑up funded via Ryan’s Solo 401(k).
- LOI provided 45% ownership to DiCosola, 45% to Mahoney, and 10% nonvoting shares to Ryan, with Ryan funding the start‑up and conceivably paying prior costs.
- Plaintiff alleged Ryan breached by not contributing the $1,000,000, causing the projected corporation to fail to form.
- Ryan paid a $5,500 retainer to Centarus Legal Group for related docs, then informed Centarus she would not engage in the venture or sign related agreements.
- Circuit court dismissed the complaint with prejudice under 2-619, finding no enforceable contract and lack of consideration; on appeal, the court affirmatively reviewed the 2-615/2-619 rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LOI constitutes an enforceable contract given consideration. | DiCosola argues LOI created binding duties on all promoters. | Ryan contends LOI lacks consideration and binding terms. | No enforceable contract for want of consideration. |
| Whether the promises in LOI are illusory and thus not enforceable. | Promoters’ duties were definite and binding. | Undertakings are illusory absent fixed duration. | Undertakings are illusory; not enforceable. |
| Whether plaintiff lacked standing/required party status to sue for a nonformed corporation. | N/A | Action premised on nonformed entity; standing lacking. | Courts need not reach standing if no contract exists; still affirmed on contract grounds. |
| Whether any other grounds support dismissal (e.g., unenforceable document, future action, or securities issues). | N/A | LOI references future actions and securities scheme; unenforceable. | Court affirmed dismissal on the lack of consideration/unenforceable contract grounds. |
Key Cases Cited
- Carter v. SSC Odin Operating Co., 2012 IL 113204 (Ill. 2012) (consideration essential; illusory promises fail contract formation)
- Tin Cup Pass Ltd. Partnership v. Daniels, 195 Ill. App. 3d 847 (Ill. App. Ct. 1990) (promoter status; implications for enforceability among copromoters)
- Duldulao v. Saint Mary of Nazareth Hospital Center, 115 Ill. 2d 482 (Ill. 1987) (promissory duration; at-will termination affects consideration)
- W.E. Erickson Construction, Inc. v. Chicago Title Insurance Co., 266 Ill. App. 3d 905 (Ill. App. Ct. 1994) (illusory promises—mutual obligations must be binding)
- Lindy Lu LLC v. Illinois Central R.R. Co., 2013 IL App (3d) 120337 (Ill. App. Ct. 2013) (definition of consideration and forbearance)
- CNA International, Inc. v. Baer, 2012 IL App (1st) 112174 (Ill. App. Ct. 2012) (consideration requirement; contract formation analysis)
- Geving v. Fitzpatrick, 56 Ill. App. 3d 206 (Ill. App. Ct. 1978) (copromoter contract concepts; enforceability among promoters)
- Suchy v. City of Geneva, 2014 IL App (2d) 130367 (Ill. App. Ct. 2014) (de novo review of 2-615/2-619 dismissals; standard of review)
- Wallace v. Smyth, 203 Ill. 2d 441 (Ill. 2002) (preliminary considerations in dismissal and contract claims)