370 F. Supp. 3d 906
E.D. Ill.2019Background
- Justin London (and his companies Linkepic, Veoxo, GMAX) contracted with Vyasil/eWittas (run by Mehul Vyas) for multiple software projects; Vyas later defaulted and entries of default were entered against Vyas and Vyasil.
- London paid repeated invoices he believed reflected performed work; he alleges many invoices were false and that Vyasil did not perform the work.
- Karl Wittstrom (40% owner/member-manager) and Ryan Tannehill (20% owner via RMT; signatory on Vyasil bank account) had business relationships and frequent communications with Vyas but lacked technical expertise.
- Key factual disputes: (1) whether Wittstrom presented himself (or allowed presentation) as a Vyasil “partner” and failed to correct that representation; (2) whether Wittstrom forwarded/caused a Bill Swanson business card to be shown to London; (3) whether Tannehill prepared/authorized or knew of fraudulent invoices and had a $150,000 loan to Vyas repaid via customer payments; (4) whether defendants agreed with Vyas to divert funds (conspiracy).
- Procedural posture: cross-motions for summary judgment by London and defendants (Wittstrom, Tannehill). Court grants summary judgment for defendants on agency theory and promissory estoppel and as to direct fraud based on Wittstrom forwarding Swanson’s card; otherwise denies both motions and sends remaining factual disputes (fraud, ICFA, conspiracy) to jury.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Agency (liability for Vyas’s acts) | Vyas acted with apparent authority to bind Wittstrom/Tannehill | No words/conduct by Wittstrom/Tannehill created apparent or actual authority | Defendants' motion granted — no agency liability (apparent authority must stem from principal's words/actions) |
| Common-law fraud (Wittstrom silence at March 2010 conf.) | Wittstrom, introduced as "partner," remained silent to induce reliance and contract | Silence alone is not fraud; no duty to disclose; not material | Denied in part: jury issues remain. Court rules London justified in reliance as a matter of law but other elements (duty, materiality, intent, causation) are for jury |
| Common-law fraud (Wittstrom forwarding Swanson card) | Card intended to suggest high-level contacts and legitimize Vyasil | Wittstrom knew Swanson and card was genuine; not a false statement by Wittstrom | Granted for defendants — no direct fraud: no false statement by Wittstrom (but conspiracy theory remains possible) |
| Common-law fraud (Tannehill & invoices) | Tannehill prepared/authorized invoices that misrepresented work and his role; hid $150K loan | Tannehill denies sending/making false invoices or knowing work was unperformed | Denied — triable issues exist on authorship/knowledge; court finds inducement and damages elements satisfied as matter of law (narrowed) |
| Illinois Consumer Fraud Act (ICFA) | Deceptive acts (omissions, misrepresentations, invoices) occurred in trade or commerce; London is a consumer | London not a consumer; deceptions not directed to public; proximate cause disputed | Denied for both sides on most elements. Court holds London is a consumer and Wittstrom engaged in deceptive acts; remaining elements (intent, proximate cause re: Tannehill) for jury |
| Civil conspiracy | Defendants conspired with Vyas to divert funds and induce payments; circumstantial evidence (emails, communications, loans) suffices | Claim duplicative of fraud; insufficient evidence of agreement | Denied — factual disputes (communications, loans, joint projects) permit inference of agreement; conspiracy claim may proceed |
| Promissory estoppel / promissory fraud | (alternative) promises by defendants made London rely | Contracts existed and had consideration; estoppel not available as gap filler | Granted for defendants — promissory estoppel fails because contracts (with consideration) exist; plaintiff may not amend to promissory fraud now |
Key Cases Cited
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (summary judgment standard inferences) (discussing view of facts for cross-motions)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment genuine-issue standard)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden allocation)
- Cozzi Iron & Metal, Inc. v. U.S. Office Equipment, Inc., 250 F.3d 570 (elements and justified reliance in fraud claims)
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (ICFA and promissory estoppel principles)
- Connick v. Suzuki Motor Co., Ltd., 174 Ill.2d 482 (duty to disclose and omissions in Illinois law)
- Fritz v. Johnston, 209 Ill.2d 302 (elements of civil conspiracy under Illinois law)
- Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697 (cannot weigh credibility at summary judgment)