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1-99-3727                                                                                                                    First District
                                                                                                                                     January 14, 2002

PRESIDING JUSTICE COHEN delivered the opinion of the court:

On June 6, 1997, plaintiff Barry Schrager filed a complaint alleging negligence and fraudagainst defendants North Community Bank, its president, Scott Yelvington, and its chairman andchief executive officer (CEO), Peter Fasseas. Defendants answered plaintiff's complaint andlater moved for summary judgment. In considering defendants' motion for summary judgment,the trial court agreed with defendants' characterization of plaintiff's fraud count as alleging bothfraudulent misrepresentation and fraudulent concealment of material fact. The trial court furtheragreed that plaintiff's negligence count alleged negligent misrepresentation. On October 20,1999, the trial court granted defendants' motion for summary judgment on all claims.

On appeal, plaintiff alleges that the trial court erred in granting summary judgment whereit determined that: (1) defendants' statements were opinions rather than representations ofmaterial fact; (2) defendants had no duty to disclose certain facts to plaintiff; and (3) plaintiff'sreliance on defendants' statements was not justifiable as a matter of law.

For the reasons set forth below, we hold that questions of material fact sufficient towithstand summary judgment exist with respect to each of plaintiff's asserted errors. Wetherefore reverse the judgment of the trial court and remand this cause for further proceedings.

BACKGROUND

On March 11, 1993, as a prospective investor in the 1255 State Parkway BuildingLimited Partnership (1255 Partnership), a real estate venture of Jeffery E. Grossman and DonaldGrauer, plaintiff Barry Schrager attended a meeting held at North Community Bank arranged byGrossman to introduce defendants Scott Yelvington and Peter Fasseas to Schrager. At the time,Yelvington was president of North Community Bank. Fasseas was the bank's chairman andCEO. Both Grossman and Grauer were present at the meeting. The meeting was held inYelvington's office at the bank.

The record reflects that at the time of the meeting on March 11, North Community Bankheld a $600,000 mortgage (of which $420,000 had been disbursed) on property owned by the1255 Partnership. The note on that mortgage, executed on February 24, 1992, was guaranteed byboth Grauer and Dr. Lawrence Metrick. Dr. Metrick was Grossman's daughter's father-in-law. At his deposition, Grossman testified that Metrick had contacted him by telephone and informedGrossman that Metrick was "getting cold feet" and wished to withdraw his guaranty. In search ofa guarantor to replace Metrick, Grossman testified that in late 1992 he provided Schrager with aprospectus. The prospectus outlined Grossman's proposal that Grossman proposed that Schragerpurchase a 50% share in the 1255 Partnership for $375,000, and agree to guarantee the note onthe mortgage in place of Metrick.

The parties dispute both the nature of the March 11 meeting and the substance of thematters discussed at the meeting. Defendants claim that the meeting was simply a "social call,"the purpose of which was merely to introduce Schrager to Yelvington and Fasseas. Defendantsmaintain that no matters of significant business import were discussed at the meeting. Schrager,however, claims that it was clearly understood among the parties that the purpose of the meetingwas to discuss Schrager's potential investment in the 1255 Partnership.

Grossman testified at his deposition that when he contacted Yelvington to arrange themeeting, he informed Yelvington that Schrager was his (and Grauer's) "new partner." Accordingto Schrager, Grossman also told Yelvington at the start of the March 11 meeting that Schragerwas a prospective investor in the 1255 Partnership. Schrager stated at his deposition that duringthe March 11 meeting, "Yelvington asked me what I would like to know about [Grossman] or[Grauer]." Schrager testified that he replied, "anything you can tell me about [Grossman,Grauer] or the project." (Emphasis added.) Schrager testified that in response to his inquiry,Yelvington told him that Grossman and Grauer were "excellent real estate developers, very goodcustomers of the bank, and very good business men [sic]." Bank chairman and CEO PeterFasseas, who later joined the meeting, was asked the same question and gave a substantiallysimilar answer. Fasseas added that he was "good friends" with Grossman and Grossman's wife.

At his deposition, Yelvington testified that he could not recall whether Schrager madeany such inquiry at the March 11 meeting.⁽¹⁾ Yelvington further testified, however, that he knewat the time of the March 11 meeting that Grossman was bankrupt. In re Jeffrey E. Grossman, 92B 1534 (filed January 23, 1992). Yelvington was also aware of the fact that the 1255Partnership's account at the North Community Bank had been overdrawn at least 57 times during1992, occasionally in amounts in excess of $10,000. Yelvington further testified that at the timeof the March 11 meeting, he was aware that Grossman and Grauer's planned construction on the1255 State Parkway premises could not proceed due to disputes both with the building'scondominium association and, more significantly, with the relevant zoning authorities of the Cityof Chicago.

Schrager admitted in his deposition that after the March 11 meeting with Yelvington andFasseas, he made no additional independent inquiry into the financial history of either Grossmanor Grauer. Schrager further admitted that about three months prior to the March 11 meeting, hehad begun investing approximately $850,000 in three other real estate ventures with Grossmanand Grauer. In one of these prior ventures, Schrager retained an attorney to draft an agreementdesigned to "protect his interests." Schrager retained no attorney with respect to investing in anyof Grossman and Grauer's ventures subsequent to the March 11 meeting. During his deposition,in response to counsel's question about whether Schrager had asked Grossman or Grauer if eitherhad ever declared bankruptcy, Schrager replied: "They were portraying themselves as multi-millionaires. That would not even have occurred to me."

Plaintiff states that he relied upon defendants' responses to his inquiry in deciding both tobecome a guarantor on the 1255 Partnership loan in place of Metrick as well as to invest a totalof more than $4 million in the 1255 Partnership and other real estate development deals withGrossman and Grauer.

Subsequent to the March 11 meeting, the $600,000 mortgage loan on the 1255Partnership property was refinanced with another bank. As security, Schrager posted on behalfof the 1255 Partnership a letter of credit in the amount of $450,000, executed on December 10,1993, concurrently with a new note on the refinanced loan. Grauer admitted in his depositionthat there was an understanding, of which Grossman had made him aware, between Grossmanand the North Community Bank to the effect that upon Schrager's posting of the letter of credit,the prior guarantee of Dr. Metrick on the original mortgage note would be cancelled or released. The record reflects that such a release did in fact occur.

According to Schrager, all properties in which he invested in reliance on the defendants'endorsement of Grossman and Grauer's business skills subsequently became worthless. OnFebruary 7, 1997, Schrager filed a complaint for damages in the circuit court of Cook Countyalleging a single count of negligence against defendants. Schrager then amended his complaintby adding a fraud count and sought damages totaling more than $4 million.

On June 28, 1999, defendants filed a motion for summary judgment. In their motion,defendants described Schrager's somewhat confusing amended complaint as setting forth both anegligence claim predicated on a theory of negligent misrepresentation and a fraud claimpredicated on theories of fraudulent misrepresentation and fraudulent concealment of materialfact. The court adopted defendants' characterization of plaintiff's amended complaint and granteddefendants' motion for summary judgment. In so doing, the trial court held that: (1) defendants'statements to Schrager expressed nonactionable opinions rather than material facts; (2) norelationship existed between Schrager and defendants upon which a duty to disclose might bepredicated; and (3) Schrager could not prove justifiable reliance on defendants' statementsbecause he could have discovered the relevant financial information about Grossman and Grauerby asking them directly.

On appeal, Schrager argues that the trial court erred in granting defendants summaryjudgment because defendants' statements constituted representations of material fact rather thanopinions. Schrager further claims that a relationship sufficient to trigger a duty to discloseexisted between himself and defendants by virtue of defendants' "position of trust and influence." Finally, Schrager claims that whether his reliance on defendants' statements was justifiable is aquestion of fact that was improperly decided by the trial court on summary judgment.

Defendants respond that the trial court correctly determined that defendants had merelyexpressed to Schrager their opinions as to the future performance of Grossman and Grauer. Defendants further argue that the trial court properly determined that they had no "special orfiduciary relationship with [Schrager]" sufficient to trigger a duty to disclose to Schragerinformation about Grossman and Grauer's financial history. Finally, defendants argue that inlight of Schrager's preexisting business relationship with Grossman and Grauer, as well asSchrager's failure to exercise ordinary prudence in seeking information about the 1255Partnership investment, plaintiff could not have justifiably relied on defendants' statements as amatter of law.

ANALYSIS

I. Standard of Review

As this court must determine whether summary judgment was properly granted, ourreview is de novo. Sims v. Tezak, 296 Ill. App. 3d 503, 508 (1998). "Summary judgment is to begranted only if the pleadings, affidavits, depositions, admissions, and exhibits on file, whenreviewed in the light most favorable to the nonmovant, show that there is no genuine issue as toany material fact and that the movant is entitled to judgment as a matter of law." Berlin v. SarahBush Lincoln Health Center, 179 Ill. 2d 1, 7 (1997); 735 ILCS 5/2-1005(c) (West 2000). Inconducting our review, "we are free to consider any pleadings, depositions, admissions, andaffidavits on file at the time of the hearing regardless of whether facts contained therein werepresented to the trial court in response to the motion for summary judgment." William J.Templeman Co. v. United States Fidelity & Guaranty Co., 317 Ill. App. 3d 764, 769 (2000). "Atriable issue of fact exists where there is a dispute as to a material fact or where, although thefacts are not in dispute, reasonable minds might differ in drawing inferences from those facts."Petrovich v. Share Health Plan of Illinois, Inc., 188 Ill. 2d 17, 31 (1999).

"Summary judgment is a 'drastic means of disposing of litigation and thereforeshould be allowed only when the right of the moving party is clear and free fromdoubt.' [Citation.] Summary judgment must be awarded with caution to avoidpreempting a litigant's right to trial by jury or the right to fully present the factualbasis of a case where a material dispute may exist. * * * Reversal of [an ordergranting] summary judgment * * * is warranted where, on review, a material issueof fact or an inaccurate interpretation of the law exists." Anderson v. Alberto-CulverUSA, Inc., 317 Ill. App. 3d 1104, 1110 (2000).

II. Fraudulent and Negligent Misrepresentation

In Illinois, a claim of fraudulent misrepresentation -- a form of common law fraud (Millerv. William Chevrolet/Geo, Inc., No. 1-00-4255, slip op. at 6 (November 27, 2001)) -- requiresclear and convincing proof (Niemoth v. Kohls, 171 Ill. App. 3d 54, 68 (1988)) of the followingfive elements: "(1) a false statement of material fact; (2) knowledge or belief of the falsity by theparty making it; (3) an intention to induce the other party to act; (4) action by the other party inreliance on the truth of the statement; and (5) damage to the other party resulting from suchreliance. [Citation.]" Neptuno Treuhand-Und Verwaltungsgesellschaft MBH v. Arbor, 295 Ill.App. 3d 567, 571 (1998). Furthermore, plaintiff's reliance must be justifiable to sustain the causeof action. Neptuno, 295 Ill. App. 3d at 571.

The elements of negligent misrepresentation are substantially similar to those offraudulent misrepresentation, except that the required mental state is less stringent. Board ofEducation of the City of Chicago v. A, C & S, Inc., 131 Ill. 2d 428, 452 (1989). A defendant'scarelessness or negligence in ascertaining the truth or the falsity of his statement is sufficient tosustain a claim of negligent misrepresentation. Board of Education, 131 Ill. 2d at 452. Aplaintiff must further allege that the defendant owed a duty to the plaintiff to communicateaccurate information. Board of Education, 131 Ill. 2d at 452.

As a general rule, the law will not support a misrepresentation claim predicated on anopinion; however, an exception exists where the circumstances suggest that a plaintiff may havejustifiably relied on the opinion as though it was a statement of fact. Buttitta v. Lawrence, 346Ill. 164, 173 (1931). "'Wherever a party states a matter which might otherwise be only anopinion but does not state it as the expression of the opinion of his own but as an affirmative factmaterial to the transaction, * * * the statement clearly becomes an affirmation of the fact withinthe meaning of the rule against fraudulent misrepresentation.'" Heider v. Leewards CreativeCrafts, Inc., 245 Ill. App. 3d 258, 266 (1993), quoting Perlman v. Time, Inc., 64 Ill. App. 3d 190,197 (1978). "Thus, the general rule is that it is not 'the form of the statement which is importantor controlling, but the sense in which it is reasonably understood.'" West v. Western Casualty &Surety Co., 846 F.2d 387, 394 (7th Cir. 1988), quoting W. Keeton, Prosser and Keeton on Torts