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Kurti v. Fox Valley Radiologists

OPINION FILED JUNE 6, 1984.

DAVID J. KURTI, M.D., PLAINTIFF-APPELLANT,

v.

FOX VALLEY RADIOLOGISTS, LTD., DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Du Page County; the Hon. Robert A. Lucas, Judge, presiding.

JUSTICE VAN DEUSEN DELIVERED THE OPINION OF THE COURT:

Plaintiff, David J. Kurti, M.D., appeals from an order of the circuit court of Du Page County entering judgment against him and in favor of defendant, Fox Valley Radiologists, Ltd., following trial on plaintiff's complaint for wages allegedly due under a contract of employment. Plaintiff asserts that the trial court erroneously upheld the affirmative defense of fraud.

Defendant was a corporation with offices in Aurora, Illinois. Dr. Kenneth E. Hurst was defendant's president and sole shareholder. At the time of the firm's incorporation in 1971, approximately 85% of its business consisted of providing radiology services at Edward Hospital in Naperville. As of October 1981, the sole business of the defendant involved work at this hospital, where Dr. Hurst was head of the radiology department.

Plaintiff began working for defendant in July 1975 as a diagnostic radiologist. Plaintiff was employed pursuant to a written contract providing that he would be paid 45% of the corporation's yearly net income. Plaintiff's share was subsequently modified to 48%, and by 1981 plaintiff received an approximate monthly salary of $12,000. The contract further prohibited plaintiff from engaging in outside professional employment without defendant's consent.

On October 26, 1981, the board of directors of Edward Hospital voted to terminate its agreement with defendant for provision of radiology services following the required 30-day notice. The effect of this decision virtually put defendant out of business, reducing the corporation in essence to a collection center for accounts receivable. Dr. Hurst was informed of the decision of the hospital board on October 27, 1981, and on October 29 he gave plaintiff notice that the latter's employment was terminated as of December 31, 1981.

At the time Dr. Hurst notified plaintiff of his impending termination, plaintiff said nothing regarding his future plans. During the following month, plaintiff held discussions with officials both at Edward Hospital and at Aurora's Copley Hospital regarding the possibility of future employment. At Copley Hospital, Dr. Singh was receptive to plaintiff's interests and extended to him a verbal offer of employment to commence in January 1982. Dr. Singh asked plaintiff about working a few weekends in December to become familiar with the hospital. Plaintiff also called Mr. Ladley, a member of the board of directors at Edward Hospital, on two occasions during November. Plaintiff inquired regarding his chances of becoming the new chairman of radiology at that hospital. Ladley's response was negative, and plaintiff then called Dr. Doris, one of the leading contenders for the Edward chairmanship, to inquire regarding selection for a position as a staff radiologist. Dr. Doris did not provide plaintiff with either a positive or negative reply.

On November 20, 1981, plaintiff approached Dr. Hurst and asked him to sign a release which read: "Under the terms of the employment agreement between Fox Valley Radiologists and David J. Kurti, M.D., this is official permission and consent to engage in professional activities outside the employ of the corporation while said agreement remains in force." Plaintiff explained that he had been talking to Copley Hospital personnel, "and they had said they wanted me to work some weekends in December and that I would like official permission, and I handed him the paper for him [Dr. Hurst] to sign." Although plaintiff did not expressly request to have the release signed immediately, Dr. Hurst believed that plaintiff desired his prompt signature because approximately a week before, plaintiff had disclosed that he was having conversations with Dr. Singh and that Singh wanted plaintiff to work at Copley on weekends. Hurst signed the release without inquiring as to plaintiff's arrangements with Copley. Plaintiff did not mention any discussion with personnel at Edward Hospital. Hurst stated that he would not have signed a release permitting plaintiff to work at Edward because Hurst believed that Edward might not be able to replace his corporation as quickly as planned, and without another radiology service the hospital might be compelled to retain Fox Valley's services through December. Plaintiff gave nothing of value for the release. During this conversation, Hurst did not suggest that he needed plaintiff's services during December, nor did he say that plaintiff would have to work in December in order to be paid.

On November 27, 1981, while plaintiff was packing in preparation for his departure from Edward Hospital, Dr. Doris called and asked plaintiff to remain as an employee. Plaintiff thereupon telephoned Dr. Hurst and stated that he was going to remain at Edward Hospital during December and work for Dr. Doris. Hurst replied that this would negate the release he had signed the previous week and that plaintiff would not be paid by defendant during December. Plaintiff protested that this was not fair and Hurst replied, "That's too bad."

Dr. Hurst did not request plaintiff to perform any work during December 1981. Plaintiff worked at Edward Hospital during that month and was paid $7,200. He thereafter brought suit against defendant for $12,000, the alleged amount of his December salary. Defendant answered, raising four affirmative defenses: fraud in inducing Dr. Hurst to sign the release, lack of consideration, pre-existing break of contract by plaintiff, and the doctrine of commercial frustration. In a letter of opinion, the trial court found that plaintiff's conduct was tantamount to fraud. Judgment was accordingly entered for defendant and this appeal followed.

The trial court's letter of opinion set out the following rationale for its holding that the release signed by Dr. Hurst was invalid on account of fraud:

"Although the evidence is not clear that Plaintiff `knew' on November 20, 1981, of employment with Edward Hospital, it can unquestionably be inferred, at some later time, his acceptance of employment with Edward Hospital would require disclosure of that fact. Plaintiff was then under an affirmative duty to disclose his new professional relationship with Edward Hospital during the balance of the employment contract life. Silence on the part of the Plaintiff at this juncture, when he was [sic] a duty to speak, is tantamount to fraud, voiding the previous consent of November 20, 1981."

Plaintiff contends on appeal that he had no duty, akin to a fiduciary duty, to disclose to defendant prior to November 20, 1981, the mere fact that he had had employment negotiations with Edward Hospital. Plaintiff, therefore, concludes that his conduct in requesting the release cannot be tantamount to fraud. Alternatively, he claims that defendant is unable to show any damages arising from the alleged misrepresentation, and consequently an essential element of a fraud claim is absent.

• 1-4 To establish a cause of action for fraudulent misrepresentation, there must have been a false statement of material fact which was known or believed to be false by the maker, an intent to induce another party to act, a justified reliance by the other party upon the truth of the statement, and damage to the other party resulting from such reliance. (Soules v. General Motors Corp. (1980), 79 Ill.2d 282, 286.) In order for concealment of facts to constitute a fraud, it must be shown to have been done with the intention to deceive under circumstances creating an opportunity and duty to speak. (Semmens v. Semmens (1979), 77 Ill. App.3d 936, 940; Dendrinos v. Dendrinos (1978), 58 Ill. App.3d 639, 642.) A statement, although technically true, may nevertheless be fraudulent where it omits qualifying material, for a half-truth is sometimes more misleading than an outright lie. (Perlman v. Time, Inc. (1978), 64 Ill. App.3d 190, 195.) Moreover, it is essential to a finding of fraud that the plaintiff has been induced by the fraud to act to his detriment. (Macaluso v. Jenkins (1981), 95 Ill. App.3d 461, 469.) In addition to actual fraud, a misrepresentation may give rise to constructive fraud where there has been a breach of duty arising out of a fiduciary or confidential relationship. (Paskas v. Illini Federal Savings & Loan Association (1982), 109 Ill. App.3d 24, 30.) Even where a fiduciary relationship does not exist as a matter of law, it may nonetheless arise where trust and confidence, by reason of friendship, agency and experience, are reposed by one person in another so the latter gains influence and superiority over the former. (Gary-Wheaton Bank v. Burt (1982), 104 Ill. App.3d 767, 774.) However, the existence of a friendship does not of itself establish the existence of such a relationship, nor does one person's assistance of another in business affairs. See Gary-Wheaton Bank v. Burt (1982), 104 Ill. App.3d 767; see, e.g., Carey Electric Contracting, Inc. v. First National Bank of Elgin (1979), 74 Ill. App.3d 233.

In the instant case, plaintiff denies that he owed defendant any fiduciary duty to disclose the extent of his inquiries into obtaining employment at area hospitals. He claims that his relationship with Dr. Hurst involved no special trust or influence which would have given rise to a confidential relationship. He particularly asserts the inapplicability of a fiduciary relationship when the manifest purpose of his release was to allow him to seek other employment at an area hospital, obviously involving at least a degree of competition with Dr. Hurst in the provision of professional services. Defendant, in turn, points to the long-standing personal and professional relationship between the parties and ...


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