the crux of his case, in which he essentially argues that he had a binding employment agreement as of September 1994.
Glass has failed to present evidence of any written statements by Oberst or written or oral statements by anyone else that directly contradict Oberst's written statements that Glass's employment agreement had to be approved by Kemper and the Kepro board of directors. Rather, Glass simply claims that Jack Neal, Oberst's supervisor, told Glass that Oberst had all the authority he needed to get Diagonal Mar built and that Glass should follow Oberst's management instructions; (see id. Ex. B P 4); that Oberst told Glass that he was Kemper's designee to conduct contract negotiations; (id. PP 7, 9); and that Oberst told Glass that Kemper or Kepro approvals could be made by a designee and that either Oberst or Jack Neal was such a designee. (See Pl.'s Rule 12(N) Statement at 19 P 13).
As the court has noted, Glass's own notes belie his claim that he thought that Oberst could enter into a binding employment contract with Glass. Moreover, neither Neal's statement that Oberst had all the authority he needed to get Diagonal Mar built nor Oberst's statement that he had authority to negotiate an employment agreement translates to a representation that Oberst had authority to reach a binding employment agreement without Kemper and Kepro approval. In fact, nowhere does Glass claim that Oberst or anyone else explicitly told him that Oberst could enter into a binding employment agreement with him.
Finally, even if Oberst orally stated to Glass that he had authority to bind Kemper and Kepro to an employment contract with Glass, Oberst's numerous written assertions to the contrary made any reliance by Glass on the oral statements unreasonable. See Runnemede, 861 F.2d at 1059; Mason & Dixon, 975 F.2d at 1305.
The court acknowledges Glass's contention that the elements of fraud or estoppel, including reasonable reliance, generally are questions of fact. See, e.g., R.S. Bennett & Co., Inc. v. Economy Mechanical Indus., Inc., 606 F.2d 182, 186-87 (7th Cir. 1979) (estoppel); Loganberry Partners, L.P. v. Alternate Benefits Sales, Inc., 1996 U.S. Dist. LEXIS 7612, No. 95 C 7028, 1996 WL 296669, *4 (N.D. Ill. May 31, 1996) (citing Jeffrey M. Goldberg & Assoc., Ltd. v. Collins Tuttle & Co., 264 Ill. App. 3d 878, 885, 637 N.E.2d 1103, 1108, 202 Ill. Dec. 367 (1st Dist. 1994)) (fraud).
Nonetheless, the existence of reasonable reliance can be a question of law, appropriately decided on a motion for summary judgment, where no reasonable jury could find that it was reasonable for a plaintiff to rely upon the statements of the defendant. See Puri v. Blockbuster Music Retail, Inc., 1995 U.S. Dist. LEXIS 18819, No. 95 C 50018, 1995 WL 756855, *5 (N.D. Ill. Dec. 20, 1995) (as matter of law, any reliance on oral assertions by plaintiff was unreasonable in light of unambiguous language in lease agreement that contradicted oral assertions).
The Seventh Circuit in Runnemede, 861 F.2d at 1059, and Mason & Dixon, 975 F.2d at 1305, did not explain why it ruled as a matter of law on whether the plaintiffs had reasonably relied on the representations of the defendants. Nonetheless, the facts of those cases indicate that the court presumably found that no question of fact existed about whether the plaintiffs could prove reasonable reliance. The present case is not materially different from those cases, or from Puri, 1995 U.S. Dist. LEXIS 18819, 1995 WL 756885, *5.
Accordingly, the court finds that no genuine issue of material fact exists regarding whether Glass reasonably relied on any representations that Oberst had authority to enter into a binding employment agreement with Glass without approval by both Kemper and the Kepro board of directors; he did not. Since Glass cannot establish an essential element of his promissory fraud, promissory estoppel, and equitable estoppel claims, the court grants summary judgment in favor of Kemper on those claims.
2. Count I -- promissory fraud claim
In addition to its argument regarding justifiable reliance, Kemper raises an additional reason why it deserves summary judgment on Glass's promissory fraud claim. Kemper contends that Glass cannot meet the "deliberately high" burden of establishing the "disfavored" action of promissory fraud.
Promissory fraud generally is not actionable in Illinois, but an exception exists "'where the false promise or representation of intention of future conduct is the scheme or device to accomplish the fraud.'" Bower v. Jones, 978 F.2d 1004, 1011 (7th Cir. 1992) (quoting Steinberg v. Chicago Medical School, 69 Ill. 2d 320, 334, 371 N.E.2d 634, 641, 13 Ill. Dec. 699 (1977)). The scheme exception applies where "'a party makes a promise of performance, not intending to keep the promise but intending for another party to rely on it, and where the other party relies on it to his detriment.'" Bower, 978 F.2d at 1011 (quoting Concord Indus., Inc. v. Harvel Indus. Corp., 122 Ill. App. 3d 845, 849-50, 462 N.E.2d 1252, 1255, 78 Ill. Dec. 898 (1st Dist. 1984)).
However, promissory fraud is a "disfavored cause of action in Illinois because fraud is easy to allege and difficult to prove or disprove." Bower, 978 F.2d at 1012 (citing Hollymatic Corp. v. Holly Systems, Inc., 620 F. Supp. 1366, 1369 (N.D. Ill. 1985)). Thus, a plaintiff claiming promissory fraud has a "deliberately high" burden of proof. Bower, 978 F.2d at 1012.
"In order to survive the pleading stage, a claimant must be able to point to specific, objective manifestations of fraudulent intent -- a scheme or device. If he cannot, it is in effect presumed that he cannot prove facts at trial entitling him to relief. If the rule were otherwise, anyone with a breach of contract claim could open the door to tort damages by alleging that the promises were never intended to be performed. Presumably, it is this result that the Illinois rule seeks to avoid."
Id. (quoting Hollymatic, 620 F. Supp. at 1369) (emphasis added).
In all of his voluminous evidentiary submissions to the court, Glass has not pointed to any "specific, objective manifestations" of Kemper's intent to commit fraud on him. The court has found nothing in either party's submissions to the court that even hints at such a fraudulent intent on Kemper's behalf. In fact, in his deposition testimony, Glass himself stated that other than his suspicion about purported "aberrant behavior" of Oberst, he has no evidence that Oberst's representation that Glass would be given a new employment contract was part of a scheme to carry out any type of fraud on Glass. (See Pl.'s Rule 12(N) Statement Ex. C.)
Glass's speculation about Oberst's behavior is not sufficient to establish fraud by clear and convincing evidence, which is the burden that Glass bears. See Athey Products Corp. v. Harris Bank Roselle, 89 F.3d 430, 434-35 (7th Cir. 1996) ("speculation, possibilities, and reasonable explanations for [defendant's allegedly fraudulent] conduct do not satisfy [plaintiff's] burden of showing fraud by clear and convincing evidence"). Other than speculation, Glass has not presented even a scintilla of evidence to support his promissory fraud claim.
Accordingly, the court grants summary judgment in favor of Kemper on Count I.
3. Count II -- breach of contract
Kemper contends that in order to maintain a breach of contract claim against Kemper, Glass must prove that Oberst had apparent authority to bind Kemper and Kepro to a new employment contract. However, Kemper argues, because Glass knew that any new employment terms required both Kemper and Kepro approval, Glass knew that Oberst had no authority to bind Kemper and Kepro to a new employment contract.
An agent can bind his principal through the existence of apparent authority. Mason & Dixon, 975 F.2d at 1303 (citing Bank of North Carolina, N.A. v. Rock Island Bank, 630 F.2d 1243, 1251 (7th Cir. 1980)). "'"Apparent authority arises when a principal creates, by its words or conduct, the reasonable impression in a third party that the agent has the authority to perform a certain act on its behalf."'" Mason & Dixon, 975 F.2d at 1303 (quoting Bank of North Carolina, 630 F.2d at 1251 (quoting Crawford Savings & Loan Ass'n v. Dvorak, 40 Ill. App. 3d 288, 292, 352 N.E.2d 261, 264 (1st Dist. 1976))).
In Mason & Dixon, the plaintiffs brought suit against defendants for, among other things, breach of an oral agreement to settle a previous lawsuit brought by the defendant union pension fund to impose withdrawal liability on the plaintiffs. Mason & Dixon, 975 F.2d at 1300. The plaintiffs contended that one of the trustees of the pension fund several times had represented that he had the authority to settle the case, that they had reached a settlement with the trustee, and that the trustee had stated that the settlement was a "done deal." Id. at 1302, 1303-04.
The district court found the trustee's statements irrelevant because it found that the plaintiffs knew that the trustee lacked authority to settle the case. The district court based its finding on a letter the trustee had written to the plaintiffs stating that any settlement would have to be approved by the other trustees of the pension fund. The trustee had written this letter prior to the date on which the plaintiffs claimed they had reached an oral settlement agreement with the trustee. Id. at 1304. Thus, the district court granted summary judgment in favor of defendants on the breach of oral agreement claim. Plaintiffs appealed. Id. at 1300.
The court of appeals affirmed, finding the trustee without apparent authority to settle the litigation. According to the court, the fundamental problem with plaintiffs' argument was that long before the alleged oral settlement agreement was reached, the trustee made clear in writing that there could be no settlement agreement until the other trustees approved any settlement agreement. Consequently, subsequent to that letter, the plaintiffs could not reasonably rely on the trustee's oral assurances that he could agree to a settlement, since they had a clear written statement by him to the contrary. The court thus held that the plaintiffs had notice that the trustee lacked authority to agree to a settlement on behalf of the other trustees, and that the district court correctly granted summary judgment in favor of defendants on the oral contract claim. Id. at 1304-05.
Glass's breach of contract claim is factually analogous to the oral contract claim in Mason & Dixon. Even if Oberst made oral representations to Glass that he had authority to enter into a binding employment contract with Glass, from the beginning of negotiations with Glass, he repeatedly stated in writing that any new employment terms would have to be approved by Kemper and the Kepro board of directors. (See Section II.D.1. above.) Thus, Glass had clear written notice that Oberst lacked the authority to agree to new employment terms without approval by Kemper and the Kepro board, and it would have been unreasonable for Glass to rely on oral representations to the contrary.
Because Oberst did not have apparent authority to enter into a new employment contract with Glass, and Kemper and Kepro did not approve a new employment agreement with Glass, there was no contract for Kemper to breach. Accordingly, the court grants summary judgment in favor of Kemper on the breach of contract claim.
E. Effect on Prime defendants of summary judgment in favor of Kemper
As the court previously noted, the Prime defendants' liability is derivative of Kemper's liability, since the Prime defendants' liability rests on being joint venture partners with Kemper. Thus, though the Prime defendants' own motion did not warrant the court's granting summary judgment in their favor, Kemper's motion does.
Accordingly, because the court grants summary judgment in favor of Kemper, it also grants summary judgment in favor of the Prime defendants.
For the foregoing reasons, the court strikes defendant Michael Oberst's motion for summary judgment as moot, and grants the motions for summary judgment of defendants Prime Group, Inc., Prime International, Inc., and Kemper Corporation. The court enters summary judgment on Counts I, II, III, and IV against plaintiff Gregory Glass and in favor of defendants Prime Group, Inc., Prime International, Inc., and Kemper Corporation.
Date: JAN 16 1997
JAMES H. ALESIA
United States District Judge
JUDGMENT IN A CIVIL CASE
Decision by Court. This action came to a hearing before the Court. The issues have been heard and a decision has been rendered.
IT IS ORDERED AND ADJUDGED that on April 1, 1996, defendants Stephen timbers and John Neal were dismissed as party defendants.
On June 25, 1996, the court granted defendant Michael Oberst's motion to dismiss Counts I and VI of plaintiff's second amended complaint. Counts I and VI of plaintiff Glass's second amended complaint was dismissed, and defendant Michael Oberst was dismissed as a party defendant.
In the Final Pre-Trial Order entered on June 28, 1996, plaintiff Glass waived his claim in Count V for unjust enrichment.
The court strikes defendant Michael Oberst's motion for summary judgment as moot, and grants the motions for summary judgment of defendants Prime Group, Inc., Prime International, Inc., and Kemper Corporation. The court enters summary judgment on Counts I, II, III and IV against plaintiff Gregory Glass and in favor of defendants Prime Group, Inc., Prime International, Inc., and Kemper Corporation. This case is closed.
January 16, 1997