Krautsack v. Anderson

• Decision Date: 21 December 2006
• Docket Number: No. 101718.,101718.
• Citation: 223 Ill.2d 541,861 N.E.2d 633,308 Ill.Dec. 302
• Parties: Richard G. KRAUTSACK, Appellee, v. David ANDERSON et al., Appellants.
• Court: Illinois Supreme Court

861 N.E.2d 633

223 Ill.2d 541

308 Ill.Dec. 302

Richard G. KRAUTSACK, Appellee, v. David ANDERSON et al., Appellants.

No. 101718.

Supreme Court of Illinois.

December 21, 2006.

John N. Bielski II, of Pembroke, Bielski & Associates, L.L.C., Park Ridge, for appellants.

James A. Flesch, of Gordon, Glickman, Flesch & Rosenwein, Chicago, for appellee.

Justice FITZGERALD delivered the judgment of the court, with opinion:

Plaintiff, Richard G. Krautsack, brought an action in the circuit court of Cook County against defendants, Luxury Adventures, Ltd. (Luxury), a California corporation, and David Anderson, Luxury's president and sole shareholder, for breach of contract and violations of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act or Act) (815 ILCS 505/1 et seq. (West 2004)). Defendants prevailed at trial and subsequently filed a petition seeking attorney fees and costs pursuant to section 10a(c) of the Act (815 ILCS 505/10a(c) (West 2004)) and Supreme Court Rule 137 (155 Ill.2d R. 137). The trial court granted plaintiff's motion to strike defendants' fee petition. Both parties appealed. The appellate court affirmed the trial court's judgment in favor of defendants on plaintiff's complaint, and affirmed the trial court's order striking defendants' fee petition. No. 1-04-2135 (unpublished order under Supreme Court Rule 23) (Krautsack II). We allowed defendants' petition for leave to appeal and now affirm the judgment of the appellate court.

BACKGROUND

On January 9, 1998, plaintiff and three family members embarked on a two-week, $38,000 safari to East Africa arranged by Luxury. Although the trip was scheduled during what would ordinarily be the dry season, plaintiff's safari experience was marred by heavy rainfall reportedly due to the phenomenon known as "El Nino." Upon return from East Africa, plaintiff contacted Anderson and requested a cash refund, which Anderson declined. The parties were unable to resolve their dispute and on September 1, 1998, plaintiff filed suit against Anderson, seeking a full refund, attorney fees and costs, and punitive damages. Plaintiff later amended the complaint to add Luxury as a defendant.

Count I of the amended complaint alleged a violation of the Consumer Fraud Act by Anderson. Plaintiff alleged that shortly before leaving on safari, he obtained information that the countries on the tour were experiencing heavy rainfall. Plaintiff contacted Luxury and "was assured by Anderson that the information he had received was incorrect and that the tour would neither be disrupted nor made more difficult because of the rain." Plaintiff claimed these representations were false and were made in an effort to convince plaintiff not to postpone the tour. Count II of the amended complaint alleged that Luxury, as Anderson's employer, was liable for his fraudulent conduct under the doctrine of respondeat superior. Finally, count III of the amended complaint alleged that Luxury breached its contract with plaintiff "because certain of the designated tour sites could not be visited, and certain other sites could only be reached with great difficulty."

Defendants moved for summary judgment. Briefly, defendants argued that Anderson's statements regarding the weather in Africa were not actionable under the Consumer Fraud Act, but even if those statements were deceptive, they did not proximately cause plaintiff any injury. According to defendants, the statements were made shortly before the planned departure date and, under the parties' contract, plaintiff could not have cancelled the safari without forfeiting the entire cost of the trip. Defendants also argued that plaintiff signed a contract clearly stating that Luxury was not liable for acts of God or the weather. Finally, defendants claimed entitlement to a reasonable attorney fee under section 10a(c) of the Act.

In response, plaintiff argued that material issues of fact regarding the communications between the parties, the cancellation and refund provisions of the parties' contract, and other relevant matters precluded summary judgment. Plaintiff also refined his theory of recovery under the Consumer Fraud Act. Although plaintiff still maintained that defendant Anderson deceived plaintiff when he stated that the weather in Africa would not adversely affect the safari, plaintiff now argued that, based on the record generated in discovery, Anderson had a financial motive for deceiving him and acted out of "greed and avarice." According to plaintiff:

"When [plaintiff] asked for Anderson's recommendation, Anderson found himself in a bind because Anderson had already paid his African suppliers in advance for [plaintiff's] trip, and if [plaintiff] postponed, Anderson would lose all of that money. * * * [I]nstead of being truthful with [plaintiff], Anderson lied to him, recommended to plaintiff that he leave for Africa on January 9, but not revealing that the reason for his recommendation was that he did not want to lose money.

* * *

Anderson's misrepresentation to [plaintiff] and his withholding from [plaintiff] the true basis of his recommendation, is actionable because [plaintiff] would clearly have acted differently had he known the truth, instead of being deceived by Anderson."

The trial court granted defendants summary judgment on all three counts of the amended complaint. With respect to the consumer fraud counts, the trial court stated in relevant part:

"Although [d]efendants' actions may have been motivated by self interest, as they had already forwarded certain nonrefundable sums to their African suppliers, [d]efendants cannot predict the weather in such a harsh tropical environment. Defendants are clear that their representations about the weather and its effects on their clients' transportation were based purely on their personal experiences as well as those of their contacts in the region. There is no possible way that these statements could be viewed as fraudulent and deceptive. It would be against public policy to hold one liable for acts of God. The choice was left to [p]laintiff to cancel the trip—he chose not to. Therefore, the Court finds that there is no question of fact that [d]efendants did not engage in any deceptive act or practice in this case."

With respect to the contract count, the trial court ruled that no evidence was introduced that Luxury had a contractual duty to recommend that plaintiff postpone his trip, and the evidence that was presented indicated that Luxury satisfied all of its contractual obligations. The trial court also noted that damages did not result directly from Luxury's action, but were the direct result of inclement weather, "something obviously outside of Luxury's control." The trial court concluded: "The facts are clear that Luxury used its best efforts to book a trip for [p]laintiff during the dry season and there have been no facts presented by [p]laintiff to contradict this."

Defendants thereafter filed an amended petition for attorney fees under section 10a(c) of the Consumer Fraud Act. Section 10a(c) states that a court "may award * * * reasonable attorney's fees and costs to the prevailing party." 815 ILCS 505/10a(c) (West 2004). Defendants also filed a motion for Rule 137 sanctions, arguing that no basis in fact or law existed to support plaintiff's claims. See 155 Ill.2d R. 137. The trial court granted the fee petition and the sanctions motion, assessing fees of $10,499 and costs of $104. Plaintiff appealed.

On appeal, plaintiff further refined his theory of recovery under the Consumer Fraud Act, arguing that the relationship between plaintiff and defendants was that of principal and agent, and that the relationship was a fiduciary one. Plaintiff claimed Anderson had a conflict of interest when he advised plaintiff to continue with his travel plans. Plaintiff explained:

"The source of the conflict was that any recommendation that Anderson could make to [plaintiff] could not have benefitted both of their respective financial interests. If Anderson advised [plaintiff] to postpone his travel plans, then Anderson would lose a substantial amount of money. If, on the other hand, Anderson advised [plaintiff] to continue with his travel plans, then [plaintiff] would travel to Africa during a period of torrential rainfall.

Faced with this conflict, Anderson was obligated, as [plaintiff's] agent, and consistent with his fiduciary duty, to subordinate his personal interests to [plaintiff's] interests and to advise [plaintiff] without bias. Alternatively, if Anderson was unwilling to subordinate his personal interest, as was the case, then Anderson was required to fully disclose this interest to [plaintiff]."

Plaintiff also argued on appeal that the record contained substantial evidence supporting his consumer fraud claim that precluded summary judgment. In particular, plaintiff cited a March 1998 e-mail from Anderson to one of the African tour operators in which Anderson states that plaintiff "did not get what he paid for," and that Anderson "was protecting a lot of asses when [he] `pushed' [plaintiff] to continue with his travel plans."

As to the contract count, plaintiff argued, inter alia, that an issue of disputed fact existed as to whether Luxury could fulfill its contractual obligations to arrange for a safari in the dry season where the dry season was so plagued by rainfall that the safari was made almost impossible to conduct. As to proximate causation, plaintiff argued that his damages were the direct result of Luxury's failure to reschedule the safari and not an act of God.

The appellate court reversed the grant of summary judgment. Krautsack v. Anderson, 329 Ill.App.3d 666, 263 Ill.Dec. 373, 768 N.E.2d 133 (2002) (Krautsack I). As to the consumer fraud count, the appellate court noted that "[w]hile the failure to disclose or concealment of material information by a travel agent, based on the agent's fiduciary duty to his clients, is a novel and...