Business Torts

Effective Chicago Business Tort Attorneys

Defending Illinois Businesses Against Unfair Practices

The business world can be very competitive — some may even say cutthroat. But even in a difficult business climate, some behavior is simply unacceptable. To discourage the perpetrators of this type of conduct, the law allows businesses who have suffered economic loss due to unfair practices to recover compensation from responsible parties. The Chicago business tort attorneys of the Clinton Law Firm understand the law governing this type of relief. We are aggressive advocates for clients who have suffered financial harm due to unfair commercial conduct. And we are also principled defenders of clients facing business tort allegations.

What are Business Torts?

Somewhat like a personal tort, a business tort occurs when the wrongful conduct of an individual or business causes financial harm to another business. Chicago commercial litigation lawyers can pursue tort relief for a variety of wrongful acts:

• Fraud
• Breach of fiduciary duty
• Tortious interference with contract
• Tortious Interference with business relationship or reasonable business expectancy

Our Chicago business tort lawyers have represented clients alleging a variety of business torts involving breach of fiduciary duty. Corporate officers, directors, high-level employees, agents and brokers generally owe fiduciary duties to their principals or to the corporation and its shareholders. Cases asserting breach of fiduciary duty may involve allegations of conflicts of interest, insider trading, fraudulent conduct or breach of the duties of care and loyalty. Proving these claims in a judicial setting requires the skill of an experienced Chicago commercial litigation attorney.

Another common business tort is intentional or tortious interference with business contracts or business relationships. This tort recognizes that business relationships are, under certain circumstances, a protected property interest that should be free from a third party’s unjustified interference and that any losses caused by this interference may be recoverable. Our firm has recovered from attorneys who interfered with the business relationship between another firm and its clients. Our business tort attorneys in Chicago have also prosecuted claims arising from one business’s wrongful or intentional interference with the business relationships of another.

Here is a brief introduction to several basic business tort claims recognized in Illinois.

Fraud

It requires a great deal of work and thought to plead a fraud claim. In Connick v. Suzuki Motor, 174 Ill. 2d 482 (Ill. 1990), the Illinois Supreme Court explained what must be alleged in a complaint seeking recovery for fraud:

The elements of common law fraud are: (1) a false statement of material fact; (2) defendant’s knowledge that the statement was false; (3) defendant’s intent that the statement induce the plaintiff to act; (4) plaintiff’s reliance upon the truth of the statement; and (5) plaintiff’s damages resulting from reliance on the statement. Board of Education, 131 Ill.2d at 452, 137 Ill.Dec. 635, 546 N.E.2d 580; Gibbs v. Ernst, 538 Pa. 193, 210, 647 A.2d 882, 889 (1994). A successful common law fraud complaint must allege, with specificity and particularity, facts from which fraud is the necessary or probable inference, including what misrepresentations were made, when they were made, who made the misrepresentations and to whom they were made. Board of Education, 131 Ill.2d at 457, 137 Ill.Dec. 635, 546 N.E.2d 580; Pa.R.Civ.P. 1019(b); Martin v. Lancaster Battery Co., 530 Pa. 11, 18, 606 A.2d 444, 448 (1992).

If you believe that you were defrauded, contact us for a free consultation. Illinois courts are careful and cautious. What may seem to be fraud to you may not be sufficient in an Illinois court. That is why you need counsel who has experience with fraud claims.

Breach of Fiduciary Duty

In some cases, you may be able to allege a breach of fiduciary duty. A fiduciary duty is a higher level duty that is applied to certain individuals who are in positions of trust and responsibility. For example, a trustee of a minor’s trust owes a fiduciary duty to the trust. An executor of an estate owes a fiduciary duty to the estate. An investment advisor may owe a fiduciary duty to its customers. A lawyer undoubtedly owes a fiduciary duty to his clients.

To prove a claim for a breach of fiduciary duty, you must show that there was a fiduciary relationship and that the defendant used that relationship in a selfish way to benefit himself at the expense of the plaintiff. See Neade v. Portes, 193 Ill. 2d 433 (2000).

Remember that a contractual relationship does not create a fiduciary duty. You must establish a relationship where one party controls and dominates the other party.

The essence of a fiduciary relationship is that one party is dominated by the other. ( Pommier, 967 F.2d at 1119 ; see also Paskas v. Illini Federal Savings & Loan Association (1982), 109 Ill.App.3d 24, 31, 64 Ill.Dec. 642, 440 N.E.2d 194 .) Indeed, in the absence of dominance and influence there is no fiduciary relationship regardless of the level of trust between the parties. ( Continental, 857 F.Supp. at 1275 ; see also In re VMS Ltd. Partnership Securities Litigation (N.D.Ill.1992), 803 F.Supp. 179, 195-96 (Illinois law).) As numerous courts have pointed out, a “`slightly dominant business position * * * [does] not operate to turn a formal, contractual relationship into a confidential or fiduciary relationship.'” ( Mid-America National Bank v. First Savings & Loan Association (1987), 161 Ill.App.3d 531, 538, 113 Ill.Dec. 367, 515 N.E.2d 176, quoting Gary-Wheaton Bank v. Burt (1982), 104 Ill.App.3d 767, 774, 60 Ill.Dec. 518, 433 N.E.2d 315 .) Thus, the touchstone of a fiduciary relationship is the presence of a significant degree of dominance and superiority of one party over another. See Pommier, 967 F.2d at 1119 ; Burdett, 957 F.2d at 1381 ; Continental, 857 F.Supp. at 1275 .

Lagen v. Balcor Company, 274 Ill. App. 3d 11 (Ill. App. 2d. Dist. 1995).

Tortious Interference with Contract

One type of business tort is known as tortious interference with contract. Such a claim would arise when a client has a contract with another party and someone else defames or makes a false claim about the client. The client then loses the valuable relationship with the customer. That is the fact pattern in virtually every tortious interference with contract case. One Illinois court recently explained the elements of a tortious interference with contract claim:

“`(1) the existence of a valid and enforceable contract between the plaintiff and another; (2) the defendant’s awareness of this contractual relation; (3) the defendant’s intentional and unjustified inducement of a breach of the 155 *155 contract; (4) a subsequent breach by the other, caused by the defendant’s wrongful conduct; and (5) damages.'” Prudential Insurance Co. v. Van Matre (1987), 158 Ill. App.3d 298, 304, quoting Belden Corp. v. InterNorth, Inc. (1980), 90 Ill. App.3d 547, 551 .

The difficulty here is that you must prove that the defendant (or business rival) knew that there was a contract between client and the third party. Tortious interference with contract happens every day in business – the hard part is proving that it occurred.

Tortious Interference With A Business Relationship

What happens when your client does not have a contract with the third party, but it reasonably expects to receive orders and further business? One example would be a vendor that sells French fries to a fast food chain. There may not be a contract – but the vendor has an expectancy that the fast food chain will order a large amount of fries every month. If a competitor says something false about the French fry vendor (such as “the Health Department closed them down” or “they were the source of the e coli outbreak”), the vendor may well have a tortious interference with business expectancy claim.

Then your client may be a victim of tortious interference with a business relationship. Again, the Illinois Courts have set forth exactly what you have to prove to recover.

To state a cause of action for intentional interference with prospective economic advantage, a plaintiff must allege (1) a reasonable expectancy of entering into a valid business relationship, (2) the defendant’s knowledge of the expectancy, (3) an intentional and unjustified interference by the defendant that induced or caused a breach or termination of the expectancy, and (4) damage to the plaintiff resulting from the defendant’s interference. Fellhauer v. City of Geneva, 142 Ill.2d 495, 511, 154 Ill.Dec. 649, 568 N.E.2d 870 (1991) .

Anderson v. Vanden Dorpel, 172 Ill. 2d 399 (1999). In most cases the unjustified interference is a false or defamatory statement.

Our Attorneys Understand Business Tort Litigation

We have handled business tort cases for both plaintiffs and defendants for many years. The Clinton Law Firm has been a staunch advocate for better business practices in Illinois for 20 years. Our attorneys have represented numerous individuals and companies as plaintiffs and defendants in business tort actions. To schedule a consultation and discuss your case with a knowledgeable Chicago business law attorney, call us at 312.357.1515 or contact us online today.