(December 2024) The firm is pleased to announce that partner Antonio DeBlasio and the litigation team at DeBlasio Law Group recently settled a corporate litigation lawsuit involving claims that a client was fraudulently induced to execute a promissory note and sell a substantial stake in a limited liability company franchise valued at $3 million. Terms of the settlement are confidential.
One of the key issues in the DuPage County lawsuit was the execution of a promissory note to repay a specific sum of money despite the fact that the “lender” had never subsequently loaned the full amount to the maker of the note. Under Illinois law, this failure presented a significant obstacle to enforcement of the promissory note, especially when the “lender” (plaintiff) filed a verified complaint stating under oath that it had in fact loaned the money. See e.g., Brown v. Grimes, 192 Cal. App. 4th 265, 277 (2011) (“When a party’s failure to perform a contractual obligation constitutes a material breach of the contract, the other party may be discharged from its duty to perform under the contract.”); see also Bisla v. Parvaiz, 379 Ill.App.3d 567, 572-573 (1st Dist. 2008) (court held a material “breach of contract can operate to discharge the duties of a non-breaching party” where “the breach worked to defeat the bargained-for objective of the parties or caused disproportionate prejudice to the non-breaching party”).
Another significant issue in the case was the lender’s fraudulent actions to induce execution of the promissory note and to induce the purchase of a significant equity stake in the LLC. During a discovery deposition, the lender admitted that it was a “shell” company and that it did not have the capital needed to fund the loan or to meet any capital calls as a new member of the LLC. These facts and others formed the basis for a fraudulent inducement claim against the member / lender under Illinois law. See Shanahan v. Schindler, 63 Ill. App. 3d 82 (1st Dist. 1978) (where promisor was fraudulently induced to sign the promissory note, contract was voidable at promisor’s option and court upheld the established principle that a party committing fraud should be precluded from benefiting therefrom); see also Tower Investors, LLC v. 111 E. Chestnut Consultants, Inc., 371 Ill. App. 3d 1019, 1030-1031 (1st Dist. 2007) (“Fraud in the inducement of a contract is a defect which renders the contract voidable at the election of the innocent obligor).
Claims of material breach of contract and fraud require a meticulous analysis of the underlying facts and a close working relationship with counsel to further develop those facts. Attorney Antonio DeBlasio has been selected by Super Lawyers® in 2008 and in each year from 2014 through 2025. No more than 5% of Illinois attorneys receive this distinction. Mr. DeBlasio has over 30 years of experience as an Illinois attorney, representing businesses, individuals, employees, employers, estates and beneficiaries of estates in Illinois. For information on scheduling a consultation, call DeBlasio Law Group at (630) 560.1123, or you may reach us through our firm’s website at www.DGLLC.net/contact.