Opinion
No. 00 C 282, (Related case: 99 C 4731).
October 12, 2000.
MEMORANDUM OPINION AND ORDER
This case concerns Ameritech's promise to do a deal with Vakil. Roxford, Vakil's principal, wanted to set up a transaction between Ameritech and BCE, Inc. He offered to give Ameritech confidential information concerning BCE in exchange for compensation if the deal occurred or confidentiality if Ameritech decided not to pursue the opportunity. In the end, after signing a Final Confidentiality Agreement, Ameritech told Vakil that it wasn't interested in pursuing the transaction. Two years later, Roxford learned that Ameritech negotiated a deal with BCE. Roxford filed a complaint alleging breach of contract and promissory fraud. Ameritech moves to dismiss Count II of Roxford's amended complaint, the promissory fraud claim. Previously, I dismissed this count with leave to amend. Roxford v. Ameritech, 2000 WL 949572 *1, *3 (N.D. Ill. 2000). I assume familiarity with that opinion.
As an initial matter, I must decide which law, California or Illinois, applies to this claim. Roxford filed suit in California Superior Court, defendants removed the case to the Northern District of California, and Judge Walker transferred it to this Court. Since the case began in California, I apply California's choice of law rules to determine which law applies. International Marketing Ltd. v. Archer-Daniels-Midland Co., 192 F.3d 724, 729 (7th Cir. 1999).
First, a California court asks if there is a true conflict between the laws of the jurisdictions at issue. Arno v. Club Med, Inc., 22 F.3d 1464, 1467 (9th Cir. 1994). In this case, the parties agree that a true conflict exists; Illinois generally does not recognize the tort of promissory fraud, while California does. I note that a difference in law is not necessarily a "true" conflict. Given that Illinois recognizes a broad exception to its rule, see Bower v. Jones, 978 F.2d 1004, 1011 (7th Cir. 1992), one could find that the difference is one of degree not substance. However, it is clear that Illinois is hostile to this claim, and courts have expressed policy rationales in defense of the respective regimes. Hollymatic Corp. v. Holly Systems, Inc., 620 F. Supp. 1366, 1369 (N.D. Ill. 1985) (promissory fraud is disfavored because it is too easy to allege and too difficult to prove or disprove); Lazar v. Superior Court of Los Angeles County, 12 Cal.4th 631, 646 (1996) (tort is designed to vindicate social policy). Based on the distinctly divergent policies expressed by the two jurisdictions, and in light of the parties' agreement on this issue, I find that a true conflict does exist.
If a true conflict exists, I must determine whether a particular state's governmental interests favor the application of its laws. This analysis requires me to determine the relative commitment of the respective states to the laws involved. Waggoner v. Snow, Becker, Kroll, Kiaris Krauss, 991 F.2d 1501, 1507 (9th Cir. 1993). In this case, that analysis is a draw. Both states are committed to their view of this tort; neither party has attempted to demonstrate a lack of vitality in either state's jurisprudence of promissory fraud. See Waggoner, 991 F.2d at 1507 (court should consider the history and current status of the states' laws). Roxford says California has a stronger interest in protecting the contract rights of its residents, particularly when the resident negotiates those rights from California, citing Arno, 22 F.3d at 1469. This is an argument for applying California contract law to the breach of contract claim, not for applying California tort law to the tort claim. See Arno, 22 F.3d at 1468 (applying French law to tort claim, California law to contract claim). Therefore, it does not affect the analysis.
The tie-breaker in this case is the reasonable expectations of the parties as to which state law would govern the dispute between them. See Rosenthal v. Fonda, 862 F.2d 1398, 1403 (9th Cir. 1988). Roxford's expectation that California law would apply is based solely on the fact that he lives in California and originally filed suit there (an action that occurred after the dispute arose). Meanwhile, Roxford reached out to Ameritech's Illinois offices, the parties planned a meeting in Illinois and acceptance of Roxford's offer occurred in Illinois, As in Waggoner, residence of the plaintiff is not enough to make it reasonable to expect California law to govern. Waggoner, 991 F.2d at 1507. The action occurred, or was meant to occur, in Illinois, thus the reasonable expectations of the parties should have been that Illinois law would govern any tort claims arising out of Ameritech's conduct. Illinois law applies to Count II.
Previously, I applied California law to the breach of contract claim. Roxford, 2000 WL 949572 at * 2 n. 1. That finding is not at issue here, nor is it implicated by this ruling, for the choice of law analysis differs with respect to the contract claim.
As noted above, promissory fraud (a promise to perform an act even though the party intends not to perform) is generally not actionable in Illinois. Roda v. Berko, 401 Ill. 335, 340, 81 N.E.2d 912, 915 (1948). There is an exception, however, for promises that are apart of a scheme to defraud. Doherty v. Kahn, 289 Ill. App.3d 544, 562, 682 N.E.2d 163, 176 (1st Dist. 1997). The Seventh Circuit's "best interpretation" of this exception "is that promissory fraud is actionable only if it is particularly egregious or, what may amount to the same thing, it is embedded in a larger pattern of deceptions or enticements that reasonably induces reliance and against which the law ought to provide a remedy." Desnick v. American Broadcasting Cos., Inc., 44 F.3d 1345, 1354 (7th Cir. 1995). To survive a motion to dismiss, the complaint must point to specific, objective manifestations of fraudulent intent. Bower, 978 F.2d at 1012 (quoting Hollymatic, 620 F. Supp. at 1369).
Roxford's amended complaint does not satisfy the requirements of Illinois law. The complaint essentially says that Ameritech's employee, Dan Foreman, promised Roxford he would honor the contract; he gave Roxford his word. There must be more, i.e., a manifestation of fraudulent intent. For example, in Pepper v. Marks, 168 III.App.3d 253, 258, 522 N.E.2d 688, 691 (1st Dist. 1988), relied on by Roxford, defendant promised plaintiff it had no plans for an auction; four days later, it entered into a contract for an auction. This was an objective fact that indicated defendant's fraudulent intent; a court could infer from defendant's conduct a mere few days later that it intended to make a false promise. The analogous conduct in this case occurred two years after the promise — too long a period to constitute an objective manifestation of intent. Roxford does not allege any conduct by Ameritech that suggests a particularly egregious fraud or a pattern of deception. The complaint says Ameritech made a promise and it reneged. This is truly a breach of contract claim, for which contract law provides a remedy.
CONCLUSION
The motion to dismiss Count II [40-1] is granted. Since I have given Roxford leave to amend once before, I dismiss this count with prejudice.
In an effort to stave off dismissal, Roxford seeks leave to conduct discovery to find evidence to support his fraud claim. This request ignores the purpose behind the pleading rules and seeks an end-run around Fed.R.Civ.P. 9(b). The request is denied.