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Law School Case Brief

Steinberg v. Chi. Med. Sch. - 69 Ill. 2d 320, 13 Ill. Dec. 699, 371 N.E.2d 634 (1977)

Rule:

The general rule denies recovery for fraud based on a false representation of intention or future conduct, but there is a recognized exception where the false promise or representation of future conduct is alleged to be the scheme employed to accomplish the fraud. 

Facts:

Plaintiff Robert Steinberg received a catalog from and applied for admission to defendant Chicago Medical School ("School") for the academic year 1974-75, and he paid a $ 15 application fee. His application was rejected. Steinberg then filed a putative class action against the School in Illinois state court, claiming that the School failed to evaluate his application and those of other applicants according to the academic criteria in the School's bulletin that had been distributed to prospective students for that academic. According to the complaint, the School used nonacademic criteria, primarily the ability of the applicant or his family to pledge or make payment of large sums of money to the school, when making admissions decisions. The complaint alleged breach of contract; violations of the Consumer Fraud and Deceptive Business Practices Act and the Uniform Deceptive Trade Practices Act; fraud; and unjust enrichment. The trial court dismissed the complaint for failure to state a cause of action. On Steinberg's appeal, the appellate court reversed as to the breach of contract action, and permitted it to be maintained as a limited class action. It affirmed the dismissal of the remaining counts.

Issue:

Did the appellate court err in dismissing the fraud claim?

Answer:

Yes.

Conclusion:

The state supreme court affirmed the appellate court's reversal of a breach of contract claim, reversed that court's dismissal of a fraud claim, reversed its abbreviation of the class, affirmed the dismissal of all other claims raised by Steinberg and remanded the case for further proceedings. The court ruled, inter alia, the complaint set forth facts that could mean that the School contracted, under the circumstances, to appraise applicants and their applications according to the criteria it described in its brochure. In addition, the court ruled, the allegations—that with intent to deceive and defraud Steinberg and others, the School stated in its catalogs it would use certain criteria to evaluate applications; that these representations were false in that applicants were selected primarily for monetary considerations; that plaintiffs relied on said representations and were each thereby induced to submit their applications and pay $ 15 to their damage—supported a cause of action for fraud. On remand, the trial court was directed to hold a preliminary hearing and make pretrial findings proper to class action litigation.

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