No claim against fund-raiser who fell short: federal judge

By PATRICIA MANSON
Publication: Chicago Daily Law Bulletin
Date: Monday, April 27 2009 

A school board does not have a claim for conversion against a fund-raiser who allegedly failed to comply with a promise to find more than $10 million in donations for the district, a federal judge has held.

U.S. District Judge Robert W. Gettleman dismissed the conversion count that the Board of Education of Crete-Monee Community Unit School District No. 201-U included in its lawsuit against Funding Connection Inc. and its president.

A litigant pursuing a conversion claim under Illinois law is required to show the existence of four elements, Gettleman said, citing cases that included Sutherland v. O'Malley, 882 F.2d 1196 (7th Cir. 1989), and General Motors Corp. v. Douglass, 206 Ill.App.3d 881 (1st Dist. 1990).

Gettleman said those elements included taking wrongful control over the property of another person or entity and the the existence of a right on the part of the other person or entity to that property.

Before a claim for the tort of conversion can be stated, the person or entity also must have the right to the immediate possession of the property and must demand possession, Gettleman said.

Gettleman held that the school board had failed to state all of those elements in the conversion count in its suit.

In the suit, the board alleged that it paid $240,000 to Funding Connection over two years under a contract that required the company to draw up fund-raising plans and to monitor funding opportunities for the school district.

The board also alleged that Funding Connection agreed to collect payments or pledges for at least $10,240,000 in donations to the district during the 24-month life of the contract.

And the board alleged that Funding Connection and its president, Gary DeFrancesco, failed to live up to the terms of the agreement.

In an opinion made available on Friday, Gettleman noted that the board argued that the Illinois Appellate Court in Bill Marek's The Competitive Edge v. Mickelson Group Inc., 346 Ill.App.3d 996 (2d Dist. 2004), held that a conversion claim could be brought under Illinois law "where the money can be described and identified."

The board also contended that Illinois courts in such rulings as Roderick Development Investment Company Inc. v. Community Bank of Edgewater Inc., 282 Ill.App.3d 1052 (1st Dist. 1996), "have held that money is identifiable when the claim is for a specific and determinate amount," Gettleman said.

Gettleman rejected the board's arguments.

In both Bill Marek's and Roderick Development, the defendant accused of converting money had received the money from a third party, Gettleman said.

Gettleman said the circumstances surrounding Funding Connection's receipt of money were different.

"In the instant case, Funding Connection did not receive its money from a third party and, in fact, received the money voluntarily from the board," Gettleman wrote. "Due to the voluntary nature of this transfer there is no unauthorized and wrongful assumption of the board's chattel, and therefore plaintiff has failed to state a cause of action for conversion."

Gettleman also dismissed a count in the suit accusing DeFrancesco of using false statements to induce the school board to enter the contract with Funding Connection.

Gettleman said the board failed to give enough details to state a claim of fraudulent inducement.

Gettleman's ruling left pending in the board's suit one count of breach of contract and one count of breach of good faith and fair dealing.

Gettleman issued his ruling in Board of Education of Crete-Monee Community Unit School District No. 201-U v. Gary DeFrancesco, et al., No. 08 C 4060.

The lead attorney for the board is Christopher L. Petrarca of Sraga, Hauser LLC in Oak Brook. The lead attorney for DeFrancesco and the school board is Samuel E. Neschis of Horowitz & Weinstein in Chicago.

Source

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