LSC001, LLC v. Liferoc Capital, LLC

This appeal arose from a circuit court order dismissing Counts III through VIII of plaintiffs' amended complaint with prejudice, based on an exclusive-remedy and waiver provision (section 5.05) in purchase agreements between the parties and a determination that the Illinois Consumer Fraud and Deceptive Business Practices Act did not apply. Plaintiffs, several LLCs, alleged that defendants knowingly concealed unfavorable life-expectancy reports while marketing viatical settlement policies using more favorable reports—conduct they argued constituted intentional fraud rather than mere inaccurate estimates.

The Illinois Appellate Court reversed and remanded, holding that the circuit court erred by enforcing section 5.05 without addressing established Illinois precedent holding that exculpatory and waiver provisions cannot shield a party from liability for fraud or willful and wanton conduct, and without considering the Consumer Fraud Act's anti-waiver provision (section 10c). The court also held that the New York choice-of-law provision could not be treated as automatically dispositive; the circuit court must first analyze whether Illinois has a materially greater interest and whether applying New York law would conflict with fundamental Illinois public policy. Finally, the court held that the corporate status of the parties alone does not resolve whether the Consumer Fraud Act applies, and remanded for analysis of whether the alleged conduct involved trade practices directed at the market generally or implicated consumer-protection concerns.

For practitioners, this decision underscores that contractual waiver, exclusive-remedy, and choice-of-law provisions require searching public-policy analysis at the pleading stage when fraud is alleged, and that dismissal based on such clauses without that analysis is vulnerable on appeal.