Aiding and Abetting

Attorney Aiding and Abetting and Assignment of Malpractice Claims

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Rabbi Stanley Kroll (“Kroll”) had a thirty-year employment contract with his Synagogue. The contract included a deferred compensation plan (the “Plan”) to fund Kroll’s retirement.  The Synagogue was allowed to amend the Plan unilaterally, but not in any way that divested credits to the account or rights to which Kroll would be entitled if the Plan were terminated before an amendment took effect.  Id. at 1.  The Synagogue asked Kroll to retire six years early. Kroll agreed, but on his last day, a Synagogue officer told him that a tax issue had arisen, promising it would be resolved.  Kroll found out later that the issue had not been resolved, thereby subjecting his deferred compensation to heavy taxes and penalties.  Moreover, the Synagogue did not have sufficient funds to pay Kroll, and had amended the Plan to eliminate benefits to which Kroll would otherwise be entitled. Kroll sued the Synagogue, which settled and assigned to him all causes of action related to the Plan that it might have against the law firm it used to amend it: Cozen O’Connor (“Cozen”). Kroll then sued Cozen on multiple counts, but Cozen moved to dismiss. The motion was granted in part and denied in part.

To begin, the Court noted that legal malpractice claims may not be assigned in Illinois except under three exceptions.  However, none of these exceptions applied. It explained that “Kroll is a stranger to [the Synagogue] and Cozen’s attorney-client relationship and was owed no duty by Cozen.”  Id. at 4.  The Court also granted dismissal of Kroll’s aiding and abetting breach of fiduciary duty claim.  It said that no fiduciary duty existed between Kroll and the Synagogue, so Cozen could not have aided a breach of that duty. Id. at 7.  The Court dismissed Kroll’s fraudulent concealment claim as well, since Kroll did not allege facts sufficient to explain how a Cozen attorney used his position of superiority and legal knowledge to take advantage of Kroll’s trust and confidence in him, “especially given that [the attorney] represented the opposing party.”  Id. at 8, emphasis in original.

Conversely, the Court rejected Cozen’s argument that Kroll’s claims were barred by Illinois’ two-year statute of limitations for claims arising out of an attorney’s performance of professional services.  Here, it held that Kroll had demonstrated possible equitable tolling or estoppel when he asserted that a Synagogue officer misled him about resolving the tax issue and that a Cozen attorney misrepresented the enforceability of the Plan’s amendment.  Id. at 5.  Kroll’s claim that Cozen aided and abetted the Synagogue’s fraud was allowed to stand as well.  The Court, quoting an Illinois case, saw “no reason to impose a per se bar that prevents imposing liability upon attorneys who knowingly and substantially assist their clients in causing another party’s injury.”  Id. at 6. Here, the Court agreed that Kroll had pleaded facts sufficient to assert the Synagogue’s fraud and Cozen’s assistance therein.

Rabbi Stanley Kroll, Plaintiff, v. Cozen O’Connor, 2020 WL 919005

(This is for informational purposes and is not legal advice.)

Making Allegations in Another Case Demonstrates Knowledge for Statute of Limitations

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Edward Shrock (“Shrock”) and Robert Meier (“Meier) were both members of Baby Supermall, LLC (“BSM”).  In November, 2016, Shrock and BSM sued Ungaretti & Harris Ltd. (“Ungaretti”) and others for aiding and abetting Meier in violating an injunction Schrock had obtained against him.  Ungaretti moved to dismiss because, among other things, Shrock’s claims were time-barred under the two-year statute of limitations for legal malpractice.  The motion was granted, and Shrock appealed.  The Appellate Court of Illinois, First District, affirmed.  It explained that the statute of limitations begins to run when “the plaintiff knew or reasonably should have known of the injury and that it may have been wrongfully caused.”  Id. at ¶ 49.

In this case, Shrock had sufficient information to bring this lawsuit more than two years before he actually filed it.  For example, in July 2014, Shrock’s filing in a bankruptcy action against Meier “out-and-out accused defendant Ungaretti of ‘conspiring with Meier to evade the injunction.’”  Id. at ¶ 61.  Shrock objected that courts may not take judicial notice of the substance of claims made in other cases.  The Appellate Court countered that it was not taking notice of the facts themselves, but that such facts were in Shrock’s possession.   BSM raised the same arguments and lost, but added that the statute of limitations was tolled under the “adverse domination” doctrine.  It states that a statute of limitations is tolled “for claims by a corporation against its officers and directors during the time the corporation is controlled by those wrongdoing officers or directors.”  Id. at ¶ 73.  Here, Meier was the sole manager and overwhelming majority owner of BSM until 2015, and so allegedly would never have permitted himself to be sued or admitted to any wrongdoing.  However, the presumption created by the adverse domination doctrine is rebuttable by evidence “that someone other than the wrongdoing directors had knowledge of the cause of action and both the ability and the motivation to bring suit.”  Id. at ¶ 77.  The Appellate Court held that Shrock, a fellow member of BSM, met all of these prerequisites “long before the two-year window.”  Id. at ¶ 85.

Shrock v. Ungaretti & Harris Ltd., 2019 IL App (1st) 181698

(This is for informational purposes and is not legal advice.)

Hill v. Simmons

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In this unpublished opinion, the First District held that a complaint against a lawyer was properly dismissed as time-barred.   The court held that the plaintiff’s claims for fraud, aiding and abetting fraud, breach of fiduciary duty and conspiracy were properly subject to the two year attorney statute of limitations, and that the statute began to run when the plaintiff learned of the lawyer’s alleged misrepresentations.

Hill v. Simmons, 2017 IL App (1st) 160577-U

(This is for informational purposes and is not legal advice.)

Farwell v. Senior Servs. Assocs., Inc., 2012 IL App (2d) 110669, 970 N.E.2d 49

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Farwell v. Senior Servs. Assocs., Inc., 2012 IL App (2d) 110669, 970 N.E.2d 49 (malicious prosecution requires malice independent of desire to serve client)

Salaymeh v. InterQual, Inc., 155 Ill. App. 3d 1040, 508 N.E.2d 1155 (5th Dist. 1987)

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Salaymeh v. InterQual, Inc., 155 Ill. App. 3d 1040, 508 N.E.2d 1155 (5th Dist. 1987)

Thornwood, Inc. v. Jenner & Block, 344 Ill. App. 3d 15, 799 N.E.2d 756 (1st Dist. 2003)

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Thornwood, Inc. v. Jenner & Block, 344 Ill. App. 3d 15, 799 N.E.2d 756 (1st Dist. 2003)

Grimes v. Saikley, 388 Ill. App. 3d 802, 904 N.E.2d 183 (4th Dist. 2009)

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Grimes v. Saikley, 388 Ill. App. 3d 802, 904 N.E.2d 183 (4th Dist. 2009)

Bosak v. McDonough, 192 Ill. App. 3d 799, 549 N.E.2d 643 (1st Dist. 1989)

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Bosak v. McDonough, 192 Ill. App. 3d 799, 549 N.E.2d 643 (1st Dist. 1989) (evidence insufficient to establish conspiracy)