Assignment

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.)

Recent Illinois Case: Bay Industrial Safety Services, Inc. v. Robert Wilson

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The Southern District of Illinois held that the assignment of a malpractice claim that occurred when a plaintiff filed for bankruptcy did not violate the rule against assigning malpractice claims, and that the Chapter 11 debtor-in-possession maintained standing to prosecute the claim for the benefit of the bankruptcy estate.

Bay Industrial Safety Services, Inc. v. Robert Wilson, 2016 WL 3541389

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

Learning Curve Int’l, Inc. v. Seyfarth Shaw, LLP, 392 Ill. App. 3d 1068, 911 N.E.2d 1073, (1st Dist. 2009)

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Learning Curve Int’l, Inc. v. Seyfarth Shaw, LLP, 392 Ill. App. 3d 1068, 911 N.E.2d 1073, (1st Dist. 2009) (assignment to shareholders)

Hoth v. Stogsdill, 210 Ill. App. 3d 659, 569 N.E.2d 34 (2d Dist. 1991)

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Hoth v. Stogsdill, 210 Ill. App. 3d 659, 569 N.E.2d 34 (2d Dist. 1991)

Wilson v. Coronet Ins. Co., 293 Ill. App. 3d 992, 689 N.E.2d 1157 (1st Dist. 1997)

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Wilson v. Coronet Ins. Co., 293 Ill. App. 3d 992, 689 N.E.2d 1157 (1st Dist. 1997)

Clement v. Prestwich, 114 Ill. App. 3d 479, 448 N.E.2d 1039 (2d Dist. 1983)

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Clement v. Prestwich, 114 Ill. App. 3d 479, 448 N.E.2d 1039 (2d Dist. 1983) (legal malpractice claim not assignable)

Schechter v. Blank, 254 Ill. App. 3d 560, 627 N.E.2d 106 (1st Dist. 1993)

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Schechter v. Blank, 254 Ill. App. 3d 560, 627 N.E.2d 106 (1st Dist. 1993)