Fraud

Conspiracy Requires Knowing the Co-Conspirators, Malpractice Requires Knowing the Underlying Outcome

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Natalja Vildziuniene (“Vildziuniene”) sued attorney Bradley Foreman (“Foreman”) for conspiracy to commit fraud and legal malpractice.  Specifically, she alleged that Foreman conspired to defraud her, breached the duty of care, and represented her in various court proceedings without her knowledge.  Foreman moved successfully to dismiss these counts and Vildziuniene appealed.  The Appellate Court of Illinois, First District, affirmed.  With respect to the conspiracy to commit fraud, it stated that Vildziuniene’s accusations were a “mere characterization of acts as a conspiracy.” Id. at ¶47.  Moreover, “there were no allegations that Foreman knew the other defendants, spoke with the other defendants, or knew anything about the allegedly fraudulent purpose behind these” supposedly fraudulent transactions.  Id. at ¶50.  Regarding the alleged malpractice, the Appellate Court noted that “there are no allegations as to what happened in any of the cases in that Foreman allegedly represented plaintiff” such as whether Vildziuniene even prevailed in those matters.  Id. at ¶54.  It was therefore impossible to ascertain whether she would have prevailed in the underlying actions but for Foreman’s negligence.

Vildziuniene v. Rieff, 2019 IL App (1st) 181324-U

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

Breach of the Standard of Care Must be the Proximate Cause

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In 2006, insurance executive Steven Menzies (“Menzies”) sold over $64 million worth of his company’s stock without reporting any capital gains on his federal tax return.  He alleged that this was due to a fraudulent tax shelter presented to him and others by tax attorney Graham Taylor (“Taylor”), Taylor’s law firm Seyfarth Shaw (“Seyfarth”), and two financial services firms: Northern Trust and Christiana Bank.  Menzies brought claims against all four defendants under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and Illinois law.  The defendants moved successfully to dismiss all counts, and Menzies appealed.  The Seventh Circuit affirmed in part, reversed in part, and remanded.  With respect to Menzies’ RICO claim, it held that it “falls short on the statute’s pattern-of-racketeering element” in that Menzies “failed to plead not only the particulars of how the defendants marketed the same or similar tax shelter to other taxpayers, but also facts to support a finding that the alleged racketeering activity would continue.”  Id. at 332.  The Court added that finding otherwise would allow “an ordinary (albeit grave) claim of fraud to advance in the name of RICO.”  Id.  Conversely, Menzies’ state law claims against Taylor and Seyfarth were barred by the Illinois’ two-year statute of limitations for attorney misconduct.  Id. at 346.   However, his claims against Northern Trust and Christiana Bank were allowed to proceed on remand.  Id.  The court did not address whether the RICO claims against Taylor and Seyfarth would be barred by the two-year attorney statute as well.

Menzies v. Seyfarth Shaw LLP, 943 F.3d 328 (7th Cir. 2019)

(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.)

Recent Illinois Case: Damian v. Carey

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The Northern District of Illinois refused to dismiss a legal malpractice case on collateral estoppel grounds. In the underlying case, the malpractice plaintiffs were held liable for committing intentional fraud.  In so holding, the court rejected the malpractice plaintiffs’ defense that they had reasonably relied on their attorneys’ advice finding, to the contrary, that they had ignored their attorneys’ advice. In the malpractice action, the Northern District of Illinois recognized that plaintiffs faced an uphill battle proving causation in light of the underlying court’s finding that the plaintiffs had ignored their attorneys’ warnings, but declined to apply collateral estoppel because the underlying court did not analyze the adequacy of the attorneys’ representation.

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

Damian v. Carey, 2016 WL 851992

 

Recent Illinois Case: Navar v. Tribler, Orpett and Meyer, P.C.

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In this unpublished opinion, the Appellate Court affirmed the dismissal of three claims against lawyers. A breach of contract claim was properly dismissed because the plaintiff failed to identify a specific contract term that was breached. The malpractice claim was properly dismissed because the complained of acts involved judgment and not malpractice. The fraud claim was properly dismissed because predictions of future events do not constitute fraud. The Appellate Court also affirmed the trial court’s refusal to allow a further amendment.

Navar v. Tribler, Orpett and Meyer, P.C., 2015 IL App (1st) 142641-U

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

Recent Illinois Case: Saleh v. Azulay Seiden Law Group

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Consumer fraud act claim against attorney dismissed because the act does not apply to attorneys.

Saleh v. Azulay Seiden Law Group,  2015 IL App (1st) 140768-U

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

Recent Illinois Case: Banks v. Casson

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This recent case involved a dispute between attorneys over failure to pay a lawyer referral fee.  The attorneys never obtained signed written consent from the client for the referral fee, as required by Rule 1.5 of the Illinois Rules of Professional Conduct. Nonetheless, the attorney who was allegedly owed the fees filed a lawsuit, seeking damages for breach of fiduciary duty (under a joint venture theory) and fraud.  The First District affirmed dismissal, holding that the breach of fiduciary duty claim failed because the “joint venture” was based on an unenforceable agreement.   The fraud claim was time barred.

Banks v. Casson, 2015 IL App (1st) 133141-U

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