### In the



# United States Court of Appeals

For the Seventh Circuit

____________________

No. 16

‐ 2983

O AKLAND P OLICE & F IRE R ETIREMENT S YSTEM

, et al

., Plaintiffs

‐ Appellants

,

v.

M AYER B ROWN

, LLP,

Defendant

‐ Appellee

.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 15 C 6742

— Robert W. Gettleman Judge

.

____________________

A RGUED M ARCH 30, 2017

— D ECIDED J UNE 28, 2017

____________________

Before P OSNER

, M ANION

, and H AMILTON

, Circuit Judges

.

H AMILTON

, Circuit Judge

. This appeal began with a $1.5 bil

‐

lion (with a “b”) mistake in documenting a commercial trans

‐

action. The central question is who might be held legally re

‐ sponsible for that mistake. General Motors, represented by

the Mayer Brown law firm, entered into two separate secured

transactions in which the JP Morgan bank acted as agent for

two different groups of lenders. The first loan (structured as a

secured lease) was made in 2001 and the second in 2006. In2 No. 16

‐ 2983

2008, the 2001 secured lease was maturing and needed to be

paid off. The closing for the 2001 payoff required the lenders

to release their security interests in the collateral securing the

transaction. The big mistake was that the closing papers for

the 2001 deal accidentally also terminated the lenders’ secu

‐ rity interests in the collateral securing the 2006 loan. No one

noticed—not Mayer Brown and not JP Morgan’s counsel.

But after General Motors filed for bankruptcy protection

several months later in 2009, General Motors and JP Morgan

noticed the error. Although the security for the plaintiffs’ 2006

loan had been terminated, the plaintiffs in this case (members

of the consortium of lenders on the 2006 loan) were not in

‐

formed until years later. These lenders brought this suit as

‐ serting legal malpractice and negligent misrepresentation.

But they sued not JP Morgan or its law firm, who would seem

to be the most obvious defendants under the circumstances,

but borrower General Motors’ law firm—Mayer Brown.

The district court dismissed for failure to state a claim,

holding that Mayer Brown did not owe a duty to plaintiffs,

who are third

‐ party non

‐ clients. Oakland Police & Fire Retire

‐

ment System v. Mayer Brown, LLP

, No. 15 C 6742, 2016 WL

3459714, at *6 (N.D. Ill. June 22, 2016). Plaintiffs appealed, ar

‐ guing that Mayer Brown owed them a duty of due care. Plain

‐

tiffs offer three theories: (a) JP Morgan was a client of Mayer

Brown in unrelated matters and thus not a third

‐ party non

‐

client; (b) even if JP Morgan was a third

‐ party non

‐ client,

Mayer Brown assumed a duty to JP Morgan by drafting the

closing documents; and (c) the primary purpose of the Gen

‐

eral Motors

‐ Mayer Brown relationship was to influence JP

Morgan. We agree with Judge Gettleman that Mayer BrownNo. 16

‐ 2983 3

did not owe a duty to plaintiffs under any of these theories.

We affirm the judgment dismissing the case.

I. Factual and Procedural History

We begin with the terms of the two transactions that led to

this case and the mistake that might cost plaintiffs a great deal

of money. We then review briefly the relevant portions of

other lawsuits associated with this case.

A. The 2001 Synthetic Lease

A syndicate of lenders represented by JP Morgan entered

into a secured financial agreement with General Motors in

2001 for $300 million. We call this transaction the 2001 Syn

‐

thetic Lease. General Motors was represented by Mayer

Brown in negotiating, documenting, and closing the deal. JP

Morgan was represented by the Simpson, Thacher, and Bart

‐

lett law firm. The arrangement required General Motors to

sell twelve real estate properties to the lenders, who then

leased those same properties back to General Motors. In es

‐

sence, General Motors secured a loan with its real estate prop

‐

erties. The security interests were perfected by UCC

‐ 1 financ

‐ ing statements. On October 31, 2008, the lease matured, and

General Motors was scheduled to pay the remaining balance

of the lease—$150 million.

B. The 2006 Term Loan

In 2006, General Motors borrowed $1.5 billion from a dif

‐

ferent group of over 400 lenders, including plaintiffs Oakland

Police and Fire Retirement System and the Employees’ Retire

‐

ment System of the City of Montgomery. Again, JP Morgan

acted as agent and held the security interests. The collateral

for the loan was recorded in a UCC

‐ 1 financing statement. We

refer to this as the 2006 Term Loan. The 2001 Synthetic Lease4 No. 16

‐ 2983

and 2006 Term Loan were secured by different real estate

properties for the benefit of two different groups of lenders.

C. Mayer Brown’s Mistake

In the month leading up to the maturity date, General Mo

‐

tors instructed Mayer Brown to prepare the documents to pay

off the 2001 Synthetic Lease. At closing, when General Motors

paid the $150 million balance, JP Morgan, as agent for the

lenders, would release the real estate serving as security.

Mayer Brown prepared a closing checklist and drafted the rel

‐

evant documents, including a UCC

‐ 3 termination statement.

A termination statement is a filing required to terminate a se

‐ curity interest that has been perfected by a UCC

‐ 1 filing. See

6 Del. Code §§ 9

‐ 509 & 9

‐ 513 (Delaware enactment of Uniform

Commercial Code §§ 9

‐ 509 & 9

‐ 513). According to plaintiffs’

complaint, Mayer Brown mistakenly included the unrelated

2006 Term Loan UCC

‐ 1 document as one of the financing

statements to be terminated in paying off the 2001 Synthetic

Lease.

Mayer Brown thus prepared a UCC

‐ 3 termination state

‐

ment for the collateral for the $1.5 billion Term Loan. Mayer

Brown provided the draft to JP Morgan’s counsel to review.

Without catching the error, JP Morgan authorized the release

of the collateral. Consequently, the $1.5 billion security inter

‐

est for the plaintiff’s 2006 Term Loan was released along with

the security interests for the remaining $150 million in the

2001 Synthetic Lease.

The plaintiffs’ complaint offers the following autopsy of

the error, which we accept for purposes of the motion to dis

‐

miss: a senior Mayer Brown partner was responsible for su

‐ pervising the work on the closing. He instructed an associateNo. 16

‐ 2983 5

to prepare the closing checklist. The associate, in turn, relied

on a paralegal to identify the relevant UCC

‐ 1 financing state

‐

ments. As a cost

‐ saving measure, the paralegal used an old

UCC search on General Motors and included the 2006 Term

Loan. Another paralegal tasked with preparing the termina

‐

tion statements recognized that the 2006 Term Loan had been

included by mistake and informed the associate of the prob

‐

lem, but he ignored the discrepancy. The erroneous checklist

and documents were then sent to Simpson Thacher for re

‐

view. The supervising partner at Mayer Brown never caught

the error, nor did anyone else. With JP Morgan’s authoriza

‐

tion, the 2001 Synthetic Lease payoff closed on October 30,

2008.

D. The General Motors Bankruptcy

In June 2009, less than a year after the 2001 Synthetic Lease

payoff, General Motors filed for bankruptcy protection. Be

‐

tween October 2008 and June 2009, however, General Motors

continued to follow the terms of the 2006 Term Loan. Only

during the bankruptcy proceedings did someone discover

that the UCC

‐ 3 termination statement had been filed in error

for the collateral securing the 2006 Term Loan. Plaintiffs allege

that JP Morgan chose not to tell the lenders. However, the

bankruptcy court ordered General Motors to repay the 2006

Term Loan with interest, and General Motors complied in July

2009. The bankruptcy court thus treated the lenders as if they

were still secured lenders, subject to the Creditors’ Commit

‐

tee’s right to challenge the perfection of the security interest.

Official Comm. of Unsecured Creditors v. JP Morgan Chase Bank,

N.A. ( In re Motors Liquidation Co. I ), 486 B.R. 596, 615, 617–18,

648 (Bankr. S.D.N.Y. 2013).6 No. 16

‐ 2983

Adversary proceedings followed in the bankruptcy case.

General Motors creditors alleged that the 2006 Term Loan se

‐ curity interest had been terminated so that the lenders for the

2006 Term Loan (plaintiffs) were not secured lenders and

should have to repay the money they had received. The bank

‐

ruptcy court found that the security interest had not been ter

‐

minated, and the decision was appealed to the Second Circuit.

E. Second Circuit Decision

In 2015, after certifying the key issue of state law to the

Delaware Supreme Court, the Second Circuit reversed the

bankruptcy court and held that the 2006 Term Loan security

interest had in fact been terminated when the UCC

‐ 3 state

‐

ment was filed. Official Comm. of Unsecured Creditors v. JP Mor

‐

gan Chase Bank, N.A. ( In re Motors Liquidation Co. II ), 777 F.3d

100, 105–06 (2d Cir. 2015). The court held that JP Morgan

knowingly terminated the security interest when it approved

the filing. Thus, while the release was mistaken, it was still

enforceable. Id. at 105. In 2015, plaintiffs were served with

process in the adversary proceeding. Plaintiffs say this was

the first notice of the error they received. After the Second Cir

‐

cuit decision, the creditors amended their complaint in the

proceeding to “claw back” the 2006 Term Loan principal and

interest payments to lenders like plaintiffs. As far as we know,

those proceedings are still pending.

F. Plaintiffs’ Malpractice and Misrepresentation Claims in

Federal Court

From plaintiffs’ account of the situation, it is easy to see

why they might have claims against JP Morgan and/or Simp

‐

son Thacher, but that is not this case. Instead, these plaintiffsNo. 16

‐ 2983 7

filed this putative class action against Mayer Brown. They al

‐ lege that Mayer Brown committed malpractice and negligent

misrepresentation. Mayer Brown

, 2016 WL 3459714. They seek

to hold Mayer Brown liable for the damages resulting from

the erroneous release of the wrong security interest. The

plaintiffs assert that Mayer Brown owed them a duty of care,

breached that duty, and caused them harm. The district court

dismissed the amended complaint and granted the defend

‐

ant’s motion to dismiss for failure to state a plausible claim.

The court held that under controlling Illinois law, Mayer

Brown did not owe a duty of care to the plaintiffs, who were

not its clients but parties adverse to Mayer Brown’s client in

the loan transaction.

II. Analysis

A. Standard of Review

We review de novo a dismissal for failure to state a claim,

and we accept as true the facts alleged in the plaintiffs’ con

‐

solidated complaint, but not alleged legal conclusions. Bonte

v. U.S. Bank, N.A.

, 624 F.3d 461, 463, 465 (7th Cir. 2010), citing

Bell Atlantic Corp. v. Twombly

, 550 U.S. 544, 555 (2007); Hickey

v. O’Bannon

, 287 F.3d 656, 657–58 (7th Cir. 2002). Rule 12(b)(6)

requires the complaint to “state a claim to relief that is plausi

‐

ble on its face.” Twombly

, 550 U.S. at 570; Firestone Fin. Corp. v.

Meyer

, 796 F.3d 822, 826 (7th Cir. 2015). “A claim has facial

plausibility when the plaintiff pleads factual content that al

‐

lows the court to draw the reasonable inference that the de

‐

fendant is liable for the misconduct alleged.” Ashcroft v. Iqbal

,

556 U.S. 662, 678 (2009). To rise above the “speculative level”

of plausibility, the complaint must make more than “[t]hread

‐

bare recitals of the elements of a cause of action, supported by8 No. 16

‐ 2983

mere conclusory statements.” Iqbal

, 556 U.S. at 678. The plau

‐ sibility requirement, however, “does not impose a probability

requirement,” and the claims may proceed even if they seem

unlikely to succeed. Twombly

, 550 U.S. at 556.

B. Legal Malpractice and Negligent Misrepresentation

Plaintiffs brought two claims in district court—legal mal

‐ practice and negligent misrepresentation. The parties agree

that Illinois law governs. See Treat v. Tom Kelley Buick Pontiac

GMC, Inc.

, 646 F.3d 487, 490 (7th Cir. 2011). Both claims re

‐ quire plaintiffs to establish that Mayer Brown owed a duty to

them. See Nelson v. Quarles & Brady, LLP

, 997 N.E.2d 872, 880

(Ill. App. 2013), quoting Fox v. Seiden

, 887 N.E.2d 736, 742 (Ill.

App. 2008) (claim of legal malpractice is available when “the

defendant attorney owed the plaintiff client a duty of due care

arising from an attorney

‐ client relationship”); First Midwest

Bank, N.A. v. Stewart Title Guar. Co.

, 843 N.E.2d 327, 335 (Ill.

2006) (claim for negligent misrepresentation under Illinois

law requires “a duty on the party making the statement to

communicate accurate information”). We begin and end with

the issue of duty.

Whether an attorney or law firm owed a duty to someone

can depend on the facts, but in this case the issue can be de

‐

cided as a matter of law on a motion to dismiss. See In re Estate

of Powell

, 12 N.E.3d 14, 20 (Ill. 2014); Orr v. Shepard

, 524 N.E.2d

1105, 1110 (Ill. App. 1988); cf. Jewish Hosp. of St. Louis v. Boat

‐

men’s Nat’l Bank of Belleville

, 633 N.E.2d 1267, 1275 (Ill. App.

1994) (observing that the question of duty “is always a ques

‐

tion of law” that requires “consideration of all the circum

‐

stances”).No. 16

‐ 2983 9

In the vast majority of legal malpractice cases, the plaintiff

was a client of the defendant

‐ attorney, and the direct attorney

‐

client relationship establishes the attorney’s professional du

‐

ties to the client. Pelham v. Griesheimer

, 440 N.E.2d 96, 99 (Ill.

1982). There is a small corner of legal malpractice law, how

‐

ever, in which Illinois recognizes that attorneys owe profes

‐

sional duties to persons who are not their clients. In Pelham

, the Illinois Supreme Court provided its most comprehensive

discussion of these situations that are exceptions to the gen

‐

eral rule. Id. at 99–101. Pelham held that an attorney may owe

a duty to a third party when “the primary purpose and intent

of the attorney

‐ client relationship itself was to benefit or in

‐

fluence the third party.” Id. at 100. Examples of third parties

to whom attorneys owe a duty include third

‐ party beneficiar

‐

ies of wills, third

‐ party beneficiaries of wrongful death ac

‐

tions, and third

‐ party recipients of formal opinion letters. See

In re Estate of Powell

, 12 N.E.3d at 21; Geaslen v. Berkson, Gorov

& Levin, Ltd. ( Geaslen II ), 613 N.E.2d 702, 704 (Ill. 1993); McLane

v. Russell

, 546 N.E.2d 499, 504 (Ill. 1989).

In this case, the plaintiffs are attempting to expand these

exceptions to impose a duty on the lawyer for one party in a

commercial transaction to the counterparty and even to the

counterparty’s principals in a separate transaction. In the Syn

‐

thetic Lease payoff, Mayer Brown represented General Mo

‐

tors, not JP Morgan or its principals in the Synthetic Lease, let

alone its principals in the 2006 Term Loan. As noted above,

plaintiffs offer three theories to support this expansion of Illi

‐

nois law. First, they argue that JP Morgan was actually a

“longstanding and current client” of Mayer Brown so that

they can rely on the general rule in favor of actual clients with

‐

out relying on Pelham

. Second, the plaintiffs interpret Pelham

to include an exception to the primary purpose rule so that10 No. 16

‐ 2983

the limits of Pelham do not apply. Third, plaintiffs argue that

even if Pelham applies, it is satisfied because the primary pur

‐

pose of General Motors’ employment of Mayer Brown was to

influence JP Morgan. We take each argument in turn.

1. Attorney

‐ Client Relationship

Plaintiffs argue that their claim is within the mainstream

of legal malpractice law because JP Morgan was actually a cli

‐

ent of Mayer Brown at the time of the 2001 Synthetic Lease

payoff, but for different matters. Plaintiffs reason that Mayer

Brown thus owed a duty of care to JP Morgan and (indirectly)

to them as its principals. Plaintiffs do not argue that Mayer

Brown represented them or their agent JP Morgan in the clos

‐ ing of the 2001 Synthetic Lease payoff or the 2006 Term Loan.

Rather, plaintiffs argue that Mayer Brown breached a duty it

owed to JP Morgan as a client in other matters, despite the fact

that the alleged harm resulted from a matter unrelated to the

matters in which Mayer Brown actually represented JP Mor

‐

gan.

That is an astonishing claim. As a matter of course, large

modern law firms use mechanisms such as conflict

‐ waiver

agreements and ethics screens to represent many clients in

transactions and litigation in which their clients are adverse

to one another. Plaintiffs have not alleged that Mayer Brown’s

representation of General Motors in a transaction with JP

Morgan as the counterparty presented an unwaived conflict

of interest, as it obviously would have been without a valid

waiver. We would be flabbergasted if JP Morgan did not sign

a conflict

‐ waiver agreement with Mayer Brown with respect

to this transaction. See Ill. R. Prof’l Conduct 1.7 (prohibiting a

lawyer from undertaking representation directly adverse to

another client without informed consent). Further, ethicsNo. 16

‐ 2983 11

screens are used regularly in law firms to protect client inter

‐

ests and confidential information when one arm of the firm

undertakes representation that may be adverse to clients rep

‐

resented by another arm of the firm. We are not surprised

that, as plaintiffs allege, Mayer Brown simultaneously repre

‐

sented JP Morgan in a multi

‐jurisdictional transaction with

Liz Claiborne and also represented General Motors across the

table from JP Morgan in the transactions at issue in this case.

Scenarios like this are routine, at least so long as clients con

‐

sent and firms honor the mechanisms to prevent sharing of

clients’ confidential information.

Illinois law recognizes as much. It categorizes such “cli

‐

ents” as third parties with adverse interests in the matter at

hand. For example, in Fitch v. McDermott, Will & Emery, LLP

,

a law firm simultaneously represented a man (Fitch) in plan

‐ ning his own estate while also representing his mother’s es

‐

tate, of which the son was a beneficiary. 929 N.E.2d 1167,

1183–84 (Ill. App. 2010). The son brought a claim against the

law firm for legal malpractice, arguing that it should have ad

‐

vised him about his mother’s estate. The court found that no

such duty existed because the son was only a third

‐ party non

‐

client with respect to the law firm’s representation of his

mother’s estate, even while he was also a client in another

matter, his own estate planning. Id. at 1184–85. This reasoning

applies here.

Consider the consequences of the rule plaintiffs advocate,

that a law firm owes a duty of care to a party adverse to its

client because the adverse party is a client in unrelated mat

‐

ters and has waived the conflict of interest. If plaintiffs’ theory

held water, the law firm would continue to owe a duty of care

to look out for the adverse party’s interests, in conflict with its12 No. 16

‐ 2983

duties to its client in the matter at hand. The law firm would

then face an impossible and unwaivable conflict of interest.

Plaintiffs’ theory thus conflicts with the rules of professional

conduct that allow such waivers (and that, as a practical mat

‐

ter, have allowed law firms to grow as large as they have in

recent decades). See generally Ill. R. Prof’l Conduct 1.7 (Con

‐

flict of Interest: Current Clients), 1.8 (Conflict of Interest: Cur

‐

rent Clients: Specific Rules), 1.9 (Duty to Former Clients), and

1.10 (Imputation of Conflicts of Interest: General Rule).

Under Illinois law, the scope of the attorney’s duty to a cli

‐

ent is limited by the representation sought. Simon v. Wilson

,

684 N.E.2d 791, 801 (Ill. App 1997). Plaintiffs have not alleged

that they sought and obtained Mayer Brown’s counsel for the

2001 Synthetic Lease payoff—nor, of course, the separate 2006

Term Loan transaction in which they were involved. Like the

plaintiff in Fitch

, these plaintiffs were third

‐ party non

‐ clients

with respect to the Mayer Brown

‐ General Motors attorney

‐

client relationship. Plaintiffs’ argument to the contrary is in

‐

consistent with Illinois law.

2. Attorney Duties to Third

‐ Party Non

‐ Clients

As noted, the general rule is that an attorney owes a pro

‐

fessional duty only to the attorney’s client, not to third parties.

First Nat’l Bank of Moline v. Califf, Harper, Fox & Dailey

, 548

N.E.2d 1361, 1363 (Ill. App. 1989). Pelham states the standard

in Illinois on the issue of attorney duty to third

‐ party non

‐ cli

‐

ents in both legal malpractice and negligent misrepresenta

‐

tion claims. See, e.g., Auto

‐ Owners Ins. Co. v. Konow

, 57 N.E.3d

1244, 1247–48 (Ill. App. 2016) (relying on Pelham rule); Kelley

v. Carbone

, 837 N.E.2d 438, 441 (Ill. App. 2005) (same); see also

Greycas, Inc. v. Proud

, 826 F.2d 1560, 1563–65 (7th Cir. 1987)

(same). Pelham teaches that in Illinois, “a duty owed by theNo. 16

‐ 2983 13

defendant attorney to the nonclient” is established only when

“the intent of the client to benefit the nonclient third party was

the primary or direct purpose of the transaction or relation

‐ ship.” Pelham

, 440 N.E.2d at 99. “In cases of an adversarial na

‐

ture, in order to create a duty on the part of the attorney to

one other than a client, there must be a clear indication that

the representation by the attorney is intended to directly con

‐

fer a benefit upon the third party.” Id. at 100.

a. No Exception to the Primary Purpose Rule

In an attempt to avoid the Pelham rule and its conse

‐

quences, plaintiffs assert that Pelham contains an exception to

the “primary purpose” rule and imposes an attorney duty of

care to third

‐ party non

‐ clients when the attorney voluntarily

undertakes to perform a service with foreseeable reliance on

the performance. See id. at 101 (“We believe a different situa

‐

tion would confront us if this complaint had alleged sufficient

facts to show that the defendant had undertaken a duty

... because his client and the plaintiffs herein could have justifi

‐ ably relied on that undertaking.”); Auto

‐ Owners Ins.

, 57

N.E.3d at 1248 (acknowledging that Pelham left this possibility

open, but not relying on it for its decision). Here, plaintiffs’

theory is that Mayer Brown voluntarily undertook responsi

‐ bility for drafting the UCC

‐ 3 termination statements and that

plaintiffs could justifiably rely on Mayer Brown’s actions. We

are not persuaded. The “different situation” hypothesized in

Pelham was obiter dictum, not controlling law, but more im

‐

portant, the theory does not fit the plaintiffs’ factual allega

‐

tions here.

First, courts that have considered the Pelham dictum on

voluntary undertaking also applied the primary purpose test.

See, e.g., Geaslen v. Berkson, Gorov & Levin, Ltd. ( Geaslen I ), 58114 No. 16

‐ 2983

N.E.2d 138 (Ill. App. 1991), aff’d in part & rev’d in part

, Geaslen

II

, 613 N.E.2d 702. For example, in Geaslen I

, the court held

that an opinion letter drafted by a lawyer for a non

‐ client may

give rise to a duty. Id. at 142. The court reasoned that although

the scope of the larger relationship between the defendant law

firm and its client was not to benefit the plaintiff, the primary

purpose test could be applied to the individual task of pro

‐ ducing an opinion letter at the direction of the client for the

benefit of the third

‐ party plaintiff. Id. However, the court re

‐

lied on the primary purpose test explicitly in its holding: “the

primary purpose of the letter of opinion was to benefit plain

‐

tiffs.” Geaslen II

, 613 N.E.2d at 703. Accord, Greycas

, 826 F.2d

at 1562–63 (borrower’s attorney who provided opinion letter

assuring lender that collateral had no prior liens owed duty

of care to lender).

Thus, there is no exception to the primary purpose rule.

The relationship between Mayer Brown and the plaintiffs

here simply is not similar to those presented in Geaslen I and

Geaslen II

. Preparing the closing checklist and UCC

‐ 3 termina

‐

tion documents is not akin to an opinion letter that is pre

‐ pared at the direction of a client for the specific purpose of

providing comfort to a third party. Opinion letters are written

to allow non

‐ clients to rely on them. That’s their purpose.

Even if we examine only document drafting rather than

the full scope of Mayer Brown’s representation, as plaintiffs

urge, the primary purpose of the document preparation was

not similar in nature to the primary purpose of an opinion let

‐

ter. As noted at oral argument, in every complex transaction

like the loan and payoff between General Motors and JP Mor

‐

gan, one party or another must prepare the first draft of everyNo. 16

‐ 2983 15

document. By preparing a first draft, an attorney does not un

‐

dertake a professional duty to all other parties in the deal. The

fact that the Mayer Brown drafts were provided to Simpson

Thacher for review indicates that the drafts prepared by

Mayer Brown were simply that—drafts—not a legal opinion

to be relied upon by other parties. We must also note that,

when provided an opportunity to review the Mayer Brown

drafts, a Simpson Thacher attorney replied, “Nice job on the

documents.” In re Motors Liquidation Co. II

, 777 F.3d at 105.

In sum, there is no exception to the Pelham primary pur

‐

pose rule, and there is no plausible allegation that Mayer

Brown voluntarily assumed a duty to plaintiffs by providing

drafts to Simpson Thacher for review.

b. Types of Attorney Duties to Third

‐ Party Non

‐ Cli

‐

ents

Including the recipients of opinion letters as in Geaslen

, the

Illinois Supreme Court has recognized only three types of

non

‐ clients able to establish that they are the primary benefi

‐

ciaries of an attorney’s relationship with another client and

thus are owed a duty of care. First, “an attorney who brings a

wrongful death action owes a legal duty to the decedent’s ben

‐

eficiaries at the distribution of funds phase of the action.” In

re Estate of Powell

, 12 N.E.3d at 21, citing Carter v. SSC Odin

Operating Co.

, 976 N.E.2d 344 (Ill. 2012); DeLuna v. Burciaga

,

857 N.E.2d 229 (Ill. 2006). Second, an attorney owes a duty of

care to the intended beneficiaries of wills. McLane

, 546 N.E.2d

at 502–04. Third, an attorney owes a duty of care to third

‐

party recipients of formal opinion letters authored by the at

‐

torney at the direction of the attorney’s client. Geaslen II

, 613

N.E.2d at 704.16 No. 16

‐ 2983

Plaintiffs argue that even if their first two arguments fail,

they can still satisfy the Pelham primary purpose rule. They

assert that the primary purpose of Mayer Brown’s representa

‐

tion of General Motors was to influence JP Morgan. Thus,

plaintiffs reason, their relationship with Mayer Brown is akin

to the types of relationships in which the Illinois Supreme

Court has found an attorney duty to a third

‐ party non

‐ client.

The argument is creative but we believe it runs contrary to

Illinois law.

We find persuasive another decision by Judge Gettleman,

who also authored the district court decision in this case. In

Freedom Mortgage Corp. v. Burnham Mortgage, Inc.

, 720 F. Supp.

2d 978 (N.D. Ill. 2010), he held that the facts alleged presented

one of the rare instances satisfying the primary purpose rule

in Pelham

. In Freedom Mortgage

, a lender claimed that a title

company’s attorney who had performed faulty title searches

and prepared inaccurate closing documents for the loan owed

the third

‐ party lender a duty. Id. at 990–92. Because the law

‐ yer’s “work was nonadversarial in the sense that an attorney’s

services as a closing agent are typically relied upon by all par

‐

ties to a real estate transaction,” the plaintiff had pled suffi

‐ ciently that the primary purpose and intent of the attorney’s

work was to influence the plaintiff with respect to the real es

‐

tate transaction. Id. at 991.

In contrast, neither the Illinois courts nor the federal courts

in Illinois have recognized another situation in which an at

‐

torney owes a third party a duty. For example, in Gold v. Va

‐ sileff

, an Illinois court observed that an “attorney owes a duty

to a non

‐ client only in the most limited circumstances.” 513

N.E.2d 446, 448 (Ill. App. 1987). There, the buyers of a grocery

store alleged that the sellers’ attorney “had knowledge thatNo. 16

‐ 2983 17

the sellers would not perform [under the contract] and failed

to share this knowledge with the buyers.” Id. The court held

on the pleadings that the sellers’ attorney owed no duty to the

plaintiff

‐ buyers. Id.

Similarly, in First National Bank of Moline

, the court found

that a borrower’s law firm owed no duty to the lending bank.

548 N.E.2d at 1363–64. The plaintiff lender sought damages

for negligent preparation of the mortgage by the borrower’s

attorney. The plaintiff was unable to establish that the primary

purpose and intent of the borrower

‐ attorney relationship was

to benefit the bank, even though the bank would ultimately

derive some benefit from the loan by collecting interest. Id. at

1363. The court affirmed dismissal on the pleadings, observ

‐ ing that nothing prevented the bank from having its own

counsel review the documents at issue. Such legal expenses,

the court noted, were just part of “the costs of doing busi

‐

ness.” Id. at 1364.

Here, plaintiffs allege that “General Motors’ primary pur

‐

pose and intent in engaging Mayer Brown to prepare the Syn

‐

thetic Lease Closing Documents was to effect the Synthetic

Lease Payoff by influencing JPMorgan to execute and/or ap

‐

prove the Synthetic Lease Closing Documents prepared by

Mayer Brown.” The factual allegations contained in the com

‐ plaint contradict that conclusory allegation about the primary

purpose of the General Motors

‐ Mayer Brown relationship.

While the complaint characterizes the transaction as the mere

formal, non

‐ adversarial completion of a previously negoti

‐

ated transaction, the complaint characterizes similar transac

‐

tions as sophisticated and complex. We assume that the terms

of the 2001 Synthetic Lease payoff were clear and unambigu

‐

ous, and that the responsibilities of both parties were agreed18 No. 16

‐ 2983

to previously. Yet each party had a distinct interest in ensur

‐ ing that the other fulfilled its duties. Thus, while plaintiffs fur

‐

ther allege a “common interest” in closing the transaction, the

facts do not support the conclusory claim that the transaction

lacked “any adversity.” There is no plausible allegation that

Mayer Brown was attorney to the transaction where the two

principal parties each had the advice of their own lawyers.

The alleged relationship between Mayer Brown and plain

‐

tiffs here is easy to distinguish from Freedom Mortgage and

other cases in which a court found an attorney owed a duty

to a third party. The natural and reasonable reading of the

facts alleged is, as the district court stated, “GM hired defend

‐

ant for its own benefit—to ensure that all of its property was

properly released as security pursuant to the terms of the 2001

lease agreement.” Mayer Brown

, 2016 WL 3459714, at *5. JP

Morgan, in turn, hired its own counsel, Simpson Thacher, to

protect the lenders’ interests in ensuring that the security was

not released until full payment was made. Accordingly,

Mayer Brown was not an “attorney to the transaction” like the

closing agent in Freedom Mortgage

. It was instead representing

the interests of its client. It simply is not plausible to infer oth

‐

erwise.

Plaintiffs “cannot avoid the mandates of Pelham by couch

‐ ing their grounds for recovery in principles that have not been

accepted in delineating the duty of an attorney to his clients

and nonclients.” Orr

, 524 N.E.2d at 1108. Plaintiffs cannot es

‐

cape the application of Pelham by claiming to be in an attor

‐

ney

‐ client relationship with Mayer Brown or asserting that

Mayer Brown voluntarily undertook a responsibility trigger

‐ ing a duty. The plaintiffs’ relationship to Mayer Brown is likeNo. 16

‐ 2983 19

those attorney–third

‐ party relationships in Gold and First Na

‐

tional Bank of Moline

. They were represented by counsel who

were not prevented from reviewing the documents and had

no valid justification for relying on Mayer Brown’s drafts.

Plaintiffs have not plausibly alleged that the primary purpose

of General Motors’ relationship with Mayer Brown was to in

‐

fluence JP Morgan.

Because plaintiffs cannot establish a duty between Mayer

Brown and JP Morgan, our analysis stops here. We do not

need to address the additional step plaintiffs would need to

take to show that Mayer Brown owed a duty to JP Morgan’s

principals (the plaintiffs) in a transaction entirely separate

from the 2001 Synthetic Lease closing. The judgment of the

district court dismissing this action is

AFFIRMED.