Court Opinion

ID: 3135818
Source: CourtListenerOpinion
Date Created: 2015-10-22 17:41:46.325013+00
Date Added: 2024-06-11T11:54:13.223138
License: Public Domain

ILLINOIS OFFICIAL REPORTS
                                        Supreme Court

                           Khan v. Deutsche Bank AG, 2012 IL 112219

Caption in Supreme         SHAHID R. KHAN et al., Appellees, v. DEUTSCHE BANK AG et al.,
Court:                     Appellants.

Docket Nos.                112219, 112221, 112223 cons.

Filed                      October 18, 2012

Held                       Where plaintiffs’ 2009 lawsuit complained of 1999 and 2000 investments
(Note: This syllabus       which were placed with the defendants in anticipation of tax advantages
constitutes no part of     and profits that did not materialize, the complaint was timely under the
the opinion of the court   discovery rule when filed within the applicable limitation period after
but has been prepared      plaintiffs’ receipt of tax deficiency notices in 2008.
by the Reporter of
Decisions for the
convenience of the
reader.)

Decision Under             Appeal from the Appellate Court for the Fourth District; heard in that
Review                     court on appeal from the Circuit Court of Champaign County, the Hon.
                           Jeffrey B. Ford, Judge, presiding.

Judgment                   Appellate court judgment affirmed.
Counsel on               Thomas F. Falkenberg and Benjamin M. Whipple, of Williams
Appeal                   Montgomery & John Ltd., of Chicago, and Kay Nord Hunt, of Lommen,
                         Abdo, Cole, King & Stageberg, P.A., of Minneapolis, Minnesota, for
                         appellant Grant Thornton LLP.

                         Joel D. Bertocchi and Joshua G. Vincent, of Hinshaw & Culbertson,
                         LLP, of Chicago, and Theresa Trzaskoma and Adam Hollander, of New
                         York, New York, and Christopher Wimmer, of San Francisco, California,
                         all of Brune & Richard, LLP, for appellant David Parse.

                         J. Timothy Eaton and Jonathan B. Amarilio, of Shefsky & Froelich Ltd.,
                         of Chicago, and Allan N. Taffet, Kirk L. Brett and Keith Blackman, of
                         Duval & Stachenfeld LLP, of New York, New York, for appellants
                         Deutsche Bank AG and Deutsche Bank Securities, Inc.

                         James D. Green, of Thomas, Mamer & Haughey, LLP, of Champaign,
                         David R. Deary, J. Dylan Snapp and Carol E. Farquhar, of Loewinsohn
                         Flegle Deary, LLP, of Dallas, Texas, and David C. Frederick, Brendan
                         J. Crimmins and Emily T.P. Rosen, of Kellogg, Huber, Hansen, Todd,
                         Evans & Figel, P.L.L.C., of Washington, D.C., for appellees.

Justices                 JUSTICE GARMAN delivered the judgment of the court, with opinion.
                         Justices Freeman, Thomas, Karmeier, and Burke concurred in the
                         judgment and opinion.
                         Justice Theis concurred in part and dissented in part, with opinion, joined
                         by Chief Justice Kilbride.

                                           OPINION

¶1        On July 6, 2009, plaintiffs Shahid R. Khan, his wife, Ann C. Khan, and various of their
      business entities filed a multicount complaint in the circuit court of Champaign County
      against defendants for losses incurred in connection with a series of investment strategies
      entered into in 1999 and 2000, a primary purpose of which was to create artificial tax losses
      for plaintiffs. Instead, the Internal Revenue Service (IRS) disallowed the resulting tax losses
      and determined that plaintiffs owed back taxes, penalties, and interest. Pertinent to this
      consolidated appeal, defendants Deutsche Bank AG, Deutsche Bank Securities, Inc., David
      Parse, and Grant Thornton filed motions to dismiss pursuant to sections 2-615 and 2-619 of
      the Code of Civil Procedure (Code) (735 ILCS 5/2-615, 2-619 (West 2008)). The section 2-

                                               -2-
     619 motions alleged that plaintiffs’ action was time-barred. The trial court granted the
     motions and entered an order under Supreme Court Rule 304(a), finding no just reason to
     delay enforcement or appeal of its rulings. Ill. S. Ct. R. 304(a) (eff. Feb. 26, 2010). The
     appellate court reversed and remanded. 408 Ill. App. 3d 564. This court granted defendants’
     petitions for leave to appeal (Ill. S. Ct. R. 315 (eff. Feb. 26, 2010)) and consolidated the
     cases for review.

¶2                                      BACKGROUND
¶3       Plaintiffs’ 11-count complaint sought damages for breach of fiduciary duty,
     negligence/professional malpractice, negligent misrepresentation, disgorgement, rescission,
     declaratory judgment, breach of the duty of good faith and fair dealing, fraud, violations of
     the Illinois Consumer Fraud and Deceptive Business Practices Act, breach of contract, and
     civil conspiracy. Plaintiffs alleged that defendants, pursuant to a common scheme, advised
     plaintiffs to undertake certain investment strategies, referred to as the 1999 Digital Options
     Strategy and the 2000 COINS Strategy. According to plaintiffs, defendants advised them that
     the investment strategies could yield a substantial profit and also legally minimize plaintiffs’
     federal and state income tax liability. Plaintiffs alleged that defendants knew or should have
     known that the investment strategies would not yield such profits or tax benefits because
     defendants knew that the IRS was investigating the same or substantially similar transactions
     and had concluded that the transactions were illegal tax shelters. Defendants did not inform
     plaintiffs of these facts; rather, plaintiffs alleged, defendants’ primary motive in pitching
     their scheme was to exact significant fees and commissions from plaintiffs. Plaintiffs further
     alleged that they were unknowledgeable and unsophisticated concerning tax laws and tax-
     advantaged investment strategies and that they relied on their trusted legal, accounting, and
     tax advisors for comprehensive legal, accounting, tax, and investment advice.
¶4       Following is a brief summary of the factual allegations of plaintiffs’ complaint. A fuller
     statement of the facts is contained in the appellate court opinion.

¶5                             The 1999 Digital Options Strategy
¶6       In 1999, plaintiff Shahid Khan was involved in negotiations to purchase a Canadian
     company owned by Japanese investors. The investors requested that Khan pay them the sale
     proceeds in Japanese yen. As Khan had no experience with foreign currency, he sought a
     referral to any potential advisors with foreign currency trading experience. He was referred
     to Paul Shanbrom, a tax partner at BDO Seidman (BDO). At a meeting, Shanbrom suggested
     that Khan invest in the 1999 Digital Options Strategy. Shanbrom advised Khan that BDO’s
     tax professionals had devised tax-advantaged investment plans that would provide an above-
     average rate of return and minimize tax obligations and that the 1999 Digital Options
     Strategy was completely legal. Shanbrom recommended defendants David Parse and
     Deutsche Bank to execute the options, representing that Parse and Deutsche Bank had
     special expertise in foreign currency investments. He also told Khan that he would receive
     a legal opinion from an independent law firm that would confirm the propriety of the 1999
     Digital Options Strategy, protect Khan in the event of an IRS audit, and prevent the IRS
     from assessing plaintiffs with penalties in the unlikely event of an audit. Shanbrom

                                               -3-
     recommended the law firm of Jenkens & Gilchrist to provide this opinion. Shanbrom set up
     a conference call in which he, Khan, and Parse discussed foreign currency trading. During
     the call, Shanbrom and Parse reiterated what Shanbrom had earlier told Khan about the
     legality of the 1999 Digital Options Strategy. Neither Shanbrom nor Parse informed Khan
     that the foreign currency digital options were simply private bets with Deutsche Bank as to
     where the underlying foreign currencies would be on a particular date and time and that
     Deutsche Bank controlled the outcome. Plaintiffs alleged that, unbeknownst to them,
     Deutsche Bank was able to control the outcome of the options because the contract with
     plaintiffs gave Deutsche Bank the power to choose the particular spot rate it wished to use
     on the designated date and time. According to plaintiffs, Deutsche Bank designed the options
     so that they would expire “out of the money” and be rendered worthless. Thus, plaintiffs lost
     the $350,000 premium they paid to Deutsche Bank, which plaintiffs alleged was defendants’
     plan all along. Based upon the representations of Shanbrom and Parse, Khan decided to
     invest in the 1999 Digital Options Strategy. To that end and in accordance with defendants’
     instructions, Khan formed various legal entities to carry out the investment strategy.
¶7       Plaintiffs alleged that defendants made material misrepresentations and omissions on
     which plaintiffs relied to their detriment and that defendants intentionally deceived plaintiffs
     for the purpose of persuading them to invest in the 1999 Digital Options Strategy.
¶8       We quote below the appellate court’s explanation of how the 1999 Digital Options
     Strategy worked:
              “The Khans entered into a private contract with Deutsche Bank whereby the Khans,
              through SRK Wilshire Investments (Wilshire Investments), bought from Deutsche
              Bank a long option on foreign currency and sold to Deutsche Bank a short option.
              Thus, there came into existence an opposing pair of options, one long and the other
              short. These options were designed to cancel each other out. The strike prices of the
              two options were only a fraction of a penny apart, and the premium that the Khans
              paid Deutsche Bank for the long option, though large, was almost entirely offset by
              the premium Deutsche Bank agreed to pay the Khans for the short option (almost but
              not quite: the Khans paid a net premium to Deutsche Bank of $350,000, the
              difference between the $35 million that the Khans paid for the long option and the
              $34,650,000 that Deutsche Bank agreed to pay them for the short option). Because
              the strike prices of the opposing options were so close together and because
              Deutsche Bank, as the calculation agent, had the right to select the applicable spot
              rate from a range of currency rates, it was a virtual certainty that the transaction
              would be close to a wash—Deutsche Bank would see to that.
                  So, pursuant to this scheme that was calculated to be a wash on the investment
              side (and, as we will explain, a loss on the tax side), the Khans formed the necessary
              business entities and transferred assets between them, all under the guidance of
              BDO. On November 17, 1999, the Khans formed Wilshire Investments and SRK
              Wilshire Partners (Wilshire Partners). On November 24, 1999, through Wilshire
              Investments, the Khans bought and sold the opposing options, which had expiration
              dates of December 23, 1999. On November 26, 1999, Wilshire Investments
              contributed its interest in the as-of-yet unexpired options to Wilshire Partners as a

                                               -4-
              capital contribution. On December 10, 1999, Wilshire Partners purchased a quantity
              of Canadian dollars as an investment. On December 23, 1999, both the long option
              and the short option terminated ‘out of the money’: the options became worthless,
              based on the spot rate that Deutsche Bank chose. Of course, both the Khans and
              Deutsche Bank got to keep the premiums they had paid each other, but Deutsche
              Bank’s premium was $350,000 greater than the premium it had paid to the Khans (or
              Wilshire Investments). On December 27, 1999, the Khans contributed their interest
              in Wilshire Partners to Wilshire Investments, causing the dissolution and liquidation
              of Wilshire Partners. As a distribution in liquidation of Wilshire Partners, all of the
              investments in foreign currency were distributed to Wilshire Investments.
                  Consequently, for tax purposes, the Khans’ interest in Wilshire Investments had
              a basis equal to the amount they had paid to Deutsche Bank for the long option, but
              that amount supposedly was not offset as a result of the assumption by Wilshire
              Investments of the Khans’ obligation to Deutsche Bank on the short option, perhaps
              on the theory that the short option was only a contingent liability. [Citation.] In other
              words, the long option counted for purposes of the basis the Khans had in Wilshire
              Investments, but the short option, which greatly reduced the economic significance
              of the long option, supposedly did not count. Upon the disposition of the Khans’
              partnership interest in Wilshire Investments, the expensive long option had expired
              ‘out of the money’ and had lost all its value, so the Khans claimed a tax loss equal
              to the premium they had paid for the long option, even though (because of the
              offsetting short option) they had not really incurred an economic loss in that
              amount.” 408 Ill. App. 3d at 571-72.

¶9                                    The 2000 COINS Strategy
¶ 10       Plaintiffs alleged that in June 2000, aware of Khan’s displeasure at losing money on the
       1999 Digital Options Strategy, Shanbrom told Khan of another BDO investment strategy that
       Shanbrom claimed had been designed to provide an even better chance at making a profit
       than the 1999 Digital Options Strategy and, at the same time, provide clients with the same
       positive tax benefits found in the 1999 Digital Options Strategy. The same procedure was
       followed for the 2000 COINS Strategy as had been implemented on the 1999 Digital Options
       Strategy. Jenkens & Gilchrist would issue an opinion letter confirming the legality of the tax
       advantages of the 2000 COINS Strategy. Shanbrom again referred Khan to David Parse and
       Deutsche Bank to implement the plan. Khan had telephone conversations with Parse and a
       representative of Jenkens, who assured him of the legality of the 2000 COINS Strategy and
       that the foreign currency digital options were designed in a way to provide Khan with a good
       chance of making a profit while also legally reducing his taxes. Plaintiffs alleged that the
       purpose of the promotion by defendants of the 2000 COINS Strategy was to generate large
       fees from plaintiffs. Based upon the advice and representations of defendants, Khan decided
       to engage in the 2000 COINS Strategy. The 2000 COINS Strategy was a variation on the
       1999 Digital Options Strategy. Again, we quote the appellate court’s explanation of how the
       2000 COINS Strategy worked:
                “On September 29, 2000, using Deutsche Bank as the counterparty, Wilshire

                                                -5-
                Investments bought and sold offsetting pairs of options tied to foreign-currency
                exchange rates during specified periods in the future, with extremely close strike
                prices and a spot rate to be chosen by Deutsche Bank in its sole discretion. The cost
                of the long option, though large, was mostly (but not entirely) offset by the premium
                Wilshire received on the sale of the short option. On October 18, 2000, pursuant to
                BDO’s instructions, Wilshire Investments made a capital contribution of these option
                positions to a partnership formed specifically for purposes of the 2000 COINS
                Strategy, Thermosphere FX Partners, LLC (Thermosphere). Supposedly, the long
                option counted toward the basis, without any offset by the short option. On
                December 6 and 11, 2000, the strike prices on the opposing options were met, with
                the result that the gain on one option was, roughly speaking, matched by the loss on
                the other option. The options now were worthless, requiring an adjustment in
                plaintiffs’ basis in Thermosphere. On December 15, 2000, Thermosphere purchased
                foreign currency. Plaintiffs requested to be redeemed out of Thermosphere, and on
                December 18, 2000, plaintiffs’ entire capital balance was redeemed, and a portion
                of the foreign currency that Thermosphere had purchased was distributed to them.
                On December 27, 2000, plaintiffs sold the foreign currency and subsequently
                claimed an ordinary loss.” 408 Ill. App. 3d at 574.
¶ 11        Plaintiffs alleged in their complaint that defendants failed to disclose to Khan that
       Deutsche Bank retained virtually unlimited discretion to determine whether the investments
       would pay out and, therefore, could ensure that they would not pay out. Plaintiffs also
       alleged that defendants failed to disclose that the investments had no reasonable possibility
       of a profit in excess of the substantial fees plaintiffs paid to Deutsche Bank.
¶ 12        In December 1999, the IRS issued Notice 1999-59, entitled “Tax Avoidance Using
       Distribution of Encumbered Property.” Plaintiffs alleged that this notice advised taxpayers
       that transactions wholly lacking in economic substance for the purpose of generating tax
       losses were not allowable for federal income tax purposes. Plaintiffs alleged that based upon
       this notice, defendants knew or should have known that the IRS would conclude that the
       purported losses from the 1999 Digital Options Strategy and the 2000 COINS Strategy were
       improper and not allowable for tax purposes. Nonetheless, defendants intentionally failed
       to disclose this information to plaintiffs. In August 2000, the IRS issued Notice 2000-44,
       entitled “Tax Avoidance Using Artificially High Basis.” According to plaintiffs, this notice
       described transactions similar to the 1999 Digital Options Strategy and the 2000 COINS
       Strategy and indicated that any losses from such transactions were not allowable as
       deductions for federal income tax purposes. Plaintiffs alleged that despite the clear import
       of these IRS notices, defendants failed to advise plaintiffs that the purported losses arising
       from the 1999 Digital Options Strategy and the 2000 COINS Strategy were not allowable
       for tax purposes and that plaintiffs would be exposed to substantial penalties if they claimed
       the losses on their tax returns. Instead, defendants improperly represented to plaintiffs that
       they did not have to disclose the 1999 Digital Options Strategy on their 1999 federal tax
       returns. In fact, plaintiffs alleged, defendants had failed to register either the 1999 Digital
       Options Strategy or the 2000 COINS Strategy as tax shelters with the IRS, despite the fact
       that such registration was required. In addition, the opinion letters issued by Jenkens &
       Gilchrist verifying the legitimacy of the purported losses generated by the 1999 Digital

                                                -6-
       Options Strategy and the 2000 COINS Strategy specifically advised plaintiffs that the
       analysis used by the IRS in Notice 1999-59 was inapplicable to plaintiffs. Plaintiffs alleged
       that, based on defendants’ advice, they filed their 1999 and 2000 tax returns and included
       the purported losses from the investment strategies.
¶ 13        Plaintiffs alleged that in late 2001 and early 2002, the IRS offered the tax amnesty
       program, whereby taxpayers who disclosed their involvement in transactions such as the
       1999 Digital Options Strategy and the 2000 COINS Strategy could avoid penalties without
       conceding liability for back taxes or interest. Defendants advised plaintiffs not to participate
       in the amnesty program. Plaintiffs alleged that the failure to advise them to participate in the
       program resulted in plaintiffs being assessed substantial penalties and interest that would
       have been waived had they participated in the amnesty program.
¶ 14        The trial court granted the section 2-619 motions to dismiss filed by Deutsche Bank,
       Parse, and defendant Grant Thornton, an accounting firm that had prepared Thermosphere’s
       tax returns. The court found that plaintiffs suffered injury in 1999 through 2001 when they
       paid fees to Deutsche Bank and paid for the opinion letters from Jenkens & Gilchrist. The
       court noted that plaintiffs had engaged trial counsel in May 2003, who retained an
       independent accounting firm to assist with the pending IRS audits. The court found that due
       diligence would have discovered the IRS notices referred to above, which would have put
       plaintiffs on notice that the tax shelters were illegal. The trial court also granted defendants’
       section 2-615 motions to dismiss plaintiffs’ claim for breach of fiduciary duty, finding that
       plaintiffs had failed to adequately plead a breach of fiduciary duty and that, in any event,
       they had disclaimed the existence of such a duty in the written transaction confirmations
       signed after the trades were made. The trial court relied on an affidavit and the transaction
       confirmations that were attached to the section 2-615 motions to dismiss. The trial court also
       granted the motions as to plaintiffs’ claim for negligent misrepresentation based upon its
       finding that plaintiffs had failed to plead the existence of a fiduciary relationship.
¶ 15        The appellate court reversed and remanded. As to the statute of limitations issue, the
       court found that the limitations period does not begin to run until the IRS makes a formal
       assessment of the taxpayer’s tax liability or the taxpayer agrees with the IRS to pay
       additional taxes, penalties, or interest. 408 Ill. App. 3d at 602. On the breach of fiduciary
       duty issue, the appellate court acknowledged the affidavit and contractual documents
       containing the disclaimers that were attached to the section 2-615 motions to dismiss, but
       it found that a preagency fiduciary duty existed as a matter of law between the parties based
       upon this court’s decision in Martin v. Heinold Commodities, Inc., 163 Ill. 2d 33 (1994), and
       that the contractual disclaimers were voidable due to the Deutsche defendants’ failure to
       disclose material facts to Khan concerning the nature of the options transactions and the
       nondeductibility of the tax losses. Id. at 593-94. The appellate court also found that plaintiffs
       had adequately pleaded a cause of action for negligent misrepresentation. Id. at 595. As to
       Grant Thornton, the appellate court concluded that the trial court erred in granting its section
       2-619 motion to dismiss. The court found that plaintiffs’ action was timely under the statute
       of repose found in the accounting malpractice statute of limitations. Id. at 611.

¶ 16                                        ANALYSIS

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¶ 17                     I. Statute of Limitations—The Deutsche Defendants
¶ 18       A section 2-619 motion to dismiss admits as true all well-pleaded facts in the complaint,
       together with all reasonable inferences gleaned from those facts. Wackrow v. Niemi, 231 Ill.
       2d 418, 422 (2008). When ruling on a section 2-619 motion to dismiss, a court interprets all
       pleadings and supporting documents in the light most favorable to the nonmoving party. Id.
       A reviewing court applies de novo review to a trial court’s ruling on the motion. Id.
¶ 19       The parties agree that the five-year statute of limitations contained in section 13-205 of
       the Code of Civil Procedure (Code) (735 ILCS 5/13-205 (West 2008)) applies in this case.
       That section provides that all civil actions not otherwise provided for “shall be commenced
       within 5 years next after the cause of action accrued.” The heart of the parties’ dispute
       concerns the date on which the limitations period began to run. Deutsche Bank and David
       Parse (hereafter, Deutsche defendants) argue that the statute of limitations in tort actions
       begins to run when a plaintiff’s cause of action accrues and that plaintiffs’ cause of action
       accrued in 1999 and 2000 when they paid fees to Deutsche Bank for the 1999 Digital
       Options Strategy and the 2000 COINS Strategy.
¶ 20       The statute refers to the accrual of the cause of action. A cause of action “accrues” when
       facts exist that authorize the bringing of a cause of action. Thus, a tort cause of action
       accrues when all its elements are present, i.e., duty, breach, and resulting injury or damage.
       Brucker v. Mercola, 227 Ill. 2d 502, 542 (2007). A mechanical application of the statute of
       limitations, however, may result in the limitations period expiring before a plaintiff even
       knows of his or her cause of action. To ameliorate the potentially harsh results of such an
       application, this court has adopted the “discovery rule,” the effect of which is to postpone
       the start of the period of limitations until the injured party knows or reasonably should know
       of the injury and knows or reasonably should know that the injury was wrongfully caused.
       Witherell v. Weimer, 85 Ill. 2d 146, 156 (1981); Nolan v. Johns-Manville Asbestos, 85 Ill.
       2d 161, 170-71 (1981). At that point, the burden is on the injured person to inquire further
       as to the possible existence of a cause of action. Witherell, 85 Ill. 2d at 156.
¶ 21       This court has noted that the discovery rule formulated by this court:
                “is not the same as a rule which states that a cause of action accrues when a person
                knows or should know of both the injury and the defendants’ negligent conduct. Not
                only is such a standard beyond the comprehension of the ordinary lay person to
                recognize, but it assumes a conclusion which must properly await legal
                determination. [Citation.] Moreover, if knowledge of negligent conduct were the
                standard, a party could wait to bring an action far beyond a reasonable time when
                sufficient notice has been received of a possible invasion of one’s legally protected
                interests. [Citation.] Also, such a rule would seem contrary to the underlying purpose
                of statutes of limitations, which is to ‘require the prosecution of a right of action
                within a reasonable time to prevent the loss or impairment of available evidence and
                to discourage delay in the bringing of claims.’ [Citations.]
                     We hold, therefore, that when a party knows or reasonably should know both that
                an injury has occurred and that it was wrongfully caused, the statute begins to run
                and the party is under an obligation to inquire further to determine whether an
                actionable wrong was committed. In that way, an injured person is not held to a

                                                -8-
               standard of knowing the inherently unknowable [citation], yet once it reasonably
               appears that an injury was wrongfully caused, the party may not slumber on his
               rights. The question of when a party knew or reasonably should have known both of
               an injury and its wrongful cause is one of fact, unless the facts are undisputed and
               only one conclusion may be drawn from them.” Nolan, 85 Ill. 2d at 170-71.
¶ 22       Along these same lines, this court has noted that the term “wrongfully caused” as used
       in the discovery rule does not connote knowledge of negligent conduct or knowledge of the
       existence of a cause of action. That term must be viewed as a general or generic term and not
       as a term of art. Knox College v. Celotex Corp., 88 Ill. 2d 407, 416 (1981). In addition, this
       court has “never suggested that plaintiffs must know the full extent of their injuries before
       the statute of limitations is triggered. Rather, our cases adhere to the general rule that the
       limitations period commences when the plaintiff is injured, rather than when the plaintiff
       realizes the consequences of the injury or the full extent of her injuries.” Golla v. General
       Motors Corp., 167 Ill. 2d 353, 364 (1995).
¶ 23       The Deutsche defendants argue that plaintiffs’ claim is that they were defrauded into
       investing millions of dollars in the investment strategies. To that end, plaintiffs paid
       Deutsche Bank over $1 million in fees, which plaintiffs allege was part of the fraud. The
       Deutsche defendants argue that the tax-related damages were merely additional
       consequences of the alleged wrongdoing and the fact of these later damages does not
       postpone the accrual of plaintiffs’ claim. Alternatively, the Deutsche defendants argue that
       the limitations period began to run, at the latest, in May 2003, when plaintiffs hired
       independent tax counsel, who should have discovered through the exercise of due diligence
       the IRS notices advising that artificial losses from tax shelters similar to the ones at issue
       here would be disallowed. The appellate court rejected this argument, concluding that until
       an assessment or settlement with the IRS, there was no actual harm and hence no accrual of
       a cause of action, even if, by May 2003, Khan knew that defendants had given him false
       advice.
¶ 24       Plaintiffs disagree that the statute of limitations began to run in 1999 or 2000. They argue
       that the Deutsche defendants concealed the fact that plaintiffs would never make a profit on
       their investment because they did not inform plaintiffs that Deutsche Bank, as calculation
       agent, maintained complete control over the outcome of the transactions. According to
       plaintiffs, Deutsche Bank could always pick a spot rate that would ensure that the options
       expired “out of the money.” This would enable Deutsche Bank to pocket the spread between
       what plaintiffs paid and received from buying and selling the paired options.
¶ 25       Taking as true the well-pleaded facts of plaintiffs’ complaint, they have alleged that the
       Deutsche defendants and others entered into a conspiracy to conceal the true nature of the
       investment strategies and that they failed to reveal the degree of control Deutsche Bank had
       over the outcome of the transactions. A reasonable inference from these allegations is that
       plaintiffs did not know and could not reasonably have discovered the wrongful nature of
       their injury in 1999 or 2000. The same is true with respect to the purported tax benefits of
       the investment strategies. The Deutsche defendants argue that plaintiffs should have been
       alerted by IRS notices issued in 1999 and 2000 that any losses generated by the investment
       strategies would likely not constitute allowable tax losses. Plaintiffs allege, however, that

                                                 -9-
       the Deutsche defendants themselves were aware of the IRS notices and, despite knowing that
       the alleged tax-reducing investment strategies would likely be disallowed by the IRS,
       continued to advise plaintiffs to the contrary. Plaintiffs allege that the Deutsche defendants
       used purportedly reputable law firms such as Jenkens & Gilchrist to provide plaintiffs with
       purportedly independent legal opinions concerning the tax-related bona fides of the
       investment strategies, but that, in fact, the opinions provided to plaintiffs were nothing more
       than “fill in the blank” boilerplate opinions and that Jenkens & Gilchrist was a coconspirator
       with the Deutsche defendants in the investment schemes. Plaintiffs alleged that the Jenkens
       & Gilchrist opinion provided to them for the 1999 Digital Options Strategy affirmatively
       stated that the 1999 IRS notice was inapplicable to the transactions at issue. The opinion
       provided in connection with the 2000 COINS Strategy stated that the 2000 IRS notice was
       “more likely than not legally inapplicable.” Plaintiffs thus alleged that the Deutsche
       defendants affirmatively misrepresented both the content and significance of the IRS notices.
¶ 26       Plaintiffs further alleged that in 2001 and 2002, when the IRS announced an amnesty
       program for those who had claimed tax losses associated with transactions similar to the
       investment strategies, the Deutsche defendants, in furtherance of their conspiracy, advised
       plaintiffs not to participate. Plaintiffs alleged the reason for this advice was that one of the
       conditions of participation required the taxpayer to disclose to the IRS the identities of the
       individuals and entities who were involved in the marketing, sale, or implementation of the
       investment strategies, or who received a fee, and that the Deutsche defendants feared
       disclosure to the IRS of their involvement in the investment strategies. Taking plaintiffs’
       well-pleaded factual allegations as true, together with reasonable inferences therefrom, we
       conclude that while a portion of plaintiffs’ injury occurred in 1999 and 2000, they could not
       have been expected at that time, given the alleged actions of the Deutsche defendants and
       their alleged coconspirators, to discover that their injury was wrongfully caused.
¶ 27       In support of their alternative argument that the statute of limitations began to run, at the
       latest, in May 2003, the Deutsche defendants assert that in early 2003, plaintiffs received
       notices from the IRS that it would audit their 1999 and 2000 federal income tax returns.
       Plaintiffs hired independent tax litigation counsel to represent them in the audit. The
       Deutsche defendants argue that plaintiffs’ counsel should have discovered the existence of
       the IRS notices concerning the illegal tax shelters in 2003. Plaintiffs respond that because
       they alleged that the Deutsche defendants advised them to participate in the investment
       strategies and represented that plaintiffs would realize substantial tax benefits, plaintiffs’
       claims depend on the ability to establish damages in the form of additional tax liability.
       Thus, according to plaintiffs, the earliest that they suffered actual harm was when they
       received a notice of deficiency from the IRS in 2008.
¶ 28       The appellate court held that the statute of limitations did not begin to run in this case
       until the IRS made a deficiency assessment against plaintiffs or when plaintiffs settled their
       tax dispute with the IRS, whichever first occurred. In doing so, the appellate court relied on
       Federated Industries, Inc. v. Reisin, 402 Ill. App. 3d 23 (2010). Federated involved a lawsuit
       by the plaintiffs against their accountants. The plaintiffs alleged that the defendants provided
       negligent accounting services in 2002 and 2003 that required the plaintiffs to pay additional
       taxes and penalties. The plaintiffs entered into a settlement with the IRS. They returned their

                                                 -10-
       formal written acceptance of the IRS’s proposal along with their check for the amount of
       taxes in 2006. The plaintiffs filed suit in May 2008. The defendants filed a motion to dismiss
       on the ground that the plaintiffs’ action was filed beyond the statute of limitations for
       accounting malpractice actions. The trial court dismissed the action and the plaintiffs
       appealed. Under the applicable statute of limitations, an action was required to be filed
       within two years from the time the plaintiffs knew or should reasonably have known of the
       alleged act or omission. The statute further provided that in no event shall an action be
       brought more than five years after the date on which the alleged injurious act or omission
       occurred. Id. at 25-28.
¶ 29       On appeal, the defendants argued that the statute of limitations should begin to run when
       the plaintiffs were aware of some injury and that this event occurred when plaintiffs
       consented to the IRS’s proposed tax adjustments in December 2005, more than two years
       before they filed their lawsuit. The appellate court reviewed IRS procedures for examining
       tax returns and assessing deficiencies. The court noted that the final step in the process is the
       assessment of a deficiency, either via the taxpayer’s consent to a deficiency assessment or
       the receipt of a final deficiency notice. At that point, the matter is final as to the IRS and
       subject to legal appeal in federal tax court. The appellate court noted that courts in some
       jurisdictions hold that the statute of limitations begins to run upon an indication from the IRS
       of a disagreement with the taxpayer’s return, while other courts have held that the limitations
       period does not begin to run until the issuance of the statutory notice of deficiency. Id. at 31-
       32. In resolving the statute of limitations question, the appellate court relied on a California
       case, International Engine Parts, Inc. v. Feddersen & Co., 888 P.2d 1279 (Cal. 1995).
¶ 30       In Feddersen, the IRS commenced an audit of the plaintiffs’ corporate income tax
       returns. Two years into the audit, the plaintiffs were advised that certain adverse tax
       consequences would be forthcoming. As a consequence, the plaintiffs withdrew their
       settlement offer in unrelated litigation and their bank reduced their line of credit because of
       the plaintiffs’ potential additional tax liability. The IRS assessed the tax deficiency and the
       plaintiffs filed suit two years later. The trial court dismissed the case on statute of limitations
       grounds and the appellate court affirmed. The California Supreme Court reversed, holding
       that although the defendants’ alleged negligence may have been discovered during the audit,
       the potential liability could not amount to actual harm until the date of the deficiency
       assessment or finality of the audit process. While the withdrawal of the settlement offer and
       the reduction of the plaintiffs’ line of credit may represent “palpable harm” caused by the
       negligence of the defendants, they are based on a tentative assessment of potential tax
       liability only. This does not amount to actual harm until the date of the deficiency tax
       assessment or finality of the audit process. The Feddersen court noted that its rule
                “both conserves judicial resources and avoids forcing the client to sue the allegedly
                negligent accountant for malpractice while the audit is pending. It also avoids
                requiring the client to allege facts in the negligence action that could be used against
                him or her in the audit, without first allowing the accountant to correct the error (or
                mitigate the consequences thereof) during the audit process.” Feddersen, 888 P.2d
                at 1287.
¶ 31       The appellate court in Federated noted that sound policy reasons supported the

                                                 -11-
       Feddersen approach, including creating a bright-line rule, judicial economy, and
       preservation of the accountant-client relationship. As the appellate court noted here,
       however, Federated did not adopt Feddersen’s determination that the trigger for the running
       of the statute of limitations is the assessment of a deficiency by the IRS. Rather, Federated
       held that the limitations period begins to run when the IRS issues a notice of deficiency or
       when the taxpayer agrees with the IRS’s proposed adjustments. Federated, 402 Ill. App. 3d
       at 36.
¶ 32       The appellate court in the instant case adopted the Feddersen approach, concluding that
       for purposes of an accounting malpractice case involving increased tax liability, the taxpayer
       suffers actual harm upon the earliest of two events: (1) the IRS makes a deficiency
       assessment or (2) the taxpayer agrees with the IRS to pay additional taxes, penalties, or
       interest for which the taxpayer would not have been liable but for the accountant’s
       negligence. 408 Ill. App. 3d at 602.
¶ 33       The Deutsche defendants argue that the policy reasons underlying the Federated and
       Feddersen decisions are meaningless in the intentional fraud context, noting that
       justifications such as preserving the accountant-client relationship and encouraging clients
       to seek assistance from their accountants in sorting out their tax difficulties do not apply
       where the client has alleged that a party to a transaction committed intentional fraud at the
       time of the transaction. In addition, the Deutsche defendants note that plaintiffs did not
       contact Deutsche Bank at any point after the 2000 COINS Strategy was completed.
¶ 34       While it may be true that not all of the policy reasons identified by Federated and
       Feddersen would apply to this case because the Deutsche defendants were not acting as
       accountants, we believe the proper focus should be on the nature of the harm allegedly
       caused, not on the status of the parties. Here, although plaintiffs alleged that they suffered
       injury by paying fees to Deutsche Bank, they also alleged that the major benefit promised
       to them by the Deutsche defendants and their alleged coconspirators in persuading them to
       participate in the tax-reducing investment strategies was that they would be able to deduct
       losses on their income tax returns regardless of whether they made any profit on the
       investment strategy transactions. The factual allegations of the complaint make clear that the
       essence of the investment strategies was to provide plaintiffs with a tax benefit, not to make
       a profit. In addition, we note that, in its motion to dismiss in the trial court, Deutsche Bank
       itself emphasized the fact that plaintiffs “implemented a series of tax shelters (three in as
       many years) to avoid tax liabilities in 1999, 2000 and 2001.” Deutsche Bank alleged that
       “Shahid Khan made calculated, informed decisions to execute transactions in the hope that
       by doing so, he might be able to shelter huge amounts of income.” Thus, Deutsche Bank
       recognized that the main purpose of engaging in the investment strategies was to shelter the
       Khans’ income from taxation. To this end, the Deutsche defendants arranged for a legal
       opinion from Jenkens & Gilchrist purporting to confirm to plaintiffs that the tax-reducing
       investment strategies were legitimate and would allow plaintiffs to claim losses on their tax
       returns. Plaintiffs alleged that in furtherance of the fraudulent scheme, they were advised not
       to participate in the IRS amnesty programs and were assured that the investment strategies
       were not the kinds of tax shelters described by the IRS as lacking in economic substance.
       Thus, it is clear from the factual allegations of plaintiffs’ complaint that the primary benefit

                                                -12-
       plaintiffs sought from the investment strategies was the purported tax benefits. That
       defendants were not professional accountants is not determinative of the analysis to be used
       here.
¶ 35        Deutsche Bank argues that the Federated decision conflicts with the appellate court’s
       decision in SK Partners I, LP v. Metro Consultants, Inc., 408 Ill. App. 3d 127 (2011), an
       accounting malpractice case. The plaintiffs there overpaid their taxes due to errors made by
       the defendant accountants. The IRS conducted an audit and issued refund checks. Nearly two
       years later, the plaintiffs filed their lawsuit alleging negligence in the preparation of their tax
       returns by failing to claim a proper depreciation deduction. The trial court granted the
       defendants’ motion to dismiss on statute of limitations grounds. The appellate court
       affirmed, holding that actual damages occurred at the moment taxes were overpaid and the
       plaintiffs were deprived of funds they were rightfully entitled to retain. The limitations
       period began to run when their injury was discovered by another accountant. The court
       distinguished Federated because there the plaintiffs suffered no damages until the IRS audit
       revealed an underpayment of taxes and a deficiency assessment was made. Id. at 131-32.
       According to the Deutsche defendants, SK Partners makes clear that tort claims generally
       accrue when the defendant’s alleged breach first causes the plaintiff harm and the statutory
       limitations period does not toll merely because the IRS is involved. We discern no conflict
       between SK Partners and Federated. SK Partners actually used Federated’s analysis in
       determining that actual damages accrued when the taxes were overpaid, although it
       acknowledged that the rule in Federated did not readily apply to overpayment of taxes. Id.
       at 131.
¶ 36        Deutsche Bank argues that the appellate court’s decision runs counter to the majority of
       courts that have considered the issue. It cites primarily federal district cases in which the trial
       courts there found the limitations period began to run much earlier in similar situations. At
       the outset, we note that cases from the federal trial courts lack significant precedential
       weight. See Price v. Philip Morris, Inc., 219 Ill. 2d 182, 263 (2005). Nonetheless, Deutsche
       Bank cites Hutton v. Deutsche Bank AG, 541 F. Supp. 2d 1166 (D. Kan. 2008), where the
       plaintiff brought a class action against investment advisors for allegedly misrepresenting the
       nature of investment strategies as legal tax shelters. The defendants filed motions to dismiss
       on statute of limitations grounds. The district court granted the motions. It rejected the
       plaintiff’s argument that the statute of limitations had not started to run because he was still
       litigating his tax-shelter claim in the court of federal claims. The district court noted that
       other courts had found allegations similar to the plaintiff’s sufficient to start the running of
       the limitations period, such as fees paid to the defendants, losses incurred in the investment
       transactions, and expenses paid to accountants and attorneys to assist in the defense of
       audits, as well as taxes and penalties paid. The Hutton court found that the plaintiff’s similar
       allegations alleged immediate and definite injury sufficient to commence the limitations
       period. Id. at 1172-73.
¶ 37        Deutsche Bank also cites Kottler v. Deutsche Bank AG, 607 F. Supp. 2d 447 (S.D.N.Y.
       2009), a case concerning allegedly fraudulent investment schemes similar to Hutton and to
       the instant case. The trial court in Kottler held that the statute of limitations began to run
       when the IRS audited a prior year’s return relative to an investigation of one of the

                                                  -13-
       investment strategies after the plaintiff was informed by his accountant that the IRS was
       investigating that particular strategy and the plaintiff then disclosed his participation in the
       investment strategy. The plaintiff received a notice of deficiency detailing the several million
       dollars the IRS claimed the plaintiff owed on his 1998 return. The trial court rejected the
       plaintiff’s argument that he did not know of the fraud until a Senate subcommittee held
       hearings and issued its final report on this and other investment schemes. Id. at 460-61.
¶ 38       In Moorehead v. Deutsche Bank AG, 2011 WL 4496221 (N.D. Ill. 2011), another case
       cited by the Deutsche defendants that is similar in many respects to the instant case, the
       plaintiffs were offered the opportunity to invest in tax-reducing strategies called OPIS and
       BLIPS. The sales pitch made by the defendants to the plaintiffs were similar to the ones
       made here. The IRS published a series of public notices stating that losses from the OPIS and
       BLIPS strategies were not allowable and that the transactions were fraudulent and illegal.
       The IRS also issued formal settlement offers for both the OPIS and BLIPS strategies,
       offering to forgo penalties and allow affected taxpayers to recognize some amount of their
       capital losses. The IRS audited the plaintiffs’ returns and issued a notice of deficiency.
       Nearly two years later, the plaintiffs filed suit. The defendants filed a motion to dismiss on
       statute of limitations grounds. The district court applied the law of Texas to the limitations
       issue. The court held that under Texas law, the plaintiffs suffered legal injury when the faulty
       professional advice was given. However, the discovery rule postponed accrual until the
       plaintiff knows or in the exercise of ordinary diligence should know of the wrongful act and
       resulting injury. The district court rejected the plaintiffs’ argument that they suffered no
       cognizable injury until the IRS assessed back taxes and penalties against them. The court
       noted that the plaintiffs alleged in their complaint that the IRS was auditing their tax returns
       and that despite this knowledge and the knowledge of the IRS settlement offers on the OPIS
       and BLIPS strategies, the defendants failed to advise the plaintiffs to enter into the
       settlement offers. The district court regarded these allegations as admissions by the plaintiffs
       that the notices of audit they received related specifically to the investment strategies. This
       fact, together with the IRS notices and settlement offers was sufficient to put the plaintiffs
       on notice of a claim for fraudulent tax advice and the statute of limitations began to run at
       that point. Id. at * 6-8.
¶ 39       In Seippel v. Jenkens & Gilchrist, P.C., 341 F. Supp. 2d 363 (S.D.N.Y. 2004), a case
       similar to the case at bar, the plaintiffs alleged they were defrauded into investing in illegal
       tax shelters. The defendants sought dismissal of the complaint on statute of limitations
       grounds. Deutsche Bank, one of the defendants, argued that the plaintiffs’ claims were not
       ripe because there had been no final resolution of their dispute with the IRS and state taxing
       authorities. The district court rejected that argument, citing losses incurred by the plaintiffs,
       including fees paid to the defendants, expenses incurred in defending tax audits, and tax
       penalties already assessed and paid. Id. at 371.
¶ 40       We do not find these cases to be persuasive. In Hutton, the taxpayer had already paid
       taxes and penalties related to the illegal tax shelter, as well as other expenses to defend
       against the audits. In Kottler, the IRS had audited a prior year’s tax return due to an
       investigation of one of the investment strategies the taxpayer had entered into and his
       accountant had informed him that the IRS was investigating that strategy. The taxpayer then

                                                 -14-
       elected to disclose his participation to the IRS. In addition, the taxpayer had received a
       notice of deficiency related to the illegal tax shelter, yet he did not file his complaint until
       much later. In Seippel, tax penalties had already been assessed against the plaintiffs and paid
       by them before they filed their complaint. Moorehead is more supportive of the Deutsche
       defendants’ position than the other cases they cite. We have held, however, that the
       limitations period began to run in this case when plaintiffs received a notice of deficiency.
       Thus, we disagree with Moorehead’s analysis.
¶ 41       Defendant David Parse separately argues that fraud is the gravamen of plaintiffs’
       complaint based upon representations made to them by Parse and others that the options
       transactions were legitimate investments with a real expectation of profit when, in fact, the
       opposite was true. He asserts that plaintiffs were on notice of the alleged fraud in 2003 and
       that is when the limitations period began to run. However, as plaintiffs argue in their brief,
       the discovery rule does not apply before an actionable injury has occurred.
                “The discovery rule can delay the commencement of the limitations period where an
                injury has already occurred but has not been discovered. [Citation.] However, the
                period of limitations does not commence in the first instance until an injury is
                incurred. [Citation.] Where no injury has yet occurred, the discovery rule is
                irrelevant because there is nothing to discover.” MC Baldwin Financial Co. v.
                DiMaggio, Rosario & Veraja, LLC, 364 Ill. App. 3d 6, 22 (2006).
¶ 42       As of May 2003, no injury had occurred. Plaintiffs had filed their tax returns and claimed
       tax losses based on the options transactions. At that point, they had received the promised
       tax benefits. Further, plaintiffs alleged in their complaint that they had been assured by some
       of the alleged coconspirators that the IRS notices did not apply to them. Parse is alleged to
       be one of the coconspirators.
¶ 43       Parse further argues that the limitations period begins to run when the plaintiff has a
       remedy. He notes that plaintiffs included in their complaint a count seeking rescission and
       a count seeking declaratory judgment that the contracts entered into in connection with the
       investment transactions are unenforceable due to a lack of consideration. Parse’s view is that
       these remedies were available to plaintiffs in May 2003 when, according to Parse, plaintiffs
       knew that the IRS had declared similar options transactions a sham. We reject this argument.
       The main purpose of entering into the options transactions was to provide plaintiffs with a
       tax benefit in the form of a legal tax shelter. While plaintiffs initially received the benefit of
       claiming tax losses on their tax returns, the IRS subsequently disallowed the losses and
       proposed to assess plaintiffs with back taxes, penalties, and interest. Once the tax returns
       were filed and the losses claimed, rescission and a declaratory judgment would not have
       provided plaintiffs with any real remedy.
¶ 44       It remains to determine whether the statute of limitations begins to run when the IRS
       issues a notice of deficiency or when the IRS makes an assessment. The appellate court here
       held that the statute of limitations begins to run at the earlier of (1) an assessment by the IRS
       or (2) the taxpayer’s settlement agreement with the IRS. The court found that it was at this
       point that the taxpayer suffers actual harm. The appellate court in Federated purported to
       follow the Feddersen decision from California; however, Feddersen held that the statute
       begins to run when an assessment is made by the IRS, while Federated chose the notice of

                                                 -15-
       deficiency as the earliest event that would trigger the running of the limitations period.
       Federated noted that a majority of jurisdictions in decisions preceding Feddersen had held
       that the limitations period commences when there is a formal assessment of a deficiency by
       the taxing authority. Federated, 402 Ill. App. 3d at 35.
¶ 45       We conclude that the limitations period begins to run when the IRS issues a notice of
       deficiency to the taxpayer. The notice of deficiency “describe[s] the basis for, and
       identif[ies] the amounts (if any) of, the tax due, interest, additional amounts, additions to the
       tax, and assessable penalties included in such notice.” 26 U.S.C. § 7522(a) (2006). Receipt
       of the notice of deficiency puts the taxpayer on notice that he has suffered an injury and that
       the injury was wrongfully caused. The notice of deficiency is not a final determination of the
       taxpayer’s damages; the formal assessment made by the IRS constitutes the final
       determination of the taxpayer’s liability. It is at this latter point that the taxpayer is fully
       informed as to the full extent of his injuries. As we have stated, however, the discovery rule
       applies in this case. Under that rule, a plaintiff may not sit on his rights, but must investigate
       further once alerted to an injury that may have been caused by wrongful conduct. As
       previously noted, this court has “never suggested that plaintiffs must know the full extent
       of their injuries before the statute of limitations is triggered. Rather, our cases adhere to the
       general rule that the limitations period commences when the plaintiff is injured, rather than
       when the plaintiff realizes the consequences of the injury or the full extent of her injuries.”
       Golla, 167 Ill. 2d at 364. To permit plaintiffs to wait until the full extent of their injuries are
       known would read the discovery rule out of this case. Starting the limitations period at the
       issuance of the notice of deficiency gives plaintiffs a five-year window within which to file
       suit. Thus, even if the IRS has not yet issued a formal deficiency assessment against
       plaintiffs in this case, their action is timely.

¶ 46                                II. Breach of Fiduciary Duty
¶ 47       The Deutsche defendants filed a section 2-615 motion seeking to dismiss count I of
       plaintiffs’ complaint, alleging breach of fiduciary duty. The trial court granted the motion.
       A section 2-615 motion to dismiss challenges the legal sufficiency of the complaint based
       upon defects apparent on its face. Accordingly, we review de novo the trial court’s order
       granting defendants’ motion. Marshall v. Burger King Corp., 222 Ill. 2d 422, 429 (2006).
       In reviewing the sufficiency of a complaint, we accept as true all well-pleaded facts in the
       complaint and all reasonable inferences that may be drawn therefrom. In addition, we
       construe the allegations of the complaint in the light most favorable to the plaintiff. Only
       those facts apparent from the face of the pleadings, matters of which the court can take
       judicial notice, and judicial admissions in the record may be considered. K. Miller
       Construction Co. v. McGinnis, 238 Ill. 2d 284, 291 (2010). A cause of action should not be
       dismissed unless it is clearly apparent that no set of facts can be proved that would entitle
       a plaintiff to recover. Marshall, 222 Ill. 2d at 429.
¶ 48       In count I of their complaint, plaintiffs alleged that they placed their trust and confidence
       in defendants and that defendants had influence and superiority over plaintiffs; thus
       defendants owed plaintiffs the duties of honesty, loyalty, and care. In addition, plaintiffs
       incorporated their numerous factual allegations into count I. They alleged that defendants

                                                  -16-
       breached their fiduciary duty to plaintiffs by (1) advising plaintiffs to engage in the
       investment strategies; (2) failing to advise plaintiffs that the legal opinions were not
       independent and, as a result, could not provide the required legal support or penalty
       protection; (3) advising plaintiffs that they could make a profit on the 1999 Digital Options
       Strategy contracts and the options; (4) orchestrating the implementation of the investment
       strategies; (5) providing the purported required legal opinion letters verifying that the
       investment strategies were completely legal; (6) failing to advise plaintiffs that certain
       defendants and/or other participants had undisclosed fee-splitting or sharing arrangements;
       and (7) advising plaintiffs to sign and file their tax returns in reliance on defendants’ advice,
       representations, recommendations, instructions, and opinions, which defendants knew or
       should have known the IRS would conclude were improper and illegal, for the purpose of
       generating huge fees for defendants.
¶ 49       Initially, we bear in mind that we are not determining whether a fiduciary relationship
       actually existed between the Deutsche defendants and plaintiffs. That matter must be left for
       further proceedings on remand. We determine only whether the well-pleaded factual
       allegations of the complaint adequately alleged that a fiduciary relationship existed and was
       breached by the Deutsche defendants. In making this determination, we are limited to the
       factual allegations of the complaint and reasonable inferences drawn therefrom. We may not
       consider extraneous matters. As this court stated in Illinois Graphics Co. v. Nickum, 159 Ill.
       2d 469 (1994):
                    “A motion to dismiss under section 2-615 attacks only the legal sufficiency of a
               complaint. Such a motion does not raise affirmative factual defenses, but alleges only
               defects appearing on the face of the complaint. [Citations.] A section 2-615 motion
               is required to point out the defects complained of and must specify the relief sought.
               [Citation.] The only matters to be considered in ruling on such a motion are the
               allegations of the pleadings themselves.” Id. at 484-85.
¶ 50       Here, the Deutsche defendants filed a combined motion to dismiss the fiduciary duty
       count of the complaint on the basis of section 2-615 and to dismiss the entire complaint on
       statute of limitations grounds pursuant to section 2-619. In the section 2-615 section of the
       motion to dismiss, the Deutsche defendants referred to an affidavit of Michael R. Wanser,
       one of the attorneys for Deutsche Bank, which verified the accuracy of exhibits attached to
       the motion. Those exhibits included confirmations for the 1999 Digital Options Strategy and
       the 2000 COINS Strategy transactions and the account agreements entered into by the
       parties. The confirmations contained the following language:
                    “3. Representations
                    Each party represents to the other party that it is entering into this Transaction
               as principal (and not as agent or in any other capacity, fiduciary or otherwise) and
               that
                    (i) It has sufficient knowledge and experience to be able to evaluate the
               appropriateness, merits and risks of entering into this Transaction and is acting in
               reliance upon its own judgment or upon professional advice it has obtained
               independently of the other party as to the appropriateness, merits and risks of so
               doing, including where relevant, upon its own judgment of the correct tax and

                                                 -17-
               accounting treatment of such Transaction;
                    (ii) It is not relying upon the views or advice of the other party (including,
               without limitation, any marketing materials or model data) with respect to this
               Transaction; and
                    (iii) It acknowledges that, with respect to this Transaction, the other party is
               acting solely in the capacity of an arm’s length contractual counterpart and not in the
               capacity of financial adviser or fiduciary.”
¶ 51        The Deutsche defendants argued in their motion that the allegations of the complaint
       were contradicted by the terms of the contractual documents and that plaintiffs had
       disclaimed any reliance on advice from the Deutsche defendants, thereby negating the
       existence of a fiduciary relationship. The appellate court noted the impropriety of
       considering the contractual documents in connection with the section 2-615 motion to
       dismiss. Nonetheless, the court found that plaintiffs had forfeited any argument that the trial
       court’s consideration of the affidavit and exhibits was improper by making substantive
       arguments, rather than by relying on a procedural objection to consideration of the
       documents. 408 Ill. App. 3d at 579-80. We disagree with the appellate court’s conclusion.
¶ 52        The appellate court recognized that the affidavit and exhibits attached to the Deutsche
       defendants’ motion to dismiss could not negate the well-pleaded facts of the complaint. The
       court further noted that the contractual documents were not attached to plaintiffs’ complaint
       and that, even if they were, the documents could only trump the allegations in the complaint
       if the complaint were founded on the documents. The court observed that plaintiffs’ claim
       for breach of fiduciary duty was not founded upon the contractual documents. Id. at 580. In
       support, the appellate court cited this court’s decision in Armstrong v. Guigler, 174 Ill. 2d
       281 (1996), where the question before the court was whether the 10-year statute of
       limitations for actions on a written contract or the five-year statute of limitations for all civil
       actions not otherwise provided for applied to a cause of action for breach of an implied
       fiduciary duty. The appellate court in that case had held that the implied duty was created
       in a written document and, therefore, the 10-year limitations period applied. This court
       reversed, holding that the five-year statute applied. Pertinent to the issue in the instant case,
       the court noted that a fiduciary duty is not expressed in a written contract, but is implied in
       law. Id. at 287. A breach of an implied fiduciary duty is not an action on a contract simply
       because the duty arises by legal implication from the parties’ relationship under a written
       agreement. A fiduciary duty is founded upon the substantive principles of agency, contract,
       and equity. Id. at 293-94.
¶ 53        Based upon this reasoning, the appellate court concluded that since plaintiffs’ action for
       breach of fiduciary duty is not founded on the contractual documents, those documents do
       not override the factual allegations of the complaint. Accordingly, the appellate court
       declared that it would take all of the well-pleaded facts of the complaint as true even if the
       disclaimer in the contractual documents appeared to contradict those factual allegations. 408
       Ill. App. 3d at 580-81.
¶ 54        We agree with the appellate court that the contractual documents appended as exhibits
       to the motion to dismiss are not properly considered under the standard of review for a
       section 2-615 motion to dismiss. We disagree, however, with the appellate court’s

                                                  -18-
       conclusion that plaintiffs forfeited any argument that the documents were improperly
       considered by the trial court. The appellate court acknowledged that plaintiffs argued on
       appeal that “notwithstanding Wanser’s affidavit, [the court] should ‘accept as true all well-
       pleaded facts in the complaint and all reasonable inferences which can be drawn therefrom’
       and that [the court] should ‘interpret the allegations of the complaint in the light most
       favorable to the plaintiffs.’ ” Id. at 580. This argument urged the appellate court to apply the
       accepted standard of review in evaluating the merits of the Deutsche defendants’ section 2-
       615 motion to dismiss. Thus, plaintiffs did in fact argue that consideration of the Wanser
       affidavit and the contractual documents was improper under the applicable standard of
       review. Any substantive arguments plaintiffs made concerning the content and effect of the
       contractual documents can properly be seen not as a concession to the applicability of the
       documents but as an argument that was necessary due to the trial court’s consideration of the
       contractual documents. Thus, contrary to the appellate court, we find that plaintiffs did not
       forfeit their argument that the contractual documents should not be considered.
¶ 55        A further reason not to go beyond the face of the complaint here is that plaintiffs point
       out what they perceive to be conflicts between the transaction confirmations and the account
       agreements regarding the alleged disclaimer of any fiduciary relationship between the parties
       with respect to the options transactions. The account agreements were entered into at the
       inception of the parties’ relationship and plaintiffs assert that these agreements contain no
       disclaimer of a fiduciary relationship. In contrast, the confirmations were signed following
       the completion of the options transactions. Plaintiffs assert that these conflicts illustrate the
       difficulties inherent in attempting to definitively resolve the existence of a fiduciary
       relationship at the pleading stage, especially where the defendant relies on factual material
       outside the pleadings to defeat the complaint’s allegations. Plaintiffs argue that the import
       and weight, if any, to be given to the contractual documents should be determined only after
       discovery and the development of a proper evidentiary record. In addition to this
       consideration, we note that plaintiffs have alleged that the Deutsche defendants fraudulently
       misrepresented the nature of the tax-reducing investment strategies in an attempt to induce
       plaintiffs to enter into the transactions at issue. To the extent that these allegations, if proven,
       would have any effect on the nature of the parties’ relationship, it would be premature to
       determine the effect of the disclaimers on plaintiffs’ allegations of the existence of a
       fiduciary relationship.
¶ 56        The standard of review on a section 2-615 motion to dismiss clearly limits our review
       to the face of the complaint. In contrast, on a motion for summary judgment, courts consider
       the pleadings, depositions and admissions on file, together with affidavits, if any. Millennium
       Park Joint Venture, LLC v. Houlihan, 241 Ill. 2d 281, 308 (2010). Consideration of the
       contractual documents attached to the Deutsche defendants’ motion would essentially
       convert their section 2-615 motion to dismiss into a motion for summary judgment. We
       decline to take this step. In addition, we agree with plaintiffs’ argument that to consider
       matters outside the pleadings would inappropriately resolve issues that are best resolved on
       remand with the benefit of a full evidentiary record. For all of these reasons, we decline to
       address the effect of the alleged disclaimers in the contractual documents at this stage of the
       proceedings. Therefore, we will confine our review to the well-pleaded factual allegations
       in plaintiffs’ complaint, together with reasonable inferences to be taken therefrom.

                                                  -19-
¶ 57       The Deutsche defendants alleged in the appellate court that New York law applied to the
       fiduciary duty issue because the contractual documents attached to Wanser’s affidavit
       provided that New York law would apply to the construction of the account agreements and
       the transaction confirmations. The appellate court determined that it would apply New York
       law “insomuch as this case requires us to interpret and apply exhibits A through C [the
       contractual documents] of Wanser’s affidavit.” 408 Ill. App. 3d at 581. We need not address
       this question. As we have indicated, the contractual documents are not properly part of our
       analysis on the section 2-615 issue. Resolution of the effect of the documents on plaintiffs’
       claim for breach of fiduciary duty must await further proceedings in the circuit court.
¶ 58       A fiduciary relationship exists where one party reposes trust and confidence in another,
       who thereby gains a resulting influence and a superiority over the subservient party. This is
       generally accomplished by establishing facts showing an antecedent relationship that gives
       rise to trust and confidence reposed in another. Ray v. Winter, 67 Ill. 2d 296, 304 (1977). The
       question is whether plaintiffs have sufficiently alleged facts establishing such a relationship.
¶ 59       Deutsche Bank argues that no fiduciary duty existed in this case. It describes Khan as a
       sophisticated businessman and characterizes its relationship with him as an isolated and
       adversarial financial transaction made at arm’s length based upon a single telephone call
       between Khan and Parse prior to either party agreeing to enter into any relationship or
       transaction. The complaint, however, alleges that Khan was unknowledgeable and
       unsophisticated concerning tax laws and tax-advantaged investment strategies and that he
       relied on the Deutsche defendants for comprehensive legal, accounting, tax, and investment
       advice. Plaintiffs further alleged that Khan was persuaded to invest in the tax-reducing
       investment strategies after a series of telephone conferences with defendant Parse, not just
       a single telephone call, as Deutsche Bank claims. According to plaintiffs, Parse, who was
       Deutsche Bank’s employee, assured Khan that (1) the options transactions were actual,
       legitimate investments; (2) Deutsche Bank would handle all aspects of the transaction, (3)
       Parse was the expert and would make all decisions concerning the digital options
       transactions, (4) Deutsche Bank had internal procedures that would determine the right types
       of investments to make, (5) the tax-reducing investment strategies would produce legal tax
       losses for plaintiffs, and (6) plaintiffs would have a good chance of making a profit on the
       investments. The complaint alleged that plaintiffs decided to participate in the tax-reducing
       investment strategies based upon the Deutsche defendants’ assurances, and that the Deutsche
       defendants knew that plaintiffs reposed “tremendous trust and faith” in them as their tax,
       financial, and investment advisors with respect to all aspects of the tax-reducing investment
       strategies.
¶ 60       We find that these allegations adequately pleaded that the Deutsche defendants had
       superior knowledge and influence over Khan and that he relied on them to give him sound
       investment and tax advice. It is undisputed that the Deutsche defendants had complete
       control over the handling and the outcome of the transactions. In addition, we note that the
       Deutsche defendants do not argue that the factual allegations of the complaint are inadequate
       to plead the existence of a fiduciary relationship between them and plaintiffs. Instead, they
       take issue with the accuracy of the complaint’s factual allegations and focus their argument
       on their view that the transactions at issue here were arm’s-length transactions entered into

                                                -20-
       by parties who were on equal footing and that, in any event, any fiduciary relationship was
       disclaimed by plaintiffs in the contractual documents. Deutsche Bank places great emphasis
       on its claim that there was but a single telephone call between Khan and Parse and that this
       is insufficient to establish a fiduciary relationship. However, as we have stated, the
       complaint alleges a series of telephone conferences among the parties. We note again that
       in reviewing an order granting a section 2-615 motion to dismiss, we must take the well-
       pleaded factual allegations of the complaint as true. Napleton v. Village of Hinsdale, 229 Ill.
       2d 296, 305 (2008).
¶ 61        The appellate court found that the Deutsche defendants had a preagency fiduciary duty
       to Khan that predated the existence of the disclaimers in the transaction confirmations,
       pursuant to this court’s decision in Martin v. Heinold Commodities, Inc., 163 Ill. 2d 33
       (1994). The Deutsche defendants argue that the appellate court misapplied Martin in finding
       that a fiduciary duty arose between the parties as a matter of law. The appellate court found
       it necessary to address this issue because of the possible effect of the contractual disclaimers.
       However, we have concluded that the contractual documents may not be considered on a
       section 2-615 motion to dismiss. Therefore, it is unnecessary for us to discuss Martin or the
       question of whether a preagency fiduciary duty existed in this case.
¶ 62        Thus, we conclude that the trial court improperly granted the Deutsche defendants’
       section 2-615 motion to dismiss plaintiffs’ claim of breach of fiduciary duty.

¶ 63                                III. Negligent Misrepresentation
¶ 64        The trial court determined that no fiduciary relationship existed between the parties and
       that this conclusion was sufficient to dismiss plaintiffs’ claim for negligent misrepresentation
       against the Deutsche defendants. We have determined that plaintiffs adequately pleaded a
       cause of action for breach of fiduciary duty based upon the well-pleaded factual allegations
       of the complaint and that the contractual documents that were the basis for the trial court’s
       dismissal of the fiduciary duty claims were improperly considered by that court. Thus, the
       trial court’s order dismissing the count for negligent misrepresentation on this basis was
       erroneous. The appellate court concluded that plaintiffs had adequately pleaded a cause of
       action for negligent misrepresentation. Plaintiffs alleged that they suffered pecuniary injury
       by relying on false information that the Deutsche defendants negligently or fraudulently gave
       them in the course of their business. We note that defendants do not argue that the factual
       allegations of negligent misrepresentation are insufficient to state a claim. Thus, they have
       forfeited any argument to that effect. Ill. S. Ct. R. 341(h)(7) (eff. July 1, 2008) (“Points not
       argued are waived and shall not be raised in the reply brief, in oral argument, or on petition
       for rehearing.”). In fact, the Deutsche defendants did not raise any issue regarding plaintiffs’
       claim for negligent misrepresentation in their petitions for leave to appeal. For this additional
       reason, we find that the Deutsche defendants have forfeited any review of the appellate
       court’s findings concerning plaintiffs’ claim for negligent misrepresentation. See Buenz v.
       Frontline Transportation Co., 227 Ill. 2d 302, 320-21 (2008).

¶ 65                                 IV. Grant Thornton, LLP

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¶ 66       Plaintiffs allege in their complaint that Grant Thornton participated in the alleged
       conspiracy with BDO Seidman and the Deutsche defendants. Grant Thornton, a public
       accounting firm, rendered services to Thermosphere FX by preparing its 2000 federal and
       state income tax returns. These tax returns claimed the artificial losses created by the 2000
       COINS Strategy investment. These losses then flowed through to the Khans as partners.
       Thus, the Khans’ individual returns contained the losses from the 2000 COINS Strategy.
¶ 67       The trial court dismissed plaintiffs’ claims against Grant Thornton on statute of
       limitations grounds. The court held that the five-year statute of repose applicable to actions
       against public accountants barred those claims.
¶ 68       The statute of limitations that applies to plaintiffs’ claims against Grant Thornton is
       contained in section 13-214.2 of the Code (735 ILCS 5/13-214.2 (West 2008)). That statute
       provides in relevant part as follows:
                   “(a) Actions based upon tort, contract or otherwise against any person,
               partnership or corporation registered pursuant to the Illinois Public Accounting Act,
               as amended, or any of its employees, partners, members, officers or shareholders, for
               an act or omission in the performance of professional services shall be commenced
               within 2 years from the time the person bringing an action knew or should
               reasonably have known of such act or omission.
                   (b) In no event shall such action be brought more than 5 years after the date on
               which occurred the act or omission alleged in such action to have been the cause of
               the injury to the person bringing such action against a public accountant. Provided,
               however, that in the event that an income tax assessment is made or criminal
               prosecution is brought against a person, that person may bring an action against the
               public accountant who prepared the tax return within two years from the date of the
               assessment or conclusion of the prosecution.” 735 ILCS 5/13-214.2 (West 2008).
¶ 69       The interpretation of a statute is a question of law that this court reviews de novo. People
       v. Smith, 236 Ill. 2d 162, 167 (2010). The primary goal in construing a statute is to give
       effect to the intention of the legislature. The statute’s language must be given its plain and
       ordinary meaning. When statutory terms are left undefined, we presume the legislature
       intended the terms to have their popularly understood meaning. Id. at 166-67.
¶ 70       Grant Thornton first argues that plaintiffs’ complaint alleges they suffered an injury
       when their investments were made and they paid substantial fees to Deutsche Bank. Grant
       Thornton also notes that plaintiffs hired tax counsel in 2003 to represent them in litigation
       with the IRS and it argues that the statute of limitations began to run at one of these points.
       These are the same arguments made by Deutsche Bank and Parse, which we have previously
       rejected. We reject Grant Thornton’s arguments for the same reasons.
¶ 71       Grant Thornton attempts to avoid the application of Federated and Feddersen by citing
       two cases that refused to apply Feddersen to an action against an accountant, Apple Valley
       Unified School District v. Vavrinek, Trine, Day & Co., 120 Cal. Rptr. 2d 629 (Cal. Ct. App.
       2002), and Van Dyke v. Dunker & Aced, 53 Cal. Rptr. 2d 862 (Cal. Ct. App. 1996). Neither
       of these cases involved preparation of tax returns and subsequent IRS proceedings. In Apple
       Valley, the accountants prepared an audit report that induced the plaintiff school district to
       provide state funds to a charter school district that was not eligible for the funds. The school

                                                -22-
       district learned of the wrongdoing and hired counsel and a different accountant. More than
       two years later, the school district filed suit against the defendant accountant during the
       pendency of the state comptroller’s audit, which ultimately determined that the charter
       school had received several million dollars in funds to which it was not entitled. The school
       district argued that the statute of limitations did not begin to run until the comptroller’s final
       report determined the amount of the school district’s liability. The California appellate court
       disagreed, holding that the school district first sustained an injury when it learned of the
       improper conduct and incurred expenses to investigate the extent of the alleged wrongdoing.
       The court found that Feddersen did not apply, noting that subsequent decisions had given
       the holding of Feddersen a narrow application limited to the context of negligent preparation
       of tax returns. Apple Valley, 120 Cal. Rptr. 2d at 636-38.
¶ 72       Similarly, the Van Dyke court found Feddersen inapplicable. The plaintiffs there made
       a charitable contribution of land based on their accountant’s advice that they would receive
       a tax deduction for the full value. In reality, they were entitled to a partial deduction, which
       they then claimed on their tax return. They filed suit against the accountant after the IRS
       determined their final tax liability. The Van Dyke court found Feddersen to be limited to the
       negligent preparation of tax returns. The court noted that the plaintiffs suffered an actual
       injury before the IRS determined their tax liability when they conveyed the land or when
       they paid more taxes than they had expected to pay by receiving only a partial deduction.
       Van Dyke, 53 Cal. Rptr. 2d at 868-69. Apple Valley and Van Dyke involve factual situations
       that are quite different from the one before us. Grant Thornton’s reliance on these two cases
       is misplaced.
¶ 73       Grant Thornton argues in the alternative that even if plaintiffs’ action against it is not
       barred by the two-year limitations period contained in section 13-214.2, their action is barred
       by the five-year repose period contained in the statute. The preparation of the Thermosphere
       returns by Grant Thornton took place in 2001. Thus, the period of repose expired in 2006.
       Plaintiffs filed suit in 2009, more than five years after the returns were prepared. Plaintiffs
       note the exception to the repose period contained in the statute which provides that in the
       event an income tax assessment is made or criminal prosecution is brought against a person,
       that person may bring an action against the public accountant who prepared the tax return
       within two years from the date of the assessment or conclusion of the prosecution. Grant
       Thornton argues that, rather than extending the period of repose, the exception contained in
       the statute condenses the repose period. This was the construction put on the exception by
       the circuit court and rejected by the appellate court. The latter court found it significant that
       the exception provides that the plaintiff “may” bring the action, rather than “shall” bring the
       action. According to the appellate court, the word “may” indicates that the plaintiff has
       permission to bring the action and such permission would be necessary only if the five-year
       repose period had expired. Grant Thornton takes issue with this reasoning, arguing that, here,
       the term “may” is synonymous with “shall.” It argues that plaintiffs had knowledge of the
       relevant facts giving rise to their action at least six years before they filed their lawsuit. Thus,
       according to Grant Thornton, this case does not present the circumstance envisioned by the
       statute of a taxpayer being blind sided by an assessment. We note that Grant Thornton cites
       no authority for its claim that the legislature intended the exception to the repose period to
       apply only in those circumstances.

                                                  -23-
¶ 74        We reject Grant Thornton’s reading of the exception in the statute. If “may” is construed
       to mean “shall,” there would be no need for the proviso in the first instance. An assessment
       fixes the taxpayer’s liability and the amount of the assessment becomes a lien on the
       taxpayer’s property. 26 U.S.C. § 6321. Certainly, once an assessment is made, the taxpayer
       knows full well that he has been injured and that the injury was wrongfully caused and the
       limitations period would begin to run at that point in any event. The only reading that gives
       the proviso meaning is that it is a true exception to the repose period and that in the
       circumstances envisioned by that exception, the taxpayer has an additional two years beyond
       the five-year repose period to bring an action against the accountant from the date of the
       assessment or the conclusion of the criminal prosecution.
¶ 75        Grant Thornton further argues that the two-year exception does not apply here in any
       event because there has been neither an income tax assessment nor a criminal prosecution.
       Grant Thornton asserts that the term “income tax assessment” in the statute refers to a formal
       assessment made by the IRS and notes that the record does not indicate that a tax assessment
       has been made against any plaintiff. Rather, they have received only a notice of deficiency.
       Grant Thornton cites no authority in support of its argument that the phrase “income tax
       assessment” refers only to a formal IRS assessment of tax. The phrase is not defined in the
       statute. Where a term is undefined, we presume that the legislature intended the term to have
       its popularly understood meaning. People v. Maggette, 195 Ill. 2d 336, 349 (2001). We note
       that Black’s Law Dictionary provides a definition for “deficiency assessment,” defining that
       term as “[a]n assessment by the IRS—after administrative review and tax-court
       adjudication—of additional tax owed by a taxpayer who underpaid.” Black’s Law Dictionary
       133 (9th ed. 2009). This definition would comport with Grant Thornton’s view; however,
       the legislature did not use “deficiency assessment” in the statute.
¶ 76        It is appropriate to employ a dictionary to ascertain the meaning of an otherwise
       undefined word or phrase. Landis v. Marc Realty, L.L.C., 235 Ill. 2d 1, 8 (2009). The
       dictionary definition of “assessment” relevant to this case is “a specific charge or tax
       determined upon by assessing : amount assessed.” The word “assess” is defined as “to
       determine the rate or amount of (as a tax, charge, or fine).” Webster’s Third New
       International Dictionary 131 (2002). Plaintiffs argue that the statutory phrase encompasses
       the determination of tax liability made by the IRS here in its notice of deficiency. However,
       the notice of deficiency is not a final determination of tax liability. That determination comes
       only with the tax assessment made by the IRS. The notice of deficiency is a preliminary
       determination by the IRS of tax liability that may change once the assessment proceeding
       has run its course. In light of these factors and the dictionary definition of “assessment,” we
       agree with Grant Thornton that the two-year extension of the statute of repose contained in
       section 13-214.2 begins to run when the IRS makes a final assessment of taxes owed by the
       taxpayer. We also agree, however, with the appellate court that in the event an assessment
       is not made due to a settlement entered into between the taxpayer and the IRS, the two-year
       extension would begin to run from the date of the settlement. It would be incongruous to
       allow a taxpayer who received an assessment to take advantage of the two-year extension,
       but deny that privilege to a taxpayer who settled with the IRS prior to an assessment.
       Interpreting the statute otherwise would lead to an unjust and unreasonable outcome,
       something courts should avoid doing whenever possible. See Roselle Police Pension Board

                                                -24-
       v. Village of Roselle, 232 Ill. 2d 546, 558-59 (2009).
¶ 77       Grant Thornton asserts that the record does not show that the IRS has yet made an
       assessment in plaintiffs’ case. Plaintiffs do not dispute this contention but instead they argue
       that to the extent there is a factual issue concerning whether an assessment has been made,
       that issue should be considered on remand. We agree with plaintiffs that this is a question
       of fact that may not be decided under the current posture of this case. The trial court did not
       make that determination because it held that the proviso in the statute did not extend the
       period of repose beyond five years. Therefore, on remand, the trial court may determine
       whether an assessment has in fact been made. If an assessment has not been made, the trial
       court may entertain whatever motions it deems appropriate.
¶ 78       Grant Thornton also argues that the proviso in the statute is inapplicable because Grant
       Thornton prepared tax returns for Thermosphere, which did not receive any notice of tax
       deficiency from the IRS. Plaintiffs respond, however, that Thermosphere did in fact receive
       a formal notice from the IRS of intent to disallow the tax losses claimed on its return. Grant
       Thornton also notes that any assessment made by the IRS will be against the Khans on their
       tax returns and it argues that it did not prepare the Khans’ returns. Thus, the proviso in the
       repose period should not be applied to Grant Thornton’s preparation of the Thermosphere
       returns. The appellate court rejected this argument, noting that the legislature must have been
       aware that negligent preparation of a partnership tax return can cause the individual partners’
       returns to be incorrect and result in assessment proceedings against the partners. The court
       concluded that because the statute says “the tax return,” rather than “the person’s tax return,”
       it does not matter that the tax return prepared was not that of the Khans. Here, the tax losses
       claimed on Thermosphere’s return flowed through to the Khans as partners. To agree with
       Grant Thornton’s position would deprive the Khans and others like them of the two-year
       extension to the repose period where the accountant who prepared the partnership’s returns
       did not also prepare the individual partners’ returns. In construing a statute, we presume that
       the legislature did not intend absurd, inconvenient, or unjust results. People ex rel. Sherman
       v. Cryns, 203 Ill. 2d 264, 280 (2003). We agree with the appellate court that the legislature
       could not have intended a result that would allow an accountant in this situation to escape
       liability for the consequences of its negligence because it did not also prepare the partners’
       tax returns. We therefore reject this argument.
¶ 79       Accordingly, we conclude that the trial court erred in granting Grant Thornton’s section
       2-619 motion to dismiss.

¶ 80                                    CONCLUSION
¶ 81      For the reasons stated, we affirm the appellate court’s judgment.

¶ 82      Appellate court judgment affirmed.

¶ 83       JUSTICE THEIS, concurring in part and dissenting in part:
¶ 84       The majority holds, in pertinent part, that the five-year limitations period, applicable to
       plaintiffs’ various causes of action against the Deutsche defendants (Deutsche Bank AG,

                                                -25-
       Deutsche Bank Securities, Inc., and David Parse), did not begin to run until 2008 when
       plaintiffs received a deficiency notice from the Internal Revenue Service (IRS), and that
       plaintiffs’ complaint, filed in 2009, was therefore timely. Supra ¶¶ 17-45. Because this
       holding cannot be reconciled with our discovery rule, I dissent from this portion of the
       majority opinion.
¶ 85       The instant litigation arose out of plaintiffs’ participation, beginning in 1999, in a series
       of so-called “investment strategies.” Although plaintiffs alleged numerous causes of action,
       the gravamen of plaintiffs’ complaint is that defendants defrauded plaintiffs by marketing
       and selling investment strategies to them, knowing that, contrary to defendants’
       representations, plaintiffs’ investment would yield no profit (because the investment was
       rigged) and would not minimize plaintiffs’ tax liability (because defendants knew that the
       IRS had found the same or similar investment strategies illegal). The Deutsche defendants’
       alleged role in this fraud was confined to the first two investment strategies: the 1999 Digital
       Options Strategy and the 2000 COINS Strategy. Plaintiffs alleged that, as a consequence of
       defendants’ fraudulent conduct, they suffered the following injuries:
                “(1) they paid significant fees to the Defendants and Other Participants, (2) they
                unnecessarily purchased the options and digital options and made other investments
                to effectuate the Investment Strategies, (3) the IRS has determined that Plaintiffs owe
                substantial back-taxes, penalties, and interest, (4) they lost the opportunity to avail
                themselves [of] other legitimate tax-savings opportunities, (5) they failed to file
                qualified amended returns, (6) they failed to take part in the Amnesty Program, (7)
                they failed to take part in the Announcement 2004-46 global settlement initiative,
                and (8) they have and will continue to incur substantial additional costs to rectify the
                situation.”
¶ 86       The first alleged injury—the payment of significant fees to defendants—figures
       prominently in plaintiffs’ complaint. Plaintiffs alleged that defendants “conspired with one
       another to design, promote, sell, and implement the Investment Strategies for the purpose
       of receiving and splitting substantial fees,” and that “[t]he receipt of those fees was the
       primary, if not sole, motive in the development and execution of the Investment Strategies.”
       Plaintiffs sought disgorgement of all payments received by defendants from plaintiffs, and
       a declaration that defendants have been unjustly enriched and that all fees paid to defendants
       should be returned to plaintiffs.
¶ 87       In line with these allegations, the Deutsche defendants contend that plaintiffs were first
       injured in 1999 and 2000 when they paid Deutsche Bank over $1 million in fees in
       connection with the 1999 Digital Options Strategy and 2000 COINS Strategy. The majority
       agrees with the Deutsche defendants that “a portion of plaintiffs’ injury occurred in 1999 and
       2000.” Supra ¶ 26. Of course, the five-year limitations period applicable to plaintiffs’ causes
       of action did not necessarily commence in 1999. Rather, pursuant to our discovery rule, the
       limitations period commenced when plaintiffs knew, or reasonably should have known, that
       this injury occurred and that it was wrongfully caused. See Nolan v. Johns-Manville
       Asbestos, 85 Ill. 2d 161, 171 (1981). Although plaintiffs alleged that they suffered further
       injuries beyond the payment of fees, as the majority opinion recognizes, “ ‘the limitations
       period commences when the plaintiff is injured, rather than when the plaintiff realizes the

                                                 -26-
       consequences of the injury or the full extent of [his] injuries.’ ” Supra ¶ 22 (quoting Golla
       v. General Motors Corp., 167 Ill. 2d 353, 364 (1995)).
¶ 88       Echoing the trial court’s ruling, the Deutsche defendants argue that plaintiffs should have
       known of their injury, and that it was wrongfully caused, no later than May 2003. At that
       point, plaintiffs were aware that their investment in the 1999 Digital Options Strategy and
       the 2000 COINS Strategy had yielded no profit; plaintiffs had received audit notices from
       the IRS in connection with their 1999, 2000, and 2001 tax returns; and plaintiffs had hired
       independent tax counsel in connection with those audits. According to the Deutsche
       defendants, plaintiffs’ tax counsel should have discovered, through the exercise of due
       diligence, two IRS notices issued in 1999 and 2000 that clearly disallowed sham investment
       schemes like the 1999 Digital Options Strategy and the 2000 COINS Strategy.
¶ 89       The import of the two IRS notices is amply set forth in plaintiffs’ complaint. Plaintiffs
       alleged that the “clear message” set forth in IRS Notice 1999-59, issued December 27, 1999,
       “was that purported losses arising from transactions wholly lacking in ‘economic substance’
       (e.g., the 1999 Digital Options Strategy) are not properly allowable for Federal income tax
       purposes,” and “[a]s a result of Notice 1999-59, the 1999 Strategy Defendants knew or
       certainly should have known that the IRS would conclude that the purported losses arising
       from the 1999 Digital Options Strategy were improper and not allowable for tax purposes.”
       Plaintiffs also alleged that IRS Notice 2000-44, issued August 11, 2000, “once again clearly
       and unequivocally informed accountants, tax attorneys, and financial advisors across the
       country—and specifically the 1999 Strategy Defendants *** that it believed the 1999 Digital
       Options Strategy was an illegal and abusive tax shelter.” “Most importantly,” according to
       plaintiffs, “Notice 2000-44 specified the precise transaction the 1999 Strategy Defendants
       marketed and sold to Plaintiffs,” and that the “clear message *** was that the IRS would
       conclude that the purported losses arising from the 1999 Digital Options Strategy are not
       properly allowable for federal income tax purposes.”
¶ 90       Plaintiffs further alleged that IRS Notice 2000-44 “put the 1999 Strategy Defendants ***
       on notice that the IRS would disallow the 1999 Digital Options Strategy as an illegal and
       abusive tax shelter and that any taxpayer who filed tax returns using the losses generated
       from the 1999 Digital Options Strategy would be exposed to penalties.” Reiterating its
       position, plaintiffs alleged that “there is no doubt that the 1999 Strategy Defendants knew
       or should have known as a result of IRS Notice 1999-59 and 2000-44 *** that the IRS would
       conclude that the purported losses arising from the Plaintiffs’ participation in 1999 Digital
       Options Strategy were not properly allowable for federal or state income tax purposes and
       that Plaintiffs would be exposed to substantial penalties if they used the losses generated
       from the 1999 Digital Options Strategy on their tax returns.” Plaintiffs made comparable
       allegations concerning the import of IRS Notices 1999-59 and 2000-44 with respect to the
       2000 COINS Strategy.
¶ 91       In light of these allegations, I agree with the trial court that, pursuant to our discovery
       rule, the five-year limitations period commenced no later than May 2003. At that point,
       plaintiffs knew or should have known that the investment strategies the Deutsche defendants
       helped market and sell were not what defendants allegedly represented them to be, namely,
       an opportunity to reap “a substantial profit and, at the same time, legally minimize Plaintiffs’

                                                -27-
       state and federal tax liability.” Although plaintiffs may not have realized in May 2003 the
       full extent of their injuries, they were, at that point, under a burden “to inquire further as to
       the possible existence of a cause of action.” Supra ¶ 20 (citing Witherell v. Weimer, 85 Ill.
       2d 146, 156 (1981)). Accordingly, plaintiffs’ complaint against the Deutsche defendants,
       filed in 2009, was outside the five-year limitations period and was properly dismissed by the
       trial court.
¶ 92        The majority faithfully sets forth our discovery rule, but fails to apply it in any
       meaningful fashion in this case. Instead, the majority applies a variation of the rule adopted
       by the California Supreme Court to determine “when actual injury, caused by an
       accountant’s negligent filing of tax returns, occurs,” so as to commence the running of the
       statute of limitations period under California’s Code of Civil Procedure. (Emphasis in
       original.) International Engine Parts, Inc. v. Feddersen & Co., 888 P.2d 1279, 1280 (Cal.
       1995). Under the California rule, “actual injury” (which is a legal term of art under
       California law (id. at 1287)), occurs, and the limitations period begins to run, on the date of
       the IRS deficiency tax assessment or finality of the IRS audit process, even if the
       accountant’s negligence may have been discovered earlier during the audit (id. at 1287,
       1288). The California high court observed that the rule “both conserves judicial resources
       and avoids forcing the client to sue the allegedly negligent accountant for malpractice while
       the audit is pending. It also avoids requiring the client to allege facts in the negligence action
       that could be used against him or her in the audit, without first allowing the accountant to
       correct the error (or mitigate the consequences thereof) during the audit process.” Id. at
       1287.
¶ 93        Based on Feddersen, the majority holds that the limitations period in this case
       commenced when the IRS issued a notice of deficiency to plaintiffs in 2008. Supra ¶ 45. The
       policy concerns underlying the holding in Feddersen, however, are not implicated in this
       case. Simply stated, the Deutsche defendants were not plaintiffs’ accountants, they did not
       prepare plaintiffs’ tax returns, and they could not have mitigated the tax consequences of
       their earlier alleged fraud. The majority discounts these differences and justifies its holding
       by focusing on the “nature of the harm” defendants’ conduct allegedly caused. Supra ¶ 34.
       Although acknowledging that plaintiffs’ alleged injuries included the payment of significant
       fees to Deutsche Bank in 1999 and 2000 (supra ¶¶ 26, 34), the majority disregards that
       injury when considering the “nature of the harm.” Instead, the majority turns to what it
       concludes is the “major benefit” plaintiffs sought in their transactions with the Deutsche
       defendants: the ability to deduct their losses on their income tax returns. Supra ¶ 34.
       Presumably, the alleged inability to enjoy this “major benefit” constitutes the major harm
       or the major injury to plaintiffs. The majority thus pegs this case as a tax-liability case,
       bringing it a step closer to a Feddersen-type scenario. But the majority’s approach is
       contrary to our discovery rule and contrary to plaintiffs’ complaint.
¶ 94        Our discovery rule only delays commencement of the limitations period until the plaintiff
       knows, or reasonably should know, of some injury and that it was wrongfully caused. Our
       discovery rule does not delay commencement of the limitations period until the plaintiff
       knows of some unfulfilled “major benefit” resulting in a major injury. See Golla, 167 Ill. 2d
       at 363-64. As set forth above, plaintiffs alleged in their complaint numerous injuries, in

                                                 -28-
       addition to an increase in their tax liability. Plaintiffs alleged injury in the payment of
       significant fees to defendants; the costs associated with implementing the investment
       strategies; the lost opportunity to invest in legitimate tax-savings strategies; and the lost
       opportunity to mitigate their losses by participating in the IRS amnesty program. This court
       should not rewrite plaintiffs’ complaint, and our discovery rule, by tying the limitations
       period to the injury it regards as the “major” one.
¶ 95       For these reasons, I dissent from part I of the majority opinion which affirms the
       appellate court judgment as to the timeliness of plaintiffs’ complaint against the Deutsche
       defendants, and would affirm the trial court’s dismissal of plaintiffs’ claims against these
       defendants. Accordingly, I do not join in parts II and III of the majority opinion because
       dismissal would moot any other issues as to plaintiffs’ claims for breach of fiduciary duty
       (part II) and negligent misrepresentation (part III). In all other respects, I concur in the
       majority opinion.

¶ 96      CHIEF JUSTICE KILBRIDE joins in this partial concurrence and partial dissent.

                                               -29-