Court Opinion

ID: 9544240
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:53:31.375208+00
Date Added: 2024-06-11T15:12:29.164936
License: Public Domain

JUSTICE FREEMAN, dissenting: I respectfully dissent. The majority concludes that no duty exists between plaintiffs and defendants Edmund P. Burke and Burke & Burke, Ltd. (Burke), and that plaintiffs fail to state a cause of action for professional negligence or breach of contract. I disagree with the majority’s holding and would find that plaintiffs’ complaint sufficiently alleges a duty between plaintiffs and Burke. For that reason, I would reverse the trial court and remand this matter with directions to allow plaintiffs leave to amend their complaint. Plaintiffs’ action against Burke arises out of Burke’s undertaking to establish or open up an escrow account on behalf of plaintiffs, Burke, and other codefendants in accord with the escrow agreement entered into by the parties in the underlying litigation. A detailed review of the pertinent allegations of plaintiffs’ complaint is necessary for a determination of the correctness of the trial court’s decision. The complaint states: “12. At a meeting with their attorneys on or about August 4, 1982, at the offices of Burke & Burke, Ltd., Signal and Orr Building agreed to place the insurance proceeds into an escrow account pending resolution of their dispute. 13. Signal and Orr Building executed the Escrow Agreement, a copy of which is attached hereto as Exhibit A and incorporated herein as though fully set forth. The Escrow Agreement provides, inter alia, that the insurance proceeds shall be deposited in an interest-bearing account at the Continental Illinois National Bank, and ‘Said escrow may be terminated by the agreement of the parties and upon the joint signatures of the parties ***.’ 14. Burke & Burke, Ltd. and Edmund P. Burke undertook establishment of an escrow account that conformed to the expressed intent of the parties. A copy of a letter so indicating is attached hereto as Exhibit B and incorporated herein as though fully set forth. Plaintiffs relied, reasonably, upon these defendants to establish an escrow account that would conform to the Escrow Agreement. 15. Burke & Burke, Ltd. and Edmund Burke caused bank signature cards to be prepared for signature by the two corporations through their officers. A copy of the signature card is attached hereto as Exhibit C and incorporated herein as though fully set forth. * * * 21. On May 16,1984, plaintiff received from Burke & Burke, Ltd. and Edmund P. Burke a copy of the Certificate of Deposit that was established pursuant to the Escrow Agreement, Exhibit A. Plaintiff had never before seen this document. A copy of the Certificate of Deposit is attached hereto as Exhibit D and incorporated herein as though fully set forth. 22. During a meeting with an attorney representing the Orrs on May 16, 1984, Edmund P. Burke stated that he and Burke & Burke, Ltd. did establish the escrow account, gave the copy of Exhibit D to plaintiffs’ attorney and stated that Exhibit D is the Certificate of Deposit in or by which the escrowed funds were deposited in the Continental Illinois National Bank & Trust Co. of Chicago, and that the original Certificate of Deposit is in the possession of Burke & Burke, Ltd. LIABILITY * * * 24. In the alternative, Burke & Burke, Ltd. and Edmund P. Burke negligently established the account in which the said insurance proceeds were to be held in escrow by: a) Failing to inform Continental Illinois National Bank & Trust Co. of Chicago that the account was to be an escrow account, or b) Established the account in the name, ‘Carter Shepard or Donald Orr or Survivor,’ so that either person could withdraw the funds therefrom without the signature or permission of the other party or without a court order, in violation of its undertaking to establish an account in accordance with the terms of the aforesaid Escrow Agreement, or c) Failed to review the said Certificate of Deposit when received, to see whether the account conformed to the Escrow Agreement. * * * WHEREFORE, Plaintiff prays the court to order as follows: * * * G. To enter judgment against Burke & Burke, Ltd., Edmund P. Burke and/or Continental Illinois National Bank & Trust Co. of Chicago in a sum equal to the insurance proceeds and interest thereon not restored by Carter Shepard.” While Burke is an attorney who represented other codefendants in the underlying action, plaintiffs do not allege that they have a special or confidential relationship with Burke, viz., an attorney-client relationship. Nor do plaintiffs assert that they are the indirect or third-party beneficiaries of the attorney-client relationship between Burke, as an attorney, and the other codefendants, as his clients. The excerpted allegations, however, do establish a cause of action in negligence. Common law negligence consists of a duty owed by the defendant to the plaintiff, a breach of that duty, and an injury or damages proximately caused by the breach. (Mieher v. Brown (1973), 54 Ill. 2d 539, 541, 301 N.E.2d 307; McColgan v. United Mine Workers (1984), 124 Ill. App. 3d 825, 464 N.E.2d 1166, cert. denied (1985), 470 U.S. 1051, 84 L. Ed. 2d 816, 105 S. Ct. 1752.) The existence of a duty, that is, a legal obligation to conform one’s conduct to a certain standard for the benefit or protection of another, is a matter of law to be determined by the court. Fancil v. Q. S. E. Foods, Inc. (1975), 60 Ill. 2d 552, 555, 328 N.E.2d 538; W. Prosser, Torts §37, at 206 (4th ed. 1971). The majority states that the record fails to indicate that plaintiffs and Burke “stood in such a relationship to one another that the law imposed upon Burke an obligation of reasonable conduct for the benefit of the Orrs.” (171 Ill. App. 3d at 108.) The majority states that if plaintiffs placed trust and confidence in Burke, it was unreasonably placed, and that no duty existed between plaintiffs and Burke. The majority relies on the holding in Pelham v. Griesheimer (1982), 92 Ill. 2d 13, 440 N.E.2d 96, that for a nonclient to succeed in a negligence action against an attorney, he must prove that the primary purpose and intent of the attorney-client relationship itself was to benefit or influence the third party. (Pelham, 92 Ill. 2d at 21.) Since plaintiffs fail to allege that the attorney-client relationship between Burke and the other codefendants was entered into in order to directly benefit plaintiffs, the complaint fails to state a cause of action. This court, however, need not apply the “intent-to-directly-benefit” test to the case at bar. Rather, the law has provided for recovery, under such facts as are alleged in the instant case, based on the assumption by defendant of an obligation and plaintiff’s reasonable reliance on him. In Nelson v. Union Wire Rope Corp. (1964), 31 Ill. 2d 69, 74, 199 N.E.2d 769, the Illinois Supreme Court reiterates the ancient principle that liability can arise from negligent performance of a voluntary undertaking. (See also McColgan v. United Mine Workers (1984), 124 Ill. App. 3d 825, 827, 464 N.E.2d 1166, cert. denied (1985), 470 U.S. 1051, 84 L. Ed. 2d 816, 105 S. Ct. 1752.) The supreme court also explains that the scope of the duty is limited by the extent of the undertaking. Pippin v. Chicago Housing Authority (1979), 78 Ill. 2d 204, 209-10, 399 N.E.2d 596; McColgan, 124 Ill. App. 3d at 827. Apparently, however, there are no Illinois cases which deal specifically with facts and issues substantially similar to those in the case at bar. In Pelham v. Griesheimer (1982), 92 Ill. 2d 13, 440 N.E.2d 96, however, the court carved out an exception to the rule that an attorney generally is not liable for negligence to a nonclient unless the client intended that the primary purpose of the attorney-client relationship was to benefit the nonclient. The court in Pelham stated: “We believe a different situation would confront us if this complaint had alleged sufficient facts to show that the defendant had undertaken a duty to notify the insurance company or the husband’s employer of the provision in the divorce decree. In that situation, the attorney may have a duty to exercise reasonable care because his client and the plaintiffs herein could have justifiably relied on that undertaking. Schwartz v. Greenfield, Stein & Weisinger (1977), 90 Misc. 2d 882, 396 N.Y.S.2d 582; Steward [sic] v. Sbarro (1976), 142 N.J. Super. 581, 362 A.2d 581.” (Pelham, 92 Ill. 2d at 24.) Thus, the court in Pelham left open the door to recovery for a non-client plaintiff who reasonably relies on a defendant attorney who has undertaken a duty to act for the benefit of the plaintiff. The court in Pelham cites Stewart v. Sbarro (1976), 142 N.J. Super. 581, 362 A.2d 581, which provides: “It is true that generally an attorney is not liable to third persons for negligence in the performance of his professional duties. [Citation.] But this rule is not all encompassing. Thus, where an attorney assumes a fiduciary obligation, it applies to persons who, though not strictly clients, he has or should have reason to believe rely on him. [Citations.] We believe, moreover, that where, as here, an attorney undertakes a duty to one other than his client, he may be liable for damage caused by a breach of that duty to a person intended to be benefited by his performance. [Citation.]” Stewart, 142 N.J. Super, at 593, 362 A.2d at 588. A fiduciary is a person having a duty, created by his undertaking, to act primarily for another’s benefit in matters connected with such undertaking. A fiduciary relationship exists where special confidence is reposed in one who in equity and good conscience is bound to act in good faith and with due regard to interests of one reposing the confidence. Black’s Law Dictionary 563-64 (5th ed. 1979). The allegations of plaintiffs’ complaint sufficiently allege facts that come within the exception carved out in Pelham and Stewart. Plaintiffs allege the duty, i.e., that Burke “undertook establishment of an escrow account that conformed to the expressed intent of the parties.” Plaintiffs also allege specific acts taken by Burke in relation to performance of the assumed duty, i.e., Burke “caused bank signature cards to be prepared for signature by the two corporations,” and Burke supplied plaintiffs with a copy of the certificate of deposit that was established pursuant to the escrow agreement. Further, plaintiffs allege that they reasonably relied on Burke to establish an escrow account which would conform to the escrow agreement. I believe that these allegations are sufficient to survive defendants’ motion to . dismiss. Plaintiffs contend on appeal that the trial court erred in not allowing them leave to amend their complaint. The majority finds no abuse of discretion by the trial court, and notes that plaintiffs failed formally to request leave to amend in the trial court and failed to tender an amended complaint. I disagree with the majority’s analysis and conclusion and would find that the trial court abused its discretion in failing to grant plaintiffs leave to amend the complaint. The allowance of amendments to pleadings is within the sound discretion of the trial court, and the refusal to allow an amendment is not prejudicial error unless such discretion is abused. (Old Salem Chautauqua Association v. Illinois District Council of the Assembly of God (1958), 13 Ill. 2d 258, 266, 148 N.E.2d 777.) Amendments must be made on “just and reasonable terms.” (111. Rev. Stat. 1987, ch. 110, par 2 — 616(a).) Leave to amend a complaint should be granted unless it is apparent that even after amendment no cause of action can be stated. (Juhasz v. Hejna (1985), 139 Ill. App. 3d 35, 487 N.E.2d 113.) The circuit court’s power to permit amendments should be exercised with a view toward allowing a party to fully present his cause of action. (Morris v. City of Chicago (1985), 130 Ill. App. 3d 740, 746, 474 N.E.2d 1274.) The test to be applied in determining whether the trial court abused its discretion is whether the decision furthers the ends of justice. Hall v. Northwestern University Medical Clinics (1987), 152 Ill. App. 3d 716, 504 N.E.2d 781; Murphy v. Roppolo-Prendergast Builders, Inc. (1983), 117 Ill. App. 3d 415, 453 N.E.2d 846. I believe that the trial court abused its discretion by denying plaintiffs’ request for leave to amend the complaint. While I would find that plaintiffs sufficiently state a cause of action against Burke since the complaint reasonably informs defendants of the nature of the claims against them (111. Rev. Stat. 1987, ch. 110, par. 2 — 612(b)), I think that plaintiffs should be allowed leave to amend in order to state their claims against the various defendants in separate counts, as required by section 2 — 613(a) of the Code of Civil Procedure (111. Rev. Stat. 1987, ch. 110, par. 2 — 613(a)). Allowing plaintiffs leave to amend their complaint would further the ends of justice. It is clear from plaintiffs’ original complaint that plaintiffs are able to state a cause of action against Burke. This court should allow plaintiffs to fully present their cause of action against Burke. For the foregoing reasons, I would reverse the trial court’s granting of defendant’s motion to dismiss and grant plaintiffs leave to amend their complaint.