Pelham v. Griesheimer

• Citation: 64 Ill.Dec. 544,440 N.E.2d 96,92 Ill.2d 13
• Decision Date: 18 June 1982
• Docket Number: No. 54851,54851
• Parties: , 64 Ill.Dec. 544 Thomas PELHAM et al., Appellants, v. Ronald E. GRIESHEIMER, Appellee.
• Court: Supreme Court of Illinois

Page 96

440 N.E.2d 96

92 Ill.2d 13, 64 Ill.Dec. 544

Thomas PELHAM et al., Appellants, v. Ronald E. GRIESHEIMER, Appellee.

No. 54851.

Supreme Court of Illinois.

June 18, 1982.

William E. Hartnett and Joseph W. Griffin, Waukegan, for appellants.

Snyder, Clarke, Dalziel & Johnson, Waukegan (Julian Johnson, Waukegan, of counsel), for appellee.

RYAN, Chief Justice:

Plaintiffs appeal the dismissal of their amended complaint for failure to state a cause of action for legal malpractice against the defendant, Ronald Griesheimer. The circuit court of Lake County held that there was no attorney-client relationship between the plaintiffs and the defendant and that therefore no cause of action for legal malpractice was stated. The appellate court affirmed. (93 Ill.App.3d 751, 49 Ill.Dec. 192, 417 N.E.2d 882.) We granted plaintiffs leave to appeal (73 Ill.2d R. 315).

Plaintiffs' amended complaint alleges that the defendant was retained to represent Loretta Ray in a divorce action against her husband, George Ray. The plaintiffs herein are the children of Loretta and George Ray, all of whom were minors at the time the divorce was granted in June 1971. The divorce decree contained a provision requiring George Ray to "maintain all four of his children as the prime beneficiaries in his life insurance policies." George Ray had a $10,000 life insurance policy through his employer at the time the divorce decree was entered. After the divorce decree was entered, he remarried and named his second wife the beneficiary of the insurance policy. She received the proceeds after his death in 1976.

The complaint also alleges that the defendant owes the plaintiffs "the duty to exercise a reasonable degree of professional care and skill, as an attorney, with reference to seeing that the plaintiffs became the prime beneficiaries in all life insurance policies which insured GEORGE J. RAY." The complaint also alleges that the defendant breached that duty by "negligently and carelessly," inter alia, failing to notify George Ray's employer, or the insurance company, of the divorce-decree provision and failing to advise Loretta Ray to notify her ex-husband's employer or insurance company of the provision. Finally, the amended complaint alleges that "as a direct and proximate result of the negligent acts or omissions of the defendant" the plaintiffs have suffered monetary damage.

Plaintiffs argue that their complaint states a cause of action for breach of contract. The plaintiffs maintain that this complaint should be construed to allege that the children are direct third-party beneficiaries of the contract between their mother, Loretta Ray, and her attorney, the defendant. The defendant argues that the complaint fails to allege that a contract was entered into for the direct benefit of the plaintiffs and that, in any event, the plaintiffs herein could not have been intended beneficiaries of the contract.

The purpose of pleadings is to present, define and narrow the issues and limit the proof needed at trial. (People ex rel. Fahner v. Carriage Way West, Inc. (1981), 88 Ill.2d 300, 307, 58 Ill.Dec. 754, 430 N.E.2d 1005.) We acknowledge that pleadings are to be liberally construed with a view to doing justice between the parties. (Ill.Rev.Stat.1977, ch. 110, par. 33(3).) In considering a motion to dismiss, however, "the pleadings are to be construed strictly against the pleader." (Knox College v. Celotex Corp. (1981), 88 Ill.2d 407, 421, 58 Ill.Dec. 725, 430 N.E.2d 976.) Illinois requires fact pleading under its Civil Practice Act. (Ill.Rev.Stat.1977, ch. 110, pars. 31, 33.) Notice pleading, as used in Federal courts and other jurisdictions, is not sufficient. Although sections 42(2) and 33(3) of our practice act (Ill.Rev.Stat.1977, ch. 110, pars. 42(2), 33(3)) contain provisions concerning liberal construction, such provisions do not remedy the failure of a complaint to state a cause of action. Knox College v. Celotex Corp. (1981), 88 Ill.2d 407, 427, 58 Ill.Dec. 725, 430 N.E.2d 976.

The amended complaint herein clearly fails to state a cause of action for breach of contract. The amended complaint fails to allege, legally or factually, that a contract was entered into for the direct benefit of the plaintiffs, which is an indispensable element of a third-party beneficiary theory of recovery. (Altevogt v. Brinkoetter (1981), 85 Ill.2d 44, 51 Ill.Dec. 674, 421 N.E.2d 182; People ex rel. Resnik v. Curtis & Davis, Architects & Planners, Inc. (1980), 78 Ill.2d 381, 36 Ill.Dec. 338, 400 N.E.2d 918; Carson Pirie Scott & Co. v. Parrett (1931), 346 Ill. 252, 178 N.E. 498.) The making of a contract with an attorney for the benefit of a third party does not necessarily create an attorney-client relationship between the attorney and the third-party beneficiary.

Also, this complaint for legal malpractice is couched in terms of negligence, not contract. Throughout the complaint there are allegations that the defendant attorney owed certain duties to the plaintiffs and that he negligently breached those duties. Paragraph 4 of the complaint states:

"That the Defendant * * * owed to the Plaintiffs the duty to exercise a reasonable degree of professional care and skill, as an attorney * * *."

Paragraph 5 states:

"That the Defendant * * * failed to exercise a reasonable degree of professional care and skill by negligently and carelessly doing one or more of the following * * *."

Paragraph 8 states:

"That as a direct and proximate result of the negligent acts or omissions of the defendant * * *."

If plaintiffs' amended complaint states a cause of action at all, it is in tort, rather than contract.

A complaint for negligence, to be legally sufficient, must set out facts that establish the existence of a duty owed by the defendant to the plaintiff, a breach of that duty, and an injury proximately resulting from the breach. (Cunis v. Brennan (1974), 56 Ill.2d 372, 374, 308 N.E.2d 617.) The determination of the duty--whether the defendant and the plaintiffs stood in such a relationship to one another that the law imposed upon the defendant an obligation of reasonable conduct for the benefit of the plaintiffs--is an issue of law for the determination of the court. Mieher v. Brown (1973), 54 Ill.2d 539, 301 N.E.2d 307, Prosser, Torts sec. 45, at 289 (4th ed. 1971).

In concluding that the plaintiffs' complaint failed to state a cause of action, the appellate court relied on the fact that no attorney-client relationship--no privity--existed between the plaintiffs and the defendant and, therefore, no duty existed. We consider that privity is not an indispensable prerequisite to establishing a duty of care between a non-client and an attorney in a suit for legal malpractice. In this case, however, we find that no duty existed between the parties to this lawsuit.

The traditional, general rule has been that the attorney is liable only to his client, not to third persons. (National Savings Bank v. Ward (1880), 100 U.S. 195, 25 L.Ed. 621.) The concept of privity has long protected attorneys from malpractice claims by nonclients. We note that several Illinois cases have refused to extend the obligations of an attorney to nonclient third parties. In Bloomer Amusement Co. v. Eskenazi (1979), 75 Ill.App.3d 117, 31 Ill.Dec. 100, 394 N.E.2d 16, the contract seller of certain realty brought an action against the attorney for the contract purchaser, alleging negligence in the attorney's failure to record the real estate contract. In affirming the trial court's granting of summary judgment for the attorney, the court quoted from National Savings Bank v. Ward (1880), 100 U.S. 195, 200, 25 L.Ed. 621, 623, that "the general rule is that the obligation of the attorney is to his client and not to a third party," absent fraud or collusion.

More recently in Byron Chamber of Commerce, Inc. v. Long (1981), 92 Ill.App.3d 864, 868, 48 Ill.Dec. 77, 415 N.E.2d 1361, the appellate court stated:

"It is the general rule and the rule followed in Illinois that a contract for professional services between a lawyer and a client does not create a professional obligation between the lawyer and an unknown third party."

Though both Bloomer and Long arose under substantially different factual circumstances than the case at bar, both recognized the traditional requirement of privity for a nonclient to recover from an attorney. See annot., 45 A.L.R.3d 1181 (1972).

The trend in tort law has been to abolish privity of contract (Rozny v. Marnul (1969), 43 Ill.2d 54, 252 N.E.2d 656) as a prerequisite to establishing a duty. In Rozny, the plaintiffs purchased a house and lot which was described in a plat of an admittedly inaccurate survey prepared by defendant for S&S Builders. In discussing the tort of misrepresentation the court stated:

"This process of adhering to or eliminating the privity requirement has proved to be an unsatisfactory method of establishing the scope of tort liability to third persons. * * * To eliminate any uncertainty still remaining after Suvada v. White Motor Co., 32 Ill.2d 612, 617, 210 N.E.2d 182, we emphasize that lack of direct contractual relationship between the parties is not a defense in a tort action in this jurisdiction. Thus, tort liability will henceforth be measured by the scope of the duty owed rather than the artificial concepts of privity." Rozny v. Marnul (1969), 43 Ill.2d 54, 62, 252 N.E.2d 656.

While privity of contract has been abolished in many areas of tort law, the concern is still that liability for negligence not extend to an unlimited and unknown number of potential plaintiffs. In the area of legal malpractice the attorney's obligations to his client must remain paramount. In such cases the best approach is that the plaintiffs must allege and prove facts demonstrating that they are in the nature of third-party intended beneficiaries of the relationship between the client and the attorney in order to recover in tort. (See Clagett v. Dacy (1...