Rajcan v. Donald Garvey & Assocs., Ltd.

• Decision Date: 05 April 2004
• Docket Number: No. 2-03-0270.,2-03-0270.
• Citation: 807 N.E.2d 725,283 Ill.Dec. 120,347 Ill. App.3d 403
• Parties: CATHERINE RAJCAN, CAROLYN MULCAHEY, and KEVIN ARMBRUST, as co-trustees of the Donald J. Armbrust Trust; LYNETTE ARMBRUST; and STEVEN ARMBRUST, Plaintiffs-Appellants, v. DONALD GARVEY AND ASSOCIATES, LTD.; BISHOP, ROSSI AND SCARLATI, LTD.; DONALD GARVEY; and ROBERT HALL, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

807 N.E.2d 725

347 Ill. App.3d 403

283 Ill.Dec. 120

CATHERINE RAJCAN, CAROLYN MULCAHEY, and KEVIN ARMBRUST, as co-trustees of the Donald J. Armbrust Trust; LYNETTE ARMBRUST; and STEVEN ARMBRUST, Plaintiffs-Appellants, v. DONALD GARVEY AND ASSOCIATES, LTD.; BISHOP, ROSSI AND SCARLATI, LTD.; DONALD GARVEY; and ROBERT HALL, Defendants-Appellees.

No. 2-03-0270.

Appellate Court of Illinois, Second District.

April 5, 2004.

For Kevin Armbrust, Lynette Armbrust, Steven Armbrust, Carolyn Mulcahey, Catherine Rajcan, Appellant: Arnold H. Landis, Attorney at Law, Chicago, Illinois.

For Donald Garvey & Associates. Ltd., Donald Garvey, Appellee: Mulherin, Rehfeldt & Varchetto, P.C., Attorneys at Law, Wheaton, Illinois. Patricia L. Argentati, Mulherin, Rehfeldt & Varchetto, P.C., Wheaton, Illinois.

For Bishop Rossi & Scarlati, Ltd., Robert Hall, Appellee: Norton, Mancini, Argentati, Weiler & DeAno, Attorneys at Law, Wheaton, Illinois. Thomas J. Long, Norton, Mancini, Argentati, Weiler & DeAno, Wheaton, Illinois. Larry A. Mancini, Norton, Mancini, Weiler & DeAno, Wheaton, Illinois.

Justice CALLUM delivered the opinion of the court Plaintiffs, Catherine Rajcan, Caroline Mulcahey, and Kevin Armbrust, as co-trustees of the so-called Donald J. Armbrust Trust, and Lynette Armbrust and Steven Armbrust, individually, appeal from an order of the circuit court of Du Page County granting the motion of defendants Donald Garvey, Donald Garvey and Associates, Ltd. (the Garvey firm), Robert Hall, and Bishop, Rossi and Scarlati, Ltd., (the Bishop firm), to dismiss plaintiffs' second amended complaint pursuant to section 2-619(a)(5) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(5) (West 2002)). The trial court granted the motion on the basis that the action was barred by the six-year statute of repose applicable to legal malpractice lawsuits. See 735 ILCS 5/13-214.3 (West 2002). We reverse and remand.

Plaintiffs filed their original complaint on July 19, 2001. As amended, the complaint alleges that plaintiffs (whom we shall refer to by first name) are the children of Donald Armbrust. In 1993, Donald retained Garvey and Hall as his attorneys to prepare a will and to establish a trust. According to the complaint, Garvey and Hall were, at the time, "actual and/or apparent agents" of the Bishop firm. After May 1994, Garvey was an employee of the Garvey firm.

In October and November 1993, Garvey and Hall drafted a trust agreement that named Donald as trustee with the power to withdraw any part or all of the net income and principal of the trust. Upon Donald's death, Catherine, Carolyn, and Kevin would serve as co-trustees and would "divide the trust into separate equal trusts" for Donald's children. The property held in trust for Catherine, Carolyn, and Kevin would be distributed to each of them. With respect to the trusts created for Steven and Lynette, the co-trustees were directed to distribute "the net income of the trust, and so much of the principal thereof as the trustee from time to time believes desirable for [Steven or Lynette's] reasonable support, education and health considering the child's other resources known to the trustee."

Donald died on July 19, 1999. In count I of their complaint, plaintiffs alleged that, while preparing the trust instrument, Hall and Garvey were aware that Lynette and Steven were disabled as a result of mental or emotional disorders. According to the complaint, Hall and Garvey were negligent in failing to advise Donald of the possibility of establishing a "special needs" trust for Lynette and Steven, which would not impair their eligibility for certain public assistance benefits. Plaintiffs alleged that, because of the improper advice and the consequent failure to establish a "special needs" trust, Lynette and Steven have suffered the loss of those benefits.

Counts II and III sought recovery from Garvey and the Garvey firm under theories of breach of fiduciary duty and negligence. In count II, plaintiffs alleged that in May, June, and November 1998, Catherine and Donald repeatedly asked Garvey to provide them with a copy of the trust agreement and Garvey assured them that he would do so. Plaintiffs alleged that Garvey had no intention of providing the document and that he withheld it to conceal his prior negligence. The negligence allegations against Garvey and the Garvey firm in count III of the complaint have no bearing on the issues in this appeal and it is unnecessary to describe them.

Hall and the Bishop firm filed a combined motion to dismiss under sections 2-615 (735 ILCS 5/2-615 (West 2002)) and 2-619(a)(5) of the Code. Garvey and the Garvey firm also filed such a motion. Both motions sought dismissal under section 2-619(a)(5) on the basis that the six-year statute of repose for legal malpractice actions expired no later than November 1999. The trial court dismissed the action on this basis. Following the denial of their motion for reconsideration, plaintiffs filed a timely notice of appeal.

Plaintiffs initially argue that it was error to dismiss as to Garvey and the Garvey firm on the basis of the statute of repose, because plaintiffs alleged that Garvey had fraudulently concealed the cause of action. Section 13-215 of the Code (735 ILCS 5/13-215 (West 2002)) provides that "if a person liable to an action fraudulently conceals the cause of such action from the knowledge of the person entitled thereto, the action may be commenced at any time within 5 years after the person entitled to bring the same discovers that he or she has such cause of action, and not afterwards." To toll the statute of repose, the plaintiff must show "affirmative acts or representations designed to prevent discovery of the cause of action or to lull or induce a claimant into delaying the filing of his claim." Dancor International, Ltd. v. Friedman, Goldberg & Mintz, 288 Ill.App.3d 666, 675, 681 N.E.2d 617, 224 Ill.Dec. 302 (1997). Plaintiffs argue that the allegations in count II of the complaint, which seeks recovery for breach of fiduciary duty, are sufficient to invoke this exception

The trial court dismissed plaintiffs' second amended complaint pursuant to section 2-619(a)(5), which allows the dismissal of an action if it "was not commenced within the time limited by law." 735 ILCS 5/2-619(a)(5) (West 2002). A motion to dismiss pursuant to section 2-619 of the Code admits the legal sufficiency of the complaint but asserts affirmative matter to avoid or defeat the claim. Peetoom v. Swanson, 334 Ill.App.3d 523, 526, 778 N.E.2d 291, 268 Ill.Dec. 305 (2002). More importantly, a section 2-619 motion admits all well-pleaded facts and reasonable inferences therefrom. Peetoom, 334 Ill.App.3d at 526. Thus, resolution of this issue hinges on whether plaintiffs' complaint sets forth allegations satisfying the requirements of the statutory fraudulent concealment exception to the statute of repose.

In ruling on this issue, the trial court stated as follows:"I

have [sic] read Count Two before and when discussion was made today about it sounding in *** [`] fraudulent concealment [.'] *** I categorically disagree with that argument. I do not find Count Two to even purport to begin to lay out a cause of action for *** [`] fraudulent concealment [`] *** or to have a sufficient factual or pled basis for any allegation of fraudulent concealment. It is clearly [sic] not only in its title a breach of fiduciary duty, but in the content of the complaint itself speaking of the different relationships that were done [sic] between the parties and what was or wasn't breached."

The trial court may have placed undue emphasis on the nature of the cause of action set forth in count II of the complaint. Similarly, Garvey and the Garvey firm stress that plaintiffs' complaint contains no "theory or count which was entitled or which referred to `fraudulent concealment.'" As noted, the salient question is whether the allegations in count II establish a fraudulent concealment sufficient to overcome the statute of repose. For present purposes, it is irrelevant whether those facts constitute a "cause of action" for fraudulent concealment; plaintiffs are asserting fraudulent concealment, not as an independent basis for recovery, but as an exception to the statute of repose. Moreover, the fact that count II is denominated a claim for breach of fiduciary duty does not mean that the allegations cannot encompass the requirements of the fraudulent concealment exception to the statute of repose.

Turning our attention to the substance of the allegations, we conclude that they are sufficient to defeat Garvey and the Garvey firm's motion to dismiss. Plaintiffs have alleged that during May, June, and November 1998, Catherine and Donald repeatedly asked Garvey for a copy of the trust agreement and, in response to these requests, Garvey falsely assured Catherine that he would provide one. Garvey and the Garvey firm argue that, by withholding the trust agreement from Catherine, Garvey was merely guilty of a failure to act, as opposed to an affirmative act of concealment. We agree with plaintiffs that the alleged false assurances to Catherine were affirmative acts that could have assuaged plaintiffs, who might otherwise have been more assertive in attempting to obtain and examine a copy of the trust agreement.

Garvey and the Garvey firm also argue that, because plaintiffs were not Garvey's clients, he had no obligation to...