Haul Heddick v. M. Thomas Suits

¶ 1 Plaintiffs, Haul Reddick, both individually and in his capacity as executor of the estate of

his deceased brother, Mark Reddick, and Debra Reddick, appeal the judgment of the circuit court

of Ogle County granting the motion for summary judgment of defendants, M. Thomas Suits and

the Law Office of M. Thomas Suits, P.C. Below, plaintiffs contended that they incurred

damages resulting from defendants' errors in reinstating an administratively dissolved Illinois

corporation. The trial court granted defendants' motion for summary judgment on the ground

that defendants owed no duty to plaintiffs, but only to Mark's corporation. (The trial court

expressly did not rule on other aspects of their motion or on plaintiffs' cross-motion for

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summary determination of major issues.) On appeal, plaintiffs contend that defendants owed a

duty to them, that the remaining grounds asserted in defendants' motion for summary judgment

were insufficient, and that the trial court erred in failing to grant plaintiffs' cross-motion for

summary determination of major issues. We affirm.

¶ 2 We first summarize the facts appearing of record. On July 8, 2005, RPF Holdings, Inc.

(RPF), was incorporated. Suits was the attorney who performed the incorporation. Mark

Reddick, Neil Scott, and John Vukadinovich were the original shareholders of RPF, each with an

approximately one-third share of the business.

¶ 3 RPF produced plastic film from resin. It had acquired the assets of an earlier corporation,

Rochelle Plastic Film, Inc., which was in the same business. Suits had represented Rochelle

previously. In 2005, Suits was approached by Mark Reddick and John Buckner to effect the

transfer of assets from Rochelle to RPF. Rochelle was at that time in default with respect to a

secured creditor and could no longer pay its debts. Suits provided legal services to both

Rochelle and RPF. Rochelle's assets were transferred to the secured creditor and then purchased

by RPF from the creditor in exchange for RPF assuming Rochelle's secured debt. RPF

continued to do business with some of Rochelle's trade creditors, but sent letters to others

indicating that Rochelle was unable to pay its debts to them.

¶ 4 Mark Reddick, who died on March 3, 2007, was the president of RPF until his death.

When he died, his brother, Haul Reddick, became the executor of Mark's estate (Estate).

¶ 5 Early in 2007, as a result of Mark's illness, Haul first became involved with RPF's

business. Haul testified in his deposition that he had grown up in North Carolina (where Mark

lived) but had moved to Arizona in 1973. Haul had a doctorate in educational administration

from Northern Arizona University and had taken two undergraduate courses in accounting. Haul

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had served as an officer of Reddick Education Services, an Arizona corporation; Reddick Realty,

an Arizona real estate holding company; and Reddick Fumigants, a North Carolina corporation

of which Mark had been president until his death. Haul's responsibilities with Reddick

Education included making sure that the corporation remained in good standing. Haul testified

that it was his understanding that, if a corporation did not remain in good standing, then the

shareholders could be liable for the debts incurred by the corporation.

¶ 6 From January 2007 until Mark's death in March 2007, Haul reviewed the files relating to

RPF and talked to Mark about the business. Haul reviewed, among other things, RPF's financial

statements. Haul testified that the quality of all of the financial statements he reviewed was

suspect, and he never received any financial statement that he would have been willing to say

was correct. As a result of his review, Haul concluded that RPF should be sold or liquidated as

quickly as possible, and no more money should be invested in the company. Haul advised Neil

Scott of his conclusion in a written memo. Haul also advised Scott that he had reviewed a letter

of intent from John Buckner, the general manager of RPF responsible for its day-to-day

operations, on behalf of RPF Acquisitions, offering to purchase all of RPF's assets. He further

noted that he had discussed with Buckner problems relating to Vukadinovich, who, in October

2006, had been removed from his director's position.

¶ 7 Shortly after Mark's death, Haul was elected president and director of RPF. Haul had not

previously been an officer or a director of RPF, and he was never a shareholder. At the time of

his elections, the shareholders of RPF were the Estate, Scott, and Vukadinovich. The directors

of RPF were Debra Reddick (Mark's widow), Haul, and Scott. The officers of RPF were Haul

(president), Scott (vice president), and Debra (secretary). Vukadinovich was RPF's registered

agent, and its day-to-day operations were still under Buckner's direction.

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¶ 8 On March 7 or 8, 2007, Haul learned that, as of December 1, 2006, RPF had been

administratively dissolved. On Friday, March 9, 2007, Haul sent an e-mail to Buckner about the

dissolution, directing that the corporation be reinstated and the registered agent be changed from

Vukadinovich to Tom Winebaugh. Haul testified that he wanted RPF to be reinstated because

RPF Acquisition's letter of intent required the company to be in good standing, as well as to

ensure that Mark or the Estate would not be personally liable (Haul believed at that time that a

corporation's shareholders could be personally liable if the corporation were dissolved). Haul

did not understand that it was not the shareholders who faced personal liability, but the directors

and officers of the corporation who could be liable for the corporation's dealings while it was

dissolved. Haul testified that, had he known, he would likely have consulted with an attorney

and removed himself as an officer and director of RPF.

¶ 9 On the same day, Buckner forwarded Haul's e-mail to Suits, informing him that "we

need to take care of this pronto.” Later on the same day, Suits sent an e-mail to Haul stating that

he had completed the documents needed for reinstatement and would send them to the Illinois

Secretary of State on Monday, March 12.

¶ 10 Beginning March 12, 2007, a parade of missteps and errors ensued as Suits

unsuccessfully attempted to have RPF reinstated. On that day, he submitted a package

containing a completed 2006 annual report form, a check, and a form to change the registered

agent. The package did not contain an application for reinstatement or a check for the

reinstatement fee. On March 30, 2007, the Secretary of State rejected Suits' first submission

because no application for reinstatement had been included. The Secretary of State sent a letter

with this information to Vukadinovich stating why RPF remained dissolved and enclosing a

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reinstatement form as well as an estimate of the fees and penalties necessary to accomplish both

the reinstatement and the change of the registered agent.

¶ 11 On April 17, Suits sent Haul a letter including two originals of the application for RPF's

reinstatement and requesting that Haul sign them and return them. On April 20, Haul signed the

reinstatement forms and returned them to Suits.

¶ 12 Suits did not submit the applications received from Haul, because, in the meantime, Tom

Winebaugh told Suits that he had submitted the forms to reinstate RPF. Suits knew that

Winebaugh was a certified public accountant. At this point, Haul had not told Suits that he was

no longer to be involved in the effort to reinstate RPF. On April 27, Haul e-mailed Suits asking

when RPF would be reinstated and asking Suits to identify the forms that Winebaugh had

submitted. On May 2, Suits e-mailed his reply, averring that "[a]ll of the necessary forms and

funds” were sent to the Secretary of State. Suits testified in his deposition that he believed he

had asked Winebaugh what documents he had submitted and was satisfied with Winebaugh's

response.

¶ 13 On May 3, the Secretary of State rejected Winebaugh's submission because Winebaugh

did not include an application for reinstatement. On May 8, Winebaugh sent a letter to Suits

noting that the application for reinstatement needed to be included. Winebaugh sent Suits all of

the materials he had so Suits could forward them to Haul for signature. When Suits received

Winebaugh's information, he mailed a second submission to the Secretary of State. In this

submission, Suits included the signed application for reinstatement, the 2006 annual report, and

a check sufficient to cover the fees and penalties.

¶ 14 On May 18, the Secretary of State rejected Suits' second submission because the

registered agent on the annual report was not the same as the one on the application for

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reinstatement. On May 31, Suits made a third submission to the Secretary of State. However,

on June 19, the Secretary of State returned the third submission to Suits because, on May 25,

RPF had been reinstated. As it turned out, on May 24, Haul had retained a law firm in

Springfield to accomplish the RPF reinstatement. On May 25, the Springfield law firm

submitted the necessary paperwork and fees and penalties, and on the same day, RPF was

reinstated.

¶ 15 In his deposition, Suits testified that, as of March 9, 2007, at the beginning of the

reinstatement efforts, he understood that, if a corporation were dissolved but continued to carry

on its regular business and to enter into contracts, then the officers and directors faced potential

personal liability for any obligations the corporation incurred during the period it was dissolved.

Further, their liability would not be extinguished retroactively by reinstatement of the

corporation. Suits did not discuss these risks with Haul.

¶ 16 Suits further testified that he had experience in reinstating a dissolved corporation and

was aware of the requirements for reinstatement, including the submission of all completed

annual report forms that had not been previously submitted, a completed application for

reinstatement, and all required fees and penalties. Suits was also aware that a reinstatement

could be expedited with the payment of an additional fee.

¶ 17 Suits acknowledged that, as legal tasks go, reinstating a dissolved corporation is a

relatively simple task. However, if the task were not completed correctly or promptly, it could

create significant risks of personal liability for the officers and directors of the corporation. Suits

acknowledged that he had not accomplished the reinstatement correctly as he forgot or neglected

to include the application for reinstatement along with the other materials submitted.

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¶ 18 Suits testified that, in undertaking to reinstate RPF, his client was the corporation and

only the corporation. He was not hired to represent Haul, Debra, or the Estate. Likewise, Haul

testified that he did not hire Suits to represent him or Debra, personally. Haul further testified

that, to the best of his knowledge, Suits had not performed any legal services for him personally

or individually, or for Debra personally or individually.

¶ 19 Suits testified that, as of March 9, he was retained to reinstate RPF, but he had no

knowledge about RPF's condition, its status, its finances, or who were the officers and directors

and whether there had been any change to the officers and directors since RPF's incorporation.

Suits did not ask and was not informed whether RPF was continuing to do business following its

December 2006 dissolution. Suits was also unaware of any measures, aside from hiring Buckner

as a consultant, to solve the issues that caused Rochelle to fail. Suits acknowledged that, from

the time he was retained until the end of May, he never discussed with Haul any of the risks to

him or the other officers and directors if RPF continued to conduct business following its

dissolution.

¶ 20 While RPF was dissolved, it continued in business under Buckner's daily direction.

RPF's operations included purchasing materials from vendors and paying its bills. Debra was

not involved in RPF's business and, according to Haul, was a director in name only. Haul was

not consulted about ordering resin and did not know when resin would be ordered or even if the

invoices for the resin were being paid. In April 2007, Haul was contacted by Shannon Industrial,

one of RPF's resin suppliers, about payments that it had not received and a problem with the

banking arrangements. Haul referred the problem to Buckner, who reported back to Haul that

there had been delays in paying Shannon, but everything had been taken care of.

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¶ 21 On June 4, 2007, Shannon filed a suit against RPF, Vukadinovich, Buckner, Haul, and

Debra. Later, Buckner was dismissed from the suit, and Scott and the Estate were added as

parties defendant. It was only after the Shannon suit had been filed that Haul consulted with the

Estate's attorney and learned that under Illinois law he and Debra, as directors, were exposed to

personal liability for the debts of RPF.

¶ 22 Shannon sought to recover $400,000 for unpaid invoices incurred during the period of

RPF's dissolution, as well as for the balance owed on a pre-dissolution promissory note from

RPF to Shannon. Shannon alleged that the individual defendants were personally liable due to

their positions as officers and directors carrying on RPF's business after it had been dissolved.

¶ 23 Shannon sought to recover from RPF, Haul, Debra, Scott, and the Estate for the unpaid

invoices for goods sold and delivered during the RPF dissolution, in the amount of about

$255,000. Of this amount, about $71,000 was for invoices dated after the dissolution but before

Suits was retained to reinstate RPF, and about $184,000 was for invoices incurred between the

date Suits was retained and the date RPF was reinstated (March 9 to May 25). Shannon also

sought to recover from RPF for the balance on the promissory note totaling about $135,000.

Plaintiffs retained Much Shelist Denenberg Ament & Rubinstein, a Chicago law firm, to defend

them against Shannon; Scott retained separate counsel.

¶ 24 Eventually, the parties reached a settlement in the Shannon lawsuit. For their part,

plaintiffs paid $135,000 to Shannon. Scott made a separate payment. Plaintiffs also incurred

and paid attorney fees in the amount of about $80,000.

¶ 25 The settlement agreement between the parties did not provide an allocation of the total

settlement amount among the different claims. In his supplemental affidavit, however, Haul

stated that, during the negotiations and at the time of the settlement, RPF was insolvent and had

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again been dissolved, and it could pay nothing toward either the settlement or the attorney fees.

Haul further averred that RPF did not make any payments. In addition, Haul averred that it was

due only to the individual plaintiffs' potential personal liability that the settlement amount was

offered and paid, and no portion of the settlement was attributable to the release of RPF. RPF

was included in the settlement only because of plaintiffs' concern that, if RPF were not released,

there might be some way that a future judgment against RPF could result in additional personal

liability against the individual plaintiffs.

¶ 26 The Estate made all payments for the settlement and attorney fees on plaintiffs' behalf.

In turn, plaintiffs agreed that any net recovery from a legal malpractice action against Suits

would be paid to the Estate.

¶ 27 On June 8, 2009, Rochelle Industrial Properties, Ltd. (landlord), RPF's landlord, filed an

action against Haul, Debra, and Scott for unpaid rent totaling nearly $39,000, which was due

during the period of RPF's dissolution. The landlord alleged that Haul and Debra were

personally liable for the unpaid rent because of their positions as RPF's officers and directors.

When Haul executed his supplemental affidavit, the landlord's lawsuit over the unpaid rent was

still pending, Haul and Debra had incurred attorney fees to defend against it, and the Estate had

advanced the necessary funds.

¶ 28 After the Shannon suit had settled, plaintiffs filed this action against Suits alleging that he

was negligent in failing to take the necessary steps to have RPF reinstated in a timely fashion,

along with failing to advise them about the potential personal liability they faced if RPF

continued to conduct business while it was dissolved. Plaintiffs further alleged that Suits'

negligence was the proximate cause of their damages, which they alleged to be the amount of the

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Shannon settlement and the attorney fees they incurred defending against Shannon's action and

the landlord's action. Suits denied liability and raised a number of affirmative defenses.

¶ 29 The parties filed cross-motions for summary judgment. The trial court entered judgment

in favor of defendants and against plaintiffs, holding that defendants owed no duty to plaintiffs

and declining to address any of the other issues raised in the cross-motions. Plaintiffs timely

appeal.

¶ 30 On appeal, plaintiffs argue that the trial court erred in granting defendants' motion for

summary judgment and denying plaintiffs' cross-motion for summary determination of major

issues. Summary judgment may be granted where the pleadings, depositions, admissions on file,

and affidavits, if any, show that there is no genuine issue of material fact and that the moving

party is entitled to a judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2008); Pielet v.

Pielet, 407 Ill. App. 3d 474, 490 (2010). When considering a motion for summary judgment, the

court views the record in the light most favorable to the nonmoving party and will grant the

motion only where the moving party's right to judgment is clear and free from doubt. Pielet,

407 Ill. App. 3d at 490. The motion for summary judgment does not ask the court to decide a

question of fact, but asks the court to determine if a question of fact exists that would preclude

the entry of summary judgment as a matter of law. Pielet, 407 Ill. App. 3d at 491. We review de

novo the trial court's decision whether to grant or deny summary judgment. Pielet, 407 Ill. App.

3d at 491.

¶ 31 Plaintiffs argue that defendants committed legal malpractice when Suits botched his

attempts to reinstate RPF from its administrative dissolution. To succeed on a claim of legal

malpractice, a plaintiff must prove that the attorney owed the plaintiff a duty of due care, the

attorney breached the duty, the plaintiff was injured as a proximate result of the breach, and

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damages. Nettleton v. Stogsdill, 387 Ill. App. 3d 743, 748 (2008). If the plaintiff fails to prove

the existence of any one of the elements of legal malpractice, the plaintiff cannot prevail on its

legal malpractice claim. Nettleton, 387 Ill. App. 3d at 748.

¶ 32 In this case, the trial court held that plaintiffs could not succeed in proving the element of

duty. Generally, an attorney owes a duty only to his client, and not to third persons. Pelham v.

Griesheimer, 92 Ill. 2d 13, 19 (1982). However, in Pelham, the court noted that the trend in tort

law was toward abolishing the privity-of-contract requirement in determining duty. Pelham, 92

Ill. 2d at 20. In order to avoid making the attorney's duty unlimited, the court held that, for an

attorney to have a duty toward a nonclient third-party plaintiff, that plaintiff must plead and

prove facts showing that the plaintiff is an intended third-party beneficiary of the relationship

between the attorney and the client. Pelham, 92 Ill. 2d at 20. In other words, to establish a duty

between an attorney and a nonclient third-party plaintiff, the plaintiff 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. In so holding, the court acknowledged the California

balancing approach, which considers the following factors:

"the extent to which the transaction was intended to affect the plaintiff, the foreseeability

of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of

the connection between the defendant's conduct and the injury suffered, the moral blame

attached to the defendant's conduct[,] and the policy of preventing future harm.”

Pelham, 92 Ill. 2d at 22.

The court did not adopt this balancing test, however, observing that the test usually reduced to

considering whether the services were intended to benefit the plaintiff. Pelham, 92 Ill. 2d at 22.

The court further differentiated, somewhat, between representation in cases of an adversarial

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nature and nonadversarial nature, stating that, in the adversarial setting, "in order to create a duty

on the part of the attorney to one other than a client, there must be a clear indication that the

representation by the attorney is intended to directly confer a benefit upon the third party.”

Pelham, 92 Ill. 2d at 23. The court also noted that the courts employing the California balancing

test were more willing to extend the attorney's duty to third parties in cases in which the

attorney's representation was nonadversarial. Pelham, 92 Ill. 2d at 22. With this background in

mind, we turn to plaintiffs' contentions.

¶ 33 Plaintiffs challenge the trial court's judgment that Suits owed them no duty. Plaintiffs

argue that the trial court's judgment was erroneous for three reasons: (1) in legal malpractice

cases, Illinois has abolished the requirement that the plaintiff be in privity with the defendantattorney;

(2) plaintiffs were the intended third-party beneficiaries of Suits' representation of RPF

for purposes of reinstating it; and (3) a genuine issue of material fact regarding the parties' intent

precludes the entry of summary judgment. We consider each argument in turn.

¶ 34 Plaintiffs first contend that the requirement of privity in legal malpractice cases has been

relaxed or abolished to allow third parties to bring a malpractice claim against an attorney. This

argument is somewhat a straw man. While defendants argued below (and here) that plaintiffs

were not represented by Suits, this was not defendants' only argument. Rather, this argument

was intended only to foreclose a general, run-of-the-mill legal malpractice claim, not to foreclose

a third-party beneficiary legal malpractice claim. Indeed, defendants acknowledged that the

privity requirement had been abolished by Pelham, 92 Ill. 2d at 21. Thus, neither party disagrees

that a third party, under the proper circumstances, can maintain a legal malpractice action against

an attorney. The parties disagree, however, on whether the circumstances of this case are

appropriate to support a legal malpractice action. Accordingly, while we agree with plaintiffs

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that third parties to the attorney-client relationship may maintain legal malpractice actions, our

inquiry must continue.

¶ 35 Plaintiffs next contend that they were the intended third-party beneficiaries of Suits'

representation of RPF. As noted in Pelham, an attorney will owe a duty to a third party only

where the attorney was hired by the client specifically for the purpose of benefitting that third

party. Pelham, 92 Ill. 2d at 21. The "key consideration” for determining if the attorney owed a

duty to the third party is whether the attorney was "acting at the direction of or on behalf of the

client to benefit or influence [the] third party.” Pelham, 92 Ill. 2d at 21. Utilizing that key

consideration, we hold that Suits owed no duty to plaintiffs. While Haul in fact retained Suits,

he, in his capacity as an agent of RPF, retained Suits to represent RPF with regard to reinstating

it from an administrative dissolution. The corporate entity, RPF, was Suits' client, and the

purpose of Suits' engagement was to restore RPF's good standing. This would have two direct

benefits to RPF: it would enable RPF to conduct business, and it would facilitate the sale of

RPF's assets. The restoration of RPF's good standing would have an incidental benefit to the

directors and officers in that they would no longer be personally liable for any contracts entered

into or business conducted by RPF. We cannot say, however, that Suits was acting at RPF's

direction to benefit or influence the directors or officers of RPF. Consequently, Suits owed no

duty to plaintiffs, and the trial court's judgment was correct.

¶ 36 Schechter v. Blank, 254 Ill. App. 3d 560 (1993), reinforces our conclusion. In Schechter,

the defendant lawyer was retained by two corporate entities to institute chapter 11 bankruptcy

reorganizations. The defendant allegedly negligently handled the chapter 11 bankruptcies by

failing to take the steps needed to secure each entity's most valuable asset, and, by failing to

preserve these assets, the entities were forced to convert the chapter 11 bankruptcies into chapter

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7 liquidations in bankruptcy, which also forced the individual plaintiff-owners to file for

individual bankruptcy. Schechter, 254 Ill. App. 3d at 561. The plaintiffs contended that it was

" 'axiomatic' ” that a chapter 11 bankruptcy was filed for the benefit of the corporate creditors,

and this conferred standing upon the plaintiffs to raise legal malpractice claims against the

lawyer. Schechter, 254 Ill. App. 3d at 562-63. The court determined that the "primary and

direct reason” that the plaintiffs hired the lawyer to handle the chapter 11 reorganizations was to

keep their businesses afloat; thus, while the owners and creditors would benefit more from a

chapter 11 reorganization than a chapter 7 liquidation, the primary purpose and intent of the

lawyer's representation was not the payment of the creditors, but to reorganize and preserve the

businesses so that the owners could continue to have creditors and run their businesses.

Schechter, 254 Ill. App. 3d at 565. Additionally, the court cautioned:

"The fact that a third party may benefit from an attorney's representation of his

client does not mean that the attorney thereby owes a duty to the third party. [Citation.]

As stated above, the law only imposes a duty upon an attorney for the benefit of a third

party when the 'primary purpose and intent' of the attorney-client relationship is to

benefit the third party. It would strain the meaning of the 'primary purpose and intent'

language in Pelham for a third party to come within that category simply because he may

benefit from the attorney's representation of his client.” Schechter, 254 Ill. App. 3d at

566-67.

¶ 37 Schechter is directly on point. Here, the primary purpose and intent of Suits'

representation of RPF was to reinstate it from administrative dissolution. That RPF's directors

and officers would benefit by being freed of the possibility of personal liability for business

conducted by RPF is incidental to the primary purpose and intent of restoring RPF to good

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standing. That incidental benefit does not transform the primary purpose and intent of Suits'

representation into protecting RPF's directors and officers. Schechter, 254 Ill. App. 3d at 567.

Accordingly, we conclude that Schechter provides strong support for our conclusion that Suits

owed plaintiffs no duty.

¶ 38 Plaintiffs argue that the trial court erred in its assessment of Suits' duty. Initially,

plaintiffs focus on Pelham's discussion of duty to third parties in adversarial and nonadversarial

situations. Plaintiffs begin with the court's statement regarding a nonadversarial representation:

"It would appear that courts are more willing to apply the balancing test to extend an attorney's

duty to nonclients in cases in which the attorney's representation of his client has essentially

been of a nonadversarial nature.” Pelham, 92 Ill. 2d at 22. Next, plaintiffs note that, in

adversarial representations, "in order to create a duty on the part of the attorney to one other than

a client, there must be a clear indication that the representation by the attorney is intended to

directly confer a benefit upon the third party.” Pelham, 92 Ill. 2d at 23. From this, plaintiffs

argue that our supreme court, in assessing an attorney's duty to a nonclient, established a

dichotomy depending on whether the representation is adversarial or nonadversarial, citing,

among others, Jewish Hospital of St. Louis, Missouri v. Boatmen's National Bank of Belleville,

261 Ill. App. 3d 750, 761 (1994) ("Our supreme court has strongly embraced the concept that

third-party-beneficiary status should be easier to establish when the scope of the attorney's

representation involves matters that are nonadversarial, such as in the drafting of a will, rather

than when the scope of the representation involves matters that are adversarial ***.”). Plaintiffs

assert that the scope of Suits' representation in this case was nonadversarial. Because of the

purportedly lesser standard in nonadversarial matters and because the reinstatement of RPF was

assertedly nonadversarial, plaintiffs conclude that Suits' duty should be extended to them

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because they should be deemed the intended beneficiaries of Suits' undertaking here. We

disagree.

¶ 39 Initially, we note that the supreme court's comment about courts being more willing to

extend an attorney's duty to a nonclient third party in a nonadversarial matter referred to the

California courts and the California balancing approach. Pelham, 92 Ill. 2d at 22. Thus, to say

that Pelham advocated a less stringent approach to determining an attorney's duty to a nonclient

third party in a nonadversarial matter wrenches the comment from its context and is, perhaps, a

bit of an overstatement. Nevertheless, Illinois courts seem to have accepted that interpretation.

See Jewish Hospital, 261 Ill. App. 3d at 761.

¶ 40 More importantly, however, plaintiffs fail to directly analyze the circumstances of this

case to determine if they were the intended beneficiaries of Suits' representation of RPF. Even

in the cases cited by plaintiffs for the purpose of proving their position that an attorney's duty in

a nonadversarial representation is viewed more expansively than in an adversarial matter, the

key inquiry was whether the attorney acted at the direction of or on behalf of the client to benefit

or influence the third party. For example, in McLane v. Russell, 131 Ill. 2d 509 (1989), a legal

malpractice case arising from the drafting of a will, the court did not even mention the

adversarial-versus-nonadversarial language in Pelham even though it relied upon Pelham in

resolving the issue. The evidence in McLane showed that the decedent had decided to devise her

interest in a family farm to the plaintiffs, who were the farm's long-time tenants. McLane, 131

Ill. 2d at 518. The lawyer drafted the provision so that the plaintiffs would receive the

decedent's interest only if the decedent's sister predeceased her, but the decedent died first, and

the farm eventually passed to someone else. McLane, 131 Ill. 2d at 513. The attorney argued

that extending his duty to the plaintiffs would conflict with Pelham because it would authorize

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both contingent and intended beneficiaries under a will to sue an attorney. McLane, 131 Ill. 2d

at 517. The court reiterated the Pelham holding, that the key consideration is whether the

attorney acted at the direction of or on behalf of the client to benefit or influence a third party,

and, after reviewing the evidence, it concluded that the attorney had acted at the direction of the

decedent to devise her interest in the farm to the plaintiffs, regardless of whether her sister

predeceased her. McLane, 131 Ill. 2d at 518-20. The court expressly held that, "[a]pplying the

'intent to directly benefit' standard in Pelham to the facts alleged in the complaint, we conclude

that the plaintiffs were intended, rather than contingent, third-party beneficiaries of the contract

for professional services between the defendant-attorney and his client, [the decedent].”

McLane, 131 Ill. 2d at 520.

¶ 41 In Ogle v. Fuiten, 102 Ill. 2d 356, 363 (1984), the court again relied upon Pelham, but

this time, it also noted that the controversy concerned the drafting of a will, which was a

nonadversarial matter. Throughout the opinion, the court referred to cases that determined that

third parties were intended beneficiaries of negligently drawn wills. Ogle, 102 Ill. 2d at 362.

Additionally, the court expressly noted that the plaintiffs had alleged that they were the intended

beneficiaries of the will allegedly negligently drafted by the defendant. Ogle, 102 Ill. 2d at 363.

¶ 42 In Jewish Hospital, 261 Ill. App. 3d at 760, the court relied on Ogle in holding that the

attorney owed a duty to the plaintiffs for mistakes made in drafting a will. The court noted that

the supreme court had "strongly embraced the concept that third-party-beneficiary status should

be easier to establish when the scope of the attorney's representation involves matters that are

nonadversarial, such as in the drafting of a will, rather than when the scope of the representation

involves matters that are adversarial.” Jewish Hospital, 261 Ill. App. 3d at 761. Despite its

reference to the adversarial-versus-nonadversarial dichotomy, the court nevertheless analyzed

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the facts to determine whether there was an indication that the plaintiffs were intended thirdparty

beneficiaries of the will at issue. Jewish Hospital, 261 Ill. App. 3d at 760-61. Indeed, the

court held that "it is clear from the mere reading of the will in the case at bar that the testator

intended to benefit [the] plaintiffs.” Jewish Hospital, 261 Ill. App. 3d at 761.

¶ 43 There is a consistent thread in McLane, Ogle, and Jewish Hospital, namely, the

paramount consideration of whether the attorney acted at the direction of or on behalf of the

client to directly benefit or influence the third party. Despite the nonadversarial nature of the

representations in McLane, Ogle, and Jewish Hospital, those courts still accorded primary

weight to whether the plaintiffs were intended beneficiaries of the legal representation by the

defendant attorneys. In this case, plaintiffs contend that the reinstatement of RPF from its

administrative dissolution was a nonadversarial undertaking. Even accepting this as true for the

purpose of argument, we cannot avoid the consideration of whether Suits' representation of RPF

was undertaken to directly benefit plaintiffs. We see nothing in the evidence that indicates that

the representation was designed to insulate plaintiffs from potential personal liability for the

business that RPF conducted while it was dissolved. Instead, the evidence shows that the

reinstatement was, at most, intended to put RPF in the condition where plaintiffs could continue

with their intention of selling RPF's assets to an interested buyer. The protection of plaintiffs

from personal liability was only incidental to that primary purpose. Accordingly, despite any

relaxation accruing from the nonadversarial nature of the representation, we cannot conclude that

Suits owed a duty to plaintiffs as intended third-party beneficiaries of his representation of RPF.

¶ 44 Plaintiffs next contend that a duty should be imposed on Suits because it was plaintiffs

and not RPF who were most at risk from any failure to reinstate RPF. Again, while this assertion

may be true, there is no case law that supports plaintiffs' implied point that, in such a situation,

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the lawyer should bear the risk of harm to third parties arising from his negligence in the

representation of his client. Additionally, we cannot escape the paramount command of Pelham,

namely, to consider whether the third party was an intended beneficiary of the client's

representation by the attorney. Simply because the third parties here, plaintiffs, were at risk of

personal liability does not transform the incidental benefits of Suits' representation of RPF into

direct and intended benefits for plaintiffs. In considering the difference between incidental

benefits and direct benefits, we find York v. Stiefel, 99 Ill. 2d 312 (1983), to be helpful.

¶ 45 In York, the husbands had retained an attorney to help them navigate business problems,

including bankruptcy and potential criminal liability. Consulting only his memory and none of

the documents, the attorney instructed the husbands to sign personal guarantees and take second

mortgages on their homes in order to keep their business afloat for another 30 days while they

sought financing elsewhere. York, 99 Ill. 2d at 317-18. The attorney believed that the husbands

were already personally liable; their original loan, however, was not personally guaranteed. At

the end of the 30-day period, the husbands had not secured financing, and the business was

closed and its assets sold. The husbands also lost their houses. York, 99 Ill. 2d at 318. The

wives claimed that they were intended beneficiaries of the representation because they too

signed the personal guarantees and second mortgages. York, 99 Ill. 2d at 320. The court found

that the attorney owed no duty to the wives. Even though the wives signed the documents, and

even though the attorney negotiated a homestead exemption in the second mortgages, from

which the wives benefitted, the court concluded that no duty arose to the wives. The benefit

from the homestead exemption did not make the wives intended beneficiaries; instead they were

no more than incidental beneficiaries because the purpose of the attorney's representation of the

husbands was directed at saving their business. York, 99 Ill. 2d at 320-21.

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¶ 46 In determining intended versus incidental beneficiaries, the court continued its focus on

the client and the goal of the representation. York, 99 Ill. 2d at 320-21. Because the husbands

were clients, and the goal of the representation was to help keep the husbands' business afloat,

the court could not conclude that the wives were intended beneficiaries of the attorney's actions.

¶ 47 Likewise here. Although Haul retained Suits, he did so on behalf of and as an agent for

RPF. Haul admitted that Suits was not retained to represent any of the plaintiffs as individuals,

but was retained to represent only the corporate entity while it was being reinstated. The goal of

the representation was RPF's reinstatement. That plaintiffs would receive the benefit of

terminating any continuing exposure to personal liability for business conducted by RPF was

incidental to the goal of reinstating RPF. Accordingly, we cannot conclude that plaintiffs were

any more than incidental beneficiaries of Suits' representation.

¶ 48 Plaintiffs' contention seeks to invoke the courts' role in determining whether a duty

exists. "Duty is a question of whether the defendant and the plaintiff 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 plaintiff.” Turner v. Northern Illinois Gas Co., 401 Ill. App. 3d 698, 704

(2010). In determining the existence of a duty, a court will consider certain relevant factors,

including: (1) the reasonable foreseeability that the defendant's conduct might injure another; (2)

the likelihood of an injury occurring; (3) the magnitude of the burden of guarding against such

injury; and (4) the consequences of placing that burden on the defendant. Turner, 401 Ill. App.

3d at 704-05. Plaintiffs' contention combines the third and fourth factors of this consideration,

while presupposing that plaintiffs and defendants stand in such relation to each other that a duty

may be imposed. This is the error of plaintiffs' contention, the assumption that their relationship

with defendants will support a duty.

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¶ 49 Suits represented the corporate entity, RPF, and did not represent any plaintiffs in their

individual capacities. Thus, plaintiffs were not Suits' clients, but third parties. Pelham gives us

the tools to determine whether the relationship between the parties will support a duty, even

while Turner provides the tools to determine whether the duty exists. The question posed by

plaintiffs' contention, then, cannot be asked until the issue of the relationship of the parties has

been determined. Plaintiffs contend that, under Turner, a duty exists because plaintiffs bore the

greater burdens and risks resulting from a botched reinstatement, both personally and as a matter

of public policy. Although that may be true, we do not reach that question, because we have

determined that, under Pelham, York, McLane, Ogle, and Jewish Hospital, the parties do not

stand in such a relationship that a duty may be imposed on defendants. Plaintiffs' contention,

then, makes the faulty presupposition that the relationship of the parties will support a duty

between them. As a result, we need not further consider this contention.

¶ 50 Plaintiffs next contend that reinstatement is a simple task, and it is made no more

difficult if the attorney's duty is extended to include those at risk if the attorney bungles the task.

We first note that plaintiffs include no citation to authority to support their position, thereby

forfeiting our review of this contention. Ill. S. Ct. R. 341(h)(7) (eff. Sept. 1, 2006); Vilardo v.

Barrington Community School District 220, 406 Ill. App. 3d 713, 720 (2010). More importantly,

this contention suffers from the same infirmity as the preceding contention: it presupposes the

existence of a relationship between the parties that will support the imposition of a duty on one

to act for the benefit of the other. Again, plaintiffs' contention concerns the factors used to

determine the existence of a duty without first establishing that the parties stand in such a

relationship that a duty may be imposed. Further, plaintiffs seem to suggest that, in addition to

the normal rules surrounding the imposition of a duty, we should create an exception that

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automatically imposes a duty on a lawyer to all third parties who could be harmed by the

lawyer's negligence if the task the lawyer is performing for the client is "simple.” There is no

authority for creating such an exception, to say nothing about defining which legal tasks are

"simple.” Additionally, we see no benefit to such a proposition, other than the job security that

would attach to the inevitable litigation that such a result would engender. We need not further

address plaintiffs' contention on this point.

¶ 51 Plaintiffs' final contention on the issue of duty is that we should impose a duty on

defendants because Suits knew or should have known that plaintiffs would rely on him to protect

their interests in having RPF reinstated. Plaintiffs base this contention on dicta in Pelham. In

Pelham, the plaintiffs were children whose mother the defendant attorney had represented in her

divorce from the children's father. The father was required by the divorce decree to maintain

life insurance with the children as the prime beneficiaries of the policies. The father did not do

so, and instead named his second wife as beneficiary of his life insurance policy. The second

wife received the proceeds of the father's life insurance policy after he died, and the plaintiffs

alleged that the defendant attorney had committed legal malpractice by failing to make sure that

the father complied with the divorce decree. Pelham, 92 Ill. 2d at 16. The court held that the

children were not intended beneficiaries of the mother's representation by the defendant

attorney, but were only incidental beneficiaries at best, so the defendant attorney owed the

children no duty. Pelham, 92 Ill. 2d at 23. Plaintiffs base their contention on the following

dicta:

"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 [father]'s employer of the provision in the divorce decree. In that

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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.” Pelham, 92 Ill. 2d

at 24.

Plaintiffs argue that the same result as is implied in the above-quoted dicta should obtain here,

and we should impose a duty on Suits regarding his undertaking of reinstating RPF. We

disagree.

¶ 52 In the Pelham dicta, the court noted that a duty might have been imposed had the

defendant attorney voluntarily undertaken the additional task of notifying the court or the

father's employer in addition to the task he was retained to do, namely, obtain a divorce from the

father for the mother. To have a situation similar to that described in the Pelham dicta, then,

Suits would have had to voluntarily undertake another task for plaintiffs in addition to his

representation of RPF for the purpose of reinstating it. Suits did not undertake any additional

tasks, and Pelham's dicta is inapposite to the factual circumstances of this case and cannot serve

as a basis for imposing a duty on Suits to act for the benefit of plaintiffs, who were nonclient

third parties. Accordingly, we reject plaintiffs' contention.

¶ 53 Plaintiffs next argue that there were material issues of fact that should have precluded the

entry of summary judgment. We have determined, however, that the undisputed facts failed to

establish that defendants owed plaintiffs a duty. In the absence of a duty, which is an issue of

law to be determined by the court, a claim of negligence may not stand. See, e.g., Pelham, 92

Ill. 2d at 18-19. If the undisputed facts fail to support a duty, then, even if there are other,

disputed facts that would otherwise prevent summary judgment, summary judgment is

nevertheless proper because the claim of negligence cannot be maintained in the absence of a

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duty. We need not, therefore, further consider plaintiffs' contentions regarding further factual

disputes.

¶ 54 Plaintiffs also raise a number of other issues challenging the trial court's judgment.

Having found that no duty exists, and thereby finding that the trial court's judgment was proper,

we need not address any of these issues, as the failure to demonstrate the existence of a duty

owed by defendants to plaintiffs is dispositive.

¶ 55 For the foregoing reasons, the judgment of the circuit court of Ogle County is affirmed.



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See: http://www.state.il.us/court/Opinions/AppellateCourt/2011/2ndDistrict/November/2100480.pdf

¶ 56 Affirmed.

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