Third Party-Primary Purpose

Reynolds v. Lyman, 903 F.3d 693 (2018)

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Brian Reynolds sued the law firm Henderson & Lyman, which represented various LLC’s he co-owned and managed, and one of its lawyers.  Reynolds accused H&L of giving negligent advice to the LLC’s that led him to violate federal disclosure laws.  The District Court granted summary judgment in favor of H&L, explaining that “Reynolds could not bring a malpractice suit on his own behalf because he did not have a personal attorney-client relationship with H&L.”  Id. at 695.  Reynolds appealed.

The Seventh Circuit affirmed, describing the attorney-client relationship as a “voluntary, contractual relationship that requires the consent of both the attorney and client.”  Id.  Given Reynold’s admission that he never asked H&L to represent him, that no one at H&L said anything suggesting it thought it represented him, and that Reynolds never entered into an agreement with H&L to that effect, the Seventh Circuit held that no attorney-client relationship existed. Reynolds argued that, as part-owner and manager of the LLC’s, his interests and theirs were “so closely bound […] as to be functionally indistinguishable.”  Id. at 696.  However, the court rejected this argument.  “‘Simply because the [officers of a business entity] were at risk of personal liability,’” it explained, “‘does not transform the incidental benefits of [the law firm’s] representation of [the business entity] into direct and intended benefits for [the officers].’”  Id. at 696, quoting Reddick v. Suits, 2011 IL App (2d) 100480, ¶ 44.  Rather, the only time an Illinois attorney owes a duty of care to a third party is “when the attorney was hired for the primary purpose of benefiting that third party.”  Id.

Reynolds v. Lyman, 903 F.3d 693 (2018)

(This is for informational purposes and is not legal advice.)

 

Tagliasacchi v. Morrone, 2017 IL App (1st) 171178-U

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In this unpublished opinion, the First District affirmed the dismissal of a third-party malpractice claim. The court held that the attorney for an estate owes her duty to the estate in the event of a conflict among estate beneficiaries, which was the case here. Accordingly, the plaintiff could not show that the primary or direct purpose of the retention of the defendant attorney was to benefit her, and the attorney owed no duty to the plaintiff.

Tagliasacchi v. Morrone, 2017 IL App (1st) 171178-U

(This is for informational purposes and is not legal advice.)

 

 

 

Mareskas-Palcek v. Schwartz, Wolf & Bernstein, LLP

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The First District affirmed the dismissal of conversion and breach of fiduciary duty claims against a lawyer and law firm that allegedly closed a real estate sale the day after their client died. The court held that the executor of the estate of the client was the proper party to bring the claim and that the plaintiffs, who were beneficiaries of trusts that were to receive the sale proceeds, did not have standing to bring suit. The court also held that the plaintiffs were not the lawyer’s clients and were not owed a duty by the lawyer because the primary purpose for the lawyer’s retention was not to benefit plaintiffs.

Mareskas-Palcek v. Schwartz, Wolf & Bernstein, LLP

(This is for informational purposes and is not legal advice.)

Recent Illinois Case: Auto-Owners Insurance Co. v. Konow

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The Second District held that an attorney does not owe a duty to a non-client in a negligent misrepresentation case unless the Pelham test applicable to legal malpractice claims is satisfied. The court held: “This can be accomplished by synthesizing Pelham’s third-party-beneficiary model with the Penrod /Restatement rule so that information disseminated by an attorney in connection with a client matter is not for the ‘guidance’ of a third party unless the primary purpose of the attorney-client relationship was to guide or influence the third party.”

Auto-Owners Insurance Company v. Konow, 2016 IL App (2d) 150823

(This is for informational purposes and is not legal advice.)

Baez v. Rosenberg, 409 Ill. App. 3d 525, 949 N.E.2d 250 (1st Dist. 2011)

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Baez v. Rosenberg, 409 Ill. App. 3d 525, 949 N.E.2d 250 (1st Dist. 2011) (Attorney retained by special administrator of estate to prosecute wrongful death action owes fiduciary duty to beneficiaries of estate; attorney who acts against interest of beneficiaries may be denied fees)