Opinion
20-L-348
11-09-2022
REBECCA LYNN SWANIGAN, ESTATE OF KATHRYN DORMAN, JACQUELINE R. EVERSON, and TYRHA KALIA DOOLEY, and All Other Persons Similarly Situated, Plaintiffs-Appellants, v. GREGORY A. CADE; KEVIN B. McKIE; GARY A. ANDERSON; ENVIRONMENTAL LITIGATION GROUP, PC; PAUL G. SCHOEN; SCHOEN LAW FIRM, PC; LLOYD A. CUETO; LAW OFFICE OF LLOYD A. CUETO, PC; CHRISTOPHER CUETO; LAW OFFICE OF CHRISTOPHER CUETO, LTD.; TROY WALTON; and WALTON TELKEN & FOSTER, LLC, Defendants-Appellees.
This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).
Appeal from the Circuit Court of St. Clair County No. 20-L-348, Honorable Andrew J. Gleeson, Judge, presiding.
Presiding Justice Boie and Justice Moore concurred in the judgment.
ORDER
VAUGHAN, JUSTICE
¶ 1 Held: The trial court's order dismissing plaintiffs' fourth amended complaint with prejudice is affirmed where the allegations fail to establish a cause of action upon which relief can be granted.
¶ 2 Plaintiffs, Rebecca Swanigan, Estate of Kathryn Dorman, Jacqueline Everson, Tyrha Dooley, and all other persons similarly situated, appeal the trial court's order dismissing their fourth amended complaint. For the following reasons, we affirm.
¶ 3 I. BACKGROUND
¶ 4 On April 24, 2020, plaintiffs filed a four-count class action complaint against defendants, Gregory Cade; Kevin McKie; Gary Anderson; Environmental Litigation Group, P.C.; Paul Schoen; Schoen Law Firm, P.C.; Lloyd M. Cueto; Law Office of Lloyd M. Cueto, P.C.; Christopher Cueto; Law Office of Christopher Cueto, Ltd.; Troy Walton; and Walton Telken & Foster, LLC. The complaint alleged violations of the Illinois Rules of Professional Conduct due to defendants' alleged misrepresentation of plaintiffs in 20 mass toxic tort cases previously settled against Monsanto. The initial underlying settlement was previously addressed by this court in Custer v. Cerro Flow Products, Inc., 2018 IL App (5th) 160161, which held that the trial court abused its discretion in finding the settlement agreement between Monsanto and the plaintiffs was made in good faith. Id. ¶ 95. Thereafter, this court vacated the trial court's order finding good faith and remanded the case. Id.
Cerro Flow Products, Inc. was one of numerous defendants named in the initial litigation. Unlike Monsanto, Cerro Flow did not reach any settlement with plaintiffs, remain defendants in the underlying litigation, and are not parties in this appeal.
¶ 5 In the instant matter, it was alleged that after receiving the Custer decision and underlying settlement information, the plaintiffs fired defendants who represented them in the Monsanto litigation and filed the instant class action complaint against them. Counts I, II, and III were based, respectively, on professional negligence, breach of a fiduciary duty, and breach of contract-both express and implied. Count IV requested punitive damages. On July 29, 2020, plaintiffs moved to voluntarily dismiss the complaint, without prejudice, against defendants Lloyd M. Cueto and the Law Office of Lloyd M. Cueto, P.C. The trial court granted the motion and entered a dismissal order, solely as to those defendants, on August 3, 2020.
¶ 6 On September 9, 2020, plaintiffs filed a two-count, first amended class action complaint against the same defendants, including Lloyd A. Cueto and the Law Office of Lloyd A. Cueto, P.C. Count I was based on breach of a fiduciary duty and count II requested punitive damages.
¶ 7 On October 23, 2020, defendants Christopher Cueto and the Law Office of Christopher Cueto, Ltd. (Cueto et al) filed a motion to dismiss the first amended complaint claiming plaintiffs failed to state a claim for breach of fiduciary duty by failing to allege proximate cause and damages and the claim for punitive damages was statutorily barred pursuant to section 2-1115 of the Code of Civil Procedure (Code) (735 ILCS 5/2-1115 (West 2020)). On November 13, 2020, plaintiffs filed a response disputing that proximate cause and damages were necessary for a breach of fiduciary claim and further stating that punitive damages were allowed for a claim of constructive fraud.
¶ 8 On November 23, 2020, defendants Paul Schoen; Schoen Law Firm, P.C; Troy Walton; Walton Telken Foster, LLC; Lloyd Cueto; and Law Office of Lloyd A. Cueto (Schoen et al) filed a motion to dismiss pursuant to section 2-615 of the Code (id. § 2-615) claiming plaintiffs failed to present evidence of a breach of a standard of care, failed to state a specific claim of damages, and that plaintiffs' fraud or fraudulent concealment claim as a form of negligence was improper. The motion further argued that any claim for punitive damages was barred by section 2-1115 of the Code. On December 3, 2020, defendants Gregory Cade, Kevin McKie, Gary Anderson, and the Environmental Litigation Group (Cade et al) filed dismissal motions essentially restating the arguments presented in the Schoen et al, November 23, 2020, motions to dismiss.
¶ 9 On December 28, 2020, and December 29, 2020, plaintiffs filed their responses to the motions to dismiss, again stating their allegations for the breach of fiduciary claim were sufficient and their claim for fraud or constructive fraud was sufficient for an award of punitive damages. On February 11, 2021, the trial court issued an order granting defendants' motions to dismiss pursuant to section 2-615 and allowed plaintiffs to file a second amended complaint by March 12, 2021.
¶ 10 On March 12, 2021, plaintiffs filed a three-count second amended class action complaint against the same defendants. The three counts claimed, respectively, a breach of fiduciary duty, constructive fraud, and unjust enrichment.
¶ 11 On April 8, 2021, defendants Cade et al. filed a motion to dismiss pursuant to section 2- 615, claiming that count I failed to state a cause of action due to its failure to allege proximate cause and damages and count II was deficient for the same reasons. Cade et al. stated count III was barred because the parties had a contract. The pleading further alleged that plaintiffs' request for attorney fees was improper and should be stricken. Similar pleadings were filed by defendants Schoen et al. on April 8, 2021, and defendants Cueto et al. on April 12, 2021.
¶ 12 Plaintiffs filed their responses to each of defendants' pleadings on May 7, 2021, in which plaintiffs requested leave to file a third amended complaint. On May 20, 2021, the trial court issued an order granting defendants' section 2-615 motions to dismiss. The order granted plaintiffs until June 17, 2021, to file a third amended complaint.
¶ 13 On June 17, 2021, plaintiffs filed a third amended class action complaint against the same defendants consisting of two counts claiming constructive fraud and negligence. Defendants filed motions to dismiss pursuant to section 2-615 on July 16, 2021, July 19, 2021, and August 16, 2021. The motions again contended plaintiffs' complaint failed to state a cause of action because the allegations in both counts insufficiently alleged proximate cause and damages. On August 18, 2021, plaintiffs filed their responses to the section 2-615 motions stating the complaint sufficiently stated the breaches of fiduciary duties and damages flowed therefrom. On November 10, 2021, the trial court issued an order granting defendants' section 2-615 motions to dismiss and allowed plaintiffs 30 days to file an amended complaint.
¶ 14 On December 13, 2021, plaintiffs filed a two-count, fourth amended class action complaint against the same defendants. Plaintiffs' initial factual allegations for both counts were nearly identical to the facts set forth in Custer, 2018 IL App (5th) 160161, ¶¶ 3, 5-9, 11, 14-17, 19-22, 25-28, 30-33, 36-37, 44, 51-53. Plaintiffs' remaining factual allegations came directly from the analysis section of Custer, 2018 IL App (5th) 160161, ¶¶ 75-78, 80-87. Count I, for constructive fraud, incorporated all the facts usurped from Custer, and addressed the defendants' fiduciary obligations stemming from their prior representation, and alleged:
"135. Defendants deliberately made false, untrue, or incomplete statements or representations concerning future payments under the Settlement Agreement with the specific intent to cause Plaintiffs to rely upon the statements and representations for the purpose of obtaining their agreement to accept the $600.00 'participation payment' from settlement funds Defendants had arbitrarily and capriciously apportioned to Plaintiffs rather than go to trial on their individual personal injury claims; the loss of the right to sue or go [to] trial against Monsanto having a greater value far in excess of the $600.00 'participation payment' and the personal injury and property payments actually received by Plaintiff and all putative class members.
136. Plaintiffs reasonably relied upon the aforesaid false, untrue[,] or incomplete statements and representations and signed the Releases, in part, because Defendants deliberately failed to disclose the total amount of the settlement, the terms of the Settlement Agreement and the Trust Agreement in order to primarily protect their own financial
interests in the settlement proceeds remaining after their arbitrary and capricious apportionment of settlement funds to Plaintiffs.
137. Defendants' intentional acts and omissions in failing to preserve Plaintiffs' right to proceed to trial or to file suit against Monsanto until the settlement was actually final and not subject to appeal were the direct, foreseeable, intended, and actual proximate cause of harm to Plaintiffs; said harm having a monetary value as an equitable matter far in excess of at least equal to the amount of the attorneys' fees and expenses that Defendants fraudulently took from the total settlement funds.
138.Plaintiffs and Class members would not have accepted the settlement and signed the releases and would have obtained other counsel and sued or gone to trial if Defendants had not abused their position of power, trust, and authority over Plaintiffs and Class members and committed constructive fraud to advance their own interest in the settlement funds.
139.As an equitable remedy for Defendants' intentional acts and omissions in (a) failing to take all action legally necessary and appropriate to protect each Plaintiff's interests in the Monsanto litigation, including the settlement process; (b) failing to refrain from conduct that exposed each Plaintiff to unnecessary or unreasonable financial harm, and (c) failing to act solely in each Plaintiff's absolute best interests, Plaintiffs are now entitled to recover from Defendants a disgorgement of the $5,496,804.72 in attorney fees and the $5,334,479.64 in expenses they took from the total settlement as a result of their abuse of their positions of trust, power, and authority over Plaintiffs; said disgorged amounts properly being subject to imposition of a constructive trust."
¶ 15 Plaintiffs' count II, founded in negligent breach of fiduciary duty, reincorporated the Custer facts, and thereafter stated:
"141. Defendants owed each Plaintiff and Class member, pursuant to the attorney-client relationship, a general duty to exercise reasonable competence and diligence in their legal representation, and to always act in the best interest of each Plaintiff with undivided loyalty.
142.The duties that Defendants owed to Plaintiffs and negligently violated, included, but were not limited to (a) failing to accurately and effectively providing Plaintiffs with sufficient information to make informed decisions about the course of litigation with the Monsanto defendants; (b) failing to accurately and effectively providing Plaintiffs with sufficient information to make informed decisions about the settlement negotiations with the Monsanto defendants; (c) failing to provide Plaintiffs with a copy of the Settlement Agreement and Trust Agreement for review and accurately and effectively explaining the meaning and effect of these documents; (d) failing to accurately and effectively inform Plaintiffs of their right to seek other counsel regarding the meaning and effect of these documents, and (e) failing to assure that Plaintiffs' rights to be zealously represented were not diluted by legally or ethically actionable conflicts of interest.
143. Defendants' negligent acts and omissions, as evidenced by their conduct during representation of Plaintiffs in the Monsanto settlement was the direct, foreseeable, intended, and actual proximate cause of Plaintiffs and Class members approving the settlement, signing the Releases with the 2009 plaintiffs to losing their right to proceed to trial against Monsanto and the 2014 Claimants losing their right to sue Monsanto; the loss of said rights having a value far in excess of the $600.00 'participation payment' and the
personal injury and property payments actually received by Plaintiff and all putative Class members as evidenced by the individual jury verdicts obtained against joint tortfeasor Cerro in the St. Clair Circuit Court in cases No. 21L592-603 on October 15, 2021.
144. Plaintiffs and Class members would not have accepted the settlement and signed the releases and would have obtained other counsel and gone to trial if Defendants had not breached their fiduciary duties."
¶ 16 On December 30, 2021, Cade et al. filed a section 2-615 motion to dismiss claiming that plaintiffs' fourth amended complaint again failed to state identifiable and provable proximate causation as there was no allegation that the plaintiffs would have received more than what they received in the settlement if they had proceeded in a trial against Monsanto, and that such allegation was necessary to meet the pleading requirements for proximate cause and damages. Cade et al. further alleged that the pleading requirement could not be met because Monsanto and Cerro were tortfeasors who were jointly and severally liable in the underlying litigation, and therefore, until the Cerro litigation was complete, the requisite pleading requirement was impossible.
¶ 17 On January 3, 2022, Cueto et al. filed a section 2-615 motion to dismiss stating plaintiffs again failed to allege damages proximately caused by defendants, stating, "Simply alleging that Plaintiffs would have rejected the settlement and gone to trial is not recognized as a recoverable injury absent an allegation that Plaintiffs would have prevailed against Monsanto at trial or obtained a better settlement." Plaintiffs failed to allege why they would be entitled to a greater recovery against Monsanto when there were no allegations that plaintiffs would have prevailed at trial against, or obtained a better settlement from, Monsanto. Cueto et al. further stated that because the fourth amended complaint clarified that Cerro was not a party to the Monsanto settlement and mediation efforts between Cerro and plaintiffs ended with no agreement, actual damages could not be proven as there remained a viable defendant from which plaintiffs could recover.
¶ 18 On January 6, 2022, Schoen et al. also filed a section 2-615 motion to dismiss claiming that plaintiffs' count I failed to allege that the breach of duty "proximately caused the injury of which plaintiff complains." Schoen et al. argued that plaintiffs were required to "plead facts sufficient to show that but for the attorney's malpractice, the client would have been successful in the undertaking the attorney was retained to perform." Schoen et al. further argued that none of the named plaintiffs took any steps to set aside the Monsanto settlement despite obtaining new representation in May 2018 and all had viable claims against the joint tortfeasor Cerro for the same claimed personal or property damage alleged against Monsanto. Schoen et al. also alleged similar deficiencies with regard to the negligence claimed in count II, stating both counts required plaintiffs to allege proximate cause and damages.
¶ 19 Plaintiffs provided responses to the defendants' motions on February 2, 2022, stating," [a]t this point, it is clear that the parties in this case agree that this matter involves legal malpractice." Plaintiffs claimed that count I was for constructive fraud and count II was for breach of a fiduciary duty stating both were equitable causes of action and "the issue of damages in the underlying action does not apply to a cause of action based upon lawyer's intentional torts against his client, such as in this case." Further, even if damages were required, plaintiffs claimed the factual allegations "now adequately set forth their two causes of action and the damages proximately caused by Defendants' intentional acts and omissions." Plaintiffs contended that their loss of the "right to proceed to trial against Monsanto" was sufficient to show damages and stated the language in paragraph 137 sufficiently stated proximate cause and damages.
¶ 20 The parties presented oral argument on February 15, 2022. Defendants continued to contend that plaintiffs were required to allege that their claims against Monsanto would have received more at trial than in the settlement in order to sufficiently allege proximate cause and damages. Defendants also requested a ruling with prejudice since plaintiffs repeatedly refused to include the necessary allegation. Plaintiffs argued that the case was "really about fraud in the inducement to settle *** and we believe that the fraud was intentional."
¶ 21 The trial court entered a written order granting the section 2-615 motions with prejudice, on February 22, 2022, finding Martin v. Heinold Commodities, Inc., 163 Ill.2d 33 (1994), and Turcios v. The DeBruler Co., 2015 IL 117962,
"instructive, in that, regardless of the claim being grounded in negligence or intentional conduct, the element of proximate causation is essential to stating a cause of action and recovery. A plaintiff must allege and properly prove that the defendant's [sic] actions proximately caused their injuries. This is true even in instances such as this case where Plaintiffs claim the Defendants intentionally breached a fiduciary duty owed to them.
The Court has not found, and Plaintiffs have not cited to any case which holds that the 'loss of a right to a jury trial' is a recoverable damage. This Court further accepts Defendants['] argument that Plaintiffs have not suffered any recoverable damages as they have a continuing viable cause of action against Cerro Flow Products within which to recover any and all damages that they may have been entitled to in the underlying action. Consequently, although Plaintiffs have stated sufficient allegations to support the existence of a fiduciary duty and a breach of that duty, the Fourth Amended Complaint fails to set forth the requisite element of proximate causation, or any cognizable claim for related damages.
However, even if, conceptually, the 'loss of the right to go to trial against Monsanto' is potentially a recoverable damage, the plaintiffs still have to plead and prove that they would have prevailed at trial against Monsanto and recovered more than the amount of the settlement and any amount that they could recover from Cerro. As was the case in the four prior Complaints, they have failed to so allege in the Fourth Amended Complaint.
This Court has given Plaintiffs multiple opportunities to state a claim. A review of the previous pleadings in this case makes clear that Plaintiffs continue to avoid [pleading] the necessary element of proximate causation in the fact of multiple motions to dismiss by the Defendants which raised that failure over the last 18 months of the pendency of this case. As such, the Court sees no further need to provide leave to amend."
Plaintiffs timely appealed.
¶ 22 II. ANALYSIS
¶ 23 On appeal, plaintiffs argue that the trial court erred by ruling (1) plaintiffs' claim in equity for constructive fraud was defective because it did not properly plead that defendants' acts proximately caused them injury; and (2) plaintiffs' claim in equity for constructive fraud and claim at law for breach of fiduciary duty was defective because it did not properly plead that plaintiffs would have recovered more money by going to trial against Monsanto or actually suing Monsanto instead of settling. Defendants argue that the trial court correctly dismissed plaintiffs' claims for failure to state a cause of action and urge affirmation of the order.
¶ 24 A motion to dismiss for failure to state a claim tests the legal sufficiency of the plaintiff's complaint and is based on defects apparent on the face of the complaint. Marshall v. Burger King Corp., 222 Ill.2d 422, 429 (2006); see also 735 ILCS 5/2-615 (West 2020). We review the trial court's order from a section 2-615 motion de novo. Solaia Technology, LLC v. Specialty Publishing Co., 221 Ill.2d 558, 579 (2006). Doing so, we take as true all well-pled facts in the complaint and determine "whether the allegations of the complaint, construed in a light most favorable to the plaintiff, are sufficient to establish a cause of action upon which relief may be granted." King v. First Capital Financial Services Corp., 215 Ill.2d 1, 11-12 (2005).
¶ 25 On appeal, plaintiffs' sole citation for the first issue is to Prodromos v. Everen Securities, Inc, 341 Ill.App.3d 718, 724 (2003). They rely on Prodromos to contend that count I was not a claim for breach of fiduciary duty; it was a claim for constructive fraud that only requires a showing that "the superior party (i.e., the one in whom the plaintiff put trust and confidence) must have benefited through the alleged action or inaction." Indeed, in order to state a claim for constructive fraud, Prodromos requires the plaintiff to "show that defendant (1) breached the fiduciary duty he owed to plaintiff and (2) knew of the breach and accepted the fruits of the fraud." Prodromos, 341 Ill.App.3d at 726.
¶ 26 This language, standing alone, would seem to contradict language in Kovac v. Barron, 2014 IL App (2d) 121100, ¶ 64, contending that "[t]he elements of constructive fraud are: (1) a fiduciary relationship; (2) a breach of the duties that are imposed as a matter of law because of that relationship; and (3) damages." We also note that the same elements found in Kovac are those listed for a breach of a fiduciary duty. See Lawlor v. North American Corp. of Illinois, 2012 IL 112530, ¶ 69; see also Neade v. Portes, 193 Ill.2d 433, 444 (2000) (to state a cause of action for breach of a fiduciary duty, a plaintiff must allege that: (1) a fiduciary duty exists, (2) the fiduciary duty was breached, and (3) such breach proximately caused the injury of which the plaintiff complains (citing Heinold Commodities, Inc, 163 Ill.2d 33, 55 (1994))). We would be concerned with the claimed difference in elements, but for the fact that plaintiff failed to address the later language in Prodromos stating, "Plaintiff must also prove that the defendant's actions proximately caused plaintiff's injury before plaintiff may recover, 'even in instances of intentional torts where fiduciaries are involved.'" Prodromos, 341 Ill.App.3d at 727 (quoting Heinold Commodities, Inc., 163 Ill.2d at 59).
¶ 27 Our supreme court has repeatedly held, regardless of whether the claim is grounded in negligence, or intentional conduct, a right of action requires a wrongful act by the defendant and a loss resulting from that act. Heinold Commodities, Inc., 163 Ill.2d at 58-59 (citing Town of Thornton v. Winterhoff, 406 Ill. 113, 119 (1950)). "[P]laintiffs must prove that a defendant's actions proximately caused their injuries before they can recover in tort, even in instances of intentional torts where fiduciaries are involved." Id. at 59. This is true even when the claim involves alleged misrepresentations by the defendant. See id. at 64-66.
¶ 28 During oral argument, plaintiffs argued this claim was about fraud, and the claim for a constructive fraud was based in equity; however, this is not a novel concept for fraud or any other equitable claim. Our supreme court held,
"[I]t is a well settled principle in regard to false representations, that fraud without damage is neither sufficient to support an action at law, nor a ground for relief in equity. Fraud and injury must concur to furnish a ground for judicial action. In an action for fraudulent representations, the plaintiff must not only show, that the representations were made, and that they were false and fraudulent, but he must also show affirmatively that he has been injured thereby." Jones v. Foster, 175 Ill. 459, 469 (1898) (citing 3 Wait, Act. & Def. pp. 442, 453; Bartlett v. Blaine, 83 Ill. 25 (1876); Werden v. Graham, 107 Ill. 169 (1883); Nye v. Merriam, 35 Vt. 438 (1862); Freeman v. McDaniel, 23 Ga. 354 (1857); Taylor v. Guest, 58 N.Y. 262 (1874); and Hanson v. Edgerly 29 N.H. 343 (1854)).
¶ 29 Similarly in Bartlett, our supreme court stated,
"In such action [for fraudulent misrepresentation], the plaintiff must not only show that the representations were made, and that they were false and fraudulent, but he must also show, affirmatively, that he has been injured thereby-that he is, in some way, in a worse condition than he would have been had the words been true." Bartlett, 83 Ill. at 27.
¶ 30 Nor has the law changed. As noted by the Second District appellate court, "In an action for fraud, damages may not be predicated on mere speculation, and must be a proximate, and not remote, consequence of the fraud." Brown v. Broadway Perryville Lumber Co., 156 Ill.App.3d 16, 25 (1987). Our courts require the same for intentional misrepresentations, even when fiduciaries are involved. See Vermeil v. Jefferson Trust & Savings Bank, 176 Ill.App.3d 556, 562- 63 (1988); Martin v. Allstate Insurance Co., 92 Ill.App.3d 829, 835 (1981); Heinold Commodities, Inc., 163 Ill.2d at 58-59 ("We conclude that plaintiffs must prove that a defendant's actions proximately caused their injuries before they can recover in tort, even in instances of intentional torts where fiduciaries are involved.").
¶ 31 Here, there is no dispute that, despite five attempts, plaintiffs failed, whether intentionally or unintentionally, to plead proximate cause to damages, for either constructive fraud or negligent breach of fiduciary duty. While plaintiffs' reply brief contained additional citations to authority, the arguments were never presented to either the trial court or this court in the initial brief and are forfeited. See Haudrich v. Howmedica, Inc., 169 Ill.2d 525, 536 (1996) ("It is well settled that issues not raised in the trial court are deemed [forfeited] and may not be raised for the first time on appeal."); Ill. S.Ct. R. 341(h)(7) (eff. Oct. 1, 2020) ("Points not argued are forfeited and shall not be raised in the reply brief, in oral argument, or on petition for rehearing.").
¶ 32 With regard to their second issue, plaintiffs' initial brief presented no coherent argument and cited no authority in support thereof. Such failure is equally contrary to the mandates of Supreme Court Rule 341(h)(7). "It is well established that a court of review is entitled to have briefs submitted that are articulate and organized and that present cohesive legal argument in conformity with our supreme court rules." Eckiss v. McVaigh, 261 Ill.App.3d 778, 786 (1994). Issues should be "clearly defined with pertinent authority cited." Id. "Mere contentions without argument or citation of authority do not merit consideration on appeal." Id. Here, the lack of intelligible argument coupled with no citation to authority merits no consideration and we consider the issue forfeited. Ill. S.Ct. R. 341(h)(7). As such, we affirm the trial court's dismissal of plaintiffs' fourth amended complaint.
¶ 33 III. CONCLUSION
¶ 34 For the foregoing reasons, we affirm the trial court's order granting defendants' motions to dismiss plaintiffs' fourth amended complaint with prejudice.
¶ 35 Affirmed.