Illinois Appellate Court Reverses Dismissal of Legal Malpractice Claim on Fraudulent Concealment Grounds

          In Anderson v. Sullivan, Taylor, and Gumina P.C., 2023 IL App (1st) 221796-U, the Illinois appellate Court, Second Division, reversed the dismissal of plaintiff’s legal malpractice claim on the grounds that she pleaded sufficient facts that, if true, demonstrated fraudulent concealment and thereby tolled the six-year statute of repose for attorney malpractice actions. Plaintiff divorced her husband in 2011 via a negotiated settlement agreement where she was represented by defendants. One provision of the agreement was intended to secure plaintiff’s right to receive death benefits from ex-husband’s pension if he predeceased her. Plaintiff alleged that defendants repeatedly informed her that she could receive this death benefit. Plaintiff claimed the potential for receiving a death benefit was a material factor in her decision to enter into the settlement, and that she waived claims to other financial benefits as a result.

Plaintiff and ex-husband’s settlement was entered in July 2011. Eight years later, in 2019, ex-husband became incapacitated, and plaintiff became the guardian of his person and estate. Plaintiff communicated with ex-husband’s pension administrator in this role and was informed in 2020 that only surviving spouses and dependents were eligible for death benefits. Plaintiff had been informed by defendants during the initial settlement discussions that he would file a QUILDRO order to give effect to the provision of the settlement granting death benefits. When plaintiff reached out to defendants in 2020, she alleges that she was told the purpose of the QUILDRO was to override the Pension Code so that she could receive death benefits and that defendants would investigate whether one was filed. A QUILDRO was sent to plaintiff to sign, and defendants filed it with the court in June of 2020.

After the QUILDRO was filed, the pension administrator sent a letter to defendants, informing them that a former spouse cannot qualify as a surviving spouse. The pension administrator additionally informed defendants that plaintiff could only receive a benefit at ex-husband’s death if a rare sequence of circumstances occurred. Plaintiff began receiving her marital portion of the pension but brought a malpractice suit in September of 2021 against defendants alleging that she could never have received death benefits and that she would have taken a different position but for defendants’ advice. Defendants filed a motion to dismiss this action on the grounds that the 2021 suit was time barred by the six-year statute of repose because the alleged misconduct occurred ten years earlier in 2011. The trial court granted this motion and dismissed plaintiff’s claims with prejudice.

The appellate court began its analysis by concluding that the harm to plaintiff was complete when the settlement was entered in 2011, making the statute of repose begin to run at that point. In so doing the court rejected plaintiff’s argument that the harm extended through the filing of the QUILDRO order because the order ultimately had no bearing on her rights and could not change her circumstance. Next, the court rejected plaintiff’s equitable estoppel argument. The court reasoned that defendants must have been aware of the negligence, and according to plaintiff’s estoppel argument they did not have notice until the pension administrator contacted them. The court also articulated that plaintiff did not allege that defendants did or told her anything to delay her filing of a claim. The court thus held that core elements of the estoppel claim were missing and rejected the argument.

However, the court did side with plaintiff on the estoppel argument, and held that she pled sufficient facts that, if proven, would demonstrate fraudulent concealment. Fraudulent concealment would thus pause the statute of repose, and grant plaintiff five years from the discovery of the concealment to bring a lawsuit under 735 ILCS 5/13-215. The court noted that to state a claim for fraudulent concealment a plaintiff must allege:
(1) the defendant concealed a material fact under circumstances that created a duty to speak; (2) the defendant intended to induce a false belief; (3) the plaintiff could not have discovered the truth through reasonable inquiry or inspection, or was prevented from making a reasonable inquiry or inspection, and justifiably relied upon the defendant’s silence as a representation that the fact did not exist; (4) the concealed information was such that the plaintiff would have acted differently had he or she been aware of it; and (5) the plaintiff’s reliance resulted in damages.

Anderson v. Sullivan, Taylor, and Gumina, P.C., 2023 IL App. (1st) 221796-U at 15. The court articulated that although plaintiffs must typically prove affirmative acts or representations intended to prevent or delay the filing of a lawsuit, the standard is lower for fiduciary relationships like that of an attorney-client relationship. In those cases, the plaintiff needs only to allege that the attorney failed to fulfill his duty to disclose material facts concerning the existence of a cause of action. Plaintiff pled her fraudulent concealment in the alternative to her estoppel claim, and it thus involved an analysis of different alleged facts.

In this case, plaintiff pled a variety of facts that the court found, when taken together, to be sufficient. Plaintiff alleged that the defendants declined to file a QUILDRO because it would lead to their negligence being discovered, that she had no reason to inquire as to the status and no concern for not being paid the death benefits, knowingly held from her that a QUILDRO was not filed and did so to conceal their negligence from her. Although plaintiff accidentally incorporated an allegation that defendants did not know about the negligence form an alternative count, the court refused to dispose of her claim because of a technical defect that did not confuse defense counsel. The court held that attorneys cannot refuse to perform an act inherent in their representation, which is the filing of the QUILDRO here, to conceal fraud, as plaintiff alleged. The court concluded that if plaintiff can prove the alleged facts, the statute of repose will not bar her claim.   

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