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Majumdar v. Lurie

July 20, 1995



Petition for Leave to Appeal Denied December 6, 1995.

Presiding Justice Hoffman delivered the opinion of the court: Cahill and Theis, JJ., concur.

The opinion of the court was delivered by: Hoffman

PRESIDING JUSTICE HOFFMAN delivered the opinion of the court:

The plaintiffs appeal from orders of the circuit court dismissing their three-count second-amended complaint and denying them leave to replead. Because the complaint in issue was dismissed in response to the defendants' motion brought pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 1992)), the only question before this court is whether the dismissed counts stated causes of action. The issue is one of law and our review is de novo. Metrick v. Chatz (1994), 266 Ill. App. 3d 649, 639 N.E.2d 198, 203 Ill. Dec. 159.

In determining whether the plaintiffs stated causes of action upon which relief could be granted, we must accept as true all well pled facts in their complaint ( Miner v. Gillette Co. (1981), 87 Ill. 2d 7, 428 N.E.2d 478, 56 Ill. Dec. 886), and must draw all reasonable inferences from those facts which are favorable to the plaintiffs ( Your Style Publications, Inc. v. Mid-Town Bank & Trust Co. (1986), 150 Ill. App. 3d 421, 501 N.E.2d 805, 103 Ill. Dec. 488). However, we do not accept as true any conclusions of law or fact contained within the complaint which are unsupported by allegations of specific facts upon which those conclusions rest. Curtis v. Birch (1983), 114 Ill. App. 3d 127, 448 N.E.2d 591, 69 Ill. Dec. 873.

In their second-amended complaint, the plaintiffs sought relief against the defendants, who were their former attorneys, for legal malpractice. Count I alleged negligence, count II alleged breach of contract, and count III alleged breach of fiduciary duty. The following facts, taken exclusively from the plaintiffs' second-amended complaint, form the basis of their claims for relief.

In 1974, the plaintiff, Amalendu Majumdar, M.D. (Majumdar), became an employee of the Bel-Austin Medical Corporation (Bel-Austin). In February 1977, Majumdar acquired a 49% interest in the outstanding stock of Bel-Austin and was named an officer and director of the corporation. The defendants acted as Bel-Austin's corporate legal counsel in the transaction.

In June 1980, Majumdar, while still a shareholder, officer, and director of Bel-Austin, contacted the defendants and requested that they represent him in forming a medical corporation independent of Bel-Austin. The defendants accepted the engagement and the plaintiff, Amalendu Majumdar, M.D., S.C. (AMSC), was incorporated on July 1, 1980. The corporate purpose contained in the articles of incorporation for AMSC drafted by the defendants permitted the corporation to engage in the unrestricted practice of medicine, which is the same purpose as contained in Bel-Austin's articles of incorporation. Majumdar was the sole shareholder of AMSC and became its only officer and director. Beginning upon its incorporation, AMSC acted as an independent contractor providing medical services to Bel-Austin.

The allocation of Bel-Austin's profits was restructured in 1986 because Majumdar was displeased with the income disparity between himself and Dr. Bruce Zummo, Bel-Austin's other shareholder. In March 1987, Majumdar informed Zummo that he would be seeing patients outside of his relationship with Bel-Austin. In November 1987, the defendants were present at a meeting where Zummo announced that Majumdar was seeing patients in direct competition with Bel-Austin.

On December 2, 1987, the defendants, acting as corporate legal counsel for Bel-Austin, sent a letter to Majumdar outlining a proposed acquisition of his interest in Bel-Austin by Zummo. Nothing further is alleged in the complaint relating to the buy-out.

In 1988, the plaintiffs, represented by counsel other than the defendants, filed an action in the circuit court of Cook County against Zummo and Bel-Austin known as case No. 88 CH 1190. Bel-Austin filed a counterclaim in that action against Majumdar alleging that he breached his fiduciary duty as an officer and director of Bel-Austin by engaging in direct competition and diverting fees due from its patients to himself. That action was settled and dismissed on February 5, 1992, upon terms which required, inter alia, that Majumdar resign as an officer and director of Bel-Austin, assign all of his Bel-Austin stock to Zummo, and pay Bel-Austin $70,000.

In the instant action, the plaintiffs assert that the defendants improperly incorporated AMSC, failed to advise Majumdar of his fiduciary duties as an officer and director of Bel-Austin, failed to advise him to resign as an officer and director of Bel-Austin, and engaged in a conflict of interest in representing both the plaintiffs and Bel-Austin. The plaintiffs conclude that the defendants' acts and omissions constituted negligence (count I), breach of contract (count II), and breach of fiduciary duty (count III), all of which proximately resulted in the damages sustained by them as a consequence of the settlement in case No. 88 CH 1190.

As we stated in Metrick: "To plead a good and sufficient cause of action against an attorney for legal malpractice, a plaintiff must allege facts which establish (1) an attorney/client relationship, (2) a duty owed by the defendant to the plaintiff arising out of that relationship, (3) a breach of that duty on the part of the defendant, (4) a proximate causal relationship between the defendant's breach of duty and the damages sustained by the plaintiff, and (5) damages." (266 Ill. App. 3d at 652; see also Claire Associates v. Pontikes (1986), 151 Ill. App. 3d 116, 502 N.E.2d 1186, 104 Ill. Dec. 526.) A complaint against an attorney for malpractice may be couched in either contract or tort ( Collins v. Reynard (1992), 154 Ill. 2d 48, 607 N.E.2d 1185, 180 Ill. Dec. 672); however, even when grounded in tort, the action arises out of either an express or implied contract for legal services ( Land v. ...

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