The opinion of the court was delivered by: RONALD GUZMAN, District Judge
MEMORANDUM OPINION AND ORDER
This diversity action involves the alleged misappropriation and
conversion of U.S. Treasury Stripped Bonds ("the Bonds") from trust
accounts created for the purpose of making
periodic payments to Loy. E. King, Jr. ("King") and his estate pursuant to
a settlement agreement. Plaintiff Sherman Cotton ("Cotton") has sued
Lewis, Rice, Fingersh, L.C. ("Lewis Rice") for tortious interference with
contract (Count IV), tortious interference with economic expectancy
(Count V), inducement of breach of fiduciary duty (Count VI), conversion
of assets (Count VII), and conspiracy to breach fiduciary duty (Count
XVII). Defendant has moved to dismiss all five Counts of Plaintiff's
second amended complaint currently pending against Lewis Rice pursuant to
Fed.R.Civ.P. ("Rule") 12(b)(6). For the reasons set forth below, the
Court denies Lewis Rice's motion.
This case arises out of a settlement agreement pertaining to a personal
injury suit brought by King. As a part of the settlement agreement, the
defendant in the personal injury suit assigned its rights and
responsibilities to SBU, Inc. ("SBU"), a Missouri corporation, who agreed
to make the requisite periodic payments to King and King's estate by way
of a trust account consisting of U.S. Treasury Stripped Bonds ("Bonds").
SBU subsequently transferred the Bonds to Private Bank and Trust Company
("PrivateBank"), who created a structured settlement trust to distribute
periodic payments to King.
This trust designed SBU as the settlor and sole beneficiary,
PrivateBank as the trustee, and Cotton as the trust creditor,
PrivateBank, as trustee, then resigned as trustee and appointed Flag
Finance Corporation ("Flag") as successor trustee. Subsequently, Flag and
SBU, of both James R. Gibson ("Gibson") was officer and majority
shareholder, directed PrivateBank to transfer securities including the
Bonds to an account held by Crews & Associates, a broker-dealer, who
then at the request of either Flag or SBU or one or more of the Gibsons
transferred some of the Bonds to a non-trustee account at C1BC World
Markets Corp, ("CIBC").
Plaintiff alleges that prior to the Fall of 1999, Gibson converted the
Bonds from the structured settlement trust held by Crews and CIBC for his
own use and benefit and left the country. King stopped receiving payments
pursuant to the Trust Agreements in July 2000. On April 4, 2000, Cotton
allegedly received notification that PrivateBank had previously in August
1996 resigned as trustee and paying agent.
This suit commenced on February 16, 2001, when Plaintiff filed suit in
the U.S. District Court for the Northern District of Illinois against
PrivateBank for damages, costs and equitable relief related to the
alleged misappropriation and conversion of the Bonds from the structured
trust account detailed above. Private Bank then filed complaints against
BDO Seidman, L.L.P. ("BDO"), Crews, CIBC, SBU, Flag, and Gibson. Cotton
then amended his complaint to include BDO as a Defendant, a claim that
has now been settled. See Cotton v. PrivateBank & Trust Co., No. 01 C
1099, 2003 WL 22220259, at *7 (N.D. Ill. Sept. 24, 2003).
On July 7, 2003, Plaintiff was granted leave to amend the complaint to
also add Lewis Rice ("Defendant") as a Defendant, alleging five counts:
tortious interference with contract (Count IV), tortious interference
with economic expectancy (Count V), inducement of breach of fiduciary
duty (Count VI), conversion of assets (Count VII), and conspiracy to
breach fiduciary duty (Count XVII). Plaintiff alleges that Lewis Rice, as
attorney for Gibson, SBU, and King, was aware at the time of its
relationship with those parties that there existed a valid and
enforceable contract which obligated them to make periodic payments to
King under the Trust Agreement; that nevertheless Lewis Rice advised and
assisted Gibson and SBU to misappropriate and convert the trust assets to
purchase twenty-three grocery stores, knowing that the transaction would
deprive the Trust of its source of monies; and that Lewis Rice acted with
actual malice and was motivated throughout this transaction by a
30% fee contingent upon the closing of the deal to purchase said stores.
(Compl. ¶¶ 103-07.)
Defendant has filed a motion to dismiss pursuant to Rule 12(b)(6),
arguing that Plaintiff's claims are time-barred under 735 ILL. COMP.
STAT. 5/13-214, 3, as well as that Plaintiff's third-party, non-client
causes of action are barred by Lewis Rice's qualified privilege against
liability under Illinois law.
A. Statute of Limitations
This Court sitting in diversity will apply the procedural and
substantive law of the forum state, including its statute of
limitations. See Reinke v. Boden, 45 F.3d 166, 172 (7th Cir. 1995)
(holding that "it is clear that, as a general rule, Illinois considers
statute of limitations matters to be procedural" and thus binding on
federal courts in diversity suits).
The general civil Illinois statute of limitations provides:
Except as provided in Section 2-725 of the "Uniform
Commercial Code" . . . and Section 11-13 of "The
Illinois Public Aid Code" . . . actions on unwritten
contracts, expressed or implied, or on awards of
arbitration, or to recover damages for an injury done
to property, real or personal, or to recover the
possession of personal property or damages for the
detention or conversion thereof, and all civil actions
not otherwise provided for, shall be commenced within
5 years next after the cause of action accrued,
735 ILL, COMP. STAT. 5/13-205 (emphasis added).
Defendant Lewis Rice, however, argues that Plaintiffs claims of
tortious interference, interference with economic expectancy, inducement
to breach fiduciary duty, conversion of assets and conspiracy to breach
fiduciary duty are time-barred under Illinois' statute of ...