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Brandolino v. Schlak

United States District Court, N.D. Illinois, Eastern Division

July 22, 2019



          John Z. Lee, United States District Judge.

         Plaintiffs Brian Paul Brandolino, Bruce David Brandolino, and Brad Allan Brandolino (together, “Plaintiffs”) allege that Douglas Winter Schlak, an individual doing business as Douglas W. Schlak & Associates, committed legal malpractice by failing to properly represent their interests in a real estate sale. Schlak has moved to dismiss the present complaint, contending that it is untimely under Illinois's statute of repose, 735 Ill. Comp. Stat. 5/13-214.3(c). For the reasons that follow, Schlak's motion is denied.

         Background [1]

         In 2005, Robert R. Brandolino retained Schlak to assist him in the sale of a property that Robert had received from a family trust. Am. Compl. ¶¶ 14, 30, ECF No. 23. Robert held a life estate in the property, and his sons-who are the Plaintiffs in this case-held the remainder interests. Id. ¶ 14.

         To facilitate the sale of the property, Schlak prepared certain documentation for Plaintiffs to sign to sell their remainder interests. Id. ¶¶ 15(A), 31. The documents prepared by Schlak and signed by Plaintiffs included Powers of Attorney for each of the Plaintiffs, appointing Schlak to represent them in the real estate sale. Id. ¶ 15(A)(5-7). At the conclusion of the sale, Robert gave $100, 000 to each son. Id. ¶¶ 20-21.

         It appears that the payment of $100, 000 was intended to compensate each son for the sale of their remainder interests in the property as part of the overall sales transaction. See Id. However, Plaintiffs now allege that they did not exactly know what it meant to have a remainder interest in the property. Id. ¶ 17. To their understanding, the only right that they had was to receive the property in the event of their father's death, but they believed that their father had the right to dispose of the property while he was alive and to keep all of the proceeds. Id. ¶¶ 17-20.

         As for the $100, 000, Plaintiffs believed that the payments were gifts from their father for helping to facilitate the sale and to compensate them for the loss of their future inheritance of the property. Id. ¶¶ 18, 20, 27. If they had known that they were giving up their remainder rights (and how valuable those rights were) in exchange for $300, 000, they say, they would not have agreed it. Id. ¶¶ 19, 25.

         Plaintiffs go on to allege that Schlak never spoke to them, let alone explained what a remainder interest was. Id. ¶ 32. Nor did he advise Plaintiffs to seek independent counsel or inform them of the potential conflict of interest between their interests and those of their father's. Id. ¶ 26. As a result, Plaintiffs contend, Schlak committed legal malpractice by breaching his duties (1) to exercise due care and diligence in representing them, (2) to be loyal, honest, and fair to Plaintiffs as his clients, (3) to disclose all facts bearing on his representation of them, (4) to zealously represent Plaintiffs' interests in the property sale, and (5) to avoid conflicts of interests. Id. ¶ 37.

         Additionally, Plaintiffs allege that the transaction documents created by Schlak were intentionally misleading and did not inform them that the compensation they received was in exchange for their remainder interests, and not a gift. Id. ¶¶ 44, 46-48, 52. According to Plaintiffs, Schlak also prevented them from receiving any tax documentation about the sale, which would have revealed the true nature of the transaction. Id. ¶ 55. Finally, Plaintiffs contend that Schlak purposely failed to provide them with documentation of the closing, thereby preventing them learning of their true interests in the property. Id. ¶¶ 44, 46-48, 52-53, 56.

         Sometime after May 1, 2017, Robert became hospitalized. Id. ¶ 8. At that time, Robert gave permission to Brian to enter his house and retrieve certain financial documents. Id. ¶ 9. In the house, Brian found envelopes from Schlak addressed to both Robert and Brad. Id. ¶¶ 10-12. The envelopes contained documents from the property sale, many of which Plaintiffs had never received or seen. Id. ¶¶ 15-16. These documents revealed the true nature of the sale, including proof that the $100, 000 received by each Plaintiff was in exchange for their reminder interests and not a gift. Id. ¶¶ 15(B)(7), 15(C)(2-4). Furthermore, the envelope addressed to Brad contained a number of documents signed by Schlak on behalf of Plaintiffs, unbeknownst to them. Id. ¶ 15(B). It was only after reading these documents that Plaintiffs understood the nature of the transaction. Id. ¶¶ 22-23.

         Legal Standard

         To survive a motion to dismiss under Rule 12(b)(6), a complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         Additionally, when considering motions to dismiss, the Court accepts “all well-pleaded factual allegations as true and view[s] them in the light most favorable to the plaintiff.” Lavalais v. Vill. of Melrose Park, 734 F.3d 629, 632 (7th Cir. 2013) (citing Luevano v. Wal-Mart Stores, Inc., 722 F.3d 1014, 1027 (7th Cir. 2013)). At the same time, “allegations in the form of legal conclusions are insufficient to survive a Rule 12(b)(6) motion.” McReynolds v. Merrill Lynch & Co., Inc., 694 F.3d 873, 885 (7th Cir. 2012) (citing Iqbal, 556 U.S. at 678). As such, “[t]hreadbare recitals of the elements of the cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678.

         Dismissal under Rule 12(b)(6) based on untimeliness is inappropriate, unless the complaint itself establishes that the suit is untimely and that there is no way around the time bar. Sidney Hillman Health Ctr. v. Abbott Labs., Inc., 782 F.3d 922, 928 (7th Cir. 2015); see also Chi. Bldg. Design, P.C. v. Mongolian House, Inc., 770 F.3d 610, 613-14 (7th Cir. 2014). This is because timeliness is an affirmative defense that need not be anticipated in the complaint. United States v. Lewis, 411 F.3d 838, 842 (7th Cir. 2005). If there is “a conceivable set of facts, consistent with the complaint, that would defeat [the affirmative] defense, questions of timeliness are left for summary judgment (or ...

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