Articles Posted in Fiduciary Duty

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Lincoln-Park-3-300x225In the case of Neubauer v. Piercy, 2025 IL App (2d) 240357-U, the Illinois Appellate Court for the Second District affirmed the dismissal of a breach of fiduciary duty claim against a law firm on statute of limitations grounds. The court held that the two-year statute of limitations barred the claim because the plaintiffs knew or should have known of their injury more than two years before they filed suit. Plaintiffs sued the Defendant law firm for breach of fiduciary duty. Rodney Piercy founded Piercy & Associates, an estate planning law firm. In 2014, Rodney Piercy and his son, Matthew, formed an investment firm known as Family Wealthy Legacy. Matthew was principally responsible for managing the investments of the company. In 2018, plaintiffs invested $1.4 million in Family Wealth Management.  Plaintiffs were essentially alleging that Rodney breached his fiduciary duty to them by failing to disclose to them in 2018 that his son was likely a fraud and crook.

The opinion sets forth the facts as follows:

¶ 6 In July 2018, Matthew confessed to Rodney that he had misrepresented to investors how he managed their money. Matthew admitted that he had “`lost'” $21 million that he had gathered from investors. Matthew asked for Rodney’s help with his plan to recover the money, which involved selling the “algorithmic application” used by investors. Matthew also told Rodney that he was the subject of a criminal grand jury investigation led by the United States Attorney for the Eastern District of California. Rodney agreed to help Matthew and to act as legal liaison to Matthew’s criminal defense counsel. By the end of August 2018, Rodney concluded that the misappropriated monies would not be recovered through the sale of the algorithmic application.

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This case is captioned Khoury v. Kathleen Niew, Stanley Niew, and Niew Legal Partners, 2021 IL App (2d) 200388. Kathleen Niew converted funds of the plaintiffs that were held in her firm’s trust account. The only issue on appeal was whether the trial court properly held that Stanley Niew also had a fiduciary duty to the plaintiffs. The Appellate Court reversed the judgment and held that Stanley Niew did not owe a fiduciary duty to the plaintiffs. The court’s reasoning is important for all lawyers to read and understand:

¶47 Plaintiffs do not contend that they had a fiduciary relationship with Stanley as a matter of law based on an attorney-client relationship. This is wise, as the formation of an attorney-client relationship is a consensual relationship in which the attorney must indicate acceptance to work on behalf of the client, and the client must authorize the attorney to work on their behalf. …The record shows that plaintiffs and Stanley barely communicated at all, much less demonstrated a consensual relationship for Stanley to work on their behalf. Plaintiffs admit that they never spoke with Stanley via phone, e-mail, or text and at most Jamal could recall three short interatctions, which can be fairly described as small talk.The record does not support that Stanley ever agreed to perform work on their behalf, performed work on their behalf, or billed them for his services.

The court held that there was no attorney-client relationship with Stanley and held that the trial court erred in failing to grant summary judgment on his behalf.

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