Chicago Legal Malpractice Lawyer Blog
In 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.
¶ 7 In October 2018, plaintiffs were introduced to Matthew by Grant Birkley, a broker with SagePoint Financial. Plaintiffs spoke with Birkley and Matthew on the phone about investing in an FWL investment managed by Matthew. On November 17, 2018, plaintiffs transferred approximately $1.4 million from a SagePoint account to Matthew to purchase a certain FWL investment.
¶ 8 In December 2018, at Birkley’s recommendation, plaintiffs retained Rodney and P&A to amend their trust agreement. During a December 2018 meeting with Rodney, plaintiffs discussed their assets and specifically mentioned the monies invested with FWL under Matthew’s management. Plaintiffs provided Rodney with a December 1, 2018, FWL statement. Plaintiffs were aware that Matthew was Rodney’s son. Rodney completed the amended trust agreement.
¶ 9 The second amended complaint alleged:
“Beginning in January 2020, [plaintiffs] began to question Matthew about the status of their account. They had not received statement [sic] for several months, and Matthew’s explanation for the untimely statements began to concern them. In early 2020[,] [plaintiffs] demanded the liquidation of their FWL account and the return of the monies they entrusted to Matthew and FWL. In March 2020, after [plaintiffs] received a grand jury subpoena requesting documents concerning Matthew, FWL[,] and communications they received from Matthew, their efforts to recover their investments increased but with no success.”
¶ 10 On November 11, 2020, a federal grand jury indicted Matthew on 29 counts, which alleged that, “`[b]eginning in or about July 2015 and continuing until at least August 2020[,] Matthew *** knowingly participated in a scheme to defraud investors[.]'” According to the second amended complaint, Matthew was in federal prison awaiting trial.
¶ 11 Count I of the second amended complaint alleged that Rodney owed plaintiffs the duties of fidelity, honesty, and good faith, which he breached when he failed to disclose to plaintiffs, among other things, (1) any conflict of interest he may have had and (2) information about Matthew, namely his confession that he made misrepresentations to FWL investors, lost $21 million in invested funds, and was under federal investigation for securities fraud.
Defendants moved for summary judgment on the ground that they filed the case after the two-year statute of limitations for claims against attorneys had run. Plaintiffs filed suit on March 14, 2022. Defendants argued that they knew or should have known of their injuries by January 2020, when they demanded the return of $500,000 from FWL. Defendants relied upon the deposition of one of the plaintiffs. They argued that plaintiffs in January 2020, plaintiffs were aware or suspected that their money had been lost to a scam.
The court held that the plaintiffs discovered their injury in January 2020 and that the two-year statute of limitations barred the claim.
¶ 31 We hold no genuine issue of material fact exists that, based on Richard’s testimony, plaintiffs knew or reasonably should have known before March 14, 2020, that they had suffered a financial injury and that it was wrongfully caused. When asked “[w]hat prompted [him] in January 2020 to demand a return of $500,000 that [he] had invested with [FWL],” Richard stated:
“I was already fairly confident at that point that this was a charade and that this was a scam that we had been vulnerable toward, and I wanted my money back as soon as I could, but I also reasoned that I didn’t want to spook Matt[hew] *** by asking for the entire amount, and—and I thought if I could get half of it back, it would be better than nothing, and once I got that back, I would go after the remainder. I wanted him to still think we were partnering with him.” (Emphasis added.)
The court also rejected Plaintiffs’ argument that Rodney should be equitably estopped from relying on the statute of limitations defense. The court summarized the requirements to establish equitable estoppel:
To invoke equitable estoppel, the party claiming estoppel must demonstrate the following:
“(1) the other person misrepresented or concealed material facts; (2) the other person knew at the time he or she made the representations that they were untrue; (3) the party claiming estoppel did not know that the representations were untrue when they were made and when that party decided to act, or not, upon the representations; (4) the other person intended or reasonably expected that the party claiming estoppel would determine whether to act, or not, based upon the representations; (5) the party claiming estoppel reasonably relied upon the representations in good faith to his or her detriment; and (6) the party claiming estoppel would be prejudiced by his or her reliance on the representations if the other person is permitted to deny the truth thereof.” DeLuna v. Burciaga, 223 Ill. 2d 49, 82-83 (2006).
Regardless, the principles behind the two doctrines are substantively the same. Turner v. Nama, 294 Ill. App. 3d 19, 26 (1997). For either equitable estoppel or fraudulent concealment to apply, “a party must generally show that the defendant said or did something to lull or induce [the] plaintiff to delay the filing of his claim until after the limitations period has run.” (Internal quotation marks omitted.) Carlson v. Michael Best & Friedrich LLP, 2021 IL App (1st) 191961, ¶ 56.
Rodney argued that there was no equitable estoppel because he did not make an affirmative false representation.
The court rejected the equitable estoppel argument. It stated: “¶ 40 In any event, we agree with defendants that estoppel does not apply, because (1) the estoppel claim is based on the same conduct as plaintiff’s cause of action and (2) the conduct underlying the estoppel claim did not prejudicially impact the filing of plaintiffs’ action. It is well established that “the allegedly fraudulent statements or omissions that form the basis of the cause of action may not constitute the fraudulent concealment in the absence of a showing that they tend to conceal the cause of action.” Barratt v. Goldberg, 296 Ill. App. 3d 252, 257 (1998); see also Brummel v. Grossman, 2018 IL App (1st) 162540, ¶ 38 (“[I]t is well-established that the basis of a legal malpractice action also cannot constitute the grounds for equitable estoppel; there must be some misrepresentation by the defendant that the plaintiff relied on to his or her detriment to prevent the filing of a legal malpractice action.”).”….¶ 42 Moreover, even assuming that Rodney, by his silence at the December 10, 2018, meeting, fraudulently concealed the present cause of action, plaintiffs did not rely on that concealment to their detriment, because they still had a reasonable period of time to bring the present cause of action upon discovering it. Indeed, they had the entire two-year limitations period. “The doctrine of equitable estoppel will not apply to a case if the defendant’s conduct terminated within ample time to allow the plaintiff the opportunity to file a cause of action within the limitation period.” Barratt, 296 Ill. App. 3d at 259.
Comment: I don’t agree with the argument that equitable estoppel or fraudulent concealment should not apply. However, the court is correct that the plaintiffs had the entire two years in which to file suit. The fraudulent concealment (Rodney’s failure to speak) did not prejudice them because they still had a full two years in which to sue. On the issue of prejudice, the court’s discussion is thoughtful, thorough and well-reasoned.
The statute of limitations is often the only defense that a lawyer has to a case of this type. Almost any jury would award damages in this case if it survived summary judgment. If you have been burned in a transaction, you should get someone independent of your current counsel to review the fact pattern.
Matthew Piercy ultimately pleaded guilty. He is scheduled to be sentenced in September 2025.
Ed Clinton, Jr.