1ST Class Legal (I.S.), Ltd. v. Niro, et al.

Northern District of Illinois, ilnd-1:2016-cv-06793

MEMORANDUM by Niro Law, Ltd. in Opposition to motion for leave to file {{53}} proposed amended complaint

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Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 1 of 14 PageID #:664 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION 1st CLASS LEGAL (I.S.), LTD., a foreign) Corporation,)) Plaintiff,)) No. 16 C 6793 v.)) Judge Dow RAYMOND NIRO, et al.,)) Defendants.) OPPOSITION OF NIRO LAW, LTD. TO 1ST CLASS’ MOTION FOR LEAVE TO FILE AMENDED COMPLAINT This case began as a breach of contract case in June 2016, and it remained just that for about a year (including Niro Law’s counterclaim alleging that it was 1st Class, not Niro Law, that breached the contract, a charge firmly supported by numerous admissions by 1st Class, see Dkt. 44 ¶¶ 10-15). 1st Class now seeks to expand it into a complete debacle. 1st Class seeks to add a tort theory (fuzzily labeled "misrepresentation"); to add eight new individual defendants, five of whom are—literally—never mentioned in the proposed amended complaint except in the caption and paragraph 4, which indicates they were "shareholders and/or partners" of the Niro Law firm (and we will dispense with the "partners" nonsense shortly); to also add two of those defendants (in addition to naming them personally) as representatives of the estate of the late Ray Niro, Sr.; to add one of those defendants (in addition to naming him personally and as representative of the estate) as trustee of a trust established by Ray Niro, Sr. (on a theory that we cannot even begin to fathom); and to add an entirely new law firm that has apparently had no dealings whatever with 1st Class, but which 1st Class claims (without a wisp of factual support) should be treated as a "successor in interest" to Niro Law, Ltd. 1 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 2 of 14 PageID #:665 That’s essentially 11 new parties (eight individuals, an estate, a trust, and a law firm)—which is not even to contemplate the inevitable third-party claims if the matter is permitted to proceed against any of Niro Law’s corporate shareholders, who number in the dozens. A district court has "broad discretion to deny leave to amend where there is undue delay, bad faith, dilatory motive,... undue prejudice to the defendants, or where the amendment would be futile." Hukic v. Aurora Loan Servs., 588 F.3d 420, 432 (7th Cir. 2009). 1st Class no doubt thinks, a la Willie Sutton, that it is going where the money is, or where it can cause so much tumult and potential reputational damage that at least some parties will cry "uncle" and pay to be left alone. The motion to amend appears to be strategically aligned with 1st Class’ effort to resolve the case while it goes through "Administration" (akin to a U.S. bankruptcy) in the U.K. We have been informed that 1st Class will soon be in liquidation, while Niro Law itself has dissolved following the untimely death of Ray Niro, Sr. 1st Class’ motivation in seeking new parties to sue seems clear. The motion to amend should be denied because it is futile and brought in bad faith. An amendment is futile when a new claim would not survive a motion for summary judgment, Bethany Pharmacal Co. v. QVC, Inc., 241 F.3d 854, 861 (7th Cir. 2001), or a motion to dismiss, McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674, 685 (7th Cir. 2014). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to'state a claim to relief that is plausible on its face.’" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). "[P]leadings that are mere conclusory statements of legal principles or elements of causes of action are not entitled to the presumption of truth." Oshana v. Buchanan Energy, No. 11 C 4135, 2012 WL 426921, at *2 (N.D. Ill. Feb. 10, 2012), citing Iqbal. 1st Class’ proposed amendment falls short of these requirements, and not just by a little, bespeaking both futility and bad faith. To begin with, Niro Law, Ltd. (known in 2011 as Niro, Haller & Niro, Ltd.) is, and at all relevant times has been, a corporation. That was not merely a matter of 2 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 3 of 14 PageID #:666 public record, it was repeatedly noted in the parties’ contract, the Master Loan Agreement (Exhibit A to the proposed amended complaint). Barring a properly pled claim to pierce the corporate veil, this obviously precludes shareholder liability arising in contract. Likewise, barring a properly pled claim for successor liability, this precludes the futile effort to bring in an entirely new law firm. The effort to sue Ray Niro, Sr.’s estate (via its personal representatives) can fare no better than a claim against Mr. Niro during his lifetime when he was a shareholder, which is to say not at all. And the effort to sue Mr. Niro’s trust (via its trustee) is even further afield (which is saying something). Finally, 1st Class’ effort to plead a tort claim (and thus to skirt the shareholders’ insulation from liability) fails to state a claim under clearly established Illinois law. 1. 1st Class Entered Into a Contract With a Corporation (and knew it). The contract was entered into in December 2011. While the contract repeatedly refers to the "Borrower" as "Niro, Haller & Niro" (without the "Ltd."), it also expressly recites that "The Borrower is duly incorporated under the laws of the state in which it is incorporated." (Ex. A to proposed amended complaint at 8, § 22.1 (emphasis added).)1 It also recites that "All necessary corporate, shareholder or other action has been taken to authorise the execution, delivery and performance" of the contract and related papers. (Id. § 23.2 (emphasis added.) While the contract’s signature page provided signature lines for the Borrower labeled "First Director/Partner" and "Second Director/Partner," the signatories hand-wrote "Shareholder-President" and "Shareholder-Treasurer" above their signatures. (Id. at 16.) Thus, the contract itself clearly 1 "Incorporation" carries the same meaning in British parlance as it does here. See https://www.gov.uk/limited-company-formation/setting-up, the official U.K. government webpage explaining how to set up a "private limited company," which is "legally separate from the people who run it"; "To set up a private limited company you need to register with Companies House. This is known as'incorporation’." 3 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 4 of 14 PageID #:667 establishes the firm’s status as a corporation, and 1st Class’ knowledge of that fact.2 1st Class was a sophisticated company in the business of loaning money to law firms. For 1st Class to now feign ignorance of Niro Law, Ltd.’s status as a corporation belies the documents and dealings between the parties. 2. Shareholders Do Not Share the Corporation’s Liabilities. A corporation’s shareholder is not liable for a breach of contract by the corporation. "The core principle of corporate law is that a corporation is a distinct legal entity, separate from its shareholders, directors, officers, and affiliated corporations, so that the obligations of a corporation are not shared by affiliates, officers, directors, or shareholders." Northbound Grp., Inc. v. Norvax, Inc., 795 F.3d 647, 650 (7th Cir. 2015). Pursuant to this "core principle" of the law, 1st Class’ effort to drag a small number of the corporation’s shareholders (or a shareholder’s estate, or a shareholder’s trust) into this action is futile, is made in bad faith, and should be rejected. If the claim against these shareholders (some of whom left the firm years ago) is permitted to proceed, there is a substantial likelihood that all of the former shareholders will have to become parties to the case. 3. Plaintiff Has Not Stated a Claim for Piercing the Corporate Veil. "In diversity cases in which plaintiffs allege veil piercing claims, the Seventh Circuit has held that courts should apply the law of the state of incorporation." Eagle Air Transp., Inc. v. Nat’l Aerotech 2 The firm was indeed duly incorporated; attached as Exhibit 1 hereto is a January 26, 2011 Certificate of Registration from the Supreme Court of Illinois identifying "Niro, Haller & Niro, Ltd. a professional service corporation." Attached as Exhibit 2 is the firm’s Domestic Corporation Annual Report dated March 9, 2011 filed with the Illinois Secretary of State. "[T]o the extent that the terms of an attached contract conflict with the allegations of the complaint, the contract controls." Centers v. Centennial Mortgage, Inc., 398 F.3d 930, 933 (7th Cir. 2005). Moreover, the court may take judicial notice of matters of public record without converting a motion for failure to state a claim into a motion for summary judgment. Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997); see also City of Waukegan v. Bond Safeguard Ins. Co., No. 15 C 3007, 2015 WL 6870106, at 2 (N.D. Ill. Nov. 6, 2015) (taking judicial notice of defendant’s corporate filings with Secretary of State); Allen v. Chase Home Fin. LLC, No. 10 C 8270, 2011 WL 3882814, at 4 (N.D. Ill. Sept. 2, 2011) (same). 4 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 5 of 14 PageID #:668 Aviation Delaware, Inc., 75 F. Supp. 3d 883, 896 (N.D. Ill. 2014), citing Wachovia Securities, LLC v. Banco Panamericano, Inc., 674 F.3d 743, 751 (7th Cir. 2012). Under Illinois law, "the corporate veil will be pierced if: (1) there is such a unity of interest and ownership that the separate personalities of the corporation and the parties who compose it no longer exist; and (2) circumstances are such that adherence to the fiction of a separate corporation would promote injustice or inequitable circumstances." Escobedo v. Ram Shirdi Inc., 10 C 6598, 2014 WL 4553186, at *4 (N.D. Ill. Sept. 15, 2014) (Dow, J.) (quotation marks and citation omitted). "[C]onclusory allegations" that "merely recite the formulaic elements" for veil-piercing "are not sufficient to state a claim." Id. Here is the sum total of piercing-related allegations in the proposed amended complaint (and we err on the side of inclusion): • "At the time of entering into the written agreements described hereinafter, Defendant NHN was operating in a manner which led 1CL to believe it was a law partnership, rather than a corporation, for reasons stated hereinafter and Plaintiff contends that it and its shareholders should be treated as a partnership for purposes of the liabilities and claims set forth hereinafter" (¶ 2); • "At all times relevant, NHN was operating in a manner which reasonably led 1CL to believe it was an unincorporated entity with'partners’ based upon documents, correspondence, and written agreements executed by Defendant NHN such that there was such a unity of interest and control between these Defendants and the other individual entities that these entities should be disregarded and should be treated collectively as a non-corporate entity of which the individual defendants named herein are owners and/or partners" (¶ 3); • "Defendant NHN failed to operate in a manner consistent with being a corporation and, instead operated as a partnership or other unincorporated entity. Attorneys in Defendant NHN represented themselves to Plaintiff to be'partners’ or'supervising partner’ and otherwise failed to identify themselves as shareholders of Defendant NHN. Virtually all documents constituting communications between Plaintiff and Defendant NHN failed to identify Defendant NHN as a corporation and in many instances the purported shareholders of Defendant NHN represented themselves as'partners’ of Defendant NHN. The Agreement referenced hereinafter defined the'Borrower’ as a firm of attorneys known as Niro Haller & Niro, rather than a corporation. The CSLAs referenced hereinafter were signed by individuals who were not identified as either shareholders, officers or directors of Defendant NHN. Plaintiff’s communications with Defendant NHN and the Shareholder Defendants indicated that Plaintiff had an understanding that Defendant NHN was a 5 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 6 of 14 PageID #:669 partnership by referencing'partners’ in forms and other communications made by Plaintiff to Defendant NHN and its Shareholder Defendants and neither of them ever informed Plaintiff that its understanding was incorrect in any manner until after commencement of this action." (¶ 7); • "Plaintiff is informed and believes, and thereon alleges that, at all times relevant to this complaint, Defendants share a unity of interest and ownership such that any individuality and separateness between Defendants does not exist, or ceased to exist, such that those certain Defendants are the alter ego of the other certain Defendants and exerted control over each other. An inequitable and unjust result would be caused, and corporate privilege would be abused, by the fictitious separation of these certain purported corporate Defendants as entities distinct from the other individual Defendants. Plaintiff is informed and believes, and thereon alleges that, at all times relevant hereto, Defendants were the agents and employees of their co-Defendants and, in doing the things alleged herein, acted in such a manner as to ratify the conduct of their co-Defendants within the course and scope of such agency and employment." (¶ 8); • "Plaintiff is informed and believes and thereon alleges that at all times herein mentioned, Defendants, and each of them, were the agent, servant, employee, co-conspirator, joint venture and/or partner of each of the other co-defendants, and in doing the things alleged herein, each co-defendant was acting within the scope of authority conferred upon that party by conspiracy agreement, common consent, approval and/or ratification, whether said authority was actual or apparent." (¶ 9.) Each of these allegations suffer from incurable problems. First, as to the one passage in these allegations that can be construed as factual—"The Agreement referenced hereinafter defined the'Borrower’ as a firm of attorneys known as Niro Haller & Niro, rather than a corporation" (¶ 7)—this is verifiably (and sanctionably) false. As noted above, the agreement recites that the "Borrower" is "duly incorporated," and it is signed on "Borrower’s" behalf by a "Shareholder-President" and a "Shareholder-Treasurer." "‘It is a well-settled rule that when a written instrument contradicts allegations in the complaint to which it is attached, the exhibit trumps the allegations.’ N. Indiana Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449, 454 (7th Cir.1998); see also Matter of Wade, 969 F.2d 241, 249 (7th Cir.1992) (‘A plaintiff may plead himself out of court by attaching documents to the complaint that indicate that he or she is not entitled to judgment.’)." VBR Tours, LLC v. Nat’l R.R. Passenger Corp., 14 C 804 2015 WL 5693735, at *9 (N.D. Ill. Sept. 28, 2015) (Dow, J.). 6 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 7 of 14 PageID #:670 Beyond the demonstrably false allegation and the assorted legalistic incantations, 1st Class is left with its claim that "Defendant NHN" led 1st Class to believe it was not a limited liability entity. In light of the contract language referred to above, even those allegations are not entitled to any assumption of truthfulness. But even if they were, 1st Class has not pleaded any facts to support either condition (both of which must be met) for piercing: A "unity of interest and ownership" such that the separate personalities of the corporation and the individuals no longer exist, and circumstances such that adherence to the concept of separate corporate existence "would promote injustice or sanction a fraud." In determining whether the "unity of interest and ownership" prong of the piercing-the-corporate-veil test is met, a court generally will not rest its decision on a single factor, but will examine many factors, including: (1) inadequate capitalization; (2) failure to issue stock; (3) failure to observe corporate formalities; (4) nonpayment of dividends; (5) insolvency of the debtor corporation; (6) nonfunctioning of the other officers or directors; (7) absence of corporate records; (8) commingling of funds; (9) diversion of assets from the corporation by or to a stockholder or other person or entity to the detriment of creditors; (10) failure to maintain arm’s-length relationships among related entities; and (11) whether, in fact, the corporation is a mere facade for the operation of the dominant stockholders. Fontana v. TLD Builders, Inc., 362 Ill. App. 3d 491, 503 (2d Dist. 2005). The "injustice/fraud" prong of the Illinois veil-piercing test "requires something less than an affirmative showing of fraud, but something more than the mere prospect of an unsatisfied judgment. A plaintiff must show that the person to be held liable personally benefited from the alleged use of the corporate form." Escobedo, supra, 2014 WL 4553186, at * 4 (citations omitted). Plaintiff’s proposed amended complaint does not contain a single factual allegation sufficient to satisfy either of these two necessary elements, and the proposed amended complaint thus "stops [well] short of the line between possibility and plausibility of entitlement to relief." Escobedo, supra, at *5, quoting Twombly, 550 U.S. at 570. 7 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 8 of 14 PageID #:671 4. Plaintiff Has Not Pleaded a Claim for Successor Liability. 1st Class seeks to add a new law firm, Vitale, Vickrey, Niro & Gasey LLP, as a defendant under the theory that it bears successor liability for the obligations of Niro Law, Ltd. (which the proposed amended complaint refers to as "NHN"). This effort by 1st Class is contained in a portion of a single paragraph of its proposed amended complaint: Plaintiff is informed and believes and thereon alleges that in or around November, 2016 and only after the commencement of this action, shareholders of NHN took action to dissolve NHN and establish a new law firm called Vitale, Vickrey, Niro, & Gasey LLP, an Illinois limited partnership with its principal business office in Chicago, Illinois (hereinafter referred to as "Defendant VVNG") and decided to transfer the representation of legal matters being handled by NHN to VVNG and other NHN shareholders, including those legal matters which are the subject of the agreements described hereinafter. Plaintiff is informed and believes and thereon alleges that Defendant VVNG was established to operate as a "mere continuation" of Defendant NHN comprising of the same attorneys and owners as in NHN and is therefore a successor in interest of liabilities of NHN. NHN and VVNG have such an identity of interest and common ownership and apparently are being used interchangeably with respect to representation of clients.... Proposed Am. Cmplt. ¶ 3. (Of the 20 shareholders who were part of Niro, Haller & Niro, Ltd. at the time the contract was signed in 2011, four are now partners at Vitale, Vickrey, Niro & Gasey, LLP.) As with veil-piercing, threadbare recitals and conclusory statements "are insufficient to state a plausible claim of successor liability...." Precision Brand Prod., Inc. v. Downers Grove Sanitary Dist., 08 C 5549, 2011 WL 3489844, at *4 (N.D. Ill. Aug. 8, 2011). Even as threadbare and conclusory statements go, 1st Class’ are (to be charitable) confused. "Mere continuation," under Illinois law, is one of the exceptions to the general rule "that a corporation that purchases the assets of another corporation is not liable for the debts or liabilities of the transferor corporation." Groves of Palatine Condo. Ass’n v. Walsh Constr. Co., 2017 IL App (1st) 161036, ¶ 57. Here, 1st Class has made no allegation that VVNG purchased any assets of Niro Law/NHN. So 1st Class is reciting, in threadbare and conclusory fashion, the existence of an 8 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 9 of 14 PageID #:672 exception (for "mere continuation") to a general rule ("nonliability") that applies to a circumstance (acquisition by one corporation of the assets of another) that is not even alleged to exist.3 1st Class’ proposed amended complaint alleges no facts to suggest that VVNG could be liable for the obligations of Niro Law/NHN. 5. 1st Class Has Not Alleged a Basis for Liability Against the Representatives of the Estate of Ray Niro, Sr. 1st Class’ proposed amended complaint also seeks to name as defendants Raymond P. Niro, Jr. and Dean Niro as the co-personal representatives of the estate of Ray Niro, Sr. (separate and apart from seeking to name them as shareholders of Niro Law, as discussed above). The sole basis pled for suing the estate (through its representatives) is that it is a "successor[] in liability to" Mr. Niro, Sr. (Prop. Am. Cmplt. ¶ 5.) Accordingly, the effort to sue the estate can be no stronger than an effort to sue Mr. Niro, Sr., were he still alive. The liability of Mr. Niro, Sr. for the liabilities of the corporation in which he was a shareholder and officer is no different than that of the corporation’s other shareholders and officers, which is to say non-existent, for the reasons set forth in sections 2 and 3, above. The attempt to amend to name Raymond P. Niro, Jr. and Dean Niro as representatives of the estate of Mr. Niro, Sr., is futile. 3 Likewise confused (and confusing) is 1st Class’ assertion that "shareholders of NHN... decided to transfer the representation of legal matters being handled by NHN to VVNG and other NHN shareholders...." Lawyers in Illinois do not "transfer" their representation. A lawyer’s clients "are not commodities that can be purchased or sold at will," and a client always retains the right to choose its counsel. Ill. R. of Prof. Conduct 1.17)(c)(2) and Comment [1]. That some Niro Law clients may have chosen to be represented by lawyers from a dissolving firm that have moved to a new firm is hardly surprising, and hardly constitutes a basis for saddling the new firm with contractual liabilities of the dissolving firm. 9 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 10 of 14 PageID #:673 6. 1st Class Has Not Pled a Claim for Relief Against the Trustee of the Raymond P. Niro Trust. 1st Class’ proposed amended complaint seeks to name Dean Niro not only in his individual capacity and in his capacity as one of the personal representatives of the estate of Mr. Niro, Sr., but also in his capacity as the trustee of the Raymond P. Niro Trust Agreement dated February 15, 1980. Here is the sole allegation made in 1st Class’ proposed amended complaint regarding that effort: "Plaintiff is... informed and believes that Defendant Dean Niro is the trustee under the Raymond P. Niro Trust Agreement, dated February 15, 1980, which appears to be a trust related to the aforesaid estate [of Mr. Niro, Sr.] and holds assets which may be subject to the liabilities of Raymond P. Niro, Sr. and is therefore being sued on that basis and as a successor in liability to Raymond P. Niro, Sr." (¶ 5.) Here again, to the extent there is any basis for claiming that the trust is a successor in liability for Mr. Niro, Sr., the trust can succeed to no liability greater than that possessed by Mr. Niro, Sr., in his lifetime, which is to say none at all. Moreover, we are unable to find any authority for the proposition that a trust (or its trustee) can be sued for the debts of the trust’s settlor without some basis beyond the trust’s mere existence. Some general propositions regarding the law of trust in Illinois are contained in Rush Univ. Med. Ctr. v. Sessions, 2012 IL 112906, but neither that case nor any other of which we are aware provides authority for suing a trust (or its trustee) simply because the trust "appears to be... related to [a decedent’s] estate...." 1st Class’ effort to amend to name the trustee of a trust that Mr. Niro, Sr. apparently established 37 years ago is futile. 7. 1st Class Has Failed to Plead an Action in Tort. As its final gambit for converting this breach of contract case into something it is not, and for adding parties that do not belong, 1st Class attempts to allege a tort count for 10 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 11 of 14 PageID #:674 "misrepresentation," alleging that Niro Law/NHN, Mr. Niro, Sr. and various other individual would-be defendants made written representations, when submitting "drawdown requests" under the contractual parties’ funding agreements, stating that all conditions of the funding agreement were satisfied. (Prop. Am. Cmplt. ¶ 43.) To be clear: The only "misrepresentations" alleged were representations that the conditions of the 1st Class/Niro Law contract were satisfied. This proposed count suffers from a number of problems, but for present purposes we can focus on one: Illinois law does not recognize a tort for "misrepresentation" that could apply under these circumstances. In Moorman Manuf’g Co. v. Nat’l Tank Co., 91 Ill. 2d 69 (1982), the Illinois Supreme Court held that a party "cannot recover for solely economic loss under the tort theories of strict liability, negligence and innocent misrepresentation." 91 Ill. 2d at 91. Exceptions exist in limited instances: (1) injuries to person or property resulting from "a sudden or dangerous occurrence," (2) where the loss is caused by "a defendant’s intentional, false representation, i.e., fraud," and (3) where plaintiff’s damages "are proximately caused by a negligent misrepresentation by a defendant in the business of supplying information for the guidance of others in their business transactions." First Midwest Bank, N.A. v. Stewart Title Guar. Co., 218 Ill. 2d 326, 337 (2006) (quoting Moorman). Clearly, 1st Class is not alleging an injury to person or property caused by a sudden occurrence. Nor is it alleging intentional fraud (making no effort to comply with Rule 9(b), Fed. R. Civ. P., nor to plead the elements of common law fraud, which it plainly cannot), thus leaving as its only potential avenue a negligent misrepresentation "by a defendant in the business of supplying information for the guidance of others in their business transactions." 1st Class has not even pled that Niro Law was in such a business, nor could it. See Boyd Grp. (U.S.) Inc. v. D’Orazio, 14 C 7751, 2015 WL 3463625, at *10 (N.D. Ill. May 29, 2015) (Dow, J.) (plaintiff "has not pleaded, even in 11 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 12 of 14 PageID #:675 conclusory fashion, that D’Orazio was in the business of supplying information, thus warranting dismissal of its claim"). The Illinois Supreme Court has concluded, based solely on long tradition, that Moorman is not an impediment to a client suing a lawyer in tort "for professional malpractice." Collins v. Reynard, 154 Ill. 2d 48, 50 (Ill. 1992) (reversing appellate court ruling: "While we do not fault [the appellate court’s] logic, we do not follow its ruling. Rather, we adhere to long established practice and custom. Logic may be a face card but custom is a trump.") Collins was expressly limited "to the specific field of lawyer malpractice as an exception to the so-called Moorman doctrine and to the distinctions separating contract from tort." 154 Ill. 2d at 52. Attorneys, qua attorneys, do not have tort duties to non-clients except in extremely limited circumstances, none of which apply here. See Oakland Police & Fire Ret. Sys. v. Mayer Brown, LLP, __ F.3d __, 2017 WL 2791101, *8 (7th Cir. June 28, 2017) (no tort duties owed by borrower’s counsel to borrower’s lender where borrower’s "primary purpose" in retaining its counsel was not for the benefit of the lender). Each exception to the Moorman doctrine is "rooted in the general rule that'[w]here a duty arises outside of the contract, the economic loss doctrine does not prohibit recovery in tort for the negligent breach of that duty.’ Congregation of the Passion, Holy Cross Province v. Touche Ross & Co., 159 Ill. 2d 137 (1994). To determine whether the Moorman doctrine bars tort claims, the key question is whether the defendant’s duty arose by operation of contract or existed independent of the contract." Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 567 (7th Cir. 2012) (emphasis added). Here the duty that 1st Class claims expressly arises from and is governed by the contract between 1st Class and Niro Law. Accordingly, the Moorman doctrine precludes a claim in tort. 12 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 13 of 14 PageID #:676 CONCLUSION 1st Class’ motion to amend should be denied as futile. The general practice of liberally permitting amendments should not govern 1st Class’ proposed pleading, which could not withstand a motion to dismiss, and which seeks to turn a relatively straightforward claim and counterclaim for breach of contract between two business entities into a suit involving a dozen (for starters, and potentially several dozen) parties. There is no cognizable basis for a tort claim, nor for adding any of the 11 new parties 1st Class seeks to add as defendants (eight individuals, an estate, a trust, and a law firm). Whatever 1st Class’ motivation in bringing this ill-founded motion, that motion should be denied. Respectfully submitted,/s/Matthew D. Tanner Matthew D. Tanner Peter S. Roeser ROESER BUCHEIT & GRAHAM LLC Two N. Riverside Plaza, Suite 1850 Chicago, Illinois 60606 (312) 300-2522 13 Case: 1:16-cv-06793 Document #: 59 Filed: 07/14/17 Page 14 of 14 PageID #:677 CERTIFICATE OF SERVICE Matthew D. Tanner hereby certifies that he caused this opposition to be served upon all counsel of record via the court’s electronic docketing system on July 14, 2017./s/Matthew D. Tanner 14