Monco v. Zoltek Corporation et al

Filing 257

MEMORANDUM Opinion and Order. Status hearing held on 2/27/2019. For the foregoing reasons, Plaintiff's motion to dismiss Zoltek's Counterclaim, R. 58 , is granted in part and denied in part, and Rumy's motion to dismiss the claims a gainst him, R. 239 , is granted in part and denied in part. For the reasons stated orally in open court, Wood Phillips' and John Mortimer's motion to hold that Wood Phillips can bind all plaintiffs in a settlement with Zoltek Corporation is denied without prejudice. 253 Signed by the Honorable Thomas M. Durkin on 2/27/2019:Mailed notice(srn, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DEAN A. MONCO; JOHN S. MORTIMER;
WOOD, PHILLIPS, KATZ, CLARK &
MORTIMER,
Plaintiffs,
v.
ZOLTEK CORPORATION; ZSOLT RUMY; AND
TORAY INDUSTRIES, INC.,
Defendants.

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No. 17 C 6882
Judge Thomas M. Durkin

MEMORANDUM OPINION AND ORDER
Plaintiffs Dean A. Monco, John S. Mortimer, and Wood, Phillips, Katz, Clark,
& Mortimer seek recovery of legal fees from defendants Zsolt Rumy, Zoltek
Corporation and Toray Industries, Inc. (which purchased Zoltek in 2014) under a
quantum meruit theory for their representation of Zoltek in patent litigation
spanning the course of 20 years. Plaintiffs also allege that Rumy tortiously interfered
with Monco’s expectancy of recovering legal fees from that litigation. Currently before
the Court are Plaintiffs’ motion to dismiss Zoltek’s Counterclaim under Federal Rule
of Civil Procedure 12(b)(6), R. 58, and Rumy’s motion to dismiss Plaintiffs’ Second
Amended Complaint for lack of personal jurisdiction under Federal Rule of Civil
Procedure 12(b)(2), R. 239. For the following reasons, the Court grants in part and
denies in part both Plaintiffs’ motion to dismiss Zoltek’s Counterclaim, and Rumy’s
motion to dismiss the Second Amended Complaint as to him.

BACKGROUND 1
Defendant Zoltek is a carbon fiber manufacturer based in Missouri. R. 217 ¶ 9.
Defendant Rumy, a Florida or Missouri citizen, 2 was the founder and majority
shareholder of Zoltek until defendant Toray, an international Japanese corporation,
acquired Zoltek in 2014. Id. ¶¶ 10, 11. Plaintiff Wood Phillips is an Illinois law firm,
and plaintiffs Monco and Mortimer are attorneys with Wood Phillips licensed to
practice, and living, in Illinois. Id. ¶¶ 7, 8.
In 1996, Zoltek hired Monco and Mortimer to represent Zoltek in litigation
conducted in Washington, D.C. to enforce a Zoltek patent (“Stealth litigation”). Id. ¶¶
1-2, 18-20. That litigation lasted for 20 years. Id. ¶ 2. Monco and Mortimer were paid
for their work largely on a contingency basis. Id. ¶ 3. In February 1996, Zoltek entered
into a retainer agreement with Wood Phillips. Id. ¶ 19. In April 1996, Zoltek signed
a second retainer agreement directly with Wood Phillips attorneys Monco and
Mortimer. Id. ¶ 20. Plaintiffs maintain that the April 1996 agreement displaced the
February 1996 agreement. Id. Then, in 2011, Monco, Mortimer and Zoltek signed a
modification to the April 1996 retainer agreement. Id. ¶ 58. Rumy signed each
agreement on behalf of Zoltek. Id. ¶¶ 99-100; R. 243-1; R. 243-2.
In each agreement, Zoltek, Wood Phillips, Monco and Mortimer (as applicable)
agreed to:

Additional background facts are set forth in the Court’s two previously issued
opinions in this case. See R. 183; R. 221.
2 The Second Amended Complaint alleges that Rumy is a Missouri citizen. R. 217 ¶
10. Rumy alleges he is a Florida citizen. R. 38 at 1. Because no party claims that
Rumy is an Illinois citizen, his precise citizenship is not relevant.
1

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submit themselves to the jurisdiction and venue of the Federal District
Court for the Northern District of Illinois for resolution of any and all
disputes under [the agreement].
R. 243-1 at 6; R. 243-2 at 7; R. 243-3 at 3. 3 The February 1996 agreement provided in
relevant part that if Zoltek terminated Wood Phillips:
ZOLTEK shall pay WOOD, PHILLIPS for no less than the value of legal
services provided to ZOLTEK by WOOD, PHILLIPS, which payment
shall be made from any future recoveries by ZOLTEK promptly upon
receipt of such recoveries.
R. 243-1, at 5.
The April 1996 retainer agreement similarly provided that if Zoltek terminated
Monco and Mortimer:
MONCO/MORTIMER shall be entitled to receive from ZOLTEK no less
than the reasonable value of its services performed on ZOLTEK’s behalf
up to the date of termination, to be paid from funds received by ZOLTEK
upon completion or termination of the litigation.
R. 243-2, at 5. The 2011 modification agreement provided that Monco and Mortimer
would be paid $200 per hour for their time in exchange for a reduction in their
percentage from any judgment or settlement from 45% to 38%. R. 243-3, at 2-3. The
2011 modification agreement also provided that 150% of any attorneys’ fees paid by
Zoltek to Plaintiffs would be deducted off of any recovery and credited to Zoltek before
distribution of fees from the remainder under the April 1996 retention agreement,
and stated:

The 2011 modification agreement incorporated this forum selection clause, changing
the financial terms of the parties’ relationship, but noting “All other terms of the
Retainer Agreement shall remain the same and continue in full force and effect.” R.
217 ¶ 100; R. 243-3, ¶ 8.

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ZOLTEK and MONCO/MORTIMER each acknowledge that they have
reviewed this MODIFICATION to the Retainer Agreement with counsel
prior to signing, and that each has entered into it freely, voluntarily and
knowingly.
Id. at 2-3.
In late 2014, Toray purchased Zoltek, and Zoltek started operating as a whollyowned subsidiary of Toray. R. 217 ¶ 9, 71. Plaintiffs allege that Toray acquired “all
rights to the Zoltek Patent and any recovery from the lawsuit” in conjunction with
the purchase. Id. ¶ 71.
Ultimately, the relationship between Zoltek and Monco and Mortimer
deteriorated. During a crucial meeting in St. Louis in July 2016, Zoltek’s other outside
counsel, Missouri-based Thompson Coburn, told Monco and Mortimer that the April
1996 retainer agreement was being terminated and proposed paying them an hourly
rate for their work going forward. Id. ¶¶ 75, 77. Rumy also allegedly made false
statements about Monco and Mortimer to a Toray representative about the value of
the Stealth litigation being zero and that Monco and Mortimer jeopardized the case
by not taking damage discovery. Id. ¶¶ 102, 115. After the meeting, Zoltek terminated
Monco and Mortimer as counsel, substituted another firm as lead counsel in the
Stealth litigation, and refused to pay Monco and Mortimer for overdue bills. Id. ¶¶
78-80. A few weeks later, the Stealth litigation settled for $20 million. Id. ¶ 87.
Plaintiffs did not recover anything from the settlement.
Plaintiffs filed suit in September 2017. R. 1. Thereafter, in January 2018
Plaintiffs amended their complaint, asserting a claim against Rumy for tortious
interference with prospective economic advantage, and a claim against Zoltek and
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Toray for recovery under a quantum meruit theory. R. 28 ¶¶ 91-108. In February
2018, Rumy moved to dismiss the amended complaint for lack of personal jurisdiction,
arguing that he had conducted his business entirely outside of the State of Illinois,
only occasionally contacting the Illinois Plaintiffs by phone or email in his capacity
as a Zoltek representative. R. 37. The Court agreed, granting Rumy’s motion but
expressly permitting Plaintiffs to further amend their complaint if they believed they
could set forth a plausible basis for minimum contacts between Rumy and Illinois. R.
183. In the meantime, Zoltek answered the amended complaint and filed a
Counterclaim against Plaintiffs. R. 40. Plaintiffs moved to dismiss Zoltek’s
Counterclaim in March 2018. R. 58.
Then, in October 2018, Plaintiffs filed a Second Amended Complaint. R. 217.
The Second Amended Complaint repeats Plaintiffs’ claim against Zoltek and Toray,
alleging that they accepted Monco and Mortimer’s services throughout the difficult
and lengthy Stealth litigation and deserve to recover for those services on a quantum
meruit basis (Count I). Id. ¶¶ 88-97. The Second Amended Complaint also adds a
claim by all Plaintiffs against Rumy under quantum meruit (Count II). Id. ¶¶ 98-109.
There, Plaintiffs allege that throughout the Stealth litigation, Rumy had regular
contact with Plaintiffs in Chicago including regarding their payment (or nonpayment) for services, and that while he agreed to personally assume responsibility
for directing the Stealth litigation on Zoltek’s behalf and resolving Plaintiffs’ claim
for fees, in actuality, motivated by his personal interests in the litigation, Rumy
secured a substantial share of the settlement for himself, and has yet to pay Plaintiffs,

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notwithstanding the personal benefit he received from their services. Id. Finally,
Plaintiffs replead Monco’s claim against Rumy for tortious interference with
prospective economic advantage (Count III), in which they allege that Rumy
purposely interfered with Monco’s expectation to earn substantial legal fees through
the Stealth litigation by inducing Zoltek to terminate Monco as its attorney and
negotiating a secret deal with Zoltek pursuant to which he would receive half of the
Stealth litigation settlement, and from which he has yet to pay Monco. Id. ¶¶ 110-20.
Rumy again moved to dismiss for lack of personal jurisdiction. R. 239. This
time, Plaintiffs allege the Court has jurisdiction over Rumy as to the tortious
interference claim because Rumy signed the April 1996 retainer agreement on
Zoltek’s behalf as its largest shareholder, and thus that he is “so closely related” to
the underlying dispute arising from that agreement that it was “foreseeable that
Rumy would be bound by the jurisdiction/venue clause.” R. 217 ¶¶ 13-14, 108.
Plaintiffs also allege that this Court has specific jurisdiction over Rumy with respect
to both the quantum meruit and tortious interference claims because he sent
hundreds of emails and placed “likely” over a dozen telephone calls to Plaintiffs in
Illinois throughout the course of the Stealth litigation. Id. ¶¶ 101, 103. 4
For its part, Zoltek answered the Second Amended Complaint, and repeated
its Counterclaim alleging Plaintiffs’ professional negligence and breach of fiduciary

While the Second Amended Complaint’s “Jurisdiction and Venue” section calls out
only the Court’s jurisdiction over Rumy generally based on the forum selection clause,
in Count II, it describes the email and telephone communications Rumy directed to
Plaintiffs in Illinois, and upon which Plaintiffs rely for the Court’s personal
jurisdiction over Rumy as to both counts. See R. 217 ¶¶ 13-14, 101, 103, 108.

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duty, and seeking a declaratory judgment that the April 1996 retainer agreement and
2011 modification agreement between Monco, Mortimer and Zoltek are void. R. 243
at 45-46. In so doing, Zoltek noted that its Counterclaim as plead in its answer to the
Second Amended Complaint remained the same, and thus was still subject to the
parties’ briefing on Plaintiffs’ earlier-filed motion to dismiss. Id. at 1. The Court will
first address Plaintiffs’ motion to dismiss Zoltek’s Counterclaim, and then Rumy’s
motion to dismiss the Second Amended Complaint.
ANALYSIS
I.

Plaintiffs’ Motion to Dismiss Zoltek’s Counterclaims
As noted, Zoltek asserts three counterclaims. Count I seeks a declaratory

judgment that the April 15, 1996 retainer agreement and the 2011 modification
agreement between Zoltek, Monco and Mortimer are void as impermissible
modifications of a fee agreement. Count II alleges professional negligence by
Plaintiffs. And Count III alleges that Plaintiffs breached their fiduciary duties. R.
243. In their motion to dismiss, Plaintiffs argue that Count I fails to state a claim and
Counts II and III are time-barred. See generally R. 58. At the parties’ request, the
Court heard oral arguments on Plaintiffs’ motion to dismiss Zoltek’s Counterclaim on
May 7, 2018. The Court will address Plaintiffs’ arguments in turn.
A.

Standard

A Rule 12(b)(6) motion challenges the “sufficiency of the complaint.” Berger v.
Nat. Collegiate Athletic Assoc., 843 F.3d 285, 289 (7th Cir. 2016). A complaint must
provide “a short and plain statement of the claim showing that the pleader is entitled
to relief,” Fed. R. Civ. P. 8(a)(2), sufficient to provide defendant with “fair notice” of
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the claim and the basis for it. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
This standard “demands more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While “detailed
factual allegations” are not required, “labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555.
The complaint must “contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 570). “‘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.’” Boucher v. Fin. Sys. of Green Bay, Inc., 880 F.3d
362, 366 (7th Cir. 2018) (quoting Iqbal, 556 U.S. at 678). In applying this standard,
the Court accepts all well-pleaded facts as true and draws all reasonable inferences
in favor of the non-moving party. Tobey v. Chibucos, 890 F.3d 634, 646 (7th Cir. 2018).
B.

Analysis of Counterclaims
1.

Count I: Declaratory Judgment as to Agreements

Plaintiffs contend first that Count I, which seeks a declaratory judgment that
the April 1996 retainer and 2011 modification agreements are void as impermissible
modifications of a fee agreement, fails to state a claim upon which relief can be
granted. Plaintiffs assert three basic arguments in support. First, Plaintiffs contend
that the agreements are not void, and the 2011 modification is not even voidable.
Second, Plaintiffs assert that Count I is barred by the 10-year statute of limitations
on contract actions. Finally, Plaintiffs argue that Count I is moot in any event, since
Plaintiffs seek recovery only on a quantum meruit basis, and there is no “actual
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controversy” that a declaratory judgment would resolve. See generally R. 59; R. 88.
The Court addresses each argument below, beginning with Plaintiffs’ argument that
Count I is moot.
a.

Mootness

Plaintiffs argue that any claim based on the agreements is moot because their
fee agreement terminated when Zoltek discharged Plaintiffs as counsel, and they can
seek and are seeking only compensation in quantum meruit. R. 59 at 7. Zoltek
responds with three arguments, each focusing on Plaintiffs’ alleged reliance on the
April 1996 retention agreement. First, Zoltek contends that its declaratory judgment
action is not moot because Plaintiffs rely on the retention agreements to establish
jurisdiction. R. 83 at 8-9. The Court addresses the merits of Plaintiffs’ position on
jurisdiction later, but it is sufficient to note here that generally, a forum selection
clause can survive the termination of an agreement for purposes of establishing
jurisdiction. 5 Advent Electronics, Inc. v. Samsung Semiconductor, Inc., 709 F. Supp.
843, 846 (N.D. Ill. 1989) (“In the absence of contractual language expressly or
implicitly indicating to the contrary, a forum selection clause survives termination of
the contract.”). Furthermore, Zoltek cites no authority to suggest that the entry of its

The Court addressed one exception to this rule in its October 26, 2018 order granting
Toray’s motion to dismiss for lack of jurisdiction, R. 221. Specifically, under Vance v.
Gallagher, 280 F. App’x 533 (7th Cir. 2008) and Illinois law, “when an attorney and
a client enter into a fee agreement, if the client terminates the attorney, the contract
ceases to be operative,” and the attorney may recover fees only “under the equitable
theory of quantum meruit.” Id. at 537. Where the attorney “assert[s] a claim for fees
based on quantum meruit,” reliance on a forum selection clause in a fee agreement is
“misplaced,” since “a quantum meruit sounds in restitution rather than contract.” Id.

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declaratory judgment would automatically invalidate the forum selection clause for
this purpose in any event. Zoltek also argues that Monco and Mortimer, as Wood
Phillips partners at all relevant times, are plaintiffs in this action only because of the
April 1996 retention agreement, which purports to be between Monco, Mortimer and
Zoltek. R. 83 at 9. Finally, Zoltek argues that although Plaintiffs seek recovery under
quantum meruit, they rely upon the fee structure in the April 1996 retention
agreement. Id. But again, Zoltek cites no authority to support its apparent contention
that this so-called “reliance” by Plaintiffs on the April 1996 retention agreement
creates an “actual controversy” now ripe for the Court in 2018, where there is no
dispute that Zoltek exercised its right to terminate the agreement in 2016 in any
event. Thus, although Zoltek contends that “Plaintiffs claims are littered with
reliance on the [April 1996 retention agreement],” R. 83 at 8, because in actuality
their claims sound in quantum meruit and tortious interference, and because Zoltek
fails to persuade the Court otherwise, the Court agrees with Plaintiffs that Count I
is moot.
b.

Failure to state a claim

Although having determined that Count I is moot the Court need not consider
Plaintiffs’ remaining arguments, it bears mentioning that those arguments also
support dismissal. Plaintiffs contend that unethical fee agreements are not void as a
rule, and that Count I fails to “state facts supporting any declaration that the 2011
Modification even was voidable.” In support, Plaintiffs point out the parties’

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representations that they had independent counsel review the modification, and that
both sides entered into it “freely, voluntarily and knowingly.” R. 59 at 7.
Zoltek argues in response that fee agreements renegotiated to the benefit of
the attorney after representation begins are “presumptively improper,” and that the
modifications arising out of the April 1996 agreement made Monco and Mortimer full
partners with Zoltek, a structure that requires close scrutiny under the law. R. 83 at
10. But Zoltek cites just three cases, none of which the Court finds compelling, and
none of which even demonstrate that an attorney-client agreement can be void as
opposed to voidable. 6 Two of the cases involve divorce proceedings and are easily
distinguished. Id. (citing In re Marriage of Pagano, 537 N.E.2d at 405 (“Where a
transaction is entered into between an attorney and his client during the existence of
that relationship and the attorney benefits . . . it is presumed that the attorney
exercised undue influence.”) and In re Marriage of Bennett, 476 N.E.2d 1297, 1302
(Ill. App. Ct. 1985) (“A fee arrangement which is modified to an attorney’s advantage
during the relationship of attorney and client is presumptively fraudulent.”)). Simply
put, as a sophisticated, publicly-traded company, Zoltek could not have been at risk
of undue influence by Plaintiffs in the same way that the divorce clients were in
Pagano and Bennett. The parties’ acknowledgements in the 2011 modification
agreement serves as further evidence of this. Id. (presumption of invalidity overcome

Indeed, the cases Zoltek cites make clear that “attorney-client transactions are not
void in Illinois but merely presumptively fraudulent.” See Monco v. Janus, 583 N.E.2d
575, 583 (Ill. App. Ct. 1991) (quoting In re Marriage of Pagano, 537 N.E.2d 398, 405
(Ill. App. Ct. 1989)).
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when modification “made with unquestionable good faith, fairness, adequacy of
consideration and freedom from undue influence.”).
Moreover, Zoltek’s reliance upon Monco v. Janus, 583 N.E.2d 575 (Ill. App. Ct.
1991) does not add much to the analysis, even while it involves one of the plaintiffs
from this case. There, the court held that the defendant (Monco) failed to rebut the
presumption of undue influence over an attorney-client transaction with plaintiff—a
sole proprietor in a landscaping business—which resulted in a 50/50 ownership
interest in patent rights to an invention. Id. at 581-83. The court concluded that there
was insufficient evidence that Monco gave adequate consideration to support his
interest where the patent idea originated with the plaintiff, and also that Monco
failed to fulfill his obligation to ensure that plaintiff, who had “extreme trust” in
Monco, sought review of the transaction by independent counsel. Id. at 582. The Court
finds little parallel here, and Zoltek provides little assistance. While under Illinois
law, it is Plaintiffs’ burden to demonstrate a lack of undue influence once the
presumption is established, Zoltek fails to cite a single case even remotely analogous
to the facts here, such that the Court is unable to determine whether or how the rule
Plaintiffs put forward applies to a sophisticated client like Zoltek. What is more,
Zoltek already exercised its option to terminate its relationship with Plaintiffs (and
the agreements governing same), and never sought to rescind the agreements about
which it now complains in any event. See Deutsche Bank Nat. Trust Co. v. Hart, 67
N.E.3d 299, 307 (Ill. App. Ct. 2016) (holding that “[a] voidable contract . . . may be
ratified and enforced by the obligor” but a “party seeking to prevent its enforcement

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must have promptly sought rescission” (citing Zirp-Burnham, LLC v. E. Terrell
Associates, Inc., 826 N.E.2d 430 (Ill. 2005))). Having concluded that Zoltek has failed
to state a plausible claim that circumstances existed which would have permitted
voiding the agreements, the Court finds grounds to dismiss Count I on this issue
alone.
c.

Timeliness

Finally, Plaintiffs argue that the 10-year statute of limitations on written
contracts, 735 ILCS 5/13-206, bars any claim on the April 1996 agreement, the terms
of which give rise to Count I. R. 59 at 7; R. 88 at 3. Plaintiffs assert that Zoltek’s
declaratory judgment action regarding alleged voidness was ripe for adjudication
when the parties signed and began performing under the agreement in 1996. R. 59
at 7; R. 88 at 3. Zoltek contends that the statute of limitations on written contracts
should not apply here, attempting to analogize its declaratory judgment action to a
third-party action “which was not ripe until the April 1996 [retainer] agreement was
asserted against Zoltek” through this lawsuit. R. 83 at 11. Neither party points the
Court to a case discussing when a claim for voidness or voidability accrues. In the
sole case Zoltek cites, plaintiffs brought a breach of contract (and more) action against
their construction contractor, and the contractor then asserted its own breach of
contract actions against each of its subcontractors for the same work. The Illinois
Supreme Court found that the statute of limitations on such a third-party action
“begins to run on the date the third-party plaintiff is served with the underlying
action.” Guzman v. C.R. Epperson v. Construction, Inc., 752 N.E.2d 1069, 1076 (Ill.

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2001). But other than to declare Count I “a derivative claim, seeking a declaration
that Plaintiffs cannot assert the April 1996 [retainer agreement], as modified,” Zoltek
offers no explanation for how Guzman controls here. And nor can the Court fathom
one. Instead, because there is no evidence that Zoltek, a sophisticated, publicly-traded
corporation, lacked knowledge at the time of signing of an alleged basis to have its
agreements with Plaintiffs declared void, the Court questions whether any such claim
was waived in any event. See Deutsche Bank Nat. Trust Co., 67 N.E.2d at 307 (finding
that party waived the opportunity to attack mortgage contract when instead of
promptly seeking rescission, they ratified it by accepting its benefits). Having
determined that Count I is moot and fails to state a claim in any event, the Court
need not decide this issue.
2.

Counts II and III: Professional Negligence and Breach of
Fiduciary Duty

Plaintiffs also argue that Zoltek’s professional negligence and breach of
fiduciary duty claims are time-barred under both the applicable statute of limitations,
735 ILCS 5/13-214.3(b), and the statute of repose, 735 ILCS 5/13-214.3(c). The statute
of limitations applies to all claims against attorneys—“tort, contract or otherwise”—
and incorporates the discovery rule, requiring an action “be commenced within 2
years from the time the person bringing the action knew or reasonably should have
known of the injury for which damages are sought.” 735 ILCS 5/13-214.3(b); see also
White v. Richert, 2016 WL 3582083, at *4 (N.D. Ill. June 28, 2016) (statute of
limitations applies to all claims against attorneys, “including . . . breach of fiduciary
duty or legal malpractice” (quoting Evanston Ins. Co. v. Riseborough, 5 N.E.3d 158,
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166 (Ill. 2014))). In turn, the statute of repose, to which the discovery rule does not
apply, provides that an action against an attorney “may not be commenced in any
event more than 6 years after the date on which the act or omission occurred.” 735
ILCS 5/13-214.3(c); see also Fricka v. Bauer, 722 N.E.2d 718, 723 (Ill. App. Ct. 1999)
(“The statute of repose . . . includes no . . . provision making it subject to the discovery
rule reflected in the limitations section.”).
Generally, “[d]ismissing a complaint as untimely at the pleading stage is an
unusual step, since a complaint need not anticipate and overcome affirmative
defenses, such as the statute of limitations.” Sidney Hillman Health Ctr. of Rochester
v. Abbott Labs., Inc., 782 F.3d 922, 928 (7th Cir. 2015) (citation omitted). Dismissal
on this basis “is appropriate only where the allegations of the complaint itself set
forth everything necessary to satisfy the affirmative defense.” Id. Indeed, if there is
any “conceivable set of facts, consistent with the complaint, that would defeat a
statute-of-limitations defense, questions of timeliness are left for summary judgment
(or ultimately trial), at which point the district court may determine compliance with
the statute of limitations based on a more complete factual record.” Id. Nevertheless,
in providing that an action against an attorney may not be commenced at all more
than six years after the date on which the negligent act or omission occurred, 735
ILCS § 5/13–214.3(c), the statute of repose “place[s] an outer limit on the time for
commencing an action.” Hester v. Diaz, 805 N.E.2d 255, 259 (Ill. App. Ct. 2004)
(quoting Sorenson v. Law Offices of Theodore Poehlmann, 764 N.E.2d 1227, 1229 (Ill.
App. Ct. 2002)). Indeed, “[i]f the statute of repose did not exist, then the statute of

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limitations would essentially be limitless in certain undiscovered situations.” Id.
(citing Sorenson, 764 N.E.2d at 1230).
a.

Statute of limitations

Plaintiffs argue that Zoltek’s professional negligence and fiduciary duty claims
are based on acts and omissions occurring years ago, including their alleged “failure
to obtain evidence of infringement for many years before 2012,” “entering into Section
6 of the April 15, 1996 Retainer Agreement, in 1996,” and other conduct occurring
before 2012 and therefore plainly outside of the 6-year statute of repose, let alone the
2-year statute of limitations. R. 59 at 10. In response, Zoltek argues for application of
the discovery rule to toll the 2-year statute of limitations, alleging that Zoltek could
not and did not learn of the basis for its professional negligence and breach of
fiduciary duty claims until it engaged Thompson Coburn for a “second opinion” in the
summer of 2016, and that engagement revealed significant flaws in Plaintiffs’
handling of the case. R. 83 at 6-7, 12-13.
A review of the Counterclaim does not suggest that Zoltek knew of Plaintiffs’
alleged malpractice as it occurred. To the contrary, Zoltek even alleges that Plaintiffs
concealed their malpractice, and, as noted, that malpractice was revealed only after
another firm reviewed the records in 2016. R. 243 ¶¶ 85-87. Zoltek’s Counterclaim
also does not suggest beyond a doubt that a diligent reasonable person should have
known of or discovered Plaintiffs’ acts earlier. Thus, the Court cannot find based only
on the Counterclaim and its exhibits that there is no set of facts that would defeat
the timing defense raised by Plaintiffs. See Sanders v. JGWPT Holdings, Inc., 2016

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WL 4009941, at *9 (N.D. Ill. July 26, 2016) (declining to dismiss claims on statute of
limitations grounds where plaintiffs alleged defendants orchestrated a scheme to
mask unlawfulness, and the complaint did not suggest that a reasonable person
should have known or discovered the unlawful acts sooner). In declining to dismiss
the Counterclaim on statute of limitations grounds now, the Court notes that
subsequent discovery may reveal a basis to do so later in any event. By way of
example, discovery may reveal that Zoltek had information in 2009 that called into
doubt Plaintiffs’ performance, thus causing it to engage another firm, and triggering
the statute of limitations. For now, it is sufficient to note that Plaintiffs may re-raise
their statute of limitations defense later if warranted.
b.

Statute of repose

Plaintiffs also contend that Counts II and III are barred by the 6-year statute
of repose. R. 59 at 10; R. 88 at 5-8; 735 ILCS § 5/13-214.3. Zoltek argues that this
view ignores the allegations of actionable conduct within the 6-year period prior to
suit, as well as the allegations that Plaintiffs concealed evidence of their malpractice.
R. 83 at 13-14.
Zoltek points the Court to Sanders v. JGWPT Holdings, Inc., to conclude that
the statute of repose does not begin until “the acts of representation end.” 2016 WL
4009941, at *9. Zoltek urges the Court to conclude that the statute of repose did not
commence until 2016 when Zoltek terminated Plaintiffs as counsel, about a year and
a half before Zoltek filed its Counterclaim, and therefore well within the statute of
repose. R. 83 at 14. But the Sanders court applied the fraudulent concealment

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exception (discussed below) to hold that the complaint was timely, without deciding
when the statute of repose period would have otherwise begun. See id. (declining to
dismiss plaintiff’s claims based on statute of limitation or repose because plaintiff’s
“allegations that Defendants concealed their true intentions from Plaintiffs” and
“worked to hide their wrongful deeds” convinced the court that “discovery may
uncover facts to support fraudulent concealment”).
Contrary to any suggestion otherwise in Sanders, Illinois law makes clear that
the statute of repose is not automatically tolled because the attorney-client
relationship is ongoing. See Mauer v. Rubin, 926 N.E.2d 947, 956 (Ill. App. Ct. 2010)
(“the statute of repose is not tolled merely by the continuance of the attorney-client
relationship.” (citing Witt v. Jones & Jones Law Offices, P.C., 646 N.E.2d 23, 25 (Ill.
App. Ct. 1995)). Nor is it tolled by the attorney’s “continuing duty to correct any defect
or omission related to the work product” after it is complete. Fricka, 722 N.E.2d at
720; Lamet v. Levin, 39 N.E.3d 136, 140 (Ill. App. Ct. 2015) (“the period of repose is
not tolled by the attorney’s ongoing duty to correct past mistakes”). It is also
questionable whether a theory of continued negligence—akin to the continuing
violation theory in tort—is available to toll the statute of repose. See Memorylink
Corp. v. Motorola, Inc., 2010 WL 11534462, at *4 (N.D. Ill. Aug. 5, 2010) (application
of “continuous course of negligent representation” theory “is at least questionable in
the context of legal malpractice” (emphasis in original)); see also Mauer, 926 N.E.2d
at 956 (drawing textual distinctions between statutes of repose in medical versus
legal malpractice actions, and noting in dicta that those differences may mean

18

continuous course of negligent representation theory is not available in the latter
context).
Generally, the period of repose “begins to run on the last date on which the
attorney performs the work involved in the alleged negligence.” Fricka, 722 N.E.2d at
722 (emphasis added); see also Tidemann v. Schiff, Hardin & Waite, et al, 2005 WL
475163, at * (N.D. Ill. Feb. 28, 2005) (“The statute of repose runs from the time of the
acts or omissions alleged to have caused injury; the fact that the attorney-client
relationship endures thereafter does not affect the repose period” (quoting Sorenson,
764 N.E.2d at 1230)). But this rule is easier said than applied. It is clear that “where
there is a single overt act from which subsequent damages may flow, the statute
begins to run on the date the defendant invaded the plaintiff’s interest and inflicted
injury . . . despite the continuing nature of the injury.” Terra Found. for American Art
v. DLA Piper LLP, 61 N.E.3d 202, 214 (Ill. App. Ct. 2016) (quoting Feltmeier v.
Feltmeier, 798 N.E.2d 75 (Ill. 2003)). But even as courts doubt the availability of a
continuous course of negligent representation theory, they provide breathing room
for cases in which the injury is “cumulative or aggregate in nature.” Mauer, 926
N.E.2d at 955-57 (even assuming statute of repose for legal malpractice allowed for a
continuous course of negligent representation theory, it was inapplicable where “the
injury alleged . . . is not cumulative or aggregate in nature”); see also Memorylink
Corp., 2010 WL 11534462, at *4 (“even if the [continuous course of negligent conduct]
theory is applicable,” plaintiff did not allege that defendants “engaged in any
‘cumulative’ conduct . . . which compounded [plaintiff’s] injury”).

19

Here, Zoltek’s Counterclaim was first filed on February 15, 2018. R. 40. A
careful review of the Counterclaim reveals Zoltek’s theory that Plaintiffs’ alleged
malpractice began when it declined to alter an ill-fated strategy adopted as early as
1996, and that Zoltek terminated Plaintiffs “for cause” in the summer of 2016 due to
Plaintiffs’ (allegedly just discovered) “gross mismanagement” of the Stealth litigation.
Between its rehiring of Plaintiffs in 2011 and their ultimate termination in 2016,
Zoltek points the Court to several actions by Plaintiffs that it alleges fell within the
6-year period prior to its Counterclaim. Specifically, Plaintiffs’ failed efforts at
settlement in 2012 and 2016 that allegedly “weakened Zoltek’s negotiating position
because Plaintiffs had no actionable infringement evidence,” pursuit of a damage
valuation that “required reliance on a theory narrowly permitted and heavily
criticized by the Federal Circuit,” retention and direction of an additional law firm to
pursue legislative action and lobbying,” and “[s]eeking discovery known to be
prohibited by the state secret bar.” R. 83 at 5-6 (citing R. 40 ¶¶ 24, 75-78, 86-90).
From these allegations, the Court is unable to conclude when the statute of
repose commenced. Zoltek seems to plead a continuous course of negligent
representation theory that results in injury which is “cumulative” or “aggregate” in
nature, pointing to delayed settlement of the Stealth litigation and excessive fees and
costs incurred. 7 While Illinois courts have questioned the viability of this doctrine,

At oral argument held at the request of the parties on May 7, 2018, counsel for
Zoltek seemed to advance a theory that the statute of repose began anew for each
separate act of malpractice alleged, and that each act of malpractice thus had its own
period of repose. Because Zoltek did not advance this argument in its brief, and

7

20

the Court is not prepared to say at this stage that it is unavailable here, particularly
where there is no “single overt act” to point to from which injury flows, and where
Zoltek alleges the malpractice continued up until Plaintiffs’ termination in 2016.
Terra Found. for American Art, 61 N.E.3d at 214.
Nor do Plaintiffs’ arguments persuade the Court otherwise. Plaintiffs rely on
a pair of Illinois appellate court decisions—Mauer v. Ruben and Lamet v. Levin—to
argue that Zoltek’s malpractice theory is based on facts occurring in 1996, and thus
that the statute of repose ran long ago. R. 88 at 5 (citing R. 83 at 5). Both cases are
distinguishable. 8 In Mauer, defendants represented plaintiff in his divorce and
prepared a marital settlement agreement that became part of the judgment for
dissolution of marriage. 926 N.E.2d at 951. When plaintiff later discovered that the
agreement was defective, defendants attempted to file a post-judgment motion to
correct it, before subsequently withdrawing the motion some years later and without
plaintiff’s consent. Id. at 951-52. The court concluded that the judgment for
dissolution of marriage started the statute of repose period notwithstanding the
defendants’ ongoing duty to correct their error, because it was a “final judgment” and
“the alleged damage to Mauer’s monetary interests was already complete” at that
time. Id. at 958-59. Thus, the injury was not “cumulative or aggregate in nature, so

because the Court will allow the Counterclaim to proceed in any event, it will not
address that theory here.
8 Plaintiffs also fail to describe for the Court whether and how the differing pleading
standards in Illinois state court might affect the analysis of those cases here.
21

as to trigger the application of the continuing violation doctrine”; instead, any injury
could “be traced to the entry of that judgment.” Id. at 957.
Here, in contrast, there is no single date on which the Court can be certain the
injury arose. Instead, as noted, Zoltek’s allegations that Plaintiffs’ actions caused
delayed settlement and payment of “excessive and unnecessary legal fees and
expenses” may fall directly within the kind of “cumulative or aggregate” injury that
Illinois courts have identified as a possibility but have yet to have the opportunity to
confront. R. 243 ¶¶ 126, 135. Additionally, unlike in Mauer, Zoltek’s claims are based
on ongoing actions by Plaintiffs leading up to—not following—the eventual resolution
of the litigation at issue. And there can be no dispute that the complexity of the issues
and of the litigation giving rise to the malpractice action here far outweighs that
before the court in Mauer in any event.
Plaintiffs’ reliance on Lamet also is misplaced. There, plaintiff alleged that his
lawyer knew or reasonably should have known when first retained in 1994 that there
were “no legitimate defenses to his landlord’s action to collect unpaid rent.” 39 N.E.3d
at 141. The court held that because his lawyer’s failure to advise plaintiff of this in
1994 was the basis for plaintiff’s suit, the statute of repose began then and his
malpractice lawsuit, filed 17 years later, was thus untimely. Id.
Unlike in Lamet, Zoltek’s Counterclaim does not and likely could not credibly
allege that Plaintiffs knew or reasonably should have known from day one of the
lengthy and complex patent litigation that Zoltek’s infringement theory was devoid
of merit. And again, the injury and conduct complained of are far more complex here.

22

In sum, Zoltek enumerates specifics acts by Plaintiffs, some of which fall within the
6-year period immediately prior to the filing of Zoltek’s Counterclaim. Zoltek’s theory
appears to be that these actions, taken together, delayed and weakened its settlement
position. At no point does the Counterclaim suggest that “the alleged damage to
Zoltek’s monetary interests was [ ] complete” as of some specified date. Mauer, 926
N.E.2d at 958-59. This is enough to survive Plaintiffs’ motion to dismiss.
c.

Equitable estoppel and fraudulent concealment

In addition to contending that neither the statute of limitations nor the statute
of repose bar its claims, Zoltek argues that even if one or both otherwise would, the
doctrine of equitable estoppel doctrine would save them, because Plaintiffs had been
concealing from it its “lack[ of] an actionable infringement theory as well as any
evidence upon which to base infringement.” R. 243.
While Zoltek does not invoke the fraudulent concealment statute by name, 735
ILCS 5/13-2015, Zoltek cites to Sanders—which relied upon it—in support of its
contention that Plaintiffs’ alleged concealment of “evidence from it that would have
led to discovery of [its] malpractice claim earlier” is another basis to deny Plaintiffs’
motion to dismiss. 9 R. 83 at 15. The “principles behind the [doctrine of equitable
estoppel and the fraudulent concealment statute] are substantively the same.”
Memorylink Corp., 2010 WL 11534462, at *5 (quoting Turner v. Nama, 689 N.E.2d

The fraudulent concealment statute provides: “If a person liable to an action
fraudulently conceals the cause of action from the knowledge of the person entitled
thereto, the action may be commenced at any time within 5 years after the person
entitled to bring the same discovers that he or she has such cause of action, and not
afterwards.” 735 ILCS 5/13-2015.

9

23

303, 308 (Ill. App. Ct. 1997)); see also Mauer, 926 N.E.2d at 648 (“The common-law
doctrine of equitable estoppel, as applied in the context of the statute of repose,
parallels the fraudulent concealment statute.”). To establish that either applies,
generally, a party must show that the other “said or did something to lull or induce
[it] to delay the filing of [its] claim” until after the limitations or repose period ran.
Memorylink Corp., 2010 WL 11534462, at *5 (quoting Wolf v. Bueser, 664 N.E.2d 197,
205 (Ill. App. Ct. 1996)). That is, the plaintiff must allege “affirmative acts by the
defendant that are designed to prevent the discovery of the action.” Lamet, 39 N.E.3d
at 143 (citing Clay v. Kuhl, 727 N.E.2d 217 (Ill. 2000)). But the fraudulent
concealment statute can be invoked when an attorney—as a fiduciary—merely fails
in its duty “to disclose material facts concerning the existence of a cause of action,”
and thus an attorney need not induce a client not to sue through acts or
representations for a plaintiff to invoke the statute. DeLuna, 223 Ill.2d at 77-80.
In Sanders, the court found plaintiffs’ “allegations that Defendants concealed
their true intentions from Plaintiffs and that Defendants worked to hide their
wrongful deeds” sufficient to deny the motion to dismiss on statute of limitations or
statute of repose grounds. 2016 WL 4009941, at *9. Similarly, Zoltek alleges on
information and belief that Plaintiffs learned long before their termination in 2016
that Zoltek lacked evidence of infringement and that their infringement theory lacked
merit, and yet concealed this from Zoltek. R. 83 at 13; R. 243 ¶¶ 85-87. Accordingly,
discovery may also reveal a basis for the Counterclaim to proceed even if the statutes
of limitation or repose otherwise would bar it.

24

C.

Summary

In sum, the Court finds ample reason to dismiss Count I of Zoltek’s
Counterclaim. With regard to Counts II and III, however, while it is possible that
discovery may reveal that Plaintiffs’ complained-of conduct all related to a single,
negligent decision made years prior triggering the statute of repose, or that Zoltek
had reason to know of Plaintiffs’ alleged malpractice long ago triggering the statute
of limitations, the Court declines to dismiss Counts II or III on either basis at this
time. If appropriate, Plaintiffs may raise these matters again on summary judgment
or at trial.
II.

Rumy’s Motion to Dismiss the Claims Against Him
In his motion to dismiss the claims against him in the Second Amended

Complaint, Rumy again argues that the Court lacks personal jurisdiction over him.
See generally R. 239. Plaintiffs contend as to their quantum meruit claim that the
“hundreds of emails” Rumy sent and “(likely over a dozen) telephone calls” Rumy
made to them in Illinois concerning their 20-year representation of Zoltek establish
the Court’s jurisdiction over Rumy. Although styled as a motion to dismiss for lack of
personal jurisdiction, Rumy’s argument reads as a motion to dismiss for failure to
state a claim. Specifically, Rumy contends that the quantum meruit claim against
him should be dismissed because there has been no showing that Rumy and Plaintiffs
enjoyed a personal attorney-client relationship pursuant to which they may seek
relief directly from him, as opposed to Zoltek.
As to the tortious interference claim, Monco contends that the same emails and
telephone calls that allegedly establish this Court’s jurisdiction over Rumy on the
25

quantum meruit claim support jurisdiction over Rumy there. Monco further alleges
that Rumy waived his right to contest jurisdiction as to the tortious interference claim
in any event because he signed the April 1996 retainer agreement containing a forum
selection clause, and was so “closely related” to the dispute regarding fees that it was
“foreseeable” that he would be haled into this Court. Rumy disagrees with both
alleged bases for jurisdiction. First, Rumy argues that the communications directed
to Monco in Illinois are not part of the actions alleged to constitute tortious
interference. Second, Rumy argues both that he meets none of the special
circumstances in which it is appropriate to bind a non-signatory to a forum selection
clause, and also that the clause does not extend to the tortious interference claim in
any event. The Court will address each claim in turn.
A.

Standard

“A complaint need not include facts alleging personal jurisdiction. However,
once the defendant moves to dismiss the complaint under Federal Rule of Civil
Procedure 12(b)(2) for lack of personal jurisdiction, the plaintiff bears the burden of
demonstrating the existence of jurisdiction.” Purdue Research Found. v. SanofiSynthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). When the court rules on the
motion without a hearing, the plaintiff need only establish a prima facie case of
personal jurisdiction. Id. The court reads “the complaint liberally, in its entirety, and
with every inference drawn in favor” of the plaintiff to determine whether it has set
forth a prima facie case for personal jurisdiction. Cent. States, Se. & Sw. Areas
Pension Fund v. Phencorp Reinsurance Co., 440 F.3d 870, 877-78 (7th Cir. 2006).
“[O]nce the defendant has submitted affidavits or other evidence in opposition to the
26

exercise of jurisdiction, the plaintiff must go beyond the pleadings and submit
affirmative evidence supporting the exercise of jurisdiction.” Purdue, 338 F.3d at 783.
B.

Analysis of Claims Against Rumy

“Federal courts ordinarily follow state law in determining the bounds of their
jurisdiction over persons.” Walden, 571 U.S. at 283 (quoting Daimler AG v. Bauman,
571 U.S. 117 (2014)). The Illinois long-arm statute requires nothing more than the
standard for federal due process: that the defendant have sufficient contacts with the
forum state “such that the maintenance of the suit does not offend traditional notions
of fair play and substantial justice.” Brook v. McCormley, 873 F.3d 549, 552 (7th Cir.
2017) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
Personal jurisdiction can arise by way of: (1) “general jurisdiction (i.e.,
continuous and systematic contacts with Illinois)”; (2) “specific jurisdiction (i.e.,
sufficient minimum purposeful contacts with Illinois and the dispute arose out of
those contacts)”; or (3) waiver, including when the agreement out of which a dispute
arises contains a forum selection clause and the defendant is either party to that
agreement or “so closely related to the dispute” that it is “bound by the forum selection
clause” even though it did not sign the agreement. Solargenix Energy, LLC v. Acciona,
S.A., 17 N.E.3d 171, 182 (Ill. App. Ct. 2014); accord Burger King Corp. v. Rudzewicz,
471 U.S. 462, 472 n.14 (1985) (“because the personal jurisdiction requirement is a
waivable right, there are a variety of legal arrangements by which a litigant may give
express or implied consent to the personal jurisdiction of the court,” including based
on a freely negotiated forum selection clause). Plaintiffs have not asserted that this

27

Court may exercise general jurisdiction over Rumy, so this Court considers only
specific jurisdiction over each of the claims against Rumy, and whether Rumy has
waived his right to contest the Court’s personal jurisdiction over him.
1.

Quantum Meruit Claim

As explained, Plaintiffs allege that this Court has personal jurisdiction over
Rumy as to their quantum meruit claim because Rumy directed hundreds of emails
to Plaintiffs in Illinois and “likely” placed over a dozen telephone calls to them. R. 217
¶ 101; R. 247 at 4-5. Plaintiffs further allege that in many cases these emails and
calls concerned Rumy’s attempts to reengage or keep Plaintiffs as counsel for Zoltek,
and in some cases concerned how and whether Plaintiffs would be paid for their
representation of Zoltek. R. 247 at 4-5. Plaintiffs contend that this “Illinois-directed
conduct conferred specific jurisdiction over Rumy without regard to the forum
selection clause” discussed below. 10 R. 247 at 4; R. 217 ¶¶ 54, 101, 103-105.
Specific jurisdiction grows out of “the relationship among the defendant, the
forum, and the litigation.” Walden, 571 U.S. at 284. It requires that “(1) the defendant
[] purposefully availed himself of the privilege of conducting business in the forum
state or purposefully directed his activities at the state; (2) the alleged injury must

Unlike Monco’s tortious interference claim (discussed below), Plaintiffs do not
suggest that the forum selection clause could support this Court’s jurisdiction over
Rumy with respect to the quantum meruit claim. Nor could they. As noted, Vance v.
Gallagher, 280 F. App’x 533 (7th Cir. 2008) provides that under Illinois law, when a
client terminates an attorney, any written contract between them becomes
inoperative, and the attorney may recover fees only “under the equitable theory of
quantum meruit;” accordingly, any reliance on a forum selection clause in a fee
agreement is “misplaced” for that purpose. Id. at 537.
10

28

have arisen from the defendant’s forum-related activities; and (3) the exercise of
jurisdiction must comport with traditional notions of fair play and substantial
justice.” Felland v. Clifton, 682 F.3d 665, 673 (7th Cir. 2012). “[A] defendant’s
relationship with a plaintiff or third party, standing alone, is an insufficient basis for
jurisdiction.” Walden, 571 U.S. at 286. And “[t]he proper question is not where the
plaintiff experienced a particular injury or effect but whether the defendant’s conduct
connects him to the forum in a meaningful way.” Walden, 571 U.S. at 290.
Here, at first blush, the Second Amended Complaint seems to establish that
Rumy’s communications directed to Plaintiffs in Illinois “connect[ed] him to [Illinois]
in a meaningful way” with regard to Plaintiffs’ quantum meruit claim. Walden, 571
U.S. at 290. “To recover under a quantum meruit theory, the plaintiff must prove
that: (1) he performed a service to benefit the defendant, (2) he did not perform this
service gratuitously, (3) [the] defendant accepted this service, and (4) no contract
existed to prescribe payment for this service.” Bernstein & Grazian, P.C. v. Grazian
& Volpe, P.C., 931 N.E.2d 810, 825-26 (Ill. App. Ct. 2010). Plaintiffs argue that
through Rumy’s email and telephone communications Rumy personally “reach[ed]
into Chicago to re-engage Plaintiffs as lead counsel” in 2011, and also informed
Plaintiffs in 2014 that Zoltek would not honor its payment obligation and they would
have to handle the appeal on their own dime. R. 247 at 4-5. Plaintiffs contend these
actions directly underlie their quantum meruit claim for fees. R. 247 at 4-5. Plaintiffs
also point to Monco’s declaration (attached to its response brief) to demonstrate that
the “overwhelming amount of Plaintiffs’ work on the case—which directly benefitted

29

Rumy—was performed in Chicago,” and also to support their contention that Monco
and Mortimer were reengaged in the Stealth litigation as a direct result of Rumy
reaching out to them by telephone and letter. Id. at 5; R. 247-1 at 2-3. 11
But the Court agrees with Rumy that at its core, and even assuming the emails
and telephone calls constitute adequate contacts with Illinois, the issue is whether
Rumy can personally be haled into court in Illinois on a claim for alleged attorneys
fees when there has been no credible allegation that Rumy sought, let alone obtained,
an attorney-client relationship with Plaintiffs separate from the one he sought and
obtained on behalf of Zoltek. 12 Without such a relationship, Rumy contends he could
not personally avail himself of the privilege of doing business in Illinois. R. 249 at 45. Plaintiffs also have not alleged that they performed legal services for the purpose
of specifically benefitting Rumy as opposed to Zoltek, and cite no case in which “a

Although the Second Amended Complaint does not allege that Rumy traveled to
Chicago, it need not, given the numerous emails and telephone calls placed by Rumy
regarding the Stealth litigation, and particularly those concerning the terms of
Plaintiffs’ engagement, and the payment (or nonpayment) by Rumy under those
terms. See Pentwater Equity Opportunities Master Fund, Ltd. v. Baker, 2016 WL
454342, at *7 (N.D. Ill. Feb. 5, 2016) (“The fact that [defendant] attorneys never
travelled to Illinois as part of the transaction is not dispositive given the extensive
phone and email communications between [defendant and plaintiff] representatives
in Illinois.”); compare Walden, 571 U.S. at 289 (“Petitioner never traveled to,
conducted activities within, contacted anyone in, or sent anything or anyone to
Nevada. In short, when viewed through the proper lens—whether the defendant’s
actions connect him to the forum—petitioner formed no jurisdictionally relevant
contacts with Nevada.”).
12 While Rumy did not address the emails and telephone calls in his motion, the Court
assumes Rumy did not realize that Plaintiffs were asserting specific jurisdiction
based on Rumy’s telephone and email communications to Plaintiffs in Illinois. As
noted, the Second Amended Complaint’s “Jurisdiction and Venue” section describes
the Court’s jurisdiction over Rumy based only on the forum selection clause discussed
further below. See R. 217 ¶¶ 13-14.
11

30

defendant purposely availed herself of the benefit of doing business in a forum by
directing work for another party.” Id. at 4-5. The sole case Plaintiffs do cite to support
jurisdiction over the quantum meruit claim merely states that contact must flow from
the defendant to the plaintiff for jurisdiction to lie. See Brook, 873 F.3d 549 (no
jurisdiction where defendants “never sought out nor conducted business in Illinois,
rather [plaintiff] sought out legal services from [defendants]”). Without a personal
attorney-client relationship, the Court is hard-pressed to conclude that Plaintiffs
have stated a plausible claim for relief against Rumy on a quantum meruit basis.
However, because the parties have not briefed the issue, the Court declines to dismiss
Plaintiffs’ claim on this ground at this stage. If Rumy believes he has a credible basis
on which to do so, he may file a separate motion to dismiss Plaintiffs’ quantum meruit
claim against him under Rule 12(b)(6) within fourteen days of this ruling. The Court
will set an expedited briefing schedule on any such motion.
2.

Tortious Interference Claim

Plaintiffs contend that the Court also has personal jurisdiction over Monco’s
tortious interference claim against Rumy both because of the communications Rumy
directed to him in Chicago and because Rumy, as an officer of Zoltek, signed retainer
agreements containing forum selection clauses and thus waived the right to contest
jurisdiction. See generally R. 247. But Rumy argues that the communications Monco
relies upon to establish personal jurisdiction were not “case-related” contacts, and
that, as a non-party signatory to an agreement containing a forum selection clause,
there was no waiver of jurisdiction simply because it was arguably “foreseeable” that

31

he might be haled to court based on his alleged close relationship with the dispute
and parties. See generally R. 239; R. 249. He further argues that the contract was
terminated and narrowly crafted and could not apply to the post-contractual dispute
here in any event. R. 239 at 1. The Court will address first whether the Court has
specific jurisdiction over Rumy, and then whether Rumy waived any right to contest
jurisdiction by signing the agreements on Zoltek’s behalf.
a.

Rumy’s communications

The parties dispute whether Rumy’s email and telephone communications
directed to Plaintiffs in Illinois are sufficient to establish specific jurisdiction over
Rumy. Where, as here, the plaintiff’s claim is an intentional tort, the purposeful
availment inquiry focuses on whether the conduct underlying the claims was
purposely directed at the forum state. Tamburo v. Dworkin, 601 F.3d 693, 702 (7th
Cir. 2010). In such cases, courts look to whether the plaintiff has shown “(1)
intentional conduct (or ‘intentional and allegedly tortious’ conduct); (2) expressly
aimed at the forum state; (3) with the defendant’s knowledge that the effects would
be felt—that is, the plaintiff would be injured—in the forum state.” Id. at 703 (citing
Calder v. Jones, 465 U.S. 783, 789-90 (1984)). This is known as the Calder test. The
Supreme Court made clear in Walden v. Fiore, 571 U.S. 277 (2014) that to satisfy this
test, the defendant’s own allegedly tortious conduct must be directly connected to the
forum state itself, and not just to the plaintiff who resides there. 571 U.S. at 286-88
(“A forum State’s exercise of jurisdiction over an out-of-state intentional tortfeasor
must be based on intentional conduct by the defendant that creates the necessary

32

contacts with the forum.”). Moreover, for jurisdiction to lie, “a defendant’s contacts
with the forum State [must] be directly related to the conduct pertaining to the claims
asserted.” Brook v. McCormley, 873 F.3d 549, 552 (7th Cir. 2017) (citing Tamburo v.
Dworkin, 601 F.3d 693, 702 (7th Cir. 2010)). Put another way, “[s]pecific jurisdiction
must rest on the litigation-specific conduct of the defendant in the proposed forum
state” that relates to the “allegedly unlawful activity.” Advanced Tactical Ordinance
Systems, LLC v. Real Action Paintball, Inc., 751 F.3d 796 (7th Cir. 2014) (emphasis
in original).
Here, the first and third prongs of Calder are easily met. Monco alleges that
Rumy’s actions constituted intentional tortious interference with prospective
economic advantage, satisfying the first prong. And as to the third prong, Monco is
an Illinois citizen who is licensed, and practices, in Illinois, and thus any of his
financial losses were presumably suffered in Illinois.
But Calder’s second prong—whether Rumy’s actions were expressly aimed at
Illinois—is not met here. Indeed, while Monco alleges that Rumy tortiously interfered
with his legal representation of Zoltek, all of the actions alleged to underlie the
tortious interference took place in Missouri. Plaintiffs contend that Rumy sent emails
to Monco in May and June 2016 regarding the transfer of the Stealth litigation to
Rumy. Id. ¶ 114. Plaintiffs allege that after receiving and in response to these emails,
Monco rendered advice to Zoltek which angered Rumy. Id. As a result, Plaintiffs
allege that Rumy instructed Zoltek to fire Plaintiffs, telling Toray and Zoltek that the
case was worthless and that it “is Zoltek’s right to dismiss the [Plaintiffs] without

33

further liability.” Id. ¶ 115. Plaintiffs allege that Rumy “even sent a draft letter
terminating Plaintiffs for Zoltek’s signature,” and that Rumy “undertook these efforts
to safeguard his planned personal stake in the case,” and “insisted that Zoltek keep
his personal interest in the case secret from Plaintiffs” when he negotiated an
agreement between himself and Zoltek to split any settlement evenly between them.
Id. ¶¶ 115-16. Monco argues that Rumy directed his actions at Illinois when he
emailed Monco in Illinois to inform him of the case transfer. But these are not actions
by which Rumy allegedly accomplished the tortious interference; they are simply part
of the circumstances explaining Rumy’s alleged motive. Monco also points out that he
suffered injury in Illinois. But of course that is relevant to Calder’s third prong, not
second.
Next, Plaintiffs rely on Hugel to argue that because a tortious interference
claim arises from “the contractual relationship,” Rumy’s hundreds of emails and over
a dozen phone calls to Plaintiffs in Illinois regarding Plaintiffs’ representation in the
Stealth litigation are sufficient to confer jurisdiction. R. 247 at 9 (citing Hugel v. Corp.
of Lloyd’s, 999 F.2d 206, 209 (7th Cir. 1993)). But Hugel did not present a personal
jurisdiction issue. Instead, Hugel concerned whether a non-party to an agreement
was “closely related” enough to the dispute such that it should be bound by the
agreement’s forum selection clause for purposes of venue. See generally Hugel, 999
F.2d 206.
Plaintiff also cites Café Real Estate LLC v. VSP N. Am. LLC, 262 F. Supp. 3d
637, 640 (N.D. Ill. 2017) for the general proposition that a defendant’s “case-related

34

contacts with Illinois must be viewed in the aggregate.” But again, neither Hugel nor
Café Real Estate LLC compel the Court to find jurisdiction where Monco’s claim is
based on allegations that Rumy’s actions were directed at Zoltek in Missouri, as
opposed to Monco in Illinois. Moreover, the fact that Monco suffered injury in Illinois
is of no moment, since the tortious conduct alleged plainly occurred in Missouri, even
as it affected Monco in Illinois. See Brook, 873 F.3d at 552 (“The mere fact that a
defendant’s conduct affects a plaintiff with connections to the forum State is not
sufficient to establish jurisdiction”); Kraft Chem. Co. v. Salicylates and Chemicals
Private Ltd, et al, 2014 WL 11127924, at *2 (N.D. Ill. Oct. 28, 2014) (“the plaintiff’s
claimed injury is relevant only to the extent that it evinces a contact between the
defendants and the forum state”). Accordingly, the Court agrees with Rumy that his
May and June 2016 emails to Monco—which Plaintiffs allege caused Monco to render
advice that angered Rumy and in turn caused Rumy to speak out against Monco to
Zoltek in Missouri, and the only contacts even remotely related to the tortious
interference claim—are “two causal links in the chain too many,” and will not find
jurisdiction on this basis. R. 249 at 8.
b.

Forum selection clause

Plaintiffs also assert personal jurisdiction over Rumy based on implied waiver
under the April 1996 retainer agreement and 2011 modification agreement forum
selection clause. R. 247 at 7-8. “[T]he personal jurisdiction requirement is a waivable
right, there are a variety of legal arrangements by which a litigant may give express
or implied consent to the personal jurisdiction of the court.” Burger King Corp., 471

35

U.S. at 473 n.14. “For example, . . . parties frequently stipulate in advance to submit
their controversies for resolution within a particular jurisdiction. Where such forumselection provisions have been obtained through freely negotiated agreements and
are not unreasonabe and unjust, their enforcement does not offend due process.” Id.;
United Airlines, Inc. v. Zaman, 152 F. Supp. 3d 1041, 1054 (N.D. Ill. 2015) (“Personal
jurisdiction can be waived by the parties,” including based on a forum selection
clause). Under Illinois law, “forum selection clauses are presumed valid and
enforceable, unless proven otherwise by the party contesting their application,” and
“have been held to apply not merely to contract claims involving the terms of the
contract in which the clause appears, but also to other claims . . . connected to the
contract, such as tort claims arising from the contract.” Solargenix Energy, LLC, 17
N.E.3d at 182 .
The forum selection clause at issue is broadly-worded to provide:
both Zoltek and Monco/Mortimer shall submit themselves to the
exclusive jurisdiction and venue of the Federal District Court for the
Northern District of Illinois for resolution of any and all disputes under
this Agreement.
R. 243-2 at 7. Rumy does not argue that the forum selection clause is unenforceable
per se. Instead, the question is whether it is enforceable against him—a non-party
signatory as a Zoltek officer—with respect to Monco’s tortious interference claim.
Rumy makes two principle arguments as to why the forum selection clause
does not bestow personal jurisdiction. First, Rumy argues that Plaintiffs “have not
alleged the kind of corporate affiliation, mutuality, or special circumstances”
necessary to “bind[ ] a ‘closely related’ party to a forum selection clause he did not
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sign” for personal jurisdiction purposes. R. 240 at 3 (citing Guaranteed Rate, Inc. v.
Conn, 264 F. Supp. 3d 909, 928 (N.D. Ill. 2017) and Adams v. Raintree Vacation
Exchange, LLC, 702 F.3d 436, 439 (7th Cir. 2012)). Second, Rumy contends that the
forum selection clause is not broad enough to cover Plaintiffs’ tortious interference
claim in any event. Plaintiffs, contend the opposite, arguing that Rumy “voluntarily”
joined Zoltek in the Stealth litigation in which he was a “silent partner,” and that he
was a “third party beneficiary” to the retention agreements, and therefore that there’s
“ample reason” for him to be subject to the forum selection clause. R. 247 at 7-8.
Although the question as framed by the parties becomes what constitutes a
“close[ ] relat[ionship] to the dispute” for purposes of satisfying the “closely related”
test, Solargenix, 17 N.E.3d at 183, at the outset, the Court addresses a point that
neither party discusses and proves dispositive. That is, where an officer signs an
agreement on behalf of a corporation “and indicates next to his signature his
corporate affiliation, then absent evidence of contrary intent in the document, the
officer is not personally bound.” Sullivan v. Cox, 78 F.3d 322, 326 (7th Cir. 1996)
(quoting Wottowa Ins. Agency, Inc. v. Bock, 104 Ill.2d 311, 315-16 (Ill. 1984)); First
Classics, Inc. v Jack Lake Productions, Inc., 2018 WL 1427125, at *2 (N.D. Ill. Mar.
22, 2018) (same). Plaintiffs do not allege and the retention agreements do not indicate
that Rumy signed them personally. Rather, Rumy signed them in his representative
capacity on behalf of Zoltek. Nor do the agreements mention Rumy personally.
Instead, the agreements reference only Zoltek. Thus, under this basic principle,
Zoltek is bound by the forum selection clause and therefore subject to this Court’s

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personal jurisdiction because of it, but Rumy is not. See Patriot Resource Partners II,
LLC v. Service Disabled Veterans Business Assocs., Inc., 2008 WL 4534017, at *6
(N.D. Ill. Oct. 3, 2008) (officer did not waive personal jurisdiction by signing an
agreement containing a forum selection clause where he signed it in his
representative capacity on behalf of corporation, and agreement did not mention him
personally); see also G2 Enterprises, LLC v. Nee, 2006 WL 1647518, at *3 (N.D. Ill.
June 7, 2006) (officer did not waive personal jurisdiction by signing contract
containing forum selection clause where he signed in his official capacity and contract
did not mention him personally); First Classics, Inc., 2018 WL 1427125 at *2 (“The
Court is not convinced that [officer defendant] was acting outside of his capacity as
president when he transacted with First Classics and thus, it finds that he should
not be bound by the forum selection clause personally.”).
Courts have recognized an exception to this rule where the individual is an
alter ego of the corporation, and will pierce the corporate veil to hold the individual
liable. Kaeser & Blair, Inc. v. Willens, 845 F. Supp. 1228, 1234 (N.D. Ill. 1993).
However, to invoke the exception, the plaintiff must show “such unity of interest and
ownership [between the individual defendant and the corporation] that the separate
personalities of the corporation and the individual no longer exist . . . and the
circumstances [are] such that adherence to the fiction of separate corporate existence
would sanction a fraud or promote injustice.” Id. (quoting Van Dorn Co. v. Future
Chemical and Oil Corp., 753 F.2d 565, 569-70 (7th Cir. 1985)). This is a high
standard, and the Court finds that Plaintiffs—even as they allege that Rumy was the

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founder and largest shareholder at 18% when he signed the retention agreements on
behalf of Zoltek and had influence over both Zoltek’s sale and Plaintiffs’
termination—have not alleged sufficient facts to invoke the exception.
The parties’ analysis of the “closely related” test does not change the result.
Both Plaintiffs and Rumy cite to the Seventh Circuit decision in Adams v. Raintree
Vacation Exchange, LLC, 702 F.3d 436 (7th Cir. 2012), and this Court’s decision in
Guaranteed Rate, Inc. v. Conn, 264 F. Supp. 3d 909 (N.D. Ill. 2017), in support of their
respective positions. The court in Adams applied the “closely related” test in the
venue context, noting that the standard is “vague,” yet “decompos[ing]” it into the
principles of “affiliation” and “mutuality,” either of which allow a nonsignatory party
to invoke or be bound by (as applicable) a forum selection clause. 702 F.3d at 439.
“Affiliation” applies:
when a subsidiary is a party to a contract that contains a forum selection
clause and the other party to the contract sues the parent under the
contract. The parent should be allowed to invoke the clause and thus
insist that the suit be litigated in the same court which, pursuant to the
clause, its subsidiary is being sued.
Id. at 439-40. There can be no allegation that this concept allows jurisdiction here;
Rumy is an officer, not a subsidiary, of Zoltek.
Next, the Adams court explained that the principle of “mutuality” allows a
plaintiff to enforce the clause in the same situations the defendant is able to invoke
them. See id. at 442-43. Otherwise, defendants “would have their choice of forum and
applicable law, but Plaintiffs would be bound to litigate in Illinois under Illinois law.”

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Walls v. VRE, 344 F. Supp. 3d 932, 946 (N.D. Ill. 2018). This “mutuality” concept also
does not apply.
This Court explained in Guaranteed Rate, Inc. that there may be “other
specified circumstances” beyond principles of corporate affiliation and mutuality
under which non-signatories may be bound by forum selection clauses, “at least
insofar as venue is concerned,” but expressly warned that the personal jurisdiction
context implicates an additional set of considerations. 13 264 F. Supp. 3d at 927.
Namely: concerning due process. Id. at 926. Accordingly, the Court explained its
“serious concerns over whether it would be ‘[ ]reasonable and [ ]just’” under Burger
King Corp., 471 U.S. at 473 n. 14, “to apply a ‘close relationship’ test relying on
‘foreseeability’ to find implied consent to personal jurisdiction.” Id. Indeed, “[i]f
foreseeability cannot establish minimum contacts, it should not be a sufficient basis
for finding a waiver or implied consent either,” since a court holding a “nonsignatory
is bound by the forum selection clause is really applying a concept more akin to
forfeiture or estoppel.” Id. Ultimately, for these reasons, the Court declined to find
jurisdiction over an out-of-state new employer under the “closely-related” party
doctrine based on a contract to which it was not a party where it did not “voluntarily
join” the contracting employee in litigation. Id. While the Court made clear that
“[n]othing about [its] discussion [wa]s meant to call into question the holdings in

Examples cited include Frietsch v. Refco, Inc., 56 F.3d 825, 828 (7th Cir. 1995) (cat’s
paw); Fcstone, LLC v. Adams, 2011 WL 43080 (N.D. Ill. Jan. 6, 2011) (husband/wife
scenario); Am. Patriot Ins. Agency, Inc. v. Mut. Risk Mgmt., Ltd., 364 F.3d 884, 889
(7th Cir. 2004) (parties to other agreements that together with the contract
containing the forum selection clause constitute a cohesive contractual scheme).

13

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Adams and similar cases” “based on principles, among other things, of . . . corporate
affiliation,” it held that those cases “simply [we]re not applicable” because there was
“no evidence of corporate affiliation, mutuality, or any of the other types of
relationships discussed in the case law” for enforcing forum selection clauses against
non-signatories. Id.
Here, while Plaintiffs alleged that Rumy was heavily involved in the Stealth
litigation and engaging and managing Plaintiffs’ work on that same litigation, and
that he signed the fee agreements with Plaintiffs on Zoltek’s behalf, Plaintiffs have
not alleged facts tending to show the kind of special relationship required to find a
waiver of jurisdiction. Plaintiffs contend without more that Rumy was a “silent
partner” with Zoltek in the Stealth litigation before Zoltek fired Plaintiffs, and that
Rumy “voluntarily joined” Zoltek in the litigation, and thus is “closely related” enough
to the agreement and dispute to have waived jurisdiction on that ground under
Guaranteed Rate, Inc.. R. 247 at 8 (citing Guaranteed Rate, Inc., 246 F. Supp. 3d at
927). But this Court made clear in Guaranteed Rate, Inc. that the “closely related”
theory is limited. The Court certainly did not hold, and will not hold here, that an
officer who signed an agreement in his representative capacity and assisted in
litigation for the corporation necessarily subjected himself to jurisdiction. Finally,
Plaintiffs’ argument that Rumy was a third party beneficiary to the retention
agreements and that he should be bound for that reason alone similarly fails. R. 247
at 8 (“The non-signatory need not also be deemed a third party beneficiary of the
contract in order for a court to find that the forum selection clause applies to it,

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although third party beneficiary status would, by definition, satisfy the closely
related and foreseeability requirements” (quoting Solargenix, 17 N.E.3d at 183)).
While true that Rumy may have benefitted from Plaintiffs’ work in the Stealth
litigation through his status as a Zoltek officer and shareholder, he is not a “third
party beneficiary” as contemplated by the court in Solargenix. To hold otherwise
would severely undercut the rule that officers generally are not bound by—including
for personal jurisdiction purposes—contracts signed in their representative
capacities. Sullivan, 78 F.3d at 326.
Simply put, Plaintiffs fail to cite a single case holding that an officer who signed
an agreement containing a forum selection clause in his capacity as a corporate
representative impliedly consented to personal jurisdiction through that clause.
Thus, for all of Plaintiffs’ allegations that Rumy’s actions were motivated by personal
interest and spite, Plaintiffs fail to make a credible case for personal jurisdiction over
him in this Court. Despite Plaintiffs’ perfunctory arguments to the contrary, the
Court agrees with Rumy that while it may have been “foreseeable” to Rumy that he
was at risk of being sued in Illinois when he “knowingly allow[ed himself] to become
embroiled in a dispute related to a contract with a forum selection clause,” this simply
does not mean he “intended to relinquish [his] constitutional right to be free from suit
except in a forum with which [he] has minimum contacts.” Guaranteed Rate, Inc., 264
F. Supp. 3d at 926. Accordingly, Rumy is not subject to personal jurisdiction in Illinois
based on the forum selection clauses in the retainer agreements to which he is not a
party. To hold otherwise would call into question the basic principles of officer

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liability. See Playboy Enterprises Intern., Inc. v. Smaritian (Singapore) PTE Ltd., 908
F. Supp. 2d 730, 737 (N.D. Ill. 2011) (declining to allow plaintiff to “sidestep corporate
veil piercing requirements” to establish personal jurisdiction over director through a
forum selection clause “simply because [he was] closely related to the dispute”).
Having determined that Rumy cannot be subject to jurisdiction based on the
forum selection clause, the Court need not consider whether the forum selection
clause is broad enough to include the tortious interference claim.
C.

Summary

Even as replead, the Second Amended Complaint still fails to establish this
Court’s jurisdiction over Rumy as to Monco’s tortious interference claim. As noted,
Rumy may file a separate motion to dismiss Plaintiffs’ quantum meruit claim as to
him under Rule 12(b)(6) if he believes he has a sufficient basis to do so.
*

*

*

*

*

CONCLUSION
For the foregoing reasons, Plaintiff’s motion to dismiss Zoltek’s Counterclaim,
R. 58, is granted in part and denied in part, and Rumy’s motion to dismiss the claims
against him, R. 239, is granted in part and denied in part.
ENTERED:

_____________________
Honorable Thomas M. Durkin
United States District Judge

Dated: February 27, 2019
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