Saunders v. Hedrick
MEMORANDUM Opinion and Order signed by the Honorable Virginia M. Kendall on 7/14/2021. Defendant's Motion to Dismiss [Dkt. 12] is denied. Plaintiff has plausibly alleged a claim for fraudulent concealment and his Amended Complaint may proceed. See Opinion for further details. Mailed notice(lk, )
NORTHERN DISTRICT OF ILLINOIS
MICHAEL S. HEDRICK,
No. 20 C 6835
Judge Virginia M. Kendall
MEMORANDUM OPINION AND ORDER
This Court recently granted Defendant Michael Hedrick’s Motion to Dismiss Plaintiff
William Saunders’s Complaint alleging legal malpractice and fraudulent concealment claims. The
Court found that Saunders’s legal malpractice claim was untimely and that he did not plausibly
allege a fraudulent concealment claim. (Dkt. 9). The Court gave leave to Plaintiff to file an
Amended Complaint, which he timely filed. (Dkt. 11). Defendant now moves to dismiss the
Amended Complaint, arguing that Plaintiff failed to plead his fraudulent concealment claim with
the requisite particularity. For the reasons that follow, Defendant’s Motion to Dismiss the
Amended Complaint (Dkt. 12) is denied.
On a motion to dismiss under Rule 12(b)(6), the Court accepts the complaint’s wellpleaded factual allegations, with all reasonable inferences drawn in the non-moving party’s favor,
but not its legal conclusions. See Smoke Shop, LLC v. United States, 761 F.3d 779, 785 (7th Cir.
2014). The following factual allegations are taken from Plaintiff’s Amended Complaint (Dkt. 11)
and are assumed true for purposes of this motion. W. Bend Mut. Ins. Co. v. Schumacher, 844 F.3d
670, 675 (7th Cir. 2016).
Plaintiff William Saunders was a long-term correctional officer employed by the Sheriff of
Lake County, in Lake County, Illinois until his termination of employment in 2010. (Dkt. 1 ¶ 3).
Defendant Michael S. Hedrick is an attorney who is barred and practices in Illinois. (Id. ¶ 4).
Sometime after Saunders was terminated from his job, he contacted Hedrick to represent him in a
lawsuit against his employer, as Hedrick claimed to concentrate his practice in the field of
employment law and wrongful termination. (Id. ¶¶ 5–6). Hedrick agreed to represent Saunders in
2010 and Hedrick filed suit on Saunders’ behalf in federal court. (Id. ¶¶ 6–7). The litigation
continued between 2010 and 2012 and Saunders was reasonably satisfied with Hedrick’s
representation. (Id. ¶¶ 9–10).
On June 6, 2012, the defendants in the employment case filed a Rule 68 Offer of Judgment.
(Id. ¶ 10). Hedrick contacted Saunders and told him that he had to accept the settlement and that
if he did not do so, the offer would be withdrawn; that if they continued to trial and Saunders did
not win a larger amount of money than what he was offered, Saunders would receive much less
and would be required to pay all attorneys’ fees, as well as costs for defendants, which was
inaccurate; and that the $375,000 settlement amount was a sufficient and good judgment and would
involve his reinstatement as a correctional officer together with credits to his pension. (Id. ¶ 11).
Saunders claims these representations were inaccurate, but that Saunders accepted the settlement
offer based on Hedrick’s advice. (Id. ¶ 12–13). Saunders alleges that at no time did Hedrick
review the pension rules enacted by the Illinois Municipal Retirement Fund (“IMRF”), which
contain guidelines on how the settlement effected Saunders’s pension and is easily accessible to
attorneys. (Id. ¶ 13).
After Saunders accepted the settlement, Hedrick began inquiring of the defendant in the
employment case, Lake County, as to when they could transfer his legal fees and cost to his account
by wire. (Id. ¶ 14). By this time, and prior to the consummation of the settlement, Hedrick had
received calculations from Lake County that showed the effect of the settlement on Saunders’s
pension. (Id. ¶ 15). Hedrick realized that by not including the settlement amount, Saunders did
not have an accurate idea of how much money he would be receiving after his retirement, as
Hedrick had previously advised Saunders of an incorrect amount calculated by his accountant.
(Id.). Hedrick purposefully concealed the effect of the settlement on Saunders’s pension from
Saunders as Saunders would not have accepted had he known. (Id. ¶ 16–17).
Saunders was unaware of any handbook enacted by the IMRF which contain guidelines on
how the settlement effected Saunders’s pension, although Hedrick should have been aware. (Id. ¶
18). Hedrick continued to advise Saunders that settlement was his best option, and after Saunders
learned of Hedrick’s errors, Hedrick told Saunders that it was an error made by the pension plan.
(Id. ¶ 20). However, as a result of the settlement, the IMRF notified Saunders sometime in 2020
that his monthly pension would be reduced. (Id. ¶¶ 23, 25, 28). Saunders alleges that had Hedrick
performed a proper investigation and advised Saunders of the negative effects on his pension, he
would have rejected the settlement offer. (Id. ¶ 30). Saunders paid Hedrick $184,729.67 for his
negligent representation and was also forced to pay a new attorney to assist him in renegotiating
his pension with Lake County. (Id. ¶ 26). Saunders also lost hundreds of thousands of dollars in
pension benefits. (Id.).
To survive a motion to dismiss under Rule 12(b)(6), the 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) (internal quotation marks omitted). A claim is facially plausible
“when the plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id. The Court is “not bound to accept as
true a legal conclusion couched as a factual allegation.” Olson v. Champaign Cty., 784 F.3d 1093,
1099 (7th Cir. 2015) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “Threadbare
recitals of the elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Toulon v. Cont’l Cas. Co., 877 F.3d 725, 734 (7th Cir. 2017) (quoting Iqbal, 556 U.S. at
678). This means that the plaintiff must “give enough details about the subject-matter of the case
to present a story that holds together.” Vanzant v. Hill’s Pet Nutrition, Inc., 934 F.3d 730, 736
(7th Cir. 2019) (quoting Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir.2010)).
The Court previously dismissed Plaintiff’s fraudulent concealment claims for failure to
allege such a claim with the requisite particularity. As the Court discussed, a fraudulent
concealment claim requires a plaintiff to “allege that the defendant concealed a material fact when
he was under a duty to disclose that fact to plaintiff.” Squires-Cannon v. Forest Preserve District
of Cook County, 897 F.3d 797, 805 (7th Cir. 2018) (Connick v. Suzuki Motor Co., 675 N.E.2d 584,
593 (1996)). The duty to disclose arises only in certain situations, including where the “plaintiff
and defendant are in a fiduciary or confidential relationship” and “where plaintiff places trust and
confidence in defendant, thereby placing defendant in a position of influence and superiority over
plaintiff.” Id. (citations omitted).
To prevail on a claim for fraudulent concealment, a plaintiff must prove: “(1) the
concealment of a material fact; (2) that the concealment was intended to induce a false belief under
circumstances creating a duty to speak; (3) that the innocent party could not have discovered the
truth through a reasonable inquiry or inspection, or was prevented from making a reasonable
inquiry or inspection, and relied upon the silence as a representation that the fact did not exist; (4)
that the concealed information was such that the injured party would have acted differently had he
been aware of it; and (5) that reliance by the person from whom the fact was concealed led to his
injury.” Trustees of AFTRA Health Fund v. Biondi, 303 F.3d 765, 777 (7th Cir. 2002) (citing
Schrager v. North Community Bank, 767 N.E.2d 376, 384 (2002). Rule 9(b)’s heightened pleading
standard requiring Plaintiffs to allege fraud with particularity applies to fraudulent concealment
claims. Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 571 (7th Cir. 2012).
Again, the parties do not dispute that Hedrick owed a duty to Saunders as he was serving
as his attorney. See DeLuna v. Burciaga, 857 N.E.2d 229, 246 (Ill. 2006) (serving as an attorney
establishes a fiduciary duty requisite to a fraudulent concealment claim). Hedrick once again
argues that Saunders has failed to allege with the required particularity. Defendant argues that the
Amended Complaint only attempts to satisfy the heightened pleading standard by simply reciting
some of the elements of a claim in bare bone fashion. Defendant claims that the Amended
Complaint argues that Defendant received calculations regarding Plaintiff’s pension and that
“[t]here is no allegation in the complaint as to what particular material fact or facts about pension
calculations the Defendant concealed.” (Dkt. 12 at 5). Defendant also claims that the Amended
Complaint fails to allege what actions of concealment that Defendant took and also fails to allege
Defendant’s arguments are made in conclusory fashion, with little elaboration beyond
statements that Plaintiff’s Amended Complaint is insufficient. Plaintiff heeded the Court’s advice
and added allegations to meet the standards for pleading a claim of fraudulent concealment. In
particular, Plaintiff has pled prior to the consummation of the settlement, Hedrick had received
calculations from Lake County that showed the effect of the settlement on Saunders’s pension,
that Hedrick realized that this could negatively impact Saunders’s pension, although Hedrick had
previously given him an incorrect amount, and that Hedrick purposefully concealed this material
fact from Saunders in order to induce him to settle. (Dkt. 11 ¶¶ 15–17). Hedrick argues this is
not a material fact, but quite obviously the fact that Saunders stood to lose hundred of thousands
of dollars from his retirement because of a settlement is a material fact. Saunders alleges that he
would not have settled had he known the impact on his pension.
Saunders also alleges that he was unaware of any handbook enacted by the IMRF which
contain guidelines on how the settlement effected Saunders’s pension, although Hedrick should
have been aware as he was Saunders’s attorney. (Id. ¶ 18). Not to mention, Hedrick continued
to advise Saunders that settlement was his best option, and after Saunders learned of Hedrick’s
errors, Hedrick told Saunders that it was an error made by the pension plan. (Id. ¶ 20). Such facts
strike at the pleading requirement that the innocent party could not have discovered the truth
through a reasonable inquiry or inspection or relied upon Defendant’s silence.
As to the
requirements that the concealed information was such that the injured party would have acted
differently had he been aware of it and that reliance by the person from whom the fact was
concealed led to his injury, Plaintiff has pled that he would not have accepted the settlement had
he known about the impact on his pension and that he was following his attorneys’ advice, who
continued to advise him that settlement was his best option, despite his alleged knowledge of the
impact of the settlement on Plaintiff’s pension. Finally, Defendant argues that Plaintiff has failed
to allege damages. He does not cite any case law that Plaintiff must allege damages with
particularity. In any event, Plaintiff has alleged that he paid Hedrick $184,729.67 for his negligent
representation, was forced to pay a new attorney to assist him in renegotiating his pension with
Lake County, and lost hundreds of thousands of dollars in pension benefits because of Defendant’s
legal malpractice and fraudulent concealment. (Id. ¶ 26).
The Court previously dismissed because the original Complaint was devoid of any
allegations that Hedrick “purposefully concealed the ramifications of the settlement on Saunders’s
pension, that Hedrick knew that he was being untruthful, that Hedrick was untruthful to induce
Saunders to settle, or that Saunders could not have discovered the truth through a reasonable
inquiry or inspection.” (Dkt. 12 at 6). Saunders has now fleshed out his fraudulent concealment
claim to allege that Hedrick purposefully concealed the impact of the settlement on his pension in
order to induce him to settle and that he knew he was being untruthful. Further, Saunders has
alleged that he could not have discovered the truth through a reasonable inquiry. Because Saunders
has plausibly alleged a claim of fraudulent concealment, Hedrick’s Motion to Dismiss the
Amended Complaint is denied.
For the reasons discussed above, Defendant’s Motion to Dismiss [Dkt. 12] is denied.
Plaintiff has plausibly alleged a claim for fraudulent concealment and his Amended Complaint
Date: July 14, 2021
Virginia M. Kendall
United States District Judge
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