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that his transfer of 500 shares to his wife was “illegal” and “would get him in further trouble.” Accordingly, “at the
insistence” of the lawyer and the “considerable badgering” from the lawyer and Harris, Miller signed the two
agreements and also signed his wife's name to them. The complaint states, however, that the Millers “maintain that
included: conducting corporate directors' meetings and shareholders' meetings without notice to the Millers; cancel-
ling (without notice) the credit cards held by Maxine Miller since 1990; changing the corporate health insurance
program “in such a way as to deprive [the Millers] of their health insurance”; notifying Maxine Miller about the
termination of her health insurance benefits in a manner that negatively affected her “opportunity to convert or take
any action to maintain” those benefits; reporting distributions to Harris, Hoxie, and the Millers, despite the fact that
¶ 12 The complaint alleges that after 2002, contrary to Verchota's duty of loyalty to the Millers and his duty not
to put the interests of others ahead of the Millers' interests, Verchota followed Harris's instructions to adjust Claim-
sco's books and records so as to maximize the Millers' financial liabilities, falsely reflect income to them without
actually transferring that income, and unfairly disadvantage them compared to the other shareholders. The 2002 and
Millers' accountant and continued as the accountant for Claimsco and Harris. The complaint asserts that from 2002
onward Verchota used the confidential information he had obtained from the Millers to act to their detriment. The
complaint alleges that the Millers sustained damages of more than $50,000 through substantially higher taxes, “lia-
bilities to the United States Treasury,” and the costs of hiring other accountants to straighten out their financial mat-
ters.
ruling. The trial court denied the Millers' motion to reconsider on March 8, 2011. Thereafter, the Millers settled with
the other defendants, and the remaining counts of the complaint were dismissed pursuant to a settlement agreement
on April 2, 2012. The Millers filed a timely notice of appeal.
¶ 16 A motion to dismiss brought under section 2–615 of the Code attacks the sufficiency of the complaint, on
the basis that, even assuming the allegations of the complaint to be true, the complaint does not state a cause of ac-
tion that would entitle the plaintiff to relief. 735 ILCS 5/2–615 (West 2010); Kolegas v. Heftel Broadcasting Corp.,
154 Ill.2d 1, 8, 180 Ill.Dec. 307, 607 N.E.2d 201 (1992). We review de novo the grant of such a motion. Khan, 2012
IL 112219, ¶ 47, 365 Ill.Dec. 517, 978 N.E.2d 1020. As we noted earlier, in reviewing the sufficiency of a com-
lers attached to their complaint: the 1990 Agreement, the 2002 Agreement, and the Executive Agreement. Verchota
correctly points out that documents attached as exhibits to a complaint become part of the complaint. Burton v. Air-
borne Express, Inc., 367 Ill.App.3d 1026, 1034, 306 Ill.Dec. 308, 857 N.E.2d 707 (2006). Verchota argues from this
that the terms of the 2002 Agreement “control over” any contradictory allegations in the complaint, and doom the
cause of action because it is undisputed that Verchota followed the 2002 Agreement in performing his accounting
The plaintiffs alleged, among other things, that the defendants had breached their fiduciary duty toward the plaintiffs
by improperly advising them regarding prospective investments, improperly telling the plaintiffs that the invest-
ments were legal and were adequately supported by legal opinions, and failing to tell the plaintiffs that some of the
defendants and other participants had undisclosed arrangements for fee-splitting or fee-sharing. Id. ¶ 48. In their
motion to dismiss for failure to state a claim, the defendants noted that the plaintiffs had signed documents contain-
¶ 19 On review, the appellate court rejected this argument, holding that the documents did not control over the
contrary allegations in the complaint for several reasons. First, the appellate court noted that the documents had not
principles of agency, contract, and equity.” Id. (citing Armstrong, 174 Ill.2d at 293–94, 220 Ill.Dec. 378, 673 N.E.2d
290). Thus, as the plaintiffs' claim for breach of fiduciary duty was not founded on contractual documents such as
those put forward by the defendants, those documents did not control over the allegations of the complaint. Id. ¶ 53.
Instead, “the appellate court declared that it would take all of the well-pleaded facts of the complaint as true even if
the disclaimer in the * * * documents appeared to contradict those factual allegations.” Id. The supreme court ap-
passed duties of loyalty and honesty. The Millers allege that that relationship arose out of Verchota's oral agreement
with them to serve as their personal tax accountant, and also out of the oral agreement with Claimsco (the majority
shareholders of which were the Millers) to serve as its accountant. Neither the 2002 Agreement nor any of the other
agreements contradicts or otherwise overcomes these allegations. Regardless of whether the 2002 Agreement was
valid or invalid, or whether as Claimsco's accountant Verchota had a duty to follow the 2002 Agreement (issues that
supreme court noted the strict limitations upon the matters that a court may consider in ruling on a section 2–615
motion to dismiss a claim for breach of fiduciary duty:
“[W]e are not determining whether a fiduciary relationship actually existed between the* * * defendants and
plaintiffs. * * * We determine only whether the well-pleaded factual allegations of the complaint adequately al-
matter of law from the existence of a particular relationship, such as an attorney-client or principal-agent relation-
ship” (Gonzalzles v. American Express Credit Corp., 315 Ill.App.3d 199, 210, 247 Ill.Dec. 881, 733 N.E.2d 345
(2000)), or come about when “one party reposes trust and confidence in another, who thereby gains a resulting in-
with tax advice. They therefore provided him with confidential financial information and trusted him to minimize
their tax liabilities, a duty that Verchota undertook as part of their oral agreement with him. These allegations are
sufficient to allege the existence of a fiduciary relationship. A fiduciary relationship carries with it “the duty of * * *
candor, rectitude, care, loyalty, and good faith.” Burdett v. Miller, 957 F.2d 1375, 1381 (7th Cir.1992). An agent
must not place himself in a position which is adverse to that of his principal during the existence of the agency.
An agent, thus, must keep the principal informed on all matters of which he has knowledge that pertain to the
subject matter of the agency. The agent breaches this duty not only when he acts adversely to the principal's inter-
est, but also when he conceals facts that involve the principal's advantage.” Beaton & Associates, Ltd. v. Joslyn
Manufacturing & Supply Co., 159 Ill.App.3d 834, 842–43, 111 Ill.Dec. 649, 512 N.E.2d 1286 (1987), superseded
sco) ahead of theirs in making distributions from Claimsco; failed to honor his agreement with the Millers to use the
1990 Agreement in structuring Claimsco's financial accounts and records; used the Millers' personal financial infor-
mation to harm them; failed to inform the Millers about any of this; and affirmatively acted to keep financial infor-
mation about Claimsco and necessary tax-related documents from the Millers. The Millers also allege that Vercho-
ta's conduct caused them damages of more than $50,000. It might be that, at trial, the Millers are unable to prove
because it was the product of coercion and duress, in that the complaint does not contain any allegations relating to
this contention. However, this is simply incorrect. Paragraphs 28 and 29 of the complaint allege no consideration,
and paragraphs 27, 32, and 33 allege coercion and duress. Similarly, Verchota's assertion that the complaint does not
that, even if the 2002 Agreement was unenforceable initially, the Millers ratified it by accepting the benefits of the
Executive Agreement. However, these are substantive arguments directed to the merits of the complaint, rather than
arguments that point out some deficiency in the pleading. As such, we cannot consider them here. See Khan, 2012
IL 112219, ¶¶ 55–56, 365 Ill.Dec. 517, 978 N.E.2d 1020 (court must restrict its consideration to the allegations of
the complaint; moreover, where key facts relating to the cause of action are disputed, the resolution of the issues
¶ 26 Verchota also raises arguments that must fail because they do not relate to the claim asserted here, which is
a claim for breach of fiduciary duty. For instance, Verchota argues that he had no duty to advise the Millers regard-
ing the validity or invalidity of the 2002 Agreement because he is an accountant, not a lawyer. However, the Millers
have not claimed that Verchota had any such duty. Rather, they assert that he had the duty either to continue follow-
¶ 27 Similarly, Verchota argues that he had no legally enforceable contractual obligation to ignore the 2002
Agreement, because any such obligation would run counter to his professional duties and would get him in trouble
under the Illinois Public Accounting Act (225 ILCS 450/20.01(a)(14) (West 2010)). Again, however, this argument
treats the Millers' claim as one for breach of contract, which it is not. Verchota has not identified any case law sug-
gesting that the Illinois Public Accounting Act excuses an accountant from his fiduciary duties.
alleged. The sole exception is Abrams v. Illinois College of Podiatric Medicine, 77 Ill.App.3d 471, 476, 32 Ill.Dec.
680, 395 N.E.2d 1061 (1979), in which the allegations of an oral contract were extremely vague, stating only that
the defendant there told the plaintiff not to worry about the difficulties he was having, and “ ‘that everything would
obtained through discovery. See Khan, 2012 IL 112219, ¶ 47, 365 Ill.Dec. 517, 978 N.E.2d 1020 (“A cause of action
should not be dismissed unless it is clearly apparent that no set of facts can be proved” consistent with the allega-
tions that would entitle the plaintiffs to recover.). This is especially true in view of the fact that this is an action for
breach of fiduciary duty, not an action for breach of contract.
malpractice but for breach of fiduciary duty. (Although the phrase “accountant malpractice” appears in the title of
count II, we look to the substance of the allegations rather than the title. See Wabash County, Illinois v. Illinois Mu-
nicipal Retirement Fund, 408 Ill.App.3d 924, 932, 349 Ill.Dec. 411, 946 N.E.2d 907 (2011).) Moreover, the allega-
tions of the complaint, which must be construed in the light most favorable to the Millers at this point (Khan, 2012
IL 112219, ¶ 47, 365 Ill.Dec. 517, 978 N.E.2d 1020), do not support Verchota's contentions: the Millers clearly al-
¶ 30 CONCLUSION
¶ 31 For all of these reasons, we reverse the January 25, 2011, order of the circuit court of Lake County dismiss-
ing count II of the fourth amended complaint, and remand the case for further proceedings consistent with this opin-
ion.
Miller v. Harris
--- N.E.2d ----, 2013 IL App (2d) 120512, 2013 WL 633318 (Ill.App. 2 Dist.)
END OF DOCUMENT
the other defendants, and the remaining counts of the complaint were dismissed pursuant to a settlement agreement
on April 2, 2012. The Millers filed a timely notice of appeal.
¶ 16 A motion to dismiss brought under section 2–615 of the Code attacks the sufficiency of the complaint, on
the basis that, even assuming the allegations of the complaint to be true, the complaint does not state a cause of ac-
tion that would entitle the plaintiff to relief. 735 ILCS 5/2–615 (West 2010); Kolegas v. Heftel Broadcasting Corp.,
154 Ill.2d 1, 8, 180 Ill.Dec. 307, 607 N.E.2d 201 (1992). We review de novo the grant of such a motion. Khan, 2012
IL 112219, ¶ 47, 365 Ill.Dec. 517, 978 N.E.2d 1020. As we noted earlier, in reviewing the sufficiency of a com-
lers attached to their complaint: the 1990 Agreement, the 2002 Agreement, and the Executive Agreement. Verchota
correctly points out that documents attached as exhibits to a complaint become part of the complaint. Burton v. Air-
borne Express, Inc., 367 Ill.App.3d 1026, 1034, 306 Ill.Dec. 308, 857 N.E.2d 707 (2006). Verchota argues from this
that the terms of the 2002 Agreement “control over” any contradictory allegations in the complaint, and doom the
cause of action because it is undisputed that Verchota followed the 2002 Agreement in performing his accounting
The plaintiffs alleged, among other things, that the defendants had breached their fiduciary duty toward the plaintiffs
by improperly advising them regarding prospective investments, improperly telling the plaintiffs that the invest-
ments were legal and were adequately supported by legal opinions, and failing to tell the plaintiffs that some of the
defendants and other participants had undisclosed arrangements for fee-splitting or fee-sharing. Id. ¶ 48. In their
motion to dismiss for failure to state a claim, the defendants noted that the plaintiffs had signed documents contain-
¶ 19 On review, the appellate court rejected this argument, holding that the documents did not control over the
contrary allegations in the complaint for several reasons. First, the appellate court noted that the documents had not
principles of agency, contract, and equity.” Id. (citing Armstrong, 174 Ill.2d at 293–94, 220 Ill.Dec. 378, 673 N.E.2d
290). Thus, as the plaintiffs' claim for breach of fiduciary duty was not founded on contractual documents such as
those put forward by the defendants, those documents did not control over the allegations of the complaint. Id. ¶ 53.
Instead, “the appellate court declared that it would take all of the well-pleaded facts of the complaint as true even if
the disclaimer in the * * * documents appeared to contradict those factual allegations.” Id. The supreme court ap-
passed duties of loyalty and honesty. The Millers allege that that relationship arose out of Verchota's oral agreement
with them to serve as their personal tax accountant, and also out of the oral agreement with Claimsco (the majority
shareholders of which were the Millers) to serve as its accountant. Neither the 2002 Agreement nor any of the other
agreements contradicts or otherwise overcomes these allegations. Regardless of whether the 2002 Agreement was
valid or invalid, or whether as Claimsco's accountant Verchota had a duty to follow the 2002 Agreement (issues that
supreme court noted the strict limitations upon the matters that a court may consider in ruling on a section 2–615
motion to dismiss a claim for breach of fiduciary duty:
“[W]e are not determining whether a fiduciary relationship actually existed between the* * * defendants and
plaintiffs. * * * We determine only whether the well-pleaded factual allegations of the complaint adequately al-
matter of law from the existence of a particular relationship, such as an attorney-client or principal-agent relation-
ship” (Gonzalzles v. American Express Credit Corp., 315 Ill.App.3d 199, 210, 247 Ill.Dec. 881, 733 N.E.2d 345
(2000)), or come about when “one party reposes trust and confidence in another, who thereby gains a resulting in-
with tax advice. They therefore provided him with confidential financial information and trusted him to minimize
their tax liabilities, a duty that Verchota undertook as part of their oral agreement with him. These allegations are
sufficient to allege the existence of a fiduciary relationship. A fiduciary relationship carries with it “the duty of * * *
candor, rectitude, care, loyalty, and good faith.” Burdett v. Miller, 957 F.2d 1375, 1381 (7th Cir.1992). An agent
must not place himself in a position which is adverse to that of his principal during the existence of the agency.
An agent, thus, must keep the principal informed on all matters of which he has knowledge that pertain to the
subject matter of the agency. The agent breaches this duty not only when he acts adversely to the principal's inter-
est, but also when he conceals facts that involve the principal's advantage.” Beaton & Associates, Ltd. v. Joslyn
Manufacturing & Supply Co., 159 Ill.App.3d 834, 842–43, 111 Ill.Dec. 649, 512 N.E.2d 1286 (1987), superseded
sco) ahead of theirs in making distributions from Claimsco; failed to honor his agreement with the Millers to use the
1990 Agreement in structuring Claimsco's financial accounts and records; used the Millers' personal financial infor-
mation to harm them; failed to inform the Millers about any of this; and affirmatively acted to keep financial infor-
mation about Claimsco and necessary tax-related documents from the Millers. The Millers also allege that Vercho-
ta's conduct caused them damages of more than $50,000. It might be that, at trial, the Millers are unable to prove
because it was the product of coercion and duress, in that the complaint does not contain any allegations relating to
this contention. However, this is simply incorrect. Paragraphs 28 and 29 of the complaint allege no consideration,
and paragraphs 27, 32, and 33 allege coercion and duress. Similarly, Verchota's assertion that the complaint does not
that, even if the 2002 Agreement was unenforceable initially, the Millers ratified it by accepting the benefits of the
Executive Agreement. However, these are substantive arguments directed to the merits of the complaint, rather than
arguments that point out some deficiency in the pleading. As such, we cannot consider them here. See Khan, 2012
IL 112219, ¶¶ 55–56, 365 Ill.Dec. 517, 978 N.E.2d 1020 (court must restrict its consideration to the allegations of
the complaint; moreover, where key facts relating to the cause of action are disputed, the resolution of the issues
¶ 26 Verchota also raises arguments that must fail because they do not relate to the claim asserted here, which is
a claim for breach of fiduciary duty. For instance, Verchota argues that he had no duty to advise the Millers regard-
ing the validity or invalidity of the 2002 Agreement because he is an accountant, not a lawyer. However, the Millers
have not claimed that Verchota had any such duty. Rather, they assert that he had the duty either to continue follow-
¶ 27 Similarly, Verchota argues that he had no legally enforceable contractual obligation to ignore the 2002
Agreement, because any such obligation would run counter to his professional duties and would get him in trouble
under the Illinois Public Accounting Act (225 ILCS 450/20.01(a)(14) (West 2010)). Again, however, this argument
treats the Millers' claim as one for breach of contract, which it is not. Verchota has not identified any case law sug-
gesting that the Illinois Public Accounting Act excuses an accountant from his fiduciary duties.
alleged. The sole exception is Abrams v. Illinois College of Podiatric Medicine, 77 Ill.App.3d 471, 476, 32 Ill.Dec.
680, 395 N.E.2d 1061 (1979), in which the allegations of an oral contract were extremely vague, stating only that
the defendant there told the plaintiff not to worry about the difficulties he was having, and “ ‘that everything would
obtained through discovery. See Khan, 2012 IL 112219, ¶ 47, 365 Ill.Dec. 517, 978 N.E.2d 1020 (“A cause of action
should not be dismissed unless it is clearly apparent that no set of facts can be proved” consistent with the allega-
tions that would entitle the plaintiffs to recover.). This is especially true in view of the fact that this is an action for
breach of fiduciary duty, not an action for breach of contract.
malpractice but for breach of fiduciary duty. (Although the phrase “accountant malpractice” appears in the title of
count II, we look to the substance of the allegations rather than the title. See Wabash County, Illinois v. Illinois Mu-
nicipal Retirement Fund, 408 Ill.App.3d 924, 932, 349 Ill.Dec. 411, 946 N.E.2d 907 (2011).) Moreover, the allega-
tions of the complaint, which must be construed in the light most favorable to the Millers at this point (Khan, 2012
IL 112219, ¶ 47, 365 Ill.Dec. 517, 978 N.E.2d 1020), do not support Verchota's contentions: the Millers clearly al-
¶ 30 CONCLUSION
¶ 31 For all of these reasons, we reverse the January 25, 2011, order of the circuit court of Lake County dismiss-
ing count II of the fourth amended complaint, and remand the case for further proceedings consistent with this opin-
ion.
Miller v. Harris
--- N.E.2d ----, 2013 IL App (2d) 120512, 2013 WL 633318 (Ill.App. 2 Dist.)
END OF DOCUMENT
