Mercola v. Abdou

223 F. Supp. 3d 720, 2016 U.S. Dist. LEXIS 171202, 2016 WL 7188160
CourtDistrict Court, N.D. Illinois
DecidedDecember 12, 2016
Docket14 C 8170
StatusPublished
Cited by13 cases

This text of 223 F. Supp. 3d 720 (Mercola v. Abdou) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mercola v. Abdou, 223 F. Supp. 3d 720, 2016 U.S. Dist. LEXIS 171202, 2016 WL 7188160 (N.D. Ill. 2016).

Opinion

Memorandum Opinion and Order

Gary Feinerman, United States District Judge

Joseph Mercóla (along with his sister and his company, who can be ignored) alleges in this diversity suit that attorney Mark Ziebold, insurance broker Mostafa Abdou, and Abdou’s employer, The Koenig Group, LLC, hoodwinked him. into purchasing several premium financed life insurance policies. Doc. 139. The operative complaint alleges legal malpractice against Ziebold, breach of fiduciary duty against Abdou and Koenig, and common law and statutory fraud against Abdou. Earlier in the case, the court denied Defendants’ motions to dismiss. Docs. 59-60 (reported at 2015 WL 3545414 (N.D. Ill. June 5, 2015)); Docs. 66-67 (reported at 2015 WL 4475287 (N.D. in. July 21, 2015)).

After answering, Defendants—whom this opinion will call “Third-Party Plaintiffs”—filed third-party complaints under the Illinois Joint Tortfeasor Contribution Act (“JTCA”), 740 ILCS 100/2(a), against the investment advisor AXA Advisors, LLC, its agent Andrew Bennett, and the law firm Duggan Bertsch, LLC (and a Duggan partner, who can be ignored). Docs. 176-78. Because the third-party complaints are materially identical, they will be referred to in the singular and only one will be cited. Third-Party Defendants have moved under Federal Rule of . Civil Procedure 12(b)(6) to dismiss the third-party complaints. Docs. 196, 213, 215. In addition, Duggan has moved under the JTCA for a finding that the settlement it reached with Mercóla was made in good faith and thus bars the third-party contribution claims against it. Doc. 235. The motions are denied.

Background

On a Rule 12(b)(6) motion, the court must accept the third-party complaint’s well-pleaded factual allegations, with all reasonable inferences drawn in Third-Party Plaintiffs’ favor, but not its legal conclusions. See Zahn v. N. Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). The court must also consider “documents attached to the [third-party] complaint, documents that are critical to the [third-party] complaint and referred to in it, and information that-is subject to proper judicial notice,” along with additional facts set forth in Third-Party Plaintiffs’ briefs opposing dismissal, so long as those additional facts “are consistent with the pleadings.” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th Cir. 2013). The facts are set forth as favorably to Third-Party Plaintiffs as those materials permit. See Pierce v. Zoetis, 818 F.3d 274, 277 (7th Cir. 2016).

Mercola’s allegations against Third-Party Plaintiffs are set forth in a prior opinion, familiarity with which is assumed. 2015 WL 3545414 at *1-2. The third-party [726]*726complaint acknowledges the existence though not the truth of Mercola’s allegations, i.e., that Third-Party Plaintiffs breached their fiduciary duties to Mercóla, made negligent misrepresentations, and committed legal malpractice in connection with Mercola’s obtaining premium financed life insurance policies, and that as a result, Mercóla incurred substantial losses when he surrendered those policies and repaid the loans that he had used to finance the premiums. Doc. 176 at ¶¶ 16-22. The third-party complaint proceeds to allege the following. On or about October 2013, when he still held the policies, Mercóla retained Bennett, AXA Advisors, and Duggan to be his “Financial Advisory Team” and advise him about the policies. Id. at ¶¶ 23-25. Based on their advice, Mercóla prematurely surrendered the policies, incurring losses alleged to exceed $3 million. Id. at ¶ 26. In advising Mercóla to prematurely surrender the policies, Third-Party Defendants breached the duty of care that they owed Mercóla, thus giving rise to third-party contribution liability to Third-Party Plaintiffs. Id. at ¶¶ 29-30, 34-35.

Discussion

I. Third-Party Defendants’ Motion to Dismiss

A. Whether the Third-Party Claims Comply With Rule 14

Rule 14(a) states that “[a] defending party may, as third-party plaintiff, serve a summons and complaint on a non-party who is or may be liable to it for all or part of the claim against it.” Fed. R. Civ. P. 14(a)(1). Third-Party Defendants argue that Rule 14(a) allows a third-party complaint only if the third-party plaintiff alleges that the third-party defendant is derivatively liable to the third-party plaintiff for the plaintiffs claim against it. Doc. 198 at 7-8. In this, Third-Party Defendants are correct. See Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 368 n.3, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978); Hartford Acc. and Indem. Co. v. Sullivan, 846 F.2d 377, 381 (7th Cir. 1988) (“[I]t is hard to see how [the requirements of Rule 14] could be fulfilled unless the third-party’s liability was derivative.”). Third-Party Defendants then argue that the third-party complaint, which charges that they acted negligently towards Mercóla, does not allege that they are derivatively liable to Third-Party Plaintiffs. Doc. 198 at 8-11. In this, they are wrong.

Whether derivative liability exists is a question of substantive law, which in this diversity suit is Illinois law. See Ragusa v. City of Streator, 95 F.R.D. 527, 528 (N.D. Ill. 1982) (“Though Rule 14(a) establishes the procedure for bringing in a third party, choice of law rules direct us to Illinois law to determine the substantive propriety of doing so.”); 6 Charles Allen Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 1448, at 453-54 (3d ed. 2010) (“If the governing substantive law recognizes a right of contribution, impleader under Rule 14 is a proper procedure by which to seek relief from joint tortfeasors.”). The JTCA states that “where 2 or more persons are subject to liability in tort arising out of the same injury to person or property, or the same wrongful death, there is a right of contribution among them, even though judgment has not been entered against any or all of them.” 740 ILCS 100/2(a). The third-party complaint alleges that “in the event” Third-Party Plaintiffs are held liable to Mercóla, they should recover from Third-Party Defendants “by way of contribution ... an amount as is commensurate with the relative degree of culpability or fault attributable” to Third-Party Defendants. Doc. 176 at ¶¶ 31, 36. Thus, any liability that Third-Party Defendants may have to Third-Party Plain[727]*727tiffs depends on, and thus is derivative of, Third-Party Plaintiffs’ liability to Mercóla. It follows that the third-party complaints for contribution under the JTCA are proper under Rule 14(a). See Dowe v. Nat’l R.R. Passenger Corp., 2008 WL 22383016, *4 (N.D. Ill. Oct. 17, 2003) (“If the particular alleged tortfeasor who is sued wants to protect itself against paying more than its ‘fair share’ of the plaintiffs damages, it can do so (if permitted by the relevant jurisdiction’s law) by making contribution claims against the other joint tortfeasors as third party claims under Rule 14.”).

B.

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Cite This Page — Counsel Stack

Bluebook (online)
223 F. Supp. 3d 720, 2016 U.S. Dist. LEXIS 171202, 2016 WL 7188160, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mercola-v-abdou-ilnd-2016.