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Keywords

lawsuitattorneyfiduciarymalpracticecorporationfiduciary duty
plaintiffdefendantattorneyfiduciarymalpracticecorporationfiduciary dutygood faith

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Felty v. Hartweg, 169 Ill.App.3d 406, 523 N.E.2d 555, 119 Ill.Dec. 799

Facts

Michael Felty, a minority shareholder in C–4 Computer Company, Inc., filed a lawsuit against attorney Darrell L. Hartweg, claiming that Hartweg failed to inform him of misconduct by the corporation's officers, leading to financial losses. Felty alleged that Hartweg was hired to serve as counsel for the corporation and that he had a duty to protect the interests of the minority shareholders. The court found that the complaint did not establish an attorney-client relationship between Felty and Hartweg, as Hartweg represented the corporation, not the individual shareholders.

On August 20, 1987, plaintiff Michael Felty filed suit in the circuit court against defendants Darrell L. Hartweg and a law firm of which Hartweg was a member. The suit against the law firm was later abandoned. The essence of the complaint as amended was that Hartweg had been attorney for a closely held corporation (C–4 Computer Company, Inc.) in which plaintiff was a minority shareholder, and Hartweg failed to inform plaintiff of misconduct by officers of the corporation, thereby causing plaintiff to suffer loss.

Issue

Did attorney Darrell L. Hartweg owe a fiduciary duty to minority shareholder Michael Felty, and did Felty state a valid cause of action against Hartweg for failing to disclose corporate misconduct?

Did attorney Darrell L. Hartweg owe a fiduciary duty to minority shareholder Michael Felty, and did Felty state a valid cause of action against Hartweg for failing to disclose corporate misconduct?

Rule

An attorney can be liable for malpractice only to a client to whom the attorney has a duty. A fiduciary relationship exists between an attorney and a client, but an attorney owes a duty to a nonclient only in limited circumstances, typically when the nonclient is an intended beneficiary of the attorney-client relationship.

An attorney can be liable for malpractice only to one to whom the attorney has a duty. ( Pelham v. Griesheimer (1982), 92 Ill.2d 13, 64 Ill.Dec. 544, 440 N.E.2d 96.) A fiduciary relationship exists between an attorney and a client, and the attorney owes the client the utmost fidelity, honesty, and good faith. ( Christison v. Jones (1980), 83 Ill.App.3d 334, 39 Ill.Dec. 560, 405 N.E.2d 8.)

Analysis

The court analyzed whether Felty's allegations created an attorney-client relationship between him and Hartweg. It concluded that Felty's claims did not establish such a relationship, as Hartweg represented the corporation and not the individual shareholders. The court noted that even if Felty believed Hartweg had a duty to protect minority shareholders, this belief did not create a legal obligation on Hartweg's part, as the law does not impose such a duty in the absence of a direct attorney-client relationship.

Here, the court analyzed whether Felty's allegations created an attorney-client relationship between him and Hartweg. It concluded that Felty's claims did not establish such a relationship, as Hartweg represented the corporation and not the individual shareholders. The court noted that even if Felty believed Hartweg had a duty to protect minority shareholders, this belief did not create a legal obligation on Hartweg's part, as the law does not impose such a duty in the absence of a direct attorney-client relationship.

Conclusion

The court affirmed the dismissal of Felty's complaint, concluding that he failed to state a cause of action against Hartweg due to the lack of an attorney-client relationship.

We agree with the circuit court that the complaint here should not be deemed to state a cause of action against Hartweg. We affirm the decision to dismiss the complaint in bar of action.

Who won?

Darrell L. Hartweg prevailed in the case because the court found that he did not owe a fiduciary duty to Felty as a minority shareholder, and Felty failed to establish a valid claim against him.

The court affirmed the dismissal of Felty's complaint, concluding that he failed to state a cause of action against Hartweg due to the lack of an attorney-client relationship.

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