2020 IL App (1st) 191049
Ill. App. Ct.2021Background
- Asian Human Services, Inc. (AHS) contracted with Asian Human Services Family Health Center, Inc. (AHSFHC) for services; James Wong served as AHS’s independent auditor since 2003 and worked closely with AHS.
- AHS sued (third-party complaint) Wong for breach of fiduciary duty, alleging he became a fiduciary by "special circumstances": long‑time advisor, participated in hiring CFOs, signed 2017 financials used to justify termination efforts, and failed to disclose he was working with AHSFHC to transition away from AHS.
- Wong moved to dismiss under Ill. Sup. Ct. Rule 2-619, arguing auditors generally do not owe fiduciary duties and no special circumstances exist here; the motion admitted the complaint’s legal sufficiency but asserted affirmative matter defeating the claim.
- The trial court granted Wong’s 2-619 motion with prejudice and entered a Rule 304(a) finding; AHS appealed the dismissal.
- The appellate court reviewed de novo whether, as a matter of law, an independent auditor owes a fiduciary duty or whether the pleaded facts created a special‑relationship fiduciary duty.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wong owed AHS a fiduciary duty such that AHS stated a claim for breach of fiduciary duty | AHS: alleged "special circumstances"—long‑time auditor/advisor, involved in CFO hiring, signed financials, concealed work with AHSFHC—creating trust, superiority, and influence | Wong: independent auditors do not generally owe fiduciary duties; AHS conceded it was not arguing auditors are fiduciaries per se; alleged facts do not show superiority or special relationship | Affirmed dismissal: as a matter of law auditors generally are not fiduciaries; pleaded facts do not establish the required superiority/influence to create fiduciary duty under special‑relationship theory |
Key Cases Cited
- Resolution Trust Corp. v. KPMG Peat Marwick, 844 F. Supp. 431 (N.D. Ill. 1994) (independent auditor generally does not owe client a fiduciary duty)
- Lawlor v. North American Corp. of Illinois, 2012 IL 112530 (Ill. 2012) (elements required to prove breach of fiduciary duty)
- Neade v. Portes, 193 Ill. 2d 433 (Ill. 2000) (fiduciary‑duty framework cited by Lawlor)
- Khan v. Deutsche Bank AG, 2012 IL 112219 (Ill. 2012) (distinguishable example where advisers’ comprehensive tax/investment role supported superior influence)
- Martin v. State Farm Mut. Auto. Ins. Co., 348 Ill. App. 3d 846 (Ill. App. Ct. 2004) (conclusory allegations insufficient to show dominance/superiority necessary for fiduciary relationship)