Mercola v. Abdou
223 F. Supp. 3d 720
N.D. Ill.2016Background
- Mercóla sued his attorney (Ziebold), broker (Mostafa Abdou/Koenig Group), and others for inducing purchase of premium‑financed life insurance and related malpractice, breach of fiduciary duty, and fraud; earlier motions to dismiss were denied.
- Defendants (now Third‑Party Plaintiffs) impleaded AXA Advisors, Andrew Bennett, and law firm Duggan Bertsch under Illinois’s Joint Tortfeasor Contribution Act (JTCA), claiming those third‑party defendants negligently advised Mercóla to surrender the policies prematurely, increasing his losses.
- Third‑Party Defendants moved to dismiss the third‑party complaints under Fed. R. Civ. P. 12(b)(6); Duggan separately moved for a JTCA good‑faith settlement finding to bar contribution claims after settling with Mercóla for $25,000.
- The third‑party complaints allege derivative contribution claims: if Third‑Party Plaintiffs are liable to Mercóla, they seek contribution commensurate with third‑party defendants’ comparative fault for the same injury (exacerbated loss from premature surrender).
- At the pleading stage the court accepted the alleged facts as true and considered documents and briefing consistent with the pleadings when resolving the motions.
Issues
| Issue | Plaintiff's Argument (Third‑Party Plaintiffs) | Defendant's Argument (Third‑Party Defs.) | Held |
|---|---|---|---|
| Rule 14 impleader: is impleader proper where third‑party liability is derivative? | Impleader is proper because JTCA creates contribution claims that are derivative of Plaintiffs’ liability to Mercóla. | Third‑Party Defs. argued Rule 14 requires derivative liability and complain the pleadings do not allege derivative liability. | Court: Proper. JTCA contribution claim is derivative of Third‑Party Plaintiffs’ liability; Rule 14(a) satisfied. |
| JTCA "same injury" requirement: do allegations that third‑party advice exacerbated Mercóla’s losses plead the same injury? | The third‑party complaint pleads that third‑party defendants’ advice caused Mercóla to surrender policies prematurely, exacerbating the same economic injury. | Third‑Party Defs. contended the complaint is just "it was him, not me" and does not allege contribution to the same injury. | Court: Held sufficient — "same injury" focuses on the injury itself, not timing/type of conduct; allegations that advice contributed to the same loss suffice. |
| Sufficiency of negligence/fiduciary pleading: do complaints adequately allege tort duties (malpractice/negligence) against Duggan and Bennett? | Pleadings allege breach of duty of care (negligent advice) causing premature surrender; claims sound in tort (malpractice/negligence) and are proper JTCA targets. | Defendants argued claims actually sound only in fiduciary duty (not tort), or that broker claims are subject to Moorman economic‑loss rule. | Court: Pleadings sufficiently allege tort duties — attorney malpractice and broker negligence are tortious; statutory broker duties supply extracontractual duty; Moorman inapplicable because extracontractual duty exception applies to financial/advisory services. |
| Duggan settlement good faith: does the $25,000 settlement with Mercóla satisfy JTCA good‑faith settlement bar? | Duggan: Settlement is valid and bars contribution; amount reflects risk/likelihood of recovery. | Third‑Party Plaintiffs: Settlement is paltry vs claimed damages and the long attorney‑client relationship suggests collusion; no basis on pleadings to find low recovery likely. | Court: Denied good‑faith finding. On pleadings, settlement amount and close relationship create suspicion of lack of good faith; Duggan not shielded. |
Key Cases Cited
- Zahn v. N. Am. Power & Gas, LLC, 815 F.3d 1082 (7th Cir.) (Rule 12(b)(6) pleading standards)
- Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017 (7th Cir.) (consideration of documents integral to complaint on Rule 12(b)(6))
- Pierce v. Zoetis, 818 F.3d 274 (7th Cir.) (pleading‑stage inference rules)
- Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365 (U.S.) (Rule 14 derivative‑liability discussion)
- Hartford Acc. & Indem. Co. v. Sullivan, 846 F.2d 377 (7th Cir.) (derivative liability and impleader)
- People v. Brockman, 148 Ill.2d 260 (Ill.) (Illinois "same injury" focus for contribution claims)
- Alper v. Altheimer & Gray, 257 F.3d 680 (7th Cir.) (contribution and "same injury" analysis)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S.) (pleading requires more than labels and conclusions)
- Barth v. Reagan, 139 Ill.2d 399 (Ill.) (attorney malpractice can sound in tort)
- Collins v. Reynard, 154 Ill.2d 48 (Ill.) (malpractice may be pled in tort or contract)
- Plumb v. Fluid Pump Servs., 124 F.3d 849 (7th Cir.) (insurance broker fiduciary relationship discussion)
- Nelson v. Union Wire Rope Corp., 31 Ill.2d 69 (Ill.) (general tort duty/principles)
- Moorman Mfg. Co. v. National Tank Co., 91 Ill.2d 69 (Ill.) (economic‑loss doctrine)
- Congregation of the Passion v. Touche Ross & Co., 159 Ill.2d 137 (Ill.) (extracontractual duty exception to Moorman for professionals)
- Johnson v. United Airlines, 203 Ill.2d 121 (Ill.) (good‑faith settlement standard under JTCA)