Supreme Court Summaries
Opinions filed October 18, 2012
Khan v. Deutsche Bank AG, 2012 IL 112219
Appellate citation: 408 Ill. App. 3d 564.
JUSTICE GARMAN delivered the judgment of the court, with opinion.
Justices Freeman, Thomas, Karmeier, and Burke concurred in the judgment and opinion.
Justice Theis concurred in part and dissented in part, with opinion, joined by Chief Justice Kilbride.
This Champaign County civil litigation is before the supreme court on an appeal from the granting of motions to dismiss. No trial has occurred.
The plaintiffs’ 2009 complaint alleged that the defendants, in 1999 and 2000, marketed and sold to them investments, known as the 1999 Digital Options Strategy and the 2000 COINS Strategy, which were promoted as not only producing profits, but also as reducing tax liabilities. Plaintiffs were charged substantial fees, but the promised benefits did not occur. The parties agree that the five-year statute of limitations for actions not otherwise provided for is applicable. In the circuit court, the defendants obtained a dismissal, but the appellate court reversed and remanded.
In this decision, the supreme court held that the limitation period began to run when the Internal Revenue Service issued deficiency notices to the plaintiffs in 2008. The supreme court applied the “discovery rule” that a limitation period begins to run when the plaintiff knows or reasonably should know of the injury and its wrongful cause. The action complaining of the promotion of bogus tax shelters and the ultimate disallowance of losses was, thus, timely filed, and this holding also applies to the accounting firm which was made a defendant concerning the year 2000 strategy.
In addition to disapproving of the limitations dismissals, the supreme court further held that the complaint adequately alleged breach of fiduciary duty, that there was no basis for dismissing this claim as legally insufficient, and that resolution of the breach of fiduciary duty count must await upcoming proceedings in the circuit court. Defendants’ challenges to the sufficiency of the pleadings to allege negligent representation have been forfeited and are no longer before the supreme court. The appellate court judgment was affirmed.