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Statutory Interpretation – Breach of Fiduciary

By: Derek Hawkins//December 3, 2018//

Statutory Interpretation – Breach of Fiduciary

By: Derek Hawkins//December 3, 2018//

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7th Circuit Court of Appeals

Case Name: Peter T. Dvorak v. Granite Creek GP Flex Cap I, LLC, et al.

Case No.: 18-1892

Officials: BAUER, EASTERBROOK, and SCUDDER, Circuit Judges.

Focus: Statutory Interpretation – Breach of Fiduciary

A plaintiff may dismiss a federal suit without prejudice to refiling. That privilege may be used only once. “[I]f the plaintiff previously dismissed any federal- or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits.” Fed. R. Civ. P. 41(a)(1)(B). Illinois follows the same rule. 735 ILCS 5/13-217.

This appeal arises from a federal-state-federal sequence: the first suit was filed in federal court and dismissed, the second was filed in Illinois court and dismissed, and the third is back in federal court. The district judge deemed the Illinois statute applicable and dismissed the third suit with prejudice. 2017 U.S. Dist. LEXIS 25211 (N.D. Ill. Feb. 23, 2017).

Dvorak contests this decision on the ground that the complaint alleges other, later wrongful acts by Radzik. According to Dvorak, when one person commits multiple wrongs the statute of limitations runs from the last of them. That is so when multiple wrongs cause a cumulative injury. See Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc., 199 Ill. 2d 325, 345 (2002). See also, e.g., National Railroad Passenger Corp. v. Morgan, 536 U.S. 101 (2002) (distinguishing discrete wrongs, each of which carries its own period of limitations, from acts that become wrongful only cumulatively). But Dvorak does not allege that it took multiple steps by Radzik to add up to one tort or that he suffered cumulative harm from a series of similar acts. Nor does he contend that Radzik always acted in the same capacity. Instead he alleges that in 2008 Radzik preferred his own interests over those of both Dvorak and the partnership, and that in later years, in his capacity as the manager of the partnership’s general partner, Radzik took different steps that led to other partners acquiring Dvorak’s stake. These events are discrete, as are the capacities in which Radzik acted and the harms Dvorak suffered. The legal theories also are discrete: negligence for Radzik’s advice in 2008 and breach of fiduciary duty for those later events in which Radzik was acting on behalf of the general partner. Illinois does not allow allegations of distinct new wrongs to extend, indefinitely, the time to sue on old ones. Belleville Toyota, 199 Ill. 2d at 348–49. The district court properly dismissed this claim.

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.

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