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Illinois’s highest court has considered whether partners had a duty to warn an attorney/broker who about threats of physical harm another partner had made about the attorney/broker.
In 1995, Edward Slavin (“Attacker”) and Sheldon Gross (“Gross”) formed a corporation with the purpose of building a car wash. Gross contacted Mitchell Iseberg (“Broker”), a real estate broker and attorney, about their interest in acquiring property for the car wash. The Broker informed Gross that he had formed a corporation with Henry Frank (“Frank”) and his corporation was in the process of purchasing land to develop into a strip mall. Thereafter, the two corporations entered a partnership to jointly purchase the land identified by the Broker.
Over the years, a series of disputes arose between the partners and eventually the parties resolved their differences through a settlement. The settlement ended all involvement by the Broker in the business dealings and the creation of a joint venture between the remaining three individuals. The settlement agreement stated that the Broker “shall cease and desist from having any involvement with the Property…unless requested in writing by the Venture”.
The property remained unsold through 1998, when the Attacker became unable to continue to meet his monthly payment obligations. This caused the Attacker to forfeit his interest in the joint venture and lose all of his savings. According to statements made by Gross, the Attacker blamed his lost investment on the Broker and he began making threats of physical harm to the Broker. Gross alerted the Attacker’s brother about the threats and also shared his concerns with Frank.
In 2000, the Attacker shot the Broker, rendering the Broker a paraplegic. The Broker filed a lawsuit that included claims against Gross and Frank, claiming that they had a duty to warn him of the threats made against him by the Attacker. The trial court dismissed these allegations, and the appellate court affirmed on the grounds that there is no affirmative duty to protect another from criminal attacks by third parties. The Broker appealed.
The Supreme Court of Illinois affirmed the lower courts. There are four “special relationship” exceptions to the general rule about warning another about attacks by third parties: common-carrier passenger, innkeeper-guest, business invitor-invitee, and voluntary custodian-protectee. The Broker did not argue that any of those exceptions applied; instead, the Broker claimed that he was an agent in the employ of the joint venture and so they had a special duty to warn him of the threats made by the Attacker.
The court rejected the Broker’s principal/agent argument. While the Broker argued that he was an agent of the joint venture, the settlement agreement between the parties directly contradicted this, as that document stated that the Broker would have nothing to do with the joint venture unless there were specific written instructions. There was also no evidence that the Broker had ever received such written instructions. Further, a principal’s duty to warn his/her agent during the agent’s employment arises when the principal is aware of possible harm arising during the course of the agent’s employment. The lawsuit did not allege that the Broker encountered a risk of harm while performing actions on behalf of the joint venture; instead, these allegations involved threats made by a disgruntled former partner. Therefore, the court ruled that Gross and Frank had no special duty to warn the Broker and so affirmed the lower courts.
Iseberg v. Gross, 227 Ill.2d 78, (Ill. 2007)