Summary
- On April 24, 2018, the Circuit Court of Cook County, Illinois entered its order dismissing with prejudice the plaintiff’s Third Amended Complaint in the action entitled SFH Co. v. Quarles & Brady LLP.
The Spring 2017 issue of Opinions Matters reported on a complaint against a law firm that provided to the plaintiff lender an opinion on behalf of a Borrower and Guarantors. The complaint made several allegations:
(a) The opinion letter included a no litigation confirmation in the form of: “To our knowledge, there are no legal or administrative proceedings pending or threatened before any court or any governmental agency against Borrower or any Guarantor, except as disclosed in the Certificate of Manager [the “Certificate”] ….”
(b) Guarantors and the opinion giver knew that Guarantors or entities they controlled were in default in obligations to another lender and that Guarantors had an obligation to that lender under a Guarantee Agreement.
(c) The Certificate asserted that there were only six instances of “litigation pending or threatened that would have a material adverse effect on the Borrower or Guarantors.” None of those instances mentioned, or were related to, the claims being made by the other lender.
(d) The opinion giver represented Guarantors in meetings and negotiations with the other lender regarding the defaults and knew that the assertions in the Certificate were false.
On April 24, 2018, the Circuit Court of Cook County, Illinois entered its order dismissing with prejudice the plaintiff’s Third Amended Complaint in the action entitled SFH Co. v. Quarles & Brady LLP.
The opinion letter at issue was issued in 2007, years before the publication of the Real Estate Finance Opinion Report of 2012. If the opinion giver had either (1) successfully resisted providing the confirmation, or (2) provided a more limited confirmation, both as described in the 2012 Report, the litigation might have been avoided entirely.