                             2018 IL App (2d) 180127 

                                  No. 2-18-0127

                         Opinion filed November 13, 2018 

______________________________________________________________________________

                                           IN THE


                             APPELLATE COURT OF ILLINOIS


                              SECOND DISTRICT

______________________________________________________________________________

ROBERT MITCHELL,                       ) Appeal from the Circuit Court
                                       ) of Du Page County.
       Plaintiff-Appellant,            )
                                       )
v.                                     ) No. 15-L-610
                                       )
STONECASTERS, LLC, a/k/a Henri Studio; )
FRANK HONOLD; and JOSEPH MODICA )
& ASSOCIATES, LTD.,                    )
                                       )
       Defendants                      )
                                       ) Honorable
(Joseph Modica & Associates, Ltd.,     ) Dorothy French Mallen,
Defendant-Appellee).                   ) Judge, Presiding.
______________________________________________________________________________

       JUSTICE ZENOFF delivered the judgment of the court, with opinion.
       Justices McLaren and Hutchinson concurred in the judgment and opinion.

                                          OPINION

¶1     Plaintiff, Robert Mitchell, appeals an order dismissing his professional negligence claim

against defendant, Joseph Modica & Associates, Ltd., as time-barred. For the reasons that follow

we affirm.

¶2                                    I. BACKGROUND

¶3     Stonecasters, LLC (Stonecasters), manufactures garden decor and furnishings. Frank

Honold is Stonecasters’ president. From late 2012 through early 2013, plaintiff and Honold

discussed plaintiff’s becoming both an employee and part-owner of Stonecasters.          Those
2018 IL App (2d) 180127


negotiations came to fruition in April 2013, when plaintiff began working for Stonecasters and

purchased an 11.5% interest in the company. According to plaintiff, the $149,500 purchase price

that he paid was based in large part on prior transactions of membership interests within the

company.

¶4     In August 2013, plaintiff and Stonecasters executed a written employment agreement.

That agreement obligated Stonecasters to repurchase plaintiff’s interest at fair market value in

the event of his termination. Such value would be determined “by a company valuation expert

acceptable to the Employer and the Employee that is an investment banking firm, a firm of

independent public accountants, or an appraiser who meets the requirements set forth in Treasury

Regulation § 301.6501(c)-1(f)(3)(i) (a ‘Qualified Appraiser’).” The agreement gave plaintiff and

Stonecasters each the right to select one “Qualified Appraiser.”        Those two “Qualified

Appraisers” would then jointly select another “Qualified Appraiser,” who would ultimately be

solely responsible for determining the fair market value of plaintiff’s interest at the time of

termination.

¶5     During the course of his employment with Stonecasters, plaintiff allegedly received

information from Honold indicating that the company was improving financially.

¶6     Stonecasters terminated plaintiff without cause on October 24, 2014. Pursuant to the

employment agreement, plaintiff and Stonecasters selected their respective “Qualified

Appraisers.” Stonecasters chose Jeff Smiejek, and plaintiff chose Mary Lynn Hoffer. Smiejek

and Hoffer, in turn, selected Joseph Modica of Joseph Modica & Associates, Ltd., to value

plaintiff’s interest. (For ease of reference, we will refer to Joseph Modica and also to his

company as “Modica,” although we recognize that plaintiff ultimately sued the corporate entity,




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not Joseph Modica individually.) Modica was a certified public accountant (CPA) as well as a

certified valuation analyst.

¶7     On January 9, 2015, Modica issued a report opining that the fair market value of

plaintiff’s interest in Stonecasters at the time of his termination was $13,000. Modica was aware

that certain individuals other than plaintiff had acquired or sold ownership interests in the

company during 2013. According to the report, however:

       “Management does not believe these transactions are relevant in determining the buy-out

       price of [plaintiff’s] ownership interest. As a result, they have chosen not to disclose the

       terms of these transactions. Therefore, we have not considered the prior sales of the

       Company’s stock in determining Stonecasters’ fair market value. Had this approach been

       considered, it may have affected our conclusions of the fair market value for the subject

       interest.”

¶8     Plaintiff believed that the $13,000 appraised value was much too low. It seems that

plaintiff enlisted Hoffer to review Modica’s report, because the record contains an e-mail that

Hoffer sent to Modica on February 10, 2015. In that e-mail, Hoffer indicated that she was

“consulting with one of [her] tax clients (Bob Mitchell) on a matter that concerns [Modica’s]

valuation on [sic] Stonecasters, LLC.” Hoffer asked Modica a number of questions about his

report. For example, she questioned whether Modica had considered all of Stonecasters’ assets:

       “Page 27 of your report contains the following qualification:

               ‘It should be noted, the only fixed assets listed on Stonecasters’ balance sheet are

               a power sweeper, an auger, and software. There is no other furniture, fixtures,

               machinery or equipment listed. Therefore, our estimate does not include any

               assets other than the sweeper, auger, and software. To the extent other assets are



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               owned by the Company, and possess a market value, their fair market values

               should be added to our estimate.’

                       (a) Do you have additional information regarding unrecorded equipment

               and other fixed assets?

                       (b) Did you request or suggest that the company obtain an equipment

               appraisal since you found it necessary to rely on the asset approach?

                       (c) Did you review the purchase accounting when Stonecasters was

               organized in 2012 and come to any conclusions about the details of the assets

               acquired at that date?”

On February 18, 2015, Modica sent Hoffer a letter responding to her questions. The letter

indicates that a copy was sent to what appears to be plaintiff’s e-mail address.

¶9     On June 26, 2015, plaintiff filed his original complaint against Stonecasters for breach of

contract.   According to the complaint, after unfairly manipulating and withholding critical

information from Modica, Stonecasters used Modica’s “distorted opinion of value” to deny

plaintiff fair payment for his interest in the company.           Plaintiff sought damages from

Stonecasters in the amount of “the difference between the true termination value as of October

2014 and the $13,000.00 amount which Stonecasters offered,” plus certain costs and expenses

allowed by the employment agreement.

¶ 10   On July 29, 2016, plaintiff filed a two-count first amended complaint against

Stonecasters. Plaintiff alleged fraud in that Stonecasters induced him to invest in the company in

2013 by concealing negative financial information. In his breach-of-contract count, which was

pleaded in the alternative to the fraud count, plaintiff alleged that Stonecasters refused to provide

Modica with relevant information during his valuation of plaintiff’s interest.



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¶ 11   According to plaintiff, prior to July 21, 2017, although he disagreed with Modica’s

valuation report, he believed that Stonecasters had procured Modica’s “unfavorable opinion” by

withholding information. On that day, however, as part of the discovery relating to his action

against Stonecasters, plaintiff learned of a December 30, 2014, e-mail exchange between Honold

and Modica. Plaintiff believed that this exchange evidenced a “deceptive scheme and cover-up”

between Honold and Modica, which allowed Stonecasters to buy out plaintiff’s interest at less

than 10 cents on the dollar.

¶ 12   Specifically, at 12:31 p.m. on December 30, 2014, Honold wrote the following e-mail to

Modica:

               “Hi Joe, I’m looking for the documentation we discussed.

               Just so we’re clear, our transaction with [a prior member of Stonecasters] was a

       negotiation to get him out of the partnership. It was a toxic relationship.

               It had nothing to do with market value as is stated in our contract with [plaintiff].

       The parameters for [plaintiff’s] case are spelled out pretty clearly in his employment

       agreement, which requires that the value of his membership interest equal his pro rata

       share of the amount that would be distributable with respect to the membership interests

       in the company if the company were sold as a going concern in an orderly transaction

       designed to maximize the proceeds of the sale, without discount for illiquidity or minority

       interest (i.e., for a price that includes good will). Unless the parties can agree on the [fair

       market value], the determine [sic] is to be made by a third party appraiser within thirty

       days after his termination date.

               Please let me know any other questions. 


               Best Regards.”




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2018 IL App (2d) 180127


At 10:34 p.m., Modica responded:

               “Frank,

               I really do understand your comments.        However, there are really only two

       options: (1) I review the terms of the previous buy-out and explain why it is or isn’t an

       indication of the current value; or (2) I comment that there was a prior buy-out however

       the terms were not disclosed because management does not believe it is relevant.

               I am ok addressing it either way.”

Nineteen minutes later, Honold replied: “We’ll go with option 2 then. Thank you Joe. Best

Regards.”

¶ 13   On October 27, 2017, plaintiff filed a second amended complaint. Counts I and II—

which asserted breach of contract against Stonecasters and breach of fiduciary duty against

Honold, respectively—are not at issue in this appeal. In count III, which alleged professional

negligence against Modica, plaintiff criticized Modica for resorting to a “net asset” valuation

approach instead of applying a “market” approach.           Additionally, according to plaintiff,

Modica’s “net asset” approach was flawed insofar as Modica should have known from his own

observations of Stonecasters’ facilities that Stonecasters possessed additional assets that were not

included in the valuation. Furthermore, plaintiff alleged that Modica knew or should have

known, through his consultations with Stonecasters’ management, that the price plaintiff paid for

his interest in 2013 was based in part on prior company transactions. Those transactions thus

should have been taken into account as part of the valuation process. Plaintiff further criticized

Modica for failing to accurately state in his report the true circumstances surrounding

Stonecasters’ refusal to produce relevant documentation during the valuation process. Plaintiff




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maintained that the true circumstances were reflected in the December 30, 2014, e-mail

exchange between Modica and Honold.

¶ 14   Plaintiff alleged that Modica breached the standards promulgated by the National

Association of Certified Valuators and Analysts (NACVA) in numerous ways, including

(1) “misrepresenting the financial status of Stonecasters and subrogating judgment on what

would be considered to Honold”; (2) “failing to obtain adequate documentation as was requested

prior to completing his valuation”; (3) “failing to obtain sufficient relevant data on the financial

status of Stonecasters prior to his valuation”; (4) “failing to avoid bias in favor of Stonecasters in

determining his valuation conclusion”; (5) “failing to apply his professional judgment and select

an appropriate method of valuation,” insofar as Modica “wrongfully avoided using an

appropriate market valuation method” by “allowing Honold to instruct him not to consider prior

sales of company stock”; (6) “refusing to consider any [of] Stonecasters[’] assets except the

power-sweeper, augur and software, which prompted Modica to include a unique limiting factor

and assumption, and wrongfully prevented him from using an appropriate asset-based valuation

method”; (7) “failing to obtain and analyze prior sales of interests in Stonecasters as one of the

required sources of information for any member of NACVA to accomplish an assignment”;

(8) “misrepresent[ing] that prior sales of company stock were considered, despite explicitly

stating later in the report that he did not consider any prior sales due to the request of

Stonecasters’ management”; (9) “certify[ing] that his report had been prepared in conformity

with NACVA standards despite numerous failings and inconsistencies”; (10) “disregarding the

prior sales of interests within Stonecasters as market evidence to be considered in his valuation

of [plaintiff’s] membership interest”; and (11) knowingly and deceptively “fail[ing] to disclose

the true facts concerning the company’s decision to not disclose the prior sale transactions.” Had



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Modica conducted the valuation in a manner that was consistent with the applicable professional

standards, plaintiff believed, Modica would have valued plaintiff’s interest in Stonecasters

substantially higher than $13,000.

¶ 15   Modica moved to dismiss count III of the second amended complaint pursuant to section

2-619(a)(5) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(5) (West 2016)),

arguing that the claim was not commenced within the time limited by law. Modica maintained

that the following statute of limitations, contained in section 13-214.2(a) of the Code, applied:

       “Actions based upon tort, contract or otherwise against any person, partnership or

       corporation registered pursuant to the Illinois Public Accounting Act, as amended, or any

       of its employees, partners, members, officers or shareholders, for an act or omission in

       the performance of professional services shall be commenced within 2 years from the

       time the person bringing an action knew or should reasonably have known of such act or

       omission.” 735 ILCS 5/13-214.2(a) (West 2016).

According to Modica, plaintiff was “fully aware of his alleged injury on January 9, 2015 when

Modica completed [the] valuation and issued [the] valuation report.” At the very least, Modica

asserted, plaintiff was aware of his injury by June 26, 2015, when he filed his original complaint

against Stonecasters. Because plaintiff did not file any claim against Modica until October 27,

2017, Modica contended that count III was untimely.

¶ 16   In his response to Modica’s motion, plaintiff argued that “Modica was acting in his

appraisal capacity, not in an accounting capacity,” when he valued plaintiff’s interest in

Stonecasters. Therefore, the accounting statute of limitations did not apply, and the claim was

instead subject to the five-year statute of limitations governing “all civil actions not otherwise

provided for.” 735 ILCS 5/13-205 (West 2016). Irrespective of whether the limitations period



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was two years or five years, plaintiff insisted that he did not discover any wrongdoing by Modica

until July 21, 2017, when he obtained a copy of the December 2014 e-mail exchange.

¶ 17   Following a hearing, the court dismissed Modica from the action with prejudice. The

court made findings rendering the order immediately appealable in accordance with Illinois

Supreme Court Rule 304(a) (eff. Mar. 8, 2016). Plaintiff timely appealed.

¶ 18                                     II. ANALYSIS

¶ 19   The parties address two issues: (1) whether the two-year statute of limitations contained

in section 13-214.2(a) of the Code applies to plaintiff’s claim against Modica and (2) if so,

whether plaintiff’s claim was untimely as a matter of law.

¶ 20   The court dismissed plaintiff’s professional negligence claim as untimely pursuant to

section 2-619(a)(5) of the Code. “A section 2-619 motion to dismiss admits as true all well-

pleaded facts in the complaint, together with all reasonable inferences gleaned from those facts.”

Khan v. Deutsche Bank AG, 2012 IL 112219, ¶ 18. The court was required to interpret all

pleadings and supporting documents in the light most favorable to plaintiff, as the nonmoving

party. Khan, 2012 IL 112219, ¶ 18. Modica had the burden of proving his affirmative defense

of untimeliness, and the motion should have been granted only if the record established that no

genuine issue of material fact existed. Federated Industries, Inc. v. Reisin, 402 Ill. App. 3d 23,

27 (2010). Our review is de novo. Reisin, 402 Ill. App. 3d at 27.

¶ 21                        A. Which Statute of Limitations Applies?

¶ 22   The parties dispute whether the accounting statute of limitations contained in section 13­

214.2(a) of the Code applies to plaintiff’s claim against Modica. Plaintiff reiterates his position

that (1) Modica “has dual professions” as an appraiser and as an accountant and (2) Modica was

acting as an appraiser, not an accountant, when he valued plaintiff’s ownership interest in



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Stonecasters. Therefore, plaintiff maintains, the five-year statute of limitations governing “all

civil actions not otherwise provided for” (735 ILCS 5/13-205 (West 2016)) applies. He submits

that a defendant who happens to be an accountant should not benefit from the shorter limitations

period unless he or she was actually providing “services in the nature of an accountant” at the

time of the act or omission giving rise to the claim.           Were that not the case, plaintiff

hypothesizes, “an accountant who had a second profession as an electrician or a plumber could

claim the benefit of § 214.2(a) if he or she wrongfully caused injuries in performing electrical or

plumbing services.”

¶ 23   Modica responds that the two-year statute of limitations embodied in section 13-214.2(a)

applies to all actions against registered accountants. Moreover, he argues, valuation services fall

neatly within the scope of his professional services as an accountant. To that end, he notes that

the Illinois Public Accounting Act defines “accountancy activities” broadly to include “financial

or consulting services” (225 ILCS 450/8.05(a)(3) (West 2016)) and that both Illinois and foreign

authorities recognize that accountants offer a variety of professional services. 1 Modica also

stresses that he personally adheres to the standards promulgated by the American Institute of

Certified Public Accountants (AICPA) when he conducts business valuations.

¶ 24   As noted above, section 13-214.2(a) of the Code provides:

       “Actions based upon tort, contract or otherwise against any person, partnership or

       corporation registered pursuant to the Illinois Public Accounting Act, as amended, or any

       1
           One of the Illinois cases that Modica discusses is an unpublished order. We remind

counsel that unpublished orders “may not be cited by any party except to support contentions of

double jeopardy, res judicata, collateral estoppel or law of the case.” Ill. S. Ct. R. 23(e)(1) (eff.

Apr. 1, 2018).



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         of its employees, partners, members, officers or shareholders, for an act or omission in

         the performance of professional services shall be commenced within 2 years from the

         time the person bringing an action knew or should reasonably have known of such act or

         omission.” 735 ILCS 5/13-214.2(a) (West 2016).

The parties agree that, at all relevant times, Modica was registered pursuant to the Illinois Public

Accounting Act. They disagree, however, as to whether Modica was providing “professional

services” within the meaning of this statute when he valued plaintiff’s interest in Stonecasters.

This presents a question of statutory interpretation. Our primary goal in construing a statute is to

effectuate the legislature’s intent, giving the language its plain and ordinary meaning. Khan,

2012 IL 112219, ¶ 69.

¶ 25     As we explained in Polsky v. BDO Seidman, 293 Ill. App. 3d 414, 424 (1997): “[B]y its

plain words, section 13-214.2(a) applies to actions based on tort, contract, or otherwise arising

from acts or omissions in the performance of professional services involving accounting. This is

broad language.”      Plaintiff, by contrast, advances a narrow interpretation of the term

“professional services.” Emphasizing that a person need not be a CPA to conduct a business

valuation, plaintiff suggests that “professional services” means services that accountants, and

only accountants, may perform. He cites no authority to support this novel proposition. His

argument immediately falls apart when we consider that the two-year statute of limitations has

been held to apply to actions arising from an accountant’s preparation of income tax returns.

See, e.g., Khan, 2012 IL 112219, ¶¶ 66, 68. As with business valuations, Illinois law does not

require one to be a CPA to prepare tax returns. See 225 ILCS 450/8.05(a)(3), (b)(3) (West

2016).




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¶ 26    Interestingly, plaintiff does not dispute that many accountants offer business valuation

services to their clients. Indeed, in light of the “increasing numbers of [its] members *** who

are performing business valuation engagements or some aspect thereof,” the AICPA enacted

standards that its members must follow when conducting business valuations. Am. Inst. of

Certified Pub. Accountants, Statements on Standards for Valuation Services § 100, Foreword

(June     2007),     https://www.aicpa.org/interestareas/forensicandvaluation/resources/standards

/downloadabledocuments/ssvs_full_version.pdf. (Last visited Nov. 8, 2018) [https://perma.cc

/ZGM7-7VWR]. Modica indicated in his report that he followed those standards—along with

NACVA’s standards and the guidelines set forth by the Internal Revenue Service—when he

valued plaintiff’s interest in Stonecasters.

¶ 27    Plaintiff nevertheless insists that Modica was wearing his “appraisal hat” and not his

“accountant hat” when he performed the business valuation in question. This argument is

unavailing. The legislature recognizes that accountants may provide any number of services,

some of which may overlap with services provided by other professionals. Section 8.05 of the

Illinois Public Accounting Act states as follows:

               “(a) Accountancy activities are services performed by a CPA, including:

                       (1) signing, affixing, or associating the names used by a person or CPA

               firm to any report expressing an assurance on a financial statement or disclaiming

               an opinion on a financial statement based on an audit or examination of that

               statement or to express assurance on a financial statement;

                       (2) other attestation engagements not otherwise defined in paragraph (1);

               or




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                      (3) offering to perform or performing one or more types of the following

              services involving the use of professional skills or competencies: accounting,

              management, financial or consulting services, compilations, internal audit,

              preparation of tax returns, furnishing advice on tax matters, bookkeeping, or

              representations of taxpayers; this includes the teaching of any of these areas at the

              college or university level.

              (b) If offering or performing accountancy activities using the CPA title set forth in

       paragraphs (1), (2), and (3) of subsection (a) of this Section, then:

                      (1) the activities identified in paragraph (1) of subsection (a) may only be

              performed by licensed CPAs;

                      (2) the activities identified in paragraph (2) of subsection (a) may only be

              performed by licensed or registered CPAs; and

                      (3) the activities identified in paragraph (3) of subsection (a) are not

              restricted to licensed or registered CPAs, subject to the provisions of Section 9 of

              this Act.” (Emphases added.) 225 ILCS 450/8.05 (West 2016).

In Brunton v. Kruger, 2015 IL 117663, ¶ 21, our supreme court said that the list of accounting

functions in section 8.05(a) was not intended to be exhaustive. As Modica notes, the valuation

services that he provided in connection with the present case arguably constituted “financial or

consulting services” under section 8.05(a)(3). The broader point, however, is that an accountant

does not necessarily stop being an accountant simply because he or she offers services that

nonaccountants might also be qualified to provide. Given that the legislature recognizes that an

accountant’s services may overlap with the services provided by nonaccountants, it seems certain

that, had the legislature intended for the term “professional services” in section 13-214.2(a) of



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the Code to mean services that only an accountant is qualified to provide, it would have said so

explicitly.

¶ 28    As Modica points out, the court in Heaton & Eadie Professional Services Corp. v.

Corneal Consultants of Indiana, P.C., 841 N.E.2d 1181 (Ind. Ct. App. 2006), rejected an

argument that was very similar to the one that plaintiff advances here. In doing so, the court

reasoned that “[b]usiness valuations under repurchase agreements *** commonly call for the

employment of a skill-set unique to accountants.” Heaton & Eadie, 841 N.E.2d at 1187.

According to the court, “[w]hether these skills are best classified as accounting/auditing,

management advisory, financial advisory, or consulting services is irrelevant to the matter at

hand because each technical rubric falls within the practice of accountancy.” Heaton & Eadie,

841 N.E.2d at 1187. Thus, the court concluded, an accounting firm had provided “ ‘professional

accounting services’ ” within the meaning of Indiana’s statute of limitations (see Ind. Code § 25­

2.1-15-1 (2004)) when the firm determined the value of an employee’s interest in a company.

Heaton & Eadie, 841 N.E.2d at 1187. Although plaintiff is correct that Indiana’s statute of

limitations is not identical to Illinois’s statute, and although he insists that the accountant in

Heaton & Eadie performed certain tasks that Modica did not, we believe that Heaton & Eadie

provides additional support for our conclusion that business valuation activities fall comfortably

within the scope of an accountant’s “professional services” for purposes of section 13-214.2(a)

of the Code. Indeed, like the Court of Appeals of Indiana, we have previously recognized that

accounting “is essentially all that is involved in a valuation” of a closely-held business and that

“valuation is merely a small part of the larger discipline of accounting.” In re Marriage of

Olson, 223 Ill. App. 3d 636, 645-46 (1992).




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¶ 29    Plaintiff imagines a scenario where an accountant is also an electrician or a plumber and

causes an injury to another while serving in one of those latter capacities. The analogy that

plaintiff draws does not support his interpretation of the statute. If, for example, an electrician

damaged a client’s home due to faulty wiring and then attempted to invoke the statute of

limitations applying to the provision of professional services as an accountant, that would be a

much different case from the one at bar. For one thing, in that situation, the distinction between

the “accountant hat” and the “electrician hat” would be much more pronounced. The provision

of services as an electrician certainly bears no resemblance to the “accountancy activities” listed

in section 8.05 of the Illinois Public Accounting Act. We also highly doubt that the AICPA has

promulgated standards for accountants who moonlight as electricians.

¶ 30    During oral argument, plaintiff maintained that it would be “unfair” for Modica to invoke

the two-year statute of limitations here if a business valuator who was not an accountant could

not do the same. Plaintiff’s contention in this respect is undeveloped and unpersuasive. As

explained above, upon considering the plain language of section 13-214.2(a) of the Code, it is

apparent that the legislature intended for this limitations period to apply broadly to accountants

providing professional services. Any concerns about the wisdom or fairness of applying a

different limitations period to professionals who are not accountants would be more properly

directed to the legislature.

¶ 31    We thus hold that the two-year statute of limitations contained in section 13-214.2(a) of

the Code applies to plaintiff’s professional negligence claim against Modica.

¶ 32                           B. Application of the Discovery Rule

¶ 33    The question becomes whether plaintiff’s claim against Modica was untimely as a matter

of law. Plaintiff maintains that, for purposes of section 13-214.2(a), it is the discovery of the



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accountant’s wrongful conduct—rather than the discovery of some other party’s wrongful

conduct or the discovery of an injury—that triggers the two-year statute of limitations. In

accordance with that view, plaintiff argues that his claim against Modica, which he filed on

October 27, 2017, was timely, as he did not know until July 21, 2017, that “Modica and Honold

had secretly devised a plan to enable Modica to value Plaintiff’s 11½ percent interest without

consideration of prior sales.” Until then, plaintiff explains, he reasonably believed that “the only

parties involved in wrongful conduct were Stonecasters and its president Frank Honold.”

Plaintiff submits that the trial court improperly dismissed his claim against Modica where there

was a question of fact as to when he discovered or should have discovered the claim.

¶ 34   Modica responds that a plaintiff need not be aware of the full extent of his injuries, or

even that there was an actionable wrong, for the statute of limitations to start running. Instead,

Modica emphasizes, once a plaintiff is on inquiry notice, he is obligated to conduct an

investigation to ascertain all potentially liable parties.   Modica argues that, when plaintiff

disagreed with the valuation report that he received in January 2015, he was aware of his injury

and was also “on inquiry notice to investigate further.” At the very least, Modica asserts, the

statute of limitations began to run by June 26, 2015, when plaintiff sued Stonecasters and

challenged in his complaint the accuracy of Modica’s valuation. Modica further notes that

plaintiff ultimately alleged in his second amended complaint that Modica’s failure to obtain

adequate documentation before completing the valuation was in itself a breach of the standard of

care. Thus, Modica says, an “investigation was not even necessary” with respect to plaintiff’s

professional negligence claim.     Under all of these circumstances, Modica submits that the

professional negligence claim was untimely as a matter of law.




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¶ 35   If the statute of limitations were to be applied mechanically, the limitations period could

expire before a plaintiff even knew of his or her cause of action. Khan, 2012 IL 112219, ¶ 20.

The “discovery rule,” developed by case law, is intended to ameliorate those potentially harsh

results. Khan, 2012 IL 112219, ¶ 20. The effect of the rule “is to postpone the start of the period

of limitations until the injured party knows or reasonably should know of the injury and knows

or reasonably should know that the injury was wrongfully caused.” Khan, 2012 IL 112219, ¶ 20.

At that point, the injured person is charged with a duty to “inquire further as to the possible

existence of a cause of action.” Khan, 2012 IL 112219, ¶ 20. The term “wrongfully caused” is

not a term of art, and it does not mean that the plaintiff must have either knowledge of the

existence of a cause of action or knowledge of negligent conduct. Khan, 2012 IL 112219, ¶ 22.

A limitations period may commence even though the plaintiff is not yet aware of the full extent

of his or her injures. Khan, 2012 IL 112219, ¶ 22. The question of when the plaintiff should

have reasonably known both of the existence of an injury and that it was wrongfully caused

generally presents an issue of fact, “ ‘unless the facts are undisputed and only one conclusion

may be drawn from them.’ ” Khan, 2012 IL 112219, ¶ 21 (quoting Nolan v. Johns-Manville

Asbestos, 85 Ill. 2d 161, 171 (1981)).

¶ 36   Plaintiff does not deny that he was aware of his injury in January 2015 when he received

Modica’s report, which valued plaintiff’s interest in Stonecasters at significantly less than what

he believed was appropriate. The parties disagree, however, as to when plaintiff knew or should

have known that his injury was wrongfully caused. Plaintiff asks us to focus on when he knew

or should have known that Modica wrongfully caused his injury, as opposed to when he knew or

should have known that Stonecasters or Honold caused his injury. Although Modica cites

federal case law calling plaintiff’s approach into question (see Whitlock Corp. v. Deloitte &



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Touche, L.L.P., 233 F.3d 1063, 1065 (7th Cir. 2000) (determining that a litigant was under the

“misconception *** that the period of limitations starts defendant-by-defendant, rather than

injury-by-injury”)), even under plaintiff’s approach, the only conclusion that may be drawn from

the record is that plaintiff was on inquiry notice as to his claim against Modica by June 26, 2015.

¶ 37   The record indicates that, in February 2015, plaintiff’s own “Qualified Appraiser,”

Hoffer, reviewed Modica’s valuation report. Hoffer then sent Modica an e-mail on plaintiff’s

behalf asking questions about the report. Despite the exchange of an e-mail and a letter between

Hoffer and Modica in February 2015, plaintiff initially was convinced that Stonecasters was

solely responsible for the low valuation by refusing to provide Modica with requested

documentation.

¶ 38   To that end, on June 26, 2015, plaintiff filed his original complaint against Stonecasters.

Although plaintiff placed the blame on Stonecasters, he specifically alleged that Modica failed to

determine the fair market value of the subject ownership interest (“Stonecasters’ refusal and

failure to provide to the expert the requested and relevant documentation resulted in the valuation

expert failing to fairly determine the proper fair market value of the Plaintiff’s termination

membership interest under the terms of the [employment agreement].”).                Plaintiff also

complained that Modica “attempted to value Plaintiff’s eleven and one-half percent (11½%)

interest in Stonecasters without consideration of the [employment agreement], the company’s

forecasts and projections, and without other substantive requested data that was available to

Stonecasters but withheld from the expert.” Plaintiff further alleged that Stonecasters unfairly

manipulated and withheld information from Modica before using Modica’s “distorted opinion of

value” to deny plaintiff fair payment for his ownership interest.




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¶ 39   Despite asserting as early as June 2015 that Modica inaccurately valued his interest in

Stonecasters, plaintiff insists that it was not until July 2017, when he learned of the e-mails that

Modica and Honold exchanged in December 2014, that he had reason to suspect that Modica

engaged in any wrongful conduct. Certain of the allegations of professional negligence in

plaintiff’s second amended complaint, however, pertained to conduct that plaintiff knew about

long before July 2017. For example, plaintiff alleged that Modica violated NACVA standards by

(1) completing a valuation before obtaining the documentation he requested; (2) completing a

valuation without obtaining sufficient data regarding Stonecasters’ financial status;

(3) misrepresenting in his report that he considered prior sales of company stock, despite

indicating later in the report that he did not consider any such sales; and (4) refusing to consider

all of Stonecasters’ assets.

¶ 40    It was never a secret that Modica completed his valuation before he received all of the

information that he requested from Stonecasters. Plaintiff also knew or should have known

when he received the January 2015 report that Modica did not consider prior sales of company

stock, as this was stated clearly in the report. Moreover, although plaintiff criticized Modica for

failing to account for all of the assets that were observable during his tour of Stonecasters’

facility, the information underlying this particular allegation of negligence was available to

plaintiff from the report itself. Specifically, the report indicated that Modica had toured the

facility and had considered only a few of Stonecasters’ fixed assets. Hoffer even questioned

Modica in February 2015 as to whether there might have been other assets that were not

considered. We would be hard-pressed to say that plaintiff was not on inquiry notice when his

own accountant was inquiring as to the propriety of Modica’s methodology. Although plaintiff

claims that he did not know the true circumstances surrounding Stonecasters’ failure to provide



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documentation until he discovered the December 2014 e-mail exchange, as noted above, a

plaintiff who is on inquiry notice does not need to know the full extent of his injury before the

statute of limitations starts to run. Khan, 2012 IL 112219, ¶ 22.

¶ 41   Plaintiff seems to suggest that the statute of limitations did not start to run until he knew

that Modica committed professional negligence. For example, in his reply brief, plaintiff asserts:

“Defendant’s brief incorrectly argues that Plaintiff’s knowledge of a breach of contract by

Stonecasters at the time Plaintiff filed his Complaint in June of 2015 equates with knowledge

that Defendant Modica had breached his duties under NACVA standards.” To the extent that

plaintiff suggests that it was his knowledge of Modica’s breach of applicable professional

standards that triggered the statute of limitations, he is mistaken. See Dancor International, Ltd.

v. Friedman, Goldberg & Mintz, 288 Ill. App. 3d 666, 673 (1997) (rejecting a plaintiff’s

argument that it could not have known of its accountant’s negligence until it received a

professional opinion to that effect from a different accountant). Instead, “when a party knows or

reasonably should know both that an injury has occurred and that it was wrongfully caused, the

statute begins to run and the party is under an obligation to inquire further to determine whether

an actionable wrong was committed.” Nolan, 85 Ill. 2d at 171.

¶ 42   Plaintiff questions what more he could have done between the time he filed his original

complaint against Stonecasters and the time he discovered the December 2014 e-mails. One

action he could have taken was to name Modica as a respondent in discovery. See 735 ILCS

5/2-402 (West 2016). That would have allowed plaintiff to use the full panoply of discovery

tools to continue investigating Modica’s valuation methodology while leaving open the

possibility of converting him to a defendant if there was probable cause to do so. Given that

plaintiff believed all along that Modica’s valuation was flawed, the law required plaintiff to take



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reasonable measures to investigate all of his potential claims. Had plaintiff named Modica as a

respondent in discovery when he sued Stonecasters, plaintiff likely would have discovered the

December 2014 e-mails much earlier than he ultimately did.

¶ 43   We find Dancor instructive. In that case, in October 1990, the plaintiff company filed a

lawsuit in federal court against a former employee who embezzled company funds. Dancor, 288

Ill. App. 3d at 668-69. In March 1993, the plaintiff filed an action in state court against its

accountant, alleging breach of contract and professional negligence for failing to detect the

embezzlement from January 1987 through August 1990. Dancor, 288 Ill. App. 3d at 668. The

appellate court affirmed an order dismissing the state court action based on the two-year statute

of limitations. Dancor, 288 Ill. App. 3d at 674. The court determined that the statute began to

run when the plaintiff filed its complaint against the former employee in federal court. Dancor,

288 Ill. App. 3d at 674.      The court emphasized that the same allegations of fraudulent

transactions that were detailed in the federal complaint were later used to support the allegations

against the accountant. Dancor, 288 Ill. App. 3d at 674. The court explained that the paper trail

that formed the basis of the action against the former employee presented the plaintiff with

“sufficient knowledge to cause it to inquire further of a possible actionable wrong by [the

accountant]” in failing to detect those irregularities. Dancor, 288 Ill. App. 3d at 674. In other

words, although the plaintiff might not have known in October 1990 that its accountant violated

the standard of care, the plaintiff had knowledge that was sufficient to put it on notice of the

accountant’s possible invasion of the plaintiff’s legally protected rights. Dancor, 288 Ill. App.

3d at 675. The court also rejected the plaintiff’s argument that the statute of limitations was

tolled due to fraudulent concealment. According to the court, although there was conflicting

evidence as to when the plaintiff received all of the relevant records, the information that the



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plaintiff possessed by October 1990 put it on notice of its claim; the plaintiff could have obtained

any missing information either by moving to enforce a subpoena that it had issued in connection

with the federal litigation or by inspecting documents that were in the possession of an assistant

state’s attorney. Dancor, 288 Ill. App. 3d at 675-77.

¶ 44   As in Dancor, the record here leaves no doubt that, no later than when plaintiff filed his

original complaint against Stonecasters on June 26, 2015, he was well aware of his injury and

had sufficient information to suspect that Modica might have violated his legally protected

rights. By that point, the burden was on him to inquire further to determine whether Modica had

committed an actionable wrong. Plaintiff did not bring his professional negligence claim against

Modica until October 27, 2017, more than two years later. Accordingly, the court properly

dismissed count III of the second amended complaint as time-barred.

¶ 45                                   III. CONCLUSION

¶ 46   For the reasons stated, the judgment of the circuit court of Du Page County is affirmed.

¶ 47   Affirmed.




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