In the
United States Court of Appeals
For the Seventh Circuit

No. 00-3192

Pamela J. Alper and Michael N. Alper,

Plaintiffs,

v.

Altheimer & Gray, an Illinois partnership,
Myron Lieberman, and Robert L. Schlossberg,

Defendants-Third/Party
Plaintiffs-Appellants,

v.

Bickel & Brewer, a Texas partnership,

Third/Party Defendant-Appellee.

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 97 C 1200--Rebecca R. Pallmeyer, Judge.

Argued November 6, 2000--Decided November 16, 2000
Opinion July 12, 2001/*



  Before Kanne, Diane P. Wood, and Williams,
Circuit Judges.

  Kanne, Circuit Judge. We are
occasionally presented with corporate
transactions gone awry, and it is a
characterization that aptly describes the
case before us. Pamela J. Alper and
Michael N. Alper (the Alpers) owned 100%
of the shares of Terrific Promotions,
Inc. (TPI). Through TPI, the Alpers
engaged in two businesses: 1) a retail
business, Dollar Bill$, whose 136 stores
sold consumer goods priced mostly at one
dollar and 2) a wholesale merchandising
business, which sold manufacturers’
brand-name products to distributors and
wholesalers. In late 1995 and early 1996,
the law firm of Altheimer & Gray
represented the Alpers in a transaction
in which the Alpers transferred all of
the capital stock of TPI to Dollar Tree
Stores (DTS) for $53 million.

  After the transaction’s January 1996
closing date, the Alpers realized that
all was not as they had intended. They
allege that, contrary to their wishes,
both the retail business and the
wholesale merchandising business had been
transferred to DTS, rather than just the
former. Further, a key TPI employee,
Timothy Avers, had gone to work for DTS,
which the Alpers allege was in violation
of a non-compete agreement. The Alpers
hired the law firm of Bickel & Brewer
("Bickel") to sue DTS and Avers on a
variety of claims, including fraudulent
inducement, breach of contract, civil
conspiracy, and unfair competition.
Bickel filed suit in state court, and
later filed a second suit in federal
court alleging violations of the federal
securities and antitrust laws in addition
to the aforementioned state law claims.
The Alpers voluntarily dismissed the
claims in state court, though their
reason for doing so is disputed. The dis
trict court subsequently dismissed the
Alpers’ federal claims under Rule
12(b)(6) of the Federal Rules of Civil
Procedure and declined to exercise
supplemental jurisdiction over the state
law claims. See Terrific Promotions, Inc.
v. Dollar Tree Stores, Inc., 947 F. Supp.
1243, 1249 (N.D. Ill. 1996). The Alpers,
who were at that time represented by
Bickel, did not appeal these rulings.
Under Illinois law, a plaintiff who
voluntarily dismisses an action is only
permitted one refiling of that cause of
action, thus it is possible that the
Alpers are now procedurally barred from
pursuing further litigation against DTS
and Avers. See 735 Ill. Comp. Stat. Ann.
5/13-217 (West Supp. 2001); Timberlake v.
Illini Hosp., 676 N.E.2d 634, 636 (Ill.
1997) (holding that section 13-217 barred
refiling by plaintiff who had already
voluntarily dismissed action in state
court and had action dismissed for lack
of pendent jurisdiction in federal
court).

  In light of the above events, the Alpers
filed suit pursuant to 28 U.S.C. sec.
1332 in the United States District Court
for the Northern District of Illinois,
alleging, inter alia, professional
negligence on the part of Altheimer &
Gray and two of the firm’s attorneys--
Myron Lieberman and Robert L. Schlossberg
(collectively referred to as
"Altheimer"). The Alpers claim that
Altheimer failed to protect the Alpers’
interests by negligently drafting the
documents that transferred TPI to DTS.
This negligence allegedly gave DTS
control of the TPI wholesale
merchandising business and allowed DTS to
hire Avers and other key merchandising
personnel. The claim is still pending in
the district court.

  Altheimer subsequently filed a third-
party complaint against Bickel, pursuant
to 28 U.S.C. sec. 1367, alleging that
Bickel committed malpractice in the
course of pursuing the Alpers’ claims
against DTS and Avers. Altheimer denies
that it acted negligently, but asserts
that Bickel is liable to Altheimer for
contribution to the extent that Altheimer
is held liable for causing any injury to
the Alpers. The district court determined
that Altheimer could not seek
contribution because the third-party
contribution claim did not meet the
requirements of the Illinois Joint
Tortfeasors Contribution Act (the
"Contribution Act" or "Act"), 740 Ill.
Comp. Stat. Ann. 100/0.01-100/5 (West 1993,
Supp. 2001), and dismissed the claim. On
Altheimer’s motion, the court directed
the entry of final judgment on the third-
party complaint pursuant to Rule 54(b) of
the Federal Rules of Civil Procedure, in
order to permit immediate appeal to this
court. Altheimer appealed the district
court’s dismissal and we reversed and
remanded for the following reasons.

I.   Analysis

  We review dismissals under Rule 12(b)(6)
de novo, examining a plaintiff’s factual
allegations and any inferences reasonably
drawn therefrom in the light most
favorable to the plaintiff. See Marshall-
Mosby v. Corp. Receivables, Inc., 205
F.3d 323, 326 (7th Cir. 2000). Dismissal
under 12(b)(6) is proper only if the
plaintiff could prove no set of facts in
support of his claims that would entitle
him to relief. See Conley v. Gibson, 355
U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d
80 (1957); Veazey v. Communications &
Cable of Chi., Inc., 194 F.3d 850, 854
(7th Cir. 1999). "[I]f it is possible to
hypothesize a set of facts, consistent
with the complaint, that would entitle
the plaintiff to relief, dismissal under
Rule 12(b)(6) is inappropriate." Veazey,
194 F.3d at 854 (citing Graehling v.
Vill. of Lombard, Ill., 58 F.3d. 295, 297
(7th Cir. 1995)).
  The Contribution Act provides that
"where 2 or more persons are subject to
liability in tort arising out of the same
injury to person or property, . . . there
is a right of contribution among them,
even though judgment has not been entered
against any or all of them." 740 Ill. Comp.
Stat. Ann. 100/2(a) (West 1993, Supp.
2001). For a complaint to properly allege
a right of contribution pursuant to the
Act: 1) the defendant and the third party
"must both be subject to liability in
tort to the [plaintiff], and 2) their
liability must arise out of the same
injury." People v. Brockman, 592 N.E.2d
1026, 1029 (Ill. 1992). Bickel contends
that neither of these requirements are
satisfied here. Bickel also contends that
Altheimer’s third-party complaint is
inconsistent with the goals of the
Contribution Act. We address each
argument in turn.

A.   The Elements of the Contribution Act

1.   Subject to Liability in Tort

  With respect to the first requirement,
Bickel alleges that we must ask whether
it was liable in tort to the Alpers at
the time of the injury alleged in the
Alpers’ complaint. Because Bickel was not
even hired until after Altheimer’s
allegedly negligent conduct occurred,
Bickel asserts that it is not liable in
tort within the meaning of the
Contribution Act. This reading of the
Act, however, is inconsistent with
Illinois case law. To determine whether
Bickel is potentially liable in tort, we
look to "the time of the injury out of
which the right to contribution arises."
Vroegh v. J & M Forklift, 651 N.E.2d 121,
125 (Ill. 1995). Altheimer’s alleged
right to contribution is based on the
allegation that Bickel negligently
represented the Alpers.

  Under Illinois law, "[a]n action for
legal malpractice must plead facts which
establish the existence of an attorney-
client relationship; the breach of a duty
owed by virtue of that relationship; and
that such negligence was the proximate
cause of injury or of loss to the
client." Jackson Jordan, Inc. v. Leydig,
Voit & Mayer, 557 N.E.2d 525, 527 (Ill.
App. Ct. 1990), aff’d in part and rev’d
in part on other grounds, 633 N.E.2d 627
(Ill. 1994). Altheimer’s third-party
complaint asserts that Bickel had an
attorney-client relationship with the
Alpers, that Bickel’s negligence led to
the triggering of section 13-217, that
section 13-217 might prevent the Alpers
from pursuing further litigation against
DTS and Avers, and that such a bar would
prevent the Alpers from obtaining
compensation from DTS and Avers. While
each of these elements will have to be
proven at trial, Altheimer has properly
pleaded that Bickel negligently caused
the loss of the Alper’s cause of action.

  Bickel relies on Vroegh, 651 N.E.2d 121,
and Delaney v. McDonald’s Corp., 634
N.E.2d 749 (Ill. 1994), for the
proposition that it cannot be held liable
in contribution because it was not
retained until after the Alpers were
injured by Altheimer. The discussions in
those cases, however, explained that a
defendant may seek contribution from a
tortfeasor so long as the plaintiff had a
valid cause of action against the
tortfeasor at the time of the injury
caused by that tortfeasor’s conduct, even
if the plaintiff’s direct claim against
the tortfeasor is later barred for a
procedural reason. See Vroegh, 651 N.E.2d
at 125; Delaney, 634 N.E.2d at 750.
Rather than undermining Altheimer’s
claims, these cases demonstrate that even
if the Alpers are now barred from suing
Bickel (due to operation of 735 Ill. Comp.
Stat. Ann. 5/13-217 or otherwise),
Altheimer can still seek contribution
from Bickel. We thus find that
Altheimer’s complaint satisfies the first
element of the Contribution Act.

2.   The Same Injury Requirement

  We thus turn to the primary dispute
between the parties, which is whether
Bickel’s potential liability arises out
of the same injury as does Altheimer’s
potential liability. Past Illinois cases
have determined that "the proper focus
[of this inquiry] . . . is not the timing
of the parties’ conduct which created the
injury, but the injury itself." People v.
Brockman, 592 N.E.2d 1026, 1030 (Ill.
1992). Thus, if a trier of fact could
find that Altheimer’s and Bickel’s
conduct combined to produce the same
injury, Altheimer has properly pleaded a
third party action for contribution, even
though the conduct of the two parties
occurred at different times. See id.

  It should be emphasized that, in
evaluating whether the district court
properly dismissed Altheimer’s complaint,
we are determining whether Altheimer
stated a complaint under which relief
could be granted. See Fed. R. Civ. P.
12(b)(6). Thus, we are not answering the
question of whether Altheimer and Bickel
did actually cause the same injury, we
are deciding whether there is a legal
basis under which Altheimer can argue
that they did.

  With this proviso in mind, we will
compare the Alpers’ complaint to the
allegations in Altheimer’s third-party
complaint to determine whether a
reasonable fact finder could find that
Altheimer’s and Bickel’s liability arose
out of the same injury. The Alpers’ First
Amended Complaint seeks relief from
Altheimer for misconduct relating to
"defendants’ misrepresentations and
failure to competently represent the
Alpers and protect the Alpers’ legitimate
business interests." First Amended
Complaint para. 1. The Alpers allege that
Altheimer had a duty, with respect to the
Dollar Bill$ transaction, to competently
represent them and to exercise a
reasonable standard of care, skill, and
diligence. Plaintiffs assert that
defendants breached these duties by:

(a) Failing to take all necessary steps
to maximize the benefits of the Dollar
Bill$ transaction to the Alpers;

(b) Failing to properly document the
terms of the Dollar Bill$ transaction as
specified by the Alpers; [and]

(c) Failing to properly prepare the
Dollar Bill$ transaction documentation so
that the TPI/Alper wholesale
merchandising business was specifically
immunized from the transaction.

Id., para. 59./1 Plaintiffs allege
damages "to the extent of $200,000 in
attorney’s fees [the amount paid to
Altheimer for their services in
connection with the original transaction]
and in excess of $1.5 million
attributable to the loss of their
wholesale merchandising business." See
Memorandum in Support of Plaintiffs’
Motion for Summary Judgment at 12.
  In comparison, Altheimer alleges that
Bickel was negligent in its pursuit of
the Alpers’ claims against DTS and Avers
and that the Alpers’ inability to obtain
compensation from DTS and Avers for their
alleged injuries is the proximate result
of Bickel’s negligence. Altheimer asserts
that, if the Alpers were successful on
the claims they advanced against DTS and
Avers, they could have obtained relief
for all the losses they claimed to have
sustained as a result of the Stock
Purchase Agreement and DTS’ subsequent
dealings with Avers. This argument
overlooks the fact that those suits would
not have returned the $200,000 the Alpers
had already paid to Altheimer.
Nonetheless, if "the bases for liability
among the contributors" do not have to be
the same, Vroegh v. J & M Forklift, 651
N.E.2d 121, 125 (Ill. 1995), then the
fact that the monetary damage caused by
Altheimer’s and Bickel’s actions is not
equivalent should not be an obstacle to
holding both liable for contributing to
the same injury.

  Whether we find that Altheimer and
Bickel have caused the same injury
depends on how broadly or narrowly we
define the injury. Under a broad
definition of injury, a fact-finder could
find that both parties failed to
competently represent the Alpers and
protect the Alpers’ legitimate business
interests. For example, if the injury
encompasses DTS’s fraudulent acquisition
and continued retention of the diverting
business, and the Alpers’ inability to
obtain relief for Avers’ defection to
DTF, then Altheimer and Bickel could both
have contributed to that injury. In
contrast, if the Alpers’ injury is that
Altheimer drafted flawed transaction
documents, then Bickel cannot be held
liable for that injury because Bickel had
no part in the drafting.

  To determine how to appropriately
characterize plaintiffs’ injury, we look
to Illinois case law addressing the "same
injury" requirement. The most relevant
case, People v. Brockman, 592 N.E.2d 1026
(Ill. 1992), defined the injury fairly
broadly. In the underlying suit, the
State of Illinois charged the defendants
with operating a landfill site from 1970
to 1979 in a manner that: 1) caused
leachate to flow into Illinois waters,
creating a water pollution hazard, and 2)
contaminated the groundwater and
subsurface water with waste material,
constituting a public nuisance. See id.
at 1028. The Illinois EPA subsequently
contracted with an engineering firm to
monitor the site and implement a clean-up
plan. The firm completed performance of
this contract in 1986. Defendants filed
third party complaints in 1987 alleging
that the firm contributed to the
pollution hazard at the site by
negligently conducting monitoring
operations and by drilling in a manner
that caused the discharge of contaminants
into the groundwater. The engineering
firm argued that its liability and the
defendants’ liability did not arise out
of the same injury, but the Illinois
Supreme Court rejected this argument. See
id. at 1029-30. Because the State alleged
that defendants created a water pollution
hazard, and defendants alleged that the
engineering firm’s conduct "contributed
to the same water pollution hazard," the
court determined that "the trier of fact
could find that the conduct of the
defendants and [the firm], although
separate in time, contributed to produce
the same injury for purposes of the
Contribution Act." Id. at 1030.

  Bickel attempts to distinguish Brockman
in the context of the requirement that a
third party defendant must be liable in
tort to the plaintiff in order to be
liable for contribution. They allege that
because the damage to the environment was
an ongoing injury, the engineering firm’s
negligence occurred at the same time as
the injury alleged in the complaint, and
thus it was proper for the court to
determine that the third party tortfeasor
was liable to the plaintiff at the time
of defendants’ injurious conduct. This is
both an incorrect interpretation of the
case and an unnecessary argument. We have
already explained that, under Illinois
law, it is possible for a defendant to
seek contribution from a tortfeasor who
injured the plaintiff subsequent to the
defendant--the injury does not have to be
concurrent. See Vroegh, 651 N.E.2d at
125; see also Brockman, 592 N.E.2d at
1030.

  A broad characterization of the injury
thus seems appropriate here. The district
court’s discussion focused on one
particular injury: "the inability of the
Alpers to obtain relief for Avers’
joining DTS to run a wholesale diverting
business." Alper v. Altheimer & Gray, No.
97 C 1200, 2000 WL 1006740, at *2 (N.D.
Ill. July 19, 2000). The court determined
that Bickel/2 could not have caused
this same injury based upon the following
analysis: 1) Altheimer alleged that the
Alpers never instructed it not to
transfer the wholesale business to DTS;
2) If this were true, the non-compete
claims filed in state court would have
had little merit because the Alpers would
then have had no protectable interest in
preventing Avers from competing; 3) If
the jury finds that Altheimer failed to
provide an adequate cause of action for
Avers’ defection, then, to seek
contribution, Altheimer will have to
argue that Bickel was negligent in
failing to maintain a state court claim
cause of action that was inadequate; 4)
Under Roberts v. Heilgeist, 465 N.E.2d
658, 661 (Ill. App. Ct. 1984), attorneys
do not have a duty to pursue fruitless
litigation. See Alper, 2000 WL 1006740,
at *2-3. The district court thus held
that Bickel could not have caused the
same injury as did Altheimer. See id.

  This analysis does not address the fact
that what is at issue here is a motion
for dismissal under Rule 12(b)(6) of the
Federal Rules of Civil Procedure. When
reviewing such a motion, a court must be
careful not to require more than what is
mandated by Rule 8: "a short and plain
statement of the claim showing that the
pleader is entitled to relief." Fed. R.
Civ. P. 8(a)(2). Altheimer does not have
to prove its factual and legal
allegations at this stage, it must only
show that relief is possible. See Conley
v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct.
99, 2 L. Ed. 2d 80 (1957); Bartholet v.
Reishauer A.G. (Zurich), 953 F.2d 1073,
1078 (7th Cir. 1992). Further, it is
entitled to plead in the alternative,
even if the pleadings are inconsistent. 5
Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure sec. 1283 (2d ed.
1990, Supp. 2001).

  Various constructions of the facts in
this case would permit Altheimer to
recover from Bickel. For example, even if
Altheimer negligently drafted the
transaction documents, DTS and Avers
could still have fraudulently induced the
Alpers to sell their merchandising
business. If the Alpers had viable claims
against DTS and Avers, it is possible
that Bickel’s negligence prevented the
Alpers from recovering on those claims.
If the jury were to find that Altheimer
injured the Alpers by losing the
merchandising business, then Altheimer
could seek contribution from Bickel for
its role in that injury.

  We thus find that Altheimer has properly
stated a claim for contribution under the
Contribution Act because Bickel and
Altheimer both allegedly failed to
protect the Alpers’ interests with
respect to DTS and Avers. We note that
our decision today does not speak to the
merits of Altheimer’s contribution claim.
If the Alpers prevail on their claim
against Altheimer, the trier of fact will
then determine whether Bickel is liable
for contribution.

B.   Public Policy Considerations

  The district court found that Altheimer
could not pursue a contribution claim in
part based upon its determination that
public policy considerations militated
against this type of third-party
malpractice claim. Though no Illinois
case has declared such a bar, the
district court was persuaded by a state
court case from Utah, Hughes v. Housley,
599 P.2d 1250 (Utah 1979). As noted by
the district court, Hughes expressed
"policy concerns about imposition of a
duty on successor counsel in favor of his
predecessor." Alper v. Altheimer & Gray,
No. 97 C 1200, 2000 WL 1006740, at *5
(N.D. Ill. July 19, 2000). A subsequent
Illinois case, Roberts v. Heilgeist, 465
N.E.2d 658, 662 (Ill. App. Ct. 1984), did
cite to Hughes, but only in dicta.
Roberts did not reach the issue of
"whether public policy considerations
prevent a malpractice plaintiffs’ former
attorney, who is the defendant in the
malpractice action, from seeking
contribution in that action from the
plaintiff’s current attorney" but noted
that "there is substantial merit to the
rationale of other courts that have
considered this question and have held
that . . . suits by a former lawyer
against a current or succeeding lawyer
contravene public policy." Id.

   It does not appear, however, that any
Illinois courts have ever followed the
rationale of Roberts. See, e.g., Horizon
Fed. Sav. Bank v. Selden Fox & Assoc.,
No. 85 C 9506, 1988 WL 71244, at *2 (N.D.
Ill. June 29, 1988). The Illinois Supreme
Court has since recognized that an
attorney may bring a third-party action
for contribution against a successor
attorney. See Faier v. Ambrose & Cushing,
P.C., 609 N.E.2d 315, 316 (Ill. 1993);
see also Brown-Seydel v. Mehta, 666
N.E.2d 800 (Ill. App. 1996); Goran v.
Glieberman, 659 N.E.2d 56 (Ill. App. Ct.
1995). The district court distinguished
Faier, Brown-Seydel, and Goran, and found
that Altheimer could still be barred from
pursuing its claim because Altheimer and
Bickel did not work "’on the same
underlying cause.’" Alper, 2000 WL
1006740, at *5 (quoting Faier, 609 N.E.2d
at 316). It is not appropriate for a
federal court, however, to distinguish
state precedent for the purpose of
adopting the reasoning of a non-binding
state court decision. The proper role of
a federal court sitting in diversity
jurisdiction is to apply state
substantive law, and only "in the absence
of" state authority may the district
courts "consider decisions from other
jurisdictions." Lexington Ins. Co. v.
Rugg & Knopp, Inc., 165 F.3d 1087, 1090
(7th Cir. 1999). Here was Illinois
authority recognizing the right of an
attorney, under Illinois law, to "seek
contribution for a legal malpractice
claim." Goran, 659 N.E.2d at 561. Unless
the Illinois courts decide that this type
of contribution action is barred by
public policy, or the Illinois
legislature sees fit to amend the
Contribution Act, the district court is
bound to recognize this right.

II.   Conclusion

  The district court dismissed Altheimer’s
contribution claim for failure to state a
claim upon which relief could be granted
under Rule 12 (b)(6) of the Federal Rules
of Civil Procedure. The judgment of
dismissal has been REVERSED and the case
REMANDED for proceedings consistent with
this opinion.

FOOTNOTES

/* On November 16, 2000, we issued an order revers-
ing the district court’s decision and remanding
for further consideration. We indicated that an
opinion explaining our conclusion would follow.
/1 The Alpers also alleged that Altheimer failed to
memorialize the fee agreement in writing as
required by the Illinois Rules of Professional
Conduct but that claim was not discussed by
either party on appeal.

/2 Robert Cummins, a lawyer at Bickel & Brewer, was
the lawyer engaged by the Alpers to file the
lawsuit against DTS and Avers. The district court
opinion thus refers to the Third-Party Defendant
as "Cummings." Cummings subsequently departed
from Bickel and founded his own firm, Cummins &
Cronin, which represented the Alpers in the
district court.
