## Facts

- Edward Morris was the chief executive officer and an inside director of Germania Bank, a savings and loan that expanded into riskier lending after industry deregulation.
- In 1987, auditors and federal regulators questioned the adequacy of Germania’s loan-loss reserves.
- Morris proposed a public offering of subordinated capital notes (“Schnotes”); the offering materials represented that Germania had made adequate provision for estimated loan losses.
- Bank management recommended a significant increase in reserves, but the executive committee approved a much smaller increase, enabling Germania to report a quarterly profit shortly before the offering; additional reserve increases were later recommended.
- Following Germania’s collapse, Morris was federally prosecuted and convicted by a jury of mail fraud and wire fraud arising from his role in the Schnote offering; the conviction was affirmed on appeal.
- Bryan Cave, L.L.P. served as Germania’s corporate counsel; a Bryan Cave partner also served as an outside director. The firm had represented Morris in unrelated personal matters but declined to represent him in Germania-related regulatory and criminal matters due to conflicts.
- Morris filed an Illinois civil action for breach of fiduciary duty against Bryan Cave and certain partners, alleging that two partners assisted the federal prosecution by drafting cross-examination questions for the prosecutor to use against him at his criminal trial.
- Morris sought damages that flowed from the conviction, including imprisonment and related economic and reputational harms.

## Issues

1. Whether a plaintiff may maintain a breach of fiduciary duty action against attorneys when the claimed damages arise from a criminal conviction that has not been set aside.
2. Whether principles precluding inconsistent judgments, including collateral estoppel based on the federal conviction, bar a civil damages theory that depends on undermining the standing conviction.

## Decision

- The Illinois Supreme Court reversed the appellate court and affirmed the circuit court’s summary judgment for the Bryan Cave defendants.
- The Court treated Morris’s federal conviction as final and valid for purposes of the civil case.
- Assuming without deciding that Morris could allege an attorney-client relationship and a breach, the Court held the claim failed as a matter of law because Morris’s damages were inseparable from an unvacated conviction.
- The Court concluded that permitting recovery would require a state court determination inconsistent with the federal jury’s verdict and the affirmance of that conviction.

## Legal Principles

- A plaintiff cannot recover civil damages that flow from a still-valid criminal conviction unless the conviction has been reversed, vacated, or otherwise invalidated.
- A civil claim that would effectively call into question the correctness of a final criminal conviction is barred while that conviction stands.
- A final criminal conviction may preclude relitigation of issues necessarily determined in the criminal case and may foreclose damages theories that depend on contradicting the conviction’s factual and legal basis.
- When the dispositive defect is the inability to prove legally cognizable damages due to a standing conviction, disputed questions about attorney-client relationship or breach are immaterial to summary judgment.

## Conclusion

The court held that Morris’s breach of fiduciary duty action could not proceed because his requested damages derived from an unvacated federal fraud conviction, and allowing the suit would invite determinations inconsistent with that final conviction.


Morris v. Margulis, 197 Ill. 2d 28, 754 N.E.2d 314 (Ill. 2001)