Tucker v. Soy Capital Bank & Trust Co.

ILLINOIS OFFICIAL REPORTS
Appellate Court

Tucker v. Soy Capital Bank & Trust Co., 2012 IL App (1st) 103303

Appellate Court JAMES C. TUCKER, BRIAN K. ADCOCK, SHELLY K. ADCOCK,
Caption TERRY D. CAUSEY, JOHN W. FLORA, LISA S. FLORA, JANE F.
LAWSON, JEFF A. LADD, BRENT R. LOCKE, JEFFREY D. SAMS,
DANIEL T. TOUW, RON G. WEADE, and DIANNE K. WEADE, on
Behalf of Themselves as Individuals, and as Representatives of a Class
of Other Persons Similarly Situated, Plaintiffs-Appellants, v. SOY
CAPITAL BANK AND TRUST COMPANY, a/k/a Soy Capital Wealth
Management, Defendant-Appellee.

District & No. First District, Fourth Division
Docket No. 1-10-3303

Filed June 28, 2012

Held Defendant bank owed plaintiffs no fiduciary duty as trustee to investigate
(Note: This syllabus and verify the true value of a third-party investment fund, later alleged to
constitutes no part of be a “Ponzi” scheme, where the individual retirement account agreement
the opinion of the court between the bank and plaintiffs expressly released the bank from liability
but has been prepared for any losses and stated the bank had no duty to investigate the actual
by the Reporter of market value of plaintiffs’ investments in the fund.
Decisions for the
convenience of the
reader.)

Decision Under Appeal from the Circuit Court of Cook County, No. 09-CH-42951; the
Review Hon. LeRoy K. Martin, Judge, presiding.
Judgment Affirmed.

Counsel on Stephen P. Carponelli and Don F. Taylor, both of Carponelli & Krug, of
Appeal Chicago, Richard C. Leng, of Law Offices of Richard C. Leng, of
Barrington, and Christopher M. Ellis and Shane M. Mendenhall, both of
Bolen, Robinson & Ellis, of Decatur, for appellants.

W. Scott Porterfield, Adam Oyebanji, and Andrew E. Nieland, all of
Barack, Ferrazzano, Kirschbaum & Nagelberg, of Chicago, for appellee.

Panel JUSTICE PUCINSKI delivered the judgment of the court, with opinion.
Presiding Justice Lavin and Justice Fitzgerald Smith concurred in the
judgment and opinion.

OPINION

¶1 Plaintiffs opened individual retirement accounts (IRAs) with the defendant custodian
bank, Soy Capital Bank and Trust Company, a/k/a Soy Capital Wealth Management (Soy),
and brought an action against Soy for losses as the result of an alleged “Ponzi” scheme by
the owner of the fund in which they invested their IRAs. The circuit court dismissed the
plaintiffs’ first amended complaint for failure to state a cause of action for breach of fiduciary
duty, breach of the Illinois Trusts and Trustees Act (760 ILCS 5/1 et seq. (West 2008)),
professional negligence, breach of the Illinois Consumer Fraud and Deceptive Business
Practices Act (815 ILCS 505/1 et seq. (West 2008)), breach of contract, civil conspiracy,
breach of duty under a bailment, and wilful and wanton misconduct. We hold the circuit
court did not err in dismissing all claims against Soy because the IRA agreement signed by
plaintiffs, which encompassed disclosures and additional agreements and was incorporated
in their first amended complaint, specifically provided that the defendant custodian bank had
no duty to investigate the actual value of the funds and plaintiffs agreed to release and hold
the bank harmless from any losses as a result of their direction of investment in the IRAs.

¶2 BACKGROUND
¶3 The instant appeal is from the circuit court’s dismissal pursuant to section 2-615 of the
Illinois Code of Civil Procedure (735 ILCS 5/2-615 (West 2010)) of plaintiffs’ complaint
against Soy based on its alleged fiduciary duty to accurately report the value of plaintiffs’
individual retirement accounts with Hubadex, Inc. (Hubadex). Soy is an Illinois bank and
trust company which maintains offices at 455 North Main Street in Decatur, Illinois, and
conducts business in Cook County, Illinois. Plaintiffs are all Illinois residents who opened
individual retirement accounts with Soy. Since the late 1990s William A. Huber and

-2-
 Hubadex sold limited partnership interests in the Quarter Funds and the Symmetry Fund and
participation agreements in the Trimester Funds, each of which was held out as a pooled
investment vehicle. William A. Huber directed all potential investors in Hubadex to contact
Soy as the only bank they could use to invest with Hubadex. The 13 plaintiffs in this case
collectively invested over $2.5 million in the Hubadex fund through the Soy IRA accounts.
¶4 On September 29, 2009, the United States Securities and Exchange Commission (SEC)
filed a complaint against William A. Huber and Hubadex in the United States District Court
for the Northern District of Illinois, Eastern Division. The SEC complaint alleged that Huber
and Hubadex had defrauded Hubadex’s investors of at least $16 million since 2006 as part
of a “Ponzi” scheme.
¶5 Prior to September 29, 2009, each plaintiff executed an IRA application with Soy, which
included an investment direction form, “Individual Retirement Account Provisions,
Disclosures, and Consents,” and a financial disclosure. These documents were attached to
plaintiff’s first amended complaint and filed under seal in the proceedings below. The
application to open the IRA provided in a paragraph right above the signature line the
following:
“I certify that the information provided by me on this Application is accurate, and that
I have received a copy of IRS Form 5305-A, Individual Retirement Custodial Account,
a Disclosure Statement, and a Financial Disclosure. I agree to be bound by the terms and
conditions found in the Agreement, Disclosure Statement, Financial Disclosure, and
amendments thereto. I assume sole responsibility for all consequences relating to my
actions concerning this IRA. I understand that I may revoke this IRA on or before seven
(7) days after the date of establishment. I have not received any tax or legal advice from
the custodian, and I will seek the advice of my own tax or legal professional to ensure my
compliance with related laws. I release and agree to hold the IRA custodian harmless
against any and all claims or losses arising from my actions.” (Emphases in original and
added.)
The IRA application was signed by each plaintiff and one of Soy’s agents, with Soy in its
capacity as custodian of the account.
¶6 Each plaintiff also executed an investment direction form provided by Soy, which
directed that plaintiff specify what percentage of money in the new IRA would be invested
in each of the three funds offered by Hubadex. Soy charged plaintiffs fees for acting as
custodian and trustee of their IRAs, which included a minimum annual fee as well as an
annual fee based on market value.
¶7 The “Individual Retirement Account Additional Provisions, Disclosures, and Consents”
merely provided for the disclosure of the IRA owner’s name and other information obtained
pursuant to a rule of the SEC only upon written direction, and further explained that the fees
for recordkeeping and administrative services for money market and mutual funds.
¶8 The financial disclosure contained the following provision regarding the projection
method which was selected for the value of the IRA:
“Projection Method Four: The Value of Your IRA Cannot be Reasonably Projected.
The value of your IRA is solely dependent on the performance of your IRA’s

-3-
 investments such as mutual funds, stocks, bonds, and other securities and cannot be
reasonably projected. However, we are required to provide the following information as
part of this financial disclosure:
1. Earnings. The method for computing and allocating the earnings on your IRA
investments may be found in the prospectus or similar materials applicable to your IRA
investments. The method may vary depending on the provider and type of the
investments.”
¶9 The relevant portion of section 8.10 of the financial disclosure expressly provides the
following:
“Representations and Indemnity. You represent that any information you and/or your
agents provide to us is accurate and complete, and that your actions comply with this
Agreement and applicable laws governing retirement plans. You understand that we will
rely on the information provided by you, and that we have no duty to inquire about or
investigate such information. We are not responsible for any losses or expenses that may
result from your information, direction, or actions, including your failure to act. You
agree to hold us harmless, to indemnify, and to defend us against any and all actions or
claims arising from, and liabilities and losses incurred by reason of your information,
direction, or actions. Additionally, you represent that it is your responsibility to seek the
guidance of a tax or legal professional for your IRA issues.
We are not responsible for determining whether any contributions or distributions
comply with this Agreement and/or the federal laws governing retirement plans. We are
not responsible for any taxes, judgments, penalties or expenses incurred in connection
with your IRA, or any losses that are a result of events beyond our control.” (Emphases
added.)
¶ 10 Section 8.11 of the financial disclosure further provided:
“8.11. Investment of IRA Assets.
(a) Investment of Contributions. We will invest IRA contributions and reinvest your
IRA assets as directed by you based on our then-current investment policies and
procedures. If you fail to provide us with investment direction for a contribution, we will
return or hold all or part of such contribution based on our policies and procedures. We
will not be responsible for any loss of IRA income associated with your failure to provide
appropriate investment direction.
(b) Directing Investments. All investment directions must be in a format or manner
acceptable to us. You may invest in any IRA investments that you are qualified to
purchase, and that we are authorized to offer and do offer at the time of the investment
selection, and that are acceptable under the applicable laws governing retirement plans.
Your IRA investments will be registered in our name or our nominee’s name for the
benefit of your IRA. Specific investment information may be provided at the time of the
investment.
Based on our policies, we may allow you to delegate the investment responsibility
of your IRA to an agent by providing us with written notice of delegation in a format
acceptable to us. We will not review or guide your agent’s decisions, and you are

-4-
 responsible for the agent’s actions or failure to act. We are not responsible for directing
your investments, or providing investment advice, including guidance on the suitability
or potential market value of various investments. For investments in securities, we will
exercise voting rights and other similar rights only at your direction, and according to our
then-current policies and procedures.” (Emphases added.)
¶ 11 Section 8.09 of the financial disclosure provided:
“Interpretation. If any question arises as to the meaning of any provision of this
Agreement, then we shall be authorized to interpret any such provision, and our
interpretation will be binding upon all parties.”
¶ 12 Prior to February 2005, the Illinois Securities Department performed a securities audit
of Hubadex and its officers, directors, employees, agents, affiliates, successors and assigns.
As a result of that audit, on or about February 10, 2005, Hubadex executed a stipulation to
entry of a consent order entered on February 22, 2005, finding that Hubadex had violated the
Illinois Securities Law of 1953 (815 ILCS 5/1 (West 2008)) and ordering Hubadex to pay a
monetary fine of $50,000 to the Securities Audit Enforcement Fund.
¶ 13 Plaintiffs filed this eight-count class action complaint for the following claims: (1) breach
of fiduciary duty; (2) breach of the Illinois Trusts and Trustees Act (760 ILCS 5/1 et seq.
(West 2008)); (3) professional negligence; (4) breach of the Illinois Consumer Fraud and
Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2008)); (5) breach of
contract; (6) civil conspiracy for aiding and abetting a fraudulent scheme; (7) breach of duty
under a bailment; and (8) wilful and wanton misconduct.
¶ 14 Soy moved for dismissal pursuant to section 2-615 of the Illinois Code of Civil Procedure
(735 ILCS 5/2-615 (West 2008)) for failure to state a cause of action, which the court
granted. On September 22, 2010, the court entered an order dismissing plaintiffs’ amended
complaint with prejudice. The order noted that plaintiffs were electing to stand on the
complaint as to count IV. Plaintiffs appealed and ask us to reverse this order and remand the
cause with directions to reinstate counts I through VIII.

¶ 15 ANALYSIS
¶ 16 The only issue before us is whether the circuit court erred in dismissing plaintiffs’
complaint for failure to state a cause of action on each of the claims alleged in their first
amended complaint. The central issue in this case is whether defendant bank owed plaintiffs
a fiduciary duty to investigate and verify the true value of the IRAs. Plaintiffs argue that the
following documents attached to the complaint establish that Soy had a fiduciary duty to
investigate and verify the value of the Hubadex funds: (1) the investment direction form; (2)
the fee schedule; (3) the additional provisions, disclosures and consents form; and (4) the
annual disclosure form. Soy argues that all the documents constituting the agreement
between it and plaintiffs expressly state that defendant had no such duties. In its motion to
dismiss below, Soy stated that “[b]ecause Hubadex is now under investigation by the
Securities and Exchange Commission (‘SEC’) and may be insolvent, Plaintiff has sued the
Bank in an effort to find a ‘deep pocket.’ ” On appeal, Soy maintains that it did not owe
plaintiffs a fiduciary duty to investigate and report the actual value of the Hubadex fund and

-5-
 that its duty was simply to allocate the funds as directed by plaintiffs, and that plaintiffs
expressly released Soy from any liability for losses from the investment in the IRAs.
¶ 17 A motion to dismiss brought under section 2-615 tests the legal sufficiency of the
complaint. In ruling on a section 2-615 motion, a court must accept as true all well-pleaded
facts in the complaint and all reasonable inferences therefrom. Vitro v. Mihelcic, 209 Ill. 2d
76, 81 (2004) (citing American National Bank & Trust Co. v. City of Chicago, 192 Ill. 2d
274, 279 (2000), and Weatherman v. Gary-Wheaton Bank of Fox Valley, N.A., 186 Ill. 2d
472, 491 (1999)). The critical inquiry is whether the allegations of the complaint, when
construed in the light most favorable to the plaintiff, are sufficient to establish a cause of
action upon which relief may be granted. Vitro, 209 Ill. 2d at 81 (citing Jarvis v. South Oak
Dodge, Inc., 201 Ill. 2d 81, 86 (2002), and Weatherman, 186 Ill. 2d at 491). In ruling on a
section 2-615 motion attacking a complaint, a court must accept as true all well-pled facts
in the complaint and draw all reasonable inferences therefrom in favor of the plaintiffs. Vitro,
209 Ill. 2d at 81. The critical question on appeal is whether the allegations of the complaint,
when viewed in the light most favorable to the plaintiff, are sufficient to state a cause of
action upon which relief can be granted. Borowiec v. Gateway 2000, Inc., 209 Ill. 2d 376,
382 (2004). We further note that in granting defendant’s section 2-615 motion, the trial court
dismissed plaintiffs’ complaint with prejudice. A complaint should be dismissed with
prejudice under section 2-615 only if it is clearly apparent that no set of facts can be proved
that would entitle the plaintiff to recover. Andersen v. Mack Trucks, Inc., 341 Ill. App. 3d
212, 219 (2003). Our standard of review on section 2-615 dismissals is de novo. Vitro, 209
Ill. 2d at 81.
¶ 18 Plaintiffs first argue that the circuit court erred in not considering each of the documents
constituting plaintiffs’ agreement with Soy and they refer to the court’s oral findings at the
hearing on the motion to dismiss. However, we note that plaintiffs have not filed on appeal
the report of proceedings for the hearing on the motion to dismiss. “ ‘Any doubts arising
from the inadequacy of the record will be resolved against [the party appealing].’ ” Corral
v. Mervis Industries, Inc., 217 Ill. 2d 144, 155 (2005) (quoting Weaver v. Midwest Towing,
Inc., 116 Ill. 2d 279, 285 (1987), citing Foutch v. O’Bryant, 99 Ill. 2d 389, 391-92 (1984)).
The appellant “has the burden of showing error; any doubt arising from incompleteness of
the record will be resolved against the appellant.” People v. Kirkpatrick, 240 Ill. App. 3d
401, 406 (1992). “An issue relating to a circuit court’s factual findings and basis for its legal
conclusions obviously cannot be reviewed absent a report or record of the proceeding.”
Corral, 217 Ill. 2d at 156 (citing Webster v. Hartman, 195 Ill. 2d 426, 432 (2001) (“Where
the issue on appeal relates to the conduct of a hearing or proceeding, this issue is not subject
to review absent a report or record of the proceeding.”)). Where the record is incomplete, we
will indulge every reasonable presumption favorable to the judgment order from which the
appeal is taken. In re Marriage of Cepek, 230 Ill. App. 3d 1045, 1046 (1992). Moreover, it
will be presumed that the trial court heard sufficient evidence and argument to support its
decision. In re Marriage of Cepek, 230 Ill. App. 3d at 1046. Thus, we presume the circuit
court indeed reviewed the documents incorporated in plaintiffs’ first amended complaint in
ruling on the motion. We now review the sufficiency of the allegations for each of plaintiffs’
claims in turn.

-6-
¶ 19 Breach of Fiduciary Duty
¶ 20 Plaintiffs first argue that its amended complaint sufficiently stated a cause of action for
breach of fiduciary duty against Soy. Plaintiffs alleged that Soy owed them the following
fiduciary duties: to account properly for the property held in plaintiffs’ accounts; to maintain
the property held in the accounts; to protect the interests of plaintiffs in the property in their
accounts; to diligently invest and diversify the property held in plaintiffs’ accounts; not to
benefit personally from the property in plaintiffs’ accounts at their expense; and to perform
a due diligence investigation of Hubadex and the value of its funds; as well as a duty of
custody and safekeeping of securities. Plaintiffs also allege that as a fiduciary Soy owed
plaintiffs a duty of care and a “duty to warn [p]laintiffs of its ‘concerns’ about Hubadex and
its considerations regarding eliminating its Hubadex IRA accounts.” In addition to these
duties, plaintiffs also alleged “a special relationship was established at the time [p]laintiffs’
opened [sic] an IRA account with Soy that created certain duties and obligations that were
owed by Soy to [p]laintiffs.” Plaintiffs further alleged that they “placed peculiar trust and
confidence in Soy to open the IRA account[s] and provide true and accurate statements to
them.” Plaintiffs also alleged and incorporated by reference affidavits averring that “one or
more of Soy’s agents advised [p]laintiffs regarding certain Hubadex investments and gave
[p]laintiffs reassurances about their Hubadex investment.” Plaintiffs alleged that “Soy was
in the position to take reasonable steps to verify that the reported value of the Hubadex Fund
was true and accurate and to verify that the reported value of [p]laintiffs’ account was true
and accurate, and as a result Soy possessed a significant degree of dominance and superiority
over [p]laintiffs in the verification and accuracy of the Hubadex Fund’s value and the true
and accurate reporting of the account value.”
¶ 21 To state a claim for breach of fiduciary duty, plaintiffs must allege the following: the
existence of a fiduciary duty, a breach of that duty, and damages proximately caused by the
breach. Neade v. Portes, 193 Ill. 2d 433, 444 (2000). However, as Soy points out, “Illinois
courts have refused to add any additional duties to those set forth in any contract between a
bank and its customer even if the bank is a ‘fiduciary.’ ” First Midwest Bank/Joliet v.
Dempsey, 157 Ill. App. 3d 307, 313 (1987).
¶ 22 Here plaintiffs’ first amended complaint incorporated all the relevant documents forming
plaintiffs’ agreement with Soy, which establish an explicit release of Soy and, in particular,
releases Soy from any duty to investigate the market value of plaintiffs’ investment in the
IRAs. We may consider these documents under section 2-615 because they were attached to,
and incorporated by reference, the first amended complaint. Agreements that are attached as
an exhibit to a complaint are considered to be part of the pleading, and facts stated in the
exhibit are considered as having been alleged in the complaint. International Insurance Co.
v. Sargent & Lundy, 242 Ill. App. 3d 614, 622 (1993). Thus, a motion to dismiss a complaint
with attached exhibits is still considered as one brought under section 2-615 under which we
look only to the sufficiency of the pleadings. International Insurance Co., 242 Ill. App. 3d
at 622.
¶ 23 “Furthermore, matters contained in such exhibits which conflict with allegations of the

-7-
 complaint negate any contrary allegations of the complaint.” International Insurance Co.,
242 Ill. App. 3d at 622 (citing Ford v. University of Illinois Board of Trustees, 55 Ill. App.
3d 744 (1977)). Despite plaintiffs’ repeated assertions of duty in the body of their first
amended complaint, the attached documents constituting their agreement with Soy establish
that they do not have any claim for breach of fiduciary duty.
¶ 24 “Where a release is clear and explicit, the court must enforce it as written.” International
Insurance Co., 242 Ill. App. 3d at 623 (citing Continental Illinois National Bank & Trust Co.
v. Sax, 199 Ill. App. 3d 685, 693 (1990)). Illinois courts recognize releases that are specific
and pertain to claims that are within the contemplation of the parties. See Thornwood, Inc.
v. Jenner & Block, 344 Ill. App. 3d 15, 23 (2003) (holding that the claims were based on
alleged breaches of fiduciary duty which were explicitly released, and thus the claims were
barred by the release).
¶ 25 Pursuant to Soy’s agreement with plaintiffs, plaintiffs released Soy from any losses due
to their investment direction. The financial disclosure specifically provided that it was
plaintiffs’ responsibility to seek the guidance of a tax or legal professional. The financial
disclosure also specifically set forth that Soy had no duty whatsoever to investigate the
market value of plaintiffs’ investments in the IRAs. The application itself, in clear language
right above plaintiffs’ signatures, provides: “I release and agree to hold the IRA custodian
harmless against any and all claims or losses arising from my actions,” which include
plaintiffs’ investment directions, whereby they directed an investment of their money into
the Hubadex funds.
¶ 26 Further, plaintiffs have not alleged any facts in their first amended complaint that would
vitiate the release. “[T]he defenses that may be asserted to vitiate a release include fraud in
the execution, fraud in the inducement, mutual mistake and mental incompetence.” Janowiak
v. Tiesi, 402 Ill. App. 3d 997, 1005-06 (2010) (citing McCormick v. McCormick, 118 Ill.
App. 3d 455, 466 (1983), citing Blaylock v. Toledo, Peoria & Western R.R. Co., 43 Ill. App.
3d 35, 37 (1976)). Plaintiffs have not alleged any facts which set forth any of these defenses
to the release.
¶ 27 Plaintiffs additionally argue that certain oral statements by Soy’s agents regarding the
Hubadex fund establish a breach of fiduciary duty. However, as this court held in Nilsson v.
NBD Bank of Illinois, 313 Ill. App. 3d 751, 762 (1999):
“ ‘ “One is under a duty to learn, or know, the contents of a written contract before
he signs it, and is under a duty to determine the obligations which he undertakes by the
execution of a written agreement. [Citation.] And the law is that a party who signs an
instrument relying upon representations as to its contents when he has had an opportunity
to ascertain the truth by reading the instrument and has not availed himself of the
opportunity, cannot be heard to say that he was deceived by misrepresentations.” ’ ”
Nilsson, 313 Ill. App. 3d at 762 (quoting Belleville National Bank v. Rose, 119 Ill. App.
3d 56, 59 (1983), quoting Leon v. Max E. Miller & Son, Inc., 23 Ill. App. 3d 694, 699-
700 (1974)).
¶ 28 Plaintiffs were under a duty to determine the contents of their agreement with Soy
concerning the IRAs and any claims regarding oral representations countering the clear

-8-
 language of their contract with Soy are insufficient under the law. Plaintiffs here signed an
agreement clearly indicating Soy had no duty to inquire about the market value of the IRA
funds and which contained a clear release, specifically releasing Soy from any potential
claims for losses of investment in the IRAs. The circuit court did not err in dismissing the
breach of fiduciary duty claim.

¶ 29 Illinois Trusts and Trustees Act
¶ 30 Plaintiffs also argue the court erred in dismissing their claim under the Illinois Trusts and
Trustees Act (760 ILCS 5/1 et seq. (West 2008)). Plaintiffs alleged in their first amended
complaint that Soy breached its duty under section 5.1(a) of the Act not to delegate
investment functions including the verification of the value of the Hubadex fund. See 760
ILCS 5/5.1(a) (West 2008). The Act only applies to trusts. 760 ILCS 5/3(2) (West 2008). “In
order to find there is a valid express trust, these conditions must be present: an intent to
create a trust which may be shown by a declaration of trust by the settlor or circumstances
which show the settlor intended to create a trust; a definite trust res; ascertainable
beneficiaries; a trustee; specification of the purpose of the trust and how it is to be
performed; and delivery of the trust property to the trustee.” In re Estate of Davis, 225 Ill.
App. 3d 998, 1007 (1992) (citing Gary-Wheaton Bank v. Meyer, 130 Ill. App. 3d 87, 92
(1984), and Yardley v. Yardley, 137 Ill. App. 3d 747, 760 (1985)).
¶ 31 Reported precedent on the issue of whether individual retirement accounts are trusts is
surprisingly sparse. The parties cite seemingly opposing authorities. Soy cites to In re Estate
of Davis, 225 Ill. App. 3d 998, which held that a custodial IRA is not a trust. Plaintiffs cite
to Masi v. Ford City Bank & Trust Co., 779 F.2d 397 (7th Cir. 1985), where the United
States Court of Appeals held that IRAs “are special deposits that constitute a trust
relationship wherein the Bank owes a fiduciary duty to the depositor.” Masi, 779 F.2d at 401.
¶ 32 In re Estate of Davis held that a custodial account IRA is not an express trust because
there is no intent to establish a trust. In re Estate of Davis, 225 Ill. App. 3d at 1007 (citing
Estate of Davis v. Davis, 217 Cal. Rptr. 734, 736 (Cal. Ct. App. 1985)). In In re Estate of
Davis, the court held that under the facts of that case there was an intent to establish a trust
because the IRA adoption agreement incorporated the trust agreement. In re Estate of Davis,
225 Ill. App. 3d at 1007. In In re Estate of Davis, the court explained the nature of custodial
account IRAs as follows:
“A ‘custody’ or ‘custodial’ account is a type of agency account in which the
custodian has the obligation to preserve and safekeep the property entrusted to him for
his principal. (Black’s Law Dictionary 384 (6th ed. 1990).) Custodial accounts are treated
as trusts *** are held and administered consistent with that section and if the custodial
account would, except for the fact that it is not a trust, constitute an individual retirement
account as described in subsection (a) of section 408. 26 U.S.C. § 408(a) (1988);
McCarty v. State Bank (1990), 15 Kan. App. 2d 552, 555-56, 795 P.2d 940, 944.” In re
Estate of Davis, 225 Ill. App. 3d at 1006.
¶ 33 Plaintiffs raise the fact that the IRA account in In re Estate of Davis was discussed in the
context of a property settlement agreement and judgment of dissolution of marriage.

-9-
 However, this is a distinction without a difference. The issue discussed was still whether an
individual retirement account is a trust.
¶ 34 Here, under the facts as alleged by plaintiffs in their amended complaint, the IRAs in this
case specifically state that they are only custodial accounts. The disclosure statement
specifically provided that Soy would merely be “considered” plaintiffs’ “agent.” The
agreement between plaintiffs and Soy provided that Soy was the custodian and would
allocate plaintiffs’ funds as they indicated. Plaintiffs do not point to any explicit language
creating a trust in any of the documents they rely upon. Further, because no trust was
established, the duties under the prudent investor rule delineated in section 5 of the Trusts
and Trustees Act (760 ILCS 5/5 (West 2010)) do not apply.
¶ 35 Plaintiffs rely on Masi, 779 F.2d 397, where the United States Court of Appeals for the
Seventh Circuit held that “IRAs are not regular savings accounts. They clearly are special
deposits that constitute a trust relationship wherein the Bank owes a fiduciary duty to the
depositor.” Masi, 779 F.2d at 401. In Masi, the custodian bank itself directly breached the
IRA agreement regarding the appropriation of the plaintiff’s money. The lower district court
found, and neither party appealed, that the bank breached its fiduciary duties under the
plaintiff’s IRA agreement by using the funds in the IRA to satisfy the plaintiff’s obligation
under a loan. Masi, 779 F.2d at 399. The context in which the court made this comment was
in its discussion allowing the plaintiff to prove punitive damages for the breach of fiduciary
duty based on the fact that IRAs are “special deposits” constituting a “trust relationship.” In
making these comments, the Masi court quoted and relied on section 408 of the Internal
Revenue Code (26 U.S.C. § 408 (2006)), which sets forth requirements for an IRA to qualify
as a trust for certain tax treatment. See Masi, 779 F.2d at 400. The context of the court’s
comment regarding an IRA as a trust is then as follows:
“This section establishes seven requirements for inclusion in the trust instrument before
it can qualify as an IRA trust, including that the ‘interest of an individual in the balance
of his account is nonforfeitable.’ 26 U.S.C. § 408(a)(4). The clarity of this language is
convincing, if not compelling. One must recognize that IRAs are not regular savings
accounts. They clearly are special deposits that constitute a trust relationship wherein the
Bank owes a fiduciary duty to the depositor.” Masi, 779 F.2d at 400-01.
Thus, the Seventh Circuit in Masi was specifically discussing section 408 of the Internal
Revenue Code in stating that individual retirement accounts are trusts.
¶ 36 Section 408(a) of the Internal Revenue Code provides:
“(a) Individual retirement account.
For purposes of this section, the term ‘individual retirement account’ means a trust
created or organized in the United States for the exclusive benefit of an individual or his
beneficiaries, but only if the written governing instrument creating the trust meets the
following requirements ***.” (Emphasis added.) 26 U.S.C. § 408(a).
¶ 37 Although they rely exclusively on Masi for their assertion that individual retirement
accounts are trusts, plaintiffs do not address section 408 of the Internal Revenue Code. In
fact, federal courts have held that there is no cause of action against a custodian of IRAs on
the basis of Internal Revenue Code section 408’s reference to IRA’s as “trusts.” In

-10-
 Mandelbaum v. Fiserv, Inc., 787 F. Supp. 2d 1226 (D. Colo. 2011), the United States District
Court in Colorado held that there was no federal common law claim for IRAs based on
section 408 of the Internal Revenue Code. In Mandelbaum, the IRA agreements specifically
incorporated by reference section 408 of the Internal Revenue Code. Similar to the plaintiffs
in the instant case, the plaintiffs in Mandelbaum asserted claims against the defendants for
breach of contract, ordinary and gross negligence, breach of fiduciary duty, aiding and
abetting breach of fiduciary duty under federal law, and unjust enrichment and restitution,
although under federal common law instead of state common law. Mandelbaum, 787 F.
Supp. 2d at 1236. The federal court granted the defendants’ motion to dismiss all claims.
Mandelbaum, 787 F. Supp. 2d at 1231. In reaching its decision, one of the cases relied on by
the Mandelbaum federal court was Sirna v. Prudential Securities, Inc., No. 95 CIV. 8422,
1997 WL 53194 (S.D.N.Y. 1997) (mem. op.) (unpublished), which held:
“ ‘[S]ection 408 of the Code does no more than establish a framework whereby
individuals may obtain favorable tax treatment [for their retirement savings],’ and ‘there
is nothing in the wording or effect of the statute to suggest that Congress intended to
create, via the tax code, a private right of action against errant fiduciaries.’ ”
Mandelbaum, 787 F. Supp. 2d at 1237 (quoting Sirna, 1997 WL 53194, at *3).
The court held that even the incorporation by reference of section 408 of the Internal
Revenue Code into the underlying IRA agreements did not create any federal common law
claims. Mandelbaum, 787 F. Supp. 2d at 1238. The court also held that the underlying IRA
agreements for the plaintiffs’ IRA custodial accounts specifically exculpated the defendants
from any fiduciary duty to investors. Mandelbaum, 787 F. Supp. 2d at 1237-38. Thus, section
408 of the Internal Revenue Code, which was the basis of the Masi court’s comments that
IRAs are trusts, does not create any cause of action against IRA custodian banks.
¶ 38 However, even if the IRAs established here are considered trusts, the Trusts and Trustees
Act provides an exception that “[a] person establishing a trust may specify in the instrument
the rights, powers, duties, limitations and immunities applicable to the trustee, beneficiary
and others and those provisions where not otherwise contrary to law shall control,
notwithstanding this Act.” 760 ILCS 5/3(1) (West 2008). The provision on the prudent
investor rule in the Trusts and Trustees Act also provides: “The provisions of this Section
may be expanded, restricted, eliminated, or otherwise altered by express provisions of the
trust instrument.” 760 ILCS 5/5(b) (West 2008).
¶ 39 Section 8.11 of the financial disclosure specifically exculpated Soy from any liability in
providing that Soy was “not responsible for directing [plaintiffs’] investments, or providing
investment advice, including guidance on the suitability or potential market value of various
investments.” Plaintiffs also agreed in their applications that they release and would hold Soy
harmless from any losses as a result of their investment directions. Thus, even within the
ambit of the Trusts and Trustees Act, the exculpatory release provisions control and Soy
cannot be held liable.
¶ 40 Plaintiffs argue against the application of these clear exculpatory provisions but do not
argue that their amended complaint sufficiently alleged that the provisions are “otherwise
contrary to law” such that they should not control. See 760 ILCS 5/5(1) (West 2008). The

-11-
 circuit court did not err in dismissing the claim under the Truss and Trustees Act with
prejudice.

¶ 41 Professional Negligence
¶ 42 Plaintiffs also maintain that they have stated a claim against Soy for professional
negligence. The elements of a claim for professional negligence are: (1) the existence of a
professional relationship; (2) a breach of duty arising from the relationship; (3) causation;
and (4) damage. MC Baldwin Financial Co. v. DiMaggio, Rosario & Veraja, LLC, 364 Ill.
App. 3d 6, 14 (2006) (citing Belden v. Emmerman, 203 Ill. App. 3d 265, 268 (1990)).
¶ 43 Plaintiffs are very far afield in attempting to allege a claim for professional negligence
under the facts of this case. A bank is not a “professional,” and thus there is no “professional
relationship.” Plaintiffs provide no authority establishing that a claim for professional
negligence can be maintained against a bank. The circuit court appropriately dismissed this
claim with prejudice.

¶ 44 Consumer Fraud and Deceptive Business Practices Act
¶ 45 Plaintiffs also claim the circuit court erred in dismissing their claim under the Illinois
Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West
2008)). The unfair or deceptive practices provision provides the following:
Ҥ 2. Unfair methods of competition and unfair or deceptive acts or practices,
including but not limited to the use or employment of any deception fraud, false pretense,
false promise, misrepresentation or the concealment, suppression or omission of any
material fact, with intent that others rely upon the concealment, suppression or omission
of such material fact, or the use or employment of any practice described in Section 2 of
the ‘Uniform Deceptive Trade Practices Act’ [815 ILCS 510/2], approved August 5,
1965, in the conduct of any trade or commerce are hereby declared unlawful whether any
person has in fact been misled, deceived or damaged thereby.” 815 ILCS 505/2 (West
2008).
¶ 46 “Generally, to establish a violation of the Consumer Fraud Act, plaintiffs must establish
that (1) defendant committed a deceptive act, such as the misrepresentation or concealment
of a material fact; (2) defendant intended to induce plaintiffs’ reliance on the deception; and
(3) the deception occurred in a course of conduct involving trade or commerce.” Brody v.
Finch University of Health Sciences/The Chicago Medical School, 298 Ill. App. 3d 146, 157
(1998) (citing Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 501 (1996), citing Siegel v. Levy
Organization Development Co., 153 Ill. 2d 534, 542 (1992)).
¶ 47 Here, plaintiffs fail to sufficiently allege the elements necessary to sustain a claim for
violation of the Consumer Fraud and Deceptive Business Practices Act. In their brief,
plaintiffs rely solely upon the account statements in arguing that they have stated a claim for
a deceptive and/or unfair trade practice. Plaintiffs alleged in their amended complaint that
“Soy made these statements with the intention of keeping Plaintiffs’ accounts, and to
continue to charge Plaintiffs administrative, custodial, trustee and fiduciary fees.” However,

-12-
 according to the exhibits attached to and incorporated into plaintiffs’ amended complaint,
Soy merely provided the financial information that Hubadex reported. Pursuant to the
parties’ express agreement in the disclosure statement, Soy had “no duty to inquire about or
investigate such information.” Thus, plaintiffs have essentially pled themselves out of court
by attaching these agreements to their amended complaint.

¶ 48 Breach of Contract
¶ 49 Plaintiffs argue that the court also erred in dismissing their breach of contract claim. In
order to maintain a cause of action for breach of contract, plaintiffs must allege “the
existence of a contract, performance of all conditions to be performed by the plaintiff, breach
by the defendant, and damages to plaintiff as a consequence thereof.” Rodgers v. Peoples
Gas, Light & Coke Co., 315 Ill. App. 3d 340, 352 (2000). Plaintiffs alleged in their first
amended complaint that they performed all their duties under the agreement with Soy in
paying Soy for its services, but that “Soy has failed to fulfill its duty and obligations
undertaken in its ‘Fee Schedule’, namely that of custody and safekeeping of securities.”
¶ 50 However, plaintiffs have failed to allege the breach of any duty by Soy. The agreement
established a duty that Soy would apply plaintiffs’ investment funds as plaintiffs directed,
and under the allegations in the first amended complaint Soy fulfilled its duty in making the
requested transfers as directed by plaintiffs. Again, plaintiffs explicitly agreed to release and
hold Soy harmless from any losses resulting from their direction of investment in the IRAs
created. The circuit court did not err in dismissing plaintiffs’ claim for breach of contract, as
there is no way plaintiffs can establish such a claim under the facts alleged, which includes
the agreement comprised of all the disclosures.

¶ 51 Civil Conspiracy
¶ 52 Plaintiffs argue that they have stated a cause of action for civil conspiracy against Soy.
Civil conspiracy is defined as “ ‘a combination of two or more persons for the purpose of
accomplishing by concerted action either an unlawful purpose or a lawful purpose by
unlawful means.’ ” McClure v. Owens Corning Fiberglas Corp., 188 Ill. 2d 102, 133 (1999)
(quoting Buckner v. Atlantic Plant Maintenance, Inc., 182 Ill. 2d 12, 23 (1998)). In order to
state a claim for civil conspiracy, a plaintiff must allege an agreement and a tortious act
committed in furtherance of that agreement. McClure, 188 Ill. 2d at 133 (citing Adcock v.
Brakegate, Ltd., 164 Ill. 2d 54, 62-64 (1994)). The agreement is “a necessary and important”
element of this cause of action. McClure, 188 Ill. 2d at 133 (citing Adcock, 164 Ill. 2d at 62).
Civil conspiracy is an intentional tort and requires proof that a defendant “knowingly and
voluntarily participates in a common scheme to commit an unlawful act or a lawful act in an
unlawful manner.” McClure, 188 Ill. 2d at 133 (citing Adcock, 164 Ill. 2d at 64).
¶ 53 Plaintiffs’ complaint fails to state a cause of action for civil conspiracy, as plaintiffs do
not allege any agreement between Soy and Hubadex. In fact, plaintiffs’ allegations that Soy
had “concerns” about Hubadex and considered eliminating its Hubadex IRAs belies any
inference that there was any agreement between Soy and Hubadex to accomplish an unlawful
purpose.

-13-
¶ 54 Also, plaintiffs’ first amended complaint fails to set forth a tortious act by Soy. The
documents attached to the amended complaint constituting the agreement with plaintiffs gave
plaintiffs notice and bound them to a release of any claim for their losses. Even taking all the
allegations in plaintiffs’ amended complaint as true, there is no tortious act by Soy. The
circuit court did not err in dismissing plaintiffs’ civil conspiracy count for failure to state a
claim.

¶ 55 Bailment
¶ 56 Plaintiffs plead in the alternative and argue that their amended complaint stated a cause
of action for breach of duty under a bailment because IRAs are special deposits and
constitute bailments. “In order to recover under a bailment theory, the plaintiff must allege:
(1) an express or implied agreement to create a bailment; (2) delivery of the property in good
condition; (3) the bailee’s acceptance of the property; and (4) the bailee’s failure to return
the property or the bailee’s redelivery of the property in a damaged condition.” American
Ambassador Casualty Co. v. Jackson, 295 Ill. App. 3d 485, 490 (1998) (citing American
Ambassador Casualty Co. v. City of Chicago, 205 Ill. App. 3d 879, 881 (1990)).
¶ 57 However, as Soy points out, the relation here between plaintiffs and Soy is governed by
contract. When a bailment is created by an express contract the terms of the contract, either
increasing or diminishing the parties’ rights, control. Insurance Co. of North America v.
Elgin, Joliet & Eastern Ry. Co., 229 F.2d 705, 712 (7th Cir. 1956). The contract here
contained no promise to return plaintiffs’ investments in their original amount. See Mid-City
National Bank of Chicago v. Mar Building Corp., 33 Ill. App. 3d 1083, 1090 (1975) (“ ‘The
petition in this case does not aver that the identical money deposited was to be kept and paid
over ***. We think this averment fails to fasten on the money deposited the distinctive
feature of “special deposit” or bailment.’ ” (quoting Mississippi Central R.R. Co. v. Conner,
75 So. 57, 58 (Miss. 1917))).
¶ 58 Plaintiffs also argue that Soy breached its duty under a bailment because there was a
“special relationship” which “created a duty on Soy [sic] to warn Plaintiffs of the risks
involved in investing in an unaudited account, as well as a duty to warn Plaintiffs of its
concerns about Hubadex and its considerations of eliminating its Hubadex IRA accounts,”
citing Iseberg v. Gross, 227 Ill. 2d 78 (2007). However, Iseberg does not stand for this
proposition and is not on point. Iseberg dealt with the duty to warn an agent of an
unreasonable risk of harm in employment in a principal/agent relationship, and in fact held
that the defendants did not have any duty to warn. Iseberg, 227 Ill. 2d at 91. In Iseberg,
plaintiff and his wife filed an action against the defendants, claiming they were negligent
because they failed to ward Iseberg that a former mutual business partner had made threats
against Iseberg’s life. Iseberg, 227 Ill. 2d at 80. The former partner later shot Iseberg,
rendering him a paraplegic. Id. Plaintiffs’ complaint was dismissed and the plaintiffs
contended on appeal that the defendants owed them a duty to warn because of an agency
relationship with plaintiffs. Id. at 88-89. Our supreme court held that the facts contradicted
any agency relationship and that there was no duty to warn because the unreasonable risk of
harm was not involved in the employment. Id. at 91-92. Iseberg is not on point and does not

-14-
 support plaintiffs’ argument that there was any breach of duty under a bailment.
¶ 59 Plaintiffs cite no other authority for their broad-sweeping proposition that under a
bailment Soy had a duty to warn plaintiffs of the risks in investing in an unaudited account
and its concerns about Hubadex. The plaintiffs’ first amended complaint fails to state a claim
for breach of any duty under a bailment, and thus the court properly dismissed this claim.

¶ 60 Wilful and Wanton Misconduct
¶ 61 Plaintiff further maintain that they have stated a cause of action for wilful and wanton
misconduct. Plaintiffs argue that Soy had a conscious disregard for plaintiffs and their
retirement investment in failing to ascertain the true value of the funds in plaintiffs’ accounts
and in making false statements of material fact to induce plaintiffs to remain in the funds. In
order to state a claim for willful and wanton misconduct, there must be allegations that a
defendant breached some duty with a particularly malicious intent. OnTap Premium Quality
Waters, Inc. v. Bank of Northern Illinois, N.A., 262 Ill. App. 3d 254, 261 (1994). Plaintiffs
have failed to allege the breach of any duty by Soy. The agreement established a duty that
Soy would apply plaintiffs’ investment funds as plaintiffs directed, and Soy fulfilled its duty
in making the requested transfers as directed by plaintiffs. Any other duties alleged by
plaintiffs were explicitly negated in the agreement and the release contained in the
agreement. The circuit court therefore properly dismissed this final claim as well.

¶ 62 CONCLUSION
¶ 63 The circuit court did not err in dismissing the plaintiffs’ amended complaint for failure
to state a cause of action on all counts in plaintiffs’ first amended complaint for: breach of
fiduciary duty; breach of the Illinois Trusts and Trustees Act; professional negligence; breach
of the Illinois Consumer Fraud and Deceptive Business Practices Act; breach of contract;
civil conspiracy; breach of duty under a bailment; and wilful and wanton misconduct. Here,
the IRA agreement signed by plaintiffs, which encompassed the disclosures, specifically
provided that the defendant custodian bank had no duty to investigate the actual value of the
funds and plaintiffs agreed to release and hold the bank harmless from any losses as a result
of their direction of investment in the IRAs. These provisions are dispositive and negate the
requisite elements under each of the above claims.

¶ 64 Affirmed.

-15-