Illinois Appellate Court Holds that Violations of the Rules of Professional Conduct are Only Enforceable in Disciplinary Proceedings

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Last month, on July 7, 2021, the Illinois Appellate Court for the Second District held that the Circuit Court of DuPage County erred in ordering the disgorgement of $16,313 in attorney’s fees and the forfeiture of an additional $125,472 in outstanding fees related to a complicated divorce proceeding. The case began on November 6, 2015, when Sara C. Weber, represented by Botti Law Firm, P.C. (“Botti Law”), filed a petition for dissolution of her marriage to Karl Weber.

During the proceeding, Mr. Weber alleged that Mrs. Weber’s caregiver was exerting undue influence over his wife and misusing the parties’ marital and business assets. On June 9, 2016, Mr. Weber subpoenaed the caregiver’s bank records. In response, Botti Law appeared on behalf of the caregiver and began representing her.

On March 9, 2017, Mrs. Weber terminated Botti Law’s representation, but the firm continued to represent the caregiver. Later, Botti Law filed a petition for the setting of final fees and costs pursuant to sections 508(a) and 508(c) of the Illinois Marriage and Dissolution of Marriage Act (Act) (750 ILCS 5/508(a). In ruling on Botti Law’s petition, the trial court reasoned that the firm “was made aware of allegations that [the caregiver] was unduly influencing Sara Weber …” and therefore should have clearly recognized there was “at least a potential of a conflict” between Mrs. Weber and her caregiver.

The trial court concluded, there was “… no doubt that there was a conflict between Sara Weber and Mary Barton …” and decided the conflict arose when Botti Law filed its appearance on behalf of the caregiver on June 12, 2016. The court asserted that this action violated the Illinois Rule of Professional Conduct 1.7. Because the firm violated Rule 1.7, Botti Law was barred from collecting any billings after June 13, 2016. The trial court added that Botti Law’s fees were not “unreasonable, unnecessary or—and/or excessive” and that the firm would be entitled to recover its fees accrued through June 12, 2016.

On appeal, the Appellate Court disagreed. The Court held that disciplinary proceedings are the only appropriate forum for enforcing the Illinois Rules of Professional Conduct. The Court reasoned that disciplinary proceedings provide attorneys with protections not available in district courts including due process protections (e.g., removal of evidentiary obstacles like the Dead-Man’s Act) and a heighten burden of proof. As the Court summarized: “Again, the focus therein is on the ARDC proving attorney misconduct, and the burden is not on the attorney to prove that he or she did not commit misconduct.” In re Est. of Weber, 2021 IL App (2d) 200354, ¶ 28. In scolding the trial court, the Appellate Court stated:

This case is precisely the type of case that subverts the purpose behind the Rules. See Ill. R. Prof’l Conduct (2010), Scope ¶ 20 (eff. Jan. 1, 2010). The trial court’s decision completely violates the supreme court’s stated philosophy behind the Rules: “The fact that a Rule is a just basis for a lawyer’s self-assessment, or for sanctioning a lawyer under the administration of a disciplinary authority, does not imply that an antagonist in a collateral proceeding or transaction has standing to seek enforcement of the Rule.” Id. In re Est. of Weber, 2021 IL App (2d) 200354, ¶ 24.

The Court remanded the case with directions to enter judgment in favor of Botti Law on all of its claimed fees.

In re: Estate of Sara C. Weber, Deceased, 2021 Il App. (2nd) 200354

(This is for informational purposes only and not legal advice.)

Legal Malpractice Claims Require Damages

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An Illinois Appellate Court held that a legal malpractice claim cannot be proven without a showing of damages.  RealWheels Corp. v. John Crossan, 2021 IL App (1st) 120809-U. RealWheels Corporation (“RealWheels”) sued attorney John Crossan for legal malpractice claiming that Crossan was responsible for its failure to patent a “twist and lock” wheel cover. According to RealWheels, Crossan filed a provisional patent application and promised to remind RealWheels to file a regular patent the following year. Crossan then retired and did not communicate with RealWheels regarding the regular patent.  Having missed the regular patent deadline, RealWheels lost the ability to patent its wheel cover. In Crossan’s motion for summary judgment, he argued that RealWheels could not prove that anyone had copied its invention, that it was unsuccessful in selling the invention, and that it experienced a significant decrease in sales of the wheel covers long before the patent issue.  RealWheels provided no evidence to rebut Crossan’s claims.  Therefore the circuit court granted his motion.  The Appellate Court affirmed.

RealWheels Corporation v. John Crossan, 2021 IL App (1st) 120809-U

Illinois Legal Malpractice and Defense of Lawyers Blog — Novack and Macey LLP

(This is for informational purposes only and not legal advice.)

Northern District of Illinois Grants Motion to Dismiss On Statute of Limitations Grounds

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The Northern District of Illinois granted a motion to dismiss a legal malpractice claim on statute of limitations grounds.   The plaintiff alleged that his lawyer negligently failed to advise him that a settlement agreement with his former employer would adversely affect his pension.

The court held that the plaintiff’s malpractice claim accrued when he signed the settlement agreement.  Because that was more than six years before he filed suit, his malpractice claim was barred by the statute of repose.

The court held that because the plaintiff did not allege that the lawyer purposefully misled him or that he could not have discovered the truth, his complaint was not saved by the fraudulent concealment or equitable estoppel doctrines.

William Saunders v. Michael S. Hedrick; 2021 WL 63370

Illinois Legal Malpractice and Defense of Lawyers Blog — Novack and Macey LLP

(This is for informational purposes only and not legal advice.)

Clients Can Recover Punitive Damages From Their Attorneys

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As a matter of first impression, the Fifth District Appellate Court held that punitive damages assessed against a litigant that were proximately caused by an attorney’s professional negligence can be recovered as compensatory damages in a subsequent legal malpractice case. Midwest Sanitary Serv., Inc. v. Sandberg, Phoenix & Von Gontard, P.C., 2021 IL App (5th) 190360. In Midwest, the plaintiff brought a legal malpractice claim against the law firm Sandberg, Phoenix & Von Gontard, P.C. (“Sandberg”) asserting that it negligently managed a wrongful termination case and that “but for” Sandberg’s actions the jury would not have awarded punitive damages. The Court reasoned that Illinois’ prohibition on punitive damages in legal malpractice cases does not apply to these facts. 735 Ill. Comp. Stat. Ann. 5/2-1115. The Court distinguished Tri-G, Inc. v. Burke Bosselman & Weaver, 222 Ill. 2d 218 (2006), in which the Supreme Court held that an unsuccessful plaintiff cannot recover wrongfully “lost” punitive damages in a subsequent malpractice action because the bases for denying lost punitive damages did not apply to wrongfully incurred punitive damages. The court held that allowing recovery of the punitive damages is the only way to compensate the plaintiff for its total out-of-pocket losses and must be permitted.

Midwest Sanitary Services, Inc. v. Sandberg, Phoenix & Von, 2021 IL App (5th) 190360

Illinois Legal Malpractice and Defense of Lawyers Blog — Novack and Macey LLP

(This is for informational purposes only and not legal advice.)

Third District Reverses Dismissal of Legal Malpractice Claim

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The Third District reversed the dismissal of a legal malpractice claim that the trial court had dismissed on collateral estoppel grounds.  The trial court held that collateral estoppel barred the claim due to the dismissal of a related federal court action.

The appellate court held that because some of the alleged acts of malpractice occurred prior to the plaintiffs consent to certain actions (which was the basis for dismissal in the federal court) collateral estoppel did not bar the action.

The court held that the statute of limitations also did not justify dismissing the action.   When the savings statue (which tolls the statute of limitations while a federal action is pending) was considered, plaintiff adequately alleged that he did not know of the malpractice more than two years prior to filing suit.

David Bielfeldt and Karen Wales v. Lee Graves, Elm One Call Locators, Inc. and Graves Law Offices, P.C.,
2021 IL App (3d) 20118-U

(This is for informational purposes only and not legal advice.)

Claim Barred By Statute of Repose Despite Alleged Fraudulent Concealment

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In 2019 plaintiff brought a legal malpractice claim against the lawyer who represented her in connection with her divorce, which was finalized in 2013. Plaintiff alleged that, in 2013, she was assured she would receive “permanent” maintenance from her husband. When her husband retired, however, maintenance stopped. Plaintiff alleged that she contacted her lawyer in 2017 and was reassured that her maintenance was permanent. She filed suit in 2019.

The circuit court dismissed on statute of limitations and statute of repose grounds.  The appellate court affirmed.

The court held that the lawyer’s “last act” of representation occurred in 2013, when the allegedly defective marital settlement agreement and divorce judgment were entered. Therefore, the six year statute of repose barred the claim.

The court held that the lawyer’s alleged continuing representation in 2017 did not toll the statute of repose because Illinois does not recognize the continuous representation doctrine. The court held that the lawyer’s alleged fraudulent concealment did not save plaintiff’s claim.   Plaintiff had actual knowledge of her claim in 2017 when another lawyer advised her she may have a claim.   At that time, 14 months remained within the statute of repose.   Because there was a reasonable amount of time left in the limitations period, she would not be give the benefit of the five year fraudulent concealment statute.

Christine Dema v. Corine O’Hara and Shuflit & O’Hara, 2021 IL App (1st) 201003-U

(This is for informational purposes only and not legal advice.)

First District Reverses Dismissal on Statute of Limitations Grounds

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The First District reversed the dismissal of a legal malpractice claim on statute of limitations grounds.

Plaintiff argued that the law firm that represented his mother failed to properly assess her mental capacity when it helped her change her estate plan at the behest of his brother.  Consequently, when he was appointed her guardian, he had to expend funds to correct the estate plan.

The law firm moved to dismiss on statute of limitations grounds and argued that plaintiff was aware of wrongdoing more than two years prior to filing suit because he knew of his brother’s alleged undue influence.  The court held that there was an issue of fact whether plaintiff’s knowledge of his brother’s wrongdoing put him on inquiry notice of the law firm’s wrongdoing.  The court also held that the mother’s claims were tolled while she suffered from a disability, even though her son held her power of attorney, allegedly knew of her claims and could have brought suit on her behalf.

P. Andrew Katz, Individually and as Limited Guardian for the Estate of Alyce K. Newman v. Michael Hartz, Elizabeth Kreasy, and Katten Muchin Rosenman, LLP; 2021 IL App (1st) 200331

(This is for informational purposes only and not legal advice.)

Duplicative Breach of Fiduciary Duty Claim Dismissed

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The Northern District of Illinois dismissed a count of a complaint for breach of fiduciary duty that duplicated a claim for legal malpractice. The plaintiff alleged that the counts alleged different acts of wrongdoing,  but the court held that the plaintiff could not avoid the rule against pleading duplicative claims by arbitrarily assigning some facts to the breach of fiduciary duty count and some to the malpractice count.  Because all of the facts supported the malpractice claim, they were duplicative.

DD, Karma LLC v. John Paniaguas, 2021 WL 1239198

(This is for informational purposes only and not legal advice.)

Summary Judgment Dismissed Because Damages Speculative Until Judgment Entered

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The First District reversed the grant of summary judgment on statute of limitations grounds.   The trial court held that plaintiffs had suffered injury  and knew it when they paid fees to a new lawyer to correct the allegedly negligent lawyers work.  The Appellate Court held that the plaintiff’s injury was speculative until a judgment was entered against him in the underlying action.

Suburban Real Estate Services, Inc. and Bryan Barus v. William Roger Carlson Jr. and Carlson Partners, Ltd., 2020 IL App (1st) 191953

Illinois Legal Malpractice and Defense of Lawyers Blog — Novack and Macey LLP

(This is for informational purposes only and not legal advice.)

Malpractice Defendants Claim For Contribution From Second Lawyer Rejected

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The appellate court affirmed the dismissal of a third party claim for contribution brought by a legal malpractice defendant (who advised the malpractice plaintiff regarding a corporate reorganization) against another lawyer who advised the malpractice plaintiff about litigation growing out of the reorganization. 

The court noted that, under Illinois’ Joint Tortfeasor Contribution Act, a tortfeasor who is liable to a plaintiff for the “same injury to person or property” as a defendant can be liable in contribution to that defendant.  In this case, the court held that the malpractice plaintiff’s injury had already occurred at the time the second lawyer was retained.   Therefore, the second lawyer did not cause the same injury as the first lawyer.   The court rejected arguments that the second lawyer aggravated or increased the plaintiff’s injury.

Midwest Mailing & Shipping Systems, Inc. v. Schoenberg, Finkel, Newman & Rosenberg, LLC, 2021 IL App (1st) 200669

(This is for informational purposes only and not legal advice.)