Case Within a Case

Missing Out on a Possible Jury Instruction is Insufficient to Allege Causation

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Attorney Brian LaFlamme (“LaFlamme”) represented Durwyn Talley (“Talley”), an inmate with the Illinois Department of Corrections, in a civil rights action related to the conditions Talley endured at a correctional center.  Talley sued LaFlamme and the partners of his law firm for legal malpractice in that LaFlamme failed to seek discovery related to one of Talley’s most important grievances.  LaFlamme moved to dismiss for failure to state a claim.

In his motion, LaFlamme argued that Talley did not sufficiently allege causation.  The Court explained that a “plaintiff must set forth a plausible statement not only that a breach of duty occurred but that the breach caused the plaintiff to lose a valid claim or defense in the underlying action and that, absent that loss, the underlying claim would have been successful.”  Id. at 3.  Talley asserted that had LaFlamme tried to obtain “needed discovery on all issues… a negative inference jury instruction as to those issues, would’ve been given against them on those claims.”  Id.  However, this alone was not enough to properly allege that the requested discovery would have led to Talley’s success at trial. Moreover, the record showed that the most recent scheduling order required discovery to be complete more than a month before LaFlamme entered his appearance. Talley also admitted in his complaint that “he repeatedly sought discovery on all claims… before LaFlamme was appointed” to represent him.  Id. at 3.  Consequently, LaFlamme’s motion to dismiss was granted.

Talley v.  LaFlamme, No. 3:19-CV-01359-NJR, 2020 WL 2308258 (S.D. Ill. May 8, 2020)

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

Breach of the Standard of Care Must be the Proximate Cause

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Richard Sharif (“Sharif”) sued his former attorney, William Stevens (“Stevens”), for legal malpractice in an underlying matter.  He alleged that Stevens failed to comply with discovery and failed to properly raise arguments that would have resulted in a more favorable outcome.  The United States District Court for the Northern District of Illinois ruled in Stevens’ favor on all counts.  With respect to discovery, Sharif accused Stevens of not producing documents that Sharif tendered to him.  Here, the District Court held that Sharif was actually to blame because he “did not give Stevens certain documents that should have been given to him.”  Id. at 3.  As to whether Stevens should have raised a particular argument, the Northern District found that Stevens had violated the standard of care owed to Sharif.  However, the District Court still had to consider whether the court in the underlying matter “would have decided […] differently had the issue been properly raised.”  Id.  at 5.  This is because a successful claim for malpractice requires that a plaintiff establish “but for the negligence of the attorney, the plaintiff would not have suffered actual damages.”  Id. at 2.  On that point, Sharif made “no argument that a reasonable court would have made a different decision.”  Id. at 5.

Stevens v. Sharif, No. 15 C 1405, 2019 WL 4862171 (N.D. Ill. Sept. 30, 2019)

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

 

No Proximate Causation for Alleged Malpractice in an Unwinnable Case

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Debra and William Elam (“Plaintiffs”) hired the law firm O’Connor & Nakos, Ltd. and attorney Daniel V. O’Connor (“Defendants”) to represent them in a wrongful death action against several entities following the death of their daughter.  Once the underlying matter settled, Plaintiffs sued Defendants for alleged failure to investigate their claim, conduct discovery, and plead certain theories of liability.  Plaintiffs argued that they would have recovered more from one of the defendant entities, Live Nation Worldwide, Inc.,  but for Defendants’ malpractice.  The Trial Court granted Defendants’ motion for summary judgment, and Plaintiffs appealed.  The Appellate Court of Illinois, First District, affirmed.  It explained that, “in malpractice cases based upon the attorney’s conduct during litigation, i.e., the prosecution or defense of a prior claim, a plaintiff must generally prove a case-within-a-case to establish proximate cause.”  Id. at ¶ 24.  Here, the Appellate Court found that “as a matter of law, plaintiffs could not have prevailed against Live Nation” in their underlying matter.  Id. at ¶ 37.  Therefore, Plaintiffs could not establish that they suffered an injury “as a proximate result” of Defendants’ alleged malpractice.  Id. at ¶ 24.

Elam v. O’Connor & Nakos, Ltd., 2019 IL App (1st) 181123

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

Conspiracy Requires Knowing the Co-Conspirators, Malpractice Requires Knowing the Underlying Outcome

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Natalja Vildziuniene (“Vildziuniene”) sued attorney Bradley Foreman (“Foreman”) for conspiracy to commit fraud and legal malpractice.  Specifically, she alleged that Foreman conspired to defraud her, breached the duty of care, and represented her in various court proceedings without her knowledge.  Foreman moved successfully to dismiss these counts and Vildziuniene appealed.  The Appellate Court of Illinois, First District, affirmed.  With respect to the conspiracy to commit fraud, it stated that Vildziuniene’s accusations were a “mere characterization of acts as a conspiracy.” Id. at ¶47.  Moreover, “there were no allegations that Foreman knew the other defendants, spoke with the other defendants, or knew anything about the allegedly fraudulent purpose behind these” supposedly fraudulent transactions.  Id. at ¶50.  Regarding the alleged malpractice, the Appellate Court noted that “there are no allegations as to what happened in any of the cases in that Foreman allegedly represented plaintiff” such as whether Vildziuniene even prevailed in those matters.  Id. at ¶54.  It was therefore impossible to ascertain whether she would have prevailed in the underlying actions but for Foreman’s negligence.

Vildziuniene v. Rieff, 2019 IL App (1st) 181324-U

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

Speculation in Determining Causation: First District Holds Testimony as to What a Witness Would Have Done Absent Attorney’s Alleged Malpractice is Admissible

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The National League of Professional Baseball Teams (the “League”) hired the law firm Gozdecki, Del Giudice, Americus & Farkas, LLP (“GDAF”) to draft its operating agreement (the “Agreement”).  The League asserts that the Agreement was supposed to contain a $1 million liquidated damages provision to be imposed on teams that voluntarily withdrew from the League.   However, no such provision was included.  Rather, the final version of Agreement contained a provision for involuntary expulsion of a team, which included a $1 million liquidated damages penalty.  When four of the League’s eight teams chose to join a rival organization, the League suffered “devastating financial losses and eventually, the league ceased operations.”  Id. at ¶5.  The League sued GDAF for malpractice, seeking the $4 million dollars it should have been able to collect from the departing teams, but for GDAF’s alleged malpractice in drafting the Agreement.

At trial, the parties vigorously contested the type of exit fee provision the owners intended. The owners of two departing teams testified that they “would not have signed an agreement containing an exit fee provision.”  Id. at ¶32.  The League objected to the testimony, but was overruled. After the jury returned a verdict in favor of GDAF, the League appealed. Among other things, the League argued that the trial court erred in allowing the speculative testimony from two departing team owners as to what they would have done concerning an agreement that did not yet exist: an alleged violation of Illinois Rules of Evidence 602 and 701.  Id. at ¶36.  The Appellate Court disagreed, explaining that “to determine whether defendants committed malpractice by failing to include an automatic exit fee provision in the agreement, the jury had to consider the parties’ intent regarding exit fees.”  Id. at ¶38.  It added that the League “has not cited any authority stating that evidence of such intent cannot be relevant or admissible just because the parties did not have an actual agreement containing the disputed provision.” Id.

N. League of Prof’l Baseball Teams v. Gozdecki, Del Giudice, Americus & Farkas, LLP

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

Layne v. Feda 2018 IL App (2d) 170924-U

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Plaintiffs, Rhonda Layne and Louis Iacovelli, retained defendants, William Feda, Timothy Mahoney, and McNamee and Mahoney, LTD, to represent them in a lawsuit against Adoption Ark and two of its employees.  The plaintiffs allege that Adoption Ark, an adoption service, rescinded its authorization for plaintiffs to adopt a child through them on suspicion of Layne’s mental unfitness, despite Layne twice being deemed fit for parenthood by a psychiatrist.  The plaintiffs sued Adoption Ark, but lost on summary judgment.  They then sued the defendants for legal malpractice, alleging that the defendants had failed to file a timely post summary judgment motion to amend the complaint against Adoption Ark with new legal theories.  The defendants filed a motion to dismiss with prejudice for failure to plead sufficient facts to establish a cause of action, which the trial court granted.

On appeal, the plaintiffs argue that they did plead facts sufficient to show that they would have won on five different causes of action against Adoption Ark if the defendants had brought them.  Id. at ¶ 15.  The appellate court disagreed with respect to all potential claims, noting throughout their decision a “lack of specific allegations” and that the “conclusory” complaint “is not pled with… particularity and specificity.”  Id. at ¶ 29, 32, 33.  With respect to some of the facts the plaintiffs did provide, the Court described them as “mere characterization of a combination of acts.”  Id. at ¶ 35.

Layne v. Feda, 2018 IL App (2d) 170924-U

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

Nelson v. Quarles & Brady, LLP , 2018 IL App (1st) 171653

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Kenneth Nelson hired Quarles & Brady, LLP (“QB”) to represent him in a breach of oral contract dispute against Richard Curia, the general manager of Nelson’s two automobile dealerships.  Summary judgment was granted in that case, requiring Nelson to sell shares of one dealership to Curia.  Nelson appealed, discharged QB, and then hired new counsel.  The Seventh Circuit reversed the district court’s summary judgment ruling, after which Nelson settled with Curia and sued QB for legal malpractice.  After amendment, dismissal, appeal, and remand, Nelson filed the instant complaint against QB.

In it, Nelson sought to establish proximate causation by proving the case within the case, i.e., that but for QB’s negligent failure to investigate and raise certain arguments, he would have prevailed in the underlying oral contract dispute.  The district court disagreed with this assertion, and the appellate court affirmed.  In its decision, the appellate court held that Nelson “failed to establish even the existence of a contract,” let alone that there was something QB should have done to save his case.  Id. at 143.

Nelson v. Quarles & Brady, LLP , 2018 IL App (1st) 171653

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

Lurie v. Wolin , 2017 IL App (1st) 161571

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In this unusual case, the First District addressed a situation where it had previously reversed an order of dismissal and found that a complaint stated a claim for legal malpractice. The plaintiffs, an escrow company and its principals, sued their first attorney for legal malpractice related to advice given over how to address embezzlement of company funds by the CFO. The trial court dismissed the original malpractice complaint without prejudice with leave to file an amended complaint by a date certain. Plaintiffs did not file an amended complaint by that date, and the court dismissed the complaint with prejudice. Subsequently, the plaintiffs’ malpractice attorney (their second attorney overall) filed a motion to reconsider the order dismissing the complaint and included an amended complaint that purported to have a file stamp before the court’s original deadline. In their response to the motion to reconsider, defendants attached certified copies of the official docket sheets for the case showing that neither the amended complaint nor the motion for reconsideration had been timely filed.

The trial court noted the inconsistency in the court records and documents submitted by the plaintiffs’ malpractice attorney, but concluded that it could not believe that plaintiffs’ malpractice attorney “would attempt to do anything not consistent with the court rules.” Accordingly, the court granted the motion to reconsider and set aside the earlier order dismissing the case with prejudice. Defendants then filed a motion to dismiss the amended complaint on substantive grounds, which the court granted with prejudice. Plaintiffs appealed and the First District reversed the dismissal. In the course of these events, Plaintiffs also hired new counsel (their third attorney overall).

Plaintiffs original malpractice counsel (their second attorney overall) was later disbarred for misconduct that included submitting a falsified email notice of filing in the Northern District of Illinois.

On remand, the trial court held an evidentiary hearing to determine whether plaintiffs’ malpractice attorney had falsified the time stamps on the amended complaint and motion to reconsider. Defendants also argued that the trial court lost jurisdiction over the case when plaintiffs failed to file a timely motion to reconsider. Plaintiffs argued that the court’s previous ruling on the jurisdictional issue (granting the motion to reconsider and setting aside the dismissal order) became the law of the case following the First District’s reversal of the trial’s court’s order dismissing the case. The trial court ultimately held that the law of the case did not bar reconsideration of this issue because of a “significant change in circumstances” – the malpractice attorney was found guilty of falsifying court documents and lying to judges. The trial court concluded that it lost jurisdiction to take any action after plaintiffs missed the deadline for filing their motion to reconsider, vacated all orders entered after that date, and dismissed the case with prejudice.

On the second appeal, the First District held that its prior order finding that the complaint stated a claim for legal malpractice had become the law of the case, even with respect to the jurisdictional issue. Nonetheless, the Court held that the law of the case doctrine was not a limitation on its power to revisit an issue where the facts had changed or where the initial decision was “clearly erroneous and would work a manifest injustice.” Indeed, the Court found that a court may depart from the law of the case in numerous circumstances, including to remedy a fraud on the court. Thus, because plaintiffs’ malpractice attorney had perpetrated a fraud on the court, the Court exercised its discretion to consider the jurisdictional issue and affirmed the dismissal of the case.

This case is very interesting in its own right, but it raises another interesting question. What would the Lurie plaintiffs need to do to win a legal malpractice claim against the malpractice attorney who falsified documents? A number of “double malpractice” cases address the situation where a lawyer retained to prosecute a complaint against another lawyer is accused of malpractice. See, e.g., McKnight v. Dean, 270 F.3d 513 (7th Cir. 2001); Rodi v. Horstman, 2015 IL App (1st) 142787. In these cases (and others), the courts make clear that the traditional elements of a malpractice case must be proved as to both underlying cases. For example, in McKnight v. Dean, the 7th Circuit affirmed summary judgment on a legal malpractice claim. There, the plaintiff sued his attorney in a lawsuit against his former employer. He ultimately settled this malpractice suit for $765,000, but later claimed that the attorney who represented him in the malpractice suit himself committed malpractice in the advice he gave about the settlement. The plaintiff then sued that attorney for malpractice. The court granted summary judgment and the 7th Circuit affirmed, finding that the plaintiff failed to show that, had it not been for the attorney’s alleged negligence related to the settlement, the plaintiff could have expected to obtain more than $765,000 in his original lawsuit. 270 F.3d at 520. In Rodi v. Horstman, the First District affirmed summary judgment and held that because the first malpractice case was bared by the statute of limitations, the second lawyer’s failure to file a timely notice of appeal from its dismissal did not cause any loss. 2015 IL App (1st) 142787, ¶ 40. A district court case from D.C. put the requirement into words with which legal malpractice lawyers are familiar when it stated that in a double malpractice case, the court must consider the “case within the case within the case.” Edelberg v. Roberts, No. Civ. A. 04-1992 (JDB), 2005 WL 1006000, at *4 (D.D.C. April 29, 2005).

Turning back to the Lurie case with this guidance, it seems that to win a malpractice case against the disbarred malpractice attorney, the plaintiffs would not only need to show that he breached the standard of care (which seems somewhat obvious), but also that they would have been successful in that malpractice action (and, by extension, in the underlying matter) had their first attorney not committed malpractice.

Lurie v. Wolin, 2017 IL App (1st) 161571

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

Laurent v. Johnson

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The Third District affirmed the grant of summary judgment in a legal malpractice case.  The court held that plaintiff had no evidence that she would have been successful in the underlying case within a case but for the legal malpractice because she failed to satisfy the “discrepancy rule” for an insurance case.  The court also held that there was no evidence that the settlement of the underlying case was depressed by the alleged malpractice because the plaintiff settled her underlying case before the court dismissed it.  Thus, there was no evidence of either causation or damage.

Laurent v. Johnson, 2017 IL App (3d) 160627

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

Cwik v. Law Offices of Jonathan Merel, P.C.

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In this unpublished order, the First District held that the plaintiff had failed to allege that he would have won his underlying petitions but for the defendant lawyer’s malpractice.   The court held it was not enough for the plaintiff to allege that he would have defeated the underlying defendant’s motions to dismiss but for the lawyer’s negligence, he needed to allege that he ultimately would have succeeded on the petitions themselves.

Cwik v. Law Offices of Jonathan Merel, P.C., 2017 IL App (1st) 153143-U

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