Legal Malpractice

Recovery of Punitive Damages is Fair Game in Illinois Legal Malpractice Cases

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On September 22, 2022, the Illinois Supreme Court recently tackled the following question:

Does Illinois’ public policy on punitive damages and/or the statutory prohibition on punitive damages found in 735 ILCS 5/2-1115 bar recovery of incurred punitive damages in a legal malpractice case where the client alleges that, but for the negligence of the attorney in the underlying case, the jury in the underlying case would have returned a verdict awarding either no punitive damages or punitive damages in a lesser sum?

In Midwest Sanitary Serv., Inc. v. Sandberg, Phoenix & Von Gontard, P.C., 2022 IL 127327, the Court held the answer was no and that a legal malpractice plaintiff can recover punitive damages awarded against it.

In Midwest Sanitary Serv., Inc. v. Sandberg, Phoenix & Von Gontard, P.C., the plaintiffs, Nancy Donovan, Bob Evans Sr., and Midwest Sanitary Service, Inc. (“Midwest”) (collectively, “Plaintiffs”), filed a legal malpractice action in the circuit court of Madison County against their former attorneys, John Gilbert, Narcisa Symank, and the law firm of Sandberg, Phoenix, & Von Gontard, P.C. (“Sandberg P.C.”).   Plaintiffs alleged that Sandberg P.C.’s negligence in defending them in a retaliatory discharge action resulted in them paying $625,000 in punitive damages.

In response, Sandberg P.C. filed a motion to dismiss the complaint arguing that Plaintiffs’ request for punitive damages violated section 2-1115 of the Illinois Code of Civil Procedure and Illinois public policy.  Midwest Sanitary Serv., Inc. v. Sandberg, Phoenix & Von Gontard, P.C., 2022 IL 127327, ¶ 9.  The circuit court denied the motion, finding that Plaintiffs’ request to recover the punitive damages it paid in the underlying action did not violate the Code or public policy.  Id.  On August 9, 2019, the circuit court granted Sandberg P.C.’s motion to certify for immediate appeal.  On April 28, 2021, the appellate court answered the certified question in the negative, affirmed the judgment of the circuit court, and held that Midwest was not barred from recovering the punitive damages it paid in the underlying matter.

Section 2-1115 provides, in pertinent part, “In all cases, whether in tort, contract or otherwise, in which the plaintiff seeks damages by reason of legal… malpractice, no punitive…damages shall be allowed.”  Id. at ¶ 23.  The Supreme Court reasoned that the intent of the statute was to ensure that plaintiffs could not seek to punish their attorneys for their alleged misfeasance or nonfeasance.  Id. at ¶ 27.  Here, the Supreme Court held that Plaintiffs were not seeking to punish their former attorneys for their acts of negligence, but rather were seeking to be compensated for their entire loss caused by the legal malpractice.  Id. at ¶ 28. 

The Supreme Court then explained that its holding did not alter or otherwise change prior decisions which held that “lost punitive damages could not be recovered in legal malpractice actions for several reasons.”  Id. at ¶ 30.  The distinguished the speculative lost punitive from the definite and finite award of punitive damages.

In support of its holding the Supreme Court citied cases from the Supreme Court of Kanas and the Colorado Court of Appeals.  See Hunt v. Dresie, 241 Kan. 647, 740 P.2d 1046 (1987); Scognamillo v. Olsen, 795 P.2d 1357 (Colo. App. 1990).

Midwest Sanitary Serv., Inc. v. Phoenix & Von Gontard, P.C., 2022 IL 127327.

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

Winning Isn’t Everything:  A Prevailing Party Need Only Be Successful On A Significant Issue

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On August 22, 2022, the Appellate Court of Illinois, First District overturned the trial court’s decision to dismiss Plaintiff Brad M. Gold’s (“Gold”) legal malpractice claim against Defendants Carpenter, Lipps & Leland, LLP and Josh Goldberg (“Carpenter LLP”). Gold v. Carpenter, Lipps & Leland, LLP, 2022 IL App (1st) 210510-U, ¶ 1.

In September 2016, Gold, represented by Carpenter LLP, sued his family-owned business Adams Foam Rubber Co. (“Adams Foam”) and several family members for shareholder oppression seeking, among other things, the repurchase of his shares at a fair price (the “Underlying Matter”). The suit came after Gold was removed as a director of Adams Foam and forced out of the company. The Adams Foam defendants filed multiple counterclaims against Gold, including breach of fiduciary duty, declaratory judgement, and rescission of a shareholder agreement.

After a joint bench and jury trial, no clear winner emerged. The jury returned a verdict in favor of Gold for breach of an oral agreement and on his defamation claim. Id. at ¶ 8. The jury also found in favor of Gold on the Adams Foam defendants’ counterclaim for conversion. Id. Count V was entered in favor of the Adams Foam defendants. Id. The court also entered a directed verdict in favor of Gold’s father and brother on count VI. Id.

In the memorandum and opinion entered on March 18, 2019, the trial court ruled on the remaining claims. The court found that there was “no shareholder oppression under the [Business Corporations Act], but Gold was not fired ‘for cause,’ so he was entitled to buyback of his shares at ‘fair market value’ pursuant to the shareholders’ agreement, not the ‘book value’ he received. As per the procedure set out in the shareholders’ agreement, the trial court ordered that fair market value was to be determined by an independent appraiser.” Id. at ¶ 9. The trial court ruled in favor of the Adams Foam defendants on the remaining counts of Gold’s complaint and ruled in favor of Gold on the remaining counterclaims. Id.

On April 16, 2019 and April 17, 2019, Gold filed a motion for reconsideration of the trial court’s order as well as a motion for appeal, respectively. Id. at ¶ 10. The trial court denied Gold’s motion for reconsideration, but clarified the procedure for evaluating the value of Gold’s shares. Id. On October 4, 2019, Gold filed a motion for attorney fees pursuant to Adams Foam’s shareholder agreement. Id.

On October 11, 2019, Gold withdrew his October 4, 2019 fee petition and filed a motion for fees and motion to stay. The Adams Foam defendants objected to Gold’s refiled fee petition as untimely. On October 31, 2019, the trial court held that it lacked jurisdiction over Gold’s petition because it was not filed within 30 days of the judgment.

On April 20, 2020, Gold sued Carpenter LLP for legal malpractice, alleging that his former attorneys knew, or should have known, that upon withdrawal of his October 4th petition for attorney fees, the Circuit Court lost jurisdiction over the lawsuit and that they “breached the standard of care” by withdrawing that petition. Id. at ¶ 12. Gold’s complaint alleges that “[o]n October 31, 2019, Judge Shelley ruled that she lacked jurisdiction over the attorney fee claim because it was not filed within 30 days of the judgment.” Id. at ¶ 11. Gold’s complaint further claimed that he was entitled to attorney fees as the prevailing party in the Underlying Matter and “[b]ut for the breach of the standard of care, [he] would have prevailed on the attorney fee claim.” Id. at ¶ 12. In response, Carpenter LLP filed a motion to dismiss in which the firm claimed that Gold could not prove damages because he was not the “prevailing party” in the Underlying Matter. Id. at ¶ 13.

The trial court subsequently dismissed Gold’s legal malpractice complaint with prejudice. Id. at ¶ 14. The court found that the circuit court in the underlying matter was revested with jurisdiction to hear a fee petition, pursuant to Illinois Supreme Court Rule 369(b), once the mandate was returned from the appellate court and that Judge Shelley had declined “to award attorney fees to plaintiff in the underlying matter.” Id.

On January 19, 2021, Gold filed a petition to vacate the judgment and requested leave to file an amended complaint. Id. at ¶ 15. The court denied Gold’s petition finding he was not the prevailing party as a matter of law in the Underlying Matter. Id.

On appeal, Gold argued that the trial court erred in dismissing his complaint because he “brought suit and prevailed on the significant issues related to the shareholders’ agreement, so he was the prevailing party in the litigation.” Id. at ¶ 17 (internal citations omitted). The Appellate Court agreed.

A prevailing party, for purposes of awarding attorney fees, is one that is successful on a significant issue and achieves some benefit in bringing suit. J.B. Esker & Sons, Inc. v. Cle-Pa’s Partnership, 325 Ill. App. 3d 276, 280 (2001). A litigant is still considered a prevailing party even if the judgment is below the amount claimed or if they did not prevail on every claim. Powers, 326 Ill. App. 3d at 515. However, where a dispute involves multiple claims and both parties have won and lost on different claims, it may be inappropriate to find that either party is the prevailing party and an award of attorney fees to either is inappropriate. Oak Forest Properties, LLC, 2018 IL App (1st) 161704, ¶ 13 (quoting Timan v. Ourada, 2012 IL App (2d) 100834, ¶ 29).

Id. at ¶ 21.

The Appellate Court also rejected Carpenter LLP’s argument that the trial court adjudicated the fee petition once revested with jurisdiction pursuant to Illinois Supreme Court Rule 369(b). Instead, the Appellate Court found that the trial court incorrectly stated that it did not have jurisdiction. Given that Gold was the prevailing party, he should have been permitted to amend his complaint.

Gold v. Carpenter, Lipps & Leland, LLP, 2022 IL App (1st) 210510-U

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

Legal Malpractice Claims Begin to Accrue When It Is “Plainly Obvious” The Plaintiff Has Been Injured

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On June 23, 2022, the United States District Court for the Northern District of Illinois dismissed Plaintiffs’, Container Direct International Future, Inc., Concepts Design Innovation Furniture, Inc., Concepts Design Furniture, Inc., Comptoir Des Indes, and David Quaknine, legal malpractice claim with prejudice. Container Direct Int’l Furniture, Inc. v. Fisher & Broyles LLP, No. 22 C 1086, 2022 WL 2257129, at *1 (N.D. Ill. June 23, 2022). The Complaint alleged that Defendants, Alastair Warr and the law firm of Fisher & Broyles LLP, committed legal malpractice in connection with an intellectual property case filed against Plaintiffs. More specifically, the Complaint claimed that the Defendants failed to carefully review Plaintiffs’ insurance policy, failed to advise Plaintiffs they should make an insurance claim, and failed to advise Plaintiffs to obtain coverage counsel, among other things. Id.

Defendants began representing Plaintiffs in the underlying intellectual property case on March 18, 2016, nearly two years after the litigation commenced. Id. at *2. Plaintiffs alleged that they informed Defendants that they had insurance coverage, and that it might cover the litigation costs. Id. Plaintiffs further alleged that Defendants did not ask for a copy of the policy, did not review the policy, but advised them that any claim would be denied. Id. On January 29, 2018, a jury found Plaintiffs liable for trademark, patent and copyright infringement and entered a damage award of $3,559,284.

Defendants withdrew from representing Plaintiffs in February 2019. Plaintiffs then retained new counsel who advised Defendants to file an insurance claim. Id. Plaintiffs’ insurer denied it was liable for defense costs or indemnity on September 10, 2019. Id. Litigation with the insurance company ensued. On May 14, 2021, the Circuit Court of Cook County decided that Plaintiffs’ insurance company had no duty to indemnify or pay defense costs associated with the underlying matter because Plaintiffs failed to timely notify the insurance company of the claim. Id.

On December 17, 2021, Plaintiffs filed a legal malpractice action against Defendants. Defendants moved to dismiss on statute of limitations grounds. Defendants argued that Plaintiffs’ legal malpractice claim was time-barred because Plaintiffs knew or should have known that they were damaged by Defendants’ negligence by September 10, 2019, when their insurer disclaimed coverage. As such, Plaintiffs’ lawsuit, filed on December 17, 2021, was untimely under the two year statute of limitations. Id. In response, Plaintiffs argued that it was not until the May 2021 decision finding that the insurance company had no duty to defend hat they became aware that Defendants committed legal malpractice. They asserted that the Circuit Court’s May order made it clear that their insurance company would have been required to defend Plaintiffs in the underlying matter if Plaintiffs had timely filed their claim. The Court disagreed, describing Plaintiffs’ interpretation of the May order as “beyond a stretch.” Id. at *3.

In its opinion, the Court clarified that, while the statute of limitations for legal malpractice claims typically does not begin to run until the trial court enters a final judgment, this is not the case when the plaintiff suffers damages before the end of the litigation as a result of their attorney’s neglect. Id. at *4. Here, the Court found that Plaintiffs had “some indication of wrongdoing” when their insurer denied coverage. To be timely, Plaintiffs had to file their Complaint within two years of that date. As Plaintiffs failed to meet that deadline, the Court granted Defendants’ motion to dismiss. Id.

Container Direct Int’l Furniture, Inc. v. Fisher & Broyles LLP, No. 22 C 1086, 2022 WL 2257129

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

Defendant’s Failure to Keep Quiet Negates His Legal Malpractice Claim

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On May 12, 2022, the Appellate Court of Illinois, First District decided 3Red Grp. of Illinois, LLC v. Johnson, 2022 IL App (1st) 200593-U, ¶ 2. The opinion is the latest decision related to a complex and drawn out dispute involving former business partners, Edwin Johnson (“Johnson”) and Igor B. Oystacher (“Oystacher”), and their proprietary trading company, 3Red Group of Illinois, LLC (“3Red Group”). Id. On June 17, 2013, 3Red Group terminated Johnson’s employment, claiming he misused company funds and committed fraud. Id., ¶ 5. On August 15, 2013, the parties entered into a “Confidential Settlement Agreement and Reciprocal Release” (the “settlement agreement”) to resolve all disputes regarding Johnson’s termination. Id. “In connection with the termination of his employment, on June 27, 2014, Johnson filed a complaint for legal malpractice against the law firm of Gardiner Koch Weisberg and Wrona (“Koch Law”) (the “Koch litigation”) Id., ¶ 7. Johnson was represented by Jefferey O. Katz and The Patterson Law Firm, LLC (collectively “Patterson Law”). While represented by Patterson Law, Johnson responded to Koch Law’s motion to dismiss and attached a copy of the settlement agreement without filing it under steal in violation of the protective order entered in the case. Id.

On December 10, 2014, Oystacher and 3Red Group filed suit against Johnson alleging that he breached the settlement agreement by disclosing confidential information. Id., ¶ 2. In response, Johnson filed suit against his former attorneys, Patterson Law, arguing that they were responsible for the impermissible disclosure. The third-party complaint set forth five counts: indemnity, contribution, legal malpractice, fraud and defamation. “On May 27, 2015, the circuit court entered an order consolidating the Koch litigation and the instant litigation for discovery purposes.” Id., ¶ 9.

“The parties proceeded to engage in discovery, in which Johnson admitted that his attorneys in the Koch litigation inadvertently filed a pleading which contained the settlement agreement as an exhibit, but claimed that he had no knowledge of their actions at the time.” Id., ¶ 10. Meanwhile, Johnson failed to comply with other discovery requests – his refusals resulted in extensive litigation. Id. “[O]ver the course of the litigation, five motions for sanctions were granted, including one for attorney fees in the amount of $500 and another in the amount of $12,462, both due to Johnson’s noncompliance with the circuit court’s discovery orders.” Id. In addition to these monetary sanctions, the trial court held that Johnson’s actions demonstrated “egregious and contumacious disregard for this Court’s authority” and “barred Johnson ‘from introducing any and all evidence denying his disclosure of confidential information about Plaintiffs and the Confidential Settlement Agreement to the press, in lawsuits, or to any third party unless such disclosure was required by process of law.’” Id., ¶ 11.

On March 7, 2017, Patterson Law filed a motion to dismiss Johnson’s complaint “claiming (1) Johnson could not establish that the Patterson parties proximately caused his damages, as the damages were a direct result of Johnson’s own conduct during the litigation; (2) Johnson’s fraud and defamation claims were barred by the attorney litigation privilege and were duplicative of the legal malpractice counts; and (3) Johnson’s defamation claim was barred by the statute of limitations.” Id., ¶ 24. The trial court dismissed counts I and II with prejudice and (2) dismissed counts III, IV, and V “with leave to replead.” Id., ¶ 31. The court reasoned that because Johnson was prohibited from denying that he disclosed confidential information in violation of the settlement agreement he could not prove that Patterson Law proximately caused his damages. Id., ¶ 25. The court added: “Johnson’s behavior in discovery matters was an intervening cause breaking the chain of causation.” Id.

“On August 8, 2017, Johnson filed a motion to reconsider the dismissal of counts I and II of the third-party complaint.” Id., ¶ 33. In support of reconsideration, Johnson argued that he was in the process of appealing the discovery sanctions and therefore the court’s decision to grant the motion to dismiss was “inappropriate or, at best, premature.” Id. On December 5, 2017, the circuit court entered an order granting Johnson’s motion to reconsider in part, striking the words “with prejudice” in relation to counts I and II. Id., ¶ 34.

On January 9, 2018, Johnson filed an amended third-party complaint against Patterson Law alleging the same five counts: indemnity, contribution, legal malpractice, fraud, and defamation. Id., ¶ 36. Patterson Law again filed a motion to dismiss the complaint asserting that Johnson’s amendments did nothing to cure the defects of the original complaint. The trial court entered and continued the motion awaiting the Appellate Court’s decision regarding the sanctions imposed against Johnson. Id., ¶ 38. The Appellate Court affirmed the circuit court’s sanction order. Following that decision, on September 17, 2019, the court granted Patterson Law’s motion to dismiss the amended third-party complaint. Id. Johnson then appealed.

The Appellate Court affirmed the circuit court’s decision. In regards to the legal malpractice claim, the Appellate Court stated that in order to state a claim for legal malpractice the plaintiff must plead and prove “actual damages.” Id., ¶ 64. The Court concluded that Johnson’s amended complaint did not establish that but for Patterson Law, he would not have been “hauled into court.” Id., ¶ 65. Instead, the Court found that Plaintiffs Oystacher and 3Red Group did not just accuse Johnson of violating the settlement agreement in the Koch litigation, but rather alleged four separate violations including disclosing confidential information to the press. Id., ¶ 67. Given that the actions of Patterson Law were not the only reason Plaintiffs filed suit, he failed to state a claim for legal malpractice. The Court reasoned that Johnson’s actions were the superseding cause and he was responsible for this own damages.

3Red Group of Illinois, LLC v. Johnson, 2022 IL App (1st) 200593-U

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

A Sexually Violent Person Cannot Assert A Legal Malpractice Claim

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In Powers v. Doll, the Second District Appellate Court of Illinois held that any individual committed under the Sexually Violent Persons Commitment Act (the “Act”) cannot file a legal malpractice suit without first alleging that s/he is not actually a sexually violent person. 2022 IL App (2d) 210007.

In 2001, a jury found plaintiff Thomas Powers guilty of attempted aggravated criminal sexual assault with a weapon and he was sentenced to 25 years in prison. Powers v. Doll, 2022 IL App (2d) 210007, ¶ 3. In 2012, before Powers’s sentence was terminated, the Attorney General filed a petition to have Powers civilly committed as a sexually violent person under the Act. Id., ¶ 5. On June 20, 2012, the circuit court hearing the petition appointed the public defender’s office to represent Powers, and Assistant Public Defender (“APD”) David Doll began to represent him. Id. On June 25, 2012, a probable cause hearing was held. Dissatisfied with APD Doll’s representation, on October 11, 2012, Powers began representing himself. Id., ¶ 6. Ultimately, Powers was found to be a sexually violent person and he was committed to an Illinois Department of Human Services facility in Rushville, Illinois. Id.

On April 2, 2015, the circuit court reappointed the public defender’s office to represent Powers, presumably based on Powers’s petition for reexamination or for conditional release but the records is unclear. Id., ¶ 7 (noting the facts contained in Power’s pro se legal malpractice complaint were unclear). At this time, APD Jacob Rubin began representing Powers. Id. Unbeknownst to Powers, APD Rubin reported to now Chief Public Defender Doll. Id. On January 4, 2017, Powers “recused” APD Rubin and again elected to represent himself. Id., ¶ 9. In support of his petition, Powers obtained an evaluation by Dr. Diane Lytton, who opined that Powers was not a sexually violent person. Id.

In June 2019, APD Rubin was reappointed by the trial court for reasons that are unclear in Power’s legal malpractice complaint. Id. Regardless, the trial court determined that Powers was still a sexually violent person and he remains institutionalized in Rushville. Id., ¶ 6.

In May 2020, Powers filed a pro se complaint for legal malpractice against APD Doll and Rubin. Id., ¶ 4. The complaint, which included limited details, alleged that Doll was “completely unprepared” for the 2012 commitment probable cause hearing, failed to call an expert witness, failed to depose potential positive witnesses, and committed other errors. Id., ¶ 5. The complaint also alleged that between 2015 through 2017, APD Rubin committed legal malpractice by failing to communicate, conduct adequate research, perform discovery, follow instructions, among other errors which “caused an ongoing continuous deprivation of [Powers’s] liberty to perfect his release from unlawful detention.” Id., ¶ 8. In addition, the complaint asserted that APD Rubin also committed legal malpractice in 2020, by among other things, failing to prepare for two motion in limine hearings. Id., ¶ 9.

Subsequently, Defendants, through counsel, moved to dismiss Powers’ complaint pursuant to section 2-619 of the Code of Civil Procedure. Id., ¶ 11. Defendants alleged that the trial court lacked subject matter jurisdiction and that the complaint was time barred by the one-year limitations period applicable to county employees under section 8-101 of the Code of Civil Procedure. Id. Later, Defendants amended their motion to dismiss to include an affirmative defense of qualified immunity under the Public and Appellate Defender Immunity Act. Id., ¶ 13 (citing 745 ILCS 19/5 (West 2020) which requires immunity except for cases of willful and wanton misconduct.). The trial court granted Defendants’ motion to dismiss and held that “(1) Powers’s claims ‘up to Januarry [sic] of 2017 are barred by the statute of limitations;’ (2) Powers’s claims concerning Rubin’s representation “are dismissed as there is another case pending, [ ]12 MR 419, involving the same claims;’ and (3) ‘[d]efendants have immunity as state actors.’” Id., ¶ 14.

On review, the Appellate Court described the trial court’s order as “puzzling” and held that none of the justifications offered in support of granting the motion to dismiss were “quite right.” Id., ¶ 18. The Court questioned which statute of limitations the trial court applied; wondering if the court applied the one-year statute of limitations, which governs all actions against public employee, or if the court applied the two-year statute of limitations, which governs legal malpractice claims. Id., ¶ 13. Without stating which statute of limitations applied, the Appellate Court stated the record was unclear as to when Powers knew or should have known Defendants committed malpractice and thus the complaint could not be dismissed as time barred. Id., ¶ 19. The Appellate Court also rejected the trial court’s opinion that Powers’s complaint was bared because another case was pending. The Appellate Court held that the other case involved Powers’s indefinite civil commitment so while the facts were the same, the claims, parties and relief differed. Id., ¶ 20. Next, the Appellate Court stated that the trial court’s implication that the Defendants had absolute immunity was incorrect. Id., ¶ 21.

Nevertheless, the Appellate Court concluded that Powers’s complaint failed to state a claim for legal malpractice. Id., ¶ 23. In support of its conclusion, the Court held that Powers’s civil commitment, while a civil proceeding, was comparable to a criminal case in both the potential restriction of personal liberty and procedurally. Id., ¶ 26. The Appellate Court stated that civil commitment cases like criminal cases allow for “numerous opportunities to assert counsel’s ineffectiveness.” Id., ¶ 27. Given these similarities, the Court concluded that in order for a sexually violent person to assert a malpractice claim s/he, like any criminal defendant, must assert a claim of actual innocence. Id., ¶ 28. Because Powers did not and could not assert a claim of innocence, his malpractice claim was prohibited.

Powers v. Doll, 2022 IL App (2d) 210007

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

A Father’s Concealment Cannot Support A Legal Malpractice Claim

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On March 1, 2022, the United States District Court for the Northern District of Illinois, Eastern Division dismissed brothers and Plaintiffs Bruce, Brad and Brain Brandolino’s (collectively “Plaintiffs”) legal malpractice claim for failure to assert a plausible claim for fraudulent concealment and as time barred.  Brandolino v. Schlak, No. 19 C 0102, 2022 WL 602474, at *1 (N.D. Ill. Mar. 1, 2022). 

On January 9, 2019, Plaintiffs filed their legal malpractice suit against Defendant attorney Douglas Schlak (“Defendant”).  Id., at *2.  Plaintiffs’ complaint alleged that Defendant intentionally tricked them into selling their interest in a parcel of real property for less than fair market value in 2005.  Id.  According to the brothers, Defendant represented their father in the sale of the real property.  Their father received an offer for $1.8M for the property.  Id., at *1.  Unbeknownst to the brothers, the property was titled to  their father as a life tenant and Plaintiffs as remainder-persons.  Id.  Without knowing that they could equally split the property after their fathers’ death, the brothers each accepted a $100,000 gift for “helping their father” execute the sale.  Id. 

Defendant moved to dismiss the complaint as time barred under the statute of repose.  Id., at *2 (citing 735 Ill. Comp. Stat. Ann. 5/13-214.3(c) (“The Illinois statute of repose for legal malpractice actions provides that such actions ‘may not be commenced in any event more than 6 years after the date on which the act or omission [giving rise to the claim] occurred.’”)).  Plaintiffs argued that Defendant’s actions were fraudulent and therefore the statute of repose should be tolled.  Id.  In addressing the fraud question, the Court held that allegations of fraud can toll the statute of repose limitations period if Defendant committed affirmative acts of misrepresentations or in limited circumstances, Defendant’s fraudulent omissions.

Typically, fraudulent concealment must be more than “mere silence.”  Id., *3.  Further the Court held that these acts of concealment must be done by the defendant.  Here, the Court opined that the acts of concealment, if any, were committed by the Plaintiffs’ father, not the Defendant.  The Court also stated that Defendant’s omissions could only serve to toll the statute of limitations if Plaintiffs could prove “fraudulent concealment by ‘[p]leading specific facts demonstrating [that] either (1) greater diligence would not have caused them to discover the fraud sooner; or (2) the trust and confidence they placed in [the defendant] by virtue of their relationship prevented them from discovering the fraud any soon.”  Id.  The Court concluded that Plaintiffs could do neither.  Plaintiffs alleged that in 2005, they were only given the signature page of the closing documents and executed these contracts without requesting a complete set of the documents – no reasonable person would have done so.  Notably, the Court asserted that the brother’s failure to take any steps to obtain the closing documents was made more questionable given their status as “sophisticated businesspeople.”  Id., at *4.  Additionally, Plaintiffs could not prove the existence of a fiduciary relationship between themselves and Defendant.  Id.  As Plaintiffs could not assert a claim of fraudulent concealment and they waited 14 years to file their legal malpractice claim, the Court dismissed their complaint. 

Brandolino v. Schlak, No. 19 C 0102, 2022 WL 602474

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

Legal Malpractice Experts Must Be Reliable

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In Signal Fin. Holdings LLC v. Looking Glass Fin. LLC, the United States District Court, Northern District of Illinois, Eastern Division ruled on four motions regarding the admissibility of expert witnesses in a legal malpractice case.  No. 17 C 8816, 2022 WL 540662, at *1 (N.D. Ill. Feb. 23, 2022).  Applying Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) and the Federal Rule of Evidence 702, the Court evaluated each motion to determine if the expert evidence was both (1) relevant; and (2) reliable by a preponderance of the evidence.  Id. 

First, the Court denied Plaintiffs’ motion to limit or bar Defendants’ malpractice expert, Adrian Vuckovich (“Vuckovich”).  In support of its holding, the Court asserted that Vuckovich’s testimony was reliable “because, using his experience and knowledge, he link[ed] facts that he deem[ed] material to his conclusions about the standard of care for a reasonable attorney.”  Id.,at *2.  The Court disregarded Plaintiffs’ argument that Vuckovich “cherry-picked” the facts he used in support of his conclusions.  Instead, the Court concluded that the facts that Vuckovich chose to include were “rationally connected” to his opinion.  Id.  The Court also found Vuckovich’s opinion to be helpful to the jury as the “standard of care is an abstract concept to a non-attorney.”  Id.  Further, the Court concluded that Vuckovich’s expert testimony which cited to or quoted the Rules of Professional Responsibility did not “improperly instruct the jury on the applicable law.”  Id.,at *4.  The Court added that, “[u]se of the Rules of Professional Conduct and opinion on the relevant conduct offer some ‘concrete information’ to aid the jury in making its decision.”  Id. (internal citation omitted).  The Court also asserted that Vuckovich could offer his expert opinion on the issue of proximate cause.  Id.,at *5.  Although under Illinois law, proximate cause may be an issue of fact for a jury to decide, the Court held there was no reason why Vuckovich could not explain the facts that led to his opinion. 

Second, the Court granted Plaintiffs’ motion to bar Defendants’ legal funding expert, Gary Chodes, based on a conflict of interests.  Id.  In describing the conflict of interest test for the Northern District of Illinois the Court stated an expert should be barred if “(1) a confidential relationship existed between the party seeking disqualification of an expert, and (2) confidential information relevant to the action was exchanged.”  Id. (citing Demouchette v. Dart, No. 09 C 6016, 2012 WL 472917, at *3 (N.D. Ill. Feb. 10, 2012; U.S. Commodity Futures Trading Comm’n v. Oystacher, No. 15-CV-9196, 2015 WL 9259899, at *3 (N.D. Ill. Dec. 18, 2015).  The  Court added that courts should also balance policy concerns and bar experts on when “absolutely necessary.”  Id. at *5.  Based on the facts presented, the Court concluded that this was a “rare” case in which prohibition was needed.  The Court found that Mr. Chodes was the former Chief Executive Officer of Plaintiffs who had access to confidential information and whose employment agreement included a confidentiality provision.  Concluding no policy considerations overrode barring Mr. Chodes, the Court granted Plaintiffs’ motion.

Third and Fourth, the Court granted in part, and denied in part, Defendants’ motion to bar Plaintiffs’ damages experts, David Hough and Juan Arciniegas.  Having determined that Mr. Archinegas only reviewed the expert report and did not develop any of the formulas therein, the Court exercised its discretion to grant Defendants’ motion and bar his testimony. Regarding Mr. Hough, Defendants challenged his reliability.  In evaluating an expert’s reliability, the Court consider the following non-exhaustive list of factors:  “(1) whether the particular scientific theory can be (and has been) tested; (2) whether the theory has been subjected to peer review and publication; (3) the known or potential rate of error; (4) the existence and maintenance of standards controlling the technique’s operation; and (5) whether the technique has achieved general acceptance in the relevant scientific or expert community.”  Id., at *6 (internal citation omitted).  In applying these factors here, the Court found that Mr. Hough’s methodology – although specifically created for this litigation, and therefore not peer reviewed, was “factually grounded” in Defendants’ own financial data – and thus “reliable enough for admissibility’s sake.”  Id.  Further, the Court opined that even if Mr. Hough’s assumptions were questionable, the credibility of his testimony could be challenged through rigorous cross-examination.

Signal Fin. Holdings LLC v. Looking Glass Fin. LLC, 2022 WL 540662

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

Illinois Court of Appeals Reinstates Legal Malpractice Claim

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A three-judge panel of the Illinois Court of Appeals reinstated a malpractice suit against Sneckenberg Thompson & Brody LLP (“STB”) after finding that the trial court abused its discretion when it refused to allow plaintiff’s ex-wife’s trust to pursue the suit on plaintiff’s behalf after he died. Seifert v. Sneckenberg Thompson & Brody, LLP, No. 1-20-0966 (February 9, 2022). The plaintiff, Robert Seifert, acting “for himself and as property manager” for his ex-wife’s trust (the “Duffy Trust”), filed suit against STB alleging malpractice in connection with a dispute over a Barrington, Illinois property that Seifert owned with his ex-wife. Id. at ¶ 6.

When Seifert died in December 2019, plaintiff’s own trust (the “RJS Trust”) moved to substitute as party plaintiff. The Circuit Court denied the motion to substitute on February 21, 2020. Id. at ¶¶ 11-13.  In doing so, the Circuit Court found that because Seifert brought the malpractice action pursuant to a power of attorney granted to him by his ex-wife, his agency did not pass to the RJS Trust upon his death. Id. at ¶ 12. The Circuit Court explicitly found that the power to make decisions regarding the Barrington Property and the malpractice action reverted to his ex-wife “as trustee of the Duffy Trust.” Id. On March 5, 2020, the RJS Trust filed a motion to reconsider. Id. at ¶ 14. That motion was denied and the case was dismissed for want of prosecution one week later, on March 12, 2020. Id. at ¶ 15. Just one week after that, on March 19, 2020, the Duffy Trust filed to vacate the dismissal for want of prosecution and substitute as party plaintiff. Id. at ¶ 16. Once more, the Circuit Court denied the motion, citing the Duffy Trust’s lack of diligence in pursuing the claim. Id. at ¶ 18. The panel reversed the Circuit Court on appeal. It rejected an argument from STB that the applicable section of the Code of Civil Procedure limited time to substitute to 90 days after Seifert’s death. The panel also noted that it “fail[ed] to see a lack of diligence by the Duffy Trust.” Id. at ¶ 39. It noted the close succession of the relevant dates. After the initial motion to substitute was denied in February 2020, the RJS Trust filed a timely motion to reconsider that ruling just two weeks later. Id. The Duffy Trust filed its motion to substitute just two weeks after that. Id. The Court found that rather than suggesting a lack of due diligence, the Duffy Trust was merely waiting on the Circuit Court to rule on the pending motions. That the Duffy Trust was initially incorrect about the identity of the proper substitute party plaintiff does not suggest a lack of diligence on behalf of the Duffy Trust. Id. The panel further noted the absence of any intentional or willful disregard of any directions of the courts that resulted in prejudice or hardship to either party as a factor that favored reviving the claim. Id. at ¶ 40.

Seifert v. Sneckenberg Thompson & Brody, LLP, No. 1-20-0966

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

The Discovery Rule Remains Alive and Well

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On February 4, 2022, the Northern District of Illinois denied Defendant Mudd Law Offices P.C.’s (“Defendant” or “Mudd Law”) motion to dismiss Plaintiff Michael Koumjian’s (“Plaintiff”) complaint for legal malpractice. In the underlying case, Plaintiff hired Mudd Law to sue his former employer for wrongful termination. Koumjian v. Mudd Law Offices P.C., et al., 2022 WL 345080, *1 (N.D. Ill. 2022). Defendant, however, did not file suit for the better part of two-years after collecting a $10,000 retainer. Id. At which time, the statute of limitations clock had run on Plaintiff’s employment claims. Id.

Plaintiff then filed a legal malpractice suit against Mudd Law. In response, Defendant filed a motion to dismiss, asserting that Plaintiff’s legal malpractice claim was time-barred. In its short opinion, the Northern District summarized the case by stating, “The lawyer who botched the statute of limitations invokes the statute of limitations to dismiss a claim about botching the statute of limitations.” Id.

In evaluating whether Plaintiff’s malpractice complaint was time-barred, the Court’s analysis hinged on the question of when Plaintiff knew or should have known he was injured by Mudd Law and that injury was wrongfully caused. All parties conceded that Plaintiff was injured when the statute of limitations ran on his claims against his former employer, Express Jet Airlines. Id., *3. The parties, however, disagreed about whether Plaintiff should have recognized or “discovered” his wrongfully caused injury when the statute of limitations expired. Id., *4. In support of its position, Mudd Law relied on two Illinois Appellate Court decisions: McIntosh v. Cueto, 323 Ill. App. 3d 384 (5th Dist. 2001) and Brite Lights, Inc. v. Gooch, 305 Ill. App. 3d 322 (2d Dist. 1999). The Northern District Court found that neither of these cases to be helpful. Id., *5.

Ultimately, the Northern District concluded that Plaintiff did not allege any facts suggesting he knew or should have known that Mudd Law missed the deadline and therefore the legal malpractice complaint could not be dismissed at the motion-to-dismiss stage.

Koumjian v. Mudd Law Offices P.C., et al., 2022 WL 345080 *1 (N.D. Ill. 2022).

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

Evidence of No Proximate Cause Supported Dismissal of Plaintiff’s Legal Malpractice Claim

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On February 22, 2022, the Fourth District Illinois Appellate Court upheld the trial court’s decision to dismiss Jason Garrett’s (“Plaintiff”) legal malpractice suit under section 735 ILCS 5/2-619(a)(9).  Garrett v. Ackerman, 2022 IL App (4th) 210124-U, ¶ 2.  The Court concluded that proof negating proximate cause could be used as an affirmative matter to dismiss the case.

Plaintiff retained attorney James Ackerman (“Defendant”) to represent him in proceedings under the Illinois Workers’ Compensation Act (“Act”). Id. ¶ 5.  Plaintiff, through counsel, filed two applications for worker’s compensation against his employer, Liberty Mutual Insurance Group, Inc. (“Liberty Mutual”) alleging lower back pain.  Id.  The first application was filed in 2014 and the second was filed in 2015.  Both applications claimed the lower back pain was a result of an injury that occurred on August 29, 2013.  Id.  The claims proceeded to arbitration, where the arbitrator held that Plaintiff failed to meet his burden of proof.  Id.  ¶ 34.  “To obtain compensation under the Act, a claimant bears the burden of showing, by a preponderance of the evidence, that he has suffered a disabling injury which arose out of and in the course of his employment.”  Id.  ¶ 54 (citing Sisbro, Inc. v. Industrial Comm’n, 207 Ill. 2d 193, 203 (2003)).  “To arise ‘in the course of employment,’ an injury ‘generally must occur within the time and space boundaries of the employment.’”  Id.  Plaintiff then sought review from the Worker’s Compensation Commission (“Commission”), which also agreed Plaintiff failed to meet his burden. Id.  ¶ 35-37. 
Plaintiff next sought review of the Commission’s decision in the circuit court of Sangamon County, Illinois.  Id. ¶ 38. 

The circuit court upheld the Commission’s decision finding that the decision was not against the manifest weight of the evidence. Id.  ¶ 39.  Prior to reaching the merits of Plaintiff’s claim, the court noted several deficiencies in Plaintiff’s appellant’s brief and noted that the brief failed to comply with the requirements of Illinois Supreme Court Rule 341(h).  Id.  Given these shortcomings, the appeal was “subject to dismissal.”  Rather than dismissing the appeal, however, the court elected to decide the case based on the decisions of the arbitrator and Commission as well as Liberty Mutual’s filing while disregarding the portions of Plaintiff’s brief that did not comply with Illinois rules.  Id. 

In September 2019, Plaintiff filed a legal malpractice case against Defendant alleging Defendant negligently breached his duty of care by failing to comply with Illinois Supreme Court Rule 341(h).  Defendant moved to dismiss the complaint under section 2-619(a)(9), arguing that the evidence in the record was an affirmative matter that defeated Plaintiff’s claim because it proved that Defendant’s alleged negligence was not the proximate cause of Plaintiff’s injury.  Id.  ¶ 53.  The Appellate Court agreed and upheld the trial court’s dismissal.  In support of its ruling, the Court asserted:  “[P]laintiff cannot establish that he would have been successful in his appeal of the Commission’s decision absent defendant’s alleged negligent preparation of his appellant’s brief.”  Id.  ¶ 65.  Unable to prove but for Defendant’s negligence, Plaintiff would have prevailed in the underlying dispute, Plaintiff’s legal malpractice claim was properly dismissed.

Jason Garrett v. James Ackerman, 2022 IL App (4th) 210124-U

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