Attorney Aiding and Abetting and Assignment of Malpractice Claims

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Rabbi Stanley Kroll (“Kroll”) had a thirty-year employment contract with his Synagogue. The contract included a deferred compensation plan (the “Plan”) to fund Kroll’s retirement.  The Synagogue was allowed to amend the Plan unilaterally, but not in any way that divested credits to the account or rights to which Kroll would be entitled if the Plan were terminated before an amendment took effect.  Id. at 1.  The Synagogue asked Kroll to retire six years early. Kroll agreed, but on his last day, a Synagogue officer told him that a tax issue had arisen, promising it would be resolved.  Kroll found out later that the issue had not been resolved, thereby subjecting his deferred compensation to heavy taxes and penalties.  Moreover, the Synagogue did not have sufficient funds to pay Kroll, and had amended the Plan to eliminate benefits to which Kroll would otherwise be entitled. Kroll sued the Synagogue, which settled and assigned to him all causes of action related to the Plan that it might have against the law firm it used to amend it: Cozen O’Connor (“Cozen”). Kroll then sued Cozen on multiple counts, but Cozen moved to dismiss. The motion was granted in part and denied in part.

To begin, the Court noted that legal malpractice claims may not be assigned in Illinois except under three exceptions.  However, none of these exceptions applied. It explained that “Kroll is a stranger to [the Synagogue] and Cozen’s attorney-client relationship and was owed no duty by Cozen.”  Id. at 4.  The Court also granted dismissal of Kroll’s aiding and abetting breach of fiduciary duty claim.  It said that no fiduciary duty existed between Kroll and the Synagogue, so Cozen could not have aided a breach of that duty. Id. at 7.  The Court dismissed Kroll’s fraudulent concealment claim as well, since Kroll did not allege facts sufficient to explain how a Cozen attorney used his position of superiority and legal knowledge to take advantage of Kroll’s trust and confidence in him, “especially given that [the attorney] represented the opposing party.”  Id. at 8, emphasis in original.

Conversely, the Court rejected Cozen’s argument that Kroll’s claims were barred by Illinois’ two-year statute of limitations for claims arising out of an attorney’s performance of professional services.  Here, it held that Kroll had demonstrated possible equitable tolling or estoppel when he asserted that a Synagogue officer misled him about resolving the tax issue and that a Cozen attorney misrepresented the enforceability of the Plan’s amendment.  Id. at 5.  Kroll’s claim that Cozen aided and abetted the Synagogue’s fraud was allowed to stand as well.  The Court, quoting an Illinois case, saw “no reason to impose a per se bar that prevents imposing liability upon attorneys who knowingly and substantially assist their clients in causing another party’s injury.”  Id. at 6. Here, the Court agreed that Kroll had pleaded facts sufficient to assert the Synagogue’s fraud and Cozen’s assistance therein.

Rabbi Stanley Kroll, Plaintiff, v. Cozen O’Connor, 2020 WL 919005

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

Withdrawal as Counsel on the Eve of Trial

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Vanessa Wereko (“Wereko”) retained The Law Office of Tiffany M. Hughes (the “Firm”) to represent her throughout her divorce proceedings.  One month before trial, the Firm withdrew as counsel for Wereko’s alleged failure to pay all of her bills and then sued Wereko for breach of contract.  Wereko filed counterclaims for breach of contract and negligence. The circuit court found in favor of the Firm and dismissed Wereko’s counterclaims.

On appeal, Wereko asserted with respect to the parties’ breach of contract claims that the retainer agreement only permitted the Firm to withdraw under specific circumstances. These circumstances included nonpayment, but Wereko explained that the Firm had billed her more often than was agreed upon thereby improperly triggering her obligation to pay.  The court noted however that “in her email communications with the firm, Wereko did not question the frequency of the invoices, but instead communicated her inability to fully pay the billed amounts.”  Id. at ¶32.  Moreover, “the retainer agreement did not expressly provide that the enumerated bases were the exhaustive bases for withdrawal.”  Id. at ¶30.  To that, the Firm asserted that Wereko refused to comply with certain of the Firm’s advice and had not maintained a valid credit card on file with the Firm as required by the agreement.  Id. at ¶¶34, 35. The court held therefore that “the withdrawal was consistent with the terms of the parties’ agreement and appears compliant with our supreme court rules.”  Id. at ¶33.

As for Wereko’s negligence claim, the court explained that “it would be unreasonable to expect the firm to foresee that its conduct would result in” the damages suggested by Wereko. Id. at ¶46. At their core, they were expenditures resulting from Wereko’s husband’s decision to dismiss his counter-petition and refile in a new county.  Id. at ¶46. The court also noted that “the [lower court] approved the firm’s withdrawal.” Id. Thus, it concluded that “Wereko failed to prove her counterclaims.”  Id. at ¶47.

Law Office of Tiffany M. Hughes v. Wereko, 2020 IL APP (1st) 190428-U

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

Experience is Enough for Experts

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Webster Bank (“Webster”) sued Pierce & Associates, P.C. (“Pierce”) in connection with its alleged mishandling of a loan collection matter on Webster’s behalf. t issue was the standard of care and whether Pierce breached it.  The United States District Court for the Northern District of Illinois held that the question must be answered based on expert testimony at trial.  However, Pierce moved to strike the testimony of Webster’s expert: G. Patrick Murphy (“Murphy”).  Pierce argued that Murphy, a retired Federal District Court Judge and litigator, was unqualified to speak on the “highly idiosyncratic rules and customs of high volume debt collection practices” and that Murphy’s report failed to show specifically how his experience informed his conclusions.

The Court denied the motion, holding that Murphy was “qualified by knowledge and experience to address the standard of care for Illinois civil litigators.”  Id. at 3.  It explained that “the crux of this case is not about nuances and intricacies” of the underlying matter, but rather “the standard of care for a reasonable attorney practicing in Illinois under similar circumstances.”  Id.

As for Murphy’s report, the Court held that an expert’s reliance on experience, rather than a particular methodology, did not necessarily render his opinion unreliable.  The report was therefore admissible insofar as it explained what the standard of care was.

However, the Court barred any conclusion by Murphy as to whether Pierce violated that standard.  It explained that “Murphy can testify as to the standard of care, what reasonably careful lawyers would have done, and what mistakes Pierce made.  Murphy cannot tell the jury that Pierce violated the standard of care—that is the very question the jury will answer.  It is the jury’s role to determine whether Pierce violated the standard of care, not Murphy’s.”  Id. at 5.

Webster Bank, N.A. v. Pierce & Associates, P.C., No. 16-CV-2522, 2020 WL 616467 (N.D. Ill. Feb. 10, 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.)

Legal Malpractice Requires Causation and Damages

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McHenry Savings Bank (“MSB”) sued attorney Michael Cortina and his law firm, SmithAmundsen (“Defendants”), for legal malpractice arising from their representation of MSB in an unsuccessful foreclosure action.  The trial court granted Defendants’ motion to strike and dismiss.  The Appellate Court of Illinois, Second District, affirmed.  With respect to alleged pretrial errors, it explained that “a trial was held in the foreclosure case” and so “it cannot be said that, but for Cortina’s alleged negligent pretrial conduct, MSB lost its case and suffered damages.”  Id. at ¶ 36.  As for any errors during the trial, the Appellate Court held that the Foreclosure Court’s basis for granting judgment against MSG was “legally unsound,” meaning “Cortina cannot be held accountable.”  Id. at ¶ 42.  Even if causation could have been shown, the Appellate Court explained that no damage resulted since MSB would be “seeking damages from defendants that it was never entitled to due to mortgagors’ discharge in bankruptcy.”  Id. at ¶ 51.

McHenry Sav. Bank v. Cortina, 2019 IL App (2d) 180901-U

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

Making Allegations in Another Case Demonstrates Knowledge for Statute of Limitations

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Edward Shrock (“Shrock”) and Robert Meier (“Meier) were both members of Baby Supermall, LLC (“BSM”).  In November, 2016, Shrock and BSM sued Ungaretti & Harris Ltd. (“Ungaretti”) and others for aiding and abetting Meier in violating an injunction Schrock had obtained against him.  Ungaretti moved to dismiss because, among other things, Shrock’s claims were time-barred under the two-year statute of limitations for legal malpractice.  The motion was granted, and Shrock appealed.  The Appellate Court of Illinois, First District, affirmed.  It explained that the statute of limitations begins to run when “the plaintiff knew or reasonably should have known of the injury and that it may have been wrongfully caused.”  Id. at ¶ 49.

In this case, Shrock had sufficient information to bring this lawsuit more than two years before he actually filed it.  For example, in July 2014, Shrock’s filing in a bankruptcy action against Meier “out-and-out accused defendant Ungaretti of ‘conspiring with Meier to evade the injunction.’”  Id. at ¶ 61.  Shrock objected that courts may not take judicial notice of the substance of claims made in other cases.  The Appellate Court countered that it was not taking notice of the facts themselves, but that such facts were in Shrock’s possession.   BSM raised the same arguments and lost, but added that the statute of limitations was tolled under the “adverse domination” doctrine.  It states that a statute of limitations is tolled “for claims by a corporation against its officers and directors during the time the corporation is controlled by those wrongdoing officers or directors.”  Id. at ¶ 73.  Here, Meier was the sole manager and overwhelming majority owner of BSM until 2015, and so allegedly would never have permitted himself to be sued or admitted to any wrongdoing.  However, the presumption created by the adverse domination doctrine is rebuttable by evidence “that someone other than the wrongdoing directors had knowledge of the cause of action and both the ability and the motivation to bring suit.”  Id. at ¶ 77.  The Appellate Court held that Shrock, a fellow member of BSM, met all of these prerequisites “long before the two-year window.”  Id. at ¶ 85.

Shrock v. Ungaretti & Harris Ltd., 2019 IL App (1st) 181698

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

Consulting Another Attorney Starts the Clock

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Anne Anderson (“Anderson”) sued attorney Denise Kuzniewski (“Kuzniewski”) for legal malpractice during the dissolution of Anderson’s marriage.   Kuzniewski moved for summary judgment, arguing among other things that Anderson’s action was time-barred.  The motion was granted, and the Appellate Court of Illinois, Second District, affirmed on that basis.  It explained that, “the statute of limitations for attorney malpractice incorporates the discovery rule: an action must be filed within two years of when the plaintiff ‘knew or reasonably should have known of the injury for which damages are sought.’”  Id. at ¶ 28; 735 ILCS 5/13-214.3(b).  Here, Anderson filed her complaint on December 21, 2016.  However, she had expressed dissatisfaction with the dissolution of marriage judgment as early as March, 2011, and had consulted with another attorney about the judgment in October, 2011 because she “knew [the settlement] was not right.”  Id. at ¶ 12.  The Appellate Court explained that, “not only did this consultation start the limitations period (had it not started earlier), it ended any fraudulent concealment by defendant.”  Id. at ¶ 39.Anne Anderson (“Anderson”) sued attorney Denise Kuzniewski (“Kuzniewski”) for legal malpractice during the dissolution of Anderson’s marriage.   Kuzniewski moved for summary judgment, arguing among other things that Anderson’s action was time-barred.  The motion was granted, and the Appellate Court of Illinois, Second District, affirmed on that basis.  It explained that, “the statute of limitations for attorney malpractice incorporates the discovery rule: an action must be filed within two years of when the plaintiff ‘knew or reasonably should have known of the injury for which damages are sought.’”  Id. at ¶ 28; 735 ILCS 5/13-214.3(b).  Here, Anderson filed her complaint on December 21, 2016.  However, she had expressed dissatisfaction with the dissolution of marriage judgment as early as March, 2011, and had consulted with another attorney about the judgment in October, 2011 because she “knew [the settlement] was not right.”  Id. at ¶ 12.  The Appellate Court explained that, “not only did this consultation start the limitations period (had it not started earlier), it ended any fraudulent concealment by defendant.”  Id. at ¶ 39.

Anderson v. Kuzniewski, 2019 IL App (2d) 190020-U

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

Economic Loss Doctrine Prevents Set-Off Under Illinois’ Joint Tortfeasor Contribution Act

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Kevin Driscoll (“Driscoll”), the court-appointed receiver of AlphaMetrix Group, LLC (“AMG”), sued AMG’s former lawyers Juris Kins and Davis McGrath, LLC for legal malpractice.  The defendants moved to resolve the question of whether they were entitled to a set-off under Illinois’ Joint Tortfeasor Contribution Act (the “Act”), arguing that they could set-off up to $4 million due to a previous settlement agreement between Driscoll and former officers of AMG.  The Northern District of Illinois held that the Act did not apply because of the prior settlement related to breach of contract and breach of fiduciary duty claims.   It explained that, under the Act, “[w]hen a release or covenant not to sue […] is given in good faith to one or more persons liable in tort arising out of the same injury […] it reduces the recovery on any claim against the others to the extent of any amount stated in the release.”  740 Ill. Comp. Stat. 100/2(c).  Moreover, under the economic loss doctrine, “[w]hen only economic loss is incurred, the plaintiff may only raise contract theories even if the defendant’s alleged conduct constituted a tort as well as a breach of contract.”  Id. at 3.  In this case, the Court found that “no matter how Defendants creatively reframe the Receiver’s allegations [against the former officers], the claims could not have been brought in tort.”  Id.  Consequently, the lawyers were not entitled to set-off the prior settlement of claims against the former officers.

Driscoll v. Kins, No. 16 C 9359, 2019 WL 4014089 (N.D. Ill. Aug. 26, 2019)

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

 

 

Plaintiffs Entitled to Substantial Deference in Choice of Forum

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Rebecca Kujawa (“Kujawa”) sued attorney John Hopkins (“Hopkins”) in the Circuit Court of Madison County, Illinois for legal malpractice in an underlying medical malpractice matter.  Hopkins moved to transfer the case to Effingham County for forum non conveniens.  Among other things, Hopkins asserted that the underlying medical malpractice occurred in Effingham county, that essential witnesses and records relevant to the underlying case were located there, and that jurors in that county had an interest in determining whether their local medical providers were negligent.  Kujawa countered that Hopkins resided in Madison County, that his alleged malpractice took place there, that the parties would be inconvenienced by having to travel to Effingham County, and that the people of Madison county had an interest in determining whether their local attorneys committed legal malpractice.

The motion was denied, and the Appellate Court of Illinois, Fifth District, affirmed.  It explained that a plaintiff’s choice of forum “is entitled to substantial deference and should rarely be disturbed,” although it is entitled to “somewhat less deference when the plaintiff chooses a forum other than his place of residence or the location where some part of the action arose.”  Id. at ¶ 18.  Beyond that, neither public nor private factors strongly favored transfer.  As to private factors, the Court noted that Hopkins had an office across the street from the Madison County courthouse and that no medical witness in the underlying matter had provided an affidavit attesting to the inconvenience of attending trial there.  Furthermore, Hopkins had not demonstrated that any records in Effingham county could not be easily transported or electronically transmitted to Madison County.  As for public factors, such as local interest in deciding local matters, the Court found no abuse of discretion.

Kujawa v. Hopkins, 2019 IL App (5th) 180568, appeal denied, 135 N.E.3d 566 (Ill. 2019)

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