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.)

Neuman v. Gaffney, 2018 IL App (2d) 180184-U

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In September 1997, a Federal District Court ruled partially in favor of a class of plaintiffs against the State of Illinois for hiring discrimination, although the ruling did not address back pay or other pay relief.  In April 1999, attorney John Gaffney (“Gaffney”) filed a putative class action against the State of Illinois for back pay on behalf of John Mittvick (“Mittvick”) and Edward Urban as plaintiffs and class representatives.  The State moved to dismiss without prejudice, asserting the plaintiffs had failed to timely file charges of discrimination with the Equal Employment Opportunity Commission.  Before that motion could be granted, Gaffney filed his own motion to dismiss without prejudice, which was granted.  Gaffney notified his clients of this by letter, telling them he could no longer represent them and that they should join another class action on this matter already in progress.

Nearly sixteen years later, Robert Neuman (“Neuman”) filed a petition to intervene in the 1999 case, having supposedly just learned of it.  He claimed that he was an absent class member in the 1997 and 1999 cases, and that the 1999 case had not been validly dismissed.  The District Court dismissed Neuman’s petition, holding that dismissal of the 1999 case was valid.  Neuman appealed, but lost when the Seventh Circuit held that he “was already aware of a possible case in 2001 and that a diligent person would have investigated.”  Id. at ¶9.  Neuman then sued Gaffney for legal malpractice, alleging Gaffney had breached his fiduciary duty to notify unknown and unnamed absent class members prior to dismissal of the 1999 suit.  Gaffney successfully moved to dismiss because the six-year statute of repose for legal malpractice claims in Illinois had already lapsed.

On appeal, Neuman argued that the statute of repose should not have been applied because Gaffney had fraudulently concealed important information like the fact that the 1999 case had been voluntarily dismissed, which caused Mittvick not to pursue it further. This alleged concealment, he argued, would toll the statute of repose.  However, the appellate court held that whether or not Gaffney specified to Mittvick that his case had been dismissed voluntarily made no difference.  After reviewing Gaffney’s letter to Mittvick, the Court declared, “there is no indication that he attempted to conceal anything relevant from Mittvick.  He told Mittvick that the complaint had been dismissed and that Mittvick would have to seek a new attorney going forward.”  Id. at ¶22.  Despite Neuman’s insistence that Gaffney’s letter contained misrepresentations, the Court held that “such misrepresentations, even fraudulent ones, are not equivalent to acts of fraudulent concealment.”  Id.

Neuman v. Gaffney, 2018 IL App (2d) 180184-U

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

Mizrachi v. Ordower, 2019 WL 918478

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Joseph Mizrachi (“Mizrachi”) sued his former attorneys, Lawrence Ordower (“Ordower”) and Ordower & Ordower, PC, for legal malpractice and breach of fiduciary duty in connection with acquisition of a corporation and related litigation. Ordower filed a third-party complaint for contribution against attorney James Smith and the law firm Kilpatrick Townsend & Stockton LLP (together “Kilpatrick”), which also represented Mizrachi.  Kilpatrick moved to dismiss for lack of personal jurisdiction and failure to state a claim.  The US District Court for the Northern District of Illinois, sitting in diversity jurisdiction, granted the motion.

Regarding general jurisdiction, the Court explained that Kilpatrick “was not organized in Illinois, nor is its principal place of business here… it does not have an office in this state.”  Id. at 2.  At most, some of Kilpatrick’s attorneys based in other states were licensed to practice in Illinois and represent clients there; sometimes in litigation.  However, the Court held that such contacts were not sufficiently extensive or pervasive as to approximate the physical presence required for general jurisdiction.  The Court reached the same conclusion with respect to specific jurisdiction, explaining that “the only contact between Kilpatrick and Illinois… is that Kilpatrick knew it was representing a defendant based, at least partly, in Illinois.”  Id.   Nevertheless, “the mere fact that a defendant’s conduct affects a plaintiff with connections to the forum State is not sufficient to establish jurisdiction.” Id.

Mizrachi v. Ordower, 2019 WL 918478

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

Hanmi Bank v. Chuhak & Tecson, P.C., Michael Gilmartin, and Cary Fleisher, 2018 IL App (1st) 180089

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In 2009, Hanmi Bank (“the Bank”) filed six foreclosure actions in an Illinois circuit court and one in the Northern District of Illinois.  All were voluntarily dismissed without prejudice in July, 2011.  The same month, it filed a new foreclosure complaint in the Northern District of Illinois and a concurrent foreclosure action in the Eastern District of Wisconsin.  It then replaced its counsel with Chuhak & Tecson, P.C. (“Chuhak”), which was aware that the 2009 suits had been voluntarily dismissed.  Meanwhile, the defendants filed a declaratory judgment action against the Bank, to which the Bank filed a counterclaim.  When the Bank voluntarily dismissed its July, 2011 lawsuit, the defendants successfully moved to dismiss the counterclaim.  Summary judgment was then granted against the Bank in the Eastern District of Wisconsin for res judicata.  Chuhak assured the Bank that both rulings would be reversed on appeal, but neither was.  In the meantime, Chuhak allegedly had an internal discussion about whether it had committed malpractice, and notified their insurer.

The Bank sued Chuhak for legal malpractice in March, 2017, accusing it of professional negligence in the voluntary dismissal of the Bank’s suit in the Northern District of Illinois, which made it impossible for the Bank to foreclose on the properties involved.  It further alleged that Chuhak breached its fiduciary duty in making misrepresentations to the Bank to conceal its potential malpractice.  Chuhak successfully moved to dismiss, arguing that the Bank’s claims were barred by the two-year statute of limitations for legal malpractice.  The Bank moved to file an amended complaint that would assert Chuhak was estopped from raising the statute of limitations argument due to its false assurances that “lulled the Bank into waiting to file its legal malpractice complaint.”  Id. at ¶17.  The Appellate Court reversed, holding that the Trial Court came to the wrong conclusion as to “whether the proposed amendment will cure the defective pleading.”  Id. at ¶21-22.  Indeed, it found that the Bank’s proposed amendment would cure its defective complaint and that “the trial court abused its discretion by denying the Bank leave to file.”  Id. at ¶29.  “While the trial court does have wide discretion,” it explained, “any doubt as to whether a plaintiff should be granted leave to file an amended complaint should be decided in favor of allowance of the amendment.”  Id. at ¶21.

Hanmi Bank v. Chuhak & Tecson, P.C., Michael Gilmartin, and Cary Fleisher, 2018 IL App (1st) 180089

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

Board of Managers of Eleventh Street Loftominium Association v. McDonald Hopkins, LLC, 2018 IL App (1st) 172304-U

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The Board of Managers of the Eleventh Street Loftominium Association (“Association”) retained McDonald Hopkins, LLC (“McDonald”) in an action against the developer of its building.  That suit was dismissed for want of prosecution after a McDonald attorney failed to appear at two successive case management conferences.  For this, the Association fired McDonald and retained new counsel, Nyhan, Bambrick, Kinzie & Lowry, P.C. (“Nyhan”), but McDonald never formally withdrew.  Thereafter, Nyhan failed to file a new suit within a year of dismissal, foreclosing any possibility of relief.

The Association sued McDonald for legal malpractice, accusing the firm of breaching its duty of care in multiple ways, causing Nyhan to not file a timely petition to reinstate.  McDonald moved to dismiss, claiming it did not represent the Association during the last months in which a petition to reinstate could have been filed, and that the Association’s hiring of Nyhan created an intervening cause.  The motion was denied and affirmed on appeal.  Back before the trial court, McDonald moved for summary judgment on similar grounds, which was granted.

On appeal, the Association argued that granting summary judgment contradicted the law of the case established when McDonald’s earlier motion to dismiss was denied.  There, it was held that McDonald was still the Association’s counsel of record when the window to reinstate closed because it had not formally withdrawn.  The appellate court agreed, stating “the trial court erred in disregarding our earlier ruling, which is law-of-the-case.”  Id. at ¶ 28.  McDonald argued that this case lacked a final judgment necessary for the law-of-the-case doctrine to apply, but the Appellate Court stated that “permitting a Rule 308 appeal and answering the certified questions” as done in this case renders “a final judgment.”  Id. at ¶ 31.  McDonald also claimed that the facts of the case had changed during discovery, that the different standards for a motion to dismiss and for summary judgment allow different outcomes, and that the Appellate Court’s use of the law-of-the-case doctrine was palpably erroneous.  The Appellate Court disagreed with all three assertions, holding that none of them changed the already-established fact that “the firm’s failure to withdraw as counsel meant it remained attorney of record and could potentially be liable.”  Id. at ¶ 29.

Board of Managers of Eleventh Street Loftominium Association v. McDonald Hopkins, LLC, 2018 IL App (1st) 172304-U

(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.)