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.)

Doyle v. Hood, 2018 IL App (2d) 171041

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Harry Doyle retained the defendants, attorney Thomas Hood and Thomas B. Hood Law Offices, P.C., to prepare his will and a revocable living trust for his disabled wife, Patricia.  The living trust established a supplemental trust, with Patricia as its bene-ficiary.  Harry executed the necessary documents in December 2011.  Upon Harry’s death in January 2012, his son, Michael, became executor of his will and trustee of both trusts.  In late 2013, Patricia was admitted to a long-term-care facility.  Six months after that, an application for long-term benefits was filed on her behalf before the Department of Human Services.  The DHS subtracted a $2,000.00 asset allowance from the supple-mental trust, and imposed a spend-down of the remaining funds.  An appeal was filed on Patricia’s behalf, but the DHS found instead that a considerably higher penalty was owed.

Michael, as trustee, sued the defendants for professional negligence in May 2017.  He alleged that no penalty would have been assessed if the defendants had created the trust from Harry’s will instead of the living trust.  The defendants moved to dismiss, arguing that the claim was time-barred because it was filed more than two years after Harry’s death.  The trial court granted the motion, and Michael appealed.  The appellate court agreed with the defendants that the two-year statute of limitations applied, since the injury in this case occurred “when the Supplemental Trust could no longer be amended or revoked and was actually funded, both of which occurred upon Harry’s death.”   Id. at ¶ 28; (“When the injury caused by the act or omission does not occur until the death of the person for whom the professional services were rendered, the action may be com-menced within 2 years after the date of the person’s death…”), 735 ILCS 5/13-214(d).  The appellate court clarified that this exception “’applies instead of […] the six-year statute of repose.’”  Id. at ¶ 22, citing Wackrow v. Niemi, 231 Ill. 2d 418, 427 (2008).

Doyle v. Hood, 2018 IL App (2d) 171041

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

Reynolds v. Lyman, 903 F.3d 693 (2018)

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Brian Reynolds sued the law firm Henderson & Lyman, which represented various LLC’s he co-owned and managed, and one of its lawyers.  Reynolds accused H&L of giving negligent advice to the LLC’s that led him to violate federal disclosure laws.  The District Court granted summary judgment in favor of H&L, explaining that “Reynolds could not bring a malpractice suit on his own behalf because he did not have a personal attorney-client relationship with H&L.”  Id. at 695.  Reynolds appealed.

The Seventh Circuit affirmed, describing the attorney-client relationship as a “voluntary, contractual relationship that requires the consent of both the attorney and client.”  Id.  Given Reynold’s admission that he never asked H&L to represent him, that no one at H&L said anything suggesting it thought it represented him, and that Reynolds never entered into an agreement with H&L to that effect, the Seventh Circuit held that no attorney-client relationship existed. Reynolds argued that, as part-owner and manager of the LLC’s, his interests and theirs were “so closely bound […] as to be functionally indistinguishable.”  Id. at 696.  However, the court rejected this argument.  “‘Simply because the [officers of a business entity] were at risk of personal liability,’” it explained, “‘does not transform the incidental benefits of [the law firm’s] representation of [the business entity] into direct and intended benefits for [the officers].’”  Id. at 696, quoting Reddick v. Suits, 2011 IL App (2d) 100480, ¶ 44.  Rather, the only time an Illinois attorney owes a duty of care to a third party is “when the attorney was hired for the primary purpose of benefiting that third party.”  Id.

Reynolds v. Lyman, 903 F.3d 693 (2018)

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