No Advice, No Causation
Posted on January 4, 2021 Updated on December 7, 2020
Various members of the Nelson family attempted to transfer business and personal assets among themselves so as to substitute one party for another in the Nelson Family Farms, LLC ("LLC"). Plaintiffs Brian and Rebecca Nelson drafted the contract controlling these transactions, which consisted of "handwriting on two sides of a single sheet of paper." Id. at ¶2. Without consulting an attorney or exercising due diligence, the parties began exchanging money and equipment. Id. One of the parties, Doug Nelson, retained attorney Bruce Carmen ("Carmen") and the Carmen Law Office, P.C. ("Carmen Law") to complete the title work necessary to transfer certain parcels of real estate contemplated in the contract and to effectuate the substitution of members in the LLC.
After a dispute arose, Brian and Rebecca sued Carmen and Carmen Law for legal malpractice, claiming to be "clients of Carmen or intended beneficiaries of his services." Id. at ¶45. The Circuit Court granted summary judgment in favor of Carmen and Carmen Law, and Brian and Rebecca appealed. The Appellate Court affirmed, explaining that the plaintiffs could not prove the proximate causation necessary in a legal malpractice claim. It pointed to the fact that "Carmen did not give Brian and Rebecca any legal advice that they relied on in making their decisions." Id. at ¶47. Brian and Rebecca also claimed that Carmen did not request a copy of the underlying contract, meaning his representation was legally deficient. However, the Appellate Court countered that the contract, which was drafted before Carmen was retained, "contained no mention" of the point of contention and so "would not have alerted Carmen" to the issue. Id. at ¶48. Having found Carmen was not the proximate cause of Brian and Rebecca's damages, the Appellate Court added that any allegation as to a conflict of interest was without merit. Id. at ¶49.
Nelson v. Nelson, 2020 IL App (3d) 190080-U
This entry was posted in Attorney-Client Relationship, Causation, Proximate Cause.
Malpractice Case Dismissed Because Later-Hired Counsel Could Have Corrected Prior Counsel's Error.
The Northern District of Illinois dismissed a count of a legal malpractice complaint based upon the subsequent counsel rule. The court held that because subsequent counsel could have filed a claim, the prior counsel did not cause damage to the malpractice plaintiff.
Yusoff Allian, et al. v. Perry Smith, et al., 2020 WL 4547877 (N.D. IL August 6, 2020)
This entry was posted in Causation.
Facts, facts, everywhere facts. Factual issues preclude summary judgment.
Posted on November 17, 2020 Updated on October 15, 2020
Joseph Mizrachi ("Mizrachi") sued attorney Lawrence Ordower ("Ordower") and Ordower's law firm for legal malpractice and breach of fiduciary duty. The defendants moved for summary judgment and Mizrachi also moved for summary judgment.
This case involves a very complicated fact pattern in which Ordower and Mizrachi disagreed over whether Ordower represented Mizrachi. The court examined virtually every element of a legal malpractice claim and held that there were issues of fact involving: whether Ordower and Mizrachi had an attorney client relationship; whether Ordower breached any duty to Mizrachi; whether Ordower caused Mizrachi's alleged damages; and whether Mizrachi had suffered individual damages or whether entities he was associated with had been damaged. The court did conclude that Mizrachi could not recover punitive damages because Illinois law forecloses such claims in malpractice claims and Mizrachi's breach of fiduciary duty claim also involved alleged legal malpractice.
Mizrachi v. Lawrence Ordower and Ordower & Ordower, P.C., 2020 WL 4607231 (N.D. IL August 11, 2020)
This entry was posted in Attorney-Client Relationship, Causation, Damage, Elements, Punitive Damages, Standing.
Plaintiff in a Legal Malpractice Case Cannot Obtain Recovery That Would Make It Better off Than If It Had Been Successful in the Underlying Matter
Posted on October 5, 2020 Updated on July 16, 2020
Hilco Capital, LP ("Hilco") entered into a junior secured credit facility to provide financing to Payless Cashways ("Payless"). It did so in reliance upon certifications Payless had given to another one of its financiers. However, Hilco was unaware that Payless was actually near insolvency. Before making any payments to Hilco, Payless filed a voluntary Chapter 11 petition. Hilco retained counsel to pursue claims against the officers of Payless, which was covered by three layers of insurance valued at $10 million each. Hilco ultimately executed a settlement agreement drafted by attorneys Terence Thum ("Thum") and Lawrence Eagel in reliance upon their advice. Id. at ¶14-17. Subsequent to entry of judgment, one of Payless' insurers refused to pay and won a declaratory action to that effect. Hilco then sued several defendants for legal malpractice. After multiple amended complaints and motions, only one count of Hilco's third amended complaint against Thum and his law firm Bryan Cave, LLP remained. These defendants were ultimately granted summary judgment.
On appeal, Hilco first argued that the Trial Court should not have granted defendants' motion to dismiss or limited its damages. The Appellate Court disagreed, explaining that the amount to which Hilco believed it was entitled was higher than what it would have actually recovered and that "a plaintiff who obtains recovery in a legal malpractice case can be in no better position by bringing suit against the attorney than if the underlying action against the third-party had been successful." Id. at ¶60. Hilco next argued that the Court erred in striking allegations concerning the defendants' failure to disclose conflicts of interest. Id. at ¶63. The Appellate Court disagreed there as well because the allegations in question had not been asserted until Hilco's third amended complaint. That complaint had been filed five years after the applicable statute of limitations had expired and after discovery "had been closed for an extended period of time," thereby denying sufficient notice to the defendants. Id. at ¶67. Hilco's third grievance was that the Court should not have partially granted defendants' motion for summary judgment and further limited its damages. Id. at ¶70. There too the Appellate Court disagreed. Per the Illinois Joint Tortfeasor Contribution Act, a good-faith settlement reduces the recovery of a nonsettling tortfeasor to the extent of the amount stated in the release or actually paid for it. n the underlying action, Hilco executed a settlement agreement with one of Payless' insurers that capped its potential recovery as a percent of money recovered from one of the other insurers. Id. at ¶74. Consequently, the Appellate Court affirmed that damages should have been limited further. Finally, Hilco asserted that the Court erred in granting the defendants' motion for summary judgment on its legal malpractice claim. The Appellate Court affirmed on that point as well. It explained that Hilco could not prove a causal link between the defendants' actions and its damages. "It does not necessarily follow," the Appellate Court clarified, "that defendants' allegedly negligent advice… was the proximate cause of the loss…" Id. at ¶82.
Hillco Capital, LP v. Bryan Cave, LLP et al., 2020 IL App (1st) 180174-U
This entry was posted in Causation, Damage.
CLO's Wage Arbitration Did Not Bar Employer's Malpractice Suit Under Res Judicata
Posted on September 21, 2020 Updated on July 16, 2020
Richard Fisher ("Fisher") was the Chief Legal Officer for UFT Commercial Finance, LLC ("UFT"). UFT's CEO was Joanne Marlowe ("Marlowe") (together with UFT, "the Plaintiffs"). As CLO, Fisher allegedly advised the Plaintiffs they did not need directors and officers insurance ("D&O Insurance") and that such insurance would not protect Marlowe from personal liability should the company lose a wage claim or something similar. Fisher also drafted employment agreements for UFT, some of which included supplements with accrual and deferment provisions. He also drafted and executed his own agreement. During Fisher's third year as CLO, Marlowe told Fisher his employment would not be extended and Fisher resigned. Fisher then initiated arbitration proceedings against UFT and Marlowe for wages owed. The arbitrator found the Plaintiffs jointly and severally liable to Fisher, with UFT individually liable for an additional sum. In response, the Plaintiffs sued Fisher for professional negligence in that he, among other things, failed to fully and properly advise them of the legal consequences of the employment agreements and arbitration clauses, failed to advise them of the conflict of interest he had in executing his own agreement, and wrongly discouraged their purchase of D&O insurance. Fisher moved for dismissal and sanctions.
Fisher first argued that the earlier arbitration award barred the Plaintiffs' action under res judicata. The Court disagreed, explaining that the arbitration concerned whether Fisher was entitled to wages while the instant case concerned whether Fisher was negligent in giving, or failing to give, legal advice. The court also did not agree that the majority of the Plaintiffs' claims were time-barred by the two-year statute of limitations for legal malpractice since the Plaintiffs "could not have reasonably known that they were injured until they lost the arbitration." Id. at 5. Nevertheless, allegations of negligence related to Fisher's employment agreement were still barred by the six-year statute of repose for legal malpractice because UFT and Marlowe filed suit more than six years after it was executed. The Court also held that Fisher did not owe a duty to Marlowe since "[a]n attorney for an organization owes a duty to the organization, and not its individual shareholders, officers, or directors" unless that individual is an intended third-party beneficiary. Id. at 6. Moreover, the Court agreed that the Plaintiffs failed to establish proximate causation as to their use of supplemental employment agreements, not acquiring D&O Insurance, and not retaining independent counsel. Regarding employment agreements, the Court held that the Plaintiffs failed to allege damages from the agreements with employees other than Fisher himself. However, the Court denied Fisher's motion for sanctions. It explained that it did "not believe that the claims brought by Plaintiffs are wholly baseless or frivolous" or that "this suit was brought for the sole purpose of harassing and embarrassing Fisher." Id. at 8.
UFT Commercial Fin., LLC v. Fisher, No. 19 C 7669; 2020 WL 2513097 (N.D. Ill. May 15, 2020)
This entry was posted in Causation, Damage, Proximate Cause, Res Judicata/Collateral Estoppel, Sanctions, Statute of Limitations/Repose.
Defendant May File Untimely Counterclaim if Plaintiff's Claim Arose Before Counterclaim Was Barred
Posted on September 7, 2020 Updated on July 16, 2020
Paul Abramson ("Abramson") had hired attorney Alisa Levin of Levin Law, Ltd. (together "Levin") in October, 2015, but terminated Levin after a dispute arose over the amounts billed. In March, 2017, Abramson published a scathing review on Levin Law's Yelp profile. Levin published a response and sued Abramson for defamation and false light invasion of privacy. Abramson then counterclaimed for legal malpractice, breach of fiduciary duty, and defamation. Levin moved to dismiss Abramson's counterclaims. Id. at 1.
Levin argued that Abramson's counterclaims were time-barred and failed to state a claim. The Court disagreed as to timeliness, citing 735 ILCS 5/13-207, which "specifically states that the defendant in a lawsuit is permitted to bring a counterclaim that would otherwise be barred by the statute of limitations" provided the plaintiff's claim arose "before the cause of action brought as a counterclaim was barred." Id. at 4. With respect to Abramson's claims for legal malpractice and breach of fiduciary duty, the Court held that even if their accrual had begun in December, 2015 when Levin's representation of Abramson ended, the two-year statute of limitations for claims arising out of the provision of legal services would not have ended until December, 2017. However, Levin's claims arose when the Yelp review went up in March, 2017 and so were timely. Id. at 5. The court reached the same conclusion as to Abramson's defamation claim. Id. at 4.
Though not time-barred, the Court did conclude that Abramson had failed to state claims for legal malpractice and breach of fiduciary duty. Specifically, Abramson's claim for legal malpractice did "not explain how he lost the case or why Levin's actions caused him to lose" nor did it explain how he "would have prevailed on the underlying claim in the absence of [Levin's] missteps." Id. at 12. His claim for breach of fiduciary duty likewise "fail[ed] to plausibly allege that this breach proximately caused any injury." Id. at 13.
Levin v. Abramson, No. 18-cv-1723, 2020 WL 2494649 (N.D. Ill. May 13, 2020)
This entry was posted in Causation, Fiduciary Duty, Proximate Cause, Statute of Limitations/Repose.
Attorney May Testify as Expert on Standard of Care, Not on Legal Conclusions that Determine Outcome of the Case
Posted on July 27, 2020 Updated on June 16, 2020
Clay Cox ("Cox"), successor trustee for a coop formed to build and operate an ethanol facility, sued attorneys Michael Evans and Nancy Schell and their law firm, Froehling, Weber, Evans & Schell, LLP, (together "Defendants") for legal malpractice. Defendants designated attorney Walker Filbert ("Filbert") as their expert witness concerning whether Defendants "met the standard of practice for attorneys practicing law in central Illinois and that their conduct did not proximately cause any injury to the Coop." Id. at 6. Cox moved to bar Filbert's testimony, memorandum in support, and Defendants' response. The motion was granted in part and denied in part.
In ruling on Cox's motion, the Court applied the Daubert analysis, which requires evaluation of "(1) the proffered expert's qualifications; (2) the reliability of the expert's methodology; and (3) the relevance of the expert's testimony." Id. at 7, see Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993). With respect to Filbert's qualifications, Cox argued that his "experience as a lawyer in central Illinois and a CEO of an ethanol company" did not qualify him to give testimony in this matter because he had "no experience with professional responsibility and legal malpractice." Id. at 9. The Court disagreed, explaining that as "a practicing attorney, Filbert would have been required to understand the rules of professional conduct governing his practice of law and to follow those rules. Those obligations encompassed the dispute at issue here—ascertaining the standard of care for an attorney." Id. at 10. As to Filbert's methodology, Cox claimed his report was devoid of any proposed methodology and rested "entirely on his alleged expertise as a lawyer, drawing conclusions without any analysis." Id. The Court sided with Defendants again, holding that Filbert's opinions "were informed by his legal experience and his knowledge of practicing law in central Illinois" and that his "report and proposed testimony sufficiently link the facts he relies upon with his conclusions so as to be reliable." Id. at 11. The Court also held that Filbert's testimony was relevant, as the "touchstone of admissibility under Rule 702 is helpfulness to the jury" and "the lay juror is unlikely to have a strong understanding of the business considerations surrounding the purchase or sale of commercial property" as in this case. Id.
Cox did find success in arguing that some aspects of Filbert's report "invade[d] the province of the jury and are based upon unsupported assumptions." Id. Specifically, Cox objected to Filbert's conclusion that Defendants' alleged acts or omissions did not proximately cause the damages claimed. The Court agreed that this was an impermissible conclusion, explaining that expert testimony "as to legal conclusions that will determine the outcome of the case is inadmissible." Id. at 12. It clarified that "while Filbert may not offer an opinion in front of the jury as to proximate cause, he may opine, consistent with his deposition testimony, that market forces and the state of the ethanol industry following the transaction affected the viability of the grain handling facility and the prospects of obtaining financing." Id.
Cox v. Evans, No. 18-CV-1105-JES-JEH, 2020 WL 2093371 (C.D. Ill. May 1, 2020)
(This is for informational purposes and not legal advice.)
This entry was posted in Causation, Evidentiary Issues, Proximate Cause, Standard of Care.
Missing Out on a Possible Jury Instruction is Insufficient to Allege Causation
Attorney Brian LaFlamme ("LaFlamme") represented Durwyn Talley ("Talley"), an inmate with the Illinois Department of Corrections, in a civil rights action related to the conditions Talley endured at a correctional center. Talley sued LaFlamme and the partners of his law firm for legal malpractice in that LaFlamme failed to seek discovery related to one of Talley's most important grievances. LaFlamme moved to dismiss for failure to state a claim.
In his motion, LaFlamme argued that Talley did not sufficiently allege causation. The Court explained that a "plaintiff must set forth a plausible statement not only that a breach of duty occurred but that the breach caused the plaintiff to lose a valid claim or defense in the underlying action and that, absent that loss, the underlying claim would have been successful." Id. at 3. Talley asserted that had LaFlamme tried to obtain "needed discovery on all issues… a negative inference jury instruction as to those issues, would've been given against them on those claims." Id. However, this alone was not enough to properly allege that the requested discovery would have led to Talley's success at trial. Moreover, the record showed that the most recent scheduling order required discovery to be complete more than a month before LaFlamme entered his appearance. Talley also admitted in his complaint that "he repeatedly sought discovery on all claims… before LaFlamme was appointed" to represent him. Id. at 3. Consequently, LaFlamme's motion to dismiss was granted.
Talley v. LaFlamme, No. 3:19-CV-01359-NJR, 2020 WL 2308258 (S.D. Ill. May 8, 2020)
This entry was posted in Case Within a Case, Causation.
Withdrawal as Counsel on the Eve of Trial
Posted on May 11, 2020 Updated on April 1, 2020
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 entry was posted in Breach of Contract, Causation, Proximate Cause, Uncategorized.
Breach of the Standard of Care Must be the Proximate Cause
Posted on May 4, 2020 Updated on January 22, 2020
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 entry was posted in Case Within a Case, Causation, Proximate Cause, Standard of Care.