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Falconer v. Meehan

decided: October 22, 1986.

ALAN FALCONER, PLAINTIFF-APPELLANT,
v.
WILLIAM F. MEEHAN AND WILLIAM F. MEEHAN, P.C., DEFENDANTS-APPELLEES



Appeal from the United States District Court for the Southern District of Illinois. No. 82-4362 -- James L. Foreman, Judge.

Flaum and Easterbrook, Circuit Judges, and Swygert, Senior Circuit Judge.

Author: Flaum

FLAUM, Circuit Judge.

Appellant Alan Falconer appeals the district court's denial of his motion for recusal of the district judge and the order granting summary judgment that dismissed his legal malpractice claim against the defendant. We affirm the district court on both grounds.

I.

The defendant attorney handled a partnership dissolution for the plaintiff and Larry West. The partnership was dissolved by an agreement dated December 9, 1980, which provided for the sale of West's interest in the partnership assets to Falconer. The agreement provided that Falconer would retain the partnership real estate, assume the partnership liabilities, including mortgages on the real estate, and pay West a certain amount for West's interest in the partnership.

The defendant, Meehan, had served as the attorney for the partnership. He also represented Falconer in the dissolution negotiations and drafted the dissolution agreement. Meehan has represented West since the dissolution of the partnership.

The dissolution agreement ("the Agreement"), to secure Falconer's performance, required Falconer to deposit the quitclaim deeds to the partnership real estate in escrow naming West as grantor. The escrowee was City National Bank of Metropolis ("the Bank"). The terms of the agreement required that West was to receive the deeds in the event of Falconer's default. The Agreement also provided that Falconer could cure a default within the sixty days after service of written notice by West. In 1981 Falconer defaulted on the mortgage payments that were required under the dissolution agreement. West properly gave notice and the escrowee delivered the deeds conveying the real estate to West after Falconer failed to cure his default.

Falconer commenced an action on April 3, 1981 in Pulaski County Circuit Court seeking either rescission or reformation of the agreement on the ground that the forfeiture provisions were either "an error of the scrivener" or unconscionable. Both West and the City National Bank of Metropolis were named as defendants. The Bank was sued only in its capacity as an escrowee in order to prevent it from releasing the deeds conveying the property to West in accordance with the agreement.

The Pulaski County litigation was removed to the Bankruptcy Court for the Southern District of Illinois following Falconer's filing a Chapter 11 petition. The bankruptcy court made several relevant findings of fact:

1. The Agreement was prepared by Falconer's attorney, Meehan, and each party's attorney explained it to his client.

2. There was no mistake of fact in the contract.

3. The Agreement provided that Falconer could cure his default within 60 days after he received West's written notice of his default.

Falconer appealed the bankruptcy court's decision to the district court. Judge Foreman issued an order dismissing the appeal for failure to follow procedural rules.

A.

The present action was filed in the Southern District of Illinois under 28 U.S.C. ยง 1332. Falconer filed a malpractice claim against Meehan arguing Meehan was negligent in three respects: (1) Meehan omitted from the dissolution agreement a provision allowing Falconer to cure a default prior to forfeiture of his interest; (2) Meehan failed to explain the meaning of the agreement to Falconer so that Falconer did not understand the risks of forfeiture; and (3) Meehan represented Falconer in connection with the dissolution after having previously done legal work for the partnership. The defendant moved for summary judgment on all issues. On June 3, 1985, Judge Foreman granted the motion.

The district court found that Falconer was collaterally estopped from asserting both that the Agreement did not contain a cure provision and that Meehan had not explained the risk of forfeiture. The district court held that these issues were before the bankruptcy court in the prior litigation, and that court had decided these issues adversely to Falconer. Furthermore, the district court found that Meehan's ...


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