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04/06/87 Lance Goldstein, v. Steven Lustig

April 6, 1987





507 N.E.2d 164, 154 Ill. App. 3d 595, 107 Ill. Dec. 500 1987.IL.440

Appeal from the Circuit Court of Cook County; the Hon. Alan E. Morrill, Judge, presiding.


JUSTICE O'CONNOR delivered the opinion of the court. BUCKLEY and STAMOS, JJ., concur.


This is an appeal from a dismissal of a complaint pursuant to sections 2-615 and 2-619 of the Illinois Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, pars. 2-615, 2-619). On appeal plaintiff argues that the court erred: (1) in ruling that his complaint failed to state a cause of action for legal malpractice; (2) in ruling that defendant's conduct was an error of judgment rather than negligence; (3) in ruling that plaintiff was precluded from filing suit against his former attorney by virtue of the settlement of litigation between the plaintiff and his employer; and (4) in denying plaintiff's motion to amend his complaint.

The following facts are pertinent to this appeal. Plaintiff Dr. Lance Goldstein (Goldstein) was employed by Endodontic & Periodontic Associates, Ltd. (corporation), as a dentist from February 1, 1977, through January 31, 1982. In spring of 1981, Goldstein became involved in a dispute with the corporation. The dispute arose out of allegations that he had allowed an attorney access to corporate billing letterheads which the attorney had allegedly used to generate fraudulent billing statements for submission to an insurance carrier.

On or about July 1, 1981, Goldstein took his employment agreement to defendant, Steven Lustig (Lustig), an attorney, told him that the corporation had valid grounds to terminate him for misconduct and asked his legal advice as to the best course of conduct. Paragraph 8 of the agreement provided that if the doctor was terminated by the corporation for cause, pursuant to paragraph 2 he would be entitled only to the benefits set forth in paragraph 8(b). If he resigned on his own option, he would be entitled to the benefits set forth in paragraphs 8(c) and 8(d) as well as those set forth in paragraph 8(b).

Lustig advised Goldstein that it would not make any difference what he did and that if he waited and allowed himself to be terminated, he could then sue the corporation. Goldstein took Lustig's advice, was terminated and filed suit against the corporation. During the course of the litigation, Lustig advised Goldstein to settle the litigation. Goldstein and the corporation signed a consent decree, a mutual release, and a settlement agreement.

Goldstein then filed a professional malpractice action against Lustig, alleging that Lustig had negligently and carelessly misinterpreted and misadvised him as to the legal ramifications of his employment agreement.

Defendant filed a motion to dismiss pursuant to section 2-615 (Ill. Rev. Stat. 1985, ch. 110, par. 2-615) or alternatively, section 2-619. Attached as exhibits to the section 2-619 motion were the following documents from plaintiff's action against the corporation: a complaint for declaratory judgment with exhibits, plaintiff's second amended complaint; a counterclaim asserted by the employer; a motion to compel and for sanctions; the consent decree; the mutual release and the settlement agreement.

The exhibits reveal that following Goldstein's termination, he instituted an action against the corporation for wrongful discharge. Defendant remained his general counsel; however, he was represented by a separate law firm in that action. Pursuant to the mutual release, each party was forever released from any claims relating to the employment agreement, to Goldstein's ownership of corporation stock, and to Goldstein's lawsuit against the corporation. Under the settlement agreement, Goldstein and the corporation agreed that all of the obligations owed under the employment agreement were satisfied and that Goldstein would receive full benefits from the retirement and profit-sharing plans and an additional $30,000.

Goldstein filed a memorandum in opposition to defendant's motion to dismiss this case. Attached to the memorandum was a copy of his original complaint, an excerpt from the deposition of Richard Krause, a copy of the employment agreement, a copy of the letter from the corporation, and his own affidavit.

Goldstein's memorandum states that he told defendant that his former employer had valid grounds to believe that he was engaged in an insurance fraud scheme and that defendant advised him to sue his employer in order to force a settlement. Goldstein verified in his affidavit that he participated in an insurance fraud scheme, that because the lawsuit filed had little if any merit he had to ...

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