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03/15/89 Mary L. Licciardi, v. Harold E. Collins Et Al.

March 15, 1989

MARY L. LICCIARDI, PLAINTIFF-APPELLEE AND CROSS-APPELLANT

v.

HAROLD E. COLLINS ET AL., DEFENDANTS-APPELLANTS AND CROSS-APPELLEES



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

536 N.E.2d 840, 180 Ill. App. 3d 1051, 129 Ill. Dec. 790 1989.IL.321

Appeal from the Circuit Court of Cook County; the Hon. Thomas J. O'Brien and the Hon. Thomas Rakowski, Judges, presiding.

APPELLATE Judges:

PRESIDING JUSTICE FREEMAN delivered the opinion of the court. McNAMARA and WHITE, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE FREEMAN

On February 24, 1987, plaintiff, Mary Licciardi, filed a five-count amended complaint to recover $842,890 paid attorney Harold E. Collins and his law firm, Harold E. Collins & Associates (hereinafter collectively defendant), pursuant to a contingent fee contract for his services in litigation against plaintiff's former husband, Gerard Licciardi (Licciardi). On June 23, 1987, Judge Thomas J. O'Brien denied defendant's motion to dismiss the amended complaint. On February 24, 1988, Judge O'Brien granted plaintiff's motion for summary judgment on count I of her amended complaint; denied defendant's motion for same; and granted plaintiff's motion for summary judgment on count I of defendant's counterclaim. On July 12, 1988, Judge Thomas Rakowski denied plaintiff's and defendant's cross-motions for summary judgment on count III of the amended complaint; granted plaintiff's motion for summary

judgment on counts IV and V, brought against defendants Mary Collins and Michael Collins, respectively, as transferees of portions of the fee paid defendant; and granted plaintiff's motion for summary judgment on count II of defendant's counterclaim.

Defendant appeals all of the orders in favor of plaintiff and/or adverse to him. Plaintiff cross-appeals the denial of her motion for summary judgment on count III of the amended complaint and the denial of prejudgment interest at the rate of 6.74% compounded daily.

Plaintiff's amended complaint alleged the following. Plaintiff and Licciardi were divorced on January 29, 1979, in the circuit court of Cook County. The judgment of dissolution incorporated by reference a separation agreement which provided for, inter alia, maintenance in gross to plaintiff. At the time of the divorce, Licciardi was president and chief operating officer of Anadite, Inc., a California corporation (Anadite). During the negotiations concerning the separation agreement, Licciardi asked plaintiff to keep his interests in Anadite out of the divorce proceedings to avoid jeopardizing his position and interests in the company. In return, Licciardi agreed to give plaintiff 50% of his interests in Anadite. Contemporaneously with entry of the judgment on January 29, 1979, Licciardi delivered a letter agreement to plaintiff confirming their oral agreement. In October 1979, Licciardi: (1) agreed with Anadite to dispose of his interests therein and to use the proceeds to establish Gel Industries, Inc.; (2) entered a second letter agreement with plaintiff whereby she forbore from enforcing the first letter agreement and allowed Licciardi to retain the proceeds from his interests in Anadite in exchange for a 40% interest in Gel Industries. In July 1986, plaintiff consulted defendant concerning the letter agreements and the divorce after learning that Licciardi was contemplating the sale of Gel Industries. In August 1986, plaintiff entered a contract with defendant for his legal services which provided defendant with a contingency fee of 25% and $250 per hour (the contingent fee contract). Later that month, defendant filed a "Post-Decree Petition to Modify and Enforce Judgment for Dissolution of Marriage and Supplemental Agreements" in case No. 78 -- D -- 10315, plaintiff's divorce action, in the domestic relations division of the circuit court of Cook County. On October 10, 1986, an "Agreed Order for Modification of Judgment for Dissolution of Marriage and Specific Performance of Agreement" was entered by that court. In December 1986, plaintiff paid defendant the hourly fee, totaling $42,800 and a contingent fee of $800,000 pursuant to the contingent fee contract.

Count I of the amended complaint alleged that the contingent fee contract violated Supreme Court Rule 2 -- 106(c)(4), which prohibits such agreements in respect of, inter alia, the procuring of a property settlement in or arising out of a dissolution of marriage. (107 Ill. 2d R. 2 -- 106(c)(4).) Count II alleged that the fee paid defendant was so excessive as to be unconscionable. Count III alleged that defendant had a conflict of interest as a result of his representation of plaintiff and his prior representation of Licciardi in the divorce action. Count IV alleged that defendant transferred $700,000 of the fee paid by

Opinion

On appeal, defendant contends that the trial court erred in denying the motion to dismiss count I of the amended complaint.

Plaintiff originally filed this action in the chancery division of the circuit court. It was thereafter transferred to the domestic relations division of the circuit court. At a subsequent hearing before the presiding Judge of that division, plaintiff stipulated that this case was unrelated to her prior divorce action. Based on that stipulation, the Judge found that there were no matters in the instant cause "ancillary to the underlying divorce matter, 78 D 10315, and that the issue is entirely apart from said case" and retransferred the cause to the chancery division of the circuit court. Defendant now asserts that plaintiff's stipulation and the Judge's findings estopped her from prosecuting count I of her amended complaint.

We cannot agree. Neither plaintiff's stipulation nor the trial court findings based thereon precluded her from challenging the validity of the contingent fee contract with defendant. That stipulation and those findings were both made for the limited purpose of deciding the division of the circuit court in which this case would be most appropriately heard. They were not made for the purpose of defining or limiting the issues which plaintiff could assert in this cause. Only if they were made for that purpose would defendant's cited cases, bearing on the binding effect of stipulations (see, e.g., City of Chicago v. Drexel (1892), 141 Ill. 89, 30 N.E. 774; In re Estate of Moss (1969), 109 Ill. App. 2d 185, 248 N.E.2d 513), require that the stipulation and findings based thereon be given the effect which defendant seeks. The stipulation and the findings based thereon were binding upon plaintiff only in the sense that she could not thereafter seek a retransfer of the cause to the domestic relations division of the circuit court. They did not estop plaintiff from alleging that defendant had entered into a contingent fee contract with her in violation of Supreme Court Rule 2 -- 106(c)(4).

In granting plaintiff's motion for summary judgment on count I of her amended complaint, the trial court held that defendant's representation of plaintiff "was tantamount to procuring a [post-decree] modification of a property settlement agreement and therefore made in respect to procuring a property settlement that arose out of a dissolution of marriage." The trial court therefore held the parties' contingent fee contract unenforceable under Rule 2 -- 106(c)(4).

Defendant contends that this holding was error because, as a matter of law, a property settlement in a dissolution proceeding is not modifiable after a final judgment has been entered therein under section 510(a) of the Illinois Marriage and Dissolution of Marriage Act (the Act) (Ill. Rev. Stat. 1987, ch. 40, par. 510). Section 510(a), defendant asserts, divests a court of jurisdiction after rendition of a final judgment and passage of the two-year period in which to seek a vacation or modification under section 2-1401 of the Civil Practice Law (Ill. Rev. Stat. 1987, ch. 110, par. 2-1401). He thus argues that the action pursued on plaintiff's behalf was not one to procure a property ...


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