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June 21, 1994

HAVOCO OF AMERICA, LTD., a Delaware Corporation, Plaintiff,


The opinion of the court was delivered by: JAMES F. HOLDERMAN

JAMES F. HOLDERMAN, District Judge:

 Plaintiff Havoco of America, Ltd. ("Havoco") filed this action against defendants Freeman, Atkins & Coleman, Ltd., Marvin Freeman, Barry Freeman, Robert Atkins, Robert Coleman, Robert Goldberg, Kenneth Ross, Kostantinos Armiros, Scott Fredericksen and Susan Padove alleging legal malpractice. This court has jurisdiction over this case pursuant to 28 U.S.C. ยง 1332 based on diversity of citizenship. All of the defendants have filed motions for summary judgment. Havoco has also filed a cross motion for summary judgment on the issue of defendants' liability. For the reasons stated below, defendants' motions for summary judgment are granted and plaintiff's motion for summary judgment is denied.


 The following facts are undisputed by all parties. Defendant Freeman Atkins & Coleman, Ltd. was a law firm formerly doing business in Chicago, Illinois. The individual defendants were, at all relevant times, partners or associates in the firm. Up until 1988, these defendants represented Havoco in the underlying litigation entitled Havoco of America, Ltd. v. Hilco, Inc. and Elmer C. Hill ("Havoco 1981 litigation"), No. 81 C 419, filed in the United States District Court for the Northern District of Illinois.

 Defendants filed a lawsuit in January 1981 on behalf of Havoco naming Elmer Hill, and his company, Hilco, Inc. as defendants. Defendants failed to name Sumitomo Shoji America, Inc. ("Sumitomo") as a defendant until November of 1981 when the district court granted Havoco leave to amend its complaint to add Sumitomo as a party to the action. Havoco's amended complaint included claims of conspiracy to defraud; tortious interference with contractual relations; fraud and deceit; breach of fiduciary duty; and breach of contract. *fn1" In July of 1988, Havoco retained new counsel. In January of 1989, Sumitomo moved for summary judgment alleging that Havoco's tort claims against Sumitomo were barred by the applicable Illinois five-year statute of limitations. On October 30, 1990, United States District Judge James Alesia granted Sumitomo's motion for summary judgment and dismissed all claims against Sumitomo except the breach of contract claim. See Havoco of America, Ltd. v. Hilco Inc., 750 F. Supp. 946 (N.D. Ill. 1990), aff'd, 971 F.2d 1332 (7th Cir. 1992)

 The case proceeded to trial against defendant Hill on the tort claims and against defendant Sumitomo on the remaining breach of contract claim. The jury awarded Havoco a total of $ 15 million in compensatory and punitive damages against defendant Hill but found in favor of Sumitomo on the breach of contract claim. *fn2" In addition, the jury stated in its answer to the special interrogatories that Havoco waived its breach of contract claim against Sumitomo by acquiescing in Sumitomo's performance of its agreement with Havoco, and that Havoco suffered no damages from Sumitomo's failure to provide a revolving letter of credit. *fn3"


 Under Rule 56(c), summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). Summary judgment is inappropriate when there is a dispute over facts which might affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986) . In ruling on a motion for summary judgment the evidence of the non-movant must be believed, and all justifiable inferences must be drawn in the non-movant's favor. Id. at 2513. This court's function is not to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial.

 However, when a party bears the burden of proof on an issue, that party may not simply rest on its pleadings to defeat summary judgment, but must affirmatively demonstrate with specific factual allegations that a genuine issue of material fact exists and requires trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986) . The party must do more than simply "show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986) (footnote omitted) "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Id.

 I. Statute of Limitations

 Defendants argue that Havoco's legal malpractice claim is barred by the applicable five-year statute of limitations period because Havoco had notice of defendants' alleged negligence on May 14, 1987 when Havoco was notified about Sumitomo's answer and affirmative defense to Havoco's complaint in the Havoco 1981 litigation which asserted the statute of limitations as a defense to the tort claims filed against Sumitomo.

 The parties do not dispute that Illinois law applies in this case. It is also undisputed by all the parties that applicable statute of limitations period for a legal malpractice case is five years from the date of discovery. Jackson Jordan, Inc. v. Leydig, Voit & Mayer, No. 70410, 158 Ill. 2d 240, 1994 Ill. LEXIS 7, at *12, 198 Ill. Dec. 786, 633 N.E.2d 627 (Ill. Jan. 20, 1994) (citing 735 ILCS 5/13-205, Ill. ...

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