the right to pursue a claim against Sumitomo.
The court disagrees with defendants' assessment and finds that the statute of limitations period for Havoco's legal malpractice claim commenced on October 30, 1990, the date Judge Alesia dismissed Havoco's tort claims against Sumitomo as barred by the applicable statute of limitations period. See Havoco of America, Ltd. v. Hilco, Inc., 750 F. Supp. at 953 (Court held that Havoco's claims in Count I, III, IV and V were time-barred as to Sumitomo because there was no genuine issue of material fact as to Havoco's failure to add Sumitomo as a defendant within the limitations period applicable to those counts. Id.).
Not until Judge Alesia decided that Havoco's tort claims against Sumitomo were not filed within the applicable limitations period, did Havoco know that it had been injured. Contrary to defendants' contentions, Havoco could not have reasonably known at the time Sumitomo first asserted the affirmative defense that Havoco had been injured.
In fact, Sumitomo first moved for summary judgment on statute of limitations grounds in 1982, and that motion was denied. Therefore, up until October 30, 1990, when Judge Alesia decided that Havoco's tort claims against Sumitomo were barred by the statute of limitations, there was no reason for Havoco to believe that it had been injured by its attorneys' conduct, or that its attorneys had been negligent in any way. The court finds that the statute of limitations period for Havoco's legal malpractice claim against defendants commenced on October 30, 1990. Havoco tiled this case on February 3, 1993, well within the applicable limitations period for legal malpractice claims.
II. Legal Malpractice--Causation and Damages
The basic elements of a legal malpractice action are no different from any other negligence action under Illinois law. In a legal malpractice case, the plaintiff/client must prove: 1) an attorney/client relationship existed; 2) the duty owed to the plaintiff was breached; 3) the attorney's negligence was the proximate cause of the plaintiff's injuries; and 4) actual damages. Nika v. Danz, 199 Ill. App. 3d 296, 556 N.E.2d 873, 882, 145 Ill. Dec. 255, 264 (Ill. App. Ct. 1990) (citing Sexton v. Smith, 112 Ill. 2d 187, 492 N.E.2d 1284, 97 Ill. Dec. 411 (Ill. 1986)).
In order to succeed in an action for legal malpractice, "a plaintiff must prove that his/her injuries would not have occurred but for the defendant attorney's negligence. If the harm would have resulted irrespective of such negligence, then the negligence is not a substantial factor or cause-in-fact." Carmel v. Clapp & Eisenberg, P.C., 960 F.2d 698, 703 (7th Cir. 1992). "Thus, even if an attorney was negligent in not filing an action within the statute of limitations, if the client cannot establish that his case would have been meritorious, no damages are shown and no recovery can be had." Nika, 556 N.E.2d at 882, 145 Ill. Dec. at 264 (citations omitted).
In this case there is no dispute as to the existence of the first two elements; the parties had an attorney/client relationship, and defendants breached that duty by failing to file the tort claims against Sumitomo within the applicable statute of limitations period. The focus of the dispute in this case is on the remaining elements of causation and damages. If Havoco would not have been successful in the prosecution of its tort causes of actions against Sumitomo, then defendants' negligence would not have caused plaintiff any damages.
As in this case, when an attorney is charged with negligently failing to file an action within the applicable statute of limitations period, "the plaintiff must recreate and litigate the action which was never filed." Nika, 556 N.E.2d at 882, 145 Ill. Dec. at 264. The procedure for presenting evidence regarding the underlying action in a legal malpractice case is often referred to as a "case within a case," or a "trial within a trial." See Brooks v. Brennan, 255 Ill. App. 3d 260, 625 N.E.2d 1188, 1192, 193 Ill. Dec. 67, 71 (Ill. App. Ct. 1994) (citations omitted). The goal is to establish what the result would have been had the case been properly filed. Nika, 556 N.E.2d at 882, 145 Ill. Dec. at 264.
In the Havoco 1981 litigation, Havoco alleged the same facts to support both its tort claims asserted against Sumitomo and its breach of contract claim.
The breach of contract claim was ultimately tried in front of a jury. In support of these claims, Havoco alleged that Sumitomo breached a financing agreement between Havoco and Sumitomo by failing to post a revolving letter of credit, thereby jeopardizing and damaging Havoco's financial viability during its negotiations with the Tennessee Valley Authority, causing Havoco to lose the Tennessee Valley coal contract. See Havoco of America, Ltd. v. Sumitomo Corp. of America, 971 F.2d 1332, 1337 (7th Cir. 1992).
The jury found in favor of Sumitomo and against Havoco on Havoco's claim for breach of contract.
The jury also found in a special interrogatory that Havoco waived its breach of contract claim against Sumitomo by acquiescing in Sumitomo's performance of its agreement with Havoco and that Sumitomo's failure to provide a revolving letter of credit to Havoco did not cause Havoco to suffer any damages.
The tort claims against Sumitomo that were dismissed as barred by the applicable statute of limitations included two counts of fraud; one count of tortious interference with contractual relations; and one count of breach of fiduciary duty.
Under Illinois law, to establish these tort claims, as well as a breach of contract claim, a plaintiff is required to prove that the defendant's conduct caused the plaintiff to suffer damages.
In the Havoco 1981 litigation, however, the jury specifically found that Sumitomo's activities did not cause Havoco to suffer any damages. These same alleged activities by Sumitomo underlie both the breach of contract claim which Havoco presented to the jury, as well as the tort claims which were held to be time-barred. Therefore, as a matter of law, given the jury's findings, Havoco cannot show that but for defendants' failure to file these tort claims within the applicable statute of limitations period, plaintiff would have successfully prosecuted its tort actions against Sumitomo. The Havoco 1981 litigation jury's answer to the special interrogatory clearly establishes that Havoco would not have prevailed even if these tort claims would have been timely filed. The jury found that no damages resulted from Sumitomo's failure to post the revolving letter of credit. This finding applies equally to the tort claims and the breach of contract claim.
Because Sumitomo's failure to post the revolving letter of credit caused plaintiff to suffer no damages, plaintiff would be unable to prove the required element of causation for any of its tort claims against Sumitomo just as it was unable to do so for its breach of contract claim. Therefore, defendants' motions for summary judgment are granted because, based on the undisputed material facts, plaintiff cannot establish, as a matter of law, the necessary elements of causation and damages in its legal malpractice claim against defendants.
For the reasons stated above, defendants' motions for summary judgment are GRANTED and plaintiff's motion for summary judgment is DENIED. This case is DISMISSED in its entirety. Judgment is entered in favor of defendants.
JAMES F. HOLDERMAN
United States District Judge
DATED: June 21, 1994