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Hauvoco Of America, Ltd. v. Freeman

June 22, 1995

HAVOCO OF AMERICA, LTD.,

A DELAWARE CORPORATION,

PLAINTIFF-APPELLANT,

v.

FREEMAN, ATKINS & COLEMAN, LTD., MARVIN G. FREEMAN, BARRY J. FREEMAN, ROBERT F. COLEMAN, ROBERT C. GOLDBERG, KENNETH P. ROSS, AND SUSAN D. PADOVE,

DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division.

No. 93 C 715--James F. Holderman, Judge.

Before CUDAHY, ESCHBACH and RIPPLE, Circuit Judges.*

RIPPLE, Circuit Judge.

ARGUED JANUARY 12, 1995

DECIDED JUNE 22, 1995

Havoco of America, Ltd. ("Havoco") filed an attorney malpractice suit against the law firm of Freeman, Atkins & Coleman, Ltd. and several of its attorneys (collectively, "Freeman"). Havoco alleged that Freeman's failure to file a timely claim prevented Havoco from recovering from a defendant in the underlying litigation under tort, conspiracy, and breach of fiduciary duty theories. The district court granted summary judgment for Freeman. It reasoned that the jury's verdict on a contractual claim in the underlying litigation collaterally estopped Havoco from arguing that, absent Freeman's negligence in failing to file the complaint, it would have recovered under its other theories. For the reasons that follow, we reverse and remand for further proceedings.

I. BACKGROUND

A. Facts

The underlying litigation has been to this court on several occasions. *fn1 We assume familiarity with our earlier decisions, and set forth here only the factual background and procedural history directly relevant to our analysis of the attorney malpractice issue before us in this appeal.

In January 1981, the Freeman law firm filed suit on behalf of Havoco against Elmer Hill and his company, Hilco, Inc. Havoco alleged that the defendants had deprived it of the benefits of a multimillion dollar contract to supply coal to the Tennessee Valley Authority ("TVA"). In November 1981, after obtaining leave to amend, Freeman added Sumitomo Shoji America, Inc. ("Sumitomo") as a defendant. Havoco's amended complaint raised several claims against Sumitomo: conspiracy to defraud, tortious interference with contractual relations, fraud and deceit, breach of fiduciary duty, and breach of contract. With the exception of the breach of contract claim, each of these causes of action was subject to a five-year statute of limitations. By the time Freeman had filed Havoco's amended complaint, the five-year limitations period had expired.

In early 1989, Sumitomo moved for summary judgment on the ground that Havoco's tort and breach of fiduciary duty claims were time-barred. Havoco, which had retained new counsel, resisted the motion. On October 30, 1990, the district court ruled in Sumitomo's favor. Havoco of Am., Ltd. v. Hilco, Inc., 750 F. Supp. 946 (N.D. Ill. 1990). It dismissed as time-barred all of Havoco's claims against Sumitomo, except the breach of contract claim. Havoco then amended its complaint. It proceeded to trial against Hill on tort, conspiracy, and breach of fiduciary duty theories. However, it proceeded against Sumitomo only on a breach of contract claim. This breach of contract claim alleged solely that Sumitomo had "failed to provide an irrevocable, transferable, revolving letter of credit to Havoco, as was provided for in paragraph 6 of the Sales Agency contract." R.51, Ex. I, para. 41. Havoco contended that Sumitomo had breached the contract by posting monthly, non-revolving letters of credit. Sumitomo did not contest this issue. However, it argued that Havoco had waived its breach of contract claim by repeatedly accepting Sumitomo's non-revolving letters of credit. *fn2

At the close of evidence, the district court instructed the jury on Havoco's theories of recovery and on Sumitomo's defense. *fn3 The jury was given two special interrogatories that related to Havoco's claim against Sumitomo. In response to the inquiry:

Did Havoco waive its breach of contract claim against Sumitomo by acquiescing in Sumitomo's performance ...


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