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July 13, 1995


Appeal from the Circuit Court of Lake County. No. 92-CH-409. Honorable Jack Hoogasian, Judge, Presiding.

Rehearing Denied September 5, 1995. Released for Publication September 5, 1995.

The Honorable Justice Geiger delivered the opinion of the court: Inglis and Rathje, JJ., concur.

The opinion of the court was delivered by: Geiger

JUSTICE GEIGER delivered the opinion of the court:

The counter-plaintiff, Hercules Paul Zagoras (Zagoras), brought this action against the counter-defendants, Harvey and Edward Lossman (collectively the Lossmans), to recover attorney fees he incurred in his previous representation of the Lossmans. In the counterclaim, Zagoras sought to foreclose a mortgage received from the Lossmans in the amount of $22,631.71, representing unpaid trial fees, fees on appeal, a $10,000 bonus, interest accrued at 5% from a previous mortgage between the parties, plus 12% interest from the date of the new mortgage. In addition, Zagoras sought to recover $1,406.25 in post-appeal services performed after the execution of the mortgage. The trial court denied the request for trial fees, denied recovery of any post-appeal fees, and found that Zagoras was not entitled to the $10,000 bonus fee. The court did, however, award him $7,600 in appeal fees and costs, but at 5% interest. Both parties appealed the trial court's determination. For the reasons which follow, we affirm in part, reverse in part, and remand.

In 1988, the Lossmans, both retirees, hired Zagoras to defend them against Calvary Temple Assembly of God Church in a real estate contract action involving property they owned in Lake County, Illinois (the property). The parties agreed to the payment of a $3,000 retainer and fees at a rate of $125 an hour. On August 31, 1989, the court found against the Lossmans on the contract. Directly after the trial, the Lossmans, Zagoras, and Donna Boyer, counter-defendant Harvey Lossman's daughter, met in Zagoras' office to discuss the possibility of an appeal. Both Boyer and Zagoras testified that he quoted the Lossmans a flat rate fee of $7,000 to handle the appeal, plus a $10,000 "bonus" if he won.

On September 1, 1989, Zagoras informed the Lossmans by letter that they had until September 30, 1989, to file a notice of appeal, and that they would have to request a stay prior to that date. In the letter, Zagoras reiterated that his fee on appeal would be a flat rate of $7,000, plus costs of approximately $700. He did not mention anything about a $10,000 bonus in the letter, but included a statement for existing fees and expenses in the amount of $10,338.30. He stated that he hoped that the Lossmans could pay most of this statement, and that he would wait for his appeal fees. He further noted that he wanted an acknowledgment of the balance of the debt, as well as an agreement as to appeal fees, in writing.

In letters dated September 11 and September 15, 1989, Zagoras again reminded the Lossmans of the September 30 deadline. Following the September 15 letter, Harvey advised Zagoras that he was going to bring in two people to sign an appeal bond. Zagoras subsequently filed the appeal bond, a motion for stay, and a notice of appeal before the September 30 deadline.

On October 2, 1989, the Lossmans met with Zagoras at his office. Harvey had previously informed Zagoras that he could not pay anything more on the trial court fees, having paid $6,000 since the September 1, 1989, statement. At the meeting, Zagoras presented to the Lossmans a letter, note, and mortgage on the property, all three of which they signed. The letter stated that the unpaid balance of Zagoras' fees was $4,338.30, and that he agreed to represent them on appeal and advance court costs for a total of $7,600. The letter also indicated that the Lossmans had signed a note and mortgage in theamount of $11,938.30, at 5% interest. Finally, the letter stated that, by their signatures, the Lossmans agreed that Zagoras would be entitled to a $10,000 bonus if he prevailed on appeal, explaining that the bonus would be additional to the note and mortgage if he won. The note was made payable on November 1, 1990, or "whenever the Second Appellate District Court rules, whichever comes later."

The appellate court ruling in favor of the Lossmans was issued late in July 1990, reversing the trial court without remand. The court later denied reconsideration of its ruling, and the Lossmans petitioned for leave to appeal to the Illinois Supreme Court. In a letter dated November 28, 1990, Zagoras informed the Lossmans that the note and mortgage for $11,938.30 was now due. He further noted that he had been promised a $10,000 bonus in the event he won the appeal; but because the supreme court had not ruled on the petition, the bonus was not yet due.

On December 20, 1990, following the supreme court's dismissal of the appeal, Zagoras again wrote to the Lossmans. He advised them that he had rewritten the note and mortgage and increased the interest rate to 12%, and told them that he would cancel the old note once they signed the revised note and mortgage.

On January 8, 1991, the Lossmans executed a new note and mortgage in the amount of $22,631.71, dated back to December 1, 1990. The note was made payable on December 1, 1991. Zagoras testified at trial that he calculated the new amount by adding the $10,000 bonus to the previous note amount of $11,938.30, plus interest from October 2, 1989 to December 1, 1990. Upon the signing of the new documents, Zagoras marked the old note "CANCELLED" and returned it to the Lossmans.

On May 26, 1992, Sarah Vivian Lossman, plaintiff herein and a co-owner of the property, filed a complaint for partition of the property. Zagoras, Harvey, and Edward were all named defendants, as well as Eugene Lossman, another co-owner of the property.

On July 20, 1992, Zagoras filed an answer and counterclaim in the nature of a cross claim against Harvey and Edward. Count I of the counterclaim sought to recover $1,406.25 in fees for 11.25 hours of post-appeal services performed between November 15, 1990, and June 25, 1991. ...

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