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05/17/96 MALCOLM A. CHANDLER v. MAXWELL MANOR

May 17, 1996

MALCOLM A. CHANDLER, PLAINTIFF-APPELLEE,
v.
MAXWELL MANOR NURSING HOME, INC., AN ILLINOIS CORPORATION, AND JOE-ANN MCCLANDON, DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Cook County. Honorable David G. Lichtenstein, Judge Presiding.

The Honorable Justice Gordon delivered the opinion of the court: Cousins, Jr. and Hourihane,* JJ., concur.

The opinion of the court was delivered by: Gordon

The Honorable Justice GORDON delivered the opinion of the court:

Plaintiff, Malcolm A. Chandler, brought this action to recover fees for legal services allegedly rendered on behalf of defendant Maxwell Manor Nursing Home, Inc. (Maxwell Manor). At the conclusion of a bench trial, the court entered judgment in favor of the plaintiff and found that both defendants, Maxwell Manor and JoeAnn McClandon, were liable as principals.

On appeal, the defendants argue that the trial court erred in awarding fees to the plaintiff where the evidence showed that many of the plaintiff's services were not requested or were rendered after the plaintiff "suspended" his representation of Maxwell Manor due to defendants' nonpayment of fees. Defendant McClandon also argues that the trial court erred in finding her principally liable with Maxwell Manor for plaintiff's fees. She contends that she was a gratuitous surety of Maxwell Manor and that she was relieved of any liability as a surety when the plaintiff increased his hourly rate.

At trial, the plaintiff introduced into evidence a written agreement dated May 25, 1990 addressed to JoeAnn McClandon at Maxwell Manor. The letter acknowledged McClandon's request that the plaintiff represent Maxwell Manor, discussed the types of services that the plaintiff would provide, set forth plaintiff's billing procedures and hourly rate ($150 per hour), sought payment of a retainer fee, and requested that the letter be signed by McClandon and "any co-owners." With respect to liability for payment, the letter provided as follows:

"The persons responsible for the fees and other charges must include not only the legal entity that operates the home, but every individual holding an interest of twenty percent or more, directly or through other individuals and entities, in the operator or the underlying real estate, or both.

***

"You may wish to have the advice of your personal attorney before agreeing to the terms of this letter, and I encourage you to submit it to him or her for examination. When you and any co-owners are ready to sign a copy of it for my files, please return it with the required deposit so that my work may begin with the least possible delay."

Signature lines were provided in the lower left-hand corner of the letter. Above those signature lines was the following language:

"The undersigned owners of the nursing home known as Maxwell Manor *** have read and do agree to the terms of the foregoing letter, including the terms of our individual responsibility for fees and charges incurred in connection with legal services to it."

Below the first signature line was typed the name "JoAnne McLandon." On that line appeared the signature of "JoeAnn McClandon." The remaining signature lines were blank.

Also introduced into evidence were copies of plaintiff's statements for legal services, totalling $21,718 for over 120 hours of work, dated September 3, 1992; October 5, 1992; November 2, 1992; and December 11, 1992; and a copy of a letter from the plaintiff dated October 5, 1992. All of these documents were addressed to Mrs. JoeAnn McClandon. Below her name appeared the name of Maxwell Manor. In the October 5, 1992 letter, the plaintiff stated that his September billing statement for services rendered in August had not been paid and discussed the need for prompt payment. Attached to that letter was plaintiff's October billing statement for the past due fees and fees for legal services performed in September. The letter concluded by stating "work on Maxwell Manor's cases will be suspended on Friday, October 9th, pending receipt of full payment of the enclosed statement." Although plaintiff's fees were not paid, he performed an additional 7.25 hours of services during the month of October, 3.25 hours on October 6 and 4 hours during the period of October 19 to 30. Plaintiff's billing statement dated November 2, 1992, reflected these services. On December 11, 1992, the plaintiff sent a billing statement for services he rendered in August and September of 1991 totalling 13.25 hours that had not been billed previously due to Maxwell Manor's "financial constraints."

At trial, the plaintiff explained his billing procedures. He testified that he kept time records on legal matters in his diary, transferred that information onto ledger sheets and issued billing statements using the ledger sheets. The plaintiff introduced into evidence copies of portions of his 1992 diary entries and corresponding ledger sheets with respect to the services he performed on behalf of Maxwell Manor. He stated that in 1991 he prepared a report that discussed various legal actions that Maxwell Manor could file against various governmental agencies to recover monies for services rendered to certain Maxwell Manor residents. That report was entered into evidence. The plaintiff stated that in 1992 he represented Maxwell Manor before the Chicago Department of Health and the Illinois Department of Public Health with regard to alleged regulatory violations. The most serious charges involved an alleged homicide of a resident at Maxwell Manor by another resident and the drowning death of a third resident. With respect to those charges, the plaintiff communicated by telephone and in writing with the city and state agencies and with personnel at Maxwell Manor; examined documents, complaints, correspondence and medical files; prepared summaries of charges, evidence and defenses; performed legal research and prepared trial briefs; attended prehearing conferences and discussed settlement options; and attended administrative hearings where he presented testimonial and documentary evidence. In support of the various billing entries made relative to these services, the plaintiff admitted into evidence copies of follow-up letters, reports, summaries, notes and other correspondence he prepared.

With respect to the four hours of services performed after October 9, 1992, the date he threatened to suspend legal representation of Maxwell Manor, the plaintiff testified that he had a telephone conversation with legal counsel for the City of Chicago on October 22, 1992 in which they reviewed a previously held pre-hearing conference. As evidenced by plaintiff's billing statement dated November 2, 1992, the plaintiff had an additional conversation with the City's legal counsel on October 30, 1992 concerning the pending charges as well as new charges arising from the City's inspection of Maxwell Manor on September 21, 1992. That billing statement also indicated that the plaintiff had a telephone status conference with state officials on October 19, 1992 and that he made telephonic reports about those calls to personnel at Maxwell Manor. Plaintiff also introduced a copy of a letter addressed to him from the law department of the City of Chicago dated November 3, 1992 regarding violations cited as a result of the City's September 21, 1992 inspection of Maxwell Manor and a copy of his letter dated November 6, 1992 to Ruth Pearce, the administrator at Maxwell Manor, transmitting the City's November 3rd letter. The plaintiff rested without calling any additional witnesses.

The defendants called Donald F. Hemmsch, an attorney, who testified that in the fall of 1992 he negotiated a settlement with the Illinois Department of Public Health on behalf of Maxwell Manor with respect to the homicide charge pending. Hemmsch testified that he expended a total of between five to ten hours to resolve this matter and that in doing so he conversed with various representatives of that Department and Maxwell Manor and reviewed medical records and history. Hemmsch further testified that he did not need to prepare a synopsis of the case or to collate any materials in preparation for the settlement discussions.

JoeAnn McClandon testified concerning her relationship to Maxwell Manor, a not-for-profit corporation. McClandon stated that she was not a board member for Maxwell Manor. She stated that she was a partner in BMJ, the partnership that owned the building leased to Maxwell Manor. McClandon identified the lease between Maxwell Manor and BMJ and identified the signatures on that lease as Carol Buford, who signed as general partner of BMJ, and Roy T. Cogdell, who signed as secretary of Maxwell Manor.

McClandon testified that she contacted the plaintiff in August of 1992 and asked him to attend settlement negotiations between Maxwell Manor and the Department of Public Health concerning the murder of a resident at Maxwell Manor by another resident. She stated that she only asked the plaintiff to "sit with" Maxwell Manor's representatives "while they were having the negotiations." McClandon stated that she also contacted the plaintiff around August 19, 1992 regarding the State's request that Maxwell Manor turn over its "license" in exchange for a "conditional license." According to McClandon, the plaintiff agreed to call the Illinois Department of Public Health regarding the licensing change and to determine whether that Department had conducted an "exit interview" at Maxwell Manor "to make sure our rights were not violated." McClandon denied asking the plaintiff to do anything other than sit in on the negotiation session, answer her question regarding the conditional license and check on the lack of an "exit interview."

McClandon further testified that in April of 1991 she had a conversation with the plaintiff concerning Maxwell Manor's interest in filing a lawsuit against the Department of Public Health. She stated that she told him she did not want to pursue any litigation. With respect to entries made on plaintiff's billing statement regarding conversations between the plaintiff and McClandon, McClandon admitted having a conversation on August 20, 1992; denied having a conversation on August 26, 1992, stating she left for Detroit, Michigan on that date; denied having a conversation on August 27, 1992, stating she was in Detroit on that date; admitted having a conversation on September 1, 1992; denied having conversations on September 3 and 9, 1992, stating she was in Orlando on those dates; could not recall whether she did or did not have conversations on September 16 and 17, 1992; denied having a conversation on September 22, 1992, even though she was in Chicago on that date; admitted to a conversation on ...


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