Appeal from the Circuit Court of Cook County. Honorable Wayne D. Rhine, Judge Presiding.
Released for Publication December 5, 1997.
Presiding Justice Hartman delivered the opinion of the court. Hoffman and South, JJ., concur.
The opinion of the court was delivered by: Hartman
PRESIDING JUSTICE HARTMAN delivered the opinion of the court:
Plaintiffs, the law firms of Greenberger, Krauss & Tenenbaum and James J. Moylan and Associates, Ltd., sued defendant, Betty Catalfo (Betty), for attorneys' fees she incurred during their representation of Betty's son, Anthony Catalfo (Anthony), in several related legal matters. A jury found for plaintiffs and awarded Stephen Senderowitz, of the Greenberger firm, $37,678 in attorneys' fees, and James Moylan $22,634 in attorneys' fees. On appeal, Betty argues that plaintiffs' claims are barred by the statute of frauds (740 ILCS 80/1 (West 1994)), and contends that the circuit court committed errors before and during trial, which prejudiced her and warrant a new trial. In their cross-appeal, plaintiffs dispute the circuit court's denial of their joint motion for prejudgment interest on their original fee award, as well as attorney's fees.
Plaintiffs' separate complaints alleged that they each were retained by Betty to represent Anthony after he and another trader made a series of improper trades at the Chicago Board of Trade (CBOT), which caused millions of dollars in losses to others. They alleged that Betty promised to pay each for the legal services they rendered on behalf of her son, which she later refused to honor. Count I of each complaint set forth a claim for breach of contract; count II of both sought damages for an account stated; and each count III stated a claim for quantum meruit. In her answers, Betty admitted paying plaintiffs a retainer fee, but denied promising to pay the remainder of Anthony's legal bills; however, she did not set forth the statute of frauds as an affirmative defense in these pleadings.
The circuit court granted Betty's motion to consolidate the two cases for discovery and trial. After the parties completed discovery, Betty moved to continue the trial and for summary judgment, asserting that defendants could not recover from her based upon application of the statute of frauds. The court denied Betty's summary judgment motion and scheduled the case for trial. Betty thereafter filed affirmative defenses, invoking the statute of frauds. She twice moved to continue the trial, claiming she had recently undergone dental work that prevented her from traveling to Chicago from her home in New York, supported by a letter and an unsworn affidavit from her prosthodontist, noting that she could not travel for twelve to sixteen weeks. The court granted her first motion for continuance on that basis from a trial set for October 5, 1995; however, it denied her second motion and set the case for trial, after speaking by long distance telephone with both Betty and her doctor. The court placed on the record the fact that Betty was able to communicate and be understood and that the doctor thought her problem was essentially cosmetic. The trial was held on December 7, 1995, in her absence.
Moylan and Senderowitz testified at trial that their representation of Anthony began in October 1992, shortly after his first and only day as a futures trader in the United States Treasury Bond pit at CBOT. He deposited approximately $30,000 of his own money into a trading account, and a clearing broker agreed to cover his transactions, which was limited to trading the amount of his deposit. Although this amount would have allowed him to make about 10 trades, he and his friend, Darrell Zimmerman, placed hundreds of trades valued at millions of dollars, far beyond their authorized limits. Anthony made more than $1.5 million in profits that day, but Zimmerman lost money, and the clearing broker had to pay more than $9.5 million to cover the trades.
Several criminal, civil, and administrative actions were brought against Anthony and Zimmerman. The brokerage house initiated an arbitration proceeding, seeking to recover its loss. The CBOT brought a disciplinary action for violation of its rules. The Commodities Futures Trading Commission began investigating the case in anticipation of federal administrative action. Lastly, after a federal criminal investigation, a federal grand jury indicted Anthony for committing commodity fraud and wire fraud.
At trial of the instant consolidated cases, evidence was adduced revealing that after the trading spree occurred, Moylan, who specializes in securities and commodities law, received a telephone call from an attorney and former colleague named Jerry Martin, whose partner, John Sutter, was an attorney for the Catalfo family. Martin asked Moylan to represent Anthony. Sutter then called Moylan, represented himself as Anthony's attorney, and promised that Anthony would be in touch with Moylan. Because Moylan specialized in civil matters, he asked Senderowitz, who was experienced in commodity criminal litigation, to assist him. A few days later, both attorneys met with Anthony, who signed separate written representation and fee agreements, in which Anthony agreed to pay each attorney a $10,000 retainer. Without written representation authority signed by Anthony, neither attorney could appear on his behalf before the administrative bodies or courts.
The attorneys soon learned that Anthony could not pay the retainer fees. They advised him that they could not represent him. Anthony then told plaintiffs that his mother, Betty, who lived in New York, would retain them and would pay the attorneys' fees. In November 1992, Senderowitz went to New York and met with Betty, over a period of seven hours, in Sutter's office, and at her home. She asked for the details relating to the case. She inquired about his and Moylan's qualifications and experience. Senderowitz asked about her ability to pay attorneys' fees. He told her that she would have to give each attorney a retainer check if she wanted them to represent Anthony, as well as future payment arrangements that would be needed to proceed further. Betty agreed and gave Senderowitz two checks, one payable to him and the other to Moylan, each in the amount of $10,000. She assured Senderowitz that she had sufficient assets to cover attorneys' fees.
Plaintiffs worked on Anthony's case and, after their billing amount exceeded the retainer fees, they began sending Anthony monthly billing statements; he was living with his mother and they believed he would give her the bill, but they received no response from either party. The attorneys represented Anthony at the arbitration hearing in April 1993, at which Anthony and Zimmerman were found jointly liable for $9.5 million to the brokerage house. In June, Moylan issued a final billing statement to Anthony and Betty in the amount of $22,634.10, and Senderowitz sent a final bill to them for $37,678.77.
Moylan and Senderowitz testified that they each spoke with Betty numerous times during this period of representation. Moylan had at least three conversations with Betty, during which he explained the status of the case and the strategies he was considering. During these conversations, Betty assured him she would pay for his services. When Senderowitz met Betty in New York, she asked him to keep her informed, and he later wrote her a detailed letter explaining the progression of the case. He also spoke with her by telephone on several other occasions. Moylan did not ask Betty to sign a written agreement because she was not his client, and he did not want "to put a chill on that relationship by turning it into some kind of commercial relationship." He sent Anthony the billing statements rather than Betty because he was the client and he did not want to breach the attorney-client privilege with Anthony. Anthony was living with Betty most of this time. Likewise, Senderowitz felt no need to obtain a written agreement from Betty because she was not his client, and he knew she could afford to pay him. Senderowitz generally did not ask his civil law clients to sign retainer agreements, although he usually did so with his criminal law clients.
After Senderowitz and Moylan finished testifying, plaintiffs introduced evidence of the retainer fees Betty paid, their billing statements, and the letter Senderowitz wrote to Betty. The court read to the jury an admission by Betty that it was she who paid other attorneys to represent Anthony at his criminal trial and the appeal from his criminal conviction. The defense presented no testimony, but introduced several exhibits before resting its case. The circuit court denied the parties' motions for a directed verdict and submitted the case to the jury, which returned a verdict in favor of plaintiffs, awarding Moylan $22,634.10, and Senderowitz $37,678.77. As to each plaintiff, the jury was asked to answer a special interrogatory: "Do you find that the agreement between the plaintiff *** and the defendant Betty Catalfo was the promise to pay the debt of another person?" to which the jury answered "no" in each case. The court thereafter severed the two cases and entered a separate judgment for each plaintiff. Betty unsuccessfully moved for judgment notwithstanding the verdict, or a new trial, pursuant to ...