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Lucey v. Law Offices of Pretzel & Stouffer

November 12, 1998


The opinion of the court was delivered by: Justice Leavitt

Appeal from the Circuit Court of Cook County

Honorable Loretta C. Douglas, Judge Presiding.

Plaintiff Lawrence Lucey brought the present action for legal malpractice against defendants Theodore Gertz and the law firm of Pretzel & Stouffer. The trial court dismissed plaintiff's amended complaint with prejudice on the basis that the statute of limitations on the malpractice action had expired. Plaintiff now appeals, arguing the trial court erred in dismissing his complaint and not permitting him to amend his complaint if it was properly dismissed.

Inasmuch as this case was dismissed pursuant to a motion brought under section 2-619 of the Code of Civil Procedure (Code) (725 ILCS 5/2-619 (West 1996)), we accept as true all well-pleaded facts in plaintiff's complaint. See Hermitage Corp. v. Contractors Adjustment Co., 166 Ill. 2d 72, 85, 651 N.E.2d 1132 (1995). Plaintiff's first amended complaint alleged the following. In July 1989, plaintiff was employed by The Chicago Corporation, which was in the business of providing advice and brokerage services to individuals, trusts, and corporations. Michigan Physicians Mutual Liability Company (Michigan Physicians) was a client of The Chicago Corporation, and plaintiff was responsible for this account. As an integral part of his duties at The Chicago Corporation, plaintiff would on occasion attend investment committee meetings of Michigan Physicians and counsel the investment committee regarding the company's portfolio. Michigan Physicians requested plaintiff attend its investment committee meeting scheduled for July 16, 1989.

That same month, plaintiff contemplated resigning from The Chicago Corporation and starting his own firm. On July 19, 1989, plaintiff sought legal advice from Theodore Gertz and the law firm of Pretzel & Stouffer regarding the propriety of soliciting clients prior to his resignation. Specifically, plaintiff wanted to know whether he could attend an upcoming Michigan Physicians meeting and what information he would be entitled to disclose at that meeting regarding his decision to resign from The Chicago Corporation and start his own firm. Gertz advised plaintiff he could attend the meeting if he did so in his individual capacity and not as an employee of The Chicago Corporation. Gertz suggested plaintiff pay his own expenses to attend the meeting. He further advised plaintiff to inform The Chicago Corporation, prior to attending the meeting, he was resigning to start his own firm and would be attending the meeting in his individual capacity.

In reliance on this advice, plaintiff attended the Michigan Physicians meeting in his individual capacity and at his own expense. At that meeting, he disclosed his decision to leave The Chicago Corporation and begin his own firm. On July 31, plaintiff informed The Chicago Corporation of his decision to resign, effective August 15. On August 7, Michigan Physicians informed The Chicago Corporation it would be transferring its portfolio to plaintiff's new firm. On August 25, The Chicago Corporation filed suit against plaintiff based upon the loss of the Michigan Physicians account (the Chicago Corporation suit).

Plaintiff retained Gertz and Pretzel & Stouffer to defend him in the Chicago Corporation suit. Throughout plaintiff's representation by defendants in this suit, defendants continually advised plaintiff he had a valid defense to the claims asserted by The Chicago Corporation. In June or July of 1994, for reasons unrelated to the Chicago Corporation suit, plaintiff requested defendants withdraw from representing him. Plaintiff then retained other counsel. At the time of plaintiff's complaint, the Chicago Corporation suit was still pending.

Plaintiff filed the instant malpractice action against defendants on July 11, 1995. The only date relevant to the statute of limitations in this complaint was July 1989, the date the allegedly negligent advice was given. Defendants filed a motion to dismiss, arguing plaintiff's cause of action, having accrued in July 1989, was barred by the five- year statute of limitations applicable to legal malpractice actions accruing prior to January 1, 1991. See 735 ILCS 5/13-205 (West 1992). In response to this motion, plaintiff filed his first amended complaint, the contents of which we have just set forth.

Defendants again filed a motion to dismiss, pursuant to section 2-619 of the Code (725 ILCS 5/2-619(a)(5) (West 1996)), arguing plaintiff's action was barred by the applicable five-year statute of limitations. Defendants acknowledged plaintiff's first amended complaint did set forth a new date (June or July 1994--the date upon which plaintiff's representation by defendants ended) for statute of limitations purposes. They argued plaintiff's action was, nonetheless, still barred by the five-year statute of limitations, since Illinois does not recognize the "continuous representation rule." This rule, in theory, would toll the running of the statute of limitations until representation by the defendants ceased. See Witt v. Jones & Jones Law Offices, P.C., 269 Ill. App. 3d 540, 544, 646 N.E.2d 23 (1995). The trial court dismissed plaintiff's complaint, with prejudice, on the basis that the only harm alleged by plaintiff was the filing of the Chicago Corporation suit on August 25, 1989, resulting in the statute of limitations expiring on August 25, 1994.

The primary thrust of the parties' arguments on appeal, both in their briefs and at oral argument, concerns the application, under Jackson Jordan, Inc. v. Leydig, Voit & Mayer, 158 Ill. 2d 240, 633 N.E.2d 627 (1994), of equitable estoppel, i.e., whether defendants should be equitably estopped from asserting the statute of limitations defense because plaintiff's delay in bringing suit was induced by defendants' reassurances that plaintiff had a valid defense to the claims made by The Chicago Corporation. As plaintiff acknowledges in his brief, however, it appears from both the trial Judge's oral pronouncements and her written order that the Judge was more concerned with the fact that the underlying Chicago Corporation litigation was unresolved and plaintiff, therefore, could allege no damages at that point. Without damages, the trial court reasoned, plaintiff's malpractice action had not yet accrued, and both the statute of limitations and the doctrine of equitable estoppel would be inapplicable. Cf. Jackson Jordan, 158 Ill. 2d at 253 (discussing equitable estoppel in a case where the defendant law firm's representation of the plaintiff continued past date of entry of first ruling adverse to plaintiff).

We agree with the trial court that plaintiff's malpractice action was premature, at least in the procedural context presented here. The elements of a legal malpractice claim are: (1) the existence of an attorney-client relationship that establishes a duty on the part of the attorney; (2) a negligent act or omission constituting a breach of that duty; (3) proximate cause establishing that "but for" the attorney's negligence, the plaintiff would have prevailed in the underlying action; and (4) actual damages. Serafin v. Seith, 284 Ill. App. 3d 577, 586-87, 672 N.E.2d 302 (1996). The injuries resulting from legal malpractice are not personal injuries but pecuniary injuries to intangible property interests. Glass v. Pitler, 276 Ill. App. 3d 344, 349, 657 N.E.2d 1075 (1995). Damages must be incurred and are not presumed (Farm Credit Bank v. Gamble, 197 Ill. App. 3d 101, 103, 554 N.E.2d 779 (1990)), and the plaintiff must affirmatively plead and prove that he suffered injuries as a result of the attorney's malpractice. Bartholomew v. Crockett, 131 Ill. App. 3d 456, 465, 475 N.E.2d 1035 (1985). Where the mere possibility of harm exists or damages are otherwise speculative, actual damages are absent and no cause of action for malpractice yet exists. See Farm Credit Bank, 197 Ill. App. 3d at 104.

Both parties have asserted at various times in the proceedings leading to this appeal that plaintiff's cause of action accrued in July 1989, when the allegedly negligent advice was first given. That is not the law in Illinois. Defendants may have breached a duty owed plaintiff when they gave him allegedly negligent advice in July 1989, but a cause of action for legal malpractice does not accrue until a plaintiff discovers, or within a reasonable time should discover, his injury and incurs damages directly attributable to counsel's neglect. See Goran v. Glieberman, 276 Ill. App. 3d 590, 594-95, 659 N.E.2d 56 (1995). In Goodman v. Harbor Market, Ltd., 278 Ill. App. 3d 684, 663 N.E.2d 13 (1995), this court commented upon the position taken by the parties in this case:

"The relationship between an attorney and the client is one in which the attorney is charged with a duty to act skillfully and diligently on the client's behalf. Given the duty, the client is presumed unable to discern any misapplication of legal expertise. As the California Supreme Court has stated:

'If [the client] must ascertain malpractice at the moment of its incidence, the client must hire a second professional to observe the work of the first, an expensive and impractical duplication, clearly destructive of the confidential relationship between the practitioner and his client.' (Neel v. Magana, Olney, Levy, ...

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