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Schweihs v. Davis

November 03, 2003

MELINDA SCHWEIHS, PLAINTIFF-APPELLANT,
v.
DAVIS, FRIEDMAN, ZAVETT, KANE AND MACRAE AND JAMES L. RUBENS, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County Honorable David Donnersberger, Judge Presiding

The opinion of the court was delivered by: Justice McNULTY

UNPUBLISHED

Illinois courts began working on the divorce of Daniel and Melinda Schweihs in 1989. This case is further litigation related to that divorce. Following several appeals in the divorce proceeding and related litigation, Melinda brought this lawsuit charging her divorce attorneys with malpractice. She had attempted to appeal from an order awarding attorney fees to be paid from the marital estate to her husband's attorneys. This court dismissed the appeal because Melinda's attorneys did not file a timely notice of appeal.

The trial court granted Melinda's attorneys summary judgment, finding that Melinda would not have won any relief even if her attorneys had filed a timely notice of appeal. Melinda now appeals again. This time we have jurisdiction.

We agree with the trial court that Melinda would not have won on appeal, and we affirm the judgment against Melinda on her claims for the fees the marital estate paid to Daniel's attorneys. But we find that Melinda has presented sufficient evidence to create a material issue of fact as to whether the attorneys breached their contract with her, and whether that breach entitles her to a refund of the fees she paid them for the appeal they failed to timely file. Therefore we affirm the judgment in part, reverse in part, and remand for yet further proceedings.

BACKGROUND

In 1988 two directors of Disciplined Investment Advisors (DIA) voted to terminate DIA's employment of Daniel, a shareholder of DIA. DIA then sued to enjoin Daniel from telling DIA's clients that he represented DIA. Daniel countersued the directors for breach of their fiduciary duties to shareholders of DIA.

Daniel petitioned for divorce from Melinda in 1989. He admitted that the marital estate included his counterclaim against the directors of DIA. In the course of the divorce litigation, the parties contested numerous issues concerning temporary child support, maintenance, and the disposition of marital assets. On January 3, 1990, the court entered an order memorializing the agreed resolution of a number of these issues. The order included the following provision:

"The presently outstanding attorney fees to be paid in connection with Daniel's Disciplined Investment Advisors litigation (DIA) including all contingency fees shall not exceed 33 1/3 % of the ultimate recovery by settlement or trial. Should Daniel volunteer fee payments in excess of 33 1/3 % the trial court herein shall have jurisdiction to determine the allocation thereof in the division of marital property."
On July 17, 1990, Daniel signed an agreement with the law firm of Spence, Moriarity & Schuster (SMS), in which SMS agreed to represent Daniel in his lawsuit against the directors of DIA in exchange for "40% of the gross amount received." The letter agreement explained:
"The above fees apply to any and all amounts recovered for me, including amounts recovered for the value of my stock in the company. By 'gross amount,' I mean that sum received before any expenses that have been advanced by you have been deducted from the amount received."
Melinda moved to compel Daniel to settle the lawsuit and use the settlement funds to support his children. Daniel, through SMS, opposed the motion. In 1994, after the parties exhausted all other assets including the marital home, the court ordered Daniel to sell his cause of action against the directors of DIA, in effect ordering Daniel to settle the case. The directors had offered $4.7 million to be paid over 10 years. The court ordered acceptance of that offer.

SMS petitioned for an award of 40% of the settlement amount as their attorney fees under the contract with Daniel. An attorney representing the children of Daniel and Melinda also petitioned for fees, as did a law firm that initially represented Daniel in the DIA litigation. Following hearings the trial court found the present value of the settlement to be $3,950,000.

The judge held:

"Dan Schweihs individually did not have the authority to bind the marital estate to the 40-percent contingent fee contract. And this agreement is unenforceable. The contingent fee agreement of up to one-third of the gross amount received is enforceable."
Attorneys later asked for clarification of whether the judge meant that the contingent fee contract was entirely unenforceable "[a]against anyone." The court answered that Daniel "could not bind the marital estate," but "[o]bviously, he could bind himself."

From the marital estate the court awarded the petitioning attorneys fees totaling one-third of the present value of the settlement, allocating $128,232.92 to the attorney for the children, $67,054.63 to the ...


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