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Goodman v. Levy

February 28, 2007

ELLEN GOODMAN, PLAINTIFF,
v.
STEPHEN LEVY, DEFENDANT.



The opinion of the court was delivered by: Judge Robert W. Gettleman

MEMORANDUM OPINION AND ORDER

Plaintiff Ellen Goodman, formerly known as Ellen Goodman Toushin, brought a complaint against defendant Stephen Levy, invoking this court's diversity jurisdiction under 28 U.S.C. 1332, alleging legal malpractice. Defendant filed a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) and argues that plaintiff is not entitled to a trial by jury. For the reasons stated below, the court denies defendant's motion to dismiss and recognizes plaintiff's right to a jury trial.

FACTS*fn1

Plaintiff, a citizen of Florida, retained defendant, a citizen of Illinois doing business in Chicago, to represent her in a divorce proceeding in the Circuit Court of Cook County, Illinois. Plaintiff paid defendant's fees based on his billings to her at an agreed-upon hourly rate. According to plaintiff, there were many contested issues in the divorce case, including: (1) disputes as to whether assets were marital or non-marital; (2) the valuation of assets; (3) loans made by plaintiff to her husband's business; and (4) contributions made by plaintiff to businesses and property her husband claimed as non-marital. The trial judge ordered the attorneys to submit witness lists and trial documents to the court and opposing counsel regarding all pending matters.

Plaintiff provided defendant with numerous documents concerning the contested issues. She provided him with titles to several antique cars, which plaintiff claimed were gifts from her husband and which her husband claimed were in plaintiff's name for financial reasons only. Plaintiff also provided a letter from her husband indicating the cars were gifts, as well as photos and evidence of payments plaintiff made from her own bank accounts for the storage and maintenance of the vehicles. Defendant failed to disclose the documentation regarding the vehicles to the judge or opposing counsel, which prohibited him from introducing the documents as evidence at trial.

Plaintiff also provided defendant with a $40,000 promissory note documenting non-marital inheritance loaned by plaintiff*fn2 to her husband's business, which the husband claimed was not a marital asset. Plaintiff's husband's business defaulted on the loan, and plaintiff directed defendant to enforce the note. Defendant told plaintiff he would instead enforce the note at the divorce trial, but he did not depose plaintiff's husband, did not disclose plaintiff's claim on the note, and did not tender the necessary documents to the court and opposing counsel. Defendant was therefore barred from introducing evidence at trial that plaintiff was entitled to receive the principal and accrued interest due under the note. By the time the divorce proceedings concluded, plaintiff's claims against her husband's business on the note were barred by the governing statute of limitations.

Additionally, plaintiff provided defendant with documentation that she had managed her husband's businesses pursuant to a power of attorney while her husband was incarcerated for tax fraud. During that time, plaintiff was paid a salary commensurate with the salary her husband received when he managed the businesses. Plaintiff also contributed portions of her salary to the businesses, which were experiencing financial trouble. According to plaintiff, defendant did not assert plaintiff's claim for reimbursement of these contributions. Further, plaintiff invested several hundred thousand dollars in the upgrading and remodeling of a building in which plaintiff and her husband lived, and which also served as a principal place of operation for one of plaintiff's husband's businesses. Plaintiff asked defendant to seek compensation for the contributions she had made to her husband's business, but defendant failed to do so.

According to plaintiff, defendant also failed to have other assets of the marital estate valued properly, which resulted in a grossly understated valuation of the estate. Further, defendant failed to determine which businesses owned by plaintiff's husband were marital property, and he failed to analyze plaintiff's contributions to these businesses to determine if the businesses had been converted to marital property through her contributions.

Finally, defendant was not prepared for trial. After defendant commenced the cross-examination of plaintiff's husband, he asked for a continuance, stating that he needed additional preparation time. The trial judge denied defendant's request.

Plaintiff filed a claim for legal malpractice, claiming that defendant breached his duty of care and did not handle her case with ordinary care and skill when he failed to: (a) disclose documents and witnesses to the court and opposing counsel; (b) understand Illinois marital law as applied to plaintiff's ownership of antique vehicles; (c) sue on plaintiff's promissory note; (d) have assets of the marital estate valued properly: (e) introduce evidence at trial to rebut plaintiff's husband's valuation of the marital assets; (f) analyze the husband's businesses to determine if they were marital or non-marital; (g) recover contributions made by plaintiff to her husband's businesses and properties; (h) investigate plaintiff's husband's ownership or interest in the properties where his businesses were located; and (i) prepare for the cross-examination of plaintiff's husband. Plaintiff alleges that as a result of defendant's negligence, she suffered damages, including: (a) the loss of her equitable share of the marital estate; (b) the loss of her marital interests in and contributions to her husband's businesses; (c) the loss of her vehicles and a credit for their market value; (d) the loss of her ability to recover on her promissory note; and (5) additional fees and expenses.*fn3

DISCUSSION

Motion to Dismiss

The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). Federal notice pleading requires only that the plaintiff "set out in her complaint a short and plain statement of the claim that will provide the defendant with fair notice of the claim." Scott v. City of Chicago, 195 F.3d 950, 951 (7th Cir. 1999). When ruling on a motion to dismiss, the court must accept all factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Szumny v. Am. Gen. Fin., Inc., 246 F.3d 1065, 1067 (7th Cir. 2001).

Under Illinois law, "[t]he 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." Lucey v. Pretzel & Stouffer, 301 Ill. App. 3d 349, 353 (1st Dist. 1998). See also Havoco of ...


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