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Hess v. Kanoski & Associates

April 23, 2010

LAWRENCE J. HESS AND VICKIE C. WARREN, PLAINTIFFS,
v.
KANOSKI & ASSOCIATES, A PROFESSIONAL CORPORATION, RONALD L. KANOSKI, AND KENNITH W. BLAN, JR., DEFENDANTS.



The opinion of the court was delivered by: Jeanne E. Scott, District Judge

OPINION

This cause is before the Court on Defendants Kanoski & Associates's, Ronald L. Kanoski's, and Kennith W. Blan, Jr.'s Motion to Dismiss (Motion) (d/e 13) and Memorandum of Law in Support of Defendants' Motion to Dismiss (Memorandum) (d/e 14). Plaintiffs Lawrence J. Hess and Vickie C. Warren have filed Plaintiffs' Brief in Opposition to Defendants' Motion to Dismiss (d/e 15). This matter is fully briefed and ripe for adjudication. For the following reasons, Defendants' Motion is denied.

FACTS

Plaintiff Hess is an attorney licensed to practice law in the States of Illinois and Missouri. He is married to Plaintiff Warren, and both Plaintiffs are residents of St. Louis County, Missouri. Defendant Kanoski & Associates (the Firm) is a professional corporation organized under the laws of the State of Illinois whose employees are engaged in the practice of law. While the Firm's principal office is in Springfield, Illinois, it also maintains offices in Bloomington, Champaign, Decatur, Macomb, Peoria, Quincy, and Rushville, all within the State of Illinois. Defendants Kanoski and Blan are Illinois residents and attorneys licensed to practice law in the State of Illinois. Defendant Kanoski is the president and sole shareholder of the Firm; Defendant Blan is the sole proprietor of Blan Law Offices.

From May 9, 2001, until February 14, 2007, Plaintiff Hess was an employee of the Firm. Hess and the Firm entered into an Employment Agreement, which specified the terms and conditions of Hess' employment and included provisions related to Hess' compensation. Complaint (d/e 1), Ex. A, Employment Agreement. During Hess' employment with the Firm, Hess was referred and given responsibility for, among others, the following cases: the Loyd Case, the Eller Case, the Hoelscher Case, the Fetterman Case, the Lowery Case, the 170 Dow Corning Breast Implant Cases, and the Thompson Case (collectively the Disputed Cases).

At first, things went relatively well between Hess and the Firm. Hess obtained a $1,000,000 verdict in a medical malpractice case in 2003, and generated nearly $950,000 in attorneys' fees for the Firm between October 2003 and April 2005. Starting in 2002, Hess alleges that he obtained statutory attorney's liens pursuant to 770 ILCS 5/1 on the Disputed Cases. In March 2006, things turned sour between Hess and Defendants. Hess alleges that Defendants Kanoski and Blan, without Hess' knowledge or consent, took over the Hoelscher Case while Hess was out of the office with an illness. Hess further alleges that Defendants Kanoski and Blan took over other Disputed Cases, settling some of them, and losing the Eller Case at trial. Complaint, ¶¶ 33-38.

On February 14, 2007, Defendant Kanoski informed Hess that the Firm would no longer handle medical malpractice cases, and Kanoski fired Hess. Hess returned to the office on February 22, 2007, to collect his belongings, but discovered that the Firm "had thrown away all his personal and professional belongings . . . and that all of the files that were in his office had been removed from his office. [Hess] was also denied access to his computer files and work product." Complaint, ¶ 43. Apparently, Hess obtained new employment with The Rex Carr Law Firm in East St. Louis, Illinois.

On May 15, 2008, Hess' attorney, Bruce A. Carr, also of The Rex Carr Law Firm, sent notices of attorney's liens on Hess' behalf to Defendants here and to the parties in the Thompson, Loyd, and Eller Cases. Defendants allege that from February 1, 2008, through at least December 1, 2008, Hess' registration status with the Illinois Attorney Registration and Disciplinary Commission was "inactive," and that Carr knew that Hess was not authorized to practice law in the State of Illinois during that time period.

Defendants filed suit against Hess and Carr in the Circuit Court of Sangamon County, Illinois, on December 1, 2008 (State Court Case). Memorandum, Ex. A, Complaint at Law. Defendants allege that Hess and Carr committed mail fraud in contravention of 720 ILCS 5/17-24(b)(3); falsely represented to the clients in the Disputed Cases that they were the attorneys responsible for the Disputed Cases; and conspired to fraudulently deprive Defendants of attorneys' fees in the Loyd, Eller, and Thompson Cases, in violation of 720 ILCS 5/16-1(a). Defendants also allege that Hess violated 720 ILCS 5/32-5(a) by falsely impersonating an attorney authorized to practice law. Carr, who represents Plaintiffs in this lawsuit, was disqualified from representing Hess in the State Court Case. Memorandum, Ex. D, Docket Sheet for Case No. 2008 L 291, Docket Entry of July 8, 2009.

On February 23, 2009, Plaintiffs here filed a complaint nearly identical to the Complaint in this matter in federal court in Missouri. However, on August 28, 2009, the U.S. District Court for the Eastern District of Missouri dismissed Plaintiffs' case for lack of personal jurisdiction. Memorandum, Ex. I, Order of August 28, 2009.

On September 17, 2009, Hartford Casualty Insurance Company, Defendants' insurer, filed a declaratory judgment action in the U.S. District Court for the Central District of Illinois against the Firm, Kanoski, Hess, and Warren. Cent. Dist. Ill. Case No. 09-3242, Complaint for Declaratory Judgment (d/e 1). Hess and Warren filed a cross claim against the Firm, Kanoski, and Blan, asserting the same causes of action that they asserted in the previously dismissed Missouri case. Cent. Dist. Ill. Case No. 09-3242, Cross-claim/Third-Party Complaint (d/e 9). Judge Richard Mills dismissed the case on December 18, 2009, after the Firm, Kanoski, and Blan withdrew their request for coverage from Hartford. Cent. Dist. Ill. Case No. 09-3242, Opinion (d/e 24).

Plaintiffs then filed their suit in this Court on December 23, 2009, with jurisdiction predicated on diversity of citizenship. Complaint. The claims are identical to the ones presented in the Missouri suit, and to the ones presented in the cross claim in the declaratory judgment action. The eleven-count Complaint alleges claims for: (1) violations of the Wage Payment and Collection Act, 820 ILCS 115/1 et seq.; (2) deceptive practices; (3) wrongful discharge; (4) breaches of contract: (5) inducing breaches of contract; (6) tortious interference with contracts, business expectancies, and prospective economic advantages; (7) unjust enrichment and quantum meruit; (8) intentional and negligent spoliation of evidence and conversion of Hess' property; (9) breach of fiduciary duty; (10) loss of consortium brought by Plaintiff Warren; and (11) illegal conspiracy.

Defendants then filed their Motion under Federal Rule of Civil Procedure 12(b)(1), asking the Court to abstain from hearing Plaintiffs' claims under the doctrines espoused in Colorado River Water Conservation District v. United States, 424 ...


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