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Lawrence J. Hess v. Ronald O. Loyd and Cathy J. Loyd

January 17, 2012

LAWRENCE J. HESS,
PLAINTIFF-APPELLANT,
v.
RONALD O. LOYD AND CATHY J. LOYD,
DEFENDANTS-APPELLEES
BRUCE A. CARR, PARTY-APPELLANT.



Appeal from the Circuit Court of Montgomery County. Honorable Kelly D. Long, Judge, presiding. No. 08-L-11

The opinion of the court was delivered by: Justice Spomer

NOTICE

The text of this decision may be changed or corrected prior to the filing of a Petition for Rehearing or the disposition of the same.

JUSTICE SPOMER delivered the judgment of the court, with opinion. Justice Stewart concurred in the judgment and opinion.

Justice Goldenhersh concurred in part and dissented in part, with opinion.

OPINION

¶ 1 The plaintiff, Lawrence J. Hess, appeals from the December 5, 2008, order of the circuit court of Montgomery County which granted a judgment on the pleadings to the defendants, Ronald O. Loyd and Cathy J. Loyd, pursuant to section 2-615(e) of the Illinois Code of Civil Procedure (the Code) (735 ILCS 5/2-615(e) (West 2008)). Mr. Hess and his attorney, Bruce A. Carr, also appeal from the January 30, 2009, order of the circuit court of Montgomery County, as amended by an order dated March 2, 2010, which was entered while this appeal was held in abeyance pursuant to an order entered by this court. Pursuant to the circuit court's orders, Mr. Hess and Mr. Carr are required to pay the Loyds a total of $9,873.83 for attorney fees and costs as sanctions pursuant to Illinois Supreme Court Rule 137 (eff. Feb. 1, 1994). For the following reasons, we affirm all three orders entered by the circuit court. Also before this court is the Loyds' motion for sanctions on appeal pursuant to Illinois Supreme Court Rule 375 (eff. Feb. 1, 1994), which was taken with the case. For the following reasons, we allow the motion and remand this case to the circuit court for a determination of the amount of sanctions on appeal. Finally, before this court is the defendants' emergency motion to supplement the record with this court's previous decision in Loyd v. Billiter, No. 5-09-0065 (Oct. 15, 2010) (unpublished order pursuant to Illinois Supreme Court Rule 23 (eff. May 30, 2008)). We hereby deny the motion as moot, as this court is fully cognizant of its prior decisions and has fully considered the relevance of that decision herein.

¶ 2 FACTS

¶ 3 Mr. Hess is an attorney who is a former associate of Kanoski & Associates, an incorporated law firm. Mr. Hess, through his attorney, Mr. Carr, filed a complaint in the circuit court of Montgomery County on July 17, 2008, against the Loyds, who were clients of Kanoski & Associates during the time that Mr. Hess was employed there. Attached to the complaint is a copy of a contingency fee contract, dated February 11, 2002, between Kanoski & Associates and the Loyds, whereby the Loyds agreed that Kanoski & Associates would pursue their medical malpractice claim on their behalf. Also attached to the complaint is an employment contract between Mr. Hess and Kanoski & Associates, dated May 9, 2001, which clearly states the following:

"Employee acknowledges that while licensed employees must perform all legal services, the clients contracting for said services are clients of the Corporation and not of any individual employee."

¶ 4 The employment contract further provides that Mr. Hess would receive, as compensation for his services, a salary plus a bonus in the form of a percentage of the fees he generated on behalf of Kanoski & Associates.

¶ 5 The complaint alleges that Kanoski & Associates assigned the Loyds' medical malpractice file to Mr. Hess for handling. The complaint contains a multitude of paragraphs regarding other clients' files that Mr. Hess worked on and other allegations that appear to be directed at the conduct of Kanoski & Associates which have no relevance to the Loyds, who are the sole defendants. The complaint alleges that on February 14, 2007, Kanoski & Associates terminated Mr. Hess's employment in bad faith and destroyed his personal files and work product, that Mr. Hess added over $1 million in value to Kanoski & Associates' cases, that Kanoski & Associates fired him to deprive him of his bonuses, and that Kanoski & Associates owed Mr. Hess $316,616.21 in unpaid salary and bonuses.

¶ 6 According to the complaint, and as substantiated by exhibits, in May 2008, Mr. Hess, through his attorney, Mr. Carr, of the Rex Carr Law Firm, where Mr. Hess was then employed, sent letters to many of the clients of Kanoski & Associates, including the Loyds, "notifying" them that he remained their attorney and was responsible for their files. The Loyds sent a return letter to Mr. Carr, which is also attached to the complaint and stated the following:

"I received your letter regarding Mr. Hess. I am writing to inform you that Mr. Hess IS NOT responsible for my lawsuit. I have a very competent attorney. Do not contact me again regarding this matter."

¶ 7 According to the complaint, and as substantiated by exhibits and by the records of this court in Loyd v. Billiter, No. 5-09-0065 (Oct. 15, 2010) (unpublished order pursuant to Illinois Supreme Court Rule 23 (eff. May 30, 2008)), Mr. Hess, through Mr. Carr, filed a notice of attorney lien pursuant to section 1 of the Attorneys Lien Act (770 ILCS 5/1 (West 2008)), dated May 15, 2008, in the Loyds' medical malpractice lawsuit. The Loyds filed a petition to strike or adjudicate the lien on the basis that they had no contract with Mr. Hess, but instead contracted with Kanoski & Associates, which was later amended to include Kennith W. Blan, Jr., an affiliated attorney. The petition to strike or adjudicate the lien was supported by the relevant contracts.

¶ 8 Based on the factual allegations outlined above, Mr. Hess, through Mr. Carr, alleged causes of action against the Loyds in five counts: (1) breaches of contract, (2) unjust enrichment and quantum meruit, (3) breaches of promises, (4) statutory, contractual, and equitable liens, and (5) tortious interference with contracts, business expectations, and economic advantages. On August 20, 2008, the Loyds filed a motion for judgment on the pleadings pursuant to section 2-615(e) of the Code (735 ILCS 5/2-615(e) (West 2008)) and for sanctions pursuant to Illinois Supreme Court Rule 137 (eff. Feb. 1, 1994). On August 28, 2008, Mr. Hess, through Mr. Carr, filed a motion for leave to file an amended complaint to join Kanoski & Associates, Ronald Kanoski, and Kennith W. Blan, Jr., as defendants. However, the proposed amended complaint did not add to or change the allegations against the Loyds.

ΒΆ 9 On October 2, 2008, Mr. Carr sent a letter to Mr. Blan offering to dismiss the complaint against the Loyds in exchange for $165,312, which represented half of the funds that were then in escrow in Loyd v. Billiter, pending adjudication of Mr. Hess's attorney lien. On December 4, 2008, the circuit court conducted a hearing on all pending motions in the instant case, and on December 5, 2008, it entered an order granting judgment on the pleadings in favor of the Loyds. The circuit court's order found that Mr. Hess and the Loyds had no contract for representation, that the Loyds had hired Kanoski & Associates, not Mr. Hess, to represent them, and that the complaint was legally deficient. The circuit court further found that Mr. Hess, through Mr. Carr, had instituted the lawsuit against the Loyds to harass them and gain an advantage against other parties. The circuit court found that the Loyds were entitled to a sanction award pursuant to Illinois Supreme Court Rule 137 (eff. Feb. 1, 1994) and ordered the circuit clerk to schedule a hearing to determine the appropriate amount. ...


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