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Lawrence J. Hess v. Kanoski

February 2, 2012


Appeal from the United States District Court for the Central District of Illinois. No. 09-3334-Michael P. McCuskey, Chief Judge.

The opinion of the court was delivered by: Wood, Circuit Judge.


Before BAUER, WOOD, and TINDER, Circuit Judges.

This case involves a spat over attorneys' fees-in particular, the fees that the firm of Kanoski & Associates allegedly owes to its former associate, Lawrence Hess. After some five years at the firm, Hess was abruptly dismissed. Afterwards, the firm settled several of the cases on which Hess had been working and refused to pay Hess bonuses or fees based on those settlements. Hess believes that he is entitled to some of that money. He first tried to obtain the payments by filing attorney's liens in Illinois state courts. When that strategy failed, he filed this action in federal court against the firm, its president Ronald Kanoski, and Kennith Blan, Jr., a lawyer loosely associated with the firm who took over Hess's cases.

The district court granted the defendants' motion for summary judgment. It held that the Illinois courts had already determined that the firm did not owe Hess any payments based on cases that had settled after he was fired. As we explain below, this was error. No court-neither the Illinois state courts nor the district court below-has ever decided whether Hess's employment agreement entitles him to compensation for work he did on those cases. Hess makes a plausible case that the agreement entitles him to at least some portion of these revenues. He notes that his contract required the firm to give him 30 days' notice before terminating his employment, but it failed to do so. At the very least, in his view, he is entitled to a share in the settlements reached during that period. We agree with Hess that summary judgment was inappropriate for his contract theories, which he raises in Count I under the Illinois Wage Payment and Collection Act (IWPCA) and in Count IV under general contract law. The remainder of Hess's complaint, however, was correctly dismissed. Accordingly, we affirm in all other respects.


Kanoski & Associates bills itself as the "largest personal injury law firm in central Illinois." Kanoski & Associates, (last visited Jan. 30, 2012). The firm hired Hess on May 9, 2001, to work primarily on medical malpractice cases. His employment was governed by an agreement that set out his salary and bonus pay. At first Hess apparently performed well for the firm and obtained several favorable settlements. But by 2007, things had gone south; on February 14 of that year, Ronald Kanoski (the firm's president, as we mentioned earlier) fired Hess. In the wake of that action, the firm transferred several of Hess's cases to Kennith Blan, Jr., a lawyer working as an independent contractor for the firm. Over the course of the next year and a half, the firm-largely through Blan's efforts-settled many of these cases. For example, in June 2008, one case settled for $1.25 million.

Hess believed that Blan and the firm had pushed him out in order to settle his cases without sharing with him the generous compensation that accompanied the settlements. In May 2008 Hess began pursuing the fees to which he thought he was entitled. In a letter, he demanded payment from the firm for $316,616.21 in unpaid bonuses. He also filed attorney's liens in Illinois state court in two of the cases the firm had settled without him. Neither claim was successful, for the simple reason that Hess no longer had an attorney-client relationship with the clients.

Hess then turned to federal court, which had jurisdiction under 28 U.S.C. § 1332 because both plaintiffs are citizens of Missouri and all defendants are citizens of Illinois; the amount in controversy easily exceeded $75,000. His complaint raised a slew of state-law allegations against the firm. It contains eleven counts in all, including such claims as consumer fraud, conspiracy, and "intentional/negligent" spoliation of evidence. His wife, Vickie Warren, raised her own claim for loss of consortium.

At its essence, this case boils down to a single question of contract interpretation: Was Hess entitled under his employment agreement to compensation arising out of any of the post-termination settlements? The district court did not decide this question. Instead, it granted summary judgment to the defendants on the ground that the state court litigation had already resolved this issue in the firm's favor and thus Hess was collaterally estopped from litigating it anew.

We review the district court's grant of summary judgment de novo, drawing all reasonable inferences in the light most favorable to Hess, the nonmoving party. Egan v. Freedom Bank, 659 F.3d 639, 642 (7th Cir. 2011). Sum-mary judgment is appropriate only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Id. As we explain, summary judgment was appropriate for most, but not all, of Hess's claims.



We begin with the two counts in Hess's complaint that rest most directly on his employment agreement: Count I, the claim under the IWPCA; and Count IV, the claim for breach of contract. Stating that Hess "had no right to bonus money for any recoveries which occurred after his termination," the district court granted summary judgment for the firm. It gave two reasons for that conclusion: first, it believed that Hess had admitted in his deposition that he was paid all that he was due; and second, it understood that the state lien decisions had already determined that Hess had no ...

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