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Pedersen & Houpt, P.C. v. Main Street Village West, LLC

Court of Appeals of Illinois, First District, Second Division

December 28, 2012

PEDERSEN AND HOUPT, P.C., Plaintiff-Appellant,
v.
MAIN STREET VILLAGE WEST, PART 1, LLC.; TATUM AND SHEA, LTD.; OLD SECOND NATIONAL BANK, N.A.; NORTH AMERICAN SAVINGS BANK, F.S.B.; JJR HOLDINGS, LTD.; and MB FINANCIAL BANK, N.A., Defendants-Appellees.

Rehearing denied March 4, 2013

Modified opinion filed March 12, 2013

Held [*]

Plaintiff law firm’s attempt to collect its lien for attorney fees via a foreclosure action in a pending mechanic’s lien case involving third parties was properly dismissed on the ground that the Attorneys Lien Act does not provide for a foreclosure action as a means of collecting such a lien, especially when none of the parties to the mechanic’s lien case was ever defined as a party against whom plaintiff’s client may have had a cause of action.

Appeal from the Circuit Court of Cook County, No. 08-CH-30891; the Hon. Lisa R. Curcio, Judge, presiding.

Pedersen & Houpt, P.C., of Chicago (Arthur M. Holtzman and Donald J. Moran, of counsel), for appellant.

Arnstein & Lehr, LLP (David A. Golin, of counsel), Polsinelli Shughart, PC (Peter J. Schmidt, Tiffany R. Harper, and Matthew R. Moriarity pro hac vice, of counsel), and Fidelity National Law Group (Erik J. Anderson, of counsel), all of Chicago, for appellees.

Panel JUSTICE QUINN delivered the judgment of the court, with opinion. Justices Connors and Simon concurred in the judgment and opinion.

OPINION

QUINN JUSTICE

¶ 1 After questions were raised by the trial court regarding the propriety of a law firm's attempt to collect an attorney fees lien in a pending mechanic's lien case, the law firm filed a foreclosure action seeking payment of its attorney fees and priority over all mechanic's lien claimants. The trial court ruled that the Attorneys Lien Act (770 ILCS 5/0.01 et seq. (West 2010)), unlike the Mechanics Lien Act (770 ILCS 60/0.01 et seq. (West 2010)), and other statutes, did not provide for foreclosure as a mechanism to collect a statutory attorney fees lien and dismissed the action. This appeal by the law firm followed. For the reasons that follow, we affirm.

¶ 2 I. BACKGROUND

¶ 3 The genesis of the attorney fees that the Pedersen & Houpt law firm (P&H) seeks to collect via its foreclosure complaint filed in a mechanic's lien court is a real estate dispute wherein it successfully represented its client, Summit Real Estate Group, LLC (Summit). Back in 2004, P&H filed a complaint on behalf of Summit seeking specific performance of a real estate contract to acquire a parcel of real estate located in Orland Park, Illinois, from certain defendants (Lakeside Bank as trustee, the holder of legal title to the property; Hickory Properties, Inc.; and Steven P. Gianakas) in exchange for money. Summit Real Estate Group, LLC v. Lakeside Bank, No. 04 CH 16593 (Cir. Ct. Cook Co.). Trial was held in 2005, and the circuit court entered a judgment on February 17, 2005, requiring specific performance of the real estate contract wherein the defendants were to convey the Orland Park real estate to Summit. Id. The circuit court granted a stay of the specific performance order on the condition that Lakeside Bank post a $6 million bond. Lakeside sought a stay in the appellate court, also requesting that the amount of the bond be lowered. These appeals were dismissed. The circuit court set a new closing date for June 17, 2005. When Lakeside Bank still refused to close, the circuit court set July 12, 2005, as a return date on a rule to show cause. On June 28, 2005, Lakeside Bank filed a motion in the appellate court to stay the circuit court's hearing. This appeal was also dismissed. P&H represented Summit during these appeals. Neither before nor during P&H's representation of Summit's interests until the conclusion of the specific performance case did P&H ever give notice to any of the three defendants of any attorney fees lien. P&H also did not file any motion to enforce or adjudicate any attorney fees lien before the judgment became final. In other words, no statutory lien was sought to be placed on the property in the specific performance action.

¶ 4 The defendants in the above-described specific performance real estate action complied with the court's final judgment by conveying the parcel of Orland Park real estate in two separate conveyances to Summit on August 22, 2005 and January 12, 2006. The portion of the parcel conveyed to Summit on August 22, 2005 is not subject to this lawsuit. There is no evidence that P&H ever sought to enforce a lien on that portion of the parcel. The second portion of the parcel was conveyed to Summit on January 12, 2006. Summit, by quitclaim deed dated January 13, 2006, immediately conveyed the second portion of the parcel to one of the defendants in this lawsuit, Main Street Village West, Part 1, LLC. Both transactions involving the second portion of the parcel were the subject of the same closing that occurred on January 25, 2006. P&H did not assert any attorney fees lien arising out of the successful specific performance action at the January 25, 2006 closing even though P&H had a representative present at the closing. The Main Street Village West's deed was recorded on January 30, 2006. It is this second portion of the Orland Park real estate involved in the original specific performance action that is the subject of this lawsuit.

¶ 5 By letter dated January 17, 2006, almost 11 months after the judgment in the specific performance lawsuit became final, P&H sent a notice of its claimed statutory attorney fees lien to only one of the named defendants in the specific performance action, Hickory Properties, Inc. The two other defendants, Lakeside Bank and Steven P. Gianakas, against whom Summit had a claim in the specific performance action were not sent any attorney fees lien notice directly by P&H on January 17, 2006 or at any other time. Copies of the January 17, 2006 P&H attorney fees lien notice were also sent to two agents at Chicago Title & Trust, to the attorney who had represented the defendants in the specific performance litigation and to the individual former clients of P&H in the specific performance action, Messrs. Tyman and Schutte. Immediately upon receipt of the attorney fees lien notice by Hickory Properties, Inc., their attorney informed P&H on January 23, 2006, that P&H's notice of an attorney fees lien was not meritorious.

¶ 6 The January 25, 2006 closing for this second portion of the parcel of real estate was concluded and P&H purposefully did not assert or in any way claim payment should be made for its attorney fees arising out of its successful litigation in the specific performance action that made this closing possible. In other words, P&H intentionally missed the opportunity to get paid during this liquidating event. P&H's stated rationale was to try to work out a payment plan with its client for its attorney fees. P&H also never followed up with the title company by filing a claim with it for insuring over P&H's claimed lien.[1]

¶ 7 On August 1, 2006, more than six months after receipt of the January 23, 2006 letter from attorneys for Hickory Properties, Inc., and the January 25, 2006 closing on the final portion of the property where its client sold the property to a third party, P&H filed a lawsuit in the law division of the circuit court, to recover its unpaid fees from its former client, Summit, for its representation in the specific performance action. This suit included a count for enforcement of its attorney fees lien naming a subsequent owner of the second parcel of real estate, Main Street Village West, Part I, LLC, as an additional defendant. Pedersen & Houpt, LLC v. Summit Real Estate Group, LLC, No. 06 L 8078 (Cir. Ct. Cook Co.). This lawsuit did not name any of the original three defendants from the specific performance action and, specifically, did not name Hickory Properties, Inc., the one defendant to whom P&H sent its letter dated January 17, 2006 asserting a lien. On August 18, 2006 and August 21, 2006, P&H recorded two lis pendens using the personal identification number (PIN) used for mechanic's lien notices for the subject property.

¶ 8 The law division judge ruled on an attorney disqualification issue in the action filed by P&H to recover its attorney fees. P&H appealed that ruling and this court addressed the issue in an opinion. Pedersen & Houpt, P.C. v. Summit Real Estate Group, LLC, 376 Ill.App.3d 681 (2007). The appellate court opinion is illuminating as it recounts P&H's postjudgment efforts in a 43-count complaint which included allegations against its client, Summit, for fraudulent conveyance of the property that was the subject of the specific performance action " 'with the intent to defraud its creditors' " (id. at 684) including the attorney fees Summit owed to P&H, in violation of the Uniform Fraudulent Transfer Act (740 ILCS 160/1 et seq. (West 2006)). P&H also included counts for requests for payment of its attorney fees from Summit on theories of fraudulent misrepresentation and promissory estoppel due to Summit's false promises made to P&H that it would pay P&H its attorney fees. Pedersen & Houpt, P.C. v. Summit Real Estate Group, LLC, 376 Ill.App.3d 681, 684 (2007). We can find no specific judicial ruling on P&H's fraudulent conveyance, fraudulent misrepresentation and promissory estoppel actions against Summit other than the money judgment against Summit for the full amount of P&H's attorney fees that was entered by the circuit court after remand.

ΒΆ 9 On remand from the appellate court, on June 9, 2009, the law division judge of the circuit court found that the P&H attorney fees lien attached to the property that P&H obtained for Summit as a result of the specific performance litigation. On July 29, 2009, the law division judge also ...


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