Court of Appeals of Illinois, First District, Second Division
ADRIANA BRANNEN and STANDARD BANK AND TRUST, Under Trust No. 3265, Plaintiff-Appellees,
JOERG SEIFERT, Individually, JOERG SEIFERT, LTD., P.C., and JOERG SEIFERT LAW OFFICES, P.C., Defendants-Appellants.
Appeal from the Circuit Court of Cook County No. 10 L 9276 Honorable James P. Flannery, Judge Presiding.
JUSTICE PIERCE delivered the judgment of the court, with opinion. Presiding Justice Quinn and Justice Harris concurred in the judgment and opinion.
¶ 1 Plaintiffs, Adriana Brannen, the sole beneficiary of Standard Bank and Trust, trust No. 3265, and Standard Bank and Trust brought a legal malpractice action against the defendants, Joerg Seifert, Brannen's former attorney, and his law firms, Joerg Seifert, Ltd., P.C., and Joerg Seifert Law Offices, P.C., alleging professional negligence in: (a) failing to advise Brannen as to the ramifications of each available remedy under the articles of agreement for deed entered into with a third party and (b) electing to forfeit the agreement without her consent. In March 2012, a jury found in favor of plaintiffs, awarding damages in the amount of $199, 500. Defendants raise numerous issues on appeal, including: (1) the trial court erred in (a) denying defendants leave to file the affirmative defense of contributory negligence; (b) improperly allowing plaintiffs' legal expert to opine about an erroneous interpretation of Illinois law; (c) denying defendants' motion for a directed verdict as the third parties were insolvent and plaintiffs had no entitlement to the damages; (d) improperly instructing the jury that plaintiffs were entitled to a double recovery; (e) giving Illinois Pattern Jury Instructions, Civil, No. 60.01 (2006); (f) denying defendants' special interrogatories; and (g) denying defendants' motion for setoff; and (2) the evidence did not support the verdict in favor of plaintiffs. For the following reasons, we affirm as modified.
¶ 2 BACKGROUND
¶ 3 On June 30, 2005, plaintiffs entered into a contract entitled "Articles of Agreement for Deed" (the agreement) with Mark and Theresa LeFevour (buyers), for residential property at 17390 Plainfield Road, LaGrange Highlands, Illinois (the property). The property is the corpus of trust No. 3265, held by Standard Bank and Trust. The agreement stated that the LeFevours agreed to buy the property for $625, 000, payable in installments. The LeFevours were to pay $102, 750 of principle in installments, as follows: $12, 500 at closing, $12, 250 on or before December 31, 2005, $27, 000 on or before December 31, 2006; $33, 000 on or before December 31, 2007, $18, 000 on or before June 30, 2008 and the remaining principal balance on or before June 30, 2008. A similar schedule for the payment of interest at 4% was also set forth. In the event of the buyers default, section 17(a) of the agreement provided the following remedies to plaintiffs:
"A. If Buyer (1) defaults by failing to pay when due any single installment or payment required to be made to Seller under the terms of this Agreement and such default is not cured within ten (10) days of written notice to Buyer; or (2) defaults in the performance of any other covenant or agreement hereof and such default is not cured by Buyer within thirty (30) days after written notice to Buyer (unless the default involves a dangerous condition which shall be cured forthwith); Seller may treat such a default as a breach of this Agreement and Seller shall have any one or more of the following remedies in addition to all other rights and remedies provided at law or in equity: (i) maintain an action for any unpaid installments; (ii) declare the entire balance due and maintain an action for such amount; (iii) forfeit the Buyer's interest under this Agreement and retain all sums paid as liquidated damages in full satisfaction of any claim against the Buyer, and upon Buyer's failure to surrender possession, maintain an action for possession under the Forcible Entry and Detainer Act, subject to the rights of the Buyer to reinstate as provided in that Act.
B. As additional security in the event of a default, Buyer assigns to Seller all unpaid rents, and all rents which accrue thereafter, and in addition to the remedies provided above and in conjunction with any one of them, Seller may collect any rent due and owing and may seek the appointment of a receiver." Section 18 of the agreement, entitled "Default, Fees, " provided:
"B. (1) All rights and remedies given to Buyer or Seller shall be distinct, separate and cumulative, and the use of one or more thereof shall not exclude or waive any other right or remedy allowed by law, unless specifically waived in this Agreement; (2) no waiver of any breach or default of either party hereunder shall be implied from any omission by the other party to take any action or account of any similar or different breach or default; the payment or acceptance of money after it falls due after knowledge of any breach of this Agreement by Seller or Buyer, or after the termination of Buyer's right of possession hereunder, or after the service of any notice, or after commencement of any suit, or after final judgment for possession of the premises shall not reinstate, continue or extend this Agreement nor affect any such notice, demand or suit or any right hereunder not herein expressly waived."
¶ 4 Although the initial payment of $12, 500 due at closing was paid, the LeFevours immediately fell behind on their payments. In April 2007, roughly two years after the parties entered into the agreement, plaintiffs retained defendants, Joerg Seifert, Joerg Seifert, Ltd., P.C., and Joerg Seifert Law Offices, P.C., to recover the arrearage from the LeFevours and to regain possession of the property.
¶ 5 Defendants made unsuccessful attempts to collect what the LeFevours owed. The LeFevours remained in possession and in default. Despite directives to collect past amounts owed, plaintiffs alleged that defendants sent a letter to the LeFevours on July 18, 2007, that declared a default and forfeiture of the agreement. Plaintiffs alleged that defendants chose the forfeiture remedy without consulting them or explaining the consequences of declaring a forfeiture. The LeFevours moved out in November 2007.
¶ 6 Unaware that their right to collect the arrearage had been terminated when defendants declared a forfeiture, plaintiffs retained the services of another law firm to sue the LeFevours for breach of contract. The LeFevours moved to dismiss the breach of contract suit based on the prior declaration of forfeiture. Despite defendants' claim that they did not declare a contract forfeiture, the court found a forfeiture had been declared and dismissed the breach of contract action with prejudice.
¶ 7 After the breach of contract case was dismissed, plaintiffs filed the instant action against defendants for professional negligence. Plaintiffs alleged defendants breached the standard of care owed a legal client: (1) by declaring a forfeiture, such that the LeFevours did not have to pay back rent and, by choosing this remedy causing any subsequent actions for damages against the LeFevours to be barred; (2) failing to communicate their wrongdoings to their client; (3) breaching their fiduciary duties; and (4) being otherwise careless and negligent. The case proceeded to trial in March 2012.
¶ 8 At trial, Adriana Brannen testified that at the time of trial she was 85 years old and living with her son John. She testified that she is the beneficiary of the trust at Standard Bank and Trust containing the property. In 2005, when the agreement was signed, her son John was helping her with the property. She never saw any checks or payments made by the LeFevours because John handled all of the dealings with the property. The terms of the agreement were that the LeFevours would pay the property taxes and insurance after they moved in. Adriana testified that she ended up paying the taxes and insurance. After the LeFevours stopped paying the installments, Adriana told John to call them because she wanted them out of the property and wanted the money they owed. The LeFevours did not pay, so Adriana instructed John to contact defendants.
¶ 9 Plaintiffs called Joerg Seifert as an adverse witness. Seifert testified that he was a licensed attorney and the corporate representative of Joerg Seifert Limited, P.C., and Joerg Seifert Law Offices, P.C. Seifert knew Adriana and knew that her son John was her representative. Seifert was hired by John Brannen in this matter on April 17, 2007. John initially told Seifert that he wanted the LeFevours to pay what they owed and would give them until the end of July to purchase the house. If the LeFevours did not pay by the end of July, John wanted the contract rescinded and the house placed back on the market. On April 25, 2007, Seifert sent a letter to the LeFevours advising them of the $59, 160 arrearage and demanding full payment by the end of June 2007. Seifert sent them a follow-up letter on May 30, 2007, asking about their intention to pay the monies owed. On June 29, 2007, Mark LeFevour responded with a proposed payment schedule. John rejected the payment schedule. On July 3, 2007, Seifert sent a letter to the LeFevours indicating that the new proposed payment schedule was unacceptable and demanded payment of the full arrearage in timely monthly payments or they would be required to buy the property. On July 18, 2007, Seifert sent a letter to the LeFevours informing them that due to the $71, 000 in arrearage, "the Seller hereby declares a default and forfeiture pursuant to said agreement and demand is hereby made upon you to immediately vacate the premises but in no event later than July 31, 2007."
¶ 10 The attorney Brannen hired to collect the arrearage sent Seifert an email on September 11, 2007, questioning Seifert's understanding of the forfeiture remedy outlined in the agreement. Seifert responded that he did "not think a forfeiture should be filed, but available to be filed if that is the desired course." Seifert also stated "[s]ince the Brannens' primary objective was to have Mr. Lefevour vacate the premises, I thought putting us into a position to declare forfeiture was the best avenue and did not really think that it would get to a forfeiture and forcible." He went on to say, "[i]f the primary concern is to collect the moneys, then that course of action should be taken." Seifert explained his statement by indicating that although he had declared a forfeiture, he had not recorded it.
¶ 11 From the time Seifert was retained until the LeFevours vacated the property, the LeFevours did not make any payments to plaintiffs. Before he declared a forfeiture, Seifert said John Brannen gave up getting the money owed and continued wanting to regain possession of the property. Seifert testified that there were three options available in the event of a default and he was "confident" that he and John discussed the options available under the agreement, as well as the options available under the provision that allowed for "all other remedies at law and equity."
¶ 12 Seifert testified that he never discussed the ramifications of a forfeiture with Adriana. He testified that "the declaration of forfeiture references the forcible entry and detainer act. And in order to have a forcible entry and detainer action against the LeFevours, the declaration of forfeiture would have to be filed." Seifert testified that he never explained anything in writing to Adriana or John about the consequences of choosing a forfeiture. Seifert testified that he orally explained to John the consequences of a forfeiture. Seifert testified that the legal services he provided plaintiffs satisfied the standard of care and that no negligent act or omission on his part caused damage to plaintiffs.
¶ 13 Seifert testified that John Brannen attempted to sue the LeFevours for the arrearage after plaintiffs had regained possession of the property. That suit was unsuccessful due to Seifert's declaration of forfeiture. Seifert testified that he believed, under theses particular facts and circumstances, that a declaration of forfeiture was the "only course of action" in order to get the property back from the LeFevours without prolonged litigation.
¶ 14 Seifert then testified for the defense. After he was retained by John Brannen, Brannen told him that the LeFevours had been living at his mother's property for almost two years without making payments. Seifert testified that he explained to John the default remedies available under the agreement. He also explained the ramifications of declaring a forfeiture because "it's so unique." Initially, John said his primary goal was to get the money owed under the agreement. Later, John expressed his mother's frustration with the matter and indicated that she wanted the LeFevours out of the house and wanted the property back. Seifert testified that plaintiffs wanted to put the house back on the market.
¶ 15 Mark LeFevour sent an email to Seifert and John Brannen requesting additional time to secure financing and requesting that plaintiffs accept a lump sum to cover the arrearage and allow them to stay until June 2008. John Brannen told Seifert that the only way his mother would not rescind or forfeit the contract was if the LeFevours paid the total amount due. Seifert communicated this information to Mark LeFevour.
¶ 16 Seifert testified that he wrote a letter to Cornelius Brown, the attorney for the LeFevours, on August 9, 2007. In this letter, Seifert explained the financial terms that would allow the LeFevours to remain in the property. Seifert also indicated that if they did not pay, they would have to vacate the premises immediately. Seifert testified that he generated the notice of intention to declare forfeiture directed to the LeFevours. The copy contained in the record is unsigned and undated and does not provide a date by which the default must be cured. The actual declaration of forfeiture contained in the record is unsigned and dated August 20, 2007, There is no indication it was recorded.
¶ 17 On cross-examination, Seifert testified that he received an email from John Brannen in August 2007, requesting money from the LeFevours. Seifert took that to mean that plaintiffs would not allow the LeFevours to remain in the property without paying the arrearage. Seifert indicated that the notice of intent to declare forfeiture did not state that all arrearage is waived once the contract is forfeited. Seifert testified that declaring a forfeiture is "unusual" and agreed that it is "unusual" because the same thing can be accomplished under a forcible entry action.
¶ 18 Attorney Jarret Raab testified that his firm filed suit on behalf of Adriana Brannen against Mark LeFevour for breach of contract. In preparation for litigation, Raab spoke with Seifert in early 2008, who advised him that he had threatened to forfeit the agreement but did not actually declare a forfeiture.
¶ 19 Raab testified that the lawsuit against LeFevour had several different legal theories, but the primary basis was a breach of contract. The breach of contract claim was dismissed when the court ruled that the contract had been forfeited, making it no longer enforceable. Raab billed Adriana $39, 435.44 for his work on the lawsuit.
¶ 20 On cross-examination, Raab testified John acted as Adriana's representative. Raab testified that before he filed suit, he was not aware that there had been a declaration of forfeiture. Raab was only aware of a document called a notice of intent to forfeit.
¶ 21 John Brannen testified that at the time of trial he was a real estate broker. After the LeFevours expressed an interest in buying the house, Mark LeFevour drafted a contract for purchase and presented it to John, who discussed its terms with his mother. John told Seifert that he and his mother were interested in a contract for the sale of the house, not a lease. Seifert redrafted the agreement, which was executed by the parties.
¶ 22 The LeFevours made a down payment of $12, 500 and wrote two additional checks at the end of the year, one for principle and one for interest. However, Mark asked John not to cash the check for principle. The last payment received by the LeFevours was in December 2006. The LeFevours left the property in November 2007. In total, the LeFevours paid $19, 350 after moving into the property and those payments were applied to the interest owed.
¶ 23 The total unpaid interest and principal owed by the LeFevours for the time they occupied the residence was $144, 103: $102, 850 in principal and $73, 203 in interest, minus the $19, 350 in payments made. The LeFevours also owed $13, 342.90 in property taxes and $2, 594 in insurance. John testified that he was unable to get a judgment for the balance owed because the contract had been forfeited and they could not get any further payments from the LeFevours. John testified that he never instructed Seifert to forfeit the right to the principle, interest, taxes or insurance due.
¶ 24 John contacted Seifert in April 2007 and hired him to collect the money due, instructing Seifert to tell the LeFevours that if they were not going to pay they would be removed from the property. John wrote to Seifert and indicated that his mother wanted to be fully paid, they would be given 90 days to purchase the house otherwise his mother would rescind the contract. John testified that he never told Seifert that he was giving up pursuing the amount owed or instructed Seifert to stop seeking the monies owed. John testified that when Seifert sent a letter to the LeFevours indicating that if they did not pay the $59, 160 owed at that time, he would take the steps necessary to declare a forfeiture. Seifert never explained that declaring a forfeiture would result in the termination of the agreement, thereby precluding recovery of the monies owed.
¶ 25 John received a copy of a letter sent by Seifert to the LeFevours on July 18, 2007. That letter stated:
"Please be further advised that your continued failure to make the required payments pursuant to the Articles of Agreement for Deed entered into by and between you and my client has resulted in an arrearage in excess of $71, 000.
As a result of the same, the seller hereby declares a default and forfeiture pursuant to said agreement and demand is hereby made upon you to immediately vacate the premises but in no event later than July 31, 2007. Please be further advised that in the event the property is not vacated, my client shall take such steps necessary to seek legal and equitable resolution and restitution as a result of your breach."
Seifert told John the letter meant "it was an intent to forfeit, almost like a threat for them to pay."
¶ 26 Subsequently, John hired Raab to collect what was owed by the LeFevours. Had he known that their rights and remedies had been lost by the forfeiture he "probably" would not have filed suit to collect the money owed. When John inquired about the forfeiture after the lawsuit, Seifert stated that he did not believe there was a forfeiture. After the forfeiture had been declared, Seifert sent an email to Cornelius Brown, the LeFevours' attorney, dated August 30, 207, stating the "discussion on waiving the over $70, 000 in deficiencies shall not be entertained."
¶ 27 Plaintiffs' expert, Brendan Appel, testified that defendants breached the standard of care: (1) because defendants failed to fully advise their clients as to the available remedies and as to the ramifications of each remedy and allowed the clients to select which course of action to take by not properly informing his clients; and (2) choosing an incorrect remedy without the consent of his client especially when John Brannen expressed his mother's intention on several occasions to collect what was owed through the point when the LeFevours vacated the premises. Further, he opined that the agreement and Illinois law, specifically the Forcible Detainer and Entry Act (735 ILCS 5/9-102(a)(5) (West 2006)), provided the option for plaintiffs to regain possession of the property without terminating their right to file a breach of contract action to recover the arrearage.
¶ 28 Cornelius Brown testified for the defense. When he was retained by the LeFevours in 2007, they still lived in the property but owed arrearage under the agreement. During his negotiations with Seifert he conveyed his clients' desire to remain in the house and rework the payment schedule because of their financial situation. The LeFevours had discussed the possibility of bankruptcy with Brown.
¶ 29 Brown explained his concept of forfeiture. Brown asserted a forfeiture under a sales contract is where the buyer forfeits the payments made toward the purchase of the property and those payments become rent. The buyer then becomes a tenant. Under the terms of this agreement, the sellers had three remedies in the event of the LeFevour's default: sue for money damages, specific performance and forfeiture.
¶ 30 Brown testified that in his opinion, Seifert's declaration of forfeiture was the appropriate course of action. Brown explained that pursuing the LeFevours for money damages would have been futile because they had no money to pay the payments due. He further opined that joint actions, actions for possession and money damages, are almost never ...