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Illinois State Bar Association Mutual Ins. Co. v. Brooks, Adams & Tarulis

Court of Appeals of Illinois, First District, Second Division

December 23, 2014

ILLINOIS STATE BAR ASSOCIATION MUTUAL INSURANCE COMPANY, Plaintiff-Appellee,
v.
BROOKS, ADAMS and TARULIS; DOUGLAS C. TIBBLE, STEVEN B. ADAMS, RICHARD J. TARULIS, DAVID G. WENTZ, DAVID N. SCHAFFER and TIMOTHY J. HOPPA, Defendants-Appellants

Page 238

Appeal from the Circuit Court of Cook County. Nos. 09 CH 29610. The Honorable MaryAnne Mason and Jean Prendergast Rooney, Judges presiding.

For Defendants-Appellants: Michael J. Flaherty, C. Corey S. Berman, of counsel, Flaherty & Youngman, Chicago, Illinois.

For Plaintiff-Appellee: Robert Marc Chemers, Peter G. Syregelas, of counsel, Pretzel & Stouffer, Chartered, Chicago, Illinois.

JUSTICE NEVILLE delivered the judgment of the court, with opinion. Justices Pierce and Liu concurred in the judgment and opinion.

OPINION

Page 239

NEVILLE, JUSTICE.

[¶1] The trial court granted rescission of two insurance policies based on an alleged misrepresentation in the application for the first policy. We hold that a misrepresentation in an initial application does not justify rescission of a renewal of the policy, where the insured made no misrepresentation in the application for renewal and neither the new policy nor the application for renewal incorporated the initial application for insurance. We also find thata client makes a claim against an attorney when the client requests relief from the attorney for alleged errors or misconduct. When a client made a claim against his attorney in November 2002, and filed a legal malpractice lawsuit based on the same misconduct in 2005, the attorney made no misrepresentation when he told a potential insurer, in December 2007, that no claims had been made against him within five years of the date of his application. We reverse the rescission of both insurance policies.

[¶2] BACKGROUND

[¶3] In 1999, Tango Music, LLC, hired attorney Douglas Tibble, a partner in McBride, Baker and Coles, to sue Deadquick Music, Inc., for breach of contract and fraud. Tibble filed a complaint against Deadquick in federal court. Deadquick moved to dismiss the complaint. The district court ordered Tango to respond by March 22, 2002. Tibble and Tango filed no response. On September 18, 2002, the district court dismissed the lawsuit for want of prosecution.

[¶4] When Tango learned of the dismissal, it contacted Tibble and told him it would seek redress from him for his negligence in handling the lawsuit against Deadquick. Tango, through Tibble, moved for reconsideration of the order dismissing Tango's lawsuit against Deadquick. By order dated November 27, 2002, the district court denied the motion for reconsideration. On December 5, 2002, McBride, Baker and Coles notified their malpractice insurer, Continental Casualty Company, of Tango's claim against Tibble. Continental acknowledged receipt of the notice of Tango's claim. Continental noted that as of December 13, 2002, Tango had not sued Tibble or McBride, Baker and Coles. Tango eventually filed its lawsuit against Tibble and McBride, Baker and Coles for legal malpractice in March 2005.

[¶5] Tibble left McBride, Baker and Coles and started his own practice, affiliated with the firm of Brooks, Adams and Tarulis (BAT), in 2003. Three of Tibble's clients complained to the Attorney Registration and Disciplinary Commission (ARDC) that Tibble neglected their files. On May 31, 2005, the ARDC filed a charge against Tibble, alleging that he neglected client files and failed to communicate with clients. Tibble reached an agreement with the ARDC in which he accepted a 30-day suspension of his license in 2006 and he agreed to take other measures to correct the effects of his neglect.

[¶6] BAT sought to change its malpractice insurance. In 2007, Tarulis obtained an application form from the Illinois State Bar Association Mutual Insurance Company (ISBA). To respond to the form, Tarulis asked all of the attorneys working with or for BAT, including Tibble, (1) " Are you aware of any circumstance or incident that may result in a claim or suit against you?" and (2) " In the past 5 years, have any disciplinary complaints, grievances or inquiries been made to any admin. agency, court, or the ARDC ***?" Tibble answered the first question, " None." To the second question, he reminded Tarulis

Page 240

about the 2006 ARDC proceeding. Tibble did not mention the Tango lawsuit, although that remained unresolved. In accord with the answers Tarulis received from BAT attorneys, on December 11, 2007, Tarulis submitted an application to the ISBA that included the following:

" 21. a. During the past 5 years has any claim been made against: Applicant or a predecessor firm; any current member of Applicant or a predecessor firm; or, to your knowledge, any former member of Applicant or a predecessor firm? Yes X No
21. b. Is any current member of Applicant aware of any circumstance or incident that may result in a ...

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