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Carlson v. Fish

Court of Appeals of Illinois, First District, Third Division

April 22, 2015


Page 405

Appeal from the Circuit Court of Cook County. No. 13 L 7719. The Honorable Sanjay Tailor, Judge, presiding.

FOR PLAINTIFFS-APPELLANTS: Thomas C. Cronin, Leland W. Hutchinson, Jr., Daniel J. Kelley, Cronin & Co. Ltd., Chicago, Illinois.

FOR DEFENDANTS-APPELLEES: John J. Duffy, Karen Kies DeGrand, Michael J. Borree, Donohue Brown Mathewson & Smyth, LLC, Chicago, Illinois; Patrick M. Collins, Perkins Coie, LLP, Chicago, Illinois; Daniel J. Konicek, Michael P. Hannigan, Michael J. Corsi, Konicek & Dillon, P.C., Geneva, Illinois.

JUSTICE HYMAN delivered the judgment of the court, with opinion. Presiding Justice Pucinski and Justice Lavin concurred in the judgment and opinion.


Page 406


[¶1] The application of a statutes of limitations, especially in legal malpractice claims, can be tricky and technical, and, as this case shows, deadly to those who fail to adequately anticipate its possibility. Plaintiffs William Carlson sued his attorneys David J. Fish and Shawn M. Collins, and their respective law firms, alleging legal malpractice in their representation of Carlson in a dispute with his former partners in an options trading firm. The underlying dispute was resolved through mediation and resulted in a settlement agreement in which Carlson agreed to sell his share of the firm to his former partners for $17.5 million. Not long after, Carlson came to believe his former partners may have defrauded him into accepting far less for his share of the firm than it was worth and began to investigate whether he might be able to sue his former partners for fraud.

[¶2] In the course of Carlson's investigation, which included consultations with defendants and other law firms, as well as mediation and accounting firms, Carlson was advised that defendants' representation in his dispute with his former partners may have been substandard. On November 18, 2010, two years and nine months after the mediation and two years and two months after he began to investigate his fraud claims, Carlson sued defendants for legal malpractice seeking damages in excess of $20 million.

[¶3] Defendants filed a motion to dismiss on statute of limitations grounds. While the motion was pending, Carlson voluntarily dismissed the complaint. Carlson refiled the one-count complaint and defendants again filed a motion to dismiss arguing that Carlson's complaint was barred by the applicable two-year statute of limitations

Page 407

for legal malpractice actions under section 13-214.3(b) of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/13-214.3(b) (West 2012)). The circuit court granted the motion, finding that Carlson knew of his injury and had identified his former partners as the wrongful cause more than two years before he filed his complaint against defendants. Carlson contends the trial court erred because (i) no evidence indicated he knew or should have known more than two years before filing his complaint that his former partners had wrongfully caused him injury, and (ii) he timely filed the complaint as he did not know he had a legal malpractice claim until another law firm informed him of it. Alternatively, Carlson contends defendants engaged in fraudulent concealment by failing to disclose that he might have a negligence claim against them, triggering a five-year statute of limitation under section 13-215 of the Code (735 ILCS 5/13-215 (West 2012)).

[¶4] We affirm. Carlson's pleadings, including his response brief and affidavit, as well as his email correspondence with defendants, establish that he knew more than two years before he filed his complaint that he had been wrongfully injured by his former partners, which sufficiently triggered the statue of limitations on his legal malpractice claim against defendants. Further, Carlson fails to make a claim of fraudulent concealment to assert a five-year statute of limitations.


[¶6] In 2002, William Carlson, with two partners, Owen O'Neill and Thomas Hutchinson, founded Belvedere Trading, LLC, an options trading company. (Carlson owned his interest in Belvedere through Willis Capital, LLC, a wholly owned limited liability company that is also a plaintiff in this case. Both will be referred to collectively as " Carlson." ) Carlson was the sole managing member and held about a 62% membership interest; O'Neill held about a 25% interest and Hutchinson held the remaining 13% interest. By 2004, O'Neill and Hutchinson were managing members and owned an equal 33.3% interest along with Carlson. Between 2004 and 2006, Carlson took a break from actively trading with the firm, and the partners revised their operating agreement to reflect Carlson's absence, including a redistribution of company profits in favor of the active trading partners, O'Neill and Hutchinson.

[¶7] In 2006, a few months after Carlson returned to active trading for Belvedere, he had a falling out with O'Neill and Hutchinson over numerous issues, including profit distribution and management. Carlson retained Shawn Collins and David Fish of the Collins Law Firm to represent him in the dispute. (David Fish later formed the Fish Law Firm while continuing to represent Carlson. Defendants will be collectively referred to as " Collins." ) In 2007, Collins, on Carlson's behalf, filed a request for arbitration with the Chicago Board of Options Exchange. Collins also filed a complaint for injunctive relief in the Cook County circuit court, seeking to dissolve Belvedere and compel it to buy his interest for fair value under section 35-60 of the Illinois Limited Liability Company Act (805 ILCS 180/35-60 (West 2012)).

[¶8] In February 2008, Carlson, Hutchinson, and O'Neill agreed to mediate their dispute. The partners agreed that the mediation would be principals only, would be nonbinding, and would be supervised by mediator Douglas Gerrard. Carlson did not obtain an independent appraisal of his interest in Belvedere before the mediation, but in an email to Collins, he estimated that by the end of 2009, the company could be sold for $100 million. The mediation,

Page 408

held on February 13, 2008, resulted in Carlson agreeing to sell his interest in Belvedere for $17.5 million. The three owners signed a document that day delineating the terms of the sale, which were memorialized in a settlement agreement signed on March 6, 2008.

[¶9] About six months after the mediated settlement, Carlson began communicating with defendants about his dissatisfaction with the amount he had received for his interest. Beginning in September 2008, Carlson sent numerous email messages to Shawn Collins expressing his frustration and his belief that his former partners had tricked him into taking less money than he should have and may have engaged in fraud. In a September 18, 2008 email message to Collins, Carlson wrote:

" This email shows I thought I needed [$20 million] about my capital account *** I just wasn't comfortable yet without having gone over the numbers enough. You see, the mediation was to be filled with tricks referencing all sorts of stuff over the 9 month period filled with distractions (2 guys versus 1 guy) *** I had to defend my case against ghosts. [Mediator] Gerrard was confused by the excess of numbers they were distracting him with ***and wasn't asking me much when I was in the room alone after their 90 minute session.
The bottom line is: their ploy was to confuse before the *** mediation. They sent a bunch of emails on Sunday and Monday regarding options inventory and confidentiality. *** Delay and distract. Thus, I didn't review and rehearse the numbers with you guys enough (there is no one else familiar with the case I could review the numbers with) ***."

[¶10] In a reply sent later that day, Shawn Collins told Carlson he had made a good deal, stating, " Whenever you are tempted to beat yourself up for not getting a better deal at mediation, remember that it could have very easily been MUCH worse."

[¶11] Carlson sent Shawn Collins and David Fish an email on October 9, 2008, inquiring about " any legal options" he might have pertaining to his settlement and any possible appeals process. After acknowledging that he was not coerced or forced to sign the agreement, Carlson expressed regret at having " sold my founding stake in an explosive business" and recounting his numerous ...

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