October 30, 2015
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. l:13-cv-04986 -
Ronald A. Guzman, Judge.
Posner, Ripple, and Hamilton, Circuit Judges.
Ripple, Circuit Judge.
2013, West Bend Mutual Insurance Co. ("West Bend")
brought this legal malpractice action against its former
counsel, Paul Schumacher, and his law firm, Roddy, Leahy,
Guill & Ziema, Ltd. ("RLGZ"). The gravamen of
the complaint is Mr. Schumacher's alleged performance in
defending a workers' compensation claim in 2005 and 2006.
The district court dismissed the second amended complaint on
the defendant's 12(b)(6) motion and terminated the case.
In the district court's view, the complaint failed to set
forth with sufficient specificity a cause of action for legal
malpractice. We agree; the complaint fails to state plausibly
the causation and harm elements required under Illinois legal
malpractice law. Accordingly, we affirm the judgment of the
Bend first filed a legal malpractice action based on the
performance of Mr. Schumacher and RLGZ in the underlying
workers' compensation matter in 2008. The parties later
agreed to a dismissal of that claim and entered into a
tolling agreement pending the resolution of several other
tangen-tially related actions, including one for medical
the resolution of those claims, West Bend brought the present
action in the United States District Court for the Northern
District of Illinois in July 2013, and filed an amended
complaint in December 2013. After each of these filings, the
defendants moved to dismiss. The district court granted each
of the motions, concluding that the allegations were too
speculative or vague. In each case, however, the court also
granted leave to amend.
allegations of the Second Amended Complaint are central to
our task. We therefore begin with a rendition of its
December 2005, West Bend retained RLGZ to provide legal
representation with respect to a workers' compensation
claim filed by John Marzano against West Bend's insured,
Nelson Insulation. The substance of Marzano's claim is
not described. Mr. Schumacher was the attorney with principal
responsibility for defending against the Marzano claim. After
several continuances, including one requested by Mr.
Schumacher, the Illinois Workers' Compensation Commission
("IWCC") scheduled a hearing on the matter for
August 23, 2006.
to the complaint, Marzano supported his claim with the
deposition of his treating physician, Dr. Sheinkop. He also
had undergone an independent medical examination by Dr.
Nelson, who provided a written report. This report indicated
that Dr. Nelson's testimony would be favorable to West
Bend and would counter Dr. Sheinkop's opinion. In his
preparation for the scheduled August hearing, Mr. Schumacher
did not speak to or depose Dr. Nelson. Instead, without
seeking the approval of West Bend, he agreed with
Mar-zano's counsel to put a redacted version of Dr.
Nelson's report in evidence. Mr. Schumacher also did not
speak to any other witnesses or potential witnesses until the
day before the scheduled hearing; he then learned that a
witness with relevant testimony was out of town and would not
be available to testify the following day.
to the hearing, Mr. Schumacher possessed other information
that was beneficial to West Bend's defense, including
that Marzano worked a full day on the day of the alleged
incident, that he continued to work for two additional weeks
until he was laid off, and that his own treating physician
could not find any change in the condition of his knee
following the incident. Mr. Schumacher disclosed all of this
information, favorable to his client, to Marzano's
counsel prior to the hearing.
also indicated that Marzano had not reported the incident
until after he was laid off and had retained an attorney. But
Mr. Schumacher did not investigate Marzano's contrary
statements and did not verify them with Marzano's former
supervisor, to whom the incident report allegedly had been
day of the IWCC hearing, Mr. Schumacher did not request a
continuance or a bifurcated proceeding to allow for the
presentation of additional evidence. Instead, "without
[West Bend]'s knowledge or agreement, " Mr.
"Schumacher made the representation to counsel for
[Marzano] that [West Bend] would accept liability of the
workers' compensation claim" and the arbitrator was
"advised of that position."West Bend claims that it
"was forced to accept that agreement pending further
investigation of other litigation
complaint further alleges that, as a result of Mr.
"Schumacher's unauthorized actions and
representations to [West Bend], [West Bend] was forced to
make significant payments, including temporary total
disability [("TTD")] benefits and medical expenses,
with little or no likelihood of recovery." To "justify
his concession of compensability, defendant Schumacher
overemphasized" to his client "the potential for
penalties to [West Bend] if the hearing had gone
forward." Mr. Schumacher "continued to counsel
[West Bend] against getting the case reopened to present its
defenses as he believed the case was
to the complaint, West Bend alleged that Mr. Schumacher
breached duties to West Bend by virtue of "(a) his
unauthorized stipulation concerning compensability; (b) his
failure to adequately investigate the claim or claimant's
preexi[s]ting medical condition; (c) his subsequent
representations to [West Bend] regarding their litigation
options[;] and (d) his failure to adequately advise [West
Bend] of material facts and legal options prior to
hearing." The specific allegations also concerned
Mr. Schumacher's failure to depose Dr. Nelson, his
disclosure to Marzano's counsel of information beneficial
to West Bend, and his failure to discover and remedy the
unavailability of a relevant witness for the hearing.
these, West Bend alleged, resulted in its being "forced
to accept a disadvantageous position which greatly
compromised its ability to defend the
claim." It also was "forced to pay additional
sums and eventually chose to reach a disputed settlement in
order to mitigate its exposure": [a]lthough [West Bend]
technically had the option of contesting the compensability
of the claim or filing a motion to terminate benefits after
retaining new counsel, those options were not practical as
plaintiff had been paying benefits for some time and the
Commission was unlikely to und[o] or reverse such payments.
In other words, [West Bend]'s payment of benefits up to
that point severely prejudiced its capability to reverse the
concession by defendant Schumacher.
complaint further alleged that even if the Commission had
determined that West Bend was not liable, it was
"extremely unlikely" that it would require
repayment of prior benefits, and, if it did, "collection
of those funds would have been difficult if not
July 18, 2014 order granting the motion to dismiss the Second
Amended Complaint, the district court determined that, with
respect to the bulk of West Bend's allegations about Mr.
Schumacher's performance-including the failure to depose
Dr. Nelson, the failure to contact witnesses prior to the
hearing, and the disclosure of certain facts to
Mar-zano's counsel-West Bend's complaint "does
not... explain how any of these alleged acts and omissions
harmed its defense." With respect to the allegation
that Mr. Schumacher had represented that West Bend would
accept liability, the district court stated:
Though Plaintiff alleges that the representation "forced
[it] to ... pay ... temporary total disability benefits and
medical expenses, with little or no likelihood of
recovery" and "to reach a disputed settlement in
order to mitigate its exposure", these assertions are
legally and factually unsupported. As a matter of law, paying
benefits pending resolution of a claim does not preclude an
employer from contesting liability. Moreover, plaintiff
admits that it could have contested the claim, despite the
representation. In short, because plaintiff does not and
cannot allege that defendants' representation was the
cause of any damages it may have suffered, the representation
cannot support a malpractice claim.
court therefore granted the motion, and, because it had
concluded that West Bend had failed to state a claim in three
successive complaints, it terminated the case.
Bend now appeals.