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Illinois State Bar Association Mutual Insurance Co. v. McNabola Law Group, P.C.

Court of Appeals of Illinois, First District, Sixth Division

June 21, 2019

ILLINOIS STATE BAR ASSOCIATION MUTUAL INSURANCE COMPANY, Plaintiff-Appellant,
v.
McNABOLA LAW GROUP, P.C., an Illinois Professional Service Corporation; MARK McNABOLA; SCOT VANDENBERG; and PATRICIA VANDENBERG, Defendants McNabola Law Group, P.C., and Mark McNabola, Defendants-Appellees.

          Appeal from the Circuit Court of Cook County No. 18 CH 7328 Honorable Sunjay T. Tailor, Judge Presiding.

          JUSTICE HARRIS delivered the judgment of the court, with opinion. Presiding Justice Delort and Justice Cunningham concurred in the judgment and opinion.

          OPINION

          HARRIS JUSTICE

         ¶ 1 Plaintiff, Illinois State Bar Association Mutual Insurance Company (ISBA Mutual), filed an action for declaratory judgment, alleging that it had no duty to defend a motion to adjudicate an attorney's lien on behalf of defendants McNabola Law Group, P.C., and Mark McNabola (collectively, McNabola). The trial court granted judgment on the pleadings in favor of McNabola and denied ISBA Mutual's cross-motion for judgment on the pleadings. On appeal, ISBA Mutual contends that the trial court erred in granting McNabola's motion where the motion to adjudicate an attorneys lien was not a suit seeking recovery of damages as defined in ISBA Mutual's policy issued to McNabola. For the following reasons, we reverse.

         ¶ 2 I. JURISDICTION

         ¶ 3 The trial court granted McNabola's motion on October 29, 2018. ISBA Mutual filed its notice of appeal on November 8, 2018. Accordingly, this court has jurisdiction pursuant to Illinois Supreme Court Rule 301 (eff. Feb. 1, 1994) and Rule 303 (eff. July 1, 2017), governing appeals from final judgments entered below.

         ¶ 4 II. BACKGROUND

         ¶ 5 In September 2009, Scot Vandenberg was injured when he fell from the upper deck of a yacht. McNabola represented Scot and his wife Patricia in a personal injury action filed against Brunswick Corporation (Brunswick). On February 18, 2011, McNabola served his notice of a lien, as authorized by the Attorneys Lien Act (Act) (770 ILCS 5/1 (West 2016)), on KL Gates LLP, the attorneys representing defendants. On June 9, 2015, after a three-week trial, the parties negotiated a $25 million settlement. Brunswick subsequently learned that a circuit court clerk had read McNabola a jury question prior to the settlement and moved to vacate the settlement. After a hearing, the trial court granted Brunswick's motion. The Vandenbergs discharged McNabola and current counsel appeared on their behalf and filed a motion to reconsider. After a hearing on that motion in front of a different judge, the Vandenbergs' motion was granted and the settlement was reinstated. On appeal, this court affirmed the reinstatement of the settlement in Vandenberg v. Brunswick Corp., 2017 IL App (1st) 170181.

         ¶ 6 The Vandenbergs filed a legal malpractice action against McNabola, which ISBA Mutual is defending. The malpractice litigation is not an issue in this appeal.

         ¶ 7 On June 11, 2018, the Vandenbergs filed their motion to adjudicate any claimed attorneys' liens for fees/expenses. In the motion, they contended that McNabola engaged in misdeeds that resulted in the initial loss of their $25 million settlement, and to reward him with fees out of their settlement with Brunswick would be "wholly unfair and contrary to public policy." The eventual settlement was not the result of McNabola's efforts but rather was secured by present counsel in spite of McNabola's "fraudulent and unethical conduct." They argued that "Illinois law and sound public policy prohibits [sic] McNabola from receiving any fee" in this case. Should fees be ordered, the Vandenbergs requested that the amount they must pay "should be reduced by the amount the Vandenbergs are obligated to pay their new counsel that they were caused to hire as a result of McNabola's illegal, negligent and unethical handling of this case."

         ¶ 8 McNabola tendered defense of this motion to ISBA Mutual pursuant to its "Lawyers Professional Liability Insurance Claims Made and Reported Policy." The policy provided that ISBA Mutual "has the right and duty to defend any suit *** against the INSURED that seeks DAMAGES arising out of a WRONGFUL ACT." (Emphasis in original.) The policy contained the following definitions for damages and wrongful act:

"DAMAGES means all sums which an insured is legally obligated to pay for any CLAIM to which this policy applies ***. The INSURED agrees with the COMPANY that DAMAGES do not include:
4. legal fees, costs or expenses paid or incurred by the claimant, or retained or possessed by the INSURED whether claimed by way of restitution of specific funds, forfeiture, financial loss or otherwise, and injuries which ...

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