United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
diversity suit against Iurii Rypninskyi, Joseph Hope, and
Hope's bankruptcy trustee, American Inter-Fidelity
Exchange (“AIFE”) seeks a declaration that it
owes no duty to defend or indemnify Rypninskyi in a lawsuit
that Hope brought against him in state court. Doc. 21.
Rypninskyi in turn brought a third-party complaint against
his state court counsel-Cassiday Schade, LLP and several of
its attorneys, who for ease of reference will be referred to
collectively as “Cassiday Schade”-alleging that
their legal malpractice caused him to lose the state court
case. Doc. 51. Cassiday Schade moves for summary judgment on
the third-party claim. Doc. 89. The motion is denied.
court recites the facts as favorably to Rypninskyi as the
record and Local Rule 56.1 permit. See Johnson v.
Advocate Health & Hosps. Corp., 892 F.3d 887, 893
(7th Cir. 2018). At this juncture, the court must assume the
truth of those facts, but does not vouch for them. See
Gates v. Bd. of Educ. of Chi., 916 F.3d 631, 633 (7th
31, 2014, Rypninskyi and Hope got into a vehicular accident.
Doc. 109 at ¶¶ 13-14; Doc. 51 at ¶ 9. Hope
filed a negligence suit against Rypninskyi in Illinois state
court. Doc. 109 at ¶¶ 13-14. As the insurer of the
owner of the truck that Rypninskyi was driving, AIFE agreed
to defend Rypninskyi and retained Cassiday Schade to do so.
Id. at ¶¶ 39-40; Doc. 75 at ¶ 12. A
cooperation clause in the AIFE policy provided that the
insured had the duty to “[c]ooperat[e] with [AIFE] in
the investigation or settlement of the claim or defense
against the suit.” Doc. 21-1 at 9.
June 2016 through the Fall 2017 trial, Cassiday Schade had
trouble getting in touch with Rypninskyi to coordinate
discovery and ensure his presence at trial. Doc. 89-2 at
¶¶ 77-98. Rypninskyi did not appear at trial. Doc.
75 at pp. 7-8, ¶ 2. For purposes of this motion, the
court assumes that Cassiday Schade was negligent or otherwise
at fault in connection with Rypninskyi's non-appearance.
Doc. 103 at 1.
state judge sanctioned Rypninskyi for not appearing to
testify, ordering in limine that he could not
introduce the report prepared by the trooper who responded to
the accident or Hope's statements to the trooper. Doc.
89-2 at ¶¶ 21-25. Based at least in part on her
view that Rypninskyi (through Cassiday Schade) violated that
order, the court entered a default judgment against him as to
liability. Doc. 109-1 at ¶¶ 24-26; Doc. 89-1 at
168-169 (46:21-49:6). The jury, left with the task of
ascertaining damages, returned a $400, 000 verdict for Hope.
Doc. 109 at ¶ 38. Cassiday Schade did not file an appeal
on Rypninskyi's behalf, and had Rypninskyi known about
the judgment, he would have asked Cassiday Schade to appeal
it. Doc. 109-1 at ¶ 27.
alleges in this suit that Rypninskyi, by failing to appear
for trial, breached the policy's cooperation clause, thus
relieving it of its obligation to defend and indemnify him.
Doc. 21. Rypninskyi's third-party claim against Cassiday
Schade alleges that its legal malpractice caused both his
failure to appear and the judgment entered against him. Doc.
Illinois law, in order to prevail on a claim of attorney
malpractice, a plaintiff must succeed in proving four
elements: (1) an attorney-client relationship giving rise to
a duty on the attorney's part; (2) a negligent act or
omission by the attorney amounting to a breach of that duty;
(3) proximate cause establishing that but for the
attorney's negligence, the plaintiff would have prevailed
in the underlying action; and (4) actual damages.”
Mihailovich v. Laatsch, 359 F.3d 892, 904 (7th Cir.
2004). Invoking the doctrine of judicial error, Cassiday
Schade argues that Rypninskyi cannot prove the proximate
cause element of his malpractice claim because the state
judge erred in defaulting him as to liability and that error
is an intervening cause that severed the causal connection
between its alleged malpractice and Rypninskyi's injury.
See Huang v. Brenson, 7 N.E.3d 729, 737 ( Ill. App.
2014) (holding that an attorney sued for legal malpractice is
entitled to judgment where “the trial court's error
act[s] as an intervening cause” that relieves an
attorney from liability for “alleged
negligence”). Cassiday Schade's argument fails
because where an allegedly negligent attorney elects not to
appeal a judgment that the attorney contends resulted from a
judicial error, the attorney may not invoke the judicial
error doctrine as a defense to the client's malpractice
true, as Cassiday Schade observes, that “[n]o law in
Illinois requires the underlying action to be appealed before
the doctrine of judicial error is applied.” Doc. 94 at
5. And the court will assume that the doctrine applies where
the failure to appeal an assertedly erroneous judgment is not
the attorney's doing, for in that circumstance the
attorney bears no responsibility for not taking a key step
that could have led to the judgment's reversal and in
turn to the client suffering no harm due to the
attorney's alleged negligence. See Cedeno v.
Gumbiner, 806 N.E.2d 1188, 1191 ( Ill. App. 2004)
(ruling that the legal malpractice defendants, whose alleged
negligence precipitated an erroneous trial court ruling,
“could not have proximately caused [their client's]
damages since her case remained actionable at the time of
their discharge as [her] attorneys”). But where, as
here, the attorney is responsible for not appealing the
judgment that, according to the attorney, was so erroneous
that it broke the causal chain between the attorney's
alleged malpractice and the client's injury, the attorney
may not invoke the judicial error doctrine to defeat the
proximate cause element of the client's subsequent
malpractice claim. See Skinner v. Stone, Raskin &
Israel, 724 F.2d 264, 265-66 (2d Cir. 1983) (holding
that the state judge's error in entering a default
judgment did not defeat a malpractice claim against the
attorneys who “contributed to the fiasco by failing to
take steps to head off the entry of judgment, ”
reasoning that their negligence remained “a proximate
contributing cause” of the default); see also
Huang, 7 N.E.3d at 737 (citing Skinner with
Schade contends that “where the question of proximate
cause in a legal malpractice action turns upon the outcome of
an appeal that was never filed, the trial court [in the
malpractice action] must determine as a matter of law what
the appellate court [in the underlying suit] would have ruled
if an appeal was filed.” Doc. 94 at 5-6. That principle
holds true in suits alleging appellate malpractice, see
Governmental Interinsurance Exch. v. Judge, 850 N.E.2d
183 (Ill. 2006), but not where, as here, the plaintiff
alleges legal malpractice in the trial court, see
Huang, 7 N.E.3d at 738 (holding that Judge, as
an appellate malpractice case, is inapposite where the
alleged legal malpractice occurred in the trial court). The
premise of Cassiday Schade's invocation of the judicial
error doctrine is that the state judge committed an error in
defaulting Rypninskyi as to liability; if that premise is
right, then the judge's ruling would have been reversed
on appeal. Because Cassiday Schade's invocation of the
doctrine necessarily conveys its view that the judgment
against Rypninskyi would have been reversed had there been an
appeal, there is no need, at least at this stage of the case,
for the court to determine that a reversal in fact would have
ensued. Indeed, because Cassiday Schade was responsible for
failing to appeal, its contention that this court must decide
that the judgment would have been reversed on appeal-if only
an appeal had been filed-boils down to the nonsensical
proposition that it cannot be held liable for trial
malpractice in state court because it decided not to appeal.
Schade's summary ...