Opinion
No. 03 C 1939.
May 28, 2004
MEMORANDUM OPINION AND ORDER
Plaintiff, J. Donald Reiff, filed suit against Defendants, alleging professional negligence (Count I), breach of contract (Count II), and breach of fiduciary duty (Count III). Presently pending before the Court is Defendants' Motion for Summary Judgment.
BACKGROUND
In 1996, Reiff filed a demand for arbitration through the National Futures Association against his commodities brokers, Gregory Deutsche, Lehigh Valley Futures, and Rosenthal-Collins Group. (Id., ¶ 6). Attorney Robert Poulson represented Reiff in the arbitration proceeding pursuant to a contingency fee arrangement. (Id., ¶ 7). The arbitration hearing took place on August 12-13, 1997. (Id., ¶ 8).
The arbitration panel entered an award in favor of Reiff in the amount of $244,060. (Def.'s 56.1(a)(3) Statement ¶ 15). The date of service of the arbitration award was August 25, 1997. (Id., ¶ 16).
Reiff sent two letters addressed to Gerald Aksen, the chairperson of the arbitration panel. (Def.'s 56.1(a)(3) Statement ¶ 20). Reiff did not provide notice of his letters to the attorneys for the other parties involved in the arbitration. (Id., ¶ 23).
On August 28, 1997, Attorney Poulson learned that Reiff had sent letters to Aksen. Poulson notified Susan Wehrle, the case administrator assigned to the arbitration by the National Futures Association ("NFA"), as well as the other parties. (Def.'s 56.1(a)(3) Statement ¶ 26). Wehrle contacted Aksen's office and asked Aksen's office to return the letters unopened. (Id., ¶ 27).
On September 9, 1997, Rosenthal-Collins Group filed a Petition to Vacate the Arbitration Award in the Chancery Division of the Circuit Court of Cook County. (Def.'s 56.1(a)(3) Statement ¶ 28). The petition alleged, in part, that the arbitration award was procured by undue means on the grounds Reiff sent two letters to the Arbitration Panel Chairman, which allegedly was "contact" between the arbitrator and a party, and that such contact raised the presumption the award was procured by undue means. (Id., ¶ 29). On September 29, 1999, the Chancery Court granted Lehigh Valley Futures and Gregory Deutsche's Motion to Intervene. (Id., ¶ 30). The Intervening Complaint filed by Lehigh and Deutsche also alleged that the two ex parte letters Reiff sent to the chairman constituted corruption, fraud, or undue means, which justified vacating the award. (Id., ¶ 31).
On November 7, 1997, the Chancery Court ordered the parties to file amended complaints. (Def.'s 56.1(a)(3) Statement ¶ 32). The plaintiffs filed a Consolidated Application to Vacate Arbitration Award on December 5, 1997. (Id., ¶ 33). The Consolidated Application sought to vacate the arbitration award that had been entered in favor of Reiff. (Id., ¶ 34).
In September 1997, Poulson received a copy of the summons and petition to vacate. (Def.'s 56.1(a)(3) Statement ¶ 36). After receiving the summons and petition, Poulson contacted Reiff by telephone about the documents. (Id., ¶ 36). Reiff gave Poulson authorization to locate an attorney in Chicago to represent Reiff in the arbitration confirmation or vacatur. (Id., ¶ 38).
Poulson discussed with Stuart Widman of Much Shelist Freed Denenberg Ament Rubenstein, P.C. ("Much Shelist") about representing Reiff. (Def.'s 56.1(a)(3) Statement ¶ 39). Widman filed his appearance on behalf of Reiff on October 16, 1997. (Id., ¶ 47). Poulson did not enter an appearance in the Chancery Court case and was not admitted to practice in any court in Illinois during the Chancery Court case. (Plaint.'s 56.1(b)(3) Statement ¶¶ 12-13).
Poulson sent Widman papers from the arbitration and documents that he believed Widman needed to defend the action. (Def.'s 56.1(a)(3) Statement ¶ 48). Poulson discussed with Widman attorney-client and/or work-product information he believed necessary to prosecute or defend the Chancery Court litigation. (Id., ¶ 49).
Poulson spoke with Widman periodically about certain aspects of the Chancery Court litigation and expressed his views about the case. (Def.'s 56.1(a)(3) Statement ¶ 53). Poulson also sent Widman a copy of an Illinois case that he believed would be helpful to Widman. (Id., ¶ 56). Poulson also had authorization from Reiff to discuss settlement; and on April 9, 1998, Poulson instructed Widman to "press on" with the litigation and let the other side raise the topic of settlement. (Id., ¶¶ 79-81).
Poulson represented Reiff on other matters during the pendency of the Chancery Court litigation. (Def.'s 56.1(a)(3) Statement ¶¶ 104-106). Poulson is licensed to practice in New York state. (Plaint.'s 56.1(b)(3) Statement ¶ 14). Poulson also held money for Reiff in an escrow and a trust account. (Def.'s 56.1(a)(3) Statement ¶¶ 107-108). In some instances, Poulson paid Much Shelist's fees from these accounts. (Id., ¶ 109). In other instances, Reiff would send Poulson a check and Poulson would forward the check to Much Shelist. (Id., ¶ 112).
On January 6, 1999, the Chancery Court vacated the arbitration award solely on the basis of the ex parte communication. (Def.'s 56.1(a)(3) Statement ¶ 115). Widman filed a motion to reconsider the vacatur of the arbitration award on February 3, 1999. (Id., ¶¶ 117-118). On September 7, 1999, the Chancery Court denied the motion to reconsider. (Id., ¶ 120). Widman sent Poulson a letter dated September 13, 1999, with a carbon copy to Reiff, informing them that the motion to reconsider had been denied and that a notice of appeal would have to be filed no later than October 5, 1999. (Id., ¶ 121). On September 29, 1999, Widman sent a letter to Poulson and Reiff informing them that Reiff's only avenue was to appeal. (Id., ¶ 122). Widman informed Poulson that he would not file the notice of appeal until all of the outstanding bills and costs were paid. (Id., ¶ 123). Poulson believed that Widman should file the notice of appeal and advised Widman that Reiff was requesting that Widman file the notice of appeal. (Id., ¶¶ 124-126). Poulson discussed with Reiff his options of prosecuting an appeal shortly after he became aware of the denial of the motion to reconsider. (Id., ¶ 133).
On October 6, 1999, Widman filed the notice of appeal and a motion to withdraw as counsel. (Def.'s 56.1(a)(3) Statement ¶¶ 127-128). Widman sent Pouslon and Reiff the notice of appeal and the motion to withdraw that same day. (Id., ¶ 129).
Reiff authorized Poulson to retain Illinois counsel for his appeal. (Def.'s 56.1(a)(3) Statement ¶ 135). Poulson retained James Beckley to represent Reiff during the appeal. (Id., ¶ 136).
Beckley represented Reiff from November 1999 through December 1999, when Beckley passed away. (Def.'s 56.1(a)(3) Statement ¶¶ 147-148). Thomas Burke was hired to prosecute the appeal. (Id., ¶ 150). Reiff did not attempt to go back to court to seek a remand after the appeal and did not attempt to apply to the NFA to re-arbitrate. (Id., ¶¶ 157-158).
Reiff was not in a position to remand or relitigate the arbitration because he did not have the money to do so. (Def.'s 56.1(a)(3) Statement ¶ 161). Kathryn Camp, general counsel for the NFA, and Cynthia Cain, director of arbitration for the NFA, opined that there is nothing in the NFA rules that would have prevented a new arbitration between the time of the denial of the motion to reconsider and the appeal or after the appellate court decision. (Id., ¶¶ 168-177).
ANALYSIS
Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986) ( Celotex). All the evidence and the reasonable inferences that may be drawn from the evidence are viewed in the light most favorable to the nonmovant. Miller v. American Family Mutual Ins. Co., 203 F.3d 997, 1003 (7th Cir. 2000). Summary judgment may be granted when no "reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) ( Anderson). However, a party cannot defeat summary judgment by relying on unsubstantiated facts. See Greer v. Board of Educ. of the City of Chicago, 267 F.3d 723, 729 (7th Cir. 2001).
Defendants argue that Reiff's claims are barred by the applicable statute of limitations, which began running when Reiff retained and paid fees to Beckley to conduct the appeal. Reiff argues that the statute of limitations did not begin to run until April 2001, when the appellate court affirmed the Circuit Court's decision.
The parties agree that Illinois law applies to the issues before the Court. See Kaplan v. Shure Bothers, Inc., 153 F.3d 413, 420 (7th Cir. 2003). Pursuant to Illinois law, Reiff must have filed his claims within two years from the time he "knew or reasonably should have known of the injury for which damages are sought." 735 ILCS 5/13-214.3(b). Section 13-214.3(b) contains its own "discovery rule; accordingly, the limitations period begins to run when the plaintiff knows or reasonably should have known of his injury and knows or reasonably should know that the injury was wrongfully caused. See Morris v. Margulis, 197 Ill.2d 28, 35-36 (2001) ( Morris). Generally, the discovery date is a question of fact. However, if it is apparent from the undisputed facts that only one conclusion can be drawn, the court may decide the issue. See Morris, 197 Ill.2d at 36.
The term "wrongfully caused," as used in the statute, does not mean that the plaintiff must have knowledge of the defendant's negligent conduct before the statute of limitations begins to run. Instead, the limitations period begins to run at the point when the injured person becomes possessed with sufficient information concerning his injury and its cause to put a reasonable person on inquiry to determine whether actionable conduct has occurred. See Knox v. Celotex Corp., 88 Ill.2d 407, 416 (1981).
Defendants contend that Reiff had sufficient information concerning his injury, the vacating of his arbitration award and denial of the motion to reconsider, and the cause of the injury, Defendants' alleged malpractice, when he had to retain an attorney for the appeal and paid fees to that attorney. Defendant cites Palmoras v. Barcelona, 284 Ill. App.3d 642 (1996) ( Palmoras) and Goran v. Glieberman, 276 Ill. App.3d 590 (1995) ( Goran) in support of his contention. However, those cases are readily distinguishable.
In Goran, the undisputed facts demonstrated that the plaintiff knew or should have known that her cause of action against her first attorney, who filed an appellate brief and then withdrew from the case, arose when her subsequent attorneys were required to refile the original attorney's appellate brief to bring the brief into compliance with court rules. Goran, 276 Ill. App.3d at 596. In the instant case, at the time that Widman withdrew from the case and Reiff retained counsel for the appeal, appellate counsel was not required to redo any of Widman's work but was appealing what even Widman contended was an incorrect application of the law by the Circuit Court.
In Palmoras, the court found that the limitations period for alleged attorney malpractice in the drafting of a will began to run when suits contesting the validity of the will were filed. At that time, the plaintiff began incurring attorney's fees for the alleged malpractice, improper drafting of the will; and she was on notice that she had a cause of action. See Palmoras, 284 Ill. App.3d at 646-47. However, in the instant case, the undisputed facts do not conclusively demonstrate that Reiff's retention of appellate counsel and payment of fees for services were incurred because of the alleged malpractice. As noted above, appellate counsel was retained in an attempt to correct what was believed at that time by all parties to be a misapplication of law by the court, not an error by trial counsel.
The undisputed facts demonstrate that there are several possible points in time when Reiff might have had sufficient information to conclude that his attorneys were negligent. This could have occurred when he retained new appellate counsel. However, he might have known of his injury and the cause first when the appellate court made its ruling or, perhaps, some time between these events. Accordingly, a material issue of fact exists in this regard; and summary judgment on this issue is denied. See Jackson Jordan, Inc. v. Leydig, Voit Mayer, 158 Ill.2d 240, 250-51 (1994) (reversing grant of summary judgment because there were several points in time that the plaintiff might have sufficient information to conclude that its attorneys were negligent); Knox, 88 Ill.2d at 417 (question of fact existed at which point in time leaks in roof provided sufficient information to put a reasonable person on inquiry as to the nature of the defect in the roof and the cause of action existed); see also Racquet v. Grant, 318 Ill. App.3d 831, 837 (2001) (generally, an adverse judgment does not give fair warning that the attorney is to blame).
Defendants also argue that Reiff's malpractice claim fails because Defendants' actions did not proximately cause the arbitration award in favor of Reiff to be set aside.
In an attorney malpractice case, the plaintiff is required to prove a case-within-a-case. The plaintiff is required to prove the underlying action and what his recovery would have been in that action absent the alleged malpractice. See Fox v. Berks, 334 Ill. App.3d 815, 817 (2002). The plaintiff must prove: (1) an attorney-client relationship that establishes a duty on the part of the attorney; (2) a negligent act or omission constituting a breach of that duty; (3) proximate cause establishing that "but for" the attorney's malpractice, the plaintiff would have prevailed in the underlying action; and (4) actual damages. See Mitchell v. Scain, Fursel Burney, Ltd., 332 Ill. App.3d 618, 620 (2002) ( Mitchell). Accordingly, no malpractice action lies against an attorney if the client's action was still viable when his attorney is discharged or withdraws. See Mitchell, 332 Ill. App.3d at 620 (holding no malpractice action against first attorney when an absolute right to refile the action existed and statute of limitations period had not expired when new counsel was retained); Land v. Greenwood, 133 Ill. App.3d 537, 540-41 (1985) (holding no malpractice action when attorney withdrew from representation when more than one year remained on statute of limitations).
Defendants contend that their actions did not proximately cause Reiff to lose a viable action because Reiff could have had his arbitration claim heard after the Chancery Court issued its decision and after the appellate court rendered its decision. Citing testimony by Cain and Camp, Defendants contend that Reiff, if he had requested, could have re-arbitrated the matter after both the Chancery Court's decision and the appellate court's decision. However, genuine issues of material fact exist. This is particularly true as to whether Reiff would have been allowed to re-arbitrate. While Cain and Camp believe the NFA would allow re-arbitration, the by-laws of the NFA are silent on the issue; and it is not clear that Cain and Camp have the authority to allow such re-arbitration. In addition, in September 1999, following the Chancery Court's decision, Widman informed Poulson that Reiff's only avenue was to appeal. Accordingly, summary judgment is not appropriate on this issue.
CONCLUSION
For the reasons stated above, Defendants' Motion for Summary Judgment is denied.