TRI-G, Inc. v. Burke, Bosselman & Weaver ( 2006 )

Docket Nos. 99584, 99595 cons.
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
TRI-G, INC., et al., Appellees, v. BURKE, BOSSELMAN &
WEAVER et al., Appellants.
Opinion filed June 22, 2006.
JUSTICE KARMEIER delivered the judgment of the court,
with opinion.
Chief Justice Thomas and Justices Kilbride and Garman
concurred in the judgment and opinion.
Justice Freeman concurred in part and dissented in part,
with opinion, joined by Justices McMorrow and Fitzgerald.
OPINION
Tri-G, Inc. (Tri-G), brought a legal malpractice action in the
circuit court of McHenry County against the law firm of Burke,
Bosselman & Weaver (Burke) to recover damages it sustained
as a result of Burke=s failure to prosecute a complaint Tri-G had
previously filed against Elgin Federal Bank (Elgin Federal).
Following a trial on the merits, a jury found that Burke had
been negligent in handling Tri-G=s case against Elgin Federal
and that but for that negligence, Tri-G would have recovered
$1,168,775 in compensatory damages and an equal sum in
punitive damages from Elgin Federal. Accordingly, the jury
returned a verdict in favor of Tri-G and against Burke for
$2,337,550.
After the circuit court entered judgment on the jury=s
verdict, Burke appealed. Tri-G cross-appealed. The appellate
court affirmed the judgment in part, reversed in part, and
remanded the cause to the trial court for further proceedings.
353 Ill. App. 3d 197. In so ruling, the appellate court expressly
rejected Burke=s arguments that the award of punitive to Tri-G
was either improper as a matter of law or excessive in light of
the evidence adduced at trial. It held that Illinois law permits a
legal malpractice plaintiff to receive an award of lost punitive
damages from a defendant attorney and concluded that the
punitive damages award made in this case was justified by the
evidence. 353 Ill. App. 3d at 232.
Burke and Tri-G each filed petitions for leave to appeal.
177 Ill. 2d R. 315(a). We allowed their respective petitions and
consolidated the appeals for review. The primary issue before
us is whether the appellate erred in upholding the award of lost
punitive damages to Tri-G. For the reasons that follow, we hold
that it did. The judgment of the appellate court is therefore
affirmed in part and reversed in part.
The basic principles governing legal malpractice claims are
well established. To prevail on a legal malpractice claim, the
plaintiff client must plead and prove that the defendant
attorneys owed the client a duty of due care arising from the
attorney-client relationship, that the defendants breached that
duty, and that as a proximate result, the client suffered injury.
Northern Illinois Emergency Physicians v. Landau, Omahana &
Kopka, Ltd., 216 Ill. 2d 294, 306 (2005).
The injury in a legal malpractice action is not a personal
injury, nor is it the attorney=s negligent act itself. Rather, it is a
pecuniary injury to an intangible property interest caused by
the lawyer=s negligent act or omission. The fact that the
attorney may have breached his duty of care is not, in itself,
sufficient to sustain the client=s cause of action. Even if
negligence on the part of the attorney is established, no action
will lie against the attorney unless that negligence proximately
caused damage to the client. The existence of actual damages
is therefore essential to a viable cause of action for legal
malpractice. Northern Illinois Emergency Physicians v. Landau,
Omahana & Kopka, Ltd., 216 Ill. 2d at 306-07.
The theory underlying a cause of action for legal
malpractice is that the plaintiff client would have been
compensated for an injury caused by a third party, absent
negligence on the part of the client=s attorney. Where the
alleged legal malpractice involves litigation, no actionable claim
exists unless the attorney=s negligence resulted in the loss of
an underlying cause of action. If the underlying action never
reached trial because of the attorney=s negligence, the plaintiff
is required to prove that but for the attorney=s negligence, the
plaintiff would have been successful in that underlying action. A
legal malpractice plaintiff must therefore litigate a Acase within
a case.@ See Cedeno v. Gumbiner, 347 Ill. App. 3d 169, 174
(2004).
The Acase within a case@ on which Tri-G=s malpractice
claim is predicated was Tri-G=s cause of action against Elgin
Federal. That cause of action arose from certain construction
loans Tri-G received from the bank to build residential homes
in a development known as Huntington Point. Tri-G=s
complaint, filed in 1981, alleged breach of contract, common
law fraud, and violation of the Consumer Fraud and Deceptive
Business Practices Act (Consumer Fraud Act) (Ill. Rev. Stat.
1983, ch. 1212, par. 261 et seq. (now 815 ILCS 505/1 et seq.
(West 2002))).
Trial of the case was postponed for several years, during
which time Tri-G was represented by a succession of law firms.
Eventually, a May 11, 1987, trial date was set by the court.
Approximately three months before the trial was scheduled to
begin, Tri-G retained Burke to handle the case. The attorney
from Burke assigned to represent Tri-G did not file an
appearance, however, until May 4, 1987. When the case was
called for trial as scheduled the following week, the attorney
answered Anot ready.@
Because the attorney was not prepared to proceed, the
trial court dismissed Tri-G=s case with prejudice. Tri-G, still
represented by Burke, appealed the dismissal. On November
13, 1987, the appellate court dismissed the appeal sua sponte
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on the grounds that Tri-G had failed to comply with a previous
order of that court.
Tri-G subsequently replaced Burke with new legal counsel,
who filed a second complaint against Elgin Federal. The new
complaint alleged the existence of oral construction loan
contracts between the parties, numerous breaches by Elgin
Federal of those contracts, and fraud. On Elgin Federal=s
motion, the circuit court dismissed the complaint based on res
judicata. The court also imposed sanctions against Tri-G and
its attorneys. The appellate court affirmed. Tri-G, Inc. v. Elgin
Federal Savings & Loan Ass=n, 182 Ill. App. 3d 357 (1989).
With the failure of its substantive claims against Elgin
Federal, Tri-G looked to Burke for recourse. In 1989 it filed a
legal malpractice against the law firm. It voluntarily dismissed
that action in 1994 and refiled it in 1995. Burke then moved to
dismiss the complaint. Although Burke=s motion was allowed by
the circuit court, the appellate court reversed and remanded.
Tri-G, Inc. v. Burke, Bosselman & Weaver, No. 2B96B0980
(1997) (unpublished order under Supreme Court Rule 23).
Tri-G=s original and amended complaints against Burke
each consisted of a single count claiming negligence. In its
original complaint, Tri-G alleged that Burke was negligent for
(1) failing to file an appearance until May 4, 1987; (2) failing to
advise Tri-G=s witnesses and discuss their testimony in
advance of depositions; (3) failing to attend certain depositions;
(4) failing to properly prepare the case for trial; and (5) failing to
seek a voluntary nonsuit on the date of trial.
The 1981 complaint against Elgin Federal was attached as
an exhibit to the malpractice complaint. The 1981 complaint
contained 10 counts, claiming breach of contract, common law
fraud, and violations of the Consumer Fraud Act (Ill. Rev. Stat.
1981, ch. 1212, par. 261 et seq. (now 815 ILCS 505/1 et seq.
(West 2002))). It alleged that in 1976, Tri-G was the general
contractor for a residential real estate development in McHenry
County known as the Huntington Point subdivision. First
National Bank of Woodstock (First National) owned Huntington
Point as the trustee of a land trust with Tri-G as beneficiary. In
1978, Elgin Federal made construction loans to Tri-G to build
residential homes on vacant lots in Huntington Point,
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specifically enumerating 13 lots. Tri-G entered into a contract
with Chain of Lakes Group (CLG), in which CLG agreed to
complete construction on eight of those lots, specifically 7, 24,
25, 30, 32, 35, 36, and 37.
Counts I through VII of Tri-G=s complaint asserted claims
for breach of contract regarding lots 7, 24, 25, 30, 32, 36, and
37, respectively. Tri-G alleged that Elgin Federal breached its
construction loan agreements by making payouts to CLG from
the construction loans without the written authorization of Tri-G
and allowing CLG to submit new contractor=s affidavits that
Elgin Federal used as a basis for additional payouts in excess
of the amounts stated in the original contractor=s affidavits
submitted by Tri-G.
Concurrent with the construction loans, Elgin Federal
made a land loan to Tri-G for improvements to land
surrounding the lots. In count VIII of its complaint, Tri-G alleged
that Elgin Federal breached that land loan agreement by
withholding payouts owed to Tri-G after it entered into the
contract for CLG to complete construction on the eight above-
listed lots.
In count IX, Tri-G alleged that Elgin Federal committed
common law fraud by: (1) making unauthorized payouts on the
construction loans for lots 16, 17, 26, 28, and 31; (2)
withholding money from Tri-G at the time of closing on lots 16,
26, 28, 30, and 37; (3) withholding from Tri-G the fact that Elgin
Federal had made unauthorized disbursements to CLG; (4)
allowing CLG to substitute new contractor=s affidavits for the
original contractor=s affidavits with respect to the construction
loans on all 13 lots; and (5) misleading Tri-G into believing that
an accounting would be done once all of the lots had been
closed upon, at which time Tri-G would receive monies
withheld by Elgin Federal. In pleading damages under this
count, Tri-G itemized the damages incurred with respect to the
construction loans on lots 7, 17, 24, 25, 26, 28, 30, 31, 36, and
37. Tri-G further alleged that it was damaged by unauthorized
payouts from the land loan it secured from Elgin Federal in the
amount of $30,000. Tri-G claimed a total of $139,159 in
compensatory damages and $140,000 in punitive damages. In
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count X, Tri-G=s allegations under the Consumer Fraud Act
essentially mirrored those of the common law fraud count.
Discovery ensued. In January 2002, one month prior to
trial, Tri-G was allowed to amend the malpractice complaint to
add an allegation that Burke was negligent for failing to review
and amend the 1981 complaint against Elgin Federal. Also, the
trial court denied Burke=s motion in limine to exclude punitive
damages. The court reasoned that if the jury assessed punitive
damages against Elgin Federal in the underlying case, that
amount would be compensatory damages to Tri-G in the
malpractice action.
During the trial, Irene Geschke testified that in June of
1976, she and her husband, Clarence, purchased a 16.5-acre
tract of land, intending to develop it as the Huntington Point
subdivision. Irene was working as a real estate broker. Irene
and Clarence obtained a loan from First National to purchase
the property and placed it in a land trust with First National as
trustee and Irene and Clarence as beneficiaries. Irene and
Clarence formed Tri-G as general contractor for the
development of the property. Clarence was the sole
shareholder of Tri-G and Irene was principally responsible for
Tri-G=s operation. Tri-G divided Huntington Point into 46 lots,
45 of which were for single-family homes.
Irene recounted that in 1977, she approached Dennis
Neubert of Elgin Federal regarding financing for Tri-G. Tri-G
subsequently obtained a loan from Elgin Federal to pay off the
loan from First National. The loan was secured by the then-
remaining 38 unsold Huntington Point lots, 37 of which were
planned for single-family homes. Irene also
spoke with Neubert about financing for the construction of
homes on Huntington Point. Neubert told Irene that Elgin
Federal would finance the construction.
Tri-G introduced into evidence a one-page document from
Elgin Federal entitled AConstruction Loan Procedure,@ which
dealt with such matters as Elgin Federal=s inspection of
construction sites and its payout of loan proceeds to
subcontractors and suppliers of materials. Tri-G also
introduced into evidence several loan commitment letters from
Elgin Federal that set forth specific terms for each construction
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loan, e.g., the loan amount and the rate of interest. According
to Irene, the documents, which purported to memorialize the
loan agreements, actually included only some of the loan
terms. Additional terms were agreed to orally.
The oral terms identified by Irene were as follows: (1)
payout from loans would be made only upon Tri-G=s written
request; (2) each loan was separate so that funds advanced on
one loan could not be used for construction on a lot that was
subject to a different loan; (3) although interest on a particular
loan would begin accruing once funds were disbursed, principal
and interest payments on that loan would not be due until all
the funds on that loan had been paid out; and (4) the purchaser
of a completed home would be given a loan with the same
interest rate and terms, i.e., 9% interest and no points, as the
construction loan Tri-G had obtained for that house. Finally,
Irene and Neubert agreed that if a subcontractor or supplier of
materials required more funds than were originally stated in Tri-
G=s affidavit itemizing the costs for constructing the home, Tri-
G was required to submit an amended affidavit before the
additional funds would be disbursed. According to Irene, the
loan agreements contained no provision for when payouts
could be terminated by Elgin Federal.
Irene testified that Tri-G=s dealings with Elgin Federal
initially went smoothly. Although she and Neubert agreed that
interest payments on any particular loan would not be due until
the proceeds had been entirely paid out, Elgin Federal initially
billed her for interest, and she paid the interest as billed. Also,
when Tri-G needed a payout from one of its loans, Elgin
Federal would issue the payout within three days after Tri-G
had submitted a payout authorization.
Tri-G built and sold homes on eight of the Huntington Point
lots. In each case, in accord with the construction loan
agreements, the buyer of the home received a loan from Elgin
Federal with the same interest rate and terms as Tri-G=s
construction loan.
In late 1977, Neubert left Elgin Federal and Edward Swartz
assumed responsibility for the Huntington Point loans. Around
this time, Tri-G began having difficulties with Elgin Federal. For
example, Elgin Federal=s response to payout requests slowed
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down in early 1978. According to Irene, the slowdown caused
one of Tri-G=s suppliers, Hines Lumber, to file a lien in
February 1978. Irene complained to Swartz about the
slowdown in payouts, and Swartz responded that the delay
was due to his having just taken over the construction loans
from Neubert. Irene stopped paying interest in March 1978.
During Irene=s testimony, the trial court, over Burke=s
objection, allowed Tri-G to introduce evidence of breach of
contract and fraud regarding lots not specified in the 1981
complaint. The purpose of this evidence was to establish the
existence of a scheme alleged to exist with respect to the lots
that were specified in the 1981 complaint.
Irene testified that on April 17, 1978, Swartz sent Tri-G
several letters demanding regular monthly payments of
principal and interest under three of the construction loans,
even though the proceeds had not been paid out entirely on
any of these loans. Irene testified that, without warning from
Elgin Federal and without her independent knowledge, payouts
stopped altogether on May 26, 1978, during Tri-G=s
construction of homes on 14 projects: lots 7, 16, 17, 22, 24, 26,
28, 30, 31, 32, 35, 36, 37, and 38. The total amount of the
loans on these projects was $795,797. As of May 1978,
$548,626 in loan proceeds had been paid out and $247,171
remained unpaid. Irene testified that, contrary to Elgin
Federal=s position, no interest was due on any of the open
loans in May 1978 because the proceeds had not been paid
out entirely on any of the loans.
According to Irene, she received another letter from Swartz
on June 16, 1978. In that letter, Swartz stated that there was a
total of $21,688 in delinquent interest on the open construction
loans and the land loan. Swartz demanded that the delinquent
interest be paid within 45 days. Swartz also stated that Tri-G
would have to complete construction of four of the homes on
which Tri-G had open loans before Elgin Federal would open
any further loans. Swartz demanded that Tri-G begin
advertising its unsold homes at Arealistic prices.@ Swartz also
stated that purchasers of Huntington Point houses would
receive mortgages at 9.25% and one point. Swartz threatened
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that if Tri-G did not comply with the terms of the letter, Elgin
Federal would take legal action effective August 1, 1978.
Irene testified that at no time before the June 16, 1978,
letter did Elgin Federal suggest that Tri-G=s homes were
overpriced. She also testified that the letter gave no indication
that Elgin Federal had decided to terminate payouts, though in
fact payouts had ceased several weeks before, unbeknownst
to her. Irene noted that, although Elgin Federal required Tri-G
to complete four homes before it could obtain any more loans,
Elgin Federal continued to refuse to make payouts, which were
necessary for construction. Irene testified that, had Elgin
Federal continued the payouts and allowed construction to
finish, Tri-G could have paid the allegedly delinquent interest
with proceeds from sales of the homes. Irene also noted that
the terms of the mortgages offered to potential buyers in the
June 16, 1978, letter were less favorable than the terms that
she and Neubert had agreed upon.
Irene recounted that on June 20, 1978, Elgin Federal sent
her bills for interest relative to the loans on several lots. Irene
did not believe that she was obligated to pay any interest
because the entire proceeds had not been paid out on any of
the loans.
Swartz sent Tri-G another letter on July 3, 1978,
demanding payment of delinquent interest prior to Elgin
Federal refinancing any of the existing construction loans to
secure additional funds for construction. Swartz required Tri-G
to cure the delinquency on the land loan interest before Elgin
Federal would release its interest in any lots that Tri-G might
wish to sell to a third party. Swartz also stated that the terms of
the mortgages offered to potential buyers in the letter of June
16, 1978, would be valid only until October 1, 1978, after which
current market rates and fees would apply. Swartz threatened
legal action if Tri-G took no action to complete the homes and
establish an advertising plan to sell the homes Aat a realistic
price.@ Swartz further stated that Elgin Federal=s Aboard feels
that it is important to complete this project at an early date or
we will ask for a deed in lieu of foreclosure or foreclosure
proceedings will commence.@
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Swartz informed Irene that Elgin Federal had found a
buyer, CLG, for the 23 lots in Huntington Point that were still
vacant. CLG proposed to pay $15,000 for each of the vacant
lots. Based on her experience in the real estate market, Irene
testified that the fair market value of the lots at that time was
$25,000 each. Irene had found another party who wanted to
buy the lots at a higher price, but Elgin Federal refused to
release its mortgages on the lots unless the delinquencies in
interest were paid.
Elgin Federal subsequently presented Irene and Clarence
with a contract for the sale to CLG of the 23 vacant lots at the
price of $15,000 per lot. The contract provided that $9,300 of
the purchase price for each lot would be paid to Elgin Federal
for the release of the lot under the land loan agreement. The
contract also provided that CLG would act as general
contractor on 8 of the 14 lots where construction was partially
completed, and Tri-G would finish construction on the
remaining six partially completed lots. Tri-G would remain
responsible for the loans on all 14 lots. To compensate for any
shortfall should CLG fail to complete construction of the homes
within 90 days of the signing of the contract, CLG was required
to place $2,500 in escrow for each of the eight lots on which
CLG agreed to complete construction (totaling $20,000). The
contract also required Tri-G to pay Elgin Federal $51,300 to
cover any deficiency in the open construction loans. The
contract further provided that Irene and Clarence would
execute the necessary documents to allow CLG to handle
exclusively all payouts under construction loans on the partially
completed lots to be completed by CLG.
Irene=s attorney, Michael Poper, suggested changes to the
contract, but Elgin Federal rejected them and essentially gave
Tri-G the choice of signing the contract or facing foreclosure on
the open loans. Irene and Clarence agreed to the terms. The
contract was executed on August 17, 1978. The parties to the
contract were First National, as trustee of the land trust; Irene
and Clarence, as sole owners of the entire beneficial interest in
the land trust; and CLG.
After the contract with CLG was signed, Elgin Federal
refused to make payouts on the six lots on which Tri-G was to
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complete construction. Irene also discovered that Elgin Federal
was permitting CLG to use payouts for purposes other than
construction on the eight lots on which CLG was general
contractor. Irene considered this practice to be a violation of
the oral construction loan agreements, which did not allow
payouts from a particular loan to be applied to a purpose other
than construction on the lot for which that particular loan was
obtained.
Irene reviewed Elgin Federal=s ledger and determined the
amount of funds that CLG used improperly. The total was
$75,787. Irene complained to Swartz about Elgin Federal=s
refusal to make payouts on the lots on which Tri-G was to
complete construction and about the inappropriate payouts to
CLG. Swartz told her that the contract between CLG and the
Geschkes made CLG the agent of First National and deprived
Tri-G of any control over the Huntington Point development.
According to Irene, Elgin Federal made payouts from the
land loan without Tri-G=s authorization, a practice contrary to
the land loan=s terms. The trial court admitted into evidence
portions of Elgin Federal=s ledger reflecting payouts to
subcontractors during the years 1977 through 1979. Irene
identified $21,725 in payouts that she did not authorize.
Without Tri-G=s approval, CLG submitted its own
contractor=s affidavits on the eight lots on which it had agreed
to finish construction. Irene considered this a violation of the
terms of the construction loan agreements on those lots. The
costs specified in CLG=s affidavits exceeded the costs specified
in Tri-G=s original affidavits, thus reducing Tri-G=s equity in the
eight homes.
Also, according to Irene=s testimony, Elgin Federal
eventually foreclosed on the 14 open construction loans.
Although CLG did not fulfill its contractual promise to complete
construction on the eight lots, Elgin Federal returned the
$20,000 in escrow funds to CLG without Irene=s knowledge or
approval.
Irene testified that she would never have entered into loan
agreements with Elgin Federal had she known it did not intend
to honor its oral agreements. She also would not have entered
into the contract with CLG had Elgin Federal not threatened
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foreclosure and disallowed her from selling the lots to any party
other than CLG.
Michael Poper was the Geschkes= attorney during their
dealings with Elgin Federal. He testified that, without notice,
Elgin Federal stopped making payouts on May 26, 1978. Poper
noted that, even in June 1978, Elgin Federal still had not
formally announced that it had stopped payouts. When Irene
complained about the cessation of payouts, Elgin Federal told
her that it would make no more payouts until interest was
brought current.
In Poper=s opinion, Elgin Federal=s demand for interest was
premature under the construction loan agreements. In his view,
if Elgin Federal had continued making payouts, thereby
enabling Tri-G to finish constructing the homes, Tri-G could
have used the proceeds from the sales of the homes to pay
whatever interest was then due. By withholding payouts and
thus halting construction, however, Elgin Federal effectively
precluded payment of the interest it demanded. Over Burke=s
objection, Poper testified that he had represented other
developers whom Elgin Federal had placed in the same kind of
predicament.
John Brittain was a member of Elgin Federal=s board of
directors when Elgin Federal extended the land and
construction loans to Tri-G in 1977. He testified that Elgin
Federal=s standard policy at that time was to require monthly
interest payments on construction loans. Elgin Federal
threatened foreclosure in June 1978 because Tri-G had fallen
behind in interest payments. Brittain acknowledged that Irene
had complained to him that Elgin Federal had paid proceeds
from certain of Tri-G=s construction loans toward deficiencies
on other construction loans. According to Brittain, Elgin Federal
commingled funds in this fashion to avoid placing Tri-G in
default. Brittain admitted, however, that such commingling was
contrary to Elgin Federal=s policies. Tri-G rested its case.
For its defense, Burke first called Brent Sherman, the
founder and sole shareholder of CLG. Sherman testified to the
events surrounding CLG=s contract with the Geschkes under
which CLG agreed to purchase 23 vacant lots and to finish
construction on several of the remaining lots. According to
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Sherman, the contract gave him full authority to request
payouts from Elgin Federal on the homes he was completing,
but he nonetheless obtained Irene=s approval for all payouts he
requested. Also, because he did not complete construction of
the homes within the agreed time, Sherman disbursed to Tri-G
$10,000 of the $20,000 CLG had placed in escrow to
guarantee completion of the homes. Sherman admitted,
however, that he had no documentation reflecting that
payment. Sherman denied that he ever conspired with Elgin
Federal to deprive Tri-G of control over the Huntington Point
development. Also, Sherman had anticipated receiving a profit
of $20,000 on each of the 23 lots once construction was
complete.
Burke next called Edward Swartz, who testified that he
assumed responsibility for Tri-G=s loans after Dennis Neubert
left Elgin Federal in late 1977. According to Swartz, Elgin
Federal=s policies made borrowers responsible for monthly
interest payments on their construction loans once funds were
disbursed. Tri-G initially paid interest on the construction loans
without protest but stopped paying in early 1978, giving rise to
Elgin Federal=s delinquency notices and threats of foreclosure.
Contrary to Irene=s interpretation, Swartz stated that the
contract between CLG and Tri-G made CLG responsible for
interest and principal on the loans relating to the construction it
had agreed to finish. Swartz denied that funds from Tri-G=s
loans were ever commingled with funds from the loans CLG
took over.
On cross-examination, Swartz conceded that the written
construction loan agreements between Elgin Federal and Tri-G
did not specify when interest was to be paid. Swartz admitted
that Elgin Federal=s procedures were Ainformal@ and that not all
policies were in writing. Swartz acknowledged that the total
amount of delinquent interest reflected in his June 16, 1978,
letter included interest for June 1978, which in fact was not due
until after the date of the letter. According to Swartz, the
characterization of the June interest as delinquent was an
innocent error. Swartz categorically denied that Elgin Federal
had ever stopped payouts on any of Tri-G=s loans. Shown
documents from Elgin Federal reflecting that the bank had
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made virtually no payouts between May 26 and September 19,
1978, Swartz speculated that no payouts were made because
Tri-G had not requested them.
Swartz further admitted on cross-examination that, after
the contract between CLG and Tri-G was signed, Irene told him
several times that she did not want CLG authorizing payouts
on the homes CLG agreed to finish and that she was revoking
CLG=s authority under the contract to make such
authorizations. In response, Swartz told Irene that she would
have to cancel the contract in writing if she wanted to stop CLG
from authorizing payouts.
Swartz further admitted on cross-examination that he could
point to no document memorializing CLG=s assumption of
responsibility for interest and principal on the loans relating to
the construction projects CLG agreed to complete. Swartz
acknowledged that the fact that foreclosure proceedings were
brought against Tri-G when these projects failed indicated that
Tri-G remained responsible for the loans despite the contract
with CLG. Swartz also admitted that Elgin Federal commingled
funds on Tri-G=s loans and that Irene protested the practice on
numerous occasions.
At the conclusion of the evidence, the trial court instructed
the jury on five specific categories of damages, with their
respective elements, sought by Tri-G. In its closing argument,
Tri-G sought damages in the following amounts: $75,787 for
breach of the construction loan agreements; $21,675 for
breach of the land loan agreement; $10,000 for breach of the
escrow agreement; $361,000 for fraud that resulted in loss of
profits on the 23 vacant lots; and $280,000 for fraud that
resulted in lost profits on the 14 partially completed lots. These
sums totaled $748,562.
The jury ultimately returned a verdict in favor of Tri-G for
$2,337,550, more than three times the amount Tri-G asked for.
In four special interrogatories, the jury found that: (1) Burke
was negligent in representing Tri-G in the underlying case; (2)
Burke=s negligence proximately caused Tri-G to lose the
underlying case; (3) had Tri-G prevailed in the underlying case,
it would have recovered a verdict against Elgin Federal for
$1,168,775 in compensatory damages; and (4) had Tri-G
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prevailed in the underlying case, Elgin Federal would have
been required to pay it an additional $1,168,775 in punitive
damages.
Burke filed a posttrial motion seeking alternative forms of
relief. Tri-G filed a posttrial motion in which it requested interest
on the judgment and an award of attorney fees and costs
pursuant to the Consumer Fraud Act. Both motions were
denied.
Burke appealed and Tri-G cross-appealed. The appellate
court rejected a contention by Burke that the amount of
compensatory damages awarded to Tri-G was not supported
by the record. 353 Ill. App. 3d at 222-23. It upheld the award of
punitive damages to Tri-G (353 Ill. App. 3d at 226-32), but
rejected Tri-G=s claim for judgment interest (353 Ill. App. 3d at
223-24). In addition, it reversed the trial court=s denial of Tri-G=s
request for attorney fees and costs pursuant to the Consumer
Fraud Act and remanded the cause to the trial court to allow
Tri-G to request attorney fees and costs incurred in bringing
the consumer fraud claim. 353 Ill. App. 3d at 224-26.
One justice dissented solely on the issue of lost punitive
damages. 353 Ill. App. 3d at 233 (Gilleran Johnson, J.,
concurring in part and dissenting in part). That justice would
have followed precedent from New York and California and
held that Aa plaintiff may not recover punitive damages lost by
reason of attorney malpractice.@ 353 Ill. App. 3d at 236
(Gilleran Johnson, J., concurring in part and dissenting in part).
Burke and Tri-G each filed petitions for leave to appeal.
177 Ill. 2d R. 315(a). We allowed their respective petitions and
consolidated the appeals for review. We subsequently granted
leave to the Illinois Association of Defense Trial Counsel, and
the Illinois Civil Justice League, the Du Page County Bar
Association, and the Northwest Suburban Bar Association to
file amicus curiae briefs in support of Burke. See 155 Ill. 2d R.
345.
In its appeal to our court, Burke contends that it was
denied procedural due process when Tri-G was permitted to
amend its complaint to add allegations regarding lots not
specified in the 1981 complaint, that the amount of
compensatory damages awarded was not supported by the
-15-
record, and that the award of lost punitive damages was
erroneous. Because only the punitive damages issue was
raised in Burke=s petition for leave to appeal (No. 99584). Tri-G
filed motions to strike Burke=s additional two issues from its
brief. We took the motions with the case and now deny them.
Supreme Court Rule 315(b)(3) requires that a petition for
leave to appeal contain Aa statement of the points relied upon
for reversal of the judgment of the Appellate Court.@ 177 Ill. 2d
R. 315(b)(3). A party=s failure to raise an issue in the petition
for leave to appeal may be deemed a waiver of that issue.
Central Illinois Light Co. v. Home Insurance Co., 213 Ill. 2d
141, 152 (2004); Sullivan v. Edward Hospital, 209 Ill. 2d 100,
124-25 (2004). In this case, however, Tri-G filed its own,
separate petition for leave to appeal to contest the lower
courts= denial of its claim for judgment interest (No. 99595) and
that petition was allowed. Pursuant to Supreme Court Rule
318(a) (155 Ill. 2d R. 318(a)), Burke, as appellee in that cause,
is entitled to Aseek and obtain any relief warranted by the
record on appeal without having filed a separate petition for
leave to appeal or notice of cross-appeal or separate appeal.@
This authorization encompasses the two additional issues
asserted by Burke.
In challenging this conclusion, Tri-G argues that to apply
Rule 318(a) to permit Burke to assert the additional issues
Aeviscerates the principle that points relied on by an appellant
for reversal not contained in the petition for leave to appeal are
waived.@ We disagree. Tri-G chose to file a separate petition for
leave to appeal, and our application of Rule 318(a) is a natural
consequence of Tri-G=s tactical decision. See, e.g.,
Weatherman v. Gary-Wheaton Bank of Fox Valley, 186 Ill. 2d
472, 489-91 (1999); Zimmerman v. Village of Skokie, 183 Ill. 2d
30, 40-41 (1998). Tri-G=s motions to strike the additional issues
from Burke=s brief are therefore denied.
Turning then to the merits of this appeal, Burke first
contends that it was denied procedural due process by the trial
court=s decision to allow Tri-G to recover damages for the 23
vacant lots and the 14 partially completed lots not specified in
the 1981 complaint and by the appellate court=s review of that
decision. As earlier noted, Tri-G was allowed to amend the
-16-
malpractice complaint prior to trial to add an allegation that
Burke was negligent for failing to review and amend the 1981
complaint against Elgin Federal. In allowing Tri-G=s motion to
amend, the trial court stated:
ABoth sides are dragging in the question of damages.
*** [T]he proposed amendment has absolutely nothing
to do with damages because you can=t back door the
damages. I mean the damages if there are any, if it
gets that far, would have to come from the 1981
complaint. It doesn=t come from anywhere else.@
The trial court reasoned that the amendment only went to the
question of what negligence Tri-G intended to prove.
During Irene=s testimony, the trial court allowed Tri-G to
introduce evidence of breach of contract and fraud regarding
the 23 vacant and 14 partially completed lots not specified in
the 1981 complaint. The trial court admitted this evidence for
the purpose of establishing an alleged scheme with respect to
the lots that were specified in the 1981 complaint. Indeed, the
trial court expressly stated that Tri-G would not be able to
argue to the jury that it was entitled to damages based on the
additional lots. However, at the jury instruction conference,
over Burke=s objection, the trial court ruled that damages on
the fraud claims properly included the additional lots. Tri-G
sought such damages, which the jury awarded. In denying
Burke=s posttrial motion, the trial court explained that the fraud
claims relating to the additional lots were encompassed within
the 1981 complaint.
In the appellate court, Burke assigned error to this
decision. The appellate court disagreed with the trial court that
the 1981 complaint was sufficiently broad to encompass claims
relating to the additional lots. Noting that it can affirm the trial
court=s decision on any basis in the record, however, the
appellate court held as follows:
AWe hold that the claims outside the 1981 complaint
were admissible at the malpractice trial on the basis
that a reasonably competent attorney would have filed
a motion to amend the complaint to add the claims
within a reasonable time after being retained by Tri-G
in January 1987, and that such a motion should have
-17-
been granted because it would have been proper
under the prevailing rules of pleading.@ 353 Ill. App. 3d
at 214.
The appellate court opined that a reasonably competent
attorney retained by Tri-G in late January 1987, aware that
May 11, 1987, was the date certain for trial, would have
immediately reviewed the 1981 complaint. Further, according
to the appellate court, given the interrelationship between the
claims relating to the lots specified in the 1981 complaint and
the same claims relating to the additional lots, a reasonably
competent attorney would have sought to amend the 1981
complaint prior to the May 11, 1987, trial. 353 Ill. App. 3d at
214-15.
In this court, Burke specifically contends that the lower
courts= decisions cumulatively effected a deprivation of
procedural due process because Burke was unable to present
a defense to claims related to the additional lots. Burke argues
that it was fundamentally unfair for the trial court to permit the
jury to award damages on claims relating to the additional lots,
which the trial court ruled, during trial, could not be the basis of
recovery. Burke further argues that the appellate court, instead
of correcting the trial court=s error, compounded it by upholding
the trial court=s decision based on alternative reasoning. Thus,
according to Burke, the appellate court=s conclusion Awas an
integral part of the due process violation.@
Procedural due process claims concern the
constitutionality of the specific procedures employed to deny a
person=s life, liberty, or property interest. East St. Louis
Federation of Teachers, Local 1220 v. East St. Louis School
District No. 189 Financial Oversight Panel, 178 Ill. 2d 399, 415
(1997). The requirement of due process is met by having an
orderly proceeding wherein a person is served with notice,
actual or constructive, and has an opportunity to be heard and
to enforce and protect his rights. The A >fundamental
requirement of due process in any proceeding which is to be
accorded finality is notice reasonably calculated, under the
circumstances, to apprise interested parties of the pendency of
the action and afford them an opportunity to present their
objections.= @ People ex rel. Devine v. $30,700.00 United States
-18-
Currency, 199 Ill. 2d 142, 156 (2002), quoting Stratton v.
Wenona Community Unit District No. 1, 133 Ill. 2d 413, 432
(1990). Due process does not guarantee against erroneous or
unjust decisions by courts which have jurisdiction of the parties
and the subject matter, and a constitutional question is not
presented where a court may have misconstrued the law or
committed an error for which its judgment should be reversed.
See Reyes v. Court of Claims, 299 Ill. App. 3d 1097, 1104-05
(1998).
Applying these principles to this case, it is clear that Burke
was not denied procedural due process. There is no merit to
Burke=s contention that Burke was not able to present a
defense to claims relating to the additional lots. The issue of
damages related to the additional lots permeated the entire
trial, including Tri-G=s pretrial motion to amend the malpractice
complaint to include an allegation that Burke was negligent for
failing to review and amend the 1981 complaint. AAn element of
damage anticipated by a pretrial motion can hardly be said to
come as a surprise.@ Union Electric Power Co. v. Sauget, 1 Ill.
2d 125, 132 (1953). Further, the evidence of the additional lots
is nearly identical to allegations relating to the lots pled in the
1981 complaint. If Burke were truly surprised by evidence of
the additional lots, it would have requested a continuance to
conduct further discovery. Instead, Burke chose to proceed.
Indeed, Burke did not even introduce expert witnesses or other
evidence valuating the lots that were specified in the 1981
complaint. Burke does not explain how it was prevented from
deposing any witness, pursuing any line of questioning, or
presenting any avenue of proof. The absence of surprise or
other prejudice militates against finding a procedural due
process violation. See, e.g., McDermott v. Metropolitan
Sanitary District, 240 Ill. App. 3d 1, 38-39 (1992); La Salle
National Bank v. International Ltd., 129 Ill. App. 2d 381, 397-98
(1970).
In support of its position, Burke cites Delarosa v. Approved
Auto Sales, Inc., 332 Ill. App. 3d 623 (2002), Hiscott v. Peters,
324 Ill. App. 3d 114 (2001), Koplin v. Hinsdale Hospital, 207 Ill.
App. 3d 219 (1990), and Pettigrew v. National Accounts
System, Inc., 67 Ill. App. 2d 344 (1966). In each of those
-19-
cases, new causes of action were adjudicated on the merits
without the appellant being given the opportunity to answer the
new causes of action, take discovery, and prosecute or defend
itself against the new causes of action at trial. Those cases are
distinguishable from the matter before us. Unlike the appellants
in those cases, Burke was not required to litigate new causes
of action on short notice with no opportunity to answer the
causes of action, take discovery, and present evidence in
opposition to the new causes of action. Burke had ample time
to take discovery on all claims related to Tri-G=s dealings with
Elgin Federal.
Absent its unsuccessful claim of prejudice, Burke=s
contention amounts to nothing more than an argument that it
was denied procedural due process because the decisions of
the trial and appellate courts were erroneous. As we have
previously indicated, however, procedural due process is not a
guaranty against erroneous or unjust decisions, or the incorrect
interpretation of statutes or rules of law. Neither an abuse of
discretion nor an erroneous rule of law will support a reversal
for a deprivation of procedural due process. Peoples Gas Light
& Coke Co. v. Buckles, 24 Ill. 2d 520, 530 (1962); Benton v.
Marr, 364 Ill. 628, 629 (1936), quoting Genslinger v. New
Illinois Athletic Club of Chicago, 332 Ill. 316, 319 (1928). In this
case, the trial court had within its discretion the power to rule
as it did on the complained-of matters. Even if the challenged
rulings of the lower courts may have been erroneousBwhich we
expressly do not decideBthey did not deprive Burke of due
process of law. See Kazubowski v. Kazubowski, 45 Ill. 2d 405,
413 (1970); Chicago Land Clearance Comm=n v. Darrow, 12 Ill.
2d 365, 369-70 (1957).
Burke next challenges the amount of the jury=s
compensatory damages award. As earlier noted, the trial court
instructed the jury on the elements of five specific categories of
damages that Tri-G sought. In its closing argument, Tri-G
requested $75,787 for breach of the construction loan
agreements, $21,675 for breach of the land loan agreement,
$10,000 for breach of the escrow agreement, $361,000 for
fraud that resulted in loss of profits on the 23 vacant lots, and
$280,000 for fraud that resulted in lost profits on the 14 partially
-20-
completed lots. These amounts totaled $748,562. The jury,
however, determined that Tri-G was actually entitled to
$1,168,775 in compensatory damages.
In assailing the jury=s verdict, Burke contends that Tri-G
should not have recovered compensation for lost profits on the
14 partially completed lots. The firm also takes issue with the
total amount of the compensatory damages awarded by the
jury. Our consideration of these arguments is guided by the
principle that A[t]he determination of damages is a question
reserved to the trier of fact, and a reviewing court will not lightly
substitute its opinion for the judgment rendered in the trial
court.@ Richardson v. Chapman, 175 Ill. 2d 98, 113 (1997).
Absent a clear indication in the record that the jury failed to
follow some rule of law or considered some erroneous
evidence, or that the verdict was the obvious result of passion
or prejudice, a reviewing court will not upset the jury=s
assessment of damages. See Perry v. Storzbach, 206 Ill. App.
3d 1065, 1069 (1990).
Burke challenges the jury=s award of $280,000 for lost
profits on the 14 partially completed lots on the grounds that it
was speculative and not supported by the evidence. This
argument cannot be sustained. As we noted earlier, CLG
president Brent Sherman testified that he reasonably
anticipated a profit of $20,000 per lot for each completed
house. During closing argument, Tri-G relied on Sherman=s
testimony in requesting compensatory damages for lost profits
in the amount of $20,000 for each of the 14 partially completed
lots, which totals $280,000. The appellate court held that
Sherman=s testimony as to the expected profits was an
adequate basis for the jury=s award. 353 Ill. App. 3d at 221-22.
The controlling principles are well established. AA recovery
may be had for prospective profits when there are any criteria
by which the probable profits can be estimated with reasonable
certainty.@ Barnett v. Caldwell Furniture Co., 277 Ill. 286, 289
(1917). AIn order to recover lost profits, it is not necessary that
the amount of loss be proven with absolute certainty. [Citation.]
Being merely prospective, such profits will, to some extent, be
uncertain and incapable of calculation with mathematical
precision.@ Midland Hotel Corp. v. Reuben H. Donnelley Corp.,
-21-
118 Ill. 2d 306, 315-16 (1987); accord Barnett, 277 Ill. at 289.
The impossibility of proof of the exact amount of lost profits will
not justify refusing damages. The law requires only that the
plaintiff approximate the claimed lost profits by competent
evidence. Such evidence must with a fair degree of probability
tend to establish a basis for the assessment of damages for
lost profits. Barnett, 277 Ill. at 289. AHowever, recovery of lost
profits cannot be based upon conjecture or sheer speculation.
[Citation.] It is necessary that the evidence afford a reasonable
basis for the computation of damages ***.@ Midland Hotel, 118
Ill. 2d at 316.
A plaintiff may satisfy the requirement of proving with a
reasonable basis or with reasonable certainty damages for
claimed lost profits through evidence of past profits in an
established business. Generally speaking, however, courts
consider evidence of lost profits in a new business too
speculative to sustain the burden of proof. Chapman v. Kirby,
49 Ill. 211, 219 (1868); see Malatesta v. Leichter, 186 Ill. App.
3d 602, 621 (1989); Drs. Sellke & Conlon, Ltd. v. Twin Oaks
Realty, Inc., 143 Ill. App. 3d 168, 174 (1986).
Reviewing the record, the appellate court observed that
Sherman spent several years in the construction business,
which he described as profitable, prior to becoming involved in
Huntington Point. Each of the 23 vacant lots was comparable
to the 14 partially completed lots. Also, Sherman=s, i.e., CLG=s,
business of selling houses for profit was comparable to Tri-G=s
business of selling houses for profit. In the appellate court=s
view, Sherman=s testimony was an adequate basis for
calculating Tri-G=s lost profits on the 14 partially completed lots.
353 Ill. App. 3d at 221-22.
Assigning error to the appellate court=s reasoning, Burke
contends that, as a matter of law, evidence of past success in
a similar enterprise is not sufficient to support an award of lost
profits and, specifically, past success on one real estate project
is not sufficient to support an award of lost profits on a
subsequent real estate project. According to Burke,
ASherman=s testimony about his expectations based on his
prior successes on other real estate projects was [therefore]
-22-
not sufficient to support an award of lost profits of Tri-G on this
project.@ (Emphases in original.)
We cannot accept Burke=s contention. There is no inviolate
rule that a new business can never prove lost profits. Rather, in
some cases, Acourts have found that the rule that a new
business= profits are too speculative did not fit the
circumstances before them.@ Milex Products, Inc. v. Alra
Laboratories, Inc., 237 Ill. App. 3d 177, 192 (1992); see, e.g.,
Malatesta, 186 Ill. App. 3d at 620-22.
The cases on which Burke relies determined that where
lost profits are based solely upon speculation, such proof was
inadequate to establish lost profits with reasonable certainty. In
this case, CLG=s business was an established business. The
14 houses to be completed cost the same amount to construct
and had comparable prices as the completed houses. Given
these facts, with Sherman=s testimony, Tri-G=s lost profits could
be determined with reasonable certainty from CLG=s past
experience. See, e.g., Milex, 237 Ill. App. 3d at 193. We
therefore uphold the jury=s award of $280,000 for lost profits on
the 14 partially completed lots.
Burke=s contention that the jury=s overall award was
excessive presents a more difficult question. Tri-G requested a
total of $748,562 in compensatory damages for five categories
of damages on which the jury was instructed. The jury,
however, awarded $1,168,775 in compensatory damages,
which was $420,213Bover 50%Bmore than what Tri-G
requested. Burke contends that such an award was not
supported by the record and was the result of passion,
prejudice, or confusion. It therefore requests that we remand
the cause for a new trial solely on the issue of damages or,
alternatively, that we order a remittitur in the amount of
$420,213, thereby reducing the compensatory damages award
to $748,562. We conclude that remittitur is necessary in this
case.
Under Illinois law, an award of damages will be deemed
excessive if it falls outside the range of fair and reasonable
compensation, results from passion or prejudice, or is so large
that it shocks the judicial conscience. Richardson, 175 Ill. 2d at
113. In Burke=s view, the jury=s decision to award Tri-G
-23-
$420,213 more than it had requested, Acould only have been
produced by passion, prejudice, or confusion.@ We disagree. AA
jury=s award of a verdict higher than that requested by counsel
does not, by itself, indicate that the jury acted out of passion or
prejudice.@ See Fedt v. Oak Lawn Lodge, Inc., 132 Ill. App. 3d
1061, 1072 (1985). Having said that, however, we must
nevertheless conclude that the jury=s verdict, as rendered,
cannot stand.
In attempting to rationalize the jury=s compensatory
damage award, Tri-G suggests that its trial counsel deliberately
asked for less than it was entitled to recovery as a strategic
maneuver. The record, however, belies that notion. During its
closing argument, Tri-G referred extensively to evidence from
documents and witnesses. In each of the five categories of
damages on which the jury was instructed, Tri-G asked the jury
to award it the dollar amount that corresponded to the loss
reflected in the evidence. Indeed, in one category of damages,
Tri-G presented the jury with a time range within which to
determine damages and asked for the maximum amount within
that range, which the jury awarded.
In its brief, Tri-G additionally responds that the record
contains Aample@ evidence to support the jury=s $1,168,775
compensatory damages award. Citing again to documents and
witness testimony, Tri-G argues that the award Aappears to
consist@ of a list of categories of damages, assigning a dollar
value to each category. Two of Tri-G=s claimed categories of
damages, however, are outside of the five categories of
damages on which the jury was instructed: A$255,336.00 paid
by Tri-G to purchase the land and develop it into 24 lots,@ and
A$240,754.00 loss of money paid by Tri-G in opening waivers
for 14 houses.@
Tri-G does not dispute that these two claimed categories of
damages were not identified in the jury instructions. Rather,
Tri-G contends that it is not reversible error for a jury to
disregard the elements of damages identified in jury
instructions as long as the ultimate damages award Ais
consistent with the evidence and proven damages.@ This
contention is meritless.
-24-
Jurors do not possess a roving commission to find such
damages as they please. The damages awarded by a jury
must be measured by a legal standard, and that standard must
guide the jury=s determination as to what sum would
compensate the injured party. Accordingly, while the amount of
recoverable damages is a question of fact for the jury, the
measure of damages upon which the jury=s factual computation
is based is a question of law for the court (see United States
for the Use of N. Maltese & Sons, Inc. v. Juno Construction
Corp., 759 F.2d 253, 255 (2d Cir. 1985); Basic American, Inc.
v. Shatila, 133 Idaho 726, 745, 992 P.2d 175, 194 (1999); 25A
C.J.S. Damages '342 (2002); 15 Ill. L. & Prac. Damages '125,
at 558 (2000)), and the court=s instructions should limit the
jury=s consideration to facts that are properly a part of the
damages allowable (Allied Vista, Inc. v. Holt, 987 S.W.2d 138,
141 (Tex. Ct. App. 1999); accord Creek v. Village of
Westhaven, 144 F.3d 441, 447 (7th Cir. 1998) (AA jury=s
discretion in awarding damages is limited by the parameters of
what the law will allow [citations], and it is the court=s
instructions which hopefully assist the jury@); C. McCormick,
Damages '15, at 58 (1935) (observing that, in action for
damages, trial judge has duty to include in jury instructions a
rule or standard for measuring amount of award)).
In the present case, the trial court instructed the jury: AIt is
your duty to resolve this case by determining the facts and
following the law given in the instructions.@ See Illinois Pattern
Jury Instructions, Civil, No. 1.01(2) (2000). The trial court
further instructed the jury on only the five above-stated
categories of damages. Under the principles discussed above,
Tri-G therefore cannot justify the jury=s award of compensatory
damages by hypothesizing categories of damages on which
the jury was not instructed.
We are thus left with no basis in the law or the record to
support a verdict $420,213 greater that Tri-G had requested.
Where, as here, a jury=s award Aexceed[s] the proven
damages, it must be corrected. The practice of entering or
ordering a remittitur has long been an accepted practice in
Illinois and it has been consistently acknowledged to be
promotive of both the administration of justice and putting an
-25-
end to litigation.@ See McElroy v. Patton, 130 Ill. App. 2d 872,
877 (1970) (collecting authorities); see generally Best v. Taylor
Machine Works, 179 Ill. 2d 367, 411-13 (1997).
In this legal malpractice action, the underlying case was
instituted with the filing of the 1981 complaintBapproximately 24
years ago. ARather than prolong this litigation any further,
remittitur will be utilized to correct the excessive verdict.@ Peter
J. Hartmann Co. v. Capitol Bank & Trust Co., 353 Ill. App. 3d
700, 711 (2004).
The applicable principles are widely recognized. A
remittitur is an agreement by the plaintiff to relinquish, or remit,
to the defendant that portion of the jury=s verdict which
constitutes excessive damages and to accept the sum which
has been judicially determined to be properly recoverable
damages. It is a judicial determination of recoverable damages
and should not be construed as an agreement between the
parties or a concession by the plaintiff that the damages were
excessive. See Carter v. Kirk, 256 Ill. App. 3d 938, 947-48
(1993); Congregation of the Passion, Holy Cross Province v.
Touche Ross & Co., 224 Ill. App. 3d 559, 588 (1991), aff=d, 159
Ill. 2d 137 (1994); Haid v. Tingle, 219 Ill. App. 3d 406, 411
(1991) (collecting authorities).
Although a trial court may refuse to enter judgment on a
verdict unless a portion of the verdict is remitted, the court
does not have the authority to reduce the damages by entry of
a remittitur if the plaintiff objects or does not consent. The trial
court must afford the plaintiff the choice of agreeing or refusing
to the entry of a remittitur, with the proviso that the plaintiff=s
refusal to agree to the entry of a remittitur will result in the
ordering of a new trial. The only alternative to a remittitur in a
case where the verdict exceeds the damages properly proven,
or where the verdict can be accounted on the sole basis that
the jury acted from some improper motive, such as passion or
prejudice, is for the trial judge to order a new trial. Carter, 256
Ill. App. 3d at 947-48; Haid, 219 Ill. App. 3d at 411-12 (and
cases cited therein). Further, Supreme Court Rule 366(a)(5)
specifically provides that a reviewing court has the power to
grant any relief, including the entry of a remittitur. 155 Ill. 2d R.
366(a)(5).
-26-
Accordingly, in the present case, we enter a remittitur of
$420,213, thereby reducing Tri-G=s compensatory damages
award to $748,562, conditioned upon Tri-G=s consent. Absent
such consent, we order a new trial solely on the issue of
damages. See, e.g., Peter J. Hartmann Co., 353 Ill. App. 3d at
711-12; Haid, 219 Ill. App. 3d at 417; Briante v. Link, 184 Ill.
App. 3d 812, 815 (1989).
We next consider Tri-G=s contention that the lower courts
erred in denying its claim for judgment interest. In considering
Tri-G=s arguments, which repeat those it presented in the
appellate court, we observe that the pertinent facts are
undisputed and the issues raised are purely legal. AIf the facts
are uncontroverted and the issue is the trial court=s application
of the law to the facts, a court of review may determine the
correctness of the ruling independently of the trial court=s
judgment.@ Norskog v. Pfiel, 197 Ill. 2d 60, 70-71 (2001).
Tri-G divides the interest it seeks into two time periods,
with the focal point being June 1, 1987. First, Tri-G seeks
Aprejudgment@ interest, which covers the period from June
1978, when Elgin Federal committed the acts from which the
underlying case arose, to June 1, 1987, the approximate date
that a verdict would have been entered against Elgin Federal
but for Burke=s negligence. Prejudgment interest is recoverable
only where authorized by agreement of the parties or by
statute. In chancery proceedings, however, equitable
considerations permit a court to allow interest as the equities of
the case may demand. City of Springfield v. Allphin, 82 Ill. 2d
571, 576, 579 (1980) (collecting cases); Continental Casualty
Co. v. Commonwealth Edison Co., 286 Ill. App. 3d 572, 577
(1997) (collecting cases). Tri-G argues that, had a damages
judgment been entered against Elgin Federal in 1987, Tri-G
would have been entitled to prejudgment interest on equitable
grounds.
Tri-G also seeks Apostjudgment@ interest for the period
from June 1, 1987, through February 28, 2002, when judgment
against Burke was entered. Before the appellate court, Tri-G
relied on section 2B1303 of the Code of Civil Procedure, which
provides in relevant part:
-27-
AJudgments recovered in any court shall draw
interest at the rate of 9% per annum from the date of
the judgment until satisfied ***. When judgment is
entered upon any award, report, or verdict, interest
shall be computed at the above rate, from the time
when made or rendered to the time of entering
judgment upon the same, and included in the
judgment.@ 735 ILCS 5/2B1303 (West 2002).
Tri-G argues that, because Burke failed to obtain a judgment
against Elgin Federal in 1987, Burke is responsible for
Apostjudgment@ interest, extending from June 1, 1987, when
the judgment should have been entered, through February 28,
2002, when Tri-G finally recovered on its allegations against
Elgin Federal.
Relying on the plain language of the statute, the appellate
court rejected Tri-G=s purported category of Apostjudgment@
interest. ASection 2B1303 speaks of judgments recovered, not
judgments that should have been recovered. Tri-G recovered
no judgment in this action until February 28, 2002, and
therefore this is the date by which interest will be reckoned.@
353 Ill. App. 3d at 224.
Before this court, Tri-G concedes that its claim to what it
characterizes as Apostjudgment@ interest Ais not based directly@
on section 2B1303. Rather, according to Tri-G:
ACombining section [2B1303] and the principle that the
judgment in a legal malpractice case is supposed to
give the plaintiff >those sums which would have been
recovered if the underlying suit had been successfully
prosecuted,= *** Tri-G is entitled to additional
compensatory damages equal to the amount of post-
judgment interest on a judgment that would have been
entered in June 1987 but for Burke=s negligence.@
Tri-G now contends that the appellate court=s rejection of its
claim to Apostjudgment@ interest Acompletely ignored the
principle that the prevailing plaintiff in a legal malpractice case
is entitled to everything it would have recovered if the
underlying action had been successfully prosecuted.@
This argument is erroneous. A judgment is the final
determination of a court upon matters submitted to it in an
-28-
action or proceeding. A judgment is the judicial act of the court.
In contrast, the right to judgment interest, apart from contract,
Adoes not emanate from the controversy, or from the judgment,
or from anything of a judicial nature. *** The recovery of
interest in this State, not contracted for, finds its only authority
in the statute. It is purely statutory.@ Blakeslee=s Storage
Warehouses, Inc. v. City of Chicago, 369 Ill. 480, 482-83
(1938).
In this case, as the appellate court reasoned, section
2B1303 refers only to judgments recovered, not to judgments
that should have been recovered. We must give effect to this
statutory provision by giving its language its plain and ordinary
meaning. Hall v. Henn, 208 Ill. 2d 325, 330 (2003). Therefore,
we agree with the appellate court that the focus of this claim
should not be June 1, 1987, the date of a purported,
hypothetical judgment against Elgin Federal, but rather
February 28, 2002, the date when the judgment against Burke
was entered, which was the only judgment rendered in this
legal malpractice action.
Because February 28, 2002, is the operative date, the
appellate court reasoned that the interest Tri-G was seeking
was actually entirely prejudgment interest, but of two types. In
the appellate court=s view, the interest covering the period from
June 1978 to June 1, 1987, was sought from Burke only
derivatively, its ultimate basis being Elgin Federal=s
wrongdoing. By contrast, the interest for the period from June
1, 1987, to February 28, 2002, was claimed directly on the
basis of Burke=s own negligent misconduct. 353 Ill. App. 3d at
224.
In analyzing and rejecting Tri-G=s claims for this interest,
the appellate court looked to the nature of the claims for which
interest was sought. With respect to later period, ending
February 28, 2002, the appellate court reasoned that the
request for interest failed because the claim against Burke was
one at law and our state does not allow nonstatutory
prejudgment interest on any type of claim at law. We agree.
As we have already suggested, A[i]t is well settled that
interest is not recoverable absent a statute or agreement
providing for it.@ Alphin, 82 Ill. 2d at 576. An exception to this
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rule exists in equity. AIn chancery proceedings, the allowance
of interest lies within the sound discretion of the judge and is
allowed where warranted by equitable considerations and
disallowed if such an award would not comport with justice and
equity.@ (Emphasis added.) Alphin, 82 Ill. 2d at 579; accord
Groome v. Freyn Engineering Co., 374 Ill. 113, 131 (1940)
(observing: AIn a proper case, equitable considerations permit a
court of equity to allow or disallow interest as the equities of the
case may demand@). The availability of equitable relief is not
necessarily precluded merely because a case is heard in the
law division of a circuit court, nor is equitable relief
automatically awarded merely because a case is proceeding in
the chancery division of a circuit court. Rather, it is the
substance of the claim that determines the appropriate relief
and the nature of the court. Continental Casualty Co., 286 Ill.
App. 3d at 579; see, e.g., In re Estate of Wernick, 127 Ill. 2d
61, 86-87 (1989) (referring to Aproceedings sounding in
equity@). There is no question, however, that this legal
malpractice action was entirely an action at law. See 65A
C.J.S. Negligence '649 (2000) (stating that negligence is an
action at law); Cook v. Gould, 109 Ill. App. 3d 311, 314 (1982)
(stating that legal malpractice action is no different than cause
of action for ordinary nonprofessional negligence). AIllinois
courts have declined to apply the rule governing equitable
awards of prejudgment interest to cases at law,
notwithstanding that an injured party who is eventually
compensated may suffer detriment from the inability to use the
money from the date of loss to the date of compensation.@
Continental Casualty Co., 286 Ill. App. 3d at 579 (collecting
cases). Prejudgment interest in therefore not available for the
period ending February 28, 2002.
In our view, the same rationale is applicable to the earlier
period between June 1978 and June 1, 1987. The interest for
that period was ultimately linked to the February 28, 2002,
judgment and is therefore based on the legal malpractice claim
against Burke, just as the interest for the latter period was.
Because prejudgment interest is not available in legal
malpractice cases, Tri-G=s claim for prejudgment interest for
this earlier period was also properly rejected.
-30-
In reaching this conclusion, we are aware that our analysis
on this point differs from that of the appellate court. It is
axiomatic, however, that we are not bound by the appellate
court=s reasoning and may affirm for any basis presented in the
record. Raintree Homes, Inc. v. Village of Long Grove, 209 Ill.
2d 248, 261 (2004).
The final issue in this case, and the only one about which
the members of the appellate court were in disagreement,
concerns the jury=s decision to include in its judgment against
Burke the sum of $1,168,775 to compensate Tri-G for lost
punitive damages Tri-G would have received in the underlying
action against Elgin Federal but for the Burke=s legal
malpractice. As noted earlier in this opinion, Burke contended
in the appellate court that allowing recovery of punitive
damages was expressly prohibited by 2B1115 of the Code of
Civil Procedure, which provides that A[i]n all cases, whether in
tort, contract or otherwise, in which the plaintiff seeks damages
by reason of legal, medical, hospital, or other healing art
malpractice, no punitive, exemplary, vindictive or aggravated
damages shall be allowed.@ 735 ILCS 5/2B1115 (West 2002).
The appellate court rejected Burke=s position, over the
dissent of one justice. It viewed Tri-G=s lost punitive damages
in the underlying case as an element of compensatory
damages in the malpractice action, and held that such
compensatory damages were not prohibited by Code of Civil
Procedure section 2B1115. 353 Ill. App. 3d at 226-32. In
reaching this result, the appellate court acknowledged the
divergence of authority on this issue. The court recognized that
courts in New York and California have held, based on public
policy, that lost punitive damages are not recoverable in a legal
malpractice action. 353 Ill. App. 3d at 226-27 (citing Ferguson
v. Lieff, Cabraser, Heimann & Bernstein, LLP, 30 Cal. 4th
1037, 69 P.3d 965, 135 Cal. Rptr. 2d 46 (2003), and
Summerville v. Lipsig, 270 A.D.2d 213, 704 N.Y.S.2d 598
(2000)).
The appellate court discussed Ferguson, which presented
several reasons for prohibiting recovery of lost punitive
damages in legal malpractice actions. First, according to
Ferguson, allowing such recovery would defeat the punitive
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and deterrent purposes of punitive damages because the
negligent attorney in the legal malpractice action is usually not
the tortfeasor who committed the intentional or malicious acts
that gave rise to the punitive damages claim in the underlying
case. Therefore, imposing liability for lost punitive damages on
the negligent attorney would neither punish the culpable
tortfeasor nor deter that tortfeasor and others from committing
similar wrongful acts in the future. Also, the amount of the
award bears no relationship to the gravity of the negligent
attorney=s misconduct or the attorney=s wealth. 353 Ill. App. 3d
at 227, discussing Ferguson, 30 Cal. 4th at 1046-48, 69 P.3d
at 970-71, 135 Cal. Rptr. 2d at 52-54; see Summerville, 270
A.D.2d at 213, 704 N.Y.S.2d at 599.
Second, according to Ferguson, allowing recovery of lost
punitive damages in legal malpractice actions would violate
public policy against speculative damages for several reasons.
Compensatory damages in a legal malpractice action requires
an objective determination. However, an award of punitive
damages is an expression of the jury=s moral condemnation
and thus necessarily requires a moral judgment. Because
moral judgments are inherently subjective, a jury assessing
damages in a legal malpractice action cannot objectively
determine whether punitive damages would have been
awarded or the proper amount of those damages with any legal
certainty. Also, the standards of proof for compensatory and
punitive damages differ. Accordingly, the standard of proof for
lost punitive damages would be a standard in a standard. This
pragmatic difficulty is so complex that it militates against
recovery or such damages. 353 Ill. App. 3d at 227, discussing
Ferguson, 30 Cal. 4th at 1048-49, 69 P.3d at 971-72, 135 Cal.
Rptr. 2d at 54-55.
Lastly, as the Ferguson court discussed, allowing
malpractice plaintiffs to recover lost punitive damages would
exact a societal cost. Exposing attorneys to such liability would
likely increase legal malpractice premiums, cause insurers to
exclude coverage for these damages, or discourage insurers
from providing professional liability insurance in the jurisdiction.
This financial burden on attorneys would probably make it
more difficult and costly for consumers to obtain legal services,
-32-
or to obtain recovery for legal malpractice. 353 Ill. App. 3d at
227, discussing Ferguson, 30 Cal. 4th at 1050, 69 P.3d at 972-
73, 135 Cal. Rptr. 2d at 55-56. Further, there is no compelling
reason to take these risks. The recovery of lost punitive
damages is not necessary to make a successful plaintiff whole
in a legal malpractice action. Rather, a plaintiff is made whole
by compensatory damages and punitive damages constitute an
undeserved windfall. 353 Ill. App. 3d at 227, discussing
Ferguson, 30 Cal. 4th at 1050-51, 69 P.3d at 973, 135 Cal.
Rptr. 2d at 56.
The appellate court recognized that the view taken by the
courts of California and New York is not universally accepted.
Courts in several jurisdictions have held that a plaintiff in a
legal malpractice action may recover as compensatory
damages those damages that the plaintiff would have been
awarded as punitive damages in the underlying action. 353 Ill.
App. 3d at 226-27 (citing Jacobsen v. Oliver, 201 F. Supp. 2d
93 (D.C. 2002) (interpreting District of Columbia law), Haberer
v. Rice, 511 N.W.2d 279 (S.D. 1994), Scognamillo v. Olsen,
795 P.2d 1357 (Colo. App. 1990), Elliott v. Videan, 164 Ariz.
113, 791 P.2d 639 (1989), and Hunt v. Dresie, 241 Kan. 647,
740 P.2d 1046 (1987)). Rather than focusing on the purpose
behind punitive damages, these courts have focused on the
concept of compensatory damages. 353 Ill. App. 3d at 227-28.
Compensatory damages for negligence are those which
flow directly and proximately from a defendant=s breach of duty
owed to a plaintiff. In a legal malpractice action based on an
attorney=s breach of duty to represent the client in a prior case,
it is the defendant attorney=s conduct and its consequences
which govern the analysis of damages. See Scognamillo, 795
P.2d at 1361. AIf an attorney=s negligence is the cause of
dismissal of the underlying claim, the proper measure of
damages is all compensatory and punitive damages awarded
by the jury in the trial of the case within a case.@ Elliott, 164
Ariz. at 119-20, 791 P.2d at 645-46. From the vantage point of
the underlying case, some of a plaintiff=s damages might be
designated Apunitive@ damages. However, from the vantage
point of the legal malpractice action, all the damages are
simply those which proximately resulted from the attorney=s
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negligence. Indeed, they are no longer properly called punitive
damages. Hunt, 241 Kan. at 661, 740 P.2d at 1057. Thus, the
punitive damages assessed in the underlying case Aare part
and parcel@ of the damages which the plaintiff suffered as a
result of the defendant=s alleged negligence. See Haberer, 511
N.W.2d at 288; Scognamillo, 795 P.2d at 1361.
These courts have also reasoned that allowance of lost
punitive damages in a legal malpractice action furthers the goal
of deterrence: AAttorneys who appreciate that they will be liable
in malpractice actions for >lost punitives= will be motivated to
exercise reasonable care in investigating or defending punitive
damages claims.@ Jacobsen, 201 F. Supp. 2d at 101-02, citing
Hunt, 241 Kan. at 661, 740 P.2d at 1057.
After discussing the two conflicting approaches, the
appellate court adopted the view of the latter group of
jurisdictions and concluded that it should regard lost punitive
damages in the underlying case as compensatory damages in
the malpractice case. In its view,
Athe proper focus of our analysis [is] what would make
the plaintiff whole with respect to the defendant
attorney=s negligence. When, as in this case, a jury has
determined that the plaintiff would have been entitled to
punitive damages but for the negligence of the
attorney, then such damages must be recoverable in
order for the plaintiff to be made whole. We note that
this result is consistent with the general principle in this
state that >[a] legal malpractice plaintiff is entitled to
recover those sums which would have been recovered
if the underlying suit had been successfully
prosecuted.= Weisman v. Schiller, Ducanto & Fleck,
314 Ill. App. 3d 577, 580 (2000). Based on (1) our view
of lost punitive damages as compensatory and (2) the
fact that such damages are not imposed for the
purpose of punishing the attorney who commits
malpractice, we hold that section 2B1115 does not bar
the recovery of lost punitive damages in a legal
malpractice case.@ 353 Ill. App. 3d at 228-29.
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The appellate court lastly concluded that the evidence adduced
at trial justified the award of punitive damages. 353 Ill. App. 3d
at 232.
The dissenting justice, who rejected the majority=s
approach, observed that punitive damages are not awarded for
compensation and have nothing to do with a plaintiff=s loss or
making the plaintiff whole. Rather, the purpose of punitive
damages is similar to a criminal penalty, i.e., to punish a
defendant for wrongdoing and to deter that defendant and
others from committing similar misconduct in the future. Also,
section 2B1115 of the Code of Civil Procedure (735 ILCS
5/2B1115 (West 2002)) bars recovery of punitive damages in a
legal malpractice action. The dissent viewed the appellate court
majority as attempting to Acircumvent@ these limitations by
Amischaracterizing@ lost punitive damages as compensatory
damages. 353 Ill. App. 3d at 233-34 (Gilleran Johnson, J.,
concurring in part and dissenting in part). The dissent also
observed: AIt is inconsistent with Illinois public policy to transfer
punishment and deterrence intended for a malicious,
fraudulent, or deliberately oppressive wrongdoer to another
who has not acted with such a wanton disregard.@ 353 Ill. App.
3d at 234 (Gilleran Johnson, J., concurring in part and
dissenting in part). Based on these considerations, the
dissenting justice concluded that Aa plaintiff may not recover
punitive damages lost by reason of attorney malpractice.@ 353
Ill. App. 3d at 236 (Gilleran Johnson, J., concurring in part and
dissenting in part).
Burke assigns error to the reasoning and conclusion of the
appellate court majority on this issue, and points to the dissent
as Acogent and correct, and ably describ[ing] why the majority
was wrong and why this Court should reverse the award of
underlying punitive damages.@ Supported by amici, Burke
focuses on the nature of punitive damages. It is well
established that such damages are not awarded as
compensation to a plaintiff. Rather, they serve to punish the
defendant and to deter the defendant and others from
committing similar misconduct in the future. Misconduct for
which punitive damages are imposed must be outrageous,
because it is committed with an evil motive or a reckless
-35-
indifference to the rights of others. See Loitz v. Remington
Arms Co., 138 Ill. 2d 404, 414-16 (1990) (collecting
authorities). Indeed, the punitive and deterrent function of
punitive damages is similar to that of a criminal penalty.
ABecause of their penal nature, punitive damages are not
favored in the law, and the courts must take caution to see that
punitive damages are not improperly or unwisely awarded.@
Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 188 (1978).
Burke correctly observes that it was not a wanton or
malicious wrongdoer. Elgin Federal was. Elgin Federal,
however, will bear none of the consequences of its
wrongdoing. If the punitive damage award is allowed to stand,
those consequences will fall entirely on Burke.
Burke argues that punitive damages imposed against a
wrongdoer in the underlying case do not become
compensatory when paid by the attorney in the legal
malpractice action. In Burke=s view, shifting the punishment
from the wrongdoer in the underlying case to the law firm in the
legal malpractice action does not make the punishment less
punitive. Rather, Burke continues, it makes the punishment
unjust because it is inflicted on the wrong party.
In support of its argument, Burke notes the following
comment from the Restatement (Third) of the Law Governing
Lawyers:
AA few decisions allow a plaintiff to recover from a
lawyer punitive damages that would have been
recovered from the defendant in an underlying action
but for the lawyer=s misconduct. However, such
recovery is not required by the punitive and deterrent
purposes of punitive damages. Collecting punitive
damages from the lawyer will neither punish nor deter
the original tortfeasor and calls for a speculative
reconstruction of a hypothetical jury=s reaction.@
Restatement (Third) of the Law Governing Lawyers
'53, Comment h, at 393 (2000).
According to Burke: AA lost opportunity to punish does not
become >compensatory= and should not be recoverable from
someone other than the person for whom the punishment was
intended.@
-36-
Burke further cites section 2B1115 of the Code of Civil
Procedure, which bars recovery of punitive damages in a legal
malpractice action. 735 ILCS 5/2B1115 (West 2002). Burke
reasons that if punitive damages cannot, by statute, be
imposed on a law firm in a legal malpractice action for its own
negligence, it follows that punitive damages cannot be imposed
on the firm for the intentional or reckless wrongdoing of
someone else. Burke contends that the appellate court erred
Aby shifting Elgin Federal=s punishment onto Burke.@
Burke next contends that the award of lost punitive
damages that would have been imposed against Elgin Federal
in the underlying case Agrants Tri-G a windfall@ in this legal
malpractice action. Burke notes this court=s recognition of the
effect of punitive damages imposed against a defendant on the
plaintiff=s compensation. See Mattyasovszky v. West Towns
Bus Co., 61 Ill. 2d 31, 36 (1975) (AThe fine that is imposed
upon the defendant in a criminal case goes to the State. But in
a civil case the exaction taken from the defendant, under the
label of exemplary damages, becomes a windfall for the
plaintiff@). According to Burke, granting a legal malpractice
plaintiff the punitive damages it would have recovered in the
underlying case Ais not a >make-whole,= compensatory
recovery. It is a windfall.@
In further support of its position, Burke urges this court to
adopt what it considers to be the Awell-reasoned@ rationale of
the above-mentioned Ferguson and Summerville decisions.
Burke also criticizes the cases that allow recovery of lost
punitive damages in the underlying case as compensatory
damages in the legal malpractice action. In Burke=s view, the
case law allowing such recovery is wrongfully decided, or at
least factually distinguishable.
Finally, Burke warns that allowing recovery for lost punitive
damages in the underlying case as compensatory damages in
a legal malpractice action will necessarily result in increased
professional liability insurance premiums or denials of
coverage. According to Burke, attorneys representing plaintiffs
will be encouraged to seek punitive damages in cases where
they would not have done so, motivated by a fear that Atheir
-37-
failure to make the claim could be the seed from which a
malpractice claim might grow.@
Whether a plaintiff in a legal malpractice action may
recover as an element of damages punitive damages he or she
would have recovered in the underlying action but for the
attorney=s professional negligence is a question of first
impression in Illinois. It is a question on which reasonable
minds can certainly disagree. The dissent in the appellate
court, the dissent which follows in this case, and the split
among courts from other jurisdictions illustrates that sound
arguments can be made for both sides of the issue. In the end,
however, we have concluded that the approach taken by the
courts of California and New York and urged by Burke in this
case represents the sounder view. Lost punitive damages are
not recoverable in a subsequent action for legal malpractice.
Disallowing lost punitive damages means that plaintiffs in
legal malpractice actions may not receive as much money as
they might have if the underlying action had been handled
properly. Compensating plaintiffs, however, is but one of
several factors that must be balanced in assessing whether
lost punitive damages should be recognized in legal
malpractice actions. There is no reason in logic or the law why
it should be given preeminent effect where, as here, the jury
has already awarded full compensation to the plaintiff for all the
damages it actually sustained.
Punitive, or exemplary, damages are not awarded as
compensation, but serve instead to punish the offender and to
deter that party and others from committing similar acts of
wrongdoing in the future. Loitz v. Remington Arms Co., 138 Ill.
2d at 414. Allowing Tri-G to recover its lost punitive damages
from Burke would not advance that policy in any way. To the
contrary, by holding the firm liable for the intentional or willful
and wanton misconduct of a third party, it tears the concept of
punitive damages from its doctrinal moorings.
Section 2B1115 of the Code of Civil Procedure (735 ILCS
5/2B1115 (West 2002)) expressly bars recovery of punitive
damages in a legal malpractice action. By characterizing lost
punitive damages as Acompensatory,@ Tri-G is attempting to
-38-
evade reach of this statute. In our view, its efforts are ultimately
unpersuasive. If the General Assembly has determined that
lawyers cannot be compelled to pay punitive damages based
on their own misconduct, as section 2B1115 decrees, it would
be completely nonsensical to hold that they can nevertheless
be compelled to pay punitive damages attributable to the
misconduct of others. Any construction of the law that permits
such a result would be absurd and unjust. 1
For the foregoing reasons, we reverse that portion of the
appellate court=s judgment which upheld the award of
$1,168,775 in lost punitive damages to Tri-G. The judgment in
favor of Tri-G and against Burke is hereby reduced by that
amount. We also reverse the appellate court=s judgment to the
extent that it sustained the full $1,168,775 in compensatory
damages awarded to the company by the jury. Pursuant to
1
Contrary to the claim made by Justice Freeman in his separate
opinion, this characterization is not meant to castigate him or anyone
else on the court. It is simply an application of the Ano absurdity@ rule
for statutory construction. The rule has been formulated in various
ways, but essentially it holds that statutes should be construed in a
manner that avoids absurd, unreasonable, unjust or inconvenient
results. See, e.g., In re Mary Ann P., 202 Ill. 2d 393, 406 (2002). Our
court invokes the rule frequently. It appeared in In re Donald A.G.,
No. 100965 (April 19, 2006), an opinion we just filed, and is regularly
cited by this court and our appellate court. Justice Freeman, himself,
has discussed it in cases he has authored. See, e.g., Antunes v.
Sookhakitch, 146 Ill. 2d 477, 485-488 (1992).
-39-
Supreme Court Rule 366(a)(6) (155 Ill. 2d R. 366(a)(5)), we
enter a remittitur of $420,213 on the compensatory damage
award and affirm the judgment entered in favor of Tri-G for the
reduced amount of $748,562. If Tri-G does not consent to the
entry of a remittitur within 21 days of the filing of this opinion, or
any further period in which the mandate is stayed, the cause
will be remanded to the circuit court of McHenry County for a
new trial solely on the issue of damages. In all other respects,
the judgment of the appellate court is affirmed.
Appellate court judgment
affirmed in part and reversed in part;
circuit court judgment
affirmed in part and reversed in part;
remittitur entered.
JUSTICE FREEMAN, concurring in part and dissenting in
part:
My colleagues in the majority hold that lost punitive
damages are not recoverable in a legal malpractice action. See
slip op. at 28-36. The majority offers insufficient justification for
allowing legal malpractice plaintiffs to be candidly
undercompensated. Further, the majority disregards the
fundamental distinction between the nature of the damages
that would have been awarded to Tri-G in the underlying case
and the nature of the damages that were actually awarded to
Tri-G in this legal malpractice action. Accordingly, I dissent
specifically from this portion of the court=s opinion.
After recognizing that this Ais a question on which
reasonable minds can certainly disagree,@ and Athat sound
arguments can be made for both sides of the issue,@ this court
now holds: ALost punitive damages are not recoverable in a
subsequent action for legal malpractice.@ Slip op. at 35. The
court then frankly concedes: ADisallowing lost punitive
damages means that plaintiffs in legal malpractice actions may
not receive as much money as they might have if the
underlying action had been handled properly.@ Slip op. at 35.
After making this candid admission, my colleagues in the
-40-
majority attempt to justify this gross injustice by positing:
ACompensating plaintiffs, however, is but one of several factors
that must be balanced in assessing whether lost punitive
damages should be recognized in legal malpractice actions.@
Slip op. at 35.
This declaration leads the reader to anticipate a thorough
discussion of the reasons why this court is going to allow legal
malpractice plaintiffs to be candidly undercompensated.
However, the court points to only one reason for its conclusion:
the attorney in the legal malpractice action was not the
wrongdoer in the underlying case. I cannot accept this
reasoning.
A bare majority of this court accepts Burke=s emphasis on
the nature of punitive damages and relies solely thereon in
bluntly denying full compensation to legal malpractice plaintiffs.
However, I consider reference to the nature of compensatory
damages to be more helpful in resolving this case. An award of
compensatory damages is intended to compensate an injured
person for the wrong or injury that person sustained. The goal
is to make the injured party whole and restore the injured party,
as nearly as reasonably possible, to the position in which he or
she would have held absent the injury. See Harris v. Peters,
274 Ill. App. 3d 206, 207 (1995); Rodrian v. Seiber, 194 Ill.
App. 3d 504, 508-09 (1990); Roark v. Musgrave, 41 Ill. App. 3d
1008, 1011 (1976); 25 C.J.S. Damages '21 (2002). In this
case, the appellate court reasoned:
AOf course, a punitive damages award was not
imposed against [Burke]. The verdict form designates
the $2,337,550 simply as >damages,= and one of the
special interrogatories specifies what amount of that
award represents punitive damages that Tri-G would
have recovered but for [Burke=s] negligence. Thus, the
judgment against [Burke] is designed to compensate,
not punish.@ 353 Ill. App. 3d at 229.
I agree. I view the punitive damages that would have been
imposed against Elgin Federal in the underlying case as an
element of Tri-G=s compensatory damages in this legal
malpractice action.
-41-
It is indisputable that Burke=s negligence deprived Tri-G of
a punitive damages award and that Tri-G will not receive all
sums to which it was entitled in the underlying case unless
Burke is directed to pay an amount equal to the underlying
punitive damages. AThe legal malpractice action places the
plaintiff in the same position he or she would have occupied
but for the attorney=s negligence.@ Bloome v. Wiseman,
Shaikewitz, McGivern, Wahl, Flavin & Hesi, P.C., 279 Ill. App.
3d 469, 478 (1996). Thus, a plaintiff=s damages in a legal
malpractice action are limited to the actual amount the plaintiff
would have recovered had he or she been successful in the
underlying case. Eastman, 188 Ill. 2d at 412; see Weisman v.
Schiller, Ducanto & Fleck, 314 Ill. App. 3d 577, 580 (2000) (AA
legal malpractice plaintiff is entitled to recover those sums
which would have been recovered if the underlying suit had
been successfully prosecuted.@ In this case, A[Burke] simply
has been called to account for the full consequences of its
professional negligence.@ 353 Ill. App. 3d at 229.
Further, this court relies on section 2B1115 of the Code of
Civil Procedure, which bars recovery of punitive damages in a
legal malpractice action. 735 ILCS 5/2B1115 (West 2002). My
colleagues in the majority explain:
ABy characterizing lost punitive damages as
>compensatory,= Tri-G is attempting to evade reach of
this statute. In our view, its efforts are ultimately
unpersuasive. If the General Assembly has determined
that lawyers cannot be compelled to pay punitive
damages based on their own misconduct, as section
2B1115 decrees, it would be completely nonsensical to
hold that they can nevertheless be compelled to pay
punitive damages attributable to the misconduct of
others. Any construction of the law that permits such a
result would be absurd and unjust.@ Slip op. at 36.
My colleagues in the majority misperceive the nature of the
damages that the jury awarded in this legal malpractice action.
As revealed by a special interrogatory, the jury in this legal
malpractice action awarded Tri-G $1,168,775 in compensatory
damages for lost punitive damages that would have been
-42-
imposed against Elgin Federal in the underlying case. The
jury=s assessment of lost punitive damages was not a finding
that Burke=s conduct was outrageously willful and wanton; it
was a finding that Elgin Federal=s conduct was. Although
Burke=s conduct was only negligent, it nevertheless caused Tri-
G to lose its entire underlying claim. See Elliott v. Videan, 164
Ariz. 113, 119, 791 P.2d 639, 645 (1989). In this case, the
appellate court reasoned as follows:
A[A]s we noted above, a punitive damages award has
not been imposed against any party to this dispute.
Rather, [Burke] has been made to compensate Tri-G
for the recovery, composed in part of punitive
damages, that was denied it by [Burke=s] negligence.
Elgin Federal, the party that should have been
punished, was insulated by [Burke=s] negligence, and
now [Burke] is being held liable for the full
consequences of that negligence, in accord with the
dictate that a legal malpractice plaintiff is entitled to
whatever sums it would have recovered in the
underlying action but for the malpractice. [Burke] is not
being punished; it is being made to compensate.@ 353
Ill. App. 3d at 230.
I agree with the appellate court=s view of the record. 2
This court expressly adopts the rationale of the above-
discussed Ferguson and Summerville decisions. Slip op. at 35.
However, I view as better reasoned the decisions that allow the
recovery of lost punitive damages in the underlying case as an
element of compensatory damages in the legal malpractice
2
Parenthetically, the court correctly recognizes that this Ais a
question on which reasonable minds can certainly disagree,@ and
Athat sound arguments can be made for both sides of the issue.@ Slip
op. at 35. It is curious that my colleagues in the majority
subsequently castigate this viewpoint of Tri-G, shared by their
dissenting colleagues, as Anonsensical@ and Aabsurd and unjust.@
Slip op. at 36. The use of such rhetoric in this case is unfortunate
and uncivil.
-43-
action. See Jacobsen v. Oliver, 201 F. Supp. 2d 93 (D.C. 2002)
(interpreting District of Columbia law); Haberer v. Rice, 511
N.W.2d 279 (S.D. 1994); Scognamillo v. Olsen, 795 P.2d 1357
(Colo. App. 1990); Elliott v. Videan, 164 Ariz. 113, 791 P.2d
639 (1989); Hunt v. Dresie, 241 Kan. 647, 740 P.2d 1046
(1987).
These cases are in accord with a fundamental principle of
tort law. AThe general rule of damages in a tort action is that
>the wrongdoer is liable for all injuries resulting from the
wrongful acts ***, provided the particular damages are the legal
and natural consequences of the wrongful act imputed to the
defendant, and are such as might reasonably have been
anticipated.= @ Haudrich v. Howmedica, Inc., 169 Ill. 2d 525, 543
(1996), quoting Siemieniec v. Lutheran General Hospital, 117
Ill. 2d 230, 259 (1987). I agree with the court in Jacobsen that
Apermitting recovery of punitive damages as compensatory
damages in a legal malpractice action is consistent with [this
principle].@ Jacobsen, 201 F. Supp. 2d at 102, citing Haymon v.
Wilkerson, 535 A.2d 880, 885 (D.C. 1987) (AThe normal
measure of tort damages is the amount which compensates
the plaintiff for all of the damages proximately caused by the
defendant=s negligence@). I agree with these cases that, from
the vantage point of the legal malpractice action, all the
damages are simply those which proximately resulted from the
attorney=s negligence. Accordingly, the punitive damages
assessed in the underlying case are included in the damages
which the plaintiff suffered as a result of the defendant=s
negligence. See, e.g., Jacobsen, 201 F. Supp. 2d at 100-02;
Haberer, 511 N.W.2d at 288; Elliott, 164 Ariz. at 119-20, 791
P.2d at 645-46. As the dissent in Ferguson correctly explained:
AIn a malpractice action, punitive damages lost because of
attorney error are not true punitive damages but are merely a
measure of some of the injury resulting from the attorney=s
malpractice. Thus, lost punitive damages are a form of
compensatory damages.@ (Emphasis in original.) Ferguson, 30
Cal. 4th at 1055, 69 P.3d at 976, 135 Cal. Rptr. 2d at 59
(Kennard, J., concurring and dissenting, joined by Werdegar
and Moreno, JJ.).
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To be sure, the divergence of opinion in the appellate
court=s decision as well as in the above-cited cases from
foreign jurisdictions reveals a A[r]ough equality in the
persuasiveness of the competing arguments.@ C. Thatcher,
Recovery of ALost Punitive Damages@ as ACompensatory
Damages@ in Legal Malpractice Actions: Transference of
Liability or Transformation of Character?, 49 S.D. L. Rev. 1, 3-4
(2003). However, after careful consideration, I would adopt the
reasoning of the courts that have allowed recovery of lost
punitive damages in the underlying case as compensatory
damages in the legal malpractice action. As a learned
commentator recently explained:
AEven if the competing arguments are considered to
be about equally persuasive, it does not seem
appropriate *** to adopt an exception to the general
rule entitling plaintiff-clients in legal malpractice actions
to recover the full value of their lost claim, including any
punitive damages they would have collected but for the
defendant-lawyer=s negligence. *** [T]he punitive
damages portion of the award the client should have
collected from the original tortfeasor is legitimately
transformed into a portion of the compensatory
damages the client must be able to recover from the
negligent lawyer in order to make the client whole and
vindicate the client=s expectation interest.@ (Emphasis
omitted.) 49 S.D. L. Rev. at 30.
I agree with the appellate court that section 2B1115 of the
Code of Civil Procedure does not bar recovery of lost punitive
damages in a legal malpractice action.
Although I would have upheld the award of lost punitive
damages as a component of Tri-G=s compensatory damages in
the legal malpractice action, I note that a remittitur would have
been required. The jury assessed Tri-G=s compensatory and
punitive damages in the underlying case in the amount of
$1,168,775 for each component, a ratio of one-to-one. Earlier
in this opinion, this court entered a remittitur of $420,213 in
compensatory damages, reducing the compensatory damages
award to $748,562. Consequently, to maintain the jury=s one-
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to-one ratio of compensatory and punitive damages, I would
have entered a remittitur of $420,213 in punitive damages,
thereby reducing the punitive damages award to $748,562.
Therefore, in my view, the total amount remitted should be
$840,426, thereby reducing the total amount of Tri-G=s award
to $1,497,124. See 155 Ill. 2d R. 366(a)(5).
Lastly, I agree with the court=s conclusions regarding the
following issues. The trial court=s decision to allow Tri-G to
recover damages for the 23 vacant lots and the 14 partially
completed lots not specified in the 1981 complaint and the
appellate court=s review of that decision did not deprive Burke
of procedural due process. Slip op. at 15-19. The evidence
supported the award of lost profits on the 14 partially
completed lots. Slip op. at 19-21. The jury=s award of
$1,168,775 was excessive and required a remittitur, thereby
reducing Tri-G=s compensatory damages award to $748,562.
Slip op. at 21-25. Also, the lower courts correctly rejected Tri-
G=s claim for judgment interest. Slip op. at 25-28. Indeed, I
embrace the court=s analysis of these issues as though it were
my own.
For the foregoing reasons, I concur in part and dissent in
part.
JUSTICES McMORROW and FITZGERALD join in this
partial concurrence and partial dissent.
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