Midwest Sanitary Service, Inc. v. Sandberg, Phoenix & Von Gontard, P.C. , 2022 IL 127327 ( 2022 )

2022 IL 127327IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
(Docket No. 127327)
MIDWEST SANITARY SERVICE, INC., et al., Appellees, v. SANDBERG,
PHOENIX & VON GONTARD, P.C., et al., Appellants.
Opinion filed September 22, 2022.
JUSTICE NEVILLE delivered the judgment of the court, with opinion.
Chief Justice Anne M. Burke and Justices Theis, Michael J. Burke, and Carter
concurred in the judgment and opinion.
Justices Overstreet and Holder White took no part in the decision.
OPINION
¶1 The plaintiffs, Nancy Donovan, Bob Evans Sr., and Midwest Sanitary Service,
Inc. (Midwest), filed a legal malpractice action in the circuit court of Madison
County against their attorneys, defendants John Gilbert, Narcisa Symank, and the
law firm of Sandberg, Phoenix, & Von Gontard, P.C. (Sandberg). The complaint
sought, inter alia, reimbursement for punitive damages Midwest paid in the
underlying action that it alleged it would not have had to pay but for the professional
negligence of its attorneys.
¶2 The circuit court denied the defendant attorneys’ motion to dismiss but certified
the following question for immediate appeal pursuant to Illinois Supreme Court
Rule 308 (eff. Oct. 1, 2019):
“Does Illinois’ public policy on punitive damages and/or the statutory
prohibition on punitive damages found in 735 ILCS 5/2-1115 bar recovery of
incurred punitive damages in a legal malpractice case where the client alleges
that, but for the negligence of the attorney in the underlying case, the jury in the
underlying case would have returned a verdict awarding either no punitive
damages or punitive damages in a lesser sum?”
The appellate court answered the question in the negative and affirmed the
judgment of the circuit court. See 2021 IL App (5th) 190360. We allowed the
defendant attorneys’ petition for leave to appeal pursuant to Illinois Supreme Court
Rule 315 (eff. Oct. 1, 2020). We also allowed the Illinois Defense Counsel to file
an amicus curiae brief. Ill. S. Ct. R. 345 (eff. Sept. 20, 2010). For the following
reasons, we now answer the certified question in the negative, affirm the judgment
of the appellate court, and remand the cause to the circuit court for further
proceedings.
¶3 I. BACKGROUND
¶4 A. Underlying Action in the Circuit Court
¶5 On March 31, 2014, Paul Crane, an employee of Midwest, filed a complaint
against Midwest for retaliatory discharge and alleged that his employment with
Midwest was terminated after he reported numerous health and safety violations to
the Illinois Environmental Protection Agency (IEPA). Following a jury trial, Crane
was awarded $160,000 in compensatory damages against Midwest, Nancy, and
Bob Sr. and $625,000 in punitive damages against Midwest. On appeal, the
appellate court affirmed this award. See Crane v. Midwest Sanitary Service, Inc.,
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2017 IL App (5th) 160107-U.
¶6 B. Legal Malpractice Complaint
¶7 After losing the underlying retaliatory discharge action and paying
compensatory and punitive damages to its former employee, Midwest filed a two-
count legal malpractice complaint against its attorneys, John Gilbert, Narcisa
Symank, and Sandberg. In the complaint, Midwest alleged that the attorneys
breached their duty in the underlying action in the following ways: (1) failed to list
all witnesses intended to be called at trial in compliance with Illinois Supreme
Court Rule 213(f) (eff. Jan. 1, 2018), resulting in six witnesses for the defense being
barred from testifying; (2) failed to disclose a voicemail recorded message from a
Midwest customer as a lost or destroyed document in response to opposing
counsel’s request to produce, resulting in a “missing evidence” instruction being
given by the court to the jury; (3) failed to (a) object to the language of the limiting
instruction given by the court regarding the testimony of defense witnesses
concerning the destroyed voicemail message or (b) to tender an alternative
instruction, thereby forfeiting an appellate argument regarding the instruction that
was given; (4) elicited testimony during cross-examination of IEPA investigator
Chris Cahnovsky that (a) he referred Midwest to the Attorney General’s office for
prosecution and (b) the Attorney General’s office had accepted the case; and
(5) failed and refused to discuss potential settlement with opposing counsel, while
the case was pending in the appellate court, by responding to counsel’s invitation
to negotiate by stating, “no,” without discussion or informing Midwest.
¶8 Midwest alleged in its complaint that, absent the failures by its attorneys, the
result of the trial in the underlying retaliatory discharge action would have been
different and that less or no damages would have been paid, including the $625,000
in punitive damages. Count I of the complaint seeks recovery of $603,932.03 in
damages plus costs on behalf of all plaintiffs, and count II seeks recovery of
$1,068,932.03 in damages plus costs on behalf of Midwest.
¶9 In response to Midwest’s legal malpractice complaint, the attorneys filed a
combined motion to dismiss and strike the complaint pursuant to section 2-619.1
of the Code of Civil Procedure (Code) (735 ILCS 5/2-619.1 (West 2018)). The
motion alleged that Midwest’s request for punitive damages violates section 2-1115
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of the Code (id. § 2-1115) and Illinois public policy. The circuit court denied the
attorneys’ motion, finding that Midwest’s request to recover the punitive damages
it paid in the underlying action against the attorneys in the legal malpractice action
did not violate section 2-1115 of the Code or the public policy of Illinois. The
attorneys subsequently filed a motion to reconsider and to certify for immediate
appeal, pursuant to Illinois Supreme Court Rule 308 (eff. Oct. 1, 2019), the question
of whether Midwest could recover in the legal malpractice action, with the
attorneys’ alleged negligence being a proximate cause, the punitive damages it paid
in the underlying action.
¶ 10 C. Certified Question
¶ 11 On August 9, 2019, the circuit court granted the attorneys’ motion to certify for
immediate appeal the following question:
“Does Illinois’ public policy on punitive damages and/or the statutory
prohibition on punitive damages found in 735 ILCS 5/2-1115 bar recovery of
incurred punitive damages in a legal malpractice case where the client alleges
that, but for the negligence of the attorney in the underlying case, the jury in the
underlying case would have returned a verdict awarding either no punitive
damages or punitive damages in a lesser sum?”
¶ 12 On April 28, 2021, the appellate court answered the certified question in the
negative and affirmed the judgment of the circuit court, which denied the attorneys’
motion to dismiss and strike the legal malpractice complaint. In answering the
certified question in the negative, the appellate court found that Midwest was not
barred, by section 2-1115 of the Code or the public policy in Illinois, from
recovering, in a legal malpractice action, punitive damages it paid in the underlying
retaliatory discharge action that were proximately caused by the alleged negligence
of the attorneys, because the punitive damages it paid in the underlying action are
not punitive damages in the legal malpractice action but compensatory damages
that compensate Midwest for the actual “out-of-pocket” losses sustained. See 2021
IL App (5th) 190360. The defendants now appeal to this court.
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¶ 13 II. ANALYSIS
¶ 14 Initially, we note that this is an appeal in a legal malpractice case, brought
pursuant to Illinois Supreme Court Rule 308 (eff. Oct. 1, 2019), to answer the
question of whether, in a legal malpractice action, punitive damages incurred in an
underlying action, which were proximately caused by the alleged negligence of the
attorneys in the underlying action, can be recovered as compensatory damages from
the allegedly negligent attorneys in a legal malpractice action.
¶ 15 “ ‘In order to recover damages in a legal malpractice action in Illinois, a plaintiff
must establish what the result would have been in the underlying action which was
improperly litigated by the plaintiff’s former attorney.’ ” Goldfine v. Barack,
Ferrazzano, Kirschbaum & Perlman, 2014 IL 116362, ¶ 24 (quoting Eastman v.
Messner, 188 Ill. 2d 404, 411 (1999)). The plaintiff must prove that he suffered
actual damages proximately caused by the attorney’s malpractice. Id. To establish
proximate causation in a legal malpractice case, the plaintiff must prove a “case
within a case,” meaning the plaintiff must establish the underlying action and what
the result would have been in that action absent the alleged negligence. Merritt v.
Hopkins Goldenberg, P.C., 362 Ill. App. 3d 902, 910 (2005). In other words, the
plaintiff must establish that, “but for” the attorney’s negligence, the damages
alleged would not have been incurred. Id. In a legal malpractice case, the plaintiff
bears the burden of proving that damages were incurred because of the attorney’s
negligence. Sheppard v. Krol, 218 Ill. App. 3d 254, 259 (1991).
¶ 16 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 294, 306-07 (2005).
¶ 17 This legal malpractice action has not yet gone to trial; however, the damages
Midwest seeks to recover were paid to satisfy the judgment entered against it, which
includes the $625,000 in punitive damages actually paid in the underlying action.
We reiterate that it is well settled in Illinois that, to succeed and recover damages
in a legal malpractice case, the legal malpractice plaintiff must establish that the
defendant attorney caused the injury. Goldfine, 2014 IL 116362, ¶ 24. To the extent
that Midwest cannot prove that it lost at trial and incurred a punitive damages award
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against it because of the attorneys’ negligence, Midwest will not be able to recover
damages.
¶ 18 The defendant attorneys sought an immediate appeal pursuant to Illinois
Supreme Court Rule 308 (eff. Oct. 1, 2019) to address the question of whether
section 2-1115 of the Code or the public policy of Illinois bars a plaintiff, in a legal
malpractice action, from recovering, as compensatory damages, punitive damages
incurred in an underlying action because of the defendant attorneys’ alleged
negligence in the underlying action.
¶ 19 Because this appeal requires this court to construe section 2-1115 of the Code,
it involves a question of law. Board of Education of the City of Chicago v. Moore,
2021 IL 125785, ¶ 18 (statutory construction of a statute presents a question of law).
Therefore, our review is de novo. Rozsavolgyi v. City of Aurora, 2017 IL 121048,
¶ 21.
¶ 20 A. Statute Barring Punitive Damages Against Lawyers
and Public Policy Issues
¶ 21 The certified question contains two elements: (1) whether section 2-1115 of the
Code prohibits plaintiffs who bring a legal malpractice action from recovering from
their defendant attorneys punitive damages actually paid by the legal malpractice
plaintiffs in the underlying action because of the attorneys’ alleged negligence in
that action and (2) whether recovery of punitive damages from their attorneys
violates the public policy of Illinois.
¶ 22 1. Section 2-1115 Bars Punitive Damages
¶ 23 Section 2-1115 provides, in pertinent part, “In all cases, whether in tort, contract
or otherwise, in which the plaintiff seeks damages by reason of legal ***
malpractice, no punitive *** damages shall be allowed.” 735 ILCS 5/2-1115 (West
2018).
¶ 24 The attorneys first maintain that section 2-1115 of the Code prohibits the
plaintiffs from recovering punitive damages against them. When interpreting
statutory language, we are to give effect to the plain and ordinary meaning, avoiding
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absurd, unreasonable, unjust, or inconvenient results. See Cassidy v. China
Vitamins, LLC, 2018 IL 122873, ¶ 17; In re Mary Ann P., 202 Ill. 2d 393, 406
(2002). In determining the plain and ordinary meaning of a statute, we must
consider the statute in its entirety, the subject addressed, and the apparent intent of
the legislature when it enacted the statute. Hayashi v. Illinois Department of
Financial & Professional Regulation, 2014 IL 116023, ¶ 16; Blum v. Koster, 235
Ill. 2d 21, 29 (2009). Unless the words are defined within the statute itself, they will
be “interpreted as taking their ordinary, contemporary, common meaning.”
Sandifer v. United States Steel Corp., 571 U.S. 220, 227 (2014). Courts may find
words’ ordinary, contemporary, common meaning by looking at what they meant
when the statute was enacted, which is often by referencing dictionaries. See id.¶ 25 2. Punitive Damages Distinguished From
Compensatory Damages
¶ 26 Black’s Law Dictionary defines “punitive damages” or “exemplary damages”
as
“damages on an increased scale, awarded to the plaintiff over and above what
will barely compensate him for his property loss, where the wrong done to him
was aggravated by circumstances of violence, oppression, malice, fraud, or
wanton and wicked conduct on the part of the defendant, and are intended to
solace the plaintiff for mental anguish, laceration of his feelings, shame,
degradation, or other aggravations of the original wrong, or else to punish the
defendant for his evil behavior or to make an example of him.” Black’s Law
Dictionary 352 (5th ed. 1979).
¶ 27 Compensatory damages are defined as such damages as will “compensate the
injured party for the injury sustained, and nothing more; such as will simply make
good or replace the loss caused by the wrong or injury.” Id. To determine whether
the recovery Midwest is seeking violates the statute, we must analyze the damages
sought. In other words, we must consider whether the damages compensate
Midwest for the pecuniary injury suffered and are, therefore, compensatory
damages or whether the damages punish the attorneys for their alleged misfeasance
or nonfeasance and are, therefore, punitive damages.
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¶ 28 The attorneys argue that the punitive damages paid in the underlying retaliatory
discharge action are also classified as punitive damages in the legal malpractice
action. Midwest argues that the punitive damages incurred in the underlying action
as proximately caused by the attorneys’ negligence are compensatory damages in
the legal malpractice action. We agree with Midwest. We find that the punitive
damages Midwest paid in the underlying retaliatory discharge action are an element
of compensatory damages in the legal malpractice action because they do not
punish the attorneys but instead replace the loss caused by the attorneys’ alleged
misfeasance or nonfeasance. In other words, the damages make Midwest whole by
compensating it for the entirety of its pecuniary loss (the compensatory and punitive
damages Midwest paid in the underlying retaliatory discharge action caused by the
attorneys’ alleged negligence).
¶ 29 3. Cases That Bar “Lost” Punitive Damages
¶ 30 We recognize that this court, in Tri-G, Inc. v. Burke, Bosselman & Weaver, 222
Ill. 2d 218, 226 (2006), interpreted section 2-1115 of the Code and also addressed
public policy concerns with respect to the recovery of lost punitive damages in legal
malpractice cases. In Tri-G, the plaintiffs initiated a legal malpractice action against
the defendants, seeking to recover damages sustained in the underlying action in
the form of actual compensatory damages and lost punitive damages (punitive
damages that would have been awarded to them) but for the defendants’ negligence.
Id. at 224-25. We found that lost punitive damages could not be recovered in legal
malpractice actions for several reasons. First, we found that allowing such recovery
would be illogical where “the jury has already awarded full compensation to the
plaintiff for all the damages it actually sustained.” Id. at 267. Second, we found that
allowing the recovery of lost punitive damages in a legal malpractice action
contravenes the nature of punitive damages, as they 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.” Id. Third, we
found that section 2-1115 of the Code “expressly bars recovery of punitive damages
in a legal malpractice action” and, if the “General Assembly has determined that
lawyers cannot be compelled to pay punitive damages based on their own
misconduct, *** it would be completely nonsensical to hold that they can
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nevertheless be compelled to pay punitive damages attributable to the misconduct
of others.” Id. at 267-68.
¶ 31 In reaching our conclusion in Tri-G, this court gave significant consideration to
the Supreme Court of California’s decision in Ferguson v. Lieff, Cabraser,
Heimann & Bernstein, LLP, 69 P.3d 965 (Cal. 2003). In Ferguson, plaintiffs filed
a legal malpractice action against the defendants, their attorneys in the underlying
class action, seeking to recover, as compensatory damages in the legal malpractice
action, punitive damages that were lost or not recovered because of their attorneys’
negligence in prosecuting the underlying class action. Id. at 968. The Supreme
Court of California found that legal malpractice plaintiffs may not recover lost
punitive damages as compensatory damages. Id. at 969. In so doing, the Ferguson
court stated several reasons. First, it found that “[i]mposing liability for lost
punitive damages on negligent attorneys would therefore neither punish the
culpable tortfeasor [citation], nor deter that tortfeasor and others from committing
similar wrongful acts in the future.” Id. at 970. Second, it found that permitting
recovery of lost punitive damages as compensatory damages violates the public
policy against speculative damages, as punitive damages require a moral
determination of the amount of damages and not a factual amount based on actual
damages. Id. at 971.
¶ 32 Third, the standard of proof for punitive damages and compensatory damages
is different in that recovering lost punitive damages requires the plaintiff to
establish by a preponderance of the evidence that, but for attorney negligence, the
jury would have found clear and convincing evidence of oppression, fraud, or
malice. Id. at 972. Fourth, allowing recovery of lost punitive damages would
adversely affect the overall ability of courts to manage their caseloads by making
settlement more difficult in cases that involve punitive damages because of the
potential for dissatisfied clients to seek recovery for negligent undervaluation of
punitive damages claims. Id. Fifth, allowing recovery of lost punitive damages as
compensatory damages would exact a societal cost, increasing the financial burden
on lawyers and likely making it more difficult for consumers to obtain legal services
or obtain recovery for legal malpractice. Id.¶ 33 The present case is distinguishable from both Tri-G and Ferguson. First,
Midwest, one of the plaintiffs in the present case, was a defendant in the underlying
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action and paid compensatory and punitive damages in the underlying action.
Midwest is not speculating but is certain about the amount of punitive damages it
paid in the underlying action, and it now seeks to be made whole in the legal
malpractice action. Midwest had punitive damages assessed against it in the
underlying retaliatory discharge action and, in the legal malpractice action, it is now
alleging that it was forced to pay punitive damages in the underlying action because
of the negligence of its attorneys. Therefore, in this malpractice case, the punitive
damages Midwest paid in the underlying retaliatory discharge action are
compensatory damages because they replace the money Midwest paid in the
underlying action. Permitting Midwest to recover in this malpractice case the
punitive damages it paid in the underlying retaliatory discharge action would not
punish the attorneys. Instead, the punitive damages become an element of the claim
for compensatory damages and make Midwest whole because they replace the
money Midwest paid in the underlying action.
¶ 34 Second, the damages Midwest seeks in the present case are not speculative. The
exact amount of punitive damages paid is known—$625,000. Should a jury find
that the attorneys’ alleged negligence proximately caused the pecuniary loss
Midwest suffered in the retaliatory discharge action, then the jury would not be
speculating but would know the amount of damages required to compensate
Midwest for its injury.
¶ 35 Third, because the present case involves punitive damages Midwest already
paid in the underlying retaliatory discharge action, and not lost punitive damages
(punitive damages not recovered in the underlying action), Midwest would have no
difficulty proving all the damages it paid in the underlying retaliatory discharge
action. Before awarding damages in the legal malpractice action, the jury would
have to determine whether the attorneys’ negligence was the proximate cause of
Midwest being required to pay damages in the underlying action. If the jury
determines that the attorneys’ alleged negligence proximately caused Midwest to
pay punitive damages in the underlying action, the jury would then proceed to
award Midwest the total compensatory damages that were caused by the attorneys’
negligence.
¶ 36 Fourth, there is no risk of settlement difficulties in cases, such as this, involving
recovery for paid punitive damages in an underlying action because the damages
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paid are fixed and not speculative. The underlying retaliatory discharge verdict
constitutes demonstrative evidence of the compensatory and punitive damages
Midwest paid, and the total of these damages are compensatory damages and would
represent the actual pecuniary loss suffered by Midwest in the underlying action.
¶ 37 Fifth, in the present case, there is no risk of a societal cost—potentially
subjecting attorneys to a greater financial liability or consumers running the risk of
not being able to obtain legal services or obtain recovery from legal malpractice—
because the damages recoverable in this case are based on (1) proof of the
attorneys’ negligent acts and (2) the attorneys’ negligence being the proximate
cause of the damages actually paid. In the present case, Midwest has already
incurred a set amount of punitive damages in the underlying action. Legal
malpractice plaintiffs, like Midwest, who pay punitive damages in the underlying
action are only seeking, as an element of compensatory damages, the punitive
damages already paid in the underlying action.
¶ 38 4. Cases That Award Paid Punitive Damages
¶ 39 While we found no Illinois cases where plaintiffs in a legal malpractice action
recovered punitive damages paid in an underlying action from their attorneys, we
find instructive cases from other jurisdictions holding that punitive damages paid
in the underlying action are recoverable from attorneys as compensatory damages
in legal malpractice actions.
¶ 40 In Hunt v. Dresie, 740 P.2d 1046 (Kan. 1987), the plaintiff, Jack Hunt, brought
a legal malpractice action against the defendants, Grey Dresie (his attorney) and the
law firm. Hunt alleged that, but for the negligence of the attorneys allowing the
statute of limitations to run on his defense in the underlying action, he would not
have lost the underlying action and, therefore, would not have incurred $20,000 in
actual damages and $600,000 in punitive damages. Id. at 1048. Accordingly, Hunt
alleged that the attorneys were liable for his entire pecuniary injury—$620,000. Id.
The appellate court determined that the attorneys were liable for all the damages
Hunt paid, including the punitive damages awarded in the underlying action. Id. at
1056-57. The Supreme Court of Kansas, in affirming the judgment of the appellate
court, cited the reasoning of the appellate court in support of its decision:
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“The damages Hunt had to pay [in the underlying action] included damages
called punitive damages from the vantage point of that lawsuit. From the
vantage point of this lawsuit, should Hunt be successful, all the damages are
simply those which proximately resulted from his attorneys’ negligence; they
are no longer properly called punitive damages.” (Emphasis in original and
internal quotation marks omitted.) Id. at 1057.
¶ 41 We agree with the reasoning of the Kansas Supreme Court. The punitive
damages Midwest paid in the underlying retaliatory discharge action, because of
the alleged negligence of the defendant attorneys, were punitive damages Midwest
paid in the underlying action, which became an element of its claim for
compensatory damages in this malpractice action. Therefore, as to this legal
malpractice action, should a jury determine the attorneys’ negligence proximately
caused Midwest to pay punitive damages in the underlying retaliatory discharge
action, those damages are no longer punitive; instead, they are an element of
compensatory damages because they make Midwest whole and replace its loss of
$625,000.
¶ 42 Similarly, in Scognamillo v. Olsen, 795 P.2d 1357 (Colo. App. 1990), the
Colorado Court of Appeals found that Peter Scognamillo and Harry Faircloth (the
legal malpractice plaintiffs) were entitled to recover the punitive damages paid in
the underlying action as compensatory damages in the legal malpractice action. In
Scognamillo, the legal malpractice plaintiffs, like the plaintiff in the present case,
were defendants in the underlying action. In that underlying action, Scognamillo
and Faircloth formed a company with several others and were sued by certain
investors in that company. Id. at 1358. These investors brought claims of fraud,
breach of contract, and civil conspiracy in the sale of distributorships against all the
defendants in the underlying action, including Scognamillo and Faircloth. Id.Attorney Robert Olsen and his law firm defended all the defendants in the
underlying action, including Scognamillo and Faircloth. Id.¶ 43 At the conclusion of trial in the underlying action, a judgment was entered
against all the defendants, including Scognamillo and Faircloth, in the amount of
$214,830 in actual damages and $849,020 in punitive damages. Id. Scognamillo
and Faircloth appealed the judgment using a different law firm. Id. That appeal was
dismissed as untimely filed. Id. Thereafter, Scognamillo entered into a settlement
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agreement with the investors releasing him from all claims, appeals, and judgments
contingent upon his payment of $200,000. Id.¶ 44 Scognamillo and Faircloth brought a legal malpractice action against their
attorneys (Olsen and his law firm) seeking recovery of the damages paid in the
underlying action—including the punitive damages or, as to Scognamillo, his
settlement amount. Id. at 1358-59. Scognamillo and Faircloth alleged that, but for
their attorneys’ negligence in defending them in the underlying action, they would
have settled prior to the entry of the judgment in the underlying action. Id. at 1359.
¶ 45 At the conclusion of the legal malpractice trial, the jury found in favor of
Scognamillo and Faircloth and against the attorneys. Id. The jury entered an award
based on the amount each legal malpractice plaintiff had paid or was required to
pay based on the underlying judgment, and the award was offset based on,
inter alia, the legal malpractice plaintiffs’ contributory negligence and the amount
they would have paid if the underlying case had been settled on the terms upon
which they were willing to agree. Id. at 1359-60.
¶ 46 The attorneys appealed the legal malpractice judgment, arguing, inter alia, that
the trial court erred in allowing the legal malpractice plaintiffs to include the
“punitive damages assessed against them in the [underlying action] as a component
of their actual and compensatory damages” in the legal malpractice action because
it violated “a number of public policy considerations.” Id. at 1360-61. The Colorado
Court of Appeals held:
“[I]f the defendant attorney’s negligence results in entry of a judgment when
there otherwise would have been no judgment, the proper measure of damages
is the entirety of the prior judgment regardless of the theory upon which the
prior judgment was entered or the nature of the damages assessed thereunder.
[Citation.]
We see no reason to deviate from these principles in determining the proper
measure of damages to be applied here.” Id. at 1361.
In reaching this conclusion, the Scognamillo court reasoned:
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“[T]he punitive damages contested here are not, as was the case in the
[underlying action], a separate issue considered and imposed for the purpose of
punishing a defendant for wrongful conduct.
A major thrust of the [legal malpractice] plaintiffs’ negligence claim is that
[the attorneys] had negligently evaluated and advised the [legal malpractice]
plaintiffs during the [underlying action] ***. Thus, the punitive damages
assessed in the underlying case are part and parcel of the damages [the legal
malpractice] plaintiffs suffered as a result of defendants’ alleged negligence.”
Id.¶ 47 We find the reasoning of the Scognamillo court instructive in the present case.
Midwest alleges that the punitive damages it paid in the underlying action were
proximately caused by its attorneys’ alleged negligence. If a jury in the legal
malpractice action determines that, but for the alleged negligence of the attorneys,
Midwest would have been successful in the underlying action and no judgment
would have been entered against it, it follows that Midwest would not have paid
any damages, including the punitive damages. It also follows that Midwest should
be repaid for the full pecuniary loss it suffered as a result of a judgment that would
not have been entered against it but for its attorneys’ negligence.
¶ 48 In the case under review, if the attorneys were found to be negligent in their
defense of Midwest and proximately caused Midwest to be unsuccessful in the
underlying action and forced to pay punitive damages, they can be held responsible
for the entirety of the damage award entered against Midwest. The award of
punitive damages in the underlying action would no longer be punitive in the legal
malpractice action because it would not punish the attorneys. It would instead
become an element of compensatory damages because it would repay and make
Midwest whole for the pecuniary loss it suffered as a result of the attorneys’ alleged
negligence.
¶ 49 We find that, if the punitive damages Midwest paid in the underlying action are
found to be proximately caused by the attorneys’ alleged negligent conduct in the
underlying retaliatory discharge action, they are an element of compensatory
damages in the legal malpractice action and are “part and parcel” of the whole of
the pecuniary injury Midwest suffered in the underlying action. See id.; see also
Hunt, 740 P.2d at 1057. Therefore, when the punitive damages paid in an
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underlying action are proximately caused by the attorney’s alleged negligence, they
are an element of compensatory damages in a malpractice action when the damages
are certain and not speculative, compensate the plaintiff for its losses, and do not
punish the negligent attorney. Accordingly, we find that the recovery of paid
punitive damages as compensatory damages in a malpractice action would neither
violate section 2-1115 of the Code nor the public policy of this state.
¶ 50 III. CONCLUSION
¶ 51 For the foregoing reasons, we answer the certified question in the negative, we
affirm the judgment of the appellate court, and we remand the cause to the circuit
court for further proceedings.
¶ 52 Certified question answered.
¶ 53 Affirmed and remanded.
¶ 54 JUSTICES OVERSTREET and HOLDER WHITE took no part in the
consideration or decision of this case.
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