Rubin and Norris, LLC v. Panzarella

2016 IL App (1st) 141315
Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consolidated)
FIFTH DIVISION
March 11, 2016
IN THE
APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
______________________________________________________________________________
RUBIN AND NORRIS, LLC, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant and Cross-Appellee, ) Cook County.
)
v. ) No. 13 L 3903
)
STEPHEN PANZARELLA, ) Honorable
) Margaret A. Brennan,
Defendant-Appellee and Cross-Appellant. ) Judge Presiding.
______________________________________________________________________________
JUSTICE LAMPKIN delivered the judgment of the court, with opinion.
Presiding Justice Reyes and Justice Gordon concurred in the judgment and opinion.
OPINION
¶1 This consolidated appeal involves a dispute over whether the plaintiff law firm represented
the defendant and was entitled to compensation for legal services. Plaintiff, the law firm of Rubin
and Norris, LLC (Rubin), challenges the trial court’s dismissal of its claims against defendant
Stephen Panzarella, alleging a breach of a contingent fee agreement and, alternatively, a claim
based on quantum meruit for Rubin’s alleged representation of Panzarella concerning a village’s
proposed special assessment on certain property. Specifically, the trial court held that Rubin failed
to plead sufficient facts to demonstrate the existence of a written contingency fee agreement
signed by Panzarella and an attorney-client relationship.
Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
¶2 Defendant Panzarella challenges the trial court’s denial of his motion for sanctions, which
alleged Rubin filed its claims without a legal foundation and factual basis. Specifically, the trial
court found that Rubin presented an objectively reasonable argument for its position that it
represented Panzarella in a tax dispute and was owed compensation for its services.
¶3 For the reasons that follow, we affirm the trial court’s dismissal of Rubin’s contract claim,
reverse the dismissal of Rubin’s quantum meruit claim, and affirm the denial of Panzarella’s
motion for sanctions. We hold that (1) Rubin has forfeited review of the trial court’s dismissal of
its breach of contract claim; (2) the trial court erred by finding Rubin failed to plead sufficient facts
to demonstrate an attorney-client relationship and dismissing Rubin’s claim for damages pursuant
to a theory of quantum meruit; and (3) the trial court did not err by ruling that Rubin had an
objectively reasonable argument to claim it was owed fees for representing Panzarella in a tax
dispute and denying Panzarella’s motion for sanctions.
¶4 I. BACKGROUND
¶5 In April 2013, the Rubin firm filed a two count complaint seeking a judgment against
Panzarella for at least $157,464.38, plus interest and costs, and alleging: (count I) that he breached
a contingent fee agreement for work performed on a proposed special assessment by the Village of
Bensenville; and (count II) that, in the alternative, the firm was entitled to be paid on a quantum
meruit basis for the work it had performed for Panzarella. Rubin’s complaint alleged it previously
had represented Panzarella concerning his various Chicagoland area properties, and they had
agreed, after several telephone calls and e-mails, that Rubin would represent Panzarella in
challenging a proposed special assessment against his Bensenville property. Rubin further alleged
the e-mails established the parties’ agreement that Rubin would receive as its fee one third of the
reduction in the amount of the proposed Bensenville assessment. Rubin attached several e-mails to
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
its complaint.
¶6 In a February 13, 2007 e-mail, sent from Panzarella to attorney Donald Rubin at about 8
a.m., Panzarella referenced their telephone conversation from the previous day and stated that he
was “in agreement with the 36 months, no interest and [Rubin’s] representation but not in
agreement at 40%.” Panzarella stated that his records “over the years” indicated that “it has always
been 33 1/3%.” He asked Donald Rubin to “[p]lease advise if you will amend the fees to 33 1/3%
and forward me a written agreement for signature.”
¶7 The same day, Donald Rubin sent Panzarella an e-mail stating:
“We will agree to represent you for 33.33%, but you must be aware that there
may be other costs, particularly if we go to trial. Where we can share these costs
between other participating clients we will do so, but, ultimately, each client has to
demonstrate how much value, if any, this infrastructure work adds or detracts from
their own property. Clearly, as is the case with our other representation, we will
only continue with the litigation if we believe there is a substantial likelihood of
success. And remember, we only get paid a percentage of what we save you, so this
is a suicide mission for us. We either succeed or go down in flames. I think this
arrangement is fair, but if you still have doubts, I would prefer not to go forward.
However, bear in mind that if the assessment roll is confirmed against your
property, you will be saddled with about a $900,000 payoff over 20 years, or about
$45,000 per year.”
¶8 The same day, Donald Rubin sent Panzarella an e-mail stating:
“Let me review this fee structure with you. If we can negotiate a settlement
without the need for a trial, the fee will be 33%, plus appraisal fees and other costs,
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
if needed and of course with your consent. If we have to go to trial, this would be
with a jury and expert witnesses on both sides. As a result our fee must increase to
be commensurate with the immense amount of work that we will need to do in
preparation for trial.
I will be preparing an engagement letter in accordance with this letter.
Please contact me with any questions.”
¶9 The same day, Donald Rubin sent to Panzarella the following e-mail:
“The costs are borne by the plaintiff. However, our fee is 1/3rd regardless of
whether this goes to trial or not. The extra costs would be an appraisal report, expert
witness fees, filing fees and court reporters, probably around $7-8,000, absent
unforeseen circumstances. If we can get your levy down by $100,000, the fee
would be $33,000 and the other costs around $7-8,000. Therefore you would still
be way ahead. Think about it and let me know.”
¶ 10 On March 4, 2007, Panzarella sent Donald Rubin the following e-mail:
“When speaking with you on the representation of my property before
Judge Duncan I viewed this as a protest on the tax bill rate objection which your
company normally files for me on my properties.
I have been inundated with calls from law firms in Wheaton and
neighboring towns and other friends to find this is not the norm.
We agreed to cap the legal fees should this wind up in court and I am fine
with that but the 33 1/3 is excessive on this type of case and should not fall under
this type of representation.
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
I feel like the horses [sic] ass in thinking I negotiated a good deal. The offers
and the advice from the attorneys who contacted me and who filed appearances on
Feb. 16, 2007, in order to prevent default are no where near 33 1/3% in representing
my neighbors in the Industrial Park.
Please advise me if you will accept the rate of 20% for your services vs. the
33 1/3%.”
¶ 11 On March 5, 2007, at about 10:36 a.m., Panzarella sent Donald Rubin the following
e-mail:
“As long as you are willing to discuss your fees based on the amount of work, I am ok with
that because this might turn out to be a paper shuffle with so many firms representing the
respective land owners in the park. Don believe me when I tell you I have been called one after the
other regarding representation but said I was being represented.
That is when the fee subject was brought to my attention.”
¶ 12 At about 11:18 a.m. the same day, Donald Rubin sent the following e-mail to Panzarella:
“I don’t know who has been calling you or what experience they have in
this type of matter. When we went to the hearing we were the only firm that had
already filed both its appearance and objection (answer) on behalf of all of our
clients. Everybody else had done nothing and could have been defaulted out of the
case right then and there. I was also one of two attorneys out of 20 firms present at
the hearing who were quoted by the local paper. I have attached a copy for your
review. The Village is looking for a $46 million special assessment. My fee is
based upon a % of the principal savings. If I save you $50,000, my fee is $16,667.
However, if you have to pay the $50,000 over the 20-year amortization period, at
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
8%, you would be paying almost 3 times that amount. I have always dealt fairly
with you and will continue to do so. If I feel that I have not earned the fee at the end
of this process, we can talk then. I neither overcharge or cheat my clients. And,
don’t forget, if I hadn’t contacted you about this, you may have been one of those
who was defaulted.”
¶ 13 Rubin alleged in its complaint that, pursuant to Panzarella’s request, it sent him a
representation letter to sign and return. Meanwhile, Rubin proceeded to work on the proposed
Bensenville assessment due to its prior relationship with Panzarella. Specifically, Rubin filed its
appearance and other pleadings in the case on behalf of Panzarella and advised him of the progress
of his suit, which he participated in by reviewing and signing in September 2007 discovery
responses that Rubin had prepared. Rubin alleged it did not realize that Panzarella had not signed
and returned the representation letter and continued to work on the matter for more than three years
until the Village of Bensenville withdrew its proposed special assessment and the court dismissed
the special assessment case. Rubin alleged it had reached a successful completion of the case and
sent invoices to Panzarella for $157,464.38, but he refused to pay.
¶ 14 Panzarella moved to dismiss the complaint pursuant to sections 2-615 and 2-619 of the
Code of Civil Procedure (Code) (735 ILCS 5/2-615, 2-619 (West 2012)). Concerning the breach of
contract claim, Panzarella moved to strike the e-mails attached to the complaint and dismiss the
claim with prejudice because the e-mails neither constituted a written contract nor a contingent fee
contract. Concerning the quantum meruit claim, Panzarella argued that the necessary
attorney-client relationship did not exist because there was no allegation that Panzarella had
consented to the creation of such a relationship concerning the proposed Bensenville special
assessment.
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
¶ 15 In response, Rubin argued the e-mails attached to the complaint demonstrated that the
parties had reached an agreement on a contingent fee contract in the Bensenville matter. Rubin
also argued that Panzarella’s notarized signature on the September 2007 answers to interrogatories
and document request response—which were prepared by Rubin, stated that Rubin was the
attorney for Panzarella, the objector, and were filed in court in the Bensenville special assessment
case—constituted further proof of both the parties’ contingent fee agreement and attorney-client
relationship.
¶ 16 In his reply, Panzarella argued that the absence of any signed contingent fee agreement
required dismissal of Rubin’s complaint with prejudice. Panzarella also submitted an affidavit
attesting to his discussions with Rubin about the Bensenville special assessment and the
circumstances surrounding his signature on the September 2007 discovery responses. Specifically,
Panzarella asserted that although he had retained Rubin before February 2007 to represent him on
a separate matter involving his individual tax appeals for his property, he never reached an
agreement with Rubin to represent him on the Bensenville special assessment. Panzarella asserted
he told Rubin that he would not retain the firm at a 1/3 contingency fee in the Bensenville matter.
Moreover, Panzarella always had a written agreement with Rubin on each prior tax appeal the firm
had performed; never received any contingency fee agreement from Rubin despite his February
13, 2007 request for a written agreement; and did not sign any contract sent by Rubin concerning
the Bensenville special assessment because he did not agree to be represented by Rubin in that
case. Furthermore, Panzarella averred that when he signed the September 2007 discovery
responses, he thought those documents were for other matters on which he had retained Rubin, so
he signed and returned the discovery responses to Rubin without understanding the pertinence of
those documents because he had always relied on and trusted his attorneys. In addition, the
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
discovery responses were not notarized in Panzarella’s presence. Panzarella averred he did not
know Rubin thought it was representing him in the Bensenville special assessment challenge until
he received Rubin’s bill for $157,000. Panzarella averred that while Rubin claimed that it had
achieved a successful result concerning the special assessment, the Village of Bensenville
ultimately raised the taxes even higher than before. In 2011, Panzarella terminated Rubin’s
representation on all of his legal matters.
¶ 17 The trial court dismissed with prejudice Rubin’s breach of contingency fee agreement
claim, finding that the e-mails were insufficient to form a contract and the specific requirements
for a contingent fee contract had not been met. The court also dismissed Rubin’s quantum meruit
claim, finding the allegations insufficient concerning the existence of an attorney-client
relationship, but allowed Rubin the opportunity to replead that claim.
¶ 18 In November 2013, Rubin filed an amended complaint alleging only a quantum meruit
claim against Panzarella based on his denial of the contingent fee agreement and the trial court’s
agreement with him. Rubin stated that it was prepared to present evidence at the appropriate
hearing regarding the time spent on the special assessment case and the value of its services to
Panzarella. The amended complaint included all of the common facts alleged in its original
complaint and the same exhibits. In addition, Rubin added that the special assessment, if approved,
would have imposed a cost of $888,208.31 on Panzarella’s properties. Rubin also stated that even
though Panzarella would have owed Rubin $296,039.83 under the contingent fee agreement
(one-third of $888,208.13), Rubin had reduced its fee to 17.7% of the proposed special assessment
because the Village of Bensenville and property owners ultimately approved a special service area
assessment. The additional exhibits attached to the amended complaint included a copy of the
unsigned engagement letter from Rubin to Panzarella; the September 2007 discovery responses
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
signed by Panzarella; copies of two case status update letters sent from Donald Rubin to Panzarella
in April 2009 and July 2010; and a February 13, 2007 e-mail sent from Panzarella to Donald Rubin
at 3:26 p.m., which stated:
“I have just gone through a major law case and still have two outstanding. I
am shell shocked over the expenses the last three years and on going cost in legal
fees have amounted to.
What can a trial like this cost me?
The Village and I are in a case right now and it is going on for better then
[sic] a year. The village can drag this on and will.
Shared expense of the other six clients is reasonable. What do you project
the the [sic] prorated cost could be on something like this? If it goes to trial and you
win is the trial cost taken from your 33% or added to the 33%
It is not a suicide mission, if I am paying for the time and trial cost and other
cost. I could lose at both ends. That is why I believed you were to get 33.33% for
the total representation to fight this. I am not comfortable with an open end
agreement. I don’t think my company or I can sustain another law suit.”
¶ 19 Panzarella moved to dismiss the amended complaint pursuant to sections 2-615 and 2-619
of the Code. He argued the pleading failed to allege a quantum meruit claim because it failed to
sufficiently allege: the details of the services Rubin supposedly provided; a meeting of the minds
to create a contract for legal services; the basic elements of any agreement between the parties; and
the elements of a quantum meruit claim. Panzarella argued the amended complaint should be
dismissed for Rubin’s egregious conduct in demanding a contingent fee in the absence of any
agreement and for requesting an exorbitant fee. He also argued that even if the court concluded that
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
the February 13, 2007 e-mails could be construed to suggest a conditional acceptance of terms,
Rubin’s April 2013 complaint was time barred because it was filed beyond the applicable five-year
statute of limitations. Specifically, Panzarella argued that the March 2007 e-mails demonstrated
that Panzarella had rejected Rubin’s representation and Rubin failed to file its complaint within
five years of March 2007. As an exhibit to his motion to dismiss, Panzarella resubmitted his
affidavit that had supported his prior motion to dismiss.
¶ 20 In response, Rubin argued that it was not obligated to file with the complaint a detailed
statement of the services rendered in the special assessment matter; Panzarella’s statements in the
signed September 2007 discovery admitted that Rubin was his attorney and constituted judicial
admissions, and the admissions, e-mails, letters and pleadings attached to the amended complaint
clearly demonstrated that Panzarella had retained Rubin. Furthermore, Rubin’s claim was timely
because the statute of limitations had not begun to run until Rubin’s services were performed and
concluded in 2010, when the special assessment case was dismissed. In support of its response,
Rubin attached an affidavit by John Norris but signed by Donald Rubin. The affiant averred that he
was the attorney primarily responsible for the work performed in the Bensenville special
assessment case, Panzarella retained Rubin to represent him in that matter, Rubin provided the
necessary legal work that resulted in the Village of Bensenville withdrawing the special
assessment, and Rubin expended approximately 425 hours for legal services from 2007 until 2010
on the matter.
¶ 21 The trial court dismissed the amended complaint with prejudice, finding Rubin’s pleading
failed to establish either “a meeting of the minds” where there was no fee agreement or an
attorney-client relationship. The court stated that the most important e-mails in its analysis were
(1) the March 4, 2007 e-mail, in which Panzarella discussed the need to negotiate a different rate
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
because he was approached by other law firms that offered a lower fee; (2) the 10:36 a.m. March 5,
2007 e-mail, in which Panzarella told other law firms he was already being represented in this
matter; and (3) the 11:18 a.m. March 5, 2007 email, which indicated Rubin and Panzarella were
still negotiating a rate. The trial court also stated that Panzarella may have told the other law firms
he already had an attorney in order to protect himself and his signature on the discovery responses
did not constitute a judicial admission for purposes of establishing an attorney-client relationship.
¶ 22 Rubin moved the court to reconsider the dismissal of the amended complaint or,
alternatively, for leave to file a second amended complaint. Rubin argued that it did not need to
plead or establish an attorney-client relationship to recover under a quantum meruit theory. In its
proposed three-count second amended complaint, Rubin alleged (count I) breach of a contingent
fee agreement; (count II) a quantum meruit claim; and (count III) an unjust enrichment claim,
which sought a judgment of at least $160,000 and alleged that Panzarella knew of, consented to,
and received substantial value from the legal services Rubin rendered in the special assessment
litigation.
¶ 23 The trial court denied the motion for reconsideration, finding there was not sufficient
evidence to find an attorney-client relationship existed where the attorney claimed such a
relationship existed but defendant denied it. The court also denied Rubin leave to file a second
amended complaint because there was no attorney-client relationship. Rubin appealed.
¶ 24 Meanwhile, Panzarella moved for sanctions against Rubin pursuant to Illinois Supreme
Court Rule 137 (eff. July 1, 2013), arguing that Rubin’s complaint and amended complaint were
filed without a legal foundation or factual basis. The trial court denied Panzarella’s motion for
sanctions, and Panzarella appealed. Panzarella’s appeal has been consolidated with Rubin’s earlier
appeal of the trial court’s dismissal of its pleadings.
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
¶ 25 II. ANALYSIS
¶ 26 Illinois is a fact-pleading jurisdiction; although the plaintiff is not required to set forth
evidence in the complaint, the plaintiff must allege facts sufficient to bring a claim within a legally
recognized cause of action, not simply conclusions. Marshall v. Burger King Corp., 222 Ill. 2d
422, 429-30 (2006). In reviewing the dismissal of a complaint, the court must take all well-pled
facts as true and draw all reasonable inferences from those facts that are favorable to the pleader.
Canel & Hale, Ltd. v. Tobin, 304 Ill. App. 3d 906, 912 (1999). Exhibits attached to a pleading
constitute part of the pleading and are considered with the complaint in its entirety for determining
whether the pleading sets forth sufficient facts to state a cause of action. Payne v. Mill Race Inn,
152 Ill. App. 3d 269, 274-75 (1987). Dismissal of a cause of action on the pleadings is proper only
where it is clearly apparent that no set of facts can be proven entitling the plaintiff to recover.
Illinois Graphics Co. v. Nickum, 159 Ill. 2d 469, 483 (1994). A motion to dismiss under section
2-615(a) of the Code (735 ILCS 5/2-615(a) (West 2012)) tests the legal sufficiency of a plaintiff’s
claim; a motion to dismiss under section 2-619(a) (735 ILCS 5/2-619(a) (West 2012)) admits the
legal sufficiency of the plaintiff’s claim, but asserts certain defects or defenses outside the pleading
that defeat the claim. Solaia Technology, LLC v. Specialty Publishing Co., 221 Ill. 2d 558, 578-79
(2006). Under either section, our standard of review is de novo. Id. at 579.
¶ 27 A. Abandonment of the Breach of Contract Claim
¶ 28 Rubin argues the trial court erred in dismissing the breach of contract claim because the
exhibits attached to the complaint, taken together with the allegations of the complaint, established
a valid and enforceable contingency fee agreement. Panzarella argues Rubin has forfeited this
challenge to the dismissal of its breach of contract claim in its original complaint by filing an
amended complaint that asserted only a quantum meruit claim and did not refer to or adopt the
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
prior pleading. The only reference in the amended complaint to the previously dismissed breach of
contract count was Rubin’s statement in the final paragraph of its amended complaint that
“[b]ecause Panzarella had decided to deny the contingent fee agreement and the Court has agreed
with Defendant, Plaintiff asks that it be awarded fees based upon quantum meruit.”
¶ 29 Whether a dismissed claim had been preserved for review is a question of law, and our
review is de novo. People v. Gutierrez, 2012 IL 111590, ¶ 16. Our supreme court “has clearly and
consistently explained that ‘a party who files an amended pleading waives any objection to the trial
court’s ruling on the former complaints,’ and ‘ “[w]here an amendment is complete in itself and
does not refer to or adopt the prior pleading, the earlier pleading ceases to be a part of the record for
most purposes, being in effect abandoned and withdrawn.” ’ ” Bonhomme v. St. James, 2012 IL
112393, ¶ 17 (quoting Foxcroft Townhome Owners Ass’n v. Hoffman Rosner Corp., 96 Ill. 2d 150,
153-54 (1983), quoting Bowman v. County of Lake, 29 Ill. 2d 268, 272 (1963)).
¶ 30 A plaintiff may avoid forfeiture and preserve a challenge to an order dismissing with
prejudice fewer than all of the counts in his complaint by three methods. Gaylor v. Campion,
Curran, Rausch, Gummerson & Dunlop, P.C., 2012 IL App (2d) 110718, ¶ 36. First, the plaintiff
may stand on the dismissed counts, take a voluntary dismissal of the remaining counts, and argue
the matter on appeal. Id. Second, the plaintiff may file an amended pleading that realleges,
incorporates by reference, or refers to the dismissed counts. Id. “A simple paragraph or footnote in
the amended pleadings notifying defendants and the court that plaintiff [is] preserving the
dismissed portions of [the] former complaints for appeal [is] sufficient to avoid the consequences
of the Foxcroft [forfeiture] rule. ” Tabora v. Gottlieb Memorial Hospital, 279 Ill. App. 3d 108, 114
(1996). Third, the plaintiff may perfect an appeal from the dismissal order prior to filing an
amended pleading that does not refer to or adopt the dismissed counts. Gaylor, 2012 IL App (2d)
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110718, ¶ 36.
¶ 31 Significant policy considerations, particularly the interest in the efficient and orderly
administration of justice, favor adherence to the forfeiture rule. Foxcroft Townhome Owners
Ass’n, 96 Ill. 2d at 154. Because the complaint notifies the defendant of the alleged causes of
action and theories of recovery, the defendant can expect that no reference in an amended
complaint to allegations made in an earlier complaint means that those allegations are no longer at
issue. Id. “[P]ermitting a plaintiff to ‘proceed to trial on different issues contained in separate
complaints’ would certainly disadvantage defendants whereas there is ‘no undue burden in
requiring a party to incorporate in its final pleading all allegations which it desires to preserve for
trial or review.’ ” Bonhomme, 2012 IL 112393, ¶ 28 (quoting Foxcroft Townhome Owners Ass’n,
96 Ill. 2d at 154).
¶ 32 Rubin’s own pleadings in this case illustrate the confusion that can result when Foxcroft is
ignored. In its motion to reconsider the trial court’s order dismissing the amended complaint that
alleged only a quantum meruit claim, Rubin stated that it also disagreed with the trial court’s
dismissal of Rubin’s breach of contract claim from the original complaint and sought leave to file
a three-count second amended complaint alleging breach of contract, quantum meruit in the
alternative, and unjust enrichment. In denying Rubin’s motion to reconsider, the trial court
remarked that Rubin had “kind of bootstrapped to get around [the court’s] prior ruling.” In both of
its notices of appeal, which are filed in the trial court, Rubin indicated that it would be appealing,
inter alia, the trial court’s dismissal of the breach of contract claim of the original complaint and
the quantum meruit claim of the amended complaint.
¶ 33 Rubin’s amended complaint did not reallege or incorporate by reference the breach of
contract claim that was dismissed from its original complaint; instead, Rubin indicated to
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defendant and the trial court that it intended to pursue only a quantum meruit claim because
“Panzarella has decided to deny the contingent fee agreement and the Court has agreed with
Defendant.” See id. ¶ 29 (where there is no objective indication in the amended complaint that the
plaintiff intended to pursue a dismissed claim, the trial court and defendant should not be put in a
position to hazard a guess as to which counts the plaintiff intended to pursue). Had Rubin intended
to abandon the breach of contract claim that was dismissed with prejudice from the original
complaint, the record in this case might very well look exactly the same. Rubin’s amended
complaint pleaded only a claim for relief based on quantum meruit. That complaint was complete
in itself and did not refer to or adopt the previously dismissed prior pleading. As a result, Rubin has
in effect abandoned and withdrawn the breach of contract claim, and our consideration of the trial
court’s dismissal of that claim is eliminated from this appeal.
¶ 34 B. Quantum Meruit
¶ 35 Rubin argues the trial court erred in dismissing the quantum meruit claim by concluding
that the parties never formed an attorney-client relationship where they did not sign a contingency
fee agreement or agree on a fee. The source of the error, according to Rubin, was the trial court’s
failure to construe in Rubin’s favor its allegations about Panzarella’s statements in his e-mails and
his actions during the pendency of the litigation. Rubin asserts that it met its pleading burden on
the attorney-client relationship issue and Panzarella, at most, merely raised a factual dispute,
which the trial court inappropriately resolved in Panzarella’s favor in the context of a motion to
dismiss. We agree that it was error for the trial court to dismiss Rubin’s amended complaint and
terminate the litigation.
¶ 36 To state a claim for quantum meruit, a plaintiff must present facts showing that (1) the
plaintiff performed a service to benefit the defendant; (2) the plaintiff performed that service
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nongratuitously; (3) defendant accepted the service; and (4) no contract existed to prescribe
payment of the service. Owen Wagener & Co. v. U.S. Bank, 297 Ill. App. 3d 1045 (1998). An
attorney who renders professional services has a right to be compensated for such services.
Greenbaum & Browne, Ltd. v. Braun, 88 Ill. App. 3d 210, 213 (1980). When the parties have not
entered into an express contract, the court will generally find an implied promise to pay reasonable
compensation for services rendered by the attorney to the person sought to be charged under the
theory of quantum meruit. Id. The failure to agree on the details of compensation for services
rendered by an attorney and accepted by a client does not preclude quantum meruit recovery. Lee
v. Ingalls Memorial Hospital, 232 Ill. App. 3d 475, 478 (1992); Dorocke v. Farrington, 43 Ill.
App. 2d 394, 399 (1963).
¶ 37 “The right to attorney fees based on quantum meruit does not exist unless there is an
underlying attorney-client relationship where the client expressly or impliedly agrees to pay fees.”
In re Chicago Flood Litigation, 289 Ill. App. 3d 937, 945 (1997); see also Wildman, Harrold,
Allen & Dixon v. Gaylord, 317 Ill. App. 3d 590, 598 (2000) (in an action for attorney fees, whether
based on contract or quantum meruit, the plaintiff-attorney’s prima facie case includes proof of the
existence of an attorney-client relationship). “The attorney-client relationship is a voluntary,
contractual relationship that requires the consent of both the attorney and client. [Citations.] The
relationship cannot be created by an attorney alone and generally the duty falls upon a potential
client to initiate contact with the attorney.” In re Chicago Flood Litigation, 289 Ill. App. 3d at 941.
¶ 38 A formal or written agreement is not a prerequisite to the formation of an attorney-client
relationship. Herbes v. Graham, 180 Ill. App. 3d 692, 699 (1989). Rather, the relationship can be
created during the initial contact between the layperson and the lawyer. Id. Its formation hinges
upon the putative client’s manifested intention to seek professional legal advice and his reasonable
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belief that he is consulting a lawyer in that capacity. Id. (quoting Westinghouse Electric Corp. v.
Kerr-McGee Corp., 580 F.2d 1311, 1319 (7th Cir. 1978)). Illinois courts do not require the
putative client to show that he actually submitted confidential information to the lawyer. See King
v. King, 52 Ill. App. 3d 749, 753 (1977); Herbes, 180 Ill. App. 3d at 698. Moreover, the analysis
focuses on the client’s viewpoint rather than that of the attorney. Herbes, 180 Ill. App. 3d at 699.
The payment of fees and the fact that a further relationship did not develop as a result of the
preliminary consultation are not relevant considerations. King, 52 Ill. App. 3d at 753; Herbes, 180
Ill. App. 3d at 699. The rationale for this policy is the concern that “ ‘[a]t the inception of the
contacts between the layman and the lawyer it is essential that the layman feel free of danger in
stating the facts of the case to the lawyer whom he consults.’ ” King, 52 Ill. App. 3d at 752 (quoting
L. Ray Patterson & Elliot E. Cheatham, The Profession of Law 246 (1971)).
& 39 Rubin alleged that Panzarella, through his e-mail correspondence and his actions during
the pendency of the special assessment litigation, impliedly promised to pay a reasonable rate for
Rubin’s services in objecting to the Village of Bensenville’s imposition of a special assessment on
two of Panzarella’s properties despite the absence of a signed contingent fee agreement.
Specifically, in the 8 a.m., February 13, 2007 e-mail from Panzarella, he stated that he was in
agreement with “your [Rubin’s] representation, but not in agreement at 40%.” Furthermore, in the
10:36 a.m., March 5, 2007 e-mail from Panzarella, he stated that as long as Rubin was willing to
discuss its fees based on the amount of work, Panzarella was “ok with that because [the litigation]
might turn out to be a paper shuffle with so many firms representing the respective land owners in
the park.” Panzarella added that many other lawyers had contacted him but he assured Rubin that
he told the other lawyers he already “was being represented.”
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
¶ 40 Rubin also alleged Panzarella acted in conformity with his implied promise to pay a
reasonable rate for Rubin’s representation by never objecting over the three years of the special
assessment litigation to Rubin pursuing the case on his behalf and by signing and returning the
discovery responses that were prepared by Rubin and filed in the litigation. Those discovery
responses stated that Rubin was Panzarella’s attorney in the special assessment litigation. In
addition, Panzarella remained silent after receiving case status update letters from Rubin in April
2009 and July 2010. The April 2009 letter informed Panzarella that Rubin was reviewing the
legality of the Village of Bensenville’s capital recovery surcharge and would advise him of
Rubin’s recommended course of action. Rubin also informed him that he would be billed shortly
for his individual percentage of the costs Rubin had advanced on behalf of all its clients. The July
2010 letter informed Panzarella that the Village of Bensenville intended to abandon the special
assessment project and instead provide certain improvements through a different funding
mechanism. Rubin stated, “As your counsel, we will be furnished with maps detailing the
properties the Village intends to include in the designated areas.” Rubin informed Panzarella of the
Village’s proposal to settle the special assessment dispute with the objectors and would advise him
of the details of the Village’s plans when the information became available.
¶ 41 We find these allegations sufficient to show an underlying attorney-client relationship
between Rubin and Panzarella and that Panzarella accepted the nongratuitous service Rubin
performed to benefit Panzarella. Panzarella’s assertion that he erroneously thought the discovery
documents he signed, which stated that Rubin was his attorney, related to another matter in which
he had retained Rubin merely raised a factual dispute that the trial court should not have resolved
in the context of a motion to dismiss. Furthermore, the trial court failed to take as true and draw all
reasonable inferences in favor of Rubin from the well-pled fact that Panzarella told other attorneys
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
seeking his business that he was already represented by counsel in the special assessment matter.
¶ 42 Panzarella also argues dismissal of Rubin’s quantum meruit claim was proper because
Rubin failed to sufficiently allege the services for which it was seeking legal fees. Panzarella
criticizes Rubin’s allegations concerning the alleged services it provided to justify $157,464.83 in
fees as amounting to little more than general allegations regarding having provided representation
for three years, the filing of an appearance and answer, the preparation of answers to some routine
discovery propounded by the Village of Bensenville, the drafting of two update letters, and the
statement that Rubin was prepared to present evidence at an appropriate hearing regarding the time
spent on the special assessment and the value of its services to Panzarella. Furthermore, Panzarella
argues Rubin’s affidavit listing the legal services performed was improper under Illinois Supreme
Court Rule 191 (eff. Jan. 4, 2013) because it was signed by someone (Donald Rubin) other than the
stated affiant (John Norris). In addition, the affidavit does not clearly state that the services were
performed solely for Panzarella, as opposed to all the property owners represented by Rubin in the
special assessment proceeding.
¶ 43 While Rubin’s complaint is not a model of the factual detail and accuracy that should be
included in a quantum meruit claim, it is not so lacking in relevant factual allegations concerning
the nongratuitous services Rubin provided to Panzarella as to merit dismissal. The granting of a
motion to dismiss for failure to state a cause of action should be affirmed on appeal only when no
set of facts can be proved under the pleadings which will entitle plaintiff to relief. Illinois Graphics
Co., 159 Ill. 2d at 483. Rubin alleged that the services it provided to Panzarella included keeping
him advised of the progress of the lawsuit, preparing and filing discovery responses, and sending
him case update letters. In addition, Rubin alleged that Panzarella’s acceptance of its services
resulted in $888,203.312 of tax savings to Panzarella. Viewing the allegations in the light most
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
favorable to Rubin, we find the allegations, if proved, would adequately show the necessary
quantum meruit claim elements of nongratuitous services performed by Rubin to benefit
Panzarella, who accepted those services.
¶ 44 Panzarella also argues that dismissal of Rubin’s quantum meruit claim was proper because
it is time barred. Panzarella asserts the claim, which was filed on April 17, 2013, is time barred
because Rubin failed to file it within the five-year statute of limitations, which began to run in
March 2007. According to Panzarella, the March 2007 e-mails between the parties demonstrate
that any attorney-client relationship no longer existed because they were still negotiating over the
fees, and Rubin failed to file its quantum meruit claim within five years of March 2007. We
disagree.
¶ 45 Recovery predicated on a quantum meruit theory is a claim “on a contract implied by law.”
Edens View Realty & Investment, Inc. v. Heritage Enterprises, Inc., 87 Ill. App. 3d 480, 486
(1980). Pursuant to section 13-205 of the Code (735 ILCS 5/13-205 (West 2012)), such claims are
to be filed within five years next after the cause of action accrued, with accrual having been
interpreted as being the date the services have been completed (Schmidt v. Desser, 81 Ill. App. 3d
940 (1980)). Liberally construing the allegations in the amended complaint in Rubin’s favor, the
alleged facts show that Rubin and Panzarella’s alleged attorney-client relationship did not end in
March 2007 but rather continued until at least September 2010, when the special assessment
litigation was dismissed.
¶ 46 We conclude that the trial court improperly dismissed Rubin’s quantum meruit claim and
the cause must be remanded for further proceedings. Accordingly, we also reverse the trial court’s
order denying Rubin leave to file an amended complaint but only as to the quantum meruit and
unjust enrichment claims. Although Rubin does not have an absolute and unlimited right to amend
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
its pleadings, the record indicates that Rubin can cure its defective pleading, Panzarella would not
sustain prejudice or surprise by an amendment, the amendment would be timely, and Rubin has
had just one opportunity to amend its quantum meruit claim and no opportunities to amend its
unjust enrichment claim. See Hayes Mechanical, Inc. v. First Industrial, L.P., 351 Ill. App. 3d 1,
6-7 (2004).
¶ 47 C. Illinois Supreme Court Rule 137 Sanctions
¶ 48 Panzarella argues the trial court abused its discretion by denying his motion for sanctions
because Rubin’s initial and amended complaints were filed without a legal or factual basis. As
sanctions, Panzarella sought to recover attorney fees of $15,593.82 or an amount commensurate
with his arguments.
¶ 49 Illinois Supreme Court Rule 137 (eff. July 1, 2013) provides that circuit court judges may
impose sanctions when the rule is violated; they are not required to do so. The rule is designed to
discourage frivolous filings, not to punish parties for making losing arguments. Lake
Environmental, Inc. v. Arnold, 2015 IL 118110, ¶ 15. The purpose of the rule is to prevent parties
from abusing the judicial process by imposing sanctions on those who file vexatious and harassing
actions premised on unsupported allegations of fact or law. Dismuke v. Rand Cook Auto Sales,
Inc., 378 Ill. App. 3d 214, 217 (2007). Rule 137 is penal in nature and is strictly construed,
reserving sanctions for the most egregious cases. Patton v. Lee, 406 Ill. App. 3d 195, 202 (2010).
The petitioner for sanctions bears the burden of proof. Technology Innovation Center, Inc. v.
Advanced Multiuser Technologies Corp., 315 Ill. App. 3d 238, 243 (2000). On review, we ask
whether the trial court’s decision was informed, based on valid reasons, and followed logically
from the circumstances of the case. Dismuke, 378 Ill. App. 3d at 217. We review a trial court’s
ruling on a motion for Rule 137 sanctions for an abuse of discretion (CitiMortgage, Inc. v.
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Nos. 1-14-1315, 1-14-2730 & 1-14-2993 (consol.)
Johnson, 2013 IL App (2d) 120719, ¶ 19), and there is no requirement for a circuit court to explain
its reasons for denying a motion for sanctions (Lake Environmental, Inc., 2015 IL 118110, ¶ 19).
¶ 50 We find no abuse of discretion here in the trial court’s denial of Rule 137 sanctions. As
discussed above, Rubin’s pleading of its quantum meruit cause of action was sufficient to survive
dismissal with prejudice, and we cannot say that Rubin’s breach of contract claim was an
egregious case of a party asserting a claim premised on unsupported allegations of fact or law or
that there was no objectively reasonable basis for its pleadings.
¶ 51 Finally, Panzarella argues the trial court abused its discretion in striking portions of his
reply to Rubin’s response to his motion for sanctions, contending the stricken matters were related
to and responsive to matters raised by Rubin in its response. According to the record, the trial court
struck Panzarella’s new affidavit, portions of his reply and certain exhibits to his reply, finding that
he failed to state his claims of false pleading in his original petition for sanctions so that Rubin
would have had an opportunity to challenge the allegations. Based on our ruling that Rubin has
forfeited review of its breach of contract claim and pled a quantum meruit claim sufficient to
survive a motion to dismiss, we need not address Panzarella’s assertion that the trial court erred in
striking portions of his reply to Rubin’s response to his motion for sanctions.
¶ 52 III. CONCLUSION
¶ 53 We hold that Rubin has forfeited review of the circuit court’s dismissal of Rubin’s breach
of contract claim. Further, we hold that the trial court erred in dismissing Rubin’s quantum meruit
claim and denying Rubin leave to amend its quantum meruit and unjust enrichment claims, and we
remand this cause to the trial court so that Rubin may proceed on those claims. We affirm the trial
court’s denial of Panzarella’s request for sanctions.
¶ 54 Affirmed in part and reversed in part; cause remanded.
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