Fox v. Seiden

FIRST DIVISION
April 21, 2008
No. 1-06-2323
HORACE FOX, JR., Trustee in ) Appeal from the
Bankruptcy for Miriam Draiman, ) Circuit Court of
) Cook County.
Plaintiff-Appellant, )
)
v. )
)
GLENN SEIDEN; SARA M. COLLINS; ) No. 06 L 9362
GLENN SEIDEN AND ASSOCIATES, P.C.; )
an Illinois Professional Corporation, )
and AZULAY, HORN AND SEIDEN, LLC, an )
Illinois Limited Liability Company, ) The Honorable
) Kathy M. Flanagan,
Defendants-Appellees. ) Judge Presiding.
JUSTICE GARCIA delivered the opinion of the court.
The plaintiff, Horace Fox, Jr., as trustee in bankruptcy for
Miriam Draiman, filed a one-count amended verified complaint
against the defendants, Glenn Seiden, Sarah M. Collins, Glenn
Seiden & Associates, P.C., and Azulay, Horn & Seiden, LLC,1
alleging legal malpractice. The plaintiff's legal malpractice
claim arises from a judgment ordering Miriam to pay more than $1
million in attorney fees. It is Miriam's position that she is
not liable for the attorney fees and, but for the law firm's
1
The defendants in this case are individual attorneys and a
law firm that has undergone numerous changes during the time
period relevant to this appeal. For the sake of clarity, the law
firm and the individual attorneys will be referred to as "the law
firm" collectively, or individually where necessary.
negligence, the judgment for fees would not have been entered
against her. Upon the law firm's motion pursuant to section 2-
615 of the Code of Civil Procedure (the Code) (735 ILCS 5/2-615
(West 2004)), the trial court dismissed the verified amended
complaint, finding it failed to properly allege actual damages
and proximate cause. The plaintiff appeals. We reverse.
BACKGROUND
Because this case arises upon a section 2-615 motion to
dismiss, the facts are taken from the face of the plaintiff's
amended complaint and the attached documents. Iseberg v. Gross,
227 Ill. 2d 78, 81, 879 N.E.2d 278 (2007).
The legal malpractice complaint at issue in this appeal
stems from the law firm's representation of Miriam Draiman, her
husband Yehuda Draiman, and several corporations held by Miriam,
in the final stages of the case, Multiut Corp. v. Draiman, Nos.
01 CH 9989, 01 CH 20337, filed in the circuit court of Cook
County in 2001 (the underlying litigation).
I. The Underlying Litigation: Trial Proceedings
The underlying litigation involved a bitter family dispute.
Yehuda's brother, Nachshon, was the president of Multiut
Corporation (Multiut), which provides energy consulting and
energy management services. Yehuda and Miriam were both Multiut
employees.
In its 10-count complaint, Multiut alleged Yehuda and
2
Miriam, with the intent of confusing Multiut's customers,
conspired to divert business from Multiut by forming various
corporations, including M. Draiman Corporation, Multiut Electric,
Incorporated, U.S. Gas & Energy Corporation, U.S. Gas, Electric &
Telecommunications Corporation, and U.S. Utilities Corporation
(the corporate defendants). Count V of the complaint alleged
Yehuda and the corporate defendants, but not Miriam, violated
provisions of the Illinois Uniform Deceptive Trade Practices Act
(the Act) (815 ILCS 510/1 et seq. (West 2000)). In addition to
injunctive relief and monetary damages, Multiut sought payment of
attorney fees and costs in count V. Count VII, the only count in
which Miriam was individually named, alleged Yehuda, Miriam, and
some of the corporate defendants committed civil conspiracy in
diverting business from Multiut.
Yehuda, Miriam, and the corporate defendants were initially
represented in the underlying action by the law firm. The law
firm subsequently withdrew, and Yehuda, Miriam, and the corporate
defendants were represented by Altheimer and Gray. Following a
bench trial that lasted several weeks, the trial court found in
favor of Multiut in an order entered on January 17, 2003.
Relevant to this appeal, the trial court assessed damages in the
amount of $250,000 against Miriam. The court also assessed
damages against Yehuda and granted injunctive relief. Regarding
count V, the court stated, "[H]aving found that Yehuda Draiman
3
has purposely engaged in deceptive trade practices, it is this
court's determination that attorneys' fees and costs in
connection with the prosecution of this cause be awarded to the
Plaintiff and against the Defendants." The court ordered counsel
for Multiut to submit an accounting of fees and costs within 30
days.
Altheimer and Gray subsequently withdrew from the case. On
March 11, 2003, the law firm was retained again and filed a
limited appearance "for [the] purpose of any post-trial motions
prior to appeal."
On August 26, 2003, the trial court entered an order drafted
by Multiut's attorney stating, in relevant part, "Judgment is
entered on behalf of plaintiff and against defendants in the
amount of $1,002,046." The law firm, on September 19, 2003,
filed a "Motion to Clarify the Judgment Order of January 17, 2003
and Order of August 26, 2003" ("motion to clarify"). On
September 22, while the motion to clarify was pending, the law
firm filed a notice of appeal. The trial court, on September 30,
ruled it lacked jurisdiction to consider the motion to clarify
"in light of the pending appeal."
II. The Underlying Litigation: Appellate Proceedings
Yehuda and Miriam sought review of the trial court judgment
in this court. Yehuda was initially represented on appeal by the
law firm, and Miriam and the corporate defendants were
4
represented by different counsel. During the lengthy history of
the appeal, the law firm filed a motion to withdraw. We allowed
the motion, and Yehuda proceeded on appeal pro se.
On January 30, 2004, one justice of this court entered an
order finding that because Miriam was not named as a defendant in
count V of the underlying complaint--the count that resulted in
the $1,002,046 attorney fee award--she was not liable as to that
portion of the judgment. Multiut filed a petition for leave to
appeal that order in our supreme court. Miriam's counsel was
also permitted to withdraw, and Miriam proceeded pro se.
While leave to appeal the January 30, 2004, order was
pending, this court, on July 22, 2005, filed an opinion affirming
the judgment of the trial court. Multiut Corp. v. Draiman, 359
Ill. App. 3d 527, 834 N.E.2d 43 (2005). In our opinion, we
concluded that the evidence at trial established the defendant
corporations were the alter egos of Yehuda and Miriam. Multiut,
359 Ill. App. 3d at 533, 538. In response to Yehuda's contention
that the $1,002,046 attorney fee award was unreasonable, we
relied on the proposition that issues raised in a notice of
appeal but not argued in the appellate court are waived for
purposes of appeal. We held Yehuda forfeited his contention
because it was not made in his opening brief. Multiut, 359 Ill.
App. 3d at 539. Regarding Miriam's liability for the attorney
fee award, we stated:
5
"As to Miriam's liability for the fee
award, she makes no argument other than
remarking in the conclusion of her appellate
brief that this court 'reversed the
assessment of *** attorney fees.' Miriam
presumably refers to the *** order entered on
January 30, 2004, and signed by one justice
of this court ***.
Multiut argues that although Miriam
apparently refers to the January 2004 order
in contending that this court has reversed
the fee award, that order has no effect on
this appeal. Multiut asserts that an order
signed by one appellate court justice has no
operative effect, and it has appealed that
issue to the Illinois Supreme Court
[citation].
Multiut contends that Yehuda and Miriam,
in their joint answer to Multiut's petition
in support of the fee award, did not argue
that Miriam was not liable for the fees.
Multiut points out that Miriam was
represented by counsel at the hearing on the
fee petition who did not contest her
6
liability, and that although Miriam later
argued in a motion to clarify the fee award
that her liability should be reduced because
of her lower degree of culpability, she did
not assert that she bore no liability for the
fee award." Multiut, 359 Ill. App. 3d at
539-40.
We held Miriam's challenge to the fee award was forfeited
for purposes of review, as she failed to respond to Multiut's
arguments and "offer[ed] no legal argument that would free her
from the judgment against her and the other defendants."
Multiut, 359 Ill. App. 3d at 540. We also noted that at the time
our opinion was entered, the supreme court had not yet ruled on
Multiut's appeal of the January 30, 2004, order. Multiut, 359
Ill. App. 3d at 540.2
2
We take judicial notice of the following facts. On
September 29, 2005, the supreme court denied Multiut's petition
for leave to appeal. Multiut, 216 Ill. 2d 619 (2005). The
court, however, entered a supervisory order directing us to
vacate the January 30, 2004, order and reconsider it with a full
panel. On November 18, 2005, we vacated the January 30, 2004,
order. Referencing our July 22, 2005, opinion, we held the
motion upon which the January 30, 2004, order was entered was
moot.
7
III. Bankruptcy Proceedings
On May 23, 2005, Miriam filed a chapter 13 (11 U.S.C. §1301et seq. (2000)) bankruptcy petition in the Northern District of
Illinois. The bankruptcy court converted the petition to a
chapter 7 (11 U.S.C. §701 et seq. (2000)) petition. On July 1,
Multiut filed a motion for relief from the automatic stay in
which it requested that the court lift or modify the automatic
stay. On July 25, the court granted Multiut's motion.3
IV. The Legal Malpractice Complaint
On March 27, 2006, the plaintiff filed a one-count amended
verified complaint alleging legal malpractice. The complaint
3
In an attempt to shed further light on the bankruptcy
proceedings, the law firm has attached a decision from the
federal bankruptcy court entered on December 22, 2006, to its
brief. While we recognize courts may take judicial notice of
public records (Nordine v. Illinois Power Co., 32 Ill. 2d 421,
428, 206 N.E.2d 709 (1965)), the decision has no bearing on the
outcome of this case. It is well settled that "[f]acts not
alleged in or attached to the complaint cannot support a section
2-615 motion." Visvardis v. Eric P. Ferleger, P.C., 375 Ill.
App. 3d 719, 723, 724, 873 N.E.2d 436 (2007). As the bankruptcy
decision was entered subsequent to the dismissal order in this
case, and, therefore could not have been considered by the trial
court, we will not consider it on appeal.
8
alleged Miriam and the law firm entered into an attorney-client
relationship, the law firm had certain duties arising out of the
attorney-client relationship, and the law firm breached its
duties in three ways: (1) by failing to argue to the trial court
that it lacked authority to award attorney fees against Miriam
under the Act because she was not a named defendant in that
claim; (2) by failing to catch the imprecise language used in the
August 26, 2003, order that the judgment of $1,002,046 was
entered against the " 'defendants' generally rather than [the]
'defendants named in Count V *** for violations of the [Act]' ";
and (3) by failing to preserve the liability for attorney fees
issue for appeal.
The amended complaint made several factual allegations. It
alleged that at the August 26, 2003, hearing on Multiut's fee
petition, the law firm failed to argue that imposition of
attorney fees against Miriam was improper. The complaint further
alleged that although the law firm was shown a copy of the order
drafted by Multiut's attorney stating, "Judgment is entered on
behalf of plaintiff and against defendants in the amount of
$1,002,046," no objection to the "imprecise language" was raised.
Further, although the law firm filed a motion to clarify the fee
award, the law firm "failed to recognize the issue of the
wrongful imposition of an award of attorneys' fees against
[Miriam] pursuant to a claim in which she was not even named as a
9
defendant." Additionally, the trial court was divested of
jurisdiction to rule on the motion when the law firm filed a
notice of appeal "only one business day later." Therefore, the
amended complaint alleged, "even if [the law firm] had correctly
argued that the attorney fee award against [Miriam] was beyond
the trial court's authority (since she was not named as a
defendant in Count V) -- which they did not -- they nevertheless
*** prevented correction by the trial court by divesting it of
jurisdiction."
The amended complaint further alleged that Miriam initiated
bankruptcy proceedings in federal court, and that on July 25,
2005, the federal court lifted the automatic stay. According to
the amended complaint, since the entry of the July 25 order,
"Multiut's collection efforts have proceeded undaunted, as if the
Bankruptcy proceeding did not exist." The amended complaint
alleged Miriam's beneficial interest in a land trust holding
title to her home, was sold pursuant to a judicial sale, with
Multiut placing the highest bid. It also alleged Multiut
obtained a court order for turnover of Miriam's interest in
certain corporations, and, on September 21, 2005, Miriam was
forced to sign an irrevocable stock power, which turned over her
interest to the Cook County sheriff for judicial sale. The
amended complaint stated, "In short, Multiut has obtained and
[Miriam] has made partial payment towards reducing the amount
10
[Miriam] owes to Multiut, and Multiut's collection efforts
continue unabated with no relief in sight for [Miriam]."
The amended complaint further alleged:
"38. But for [the law firm's]
negligence and malfeasance, [Miriam] would
not have had judgment entered against her for
attorneys fees under the [Act]. Even if
judgment had been erroneously entered against
her in the trial court, the issue would have
been preserved for appeal and reversed by the
Appellate Court but for the negligent and
reckless conduct of [the law firm.]
39. As a direct, actual and proximate
cause of the breaches of the duty of
reasonable care by [the law firm], [Miriam]
has suffered and continues to suffer damages
in the amount of at least $1,234,053.96,
constituting the judgment for attorneys fees
and costs in the amount of $1,002,046 plus
interest at a rate of nine percent per annum
***.
40. Beyond the entry of the judgment
and the accrual of interest, [Miriam] has
been damaged and continues to be damaged
11
through Multiut's aggressive efforts to
collect the full amount of the judgment,
which, despite partial satisfaction through
the sale of [Miriam's] beneficial interest in
the land trust, wage garnishment, and
turnover of her beneficial interest in
certain corporations, and other means,
remains due, owing, and fully subject to
collection. [The law firm's] breaches of the
duty of reasonable care is the direct,
actual, and proximate cause of this damage to
[Miriam]."
The law firm filed a section 2-615 motion to dismiss the
amended complaint. The law firm argued the plaintiff failed to
adequately plead actual damages and proximate cause. The trial
court granted the motion, finding the complaint "lack[ed] the
specific, relevant factual allegations necessary to state a cause
of action for legal malpractice." (Emphasis in original.)
Although the trial court allowed Miriam leave to file a second-
amended complaint, Miriam opted to stand on her amended pleading.
This timely appeal followed.
ANALYSIS
A motion filed pursuant to section 2-615 of the Code attacks
the legal sufficiency of the complaint. Borowiec v. Gateway
12
2000, Inc., 209 Ill. 2d 376, 382, 808 N.E.2d 957 (2004). When a
section 2-615 motion is granted, the issue on appeal is whether
the allegations in the complaint, when liberally construed, taken
as true, and viewed in the light most favorable to the plaintiff,
are sufficient to state a cause of action upon which relief can
be granted. Borowiec, 209 Ill. 2d at 382; Visvardis v. Ferleger,
375 Ill. App. 3d 719, 723-24, 873 N.E.2d 436 (2007); Kopka v.
Kamensky & Rubenstein, 354 Ill. App. 3d 930, 933, 821 N.E.2d 719(2004). "When ruling on a section 2-615 motion, a trial court is
to dismiss the cause of action only if it is clearly apparent
that no set of facts can be proven which will entitle the
plaintiff to recovery." Borowiec, 209 Ill. 2d at 382-83. At
this stage, the plaintiff is not required to prove his or her
case; rather, the plaintiff need only allege sufficient facts to
state all of the elements of the cause of action. Visvardis, 357
Ill. App. 3d at 724. Our review is de novo. Hadley v. Illinois
Department of Corrections, 224 Ill. 2d 365, 370, 864 N.E.2d 162(2007); Kopka, 354 Ill. App. 3d at 933.
To state a cause of action for legal malpractice, the
plaintiff must allege facts to establish (1) the defendant
attorney owed the plaintiff client a duty of due care arising
from an attorney-client relationship, (2) the attorney breached
that duty, (3) the client suffered an injury in the form of
actual damages, and (4) the actual damages resulted as a
13
proximate cause of the breach. Governmental Interinsurance
Exchange v. Judge, 221 Ill. 2d 195, 199, 850 N.E.2d 183 (2006);
see also Tri-G, Inc. v. Burke, Bosselman & Weaver, 222 Ill. 2d
218, 225-26, 856 N.E.2d 389 (2006). At issue in this case are
the elements of actual damages and proximate cause.
I. Actual Damages
The plaintiff contends her amended complaint adequately pled
the element of actual damages based on the existence of the
attorney fee judgment against Miriam, which the plaintiff
contends constitutes a sufficient pecuniary injury. The
plaintiff points our attention to Northern Illinois Emergency
Physicians v. Landau, Omahana & Kopka, Ltd., 216 Ill. 2d 294,
306-07, 837 N.E.2d 99 (2005).
In Northern Illinois Emergency Physicians, the plaintiff
sued the law firm that defended it in an indemnity claim arising
from a medical malpractice case. Our supreme court discussed the
actual damages element of a legal malpractice claim in detail.
"The injury in a legal malpractice
action is not a personal injury [citation],
nor is it the attorney's negligent act itself
[citation]. Rather, it is a pecuniary injury
to an intangible property interest caused by
the lawyer's negligent act or omission.
[Citations.] For purposes of a legal
14
malpractice action, a client is not
considered to be injured unless and until he
has suffered a loss for which he may seek
monetary damages. [Citation.] 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. [Citation.]
The existence of actual damages is therefore
essential to a viable cause of action for
legal malpractice. [Citation.]
In a legal malpractice action, actual
damages are never presumed. [Citation.]
Such damages must be affirmatively
established by the aggrieved client.
[Citation.] Unless the client can
demonstrate that he has sustained a monetary
loss as the result of some negligent act on
the lawyer's part, his cause of action cannot
succeed. [Citation.]
Making that demonstration requires more
15
than supposition or conjecture. Where the
mere possibility of harm exits or damages are
otherwise speculative, actual damages are
absent and no cause of action for malpractice
yet exists. [Citation.] Damages are
considered to be speculative, however, only
if their existence itself is uncertain, not
if the amount is uncertain or yet to be fully
determined. [Citation.] " Northern Illinois
Emergency Physicians, 216 Ill. 2d at 306-07.
The supreme court explained, "[W]here an attorney has been
engaged to defend an action and the action is lost through the
attorney's negligence, the amount of the judgment suffered by the
client is, generally, a proper element of recovery in a
malpractice proceeding against the attorney." Northern Illinois
Emergency Physicians, 216 Ill. 2d at 307. As an example of the
application of the general rule, the court cited Gruse v.
Belline, 138 Ill. App. 3d 689, 486 N.E.2d 398 (1985).
The plaintiff cites Gruse as direct authority for the
proposition that the entry of a judgment against a legal
malpractice plaintiff in the underlying action constitutes actual
damages in the subsequent legal malpractice claim, without any
need to show payment of that judgment.
In Gruse, the plaintiff sued his former attorney, alleging
16
the attorney failed to properly advise the plaintiff about a
mortgage contingency clause in a real estate contract the
plaintiff signed but failed to perform. The jury returned a
verdict in favor of the plaintiff and the attorney appealed. On
appeal, one of the issues raised by the attorney was whether
proof of injury was satisfied by the two judgments entered
against the plaintiff, without a showing that he had paid either.
As support for his contention that proof of damages was lacking,
the defendant-attorney cited Goldzier v. Poole, 82 Ill. App. 469(1898), for the proposition that "the payment or collectability
of a judgment sustained on account of an attorney's malpractice
must be shown before the amount of the judgment may properly be
considered an element of damages." Gruse, 138 Ill. App. 3d at
697. The Gruse court found Goldzier inapposite because the case
involved attorneys who were hired to prosecute, rather than
defend, a claim. Gruse, 138 Ill. App. 3d at 697. "Generally,
where an attorney is engaged to defend an action that is lost by
his negligence, the amount of the judgment suffered by the client
is a proper element of recovery in a malpractice proceeding
against the attorney." Gruse, 138 Ill. App. 3d at 698. As an
example of the application of this general rule, the court cited
Montfort v. Jeter, 567 S.W.2d 498 (Tex. 1978), which held a
judgment against the plaintiff resulting from his attorney's
negligence "was evidence of actual damages even though it
17
remained unpaid at the time of trial." Gruse, 138 Ill. App. 3d
at 698, citing Montfort, 567 S.W.2d at 499-500. Because the
plaintiff in Gruse introduced into evidence two judgments and no
contrary evidence was submitted, the court held the plaintiff's
damages were proved at trial. Gruse, 138 Ill. App. 3d at 698.
Here, the law firm argues Miriam's damages remain
speculative, unless and until she pays the $250,000 she does not
contest owing in the underlying litigation. Until then, her
claim of damages based on the unpaid fee judgment is insufficient
to constitute actual damages for purposes of legal malpractice.
The law firm relies primarily on Eastman v. Messner, 188 Ill. 2d
404, 721 N.E.2d 1154 (1999).
In Eastman, the supreme court answered the question whether
an employer that paid workers' compensation benefits to an
injured employee could assert a lien against the employee's
recovery in a legal malpractice suit where the suit was based on
the attorney's failure to timely file a personal injury action on
behalf of the employee against an alleged third-party tortfeasor.
In deciding the employer could not assert such a lien, the
supreme court addressed the concept of actual damages in a legal
malpractice suit.
"[A] plaintiff who obtains recovery in a
malpractice suit can be 'in no better
position by bringing suit against the
18
attorney than if the underlying action
against the third-party tortfeasor had been
successfully prosecuted' [citation]. Thus, a
plaintiff's damages in a malpractice suit are
limited to the actual amount the plaintiff
would have recovered had he been successful
in the underlying case." Eastman, 188 Ill.
2d at 411-12.
To explain its holding, the supreme court set out a hypothetical
to make clear that no double recovery would occur based on the
employee's prior receipt of workers' compensation benefits. The
supreme court held that damages in the legal malpractice case
were limited to "the amount the employee lost as a result of the
attorney's malpractice," taking into account the amount of
benefits already received. Eastman, 188 Ill. 2d at 413. In
other words, the employee's damages were limited to the net
amount lost.
Applying the Eastman holding on the limitation of damages to
the case at hand, the law firm argues, "it is not the judgment
rendered against Miriam but rather the net that she paid to
satisfy that judgment" that constitutes her actual damages. The
argument goes, because the amended complaint does not "allege
that Miriam has paid any portion of the attorney fee judgment,"
the complaint fails to allege actual damages. Because the Gruse
19
holding stands in direct opposition to its position, the law firm
argues that Gruse "has been overruled sub silentio in Eastman."
We do not agree with the law firm's arguments or its
suggestion that our supreme court works in mysterious ways.
While Eastman provides clear discussion of the legal
malpractice action underlying the case, the case provides no
authority for the position the law firm asserts in the context of
this case. Eastman did not discuss the sufficiency of the
pleadings to make out a legal malpractice action. Nor did it
discuss the pleading requirements for the actual damages element
of a legal malpractice action in the context of a failure to
defend, rather than prosecute, a lawsuit.
To the extent Eastman provides any guidance on the damages
issue before us, it makes clear, when the supreme court's holding
in Northern Illinois Emergency Physicians is kept in mind, the
distinction regarding damages in a legal malpractice action
involving negligence in the prosecution of a case and negligence
in the defense of a case.
In a prosecution-type case, damages cannot be established by
the loss of the underlying case itself. It is not enough to
allege the attorney negligently "lost" the case because "no
action will lie against the attorney unless that negligence
proximately caused damage to the client." Northern Illinois
Emergency Physicians, 216 Ill. 2d at 306-07. The plaintiff must
20
be able to establish, in the case within a case, the damages "the
plaintiff would have recovered had he been successful in the
underlying case." Eastman, 188 Ill. 2d at 412. The plaintiff
must demonstrate he "would have been compensated for an injury
caused by a third party, absent negligence on the part of the
plaintiff's attorney." Eastman, 188 Ill. 2d at 411. A judgment
of "not guilty" rendered against a client, as a plaintiff in the
underling case, is not the equivalent for purposes of actual
damages in a legal malpractice case of a "guilty" verdict with
damages assessed against a client, as a defendant in the
underlying case. The plaintiff's burden in a defense-type legal
malpractice case is generally addressed in Northern Illinois
Emergency Physicians, 216 Ill. 2d 294.
In Northern Illinois Emergency Physicians, the appellate
court reversed the trial court's grant of summary judgment,
holding the entry of the indemnity judgment against the plaintiff
Northern Illinois Emergency Physicians (NIEP), combined with that
judgment remaining outstanding, was sufficient to overcome a
summary judgment motion on actual damages. On appeal to the
supreme court, NIEP argued the entry of the $4 million indemnity
judgment was sufficient to constitute actual damages "even when
the judgment remains unpaid at the time the malpractice claim is
tried," citing as authority Gruse. Northern Illinois Emergency
Physicians, 216 Ill. 2d at 308. The supreme court reversed, but
21
not on the actual damages issue, instead, on proximate cause.
The supreme court noted that NIEP was already jointly and
severally liable for the $4 million judgment in the underlying
medical malpractice action. The only actual effect of the
indemnity judgment "was to change the party to whom the $4
million was owed." Northern Illinois Emergency Physicians, 216
Ill. 2d at 311. "The acts or omissions of NIEP's lawyers in
defending against the indemnity claim therefore did not place
NIEP in any worse position than it was already in." Northern
Illinois Emergency Physicians, 216 Ill. 2d at 311. In finding no
proximate causation from the lawyers' actions to the alleged
damages, the supreme court expressly declined to reverse the
appellate court's judgment "on whether the existence of an
unsatisfied judgment is sufficient, in and of itself, to
withstand a challenge to the damages element of a legal
malpractice claim on a motion for summary judgment." Northern
Illinois Emergency Physicians, 216 Ill. 2d at 310. The supreme
court also made clear, "Damages are considered to be speculative
*** only if their existence itself is uncertain, not if the
amount is uncertain or yet to be fully determined." (Emphasis
added.) Northern Illinois Emergency Physicians, 216 Ill. 2d at
307. The court, citing Gruse approvingly, noted the general rule
that a judgment is a proper element of recovery in a malpractice
suit against an attorney. Northern Illinois Emergency
22
Physicians, 216 Ill. 2d at 307. The supreme court has not sub
silentio overruled Gruse.
In this case, while it is true the plaintiff did not allege
in the amended complaint that any portion of the judgment had
been paid, a judgment of $1,002,046 was entered against Miriam
because of negligence attributed to the law firm, an allegation
we must accept as true. In line with Gruse, we find the unpaid
judgment against Miriam resulting from the law firm's negligence
"was evidence of actual damages even though it remained unpaid."
Gruse, 138 Ill. App. 3d at 698. We therefore find the plaintiff
properly alleged actual damages. Consequently, the trial court
erred in dismissing the amended complaint on that basis.
II. Proximate Cause
Proximate cause is also an essential element of a legal
malpractice claim. Governmental Interinsurance Exchange, 221
Ill. 2d at 199. To satisfy this element, the plaintiff must
plead sufficient facts to establish that "but for" the negligence
of the attorney, the client would have successfully defended the
underlying suit. Albright v. Seyfarth, Fairweather, Shaw &
Geraldson, 176 Ill. App. 3d 921, 926, 531 N.E.2d 948 (1988).
We look to the plaintiff's amended complaint to determine
whether sufficient facts have been pled to survive a section 2-
615 challenge on the element of proximate cause. As discussed in
detail above, the plaintiff's amended complaint alleged that the
23
attorney fee award would not have been entered against Miriam but
for the negligence of the law firm. The plaintiff alleged the
law firm appeared at the hearing on Multiut's fee petition, yet
made no objection to the "imprecise language" of the court's
order awarding fees. Although the law firm filed a motion to
clarify the fee award, it did not raise the contention that
Miriam was not liable for the more than $1 million awarded in
fees based on not being a named defendant in count V. The
amended complaint also alleged that, even if the motion to
clarify had raised this contention, the law firm foreclosed the
trial court from ruling upon it by its precipitous filing of a
notice of appeal. Thus, the plaintiff alleged, "But for [the law
firm's] negligence and malfeasance, [Miriam] would not have had
judgment entered against her for attorneys fees under the [Act]."
We find the alleged facts, liberally construed, taken as true,
and viewed in the light most favorable to the plaintiff,
sufficiently plead the element of proximate cause.
Finally, the law firm argues that the sufficiency of the
pleadings on proximate cause is no bar to upholding Miriam's
liability for the attorney fee judgment. According to the law
firm, Miriam's position would be the same even if the alleged
negligence had not occurred for two reasons. See Northern
Illinois Emergency Physicians, 216 Ill. 2d at 311 (NIEP not being
placed in any worse position, it cannot be said its lawyers'
24
negligence proximately caused it any injury).
First, Miriam was personally liable for the attorney fee
award under the alter ego doctrine. The law firm points to our
prior Multiut Corp. opinion where we concluded "[t]he evidence
presented at trial established that the defendant companies,
including Multiut Electric and M. Draiman Corporation, were alter
egos of Yehuda and Miriam, who both acknowledged forming the
entities." (Emphasis added.) Multiut Corp., 359 Ill. App. 3d at
538. According to the law firm, because this court has
previously found the corporate defendants, who are undisputably
liable for the $1,002,046 attorney fee judgment, to be Miriam's
alter egos, she would likewise be liable for the attorney fee
award against the corporate defendants regardless of any of the
alleged actions or inactions taken by the law firm. See, e.g.,
In re Rehabilitation of Centaur Insurance Co., 158 Ill. 2d 166,
173, 632 N.E.2d 1015 (1994); Ted Harrison Oil Co. v. Dokka, 247
Ill. App. 3d 791, 794-95, 617 N.E.2d 898 (1993) (piercing
corporate veil will impose personal liability on a shareholder
found to be alter ego of corporation). The plaintiff responds
that our finding the defendant corporations to be alter egos of
Miriam was erroneous, as without foundation in the underlying
record, because the trial court in the underlying litigation only
found the defendant corporations were alter egos of Yehuda. The
plaintiff also argues that even if the defendant corporations
25
were Miriam's alter egos, liability would not necessarily follow
because Miriam was not named as a defendant in count V and,
consequently, had no opportunity to defend against that claim.
Second, the law firm points to the trial court's judgment
against Miriam under the conspiracy charge in count VII.
According to the law firm, she is therefore liable for the
attorney fee judgment because "the effect of a conspiracy is to
extend liability to each co-conspirator for all the tortuous acts
committed by the other co-conspirators in furtherance of the
conspiracy."
The argument regarding whether we properly found Miriam to
be an alter ego of the defendant corporations is intriguing. It
is also interesting to consider whether Miriam would nonetheless
have to answer for the attorney fee judgment as a co-conspirator
regardless of the alleged negligence of the law firm. However,
we need not address these arguments at this stage of the
litigation because this appeal arises from the grant of a section
2-615 motion to dismiss; the only issue on appeal is whether the
allegations in the complaint, taken as true and viewed in the
light most favorable to the plaintiff, are sufficient to state a
cause of action upon which relief can be granted. Borowiec, 209
Ill. 2d at 382. As discussed above, the plaintiff's amended
complaint sets forth sufficient facts to plead the element of
proximate cause. Consequently, the trial court erred in
26
dismissing the amended complaint on that basis as well.
CONCLUSION
Because the plaintiff's amended complaint alleged sufficient
facts on the elements of actual damages and proximate cause, the
trial court erred in dismissing the amended complaint.
Accordingly, the judgment of the circuit court of Cook County is
reversed, and the case is remanded for further proceedings
consistent with this opinion.
Reversed; cause remanded.
CAHILL, P.J., and R. GORDON, J., concur.
27
REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT
_________________________________________________________________
HORACE FOX, JR., Trustee in Bankruptcy for Miriam Draiman,
Plaintiff-Appellant,
v.
GLENN SEIDEN; SARA M. COLLINS; GLENN SEIDEN AND
ASSOCIATES, P.C.;an Illinois Professional Corporation, and AZULAY,
HORN AND SEIDEN, LLC, an Illinois Limited Liability Company,
Defendants-Appellees.
________________________________________________________________
No. 1-06-2323
Appellate Court of Illinois
First District, First Division
Filed: April 21, 2008
_________________________________________________________________
JUSTICE GARCIA delivered the opinion of the court.
Cahill, P.J., and R. Gordon, J., concur.
_________________________________________________________________
Appeal from the Circuit Court of Cook County
Honorable Kathy M. Flanagan, Judge Presiding
_________________________________________________________________
For PLAINTIFF - Ashman Law Offices, LLC
APPELLANT 161 North Clark Street, Suite 3575
Chicago, IL 60601
For DEFENDANTS - Elliot R. Schiff, Esq.
APPELLEES Schiff, Gorman & Krkljes
One East Wacker Drive, Suite 2850
Chicago, IL 60601
28