Nelson v. Quarles and Brady, LLP

ILLINOIS OFFICIAL REPORTS
Appellate Court
Nelson v. Quarles & Brady, LLP, 2013 IL App (1st) 123122
Appellate Court KENNETH A. NELSON, Plaintiff-Appellant, v. QUARLES AND
Caption BRADY, LLP, Defendant-Appellee.
District & No. First District, Fourth Division
Docket No. 1-12-3122
Filed September 30, 2013
Held In a legal malpractice action arising from defendant’s representation of
(Note: This syllabus plaintiff in a federal case concerning a stock purchase agreement between
constitutes no part of plaintiff and his former partner, the trial court erred in dismissing
the opinion of the court plaintiff’s third amended complaint for failing to state a cause of action,
but has been prepared since it could not be said as a matter of law that plaintiff could not prove
by the Reporter of any facts that would allow a jury to find that plaintiff’s damages were
Decisions for the proximately caused by defendant’s failure to raise additional arguments,
convenience of the and defendant’s conduct did not constitute an error of judgment for which
reader.)
it was immune from liability.
Decision Under Appeal from the Circuit Court of Cook County, No. 11-L-2107; the Hon.
Review Jeffrey Lawrence, Judge, presiding.
Judgment Reversed and remanded.
Counsel on Stewart M. Weltman, of Stewart M. Weltman LLC, and Martin J.
Appeal Oberman, of Law Offices of Martin J. Oberman, both of Chicago, for
appellant.
Michael T. Trucco and Megan T. Hughes, both of Stamos & Trucco LLP,
of Chicago, for appellee.
Panel JUSTICE EPSTEIN delivered the judgment of the court, with opinion.
Presiding Justice Howse and Justice Lavin concurred in the judgment and
opinion.
OPINION
¶1 This case involves an action for legal malpractice filed by plaintiff Kenneth A. Nelson
against defendant Quarles & Brady, LLP, the law firm that represented him in a federal
action involving a dispute concerning the terms of a stock purchase agreement between
plaintiff and his former business partner, Richard Curia. Plaintiff filed this appeal after the
circuit court dismissed his third amended complaint with prejudice pursuant to section 2-615
of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2010)) for failing to state a cause
of action. For the reasons that follow, we reverse and remand.
¶2 BACKGROUND
¶3 For purposes of our review of the ruling on defendant’s motion to dismiss, where the
legal sufficiency of the complaint has been attacked, we accept as true the allegations in
plaintiff’s third amended complaint. See Imperial Apparel, Ltd. v. Cosmo’s Designer Direct,
Inc., 227 Ill. 2d 381, 384 (2008); River Park, Inc. v. City of Highland Park, 184 Ill. 2d 290,
293 (1998). We also interpret the allegations in the light most favorable to plaintiff. Imperial
Apparel, Ltd., 227 Ill. 2d at 384.
¶4 Underlying Contractual Dispute Between Plaintiff and Richard Curia
¶5 According to the allegations of plaintiff’s third amended complaint, he was the beneficial
owner of a majority of shares in two corporations that owned two car dealerships, Ken
Nelson AutoPlaza, Inc. (AutoPlaza), and Ken Nelson AutoMall, Inc. (AutoMall). A dispute
arose between plaintiff and Richard Curia, with whom plaintiff had contracts that included
a written 1989 stock purchase agreement, a written 1993 modification agreement, and an oral
2004 agreement. The dispute involved Curia’s attempt to exercise certain options in the 1989
agreement. Curia claimed it entitled him to purchase shares in the two car dealerships, which
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would force plaintiff to sell his majority interests in the dealerships and the land upon which
they were situated. Plaintiff claimed that the 1989 agreement was inoperative and
unenforceable. Specifically, plaintiff alleged that, within a month of its execution, both he
and Curia “embarked on a course of conduct over a period of years that materially departed
from the terms of the 1989 [agreement] in deed and words, all of which made it impossible
for the three 1989 [agreement’s] options to be exercised in accordance with their terms.”
¶6 The 1989 agreement was attached to plaintiff’s complaint. As plaintiff notes, the
agreement recited that plaintiff was the sole owner of all of the outstanding shares of capital
stock in the dealerships, and that, as of that date, AutoPlaza had 8,180 shares, and AutoMall
had 1,200 shares. The 1989 agreement provided that plaintiff agreed “to sell, assign, transfer,
and convey to [Curia] all right, title and interest in and to 1000 shares of capital stock in
[AutoPlaza] and 144 shares of capital stock in [AutoMall].” The purchase price was
$100,000 and the closing date was to be on or before February 15, 1989. Plaintiff notes that
this would have resulted in plaintiff retaining 7,180 shares of Plaza stock and 1,056 shares
of Mall stock.
¶7 The 1989 agreement also gave Curia a series of three additional, successive options to
purchase the remaining shares. Specifically, paragraph 4 provided that Curia had an initial
option to purchase an additional 1,000 shares of capital stock in AutoPlaza and 144 shares
of capital stock in AutoMall for an additional $100,000. Plaintiff notes that this would have
resulted in plaintiff retaining 6,180 shares of Plaza stock and 912 shares of Mall stock, while
Curia would have owned 2,000 shares of Plaza stock and 288 shares of Mall stock. After
exercising this initial option, Curia could exercise the next option.
¶8 The second option provided that Curia could “purchase from [plaintiff] an additional
2,009 shares of capital stock of [AutoPlaza] and 300 shares of capital stock in [AutoMall]
which shares with previous purchased shares would represent 49% of the issued and
outstanding shares of capital stock in said corporations.” The purchase price for these shares
was to be based on a defined valuation formula and was to “be determined by adding to the
total net worth of each corporation a sum representing fifty (50) per cent of the total
accumulated depreciation and including the ‘LIFO’ (last in first out) reserve plus twenty (20)
per cent of the total ‘LIFO’ reserve and dividing the total sum thereof by the number of
shares in each corporation.” This formula required reference to the monthly operating reports
issued by General Motors Corporation and Nissan Motor Corporation.
¶9 As to the third and final option, paragraph 4 stated: “After exercising the first two options
to purchase as provided in this Agreement, [Curia] shall have a third option to purchase from
[plaintiff] the remaining 4,171 shares of stock in [AutoPlaza] and 612 shares of stock in
[AutoMall], provided that [Curia] also offer to purchase the land and four buildings of
[AutoPlaza].” The purchase price of the shares, similar to that of the shares described in the
second option, was to be based on a valuation formula. The purchase price of the land and
the buildings was to be determined by an appraiser.
¶ 10 The 1989 agreement required Curia to provide notice in writing of his election to exercise
each option. The contract also required that he make a lump-sum cash payment to plaintiff
of the amount required under the formula 60 days after notice was sent.
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¶ 11 Curia subsequently did not pay the initial $100,000 for 1,000 shares of AutoPlaza and
144 shares of AutoMall. Instead, at some point (the complaint contains no date), Curia paid
$200,000. Apparently, at some point (the complaint contains no date), “each corporation was
re-capitalized such that thereafter [plaintiff] owned 8,000 shares of [AutoPlaza] (instead of
7,180 as specified in the 1989 [agreement]), and 1,200 shares of [AutoMall] (versus 932
specified in the 1989 [agreement]).” Curia then “owned 2,000 shares of [AutoPlaza] (versus
1,000 specified in the 1989 [agreement]) and 300 shares of [AutoMall] (versus 288 specified
in the 1989 [agreement]).
¶ 12 In 1993, plaintiff and Curia executed a modification agreement (the 1993 Modification
Agreement), which was also attached to plaintiff’s complaint. The agreement recited, in part,
that “a mutual mistake was made by [plaintiff] and Curia in determining the fair market value
of the capital stock of said corporations and in evaluating the minority interest in said
corporations which were intended to be sold by [plaintiff] and purchased by Curia pursuant
to paragraph 1 and paragraph 4 of [the 1989 agreement].” The 1993 Modification Agreement
further altered the number of shares issued and outstanding and the amounts owned by each
which, plaintiff alleges, underscored “the impossibility of transferring the number of shares
specified in the 1989 [agreement] options.”
¶ 13 Plaintiff alleges that, in the 1993 Modification Agreement, he and Curia “agreed that the
corporations would authorize and issue additional stock so that Curia, without the payment
of additional monies, would approximately double his ownership interest in each
corporation.” Pursuant to this agreement, Curia obtained an additional 5,306 shares in
AutoPlaza (which increased his ownership interest to 47.7%) and an additional 480 shares
in AutoMall (which increased his ownership interest to 43.3%).
¶ 14 The 1993 Modification Agreement also contained a paragraph 5, entitled “Purchase of
Additional Shares,” which stated:
“Curia shall have the right to purchase additional shares of stock in said corporations
upon those terms and conditions subsequently agreed upon by the parties hereto. The
purchase price for said additional shares of stock shall be determined by adding to the
total net worth of each corporation a figure representing the accumulated ‘LIFO’ (last in
first out) reserve and dividing the total sum thereof by the number of shares of each
corporation.”
Plaintiff alleges that the effect of this paragraph was that “any future purchase of shares by
Curia after 1989 could not be taken pursuant to the 1989 [agreement] because exercise of the
1989 options was no longer possible because both the substantial changes in the number of
shares issued and outstanding in each corporation and the substantial changes in the number
of shares owned by [plaintiff] and Curia were completely different from and inconsistent
with the 1989 [agreement].” Plaintiff further alleges: “Because pursuant to the 1993
Modification, Curia received substantial additional shares in each corporation without paying
any additional monies, as a matter of law and fact, after the 1993 Modification, the 1989
[agreement’s] Options were completely inoperative and incapable of being exercised in
accordance with their own terms.” As an example, plaintiff notes that if Curia had demanded
plaintiff sell him 2,009 shares in AutoPlaza–pursuant to the second option in the 1989
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agreement–that sale would have resulted in Curia owning more than 49% of AutoPlaza. This
result, plaintiff contends, would have made Curia a majority owner and was “clearly contrary
to the terms of the option.” Plaintiff further states: “Likewise, if, in order to avoid becoming
a majority owner, Curia offered to purchase less than the 2,009 shares required under the
1989 [agreement’s] Second Option, this would have been contrary to the express terms of
the option language and ths would have rendered such an exercise inoperative.”
¶ 15 In 2004, plaintiff and Curia began discussing plaintiff’s selling all of his remaining stock
so that Curia would own 100% of both corporations. According to plaintiff, in July 2004,
they entered into an oral agreement that Curia would purchase all of plaintiff’s remaining
stock for $4.2 million. Plaintiff and Curia agreed that a closing would take place prior to
December 31, 2004. They also agreed to, and did, undertake several actions to implement the
agreement which included: (1) obtaining corporate resolutions from both boards to accept
the oral agreement; (2) Curia applying for, and receiving, a loan commitment from Fifth
Third Bank for $4.2 million to buy out plaintiff’s remaining ownership interest; and (3)
plaintiff’s writing letters to the various automobile manufacturers, as required by the
dealerships’ franchise agreements, informing them of the corporate resolutions and seeking
approval for the transfer of ownership.
¶ 16 Subsequently, although plaintiff was ready, willing and able to complete the sale, Curia
failed to tender the $4.2 million and refused to perform. Instead, on March 2, 2005, Curia
sent a “Notice of Exercise of Option” informing plaintiff that he was exercising the second
option under the 1989 agreement. By doing so, Curia was attempting to acquire all of
plaintiff’s remaining shares for far less that the $4.2 million that the 2004 Oral Agreement
required. Curia stated that he had “previously exercised [his] first option,” referring to the
$200,000 payment he had already made. Curia offered to purchase and pay for 193 shares
of AutoPlaza stock and 170 shares of AutoMall stock. However, as plaintiff notes, the
second option in the 1989 agreement required Curia to purchase and pay for 2,009 shares in
AutoPlaza and 300 shares in AutoMall.
¶ 17 On March 3, 2005, Curia sent plaintiff a second notice seeking to exercise the third
option of the 1989 agreement. He did not seek to purchase the number of shares delineated
in the agreement but did seek to purchase all of plaintiff’s remaining shares, the land, and the
buildings as set forth in the third option. Plaintiff’s position was that Curia’s attempts were
ineffective because the 1989 agreement’s options were no longer operative, and that Curia
breached the 2004 oral agreement.
¶ 18 Plaintiff’s Legal Malpractice Action Against Defendant
¶ 19 On or about March 9, 2005, plaintiff retained defendant to represent him in this dispute
with Curia to, among other things, protect his stock ownership interests in the dealerships,
enforce plaintiff’s contractual rights, and prevent Curia from attempting to enforce Curia’s
purported rights. Shortly after plaintiff retained defendant, it filed a declaratory judgment
action in federal court against Curia seeking to have the court declare that Curia could not
exercise the options in the 1989 Agreement. Curia then initiated a separate action against
plaintiff in the same court seeking, among other things, specific performance of the 1989
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agreement to force plaintiff to sell all of his shares in the dealerships.
¶ 20 On February 6, 2006, the district court entered partial summary judgment in Curia’s
favor, holding that he could exercise the options in the 1989 agreement. On June 27, 2007,
the district court entered an additional partial summary judgment in Curia’s favor, ordering
plaintiff to sell all of his remaining shares in AutoPlaza to Curia. On July 13, 2007,
defendant filed a motion to stay the June 27, 2007 order. Defendant did not recommend that
plaintiff post a bond pending appeal. On July 18, 2007, defendant filed a notice of appeal of
the decisions in Curia’s favor. On August 10, 2007, the district court denied the motion to
stay. On September 5, 2007, defendant filed a motion to stay the district court’s order and,
again, did not offer to post a bond. The Seventh Circuit denied the motion to stay.
¶ 21 While the appeal was pending in the Seventh Circuit, pursuant to the district court orders,
plaintiff was forced to, and did, sell all of his remaining shares to Curia on or about April 30,
2008. Plaintiff then discharged defendant and hired new counsel to represent him in his
appeal. On June 3, 2008, the court granted plaintiff’s motion for substitution of attorney. On
November 20, 2009, the Seventh Circuit, sua sponte, decided that the contract was
ambiguous, reversed the district court’s judgment, and remanded the case.1
¶ 22 During the 1½ years between the time Curia obtained plaintiff’s shares on April 30, 2008,
and the Seventh Circuit’s decision, Curia had obtained substantial loans and encumbered
AutoPlaza’s2 assets by using them as security for the loans. Plaintiff alleges that, as a result,
Curia materially and negatively impaired AutoPlaza’s assets and there was no practical
means for plaintiff to undo the sale of his shares to Curia. Plaintiff settled with Curia to
minimize his continued losses and was unable to regain his majority ownership of AutoPlaza.
¶ 23 Plaintiff filed the instant legal malpractice action against defendant, alleging that, during
the course of representing him, defendant breached its duties to him in that it “either
negligently and carelessly omitted and failed to perform, or negligently and carelessly
performed, certain services.” Plaintiff further alleged that defendant’s “negligent and careless
conduct included but is not limited to the complete failure to assert a meritorious cause of
action against Curia on [plaintiff’s] behalf and the complete failure to assert meritorious
defenses to Curia’s alleged causes of action.”
¶ 24 Plaintiff subsequently amended his complaint. After a hearing, the trial court dismissed
plaintiff’s second amended complaint for failure to state a cause of action. Plaintiff then filed
a motion to reconsider or, in the alternative, for leave to file a third amended complaint.
Plaintiff incorporated into the third amended complaint the affidavit of a legal malpractice
expert, Edward T. Joyce, a Chicago attorney with over 45 years of experience in complex
commercial litigation.
¶ 25 On October 17, 2012, after a hearing, the trial court allowed plaintiff’s motion to
1
Curia v. Nelson, 587 F.3d 824 (7th Cir. 2009).
2
Curia and plaintiff apparently agree that Curia’s right to purchase any remaining shares in
AutoMall was effectively terminated when they entered into a separate modification agreement in
1997 involving a third party’s purchase of stock. Curia v. Nelson, 587 F.3d at 827.
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reconsider and allowed him to file a third amended complaint, which the court dismissed.
The court decided, as a matter of law, that defendant’s actions constituted nonactionable
errors of judgment, and not professional negligence. Plaintiff now appeals.
¶ 26 ANALYSIS
¶ 27 A motion to dismiss for failure to state a cause of action pursuant to section 2-615 attacks
“the legal sufficiency of a complaint based on defects apparent on its face.” Pooh-Bah
Enterprises, Inc. v. County of Cook, 232 Ill. 2d 463, 473 (2009). “A circuit court should grant
a section 2-615 motion to dismiss only if it is clearly apparent that no set of facts can be
proved that would entitle the plaintiff to relief.” (Internal quotation marks omitted.) Estate
of Powell v. John C. Wunsch, P.C., 2013 IL App (1st) 121854, ¶ 15. At this pleading stage,
a plaintiff is not required to prove his case and need only allege sufficient facts to state all
elements of the cause of action. Fox v. Seiden, 382 Ill. App. 3d 288, 294 (2008). When
reviewing a section 2-615 motion, we accept as true “[a]ll well-pleaded facts and reasonable
inferences that can be drawn from those facts.” Tuite v. Corbitt, 224 Ill. 2d 490, 509 (2006).
We also interpret the allegations in the complaint in the light most favorable to the plaintiff.
Simpkins v. CSX Transportation, Inc., 2012 IL 110662, ¶ 13. Our review of the circuit court’s
order granting the section 2-615 motion to dismiss is de novo. Id.
¶ 28 “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 proximate
cause of the breach.” Fox v. Seiden, 382 Ill. App. 3d at 294. A legal malpractice suit is by its
nature dependent upon a predicate lawsuit. Claire Associates v. Pontikes, 151 Ill. App. 3d
116, 122 (1986). Thus, a legal malpractice claim presents a “case within a case.” Id. “[N]o
malpractice exists unless counsel’s negligence has resulted in the loss of an underlying cause
of action, or the loss of a meritorious defense if the attorney was defending in the underlying
suit.” Id.
¶ 29 By granting defendant’s motion to dismiss, the trial court decided that, as a matter of law,
defendant’s conduct constituted, at most, a mere error of judgment and not professional
negligence. Plaintiff now argues that, since he attached an affidavit of a legal expert to his
third amended complaint, a factual issue arose that precluded the trial court from dismissing
his complaint. He contends that the court erred in deciding as a matter of law that defendant’s
failures to assert plaintiff’s meritorious defenses were mere “errors of judgment.”
¶ 30 “In Illinois the question of whether a lawyer has exercised a reasonable degree of care
and skill in representing and advising his client has always been one of fact ***.” Brown v.
Gitlin, 19 Ill. App. 3d 1018, 1020 (1974); see also Keef v. Widuch, 321 Ill. App. 3d 571, 577-
78 (2001) (Whether a duty is owed is a question of law, but “whether an attorney breached
a duty of care owed to a client is a question of fact.”); Mayol v. Summers, Watson & Kimpel,
223 Ill. App. 3d 794, 806 (1992) (“Whether an attorney has exercised a reasonable degree
of care and skill is a question of fact.”); Spivack, Shulman & Goldman v. Foremost Liquor
Store, Inc., 124 Ill. App. 3d 676, 683-84 (1984) (same). Moreover, this question of fact must
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generally be determined through expert testimony and usually cannot be decided as a matter
of law. Gelsomino v. Gorov, 149 Ill. App. 3d 809, 814 (1986); see also Barth v. Reagan, 139
Ill. 2d 399, 407 (1990) (“[T]he standard of care against which the attorney defendant’s
conduct will be measured must generally be established through expert testimony.”); Mayol,
223 Ill. App. 3d at 806 (same).
¶ 31 However, although the question of whether a lawyer has breached a duty to his client
presents a factual question, courts have held that the issue may be decided as a matter of law
under the doctrine of judgmental immunity which provides that “an attorney will generally
be immune from liability, as a matter of law, for acts or omissions during the conduct of
litigation, which are the result of an honest exercise of professional judgment.” McIntire v.
Lee, 816 A.2d 993, 1000 (N.H. 2003) (citing Woodruff v. Tomlin, 616 F.2d 924, 930 (6th Cir.
1980), and Sun Valley Potatoes, Inc. v. Rosholt, Robertson & Tucker, 981 P.2d 236, 239-40
(Idaho 1999)). Both parties here discuss the doctrine of “judgmental immunity,” although no
Illinois case has used the phrase. Nonetheless, we believe the doctrine is consistent with
Illinois law, which distinguishes between negligence and mere errors of judgment. As the
Illinois Supreme Court has stated: “It is clear that an attorney is liable to his client only when
he fails to exercise a reasonable degree of care and skill; he is not liable for mere errors of
judgment.” Smiley v. Manchester Insurance & Indemnity Co., 71 Ill. 2d 306, 313 (1978)
(citing Brown v. Gitlin, 19 Ill. App. 3d 1018 (1974), citing Stevens v. Walker & Dexter, 55
Ill. 151 (1870)); accord Kling v. Landry, 292 Ill. App. 3d 329, 333 (1997); O’Brien &
Associates, P.C. v. Tim Thompson, Inc., 274 Ill. App. 3d 472, 480 (1995); Howard v.
Druckemiller, 238 Ill. App. 3d 937 (1992); Mayol, 223 Ill. App. 3d at 806; Land v. Auler,
186 Ill. App. 3d 382, 384 (1989); Shanley v. Barnett, 168 Ill. App. 3d 799, 803 (1988);
Goldstein v. Lustig, 154 Ill. App. 3d 595, 600 (1987); Gelsomino v. Gorov, 149 Ill. App. 3d
809, 813-14 (1986); Segall v. Berkson, 139 Ill. App. 3d 325, 328-29 (1985); Gruse v. Belline,
138 Ill. App. 3d 689, 695-96 (1985); Spivack, Shulman & Goldman v. Foremost Liquor
Store, Inc., 124 Ill. App. 3d 676, 683 (1984); York v. Stiefel, 109 Ill. App. 3d 342, 350
(1982), aff’d in part & rev’d in part on other grounds, 99 Ill. 2d 312 (1983); Sheetz v.
Morgan, 98 Ill. App. 3d 794, 798 (1981); Bronstein v. Kalcheim & Kalcheim, Ltd., 90 Ill.
App. 3d 957, 959 (1980); Practical Offset, Inc. v. Davis, 83 Ill. App. 3d 566, 571-72 (1980);
Schmidt v. Hinshaw, Culbertson, Moelmann, Hoban & Fuller, 75 Ill. App. 3d 516, 522
(1979); Brainerd v. Kates, 68 Ill. App. 3d 781, 786 (1979); House v. Maddox, 46 Ill. App.
3d 68 (1977); Morrison v. Burnett, 56 Ill. App. 129, 135 (1894). As one author has noted:
“[T]he ‘attorney judgment’ defense [is] also commonly referred to as ‘judgmental immunity’
or the ‘error of judgment’ rule. Whatever the label, at its core, the rule dictates that attorneys
do not breach their duty to clients, as a matter of law, when they make informed, good-faith
tactical decisions.” J. Mark Cooney, Benching the Monday-Morning Quarterback: The
“Attorney Judgment” Defense to Legal-Malpractice Claims, 52 Wayne L. Rev. 1051, 1052
(2006).
¶ 32 Citing Stevens v. Walker & Dexter, defendant contends that “Illinois law has recognized
for well over a century that an attorney cannot be held liable for an error in his thought
process while actively engaging in his client’s pursuits.” The court in Stevens v. Walker &
Dexter stated:
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“But it must not be understood that an attorney is liable for every mistake that may
occur in practice, and held responsible for the damages that may result. If the attorney
acts with a proper degree of attention, with reasonable care, and to the best of his skill
and knowledge, he will not be held responsible. Some allowance must always be made
for the imperfection of human judgment.” Stevens v. Walker & Dexter, 55 Ill. at 153.
However, despite this implicit adoption of the doctrine of judgmental immunity over a
century ago, subsequent Illinois cases have not discussed the concept in great detail. As one
court observed, the problem with the “error of judgment” concept has been pointed out in a
legal malpractice treatise. See Hunt v. Dresie, 740 P.2d 1046, 1055 (Kan. 1987) (citing
Ronald E. Mallen & Victor B. Levit, Legal Malpractice §§ 211, 215 (2d ed. 1981)). In that
treatise, the authors noted: “Notwithstanding centuries of applying the error of judgment rule
in attorney malpractice actions, the courts have not analyzed or defined the judgmental
process being protected.” Mallen, supra § 211, at 299; see also Cooney, supra at 1053
(“Courts often describe the rule in rather rote fashion, without fleshing out its nuances. A
closer examination reveals that the rule has some decidedly blurry edges.”).
¶ 33 The Hunt court also noted the authors’ proposed analysis of errors of judgment:
“ ‘Nevertheless, a client is entitled to the benefit of an informed judgment. When the
issue is one that is settled and can be identified through ordinary research and
investigation techniques, an attorney should not be able to avoid liability by claiming the
error was one of judgment. On the other hand, when the proposition is one on which
reasonable lawyers could disagree or which involves a choice of strategy, an error of
informed judgment should not be gauged by hindsight or second-guessed by an expert
witness.’ ” (Emphasis added and omitted.) Hunt v. Dresie, 740 P.2d 1046, 1055 (Kan.
1987) (quoting Mallen, supra § 215, at 311).
¶ 34 The Supreme Court of Idaho, noting at that time that at least 13 jurisdictions had adopted
the judgmental immunity rule, acknowledged that the “rule” as applied had been articulated
in different ways. See Sun Valley Potatoes, Inc. v. Rosholt, Robertson & Tucker, 981 P.2d
236, 239 n.1 (Idaho 1999) (and cases cited therein). The Sun Valley court also stated:
“Rather than being a rule which grants some type of ‘immunity’ to attorneys, it appears
to be nothing more than a recognition that if an attorney’s actions could under no
circumstances be held to be negligent, then a court may rule as a matter of law that there
is no liability. As in any other negligence case, however, if there is a genuine issue of
material fact about the reasonableness and care exercised by the attorney, then the issue
must be submitted to the jury for determination.” Id. at 240.
¶ 35 Our research has disclosed that courts in other jurisdictions have generally discussed
judgmental immunity as applying to an attorney’s decision in two situations: (1) where the
law is unsettled; or (2) the decision is tactical. As one court explained: The “principle [of
judgmental immunity] permits a court to determine, as a matter of law, that an attorney was
not negligent based on an error in professional judgment because the law was unsettled on
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the issue3 or the attorney made a tactical decision from among equally viable alternatives.”
(Emphasis added.) Merchant v. Kelly, Haglund, Garnsey & Kahn, 874 F. Supp. 300, 304 (D.
Colo. 1995) (citing Halvorsen v. Ferguson, 735 P.2d 675, 681 (Wash. Ct. App. 1986)).
¶ 36 However, one court has construed the rule as follows:
“Essentially, the judgmental immunity doctrine provides that an informed
professional judgment made with reasonable care and skill cannot be the basis of a legal
malpractice claim. Central to the doctrine [of attorney judgmental immunity] is the
understanding that an attorney’s judgmental immunity and an attorney’s obligation to
exercise reasonable care coexist such that an attorney’s non-liability for strategic
decisions ‘is conditioned upon the attorney acting in good faith and upon an informed
3
Several reported decisions addressing the doctrine of judgmental immunity have done so
in the context of discussing an attorney’s decision in an unsettled area of law. See, e.g., Evans v.
Hamby, 2011 Ark. 69, at 4, 378 S.W.3d 723 (“An attorney is not liable to a client when, acting in
good faith, that attorney makes mere errors of judgment. [Citation.] Moreover, an attorney is not,
as a matter of law, liable for a mistaken opinion on a point of law that has not been settled by the
highest court of jurisdiction and on which reasonable attorneys may differ.”); Roberts v. Chimileski,
2003 VT 10, ¶ 19, 175 Vt. 480, 820 A.2d 995 (“ ‘rule that an attorney is not liable for an error of
judgment on an unsettled proposition of law is universally recognized’ ” (quoting 3 Ronald E.
Mallen & Jeffrey M. Smith, Legal Malpractice § 18.1, at 2 (5th ed. 2000))); Blair v. Ing, 21 P.3d
452, 464 (Haw. 2001) (“An attorney cannot be held liable for every mistake made in his or her
practice, especially for an error as to a question of law on which reasonable doubt may be entertained
by well-informed lawyers.”); Sun Valley, 981 P.2d at 239-40 (“courts have *** held as a matter of
law that an attorney is not liable for failing to correctly anticipate the ultimate resolution of an
unsettled legal principal”); Manley v. Brown, 1999 OK 79, ¶ 9, 989 P.2d 448 (“[L]awyer who acts
in good faith and in an honest belief that his advice and acts are well founded and in the best interest
of his client is not answerable for a mere error of judgment when dealing with a point of law which
has not been settled by a precedent-setting pronouncement and about which reasonable doubt may
be entertained by well-informed lawyers. When the state of the law is doubtful or debatable, a lawyer
will not be held responsible for failing to anticipate how the uncertainty will ultimately be resolved.”
(Emphasis omitted.)); Wood v. McGrath, North, Mullin & Kratz, P.C., 589 N.W.2d 103, 106 (Neb.
1999) (“an attorney’s judgment or recommendation on an unsettled point of law is immune from suit,
and the attorney has no duty to accurately predict the future course of unsettled law”); Crosby v.
Jones, 705 So. 2d 1356, 1358 (Fla. 1998) (“The rule of judgmental immunity is premised on the
understanding that an attorney, who acts in good faith and makes a diligent inquiry into an area of
law, should not be held liable for providing advice or taking action in an unsettled area of law.”);
Lucas v. Hamm, 364 P.2d 685, 689 (Cal. 1961) (an attorney “is not liable for being in error as to a
question of law on which reasonable doubt may be entertained by well-informed lawyers”); Biomet
Inc. v. Finnegan Henderson LLP, 967 A.2d 662, 668 (D.C. 2009) (the unsettled law exception to
attorney malpractice liability “is based on the understanding that an attorney is not expected, much
less required, to accurately predict developments in the law”); see also Davis v. Damrell, 174 Cal.
Rptr. 257, 259 (Cal. Ct. App. 1981) (noting that test for whether judgmental immunity applies
“invokes a two-pronged inquiry: (1) whether the state of the law was unsettled at the time the
professional advice was rendered; and (2) whether that advice was based upon the exercise of an
informed judgment”).
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judgment after undertaking reasonable research of the relevant legal principals and facts
of the given case.’ [Citation.] To hold that an attorney may not be held liable for the
choice of trial tactics and the conduct of a case based on professional judgment is not to
say, that an attorney may not be held liable for any of his actions in relation to a trial. He
is still bound to exercise a reasonable degree of skill and care in all of his professional
undertakings.’ [Citation.]” (Emphasis added.) Biomet Inc. v. Finnegan Henderson LLP,
967 A.2d 662, 666 (D.C. 2009) (quoting Sun Valley, 981 P.2d at 240).
See also 7A C.J.S. Attorney & Client § 332, at 371 (2004) (“The ‘judgmental immunity rule,’
rather than granting some type of ‘immunity’ to attorneys, is nothing more than a recognition
that if an attorney’s actions could under no circumstances be held to be negligent, then a
court may rule as a matter of law that there is no liability, but if there is a genuine issue of
material fact about the reasonableness and care exercised by the attorney, then the issue must
be submitted to the jury for determination.”)
¶ 37 Citing Biomet, plaintiff argues that “in order to avoid liability based on a litigation
judgment, as claimed here by [defendant] and as found by the trial court, the attorney must
actually have exercised reasoned judgment in his decision making and *** not every act of
an attorney constitutes a professional judgment.” (Emphasis in original.) Plaintiff argues that
the alleged negligent acts at issue here “are not like those decisions which lawyers must
sometimes make which courts characterize as ‘errors of judgment’ and which form the basis
of ‘judgmental immunity’ from malpractice liability.” Instead, plaintiff argues, those errors
of judgment “are limited to situations where the lawyer has determined that there are
advantages and disadvantages to alternative courses of action, has actually weighed those
advantages and disadvantages, and then made a reasoned, professional judgment as to which
course is best for the client.”
¶ 38 Defendant asserts, however, that “[t]he alleged failure to raise certain defenses or claims
is precisely the sort of allegation to which the doctrine of judgmental immunity applies.”
Defendant also argues that claims alleging mere errors of judgment are properly dismissed
pursuant to section 2-615 and cites the case of Goldstein v. Lustig, 154 Ill. App. 3d 595
(1987), as controlling. The case involved a dentist, Lance Goldstein, who became involved
in a dispute with his employer regarding allegations that he had engaged in fraudulent billing
practices. Id. at 597. Goldstein retained an attorney, Steven Lustig. Goldstein told Lustig that
his employer “had valid grounds to terminate him for misconduct and asked his legal advice
as to the best course of conduct.” Id. Goldstein showed Lustig his employment contract,
which contained different provisions for benefits depending upon whether Goldstein were
to quit or was terminated for cause. Id. Lustig told Goldstein it would not make any
difference, and also informed him that if he waited and allowed himself to be terminated, he
could sue his employer. Id. Goldstein took this latter advice and sued. Id. Lustig then advised
settlement of the lawsuit. Id. Goldstein and his employer subsequently signed a consent
decree, a mutual release, and a settlement agreement. Id. When Goldstein then sued Lustig
for legal malpractice, Lustig filed a motion to dismiss under section 2-615 and, in the
alternative, section 2-619. Id. The motion was granted, apparently on both grounds.
Goldstein appealed both bases and the appellate court addressed each.
¶ 39 The court first analyzed Goldstein’s argument that the trial court had erred in ruling that
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his complaint against Lustig failed to state a cause of action for legal malpractice. Id. at 598-
601. The court quickly concluded that Goldstein could “plead no set of facts that [would]
establish the element of cause required for a legal malpractice action, and therefore the
complaint was properly dismissed.” Id. at 599. As the court noted, if the employer had cause
to discharge Goldstein, “he would not be able to enforce the contract and recover benefits,
regardless of whether he resigned or waited to be terminated.” Id. Noting that a party who
materially breaches a contract cannot then take advantage of the contract, the court
additionally opined as follows: “plaintiff’s use of the corporate books and records to further
an insurance fraud scheme constitutes a material breach of the employment agreement.” Id.
The court also explained that, if Goldstein had been discharged without cause, he would have
had an action against the employer for wrongful discharge and Lustig’s “advice to wait for
termination would not have precluded him from recovering his resignation benefits.” Id. at
600.
¶ 40 Goldstein is distinguishable both procedurally and factually. As plaintiff here correctly
notes, not only was Goldstein decided on a joint section 2-615 and section 2-619 motion but
“more importantly, unlike the instant case, was dismissed on the basis of a detailed factual
record of matters outside the complaint.” As plaintiff additionally notes, Goldstein is
distinguishable because the court effectively validated the lawyer’s judgment when it
determined that either course of action by Goldstein would have made no difference: “he
would not be able to enforce the contract and recover benefits, regardless of whether he
resigned or waited to be terminated.” Id. at 599.
¶ 41 Thus, regarding defendant’s contention that Goldstein constitutes established precedent
that “a trial court should determine as a matter of law whether the allegations of a complaint
amount to only allegations of error in judgment for which no cause for legal malpractice can
be stated, even without fact and expert discovery,” clearly Goldstein was limited to its facts.
In view of the court’s determination that Goldstein failed to state a cause of action for legal
malpractice because he failed to allege proximate cause, the court’s further discussion of
whether Lustig’s conduct was an error of judgment rather than negligence is dicta. As
plaintiff observes, “the principal basis for the decision in Goldstein was plaintiff’s failure
to establish proximate cause, not the claim that the lawyer committed an ‘error of judgment,’
and the Court’s observations about lawyer judgment cannot be divorced from the proximate
cause issue.” (Emphasis added.) We agree and note that the Goldstein court made the
additional determination that Lustig:
“had to exercise his judgment based on an evaluation of what plaintiff had told him about
the employment dispute, the terms of the contract, the applicable law and any alternative
remedies plaintiff might have. He also had to take into consideration that resignation
would bind plaintiff to a restrictive covenant which would not be the case if he was
wrongfully terminated.” Id. at 600-01.
¶ 42 The court also was clearly disturbed by the fact that Goldstein had engaged in fraud and
felt compelled to point this out in its section 2-619 analysis:
“The courts of Illinois have a long-established rule that they will not aid a fraudfeasor
who invokes the court’s jurisdiction to relieve him of the consequences of his fraud.
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[Citation.] Since the basis of plaintiff’s action in the present case is an attempt to reduce
the economic consequences of his fraudulent conduct by recovering from his attorney,
we hold that the trial court did not err in dismissing his complaint with prejudice.” Id. at
603.
Goldstein is inapposite for all of these reasons and is not the seminal case that defendant
portrays it to be.
¶ 43 In support of his argument that defendant’s failure to raise meritorious defenses was
negligent and not a mere “error of judgment,” plaintiff relies on Gelsomino v. Gorov, 149 Ill.
App. 3d 809 (1986). In Gelsomino, the plaintiffs had previously tried to collect on an
insurance policy but lost after a jury trial where the insurance company contended that the
insureds had committed arson. The insureds then sued their former attorneys for malpractice,
alleging they breached their duty by failing to call six witnesses who could have testified
favorably for the insureds. Specifically, the plaintiffs contended that the defendants failed “to
interview, prepare and present the testimony of certain witnesses” that would have explained
discrepancies in the sales tax figures and controverted the circumstantial evidence of arson.
Id. at 811. The defendants filed a motion for summary judgment arguing that the errors and
omissions alleged in the complaint were errors of judgment rather than errors of negligence.
Id. In response, the plaintiffs submitted the affidavits of two legal malpractice experts who
opined that the defendants’ conduct in failing to investigate and present the witnesses fell
below the appropriate standard of conduct. Gelsomino, 149 Ill. App. 3d at 814. Nonetheless,
the trial court granted summary judgment in the attorneys’ favor, holding that the failures
“were matters of professional judgment rather than errors of negligence.” Gelsomino, 149
Ill. App. 3d at 813. This court reversed.
¶ 44 Noting that the defendants had neither offered evidence to discredit plaintiff’s experts nor
provided any reason why the court should not accept the experts’ opinions on this question,
the court determined that the affidavits were sufficient to demonstrate the existence of a
question of fact as to breach of duty. Gelsomino, 149 Ill. App. 3d at 814. As the court
explained: “An attorney’s judgment in the preparation and handling of a case is not ***
always and automatically protected under the rubrics of ‘matters of professional judgment’
or ‘tactical decisions.’ ” Id. “[M]erely characterizing an act or omission as a matter of
judgment does not end the inquiry.” Id. The issue remains as to whether the attorney has
exercised a reasonable degree of care or skill in representing his client. Id. This issue is a
question of fact. Id. Noting that it was expressing no opinion as to whether the defendant
breached a duty owed to the plaintiffs, the court concluded that “summary judgment was
inappropriate on this issue because it [could not] be said as a matter of law that the movant
was entitled to judgment.” Gelsomino, 149 Ill. App. 3d at 814.
¶ 45 Plaintiff now contends that the instant case is “virtually identical” to Gelosomino because
the “the sole issue is whether the trial court could properly decide, as a matter of law and
without a trial, whether the failures alleged against the lawyer defendants constituted
actionable negligence or ‘mere errors of judgment.’ ” Plaintiff asserts that his third amended
complaint is “substantiated” by his legal malpractice expert’s uncontradicted affidavit stating
that there was no “professional judgment” to be exercised by defendant in deciding whether
to assert the meritorious defenses alleged in the complaint. Plaintiff argues, therefore, that
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a question of fact was created as to whether defendant’s conduct was negligent and could not
be decided as a matter of law.
¶ 46 Defendant attempts to distinguish Gelsomino by noting that its holding related to
“circumstances at the summary judgment stage.” (Emphasis in original.) While it is true that
the attorney defendants in Gelsomino sought summary judgment, they apparently had not
contested the legal sufficiency of the complaint’s allegations that they were “negligent in the
investigation, preparation and presentation of the plaintiff’s lawsuit.” Id. at 810. Moreover,
this court has noted that “a motion for summary judgment almost necessarily assumes the
sufficiency of the allegations of the complaint.” Hallmark Insurance Co. v. Chicago Transit
Authority, 179 Ill. App. 3d 260, 267 (1989); see also Janes v. First Federal Savings & Loan
Ass’n of Berwyn, 57 Ill. 2d 398, 406 (1974) (“When, and only when, a legally sufficient
cause of action had been stated should the court have entertained the motions for summary
judgment and considered the affidavits filed in support thereof.”). Thus, defendant has
pointed to a distinction without a difference. Nonetheless, we do not think the analysis in
Gelsomino resolves the issue before this court as to whether the trial court in the instant case
properly dismissed plaintiff’s third amended complaint on the basis that defendant’s actions
constituted nonactionable errors of judgment, and not professional negligence, as a matter
of law.
¶ 47 The parties disagree as to whether plaintiff’s expert’s affidavit may be considered. Our
supreme court addressed the use of exhibits attached to a complaint in Bajwa v. Metropolitan
Life Insurance Co., 208 Ill. 2d 414 (2004). There, as here, there was no issue regarding any
inconsistencies between the exhibit and the complaint. The Bajwa court noted generally that
a party may attach a written document to the complaint which will be treated as part of the
pleading if the pleading specifically incorporates the exhibit by reference. Id. at 432. In ruling
on a section 2-615 motion, the court may consider documents and exhibits that have been
incorporated into the pleadings. Taylor v. Frey, 406 Ill. App. 3d 1112, 1115 (2011). All facts
apparent from the face of the pleadings, including the attached exhibits, must be considered.
Green v. Rogers, 234 Ill. 2d 478, 491 (2009).
¶ 48 Defendant here now argues that plaintiff’s “use of an affidavit to bolster his Third
Amended Complaint has no bearing on this Court’s determination of the sufficiency of the
pleading.” Defendant relies on Brock v. Anderson Road Ass’n, 287 Ill. App. 3d 16 (1997).
In Brock, the experts’ affidavits attached to the complaint stated that the defendant
emergency medical technicians’ conduct “reflected ‘utter indifference and disregard for the
safety of Mr. Brock.’ ” Id. at 25. The court, noting that the issue was whether plaintiff had
sufficiently pleaded that defendant’s conduct was willful and wanton, held that the experts’
affidavits were mere “conclusions.” Id. Plaintiff now contends that Brock is distinguishable
because his expert’s affidavit, in addition to legal conclusions, sets forth the underlying
factual basis for the opinion, i.e., they are based on the allegations of plaintiff’s complaint.
Although plaintiff contends that we may therefore consider the affidavit, we actually believe
it renders the affidavit merely duplicative of any well-pleaded allegations in the third
amended complaint. The issue here, as in Brock, is whether plaintiff has sufficiently pleaded
his cause of action regarding defendant’s conduct.
¶ 49 In The Retreat v. Bell, 296 Ill. App. 3d 450 (1998), the court discussed the proper
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consideration of an affidavit submitted by the plaintiff in opposition to a section 2-615
motion to dismiss. As the court observed: “A motion for summary judgment is a better way
to determine whether there are facts to support a complaint than is a motion to dismiss.” Id.
at 453. However, the court remarked: “It appears that the sole reason [defendant] wanted this
case decided on a motion to dismiss, and not on a motion for summary judgment, was to take
advantage of the rule that affidavits may not be considered in deciding section 2-615
motions.” Id. at 453-54.
¶ 50 As the Retreat v. Bell court further stated:
“There are no cases *** that ignore affidavits and discovery materials submitted by
the plaintiff, in opposition to the section 2-615 motion, and in response to defendant’s
arguments that plaintiff is pleading only a conclusion and that plaintiff cannot plead
specific facts in support of that conclusion. The circuit court should dismiss a cause of
action on the pleadings only if it is clearly apparent that no set of facts can be proven
which will entitle a plaintiff to recovery. [Citation.] How can it be said that no set of facts
can be proved that will entitle a plaintiff to recovery when the record contains affidavits
setting out those facts? *** Why should we ignore the affidavits and limit our view
solely to the supposedly conclusory pleading, when the affidavits support, instead of
contradict, that pleading? Pleading motions should not be decided on technicalities, but
with a view to doing substantial justice between the parties. [Citation.]” (Emphasis in
original and internal quotation marks omitted.) Id. at 454.
¶ 51 In the instant case, plaintiff’s legal expert opined that defendant’s failures to assert
plaintiff’s available defenses in the underlying case constituted professional negligence, and
that it was more probably true than not that had these arguments been asserted, plaintiff
would have prevailed and would not have been ordered to sell his shares to Curia pursuant
to the 1989 agreement. Defendant contends that the affidavit contained mere legal
conclusions that cannot be considered; plaintiff contends the affidavit sets forth the
underlying factual matter on which the opinion is based. We need not resolve this issue and
need not consider the affidavit at this stage of the pleadings. Although plaintiff attached the
affidavit in support of his argument that defendant’s actions were not mere errors of
judgment, we believe that plaintiff’s third amended complaint, standing alone, contained
sufficient allegations to state a cause of action for attorney malpractice.
¶ 52 Plaintiff’s third amended complaint contained three counts alleging in detail his claims
of negligence on the part of defendant for failing to: assert meritorious and complete defenses
to Curia’s attempted exercise of the 1989 options (count I); argue that the writings were
ambiguous (count II); and enforce the July 2004 agreement (count III). Plaintiff is not merely
alleging that defendant was negligent because it lost the argument in the district court. Also,
plaintiff’s allegations go beyond mere errors of judgment by defendant. Plaintiff has alleged
sufficient facts, which we must take as true at this point, tending to show that defendant’s
conduct in the underlying lawsuit fell below the standard of care and that this negligence was
the proximate cause of plaintiff’s damages. Therefore, plaintiff’s third amended complaint
should not have been dismissed under section 2-615.
¶ 53 We recognize that it may be true that defendant considered the other legal theories that
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plaintiff now contends it should have advanced but nonetheless made a reasoned judgment
and tactical decision to proceed as it did. That is, defendant may have decided that the best
course of action was to argue that the 1989 agreement’s options were abrogated by the 1993
modification agreement instead of advancing the other legal theories. As defendant notes,
plaintiff has conceded that this was a plausible legal theory, and the Seventh Circuit
explicitly found that this argument was a reasonable one (and as reasonable as the one
advanced by Curia). Alternatively, defendant may have not pursued these other arguments
that plaintiff now alleges defendant negligently failed to assert simply because defendant was
unaware of their existence in the first instance. Defendant’s argument that its conduct
involved, at most, a mere error of judgment presupposes that an actual “decision” was made
on its part, which is not reflected in the record at this stage.
¶ 54 We find instructive the case of Howard v. Druckemiller, 238 Ill. App. 3d 937 (1992).
There, the plaintiff sued the attorney who had represented him in a real estate purchase.
Similar to the instant case, the defendant had argued that the plaintiff had alleged no more
than her error of opinion or judgment. Id. at 939. The trial court in Howard granted the
defendant’s motion to dismiss under section 2-615 of the Code of Civil Procedure for failure
to state a cause of action for legal malpractice. Id. However, this court reversed. We
concluded that the pleading “adequately alleged an attorney malpractice claim that should
not have been dismissed for legal insufficiency.” Id. at 943. We noted that the plaintiff had
clearly alleged breach of the attorney’s duty by stating that he had told the defendant that he
wished to hire a private home inspector but the defendant informed him that such an
inspection was not necessary because the Veterans Administration inspection would suffice.
Id. at 942. We also concluded that the plaintiff had adequately alleged injury or loss
proximately resulting from the defendant’s advice, referring to the cost of repairing the latent
defects he first discovered after moving into the house. Id.
¶ 55 As we explained: “[t]he plaintiff’s first amended complaint included well-pleaded facts
that, when construed in his favor, could support a conclusion that the defendant’s advice not
to hire a private inspector was a breach of the standard of care owed him. Expert opinion on
the standard of care for a real estate lawyer in the defendant’s position could establish that
the advice was such a breach.” (Emphasis added.) Id. at 943. Therefore, “[t]he plaintiff was
entitled to present evidence both on the standard of care due him and on whether the
defendant’s advice violated that standard.” Id. Similarly, in the instant case, construing the
well-pleaded facts in the third amended complaint in plaintiff’s favor could support a
conclusion that defendant breached its duty to plaintiff.
¶ 56 In sum, in the instant case, we have no way of knowing, at this stage of the proceedings,
why defendant proceeded as it did–with the argument that it lost in the district court. Despite
defendant’s numerous references to its “decision” and its “reasoned judgment” to forego
certain legal theories and arguments, we agree with plaintiff that the record is devoid of any
evidence that defendant made any strategic decision or informed judgment not to assert the
defenses that plaintiff now contends were meritorious and should have been asserted. We
also cannot determine if defendant actually “decided” not to assert plaintiff’s other, allegedly
meritorious, defenses, as opposed to defendant simply being unaware of, or overlooking, the
existence of any other legal argument. We accept as true all well-pleaded facts in plaintiff’s
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third amended complaint and the reasonable inferences that can be drawn from those facts.
In doing so, we cannot say that it clearly appears that no set of facts could be proved which
would entitle plaintiff to recover. Thus, although the trial court here erred in dismissing
plaintiff’s third amended complaint, certainly dismissal could be appropriate as a matter of
law where “it is clearly apparent that no set of facts can be proved that would entitle the
plaintiff to relief.” (Internal quotation marks omitted.) Estate of Powell v. John C. Wunsch,
P.C., 2013 IL App (1st) 121854, ¶ 15. Such was the case in Goldstein v. Lustig, 154 Ill. App.
3d 595 (1987), discussed earlier. Here we cannot say as a matter of law that defendant’s
conduct constituted a mere error of judgment for which it is immune from liability.
¶ 57 Nevertheless, defendant notes that this court may “affirm on any basis supported by the
record, regardless of whether the trial court based its decision on the proper ground.”
(Internal quotation marks omitted.) Sherman v. Township High School District 214, 404 Ill.
App. 3d 1101, 1109 (2010). Defendant asserts that the record establishes four alternative
bases for dismissal of the third amended complaint with prejudice that support affirmance
of the trial court’s dismissal order.
¶ 58 Defendant first argues that plaintiff is judicially estopped from arguing the existence of
the 2004 oral agreement as a result of an affidavit he executed in the underlying action. In
his affidavit in the underlying action, plaintiff stated:
“In July 2004, after a serious illness, I met with Curia and offered to sell my shares
in the Corporations to Curia and retire from the business.
In September 2004, I presented an offer to Curia, but Curia did not accept. However,
Curia and I continued negotiating Curia’s buy-out of my shares.
On December 4, 2004, I presented another offer to Curia. Curia did not accept the
offer but continued to discuss the sale and purchase with me.
Curia even procured bank financing allowing him to purchase my shares. However,
Curia never accepted any of my offers.
Because Curia would not move forward in the negotiations to purchase my interests
in the Corporation, I consulted an outside broker for the purpose of considering the sale
of the Corporations to an outside buyer.”
Therefore, defendant contends that plaintiff cannot argue that defendant was negligent in
failing to raise the existence of the purported 2004 oral agreement.
¶ 59 We have noted:
“The doctrine of judicial estoppel promote[s] the truth and *** protect[s] the integrity
of the court system by preventing litigants from deliberately shifting positions to suit the
exigencies of the moment. [Citation.] Judicial estoppel is flexible but five elements are
generally necessary: (1) the two positions must be taken by the same party; (2) the
positions must be taken in judicial proceedings; (3) the positions must be given under
oath; (4) the party must have successfully maintained the first position and received some
benefit; and (5) the two positions must be totally inconsistent. [Citation.] Judicial
estoppel applies to statements of fact and not to legal opinions or conclusions.
[Citation.]” (Internal quotation marks omitted.) United Automobile Insurance Co. v.
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Buckley, 2011 IL App (1st) 103666, ¶ 35.
“Before a statement can be held to be a binding judicial admission, it must be given a
meaning consistent with the context in which it was found [citation], and it must be
considered in relation to the other testimony and evidence presented. [Citation.]” Smith v.
Pavlovich, 394 Ill. App. 3d 458, 468-69 (2009). “Admissions are not binding if the amended
pleading asserts that the allegations in the original pleading were the product of mistake or
inadvertence. [Citation.]” Heider v. Leewards Creative Crafts, Inc., 245 Ill. App. 3d 258, 271
(1993).
¶ 60 Plaintiff argues that defendant drafted the affidavit for him and the legal conclusion in
the affidavit that Curia had not “accepted” the offer was defendant’s conclusion and not
plaintiff’s. He also contends that defendant advised him that “under Illinois law, Curia’s
mere oral agreement, although explicit, did not constitute a legally effective ‘acceptance.’ ”
Thus, he contends that his prior affidavit is not legally binding.
¶ 61 A somewhat similar argument was rejected in Beverly Bank v. Coleman Air Transport,
134 Ill. App. 3d 699, 704 (1985), in which an action was brought by a bank against
defendant, the maker and guarantor of promissory notes. Defendant sought to disavow an
earlier admission of liability in his original verified answer, claiming “his attorney did not
consult with him or allow him to review the answer and that the answer was the product of
mistake or inadvertence.” Id. The court decided that “[t]hese unsupported and largely
conclusionary statements [were] insufficient to show mistake or inadvertence.” Id. The court
noted that “[t]here [was] nothing in the record [indicating the] attorney did not have
knowledge of the statements in the answer or that he did not have authority to file a verified
answer in behalf of his client.” Id. The instant case, however, is different because plaintiff
is suing his attorney and alleging that the attorney drafted these statements for him.
Moreover, plaintiff has noted that defendant asserted the opposite when it filed an amended
complaint in his district court action against Curia alleging, as plaintiff now alleges here, that
in 2004 , plaintiff and Curia entered into an agreement for Curia to purchase plaintiff’s shares
for $4.2 million and that Curia later “reneged” on that agreement. Plaintiff also notes that
defendant filed this amended complaint on February 15, 2008 but it was too late to obtain
relief for him. Thus, we do not believe the judicial estoppel doctrine can be invoked by the
attorney defendant under the particular circumstances of this case.
¶ 62 Defendant next argues that, even if we do not apply judicial estoppel, any claim based
on the purported 2004 agreement should have been dismissed because plaintiff “failed to
plead facts establishing the elements of an enforceable agreement.” Specifically, defendant
contends that plaintiff did not sufficiently plead the existence of a July 2004 oral agreement
because he failed to plead the contract’s specific terms and also failed to plead that the
conditions precedent had been met.
¶ 63 In support of its argument, defendant cites Claire Associates v. Pontikes, 151 Ill. App.
3d 116 (1986). As the Pontikes court explained:
“Legal-malpractice complaints are by their nature lawsuits dependent upon predicate
lawsuits. *** [A] legal malpractice claim is a ‘case within a case.’ This is because of the
damages element of the action; no malpractice exists unless counsel’s negligence has
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resulted in the loss of an underlying cause of action, or the loss of a meritorious defense
if the attorney was defending in the underlying suit.” Id. at 122.
As the court further explained: “[I]t is not enough merely to inform the defendant of the
nature of the claim; the pleading must also provide the factual premise underlying the claim.”
Id. at 123.
¶ 64 We believe Pontikes is distinguishable. There, plaintiffs failed to plead the nature of their
claim with factual specificity and had not alleged any facts which would overcome a clearly
delineated deficiency in the underlying breach of contract action against a lender for its
refusal to keep its loan commitment. Specifically, the Pontikes court noted that the lender’s
financing commitment was granted only on the condition that the financial vitality of the
borrowing entity, i.e., the original partnership, remain unchanged, yet it had changed from
having two general partners who could be held jointly and severally liable in the event of
deficiency upon default, to a successor partnership, which had only one general partner. Id.
at 124. As a result, the lender was entitled to deny the loan to the successor partnership, and
the lender had raised this in its motion to dismiss the contract action. Id. Therefore, it was
irrelevant that defendant attorneys failed to respond to the motion. Id.
¶ 65 In the instant case, in his opening brief, plaintiff argued that he adequately alleged the
existence of an enforceable agreement. “[C]ontract formation requires only the existence of
an offer, an acceptance, and consideration.” Hubble v. O’Connor, 291 Ill. App. 3d 974, 979
(1997); see also Talbert v. Home Savings of America, F.A., 265 Ill. App. 3d 376, 380 (1994)
(“To allege the existence of a valid contract, a plaintiff must plead facts indicating there was
an offer, an acceptance, and consideration.”). “ ‘For an oral contract to be valid and
enforceable, its terms must be definite and consistent.’ [Citation.]” Downs v. Rosenthal
Collins Group, L.L.C., 2011 IL App (1st) 090970, ¶ 49. We agree with plaintiff that he has
adequately alleged the elements of the 2004 oral contract. He alleged that the parties to the
agreement were Curia and himself, that he offered to sell Curia all of his remaining stock for
a total purchase price of $4.2 million, and Curia orally agreed. Although we express no
opinion on the merits of the argument, there is nothing in the record at this point, as there
was in Pontikes, that would negate the validity of the underlying contract. Moreover, as
plaintiff has noted, defendant itself drafted a second amended complaint conceding its belief
that a valid contract existed.
¶ 66 Defendant next argues that plaintiff has failed to state a cause of action against it because
it did not proximately cause plaintiff’s damages. Defendant notes that plaintiff asserts that
defendant’s negligence caused him to lose the right to pursue a viable cause of action,
namely, the enforceability of the alleged 2004 contract. However, citing Mitchell v. Schain,
Fursel & Burney, Ltd., 332 Ill. App. 3d 618, 621-22 (2002), defendant argues that the statute
of limitations had not expired at the time he discharged defendant and, therefore, plaintiff’s
new counsel could have pursued plaintiff’s claim for breach of the putative July 2004 oral
agreement. Defendant argues that plaintiff had several avenues by which he could have
asserted his claim: (1) bring a new action for breach of contract; (2) amend his complaint
after the Seventh Circuit’s ruling; or (3) abandon the appeal and move to amend his
complaint in the district court.
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¶ 67 Similarly, with respect to plaintiff’s allegations that defendant was negligent in failing
to argue that the contract and subsequent writings were ambiguous, defendant asserts alleged
failure was not the proximate cause of plaintiff’s damages where the successor attorney could
have raised the argument and, in any event, the Seventh Circuit’s decision “resuscitated” that
argument. Defendant contends that plaintiff “did not seize that opportunity.” Defendant
contends that plaintiff had the right to “unwind the court-ordered sale” and could have
averted any harm had plaintiff been willing to refund the consideration he received for the
sale.
¶ 68 Plaintiff responds, in part, that it was too late to enforce the 2004 agreement. Plaintiff
notes that the district court had entered summary judgment on February 6, 2006, two years
before his new counsel was retained. Citing Figgie International, Inc. v. Miller, 966 F.2d
1178 (7th Cir. 1992), plaintiff argues that, “[s]ince the 2004 agreement could have and
should have been asserted at the outset of the district court litigation in 2005, the law is clear
that [his] new counsel would not have been permitted to file yet another amended complaint
in 2008, two years after [plaintiff] lost summary judgment.”
¶ 69 As the court in Figgie stated: “Leave to amend may be denied where there has been
undue delay, bad faith, prejudice to the opponent, dilatory motive on part of movant, or
amendment would be futile.” Figgie International, Inc., 966 F.2d at 1180-81. Defendant has
not cited any authority that would have permitted plaintiff to amend his complaint at such
a late date. Plaintiff also notes that the other cases cited by defendant are distinguishable
because there was no uncertainty as to whether plaintiff’s successor counsel would have been
permitted to pursue the claim lost by the initial counsel’s negligence. By contrast, plaintiff
notes he “did not have an ‘absolute right,’ or any ‘right’ to amend his complaint more than
two years after losing on summary judgment.” We agree with plaintiff that whether his new
counsel would have been permitted to amend the complaint in 2008 is a question of fact that
cannot be decided on a section 2-615 motion to dismiss.
¶ 70 The last basis for affirmance raised by defendant is that plaintiff’s proving his “case
within a case” is speculative. The parties agree that, only after finding ambiguity, would the
court have considered extrinsic evidence. Plaintiff has essentially argued that, had defendant
argued ambiguity: (1) the district court would have found an ambiguity; (2) plaintiff would
have then had the opportunity to present extrinsic evidence; and (3) plaintiff would have
prevailed. Defendant counters that “the bare bones of [plaintiff’s] argument is that
[defendant’s] persuasive prowess alone would have convinced Judge Reinhard that the
contract was ambiguous, resulting in the eventual admission of extrinsic evidence.”
Defendant also argues that plaintiff has failed to plead any facts that the Judge Reinhard
would have ruled differently had defendant argued ambiguity in the trial court. Defendant
argues that any such claim is “far too speculative to form the basis of a malpractice action.”
¶ 71 This court has acknowledged that “every legal malpractice case requiring proof of the
‘case within the case’ deals in some degree of speculation as to what the damages in the
underlying claim would have been absent the attorney misconduct.” Glass v. Pitler, 276 Ill.
App. 3d 344, 354 (1995). In Glass v. Pitler, we concluded that “the speculation required
[there was] overwhelming.” Id. We upheld summary judgment for the attorney who gave
advice regarding whether pension funds would have protection in bankruptcy. We decided
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that the clients could not prove attorney malpractice as a matter of law because they could
not establish with any reasonable degree of certainty how the underlying court would have
ruled had they filed a bankruptcy petition under the unique facts of that case. Notably, the
state of the law, on which the attorney had provided the allegedly erroneous advice, was
completely unsettled at the time. Id. at 352-53. Thus, the court would have been called upon
to “predict how a bankruptcy court judge would have viewed the law in light of existing
conflicting and nonbinding case law.” Id. at 354. The instant case is different. As plaintiff
notes, Illinois law regarding the exercise of options and the construction of contracts is not
in a state of flux or subject to conflicting court opinions.
¶ 72 In Georgou v. Fritzshall, No. 93 C 997, 1995 WL 248002 (N.D. Ill. Apr. 26, 1995),
decided under Illinois law, the court stated:
“[A] malpractice plaintiff is not required to demonstrate what award the original judge
or jury would have made if no malpractice had occurred. Once a malpractice plaintiff has
demonstrated that his attorney fell below a reasonable standard of professional conduct,
the factfinder must determine what a reasonable judge or jury would have concluded and
compare that conclusion to the actual resolution of the underlying action to determine
damages.” (Emphasis added.) Id. at *5.
This objective standard has been applied in other jurisdictions. For example, in Mattco
Forge, Inc. v. Arthur Young & Co., 60 Cal. Rptr. 2d 780 (Cal. Ct. App. 1997), the court
stated:
“The trial-within-a-trial method does not ‘recreate what a particular judge or fact
finder would have done. Rather, the jury’s task is to determine what a reasonable judge
or fact finder would have done....’ [Citation.] Even though ‘should’ and ‘would’ are used
interchangeably by the courts, the standard remains an objective one. The trier of facts
determines what should have been, not what the result would have been, or could have
been, or might have been, had the matter been before a particular judge or jury.”
(Emphasis omitted.) Id. at 793.
See also Hickey v. Scott, 796 F. Supp. 2d 1, 4 (D.D.C. 2011) (appropriate standard for the
fact finder to apply in determining causation in a legal malpractice action is the objective,
reasonable person standard, meaning that the fact finder need not attempt to discern what a
particular judge would have decided based on the facts before him but only what a
reasonable judge would have decided); McKnight v. Gingras, 966 F. Supp. 801, 812 (E.D.
Wis. 1997) (in legal malpractice action premised on claim that attorney’s negligence resulted
in reversal on appeal of a judgment for client, proper focus is not what the appellate court
that actually heard case would have decided but, rather, what a reasonable, fully briefed
judge or panel of judges would have decided if attorney had proceeded differently); Collins
v. Miller & Miller, Ltd., 943 P.2d 747, 756 (Ariz. Ct. App. 1996) (in establishing causation
in a legal malpractice action, the plaintiff must convince the trier of fact that, but for
attorney’s negligence, a reasonable judge or jury would have decided in his or her favor in
underlying action).
¶ 73 Contrary to defendant’s contention, plaintiff is not “required to plead and prove what
Judge Philip G. Reinhard would have done had a different argument *** been made.”
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(Emphasis added). The test is objective and the question is what a reasonable judge would
have done. See Restatement (Third) of Law Governing Lawyers § 53 cmt. b, at 390 (2000)
(“The judges or jurors who heard or would have heard the original trial or appeal may not
be called as witnesses to testify as to how they would have ruled. That would constitute an
inappropriate burden on the judiciary and jurors and an unwise personalization of the issue
of how a reasonable judge or jury would have ruled.” (Emphasis added.)) Thus for the
reasons stated, plaintiff’s proving his case-within-a-case is not speculative.
¶ 74 CONCLUSION
¶ 75 In view of the foregoing, we conclude that the trial court erred in dismissing plaintiff’s
third amended complaint pursuant to section 2-615. We cannot say that, as a matter of law,
plaintiff can prove no set of facts from which a jury could find that defendant’s negligence
in failing to raise the additional available arguments, as alleged in the third amended
complaint, was the proximate cause of plaintiff’s damages. Plaintiff’s complaint stated a
cause of action for legal malpractice. We therefore reverse and remand.
¶ 76 Reversed and remanded.
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