Hermansen v. Riebandt

2020 IL App (1st) 191735
No. 1-19-1735
Fourth Division
Modified opinion filed November 25, 2020
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
______________________________________________________________________________
)
LOUIS HERMANSEN and CHERYL HERMANSEN, )
)
Plaintiffs-Appellants, ) Appeal from the Circuit Court
) of Cook County.
v. )
) No. 16 L 007654
JAMES J. RIEBANDT; LEE F. DEWALD; LESTER A. )
OTTENHEIMER, III; RIEBANDT & DEWALD, PC; ) The Honorable
DEWALD LAW GROUP, PC; OTTENHEIMER LAW ) Thomas R. Mulroy, Jr.,
GROUP, LLC; and OTTENHEIMER ROSENBLOOM, ) Judge Presiding.
LLC, )
)
Defendants-Appellees. )
)
______________________________________________________________________________
PRESIDING JUSTICE GORDON delivered the judgment of the court, with opinion.
Justices Hall and Reyes concurred in the judgment and opinion.
OPINION
¶1 The instant appeal arises from the trial court’s grant of summary judgment in favor of
defendants James J. Riebandt, Lee F. DeWald, and Lester A. Ottenheimer, III, and their
related law firms, in connection with a legal malpractice action filed against them by
plaintiffs Louis and Cheryl Hermansen. Plaintiffs’ lawsuit alleges that defendants failed to
properly inform them of the risks of litigating the propriety of a mortgage lien on their
residence, leading them to reject several settlement offers in reliance on defendants’ advice
No. 1-19-1735
and resulting in an adverse judgment against them. The trial court granted defendants’
motion for summary judgment in the malpractice litigation, finding that the applicable statute
of limitations and statute of repose barred plaintiffs’ claims. Plaintiffs appeal, and for the
reasons that follow, we reverse.
¶2 BACKGROUND
¶3 I. Complaint
¶4 On August 2, 2016, plaintiffs filed a complaint for legal malpractice against defendants.
The complaint alleges that plaintiffs were the owners of C to C Imports, Inc. (CTC), a
corporation that owned a parcel of real property in Elk Grove Village (commercial property).
In connection with the commercial property, plaintiffs had signed two notes for a combined
$1,266,724.53, which were secured by two mortgages and two guaranties, all with Bank of
America.
¶5 In 2009, plaintiffs sought to sell the commercial property and retained Riebandt to
represent them for that purpose. In August 2009, Riebandt informed plaintiffs that a
prospective buyer had offered to purchase the commercial property for $1.25 million. After
the application of closing costs, the proposed sale proceeds were $99,024.38 less than the
amount of plaintiffs’ outstanding obligations on the Bank of America notes. As a result,
Riebandt negotiated with Bank of America, after which he informed plaintiffs that Bank of
America would permit the sale of the commercial property and release its mortgage interests
in the property, provided that plaintiffs would agree to (1) tender the net sale proceeds of
$1,154,380.01 to Bank of America upon closing and (2) execute a guaranty for the
$99,024.38 deficiency. On August 11, 2009, in reliance on Riebandt’s representations,
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No. 1-19-1735
plaintiffs signed a real estate sale agreement with the prospective buyer for $1.25 million,
with the closing scheduled for September 11, 2009.
¶6 On August 18, 2009, Riebandt contacted Bank of America about the execution of the sale
contract, and Bank of America responded by forwarding to Riebandt three agreements: (1) a
forbearance agreement, (2) a new note in the amount of $99,024.38, and (3) a new mortgage
securing repayment on the new note. Under the terms of the forbearance agreement, Bank of
America agreed to forbear legal action on the outstanding notes and mortgages until after the
September 11, 2009, closing on the sale of the commercial property in exchange for
plaintiffs’ execution of the new note and new mortgage, which authorized Bank of America
to record a mortgage lien on plaintiffs’ personal residence in Elk Grove Village. However,
the documents did not contain any restrictions or contingencies conditioning the validity and
enforceability of the new note and mortgage on the successful closing of the sale of the
commercial property.
¶7 On August 20, 2009, Riebandt presented plaintiffs with the Bank of America documents,
but did not discuss the risks or benefits of executing them and simply instructed plaintiffs to
sign the documents, which they did. Riebandt then tendered the executed documents to Bank
of America, which recorded the mortgage lien against plaintiffs’ personal residence on
August 27, 2009, prior to any closing on the sale of the commercial property. On September
2, 2009, the prospective buyer informed Riebandt that it was terminating the contract, and the
sale of the commercial property never closed. Plaintiffs’ obligations under the original notes
and mortgages were not released by Bank of America, and plaintiffs never received the
$99,024.38 from Bank of America under the new note. Riebandt did not discuss with
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plaintiffs any impact of the failed closing on their obligations under the new note and
mortgage.
¶8 Plaintiffs were not informed that Bank of America had recorded a mortgage lien against
their personal residence until January 2011. Bank of America never issued any statements or
demands to plaintiffs seeking repayment of the $99,024.38 obligation to Bank of America at
any time in 2009, 2010, or 2011.
¶9 The complaint alleged that from September 2009 through 2013, Riebandt and DeWald,
through their law firms, served as counsel for plaintiffs in several real estate related matters,
including the sale of the commercial property, the sale of plaintiffs’ personal residence, and
in connection with several lawsuits filed by Bank of America against plaintiffs and CTC,
their company, concerning the notes, mortgages, and guaranties on the commercial property.
¶ 10 As relevant to the instant lawsuit, on February 1, 2011, Riebandt and DeWald obtained a
“Track Search Report” from Fidelity National Title Insurance Company (Fidelity), which
showed claims or encumbrances on the title to plaintiffs’ personal residence. The report
showed that Bank of America had recorded a mortgage lien on August 29, 2009, to secure an
indebtedness of $99,024. Accordingly, the complaint alleges that, “[a]s of February 1, 2011,
or shortly thereafter, defendants Riebandt or DeWald, or both of them, knew or reasonably
should have known” that Bank of America had recorded the mortgage. Riebandt and DeWald
did not show the report to plaintiffs or discuss it with them.
¶ 11 In March 2011, Riebandt and DeWald represented plaintiffs in connection with a
proposed sale of the commercial property. The proposed buyer offered to purchase the
commercial property for $632,500. However, the commercial property was still subject to
two mortgage liens and lis pendens liens arising from Bank of America’s still-pending
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lawsuits against plaintiffs and CTC. Consequently, plaintiffs required Bank of America’s
consent to the transaction. Bank of America required plaintiffs to execute a “Mortgage
Release Agreement,” which plaintiffs did. The sale successfully closed, Bank of America
released its mortgage interests in the commercial property, and all net proceeds from the sale
($469,458.17) were tendered to Bank of America.
¶ 12 Riebandt selected Fidelity to provide title insurance and escrow services for the sale of
plaintiffs’ commercial property, but unbeknownst to plaintiffs, Riebandt had a preexisting
principal-agent relationship with Fidelity whereby Riebandt and Fidelity agreed to share
monies paid for the title services provided by Fidelity in real estate sales transactions referred
to Fidelity by Riebandt. Plaintiffs were never offered a choice of title insurers and were not
informed of the conflict of interest presented by Riebandt’s relationship with Fidelity. In the
case of the sale of the commercial property, Riebandt received $1664 of the $3430 Fidelity
charged for its title services.
¶ 13 By May 2011, plaintiffs had personal and corporate debt obligations in excess of $1
million and sought Riebandt’s advice. Riebandt recommended that plaintiffs consider
seeking bankruptcy protection and referred them to Lester Ottenheimer, a bankruptcy
attorney. Plaintiffs retained Ottenheimer to provide them advice and assistance with their
debt obligations, and he recommended that plaintiffs file for Chapter 7 bankruptcy relief.
Plaintiffs instructed Riebandt and DeWald to provide Ottenheimer “with all materials as
might bear upon or relate to the plaintiffs’ financial circumstances, assets and debts, so as to
assist and enable Mr. Ottenheimer’s preparation of the Chapter 7 Bankruptcy Petition and
related disclosures.” Riebandt and DeWald provided Ottenheimer with documents, including
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a copy of the track search report showing the August 2009 recording of Bank of America’s
mortgage lien on plaintiffs’ personal residence.
¶ 14 On May 31, 2011, Ottenheimer prepared and filed a petition with the United States
Bankruptcy Court for the Northern District of Illinois, seeking complete discharge of all
debts under Chapter 7 of the United States Bankruptcy Code. The Bank of America note and
mortgage were not listed or disclosed in the bankruptcy petition.
¶ 15 During the pendency of the bankruptcy proceedings, Ottenheimer negotiated with the
primary mortgageholder on plaintiffs’ personal residence, CitiMortgage, and advised that
plaintiffs desired to remain in their residence. Ottenheimer agreed not to seek discharge of
plaintiffs’ obligations to CitiMortgage. On September 13, 2011, the bankruptcy court entered
a discharge order, which discharged plaintiffs’ disclosed debts. The discharge order did not
discharge plaintiffs’ obligations to CitiMortgage, by agreement, and did not discharge
plaintiffs’ obligations under the Bank of America note and mortgage, which had never been
disclosed in the bankruptcy petition.
¶ 16 On January 25, 2012, CitiMortgage sought to foreclose on plaintiffs’ mortgage, and
Riebandt and DeWald agreed to represent plaintiffs in that litigation. Riebandt recommended
that plaintiffs sell their personal residence to avoid foreclosure, and plaintiffs agreed.
Plaintiffs hired a realtor to assist them with the sale and, in late January 2012, the realtor
informed them that a title search revealed the existence of the August 2009 Bank of America
mortgage lien.
¶ 17 Between February and May 2012, plaintiffs engaged e-mails with Riebandt in which they
asked him to provide them with information about the Bank of America mortgage lien.
Riebandt “repeatedly assured” plaintiffs that, while there was a record of a mortgage lien,
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No. 1-19-1735
“any such mortgage lien was not valid.” Riebandt informed plaintiffs that Bank of America
could not have recorded a valid mortgage lien in August 2009 because any obligations
arising from plaintiffs’ execution of the Bank of America note, mortgage, and forbearance
agreement had been conditioned on a successful closing of the sale of the commercial
property, which would have resulted in the $99,024.38 deficiency. Riebandt explained that,
since the transaction never closed, there was no “ ‘shortfall’ ” of $99,024.38, so there were
no obligations to Bank of America other than the original notes, mortgages, and guaranties
on the commercial property, which had been discharged in bankruptcy. Riebandt “assured
Plaintiffs that he would take steps to ensure” that the mortgage lien would not prevent
plaintiffs from selling their personal residence. The complaint alleges that “[p]laintiffs
reasonably relied upon and accepted this assurance from defendant Riebandt and so
continued to market the Personal Residence for sale while looking for a new home to
purchase with the anticipated net sale proceeds of the sale of the Personal Residence.”
¶ 18 Plaintiffs followed up with Riebandt periodically in February, March, April, and May
2012. Each time, Riebandt reported that he had not been able to make any progress in
resolving the lien interest. The complaint alleges that Riebandt variously characterized the
mortgage lien as “a ‘rogue mortgage,’ a ‘mistake by [Bank of America]’ or a mistaken belief
by [Bank of America] that plaintiffs could somehow owe [Bank of America]” $99,024.38 on
a note where the transaction never closed, no deficiency ever resulted, and plaintiffs had
never received any funds from Bank of America. The complaint alleges that “[p]laintiffs
reasonably relied upon the assurance of Riebandt” and, in June 2012, signed a contract for
the sale of their personal residence, with the closing to proceed on June 29, 2012. Plaintiffs
also entered into negotiations for the purchase of a new home in Algonquin.
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¶ 19 On June 28, 2012, the day before the closing on the sale of plaintiffs’ personal residence,
Riebandt informed plaintiffs that Bank of America refused to release the mortgage lien.
Plaintiffs asked Riebandt what could be done, and Riebandt responded that he had
“ ‘connections’ ” that would permit the closing to proceed as scheduled. Riebandt advised
that he could have the title insurer provide a policy insuring over the mortgage lien, but that
plaintiffs would need to permit him to set aside $99,024.38 into an escrow account, where it
would remain until he could secure the release of the mortgage lien. As the net proceeds of
the sale were anticipated to be approximately $214,000, plaintiffs agreed to permit Riebandt
to set aside $99,024.38, which would still allow them approximately $115,000 to apply
toward the purchase of the new home. On the same day, Riebandt forwarded closing
documents to plaintiffs, which they signed and returned. The closing proceeded the next day;
plaintiffs were not present, but Riebandt represented them at the closing and signed one or
more of the closing documents as their “ ‘attorney in fact.’ ”
¶ 20 As with the commercial property, Fidelity was chosen to be the title insurer for the sale of
plaintiffs’ personal residence. Plaintiffs did not have a choice of title insurers and were
unaware of Riebandt’s preexisting relationship with Fidelity. One of the closing documents
signed by Riebandt on plaintiffs’ behalf was an “Indemnity and Security Agreement with
Deposit of Funds to Protect and Secure Against Exceptions to Title” (indemnity agreement).
Under the indemnity agreement, plaintiffs were required to tender the entirety of the net
proceeds from the sale of their personal residence as indemnity and security for Fidelity’s
agreement to insure over the Bank of America mortgage lien. Plaintiffs were never shown the
indemnity agreement prior to closing and did not authorize Riebandt to sign it. After the
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No. 1-19-1735
closing, the entirety of the net proceeds from the sale ($214,281.95) was placed in a Fidelity-
controlled escrow account.
¶ 21 Within a day of the closing, plaintiffs contacted Riebandt and inquired as to when they
would receive the net proceeds from the sale, other than the $99,024.38 that they had
authorized to be placed into escrow. Riebandt informed them that Fidelity required that the
entirety of the net proceeds be placed into escrow in order for the closing to proceed and
advised them that Ottenheimer “would be taking the lead in further negotiations” with Bank
of America. Plaintiffs contacted Ottenheimer and requested that he resume negotiations with
Bank of America immediately, as they were paying rent on a month-to-month basis for a
house that they sought to purchase using the proceeds from the sale of their personal
residence.
¶ 22 On September 11, 2012, Ottenheimer sent a letter to Bank of America’s attorney,
claiming that the August 2009 forbearance agreement was “ ‘void’ ” after the sale of the
commercial property did not close and demanding that Bank of America immediately release
its mortgage lien. On September 20, 2012, Bank of America’s attorney responded and
offered to settle the dispute by releasing plaintiffs’ obligations in return for payment of
$99,024.38. Ottenheimer responded to Bank of America that its offer was a “ ‘nonstarter’ or
‘nonsense’ ” because plaintiffs’ obligations to Bank of America had been discharged by
bankruptcy. The complaint alleges that, on the same day, “Ottenheimer informed plaintiffs of
[Bank of America’s] settlement offer. Ottenheimer advised that the [Bank of America] offer
was ‘nonsense’ due to the bankruptcy court’s discharge order and that the plaintiffs[’] only
option was to go to court, file an emergency motion and obtain a temporary restraining order
or injunction against [Bank of America].”
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¶ 23 Plaintiffs followed up with Riebandt and DeWald about the Bank of America offer and
Ottenheimer’s advice, and Riebandt and DeWald advised plaintiffs that they agreed with
Ottenheimer’s assessment and that they would prepare a complaint against Bank of America
to obtain a judicial declaration that plaintiffs did not owe anything under the note and that
Bank of America did not have a valid mortgage interest. The complaint alleges that
“[d]efendants Riebandt and DeWald assured plaintiffs that [Bank of America’s] legal
position was weak and that if plaintiffs authorized them to pursue litigation against [Bank of
America] the plaintiffs would be able to recover their reasonable attorneys’ fees and costs in
the lawsuit.” According to the complaint, “[p]laintiffs relied upon the advice and assurances
of defendants Ottenheimer, Riebandt and DeWald and authorized defendants to prepare and
file a lawsuit against [Bank of America].”
¶ 24 On October 15, 2012, DeWald filed a complaint for declaratory judgment on plaintiffs’
behalf, alleging that the forbearance agreement, note, and mortgage were unenforceable
because they were conditioned on the successful closing of the commercial property sale. On
October 23, 2012, Bank of America’s attorney communicated with DeWald and extended a
second offer to settle the case. Bank of America offered to release plaintiffs from any liability
under the note and to release the mortgage lien in exchange for plaintiffs’ payment of half of
the note’s principal, or $49,512.19.
¶ 25 DeWald passed along Bank of America’s offer to plaintiffs. DeWald did not discuss the
risks and benefits of accepting or rejecting the offer, but instead recommended that plaintiffs
reject the settlement offer and litigate the declaratory judgment action. The complaint alleges
that “DeWald again assured the plaintiffs that [Bank of America’s] legal position was weak,
[and] that it was DeWald’s judgment that plaintiffs’ best interests were served by prosecution
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of the [declaratory judgment] Action. Mr. DeWald emphasized that doing so was essentially
without cost to plaintiffs because they would be able to recover their reasonable attorneys’
fees and costs upon winning the [declaratory judgment] Action against [Bank of America].”
According to the complaint, “[p]laintiffs relied on Mr. DeWald’s representations, informed
him that they wished to follow his advice and that he should press forward with winning the
case.”
¶ 26 The declaratory judgment action was litigated for the next three years. Bank of America
denied the allegations of the complaint and filed a counterclaim seeking the recovery of the
$99,024.38, plus default and other accrued interest, attorney fees, and costs. On March 25,
2012, the trial court in the declaratory judgment action entered judgment in Bank of
America’s favor, finding the note and mortgage to be valid and enforceable. Bank of
America offered to terminate the litigation in exchange for mutual releases and plaintiffs’
forfeiture of the entire $214,281.95 that plaintiffs had received from the sale of their personal
residence. Bank of America advised that continuing to litigate the matter, either by litigating
Bank of America’s counterclaim or through appeal, would cause Bank of America to incur
further attorney fees, which it would then seek from plaintiffs. DeWald advised plaintiffs to
“settle for any amount that he might be able to get from [Bank of America] because the
possibility that [Bank of America] would win on its counterclaim or on appeal, incur more
fees and recover them from plaintiffs was more likely than not.” Plaintiffs authorized
DeWald to complete the settlement on the best terms that could be negotiated. Ultimately,
DeWald negotiated a settlement agreement with Bank of America, which included Fidelity as
a party, and on December 9, 2015, Fidelity released the funds held in escrow as follows:
$181,500 to Bank of America, $8153.32 to Fidelity, and $24,628.63 to plaintiffs as net
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proceeds from the sale of their personal residence. Bank of America, in turn, provided a
release of the note and mortgage. On December 15, 2015, the declaratory judgment
complaint was dismissed pursuant to settlement.
¶ 27 The complaint set forth counts of six counts of legal malpractice, one count against
Riebandt, DeWald, and Ottenheimer individually, and three counts against their law firms.
The count against Riebandt alleged that he was negligent in (1) his conduct surrounding the
2009 failed closing of the sale of the commercial property; (2) failing to disclose his
relationship with Fidelity; (3) failing to obtain plaintiffs’ informed consent prior to signing
the Fidelity indemnity agreement, which resulted in the entirety of the net proceeds from the
sale of their personal residence being held in escrow; (4) failing to inform plaintiffs of the
risks of proceeding to litigation against Bank of America, including the rejection of multiple
settlement offers; and (5) negligently advising plaintiffs as to the validity of the Bank of
America mortgage lien. The count against DeWald contained similar allegations. The count
against Ottenheimer contained similar allegations as to Ottenheimer’s failure to inform
plaintiffs of the risks of pursuing litigation against Bank of America and also alleged that
Ottenheimer negligently advised plaintiffs as to the effect of the bankruptcy on their
obligations to Bank of America.
¶ 28 On January 3, 2017, defendants Riebandt and DeWald filed a combined answer and
affirmative defenses, and DeWald’s law firm also filed a counterclaim for breach of contract
against plaintiffs, seeking $24,586 allegedly owed by plaintiffs for attorney fees. On April
26, 2017, after the denial of a motion to dismiss, defendant Ottenheimer filed an answer and
affirmative defenses. On June 5, 2018, Ottenheimer filed a counterclaim for contribution
against Riebandt and DeWald, in the event that he was found liable under plaintiffs’
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complaint. In their answer to the counterclaim, Riebandt and DeWald also asserted a
counterclaim for contribution against Ottenheimer.
¶ 29 II. Motions for Summary Judgment
¶ 30 A. Motions
¶ 31 On October 12, 2018, Ottenheimer filed a motion for summary judgment, claiming that
any damages that plaintiffs allegedly suffered were not caused by Ottenheimer, but by
Riebandt and DeWald.
¶ 32 On October 25, 2018, Riebandt and DeWald filed a joint motion for summary judgment,
claiming that plaintiffs’ claims were time-barred and that they were shielded from liability
because they were merely exercising their judgment as to an unsettled question of law.
¶ 33 B. Relevant Exhibits
¶ 34 1. Party Depositions
¶ 35 a. Plaintiff Louis Hermansen
¶ 36 In his discovery deposition, plaintiff testified consistently with the allegations set forth in
the complaint. After being provided a copy of a February 3, 2011, letter, plaintiff testified
that Riebandt and DeWald sent him a copy of the tract search report, on which the 2009 Bank
of America mortgage lien was listed. However, plaintiff had no recollection of receiving such
a letter, which was unsigned. Plaintiff testified that he became aware of the existence of the
mortgage lien in 2012, when a real estate broker informed him of it. Plaintiff reached out to
Riebandt, DeWald, and Ottenheimer to “find[ ] out what this was.” Ottenheimer informed
plaintiff that he would investigate and wrote a letter to Bank of America’s attorney. When
plaintiff followed up, Ottenheimer “told us that a lawsuit would be necessary because he felt
the note and lien were discharged with the bankruptcy and that he felt the forbearance
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No. 1-19-1735
agreement was not enforceable due to the fact that that transaction with [the prospective
buyer] did not complete.” Ottenheimer further told plaintiff “he felt the forbearance
agreement was nonsense and that they had no standing in there, in court, and that it would be
to our benefit to sue and not settle with them.” Plaintiff testified that Ottenheimer specifically
represented to him that the lawsuit would be successful. Plaintiff also testified that Riebandt,
DeWald, and Ottenheimer advised him not to accept Bank of America’s initial settlement
offer.
¶ 37 Plaintiff testified that, in a July 16, 2014, e-mail to DeWald, he said that “ ‘[m]aybe we
should consider going after [Riebandt],’ ” because the lawsuit was not leading anywhere. He
testified that he “didn’t know” whether he meant a lawsuit against Riebandt, and “[t]hat’s
why I asked [DeWald] for his opinion as to what to do.” Plaintiff testified that, at that point,
they realized that there had been a mistake in the forbearance agreement, and “our question
was what rights do we have to try to correct this.”
¶ 38 Plaintiff testified that at no point did any of his attorneys—Riebandt, DeWald, or
Ottenheimer—ever inform him that there was a risk that they could lose the Bank of America
lawsuit or that a loss could result in plaintiffs being required to pay default interest and
attorney fees. Plaintiff testified that, had he been so informed, he would have taken one of
Bank of America’s settlement offers.
¶ 39 b. Defendant Riebandt
¶ 40 In his discovery deposition, Riebandt testified that he had a principal-agent relationship
with Fidelity at the time that plaintiffs sold their commercial property, but did not recall
having plaintiffs sign any disclosure agreements related to that relationship prior to their
using Fidelity as their title insurer.
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¶ 41 Riebandt testified that, when he referred plaintiffs to Ottenheimer in 2011, he “opened up
our office files to him” and gave him any documents that Riebandt had concerning plaintiffs,
including the tract search report showing the 2009 Bank of America mortgage lien on
plaintiffs’ personal residence.
¶ 42 Riebandt admitted that he had referred to the Bank of America mortgage as a “rogue
mortgage” in 2012, and that he believed that the validity of the mortgage was contingent on
the closing on the commercial property, which ultimately failed. Riebandt further testified
that there was nothing in the mortgage documents expressly conditioning the validity of the
mortgage on a successful closing.
¶ 43 Riebandt testified that, when plaintiffs sold their personal residence, he signed the
indemnity agreement with Fidelity on their behalf and testified that he “explained to them
what it was.” Riebandt admitted that the indemnity agreement was never sent to plaintiffs for
their review, but testified that he had informed them that the entirety of the net proceeds
would be held in escrow. Riebandt testified that, under the indemnity agreement, if Bank of
America sought to foreclose against the new owners of plaintiffs’ personal residence, the new
owners would turn to Fidelity as the title insurer, and Fidelity would invoke the indemnity
agreement, making plaintiffs ultimately responsible for the foreclosure judgment.
¶ 44 Riebandt denied ever advising plaintiffs that filing a lawsuit would provide “fast relief.”
When provided an e-mail authored by him using that term, Riebandt testified that he “[did
not] remember the basis of why [he] said that.” Riebandt also denied advising plaintiffs as to
the settlement offers, testifying that DeWald and Ottenheimer were in charge of the
litigation. Riebandt testified that he never informed plaintiffs that they faced legal exposure
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for not only the principal on the Bank of America mortgage, but also default interest and
attorney fees.
¶ 45 c. Defendant Ottenheimer
¶ 46 In his discovery deposition, Ottenheimer testified that, generally, a note is dischargeable
in bankruptcy, but that a consensual lien such as a mortgage is not. Ottenheimer further
testified that, while plaintiffs’ obligations to Bank of America were not listed in their
bankruptcy filing, it did not make a difference, as their obligations under the note were
nonetheless discharged and the mortgage lien remained in place. Ottenheimer testified that he
did not have a conversation with plaintiffs about the dischargeability of their obligations to
Bank of America, as he “either didn’t know or [he] missed it, one of the two.”
¶ 47 Ottenheimer testified that he became aware of the Bank of America mortgage in February
2012, and that Riebandt indicated that he would handle it. However, plaintiffs contacted
Ottenheimer, expressing frustration about Riebandt’s inability to obtain the release of the
lien, and asked Ottenheimer to contact Bank of America, which he did. Ottenheimer testified
that he had conversations with Riebandt and DeWald about whether the mortgage lien should
be handled in bankruptcy court or in state court, and Ottenheimer determined that it should
not be handled in a bankruptcy court. Ottenheimer testified that he had no involvement in the
case after the declaratory judgment lawsuit was filed.
¶ 48 Ottenheimer testified that he was unaware that plaintiffs had executed an indemnity
agreement with Fidelity and further testified that, had he known that, he would have urged
plaintiffs to negotiate a settlement instead of dismissing Bank of America’s initial offer as a
“nonstarter.” Ottenheimer also testified that he was unaware that Bank of America had
offered to split the $99,000 lien amount and, if he had known, he would have recommended
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to settle as “my philosophy is you’re always better off to settle than to litigate. Because when
you litigate, you take a chance; when you settle, you may not be happy, but it’s a sure thing
and it’s done.”
¶ 49 d. Defendant DeWald
¶ 50 In his discovery deposition, DeWald testified that he handled the litigation of plaintiffs’
action against Bank of America. DeWald admitted that he did not have a specific basis for
requesting attorney fees in the Bank of America litigation and, despite their inclusion in the
Bank of America complaint, DeWald denied ever representing to plaintiffs that they would
be able to recover their attorney fees. DeWald testified that he discussed the risks and
benefits of filing litigation with plaintiffs, but that he believed there were no benefits to
foregoing litigation and he was “pretty confident that they could get their money” from filing
suit. DeWald denied being aware that Bank of America had offered to settle prior to the
filing of the lawsuit. DeWald also denied that Bank of America had offered to split the
$99,000 principal amount but instead testified that Bank of America only offered to split the
$214,000 of net sale proceeds by allowing plaintiffs to keep $50,000.
¶ 51 DeWald testified that he did not recall advising plaintiffs that filing suit would lead to
“fast relief” and that he could not recall why Riebandt would have made that representation
to plaintiffs in an e-mail.
¶ 52 DeWald testified that he, Riebandt, and Ottenheimer met with plaintiff Louis Hermansen
at Ottenheimer’s office in June 2015 to discuss the trial court’s adverse ruling in the Bank of
America litigation, including the possibility of appeal.
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¶ 53 2. Bank of America Attorney Deposition
¶ 54 In his discovery deposition, Thomas Peckham, an attorney with the law firm representing
Bank of America with respect to the instant transaction, testified that Bank of America
initially offered to settle the matter if plaintiffs paid the principal amount on the note, but that
offer was declined. After plaintiffs filed suit, Peckham had a discussion with DeWald about
Bank of America settling if plaintiffs paid half of the principal amount; Peckham could not
recall if this was a formal offer or merely a discussion, but had no reason to doubt DeWald’s
assertion in an e-mail to plaintiffs that it was a formal offer. Finally, there was a third offer in
which Bank of America would permit plaintiffs to keep $50,000 of the net proceeds from the
sale of their personal residence. Peckham testified that all of the offers were declined.
¶ 55 Peckham testified that, after the filing of the declaratory judgment action, Bank of
America filed a motion to dismiss the complaint, which was denied, and that the opinion
denying the motion to dismiss found that the complaint stated a cause of action.
¶ 56 3. Parties’ Experts 1
¶ 57 a. Plaintiffs’ Expert
¶ 58 In her discovery deposition, Mary Robinson, plaintiffs’ expert, testified that she was a
practicing attorney and had served as an expert witness in numerous legal malpractice cases.
Robinson was the former administrator of the Attorney Registration and Disciplinary
Commission (ARDC), and her current practice involved representing attorneys in ARDC
proceedings and performing consultation services for legal ethics issues. Robinson opined
1
All of the parties retained experts. However, Riebandt and DeWald did not attach the deposition
testimony or written report from their expert to their motion for summary judgment or responses thereto.
Accordingly, that expert’s opinion is not properly before us.
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No. 1-19-1735
that defendants had violated their professional obligations by failing to provide sufficient
information to enable plaintiffs to make informed decisions as to the litigation.
¶ 59 Robinson also prepared a written report, attached to plaintiffs’ response to defendants’
motions for summary judgment. In her report, Robinson opined that defendants “failed to
meet the standard of care required of them by failing at multiple junctures to give [plaintiffs]
the information and explanations they needed to make informed decisions.” First, Robinson
opined that Riebandt did not properly inform plaintiffs about the risks of executing the Bank
of America documents in connection with the 2009 attempted sale of the commercial
property. Additionally, Robinson opined that Riebandt was required to inform plaintiffs in
2011 when he first discovered that the mortgage lien had been recorded, and that
Ottenheimer should have discussed the implications of the mortgage in advising plaintiffs as
to their bankruptcy filing.
¶ 60 Robinson further opined that Riebandt and DeWald had a conflict of interest in
challenging the Bank of America mortgage in that they should have first informed plaintiffs
that the recording of the mortgage lien had been made possible only by Riebandt’s failure to
insist on conditioning the recording on a successful closing. Robinson opined that, due to
this, Riebandt and DeWald had an interest in resolving the matter in a way that did not reflect
adversely on Riebandt’s handling of the transaction. Instead, Robinson opined that Riebandt
and DeWald “embarked upon the conflicted representation of [plaintiffs] and fell into exactly
the concerns that should have forestalled them from doing so.” Robinson noted that “[n]ot
once did they acknowledge that there was even a possibility that [Bank of America’s]
position might be found to have merit, and they advised [plaintiffs] to reject settlement offers
that would have allowed [plaintiffs] to retain sufficient funds from the proceeds of the sale of
19
No. 1-19-1735
their residence to fund the intended purchase of another home.” Robinson opined that
Ottenheimer “had a less acute but similar concern in that he had failed to notice or advise
[plaintiffs] of the existence and significance of [the mortgage] while handling their
bankruptcy case, at a time when they could at least have begun the process of challenging the
Mortgage.”
¶ 61 Robinson also opined that Riebandt’s relationship with Fidelity presented a conflict of
interest that should have been disclosed to plaintiffs. Robinson opined that, “[w]ithout
informing [plaintiffs] of that relationship, Defendant Riebandt proceeded to negotiate an
agreement with Fidelity to insure over [the mortgage] in return for [plaintiffs] agreeing not
only to escrow the full net proceeds from the sale of their home, but also to indemnify
Fidelity as to any and all claims that might be made on Fidelity in connection with any and
all exceptions to title and to be responsible for any expenses incurred by Fidelity due to any
such claims, while giving Fidelity authority to use the escrowed funds to settle any such
claims.” Instead of disclosing his relationship with Fidelity, Robinson opined that plaintiffs
“authorized Defendant Riebandt to negotiate and even execute pursuant to a power of
attorney an agreement with Fidelity under the misapprehension that Defendant Riebandt’s
loyalty to their interest was uncompromised by any competing obligations to Fidelity or by
any personal interests in protecting his ongoing relationship with Fidelity.” Robinson noted
that “[t]he indemnity agreement left [plaintiffs] bearing the entire risk of a negative outcome
in the dispute over [the mortgage], while freezing their entire sale proceeds to secure
Fidelity’s interest in the transaction. Moreover, the indemnity agreement gave Fidelity
unfettered authority, at its sole discretion, to use the escrowed funds to settle any claims.”
20
No. 1-19-1735
¶ 62 Robinson further opined that all of the defendants owed the duty to provide adequate and
accurate information to plaintiffs to allow them to make informed decisions about how to
proceed in the dispute with Bank of America. Robinson opined that the most obvious risk
was that they could lose, but, “[a]lthough that risk was obvious, it was a risk that all of the
Defendants either denied or understated, with varying degrees of self-interest motivating
their advice.” Robinson opined that it was also “critical” for plaintiffs “to understand the full
extent of their exposure should they lose,” as well as the limits of what they could recover if
they won. Robinson opined:
“Without a complete and accurate understanding of the risks of proceeding, the limits
on success, and the time that might pass before the dispute could be resolved,
[plaintiffs] could not make an informed decision on whether or not to accept either
[Bank of America’s] September 2012 offer to settle at the amount of the Mortgage
principal, or the October 2012 offer to settle for half that amount.”
¶ 63 b. Ottenheimer’s Expert
¶ 64 Kenneth Flaxman, Ottenheimer’s expert, is a practicing attorney concentrating in
commercial litigation and real estate. In his written report, 2 Flaxman opined that the note was
discharged in the bankruptcy regardless of whether Ottenheimer included it in the bankruptcy
petition, and that the mortgage would not have been discharged even if it had been listed.
Flaxman pointed to a February 3, 2011, letter from Riebandt that included a tract search
report and noted that Ottenheimer “repeatedly advised” plaintiffs that only notes, and not
mortgage liens, could be discharged in bankruptcy. Flaxman opined that Ottenheimer’s
2
In his petition for rehearing, Ottenheimer asks us to also consider Flaxman’s deposition
testimony. However, as Ottenheimer acknowledges, the deposition transcript was not attached to
Ottenheimer’s motion for summary judgment or any of the briefing on the motion. Accordingly, we
consider only the report, which was attached to the motion for summary judgment.
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No. 1-19-1735
explanations satisfied the standard of care and that plaintiffs knew that any mortgage lien
would survive their bankruptcy, even if Ottenheimer did not specifically discuss it.
¶ 65 Flaxman further opined that Ottenheimer’s conduct with respect to the settlement
negotiations did not breach the standard of care. Flaxman opined that Ottenheimer’s
September 11, 2012, letter to Bank of America, in which he demanded the release of the lien,
included a “settlement position [that] was reasonable, presented a proposition on which
reasonable lawyers could disagree, and was reasonable zealous advocacy.” In response to
Bank of America’s offer to settle for $99,000, Flaxman opined that Ottenheimer’s
characterization of the offer as a “ ‘non offer’ ” was not unreasonable, “because the parties
were still at the beginning of settlement negotiations, and the offer did not reflect a large
enough discount, in light of the arguments that could be made in regards to the meaning and
intention of the parties under the forbearance agreement.” Flaxman further opined that these
comments “do not appear to be statements intended as binding accurate legal propositions,
but instead merely statements of what Ottenheimer told the bank as part of Ottenheimer’s
zealous advocacy to try and provoke a settlement.”
¶ 66 Finally, Flaxman opined that it was reasonable for Ottenheimer to take the position that
the only option appeared to be pursuing the issue in state court. Flaxman opined that “[g]iven
the potential strength of the forbearance interpretation arguments and the failure of anyone to
inform Ottenheimer of the Indemnity agreement, Ottenheimer’s position appears to have
been a reasonable judgment call under the circumstances. Again, the threat of litigation and
escalation of a dispute to a litigation posture can be an effective tool for improving upon a
settlement.”
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¶ 67 C. Trial Court Ruling
¶ 68 On December 26, 2018, the trial court entered an order granting defendants’ motions for
summary judgment. The court found that plaintiffs’ injuries flowed from defendants’ alleged
malpractice in connection with the 2009 forbearance agreement. The court found that
plaintiff became aware of their damages from the alleged malpractice in February 2012,
when they learned that the mortgage lien had been recorded and that “[t]he advice and
actions of Defendants are inseparable from the 2009 agreement.”
¶ 69 The court found that plaintiffs knew or should have known of their injury in February
2012 even if plaintiffs may not have had actual knowledge of a malpractice cause of action.
Consequently, the court found that the statute of limitations began to run in February 2012
or, at the very latest, on July 16, 2014, when plaintiff Louis Hermansen sent an e-mail asking
if they “should consider going after [Riebandt].” Therefore, the court found that plaintiffs’
August 3, 2016, complaint was time-barred under the statute of limitations. In the alternative,
the trial court also found that the case was barred by the six-year statute of repose because
the alleged malpractice occurred in 2009 in connection with the negotiation of the
forbearance agreement.
¶ 70 The court found that the statute of repose was not tolled due to equitable estoppel. The
court found that defendants did not believe that their representations were untrue and, indeed,
at least one trial judge agreed with defendants’ interpretation of the Bank of America loan
documents. Additionally, the court found that defendants did not misrepresent or conceal
material facts.
¶ 71 Finally, the court found that defendants’ advice to plaintiffs was based on errors of
judgment as to an unsettled question of law, not failure to exercise a reasonable degree of
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No. 1-19-1735
care and skill. The court found that defendants “cannot be faulted for not disclosing what
they did not believe.”
¶ 72 The court therefore found that the case was time-barred as against Riebandt and DeWald
and, by extension, was also time-barred against Ottenheimer. Consequently, the court granted
defendants’ motions for summary judgment. Plaintiffs filed a motion for reconsideration,
which was denied on May 10, 2019. On July 26, 2019, DeWald’s counterclaim for attorney
fees against plaintiffs was voluntarily dismissed, meaning that all claims against all parties
had been decided. This appeal follows.
¶ 73 ANALYSIS
¶ 74 On appeal, plaintiffs contend that the trial court erred in granting summary judgment in
favor of defendants. A trial court is permitted to grant summary judgment only “if the
pleadings, depositions, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” 735 ILCS 5/2-1005(c) (West 2018). The trial court must view
these documents and exhibits in the light most favorable to the nonmoving party. Home
Insurance Co. v. Cincinnati Insurance Co., 213 Ill. 2d 307, 315 (2004). We review a trial
court’s decision to grant a motion for summary judgment de novo. Outboard Marine Corp. v.
Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102 (1992). De novo consideration means we
perform the same analysis that a trial judge would perform. XL Specialty Insurance Co. v.
Performance Aircraft Leasing, Inc., 2019 IL App (1st) 181031, ¶ 62.
¶ 75 “Summary judgment is a drastic measure and should only be granted if the movant’s right
to judgment is clear and free from doubt.” Outboard Marine Corp., 154 Ill. 2d at 102.
However, “[m]ere speculation, conjecture, or guess is insufficient to withstand summary
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No. 1-19-1735
judgment.” Sorce v. Naperville Jeep Eagle, Inc., 309 Ill. App. 3d 313, 328 (1999). The party
moving for summary judgment bears the initial burden of proof. Nedzvekas v. Fung, 374 Ill.
App. 3d 618, 624 (2007). The movant may meet his burden of proof either by affirmatively
showing that some element of the case must be resolved in his favor or by establishing “ ‘that
there is an absence of evidence to support the nonmoving party’s case.’ ” Nedzvekas, 374 Ill.
App. 3d at 624 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). “ ‘The purpose
of summary judgment is not to try an issue of fact but *** to determine whether a triable
issue of fact exists.’ ” Schrager v. North Community Bank, 328 Ill. App. 3d 696, 708 (2002)
(quoting Luu v. Kim, 323 Ill. App. 3d 946, 952 (2001)). We may affirm on any basis
appearing in the record, whether or not the trial court relied on that basis or its reasoning was
correct. Ray Dancer, Inc. v. DMC Corp., 230 Ill. App. 3d 40, 50 (1992).
¶ 76 In the case at bar, plaintiffs contend that the trial court erred in finding that their
complaint was time-barred. Section 13-214.3 of the Code of Civil Procedure (Code) (735
ILCS 5/13-214.3 (West 2014)) sets forth the time limitations for filing a cause of action for
legal malpractice. Specifically, section 13-214.3 provides a two-year statute of limitations for
any action against an attorney arising out of an act or omission in the performance of
professional services, which begins running at the time the person filing the action “knew or
reasonably should have known of the injury for which damages are sought.” 735 ILCS 5/13-
214.3(b) (West 2014). This section “incorporates the ‘discovery rule,’ which serves to toll the
limitations period to the time when the plaintiff knows or reasonably should know of his or
her injury.” Snyder v. Heidelberger, 2011 IL 111052, ¶ 10 (citing Hester v. Diaz, 346 Ill.
App. 3d 550, 553 (2004)). In most cases, the time at which a party has or should have the
requisite knowledge under the discovery rule is a question of fact. Jackson Jordan, Inc. v.
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No. 1-19-1735
Leydig, Voit & Mayer, 158 Ill. 2d 240, 250 (1994). “However, ‘[w]here it is apparent from
the undisputed facts *** that only one conclusion can be drawn, the question becomes one
for the court,’ and can be resolved as a matter of law, making summary judgment on statute
of limitation grounds appropriate.” Castello v. Kalis, 352 Ill. App. 3d 736, 744 (2004)
(quoting Witherell v. Weimer, 85 Ill. 2d 146, 156 (1981)); see also Jackson Jordan, 158 Ill.
2d at 250 (considering statute of limitations issue on summary judgment); Golla v. General
Motors Corp., 167 Ill. 2d 353, 358-59 (1995) (same); AYH Holdings, Inc. v. Avreco, Inc., 357
Ill. App. 3d 17, 43 (2005) (same).
¶ 77 Additionally, section 13-214.3 further provides that an action for legal malpractice “may
not be commenced in any event more than 6 years after the date on which the act or omission
occurred.” 735 ILCS 5/13-214.3(c) (West 2014). The purpose of a statute of repose, as found
in section 13-214.3(c), “operates to curtail the ‘long tail’ of liability that may result from the
discovery rule.” Snyder, 2011 IL 111052, ¶ 10 (citing Sorenson v. Law Offices of Theodore
Poehlmann, 327 Ill. App. 3d 706, 708 (2002)). A statute of repose begins to run when a
specific event occurs, regardless of whether an action has accrued. Snyder, 2011 IL 111052,
¶ 10. “Thus, a statute of repose is not tied to the existence of any injury, but rather it
extinguishes liability after a fixed period of time.” Snyder, 2011 IL 111052, ¶ 10.
¶ 78 The relevant question in the case at bar is the date from which either the two-year statute
of limitations or six-year statute of repose began to run. The trial court found that all of
plaintiffs’ claims arose from the recording of the 2009 mortgage lien, and that plaintiffs
became aware of that mortgage lien by 2012 at the latest, triggering the two-year statute of
limitations. Plaintiffs, however, claim that their cause of action did not accrue until the entry
of the adverse judgment against them in 2015, making their 2016 complaint timely.
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No. 1-19-1735
¶ 79 Plaintiffs’ claims are based on the “adverse judgment rule,” as set forth in Lucey v. Law
Offices of Pretzel & Stouffer, Chtrd., 301 Ill. App. 3d 349 (1998). The court in that case
noted that “Illinois courts have frequently recognized, either expressly or implicitly, that a
cause of action for legal malpractice will rarely accrue prior to the entry of an adverse
judgment, settlement, or dismissal of the underlying action in which plaintiff has become
entangled due to the purportedly negligent advice of his attorney.” Lucey, 301 Ill. App. 3d at
356. To prevail on a legal malpractice claim, the plaintiff client must plead and prove that the
defendant attorneys owed the client a duty of care arising from the attorney-client
relationship, that the defendants breached that duty, and that as a proximate result, the client
suffered injury. Northern Illinois Emergency Physicians v. Landau, Omahana & Kopka, Ltd.,
216 Ill. 2d 294, 306 (2005). Our supreme court has explained that “[t]he 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.” Northern Illinois Emergency Physicians, 216 Ill. 2d
at 306. Thus, for purposes of a legal malpractice action, a client is not considered to be
injured until he has suffered a loss for which he may seek monetary damages, and the fact
that an attorney may have breached a duty of care is not, in itself, sufficient to sustain a cause
of action. Northern Illinois Emergency Physicians, 216 Ill. 2d at 306. “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.]”
Northern Illinois Emergency Physicians, 216 Ill. 2d at 306-07.
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No. 1-19-1735
¶ 80 The Lucey court explained: “Since it is also possible the former client will prevail when
sued by a third party, damages are entirely speculative until a judgment is entered against the
former client or he is forced to settle. When uncertainty exists as to the very fact of damages,
as opposed to the amount of damages, damages are speculative [citation], and no cause of
action for malpractice can be said to exist.” Lucey, 301 Ill. App. 3d at 355. See also Northern
Illinois Emergency Physicians, 216 Ill. 2d at 307.
¶ 81 In the case at bar, we agree that plaintiffs’ cause of action did not accrue in 2012, when
they became aware of the mortgage lien, but in 2015, when an adverse judgment was entered
against them in the Bank of America litigation. Plaintiffs have made clear that the alleged
negligent conduct for which they are seeking relief is defendants’ advice with respect to
attempting to remove the mortgage lien. They have made equally clear that they are not
seeking relief based on any error in negotiating or drafting the Bank of America documents
in 2009, nor are they seeking relief based on Ottenheimer’s failure to include the Bank of
America note and mortgage on their bankruptcy filing. 3 Indeed, Robinson’s report and
deposition testimony set forth several instances—aside from the execution of the 2009
documents—in which defendants engaged in allegedly negligent conduct. First, Robinson
opined that Riebandt owed plaintiffs a duty to inform them when he discovered in 2011 that
the mortgage lien had been recorded, so that they had the ability of addressing the lien prior
to attempting to sell their home and without the pressure of an imminent closing date.
Similarly, Robinson opined that Ottenheimer owed plaintiffs a duty to discuss the lien in
3
We note that Riebandt’s conduct in negotiating the 2009 documents does play a role in
evaluating the propriety of defendants’ later actions—for instance, Robinson opined that defendants had
an interest in resolving the dispute in a manner that did not place Riebandt’s 2009 conduct in a negative
light. We also note that plaintiffs’ complaint includes allegations that Riebandt’s 2009 conduct was
negligent. However, plaintiffs represent in their briefs that they are not seeking to hold defendants liable
for 2009 conduct.
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No. 1-19-1735
connection with the bankruptcy. Robinson opined that Ottenheimer received the information
as to the existence of the mortgage lien while he was representing plaintiffs in their
bankruptcy, where one aspect of the representation required decisions by plaintiffs as to how
to address consensual liens on their personal residence. Robinson opined that, “[b]y failing to
address the existence and significance of [the mortgage lien] in his advice to [plaintiffs],
Defendant Ottenheimer facilitated the eventual and predictable difficulty that arose when
[plaintiffs] secured a very favorable offer to purchase their home.” 4
¶ 82 Next, Robinson opined that Riebandt and DeWald had a conflict of interest when they
attempted to address the mortgage lien in connection with the sale of plaintiffs’ personal
residence in 2012. Robinson opined that Riebandt and DeWald had a duty to disclose that
they had an interest in achieving a resolution of the dispute in such a way that did not reflect
adversely on Riebandt’s handling of the initial transaction, and that there was a risk that this
interest would influence their advice to plaintiffs. Instead, Robinson opined that Riebandt and
DeWald engaged in the conflicted representation “and fell into exactly the concerns that
should have forestalled them from doing so.” Specifically, Robinson pointed to defendants’
failure to even acknowledge the possibility that Bank of America’s position could be found
4
In his petition for rehearing, Ottenheimer asks us to find that plaintiffs “sustained actionable
damages in 2012 as a result of Ottenheimer’s alleged failure to provide competent advice in 2011 when
he represented the Plaintiffs in their bankruptcy,” based on the fact that plaintiffs did not have sufficient
funds to purchase their new home in 2012 because the funds were in escrow. We note that this argument
was raised for the first time in the petition for rehearing, and so is not properly before us. Ill. S. Ct. R.
341(h)(7) (eff. May 25, 2018) (“Points not argued [in an appellate brief] are forfeited and shall not be
raised in the reply brief, in oral argument, or on petition for rehearing.”). Additionally, Ottenheimer’s
argument is based on the claim that we “conclude[d]” that defendants failed to disclose information and
that if plaintiffs had been warned sooner, they could have avoided the issue. However, we reach no
conclusion about whether defendants’ conduct was proper, but merely present Robinson’s opinion to
show that plaintiffs have alleged negligence that occurred separately from the execution of the 2009
documents. Moreover, as we note later, it was not until 2015, when plaintiffs had a judgment entered
against them, that plaintiffs incurred an injury, as before that time, plaintiffs still could have had the lien
released.
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No. 1-19-1735
to have merit and their advising plaintiffs to reject settlement offers that would have
permitted plaintiffs to retain sufficient funds from the proceeds of the sale of their personal
residence to fund the intended purchase of another home. Robinson opined that Ottenheimer
“had a less acute but similar concern” in that he failed to notice or advise plaintiffs of the
existence of the mortgage lien while handling the bankruptcy, and did not inform plaintiffs
that he could have warned them of its existence sooner or that Riebandt could have avoided
the entire issue by conditioning the documents on a successful closing.
¶ 83 Third, Robinson opined that Riebandt had a conflict of interest arising from his agency
relationship with Fidelity, and that Riebandt had a duty to inform plaintiffs of that conflict
prior to negotiating the indemnity agreement with Fidelity. Instead, Riebandt did not provide
any such information or advise them that they could seek other counsel or another title
insurer, leading plaintiffs to believe that Riebandt’s loyalty to them was uncompromised.
This resulted in Riebandt executing the indemnity agreement, which left plaintiffs bearing
the entire risk of a negative outcome, while freezing the entirety of their sale proceeds to
secure Fidelity’s interest in the transaction and permitting Fidelity unfettered authority to use
the escrowed funds to settle any claims.
¶ 84 Finally, Robinson opined that all of the defendants owed plaintiffs a duty to explain
matters to them to the extent reasonably necessary for them to be able to make informed
decisions. Robinson opined that “[i]n order to be able to make informed decisions,
[plaintiffs] needed complete and candid advice on the risks they faced and alternatives
available to them. Such advice was particular critical for purposes of allowing them to make
informed decisions as to whether to accept or reject settlement offers from [Bank of
America].” Specifically, Robinson opined that plaintiffs should have been informed as to the
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No. 1-19-1735
risk that they could lose, the full extent of their exposure should they lose, the limits of what
they could recover even if they won, and a realistic assessment of how long it could take to
secure a court ruling. Instead, “[h]aving not been warned of multiple risks, including the risk
that the representation by the Defendants would be impacted by their own interests,
[plaintiffs] blindly trusted that they would ultimately prevail until they did not.”
¶ 85 In summary, plaintiffs have identified a number of ways in which they have alleged that
defendants were negligent, even apart from the original negotiation and execution of the
2009 documents. Thus, the fact that plaintiffs learned of the existence of the mortgage lien
did not establish an injury. At that point, plaintiffs still had at least the possibility of having
the mortgage lien released, either by Bank of America voluntarily or through court action. It
was only in 2015, when there was an adverse judgment entered against them, that plaintiffs
actually incurred any injury based on the existence of the mortgage lien. Accordingly,
plaintiffs’ cause of action accrued in 2015, meaning that their 2016 complaint was not time-
barred by the two-year statute of limitations.
¶ 86 We find unpersuasive defendants’ arguments as to the statute of limitations. First,
Riebandt and DeWald claim that plaintiffs knew that they had a legal malpractice cause of
action by July 2014, when plaintiff Louis Hermansen sent an e-mail asking if they “should
consider going after [Riebandt].” However, plaintiff testified in his deposition that he sent
that e-mail because the lawsuit was not leading anywhere. He testified that he “didn’t know”
whether he meant a lawsuit against Riebandt, and “[t]hat’s why I asked [DeWald] for his
opinion as to what to do.” Plaintiff testified that, at that point, they realized that there had
been a mistake in the forbearance agreement, and “our question was what rights do we have
to try to correct this.” We cannot find that this e-mail supports defendants’ arguments as to
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No. 1-19-1735
the statute of limitations. Even assuming that plaintiff knew that there was a legal
malpractice action—which the record does not, as a matter of law, establish—plaintiff’s
testimony shows that he was expressing frustration over the mistake in the forbearance
agreement in 2009. In other words, the “legal malpractice” he was aware of would have been
Riebandt’s 2009 conduct, which plaintiffs are not claiming in the case at bar. As explained
previously, that is not the conduct for which plaintiffs are seeking to hold defendants liable.
They are seeking to hold defendants liable for defendants’ advice in handling the release of
the lien and advising plaintiffs that the lien had no legal effect whatsoever, including the
rejection of several settlement offers without explaining that their case against Bank of
America could be a case that could be lost. There is no suggestion from the e-mail that
plaintiffs recognized that the advice that they were receiving over the release of the lien was
in any way deficient. Defendants do not cite any authority to suggest that being aware of one
form of negligence triggers the statute of limitations on a different form of negligence, and
we cannot find that the presence of this e-mail did so in the case at bar.
¶ 87 Riebandt and DeWald similarly attempt to argue that the adverse judgment rule is
inapplicable by claiming that nothing about the litigation could have changed the fact that the
mortgage lien existed. As with their earlier argument, this conflates the existence of
mortgage lien with the attempts to remove the lien. However, as noted, the instant litigation
is not about what Riebandt could have done in 2009, but about what defendants did
beginning in 2012, when they began seeking the release of the lien.
¶ 88 Finally, we find unpersuasive Ottenheimer’s claim that the statute of limitations began to
run as to claims against him when plaintiffs filed their lawsuit against Bank of America in
2012. Ottenheimer claims that, when plaintiffs retained DeWald to file suit, “they were
32
No. 1-19-1735
effectively attempting to redo the services previously provided by Ottenheimer when he
unsuccessfully attempted to negotiate a release of the mortgage lien.” However, this claim is
belied by the record, which shows that the filing of the lawsuit was a step in the progression
of the case and was a step that was discussed by Ottenheimer himself. In other words,
plaintiffs were not abandoning Ottenheimer or “redo[ing]” his work—they were escalating to
the next step of filing a lawsuit. Consequently, we find that plaintiffs’ complaint was not
time-barred under the statute of limitations.
¶ 89 However, we must also consider the six-year statute of repose. As noted, a statute of
repose begins to run when a specific event occurs, regardless of whether an action has
accrued. Snyder, 2011 IL 111052, ¶ 10. In the case at bar, the trial court found that the statute
of repose was triggered in 2009, when Riebandt’s alleged negligence as to the negotiation of
the Bank of America documents occurred.
¶ 90 “ ‘The statute of repose in a legal malpractice case begins to run as soon as an event
giving rise to the malpractice claim occurs, regardless of whether plaintiff’s injury has yet
been realized.’ ” Terra Foundation for American Art v. DLA Piper LLP (US), 2016 IL App
(1st) 153285, ¶ 31 (quoting Lamet v. Levin, 2015 IL App (1st) 143105, ¶ 20). “The period of
repose in a legal malpractice case begins to run on the last date on which the attorney
performs the work involved in the alleged negligence.” Snyder, 2011 IL 111052, ¶ 18.
¶ 91 In the case at bar, the first instance of actionable negligence identified by plaintiffs
occurred in 2012, 5 when defendants began attempting to negotiate with Bank of America to
5
We note that Robinson opined that Riebandt should have informed plaintiffs about the existence
of the mortgage lien in 2011, when he first discovered it, and should have informed them of the risks of
inaction. However, plaintiffs’ claims on appeal are focused on the settlement offers and the litigation of
the lien issue, which began in 2012. Even using the 2011 date, however, would result in the statute of
repose expiring in 2017, after the 2016 filing of the complaint.
33
No. 1-19-1735
release the mortgage lien, and arguably continued through 2015, when plaintiffs agreed to
settle the litigation after the entry of an adverse judgment against them. Taking the 2012 date,
the earliest that the statute of repose would have expired was 2018, well after the filing of the
instant lawsuit. Accordingly, the statute of repose does not bar plaintiffs’ claims.
¶ 92 We find unpersuasive Riebandt and DeWald’s contention that there was a “continuous
course of representation related to a single subject matter.” Once the attempts to remove the
lien commenced in 2012, that may have been the case. However, before that point, we cannot
agree with defendants’ claim. Riebandt and DeWald represented plaintiffs in a number of
real estate-related matters, including the litigation of the other obligations on the commercial
property. The 2009 mortgage lien at issue in the instant litigation was executed and recorded
in 2009, then was not noticed again until 2011 at the earliest, when Riebandt became aware
of it. And again, plaintiffs are not seeking to recover for any 2009 conduct, but are only
alleging negligence as to the litigation of the mortgage lien, which began in 2012.
Consequently, we cannot find that the statute of repose began in 2009.
¶ 93 Furthermore, even if the statute of repose was triggered in 2009, the statute was equitably
tolled by defendants’ conduct. We find the case at bar similar to that considered by our
supreme court in Jackson Jordan. There, the defendant attorneys were retained to advise the
plaintiff client as to a matter of patent law. Jackson Jordan, 158 Ill. 2d at 243. The attorneys
gave the client incorrect information as to the presence of a previously existing patent, and
the client proceeded with its plans in light of that information. Jackson Jordan, 158 Ill. 2d at
243-44. The client later discovered a patent-infringement lawsuit against a competitor and
asked the attorneys to evaluate the impact of that litigation on the client’s use of its own
machines. Jackson Jordan, 158 Ill. 2d at 244. In a letter, one of the attorneys “assured [the
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No. 1-19-1735
client] that [the other] patent was invalid and, in addition, outlined two defenses [the client]
could assert against an infringement claim.” Jackson Jordan, 158 Ill. 2d at 245. The holder of
the other patent subsequently contacted the client, contending that the client’s machines
infringed on the patent, and the client again sought the attorneys’ advice. Jackson Jordan,
158 Ill. 2d at 245. One of the attorneys again assured the client that the machines did not
infringe on any valid patents and recommended bringing a declaratory judgment action
against the patent holder. Jackson Jordan, 158 Ill. 2d at 245. The court found in the client’s
favor as to several portions of its complaint, and the attorneys assured the client that the
favorable portions of the judgment would be affirmed on appeal. Jackson Jordan, 158 Ill. 2d
at 246. However, the patent holder prevailed on appeal and on remand to the trial court.
Jackson Jordan, 158 Ill. 2d at 246-47.
¶ 94 The client filed a legal malpractice action against the attorneys, contending that the
attorneys failed to properly examine the patent and negligently failed to advise the client that
its machines might infringe on the patent. Jackson Jordan, 158 Ill. 2d at 247. In its answer,
the attorneys raised the statute of limitations as an affirmative defense. Jackson Jordan, 158
Ill. 2d at 247. Our supreme court found that there was a question of fact as to when the
client’s cause of action accrued. Jackson Jordan, 158 Ill. 2d at 250. However, our supreme
court further found that the attorneys were equitably estopped from asserting the statute of
limitations as a defense because the delay in filing was induced by the attorneys’ actions.
Jackson Jordan, 158 Ill. 2d at 251-53. The supreme court found that, “had it not been for
defendant’s constant reassurances that no patent was infringed upon and that [the patent
holder’s] claim was without merit, plaintiff’s suit would not have been so delayed.” Jackson
Jordan, 158 Ill. 2d at 252.
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¶ 95 Our supreme court emphasized that “[i]t is not necessary that the defendant intentionally
mislead or deceive the plaintiff, or even intend by its conduct to induce delay. [Citations.]
Rather, all that is necessary for invocation of the doctrine of equitable estoppel is that the
plaintiff reasonably rely on the defendant’s conduct or representations in forbearing suit.”
(Internal quotation marks omitted.) Jackson Jordan, 158 Ill. 2d at 252. The supreme court
found:
“The law firm in this case was hired for its advice. The advice was given and the
client relied on it, allegedly to its ultimate detriment. Throughout the proceedings,
however, the client was reassured as to the soundness of its legal position. The mere
assertion of a contrary claim and the filing of a lawsuit were not, in and of
themselves, sufficiently compelling to induce the client to seek a second legal
opinion. Meritless claims and nuisance lawsuits are, after all, a fairly commonplace
occurrence. It would be a strange rule if every client were required to seek a second
legal opinion whenever it found itself threatened with a lawsuit. Moreover, in the case
at hand, the client was lulled into a false sense of security by the firm’s soothing
reassurances and advice.” Jackson Jordan, 158 Ill. 2d at 252-53.
¶ 96 In the case at bar, as in Jackson Jordan, plaintiffs sought defendants’ advice, and
defendants reassured them at every turn that their position was correct. Defendants do not
point to any evidence showing that they ever discussed the risks of litigation with plaintiffs,
including the possibility that they could lose and their exposure if they did so. In fact, during
his deposition, DeWald struggled to identify any downside to filing the lawsuit against Bank
of America, and Ottenheimer dismissed Bank of America’s initial settlement offer as a
“nonoffer,” “nonsense,” and a “nonstarter.” Additionally, defendants do not point to any
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evidence showing that they ever discussed the limits of plaintiffs’ recovery with them or that
plaintiffs were aware of how long the litigation might take. Instead, DeWald included a
request for attorney fees in the complaint against Bank of America—which he admitted at his
deposition he had no basis for including—and informed plaintiffs that they would also be
able recover the amount of money that plaintiffs spent in rent payments. Riebandt also
suggested that plaintiffs would be able to obtain “fast relief” from the court. Soothed by these
reassurances from all three attorneys involved in the matter, as Robinson opined, “[plaintiffs]
blindly trusted that they would ultimately prevail until they did not.” Consequently, even if
the statute of repose had been triggered in 2009, it was equitably tolled by defendants’
conduct.
¶ 97 We find unpersuasive defendants’ claims that equitable estoppel would not apply because
the basis of a legal malpractice action cannot also constitute the basis for equitable estoppel.
See Brummel v. Grossman, 2018 IL App (1st) 162540, ¶ 38; Koczor v. Melnyk, 407 Ill. App.
3d 994, 1000 (2011). Equitable estoppel would only be necessary to consider if the relevant
action for purposes of the statute of repose is Reibandt’s 2009 conduct that led to the
recording of the mortgage lien. Defendants’ subsequent conduct, then, in making
representations as to the validity of the lien and the chances of success in court, is not the
same conduct that gave rise to the legal malpractice. Defendants’ argument attempts to have
it both ways—arguing that the matter is barred because the actionable conduct occurred in
2009, but then also arguing that equitable estoppel does not apply because the actionable
conduct is the representations made by defendants after 2009. In the case at bar, therefore, we
find that the statute of repose was triggered no earlier than 2012, but that, even using the
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2009 date urged by defendants, the statute of repose was equitably tolled by defendants’
conduct.
¶ 98 Finally, defendants also raise several arguments not related to the statute of limitations or
statute of repose that they claim show that summary judgment was properly entered.
However, we find these arguments unpersuasive. First, defendants claim that their conduct
was shielded by the “attorney judgment rule.” Generally, an attorney cannot be held liable for
every mistake in the practice of law. Gelsomino v. Gorov, 149 Ill. App. 3d 809, 813 (1986).
“Illinois adheres to the rule that an attorney is not liable to his client for errors in judgment,
but only for failing to exercise a reasonable degree of care and skill, notwithstanding that the
exercise of that judgment may have led to an unfavorable result for the client.” Goldstein v.
Lustig, 154 Ill. App. 3d 595, 600 (1987) (citing Smiley v. Manchester Insurance & Indemnity
Co., 71 Ill. 2d 306, 313 (1978)).
¶ 99 However, 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.’ ” Gelsomino, 149 Ill. App. 3d at 814. “[M]erely characterizing an act or
omission as a matter of judgment does not end the inquiry. The issue remains as to whether
the attorney has exercised a reasonable degree of care or skill in representing his client.”
Gelsomino, 149 Ill. App. 3d at 814. “ ‘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 ***.’ ” Nelson v. Quarles & Brady, LLP, 2013 IL App (1st) 123122,
¶ 30 (quoting Brown v. Gitlin, 19 Ill. App. 3d 1018, 1020 (1974)). “Moreover, this question
of fact must generally be determined through expert testimony and usually cannot be decided
as a matter of law.” Nelson, 2013 IL App (1st) 123122, ¶ 30.
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¶ 100 In the case at bar, plaintiffs have provided the testimony of an expert who has opined that
it was not reasonable for defendants to fail to obtain plaintiffs’ informed consent in the
instant litigation. Specifically, Robinson identified a number of instances during their
representation when defendants failed to disclose information to plaintiffs that was necessary
to enable them to make informed decisions. First, in 2011, when Riebandt discovered that the
mortgage lien had been discovered but failed to inform plaintiffs or to counsel them as to the
risk of inaction. Second, when defendants began their attempts to remove the lien and
Riebandt and DeWald failed to inform plaintiffs that they had an interest in resolving the
issue in a way that did not reflect negatively on Riebandt. Third, when Ottenheimer failed to
inform plaintiffs that he had overlooked the presence of the mortgage lien when handling
their bankruptcy. Fourth, when Riebandt and DeWald failed to disclose Riebandt’s
relationship with Fidelity, leading plaintiffs to believe that Riebandt was acting with
undivided loyalty in signing the indemnity agreement. Fifth, when defendants advised
plaintiffs to reject two settlement offers without informing them of the risks of loss, their
exposure in the event of loss, the limits to their recovery if they won, and the length of time it
would take to litigate. Thus, plaintiffs have provided evidence that defendants did not
exercise a reasonable degree of care or skill in representing plaintiffs. Ottenheimer also
presented the report of an expert, Flaxman, who opined that Ottenheimer’s conduct in
addressing the lien did not violate the standard of care. While we note that Flaxman’s report
did not address Robinson’s contention that Ottenheimer violated the standard of care by
failing to inform plaintiffs of the risks of their course of conduct, at a minimum, there is a
question of fact as to the propriety of defendants’ conduct. In the presence of this question of
fact, we cannot find that summary judgment on this basis is appropriate.
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¶ 101 Finally, Ottenheimer argues that summary judgment was appropriate as to the claims
against him because his conduct was not the proximate cause of plaintiffs’ injuries, since his
involvement ended at the time the litigation commenced. However, we do not find persuasive
Ottenheimer’s attempts to distinguish his conduct from that of Riebandt or DeWald.
“Generally, the issue of proximate causation raises an issue of fact, except where reasonable
men cannot disagree.” Gelsomino, 149 Ill. App. 3d at 815 (citing Ney v. Yellow Cab Co., 2
Ill. 2d 74, 84 (1954)). Plaintiffs have alleged that Ottenheimer was involved in advising
them—at a minimum—in 2011, when he handled their bankruptcy, and in 2012, when he
reached out to Bank of America. His advice with respect to the latter steered plaintiffs toward
filing their lawsuit against Bank of America and toward rejecting the initial settlement offer.
Plaintiffs also allege that Ottenheimer was involved in conversations concerning their claims
as late as 2015. The depositions of all parties confirm his involvement in attempting to
address the mortgage lien.
¶ 102 Additionally, Robinson identified several instances in which Ottenheimer’s conduct
specifically—apart from the other defendants—was problematic. For instance, Robinson
opined that Ottenheimer failed to notice or advise plaintiffs of the existence of the mortgage
lien during the bankruptcy proceedings, at a time when they could have addressed the issue
without the pressure of a closing date. Ottenheimer also never informed plaintiffs that he
could have warned them sooner or that the issues with the mortgage lien could have been
avoided by Reibandt in 2009. More problematically, Ottenheimer specifically characterized
the first settlement offer by Bank of America as “nonsense” and a “non-starter,” without
explaining the risks of rejecting the offer, and did not familiarize himself with the entirety of
plaintiffs’ file, including the existence of the indemnity agreement, which he testified would
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have changed his advice. Robinson also opined that the conduct of all three defendants led
plaintiffs to believe that defendants were adequately representing their interests and that
plaintiffs relied on all three defendants coordinating with each other. While the parties may
dispute the extent of Ottenheimer’s involvement or the consequences of that involvement,
that is a decision for the trier of fact, not for disposition on summary judgment. Accordingly,
we find that the trial court erred in granting summary judgment in defendants’ favor.
¶ 103 CONCLUSION
¶ 104 For the reasons set forth above, the trial court erred in granting summary judgment in
defendants’ favor. First, plaintiffs’ complaint was not barred by the two-year statute of
limitations, where their cause of action for legal malpractice did not accrue until the 2015
entry of an adverse judgment against them. Additionally, plaintiffs’ complaint was not barred
by the six-year statute of repose, where the first act of actionable negligence occurred in 2012
and the last act of negligence occurred in 2015.
¶ 105 Reversed and remanded.
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