Suburban Real Estate Servs., Inc. v. Carlson

2022 IL 126935

193 N.E.3d 1187

456 Ill.Dec. 779

SUBURBAN REAL ESTATE SERVICES, INC., et al., Appellees,

v.William Roger CARLSON Jr. et al., Appellants.

Docket No. 126935

Supreme Court of Illinois.

Filed January 21, 2022.

John J. D'Attomo, of Nisen & Elliott, LLC, of Chicago, for appellants.

John W. Moynihan, of Cooney Corso & Moynihan LLC, of Downers Grove, for appellees.

Michael L. Shakman, Diane F. Klotnia, Zachary J. Freeman, and Alexandra K. Block, of Miller Shakman Levine & Feldman LLP, of Chicago, for amicus curiae Attorneys’ Liability Assurance Society Ltd.

JUSTICE THEIS delivered the judgment of the court, with opinion.

¶ 1 In this case, we consider whether a legal malpractice claim was barred by the two-year statute of limitations in section 13-214.3(b) of the Code of Civil Procedure ( 735 ILCS 5/13-214.3(b) (West 2016)). The Cook County circuit court found that the limitations period on the claim had expired because plaintiffs’ payment of attorney fees to new counsel constituted an injury triggering the statute. The appellate court reversed, finding that no realized injury that would trigger the limitations period existed until there was an adverse judgment in the underlying action. 2020 IL App (1st) 191953, 450 Ill.Dec. 697, 182 N.E.3d 143. For the following reasons, we affirm the appellate court's judgment.

¶ 2 BACKGROUND

¶ 3 Bryan Barus is the principal and sole owner of Suburban Real Estate Services, Inc. (Suburban), a commercial real estate management company (collectively plaintiffs). In February 2006, Suburban and another company, ROC, owned by Michael Siurek, formed a new company named ROC/Suburban LLC (ROC/Suburban). The new company acted as a vendor to Suburban, supplying commercial property management services. Under the operating agreement, Suburban and ROC each owned a 50% interest in ROC/Suburban.

¶ 4 In May 2010, Barus retained William Roger Carlson Jr. and his law firm Carlson Partners, Ltd., (collectively defendants) for legal advice in unwinding Suburban's relationship with ROC/Suburban. After obtaining defendants’ assistance, Barus sent a "break-up" letter to Siurek, notifying him of the steps he planned to take to terminate Suburban's relationship with ROC/Suburban.

¶ 5 In August 2010, ROC sued Suburban, alleging that the actions taken by Suburban, by and through Barus, pursuant to the "break-up" letter constituted a breach of fiduciary duty owed to ROC/Suburban. In October 2010, Barus retained the law firm of Gaspero & Gaspero, Attorneys at Law, P.C. (Gaspero Law Firm), to defend Suburban in the ROC litigation.

¶ 6 In June 2015, after a bench trial, the trial court entered judgment for ROC. The court found that Suburban, through Barus, had breached its fiduciary duties and ordered it to pay ROC 50% of the fair value of the assets that Barus had improperly transferred out of ROC/Suburban. The court awarded damages against Suburban in the amount of $336,652.26.

¶ 7 Thereafter, in May 2016, plaintiffs filed a legal malpractice action against defendants. In their first amended complaint, they alleged that defendants were negligent in that they failed to properly advise plaintiffs of the proper steps to obtain a judicial dissolution of ROC/Suburban, recommended and/or approved the self-help actions that resulted in plaintiffs breaching fiduciary duties owed to ROC/Suburban, and failed to advise them of the consequences of these actions. They further alleged that, as a direct and proximate result of defendants’ negligence, they suffered damages in excess of $600,000.

¶ 8 Defendants moved for summary judgment pursuant to section 2-1005 of the Code of Civil Procedure ( 735 ILCS 5/2-1005 (West 2018) ), asserting that the legal malpractice claim was barred by the two-year statute of limitations ( 735 ILCS 5/13-214.3(b) (West 2018)). They argued that the plaintiffs sustained an injury resulting from defendants’ alleged negligence beginning in November 2010, when they retained new counsel and began paying them attorney fees. Defendants argued plaintiffs knew they were injured in April 2013 at the latest, when the trial judge in the underlying action told plaintiffs’ new counsel that a malpractice action was a certainty and when plaintiffs sought advice about whether a malpractice claim should be filed.

¶ 9 In support, defendants attached various exhibits, including the deposition testimony of both Carmen and Lisa Gaspero of the Gaspero Law Firm. According to their testimony, at a pretrial settlement conference in April 2013, the trial judge made it clear to Carmen and Lisa Gaspero that he would likely find Barus liable for breach of fiduciary duty if the ROC lawsuit went to trial. The court also voiced its belief that the attorney representing Barus in June 2010 "one hundred percent" committed malpractice. After the pretrial conference, the Gasperos consulted with a lawyer specializing in legal malpractice claims to evaluate a potential claim against defendants. That lawyer advised them to wait until the ROC litigation was resolved to file a claim.

¶ 10 Based on this evidence, defendants argued that plaintiffs knew or should have known of their injury and that it was caused by the alleged negligence of defendants no later than April 2013. Accordingly, defendants maintained that this action, commenced in May 2016, was barred because it was brought more than two years after the statute of limitations began to run.

¶ 11 In response, plaintiffs argued that, if Suburban had prevailed in the underlying lawsuit, defendants’ advice could not have caused any pecuniary injury. Thus, plaintiffs maintained that the cause of action did not accrue until June 2015, when a judgment was entered in the underlying litigation in favor of ROC.

¶ 12 The trial court granted summary judgment in favor of defendants, finding that plaintiffs had notice of the malpractice claim as early as 2010, when ROC filed the underlying lawsuit, and no later than April 2013, when the trial judge told counsel that plaintiffs’ malpractice action was a certainty and when counsel sought advice as to when a malpractice action should be filed.

¶ 13 The appellate court reversed and remanded, finding that plaintiffs timely filed their legal malpractice claim. 2020 IL App (1st) 191953, ¶¶ 34, 36, 450 Ill.Dec. 697, 182 N.E.3d 143. The court reasoned that plaintiffs did not suffer a realized injury until the trial court found a breach of fiduciary duty and entered a judgment against them in June 2015. Id. ¶ 26. The court further rejected defendants’ theory that plaintiffs’ payment of attorney fees purportedly related to defendants’ negligent advice constituted an injury, triggering the statute of limitations. Id. ¶¶ 27-32. We subsequently allowed defendants’ petition for leave to appeal. Ill. S. Ct. R. 315 (eff. Oct. 1, 2020). Additionally, we allowed the Attorneys’ Liability Assurance Society Ltd. to file an amicus curiae brief in support of defendants’ position. Ill. S. Ct. R. 345 (eff. Sept. 20, 2010).

¶ 14 ANALYSIS

¶ 15 The issue before this court is whether summary judgment in favor of defendants was appropriate because plaintiffs’ legal malpractice claim was time-barred under section 13-214.3(b) of the Code of Civil Procedure ( 735 ILCS 5/13-214.3(b) (West 2016)). Summary judgment is proper when "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). Summary judgment can aid in the expeditious disposition of a lawsuit, but it is a drastic measure and should be allowed only "when the right of the moving party is clear and free from doubt." Purtill v. Hess , 111 Ill. 2d 229, 240, 95 Ill.Dec. 305, 489 N.E.2d 867 (1986). Our standard of review is de novo. Cohen v. Chicago Park District , 2017 IL 121800, ¶ 17, 422 Ill.Dec. 869, 104 N.E.3d 436.

¶ 16 Section 13-214.3(b) provides that a claim for legal malpractice accrues when the client "knew or reasonably should have known of the injury for which damages are sought." ( 735 ILCS 5/13-214.3(b) (West 2018)). Thus, to discern when a claim accrues, we identify the injury and then determine when the injury was discovered or should have been discovered. Id. Much of the parties’ disagreement in this case stems from a misunderstanding of the nature of the injury in a legal malpractice claim. Accordingly, we begin our analysis by explaining what is meant by "injury" in the context of a legal malpractice claim.

¶ 17 The "injury" in a legal malpractice claim is not a personal injury or the attorney's negligent act. "Rather, it is a pecuniary injury to an intangible property interest caused by the lawyer's negligent act or omission." Northern Illinois Emergency Physicians v. Landau, Omahana & Kopka, Ltd. , 216 Ill. 2d 294, 306, 297 Ill.Dec. 319, 837 N.E.2d 99 (2005). Thus, in a legal malpractice action, a client is not considered "injured" unless and until he has suffered a loss for which monetary damages may be sought. Id. No action can be sustained against the attorney unless that negligence proximately caused damage to the client. Id. at 306-07, 297 Ill.Dec. 319, 837 N.E.2d 99.

¶ 18 "The existence of actual damages is therefore essential to a viable cause of action for legal malpractice." Id. at 307, 297 Ill.Dec. 319, 837 N.E.2d 99. "Unless the client can demonstrate that he has sustained a monetary loss as the result of some negligent act on the lawyer's part, his cause of action cannot succeed." Id. Demonstrating the existence of damages requires "more than supposition or conjecture," and where damages are speculative, no cause of action for malpractice exists. Id.

¶ 19 This court has often applied this legal framework to ascertain when a cause of action accrues in the typical case, where an attorney's negligence allegedly occurred during the attorney's representation of a client in underlying litigation. As this...