Vandenberg v. RQM, LLC

2020 IL App (1st) 190544

177 N.E.3d 718

448 Ill.Dec. 662

Scot VANDENBERG and Patricia Vandenberg, Plaintiffs-Appellees,

v.RQM, LLC; Brunswick Corporation; and Brunswick Boat Group, a Division of Brunswick Corporation, Defendants,

(McNabola Law Group, P.C., Appellant).

No. 1-19-0544

Appellate Court of Illinois, First District, SIXTH DIVISION.

June 26, 2020

Edward W. Feldman and Mary Eileen Cunniff Wells, of Miller Shakman Levine & Feldman LLP, of Chicago, for appellant.

Joseph A. Power Jr., James I. Power, and Joseph W. Balesteri, of Power Rogers & Smith, L.L.P., and John B. Kralovec and Joseph M. Conboy, of Kralovec, Jambois & Schwartz, both of Chicago, for appellees.

PRESIDING JUSTICE MIKVA delivered the judgment of the court, with opinion.

¶ 1 Appellant, McNabola Law Group, P.C. (MLG), appeals the circuit court's order granting plaintiffs Scot Vandenberg and Patricia Vandenberg's motion to adjudicate attorney liens. The circuit court adjudicated those liens to zero dollars, effectively extinguishing the liens and denying MLG's petition for fees and expenses outright. On appeal, MLG contends that the circuit court erred because (1) under the theory of quantum meruit , MLG is legally entitled to fees equal to one-third of the settlement amount (less the amount, based on hours expended and a reasonable hourly rate, that should be awarded to the Vandenbergs' new counsel) and (2) neither the fact that MLG was discharged for cause nor the circuit court's finding that the firm breached its fiduciary duties to the Vandenbergs provided a legal basis for forfeiture of the fees MLG was otherwise entitled to. MLG also argues that there was no basis for the circuit court to deny the properly documented expenses it incurred in this case and additionally seeks payment of $111,715.47 that it claims it is still owed for settlement of the Vandenbergs' claim against RQM, LLC (RQM). For the following reasons, we affirm but modify the order of the circuit court to include both an award of expenses and payment of the $111,715.47 from the RQM settlement to MLG.

¶ 2 I. BACKGROUND

¶ 3 MLG's fee request is for work performed while the firm represented the Vandenbergs in their negligence and strict liability action against defendants Brunswick Corporation and Brunswick Boat Group (collectively, Brunswick), and RQM. A history of the litigation is included in our opinion resolving an earlier appeal in this case. See Vandenberg v. Brunswick Corp. , 2017 IL App (1st) 170181, 418 Ill.Dec. 559, 90 N.E.3d 1048. We will set out those facts that are relevant to this appeal.

¶ 4 A. MLG's Retainer Agreement

¶ 5 In September 2010, the Vandenbergs retained MLG (known at the time as Cogan & McNabola, P.C.) to represent them. The firm's retainer agreement provided that, as compensation for its services, MLG would receive a contingency fee of 33.33% of the monies recovered if the case settled before a lawsuit was filed and 40% if a lawsuit was filed or if the case was sent to arbitration. It provided that the Vandenbergs would pay actual expenses incurred by the firm, "regardless of the outcome of the cause." The agreement also provided as follows:

"In the event that I request COGAN & MCNABOLA, P.C. to withdraw as my attorney prior to the resolution of my claim, suit, settlement, or otherwise, I hereby agree to pay COGAN & MCNABOLA, P.C., at the rate of four hundred fifty dollars ($450.00) per hour or their customary hourly rate for the time which they have spent in connection with my claim, or thirty-three and one-third percent (33 1/3%) of the amount being offered by parti(es) responsible and or their insurers at the time of request to withdraw, whichever is greater."

¶ 6 B. Events Preceding MLG's Termination

¶ 7 Scot Vandenberg was seriously injured when he fell from the upper deck of a yacht and broke his neck. The accident rendered him a quadriplegic. Brunswick manufactured the yacht, and RQM owned and operated it. The Vandenbergs settled with RQM and proceeded to trial only against Brunswick.

¶ 8 On June 9, 2015, after a three-week trial, the parties presented closing arguments, and the case was submitted to the jury. While the jury deliberated, Brunswick's representative, Charles Patitucci, extended to Mr. McNabola an offer to settle the Vandenbergs' claims for $25 million. Mr. McNabola informed the Vandenbergs of the offer, and at 3:40 p.m. the Vandenbergs told Mr. McNabola to accept it.

¶ 9 At 3:52 p.m., before Mr. McNabola informed Brunswick of the Vandenbergs' acceptance, he received a call from Tatianna Agee, Judge Elizabeth M. Budzinski's clerk. Ms. Agee told Mr. McNabola that the jury had sent out a note asking "CAN WE FIND FAULT WITH RQM, WITHOUT FINDING FAULT WITH BRUNSWICK?" Brooke Reynolds, a student extern for Judge Budzinski, was in the room when Ms. Agee made the call. Ms. Reynolds overheard Ms. Agee disclose the contents of the note in a hushed voice. Ms. Agee explained to Ms. Reynolds that she wanted to "give the Vandenbergs a little more of an opportunity to settle or figure the question out before the defense." Ms. Agee said that Mr. McNabola told her the answer to the jury's question was "no," but to "hold-off, don't do anything yet, I'm going to try to settle this."

¶ 10 Mr. McNabola, after trying unsuccessfully to reach Mr. Patitucci, spoke again to Ms. Agee at around 4:01 p.m., telling her that he could not get a hold of the person he needed to speak to about the settlement. He asked for further instructions and Ms. Agee told him that Judge Budzinski wanted the parties to return to court. Mr. McNabola called Brunswick's lead counsel, John Patton, and asked for Mr. Patitucci's cell phone number. He did not tell Mr. Patton that the jury had submitted a note, or that Ms. Agee had told him of the note's contents. Mr. McNabola reached Mr. Patitucci at 4:03 p.m. and—after learning that Mr. Patitucci's authority to settle was limited to the $25 million he had previously offered—accepted the offer. Mr. Patitucci gave no indication that he knew of the jury note or its contents. At 4:11 p.m., Mr. Patitucci called Mr. Patton and informed him of the settlement.

¶ 11 At 4:19 p.m., Ms. Agee called Mr. Patton and informed him that Judge Budzinski wanted the parties to come to court to discuss the jury note. This was the first Mr. Patton had heard of the jury note. Mr. Patton called Mr. Patitucci and told him that he would have someone "check into [the note]." This was also the first time Mr. Patitucci had heard of the note, and although he did not want to revoke the settlement based only on the fact that the jury sent out a note, he wanted to find out "[a]nything and everything about the note."

¶ 12 At approximately 4:40 p.m., Judge Budzinski informed the parties that the jury had sent out a note "at approximately 3:50 p.m." and she was surprised it took counsel so long to return to court after being notified. All counsel present viewed the jury note and its contents, including a handwritten notation that the note was "Rec'd 3:50 p.m." At 4:45 p.m. Mr. Patitucci was informed of the contents of the note and he called Mr. Patton. At 4:50 p.m., the settlement was entered on the record in the presence of counsel and the case was dismissed.

¶ 13 Defense counsel requested that the jury be allowed to deliberate to verdict. Judge Budzinski instructed the jury to continue deliberations according to the instructions already given. The jury reached a verdict in favor of Brunswick at approximately 5 p.m. At this time, Mr. Patton asked to speak with Judge Budzinski and informed her that the settlement had occurred without him having knowledge of the jury's note. Only later did he learn of Ms. Agee's call to Mr. McNabola prior to the settlement. Mr. Patton requested an evidentiary hearing and the preservation of phone records and court materials. On June 12, 2015, Brunswick filed a motion to vacate the settlement on the grounds that it had been procured by fraud and mistake and for judgment to instead be entered on the jury's verdict.

¶ 14 Judge Budzinski recused herself and Judge Daniel J. Lynch was assigned to the case. MLG retained C. Barry Montgomery from the firm of Williams Montgomery & John to represent the Vandenbergs at this hearing. Although they were later waived, MLG originally attempted to treat the almost $600,000 in legal fees incurred by Mr. Montgomery and his firm as expenses chargeable to the Vandenbergs. MLG did not suggest to the Vandenbergs that they should retain or consult with independent counsel at this point or make them aware of any potential conflict between MLG and the Vandenbergs.

¶ 15 Judge Lynch held an evidentiary hearing on Brunswick's motion and, on January 19, 2016, issued an oral opinion rescinding the settlement agreement. He found that "[t]here [was] absolutely no dispute between the parties in this matter as to what Ms. Agee did or failed to do between 3:50 p.m. and 4:19 p.m. with the note and its contents." He also found that Ms. Agee was "clearly not a credible witness" when she denied she saw the jury note or that she revealed its contents to Mr. McNabola at 3:52 p.m. He found no agreement or conspiracy between Mr. McNabola and Ms. Agee.

¶ 16 The court vacated the settlement on the grounds of fraud in the inducement, unilateral and mutual mistake, an absence of due process, and public policy. The jury that reached a verdict for the defense on June 9, 2015, was reconvened, and the jurors confirmed that they had reached a unanimous verdict in favor of Brunswick. At the hearing on Brunswick's motion to enter judgment on the verdict, the court found that the parties did not dispute "that the Vandenbergs did form the intent to accept this $25 million offer sometime around or shortly immediately after 3:40 p.m. Certainly neither side disputes the fact that they formed this intent to accept it prior to the 3:50 p.m. note perhaps, but certainly prior to the 3:52 phone call between Ms. Agee and Mr. McNabola." Although it found that...