2020 IL App (1st) 180174-U

No. 1-18-0174 

Order filed May 22, 2020

Fifth Division

NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as 

precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).

______________________________________________________________________________ 

IN THE

APPELLATE COURT OF ILLINOIS

FIRST DISTRICT

______________________________________________________________________________ 

HILCO CAPITAL, LP, 

Plaintiff-Appellant, 

 v. 

BRYAN CAVE, LLP; TERENCE J. THUM; MARK G. 

STINGLEY,;BRAGAR WEXLER EAGEL & SQUIRE, 

LLP; LAWRENCE P. EAGEL; THE FRANKLIN LAW 

FIRM; THOMAS M. FRANKLIN; KIRBY 

MCINERNEY, LLP; and JEFFREY H. SQUIRE,

Defendants,

(Bryan Cave, LLP and Terrence J. Thum, DefendantsAppellees). 

)

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Appeal from the

Circuit Court of 

Cook County. 

No. 10 L 13008 

Honorable 

Brigid McGrath, 

Judge, Presiding. 

JUSTICE HALL delivered the judgment of the court. 

 Presiding Justice Hoffman and Justice Delort concurred in the judgment. 

ORDER

¶ 1 Held: We affirm where the trial court properly found that: (1) plaintiff’s initial complaint 

was filed within the statute of limitations when it was filed within two years of the 

final ruling in the Delaware case; (2) plaintiff’s recoverable damages were limited

to what it would have been entitled to recover in the Delaware case; (3) plaintiff’s 
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count II in its third amended complaint raised a new cause of action that was timebarred; (4) plaintiff’s recoverable damages were properly reduced to account for 

the allocation of proceeds agreement in the 2005 settlement agreement; and (5) 

plaintiff failed to raise a genuine issue of material fact as to proximate cause and 

summary judgment was warranted. 

¶ 2 Plaintiff Hilco Capital, LP filed a legal malpractice action against defendants Bryan Cave, 

LLP (Bryan Cave), Terence J. Thum (Thum), Mark G. Stingley (Stingley) , Bragar Wexler Eagel

& Squire, LLP (Bragar Wexler), Lawrence P. Eagel (Eagel), The Franklin Law Firm (Franklin 

Law), Thomas M. Franklin (Franklin), Kirby McInerney, LLP (Kirby McInerney), and Jeffrey H. 

Squire (Squire) in November 2010 to recover damages for allegedly negligent legal advice. During 

the course of the proceedings over the span of several years, all defendants were dismissed except 

defendants Bryan Cave and Thum. The circuit court subsequently granted summary judgment in 

January 2018 in favor of Bryan Cave and Thum on plaintiff’s third amended complaint, and 

plaintiff appeals. 

¶ 3 On appeal, plaintiff contends that the circuit court erred when it: (1) partially granted 

defendants’ section 2-619(a)(5) (735 ILCS 5/2-619(a)(5) (West 2012)) motion to dismiss

plaintiff’s complaint and found that plaintiff’s damages were limited to the amount it would have 

recovered under the settlement agreement if such agreement had been enforceable in full on July 

26, 2013; (2) partially granted defendants’ motion to strike count II of plaintiff’s third amended 

complaint which alleged that defendants failed to disclose a conflict of interest on May 12, 2016; 

(3) partially granted defendants’ summary judgment motion and found that its recoverable 

damages were limited to $3.34 million and rejected plaintiff’s supplemental damages disclosure 
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on March 9, 2017; and (4) granted defendants’ renewed motion for summary judgment as to 

proximate cause on January 11, 2018. For the reasons set forth herein, we affirm.1

¶ 4 I. BACKGROUND

¶ 5 Plaintiff’s complaint alleged legal malpractice against defendants based on events which 

occurred in two prior cases, the Payless litigation in Missouri (the underlying case), and the 

declaratory judgment action in Delaware (the Delaware case). Plaintiff is a Delaware limited 

partnership that does business in the state of Illinois, Bryan Cave is an Illinois limited partnership, 

and Thum was an attorney employed by Bryan Cave in its Kansas City, Missouri office.2

¶ 6 A. The Payless Litigation-Factual Background 

¶ 7 Payless Cashways (Payless) was a publicly traded company that operated home 

improvement stores in the United States, and Congress Financial Corporation (Congress) was a 

financial institution that provided financing to Payless under a Loan and Security Agreement dated 

November 17, 1999, (the credit agreement). Under the credit agreement, Congress made funds 

available to Payless according to a formula based on a percentage of reported costs of Payless’ 

merchandise inventory as certified to Congress on daily or weekly certifications provided by 

Payless Chief Financial Officer, Robert Witaszak. 

¶ 8 Plaintiff joined Congress in providing funding to Payless on or about January 31, 2001, 

based on its review of the daily certifications that Payless had previously provided to Congress.

On or about that date, plaintiff and Payless entered into a junior secured credit facility (the junior 

1

 This case was fully briefed on March 5, 2019, and assigned to the authoring justice’s inventory 

of cases on February 21, 2019. The authoring justice first circulated a proposed disposition to Justice 

Hoffman and Justice Delort on May 14, 2020. 

2

 The other defendants were also individual attorneys or law firms that were part of the 

proceedings in the underlying case. 
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credit agreement) for $15 million, funded by plaintiff, repayable as follows: $2 million on June 

15, 2001, $3 million on June 29, 2001, $4 million on July 13, 2001, and $6 million on July 27, 

2001. Plaintiff did not clarify in its pleadings how that relationship was formed. 

¶ 9 Unknown to plaintiff, Payless was within the “zone of insolvency” beginning in December 

2000, but failed to disclose it to either Congress or plaintiff. On or about June 4, 2001, prior to 

making any payments to plaintiff under the junior credit agreement, Payless filed a voluntary 

Chapter 11 petition for reorganization in the United States Bankruptcy Court for the Western 

District of Missouri. 

¶ 10 In approximately 2002 or 2003, plaintiff retained defendants Bryan Cave and Thum to 

pursue claims and file a lawsuit in Missouri against the officers of Payless, including claims for 

negligent misrepresentation, breach of fiduciary duty and fraud.3

 Thum was presented to plaintiff 

by Bryan Cave as an expert on Missouri insurance law. Subsequently, Eagel, Bragar Wexler, 

Bryan Cave and Thum jointly filed the underlying case as lead counsel on plaintiff’s behalf in the 

United States District Court for the Western District of Missouri, Western Division (case number 

03-0390-CV-W-NKL). They represented plaintiff throughout the underlying case, including at 

the time of the settlement and thereafter in other litigation. 

¶ 11 During discovery, plaintiff learned that Payless was insured under three separate $10 

million layers of insurance coverage for a total of $30 million. AIG was the primary insurer that 

provided the first $10 million layer of coverage, whose limit of liability was reduced by the cost 

of defense applicable to the underlying case. Federal Insurance Company (Federal) was the insurer 

3 The other defendants, who were additional attorneys and law firms, were subsequently added 

over the course of the litigation. 
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for the first layer of excess coverage of $10 million and Twin Cities was the insurer for the second 

layer of excess coverage. 

¶ 12 Plaintiff, represented by defendants Eagel, Bragar Wexler, Thum and Bryan Cave, filed a 

motion for partial summary judgment in the underlying case on the issues of whether Payless’

senior officers were negligent in permitting Payless to misrepresent the amount of merchandise 

inventory to plaintiff and whether they breached fiduciary duties to plaintiff. Additionally, 

plaintiff, through counsel, made an aggregate demand for the Payless parties to settle the 

underlying case for the remaining limits available under the primary insurance policy and the two 

excess policies. 

¶ 13 While plaintiff’s motion for partial summary judgment was pending in the underlying case, 

the parties agreed to attempt settlement, however, only AIG participated in the mediation. The 

mediator suggested a conditional “high-low” settlement wherein the low portion of the settlement 

would be within AIG’s layer of coverage, and the high portion of the settlement would be within 

the excess insurers’ layers of coverage. Conditional access to the excess insurers’ coverage would 

be based on later arbitration where the arbitrator would be asked to determine a single “yes or no” 

question. If the arbitrator answered yes, a consent judgment would be entered in favor of plaintiff 

and Congress in the amount of the higher settlement amount; if the arbitrator answered no, plaintiff 

and Congress would keep the lower settlement amount. 

¶ 14 According to plaintiff, Thum advised it that pursuant to a specific Missouri practice and 

procedure, Federal did not need to consent to the high-low settlement and would be required to 

pay the full balance of any settlement amount above AIG’s eroding limits policy. Further, Thum 

advised that plaintiff would be able to compel Federal to pay the settlement amount if plaintiff 
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received an arbitration finding in its favor as long as the policy applied, the settlement amount was 

reasonable, and the settlement was non-collusive. 

¶ 15 Counsel further advised plaintiff regarding whether it should agree to the conditional 

settlement and release Payless from all liability and reiterated that Federal need not participate in 

the mediation to be bound by any settlement agreement with Payless. The settlement was 

conditioned on the approval of the parties and AIG, but not the approval of any excess insurer. 

¶ 16 After the mediation, on the affirmative advice and recommendation of Thum and Eagel, 

plaintiff conditionally agreed to the financial terms and wording of a potential settlement 

agreement for all claims in the underlying case as discussed during mediation. Plaintiff’s counsel 

subsequently drafted proposed settlement agreements in the underlying case, with the final version 

being accepted on January 4, 2005, and a court-mandated settlement conference before a federal 

magistrate judge was scheduled for the following day. By letter dated January 3, 2005, to plaintiff 

and copied to Thum, Eagel advised plaintiff that if it prevailed in the arbitration, it would receive 

a net amount of 46.4% of the total amounts recovered against Payless. 

¶ 17 Plaintiff subsequently executed the settlement agreement prepared by Thum and Eagel and 

settled the underlying case without Federal’s consent to the settlement, and the final settlement 

was memorialized in a Memorandum of Understanding (MOU) dated January 4, 2005, which was 

also prepared by Thum and Eagel. The settlement became binding on plaintiff as of the date of 

execution, even though Federal had not participated in the mediation or consented to the 

settlement. 

¶ 18 Plaintiff did not participate in the January 5, 2005, settlement conference before the federal 

magistrate judge because Thum and Eagel did not advise it to participate. At the conference, it
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was disclosed that Payless had demanded that AIG tender its full policy limits because of the 

likelihood of an adverse judgment in an amount that would have exceeded the available insurance 

limits for the first layer of coverage. Additionally, plaintiff was unaware that the Missouri practice 

and procedure rule upon which Thum and Eagel based their advice applied to duty-to-defend 

claims under Comprehensive General Liability insurance covering bodily injury and property 

damage, but not to Directors & Officers insurance covering the claims against Payless in the 

underlying case. Plaintiff was never advised to secure independent counsel since plaintiff and 

Congress were each seeking damages from the same layers of Payless’ insurance and plaintiff’s 

damages were greater than Congress’. Further, plaintiff was never advised that Federal needed to 

be given a reasonable opportunity to participate in the settlement process in order to be bound by 

the terms of any settlement agreement with Payless. Nor was plaintiff advised that Federal could 

avoid paying under the settlement agreement if it could establish that it had not unreasonably 

withheld its consent to the settlement because it was not given a reasonable opportunity to 

participate in the settlement. 

¶ 19 After the settlement agreement was entered in court, the matter proceeded to arbitration on 

the question of whether Payless’s senior officers and directors knew or should have known that 

the certifications were false. At the arbitration hearing, Payless stipulated that the certifications 

were false and admitted that when the certifications were presented to plaintiff and Congress, two 

high-level Payless employees knew or should have known that they were false. The arbitration 

subsequently resulted in a finding in favor of plaintiff and Congress. 

¶ 20 Under the previously executed MOU, the Payless officers and directors agreed to confess 

judgment and consent to the entry of judgment in the amount of $15.5 million plus interest in the 
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amount of 3.365%. The MOU further provided that Payless would assign all rights it had under 

the Federal policy to plaintiff and Congress, and that Payless would cooperate in follow-up 

proceedings against Federal seeking indemnification for the unsatisfied portion of the judgment. 

¶ 21 Subsequent to entry of the judgment, AIG paid its remaining limits of coverage, but Federal 

refused to pay the balance owed under the judgment. 

¶ 22 B. The Delaware Case 

¶ 23 Federal filed a declaratory action for coverage against plaintiff in Delaware (case number 

06C2248), the Delaware case, in which it sought a declaration that it did not have an obligation to 

cover any portion of the judgment in the underlying case. Thum did not represent plaintiff in the 

Delaware case. 

¶ 24 On November 20, 2008, a jury in the Delaware case found that Federal did not 

unreasonably withhold its consent to the Payless settlement in the underlying case, and that Payless 

breached the policy by settling before Federal decided whether it would consent to the settlement. 

Had the jury found in plaintiff’s favor, it would have been entitled to $7,233,542.15 plus postjudgment interest from May 18, 2005. 

¶ 25 Plaintiff appealed the judgment in the Delaware case, but the judgment was affirmed on 

August 10, 2009. Hilco Capital, L.P. v. Federal Ins. Co., 978 A.2d 174 (Del. 2009). The Delaware 

Supreme Court determined that Federal had not breached the policy and affirmed the jury’s 

determination that Payless breached the policy. Additionally, the court found as a matter of law 

that contrary to defendants’ advice to plaintiff, Federal had no obligation under the law applicable 

to the underlying case to pay any portion of the judgment. The court concluded that Federal had 

been willing to negotiate, but was precluded from participating in the January 5, 2005, settlement 
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conference because the settlement agreement had been executed the day before; AIG had not 

tendered its full policy limits, thereby not triggering Federal’s excess coverage; Federal’s consent 

was required before it could be bound to the terms of the settlement and judgment; Federal had not 

consented to the settlement agreement; and its consent was not unreasonably withheld. 

¶ 26 C. The Legal Malpractice Case 

¶ 27 Plaintiff filed its initial legal malpractice complaint against the multiple defendants on 

November 15, 2010, in the circuit court of Cook County. All of the defendants filed combined 

motions to dismiss under sections 2-615 (735 ILCS 5/2-615 (West 2010)) and 2-619 (735 ILCS 

5/2-619 (West 2010)) of the Code of Civil Procedure (Code). The defendants’ section 2-615 

motions were granted on July 25, 2011, and plaintiff was granted leave to file its amended 

complaint by September 6, 2011, which it filed on August 29, 2011. 

¶ 28 Defendants again filed motions to dismiss plaintiff’s complaint, and the circuit court 

granted defendants’ section 2-615 (735 LCS 5/2-615 (West 2010)) motions to strike plaintiff’s 

amended complaint without prejudice on March 7, 2012. In ruling on the motions, the circuit court 

noted that the first 2-615 motion was granted on the basis that plaintiff had not adequately set forth 

the allegations of the relationships and duties owed to it by the individual defendants. The court 

granted plaintiff leave to file its second amended complaint by April 11, 2012, which it filed on 

June 28, 2012. 

¶ 29 Defendants once again filed motions to dismiss plaintiff’s complaint. The circuit court 

subsequently granted the section 2-615 (735 ILCS 5/2-615 (West 2012)) motions of defendants 

Franklin, Franklin Law, Squire, Kirby McInerney, and Stingley; granted Stingley’s section 2-619 
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(735 ILCS 5/2-619 (West 2012)) motion to dismiss; and also dismissed those defendants from the 

case with prejudice on February 14, 2013. 

¶ 30 On the same date, the circuit court denied the joint section 2-615 motion of defendants 

Bryan Cave, Thum, and Bragar Wexler, and set a briefing schedule for the remaining defendants’ 

joint section 2-619(a)(5) (735 ILCS 5/2-619(a)(5) (West 2012)) motion to dismiss. 

¶ 31 In their section 2-619(a)(5) motion, defendants contended that plaintiff’s complaint was 

time-barred under both the Illinois two-year statute of limitations and Missouri’s five-year statute 

of limitations. Defendants claimed that plaintiff knew in February 2005 that Federal denied any 

obligation to it under the settlement agreement and that it could not recover anything against 

Federal without prevailing in the Delaware case. Defendants further claimed that even if that 

information failed to put plaintiff on notice of its claims and it only settled with Payless because it 

thought it would be able to collect from Federal, then plaintiff would have been on notice when its 

motion for summary judgment in the Delaware case was denied and it knew the case was going to 

trial, which occurred more than two years before plaintiff filed the present suit. 

¶ 32 At the hearing on defendants’ section 2-619(a)(5) motion on July 25, 2013, the circuit court 

stated that although plaintiff knew prior to August 2008 that a court found that Federal had the 

right to consent to any settlement, its damages were uncertain until the jury found that Federal did 

not unreasonably withhold its consent, which made the settlement agreement unenforceable. The 

jury verdict was returned on November 20, 2008, and was affirmed on appeal on August 10, 2009. 

The circuit court thus concluded that the cause of action did not accrue until the jury found that 

Federal did not unreasonably withhold its consent. 
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¶ 33 However, the court found that this did not end the analysis because, as defendants noted, 

the injury for which plaintiff sought damages in its complaint, namely a $22 million claim for the 

January 2005 settlement of the underlying litigation, was different from the injury plaintiff claimed 

as the trigger to refute defendants’ statute of limitations defense, namely the $7.2 million verdict 

that it failed to obtain in the Delaware coverage litigation in November 2008. 

¶ 34 The court, after acknowledging the inconsistency of plaintiff’s damages claims in its 

complaint, further noted that plaintiff alleged that it lost its case against Federal on November 20, 

2008, the date the jury in the Delaware case found that Federal had not unreasonably withheld its 

consent in the underlying case. The court further noted that in order to defeat defendants’ claim 

that plaintiff’s action was time-barred, plaintiff necessarily agreed that its damages were those at 

issue in the Delaware case, and not the earlier amount sought in the underlying case. The court 

further found that plaintiff cited no authority for its conclusion that a later injury could revive an 

untimely claim seeking recovery for an earlier injury. Accordingly, the court capped plaintiff’s 

damages at $7.2 million, the amount that Federal would have paid under the settlement agreement, 

and partially granted defendants’ section 2-619(a)(5) motion to dismiss. This ruling was 

memorialized in a written order the following day. 

¶ 35 Plaintiff was subsequently granted leave to file a third amended complaint on or before 

October 5, 2015. On October 2, 2015, defendants Bragar Wexler and Eagel filed a motion seeking 

a finding of good faith settlement and dismissal of the action against the settling defendants with 

prejudice. According to the motion, defendants Bragar Wexler, Eagel, Franklin Law, Franklin, 

Kirby McInerney and Squire entered into a confidential settlement agreement with plaintiff. The 

circuit court granted the motion, and these defendants were dismissed from the case with prejudice. 
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¶ 36 On October 5, 2015, plaintiff filed its two-count third amended complaint against the 

remaining defendants, Bryan Cave and Thum. 

¶ 37 In count I, professional negligence, plaintiff alleged that defendants held themselves out to 

members of the public and to plaintiff as being “able and experienced” in the practice of law in, 

and applying the law of, the State of Missouri. Plaintiff further alleged that defendants’ conduct 

breached various sections of the Missouri Rules of Professional Conduct, that defendants gave 

negligent legal advice which led to an unenforceable settlement against Federal, and additionally 

that due to their negligent settlement advice, defendants wrongfully received legal fees which 

caused plaintiff to only recover $1.8 million of the $15.5 million judgment entered against Payless. 

¶ 38 In count II, plaintiff alleged that Thum and Bryan Cave exhibited “complete indifference 

and/or conscious disregard of their professional obligations to their client” and that defendants 

failed to disclose a conflict of interest in the underlying case with the other attorneys, all of which 

resulted in liability for punitive damages under Missouri law. Plaintiff accordingly sought punitive 

damages. 

¶ 39 Defendants filed a motion to strike plaintiff’s third amended complaint on November 6, 

2015. In their motion, defendants asserted that plaintiff sought to change its case by adding 

additional allegations that it had previously rejected in open court; added a new malpractice theory

that it should have been fully aware of previously; provided no justification for its efforts to add a 

punitive damages claim at such a late date; and that plaintiff was simply prolonging the case to 

avoid summary judgment by filing a third amended complaint. 
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¶ 40 At a hearing on the motion to strike on May 12, 2016, the circuit court found that the new 

allegations in count II did not satisfy the Loyola factors and was untimely. The court then partially 

granted defendant’s motion by striking count II of plaintiff’s third amended complaint. 

¶ 41 Defendants subsequently filed a motion for summary judgment on July 27, 2016. In their 

memorandum in support of summary judgment, defendants argued that: (1) plaintiff could not 

demonstrate a genuine issue of fact as to the alleged malpractice based on its claim that Bryan 

Cave assured it that it would collect the Federal portion of the settlement or that Bryan Cave failed 

to advise plaintiff that Federal’s failure to consent had to be unreasonable; (2) plaintiff could not 

demonstrate that Bryan Cave committed malpractice by failing to “set up” Federal adequately or 

do additional analysis to determine the strength of plaintiff’s position against Federal after 

December 2004; (3) plaintiff could not demonstrate that it would have succeeded in the Delaware 

case had Bryan Cave taken the actions plaintiff claimed it should have; (4) plaintiff’s claims were 

barred by the statute of limitations since it was on notice of its alleged injury once it incurred legal 

fees in the Delaware case; and even if plaintiff’s claims could survive summary judgment, plaintiff 

should be limited to the $3.34 million it allegedly should have recovered from Federal without 

litigation, plus the amount of legal fees paid to Bryan Cave in connection with the Delaware case. 

Defendants further argued that plaintiff’s new allegation that it was entitled to the full settlement 

amount despite its allocation agreement with Congress was baseless.

¶ 42 A hearing was held on defendants’ motion on February 3, 2017, and the court issued its 

ruling on the motion on March 9, 2017. 

¶ 43 In its ruling, the circuit court found that plaintiff raised genuine issues of material fact on 

the issues of whether defendants violated the standard of care in rendering advice regarding the 
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insurance aspect of the settlement and the extent of Thum’s role in providing the legal advice. The 

court stated that plaintiff framed its case for malpractice on the failure of defendants to adequately 

advise it of the foreseeable risks of entering into the MOU without Federal’s participation in the 

settlement negotiations. The court further found that the summary judgment motion based on the 

lack of proximate cause was premature as there had been no expert testimony. The court cautioned 

though that the motion could be renewed on that basis after expert witness depositions. The court 

then granted defendants’ summary judgment motion on the issue of damages, and thus further 

limited plaintiff’s potential recovery to $3.34 million, the amount it would have been entitled to 

under plaintiff’s allocation agreement with Congress. 

¶ 44 On July 17, 2017, the circuit court set the matter for trial on February 15, 2018, but granted

defendants leave to renew their motion for summary judgment by August 25, 2017. 

¶ 45 Defendants renewed their motion for summary judgment on September 1, 2017, arguing 

that plaintiff’s experts failed to provide any evidence that the negligent advice of defendants led 

to the loss of the Delaware case. Defendants also renewed their assertion that the case was timebarred by the statute of limitations. 

¶ 46 The hearing on defendants’ renewed motion was held on January 8, 2018. On January 11, 

2018, the circuit court granted defendants’ renewed motion for summary judgment, finding that as 

a matter of law, plaintiff failed to raise a genuine issue of material fact as to proximate cause. The 

court found that plaintiff’s transactional malpractice theory that it would have entered into a better 

settlement agreement but for defendants’ negligence was too speculative. The court dismissed 

plaintiff’s cause of action with prejudice in its entirety and this timely appeal followed. 

¶ 47 ANALYSIS
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¶ 48 On appeal, plaintiff contends that the circuit court erred when it: (1) partially granted 

defendants’ section 2-619(a)(5) (735 ILCS 5/2-619(a)(5) (West 2012)) motion to dismiss and 

found that its damages were limited to the amount it would have recovered under the settlement 

agreement if the agreement had been enforceable in full on July 26, 2013; (2) partially granted

defendants’ motion to strike plaintiff’s third amended complaint when it struck plaintiff’s 

allegations of defendants’ failure to disclose a conflict of interest and count II on May 12, 2016; 

(3) partially granted defendants’ summary judgment motion and further limited its recoverable 

damages to $3.34 million on March 12, 2017; and (4) granted defendants’ renewed motion for 

summary judgment as to proximate cause on January 11, 2018. We shall discuss each of plaintiff’s 

contentions in turn. 

¶ 49 A. Partial Grant of Motion to Dismiss – July 26, 2013 

¶ 50 Plaintiff first contends that the circuit court erred as a matter of law when it limited its 

recoverable damages to less than what it would have recovered in the underlying case had it been 

properly advised by defendants. Plaintiff argues that defendants’ motion to dismiss was before 

the court based on defendants’ allegation that the action was filed outside the two-year statute of 

limitations. Plaintiff contends that its action was timely filed because it did not suffer injury until 

the November 2008 jury verdict in the Delaware case. While plaintiff contends that the court 

properly found that its case was not time-barred, plaintiff maintains that the court improperly went 

beyond the issue before it to place restrictions on plaintiff’s recoverable damages at the pleadings 

stage. Plaintiff argues that it was thus precluded from proceeding on its case-within-a-case theory 

of legal malpractice. 
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¶ 51 Plaintiff further contends that the court erred by conflating its injury for accrual purposes 

with its recoverable damages, and that the injury is materially distinct from its recoverable 

damages. Specifically, plaintiff contends that the injury was the compromise of its “valuable 

claims” against Payless in exchange for a mediator’s high-low settlement proposal based on 

defendants’ deficient advice that the high end of such proposal could be enforced against Federal, 

despite the fact that Federal’s policy obligations to Payless had not been triggered and was without 

Federal’s consent. Plaintiff asserts that the damage was the jury verdict in the Delaware case that

it could not enforce the settlement against Federal. Plaintiff concludes that its recoverable damages 

are what it would have recovered from Payless in the underlying case if it had not agreed to the 

settlement proposal. Accordingly, plaintiff contends that the circuit court’s July 26, 2013, ruling 

that limited its damages as a matter of law was erroneous. 

¶ 52 A section 2-619(a)(5) (735 ILCS 5/2-619(a)(5) (West 2016)) motion to dismiss provides 

that a defendant may file a motion to dismiss when a cause of action has not been brought in the 

time limited by law. PSI Resources, LLC v. MB Financial Bank, National Ass’n, 2016 IL App 

(1st) 152204, ¶ 28. A motion to dismiss under section 2-619 admits the legal sufficiency of all 

well-pleaded facts but allows for dismissal of claims barred by an affirmative matter defeating 

those claims or avoiding their legal effect. Id. A defendant who raises a statute of limitations 

affirmative defense has the initial burden of proving that the action in question was not commenced 

within the applicable limitations period. Brummel v. Grossman, 2018 IL App (1st) 162540, ¶ 23 

(citing Kirby v. Jarrett, 190 Ill. App. 3d 8, 12 (1989)). Once defendant has met this burden, the 

plaintiff must set forth facts sufficient to avoid the statutory limitation. Brummel, 2018 IL App 

(1st) 162540, ¶ 23. 
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¶ 53 When ruling on a section 2-619 motion to dismiss, a circuit court must interpret all 

pleadings, affidavits, and other supporting documents in the light most favorable to the nonmoving 

party. Id. at ¶ 29. If a complaint is filed after the running of the applicable statute of limitations, 

this is a valid reason for granting a section 2-619(a)(5) motion to dismiss. Bororwic v. Gateway 

2000, Inc., 209 Ill. 2d 376, 383 (2004). An appeal from the grant of a section 2-619 motion to 

dismiss requires the same analysis as an appeal following the grant of a summary judgment; the 

reviewing court must determine if a genuine issue of material fact precludes such dismissal or 

whether dismissal was proper as a matter of law. Id. at ¶ 30. We make such determination using 

a de novo standard of review. Id. 

¶ 54 The statute of limitations for filing a legal malpractice claim is set forth in section 13-214.3 

of the Code as follows: 

“[a]n action for damages based on tort, contract, or otherwise (i) against an attorney 

arising out of an act or omission in the performance of professional services * * * must be 

commenced within 2 years from the time the person bringing the action knew or reasonably 

should have known of the injury for which damages are sought.” 735 ILCS 5/13-214.3 

(West 2012). 

¶ 55 This statute of limitations incorporates the discovery rule, which delays commencement of 

the statute of limitations until the plaintiff knows or reasonably should have known of the injury 

and that it may been wrongfully caused. Carlson v. Fish, 2105 IL App (1st) 140526, ¶ 23. For 

purposes of legal malpractice, a client is not considered to be injured until he has suffered a loss 

for which he may seek monetary damages. Id.
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¶ 56 In the case at bar, defendants alleged that plaintiff’s cause of action was untimely because 

it knew as early as February 2005 that it was allegedly damaged by defendants’ advice in the 

underlying case. The circuit court disagreed, finding that plaintiff’s cause of action did not accrue 

until the jury reached an adverse verdict in the Delaware case. While the circuit court ultimately 

concluded that defendants’ statute of limitations challenge to plaintiff’s cause of action was 

without merit, the court however found that such ruling necessarily affected the applicable 

damages claimed by plaintiff. Specifically, the court found that plaintiff could only recover the 

amount it would have recovered if Federal had been obligated to perform under the initial 

settlement agreement. 

¶ 57 Applying de novo review, we find that the trial court correctly determined that plaintiff’s 

cause of action for legal malpractice did not accrue until the adverse ruling was received in the 

Delaware coverage case in 2008. While defendants may have given plaintiff negligent advice that 

led to the January 2005 settlement with Payless, the cause of action did not accrue until plaintiff 

discovered or reasonably should have discovered, his injury and incurs incurred damages directly 

attributable to counsel’s neglect. See Lucey v. Law Offices of Pretzel & Stouffer, Chartered, 301 

Ill. App. 3d 349, 353 (1998). Accordingly, we find that plaintiff’s 2010 cause of action was 

commenced within the two-year statute of limitations.

¶ 58 We next turn our attention to plaintiff’s contention that the circuit court improperly sua 

sponte limited its damages claim when ruling on defendants’ motion to dismiss. 

¶ 59 Here the record shows that defendants filed their motion to dismiss plaintiff’s complaint 

on the basis that it was time-barred and additionally argued that plaintiff alleged inconsistent 

theories of damages in its complaint. Plaintiff responded to the motion and a hearing was held. All
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parties were present and participated in the hearing. Therefore, the circuit court did not sua sponte

rule on the issue of plaintiff’s damages claim, but was ruling on an issue specifically raised by 

defendants. See Smith-Silk v. Prenzler, 2013 IL App (5th) 120456, ¶ 10. Moreover, even assuming 

arguendo that the circuit court sua sponte ruled on the damages claim, it was not improper to do 

so. 

¶ 60 As our supreme court held in Eastman v. Messner, 188 Ill. 2d 404, 411-12 (1999), a 

plaintiff who obtains recovery in a legal malpractice case can be in no better position by bringing 

suit against the attorney than if the underlying action against the third-party had been successful; 

thus a plaintiff’s damages in a legal malpractice suit are limited to the actual amount the plaintiff 

would have recovered had he been successful in the underlying case. 

¶ 61 In this case, plaintiff alleged in its complaint that if the jury in the Delaware case had found 

in plaintiff’s favor, the amount it would have been entitled to was $7,233,542.15 plus postjudgment interest from May 18, 2005. That was the amount that Federal would have been 

obligated to pay under the January 2005 settlement agreement, not a higher amount as plaintiff 

contends. Thus, plaintiff was not entitled to seek additional damages, and we conclude that the 

circuit court properly limited plaintiff’s damages claim to $7.2 million. 

¶ 62 B. Grant of Motion to Strike Count II of Third Amended Complaint – May 12, 2016 

¶ 63 Plaintiff also contends that the circuit court erred in striking its allegations in count II of its 

third amended complaint that were based on defendants’ failure to disclose their conflicts of 

interest and which sought punitive damages under Missouri law. Plaintiff argues that the court’s 

ruling that it raised a new cause of action that was time-barred cannot be supported under the 

Loyola factors. 
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¶ 64 Decisions as to whether a pleading may be amended pursuant to section 2-616(a) of the 

Code (735 ILCS 5/2-616(a) (West 2016)) are committed to the sound discretion of the circuit court. 

Lawry’s The Prime Rib, Inc. v. Metropolitan Sanitary District of Chicago, 205 Ill. App. 3d 1053, 

1058 (1990). Additionally, any cause of action set up in an amended pleading shall not be timebarred and shall be said to relate back to the date of the filing of the original pleading, so long as 

(1) the original pleading was timely filed and (2) it appears from the original and amended 

pleadings that the cause of action asserted grew out of the same transaction or occurrences set up 

in the original pleading. 735 ILCS 5/2-616(b) (West 2016). 

¶ 65 In determining whether a trial court abused its discretion by denying leave to amend, 

Illinois courts must determine “(1) whether the proposed amendment would cure the defective 

pleading; (2) whether other parties would sustain prejudice or surprise by virtue of the proposed 

amendment; (3) whether the proposed amendment is timely; and (4) whether previous 

opportunities to amend the pleading could be identified.” Loyola Academy v. S & S Roof 

Maintenance, Inc., 146 Ill. 2d 263, 273 (1992). 

¶ 66 During the hearing on defendants’ motion to strike plaintiff’s third amended complaint, the 

court found that the complaint attempted to raise a new cause of action in count II, specifically 

defendants’ failure to disclose a conflict of interest, and which sought punitive damages under 

Missouri law, neither of which had been previously raised. The court concluded that this cause of 

action was known to plaintiff earlier and was untimely. The court also found that it did not satisfy 

the Loyola factors. 

¶ 67 After reviewing the third amended complaint and the initial complaint, we find that the 

circuit court did not abuse its discretion in granting defendants’ motion to strike count II of the
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third amended complaint. The record reveals that plaintiff asserted for the first time in its third 

amended complaint that defendants had an undisclosed conflict of interest and sought punitive 

damages. By the time the third amended complaint was filed in October 2015, discovery had been 

closed for an extended period of time, and defendants had no notice of these allegations or 

opportunity to have discovery concerning them. Additionally, the statute of limitations expired in 

2010, as determined by the circuit court’s previous ruling on a motion to dismiss three years earlier. 

While it is true the claims of plaintiff’s count II in the third amended complaint stemmed from 

defendants’ representation during the underlying case and the Delaware case, the prior complaints 

did not give defendants notice of the facts underlying the later claims for conflict of interest. See 

Grove v. Carle Foundation Hospital, 364 Ill. App. 3d 412, 421 (2006). As such, count II of 

plaintiff’s third amended complaint did not relate back to the original complaint and was barred 

by the statute of limitations. 

¶ 68 In determining whether an amended pleading violates the statute of limitations, the critical 

inquiry is whether there is enough in the original description to indicate that plaintiff is not trying 

to slip in a new cause of action in violation of the spirit of the limitations act. Avakian v. 

Chulengarian, 328 Ill. App. 3d 147, 154 (2002) (citing Simmons v. Hendricks, 32 Ill. 2d 489, 497 

(1965)). In the case at bar, plaintiff attempted to raise an entirely new cause of action five years 

after the expiration of the statute of limitations, which fails to satisfy two of the Loyola factors. 

As such, the circuit court did not abuse its discretion in striking count II of the third amended 

complaint, and properly found that such amendment was time-barred.

¶ 69 C. Partial Grant of Summary Judgment – March 9, 2017 
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¶ 70 Plaintiff further contends that the circuit court erred in partially granting defendants’ 

motion for summary judgment and further limiting its recoverable damages to $3.34 million and

further erred by rejecting plaintiff’s supplemental damages disclosure on March 9, 2017. 

¶ 71 Summary judgment should be granted “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 2016); Construction Systems, Inc. v. FagelHaber, LLC, 2019 IL App (1st) 172430, ¶ 21. 

When deciding a motion for summary judgment, a trial court must construe the pleadings, 

depositions, admissions, and affidavits strictly against the movant and liberally in favor of the 

nonmovant. Construction Systems, 2019 IL App (1st) 172430, ¶ 21. Summary judgment should 

not be granted where the material facts are disputed or where, the material facts being undisputed, 

reasonable persons could draw different inferences form the undisputed facts. Id. We review the 

trial court’s grant of summary judgment de novo. Id. 

¶ 72 In the case at bar, in an earlier 2013 ruling as discussed earlier, the circuit court had already 

capped plaintiff’s damages to the amount it would have recovered from Federal under the 2005 

settlement agreement, namely $7.2 million. Subsequent to the filing of plaintiff’s third amended 

complaint, defendants filed a motion for summary judgment, contending, among other things, that 

plaintiff was not entitled to more than it would have been entitled to originally, because of its 2005 

agreement to the allocation of settlement proceeds with Congress. 

¶ 73 Section 2(c) of the Illinois Joint Tortfeasor Contribution Act (Contribution Act) provides 

that a good-faith settlement reduces the recovery of a nonsettling tortfeasor to the extent of the 

amount stated in the release or actually paid for it. 740 ILCS 100/2(c) (West 2016). This provision 
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reflects the long-recognized principle in Illinois that a plaintiff shall have only one satisfaction for 

an injury. Lard v. AM/FM Ohio, Inc., 387 Ill. App. 3d 915, 925-26 (2009). This provision also 

condemns and seeks to prevent a double recovery and reflects the public policy of protecting the 

financial interests of the nonsettling parties in a settlement. Allowing setoff ensures that a 

nonsettling party will not be required to pay more than its pro rata share of the shared liability. 

Id. at 926. 

¶ 74 The January 2005 settlement agreement set forth the amount of the settlement and the 

allocation of the settlement proceeds between plaintiff and Congress from the insurance companies

in the underlying case. Specifically, plaintiff would receive 46.4% of the amounts recovered 

against Federal if it prevailed in the subsequent arbitration. In a 2013 ruling, the circuit court 

found that plaintiff’s cause of action for legal malpractice did not accrue until the Delaware case 

was decided, and further that plaintiff could only seek recovery of the amount it would have been 

entitled to recover from the Delaware case, which was approximately $7.2 million plus postjudgment interest. That amount represented the total amount that Federal would have paid plaintiff 

and Congress in satisfaction of the settlement agreement. However, as defendants pointed out to 

the court in their motion for summary judgment, pursuant to the allocation of proceeds contained 

in the settlement agreement, plaintiff was only entitled to 46.4% of that amount, or $3.34 million. 

As noted earlier, a plaintiff in a legal malpractice case can be in no better position than he would

have been in had he prevailed in the underlying matter. Eastman, 188 Ill. 2d at 411-12. We 

therefore conclude that the circuit court properly granted summary judgment to defendants as a 

matter of law on the issue of further limitation of damages.

¶ 75 D. Grant of Summary Judgment – January 11, 2018 
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¶ 76 Finally, plaintiff contends that the circuit court compounded its earlier errors in its January 

11, 2018, ruling, which granted summary judgment in favor of defendants, where there were 

genuine issues of material fact regarding proximate cause. Specifically, plaintiff argues that it 

provided evidence of the attorney-client relationship it had with defendants that gave rise to the 

duty of care owed with respect to the settlement agreement; it provided evidence of defendants’ 

negligent advice and failures to disclose; and it provided proof of damages. 

¶ 77 As stated above, summary judgment should be granted “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 2016); Construction Systems, Inc., 2019 IL App (1st) 172430, ¶ 21. Our review 

of the grant of summary judgment is de novo. Id.

¶ 78 In a cause of action for legal malpractice, a plaintiff must prove that: (1) its attorney owed 

it a duty of care resulting from an attorney-client relationship; (2) its attorney breached that duty 

of care; and (3) as a proximate cause of the breach, it suffered an injury. Atkins v. Robbins, 

Salomon & Patt, Ltd., 2018 IL App (1st) 161961, ¶ 50. A legal malpractice suit is by its nature 

dependent upon a predicate lawsuit. Nelson v. Quarles and Brady, LLP, 2013 IL App (1st) 123122, 

¶ 28. Thus, a legal malpractice claim presents a “case within a case.” Id. No malpractice exists 

unless counsel’s negligence has resulted in the loss of an underlying cause of action. Id. Further, 

the fact that the attorney may have breached his duty of care is not, in itself, sufficient to sustain 

the plaintiff’s cause of action; even if negligence on the part of the attorney is established, no action 

will lie against the attorney unless that negligence proximately caused damage to the client. 
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Northern Illinois Emergency Physicians v. Landau, Omahana & Kopka, Ltd., 216 Ill. 2d 294, 306-

07 (2005). 

¶ 79 Causation requires both proof of “cause in fact” and proof of “legal cause.” Thacker v. 

UNR Industries, Inc., 151 Ill. 2d 343, 354 (1992). Courts generally use two tests when considering 

cause in fact: the traditional “but for” test and the “substantial factor” test. Id. Under the but-for 

test, a defendant’s conduct is not a cause of an event if the event would have occurred without it. 

Id. Under the substantial-factor test, the defendant’s conduct is said to be a cause of an event if it 

was a material element and a substantial factor in bringing the event about. Id. at 354-55. Legal 

cause is a question of foreseeability; a negligent act is a proximate cause of an injury if the injury 

is of a type which a reasonable person would see as a likely result of his conduct. Lee v. Chicago 

Transit Authority, 152 Ill. 2d 432, 456 (1992). 

¶ 80 Based on earlier rulings as well as allegations contained in plaintiff’s pleadings, the court 

determined that plaintiff’s cause of action was transaction-based legal malpractice. In such cases, 

proving a case-within-a-case is not always required where damages can otherwise be established. 

Union Planters Bank, N.A. v. Thompson Coburn LLP, 402 Ill. App. 3d 317, 344 (2010). An 

attorney’s liability for failing to advise a client of the foreseeable risks attended to a given course 

of legal action is predicated on the client’s exposure to a risk that the client did not knowingly and 

voluntarily assume. Id. To establish the element of proximate cause, it is necessary for the client 

to plead and prove that had the undisclosed risk been known, he or she would not have accepted 

the risk and consented to the recommended course of action. Id. 

¶ 81 Here, the circuit court previously determined that plaintiff’s recoverable damages were the 

amounts it could have recovered from Federal if it had been successful in the Delaware case, which 
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was the amount of the January 2005 settlement, less the amount allocated to Congress. Therefore, 

as to proximate cause, the court found that the issue was whether defendants’ negligence 

contributed to the loss of the Delaware case against Federal. 

¶ 82 Plaintiff’s argument on appeal ignores the circuit court’s many rulings below. Despite the 

circuit court’s rulings that any claims related to the January 2005 settlement agreement were timebarred as plaintiff did not file its initial complaint until October 2010, and that only plaintiff’s 

claims related to the loss of the Delaware case fell within the statute of limitations, plaintiff 

attempted several times in the proceedings below (and continues on this appeal) to argue that 

defendants’ negligent advice caused it to enter into the settlement agreement in the first place and 

its subsequent loss of the Delaware case. While it is true that the Delaware case occurred as a 

result of the chain of events from the underlying case, it does not necessarily follow that 

defendants’ allegedly negligent advice in 2005 concerning Federal’s obligations under the 

settlement agreement in the underlying case was the proximate cause of the loss of the Delaware 

case in 2008. 

¶ 83 As defendants noted in their summary judgment motion and as plaintiff noted in its own 

pleadings, Federal was the first-tier excess insurer of Payless. AIG was the first-tier insurer, up to 

$10 million of liability. AIG’s policy limits were not reached prior to the arbitration; thus Federal’s 

policy was not yet triggered. Moreover, as determined in the Delaware case, Federal had no 

obligation to pay any amounts of the settlement agreement as it did not consent to the settlement 

and such consent was not unreasonably withheld. As such, regardless of defendants’ advice to 

plaintiff in 2005, Federal never had any obligation to contribute to the settlement. Therefore, 
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plaintiff cannot meet its burden of proving causation, and there was no genuine issue of material 

fact that precluded summary judgment on causation. 

¶ 84 Additionally, and most importantly, any issues concerning defendant’s allegedly negligent 

advice in the underlying case were time-barred by the time that the instant case was filed in 2010. 

¶ 85 The circuit court did not err in granting summary judgment in favor of defendants. 

¶ 86 CONCLUSION

¶ 87 For the foregoing reasons, we affirm the judgment of the circuit court of Cook County. 

¶ 88 Affirmed.