Opinion ID: 757331
Heading Depth: 3
Heading Rank: 2

Heading: Claims Against Weinberg and KR & B

Text: 23 In his Second Amended Complaint, Kaplan asserted three counts against Weinberg and KR & W. Count II charged Weinberg and KR & W with negligence stemming from a variety of shortcomings in their representation; Count III alleged that Weinberg and KR & W had breached their fiduciary duties to Kaplan; and Count IV asserted that Weinberg and KR & W were in breach of contract for their failure to competently advise Kaplan. In addition, both Counts II and IV alleged that Kaplan was injured when Weinberg and KR & W failed to have RBK assign the land purchase agreement to either Kaplan or the Trust. The district court dismissed all of Kaplan's claims, finding that they were barred either by the statute of limitations or the statute of repose applicable to attorney malpractice claims. In his opening brief to this court, Kaplan only presented arguments regarding the failure-to-assign claims in Counts II and IV. By failing to present arguments with respect his other claims, Kaplan has waived any challenge to their dismissal on appeal. See Ricci, 116 F.3d at 291-92. Accordingly, we will only examine the dismissal of Kaplan's failure-to-assign claims. 24 The district court dismissed Kaplan's failure-to-assign claims because they ran afoul of both the statute of limitations and the statute of repose applicable to attorney malpractice claims under Illinois law. The relevant statute is as follows: 25 (b) An 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. 26 (c) Except as provided in subsection (d), an action described in subsection (b) may not be commenced in any event more than 6 years after the date on which the act or omission occurred. 27 735 ILCS 5/13-214.3(b) and (c). 4 These limits apply, however, only to causes of action accruing on or after January 1, 1991, the effective date of the statute. 735 ILCS 5/13-214.3(f). For causes of action accruing before this date, the applicable statute of limitations is five years and there is no statute of repose. See Harvey v. Connor, 85 Ill.App.3d 1061, 41 Ill.Dec. 381, 407 N.E.2d 879, 881 (1st Dist.1980), cert. denied, 451 U.S. 938, 101 S.Ct. 2019, 68 L.Ed.2d 326 (1981); 735 ILCS 5/13-205 (formerly Ill.Rev.Stat. ch. 110 p 13-205). The district court determined that Kaplan's failure-to-assign claim accrued after January 1, 1991, and applied the provisions of section 5/13-214.3(b) and (c); on appeal, Kaplan asserts that his claim accrued in 1987, not 1991 (or thereafter), and that the five-year statute of limitations (and no statute of repose) should apply. When Kaplan's claim accrued, therefore, is a threshold issue to which we now turn. 28 In determining when Kaplan's cause of action accrued in this diversity case, the parties agree that we must apply Illinois law. See also Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). In doing so, we must predict how the Illinois Supreme Court would decide the issue. Rodman Indus., Inc. v. G & S Mill, Inc., 145 F.3d 940, 942-43 (7th Cir.1998) (citation omitted). Since the Illinois Supreme Court has not yet passed on this issue, we examine decisions of the lower state courts to help formulate an answer. Id. The Illinois Appellate Court has taken different approaches when determining when a cause of action for legal malpractice accrues. Barratt v. Goldberg, 296 Ill.App.3d 252, 230 Ill.Dec. 635, 694 N.E.2d 604, 607 (1st Dist.1998). One line of cases holds that a cause of action accrues at the time the negligent act was committed. Id. (citing Dolce v. Gamberdino, 60 Ill.App.3d 124, 17 Ill.Dec. 274, 376 N.E.2d 273 (1st Dist.1978)). A second line of cases holds that a cause of action for legal malpractice does not accrue until the client discovers, or should have discovered, facts establishing the elements of a claim of malpractice. Id. (citing Tucek v. Grant, 129 Ill.App.3d 236, 84 Ill.Dec. 603, 472 N.E.2d 563 (2d Dist.1984)). Kaplan argues that the former rule should apply and that the district court erred in finding that his claim accrued in 1996 rather than in 1987. 29 After reviewing the relevant Illinois caselaw, we believe that the Illinois Supreme Court would follow the second line of cases and would find that accrual of a claim of attorney malpractice occurs when the plaintiff knew or should have known of his injury. The idea that a cause of action accrues at the time the negligent act was committed, as illustrated by Dolce, has been explicitly rejected by several Illinois courts. In Goran v. Glieberman, 276 Ill.App.3d 590, 213 Ill.Dec. 426, 659 N.E.2d 56, 59 (1st Dist.1995), the Illinois Appellate Court found that the rule in Dolce was no longer viable, since it was based on a limited application of the discovery rule which had been expressly rejected by the Illinois Supreme Court. 5 In addition, the court noted that Dolce represented a departure from first district precedent and that its accrual rule was counter to public policy. Goran, 659 N.E.2d at 59. The rule in Dolce was similarly rejected in Goodman v. Harbor Market, Ltd., 278 Ill.App.3d 684, 215 Ill.Dec. 263, 663 N.E.2d 13, 16-17 (1st Dist.1995), appeal denied sub nom. Goodman v. Goodman, 168 Ill.2d 589, 219 Ill.Dec. 563, 671 N.E.2d 730 (1996). In both cases, the court adopted the second approach to accrual: a cause of action for legal malpractice accrues when the plaintiff knows or reasonably should know of his injury and that it was caused wrongfully. Goran, 659 N.E.2d at 60; Goodman, 663 N.E.2d at 18. Other Illinois courts have held similarly, see Kohler v. Woollen, Brown & Hawkins, 15 Ill.App.3d 455, 304 N.E.2d 677, 681 (4th Dist.1973) (rejecting notion that cause of action accrues at time negligent act is committed and adopting the knew or should have known rule); Tucek, 472 N.E.2d at 566-67 (rejecting rule in Dolce and following knew or should have known rule), and we believe that this approach is the one that would be adopted by the Illinois Supreme Court. 30 Given our view of Illinois law, the district court was correct in concluding that Kaplan's claim accrued in 1996, not 1987, and that the two-year statute of limitations and six-year statute of repose applied to his claim. In his brief, Kaplan admits that [t]he effect of the District Court's ruling of July 17, 1996 was to put Kaplan on notice that Weinberg and KR & W had committed malpractice against Kaplan by their failure to assign RBK's rights in the Contract to the Trust or to Kaplan in 1987. See Appellant's Brief at 20. Similarly, in his Second Amended Complaint, Kaplan alleges that he knew, or should have known, that the injury to him by Weinberg's and KR & W's failure in 1987 to have RBK Furniture assign the agreement ... was wrongly caused by Weinberg and KR & W when [the district] Court ruled on July 17, 1996 and September 13, 1996. See Second Amended Complaint pp 113 and 133. Since Kaplan discovered his injury in 1996, that is when his claims accrued under Illinois law, and the statute of repose is applicable to this case. 31 Kaplan asserts, however, that the above-discussed principles apply only with respect to determining when a claim accrues for statute of limitations purposes, not with respect to determining if a statute of repose should apply retroactively to an existing cause of action. See Appellant's Brief at 22. In support of this proposition, Kaplan cites Fetzer v. Wood, 211 Ill.App.3d 70, 155 Ill.Dec. 626, 569 N.E.2d 1237, 1243 (2d Dist.1991), in which the Illinois Appellate Court considered when a cause of action under the Illinois Survival Act accrued for purposes of applying a modified comparative negligence statute. In its discussion, the court stated that the discovery rule does not actually provide for new accrual rules; it instead tolls the running of the statute of limitations, until a plaintiff's 'discovery,' of an existing cause of action. Id. (emphasis in original). Kaplan's reliance on Fetzer is misplaced, however, for several reasons. First, the court's discussion of the discovery rule was dicta, since its determination of when the plaintiff's claim accrued did not depend on that rule. In addition, the circumstances in Fetzer are distinguishable from the present case. In Fetzer, the date of accrual dictated whether a modified comparative negligence statute would be applicable to a Survival Act claim, whereas in this case the applicability of a statute of repose to a legal malpractice claim is in question. The discussion in Fetzer is therefore inapplicable to the instant case. 32 To the extent that Kaplan is asserting that statutes of repose and statutes of limitations are not one and the same, he is correct. The Illinois Appellate Court has differentiated the two statutes in this manner: 33 A statute of repose is essentially different from a statute of limitations, in that a limitations statute is procedural, giving a time limit for bringing a cause of action, with the time beginning when the action has ripened or accrued; while a repose statute is a substantive statute, extinguishing any right of bringing the cause of action, regardless of whether it has accrued. 34 Highland v. Bracken, 202 Ill.App.3d 625, 148 Ill.Dec. 104, 560 N.E.2d 406, 411 (4th Dist.), appeal denied sub nom. Highland v. Williams, 135 Ill.2d 556, 151 Ill.Dec. 382, 564 N.E.2d 837 (1990) (citing Thornton v. Mono Mfg. Co., 99 Ill.App.3d 722, 54 Ill.Dec. 657, 425 N.E.2d 522, 525 (2d Dist.1981)). As a general proposition, therefore, Kaplan's assertion that the discovery rule does not apply in determining whether a statute of repose applies to bar a cause of action appears to be true--the time the action accrued is immaterial to the application of a statute of repose. However, the Illinois Legislature's explicit statement that the new statute of repose would apply only to legal malpractice claims accruing after January 1, 1991 overrides such a general proposition, and we cannot ignore the explicit wording of the statute in favor of an abstract principle. The parties did not point us to any Illinois cases which set forth a rule for determining when a cause of action accrues for purposes of applying the statute of repose, and our research has not turned up any. 6 In the absence of any other guidance, we believe that the same rules of accrual which apply to the amended statute of limitations for attorney malpractice apply to the statute of repose. Accordingly, the district court correctly determined that Kaplan's claims accrued in 1996, not in 1987, and that the two-year statute of limitations and the statute of repose applied. 35 Having determined that the statute of repose applied to Kaplan's claims against Weinberg and KR & W, the district court also correctly held that these claims were barred by the statute of repose. According to its terms, the statute prohibits the commencement of a suit more than 6 years after the date on which the act or omission occurred. According to the allegations in Kaplan's complaint, [i]n 1987, Weinberg and KR & W negligently breached their duty to represent Kaplan competently ... by failing to have RBK furniture assign to ... Kaplan the agreement of purchase. See Second Amended Complaint p 102; id. p 132 ( Weinberg's and KR & W's failure in 1987 to have RBK Furniture assign the agreement of purchase....). Since the failure-to-assign took place in 1987, and Kaplan did not file suit until 1996, the claims are barred by the six-year statute of repose. 36 Kaplan argues, however, that applying the statute of repose to his case would be impermissible because it would be retroactive. This argument has been considered and rejected by the Illinois Appellate Court: 37 [Appellant] also claims that the statute is unconstitutional because it is retroactive in its effect and would bar a cause of action before it ripened. We disagree. The period of repose gives effect to a policy different from that advanced by a period of limitations; the purpose of the statute of repose is to impose a cap on the applicability of the discovery rule so that the outer limit terminates the possibility of liability after a definite period of time, regardless of a potential plaintiff's lack of knowledge of his cause of action.... Because the statute of repose shortens the limitations period, a person whose cause of action arose before the effective date of the statute will be given a reasonable period of time in which to bring his action.... The fact that a repose provision may, in a particular instance, bar an action before it is discovered is an accidental rather than necessary consequence. 38 Serafin v. Seith, 284 Ill.App.3d 577, 219 Ill.Dec. 794, 672 N.E.2d 302, 310 (1st Dist.1996), appeal denied, 172 Ill.2d 568, 223 Ill.Dec. 201, 679 N.E.2d 386 (1997) (internal citations omitted). The Illinois Supreme Court has stated that causes of action stemming from occurrences prior to the effective date of the statute which accrue at a later time are not terminated by a statute of repose on its effective date. Costello v. Unarco Indus., Inc., 111 Ill.2d 476, 95 Ill.Dec. 822, 490 N.E.2d 675, 678 (1986). Rather, a rule of reasonableness applies, id.; that is, the statute of repose will apply retroactively only if the plaintiff had a reasonable period of time after the amendment's effective date in which to file an action. Goodman, 663 N.E.2d at 19 (citing Phillips Products Co., Inc. v. Industrial Comm'n, 94 Ill.2d 200, 68 Ill.Dec. 500, 446 N.E.2d 234, 236 (1983)). This is the precise situation before this court; the events underlying Kaplan's claim occurred in 1987, but the claim itself did not accrue until 1996. Accordingly, we look to see whether Kaplan filed his failure-to-assign claim within a reasonable time of the effective date of the statute of repose. 39 To determine whether Kaplan's claim was filed within a reasonable time, we examine whether the law as amended afforded him a reasonable time to file his claim between the amendment's effective date and the date when the claim would be barred under the terms of the amendment. Phillips, 446 N.E.2d at 236. If the amended statute allowed a reasonable time for a claim to be filed, but the claimant failed to do so, then the claim is barred. Id. While this rule has been shaped with statutes of limitations in mind, it also applies to statutes of repose. Goodman, 663 N.E.2d at 19. What constitutes a reasonable time is not etched in stone, but periods of less than one year from the effective date of the statute have been found to be acceptable. Phillips, 446 N.E.2d at 236 (one year was reasonable time) (citing Anderson v. Wagner, 79 Ill.2d 295, 37 Ill.Dec. 558, 402 N.E.2d 560, 572 (1979) (eight months reasonable) and Carlin v. Peerless Gaslight Co., 283 Ill. 142, 119 N.E. 66 (1918) (nine months reasonable)). In this case, the failure-to-assign allegedly occurred in 1987, four years before the statute of repose came into effect. Accordingly, Kaplan had two years after the statute of repose was effective to discover his injury and file suit before the statute operated to cut off his right to sue. Since Illinois courts have held that eight months is a reasonable time, we agree with the district court that two years or more is certainly reasonable. Accordingly, the district court correctly found that Kaplan did not file his suit within a reasonable time after the statute of repose went into effect, and retroactive application of the statute is not proscribed in this case. 40 In summary, we agree with the district court's conclusion that the statute of repose applied to Kaplan's failure-to-assign claim and that he failed to file his suit within a reasonable time after the statute came into effect. Accordingly, his failure-to-assign claim was barred as a matter of law, and the district court did not err in dismissing it with prejudice. Since we have determined that Kaplan's failure-to-assign claim against Weinberg and KR & W is barred by the statute of repose, we need not consider the appellees' alternative argument (and the district court's alternative holding) that the claim was also barred by the statute of limitations.