Court Opinion

ID: 4385965
Source: CourtListenerOpinion
Date Created: 2019-04-10 21:03:23.406666+00
Date Added: 2024-06-11T14:29:38.677461
License: Public Domain

2019 IL App (3d) 170757

                           Opinion filed April 10, 2019
____________________________________________________________________________

                                   IN THE

                       APPELLATE COURT OF ILLINOIS

                               THIRD DISTRICT

                                     2019

PARTNERS FOR PAYMENT RELIEF                  ) Appeal from the Circuit Court
DE IV, LLC,                                  ) of the 13th Judicial Circuit,
                                             ) Bureau County, Illinois.
       Plaintiff,                            )
                                             )
       v.                                    )
                                             )
JOHN DAILY, UNKNOWN OWNERS and               )
NONRECORD CLAIMANTS,                         )
                                             ) Appeal No. 3-17-0757
       Defendants                            ) Circuit No. 16-CH-73
                                             )
(John Daily,                                 )
                                             )
       Third-Party Plaintiff-Appellant,      )
                                             )
       v.                                    )
                                             )
Barash & Everett, LLC, and Clinton A. Block, ) Honorable
                                             ) Cornelius J. Hollerich,
       Third-Party Defendants-Appellees).    ) Judge, Presiding.
____________________________________________________________________________

      JUSTICE O’BRIEN delivered the judgment of the court, with opinion.
      Justices McDade and Wright concurred in the judgment and opinion.
____________________________________________________________________________

                                  OPINION
¶1          The defendant and third-party plaintiff, John Daily, appealed the dismissal with prejudice

     of his third-party complaint against the third-party defendants, Barash & Everett, LLC (Barash),

     and Clinton A. Block, his former attorneys, for implied indemnity.

¶2                                                 FACTS

¶3          On November 21, 2016, the plaintiff, Partners for Payment Relief DE IV, LLC (Payment

     Relief), an assignee of the mortgagee, filed a complaint to foreclose a mortgage against Daily,

     alleging that Daily, the mortgagor, had not paid on the mortgage since June 2006. The mortgage

     was a second mortgage, entered into on May 24, 2004, for a principal sum of $31,677.

¶4          On February 24, 2017, Daily filed a third-party complaint for implied indemnity against

     the third-party defendants, Barash and Block, alleging that Daily had been advised by the third-

     party defendants that the second mortgage was stripped off or avoided in Daily’s Chapter 13

     bankruptcy proceedings. Daily alleged that the third-party defendants had been retained as his

     attorneys in his bankruptcy proceedings that commenced in June 2006. The third-party complaint

     alleged breach of contract, breach of fiduciary duty, and professional negligence in that the third-

     party defendants failed to timely seek a discharge of the subject mortgage and failed to provide

     Daily with competent legal advice.

¶5          The third-party defendants filed a motion to dismiss the third-party complaint pursuant to

     section 619(a)(5) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(5) (West 2016)),

     contending that the complaint was untimely under the statutes of limitations and repose

     contained in section 214.3(b) and (c) of the Code (id. § 13-214.3(b), (c)). The motion to dismiss

     alleged that Block filed a Chapter 13 voluntary petition in bankruptcy on behalf of Daily on June

     22, 2006. On March 16, 2010, Justin Raver, the managing partner of Barash, substituted as

     attorney of record in the bankruptcy proceedings and, on June 23, 2011, filed a motion to modify

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     or amend the plan to correct the treatment of the second mortgage, but that motion was denied on

     July 26, 2011. The motion to modify acknowledged that there had been a significant mistake in

     the Chapter 13 plan regarding the treatment of the second mortgage. The bankruptcy case was

     closed on November 21, 2011. The motion to dismiss further alleged that Daily was aware as

     early as 2010 that the second mortgage had not been stripped off in the bankruptcy case. Further,

     the motion to dismiss alleged that neither Block nor Barash had performed any legal work for

     Daily in connection with the bankruptcy since 2010 and had not received fees for services related

     thereto since 2006.

¶6          In response to the motion to dismiss, Daily referenced and attached several e-mails

     between himself and employees of Barash after 2006 regarding the second mortgage. The e-mail

     dated February 28, 2013, from attorney Raver at Barash, told Daily to “Keep me advised as to

     current events.” An e-mail dated December 6, 2013, stated: “Justin Raver reviewed your e-mail.

     He says this is the first step in a foreclosure process. If you are served with a foreclosure

     summons let us know right away.” Another e-mail from an employee of Barash on December 21,

     2015, contained the subject line “Bankruptcy” and informed Daily that Payment Relief wanted to

     negotiate a settlement regarding Daily’s second mortgage. Thereafter, in a letter dated February

     2, 2016, Barash confirmed that it was not representing Daily in relation to the collection efforts

     by the second mortgage holder and urged Daily to contact another lawyer if he wished to discuss

     his rights in the matter. As noted above, the complaint to foreclose the second mortgage was

     filed on November 21, 2016.

¶7          The trial court granted the third-party defendants’ motion to dismiss with prejudice,

     finding that the claim against the third-party defendants was barred by both the statute of

     limitations and the statute of repose (id.). The trial court found that, pursuant to Illinois Supreme

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       Court Rule 304(a) (eff. Mar. 8, 2016), there was no just reason for delaying enforcement or

       appeal and Daily appealed.

¶8                                                  ANALYSIS

¶9            Daily argues that when a complaint for legal malpractice is brought in an indemnity

       action, the limitations period for commencing the action is governed by the limitations period

       contained in section 13-204 of the Code (735 ILCS 5/13-204 (West 2016)), rather than section

       13-214.3(c) of the Code (id. § 13-214.3(c)). The third-party defendants allege that section 13-

       214.3 of the Code is the more specific statute to legal malpractice claims and should be applied

       over the more general contribution statute. We review de novo a dismissal under section 2-619 of

       the Code. Van Meter v. Darien Park District, 207 Ill. 2d 359, 368 (2003).

¶ 10          The primary objective of the court in construing the meaning of a statute is to ascertain

       and give effect to the intent of the legislature. Southern Illinoisan v. Illinois Department of

       Public Health, 218 Ill. 2d 390, 415 (2006). The plain language of the statute is usually the most

       reliable indication of legislative intent. Id. Section 214.3(b) of the Code states:

              “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 or (ii)

              against a non-attorney employee arising out of an act or omission in the course of his or

              her employment by an attorney to assist the attorney in performing 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(b) (West 2016).

¶ 11          The Illinois Supreme Court has stated that section 13-214.3 of the Code unambiguously

       applies to all claims brought against an attorney arising out of actions or omissions in the

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       performance of professional services. Evanston Insurance Co. v. Riseborough, 2014 IL 114271,

       ¶ 23 (“The ‘arising out of’ language indicates an intent by the legislature that the statute apply to

       all claims against attorneys concerning their provision of professional services.”); see also

       Landreth v. Raymond P. Fabricius, P.C., 2018 IL App (3d) 150760, ¶ 31 (section 214.3 of the

       Code is not applicable to claims that do not arise out of provision of legal services but rather

       seeks to hold partner liable derivatively based upon his status as a partner). Pursuant to the

       express language of section 214.3 of the Code, it is the nature of the act or omission, rather than

       the identity of the plaintiff, that determines whether the statute applies to a claim brought against

       an attorney. Riseborough, 2014 IL 114271, ¶ 19.

¶ 12          In this case, the claims against the third-party defendants, while stated as an implied

       indemnity action, are all claims against attorneys arising out of actions or omissions in the

       performance of professional services. Thus, section 13-214.3 of the Code governs the action,

       rather than the general contribution and indemnity statute, section 13-204 of the Code.

¶ 13          The two-year statute of limitations contained in section 13-214.3(b) (735 ILCS 5/13-

       214.3(b) (West 2016)) begins to run after a cause of action has accrued, while the statute of

       repose contained in section 13-214.3(c) of the Code begins to run as soon as an event creating

       the malpractice occurs, regardless of whether any injury has yet resulted so as to cause an action

       to accrue. Mauer v. Rubin, 401 Ill. App. 3d 630, 639 (2010); 735 ILCS 5/13-214.3(c) (West

       2016). A statute of repose begins to run when a specific event occurs, regardless of whether an

       action has accrued and extinguishes liability after a fixed period of time. Snyder v. Heidelberger,

       2011 IL 111052, ¶ 10. “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.” Id. ¶ 18.

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¶ 14          The third-party defendants argue that Block’s work occurred in 2006, so the statute of

       repose expired in 2012. Daily’s complaint alleges that he retained Block to pursue bankruptcy

       relief in 2006. Daily alleges that he was advised that the second mortgage at issue here would be

       discharged in the bankruptcy proceedings. Based on the allegations in the complaint, the trial

       court was correct to dismiss Daily’s third-party complaint. However, a dismissal with prejudice,

       with no opportunity to amend, was in error. The briefs filed in opposition to the motion to

       dismiss in the trial court indicate that the third party defendants filed a motion to amend Daily’s

       bankruptcy plan on June 23, 2011, which was denied on July 26, 2011. The third party

       defendants also continued e-mailing Daily regarding the case through late 2015, finally

       informing Daily that it did not represent him in relation to the collection efforts by the second

       mortgage holder on February 2, 2016. It is arguable that the malpractice continued until 2016

       and compounded the damage done by the admitted malpractice in the bankruptcy proceedings, so

       Daily should be allowed to amend his complaint. But see Rubin, 401 Ill. App. 3d at 645 (activity

       on the part of the attorneys after defective agreement was entered did not compound the damage

       caused by the final judgment).

¶ 15          Daily argues that he also has a meritorious equitable estoppel claim against the third-

       party defendants. Daily contends that the continued e-mails with the third-party defendants lulled

       him into a sense of security and he relied on their indications that they would protect and defend

       him.

¶ 16          A party claiming estoppel must demonstrate that (1) the other person misrepresented or

       concealed material facts; (2) the other person knew at the time he or she made the representations

       that they were untrue; (3) the party claiming estoppel did not know that the representations were

       untrue when they were made and when that party decided to act, or not, upon the representations;

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       (4) the other person intended or reasonably expected that the party claiming estoppel would

       determine whether to act, or not, based upon the representations; (5) the party claiming estoppel

       reasonably relied upon the representations in good faith to his or her detriment; and (6) the party

       claiming estoppel would be prejudiced by his or her reliance on the representations if the other

       person is permitted to deny the truth thereof. DeLuna v. Burciaga, 223 Ill. 2d 49, 82-83 (2006).

¶ 17          The Illinois Supreme Court applied equitable estoppel in the context of a statute of

       limitations in Jackson Jordan, Inc. v. Leydig, Voit & Mayer, 158 Ill. 2d 240, 252 (1994), and

       found that the attorneys’ constant reassurance of the client’s legal status lulled him into a false

       sense of security. Thus, Daily should be allowed to amend his complaint to include the estoppel

       allegations.

¶ 18                                            CONCLUSION

¶ 19          The judgment of the circuit court of Bureau County is affirmed in part in that the

       dismissal of the third-party complaint is upheld but the fact that the dismissal was with prejudice

       is reversed and the matter is remanded to allow the third-party plaintiff to file an amended third-

       party complaint.

¶ 20          Affirmed in part and reversed in part.

¶ 21          Cause remanded.

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