Court Opinion

ID: 9707528
Source: CourtListenerOpinion
Date Created: 2023-08-26 02:14:40.582087+00
Date Added: 2024-06-11T18:22:34.700843
License: Public Domain

JUSTICE FREEMAN, also dissenting: I respectfully dissent. The question raised in this appeal is simple: May a client be held vicariously liable for tortious conduct committed by counsel during litigation on the client’s behalf in furtherance of that litigation? The majority holds that a client can only be liable when the client “specifically directed, controlled, or authorized the attorney’s precise method of performing the work or *** subsequently ratified acts performed in the exercise of the attorney’s independent judgment.” 212 Ill. 2d at 14. I believe this position is inconsistent with basic agency law which this court has previously endorsed. The majority’s holding is also inconsistent with previous decisions directly on point by our appellate court, the Seventh Circuit, the Restatement (Second) of Agency, and the vast majority of foreign jurisdictions to have addressed the issue. Accordingly, I respectfully dissent. Black-letter agency law tells us that there are three types of relationships in vicarious liability analysis: master/servant, principal/agent, and independent contractor. See Restatement (Second) of Agency § 2 (1958). The relationships of master/servant and independent contractor are mutually exclusive — a subordinate is either an independent contractor or a servant, not both. Restatement (Second) of Agency § 220 (1958). But the relationships of independent contractor and agent are not mutually exclusive; one may be both an independent contractor and an agent, as the appellate majority noted. 312 Ill. App. 3d at 196. See also Restatement (Second) of Agency § 2(3) (1958) (“[a]n independent contractor *** may or may not be an agent”). In fact, “most of the persons known as agents, that is, *** attorneys, *** are independent contractors as the term is used in the Restatement of this Subject, since they are contractors but, although employed to perform services, are not subject to the control or right to control of the principal with respect to their physical conduct in the performance of the services. However, they fall within the category of agents. They are fiduciaries; they owe to the principal the basic obligations of agency: loyalty and obedience.” (Emphases added.) Restatement (Second) of Agency § 14N, Comment a (1958). So far, the majority and I are in agreement — the majority recognizes that “a person may be both an independent contractor and an agent.” 212 Ill. 2d at 13. Yet, the majority immediately thereafter states that an attorney should not be treated as an agent because of precisely those attributes which make the attorney an independent contractor — “autonomy over the details and manner of performing their work.” 212 Ill. 2d at 13. Thus, according to the majority, even though “a person may be both an independent contractor and an agent,” attorneys are not agents, because they are independent contractors. This about-face is confusing at best. The fact that someone is an independent contractor does not bar the attachment of vicarious liability for his actions if he is an agent, as this court explicitly held less than five years ago. Petrovich v. Share Health Plan of Illinois, Inc., 188 Ill. 2d 17, 31 (1999) (“As a general rule, no vicarious liability exists for the actions of independent contractors. Vicarious liability may nevertheless be imposed for the actions of independent contractors where an agency relationship is established”). To the extent that our decision in Gomein says otherwise, it is incorrect and was overruled by Petrovich.1  Simply put, a principal is liable for its agent’s conduct within the scope of the agent’s authority. Brubakken v. Morrison, 240 Ill. App. 3d 680, 686 (1992). Liability is not limited to those cases in which the principal authorized the specific conduct of the agent. Restatement (Second) of Agency § 216 (1958). Although a principal is not liable for physical harm caused by negligent physical conduct of an agent who is also an independent contractor (Restatement (Second) of Agency § 250 (1958)), a principal is liable for the agent’s conduct in matters which the agent has the right to direct under the agreement creating the agency relation, even if the principal is wholly unaware of the specific conduct in question. Restatement (Second) of Agency § 216, Comment a (1958). Accord Peddinghaus v. Peddinghaus, 314 Ill. App. 3d 900, 904 (2000); Letsos v. Century 21 — New West Realty, 285 Ill. App. 3d 1056, 1069 (1996). Cf. Woods v. Cole, 181 Ill. 2d 512, 517 (1998) (“[u]nder the doctrine of respondeat superior, a principal may be held liable for the tortious actions of an agent which cause a plaintiffs injury, even if the principal does not himself engage in any conduct in relation to the plaintiff’). The Restatement (Second) of Agency contains an entire title devoted exclusively to “Agents’ Torts — Liability Not Dependent Upon Relation of Master And Servant.” Restatement (Second) of Agency, ch. 7, topic 2, tit. C (1958). Moreover, section 253 of the Restatement speaks to the precise situation presented in this case. That section, entitled “Tortious Institution or Conduct of Legal Proceedings,” states that “A principal who authorizes a servant or other agent to institute or conduct such legal proceedings as in his judgment are lawful and desirable for the protection of the principal’s interests is subject to liability to a person against whom proceedings reasonably adapted to accomplish the principal’s purposes are tortiously brought by the agent.” Restatement (Second) of Agency § 253 (1958). The comments to section 253 explain that “The principal is liable only if the conduct of the agent is, in part at least, to carry out the purposes of the principal. The situation most frequently arising which involves the rule stated in this Section is that in which an attorney at law tortiously institutes or continues civil or criminal proceedings, or is guilty of oppressive or wrongful conduct during the course of the proceedings, in order that he may enforce a claim of the principal. The fact that the attorney is subject to discipline by the court does not prevent the client from being liable for his conduct.” (Emphases added.) Restatement (Second) of Agency § 253, Comment a (1958). Accord 7A C.J.S. Attorney & Client § 190 (1980) (“A client is liable to a third person injured by an act of the attorney done in the execution of matters within his authority, and according to the ordinary rules of agency, a client may be bound by *** the tortious institution, continuation, or prosecution of legal proceedings to enforce the client’s claim”). Additionally, although the majority contends that “there is no Illinois decision addressing whether clients may be held liable for their attorneys’ alleged intentional torts against a third party undertaken without the direction or knowledge of the client” (212 Ill. 2d at 9), Illinois courts have imposed vicarious liability for the actions of an attorney in the conduct of litigation. See Rankin v. Heidlebaugh, 321 Ill. App. 3d 255, 266-67 (2001); Flight Kitchen, Inc. v. Chicago 7-Up Bottling Co., 22 Ill. App. 3d 558 (1974). See also Doyle v. Shlensky, 120 Ill. App. 3d 807, 820 (1983) (“[t]he attorney-client relationship is one of agent-principal[,] *** and the general rule is that ‘the client is bound by the acts and omissions of his lawyer-agent in the prosecution of a remedy’ ”), quoting Dan-forth v. Checker Taxi Co., 114 Ill. App. 2d 471, 476 (1969). Rankin v. Heidlebaugh is instructive. There, our appellate court specifically held that the organization Equip for Equality (EFE) was itself directly subject to sanctions under Supreme Court Rule 137 for the actions of its attorney. There was no showing in that case that EFE “specifically directed, controlled, or authorized the attorney’s precise method of performing the work” or “subsequently ratified acts performed in the exercise of the attorney’s independent judgment” (see 212 Ill. 2d at 14). Nevertheless, the appellate court concluded that EFE was sanctionable because “[a] principal is hable for the acts of its agent committed within the scope of her authority. *** [W]e conclude that EFE is responsible as principal for the sanctionable conduct of its agent, Karen Kauffman.” Rankin, 321 Ill. App. 3d at 266-67. The majority relies heavily on In re Berry Publishing Services, Inc., 231 B.R. 676 (Bankr. N.D. Ill. 1999), which held that a purchaser in bankruptcy could not hold the trustee liable for purported misconduct by the trustee’s attorney. 212 Ill. 2d at 10-11. However, as the majority recognizes, Berry Publishing relied exclusively upon Anderson v. Marathon Petroleum Co., 801 F.2d 936, 938 (7th Cir. 1986), a case which had nothing to do with attorneys. The question there was whether Marathon should be held liable for a tank cleaner’s failure to provide proper respirators to the tank cleaner’s employees. There was no principal/agent relationship between Marathon and the tank cleaner; the question was solely whether that relationship was one of master/servant or the tank cleaner was an independent contractor. Berry Publishing erred in relying on Anderson without considering whether the agency nature of the attorney/client relationship was relevant to the vicarious liability analysis. Moreover, Berry Publishing overlooked Seventh Circuit case law postdating Anderson. See Diersen v. Chicago Car Exchange, 110 F.3d 481, 489 n.9 (7th Cir. 1997) (“ ‘attorney’s errors and misconduct are attributed to his clients. The clients are principals, the attorney is an agent, and under the law of agency the principal is bound by his chosen agent’s deeds’ ”), quoting United States v. 7108 W. Grand Ave., 15 F.3d 632, 634 (7th Cir. 1994). Berry Publishing also failed to discuss Flight Kitchen. Moreover, Berry Publishing begins its analysis of this issue by stating that “[ujnder Illinois law a principal is not liable for an agents’ [sic] torts, provided the agent is not an employee” (Berry Publishing, 231 B.R. at 682), a position which is flatly incorrect. See Petrovich, 188 Ill. 2d at 31 (“[vicarious liability may nevertheless be imposed for the actions of independent contractors where an agency relationship is established”). The case was wrongly decided and the majority errs in relying upon it. Further, the split in other jurisdictions is far more lopsided than the majority represents. See 212 111. 2d at 11-12. For example, the cases listed in the majority’s “see also” string citation (Aetna Casualty & Surety Co. v. Protective National Insurance Co., 631 So. 2d 305 (Fla. App. 1993); Feliberty v. Damon, 72 N.Y.2d 112, 527 N.E.2d 261, 531 N.Y.S.2d 778 (1988); Brown v. Lumbermens Mutual Casualty Co., 90 N.C. App. 464, 369 S.E.2d 367 (1988), aff’d, 326 N.C. 387, 390 S.E.2d 150 (1990)) are wholly inapposite. Rather than a third party suing a client for the actions of his attorney, these cases involve a client suing his attorney and the entity paying for that attorney, meaning there is no principal/agent relationship between the attorney and the defendant.2 Also factually distinguishable is Baldasarre, in which an attorney represented both sides of a real estate deal and one client sued the other for the attorney’s failure to disclose information.3  Thus, only two of the foreign cases on which the majority relies are on point. One of these eases, Lynn, must be discounted because it relies wholly on Merritt, which, again, is inapposite. This leaves the majority with a single case which supports it, Plant v. Trust Co. of Columbus, 168 Ga. App. 909, 310 S.E.2d 745 (1983). However, I note that even the appellate court of Georgia, the majority’s sole supporter, has not decided this issue uniformly. See Atlantic Co. v. Farris, 62 Ga. App. 212, 215-16, 8 S.E.2d 665, 669 (1940) (“the client is bound, according to the ordinary rules of agency, by the acts of his attorney[;] *** the client may be liable for a trespass committed by his attorney that he in no way authorized, except by his general employment of the attorney, or for the tortious institution, continuation, or prosecution of legal proceedings to enforce the client’s claim”). On the other hand, most of the cases in which the majority concedes that clients have been held liable for their attorneys’ actions, under the precepts of agency law, are quite on point. See, e.g., Southwestern Bell Telephone Co. v. Wilson, 768 S.W.2d 755 (Tex. Ct. App. 1988); Peterson v. Worthen Bank & Trust Co., 296 Ark. 201, 753 S.W.2d 278 (1988); United Farm Bureau Mutual Insurance Co. v. Groen, 486 N.E.2d 571 (Ind. App. 1985); Nyer v. Carter, 367 A.2d 1375 (Me. 1977). Indeed, the wealth of authority directly on point which runs counter to the majority is even greater than the majority recognizes. See, e.g., SEI Corp. v. Norton & Co., 631 F. Supp. 497, 503 n.6 (E.D. Penn. 1986) (“[client] is liable to [opposing party] for his attorney’s wrongful conduct during the course of the judicial proceeding irrespective of the fact that his attorney may be subject to judicial discipline”); Bridge C.A.T. Scan Associates v. Ohio-Nuclear Inc., 608 F. Supp. 1187, 1197 (S.D.N.Y 1985) (“A client and his attorney stand in the relationship of principal and agent. As such, a client may be responsible for statements made for the purpose of aiding, and within the scope of, his legal representation”); Otto v. Levy, 244 A.D. 349, 353, 279 N.Y.S. 462, 467 (1935) (“As their attorney *** was acting within the general scope of his authority, they are hable for his unlawful act”); Hewes v. Wolfe, 74 N.C. App. 610, 619, 330 S.E.2d 16, 22 (1985) (“In circumstances in which an attorney at law *** is guilty of oppressive or wrongful conduct during the course of the proceeding in order to enforce a claim of the principal, the principal is liable for the attorney’s wrongful acts”). Thus the split in other jurisdictions is not nearly as balanced as the majority suggests. Our holding puts Illinois in a distinct minority. More importantly, however, the majority disavows basic black-letter principles of agency law when it holds that principals are not liable for their agents’ conduct within the scope and in the service of the agency. See, e.g., Petrovich, 188 Ill. 2d at 31; Rankin, 321 Ill. App. 3d at 266-67; Flight Kitchen, 22 Ill. App. 3d 558; Restatement (Second) of Agency § 253 (1958); 7A C.J.S. Attorney & Client § 190 (1980). See also Diersen, 110 F.3d at 489 n.9. I recognize the public policy argument that clients should be entitled to assume that attorneys will behave properly. See 212 Ill. 2d at 16-18. It is, of course, reprehensible when an attorney oversteps the bounds of appropriate behavior in the service of his client’s cause. But the whole field of vicarious liability concerns situations in which someone entrusted with authority or responsibility falls short or acts wrongly in their principal’s service. I do not agree that we should create a special rule for attorneys, simply because attorneys are subject to disciplinary rules. In this regard I note, first, that the Restatement directly states that “[t]he fact that the attorney is subject to discipline by the court does not prevent the client from being hable for his conduct.” Restatement (Second) of Agency § 253, Comment a (1958). See also SEI Corp., 631 F. Supp. at 503 n.6 (“[client] is liable to [opposing party] for his attorney’s wrongful conduct during the course of the judicial proceeding irrespective of the fact that his attorney may be subject to judicial discipline”). Second, I note that a principal can be held liable even for criminal actions by his agent — the fact that an agent’s actions are criminal does not automatically mean that no respondeat superior liability will lie. Deloney v. Board of Education of Thornton Township, 281 Ill. App. 3d 775, 783 (1996), citing Restatement (Second) of Agency § 231 (1958). I assume that the majority is not suggesting that ordinary people are more lax in their observance of the criminal code than attorneys are with respect to the profession’s ethical rules. But otherwise, what is the basis for the majority’s distinction — that an attorney’s tortious conduct is so inherently unforeseeable that a principal cannot be held liable, whereas a normal agent’s illegal activity may still form the basis for a principal’s liability? I believe the analogy to violations of the criminal law is instructive, because when courts do reject vicarious liability in the context of a criminal act by the agent, it is because the criminality of the act is found to have taken the act outside the scope of the employment or agency. I believe that this inquiry forms the proper focus in cases seeking to hold clients liable for the wrongdoing of their attorneys. The question should be whether the attorney was conducting matters with which he had been entrusted, and was motivated at least in part by his desire to serve his client, when he committed the tort. In the case at bar, I agree with the appellate court that there are sufficient facts to survive summary judgment on this issue. See 312 Ill. App. 3d at 196 (principal of Holabird & Root stated in a deposition that the letters the law firm sent out “indicated to him that the law firm was pursuing the fee in an ‘aggressive way’ and that the firm was ‘serving them as their clients’ attorneys stated in depositions that they were doing what they were hired to do; and Holabird & Root asserted in its motion for summary judgment that the letters “were a discovery tool in litigation”). Therefore, there is no basis for concluding as a matter of law that the attorneys’ actions were outside the scope of the agency. And thus, as nearly every court to consider the question has agreed, the client may potentially be held hable for its attorney’s actions. I finally submit that the rule suggested by the majority is ill-advised as a matter of public policy. I believe the majority is unwittingly encouraging the retention of attorneys who operate at or beyond the boundaries of law and ethics. The majority would hold that no matter what an attorney does, the client is not liable for any acts except those he “specifically directed, controlled, or authorized.” Under such a rule, an unscrupulous client could freely hire an attorney known to “push the envelope” and then, ostrich-like, hide his head in the sand so as to disavow any specific involvement in the attorney’s methods, and walk away from any wrongdoing committed by his chosen agent on his behalf in the service of his cause. I firmly believe in the upstanding moral character of the membership of the Illinois bar. The Chief Justice’s observations regarding the ethical constraints within which Illinois attorneys are required to operate are entirely correct — although I must note that the majority’s alteration of the laws of agency is not restricted to attorneys licensed in this state, or even in this country. But despite my conviction that very few would stoop to take advantage of it, I cannot endorse the perverse incentive system the majority creates today. The majority holds that traditional agency principles do not apply in the context of attorneys, a quintessential agent.4 See Link v. Wabash R.R. Co., 370 U.S. 626, 633-34, 8 L. Ed. 2d 734, 740, 82 S. Ct. 1386, 1390 (1962) (“Petitioner voluntarily chose this attorney as his representative in the action, and he cannot now avoid the consequences of the acts or omissions of this freely selected agent. Any other notion would be wholly inconsistent with our system of representative litigation, in which each party is deemed bound by the acts of his lawyer-agent”); Restatement (Second) of Agency § 14N, Comment a (1958). Along the way, the majority ignores previous holdings of this court regarding general agency principles (see Petrovich, 188 Ill. 2d at 31; Woods, 181 Ill. 2d at 517), relies on inapposite and ill-founded authority from other jurisdictions, and diverges from the Restatement, the Seventh Circuit, and our own appellate court, each of which has arrived at what I submit is the proper conclusion, that a client may be held vicariously liable for the actions of his chosen counsel, his agent, by application of ordinary principles of agency law. The majority’s concern that holding the client accountable for the attorney’s actions will require the client to oversee the attorney’s actions overlooks that all agency liability is based on the premise that it is the client’s responsibility to choose its agent carefully, at risk of being held liable for their actions if they behave wrongly in promoting the principal’s interests in those actions with the conduct of which they are entrusted. Accordingly, I respectfully dissent.  The majority distinguishes Petrovich from Gomein on the basis that Petrovich involved apparent and implied authority. 212 Ill. 2d at 18-19. These doctrines were involved in Petrovich because a physician is not an agent of an HMO under ordinary agency principles. But by distinguishing the cases on this basis, and maintaining that Gomein remains good law, the majority is stating that according to Illinois law a principal is not liable for the acts of an independent contractor who is an actual agent (Gomein), but a principal is liable for the acts of an independent contractor who is an apparent agent (Petrovich).   The majority characterizes my criticism of its reliance on these cases as “concern that several of the foreign jurisdiction cases *** are insurance cases” and finds this point to be “of no consequence.” 212 Ill. 2d at 20. The majority misunderstands me. I have no objection to taking “general propositions of law *** from factually similar cases,” when on-point support is lacking — as it surely is for the majority’s position. My concern is that these cases are not factually similar because the insurer-defendants did not have an attorney-client relationship with the lawyers whose conduct aggrieved the plaintiffs. In failing to recognize the relevance of the attorney-client agency relationship to vicarious liability analysis the majority sadly repeats the analytical error committed in Berry Publishing.   The holding of Baldasarre is also unclear — although the court at one point states that a client cannot be liable for the acts of an attorney, who is an independent contractor, it elsewhere recognizes that an attorney is a client’s agent, and that a principal is ordinarily liable for the tortious acts of an agent acting within the scope of his authority. Compare Baldasarre, 132 N. J. at 288-89, 625 A.2d at 463-64, with Baldasarre, 132 N.J. at 290, 625 A.2d at 464-65.   In its briefings to this court Holabird & Root explicitly states that it does “not dispute! ]” that “in Illinois there is an agency relationship between an attorney and client.”