Court Opinion

ID: 9715643
Source: CourtListenerOpinion
Date Created: 2023-08-26 06:10:43.642065+00
Date Added: 2024-06-11T18:21:41.903642
License: Public Domain

JUSTICE MORAN delivered the opinion of the court: This appeal originates from John W. Flynn’s (plaintiff’s) action in the Cook County circuit court, where he sought an accounting, and his former law partner, Erwin Cohn (defendant), filed a counterclaim, after the dissolution of their two-partner law firm of Cohn & Flynn (partnership). Following a bench trial, where judgment was entered in favor of plaintiff, the appellate court affirmed. (220 Ill. App. 3d 393.) Thereafter, this court granted defendant’s petition for leave to appeal (134 Ill. 2d R. 315). Three issues are presented for our review: (1) whether defendant waived his Rule 220 objection to the testimony of Nicholas Burke, the plaintiff’s expert; (2) whether the overhead formula adopted by the trial court equitably distributes the overhead expense incurred by the partners for the period after dissolution; and (3) whether equitable principles require defendant to be compensated for his services rendered during the winding-up period. Because of this court's resolution of the second issue presented, it is unnecessary to address the third issue. In 1971, the parties entered into an oral partnership agreement to practice law, and to divide revenues and expenses equally. On April 1, 1987, plaintiff and defendant agreed to dissolve the partnership, and during the subsequent winding-up period, plaintiff handled 37 cases generating $37,000 in fees, while defendant handled 140 cases generating $531,233 in fees. Plaintiff then filed for an accounting to recover his share of the fees received on the partnership’s cases after dissolution; defendant counterclaimed, asking that each party receive the fees on the cases that he individually retained after the dissolution. The trial court, after an evidentiary hearing, ordered both parties to prepare an accounting of expenses and fees for the period after dissolution. At trial, plaintiff called Nicholas Burke, a CPA, to testify. Defendant objected because plaintiff had failed to disclose his expert’s identity until that same week, thereby violating this court’s Rule 220 (134 Ill. 2d R. 220). Consequently, the trial judge offered defendant the opportunity to depose Burke before he testified. Defendant deposed Burke that morning, and trial proceeded that afternoon. Burke testified that he had prepared a formula to determine each partner’s share of the overhead incurred on cases concluded after dissolution. Burke determined that the partnership’s overhead allowance was 62.64% of the gross income, based on a review of its tax returns for the previous five years. Burke then prepared the accounting, using a formula that he had adopted. His formula allegedly determined the overhead incurred on a case after dissolution in relation to how many months the case was pending. Burke explained that use of his formula would reimburse the partner who completed the case for the other partner’s share of the post-dissolution overhead. Using his formula, Burke concluded that defendant was entitled to $319,383, while plaintiff was entitled to $248,850 of the fees received after dissolution. On the other hand, defendant’s expert, Robert Vladem, determined that an alternative method should be used for calculating how the partnership’s receipts are to be distributed. The trial judge found in favor of plaintiff, and ordered defendant to prepare an amended accounting using Burke’s formula. The appellate court, in affirming the trial court, distinguished Phelps v. O’Malley (1987), 159 Ill. App. 3d 214, and its holding concerning the exclusion of experts under Rule 220. The court, analogizing the facts of this case to the circumstances in Kosinski v. Inland Steel Co. (1989), 192 Ill. App. 3d 1017, reasoned that since defendant made no objection to Burke’s testimony after having taken his deposition, he must have led the trial judge and plaintiff to believe that he was satisfied with the deposition and had abandoned his previous objection under Rule 220. As to Burke’s formula, the court felt that the trial judge’s decision to adopt it was not against the manifest weight of the evidence and, therefore, refused to disturb it. The court emphasized that the case relied upon by defendant, In re Estate of Barbera (1973), 55 Ill. 2d 235, did not require any specific method of allocating overhead to the exclusion of any other methods. The appellate court also rejected defendant’s contention that he was entitled to additional compensation since he had handled more cases during the winding-up period than plaintiff had. It ruled that there was no evidence of an agreement to compensate a partner for his work, and that compensation is prohibited in the absence of such an agreement. Ill. Rev. Stat. 1989, ch. 106½, par. 18(f). The first issue raised by defendant is whether plaintiff’s expert, Burke, was erroneously permitted to testify at trial. Defendant contends that Burke should have been barred since plaintiff failed to properly disclose him by the time required under Rule 220. Instead, he gave defendant only one week’s notice of his intention to call Burke as a witness. Supreme Court Rule 220(bXl) requires a party to disclose the identity of an expert witness retained to give an opinion at trial, either within 90 days after the expert’s opinion first becomes known to the party or at the first pretrial conference, if the opinion is known at the time, whichever is later. (134 Ill. 2d R. 220(b)(1).) Failure to disclose an expert witness within the required time frame will result in the disqualification of the expert as a witness. (134 Ill. 2d R. 220(b)(1).) Plaintiff clearly failed to meet this requirement. Defendant argues that our approval of the trial court’s allowance of Burke's testimony would diminish the future effectiveness of Rule 220(b) in deterring surprise disclosures of expert witnesses. However, we find that there is no need to reach a decision on the merits, that being the court’s ability to use discretion in applying Rule 220. Instead, we affirm the conclusion of the appellate court which, based on Kosinski, 192 Ill. App. 3d 1017, held that defendant had waived any objection that he may have had to Burke’s testifying at trial. Our review of the record clearly establishes that after defendant had made his initial objection to plaintiff’s intention to examine Burke, the trial court asked defendant whether he wished to take Burke’s deposition, and therefore postpone the proceeding at that time. The defendant, while initially expressing concern that this would delay the whole proceeding, then offered to take the deposition that day. After court was recessed in order to allow defendant to take the deposition, it resumed with the plaintiff calling Burke to testify, to which defendant acquiesced. Accordingly, we find that defendant had an opportunity to depose Burke, did so, and never indicated that the deposition would be inadequate for him to present his full defense at trial, or that some disadvantage was being realized by reason of the tardy disclosure of plaintiff’s expert. Most importantly, defendant never renewed his objection (or in any way voiced his opposition) to Burke’s testimony, after, the deposition. (Cf. Phelps, 159 Ill. App. 3d 214 (where, under a similar set of circumstances, a party moved to bar his opponent’s expert under Rule 220 before his scheduled testimony, and then, after the court adjourned to give movant an opportunity to depose the expert, the movant renewed his motion to bar him).) Defendant’s actions led the judge and plaintiff to believe that he was satisfied with the deposition and had abandoned his previous objection under Rule 220; therefore, he cannot now claim error as a result of the court’s allowance of the testimony. See Kosinski, 192 Ill. App. 3d at 1025-26. The second issue raised by defendant is whether the formula adopted by the trial court equitably distributes the overhead expense incurred by the partners after dissolution. Defendant argues that the judge erred when he accepted the formula advanced by plaintiff instead of the one proposed by him. With regard to our review of the trial court’s discretion here, we note that this court has previously stated: “Although a trial court’s decision is always subject to review, a reviewing court should not overturn a trial court’s findings merely because it does not agree with the lower court or because it might have reached a different conclusion had it been the trier of fact. [Citations.] The ' trial judge, as the trier of fact, is in a position superior to a court of review to observe the demeanor of witnesses while testifying, to judge their credibility and to determine the weight their testimony should receive. [Citations.] Consequently, where the testimony is conflicting in a bench trial, the court’s findings will not be disturbed unless they are against the manifest weight of the evidence.” In re Application of the County Treasurer (1989), 131 Ill. 2d 541, 549. After dissolution of the partnership on April 1, 1987, responsibility for the work and overhead on the partnership files was allocated between the two partners. At trial, plaintiff’s expert, Burke, presented a formula which he claimed reimbursed the partner who completed work on a file for the overhead he expended since dissolution. That formula is as follows: “fee x 62.64% x A/B x 50% = C A = number of months case pending after dissolution B = total number of months case pending C = each partner’s share of overhead incurred after dissolution” Burke had determined that the historical overhead percentage of the partnership was 62.64% of gross income. His formula apportioned the overhead incurred on a case between the months the case was pending before and after dissolution. One-half of the post-dissolution overhead was credited to the partner who handled the case after dissolution, since there were two equal partners. What was remaining from the fee was then to be divided equally between plaintiff and defendant. Defendant, however, argues that Burke’s formula violates an accounting method he claims this court adopted in Barbera, 55 Ill. 2d 235. Barbera involved the accounting of a law partnership that dissolved with the death of a partner. The surviving partner handled the partnership’s pending cases during the winding-up period. This court found the record supported an overhead allowance of 60% of the total fees collected after dissolution and allocated the entire overhead to the surviving partner before splitting any profits. Defendant argues that use of Burke’s formula is inconsistent with Barbera-, however, we find that Barbera did not adopt a specific method to allocate overhead to the exclusion of other methods. Defendant also argues that the trial judge ignored the testimony of his expert, Vladem, who criticized Burke’s formula. Vladem testified that the overhead percentage was actually 65%, rather than 62.64%, because it should have included additional expenses. He also testified that Burke’s formula violated the matching principle of accounting. Vladem further explained that the overhead incurred on a case should not have been weighed by the number of months it was pending because the fee generated was not similarly dependent on the number of months a case was pending. Finally, he contended that the overhead incurred on a case after dissolution should not have been divided in half because that had the effect of reducing overhead when the number of partners increased. Despite Vladem’s criticism, the trial judge found that Burke’s testimony was more credible than Vladem’s and that his decision was supported by the evidence, noting that Burke had experience accounting for law partnerships involving contingent-fee cases, unlike Vladem. Further, Vladem’s compensation factor (abandoned by defendant on appeal) disregarded the partnership’s overhead percentage and credited defendant for additional post-dissolution overhead based on the presumption that defendant incurred more overhead because his cases generated more income. Apparently, the compensation factor was an attempt to give defendant extra compensation but, instead, discredited Vladem’s testimony. Additionally, Burke prepared plaintiff’s accounting and supported its conclusions with his testimony while Vladem did not give an opinion of the propriety of defendant’s accounting. Burke also testified that defendant’s computation contained mathematical errors. The trial judge was in the best position to resolve the conflicts between the experts’ testimony and determine their credibility. Based on our review of the record, we agree with plaintiff that the trial and appellate courts’ finding, that Burke’s formula equitably distributes the post-dissolution overhead between the partners, was not against the manifest weight of the evidence. For the reasons stated, the judgment of the appellate court, affirming the circuit court, is affirmed. Affirmed.