Collins v. Reynard

553 N.E.2d 69, 195 Ill. App. 3d 1067, 142 Ill. Dec. 719, 1990 Ill. App. LEXIS 382
CourtAppellate Court of Illinois
DecidedMarch 28, 1990
Docket4-89-0667
StatusPublished
Cited by21 cases

This text of 553 N.E.2d 69 (Collins v. Reynard) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Collins v. Reynard, 553 N.E.2d 69, 195 Ill. App. 3d 1067, 142 Ill. Dec. 719, 1990 Ill. App. LEXIS 382 (Ill. Ct. App. 1990).

Opinion

JUSTICE STEIGMANN

delivered the opinion of the court:

This appeal is brought by defendants from an interlocutory order denying their motion to dismiss. Plaintiff, Dorothy Collins, sued defendants, Charles Reynard and his law firm, Reynard and Robb, for legal malpractice. Counts I and II are premised upon a negligence theory; counts III and IV are premised upon a breach of contract theory. In her complaint, Collins claimed as damages money due her under an installment contract negotiated by Reynard. Reynard contends that Collins failed to state a cause of action in tort because she alleged only economic damages which are not recoverable in tort. The trial court denied the motion to dismiss, but found that the issue presented a question of law with substantial grounds for difference of opinion. The court also found that an immediate appeal would materially advance the litigation. Reynard filed an application for an interlocutory appeal pursuant to Supreme Court Rule 308 (107 Ill. 2d R. 308), which this court subsequently granted.

We reverse.

Collins employed Reynard and his firm to negotiate the sale of her business. In her complaint, Collins claims that Reynard negligently drafted or approved the sales contract because (1) the contract did not reflect her intent to retain a first and prior security interest in and to the business and assets sold; (2) Reynard advised her to sign a sales agreement which did not reserve a security interest in the business and the assets; and (3) Reynard failed to advise her to obtain a signed financing statement from the buyer of the business.

The buyer of the business defaulted on the installment contract and pledged the assets of the business to another creditor, a bank, who then held a security interest superior to that of Collins. The bank perfected its interest, took possession of the business, and sold it to another buyer. Collins claims as damages the payments due under the installment contract, which include the principal, interest, costs of collection, and attorney fees, totalling $47,971.35. Collins makes no claim for any personal injury or property damage, seeking to recover only the loss of benefit of her bargain for the sale of her business.

In 1986, the Illinois Supreme Court defined economic loss as:

“ ‘[DJamages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits— without any claim of personal injury or damage to other property.’ ” (Anderson Electric, Inc. v. Ledbetter Erection Corp. (1986), 115 Ill. 2d 146, 149, 503 N.E.2d 246, 247, quoting Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, 82, 435 N.E.2d 443, 752.)

The injuries resulting from legal malpractice are not personal injuries, but are pecuniary injuries to intangible property interests. (Gruse v. Belline (1985), 138 Ill. App. 3d 689, 697, 486 N.E.2d 398, 404; Yates v. Muir (1985), 130 Ill. App. 3d 604, 609, 474 N.E.2d 934, 937.) To recover damages in a negligence action, there must be a showing of harm above and beyond disappointed expectations. A buyer’s desire to enjoy the benefit of his bargain is not an interest that tort law traditionally protects. Redarowicz v. Ohlendorf (1982), 92 Ill. 2d 171, 177, 441 N.E.2d 324, 327.

Economic damages have been characterized as objectively verifiable monetary losses, including medical expenses, loss of earnings, burial costs, loss of the use of property, costs of repair or replacement, costs of obtaining substitute domestic services, loss of employment, and loss of business or employment opportunities. Noneconomic damages have been characterized as losses for pain, suffering, inconvenience, physical impairment, disfigurement, emotional distress, loss of consortium, and injury to reputation. Evangelatos v. Superior Court (1988), 44 Cal. 3d 1188, 753 P.2d 585, 246 Cal. Rptr. 629; MacCuish v. Volkswagenwerk A.G. (1986), 22 Mass. App. Ct. 380, 494 N.E.2d 390; H. Oleck, Damages to Persons and Personal Property §46, at 31 (3d ed. 1961).

In this case, Collins seeks to recover, “all amounts due under her contract from and since February 1, 1985, including contract principal, interest, costs of collection and attorney’s fees.” We conclude the Collins’ complaint prays for purely economic damages. Having so concluded, we now must address whether such a complaint can set forth a cause of action for legal malpractice in tort based on claims of negligence.

The Indiana Court of Appeals recently discussed the issue of whether economic damages are appropriately awarded under a negligence theory. (See Jordan v. Talaga (Ind. App. 1989), 532 N.E.2d 1174.) In Jordan, the court reasoned:

“[T]he heart of this issue is the basic distinction between the theories of tort and contract law. The theory of negligence protects interests related to safety or freedom from physical harm, including not only personal injuries, but also damage caused by defective personal property. For example, the damages to an automobile wrecked by reason of its own bad brakes, as well as other property in the vicinity, is compensable through an action in negligence.
‘But where there is no accident, and no physical damage, and the only loss is a pecuniary one, through loss of the value or use of the thing sold, or the cost of repairing it, the [courts] have adhered to the rule *** that purely economic interests are not entitled to protection against mere negligence, and so have denied the recovery.’ ” Jordan, 532 N.E.2d at 1181, quoting W. Prosser, Torts §101, at 665 (4th ed. 1971).

In addition, the Illinois Supreme Court has considered whether one may recover economic damages in tort from various nonlawyer professionals. That court held that a plaintiff may not recover purely economic losses against a contractor or manufacturer for the tort of defeated expectations of a commercial bargain (Anderson, 115 Ill. 2d at 153, 503 N.E.2d at 249), against a builder for negligence (Morrow v. L.A. Goldschmidt Associates, Inc. (1986), 112 Ill. 2d 87, 97-98, 492 N.E.2d 181, 185; Foxcroft Townhome Owners Association v. Hoffman Rosner Corp. (1983), 96 Ill. 2d 150, 157, 449 N.E.2d 125, 128; Redarowicz, 92 Ill. 2d at 177, 441 N.E.2d at 327), or against a seller-manufacturer for negligence (Scott & Fetzer Co. v. Montgomery Ward & Co. (1986), 112 Ill. 2d 378, 388, 493 N.E.2d 1022

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Bluebook (online)
553 N.E.2d 69, 195 Ill. App. 3d 1067, 142 Ill. Dec. 719, 1990 Ill. App. LEXIS 382, Counsel Stack Legal Research, https://law.counselstack.com/opinion/collins-v-reynard-illappct-1990.