2020 IL App (1st) 191953 Nos. 1-19-1953 & 1-19-1973 (consol.) Opinion filed November 30, 2020 Modified upon denial of rehearing December 31, 2020
First Division ______________________________________________________________________________ IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT ______________________________________________________________________________ SUBURBAN REAL ESTATE SERVICES, INC., and ) BRYAN BARUS, ) Appeal from the ) Circuit Court of Plaintiffs-Appellants, ) Cook County. v. ) ) No. 16 L 5295 WILLIAM ROGER CARLSON JR. and CARLSON ) PARTNERS, LTD., ) Honorable ) Diane M. Shelley, Defendants-Appellees. ) Judge, presiding.
JUSTICE HYMAN delivered the judgment of the court, with opinion. Justices Pierce and Coghlan concurred in the judgment and opinion.
OPINION
¶1 Suburban Real Estate Services, Inc., and Bryan Barus retained defendants William Roger
Carlson Jr. and his law firm, Carlson Partners, Ltd., for legal advice in dissolving a company they
co-owned with ROC, Inc. (Plaintiffs will be collectively referred to as “Barus” and defendants as
“Carlson.”) After Barus followed Carlson’s advice, ROC, Inc. (ROC), sued Barus alleging breach
of his fiduciary duties. Barus retained new attorneys. They informed him that he likely had a legal
malpractice claim against Carlson but that he should wait until the claims by ROC were resolved Nos. 1-19-1953 & 1-19-1973
before pursuing it. The trial court in the underlying lawsuit found Barus had breached his fiduciary
duties and ordered him to pay to ROC 50% of the fair value of the assets he improperly transferred
out of the company. After settling his claims with ROC, Barus filed a legal malpractice complaint
against Carlson.
¶2 Carlson moved for summary judgment on the grounds that the two-year statute of
limitations for legal malpractice claims barred Barus’s claims. The trial court granted Carlson’s
motion, finding that Barus’s legal malpractice claims began to accrue when his new attorneys
advised him he may have a legal malpractice claim against Carlson. The court concluded Barus
knew or should have known when he paid attorney’s fees to the new law firm that he had a legal
malpractice claim against Carlson.
¶3 Barus argues he timely filed his malpractice complaint within two years of the judgment
against him, at which time he first knew he had been injured by Carlson’s purported negligence.
Barus asserts that filing a malpractice claim before then would have been premature because, had
he prevailed in the underlying lawsuit, he would have had no injury. We agree. As the defendant
in the underlying lawsuit, Barus was not injured for the purposes of triggering the statute of
limitations until entry of the adverse judgment in the underlying lawsuit. Further, we reject
Carlson’s contention that summary judgment was warranted because Barus would have had to pay
50% of the fair value of the company’s assets to ROC under the company’s operating agreement.
Instead, Barus suffered no damages from the purported legal malpractice. The damages the trial
court imposed related directly to the steps Barus took in dissolving the company and would not
have been owed had he not breached his fiduciary duties.
¶4 We reverse the trial court order granting summary judgment and remand for further
proceedings.
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¶5 Background
¶6 Bryan Barus is the principal and sole owner of Suburban Real Estate Services, Inc., a
commercial real estate management company. In February 2006, Suburban Real Estate and
another company, ROC, formed a joint company, ROC/Suburban LLC. Suburban Real Estate and
ROC each owned a 50% interest in the new company, which acted as a vendor to Suburban Real
Estate in supplying commercial property management services. (Michael Siurek, the sole
shareholder of ROC, is not a party to the appeal.)
¶7 In 2010, Barus decided to end Suburban Real Estate’s involvement in ROC/Suburban LLC
and retained Carlson and his law firm to represent his company in unwinding the business
relationship. On the advice of Carlson, Barus sent a “break-up” letter to Siurek, notifying him of
the steps he planned to take to terminate his company’s relationship with ROC/Suburban LLC as
of July 1, 2010, including no longer using ROC/Suburban LLC as a vendor and taking most of
ROC/Suburban LLC’s employees.
¶8 On the advice of Carlson, Barus implemented the steps described in the letter including
taking most of ROC/Suburban’s employees in June 2010, while Suburban Real Estate was still a
member of ROC/Suburban and before the vendor relationship ended on July 1. About a month
later, in August 2010, ROC sued Barus in Du Page County alleging breach of fiduciary duty.
Carlson continued as Barus’s attorney for a while; Barus eventually retained new attorneys,
Gaspero & Gaspero Attorneys at Law, P.C. (Gaspero), to represent him. At a pretrial conference
in April 2013, the trial judge told Gaspero he would likely find that Barus’s conduct constituted a
breach of fiduciary duty if the case proceeded to trial. The judge further said that, to the extent
Barus’s conduct was recommended by Carlson, the advice constituted legal malpractice and a
malpractice claim was “a hundred percent” certainty.
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¶9 Gaspero told Barus about the trial judge’s comments and discussed the possibility of a legal
malpractice claim against Carlson. Gaspero also contacted an attorney who specializes in legal
malpractice to assess the viability of a malpractice claim against Carlson.
¶ 10 After a bench trial, the trial court entered judgment for ROC on June 17, 2015. Barus
reached a settlement with ROC and filed this legal malpractice case on May 26, 2016, alleging
that, as a result of Carlson’s legal advice, he had to pay more than $500,000 in claims and
attorney’s fees to ROC.
¶ 11 Carlson moved for summary judgment, arguing that Barus knew or should have known
about his alleged negligence in 2011, when Barus retained and started paying attorney’s fees to
Gaspero or by 2013 at the latest, when the trial judge told Gaspero that a malpractice claim was a
certainty. Carlson argued that the applicable two-year statute of limitations barred Barus’s
malpractice complaint. In response, Barus argued that the statute of limitations began to run on the
entry of the adverse judgment in the ROC litigation in 2015 and, thus, his complaint was timely.
¶ 12 The trial court entered a written order granting Carlson’s motion for summary judgment,
finding that Barus had notice of his malpractice claim as early as 2010, when ROC filed the
underlying lawsuit, and no later than April 2013, when the judge told his new attorney, Gaspero,
that a malpractice action against Carlson was a “one-hundred percent certainty” and Gaspero
sought advice from another attorney about when a malpractice claim needed to be filed.
¶ 13 The court noted that a legal malpractice claim usually does not begin to accrue until the
plaintiff has suffered an adverse judgment, settlement, or dismissal in the underlying action. But,
citing this court’s decisions in Construction Systems, Inc. v. FagelHaber, LLC, 2019 IL App (1st)
172430, and Nelson v. Padgitt, 2016 IL App (1st) 160571, the trial court stated that a legal
malpractice claim can accrue before an adverse judgment where a client has to pay legal fees as a
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result of attorney neglect. The trial court found Barus’s claim barred. It concluded that Barus
discovered or should have discovered the defective legal advice at least as of April 2013, when
Gaspero began investigating a potential malpractice claim and Barus incurred attorney’s fees “as
a direct result of defendants’ allegedly-negligent legal advice.” (The trial court also entered
summary judgment in favor of Gaspero on Carlson’s third-party complaint for contribution.
Carlson separately appealed that order in appeal No. 1-19-1973, which has been consolidated with
appeal No. 1-19-1953 but stayed pending the resolution of this appeal.)
¶ 14 Analysis
¶ 15 Standard of Review
¶ 16 Summary judgment should be applied where no genuine issues of material fact remain and
the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2018).
The trial court may grant summary judgment after considering “the pleadings, depositions,
admissions, exhibits, and affidavits on file in the case” and construing that evidence in favor of the
nonmoving party. Purtill v. Hess, 111 Ill. 2d 229, 240 (1986). Summary judgment aids in the
expeditious disposition of a lawsuit, but it is a drastic measure that should be allowed only “when
the right of the moving party is clear and free from doubt.” Id. We review the trial court’s grant of
summary judgment de novo. Williams v. Manchester, 228 Ill. 2d 404, 417 (2008).
¶ 17 Statute of Limitations
¶ 18 An action for legal malpractice must be filed within two years from the time the plaintiff
“knew or reasonably should have known of the injury for which damages are sought.” 735 ILCS
5/13-214.3(b) (West 2018). To trigger the limitations period, the plaintiff must have a reasonable
belief that the injury was caused by the lawyer’s wrongful conduct and the plaintiff, therefore, has
an obligation to inquire further. Dancor International, Ltd. v. Friedman, Goldberg & Mintz, 288
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Ill. App. 3d 666, 673 (1997). But “[k]nowledge that an injury has been wrongfully caused does
not mean knowledge of a specific defendant’s negligent conduct or knowledge of the existence of
a cause of action,” and thus the statute of limitations may run despite the lack of actual knowledge
of wrongful conduct. (Internal quotation marks omitted.) Janousek v. Katten Muchin Rosenman
LLP, 2015 IL App (1st) 142989, ¶ 13 (citing Castello v. Kalis, 352 Ill. App. 3d 736, 744 (2004)).
¶ 19 “Injury” requires a legal client suffer a loss for which he or she may seek monetary
damages. Northern Illinois Emergency Physicians v. Landau, Omahana & Kopka, Ltd., 216 Ill. 2d
294, 306 (2005). Generally, a plaintiff does not sustain an injury until an adverse judgment,
settlement, or dismissal in the underlying action. Nelson, 2016 IL App (1st) 160571, ¶ 13. But “a
malpractice action may accrue before the trial court enters an adverse judgment if it is plainly
obvious that the plaintiff has been injured as the result of professional negligence or where an
attorney’s neglect is a direct cause of the legal expense incurred by the plaintiff.” (Internal
quotation marks omitted.) FagelHaber, 2019 IL App (1st) 172430, ¶ 20; Nelson, 2016 IL App
(1st) 160571, ¶ 14; see also Goran v. Glieberman, 276 Ill. App. 3d 590, 595-96 (1995) (client’s
cause of action for legal malpractice accrued when client retained and paid fees to successor
attorneys to duplicate initial attorney’s efforts).
¶ 20 Like the trial court, Carlson relies on FagelHaber and Nelson to argue that the statute of
limitations began as early as October 2010, when Barus retained Gaspero, incurring legal expenses
related to Carlson’s purportedly negligent legal advice, and no later than April 2013, when Gaspero
advised Barus he likely had a legal malpractice claim. Carlson contends the two-year statute of
limitations had expired when Barus filed the legal malpractice case in May 2016.
¶ 21 Barus asserts, however, that attorney’s fees he paid Gaspero were not actionable for
attorney malpractice, as no clear finding of attorney neglect had been shown in the underlying
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case. Rather, at that time, his malpractice claim against Carlson amounted to speculation. Then, in
June 2015, on the entry of the adverse judgment, his cause of action accrued. For support, Barus
relies on Lucey v. Law Offices of Pretzel & Stouffer, Chartered, 301 Ill. App. 3d 349 (1998), and
Warnock v. Karm Winand & Patterson, 376 Ill. App. 3d 364 (2007).
¶ 22 In Lucey, the plaintiff, relying on his attorney’s advice, solicited clients from his employer
before resigning to start his own company. Lucey, 301 Ill. App. 3d at 351. The plaintiff’s former
employer sued him. Id. at 352. While the lawsuit by the former employer was pending, the plaintiff
sued his attorney for malpractice. Id. The trial court dismissed the malpractice complaint, finding
it premature because the plaintiff had not yet sustained damages, as the underlying lawsuit by the
former employer remained pending. Id. The appellate court affirmed, holding that the legal
malpractice action accrued when the former employer’s lawsuit against the plaintiff concluded. Id.
at 355. The plaintiff could possibly prevail against the former employer, so the damages were
“entirely speculative until a judgment is entered against the former client or he is forced to settle.”
Id. “[A] cause of action for legal malpractice will rarely accrue prior to the entry of an adverse
judgment, settlement, or dismissal of the underlying action in which plaintiff has become entangled
due to the purportedly negligent advice of his attorney.” Id. at 356. The court explained that
requiring a client to bring a provisional malpractice suit would undermine judicial economy and
the attorney-client relationship. Id. at 357.
¶ 23 In Warnock, defendants-attorneys represented the sellers in a real estate transaction.
Warnock, 376 Ill. App. 3d at 365. Before closing, the purchasers asked for more time to obtain
financing. Id. at 366. The defendants drafted a letter to the purchasers’ attorney agreeing to extend
the closing date should the purchasers deposit money in an escrow account. Id. The letter
agreement also contained a liquidated damages clause stating that the earnest money would be
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forfeited if the closing did not occur. Id. When the purchasers failed to secure the necessary
financing before closing, the earnest money was released to the sellers, who refused to return it to
the purchasers. Id.
¶ 24 The purchasers sued the sellers alleging unjust enrichment. Id. The sellers retained another
law firm to represent them in the purchasers’ lawsuit. The trial court held that the letter agreements
defendants drafted were unenforceable and entered judgment against the sellers. Id. at 367. The
sellers then filed a legal malpractice action against the defendants, who moved for summary
judgment. The defendants argued the two-year statute of limitations began to accrue when the
sellers retained another law firm to defend them against the purchasers. Id. The sellers countered
that the statute of limitations began to run when the judgment was entered against them in the
underlying action. Id. The trial court granted summary judgment for the defendants. Id.
¶ 25 The appellate court reversed, reasoning that, when the purchasers filed the underlying
action, the sellers did not know whether the purchasers would or would not recover the earnest
money held in escrow. Id. at 370. The appellate court stated that “a cause of action for legal
malpractice will not accrue prior to the entry of an adverse judgment, settlement, or dismissal of
the underlying action in which plaintiff has become entangled due to the purportedly negligent
advice of his attorney.” Id. at 372. Until the trial court entered judgment in the purchasers’ favor,
the sellers did not actually discover and reasonably could not have discovered that the letter
agreements were negligently prepared. Id. Thus, the entry of the adverse judgment marked the date
on which the statute of limitations period commenced. Id.
¶ 26 Lucey and Warnock are directly on point. As in those cases, Barus did not suffer a realized
injury until the trial court entered the judgment against him on June 17, 2015. Before then, Barus’s
damages were “entirely speculative,” because he might have prevailed in the underlying case.
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Although Barus paid attorney’s fees to Gaspero before the judgment, there had not yet been a clear
finding of attorney neglect. If Barus had filed a malpractice complaint against Carlson and
prevailed in the underlying lawsuit, the malpractice complaint would have been pointless and, as
this court found in Lucey, would undermine judicial economy and the attorney-client relationship.
Lucey, 301 Ill. App. 3d at 357.
¶ 27 We reject defendant’s reliance on FagelHaber and Nelson for the proposition that the
payment of attorney’s fees here constituted a “plainly obvious” injury triggering a claim of legal
malpractice.
¶ 28 In Nelson, the attorney negotiated an employment agreement on the plaintiff’s behalf,
which stipulated a loss of salary and commission on termination for cause. Nelson, 2016 Il App
(1st) 160571, ¶ 15. After the plaintiff was terminated for cause, he brought a malpractice action
against his former attorney for failing to negotiate an employment contract that was in his best
interests. Id. ¶¶ 4, 7. There, an adverse judgment was unnecessary for the plaintiff to discover
injury—its existence was established when the client filed the underlying suit alleging he had
already sustained injury. Id. ¶ 16. The court differentiated the case from Lucey “where ‘actionable
damages were a mere potentiality’ until there was an adverse judgment.” Id. ¶ 21 (quoting Lucey,
301 Ill. App. 3d at 359). The court explained that, because the client in Lucey was the defendant
in the underlying suit, he did not know of his injury “until after the adverse judgment because he
was not the one to pursue legal action.” Id. ¶ 22.
¶ 29 In FagelHaber, the plaintiff, a steel fabricator, retained the defendant-lawyer to prepare
and record a mechanic’s lien. FagelHaber, 2019 IL App (1st) 172430, ¶ 4. The lawyer filed the
mechanic’s lien but failed to provide notice to a bank, which later filed a mortgage against the
property. Id. When litigation over the liens ensued, the client retained a different attorney and
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learned that the previous attorney had not provided proper notice of the mechanic’s lien to the
bank. Id. ¶ 6. The plaintiff sued the attorney for legal malpractice, asserting that failure to perfect
the mechanic’s lien resulted in its lien being subordinate to the bank’s mortgage lien. Id. ¶ 8. The
attorney moved for summary judgment, asserting that the statute of limitations barred the
plaintiff’s legal malpractice action because, when plaintiff retained new counsel, the plaintiff knew
or should have known about the failure to serve the required statutory notice of its mechanic’s lien
on the bank. Id. ¶ 9.
¶ 30 The trial court granted the motion for summary judgment, and the appellate court affirmed.
Relying on Nelson, the court found that the plaintiff’s legal malpractice action against the law firm
for failing to perfect its mechanic’s lien accrued when it paid attorney’s fees to replacement
counsel. Id. ¶ 24. The court noted that replacement counsel sent a letter to the original attorney
asking for his cooperation in addressing the “problematic situation” in regard to priority of the
plaintiff’s mechanic’s lien. Id. The letter demonstrated (i) the replacement attorney knew of the
law firm’s error in perfecting the mechanic’s lien, (ii) the error caused injury to the plaintiff, and
(iii) the plaintiff paid the replacement attorney for services to minimize the law firm’s negligence.
Id. ¶ 29.
¶ 31 The court distinguished Warnock and similar cases that have “reiterated the admonishment
against provisional or prophylactic legal malpractice cases.” Id. ¶ 29. Those “cases all have the
common thread that the attorney’s negligence could not have reasonably been discovered before
the trial court entered an adverse judgment.” Id. Conversely, the court found that an adverse
judgment was unnecessary for discovering the negligence “because the negligence was obvious
*** when substitute counsel discovered the defect in the lien and began researching and
developing alternative theories regarding its unperfected mechanic’s lien.” Id. ¶ 27.
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¶ 32 We agree with the holdings in FagelHaber and Nelson, but neither applies here. In both
cases, the clients were the plaintiffs in the underlying suits, and their injuries were established
before a judgment in the underlying suit. Hence, the clients knew when they retained new counsel
and began paying attorney’s fees that they had likely been injured by the attorney’s negligence.
Conversely, as in Lucey and Warnock, Barus, as the defendant in the underlying lawsuit, could not
have known he had been injured until entry of the judgment against him. As noted, had Barus
prevailed in the underlying lawsuit and the trial court found that he did not breach his fiduciary
duties by following Carlson’s legal advice, he would have no claim for legal malpractice against
Carlson. So, filing a complaint before the judgment would have been premature and pointless.
¶ 33 The judge’s comments before trial in the underlying case that a legal malpractice claim
against Carlson was “a hundred percent” certainty are misplaced. As noted, with limited exceptions
not relevant here, a plaintiff does not sustain an injury until suffering an adverse judgment,
settlement, or dismissal in the underlying action. Nelson, 2016 IL App (1st) 160571, ¶ 13. The
judge’s comments may have been made for any number of reasons, and they do not and cannot
substitute for adverse judgment, settlement, or dismissal.
¶ 34 The statute of limitations on Barus’s legal malpractice claim began to accrue when the trial
court in the underlying case entered judgment against him, June 17, 2015. He timely filed his
complaint less than a year later, May 26, 2016.
¶ 35 Carlson alternatively argues that regardless of the statute of limitations, we should affirm
the summary judgment order because the damages Barus was ordered to pay, namely, 50% of the
fair value of the assets Barus improperly transferred to his own company, constituted a pre-existing
legal obligation under the ROC/Suburban operating agreement, unrelated to Carlson’s legal
advice. In other words, Carlson asserts Barus suffered no damages because he would have been
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required to compensate ROC for its 50% share of the ROC/Suburban assets regardless of any
purported attorney malpractice. We disagree. Under the operating agreement, Barus could have
ceased using ROC/Suburban at any time. And, as the trial court in the underlying case noted, had
Barus disassociated properly under the agreement, ROC/Suburban would have no recourse.
Instead, Barus improperly took ROC/Suburban’s employees in June 2010, before the vendor
relationship terminated on July 1, 2010, and his failure to act properly was a decisive factor in the
court’s damages award. The court calculated damages as 50% of the assets Barus took, which
included the full value of the contracts, an amount Barus had to pay due to his breach of his
fiduciary duties.
¶ 36 We reverse the trial court’s summary judgment order and remand for further proceedings.
¶ 37 Reversed and remanded.
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No. 1-19-1953
Decision Under Review: Appeal from the Circuit Court of Cook County, No. 16-L- 5295; the Hon. Diane M. Shelley, Judge, presiding.
Attorneys John W. Moynihan, of Downers Grove, for appellants for Suburban Real Estate Services, Inc. and Bryan E. Barus. Appellant:
Attorneys John J. D’Attomo, of Nisen & Elliott, LLC, of Chicago, for for appellees William Roger Carlson Jr. and Carlson Partners, Ltd. Appellee: Rebecca M. Rothmann, of Wilson Elser Moskowitz Edelman & Dicker LLP, of Chicago, for other appellees.
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