Anderson v. Anchor Organization for Health Maintenance

• Decision Date: 24 August 1995
• Docket Number: Nos. 1-94-0623,1-94-1557,s. 1-94-0623
• Parties: , 211 Ill.Dec. 213 Rosie Marie ANDERSON and Frank Anderson, Plaintiffs-Appellants, v. ANCHOR ORGANIZATION FOR HEALTH MAINTENANCE, D. Dwarkanathan, and Foster McGaw Hospital, Loyola University of Chicago, Defendants (Joan Schiller Travis, Appellee). Joan Schiller TRAVIS, Plaintiff Appellant, v. Kenneth C. CHESSICK, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 675

654 N.E.2d 675

274 Ill.App.3d 1001, 211 Ill.Dec. 213

Rosie Marie ANDERSON and Frank Anderson, Plaintiffs-Appellants, v. ANCHOR ORGANIZATION FOR HEALTH MAINTENANCE, D. Dwarkanathan, and Foster McGaw Hospital, Loyola University of

Chicago, Defendants (Joan Schiller

Travis, Appellee).

Joan Schiller TRAVIS, Plaintiff Appellant, v. Kenneth C. CHESSICK, Defendant-Appellee.

Nos. 1-94-0623, 1-94-1557.

Appellate Court of Illinois First District, Fourth Division.

Aug. 24, 1995.

Kenneth C. Chessick, M.D., Schaumburg (John W. Fisk, of counsel), for appellants.

Robert Sklodowski, Chicago (Kevin E. Bry, Oak Park, of counsel), for appellee.

Presiding Justice HOFFMAN delivered the opinion of the court:

In this opinion, we address appeals from orders of the circuit court entered in two distinct but related actions. Each appeal was separately briefed, but because they involve the same operative set of facts, we have elected to consolidate the appeals.

Rose Marie Anderson and Frank Anderson (plaintiffs) engaged Joan Schiller Travis, an attorney who had previously represented their son, to represent them in a medical malpractice action and signed contingent fee retainer agreements with Travis on February 22, 1986, and April 12, 1986, respectively. Both retainer agreements provided that Travis was entitled to a fee equal to 40% of the gross amount recovered by suit or settlement plus all expenses incurred. At the time the plaintiffs signed the contingent fee agreements, section 2-1114 of the Code of Civil Procedure (Code) limited contingent attorney fees in medical malpractice actions to an amount not to exceed 33 1/3% of the first $150,000 recovered, 25% of the next $850,000, and 20% of any amount recovered in excess of $1 million (Ill.Rev.Stat.1987, ch. 110, par. 2-1114).

After the execution of the retainer agreement with Rose Marie Anderson, but before the execution of the agreement with Frank Anderson, Travis contacted Kenneth C. Chessick, who is licensed both as an attorney and a physician, and retained him to act as her co-counsel. Travis and Chessick orally agreed to equally divide the fees and costs. Although Travis advised the plaintiffs that Chessick had been retained and that there would be no additional charge for his services, the plaintiffs never consented in writing to the employment of Chessick as required by the then applicable Rule 2-107(a)(1) of the Illinois Code of Professional Responsibility (107 Ill.2d R. 2-107(a)(1)).

On January 27, 1987, a medical malpractice action was filed on behalf of the plaintiffs in the circuit court of Cook County as case No. 86 L 12564. Both Chessick and Travis rendered legal services and advanced costs in furtherance of the plaintiffs' action.

On February 19, 1992, the plaintiffs forwarded separate but identical letters to Travis discharging her as their attorney and stating that Chessick would act as their attorney. Coincidentally, on the same day, the plaintiffs signed a contingent fee agreement retaining Chessick to represent them.

After being discharged, Travis forwarded notices to all of the defendants in case No. 86 L 12564 claiming an attorney's lien in the amount of 40% of all sums that the plaintiffs might recover by settlement or judgment. Additionally, on June 19, 1992, Travis filed a multicount action against the plaintiffs and Chessick in the circuit court of Cook County as case No. 92 CH 5917.

On February 18, 1993, the plaintiffs agreed to a settlement having a value $1,442,608 with Loyola University, one of the defendants in their malpractice action. Thereafter, on April 12, 1993, the plaintiffs filed a motion in their malpractice action seeking an adjudication of Travis' attorney's lien. While that motion was pending and unresolved, the plaintiffs' malpractice action against the remaining defendant was tried to verdict and judgments were entered in favor of Rose Marie Anderson for $2,904,000 and Frank Anderson for $200,000.

On April 12, 1993, the court approved attorney fees of $533,762.74 on the plaintiffs' settlement with Loyola, and on April 22, 1993, required Chessick to hold that sum in a client fund account pending resolution of Travis' fee claims.

On May 11, 1993, Travis moved the court to consolidate her actions in case 92 CH 5917 with the plaintiffs' malpractice action. That motion was denied on June 22, 1993.

On July 20, 1993, Travis filed a four-count second-amended complaint in case No. 92 CH 5917 seeking relief against Chessick only. Count I set forth a cause of action for breach of contract and in the alternative sought relief under a quantum meruit theory, count II sought to recover for tortious interference with contract and prospective advantage, count III sought an adjudication of Travis' attorney's lien, and count IV was an action for breach of fiduciary duty.

On August 25, 1993, the trial court entered an order in case No. 86 L 12564 denying the plaintiffs' petition to adjudicate Travis' attorney's lien but ordered that her statement of professional services stand as a petition for quantum meruit recovery, consolidated her quantum meruit claim in case No. 92 CH 5917 with case 86 L 12564, ordered Chessick to respond to her statement of professional services, and continued the matter for hearing.

On January 13, 1994, after a hearing at which only Travis testified, the trial court awarded Travis $66,000 in attorney fees on a quantum meruit theory and an additional $22,000 as an enhancement for a total of $88,000 to be paid by Chessick from the attorney fees awarded as a result of the plaintiffs' settlement with Loyola. It is from this order that the plaintiffs appeal under our docket No. 1-94-0623.

On April 8, 1994, in response to Chessick's motion pursuant to sections 2-615 and 2-619 of the Code (735 ILCS 5/2-615, 5/2-619 (West 1992)), the trial court dismissed all of Travis' remaining claims in case No. 92 CH 5917. This order is the subject of Travis' appeal under our docket No. 1-94-1557.

In our review of the $88,000 judgment entered in favor of Travis on January 13, 1994, we consider: (1) whether the trial court abused its discretion in consolidating Travis' quantum meruit claim with the plaintiffs' malpractice action; (2) whether the court abused its discretion in awarding $66,000 for attorney fees on a quantum meruit theory; and (3) the propriety of awarding Travis a $22,000 fee enhancement.

Section 2-1006 of the Code provides that "actions pending in the same court may be consolidated, as an aid to convenience, whenever it can be done without prejudice to a substantial right." (735 ILCS 5/2-1006 (West 1992).) The decision of whether to consolidate actions pending in the same court is a matter committed to the discretion of the trial court. (La Salle National Bank v. Helry Corp. (1985), 136 Ill.App.3d 897, 91 Ill.Dec. 472, 483 N.E.2d 958.) The plaintiffs have failed to identify any prejudice to which they were exposed by reason of the consolidation. Additionally, the trial court was required to pass on fee issues in the plaintiffs' malpractice action by reason of Chessick's own petition for an award of fees in excess of the statutory limit in section 2-1114 of the Code and the plaintiffs' petition to adjudicate Travis' lien rights. Consequently, we find no abuse of discretion in the consolidation as a matter of convenience and judicial economy.

Relying primarily upon American Home Assurance Co. v. Golomb (1992), 239 Ill.App.3d 37, 179 Ill.Dec. 961, 606 N.E.2d 793, the plaintiffs argue: (1) that contingent fee agreements in medical malpractice actions which provide for fees in excess of the limitations set forth in section 2-1114 of the Code, such as the ones executed by them and Travis, are unenforceable as being against public policy; and (2) that attorneys who enter into contingent fee agreements providing for compensation at a rate in excess of the statutory limit contained in section 2-1114 are barred from quantum meruit recovery. We disagree with both propositions as applied to the facts in this case.

Unlike contingent fee agreements in criminal cases and actions for dissolution of marriage (see 107 Ill.2d R. 2-106(c)(4)), contingent fee agreements in medical malpractice actions are not per se prohibited by statute or the Code of Professional Responsibility. Section 2-1114 only limits the contingent fees that attorneys may recover in medical malpractice actions absent court approval of additional compensation. However, merely because a contingent fee agreement provides for compensation in excess of the maximum percentage that an attorney may receive without court approval does not necessarily render the agreement wholly unenforceable. See Leonard C. Arnold, Ltd. v. Northern Trust Co. (1987), 116 Ill.2d 157, 107 Ill.Dec. 224, 506 N.E.2d 1279.

We decline to adopt a rule holding that every violation of section 2-1114 of the Code, no matter how innocent or unintentional, renders a contingent fee agreement wholly unenforceable. Even the Golomb court accepted for analysis purposes the argument that enforcement of a contingent fee agreement is not prohibited where there is only a minor technical violation of section 2-1114. The holding in Golomb rests upon the finding that the fee agreement in issue was illegal by reason of the attorney's intentional and deceptive behavior in attempting to charge a fee in excess of the statutory cap. (Golomb, 239 Ill.App.3d at 43-44, 179 Ill.Dec. 961, 606 N.E.2d 793.) We believe that the question of whether a violation of section 2-1114 is sufficiently egregious to render the contract wholly unenforceable must be decided in the context of the particular facts surrounding the execution of the offending agreement on a case-by-case basis.

At this juncture of our analysis, however, we are not faced with a question involving the enforcement of the contingent fee agreements entered into between Travis and the plaintiffs in 1986. As was their right with or without cause...