Barth v. Reagan

• Decision Date: 30 November 1990
• Docket Number: No. 69552,69552
• Citation: 564 N.E.2d 1196,139 Ill.2d 399,151 Ill.Dec. 534
• Parties: , 151 Ill.Dec. 534, 59 USLW 2417 Barbara G. BARTH, Appellant, v. James J. REAGAN, Appellee.
• Court: Illinois Supreme Court

Page 1196

564 N.E.2d 1196

139 Ill.2d 399, 151 Ill.Dec. 534, 59

USLW 2417

Barbara G. BARTH, Appellant, v. James J. REAGAN, Appellee.

No. 69552.

Supreme Court of Illinois.

Nov. 30, 1990.

Early, Collison, Tousey, Regan & Farrell, Elgin (John F. Early and Rita A. Farrell, of counsel), for appellant.

Snyder, Clarke, Dalziel & Johnson, Waukegan (Julian Johnson, of counsel), for appellee.

Justice STAMOS delivered the opinion of the court:

This appeal raises an issue of first impression in this court: When must a plaintiff in a legal malpractice action present expert testimony to establish the cause of action?

Plaintiff, Barbara G. Barth, brought this legal malpractice action against defendant, James J. Reagan, in the circuit court of Lake County. Plaintiff sought damages for the loss of equity in certain parcels of real property that resulted from defendant's allegedly negligent defense in foreclosure actions involving the parcels. Following a jury verdict in plaintiff's favor, the trial court entered judgment on the verdict in the amount of $69,435.57, which was reduced by plaintiff's 30% contributory negligence to $48,604.90. The appellate court reversed. (190 Ill.App.3d 516, 523, 137 Ill.Dec. 463, 546 N.E.2d 87.) We granted plaintiff's petition for leave to appeal (107 Ill.2d R. 315).

FACTS

Before the events which led to the present action took place, defendant attorney had represented plaintiff in a number of legal matters. In 1976, plaintiff and her then husband, Edward Barth (Edward), consulted defendant regarding the purchase of rental property for investment purposes. Following defendant's advice, plaintiff and her husband purchased several properties and placed them, along with the couple's marital residence (which plaintiff had owned prior to her marriage to Edward), into land trusts. A local bank Trouble began in 1979 when Edward took out a second mortgage on plaintiff's residential property without her knowledge. He mortgaged this same property again in 1980. He also failed to pay the debts on the investment properties when payments were due, and failed to make mortgage payments. Thus, foreclosure actions were instituted as to all the properties in trust. Edward failed to inform plaintiff of these actions, and continued to keep the foreclosure suits secret by intercepting all mail, summonses, and notices connected with those cases.

[151 Ill.Dec. 536] served as trustee, Edward served as manager of the properties and had the power of direction under the trust agreements, and plaintiff held all beneficial interests. Defendant served as the Barths' attorney when the trusts were created, and stated that he would direct that all inquiries regarding the trusts be sent to him.

We note that Edward was unable to intercept a notice as to one matter, which was a garnishment proceeding for the Barths' failure to pay assessments of over $1,000 on one of the investment properties. Plaintiff's employer was served with a wage-deduction summons in March 1981. When plaintiff confronted her husband about this matter, he stated that one of the tenants had failed to pay several months' rent. Plaintiff never questioned her husband regarding this matter again, and the record reveals that she never questioned him regarding the amount of money in the account the couple maintained for the investment properties, never examined the account's statements, and never questioned her husband regarding whether he was making any of the other payments.

When the mortgage foreclosure actions were filed, Edward was personally served, while service on plaintiff was effected through substituted service on her husband. Edward brought the summonses to defendant and retained defendant to represent the Barths in the foreclosure actions. At that time, Edward informed defendant and Stephen Tennant, one of defendant's associates, that he was unable to bring the mortgages to a current payment status because he was insolvent.

Defendant entered appearances on behalf of plaintiff and her husband in several of the foreclosure actions, and also filed answers. Two of the answers contained what appeared to be plaintiff's notarized signature. However, plaintiff testified that she never signed those documents, and Tennant admitted to notarizing one of the signatures without observing plaintiff signing the document.

At trial, plaintiff testified that she was unaware of the foreclosure actions until June 1981, when her husband told her the properties were "all gone." Plaintiff immediately telephoned defendant, who confirmed the bad news. Plaintiff also testified that when she asked defendant why she was not informed regarding the foreclosure proceedings, defendant, without further explanation, responded that "he couldn't." Plaintiff alleged that defendant owed her a duty to notify her and keep her informed of any litigation involving her property, that defendant failed to advise her of her rights and obligations with respect to such litigation, that defendant breached his duty by allowing his employees to notarize documents purporting to bear plaintiff's signature which were not signed in her presence and which aided in keeping her from discovering the existence of the foreclosure suits, and that defendant negligently failed to specifically inform her of the pending foreclosure actions against her property and to advise her of her right to cure defaults or redeem the property.

Defendant testified that he never personally met with or telephoned plaintiff regarding the foreclosure suits or her rights to cure the defaults. However, the record reveals that defendant sent several letters concerning the foreclosures which were jointly addressed to plaintiff and her husband. Also, defendant made several appointments with Edward which were to include plaintiff, but neither Edward nor plaintiff ever kept these appointments. Defendant denied ever telling plaintiff that he "couldn't" tell her about the foreclosures before June 1981, but instead testified Also, defendant presented evidence from plaintiff's petition for dissolution of her marriage to Edward. In that document, plaintiff had stated, under oath and over her signature, that Edward was responsible for economic damages plaintiff suffered through the loss of the trust properties.

[151 Ill.Dec. 537] that he told plaintiff of the numerous letters he had sent her, in which he had explained the status of the foreclosure actions and any possibility the Barths had to redeem the properties.

On the third day of the trial, defendant moved to bar the testimony of Sam Levine, one of plaintiff's expert witnesses. Levine was plaintiff's legal malpractice expert. The trial court noted that it was bound by a recent Second District appellate court decision (Phelps v. O'Malley (1987), 159 Ill.App.3d 214, 110 Ill.Dec. 797, 511 N.E.2d 974) which held that trial courts must bar the testimony of expert witnesses of litigants who fail to disclose them to opposing parties under Supreme Court Rule 220(b) (107 Ill.2d R. 220(b)), and granted the motion to bar because plaintiff had failed to disclose the expert's identity at least 60 days before trial. See 190 Ill.App.3d at 520, 137 Ill.Dec. 463, 546 N.E.2d 87.

At the close of plaintiff's case, defendant moved for a directed verdict. Defendant claimed that plaintiff had failed to present sufficient evidence on the legal malpractice issues because plaintiff had not presented any expert testimony. The trial court denied this motion, finding that the evidence presented by plaintiff was such that defendant's negligence could be assessed by a jury of lay persons without the testimony of a legal expert. The jury returned a verdict, upon which the trial court entered judgment, in favor of plaintiff.

The appellate court reversed, finding that the trial court had erred in denying defendant's motion for a directed verdict. The appellate court recognized that, as a general rule, expert testimony is required to establish the standard of care and its breach in legal malpractice cases. It also noted that in some instances, the attorney's negligence is so grossly apparent that laymen have no trouble recognizing it. Under this "common knowledge" exception, no expert testimony is necessary. (190 Ill.App.3d at 521-22, 137 Ill.Dec. 463, 546 N.E.2d 87.) The appellate court held that the type of professional negligence in question in the case at bar was not apparent enough to laymen to allow the trial court to dispense with expert testimony. 190 Ill.App.3d at 521-22, 137 Ill.Dec. 463, 546 N.E.2d 87.

ANALYSIS

Attorneys are liable to their clients for damages in malpractice actions only when they fail to exercise a reasonable degree of care and skill. (Gray v. Hallett (1988), 170 Ill.App.3d 660, 663, 121 Ill.Dec. 283, 525 N.E.2d 89; Gelsomino v. Gorov (1986), 149 Ill.App.3d 809, 813, 104 Ill.Dec. 1, 502 N.E.2d 264; Schnidt v. Henehan (1986), 140 Ill.App.3d 798, 801, 95 Ill.Dec. 194, 489 N.E.2d 415; Spivack, Shulman & Goldman v. Foremost Liquor Stores, Inc. (1984), 124 Ill.App.3d 676, 683, 80 Ill.Dec. 388, 465 N.E.2d 500; Schmidt v. Hinshaw, Culbertson, Moelmann, Hoban & Fuller (1979), 75 Ill.App.3d 516, 522, 31 Ill.Dec. 357, 394 N.E.2d 559; House v. Maddox (1977), 46 Ill.App.3d 68, 71, 4 Ill.Dec. 644, 360 N.E.2d 580; Kasten, Attorney Malpractice in Illinois: An Early Chapter in a Book Destined for Great Length, 13 J. Marshall L.Rev. 309, 314 (1980) (hereinafter Attorney Malpractice in Illinois ).) The law distinguishes between errors of negligence and those of mistaken judgment. (Schmidt, 75 Ill.App.3d at 522, 31 Ill.Dec. 357, 394 N.E.2d 559; House, 46 Ill.App.3d at 71, 4 Ill.Dec. 644, 360 N.E.2d 580.) Generally, the rules of evidence which govern medical malpractice litigation are applicable to legal malpractice suits, except where it is necessary to accommodate differences in the nature of the two professions. (Attorney Malpractice in Illinois, 13 J. Marshall L.Rev. at 321, citing ...