Chandra v. Chandra
| Decision Date | 13 April 2016 |
| Docket Number | No. 1–14–3858.,1–14–3858. |
| Citation | 53 N.E.3d 186,403 Ill.Dec. 132 |
| Parties | Rakesh CHANDRA, M.D., Plaintiff–Appellee/Cross–Appellant, v. Lokesh CHANDRA, M.D., Defendant–Appellant/Cross–Appellee, and Robin B. Potter and Associates, Defendant–Appellee/Cross–Appellant. |
| Court | United States Appellate Court of Illinois |
Edric S. Bautista, Sanchez Daniels & Hoffman LLP, Chicago, for appellant.
Gregory A. Friedman, Michelle L. Carey, and Brian P. Keller, Friedman Maguire & Carey, P.C., Chicago, for appellee Rakesh Chandra.
Thomas B. Underwood, Michael D. Sanders, and Richard J. VanSwol, Purcell & Wardrope, Chtrd., and Robin B. Potter, Chicago, for appellee Robin B. Potter & Associates.
¶ 1 Following recovery in a qui tam action, plaintiff-appellee/cross-appellant Rakesh Chandra, M.D. (Rakesh) filed a cause of action for declaratory judgment against defendant-appellant/cross-appellee Lokesh Chandra, M.D. (Lokesh) and defendant-appellee/cross-appellant Robin B. Potter and Associates (Potter), seeking to enforce a contract entered into by the parties. Potter filed a cause of action for declaratory judgment against Lokesh in the same vein, also seeking to enforce the contract. Lokesh, meanwhile, filed answers and defenses, as well as a counterclaim and crossclaim, seeking to have the contract declared unenforceable. Rakesh and Potter eventually filed motions for judgment on the pleadings and for prejudgment interest. After briefing and argument, the trial court granted their motions in part by finding the contract at issue to be enforceable, but denied their request for prejudgment interest.
¶ 2 Lokesh appeals, contending that the trial court erred in finding the contract enforceable. He asserts that there was no consideration from Rakesh in forming the contract and that the contract itself violated the Illinois Rules of Professional Conduct (Rules) (Ill. R. Prof. Conduct (2010) R. 1.1 et seq. (eff. Jan. 1, 2010)). Lokesh asks that we reverse the trial court's grant of judgment on the pleadings, vacate this portion of its order and remand the matter for further proceedings or other just and necessary relief. Concurrently, both Rakesh and Potter appeal the trial court's denial of their requests for prejudgment interest.1 They contend that the court erred in this portion of its determination because Lokesh's actions prevented the distribution of funds to which they were entitled under the contract, depriving them of the use and benefit of the proceeds. They ask that we reverse this portion of the trial court's order and award them the interest sought. For the following reasons, we affirm in part, and reverse in part and remand with directions.
¶ 4 Rakesh and Lokesh are brothers and physicians licensed to practice in Illinois. Sushil Sheth, also a physician, covered several of Lokesh's patients. When he did so, Sheth billed Medicare, Medicaid and the private payor directly. Eventually, Lokesh began receiving complaints from his patients regarding bills they were receiving from Sheth. Around March 2006, Lokesh grew suspicious that Sheth was committing medical billing fraud and spoke to Rakesh, who had experience with this and who is also an attorney, to determine if he (Lokesh) had any reporting obligations. Lokesh provided Rakesh with billing documentation and, upon his review and analysis, Rakesh recommended that Lokesh speak with an attorney. After discussing this, Lokesh agreed to allow Rakesh to find qualified counsel. Rakesh did so and found Potter. All the parties agreed to meet on March 11, 2006.
¶ 5 On that date, Rakesh went to Potter's office; he brought her materials and documents related to the fraud claims against Sheth, which he had reviewed, prepared and organized. Lokesh, meanwhile, attended the meeting via telephone. Potter told Rakesh and Lokesh that she needed some time to review and consider the documentation Rakesh had provided to determine whether there was a viable cause against Sheth and how best to proceed. Accordingly, the parties agreed to meet the next day.
¶ 6 On March 12, 2006, Rakesh, Lokesh and Potter all met in person at Potter's office. After considering the information and documents Rakesh had provided, Potter believed there was a viable cause of action for fraudulent billing against Sheth and she offered to provide representation. Potter explained to Rakesh and Lokesh that the cause could proceed as a qui tam action against Sheth under the federal False Claims Act (FCA) (31 U.S.C. §§ 3729 –3733 (2012) ), where plaintiffs, or relators, would bring the cause, as filed under seal, in both their own right and on behalf of the government to recover sums that the government paid in false claims, and the government would review the allegations and evidence to determine whether to intervene. Potter further advised that both brothers could be named as relators in the suit; however, after some discussion, the parties agreed that only Lokesh would be a named relator.
¶ 7 Accordingly, the parties formed and entered into a two-page document entitled “Contract for Legal Services.” The contract named both Lokesh and Rakesh as Potter's “clients” and stated that they both retained and employed the firm to represent them in the qui tam action against Sheth. The contract further stated that while the parties “agree that only Lokesh” would be a “named” relator in the suit, they also “agree” that Lokesh and Rakesh “will equally share in the relators' share and relators' costs in this case.” With respect to attorney fees and services, the contract described that Potter would assume all legal fees and costs, and that Lokesh and Rakesh agree to assign all sums recovered for legal fees, were the suit be successful, to her. The contract also noted that Lokesh and Rakesh agree to pay attorney fees for services, and that this would amount to 40% of any award obtained in the suit. Finally, the contract stated that Lokesh and Rakesh “will be responsible for payment from the final proceeds in this case” and granted “a lien on any recovery for the reimbursement of costs and the payment” of attorney fees. At the conclusion of the meeting, Lokesh, Rakesh and Potter all initialed the first page of the contract and all signed the second page.
¶ 8 Following the signing of the contract and Potter's retention as their counsel, Potter drafted a complaint in order to proceed with the qui tam action against Sheth pursuant to the FCA and named Lokesh as the plaintiff-relator, as per the parties' agreement in the contract. Rakesh alleges that he continued to work with Potter to provide her with information regarding the suit when she asked for it; Potter corroborates Rakesh's statements, while Lokesh insists that Rakesh had no further involvement in the suit. Ultimately, Potter filed under seal the qui tam action in federal court under the FCA, the government found that it had merit and elected to intervene, and the cause resulted in a plea agreement and judgment in excess of $20 million against Sheth. The parties were notified that the relator's share of the settlement would be $1,335,569.86, and would be distributed by the government on September 19, 2013. However, on September 16, 2013, three days before this was to occur, Lokesh, who had now retained new counsel, sent a letter to Potter asserting that the contract signed by the parties was invalid, insisting that Rakesh should not get any of the proceeds from the suit, and demanding that she deposit the entire sum into his (Lokesh's) personal account.
¶ 9 The qui tam recovery was deposited into Potter's client trust account. After Potter notified Rakesh that she could not now distribute any of the funds due to Lokesh's demand letter, Rakesh filed a cause of action against Lokesh and Potter.2 He sought a declaratory judgment that the contract was enforceable and, thus, that he was entitled to one-half of the proceeds recovered pursuant to it plus prejudgment interest, and he alleged that Lokesh had breached both a written and oral contract to share equally with him in the recovery of the qui tam action. Lokesh attempted to remove the cause to federal court, but that court declined to exercise supplemental jurisdiction and remanded the matter to the state trial court. Soon thereafter, Potter filed a counterclaim seeking a declaratory judgment, just as Rakesh, that the contract was enforceable and that she was entitled to attorney fees in accordance with its terms plus prejudgment interest. Lokesh filed answers and defenses, as well as a counterclaim and crossclaim, asserting that the contract was not enforceable for several reasons, including that it violated the Rules, that there was a lack of consideration in its formation, and that it was otherwise unreasonable and unconscionable.
¶ 10 Eventually, Rakesh and Potter each filed motions for judgment on the pleadings. Lokesh responded, asserting, in addition to his prior objections, that the contract amounted to impermissible fee sharing with respect to the qui tam action. Following a hearing, the trial court granted Rakesh's and Potter's motions, entering judgment on the pleadings in their favor and against Lokesh. Specifically, the court found that the “Contract for Legal Services,” as signed by all the parties, was “valid and enforceable,” that Potter was entitled to her contingency fee and costs from the underlying qui tam action, and that Rakesh and Lokesh “are to divide equally the remainder of the funds awarded in that suit.” The court explained that it was “pretty undisputed that there was consideration” for Lokesh's promise to share the proceeds of the qui tam recovery with Rakesh, that the contract was not violative of the Rules, that there was no conflict of interest, and that the situation was not one amounting to fee sharing. However, in addressing Rakesh's and...
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