Dowling v. Chicago Options Associates, Inc., 102578.

Citation875 N.E.2d 1012,226 Ill.2d 277
Decision Date03 May 2007
Docket NumberNo. 102578.,102578.
PartiesBrian DOWLING, Appellee, v. CHICAGO OPTIONS ASSOCIATES, INC., et al. (DLA Piper Rudnick Gray Cary (US), LLP, Appellant).
CourtSupreme Court of Illinois

Seymour Simon, Gerald B. Lurie, Amanda C. Jones, of DLA Piper Rudnick Gray Cary (US), LLP, Chicago, appellant pro se.

Tracy E. Stevenson, of Robbins, Salomon & Patt, Ltd., Chicago, for appellee.

Kevin P. Durkin, Steven F. Pflaum, Chicago, for amicus curiae Chicago Bar Association.

Irene F. Bahr, Mary McDermott, Chicago, for amicus curiae Illinois State Bar Association.

OPINION

Justice GARMAN delivered the judgment of the court, with opinion:

Plaintiff, Brian Dowling, commenced proceedings to collect on two judgments he obtained against defendants, Chicago Options Associates and Michael E. Davis. In the process, Dowling learned that Davis had paid retainers to his lawyers, DLA Piper Rudnick Gray Cary (US), LLP (now known as DLA Piper (US) LLP) (hereafter Piper), in connection with efforts to protect his assets from Dowling's judgments. Dowling sought turnover of those retainers from Piper. The circuit court of Cook County ruled in Dowling's favor and ordered Piper to pay over to Dowling the sum of $137,576.53. The appellate court affirmed. 365 Ill.App.3d 89, 301 Ill.Dec. 811, 847 N.E.2d 821.

BACKGROUND

Dowling sued defendants for breach of contract. As a result of this action, two judgments were entered on behalf of Dowling in the total amount of $817,830.45. Thereafter, Davis set out to shield his assets from the reach of Dowling's judgments. In February 2003, Davis hired Piper to represent him in connection with the purchase of a home in Florida. For this purpose, Davis deposited a large sum of money in a trust account held by Piper. The purchase of the home was completed on February 24, 2003, with funds paid from the trust account. On February 26, 2003, Davis and his wife, Emily Seibel, authorized Piper to allocate $100,000 (the actual amount was $100,094.72) of that money as a retainer, based upon an agreement referred to by the parties as an "engagement letter." Piper transferred that money to its general account and applied it to monthly bills attributable to work performed for Davis and Seibel in connection with the purchase of their Florida home and, later on, in connection with the instant Illinois litigation with Dowling. The engagement letter was addressed to Davis and Seibel and referenced "Client Engagement; 308813-000020." It stated, in pertinent part, as follows:

"Dear Michael and Emily:

We are pleased to have the opportunity to represent you regarding your purchase of a home in Florida and to give you general advice regarding asset protection.

* * *

We customarily send monthly invoices for services rendered and other charges incurred for your account during the previous month. The monthly invoice details the work performed and the types of charges incurred. Payment will be due thirty (30) days after the date of our invoice. Payment should be made in U.S. dollars, in checks or drafts payable to `Piper Rudnick LLP.'

You have authorized us to allocate $100,000 of the cash on hand as a retainer. These funds will be applied toward payment of the final monthly invoice containing entries with respect to the above-referenced matter and will be subject to repayment by us if the amount of our fees for work done and costs incurred that remain unpaid do not equal the amount of the retainer then held by us. Under such circumstances, the balance of the retainer would then be returned to you when our representation of you on this matter ceases. We reserve the right to use any part of said funds to satisfy a delinquent payment, and to discontinue our representation until you forward funds to restore the full retainer.

* * *

* * * Finally, I remind you that we are taking very aggressive positions to attempt to protect your assets and satisfy your related concerns. Those positions are likely to be attacked in litigation in Florida or Illinois. While we believe that our advice will, more likely than not, be upheld in court, given the animosity between you and the judgment creditor, litigation is a virtual certainty."

On September 23, 2003, a citation to discover assets was served on Davis; he failed to appear at the hearing on the citation and was eventually held in contempt for failure to appear. On October 17, 2003, a citation was issued to "Piper Rudnick LLP Trust," based upon the transfer of money from Davis' Chicago bank account to Piper for the purchase of his Florida home. Dowling filed a motion to require Piper to turn over all money belonging to Davis and held in Piper's trust account or, in the alternative, to enjoin Piper from distributing from its trust account any monies received from Davis. At a hearing on November 20, 2003, Piper, through one of its partners, Gerald B. Lurie, represented to the circuit court that Piper was not holding any funds for Davis in its trust account. Based on this information, the court denied Dowling's motion. Both citations were dismissed on June 8, 2004, and leave was granted to file a second citation. On June 8, 2004, Seibel drew a check for $50,000 on a Florida account belonging to her and Davis and gave it to Piper. Piper applied that money to its monthly bills for Davis and Seibel relating to Dowling's collection efforts.

Dowling's counsel subsequently learned that Piper had received funds from Davis which it had deposited in its general account. A second citation to discover assets was issued and served on Piper on August 6, 2004. Piper produced records showing payments to Piper from Davis and Seibel and Piper's application of those payments. Dowling then filed a motion to turn over assets, requesting that Piper be ordered to pay Dowling $137,576.53 of the funds paid to Piper by Davis and Seibel. Those amounts consisted of $87,576.53, the balance on the $100,000 retainer as of October 27, 2003, and the $50,000 paid to Piper by Seibel on June 8, 2004. Oral argument was heard on April 18, 2005. The circuit court granted Dowling's motion and ordered Piper to pay Dowling $137,576.53. Piper filed a notice of appeal, seeking vacatur of the turnover order.

On appeal, Piper argued that the circuit court erred in ordering the funds turned over to Dowling. Piper argued that the retainers belonged, not to Davis, but to Piper. According to Piper, the only way Davis could have reclaimed those funds was to terminate Piper's representation of him. The appellate court disagreed, finding that Piper's argument concerning the ownership of the retainer funds was "disingenuous." The court found that the designation of the account in which Piper held the funds was not determinative of Piper's obligation to disclose to the circuit court that it held those funds. The court criticized Piper for not revealing the existence of the $100,000 retainer, which would have allowed the circuit court to determine whether the funds could be subject to a turnover order. The appellate court held that the trial court did not abuse its discretion in ordering the funds paid to Dowling, and it rejected Piper's argument that the unearned retainer funds did not belong to Davis. 365 Ill.App.3d at 98, 301 Ill.Dec. 811, 847 N.E.2d 821.

Justice Hall dissented, noting that a "retainer" is defined both as a client's authorization for the attorney to act in a case and as a fee paid to a lawyer to secure legal representation. Thus, a retainer establishes the employment of the attorney by the client. In addition, Justice Hall opined, the fact that Piper could and did satisfy its fees from the retainer as they were earned did not mean that the retainer belonged to Davis. Justice Hall found it significant that Piper deposited the funds in its general account and not in a client trust account. In the absence of any contention that Piper violated disciplinary rules by doing so, Justice Hall would find that the funds were Piper's property, subject to a duty of reimbursement of any unused funds to Davis at the end of the representation. Justice Hall was concerned that the majority's decision would have a chilling effect on the ability of judgment debtors to hire legal counsel to represent them and on the willingness of lawyers to undertake such representation. 365 Ill.App.3d at 99, 301 Ill.Dec. 811, 847 N.E.2d 821 (Hall, J., dissenting).

We allowed Piper's petition for leave to appeal (210 Ill.2d R. 315). We granted leave to the Illinois State Bar Association (ISBA) and the Chicago Bar Association (CBA) to file a brief amici curiae.

ANALYSIS
I

This appeal requires us to determine whether monies paid to Piper by Davis and Seibel in connection with Piper's legal representation belonged to Piper or to Davis and Seibel. As to the $100,000 retainer, the answer to this question hinges on the interpretation of the parties' written agreement by which Davis and Seibel agreed to pay the retainer. The interpretation of a contract involves a question of law, which we review de novo. People ex rel. Department of Public Health v. Wiley, 218 Ill.2d 207, 223, 300 Ill.Dec. 1, 843 N.E.2d 259 (2006).

We must also determine whether the circuit court erred in ordering Piper to turn over to Dowling the $50,000 paid to Piper by Seibel. No written agreement accompanied this payment. We note that prior to ruling on Dowling's motion for a turnover order, the circuit court did not conduct an evidentiary hearing, nor did the court make any findings of fact. The court apparently relied on the parties' oral argument and the record. Accordingly, we review the court's ruling on this issue de novo. See Northwest Diversified, Inc. v. Mauer, 341 Ill.App.3d 27, 33, 274 Ill.Dec. 751, 791 N.E.2d 1162 (2003) (where trial court heard no testimony and based its decision on documentary evidence, deferential standard of review is inapplicable and reviewing court will make an independent decision on the...

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