Evanston Ins. Co. v. Riseborough

• Decision Date: 21 February 2014
• Docket Number: No. 114271.,114271.
• Citation: 378 Ill.Dec. 778,5 N.E.3d 158,2014 IL 114271
• Parties: EVANSTON INSURANCE COMPANY, Appellee, v. George E. RISEBOROUGH, et al., Appellants.
• Court: Illinois Supreme Court

2014 IL 114271
5 N.E.3d 158
378 Ill.Dec. 778

EVANSTON INSURANCE COMPANY, Appellee,
v.
George E. RISEBOROUGH, et al., Appellants.

No. 114271.

Supreme Court of Illinois.

Feb. 21, 2014.

[5 N.E.3d 160]

Terry D. Weissman, Christopher D. Mickus, Sarah G. Malia, Neal, Gerber & Eisenberg LLP, Chicago, for appellants.

Joseph R. Marconi, David M. Macksey, Garrett L. Boehm, Jr., Johnson & Bell, Ltd., Chicago, for appellee.

OPINION
Justice BURKE delivered the judgment of the court, with opinion.

¶ 1 At issue in this appeal is whether section 13–214.3 of the Code of Civil Procedure (Code) (735 ILCS 5/13–214.3 (West 2008)), which sets forth a six-year statute

[5 N.E.3d 161]

of repose for “action[s] for damages based on tort, contract, or otherwise * * * against an attorney arising out of an act or omission in the performance of professional services,” applies to plaintiff's second amended complaint for breach of implied warranty of authority, fraudulent misrepresentation, and negligent misrepresentation. The circuit court of Cook County found that the statute of repose barred plaintiff's claims against the defendant attorneys and dismissed the complaint. The appellate court reversed and remanded for further proceedings, finding that the statute of repose did not apply to an action brought by a nonclient of the defendant for a cause of action other than legal malpractice. 2011 IL App (1st) 102660–U, ¶ 28, 2011 WL 10071946. We reverse the appellate court's judgment and affirm the circuit court's dismissal of plaintiff's complaint.

¶ 2 Background

¶ 3 In 1996, Kiferbaum Construction Corporation (Kiferbaum) was the general contractor for the construction of a warehouse. Two employees of a subcontractor on the project were injured at the construction site, resulting in a personal injury action filed against Kiferbaum by one of the injured workers. Kiferbaum was represented in the personal injury lawsuit by the law firm of Jacobson & Riseborough.

¶ 4 At the time of the accident, Kiferbaum was the named insured under primary and excess liability policies issued by Statewide Insurance Company (Statewide). Kiferbaum was listed as an additional insured on each of its subcontractors' insurance policies, including a $1 million excess liability policy issued by Evanston Insurance Company (Evanston), and policies issued by Steadfast Insurance Company (Steadfast) and Transportation Insurance Company (Transportation).

¶ 5 In 1997, Statewide filed a declaratory judgment action in the circuit court seeking a declaration that it owed no coverage under its policies. That action was pending when, in 2000, the parties reached a settlement in the personal injury case in the amount of $4,887,500. On October 23, 2000, Evanston, Steadfast, and CNA Insurance Company (as owner of Transportation) entered into an agreement, referred to by the parties as the “Fund and Fight Agreement,” in which they agreed to contribute their respective policy limits to fund the settlement. In accord with the agreement, Evanston contributed $1 million, Steadfast contributed $1 million, and CNA funded the remainder of the settlement. Statewide signed the Fund and Fight Agreement but did not contribute any funds. The agreement provided, in part, that the insurers reserved the right to litigate policy and coverage defenses among themselves. Statewide and Kiferbaum also agreed to reimburse the contributing insurers “if defenses to coverage on behalf of any or all of these insurers are judicially found to be valid and/or that the position taken by Kiferbaum and/or Statewide, as set forth above, is invalid.” George Riseborough, an attorney from Jacobson & Riseborough, signed the agreement as the “duly authorized agent and representative of Kiferbaum.”

¶ 6 Pursuant to the Fund and Fight Agreement, Evanston intervened in Statewide's declaratory judgment action and filed a separate complaint against Statewide and Kiferbaum with respect to coverage issues.¹ These actions were consolidated (hereinafter referred to as the “coverage action”). Evanston alleged that

[5 N.E.3d 162]

Kiferbaum should have exhausted its coverage under its primary policy issued by Statewide before turning to excess insurance carriers. Evanston alleged further that, under the terms of the Fund and Fight Agreement, Kiferbaum was required to reimburse Evanston for the $1 million it contributed to the personal injury settlement. Kiferbaum asserted as a defense to Evanston's claims that it was not bound by the Fund and Fight Agreement. In support of that defense, on December 22, 2003, Kiferbaum's president, Jacob Kiferbaum, filed an affidavit stating that he had no knowledge of the agreement at the time of its creation, and that George Riseborough lacked authorization to sign the agreement on Kiferbaum's behalf.

¶ 7 Evanston reached an agreement with Statewide to settle the coverage action, whereby Statewide agreed to pay Evanston $612,500 in exchange for Evanston's release of Statewide and Kiferbaum. On December 23, 2003, the circuit court entered an agreed order of dismissal pursuant to settlement. Statewide later went into liquidation, however, and the settlement check was not honored. Evanston filed a petition to vacate the agreed order of dismissal pursuant to section 2–1401 of the Code of Civil Procedure (735 ILCS 5/2–1401 (West 2008)), which the circuit court granted. Evanston continued to pursue its claims against Kiferbaum, and the parties engaged in discovery and motion practice. On April 29, 2009, the circuit court granted Kiferbaum's motion for summary judgment, in part, finding that Kiferbaum did not give authority to Riseborough to sign the Fund and Fight Agreement on its behalf. On December 2, 2009, following a bench trial on the remaining issue of Kiferbaum's ratification of the Fund and Fight Agreement, the circuit court entered judgment in favor of Kiferbaum and against Evanston. Evanston did not appeal the judgment in the coverage action.

¶ 8 While the insurance coverage proceedings were still pending, on December 22, 2005, Evanston filed a complaint in Cook County Circuit Court against defendants Jacobson & Riseborough, and individual attorneys George E. Riseborough and Reid Jacobson. Evanston alleged breach of implied warranty of authority, fraudulent misrepresentation, and negligent misrepresentation, based on defendants' execution of the Fund and Fight Agreement on Kiferbaum's behalf without Kiferbaum's express authority. Evanston alleged that defendants' actions caused Evanston to lose the anticipated benefits of the agreement and sustain damages. Evanston later filed an amended complaint setting forth substantially the same allegations. The relief sought by Evanston included the $1 million which Evanston had contributed to the personal injury settlement, as well as attorney fees and costs incurred in its efforts to obtain relief from Kiferbaum. The circuit court dismissed both complaints without prejudice pursuant to section 2–615 of the Code (735 ILCS 5/2–615 (West 2008)). The court found that Evanston's claims were premature because, at the time of filing the complaints, Evanston had not established its entitlement to collect reimbursement from Kiferbaum under the terms of the Fund and Fight Agreement.

¶ 9 On December 23, 2009, after the final judgment order had been entered in the coverage action, Evanston filed its second amended complaint reasserting its claims against the Riseborough defendants. Defendants filed a motion to dismiss pursuant to section 2–619 of the Code (735 ILCS 5/2–619 (West 2008)). The circuit court of Cook County granted the motion to dismiss, finding the six-year statute of repose in section 13–214.3(c) (

[5 N.E.3d 163]

735 ILCS 5/13–214.3(b) (West 2008)) barred Evanston's claims. Evanston's motion to reconsider and to vacate the order of dismissal was denied. The appellate court reversed and remanded for further proceedings. 2011 IL App (1st) 102660–U, 2011 WL 10071946. We allowed defendants' petition for leave to appeal. Ill. S.Ct. R. 315 (eff. Feb. 26, 2010).

¶ 10 Analysis

¶ 11 On appeal to this court, defendants argue that the appellate court failed to apply the plain language of section 13–214.3 and, instead, improperly limited the application of the statute solely to claims brought by a client against an attorney for legal malpractice. Evanston, however, asks that we affirm the appellate court and find that section 13–214.3 is inapplicable to claims by non-clients of the defendant. In the alternative, Evanston argues that, even if the statute of repose applies to its second amended complaint, its claims are not barred because (1) its original complaint was filed before the repose period and remained “pending on the docket” of the circuit court; (2) the second amended complaint related back to the original timely filed complaint; and (3) the trial court erred in dismissing the original and first amended complaints as premature.

¶ 12 I. Statute of Repose

¶ 13 Evanston's second amended complaint was dismissed pursuant to section 2–619 of the Code (735 ILCS 5/2–619 (West 2008)). A motion to dismiss under section 2–619 “admits the legal sufficiency of the plaintiffs' complaint, but asserts an affirmative defense or other matter that avoids or defeats the plaintiffs' claim.” DeLuna v. Burciaga, 223 Ill.2d 49, 59, 306 Ill.Dec. 136, 857 N.E.2d 229 (2006). The circuit court's dismissal of a complaint pursuant to section 2–619 is reviewed de novo. Id. Both the interpretation of a statute and the applicability of a statute of repose to a cause of action are questions of law subject to de novo review. Uldrych v. VHS of Illinois, Inc., 239 Ill.2d 532, 540, 347 Ill.Dec. 694, 942 N.E.2d 1274 (2011); Krautsack v. Anderson, 223 Ill.2d 541, 553, 308 Ill.Dec. 302, 861 N.E.2d 633 (2006).

¶ 14 The statute of repose at issue is contained in section 13–214.3 of the Code, which is titled “Attorneys.” Section 13–214.3 provides, in part:

“(b) An action for damages based on tort,...