Falconer v. Meehan

• Decision Date: 22 October 1986
• Docket Number: No. 86-1195,86-1195
• Citation: Falconer v. Meehan, 804 F.2d 72 (7th Cir. 1986)
• Parties: Alan FALCONER, Plaintiff-Appellant, v. William F. MEEHAN and William F. Meehan, P.C., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 72

804 F.2d 72

Alan FALCONER, Plaintiff-Appellant, v.William F. MEEHAN and William F. Meehan, P.C., Defendants-Appellees.

No. 86-1195.

United States Court of Appeals Seventh Circuit.

Argued Sept. 5, 1986.

Decided Oct. 22, 1986.

John J. Johnston, Johnston & Kavanaugh, Belleville, Ill., for plaintiff-appellant.

Rodney A. Clutts, Anna, Ill., for defendants-appellees.

Before FLAUM and EASTERBROOK, Circuit Judges, and SWYGERT, Senior Circuit Judge.

FLAUM, Circuit Judge.

AppellantAlan Falconer appeals the district court's denial of his motion for recusal of the district judge and the order granting summary judgment that dismissed his legal malpractice claim against the defendant.We affirm the district court on both grounds.

I.

The defendant attorney handled a partnership dissolution for the plaintiff and Larry West.The partnership was dissolved by an agreement dated December 9 1980, which provided for the sale of West's interest in the partnership assets to Falconer.The agreement provided that Falconer would retain the partnership real estate, assume the partnership liabilities, including mortgages on the real estate, and pay West a certain amount for West's interest in the partnership.

The defendant, Meehan, had served as the attorney for the partnership.He also represented Falconer in the dissolution negotiations and drafted the dissolution agreement.Meehan has represented West since the dissolution of the partnership.

The dissolution agreement ("the Agreement"), to secure Falconer's performance, required Falconer to deposit the quitclaim deeds to the partnership real estate in escrow naming West as grantor.The escrowee was City National Bank of Metropolis ("the Bank").The terms of the agreement required that West was to receive the deeds in the event of Falconer's default.The Agreement also provided that Falconer could cure a default within the sixty days after service of written notice by West.In 1981 Falconer defaulted on the mortgage payments that were required under the dissolution agreement.West properly gave notice and the escrowee delivered the deeds conveying the real estate to West after Falconer failed to cure his default.

Falconer commenced an action on April 3, 1981 in Pulaski County Circuit Court seeking either rescission or reformation of the agreement on the ground that the forfeiture provisions were either "an error of the scrivener" or unconscionable.Both West and the City National Bank of Metropolis were named as defendants.The Bank was sued only in its capacity as an escrowee in order to prevent it from releasing the deeds conveying the property to West in accordance with the agreement.

The Pulaski County litigation was removed to the Bankruptcy Court for the Southern District of Illinois following Falconer's filing a Chapter 11 petition.The bankruptcy court made several relevant findings of fact:

1.The Agreement was prepared by Falconer's attorney, Meehan, and each party's attorney explained it to his client.

2.There was no mistake of fact in the contract.

3.The Agreement provided that Falconer could cure his default within 60 days after he received West's written notice of his default.

Falconer appealed the bankruptcy court's decision to the district court.Judge Foreman issued an order dismissing the appeal for failure to follow procedural rules.

A.

The present action was filed in the Southern District of Illinois under 28 U.S.C. Sec. 1332.Falconer filed a malpractice claim against Meehan arguing Meehan was negligent in three respects: (1) Meehan omitted from the dissolution agreement a provision allowing Falconer to cure a default prior to forfeiture of his interest; (2) Meehan failed to explain the meaning of the agreement to Falconer so that Falconer did not understand the risks of forfeiture; and (3) Meehan represented Falconer in connection with the dissolution after having previously done legal work for the partnership.The defendant moved for summary judgment on all issues.On June 3, 1985, Judge Foreman granted the motion.

The district court found that Falconer was collaterally estopped from asserting both that the Agreement did not contain a cure provision and that Meehan had not explained the risk of forfeiture.The district court held that these issues were before the bankruptcy court in the prior litigation, and that court had decided these issues adversely to Falconer.Furthermore, the district court found that Meehan's representation of Falconer after having been counsel to the partnership did not create a conflict of interest.

II.

The plaintiff-appellant first contests the order granting summary judgment in favor of the defendant.Summary judgment is of course, proper only in situations where there exist no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law.Fed.R.Civ.P. 56.The burden of establishing the lack of a genuine issue of material fact is on the party moving for summary judgment.Korf v. Ball State University, 726 F.2d 1222, 1226(7th Cir.1984).The court must view the evidence, and the inferences therefrom, in the light most favorable to the party opposing summary judgment.Yorger v. Pittsburgh Corning Corp., 733 F.2d 1215(7th Cir.1984).Once a moving party has met its initial burden the opposing party must "set forth specific facts showing that there is a genuine issue for trial" and that the disputed fact is material.Posey v. Skyline Corp., 702 F.2d 102, 105(7th Cir.), cert. denied, 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 336(1983).

In the present case, the district court found that no issue of material fact existed and granted summary judgment.For the reasons set forth below we affirm.

A.

The present suit is one for legal malpractice.In Illinois a cause of action based upon legal malpractice is "a tort action for negligence premised upon a breach of an attorney's duties to the client."Gruse v. Belline, 138 Ill.App.3d 689, 93 Ill.Dec. 297, 301, 486 N.E.2d 398, 402(1985).An attorney will be held liable to his or her client when he or she fails to exercise the degree of care and skill the situation requires.Smiley v. Manchester Insurance & Indemnity Co. of St. Louis, 71 Ill.2d 306, 16 Ill.Dec. 487, 375 N.E.2d 118(1978);Schmidt v. Hinshaw, Colbertson, Moelmann, Hoban & Fuller, 75 Ill.App.3d 516, 31 Ill.Dec. 357, 394 N.E.2d 559(1979).The amount of care required is a question of fact.Schmidt, 31 Ill.Dec. at 361, 394 N.E.2d at 563.The flip side of these rules is that a mere error in judgment is not actionable.Segal v. Berkson, 139 Ill.App.3d 325, 93 Ill.Dec. 927, 487 N.E.2d 752(1985).

Falconer steadfastly asserts that the defendant was negligent.However, the precise grounds upon which his claim stands are not clear.Because there is "no such thing as negligence in the abstract,"Palsgraf v. Long Island R. Co., 248 N.Y. 339, 162 N.E. 99, 102(1928)(Andrews, J., dissenting), it is necessary to distill from plaintiff's complaint the underlining bases of his negligence claim.Plaintiff's general allegation that the Agreement was "negligently drafted" requires more specificity in order to overturn the summary judgment order.

Falconer first argues that the Agreement was negligently drafted because it contained no cure provision.Although the dissolution agreement is far from being a model of good draftsmanship, it is clear that it does permit Falconer to cure his default.The bankruptcy court, in finding of fact 9, stated that "the agreement provided that upon default by the buyer, all payments would be forfeited ... provided that the seller had given buyer (60) days written notice to cure the default under the contract."In re Falconer, Nos. 81-0208, 0240, 0246 (Bankr.S.D.Ill.1981)(unpublished order).Judge Foreman found this to be a reasonable construction of the contract and we do not find it to be clearly erroneous.SeeFed.R.Civ.P. 52(a).

Plaintiff's second basis for alleging negligence is that Meehan did not advise Falconer of the contents of the agreement.This precise issue was brought before the bankruptcy court, which found that Meehan explained the terms of the dissolution agreement to Falconer.

The district court in this action, relying on the earlier bankruptcy court decision, held that Falconer was collaterally estopped from asserting both that the Agreement contained no cure provision and that Meehan did not advise him of the Agreement's contents.The doctrine of collateral estoppel provides that the determination of an issue by a court of competent jurisdiction is conclusive in a later lawsuit based on a different cause of action involving a party to the prior litigation.Crowder v. Lash, 687 F.2d 996, 1009(7th Cir.1982).

When a plaintiff seeks to collaterally estop a defendant from relitigating an issue, the plaintiff must establish: "(1) that the party against whom the estoppel is asserted was a party to the prior adjudication, (2) the issues which formed the basis of the estoppel were actually litigated and decided on the merits in the prior suit, (3) the resolution of the particular issues was necessary to the court's judgment, and (4) those issues are identical to the issues raised in the subsequent suit."

Garza v. Henderson, 779 F.2d 390, 393(7th Cir.1985)(citation omitted)(emphasis omitted);County of Cook v. Midcon Corp., 773 F.2d 892, 898-99(7th Cir.1985).Here Falconer was a party to the prior adjudication.The issues of whether the Agreement permitted Falconer to cure a default and whether Meehan explained the agreement to Falconer were actually decided by the bankruptcy court.Furthermore, the resolution of these issues was necessary to the bankruptcy court's determination that the dissolution agreement was not unconscionable nor a product of a scrivener's error.

The plaintiff, however, argues that the issues in the bankruptcy court are not identical with the issues in the present suit.Specifically, plaintif...