First Nat. Bank of Lagrange v. Lowrey

• Decision Date: 29 June 2007
• Docket Number: No. 1-05-3686.,1-05-3686.
• Parties: FIRST NATIONAL BANK OF LAGRANGE, Guardian of the Estate of Jordan King, a Minor, by Mary Urbik King, his Mother and Next Friend, Plaintiff-Appellee and Cross-Appellant, v. John J. LOWREY, and Lowrey and Smerz, Defendants-Appellants and Cross-Appellees.
• Court: United States Appellate Court of Illinois

872 N.E.2d 447

FIRST NATIONAL BANK OF LAGRANGE, Guardian of the Estate of Jordan King, a Minor, by Mary Urbik King, his Mother and Next Friend, Plaintiff-Appellee and Cross-Appellant, v. John J. LOWREY, and Lowrey and Smerz, Defendants-Appellants and Cross-Appellees.

No. 1-05-3686.

Appellate Court of Illinois, First District, First Division.

June 29, 2007.

Douglas L. Prochnow of Wildman, Harrold, Allen & Dixon, LLP, for Plaintiff-Appellee and Cross-Appellant.

Daniel F. Konicek and Thomas W. Dillon of Konicek & Dillon, P.C. and J. Timothy Eaton of Shefsky & Forelich, Ltd., for Defendants-Appellants and Cross-Appellees.

Presiding Justice McBRIDE delivered the opinion of the court:

Defendants-appellants, John J. Lowrey and Lowrey & Smerz, appeal from a final judgment entered by the circuit court of Cook County in favor of plaintiff-cross-appellant, First National Bank of LaGrange, guardian of the estate of Jordan King, a minor, by Mary Urbik King, his mother and next friend, following a jury trial. Defendants originally represented the plaintiffs in an underlying medical malpractice action to recover damages for injuries that Jordan suffered at birth. Following a jury trial in that case, judgment was entered against plaintiffs and in favor of defendants. This court affirmed that judgment on direct appeal. First National Bank of LaGrange v. Loyola University of Chicago, No. 1-97-2963, 302 Ill.App.3d 1086, 254 Ill.Dec. 150, 746 N.E.2d 907 (1999) (unpublished order pursuant to Supreme Court Rule 23). Plaintiff subsequently filed suit against defendants for legal malpractice, alleging that defendants failed to inform Jordan's mother, Mary King, of a $1 million settlement offer in the medical malpractice case. Following a trial, the jury found against defendants and awarded plaintiff $1 million.

Defendants appeal, contending that the trial court erred by denying their motion for a directed verdict, by denying their motion for judgment notwithstanding the verdict (judgment n.o.v.), and by denying their motion for a new trial. Plaintiff cross-appeals from the trial court's denial of her posttrial motions for prejudgment interest and for costs and attorney fees. For the reasons that follow, we affirm.

Jordan King was born on October 1, 1990. As a result of physical and mental injuries suffered at birth, Jordan's parents (Mary and Donald, who is now deceased) retained John Lowrey to investigate Jordan's injuries and pursue legal recourse. Lowrey subsequently filed a medical malpractice action against Jordan's doctor and Loyola University Medical Center.

On October 28, 1996, the medical malpractice case was assigned to Judge Maddux. On that day, Judge Maddux held a conference in chambers with the attorneys, during which the medical malpractice defendants offered to settle the case for $1 million. Lowrey subsequently rejected defendants' offer (the circumstances surrounding when and how the offer was rejected are the subject of this litigation). The case proceeded to trial and while the jury was deliberating, Lowrey proposed a "high-low" settlement offer to defendants of between $3 million and $10 million. The medical malpractice defendants did not respond to this proposal, and the jury ultimately returned a verdict in favor of defendants.

Six months after the jury returned a verdict, Lowrey sent Mary a contingent fee contract for her signature. Signing the contract would have obligated Mary to pay Lowrey for his costs and expenses from the medical malpractice case. Mary did not sign the agreement.

On May 24, 2002, plaintiff filed a legal malpractice action alleging that defendants rejected the $1 million settlement without discussing it with Mary. On June 16, 2005, the legal malpractice case was tried before a jury. At the start of the trial, plaintiff's attorney read admitted facts into evidence. The following facts were admitted: Lowrey met with the Kings on or about October 1 or 2, 1990, and accepted the representation of Jordan King at that time, thereby forming an oral contract for legal services; Lowrey's representation of Jordan was on a contingent fee basis; defendants do not have any documents regarding the definition of costs or expenses in any oral contract for delivery of legal services to Jordan King; defendants do not have any documents regarding communications between Lowrey and anyone acting on Jordan King's behalf about the amount of the initial settlement demand in the medical malpractice lawsuit; on October 28, 1996, the defendants in the medical malpractice lawsuit for the first time made a formal settlement offer of $1 million; defendants do not have any documentation communicating this settlement offer to anyone acting on Jordan King's behalf; defendants do not have any documentation regarding Mary's acceptance or rejection of the settlement offer; and defendants do not have a written contingent fee agreement signed by someone acting on Jordan King's behalf.

John Lowrey testified for plaintiff as an adverse witness. Lowrey testified that he either sent the Kings a written contingency fee agreement or left the agreement with the Kings at their apartment. Lowrey did not know what happened to the agreement and acknowledged that he had it in his possession after it was signed by the Kings. He assumed that he gave the Kings the standard form agreement that he used at that time.

Lowrey testified that the written contingent fee agreement contained language which obligated the Kings to repay Lowrey's costs and expenses regardless of the outcome of the medical malpractice case. Lowrey acknowledged giving a deposition in this case in which he testified that the contract the Kings signed "probably" did not contain language obligating them to repay Lowrey's costs and expenses regardless of the outcome of the case.

Lowrey further testified that the standard form agreement he used at the time of the medical malpractice case contained a paragraph regarding settlement, although he could not recall "the exact words." Lowrey did not remember the contract requiring him to obtain the Kings' written permission before settling the case or rejecting a settlement offer, or specifically stating that he could use his own judgment in negotiating a settlement. However, it was implicit in the agreement that he could use his judgment to negotiate a settlement and that he would then have to talk to the Kings before a settlement was accepted.

Lowrey sent the malpractice defendants a letter on January 17, 1996, in which he made a settlement demand of $8.5 million. Lowrey also sent the malpractice defendants a letter on March 26, 1996, giving them a seven-day limit to propose a settlement offer before Lowrey withdrew his demand for settlement. The medical malpractice defendants responded by sending a letter to Lowrey stating that the seven-day limit was unreasonable but that they wanted to continue discussing settlement.

Lowrey testified that the medical malpractice defendants made a $1 million settlement offer in Judge Maddux's chambers on October 28, 1996, and that he did not reject the offer at that time. When defendants made the settlement offer, Lowrey thought it was a possibility that there was more than $1 million available to settle the case, although he did not believe this was probable. Lowrey acknowledged that he gave a deposition in this case in which he testified that, prior to trial in the medical malpractice case, he "figured" there might be more than $1 million available to settle the case. Lowrey did not believe that this was important information for Mary to know. Lowrey also stated that the settlement offer did not include a waiver of the $147,000 hospital bill from Loyola because he thought that the bill was paid by insurance.

Lowrey testified that he believed that he rejected the $1 million settlement offer on October 29, 1996, after speaking with Mary on the phone and advising her to reject the offer. Lowrey acknowledged that, in his answers to an interrogatory requesting that he identify all conversations he had with anyone acting on Jordan's behalf regarding accepting or rejecting a settlement offer, he stated that he advised Mary of the $1 million settlement offer "in a face to face meeting" at his office in November 1996. When asked about this discrepancy, Lowrey stated that his interrogatory answers were not complete and that his attorney pointed this out to him the night before he testified.

Lowrey further testified that he owed Mary a fiduciary and a contractual duty to advise her of the $1 million settlement offer before he rejected it and to provide her with sufficient information to make an informed decision regarding a settlement offer. However, he was not obligated to advise Mary of every settlement offer that was made.

During the course of his investigation, Lowrey had a number of experts review the facts of the medical malpractice case. Some of those doctors gave Lowrey "negative reviews" and said that no medical malpractice had occurred. Lowrey acknowledged that he had a duty, "in general terms," to tell Mary of these negative reviews.

Lowrey also testified that he had a discussion with Mary regarding what the amount of his fee would be in context of the $1 million settlement offer. Lowrey believed that this amount was $262,000, based on the standard contract which entitled him to one-third of the first $150,000 and to 25% of the remaining $850,000. At the time that Lowrey told Mary about the settlement offer, he believed she was contractually obligated to pay him $180,000 in costs regardless of the outcome. Lowrey did not believe that this was important for Mary to know because he never intended to ask her to repay his costs and expenses if they lost the case. However, Lowrey did tell Mary the amount of costs that he had incurred. If Mary had accepted the $1 million offer, Lowrey would have taken his costs of between $160,000 and $180,000 out of that amount. Under...