Goodman v. Harbor Market, Ltd., 1-94-2352

• Citation: 663 N.E.2d 13,278 Ill.App.3d 684,215 Ill.Dec. 263
• Decision Date: 08 December 1995
• Docket Number: No. 1-94-2352,1-94-2352
• Parties: , 215 Ill.Dec. 263 Shirley GOODMAN, a/k/a Mrs. Julius Goodman, Plaintiff, v. HARBOR MARKET, LTD., f/k/a Dahl Market, Inc., and Richard H. Dahl, Defendants and Third-Party Plaintiffs-Appellants (Stuart Goodman and Schiff, Hardin & Waite, Third-Party Defendants- Appellees).
• Court: United States Appellate Court of Illinois

Page 13

663 N.E.2d 13 278 Ill.App.3d 684, 215 Ill.Dec. 263 Shirley GOODMAN, a/k/a Mrs. Julius Goodman, Plaintiff,
v.
HARBOR MARKET, LTD., f/k/a Dahl Market, Inc., and Richard H.
Dahl, Defendants and Third-Party
Plaintiffs-Appellants (Stuart Goodman
and Schiff, Hardin & Waite,
Third-Party
Defendants-
Appellees). No. 1-94-2352. Appellate Court of Illinois,
First District, Fifth Division. Dec. 8, 1995.
Rehearing Denied April 19, 1996.

Page 15

[215 Ill.Dec. 265] [278 Ill.App.3d 685] Andrey B. Filipowicz, Chicago, for Appellants.

Barry S. Alberts, Kevin P. Kenealey, Schiff, Hardin & Waite, Chicago, for Appellees.

Justice THOMAS J. O'BRIEN delivered the opinion of the court:

This case arises from a legal malpractice action against the law firm of Schiff, Hardin & Waite and one of its attorneys, Stuart Goodman. At issue is whether the lawsuit is barred under section 13-214.3 of the Code of Civil Procedure (735 ILCS 5/13-214.3 (West 1992)) which contains a two year statute of limitation and a six year statute of repose. For reasons which follow, we hold that the suit is not barred as a matter of law, reverse the dismissal of the circuit court, and remand.

The alleged malpractice giving rise to this appeal involved a promissory note executed on April 29, 1985 between Shirley and Julius Goodman and their son-in-law, Richard Dahl. The note was [278 Ill.App.3d 686] drafted by Stuart Goodman, Julius's nephew. Goodman represented both the Goodmans and Dahl at the time of the transaction.

Subsequently, on January 26, 1993, Shirley Goodman instituted suit against Dahl to enforce the note. In turn, Dahl filed a third party action against his former attorneys, Stuart Goodman and the law firm, Schiff, Hardin & Waite (collectively, the attorneys). Dahl filed his suit on November 8, 1993.

The gravamen of Dahl's complaint was that the attorneys' dual representation at the time the note was drafted constituted a conflict of interest. Specifically, Dahl claimed the attorneys did not disclose the possible effects of their simultaneous representation. Moreover, the attorneys did not inform him that certain loan terms were unusual and commercially questionable. Nor did the attorneys suggest alternatives to the loan or recommend that certain oral representations be included in the written agreement. Dahl alleged that he would not have entered into the loan agreement if he had been properly advised by the attorneys.

Relevant to this appeal is Dahl's allegation that he "did not discover" the attorneys' malpractice until he was sued by Shirley. In particular, Dahl submits that he first "discovered" the attorneys' negligence when he was made a party to that lawsuit and "served with summons * * * on or about July 1, 1992." ¹

The attorneys successfully moved to dismiss Dahl's complaint pursuant to section 2-619(a)(5) on the basis that it was time-barred by the six year statute of repose for legal malpractice. (735 ILCS 5/13-214.3 (West 1992).) After granting the dismissal, the circuit court found no just reason to delay enforcement or appeal of the dismissal. See 134 Ill.2d R. 304(a).

Section 13-214.3(b) provides that

"(b) An action for damages based on tort, * * * against an attorney arising out of an act or omission in the performance of professional services * * * must be commenced

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[215 Ill.Dec. 266] within 2 years from the time the person bringing the action knew or reasonably should have known of the injury for which damages are sought.

(c) * * * an action described in subsection (b) may not be commenced in any event more than 6 years after the date on which the act or omission occurred.

* * * * * *

[278 Ill.App.3d 687] (f) This section applies to all causes of action accruing on or after its effective date." (735 ILCS 5/13-214.3 (West 1992).)

The effective date of the statute was January 1, 1991. 735 ILCS 5/13-214.3 (West 1992).

On appeal, Dahl initially maintains that section 13-214.3 does not apply because his cause of action accrued before the statute's effective date, January 1, 1991, and, therefore, his action is controlled by the five year limitation period contained in section 13-205. (Ill.Rev.Stat.1991, ch. 110, par. 13-205; see e.g., Garcia v. Pinto (1993), 258 Ill.App.3d 22, 24, 195 Ill.Dec. 795, 629 N.E.2d 103.) Section 13-205 contained no statute of repose for attorney malpractice actions.

Accrual of Dahl's Cause of Action

In order to determine which statute applies, we must first determine when Dahl's cause of action legally accrued. The Illinois appellate court has taken different approaches in determining when a cause of action for legal malpractice accrues. One line of cases, illustrated by Dolce v. Gamberdino (1978), 60 Ill.App.3d 124, 126, 17 Ill.Dec. 274, 376 N.E.2d 273, holds that the action "arises" at the time of the negligent act, i.e., "when the attorney breaches his duty to act skillfully and diligently in representing the plaintiff." (Dolce, 60 Ill.App.3d at 126, 17 Ill.Dec. 274, 376 N.E.2d 273; see also Maloney v. Graham (1912), 171 Ill.App. 409, 411.) Recognizing that this rule would bar some plaintiffs from bringing suit before they were even aware of the injury, another line of cases, illustrated by Tucek v. Grant (1984), 129 Ill.App.3d 236, 84 Ill.Dec. 603, 472 N.E.2d 563, hold that "a cause of action for legal malpractice does not accrue until the client discovers, or should discover, the factors establishing the elements of his cause of action." Kohler v. Woollen, Brown & Hawkins (1973), 15 Ill.App.3d 455, 304 N.E.2d 677; see also Tucek, 129 Ill.App.3d at 241, 84 Ill.Dec. 603, 472 N.E.2d 563.

Our supreme court has never directly addressed the question of when a cause of action for legal malpractice accrues. In its most recent decision concerning such actions, the court noted that "the discovery rule delays commencement of the relevant statute of limitations until the plaintiff knows or reasonably should know that he has been injured and that his injury was wrongfully caused." (Jackson Jordan v. Leydig, Voit & Mayer (1994), 158 Ill.2d 240, 249, 198 Ill.Dec. 786, 633 N.E.2d 627.) In Jackson, the client sued its former attorneys for negligent representation in a patent case. The law firm had, previously advised the client in 1973 that its proposed "tamping" machine did not infringe upon any existing patents. The client then proceeded with production of the machine and was later sued in 1982 by a rival company which held a patent on a similar machine. The client won [278 Ill.App.3d 688] the patent case at trial, but lost on appeal. The client then filed its action for legal malpractice in 1988.

The supreme court held that the date of discovery was a question for the jury; only the fact finder could decide when the client should be charged with the knowledge of injury. In Jackson that meant the date when the client was informed another patent existed or the date on which the rival company announced its intention to sue on the patent infringement or on the date in which the court of appeals ruled adversely to the client. Jackson, 158 Ill.2d at 250-51, 198 Ill.Dec. 786, 633 N.E.2d 627.

The decision in Jackson indicates that the date on which the actual malpractice took place--for example, the date advice is given and acted upon--is not the date of the cause of actions's accrual. If accrual occurred on the date of the advice, the supreme court in Jackson would not have found that a question of fact existed as to the date of discovery, for the parties did not dispute that the advice was given in 1973. Jackson leaves but little doubt that the accrual theory embraced in Dolce is no longer the law in Illinois. We must, therefore, adopt the rationale

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[215 Ill.Dec. 267] set forth in both Kohler and Tucek, which we believe is more consistent with Illinois caselaw concerning the discovery of injury and its effect on the accrual of a cause of action.

The Discovery Rule

Illinois courts have acknowledged the inherent inequities which arise if a plaintiff is unaware of otherwise actionable negligence until after the applicable statute of limitations has passed. The solution to the dilemma is the so-called "discovery rule," which tolls a limitations period to the time when a person knows or reasonably should know both of his injury and its wrongful cause. See e.g., Rozny v. Marnul (1969), 43 Ill.2d 54, 71-72, 250 N.E.2d 656; Witherell v. Weimer (1981), 85 Ill.2d 146, 52 Ill.Dec. 6, 421 N.E.2d 869; Nolan v. Johns-Manville Asbestos (1981), 85 Ill.2d 161, 52 Ill.Dec. 1, 421 N.E.2d 864. But c.f., Sister Marie Golla v. General Motors (1995), 167 Ill.2d 353, 212 Ill.Dec. 549, 657 N.E.2d 894; Berry v. G.D. Searle & Co. (1974), 56 Ill.2d 548, 309 N.E.2d 550; Williams v. Brown Manufacturing Co. (1970), 45 Ill.2d 418, 261 N.E.2d 305 (holding discovery rule inapplicable in cases in which a "sudden traumatic event" is involved because the nature and circumstances surrounding the event are such that the injured party is put on notice that actionable conduct might be implicated).

The discovery rule was first adopted by the supreme court in Rozny v. Marnul (1969), 43 Ill.2d 54, 71-72, 250 N.E.2d 656, where the court contemplated the rule's considerable implications in determining "when an action accrues as that word is used in various[278 Ill.App.3d 689] statutes of limitation in this State." (Rozny, 43 Ill.2d at 54, 250 N.E.2d 656.) ² In Rozny, the court held that the cause of action at issue, the professional negligence of a land surveyor, accrued for purposes of Illinois' statutes of limitation "when [plaintiffs] knew or should have known of the defendant's error." (Rozny, 43 Ill.2d at 72-73, 250 N.E.2d 656.) In so holding, the court overruled the appellate court which had held that despite the fact that the plaintiffs were unaware of the error and its impact at the time, the cause of action had accrued on the date of the surveyor's purported negligence.

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