Horwitz v. Llp

• Decision Date: 26 March 2010
• Docket Number: No. 1-09-0233.,1-09-0233.
• Citation: Horwitz v. Sonnenschein Nath and Rosenthal LLP, 399 Ill.App.3d 965, 926 N.E.2d 934, 339 Ill.Dec. 459 (Ill. App. 2010)
• Parties: Donald P. HORWITZ, Plaintiff-Appellant,v.SONNENSCHEIN NATH AND ROSENTHAL LLP, Defendant-Appellee.
• Court: Appellate Court of Illinois

399 Ill.App.3d 965

926 N.E.2d 934

339 Ill.Dec. 459

Donald P. HORWITZ, Plaintiff-Appellant,v.SONNENSCHEIN NATH AND ROSENTHAL LLP, Defendant-Appellee.

No. 1-09-0233.

Appellate Court of Illinois First District, Sixth Division.

March 26, 2010.

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Donald P. Horwitz, Glencoe, pro se.

Walter Jones, Jr. and Jenny M. Norenberg, Pugh, Jones, Johnson & Quandt, P.C.; and John C. Koski and Jeffrey Davis, Sonnenschein Nath & Rosenthal LLP, Chicago, for Appellee.

Presiding Justice CAHILL delivered the opinion of the court:

Plaintiff Donald P. Horwitz appeals the dismissal under section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2008)) of his amended complaint against defendant Sonnenschein Nath & Rosenthal, LLP, a law firm where he was a partner. Horwitz's three-count amended complaint sought (1) rescission of a “special partnership” agreement with the firm; and alleged (2) breach of contract and (3) unjust enrichment. Plaintiff appeals. We believe plaintiff's amended complaint pled sufficient facts that, if proven, would entitle plaintiff to relief. We reverse and remand for further proceedings.

Plaintiff's amended complaint alleged that he joined the defendant firm in 1990 as an equity and general partner. In 2000, defendant set up a restructuring program and proposed a “Special Partner” employment agreement to plaintiff. The agreement required plaintiff to give up his equity interest in the firm six years before his mandatory retirement date but allowed him to be paid beyond the retirement date for part-time work.

A letter of agreement was dated November 30, 2000, and contained the following relevant facts:

“1. * * * Effective January 1, 2001, you will become a Special Partner and begin drawing your retirement benefits from the Firm. * * *

2. * * * For 2001, you will receive as your Special Partner compensation, including your retirement benefit, $79,000 (a supplement to your retirement pay of $18,000). In addition, early in 2002 you will receive a bonus based on your total contribution for 2001. In measuring such contribution, we will take into account directors' fees and stock awards that accrue to the benefit of the Firm. You have asked what supplemental retirement pay you can anticipate if you bill 700 billable hours and have fee collections of $650,000 if you are treated like others similarly situated. I've advised you that I would expect that the Policy and Planning Committee, under its current approach to Special Partner compensation, would approve supplemental retirement pay of between $75,000 to $100,000 in those circumstances. [ (Emphasis added.) ]

* * *

4. In addition, commencing in 2002 and so long as you continue as a Special Partner at the beginning of each year, Firm management will determine the amount of your compensation for that year

based upon your then-current contribution to the Firm and the Firm's current practice with regard to compensating Special Partners. [ (Emphasis added.) ] So long as you are employed as a Special Partner by the Firm, during the period of payment of retirement benefits, any compensation paid to you by the Firm shall be applied pro tanto in lieu of retirement benefits which would otherwise have been paid during that period of employment, and each month of such employment, whether on a full-time or part-time basis, shall constitute a month of retirement for purposes of the partnership agreement.”

Defendant informed plaintiff by letter on June 8, 2005, that the firm would “no longer pay you a supplement to your retirement benefit, commencing in 2006.”

Plaintiff filed a complaint for rescission and other relief on August 18, 2006. In an amended complaint on March 13, 2007, plaintiff alleged: count I: rescission; count II: breach of contract; and count III: unjust enrichment.

The following paragraphs are relevant to the dismissal of the complaint under section 2-615 (735 ILCS 5/2-615 (West 2008)):

“31. In the fall of 2000, * * * the Firm proposed that Horwitz enter into a written agreement [ (the Agreement) ] that would change his status in the Firm from that of an equity partner to that of a non-equity Special Partner. * * *

32. Horwitz could have remained an equity partner until December 31, 2006. Horwitz reasonably believed that his compensation as an equity partner would have increased in the future because he was responsible for generating higher billings for the Firm.

33. By becoming a Special Partner, Horwitz could, if he chose, continue to be active in the firm part-time as a Special Partner and contribute to the Firm for a significant number of years past his December 31, 2006[,] retirement date and be compensated accordingly.

34. Horwitz accepted the Firm's proposal to change his status in the Firm and relinquished his equity interest in the firm. * * *

35. The Agreement had been drafted by the Firm and presented to Horwitz in its entirety. Horwitz made no changes. Horwitz's relinquishment of his equity interest in the Firm was good and valid consideration for the promises contained in the Agreement. * * *

* * *

47. Horwitz has performed all of his obligations under the Agreement.

* * *

50. Horwitz has continued as a Special Partner from January 1, 2001 [,] until and through the date this Amended Complaint was filed. * * *

51. The Firm has continued to treat Horwitz as eligible for the same benefits made available to Equity Partners and Special Partners of the Firm * * *. Horwitz was entitled to be paid Special Partner compensation in 2006 and 2007, because he continued to be a Special Partner and he continued to contribute to the Firm.

52. As set out in the following paragraphs, there has been substantial nonperformance of the Agreement by the Firm. The Firm violated and breached the Agreement in at least the following ways:

(a) The Firm failed to compensate and pay Horwitz for so long as Horwitz continued as a Special Partner and made a contribution to the Firm;

(b) The Firm failed to determine and pay Horwitz Special Partner compensation for each of the years 2001 through and including 2007 fairly and in good faith;

(c) The Firm failed to determine and pay Horwitz compensation for each of the years 2001 through and including 2007 on the basis of Horwitz's respective then-current contribution to the Firm;

(d) The Firm failed to determine and pay Horwitz compensation for each of the years 2001 through and including 2007 consistent with the Firm's then-current practice with regard to compensating Special Partners; and

(e) The Firm anticipatorily breached its obligation to compensate Horwitz for the years following 2007; and

(f) The Firm repudiated the Agreement.* * *

* * *

56. At or about the time the Firm wrongfully reduced Horwitz's compensation from $99,000 to $38,000 for 2002, the Firm determined to pay Horwitz the same extremely low, flat and arbitrary $38,000 amount of compensation for 2003, 2004, and 2005. This constituted a material and fundamental breach of the Agreement. * * *

* * *

66. The Special Partner compensation paid to Horwitz for 2001-2006 was substantially below the amounts which should have been paid to him under the Firm's policies and practice regarding compensation and according billing credit * * *.

* * *

69. [T]he Firm's stated policy for according billing credit to partners, including * * * Special Partners, was as follows [from the Firm's Lawyer's Handbook]:

[‘]Historically, the Firm has generally accorded billings credit to the partner responsible for originating the client relationship to the Firm, or to the partner acceding to the primary client relationship where the originating billing partner has retired or otherwise left the Firm. * * *[’]

* * *

70. It has long been the Firm's practice, that when a partner brings in a new client that partner (referred to herein as the ‘originating partner’) is credited with all billings to that client, including billings for all additional and subsequent matters for that client, whether brought in by that partner or * * * by other partners in the Firm and whether worked on or supervised by that partner or * * * by other partners of the Firm.

71. The Agreement contained language which caused Horwitz to reasonably believe that the Firm would follow its from time to time stated policy with regard to according billing credit to partners in determining his Special Partner compensation each year and that the Firm would treat him similarly to the way it treats other similarly situated Special Partners, Special Partners with agreements promising compensation each year based upon their then-current contribution to the Firm.

72. During one or more of the years subsequent to 2001, Horwitz was directly responsible for the Firm's being engaged by various parties to represent them in matters that generated income for the Firm. These parties included: [three clients]. Horwitz was the originating partner for [one client]. Horwitz was not accorded credit for certain * * * billings. Horwitz originated [another client's] relationship with the Firm, and Horwitz was and continues to be the only lawyer at the Firm who did or does work for [that client]. * * * The Firm did not give Horwitz any credit for billings it collected from [that client].

73. It has been the practice of the Firm to accord billing credit to partners * * * who served on boards of directors of clients who paid significant billings. The Firm ignored this policy with respect to Horwitz's role with * * * a significant client of the Firm, for which Horwitz was a board member, had the leadership role at the Firm for the client, and was directly responsible for the client's expansion of its business with the Firm.

74. Despite the foregoing and contrary to the Firm's policy for according billing credit and its practice with regard to compensating Special Partners, the Firm did not credit Horwitz for certain billings collected from the clients listed in the following paragraph in determining

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