Jones Motor Co. v. Holtkamp, Liese

• Decision Date: 28 December 1999
• Docket Number: Nos. 98-3573 and 98-3692,s. 98-3573 and 98-3692
• Citation: 197 F.3d 1190
• Parties: (7th Cir. 1999) Jones Motor Company, Inc., and Protective Insurance Company, Plaintiffs-Appellants, Cross-Appellees, v. Holtkamp, Liese, Beckemeier & Childress, P.C., and Paul B. Lee, Defendants-Appellees, Cross-Appellants
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1190

197 F.3d 1190 (7th Cir. 1999)

Jones Motor Company, Inc., and Protective Insurance Company, Plaintiffs-Appellants, Cross-Appellees, v. Holtkamp, Liese, Beckemeier & Childress, P.C., and Paul B. Lee, Defendants-Appellees, Cross-Appellants.

Nos. 98-3573 and 98-3692

In the United States Court of Appeals For the Seventh Circuit

Argued September 10, 1999

Decided December 1, 1999

Rehearing and Rehearing En Banc Denied Dec. 28, 1999.

Appeals from the United States District Court for the Southern District of Illinois. No. 97 C 579--G. Patrick Murphy, Judge.

Before Posner, Chief Judge, and Easterbrook and Rovner, Circuit Judges.

Posner, Chief Judge.

The plaintiffs in this legal malpractice suit appeal from its dismissal on the defendants' motion for summary judgment, raising a novel issue concerning the law of legal malpractice. The issue, which arises when as in this case the plaintiff is complaining that his lawyer booted a procedural entitlement, such as the right to a jury trial, is whether the plaintiff must show that his lawyer's negligence not only caused him to lose but brought about an unjust result--the wrong party won. The plaintiffs are the Jones Motor Company, a trucker, and its insurer. The defendants are lawyers who represented Jones in a personal injury lawsuit brought against it by Elston Cannon. Federal jurisdiction is based on diversity of citizenship; and the applicable law, the parties agree, is Illinois's common law of malpractice.

The underlying suit had been filed in a state court in St. Clair County and assigned to a judge who we are told, and accept for purposes of deciding this appeal, has the reputation of favoring plaintiffs in personal injury suits. Jones's lawyers negligently failed to make a timely effective request for a jury because they failed to accompany the request with payment of the fee for a jury trial. As a result the case was tried to the judge, who entered a judgment of $2.8 million for the plaintiff; the suit was then settled for $2.5 million. In the present case, the malpractice case, Jones tendered the opinion of an experienced lawyer in St. Clair County that had the case been tried to a jury, the verdict would have been in the neighborhood of $500,000. Jones and its insurer, which paid a part of the $2.5 million settlement, are suing for the $2 million difference.

There is some underbrush to clear out of the way before we get to the principal issue. To begin with there is the defendants' "contingent cross- appeal," which challenges the district judge's ruling that the insurer has standing to bring a malpractice suit even though it was an excess rather than primary insurer and had no duty to defend Jones, only to indemnify it if Jones's liability exceeded the excess threshold, as it did. The cross-appeal (which is contingent because the ruling is of no consequence if we affirm the judgment for the defendants) is improper, because it does not seek an alteration of the judgment. Massachusetts Mutual Life Ins. Co. v. Ludwig, 426 U.S. 479 (1976) (per curiam); Singletary v. Continental Illinois National Bank & Trust Co., 9 F.3d 1236, 1240 (7th Cir. 1993); In re Sims, 994 F.2d 210, 214 (5th Cir. 1993). The defendants want us to affirm, not modify or reverse, the judgment, which dismissed the suit with prejudice. They want to advance an alternative ground of affirmance with regard to the insurer that was rejected by an interlocutory order by the district court, but since they do not want to disturb the judgment they can advance their alternative ground, and in doing so attack the order that rejected it, simply by arguing the ground in their appellees' brief.

The cross-appeal must thus be dismissed irrespective of the failure of the contingency to materialize, but we can still consider the alternative ground for affirmance, as it has been fully briefed. The insurer had no contract with the defendants (Jones's lawyers in the suit by Cannon), as it might have had if it had had a duty to defend its insured and in fulfillment of that duty had hired the defendants to handle the defense of Cannon's suit. Therefore, the defendants argue, the insurer cannot complain that they violated a duty to it. This amounts to saying that Illinois requires privity of contract in legal malpractice cases--and it does, unless the plaintiff was an intended beneficiary of the lawyer's contract, Pelham v. Griesheimer, 440 N.E.2d 96, 99-100 (Ill. 1982); Jewish Hospital v. Boatmen's National Bank, 633 N.E.2d 1267, 1275 (Ill. App. 1994), which the insurer plaintiff was not. But this argument does not touch a suit by an insurer not claiming a breach of duty to itself but instead suing as a subrogee. Jones settled with Cannon, and the insurance company picked up a part of the tab and wants to get it back. The insurance company was in effect an assignee, and an assignee is in privity with the other party to its assignor's contract; and while it is true that Illinois refuses to permit the assignment of malpractice claims, its refusal is bottomed on grounds--having to do with fear of the "merchandising" and "commercialization" of the lawyer-client relationship, Brocato v. Prairie State Farmers Ins. Ass'n, 520 N.E.2d 1200 (Ill. App. 1988)--that have little if any applicability to the subrogation of a claim of legal malpractice, since the relation that gives rise to subrogation preexists the malpractice and the malpractice claim. But as the cases are divided on the propriety of allowing a subrogee to sue on such a claim, compare, e.g., American Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480, 485 (Tex. 1992) (pointing out that the insured client may have little incentive to sue and so lawyer negligence will go unpunished), with American Continental Ins. Co. v. Weber & Rose, P.S.C., 997 S.W.2d 12 (Ky. App. 1998) (expressing concern that the lawyer's loyalty may be divided between insured and insurer), and the Illinois courts have not spoken to the issue and its resolution is inessential to the decision of this appeal, we shall forgo ruling on it.

The plaintiffs complain not only about the defendants' failure to obtain a jury trial for them in Cannon's case but also of another procedural bobble, as a result of which Jones's expert witness was not permitted to testify. This complaint is so little developed in the plaintiff's opening brief in this court that it must be deemed waived. E.g., JTC Petroleum Co. v. Piasa Motor Fuels, Inc., 190 F.3d 775, 780-81 (7th Cir. 1999); Kerr v. Farrey, 95 F.3d 472, 481 (7th Cir. 1996); Karibian v. Columbia University, 14 F.3d 773, 777 n. 1 (2d Cir. 1994). In any event the judge admitted the expert's reports into evidence, and it is unclear what if anything the expert's live testimony would have added. Remember that this was a bench trial; oral testimony by an expert witness is less essential to enlightening a judge, who is accustomed to reading complex documents, than it is to enlightening a jury.

We come to the most important issue, which is whether, and if so when, the loss of a procedural advantage can give rise to a malpractice suit even if the advantage was not essential to the protection of the client's substantive rights. Through the defendants' negligence Jones and its insurer lost their right to a jury trial and were forced to submit to a bench trial--which means they got a trial before an authorized tribunal. They allege no error in the conduct of the trial by the judge whom they did not want to try the case, and they did not appeal from the judgment that he rendered, large as it was. The plaintiffs thus got a fair trial and there is no basis for supposing that the judgment was excessive, albeit it may have been higher than it would have been had Jones's lawyers not thrown away their client's right to a jury trial. Some Illinois cases say or imply that you cannot get a judgment for malpractice against a lawyer unless you can show that you had a meritorious claim (or defense, when the client had been a defendant rather than a plaintiff), e.g., Lucey v. Law Offices of Pretzel & Stouffer, Chartered, 703 N.E.2d 473, 476 (Ill. App. 1998); Moore v. Owens, 698 N.E.2d 707, 709 (Ill. App. 1998); Serafin v. Seith, 672 N.E.2d 302, 309-10 (Ill. App. 1996), and Jones's lawyers argue correctly that their client had no entitlement not to be mulcted by a judgment of $2.8 million.

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