Marriage of Pagano, In re

• Decision Date: 04 December 1992
• Docket Number: No. 73162,73162
• Citation: 154 Ill.2d 174,607 N.E.2d 1242,180 Ill.Dec. 729
• Parties: , 180 Ill.Dec. 729 In re MARRIAGE OF Janet PAGANO, Appellant, and Thomas Pagano (Rinella & Rinella, Ltd., Appellee).
• Court: Illinois Supreme Court

Page 1242

607 N.E.2d 1242

154 Ill.2d 174, 180 Ill.Dec. 729

In re MARRIAGE OF Janet PAGANO, Appellant, and Thomas Pagano

(Rinella & Rinella, Ltd., Appellee).

No. 73162.

Supreme Court of Illinois.

Dec. 4, 1992.

Rehearing Denied Feb. 1, 1993.

[154 Ill.2d 177] [180 Ill.Dec. 731] John S. Elson, Chicago, for appellant.

Floyd N. Nadler and Ilene E. Shapiro, Chicago, for amicus curiae American Academy of Matrimonial Lawyers, Ill. Chapter.

Peter H. Lousberg, Dennis A. Rendleman, Mary T. McDermott, Springfield, and Barry A. Schatz and Jacalyn Birnbaum, Kalcheim, Schatz & Berger, Chicago, for amicus curiae Ill. State Bar Ass'n.

Law Offices of William I. Ferguson, Wheaton (William I. Ferguson and Alicia S. Evans, of counsel), and Paul P. Biebel, Jr. and Susan L. Mahoney, Winston & Strawn, Chicago, for appellees.

Justice CLARK delivered the opinion of the court:

Appellant, Mrs. Janet Pagano (Mrs. Pagano), appeals an order of the appellate court affirming a circuit court decision requiring her to pay attorney fees to appellee, Rinella & Rinella, Ltd. (Rinella).

The facts underlying this case are detailed in In re Marriage of Pagano (1989), 181 Ill.App.3d 547, 130 Ill.Dec. 331, 537 N.E.2d 398 (Pagano I ) and involve a fee dispute between Mrs. Pagano and her former attorney, Rinella. The appellate court, in Pagano I, held that despite Mrs. Pagano's written waiver, she was entitled to a fee hearing under section 508 of the Illinois Marriage and Dissolution of Marriage Act (the Act) (Ill.Rev.Stat.1989, ch. 40, par. 508). Consequently, the appellate court remanded the cause to the circuit court for a determination of whether Rinella's fees were reasonable and also instructed the circuit court to determine if Rinella exercised undue influence or breached its fiduciary duties to Mrs. Pagano in its dealings with her. Pagano, 181 Ill.App.3d 547, 130 Ill.Dec. 331, 537 N.E.2d 398.

On remand, the circuit court, following a section 508 hearing, issued an order on April 30, 1990, awarding Rinella fees in the amount of $21,470.25. It ordered Thomas Pagano (Mr. Pagano), Mrs. Pagano's ex-husband, to pay 60% ($12,882.15) of these fees. It also determined that Rinella did not act improperly toward Mrs. Pagano and held her responsible for the balance. The appellate court affirmed the circuit court's decision in an unpublished order (No. 2-90-1222 (unpublished order under Supreme Court Rule 23)) (hereinafter Pagano II ). We granted Mrs. Pagano's petition for leave to appeal (134 Ill.2d R. 315).

In this appeal, Mrs. Pagano no longer attacks the reasonableness of the reduced fee awarded to Rinella, but focuses on the circuit court's finding that Rinella did not breach its fiduciary duty or exert undue influence. Mrs. Pagano also argues that Rinella breached a contractual obligation to her in not seeking its fees from Mr. Pagano prior to seeking them from her. Lastly, Mrs. Pagano argues that the circuit court's decision to charge her with 40% of Rinella's fees is unjustified in light of her relatively weaker financial status to that of her ex-husband.

FACTS

In January of 1985, Mrs. Pagano paid a $2,500 retainer to Rinella to represent her in dissolution of marriage proceedings. There was then no written attorney fee agreement between Rinella and Mrs. Pagano. Testimony indicated that Rinella told Pagano that while she ultimately would be responsible for attorney fees, the firm would first attempt to collect fees from Mr. Pagano, pursuant to section 508 of the Act (Ill.Rev.Stat.1989, ch. 40, par. 508).

On May 20, 1986, almost a year and a half after the Rinella firm agreed to represent Mrs. Pagano, the firm sent her a letter, signed by Richard A. Rinella, which stated the following:

"Pursuant to our telephone conversation, I am enclosing herein an Order whereby you are agreeing to pay our law firm the sum of $20,000.00 as and for additional attorneys' fees. To date we have spent 22.5 hours of court time and 72.5 hours of office time in our representation of you. As you are well aware The proposed agreed order included with the letter indicated that it was prepared pursuant to section 508 of the Act and stated:

[180 Ill.Dec. 732] your husband has filed a Petition for Custody and at this date appears serious about proceeding with the custody issue. In addition, [154 Ill.2d 180] your husband has refused to accept our proposal of settlement with respect to the child support, maintenance and property distribution and has made a counter proposal which is totally unacceptable. It therefore appears that we will be spending numerous hours of court time and office time in our representation of you in the future."

"IT IS HEREBY ORDERED:

1. That JANET B. PAGANO having been advised of her right to a full and complete hearing with respect to her attorneys' fees under section 508 of the Illinois Marriage and Dissolution of Marriage Act, and having knowingly waived her right to said hearing, agrees that she shall pay to RINELLA AND RINELLA, LTD. the sum of TWENTY THOUSAND ($20,000.00) DOLLARS as and for additional fees she has already paid said law firm.

2. That Judgment is hereby awarded RINELLA AND RINELLA LTD., against JANET B. PAGANO for said sum and said Judgment shall be a lien against her interest in the residence located at 7 South 441 Donwood Drive, Naperville, Illinois until paid in full."

Mrs. Pagano signed the proposed agreed order and the court entered it on June 2, 1986. At that time, Rinella's time sheets showed that $15,000 in attorney fees had accrued.

Almost a year later, on May 14, 1987, Richard Rinella and an associate, Steven Russo, met Mrs. Pagano in the courthouse cafeteria just prior to the start of dissolution proceedings. Before leaving for the proceedings, Richard Rinella presented Mrs. Pagano with a second proposed agreed order. This proposed agreed order was similar to the first but was handwritten, indicated the sum of $30,000 instead of $20,000, and again waived Mrs. Pagano's right to a section 508 hearing. The second proposed order stated that Mrs. Pagano's waiver was made "knowingly, intelligently, and voluntarily" and that the waiver was made "without coercion or duress." It did not purport to modify or rescind the previous agreed order, nor did it refer to the first agreed order in any way. Similar to the first agreed order, however, it indicated that judgment was "hereby entered" in favor of Rinella and that such judgment created a lien on her residence. Mrs. Pagano signed the second proposed agreed order and it was entered four days later.

On September 14, 1987, after the dissolution proceedings had concluded, Rinella was allowed to withdraw as Mrs. Pagano's attorney. A week later, Rinella sought additional security for its fees by filing a petition for $36,334.15 against both Mrs. Pagano and Mr. Pagano. On December 2, 1987, the court considered this petition in the presence of counsel representing both Mr. and Mrs. Pagano. Rinella attempted to stand on its petition which included the $30,000 agreed order and supporting time sheets. The court held that Rinella's petition was insufficient to award attorney fees against Mr. Pagano, and ordered that " 'the order entered on May 18, 1987, awarding Rinella & Rinella fees of THIRTY THOUSAND ($30,000) DOLLARS shall be the total fees awarded to Rinella & Rinella on this cause.' " See Pagano, 181 Ill.App.3d at 552-53, 130 Ill.Dec. 331, 537 N.E.2d 398.

Mrs. Pagano subsequently sought post-judgment relief by filing a section 2-1401 petition with the circuit court (Ill.Rev.Stat.1989, ch. 110, par. 2-1401). (Pagano, 181 Ill.App.3d at 553, 130 Ill.Dec. 331, 537 N.E.2d 398.) The circuit court denied this motion. Although the record is clear that the Rinella firm did not seek to use the $20,000 agreed order against either Mr. or Mrs. Pagano at the December 2, 1987, proceedings, the appellate court, in Pagano I, found that Rinella's conduct in having Mrs. Pagano sign the $30,000 order, was improper: "two agreed orders were entered in the present case for a total of $50,000 even though Rinella's own petition for fees indicated

                [180 Ill.Dec. 733]  that only $37,034.15 had been earned.  While it may have been the intent of Rinella to have the second agreed order supersede the first, that is not clear from the second order.  Consequently, we find that both orders must be vacated since the two combined were excessive."   The appellate court also reversed the December 2, 1987, order and remanded the cause for a hearing pursuant to section 508 of the Act.  (Pagano, 181 Ill.App.3d at 563, 130 Ill.Dec. 331, 537 N.E.2d 398.)   Finally, the appellate court determined that the circuit court committed procedural error in not having before it "a petition for attorneys fees and an itemization of the billing including the hourly cost, the time spent on the case, and an itemization of the tasks performed" before it entered both the $20,000 and $30,000 agreed orders, although the court did not reverse on this particular point.  Pagano, 181 Ill.App.3d at 555, 130 Ill.Dec. 331, 537 N.E.2d 398
                

MRS. PAGANO'S CLAIMS

Mrs. Pagano claims Rinella breached its fiduciary duties to her in: (1) seeking a waiver of her right to a section 508 fee hearing; (2) not fully informing her of her right to a hearing under section 508, or of the legal effect of the agreed orders, or of her need for independent advice in deciding to sign the agreed orders; (3) not filing a fee petition detailing its charges against her when it filed the agreed orders with the court, or in not delivering to Mrs. Pagano a detailed bill; (4) attempting to include prospective fees in the agreed orders, and attempting to secure $50,000 in legal fees when claiming only $37,000 in fees; and (5) seeking to collect prejudgment interest from the date the $30,000 agreed order was entered. As we have noted, she also argues that Rinella breached its contractual promise to her to seek fees first from her ex-husband when it brought...