Mc Baldwin Financial Co. v. DiMaggio

• Decision Date: 27 February 2006
• Docket Number: No. 1-04-3394.,1-04-3394.
• Citation: 300 Ill.Dec. 601,845 N.E.2d 22
• Parties: MC BALDWIN FINANCIAL COMPANY, a Partnership, TB Institutional Services, Inc., an Illinois Corporation, and L.T. Baldwin, III, Plaintiffs-Appellants, v. DiMAGGIO, ROSARIO & VERAJA, LLC, an Illinois Limited Liability Corporation, Victor J. DiMaggio, III, Elias Rosario, CCS Financial Services, Inc., an Illinois Corporation, Michael Coglianese and Gina L. Coglianese, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

845 N.E.2d 22

300 Ill.Dec. 601

MC BALDWIN FINANCIAL COMPANY, a Partnership, TB Institutional Services, Inc., an Illinois Corporation, and L.T. Baldwin, III, Plaintiffs-Appellants, v. DiMAGGIO, ROSARIO & VERAJA, LLC, an Illinois Limited Liability Corporation, Victor J. DiMaggio, III, Elias Rosario, CCS Financial Services, Inc., an Illinois Corporation, Michael Coglianese and Gina L. Coglianese, Defendants-Appellees.

No. 1-04-3394.

Appellate Court of Illinois, First District, First Division.

February 27, 2006.

COPYRIGHT MATERIAL OMITTED

Joseph R. Marconi, Johnson & Bell, Ltd., Chicago, for Appellant.

Mathew J. Iverson, Litchfield Cavo LLP, Chicago, for Appellees DiMaggio, Rosario & Veraja, LLC, Victor J. DiMaggio III and Elias Rosario.

Thomas F. Falkenberg, O'Hagan, Smith & Amundsen, LLC, Chicago, for Appellees CCS Financial Services, Inc., Michael Coglianese and Gina L. Coglianese.

Justice GORDON delivered the opinion of the court:

Plaintiffs-appellants MC Baldwin Financial Company, TB Institutional Services, Inc., and L.T. Baldwin (hereinafter collectively Baldwin) appeal the circuit court's grant of summary judgment to defendants DiMaggio, Rosario & Veraja, LLC, Victor J. DiMaggio III, and Elias Rosario (hereinafter collectively DiMaggio¹) and dismissal under section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2004)) of their complaint against defendants CCS Financial Services, Inc., Michael Coglianese, and Gina Coglianese (hereinafter collectively Coglianese). Baldwin brought suit against DiMaggio and Coglianese alleging that they each breached contracts with Baldwin to provide accounting services and were professionally negligent. The circuit court granted DiMaggio's motion for summary judgment and Coglianese's motion for dismissal on the grounds that Baldwin's complaint was filed past the applicable two-year statute of limitations. See 735 ILCS 5/13-214.2(a) (West 2004). For the reasons that follow, we reverse and remand.

I. BACKGROUND

Baldwin's complaint, filed April 18, 2003, alleged that the defendants' breaches of contract and professional negligence in performing accounting services caused it to lose its client, the CDC companies, on April 20, 2001, and incur $2,500,000 in damages. DiMaggio and Coglianese both contend on appeal that the circuit court's order granting summary judgment and involuntary dismissal, respectively, was correct because Baldwin could have filed suit against them more than two years earlier to recover monies paid to them for services that were never completed. Specifically, DiMaggio claims that Baldwin had a cause of action against it as of October 2000, when it departed from the engagement without finishing all the services it had agreed to perform. Similarly, Coglianese claims that Baldwin could have filed suit against it for not completing its obligations before departing in January of 2001. Thus, the defendants contend that the limitations period on Baldwin's claim expired as of October 2002, and January 2003, respectively. See 735 ILCS 5/13-214.2(a) (West 2004).

Baldwin's complaint made the following factual allegations. On January 2, 1996, Baldwin entered into an agreement with CDC-Gestion to develop investment products. Under the terms of the agreement, Baldwin was to be the trading manager of future and option funds and assist CDC-Gestion in becoming a commodities trading advisor. On May 7, 1997, Baldwin entered into a "trading management agreement" with CDC-Atlante. Under the terms of the agreement, CDC-Atlante was to be set up as a "multiple sub-funds investment company," and Baldwin was to provide CDC-Atlante with extensive financial and accounting reports. CDC-Gestion and CDC-Atlante are here referred to collectively as the CDC companies.

On May 26, 2000, Baldwin engaged DiMaggio to perform accounting services in relation to its agreements with the CDC companies. Baldwin's complaint further alleged that under the terms of their agreement DiMaggio was to perform six tasks and that two of these tasks were never completed, namely (1) the implementation of a new "Futures First" accounting system; and (2) the performance of all necessary work under the outsourcing agreement with the CDC. According to Baldwin, it completed all of its obligations and conditions precedent with regard to its contract with DiMaggio. In October of 2000, DiMaggio withdrew from its engagement with Baldwin.

Baldwin's complaint next alleged that it engaged Coglianese in November of 2000, to complete some of the services DiMaggio had previously agreed to perform in relation to Baldwin's agreements with the CDC companies. Attached as exhibits to Baldwin's complaint were two letters from Coglianese to Baldwin. A letter dated November 8, 2000, stated in pertinent part as follows:

"This confirms the nature and scope of the accounting services we will provide. We will provide general accounting services in reference to your futures fund. We will not perform an audit and thus will not express an opinion or any other assurance. Our services are limited to the representation of management. As you are aware, there are inherent limitations with such services. Because we will not perform a detailed examination of all transactions, there is a risk or [sic] errors that may exist and not be detected by us. We will advise you; however, of any matters of that nature that come to our attention.

You recognize that the establishment and maintenance of compliance with the Regulations and common laws are the responsibility of management. As you are aware we are not attorneys and do not hold ourselves out as such.

Specifically, our services shall include:

1. Assessing the current condition of the financial statements.

2. Completing the January 2000 financial statements.

3. Once the financial statements are setup, a new engagement letter will be issued to determine the monthly fee charged based on the funds' complexity.

For the above services, we shall charge a flat rate of $3000.00, plus out of pocket expenses, such as but not limited to, Federal Express charges, copies, faxes, etc.

If you agree to the arrangement outlined above, please indicate your agreement by signing below and return with the minimum required retainer check."

A second letter dated November 10, 2000, was also attached to Baldwin's complaint. It made no reference to the November 8 letter, but contained the exact same first two paragraphs and then stated:

"Specifically, our services shall include:

1. Consultation on current financial problems and spreadsheets.

For the above services, we shall charge a flat rate of $125.00, plus out of pocket expenses, such as but not limited to Federal Express charges, copies, faxes, etc."

The November 10 letter ended just as the earlier letter had by requesting it be returned with a signature and "the minimum required retainer check." Both letters were signed by Baldwin's L.T. Baldwin, and dated November 11, 2000.

On January 17, 2001, the CDC companies wrote to Baldwin charging that it had failed to file certain accounting reports that it was required to file under their trading management agreement. In the letter, the CDC companies stated that it considered Baldwin to be in breach of their agreement and gave Baldwin to the end of January 2001 to fulfill its requirements. That same day, Baldwin wrote to Coglianese informing Coglianese of its receipt of the CDC letter. On January 19, 2001, Coglianese responded by letter and resigned from the engagement.

On April 20, 2001, the CDC companies terminated all relations with Baldwin after CDC-Atlante's directors passed a resolution to "liquidate the trading assets" associated with Baldwin. Baldwin's complaint alleged that Coglianese failed (1) to provide consultation on the current financial problems and spreadsheets, (2) to assess the current condition of financial statements, and (3) to complete the January 2000 financial statements. Baldwin further alleged, as it had with regard to DiMaggio, that it performed every obligation and condition precedent due under its contract with Coglianese. As noted, Baldwin filed suit against DiMaggio and Coglianese on April 18, 2003, alleging that their breaches of contract and professional negligence caused $2,500,000 in damages when the CDC companies terminated their contracts with Baldwin.

On October 20, 2003, DiMaggio filed its answer to Baldwin's complaint and on November 25, 2003, it filed a motion for summary judgment alleging that Baldwin's claims were barred by the statute of limitations. DiMaggio contended that Baldwin paid it over $16,000 in August of 2000, and that any claim Baldwin had against it would have accrued at least by October of 2000, when DiMaggio departed from the engagement. In support, DiMaggio attached the affidavit of Victor DiMaggio, which stated:

"In or about May of 2000, [Baldwin] retained [DiMaggio] to step in and take over certain accounting aspects of the back office functions of Baldwin, in connection with Baldwin providing reporting to [the CDC companies]. It was agreed that the Plaintiffs were to pay [DiMaggio] a retainer of $8,096.45 per month for providing these services.

In or about late August of 2000, the plaintiffs paid [DiMaggio] two such monthly retainer payments, each in the amount of $8,096.45. * * *

However, the Plaintiffs failed to make any of the subsequent required monthly retainer payments to [DiMaggio]. Accordingly, in October of 2000 [DiMaggio] stopped providing any further professional services to the Plaintiffs in connection with this [CDC] accounting function.

* * *

The Plaintiffs never commenced this lawsuit until April 18, 2003. That was more than two-and-one half years after [DiMaggio] had stopped providing, in October of 2000, any accounting services in connection with this CDC undertaking of Baldwin. Moreover, no later than August of 2000, the plaintiffs had suffered `injury,' in that they had paid two retainer payments to ...