Schwartz v. Cortelloni

• Decision Date: 19 June 1997
• Docket Number: No. 80614,80614
• Citation: 226 Ill.Dec. 416,685 N.E.2d 871,177 Ill.2d 166
• Court: Illinois Supreme Court
• Parties: , 226 Ill.Dec. 416 Cathy SCHWARTZ, Appellant, v. Judith CORTELLONI et al. (Judith Cortelloni, Appellee).

Page 871

685 N.E.2d 871

177 Ill.2d 166, 226 Ill.Dec. 416

Cathy SCHWARTZ, Appellant, v. Judith CORTELLONI et al. (Judith Cortelloni, Appellee).

No. 80614.

Supreme Court of Illinois.

June 19, 1997.

Rehearing Denied Sept. 29, 1997.

[177 Ill.2d 168] [226 Ill.Dec. 417] Karen L. Kindall, Heyl, Royster, Voelker & Allen, Peoria, for Cathy Schwartz.

James Walker, James Walker, Ltd., Bloomington, for Judith E. Cortelloni. Justice McMORROW delivered the opinion of the court:

The central question presented for our review is whether counsel for the plaintiff should have been disqualified from representing the plaintiff in the present litigation because of an alleged conflict of interest. The question arises in the context of a partition action filed in the circuit court of Logan County by Cathy Schwartz (hereafter Schwartz) against her half-sister, Judith Cortelloni (hereafter Cortelloni), seeking the division of land in Cortelloni's possession known as Lawndale 160. Schwartz, who had been adopted as a baby, alleged that she and Cortelloni had the same biological mother, Katherine Malerich. Schwartz further alleged that she and Cortelloni owned Lawndale 160 in fee simple as tenants in common because their maternal great-aunt devised the land to the "blood lineal descendants" of their mother, Katherine Malerich. During the partition proceedings, Cortelloni sought the disqualification of Schwartz's counsel, the Gehlbach law firm, because the firm formerly represented Katherine Malerich in her capacity as guardian of Cortelloni's estate when Cortelloni was a child, nearly 40 years ago. The circuit court denied Cortelloni's motion to disqualify Schwartz's counsel and granted the partition of Lawndale 160. The court also directed Cortelloni to make an accounting. Cortelloni appealed and the appellate court reversed, holding that the circuit court had abused its discretion in denying Cortelloni's motion to disqualify the Gehlbach law firm as counsel for Schwartz. 276 Ill.App.3d 1018, 213 Ill.Dec. 431, 659 N.E.2d 61. As a sanction, the appellate court ordered the circuit court to dismiss Schwartz's case with prejudice. We allowed Schwartz's appeal. 155 Ill.2d R. 315.

BACKGROUND

In June 1945, the parties' maternal great-aunt, Katherine Wakeman, executed a will which granted a life estate in Lawndale 160 to Katherine Malerich, with a remainder interest to Malerich's "blood lineal descendants or descendent." The will also granted Malerich a life estate in property known as Elkhart 120, with a remainder interest to Malerich's blood lineal descendants.

At the time of the execution of Wakeman's will, Malerich had one child-the defendant, Judith Cortelloni. In 1948, Wakeman died, and Malerich took possession of Lawndale 160 pursuant to the life estate granted to her under the terms of Wakeman's will.

In 1953, when Cortelloni was nine years old, her father, James Edward Malerich, died in a car accident. In 1955, Cortelloni's mother, Katherine Malerich, filed a petition for the appointment of herself as guardian of Cortelloni and her estate. This case was assigned case number 275. Malerich remained the guardian of Cortelloni's estate until 1965 when the court entered an order closing case number 275.

The uncontroverted evidence presented at trial indicated that in September 1956, the Gehlbach law firm appeared on behalf of Malerich as guardian of Cortelloni in a petition bearing case number 275 to sell real estate previously owned by James Edward Malerich. Cortelloni had a one-sixth interest in the real estate which was the subject of the petition. It is undisputed that the real estate at issue in the 1956 petition had no relationship to Lawndale 160, and that the case number 275 matter concluded in October 1956 when the court entered an order approving the sale.

Further evidence showed that in November 1956, Katherine Malerich gave birth to Schwartz out of wedlock. Malerich subsequently consented to Schwartz's adoption, and Edith and John Irwin became her adoptive parents.

In April 1992, Katherine Malerich died and Cortelloni took possession of Lawndale 160, pursuant to the terms of Wakeman's will. Meanwhile, the Irwins informed Schwartz that her biological mother, Katherine, had died. Schwartz discovered Malerich's surname through a newspaper obituary, and the Irwins confirmed her biological mother's identity.

Thereafter, Thomas Schwartz, the husband of Schwartz, began making inquiries about Malerich. He informed an acquaintance, James Hickey, of his wife's discovery regarding her biological mother and her desire to learn more about her mother. Hickey testified that he later relayed this information to his friend John Gehlbach. Gehlbach indicated that he knew that Malerich had a second child because he had a client who was interested in purchasing Elkhart 120, but thought there might be a title problem due to an unknown child of Malerich, presumably Cathy Schwartz.

At the time of these various conversations in April 1992, Schwartz had not retained the Gehlbach firm's services in connection with the litigation before this court, but she had retained the firm as her counsel in unrelated legal matters.

In May 1992, John Gehlbach inspected the title to Lawndale 160, as well as a copy of Katherine Wakeman's will. In the summer of 1992, Schwartz and her husband met with John Gehlbach at his law office. The record is somewhat unclear as to the manner in which Schwartz learned of Lawndale 160 and Katherine Wakeman's will. Schwartz initially testified that prior to her first contact with the Gehlbach firm, she knew that Katherine Wakeman had died, leaving Lawndale 160. Schwartz also testified that she first learned about Katherine Wakeman's will from John Gehlbach. She stated that Gehlbach informed her that her blood relationship to Katherine Wakeman made her a proper claimant to Lawndale 160 under the terms of Wakeman's will. However, Schwartz could not precisely recall the chronology of her discoveries. John Gehlbach testified that he was the first to mention Katherine Wakeman's name at the 1992 summer meeting with Schwartz, but he could not precisely recall when he and Schwartz initially discussed the matter.

After the parties rested, the circuit court found that Schwartz was Malerich's child. The court further determined that under the terms of Katherine Wakeman's will, Schwartz had a remainder interest in Lawndale 160. The court ordered the division of Lawndale 160 between Schwartz and Cortelloni, and directed Cortelloni to make an accounting of all rents and profits collected from the property. With respect to the conflict of interest issue, the circuit court rejected Cortelloni's argument that the Gehlbach firm breached a duty owed to her. In so ruling, the court noted the length of time between the Gehlbach firm's involvement with the two separate unrelated matters. Cortelloni appealed all aspects of the judgment.

The appellate court reversed the circuit court on the conflict of interest issue. The court determined that an attorney-client relationship existed between Cortelloni and the Gehlbach law firm. See Fickett v. Superior Court, 27 Ariz.App. 793, 558 P.2d 988 (1976) (when an attorney undertakes to represent a guardian he or she also assumes a relationship with the ward). The court then found that:

"[I]t is reasonable to infer that confidential information relevant to the present representation of Schwartz would have been available to John Gehlbach during the firm's prior representation of Cortelloni, and that John Gehlbach could have obtained confidential information about Cortelloni's assets, including her remainder interest in the Lawndale 160, during that earlier representation." 276 Ill.App.3d at 1022, 213 Ill.Dec. 431, 659 N.E.2d 61.

The appellate court concluded that the subject matters of the present and former representations were substantially related, and held that the circuit court abused its discretion in denying Cortelloni's motion to disqualify the Gehlbach firm as Schwartz's counsel. The appellate court found that the Gehlbach firm's ethical breach so permeated the action that Schwartz did not deserve the relief she sought. The court also sanctioned Schwartz by ordering the circuit court to dismiss her lawsuit with prejudice.

We granted Schwartz's petition for leave to appeal. For the reasons which follow, we reverse the judgment of the appellate court and remand this cause to the appellate court so that it may consider and decide issues previously not reached by it. Boatmen's National Bank v. Direct Lines, Inc., 167 Ill.2d 88, 212 Ill.Dec. 267, 656 N.E.2d 1101 (1995).

ANALYSIS

The threshold question to be addressed is whether the circuit court abused its discretion when it denied Cortelloni's motion to disqualify the Gehlbach law firm from serving as Schwartz's counsel. ¹ Specifically, we must determine whether the Gehlbach law firm had a conflict of interest by virtue of its former representation of Katherine Malerich as guardian of Cortelloni. Rule 1.9 of the Illinois Rules of Professional Conduct defines the scope of an attorney's obligation to refrain from representing a person with interests that are materially adverse to the interests of a former client (134 Ill.2d R. 1.9). Rule 1.9 provides:

"(a) A lawyer who has formerly represented a client in a matter shall not thereafter:

(1) represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client, unless the former client consents after disclosure; or

(2) use information relating to the representation to the disadvantage of the former client, unless:

(A) such use is permitted by Rule 1.6; or

(B) the information has become generally known." 134 Ill.2d R. 1.9.

It is axiomatic that only a party who has been a client of the attorney whose conduct is in question may complain of the attorney's subsequent representation of...