Sheetz v. Morgan

• Decision Date: 28 July 1981
• Docket Number: No. 80-415,80-415
• Citation: 54 Ill. Dec. 117,424 N.E.2d 867,98 Ill.App.3d 794
• Parties: , 54 Ill.Dec. 117 Albert L. SHEETZ, Claimant-Appellee, v. Mary MORGAN, Executrix of the Estate of Samuel Morgan, Deceased, Appellant.
• Court: United States Appellate Court of Illinois

Page 867

424 N.E.2d 867

98 Ill.App.3d 794, 54 Ill.Dec. 117

Albert L. SHEETZ, Claimant-Appellee, v. Mary MORGAN, Executrix of the Estate of Samuel Morgan Deceased, Appellant.

No. 80-415.

Appellate Court of Illinois, Second District.

July 28, 1981.

French & Rogers, Richard G. French, Timothy G. Keating and Thomas F. Lucas, Chicago, for appellant.

Epton, Mullin, Segal & Druth, Ltd., Gerald B. Mullin, William L. Kabaker and Robert T. O'Donnell, Chicago, for claimant-appellee.

REINHARD, Justice:

On January 7, 1977, Dr. Albert Sheetz ("claimant") filed a claim against the estate of attorney Samuel Morgan ("estate") for breach of contract, alleging that Morgan while acting as claimant's attorney neglected to file certain "security statements" in connection with the preparation of an equipment lease, resulting in a loss of property to claimant. On April 4, 1977, the claim was dismissed by the trial court. Subsequently, this court issued an order under Supreme Court Rule 23 (Ill.Rev.Stat.1979, ch. 110A, par. 23) reversing the trial court. 64 Ill.App.3d 1101, 24 Ill.Dec. 967, 386 N.E.2d 171. Following remand, the claimant moved for summary judgment on the issue of liability only, which was granted by the trial court in November 1979. Following further hearing on the issue of damages, the court awarded claimant $97,650 as a seventh class claim against the estate. The estate's motion for rehearing was denied and this appeal followed.

The following facts were alleged in the motion for partial summary judgment. Samuel Morgan was an attorney engaged in the general practice of law in Chicago in 1974. Just prior to December 19, 1974, claimant requested Morgan to prepare a fixture and equipment lease. Morgan agreed to prepare such a document and also agreed "to do all other acts necessary to complete the lease and protect claimant's property." Morgan prepared the lease, but did not file financing statements. In October 1975, claimant's lessee filed bankruptcy proceedings and was discharged in bankruptcy. Claimant filed a petition in bankruptcy court to reclaim the leased property, but the claim was disallowed by the court, which had interpreted the lease to be a secured sale subject to the filing provisions of article 9 of the Uniform Commercial Code. (Ill.Rev.Stat.1979, ch. 26, par. 9-101 et seq.) As a result of the failure to file financing statements, claimant alleged he suffered a loss of all the equipment and sought damages therefor.

On July 17, 1979, the estate sought leave to file a late jury demand, but that request was denied by the trial court. Shortly thereafter, partial summary judgment was entered for the claimant allowing the claim and, subsequently, after a hearing on damages, the claimant was awarded $97,650. The estate presents four issues for resolution by this court:

(1) whether the court erred in entering summary judgment for the claimant absent expert testimony;

(2) whether the claim against the estate should have been dismissed for failure to state sufficiently the nature of the claim;

(3) whether the court erred in its assessment of damages;

(4) whether the court abused its discretion in refusing to permit the estate to file a late jury demand.

I.

Claimant argued, and the trial judge agreed, that expert testimony was unnecessary in this case, and that Morgan's failure to file financing statements constituted malpractice as a matter of law. We disagree.

Summary judgment is only appropriate "if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Ill.Rev.Stat.1979, ch. 110, par. 57(3).) The purpose of summary judgment is not to try issues of fact, but to determine whether any genuine issues of fact exist. (Fishel v. Givens (1977), 47 Ill.App.3d 512, 5 Ill.Dec. 784, 362 N.E.2d 97; McHenry Sand & Gravel, Inc. v. Rueck (1975), 28 Ill.App.3d 460, 328 N.E.2d 679.) Summary judgments are to be granted with great caution (Joiner v. Benton Community Bank (1979), 76 Ill.App.3d 871, 32 Ill.Dec. 461, 395 N.E.2d 691) and only where the moving party's right to such a remedy is clear and free from doubt. (Lind v. Zekman (1979), 77 Ill.App.3d 432, 32 Ill.Dec. 583, 395 N.E.2d 964; Gagliardo v. Vodica (1978), 58 Ill.App.3d 1053, 16 Ill.Dec. 424, 374 N.E.2d 1302.) Such is not the case here, especially in light of the total absence of expert testimony.

Claimant cites Practical Offset, Inc. v. Davis (1980), 83 Ill.App.3d 566, 39 Ill.Dec. 132, 404 N.E.2d 516, for the proposition that malpractice suits based on a failure to file a financing statement may be disposed of by summary judgment without expert testimony. While the reviewing court affirmed the summary judgment, it is important to point out that in Practical Offset an expert's affidavit was submitted by plaintiff on the issue of standard of care. Also, and more importantly, the transaction involved therein was clearly and indisputably a secured sale subject to article 9 of the U.C.C. The agreement to sell certain business assets between the plaintiff client and the other party to the contract specifically provided that a promissory note would be secured by a security agreement in the form approved by counsel (defendant therein) together with a proper financing statement for filing under the U.C.C. and such were, in fact, executed on the date of closing. The defendant attorney drafted the financing statement, but simply failed to file it because he relied on opposing counsel to do so.

In discussing the standard of care for an attorney, the court quoted at length from Schmidt v. Hinshaw, et al. (1979), 75 Ill.App.3d 516, 31 Ill.Dec. 357, 394 N.E.2d 559:

" 'The law is well settled that an attorney is liable to his client for damages only when he fails to exercise a reasonable degree of care and skill, and the law distinguishes between negligence and mere errors of judgment. (citations) The question of whether an attorney has exercised a reasonable degree of care and skill is one of fact (citation), and in Illinois the standard of care against which the attorney's conduct will be measured must generally be established through expert testimony. (citations) However, where "the negligence is so grossly apparent * * * that a layman would have no difficulty in appraising it" (citation), as where the record discloses such an obvious, explicit, and undisputed breach of the attorney's duty of care as letting the statute of limitations run, expert testimony as to the applicable standard of care will not be required. (citations) 75 Ill.App.3d 516, 522 (, 31 Ill.Dec. 357, 394 N.E.2d 559.)' " 83 Ill.App.3d 566, 571-72, 39 Ill.Dec. 132, 137, 404 N.E.2d 516, 521; see also House v. Maddox (1977), 46 Ill.App.3d 68, 73, 4 Ill.Dec. 644, 648, 360 N.E.2d 580, 584.

In Schmidt, which was decided for the defendant attorney on summary judgment, the plaintiff attempted to bring his case without expert opinion relying upon the "common knowledge exception" in order to create an issue of material fact for the jury. In its rejection of that contention under the facts of that case, the reviewing court stated:

"Plaintiff's failure to obtain an expert witness further supports the entry of summary judgment in Hinshaw's favor. The common sense of laymen could hardly be relied upon to provide the requisite standard of care for the drafting of the relatively complex, multidocument transaction involved in this case.

In short, plaintiff's bare claim that there is an issue of fact as to Hinshaw's negligence and that such issue can be resolved without resort to expert testimony on plaintiff's behalf is completely rebutted by the record, and therefore the trial court's entry of summary judgment in favor of Hinshaw on the negligence portion of the complaint was proper." 75 Ill.App.3d 516, 523-24, 31 Ill.Dec. 357, 394 N.E.2d 559.)

A similar result was reached in Brainerd v. Kates (1979), 68 Ill.App.3d 781, 25 Ill.Dec. 315, 386 N.E.2d 586, wherein a summary judgment for defendant was affirmed on appeal on the failure of plaintiff to obtain expert testimony necessary to prove negligence. In its analysis of whether under the facts of that case the plaintiff was required to have the testimony of an expert witness the court stated:

"In a situation of this type, far from demonstrating negligence as a matter of law, the record shows the need for expert testimony in determining whether or not defendant in the case at bar had exercised a reasonable degree of care and skill with due regard to the distinction between errors of negligence and of mistaken legal judgment." (68 Ill.App.3d 781, 786, 25 Ill.Dec. 315, 386 N.E.2d 586.)

While the general rule in Illinois is that testimony of an expert witness with respect to the standard of care owed by the lawyer to the client is required, an exception was formulated where the failure was to comply with the statute of limitations. (House v. Maddox (1977), 46 Ill.App.3d 68, 73, 4 Ill.Dec. 648, 360 N.E.2d 580.) In the instant case, unlike that situation where an attorney allows the statute of limitations to run, the negligence, if any, is not "so grossly apparent * * * that a layman would have no difficulty in appraising it." (46 Ill.App.3d 68, 73, 4 Ill.Dec. 648, 652, 360 N.E.2d 580, 584; see also Bonhiver v. Rotenberg et al. (7th Cir. 1972), 461 F.2d 925, 928.) Rather, expert legal testimony is necessary to establish the prevailing standard of care for attorneys in the community in 1974 for the type of services requested of Mr. Morgan and to determine whether Morgan deviated from that standard of care in failing to foresee that a bankruptcy court might treat the "lease" as a sale, requiring compliance with article 9 of the U.C.C. As pointed out by the estate in its brief, there may have been valid tax motives for treating the transaction as a lease rather than a sale. At trial the...