Sutherland v. O'Malley

• Decision Date: 05 September 1989
• Docket Number: No. 88-2221,88-2221
• Citation: 882 F.2d 1196
• Court: U.S. Court of Appeals — Seventh Circuit
• Parties: , RICO Bus.Disp.Guide 7288 Kimberly A. SUTHERLAND, Plaintiff-Appellant, v. Paul R. O'MALLEY and O'Malley & O'Malley, Ltd., Defendants-Appellees.

Page 1196

882 F.2d 1196

58 USLW 2209, RICO Bus.Disp.Guide 7288

Kimberly A. SUTHERLAND, Plaintiff-Appellant, v. Paul R. O'MALLEY and O'Malley & O'Malley, Ltd., Defendants-Appellees.

No. 88-2221.

United States Court of Appeals Seventh Circuit.

Argued Feb. 23, 1989.

Decided Aug. 14, 1989.

Rehearing Denied Sept. 5, 1989.

Ronald A. Bredemann, Flood, Bredemann & Evans, Park Ridge, Ill., Kimberly A. Sutherland, Chicago, Ill., for plaintiff-appellant.

Paul R. O'Malley, John A. O'Malley, Thomas D. Nissen, O'Malley & O'Malley, Chicago, Ill., for defendants-appellees.

Before BAUER, Chief Judge, POSNER and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge.

This appeal arises out of a fee dispute between two attorneys, plaintiff Kimberly Sutherland and defendant Paul R. O'Malley. ¹ Ms. Sutherland asked Mr. O'Malley to serve as co-counsel in the representation of one of her clients, Kerwin Albright. After a settlement was obtained in the Albright case, Mr. O'Malley caused the settlement payments to be sent to him and deposited the payments in his firm's client fund account. In an effort to recover the funds, Ms. Sutherland filed this action in federal district court. Ms. Sutherland's pleadings alleged that, by diverting the settlement funds to his own firm, Mr. O'Malley violated the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Secs. 1961-1968. Her pleadings also alleged state common-law claims for conversion, fraud, and interference with business relationships. On July 11, 1985, the district court granted summary judgment in favor of the defendants on the conversion count, and, on September 21, 1987, the district court granted summary judgment on the RICO claim. The remaining pendent common-law claims were then dismissed. Ms. Sutherland's motions to reconsider the orders granting summary judgment to the defendants were denied, and she now appeals. We affirm the judgment of the district court.

I. Facts

In March 1977, Ms. Sutherland entered into a contingency fee contract with Kerwin Albright in which she agreed to represent Mr. Albright in a personal injury action. The contract entitled her to attorney's fees in the amount of 40% of any recovery plus expenses. The action was filed in Illinois state court in May 1977, naming Norbran Leasing Co., Ford Motor Co., and Al Piemonte Ford, Inc. as defendants.

In March 1978, Ms. Sutherland asked Mr. O'Malley to associate himself with her as co-counsel in the Albright case. Mr. O'Malley agreed, and, in a letter to Ms. Sutherland dated April 7, 1978, stated that "[o]ur arrangement to split fees on a fifty-fifty basis or other equitable arrangement based on the degree of effort is satisfactory with me." R.24, Ex. A. Although Ms. Sutherland had filed the complaint in the Albright case and apparently participated in one deposition and a few brief court hearings and meetings, Mr. O'Malley maintains that he did the bulk of the work preparing for, and trying, Mr. Albright's case. The trial ended in a jury verdict for Mr. Albright. An appeal was taken.

The Albright case eventually settled. The settlement from all defendants totalled $127,000, resulting in attorney's fees under the contingent fee contract of $50,800. Ms. Sutherland maintains that Mr. O'Malley committed three acts of mail fraud in obtaining the settlement checks from the Albright defendants. She alleges that, in September 1982, Mr. O'Malley sent two of the defendants forged releases of her attorney's lien and instructed them to make their settlement checks payable to "Kerwin Albright and O'Malley & O'Malley, Ltd., his attorneys." Appellant's Br. at 3. In February 1983, the third defendant sent Mr. O'Malley a letter informing him that it understood that its settlement check should be made payable to Mr. Albright and the O'Malley firm. Ms. Sutherland maintains that Mr. O'Malley "omitted to correct this impression." Id. at 4. Ms. Sutherland also alleges that Mr. O'Malley sent this defendant a release, that he had signed, "in full satisfaction of claims for attorney's lien." Id. After obtaining the three settlement checks, Mr. O'Malley paid Mr. Albright his net share, paid $8,000 of his own outstanding expenses related to the Albright case, and deposited the balance, $50,800, in the O'Malley firm client fund account.

In March 1983, Mr. O'Malley informed Ms. Sutherland of the settlement and his distribution of the proceeds and advised her that "[a]ttorney's fees and your reimbursement of expenses have been retained in my Client Fund Account subject to further agreement between us." R. 1, Ex. I; R. 42, Ex. B. Mr. O'Malley also informed Ms. Sutherland that he was "certainly available to discuss further with [her] [his] position regarding division of attorney's fees." Id. He also stated that his "view has always been that the handling of this case was so time consuming to this office and a successful outcome so tenuous and unpredictable that any division of attorney's fees would have to be based upon fundamental fairness and equity." Id.

On March 16, 1983, Ms. Sutherland filed an action in Illinois state court against Mr. O'Malley alleging the conversion of her attorney's fees and expenses and seeking to recover 50% of the attorney's fees generated by the Albright case. The state court ordered Mr. O'Malley to retain $25,815.55 (50% of the total attorney's fees plus Ms. Sutherland's claimed expenses of $415.55) in the O'Malley firm client fund account pending the outcome of the state action. Mr. O'Malley has stated that the funds remain in the client fund account at this time.

On January 10, 1985, Ms. Sutherland filed this federal action. She now seeks recovery of the entire $50,800. After instituting the federal suit, Ms. Sutherland requested that the defendants in this action be voluntarily dismissed from the suit pending in state court.

The district court initially granted Mr. O'Malley partial summary judgment on the conversion claim. ² Later, it granted summary judgment on the RICO claim and dismissed the remaining pendent claims. Ms. Sutherland asks us to review the district court's determination with respect to both the conversion claim and the RICO claim.

II. Analysis

A. Conversion

Ms. Sutherland alleges that Mr. O'Malley committed the tort of conversion by withholding from her the $50,800 fund of attorney's fees generated by the Albright settlement. She maintains that the proceeds of the settlement were entirely the property of Mr. Albright, subject to valid liens. She further contends that she has a property right in the fund of attorney's fees based on her contingent fee contract with Mr. Albright and her resulting statutory attorney's lien. ³ Ms. Sutherland notes that, Mr. O'Malley, by contrast, does not have any lien on the fund of attorney's fees.

The district court granted summary judgment to the defendants on the conversion claim because it concluded that, because of Mr. O'Malley's independent right to a part of the fees, Ms. Sutherland could "claim only an indeterminate sum" of money and could not establish " 'that the money claimed ... at all times belonged to [her] and that [Mr. O'Malley] converted it to his own use.' " Sutherland v. O'Malley, 687 F.Supp. 392, 394 (N.D.Ill.1988) (quoting In re Thebus, 108 Ill.2d 255, 91 Ill.Dec. 623, 626, 483 N.E.2d 1258, 1261 (1985)). Thus, under Illinois law, Ms. Sutherland's conversion claim could not succeed.

Ms. Sutherland maintains that the district court erred because she, by virtue of her attorney's lien growing out of her express fee contract with Mr. Albright, was the only person with a right to immediate possession of the fund of attorney's fees generated by the settlement of the Albright case. Because Mr. O'Malley had no fee contract with Mr. Albright, and, thus no attorney's lien on the fund, he only had a right to recover a portion of the fees from Ms. Sutherland under their co-counsel agreement. Ms. Sutherland maintains that she has an immediate right to possession of the attorney's fees and has a claim for a precise sum of money--the entire fund of attorney's fees. She concludes that Mr. O'Malley's right to any funds, which arises merely under his co-counsel agreement with Ms. Sutherland, is not at issue in this case.

The district court properly granted summary judgment to the defendants on Ms. Sutherland's conversion claim. In order to assert successfully a claim for conversion, a plaintiff must prove four elements:

(1) an unauthorized and wrongful assumption of control, dominion, or ownership by a person over the personalty of another; (2) his right in the property; (3) his right to the immediate possession of the property, absolute and unconditional; and (4) a demand for possession thereof.

Mid-America Fire & Marine Ins. Co. v. Middleton, 127 Ill.App.3d 887, 82 Ill.Dec. 555, 558, 468 N.E.2d 1335, 1338 (1984); see also Eggert v. Weisz, 839 F.2d 1261, 1264 (7th Cir.1988); In re Thebus, 108 Ill.2d 255, 91 Ill.Dec. 623, 625, 483 N.E.2d 1258, 1260 (1985) (" 'One claiming conversion must show a tortious conversion of the chattel, a right to property in it, and a right to immediate possession which is absolute....' ") (quoting Jensen v. Chicago & Western Indiana R.R., 94 Ill.App.3d 915, 50 Ill.Dec. 470, 485, 419 N.E.2d 578, 593 (1981)). In addition, as we explained in Eggert, 839 F.2d at 1264, Illinois law limits the circumstances in which a plaintiff may maintain an action for the conversion of money. "[T]he general rule is that conversion will not lie for money represented by a general debt or obligation." Thebus, 91 Ill.Dec. at 258, 483 N.E.2d at 1261. In order for money to be the proper subject of a conversion action, it must be capable of being described as a "specific chattel." Id. 91 Ill.Dec. at 625, 483 N.E.2d at 1260; see also Eggert, 839 F.2d at 1264. In order to satisfy this requirement, the plaintiff must have a "right to a specific fund or specific money in coin or bills." Middleton, 82 Ill.Dec. at 559, 468 N.E.2d...