Tecnomatic v. Cave

• Decision Date: 01 February 2018
• Docket Number: No. 1-16-1908,1-16-1908
• Citation: 2018 IL App (1st) 161908 -U
• Parties: TECNOMATIC, S. p. A., Plaintiff-Appellant, v. BRYAN CAVE, a Limited Liability Partnership, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

2018 IL App (1st) 161908-U

TECNOMATIC, S. p. A., Plaintiff-Appellant, v. BRYAN CAVE, a Limited Liability Partnership, Defendant-Appellee.

No. 1-16-1908

APPELLATE COURT OF ILLINOIS FIRST JUDICIAL DISTRICT FOURTH DIVISION

February 1, 2018

NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).

Appeal from the Circuit Court of Cook County

16-L-50165

Honorable LeRoy K. Martin, Jr. and Kathleen M. Pantle, Judges Presiding

JUSTICE McBRIDE delivered the judgment of the court.

Justice Ellis concurred.

Justice Gordon specially concurred.

ORDER

Held: Plaintiff manufacturer waived almost all arguments on appeal by failing to first bring them in the trial court, and its attempt to void an agreement with its litigation counsel to arbitrate any disputes and conduct no discovery was rejected as the terms were not substantively unconscionable or otherwise contrary to public policy.

¶ 1 Tecnomatic, S.p.A. wants to sue instead of arbitrate claims against its former litigation counsel, Bryan Cave, LLP, regarding the services the law firm rendered and fees it charged in the defense and settlement of a lawsuit in Tecnomatic's favor in September 2014. Tecnomatic sought a judicial declaration that an arbitration clause in its attorney-client contract with Bryan Cave was unenforceable as unconscionable and against public policy, because it barred discovery and required confidentiality of the proceedings. The trial court, however, granted Bryan Cave's motion for summary judgment. Tecnomatic appeals, contending that an arbitration clause in an attorney-client fee contract "containing a sentence barring discovery is unconscionable and against public policy if the agreement does not explain the effect of the provision or advise the client to obtain independent counsel to evaluate the clause."

¶ 2 Bryan Cave responds that the appeal relies in large part on a legal theory which Tecnomatic never pled and which the trial court expressly barred when it denied Tecnomatic leave to amend its complaint and limited the scope of the summary judgment arguments. An appellant is not permitted to raise new arguments on appeal. See Haudrich v. Homedica, Inc., 169 Ill. 2d 525, 536, 662 N.E. 2d 1248, 1253 (1999). According to Bryan Cave, Tecnomatic's complaint was based on substantive unconscionability, Bryan Cave's motion for summary judgment on that pleading concerned substantive unconscionability, but Tecnomatic's appeal relies mostly on procedural unconscionability. Substantive unconscionability concerns the contents of a contract and procedural unconscionability concerns the contracting process. 12 Ill. Law and Prac. Contracts, § 59 (November 2017). A contract or contract language that is substantively unconscionable is objectively so one-sided as to oppress or unfairly surprise an innocent party, create an overall imbalance in the parties' obligations, or impose a gross disparity between price and value. Kinkel v. Cingular Wireless, LLC, 223 Ill. 2d 1, 22, 857 N.E. 2d 250, 264 (2006). "Procedural unconscionability refers to a situation where a term is so difficult to find, read, or understand that the plaintiff cannot fairly be said to have been aware he was agreeing to it, and also takes into account a lack of bargaining power." Razor v. Hyundai Motor America, 222 Ill. 2d 75, 854 N.E.2d 607, 622 (2006) (citing Frank's Maintenance &Engineering, Inc. v. C.A. Roberts Co., 86 Ill. App. 3d 980, 408 N.E.2d 403 (1980)); and Kinkel, 223 Ill. 2d at 22, 857 N.E.2d at 264). A contract or clause may be declared unenforceable on the basis of either procedural or substantive unconscionability, or a combination of both. Kinkel, 223 Ill. 2d at 21, 857 N.E.2d at 263.

¶ 3 In order to determine whether Tecnomatic is relying on an argument which the trial court barred, we will review the allegations and procedural history that culminated in the summary judgment ruling on appeal. The relevant facts are taken from the record as a whole. Founders Insurance Co. v. American Country Insurance Co., 366 Ill. App. 3d 64, 69, 851 N.E.2d 120, 125 (2006); 735 ILCS 5/2-1005(c) (West 2012).

¶ 4 Tecnomatic is an Italian corporation based in Corropoli, Italy that designs and manufactures automated assembly lines and electric motors. One of Tecnomatic's clients, Remy, Inc. (which sells under the brand names "Remy," "Delco Remy," and "World Wide Automotive"), filed suit in 2008 in federal district court in Indianapolis, Indiana alleging that a $3 million Tecnomatic assembly line installed in a factory in San Luis Potosi, Mexico was inefficient and unreliable. The automated equipment built electric drive motor assemblies for the powertrain of a General Motors' hybrid engine. Tecnomatic's president, Giuseppe Ranalli, had "a longstanding relationship" with a partner in the Chicago office of Bryan Cave, Nicola Fiordalisi, and asked him on September 28, 2008 to defend the Remy suit. Bryan Cave is an international law firm headquartered in the United States which has 27 offices and 1,000 lawyers on staff, 125 of whom are in the Chicago office. Fiordalisi agreed to handle the suit and the firm billed about $25,000 for services it provided during the course of the next month.

¶ 5 According to Bryan Cave, the parties "agreed at the inception of the engagement that the terms of Bryan Cave's representation would be documented, and subject to Bryan Cave'sstandard terms and billing practices." When the two men met in Chicago on October 27, 2008, Fiordalisi proposed a five-page written fee agreement. Tecnomatic acknowledges that the contract language "appears to be routinely used by [the law firm]." The first two pages of the contract were a letter from Fiordalisi to Ranalli and the subject line read, "Re: Engagement of Bryan Cave LLP." Fiordalisi wrote in relevant part:

"We are pleased that you have chosen to engage Bryan Cave LLP [to handle the Remy litigation] and such future matters that we mutually agree to undertake. Consistent with our normal practice, this letter and the attached Statement of Engagement Terms and Billing Practices (the 'statement') set forth the terms of our engagement. The Statement is important and is provided to our clients so that they understand in advance how various issues will be handled.

Our fees for legal services are based on the time we spend on the engagement. *** We separately charge for expenses and other charges incurred in connection with rendering our services, all as described on the Statement.

Our billing statements are normally rendered on a monthly basis and are due payable upon receipt. We endeavor to include expenses and other charges in the statement for the month in which they are incurred. On occasion, however, accounting for certain expenses and charges (i.e., late-posted items or international charges), may be delayed, in which case late-posted items will be billed on the next regular statement. The Firm reserves the right to charge a late payment penalty in the form of interest on any statements not paid within 30 days of the statement date at the legal rate of interest.

Our representation is conditioned upon receipt of the signed copy of this letter from you confirming your understanding and approval of these terms of our engagement,accompanied by your deposit check or wire transfer for $10,000, which will be used in accordance with the Statement.

Our attorney-client relationship is one of mutual trust and confidence. We do our best to see to it that our clients are satisfied not only with our services but also with the fees charged for those services. Whenever you have any questions or comments regarding our services or fees, you should contact me or any other attorney in the Firm with whom you are working. We also encourage you to inquire about any matters relating to our fee arrangements or monthly statements that are in any way unclear.

We appreciate the confidence you have placed in us and look forward to working with you. If this letter and the Statement correctly set forth our mutual understanding, please sign and date the enclosed copy of this letter and return it to us with the attached Statement."

¶ 6 Below these paragraphs was Fiordalisi's signature, followed by two sentences in bold and all-capitalized font:

"THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

THESE TERMS[,] INCLUDING THE ATTACHED STATEMENT OF ENGAGEMENT TERMS AND BILLING PRACTICES[,] ARE APPROVED."

¶ 7 Ranalli signed the contract directly below the two emphasized sentences. The attached Statement of Engagement Terms and Billing Practices covered the next three pages. The arbitration clause appeared on the second page, after paragraphs addressing topics such as billingrates and how the project would be staffed, but before paragraphs describing miscellaneous charges such as copying costs and messenger expenses. The paragraph stated in its entirety:

"Arbitration of Dispute. Should any dispute arise concerning the services provided to you by us or the statements forwarded to you, as well as any alleged claims for legal malpractice, breach of fiduciary duty, breach of contract or other claim against the Firm for any alleged inadequacy of such services, the dispute will be settled by arbitration. The arbitration shall be heard in the City of Chicago by a panel of three arbitrators, all of whom must be practicing attorneys in that city, with one arbitrator to be selected by each party and the third to be chosen by the two arbitrators selected by the parties. The arbitrators may establish such rules for the conduct of the arbitration as they may choose, except that there shall be no discovery and any proceedings conducted shall be private and confidential and shall not be disclosed to the public by either the arbitrators or the parties to the arbitration. The award of the arbitrators must be by a majority vote and shall be final and binding,

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