Tig Ins. v. Giffin Winning Cohen & Bodewes

• Decision Date: 07 April 2006
• Docket Number: No. 05-2203.,No. 05-2447.,05-2203.,05-2447.
• Citation: 444 F.3d 587
• Parties: TIG INSURANCE COMPANY, individually and as subrogee of Illinois State University, Plaintiff-Appellant, v. GIFFIN WINNING COHEN & BODEWES, P.C., an Illinois professional corporation, and Carol Hansen Posegate, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

444 F.3d 587

TIG INSURANCE COMPANY, individually and as subrogee of Illinois State University, Plaintiff-Appellant, v. GIFFIN WINNING COHEN & BODEWES, P.C., an Illinois professional corporation, and Carol Hansen Posegate, Defendants-Appellees.

No. 05-2203.

No. 05-2447.

United States Court of Appeals, Seventh Circuit.

Argued February 8, 2006.

Decided April 7, 2006.

Daniel I. Schlessinger, Hugh S. Balsam (argued), Lord Bissell & Brook, Chicago, IL, for Plaintiff-Appellant.

Robert Marc Chemers, David S. Osborne (argued), Pretzel & Stouffer, Chartered, Chicago, IL, for Defendants-Appellees.

Before MANION, KANNE, and EVANS, Circuit Judges.

EVANS, Circuit Judge.

TIG Insurance Company appeals the dismissal of its malpractice case against the Giffin Winning law firm¹ and one of its attorneys, Carol Hansen Posegate.

To explain the malpractice claim we must reach back to the underlying lawsuit, in which Giffin Winning, at least for a time, represented Illinois State University (ISU) in a class-action, gender-discrimination lawsuit brought by several female professors. In the suit, Varner v. Illinois State University, which was assigned to District Judge Michael M. Mihm, the plaintiffs contended that they were being paid less than male professors and that ISU retaliated against female professors who complained about the discrimination. Their attorney was Joel Bellows. TIG was ISU's liability insurer at the time and it paid the attorney fees which are at the heart of the present malpractice action; TIG, in turn, was reimbursed by its reinsurers.

The malpractice alleged in the present case arose out of discovery problems in the Varner case. The major problem involved Giffin Winning's failure to produce three documents called gender equity studies (two of which are at issue here) in their response to a discovery request. The response was signed in October 1996. A month later the Varner case was stayed. Soon thereafter, the law firm of Latham & Watkins filed an appearance on behalf of ISU and essentially took control of ISU's defense, though Giffin Winning remained of record. Latham had an attorney-client relationship with ISU's insurer TIG. Giffin Winning did not.

The facts show that Giffin Winning received two gender equity studies from ISU in 1994 — while the Varner case was still pending before the Equal Employment Opportunity Commission. Two years later, when the law firm received the second request for documents, the subject of the October 1996 response at issue here, they routed the request to William Gorrell, the former executive director for Information Systems and the head of the Planning Policy department at ISU. He did not at that time forward the studies to Giffin Winning for production and the law firm did not produce them on its own. On this point, Judge Mihm later said that Gorrell was the one who "dropped the ball entirely."

During the stay in the Varner case, Bellows talked with Gorrell, who by then was no longer employed by ISU and had his own lawsuit pending against the school for wrongful termination. He independently provided Bellows with the gender equity studies. He also executed an affidavit detailing particulars of a "planning policy database" on which he said the studies were based.

Once the stay was lifted, Bellows confronted Latham with the studies. (The Latham firm was now representing ISU). Bellows demanded that ISU turn over the database on which he alleged the studies were based. Apparently thinking the best defense is a good offense, Latham's first response apparently was to point fingers, saying Bellows had also not adequately complied with discovery requests. Also at this time, Latham began preparing a motion to disqualify Bellows for improperly soliciting privileged information from Gorrell.

For his part, Bellows filed a motion for sanctions against both ISU and Giffin Winning, in part based on the failure to produce the gender equity studies. As relevant here, Bellows' contention in his motion for sanctions was not simply that the studies were not produced. After all, he now had the studies. Rather, he claimed that the gender equity studies were not produced because of a conspiracy to hide the "Planning Policy database." To have produced the studies, he argued, "would have alerted the Varner plaintiffs to the existence of the databases ...."

We now arrive at the essence of the case — the pivotal facts about the database. At a 4-day hearing on the pending motions, Gorrell testified that the database contained variables relevant to the issue of gender equity and was maintained in a format which enabled a user to prepare comparative studies. He testified that the gender equity studies were prepared from this database. He said he had done one of the studies himself, though he also said he had never personally accessed the database. The actual data processing, he said, was done by his research assistant, Anna Wells, and her preparation of the data for his 1994 study would have taken her no more than a day or two using the database:

Q How long did it take Anna Wells to compile the information for the 1994 study?

A It could be done in a day or two.

That apparently was news to Wells. She testified that she did not use any database in compiling the data.

Q Ms. Wells, when you collected the information reflected in these tables, was there a single source that you could go to to collect all the information reflected in the tables?

A No.

Q Was there a single database maintained by the Planning Policy department that contained all of the information reflected in these tables?

A No.

She used hard copy (probably the same 279 banker boxes of material which had, in fact, been produced to Bellows), and it took her "a few weeks, several weeks" to locate the information and format it for use. Why? Because, as Judge Mihm found, there was no database and never had been:

I don't believe that the plaintiffs have ever established the existence of the kind of database that I thought was being alleged here, that there was some button at ISU that could be punched that would involve a print-out of all this information. That clearly is not true....

The nonexistence of the database — which Bellows said there was an alleged conspiracy to hide — is not seriously contested.

Nevertheless, Judge Mihm sanctioned Giffin Winning $10,000 for discovery lapses, a sanction which was later vacated. Judge Mihm, however, wisely denied Bellows' request for a default judgment based on the failure to produce the gender equity studies. He remarked that "I don't believe it was appropriate — but even if I had ordered that, I think that would have been reversed on appeal." In addition, although he denied Latham's motion to disqualify Bellows because of his contact with Gorrell, Judge Mihm sanctioned Bellows $10,000 as well. Ultimately, the Varner case was settled; mercifully, we think.²

We now get to the present malpractice action that TIG filed against Giffin Winning in which the damages TIG alleges are the attorney fees it paid Latham to defend against the sanction motion — a whopping $1.2 million, give or take, for the work of 27 attorneys and various paralegals. It seems that when Latham said it took the motion seriously, it meant it. As we said, TIG paid the bill and was subsequently reimbursed by its reinsurers.

Several issues swirl around in this appeal from the district court's grant of summary judgment for Giffin Winning. Two involve strictly legal issues: Does our holding in Garris v. Schwartz, 551 F.2d 156 (7th Cir.1977), preclude a legal malpractice action in which the damages are solely attorney fees, and does the collateral source rule apply in this case, thus precluding TIG's recovery of damages for which it has already been compensated. Another issue involves the striking of expert testimony. Others involve whether summary judgment was proper, specifically whether there was sufficient evidence of damages to survive summary judgment and whether the issue of causation could be resolved on summary judgment.

Our focus will be on the issue of causation. We emphasize, however, that, by concentrating on that single issue, we do not imply anything at all about the application of the collateral source rule in these circumstances or the continued viability of Garris v. Schwartz. We are deliberately skipping the larger issue of whether a malpractice claim can be based on attorney fees (the question posed by Garris v. Schwartz). What we are saying is that, assuming such a cause of action exists (which we are assuming only for the present discussion), TIG's claim would fail as a matter of law.

The elements of a legal malpractice action in Illinois are well-settled. They are: "(1) the existence of an attorney-client relationship that establishes a duty on the part of the attorney; (2) a negligent act or omission constituting a breach of that duty; (3) proximate cause and (4) damages." Lopez v. Clifford Law Offices, 362 Ill.App.3d 969, 299 Ill.Dec. 53, 841 N.E.2d 465, 470-471 (2005), citing cases. A legal malpractice case is similar to any other negligence claim, and traditional principles apply. Id. Proximate cause describes two distinct requirements — cause in fact and legal cause. First Springfield Bank & Trust v. Galman, 188 Ill.2d 252, 242 Ill.Dec. 113, 720 N.E.2d 1068 (1999); see also Abrams v. City of Chicago, 211 Ill.2d 251, 285 Ill.Dec. 183, 811 N.E.2d 670 (2004). Cause in fact exists only if the defendant's conduct was a "material element and a substantial factor in bringing about the injury." Abrams, at 675. Legal cause, on the other hand, is largely a question of foreseeability. The relevant inquiry is whether "the injury is of a type that a reasonable person would see as a likely result of his or her conduct." (Emphasis in original.) Abrams, at 675, quoting Galman. The occurrence must have been "reasonably" foreseeable: "Not what actually happened, but what the reasonably prudent person...