Visvardis v. Ferleger

• Decision Date: 27 July 2007
• Docket Number: No. 1-05-3969.,1-05-3969.
• Citation: Visvardis v. Ferleger, 873 N.E.2d 436, 375 Ill.App.3d 719 (Ill. App. 2007)
• Parties: Spiro VISVARDIS and Joanne Visvardis, Plaintiffs-Appellants, v. Eric P. FERLEGER, P.C., Eric P. Ferleger, Ferleger & Associates, and Ferleger & Cohen, Defendants-Appellees.
• Court: Appellate Court of Illinois

873 N.E.2d 436

Spiro VISVARDIS and Joanne Visvardis, Plaintiffs-Appellants, v.Eric P. FERLEGER, P.C., Eric P. Ferleger, Ferleger & Associates, and Ferleger & Cohen, Defendants-Appellees.

No. 1-05-3969.

Appellate Court of Illinois, First District, Sixth Division.

July 27, 2007.

Rehearing Denied September 4, 2007.

As Modified Upon Denial of Rehearing September 7, 2007.

Brian R. Holman, Dennis H. Stefanowicz, Jr., Holman & Stefanowicz, LLC, of Chicago, for appellants.

Stephen R. Swofford, David M. Schultz, Clifford E. Yuknis, Hinshaw & Culbertson LLP, of Chicago, for appellees.

OPINION AS MODIFIED UPON DENIAL OF REHEARING.

Justice McNULTYdelivered the opinion of the court:

In July 2002, Spiro Visvardis brought a legal malpractice action against Eric Ferleger the attorney who represented him in a lawsuit against Spiro's brother, Nick Visvardis.The trial court dismissed the complaint against Ferleger, under section 2-615 of the Code of Civil Procedure(the Code)(735 ILCS 5/2-615(West 2002)), based on the decision of the court that dismissed the underlying action against Nick.We hold that the court should not have considered documents outside of the complaint in ruling on Ferleger's motion to dismiss under section 2-615.Because Spiro has alleged facts that could support a finding he would have won the underlying lawsuit if Ferleger had not acted negligently, we reverse and remand.We publish the decision to criticize and clarify the rule in Illinois requiring plaintiffs in legal malpractice cases to plead the solvency of the underlying defendants.

BACKGROUND

In 1986, Spiro and Nick formed Techco, a company specializing in industrial painting and sandblasting.Nick and Spiro each owned half of Techco's shares.Nick managed Techco's finances and Spiro oversaw the work sites.Techco employed Nick's wife, Maria Visvardis, to handle various accounting matters.Nick and Maria also set up two other corporations, which they named Tecorp and Omega Industries.Techco granted the National Bank of Greece a security interest in Spiro's primary residence in exchange for a loan.On December 31, 1995, Techco had $425,602 in cash, accounts receivable of $631,437, and retained earnings in the amount of $784,851.The National Bank foreclosed the mortgage on Spiro's home in 1996 because Techco defaulted on the loan.

In July 1997, through Ferleger, Spiro sued Nick, Maria, Techco, Tecorp, and Omega Industries ("the original defendants"), seeking equitable relief and damages for breach of fiduciary duty and fraud.According to the complaint in the action for legal malpractice, Nick and Spiro agreed to take equal salaries from Techco.Techco paid Spiro $28,600 in 1996, while it paid Nick $72,800 in salary and $101,810 in other income.Also in 1996 Nick transferred $400,000 from Techco's bank account to his personal bank account without Spiro's authorization and without Spiro receiving a similar monetary draw.Nick changed all of the locks on the doors of Techco without providing Spiro new keys.He removed Spiro as an authorized signatory from Techco's bank accounts.Maria forged Spiro's signature on negotiable instruments written on behalf of Techco.Nick and Maria intentionally defaulted on the loan from National Bank, despite the availability of substantial assets to repay the loan.

According to the complaint Spiro filed against Ferleger, Nick owned all shares of Allied Maintenance Contractors, and Maria owned Tecorp and served as president of Century Financial & Realty Corporation.In July 1997 Century purchased Techco's assets, valued at $996,098, for $87,970.45.Pete Maroulis, a former Techco employee, swore in an affidavit incorporated into the malpractice complaint that subsequent to 1996, Nick and Maria owned various pieces of equipment costing a total of approximately $422,000, Techco performed several jobs from which it earned approximately $740,000, and Allied Maintenance performed several jobs from which it earned over $1 million.

On May 2, 2000, the original defendants moved for summary judgment.Ferleger filed a response that included an expert opinion as to the amount of damages Spiro sustained.The court granted the motion for summary judgment, stating that Ferleger failed to produce "a single fact" in his response.On behalf of the plaintiffs Ferleger filed a motion to reconsiderthe court's entry of summary judgment.To this motion, Ferleger attached 30 exhibits, including various affidavits, a "Facts Chart," and other materials.

The court denied the motion, stating that Ferleger had produced "an unorganized bulk of fact, charges, lists [of] a bunch of things that are supposedly facts.They're not organized in any way as to how they're material facts."The trial court noted that the affidavit of the expert indicated that he lacked the documents he needed to reach a conclusion concerning some of Spiro's allegations of wrongdoing.The trial court reasoned:

"The proper procedure would have been * * * to insist vigorously on that production in front of the Court with a motion to compel.That was not done.The motion for reconsideration is not the proper vehicle for Counsel to reverse his trial tactics."

Ferleger filed an appeal on behalf of Spiro on April 19, 2002.Spiro retained new counsel to prosecute the appeal.On June 30, 2003, this court affirmed the judgment in favor of the original defendants.

In July 2002, Spiro initiated a legal malpractice action against Ferleger, alleging that Ferleger acted negligently by failing to sue all responsible parties, by failing to obtain all documents the expert needed, and by failing to produce available evidence in response to the motion for summary judgment.In November 2005, the trial court dismissed Spiro's fourth amended complaint, with prejudice, pursuant to section 2-615 of the Code. 735 ILCS 5/2-615(West 2002).The trial court found that even if Ferleger had not committed the alleged malpractice, Spiro would have lost his claim against the original defendants.The trial court reasoned, "both the trial and appellate courts found the facts as alleged to be insufficient to sustain the case" against the original defendants.Spiro now appeals.

ANALYSIS

A section 2-615 motion attacks only the legal sufficiency of the complaint.735 ILCS 5/2-615(West 2002);Illinois Graphics Co. v. Nickum,159 Ill.2d 469, 484, 203 Ill.Dec. 463, 639 N.E.2d 1282(1994).Section 2-615 motions"raise but a single issue: whether, when taken as true, the facts alleged in the complaint set forth a good and sufficient cause of action."Scott Wetzel Services v. Regard,271 Ill. App.3d 478, 480, 208 Ill.Dec. 98, 648 N.E.2d 1020(1995).Ferleger brought his motion pursuant to section 2-615, but his arguments and the trial court's rulings rest primarily on the appellate court's disposition of the underlying action.Ferleger argues that Visvardis is "[r]ehashing unsuccessful allegations and materials" rejected by the court in the underlying case.Ferleger asserts that "there is nothing in the record suggesting that the trial and appellate courts in the underlying case" did not review the new evidence submitted with the motion for reconsideration.Spiro did not incorporate into the complaint against Ferlenger the appellate court's order disposing of the underlying action.Facts not alleged in or attached to the complaint cannot support a section 2-615 motion.Gilmore v. Stanmar, Inc.,261 Ill.App.3d 651, 654, 199 Ill.Dec. 189, 633 N.E.2d 985(1994).

In essence, Ferleger's argument sounds in collateral estoppel.He claims that Spiro cannot relitigate a question that the appellate court has adjudicated against him in the underlying suit.Todd v. Katz,187 Ill.App.3d 670, 674, 135 Ill.Dec. 498, 543 N.E.2d 1066(1989).Defendant should use section 2-619(a)(4)(735 ILCS 5/2-619(a)(4)(West 2002)) to attack the complaint on grounds that a prior judgment bars the cause of action.SeeTodd,187 Ill.App.3d at 674, 135 Ill.Dec. 498, 543 N.E.2d 1066.

Meticulous practice requires proper designation of all motions.Premier Electrical Construction Co. v. La Salle National Bank,115 Ill.App.3d 638, 642, 71 Ill.Dec. 481, 450 N.E.2d 1360(1983).The appellate court shall reverse if the misdesignation prejudices the nonmovant.Premier Electrical,115 Ill.App.3d at 642, 71 Ill.Dec. 481, 450 N.E.2d 1360.Here, at the hearing on the motion to dismiss, Spiro argued only the sufficiency of the allegations in his complaint, as he should in opposition to a motion to dismiss pursuant to section 2-615.The trial court asserted that section 2-615 warranted the dismissal.However, the trial court's reasoning relied on facts outside the complaint, specifically that "both the trial and appellate courts found the facts as alleged to be insufficient to sustain the case" against the original defendants.

Spiro did not have an opportunity to respond properly to the mislabeled motion.Allowing the defendant to attack the complaint under section 2-619 after failing to file the proper motion would be unjust "because the purpose of the statute is to give the plaintiff an opportunity to respond to the objection and to cure the defect in the trial court."Rowan v. Novotny,157 Ill.App.3d 691, 694, 110 Ill.Dec. 80, 510 N.E.2d 1111(1987).As Ferleger brought only a section 2-615 motion, and the court granted only a section 2-615 motion, we will confine our review to the standards for reviewing section 2-615 motions.Accordingly, we ignore all arguments based on facts not shown on the face of the complaint.

Ferleger, relying on Goran v. Glieberman,276 Ill.App.3d 590, 213 Ill.Dec. 426, 659 N.E.2d 56(1995), urges us to take judicial notice of the appellate court's judgment.In Goranthe court took judicial notice of documents in the record in order to decipher when plaintiff incurred attorney fees.Goran,276 Ill.App.3d at 596, 213 Ill.Dec. 426, 659 N.E.2d 56.However, the defendant in Goran brought his motion to...