William Carlson and Willis Capital, LLC v. David J. Fish and the Fish Law Firm, P.C., Shawn M. Collins and The Collins Law Firm, P.C., 2015 IL App (1st) 140526.
This is a decision of the Illinois Appellate Court affirming the dismissal of a legal malpractice lawsuit on the ground that the two-year statute of limitations had expired before the lawsuit was filed.
The lawsuit arose out of a business dispute between William Carlson and his business partners in an entity known as Belvedere Trading, LLC. In 2006, Carlson had a “falling out” with his partners. In February 2008, Carlson agreed to mediate the dispute with his partners. He retained the defendant lawyers to represent him. On February 13, 2008, the parties held a mediation in which Carlson agreed to sell his interest in Belvedere for $17.5 million. The settlement agreement was signed on March 6, 2008. It is noteworthy that Carlson did not obtain an independent appraisal of the value of his interest in Belvedere before the mediation.
Six months after the settlement, Carlson communicated with the defendants and expressed his frustration with the amount he had received for his interest.
On November 19, 2008, Carlson met with attorneys from another law firm, Drinker Biddle and Reath, LLP. Carlson contended that it was at this discussion that he was “first made aware of a possible claim against Collins when the Drinker lawyers raised questions about whether Collins’ legal services in connection with the settlement agreement had been substandard.” Opinion at ¶ 16.
On November 18, 2010, Carlson filed his initial legal malpractice complaint. Carlson later voluntarily dismissed the complaint but refiled on July 5, 2013 alleging that the defendants breached their professional duties by (a) failing to obtain an independent appraisal of the value of his interest in Belvedere before the mediation; (b) allowing Carlson to attend the mediation session without an attorney present; (c) advising him to sign the settlement agreement; and (d) failing to protect him from fraud perpetrated by his partners. Opinion at ¶ 17.
The defendants moved to dismiss on statute of limitations grounds. The district court concluded that the complaint was time-barred because Carlson knew that he was injured in September 2008 and he knew that his former partners were the cause of the injuries (because they allegedly defrauded Carlson) by November 13 or 13, 2008. Because the complaint was filed on November 18, 2010, more than two years after it had accrued, the circuit court held that it was time-barred.
The Appellate Court affirmed. It held that Carlson knew that he had been defrauded by his former partners in September 2008 and that knowledge commenced the statute of limitations.
Carlson’s knowledge of a wrongful cause of his injury, even if he had only identified his former partners’ fraud as that cause, rather than defendants’ failure to protect him from that fraud, commenced the two year statute of limitations. Because that date occurred no later than September 13, 2008 (and more likely even sooner), Carlson’s complaint, filed on November 18, 2010 was not timely. Thus, the trial court did not err in granting defendants’ motion to dismiss.
Opinion ¶ 41.
This is a thoughtful opinion that offers an excellent discussion of when the plaintiff knew or should have known that he was injured by his lawyers. The question is a close one and Carlson should appeal to the Illinois Supreme Court.
Edward X. Clinton, Jr.