Articles Posted in Statute of Limitations Defense

One of the most difficult issues in some malpractice litigation is whether the law suit was timely or not. Generally, the plaintiff has two years from the date of discovery of the problem. Each case is different and there is often argument as to when a plaintiff should have become aware of the facts leading him to suspect legal malpractice. The defense will often argue that the plaintiff should have suspected his injury or investigated the problem before the plaintiff contends that he was aware.

Suburban Real Estate Services, Inc. v. Carlson, 2022 IL 126935, clarifies some of these issues for legal advice that causes litigation. In the Carlson case, in 2010 the plaintiff hired a lawyer to advise him on how to terminate a joint venture with another company. The attorney allegedly advised the plaintiff to terminate the arrangement. In August 2010, the adverse party disagreed and filed a lawsuit for breach of fiduciary duty. In July 2015, after a trial, the court awarded damages in favor of the adverse party.

The key question is when did the claim arise? The defense argued that the statute of limitations began to run when the plaintiff had to hire a new attorney to defend the breach of fiduciary action. So under the defense view, plaintiff discovered his injury in 2010 and should have sued for malpractice by 2012.  Plaintiff argued that he was not aware of the allegedly incorrect legal advice until the adverse judgment was entered in the underlying case in 2015. The Illinois Supreme Court held that the injury accrued upon the entry of the adverse judgment.

Bielfeldt v. Graves, 2021 IL App (3d) 200118-U, should be a published opinion. In any event, it stands for the proposition that a legal malpractice claim was timely under the federal savings statute. Here a timely legal malpractice claim was filed in federal court. The federal court dismissed that claim for lack of subject matter jurisdiction. Bielfeldt re-filed the claim within one year of the dismissal by the federal court.

¶ 17 Bielfeldt argues that the malpractice claim was timely filed under the savings statute, section 13-217 of the Code (735 ILCS 5/13-217 (West 1994)). Under that provision, if the action is dismissed by a federal district court for lack of jurisdiction then, “whether or not the time limitation for bringing such action expires during the pendency of such action, the plaintiff*** may commence a new action within one year or within the remaining period of limitation, whichever is greater.” Id. This section only applies, though, when a plaintiff has initially filed suit in a timely manner, and the original statute of limitations has not expired before that action was ever filed. Leffler v. Engler, Zoghlin & Mann, Ltd., 157 Ill. App. 3d 718, 723-24 (1987).

¶ 18 Graves does not dispute that the state court complaint was filed within one year of dismissal from the federal court. However, Graves argues that Bielfeldt first asserted allegations of legal malpractice arising from the “Major Event” in the third amended complaint in federal court, which was not filed until August 3, 2016, after the statute of limitations would have expired according to Graves. The pleadings in the court below, however, allege that Bielfeldt did not receive a letter until on or about January 23, 2015, indicating the shares of stock to Graves that allegedly diluted his ownership interest. For purposes of a motion to dismiss, Bielfeldt sufficiently pled a legal malpractice claim against Graves that was filed within two years of when Bielfeldt allegedly knew or reasonably should have known of his injury. Thus, the legal malpractice claim survives as timely filed pursuant to the savings statute and we reverse the dismissal of count VII and remand this matter to the trial court for further proceedings as to count VII.

Short v. Grayson, No. 16-cv-2150 N.D. IL, September 3, 2021 is a malpractice case where the plaintiff alleged that his lawyer was negligent in handling litigation. The problem was that the litigation reached a final adverse judgment in 2013, but the malpractice case was not filed for three years. The District Court, in my view correctly, ruled that the case was barred by the statute of limitations. Some of the discussion follows:

The briefs are chock-full of hotly contested issues, but there is a need to address only one. Almost two and a half years after the end of the state court case, Short filed this federal case against his attorneys, alleging legal malpractice. A malpractice claim has a two-year statute of limitations. So he missed the deadline, and the claim expired.

The only claim against Donner is legal malpractice. Under Illinois law, a malpractice claim has a two-year statute of limitations. A malpractice claim “must be commenced within 2 years from the time the person bringing the action knew or reasonably should have known of the injury for which damages are sought.” See735 ILCS 5/13-214.3(b).

The Illinois Appellate Court recently decided Rosenberger v. Meltzer, Purtill & Steele, LLC, 2021 IL App (1st) 200414-U. Rosenberger hired the Defendant Law Firm to represent him in connection with the negotiation of an employment contract with CenTrust. CenTrust had entered into an operating agreement with the Office of the Comptroller of the Currency (OCC). Rosenberger was hired on February 1, 2012. His agreement provided for a three-year employment term with a base salary of $200,000 per year. The agreement also contained a clause providing for severance compensation which provided that:

“If this Agreement is terminated by the Company prior to the expiration of the Employment Period for any reason other than Cause,… then the Employee shall be entitled to receive in a single payment…an amount equals to two times his annual base salary then in effect.” The Agreement also contained section 28, titled Regulatory Suspension and Termination. That section provided that if the employee was “suspended from office and/or temporarily prohibited from participant in the conduct of the affairs of Employer by a notice served under Section 8(e)(3) …of the FDIA [Federal Deposit Insurance Act], Employer’s obligations under this agreement shall be suspended as of the date of service.”

CenTrust terminated Rosenberger on November 5, 2013 and refused to make any severance payment to Rosenberger on the ground that he had been terminated for cause and because OCC would not approve such a payment.