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The Statute of Repose Defeats Claim of Terra Museum

The Terra Museum sued its former attorneys, DLA Piper, for legal malpractice arising out of a real estate deal gone bad. Terra claimed that, due to a drafting error, it was required to pay the other party to the real estate deal millions more than it should have had to pay. The Statute of Repose gives a client six years to sue the attorney for malpractice. The Statute of Repose starts to run when the attorney commits the negligent act, not when the client discovers the error. The court explained that Terra had opportunities to file suit during the

The court explained that Terra had opportunities to file suit during the six-year repose period. The court rejected an argument that the repose period does not begin to run until the transaction was completed.

¶ 33 We conclude that the event giving rise to Terra’s injuries occurred on May 29, 2007, when Terra and NM Project executed the first amendment and chose BOMA 96 as the method of measuring the retail parcel without the exclusionary language.Fricka v. Bauer, 309 Ill. App. 3d 82, 88 (1999) (“The plain language of the statute requires filing of the lawsuit within six years of the acts or omissions that form the basis for the complaint.”). The measurements of the rentable area under the BOMA 96 standards, without excluding the common space, resulted in the increases of the retail parcel space, which required Terra to engage in arbitrations to dispute the measurements, incur the related attorney fees and expenses and make the retail parcel credit payment at the closing. Terra’s asserted injuries directly flowed from DLA’s allegedly negligent omissions and acts as to the first amendment.

¶ 34 Under the statute of repose, Terra thus had until May 29, 2013, to file its malpractice suit against DLA, and its October 2014 complaint therefore was untimely. The circuit court properly dismissed the action. See Evanston Insurance Co., 2014 IL 114271, ¶ 16 (“After the expiration of the repose period, `[t]he injured party no longer has a recognized right of action.’ [Citation.] “).

¶ 35 In considering the possible harshness of this result, we note that both the October 2010 arbitration award as to Terra’s obligation to post a line of credit, and the January 2013 arbitration award that established the retail parcel credit at the closing, were based on measurements of the retail parcel using BOMA 96 and indicated that Terra would be responsible to pay a retail parcel credit at the closing. The awards were entered before the expiration of the statute of repose and offered Terra an opportunity to file a timely action under the statute of repose against DLA. Further, the March 12, 2013, closing took place about three months before the running of the statute of repose, giving Terra yet another opportunity to file a timely suit.

¶ 36 Terra argues that a transactional malpractice action is treated differently from a litigation malpractice action under the statute of repose. According to Terra, in a transactional context, the statute of repose does not begin to run “until the completion of the last affirmative act of representation in the matter that included the attorney’s negligence” and, in this case, that would be the March 2013 closing. (Emphasis added.) Terra relies on Lamet, Snyder v. Heidelberger, 2011 IL 111052,and Trogi v. Diabri & Vicari, P.C., 362 Ill. App. 3d 93 (2005). We disagree with Terra.

¶ 37 It is true that, in applying the statute of repose to the particular facts and circumstances at hand, our courts have remarked as to certain differences between litigation and transactional matters. See, e.g., Goldstein v. DABS Asset Manager, Inc., 381 Ill. App. 3d 298, 304 (2008) (“In a transactional setting, the statute of repose may cut off a malpractice action before it accrues.”); Fricka, 309 Ill. App. 3d at 87 (where court noted that a malpractice plaintiff who is injured in a litigation setting will not often be impacted by the statute of repose, while the statute of repose may cut off suits arising in the transactional setting); Trogi, 362 Ill. App. 3d at 98 (where the court distinguished the holding in Hester v. Diaz, 346 Ill. App. 3d 550, 554 (2004), in part, because that case involved malpractice in the context of litigation). See also Union Planters Bank, N.A. v. Thompson Coburn LLP, 402 Ill. App. 3d 317, 344 (2010) (where court compared proof of damages in a litigation malpractice case with a transactional one).

This holding is consistent with Illinois law, but it illustrates the unfairness of the Statute of Repose.

Edward X. Clinton, Jr.

Source: TERRA FOUNDATION FOR AMERICAN ART v. DLA PIPER LLP, Ill: Appellate Court, 1st Dist., 6th Div. 2016 – Google Scholar