Articles Posted in Statute of Limitations Defense

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The statute of limitations often defeats legal malpractice claims that might otherwise have some merit. The statute of limitations is the best possible defense a lawyer can have. The statute of limitations differs from state to state. As a client, the important thing to remember is to get moving as quickly as possible once the statute expires. In Titshaw v. Geer, Georgia Court of Appeals 2023, May 24, 2023,  the plaintiff came to believe that his lawyer had erroneously advised him to file for bankruptcy. Unfortunately he waited after four years to file suit so his lawsuit was dismissed pursuant to the Georgia statute of limitations.

If you think you may have a claim, talk to a malpractice attorney as soon as possible. Waiting too long only benefits the lawyer defendant.

Ed Clinton, Jr.

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The Illinois statute of limitations period governing legal malpractice cases is normally two years. The plaintiff has two years from the discovery of the injury to file suit. Illinois has another provision in the statute, which often protects lawyers involved in estate planning.

5/13-214.3(d) provides that: When the injury caused by the act or omission does not occur until the death of the person for whom the professional services were rendered, the action may be commenced within 2 years after the date of the person’s death unless letters of office are issued or the person’s will is admitted to probate within that 2 year period, in which case the action must be commenced within the time for filing claims against the estate or a petition contesting the validity of the will of the deceased person, whichever is later, as provided in the Probate Act of 1975. An action may not be commenced in any event more than 6 years after the date the professional services were performed.

For this reason, in inheritance disputes lawyers will often open an estate and start the claims period running. That leaves the aggrieved party six months to file any claims against the lawyers who drafted the estate plan. Dalessandro v. Quinn-Dalessandro, 2023 IL App (1st) 211119 is one such case. The adult children of the decedent filed a claim against their step-mother within the six month period, but they did not file against the lawyers who drafted the estate planning documents that disinherited them until after the six month period had expired.  The provision in the statute is a trap for the unwary practitioner who incorrectly believes he has two years to file a malpractice lawsuit. Nope. He only has six months to file such a claim.

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This is a case of litigation malpractice. In Best Choice Products, Inc. v. Hendrick, Bryant, Nerhod, Sanders & Otis, Ltd, No. COA21-163, the Court of Appeals of North Carolina reinstated a legal malpractice action. Law Firm had represented Best Choice in an underlying case. According to the Complaint, the Law Firm failed to produce certain documents in the underlying case and the case was dismissed. The opinion at paragraph 4 quotes the key allegations of the Complaint:

¶ 4 On 20 July 2020, Best Choice filed its complaint against Defendants for professional malpractice. Best Choice attached to its complaint as exhibits the summary judgment order entered 24 July 2017, and an order granting sanctions on 25 January 2018 from the Prior Lawsuit. Best Choice made several allegations in its complaint relating to Defendants’ negligent representation and listed specific instances in which Defendants failed to meet the standard of care in rendering legal services in the Prior Lawsuit, which it designated as “Defendants’ Failures.” Best Choice made the following allegations pertinent to our review:

33. Defendants’ Failures continued in the Prior Lawsuit through the Orders referenced below, prevent Best Choice from avoiding or mitigating the adverse consequences imposed by the Orders.

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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.

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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.

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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).

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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.

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In Illinois, there are two parts to the statute of limitations.  First, you have two years from the time you discover your injury to sue a lawyer. Second, you cannot sue the lawyer based on an action that he took more than 6 years prior to the date you file your case.  The two-year and six-year rules prevent many malpractice plaintiffs from suing. They also protect lawyers who gave advice long ago, when the law may have been different.

Saunders v. Hedrick, 20 C 6835 (N.D. IL) decided on February 18, 2021, is a classic example of how these statutes work in practice.  Saunders was fired from his job as a corrections officer in 2010. He retained Hedrick who negotiated a settlement for him in 2012. In 2020, Saunders discovered that because he took a settlement his pension would be reduced. He then sued Hedrick for legal malpractice. The court held the case was time-barred because the advice to settle was given in 2012, about 8 years before the lawsuit was filed.  Saunders argued that the lawyer fraudulently concealed the error from him. The court rejected that argument because Saunders was unable to plead any false representation by Hedrick that could form the basis of fraudulent concealment.  Result: case dismissed.

If you have question about a legal malpractice case, do not hesitate to contact us at 312-357-1515.

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This case, County Line Nurseries & Landscaping, Inc. v. Kenney, 2020 IL App (1st) 200615, presents a recurring issue: when does the statute of limitations for legal malpractice begin to run?  Illinois has a two-year statute of limitations for legal malpractice. The hard question is figuring out when the statute begins to run.

County Line hired James Kenney to represent it in a contract lawsuit. The parties allegedly entered into a settlement of that lawsuit on September 23, 2014. County Line appealed and alleged that it had not entered into a binding settlement. The Appellate Court disagreed and affirmed the settlement.

On October 26, 2016, County Line filed suit against Kenney. Kenney moved to dismiss on the ground that the two-year statute barred the claim, which, in his view, had arisen on September 23, 2014. County Line argued that Kenney had fraudulently concealed the disputed settlement agreement from the client and that, therefore, the claim had not arisen on September 23, 2014. The trial court dismissed the case and the appellate court affirmed the dismissal of the malpractice lawsuit.

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The issue that arises often in litigation is: when was the plaintiff put on notice that the lawyer may have breached the duty of care? The answer to this question often determines whether or not the statute of limitations bars a claim. A case decided by the Delaware Supreme Court earlier this year captioned, ISN Software v. Richards, Layton & Finger 226 A.3d 727 (Del. Supreme Court), offers a thoughtful discussion of that very issue.

ISN Software wished to convert to an S Corporation. However, four of its shareholders could not legally be shareholders of an S Corporation. Thus, the question was how can we remove these shareholders from our company? The law firm allegedly advised ISN to use a merger to cash out the four shareholders. The way it typically works is that the company offers the shareholder a cash payment. If the shareholder accepts the cash offer, that is the end of the matter. If the shareholder elects appraisal, there is a court case where a judge decides the value of the shares. In this transaction, all four shareholders were eligible for appraisal rights. The law firm told the client in 2013 that its legal advice on who was eligible for appraisal was incorrect.

The company proceeded to litigate the value of the shares. When the court made its decision, the value was substantially higher than ISN thought it would be. ISN then sued the law firm for malpractice. The Delaware courts held the the case was time-barred because the cause of action accrued in 2013 (when the firm told the client that the advice it had given was incorrect) not 2018 when the unfavorable litigation ruling occurred.

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