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Does the Statute of Repose Apply To Claims By Non-client?

The caption of this case is Evanston Insurance Company v. Riseborough and Jacobson and Riseborough, 1-10-2660.

The opinion is not available online or on the website of the Appellate Court.  I learned of this case when I read an excellent article by the Chicago Daily Law Bulletin.  I am amazed that an opinion of this importance is not published or easily available.  I had to send someone to the Appellate Court clerk’s office to obtain a copy of the opinion.

The case is of importance because it holds that the legal malpractice statute of limitations does not apply to a suit brought by a non-client against an attorney arising out of the performance of professional services.

The dispute arouse out of a personal injury action filed against Kieferbaum Construction.  The defendant lawyers represented Kieferbaum in the lawsuit.  The plaintiff was an excess liability carrier.  The excess liability carriers filed declaratory judgment actions to determine their rights under their policies.

On October 23, 2000, the parties in the personal injury case and insurance carriers entered into a “Fund and Fight Agreement” (FFA) which allowed the subcontractor’s insurance carriers to fund a settlement for the plaintiff in the personal injury case.  The FFA allowed them to continue to fight amongst themselves over coverage issues.

The defendant lawyers signed the FFA as the agents of Kieferbaum construction.

In the coverage litigation Evanston sought repayment of the $1 million it had contributed to the settlement.

Kieferbaum then executed an affidavit in which it claimed that the defendant lawyers had no authority to enter into the FFA on Kieferbaum’s behalf.

Evanston then sued the defendant lawyers alleging breach of implied warranty of authority, fraudulent misrepresentation and negligent misrepresentation.  The defendants argued that the case was barred by the Statute of Repose, 735 ILCS 5/13-214.3.  The trial court dismissed the case and Evanston appealed.

The appellate court held that the statute of repose does not apply to an action brought by a non-client against an attorney.  Section 13-214.3 of the Code states in relevant part “(b) an action for damages based on tort, contract or otherwise (i) against an attorney arising out of an act or omission in the performance of professional services…must be commenced with 2 years from the time the person bringing the action knew or reasonably should have known of the injury for which damages are sought.”

The appellate court held that the phrase “arising out of an act or omission in the performance of professional services,” referred to an attorney-client relationship.  Because Evanston had not attorney-client relationship with the lawyers, the statute of repose did not apply.

Comment: This is a highly controversial decision that should be heard by the Illinois Supreme Court.  My view is that the holding of the panel is erroneous.  These lawyers were doing legal work, defending their client from a claim.  They signed an agreement as agents of the client.  Later, the client and the insurance company threw the lawyers under the bus and the insurer brought a claim against them.  Since the lawyers were doing legal work, they are entitled to the protections of the Statute of Repose.  They should be protected and the case should be dismissed.  This is, in my view, an easy case for the Illinois Supreme Court.  It cries out for review.

Edward X. Clinton, Jr.

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