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 clock doesn’t start ticking until the plaintiff learns of the injury under the “discovery rule.” “[U]nder the discovery rule, `when a party knows or reasonably should know both that an injury has occurred and that it was wrongfully caused, the statute begins to run and the party is under an obligation to inquire further to determine whether an actionable wrong was committed.'” See Rosenberger v. Meltzer, Purtill & Steele LLC, 2021 IL App (1st) 200414-U, at ¶ 31 (2021) (unpublished) (cleaned up) (quoting Hermitage Corp. v. Contractors Adjustment Co., 166 Ill. 2d 72, 209 Ill. Dec. 684, 651 N.E.2d 1132, 1139 (1995)).
“In this context, the term `wrongfully caused’ is used in a general or generic sense, and it does not mean that knowledge of negligent conduct, the existence of a cause of action, or the full extent of injury must exist before the statute of limitations starts to run.” Id. (citation omitted); see, e.g., Janousek v. Katten Muchin Rosenman LLP, 2015 IL App (1st) 142989, 398 Ill. Dec. 472, 44 N.E.3d 501, 507 (2015) (holding that a claim against attorneys was time-barred because the plaintiff knew that he had been injured “even though he may not yet have known that [their] representation was partly responsible and that their conduct gave rise to a cause of action”); Carlson v. Fish, 2015 IL App (1st) 140526, 391 Ill. Dec. 728, 31 N.E.3d 404, 414 (2015) (same).
In a malpractice claim, the clock often starts ticking when the court enters judgment against the client. See Suburban Real Estate Servs., Inc. v. Carlson,2020 Il App (1st) 191953, at *3 (2020) (finding that a legal malpractice action accrued when the trial court entered judgment against the plaintiff in the underlying suit); Lucey v. Law Offices of Pretzel & Stouffer, Chartered, 301 Ill. App. 3d 349, 234 Ill. Dec. 612, 703 N.E.2d 473, 479 (1998) (“Illinois courts have frequently recognized, either expressly or implicitly, a cause of action for legal malpractice will rarely accrue prior to the entry of an adverse judgment, settlement, or dismissal of the underlying action in which plaintiff has become entangled due to the purportedly negligent advice of his attorney.”); Mandalis v. Wentzel, 2019 IL App (1st) 18-0455-U, at *8 (2019) (finding that the statute of limitations begins to run when the injured party has a reasonable belief the injury was caused by wrongful conduct, which generally does not occur until there is an adverse judgment, settlement, or dismissal of the underlying action).
The fifth amended complaint includes three theories of malpractice against Donner. First, Donner failed to sue Sidewinder for breaching the oral contract between Short and Pye for the purchase of the Patent Portfolio and the subsidiaries. See Fifth Am. Cplt., at ¶ 156.a (Dckt. No. 194). Second, Donner failed to sue Pye and Meridian for causing Sidewinder’s breach of the oral contract. Id. at ¶ 156.b. Third, Donner failed to “adequately plead Short’s claims,” which required Short to defend a motion for sanctions. Id. at ¶ 156.c.
Short’s claim is time barred, under any theory. To review the bidding, Short allegedly reached an oral contract with Pye to buy the company’s patents in October 2005. See Pl.’s Resp. to Defs.’ Joint Statement of Facts, at ¶ 13 (Dckt. No. 239). Short learned that the patents weren’t for sale — because the company had already sold them — on January 5, 2006. Id. at ¶¶ 14, 42.
Donner filed a six-count complaint in state court on behalf of Short on December 30, 2010. Id. at ¶ 45. Short reviewed and approved the complaint (and all future amended complaints) before filing, and had “extensive involvement” in providing and approving the facts pled. Id. at ¶¶ 49, 67. On August 16, 2011, Short told Donner about the agreement that he had reached to buy the patents in the fall of 2005. Id. at ¶ 46.
In the years that followed, Donner and his successors filed a string of amended complaints, including a first amended complaint on December 2, 2011, a second amended complaint on April 9, 2012, a third amended complaint on September 12, 2012, and (finally) a fourth amended complaint on May 1, 2013. Id. at ¶¶ 48, 53, 64. Meanwhile, Donner withdrew on June 17, 2012. Id. at ¶ 52.
None of the claims landed. On October 4, 2013, the state court dismissed all of Short’s claims with prejudice. Id. at ¶ 65. Short’s counsel (Grayson) told Short about the dismissal on the same day. Id. So, on October 4, 2013, Short knew that his lawsuit had fallen apart, and that the state court had dismissed his claims with prejudice. Id.
On February 11, 2016, Short filed this federal lawsuit. See Cplt. (Dckt. No. 1). He brought malpractice claims against Donner and his other lawyers. Id. February 11, 2016 is two years, four months, and seven days after October 4, 2013.
The chronology confirms that Short waited too long to bring his malpractice claim. He knew about the oral contract because he was one of the two people who formed it. He knew what Donner put in the complaint, and what he didn’t. He knew that the state court complaint didn’t include a claim about a breach of an oral contract. He also knew that he could amend the complaint if he missed anything, because he filed amended complaints over and over again.
And most importantly, Short knew that his state court case collapsed in October 2013. At that point, if not before, he knew that his long-running fight about Sidewinder was over, and that he had suffered a defeat. If his lawyers were to blame for the loss, he knew everything that he needed to know to point fingers at them.
Comment: the court’s discussion of the statute of limitations issue is thoughtful and persuasive. If you suspect malpractice, you have two years from the final judgment to file suit.
Ed Clinton, Jr.