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Lawsuit Concerning Provision In Employment Agreement Barred by Two-Year SOL

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.

On March 7, 2014, Rosenberger sued the bank for breach of contract. He ultimately lost that case.

On August 31, 2016, Rosenberger filed his lawsuit for malpractice.

The trial and appellate court held that the lawsuit was time-barred because Rosenberger was on notice when he sued his former employer (March 7, 2014) that therefore Rosenberger should have known of his cause of action on March 7, 2014, more than two years before he filed his legal malpractice case. As of March 7, 2014, “the plaintiff knew he was injured when the severance payment to which he believed he was entitled under the terms of the employment agreement was not paid. It is also evidence by the date he sued UCB, he suspected that his injury was wrongfully caused. Although his immediate suspicion may have been that UCB was the party in the wrong for not making the severance payment that he believed eh was owed under the terms of his employment agreement, the holdings of Nelson, Janousek, and Carlson make clear that he was charged by this time with a duty of inquiry into any other potentially wrongful causes of hi injury, including whether the defendants had negligently failed to obtain advance regulatory approval for a severance payment or to ensure his employment agreement’s terms actually provided for him to receive a severance payment if he was terminated without cause.”

Comment: the opinion is well-written and thoughtful and is consistent with prior Illinois statute of limitations cases. The problem in Illinois is that once you decide to sue one party for breach of contract, that is your clue that you should also investigate the actions of your lawyer.

If you have any questions about a legal malpractice issue, do not hesitate to contact us at (312) 357-1515.

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