Opinion
No. 1-20-0520
03-12-2021
NICHOLAS CUDA, ANTHONY CUDA and XPH DEVELOPMENT COMPANY, Plaintiffs-Appellants, v. JEFFREY H. BUNN and LATIMER LE VAY FYOCK LLC, Defendants-Appellees.
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).
Appeal from the Circuit Court of Cook County
No. 18 L 11044
Honorable Thomas R. Mulroy, Judge, presiding.
PRESIDING JUSTICE DELORT delivered the judgment of the court.
Justices Hoffman and Rochford concurred in the judgment.
ORDER
¶ 1 Held: We affirm the circuit court's dismissal of plaintiffs' amended complaint for legal malpractice. Plaintiffs' claims were barred by the statute of limitations and were not subject to the extended limitations period for fraudulent concealment.
¶ 2 BACKGROUND
¶ 3 After a commercial real estate venture fell apart, plaintiffs Nicholas and Anthony Cuda and their wholly owned company XPH Development Company (collectively the Cudas) engaged in a protracted legal battle with their business partners, Carl and Nicolas LaPonte (the LaPontes).
The ultimate result of that litigation was a substantial money judgment in the LaPontes' favor, as well as a smaller money judgment in the Cudas' favor. Thereafter, the Cudas filed this lawsuit against their former attorney Jeffrey Bunn and his former law firm Latimer Le Vey Frock LLC (Latimer).
¶ 4 To understand the Cudas' allegations in this case, it is necessary to detail the progression of their conflict with the LaPontes. A more complete description of that litigation can be found in this court's disposition of the cross-appeals from those cases. XPH Development Co., Inc. v. LaPonte, 2016 IL App (1st) 142983-U.
¶ 5 As part of their business venture, the Cudas and LaPontes took out a loan secured by the personal guaranties of each partner. In 2005, while represented by Bunn, the Cudas purchased the loan, declared a default, and sued the LaPontes to enforce their guaranties in case 2005-L-5406 (the 2005 case). The LaPontes filed counterclaims, alleging various breaches of the Cudas' fiduciary duties.
¶ 6 The circuit court later dismissed the counterclaims as a discovery sanction and granted summary judgment to the Cudas on their claims. On the Cudas' behalf, Bunn filed a motion for a Supreme Court Rule 304(a) finding as to the summary judgment orders. See Ill. S. Ct. R. 304(a) (eff. Mar. 8, 2016) (allowing, under specific conditions, for "either enforcement or appeal or both" of "final judgment[s] as to one or more but fewer than all *** claims"). The motion did not, however, request such a finding as to the dismissal of the LaPontes' counterclaims. The court entered the requested order and the LaPontes appealed the entry of summary judgment, but not the dismissal of their counterclaim. This court dismissed that appeal for want of prosecution. XPH Development Co. v. LaPonte, No. 09-1716 (Ill. App. Ct. August 12, 2009).
¶ 7 After the circuit court entered summary judgment, but before the LaPontes filed their appeal, the LaPontes sued the Cudas in case 2009-CH-20154 (the 2009 case). The claims in the 2009 case reiterated those raised in the LaPontes' counterclaims in the 2005 case. Bunn never argued to the circuit court that the dismissal of the 2005 counterclaims or the subsequent appeal precluded the LaPontes' claims in the 2009 case.
¶ 8 After the dismissal of the LaPontes' appeal, the circuit court consolidated the 2005 and 2009 cases. Sometime thereafter, Bunn joined the Latimer firm. The consolidated cases proceeded to a bench trial, with Bunn still as the Cudas' counsel. The court found that the Cudas had breached their fiduciary duties to the LaPontes and, on April 10, 2014, entered a sizable money judgment against the Cudas for compensatory and punitive damages.
¶ 9 The parties cross-appealed, with the Cudas challenging the trial judgment against them and the LaPontes challenging the summary judgment orders from the 2005 case. On July 14, 2016—by which time the Cudas were represented by new counsel—this court entered an order directing the parties to submit supplemental briefing on the issue of this court's jurisdiction to review the rulings from the 2005 case in light of the LaPontes' earlier dismissed appeal.
¶ 10 On October 11, 2016, this court entered its ruling on the cross-appeals. This court stated that, "XPH could have, but did not, incorporate the dismissal of the counterclaims into its request for a Rule 304(a) order." XPH Development Co., 2016 IL App (1st) 142983-U, ¶ 18. That omission meant that the dismissal of the 2005 counterclaims did not become "a definitive final judgment". Id. ¶ 20. Without a "definitive final judgment" in the 2005 case, the LaPontes' breach of fiduciary duty claims properly proceeded to trial after the LaPontes filed their 2009 case and the cases were consolidated. Id. ¶¶ 19-20. Moreover, this court pointed out that the Cudas, who were represented by Bunn throughout the circuit court proceedings, "let the 2009 case go all the
way to trial without arguing that the 2005 case might have some preclusive or jurisdictional effect on the LaPontes' claims." Id. ¶ 20. This court affirmed the judgments against the Cudas and dismissed the LaPontes' cross-appeal for lack of jurisdiction. Id. ¶ 30.
¶ 11 On October 11, 2018, exactly two years after the entry of this court's ruling on the final appeal, the Cudas filed this case. In count I of the operative complaint, the Cudas alleged that Bunn's representation was negligent in numerous ways. They alleged that Bunn provided improper legal advice as to their business venture which led them to act in ways that were ultimately determined to be breaches of their fiduciary duties and resulted in the forfeiture of fees the business venture paid to Nicholas Cuda. They also alleged, inter alia, that Bunn negligently failed to request a substitution of judge after observing the judge's "hostility towards" the Cudas, failed to retain qualified expert witnesses, failed to argue that the 2005 case had preclusive effect in the 2009 case, failed to object to consolidation of the 2005 and 2009 cases, and failed to include the dismissal of the LaPontes' 2005 counterclaims in the request for a 304(a) order.
¶ 12 Count II alleged that Latimer failed to properly supervise Bunn and repeated several of Bunn's alleged failures. Count III alleged that Bunn and Latimer fraudulently concealed their negligence by failing to disclose the failures alleged in count I. Count IV alleged that Bunn and Latimer committed constructive fraud by concealing certain of the failures alleged in count I.
¶ 13 Bunn and Latimer, represented by separate counsel, each filed a motion to dismiss the complaint under sections 2-615 and 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615, 2-619 (West 2018)). After hearing argument on the motions, the circuit court granted the motions and dismissed the entire complaint. The court found that the all of the legal malpractice claims were barred by the relevant statute of limitations, that certain malpractice allegations were
also barred by the statute of repose, that the fraudulent concealment count did not state a claim upon which relief could be granted, and that the constructive fraud claim was duplicative of the legal malpractice claim. This appeal follows.
¶ 14 ANALYSIS
¶ 15 The Cudas argue that the circuit court erred in determining that their legal malpractice claims were time-barred. They contend that, at a minimum, the date on which the limitations period expired is a question of fact that could not be determined on a motion to dismiss. Moreover, they argue that the circuit court failed to accept certain allegations as true for the purpose of analyzing the motions.
¶ 16 The Code of Civil Procedure allows a party to combine a section 2-619 motion to dismiss with a section 2-615 motion to dismiss. 735 ILCS 5/2-619.1 (West 2018). A section 2-615 motion to dismiss "tests the legal sufficiency of the complaint" while a section 2-619 motion "admits the legal sufficiency of the complaint, but asserts an affirmative matter outside the complaint that defeats the cause of action." Kean v. Wal-Mart Stores, Inc., 235 Ill. 2d 351, 361 (2009). Section 2-619(a)(5) specifically allows a cause of action to be dismissed if it was not commenced within the time limited by law. 735 ILCS 5/2-619(a)(5) (West 2018); Fireman's Fund Insurance Co. v. Rockford Heating & Air Conditioning, Inc., 2014 IL App (2d) 130566, ¶ 9. Dismissal under either section should not be granted unless it is clearly apparent that no set of facts can be proved that would entitle the plaintiff to recovery. Marshall v. Burger King Corp., 222 Ill. 2d 422, 429 (2006) (section 2-615); Snyder v. Heidelberger, 2011 IL 111052, ¶ 8 (section 2-619).
¶ 17 When ruling on a section 2-615 motion or a section 2-619 motion, "a court must accept as true all well-pleaded facts, as well as any reasonable inferences that may arise from them."
Patrick Engineering, Inc. v. City of Naperville, 2012 IL 113148, ¶ 31. Mere conclusions unsupported by specific facts, however, are not accepted as true. Id. We review dismissal under either section 2-615 or 2-619 under a de novo standard. Id.
¶ 18 Although the record on appeal does not include a transcript of the hearing on the motions to dismiss, Latimer has attached a transcript to its brief. However, the record on appeal cannot be supplemented by simply attaching documents to the appendix of a brief. In re Parentage of Melton, 321 Ill. App. 3d 823, 826 (2001). We therefore disregard the attached transcript and review only the record properly before us. However, because our review is de novo, "we do not need the transcript[] of the hearing below to review the propriety of the circuit court's dismissal" of the complaint. Watkins v. Office of State Appellate Defender, 2012 IL App (1st) 111756, ¶ 20.
¶ 19 A. Statute of Limitations
¶ 20 In relevant part, section 13-214.3 of the Code provides that:
"An action for damages based on tort, contract, or otherwise [ ] against an attorney arising out of an act or omission in the performance of professional services *** 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." 735 ILCS 5/13-214.3 (West 2018).
¶ 21 As such, the statute of limitations "incorporates the 'discovery rule,' which serves to toll the limitations period to the time when the plaintiff knows or reasonably should know of his or her injury." Snyder, 2011 IL 111052, ¶ 10. The effect of the discovery rule is to "postpone the start of the period of limitations until the injured party knows or reasonably should know of the injury and knows or reasonably should know that the injury was wrongfully caused." Khan v. Deutsche Bank AG, 2012 IL 112219, ¶ 20. The limitations period begins "when an injured party
'becomes possessed of sufficient information concerning his injury and its cause to put a reasonable person on inquiry to determine whether actionable conduct is involved.' " Castello v. Kalis, 352 Ill. App. 3d 736, 744 (2004) (quoting Knox College v. Celotex Corp., 88 Ill. 2d 407, 416 (1981)). "In other words, '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.' " Steinmetz v. Wolgamot, 2013 IL App (1st) 121375, ¶ 30 (quoting Nolan v. Johns-Manville Asbestos, 85 Ill. 2d 161, 171 (1981)).
¶ 22 Often, a cause of action for legal malpractice accrues when a court enters an adverse judgment against plaintiff. See, e.g., Hermitage Corp. v. Contractors Adjustment Co., 166 Ill. 2d 72, 87 (finding that the statute of limitations began to run when the trial court entered an order reducing a mechanics lien); Zupan v. Berman, 142 Ill. App. 3d 396, 399 (1986) ("the adverse result at the time of the end of the trial is the operative factor of the beginning of the running of the statute of limitations"). However, an adverse ruling alone may not be sufficient to trigger the statute of limitations. Racquet v. Grant, 318 Ill. App. 3d 831, 837 (2000) ("a bad result itself does not give fair warning that the attorney is to blame"). Cases involving such questions "turn on their particular facts." Id.
¶ 23 The Cudas argue that the circuit court erred by not accepting as true their allegation that they were not on notice that the defendants' negligence caused their injury until this court entered its order on October 11, 2016. They argue that, at a minimum, when they were put on notice is a question of fact that precluded summary dismissal. We disagree.
¶ 24 Although the Cudas alleged that they did not discover that their injury was wrongfully caused until October 11, 2016, that is merely a legal conclusion which the circuit court did not
have to accept as true. See Patrick Engineering, 2012 IL 113148, ¶ 31. Rather, the circuit court was entitled to rule that the Cudas' claims were untimely as a matter of law because that was the only conclusion that could be drawn from the undisputed facts. See Palos Community Hospital v. Humana, Inc., 2020 IL App (1st) 190633, ¶ 56.
¶ 25 The uncontested facts in this case establish that the limitations period began to run on April 10, 2014. The Cudas' complaint specifically alleges that they witnessed several negligent acts or omissions by Bunn leading up to and during the trial. Among other things, the allegations include Bunn's allegedly negligent advice related to the Cudas' fiduciary obligations, his failure to seek a substitution of judge, and his failure to retain qualified expert witnesses. All of these alleged failures were known to the Cudas by the end of the trial. Consequently, when the circuit court entered its judgment against them, they knew that they were injured and had sufficient knowledge to suspect that the injury was wrongfully caused.
¶ 26 Moreover, the cause of action accrued on April 10, 2014 notwithstanding the Cudas' allegations that other negligent acts or omissions—such as failing to raise the preclusive or jurisdictional effects of the 2005 case—were not known to them at that time. See Carlson v. Fish, 2015 IL App (1st) 140526, ¶ 39 ("identification of one wrongful cause of [a plaintiff's] injuries initiates his limitations period as to all other causes").
¶ 27 Further, even if the discovery of Bunn's failure to argue the preclusive and jurisdictional effects of the 2005 case had been the triggering event for the limitations period, the undisputed facts show that the Cudas were on notice of that failure more than two years before they filed this suit. On July 14, 2016, this court ordered additional briefing on the unresolved jurisdictional issues regarding the dismissal of the 2005 counterclaims. Even if that order did not specifically explain what arguments Bunn had failed to make, it provided the Cudas with sufficient
information to put a reasonable person on inquiry to determine whether Bunn's conduct was actionable. Notably, the Cudas had hired new counsel by the time this court entered that order, so there is no way that Bunn or Latimore concealed that revelation from them.
¶ 28 The cause of action accrued on April 10, 2014, when the circuit court entered judgment against the Cudas. Therefore, the two-year limitations period expired in April 2016, more than two years before the Cudas filed this suit. The circuit court correctly held that the claims for legal malpractice were barred by the statute of limitations.
¶ 29 B. Statute of Repose
¶ 30 The Cudas also argue that the circuit court erred in finding that certain of their legal malpractice allegations were barred by the statute of repose. Because we have already held that the statute of limitations barred all of the legal malpractice claims, and because we may affirm on any ground appearing in the record (see Camper v. Burnside Construction Co., 2013 IL App (1st) 121589, ¶ 29), we do not reach this argument.
¶ 31 C. Fraudulent Concealment
¶ 32 Section 13-215 of the Code provides that:
"If a person liable to an action fraudulently conceals the cause of such action from the knowledge of the person entitled thereto, the action may be commenced at any time within 5 years after the person entitled to bring the same discovers that he or she has such cause of action, and not afterwards." 735 ILCS 5/13-215 (West 2018).
¶ 33 The Code's fraudulent concealment provision applies to claims for legal malpractice, tolling both the statute of limitations and the statute of repose. DeLuna v. Burciaga, 223 Ill. 2d 49, 73-74 (2006). "Generally, the concealment must consist of affirmative acts or representations that are calculated to lull or induce a claimant into delaying filing his claim or to
prevent a claimant from discovering his claim." (Emphasis added.) Barratt v. Goldberg, 296 Ill. App. 3d 252, 257 (1998). However, "mere silence on [a fiduciary's] part as to a cause of action, the facts giving rise to which it was his duty to disclose, amounts to a fraudulent concealment." (Internal quotation marks omitted.) DeLuna, 223 Ill. 2d at 76.
¶ 34 Relying on DeLuna, the Cudas allege that they sufficiently pleaded fraudulent concealment by alleging that their attorney-client relationship with the defendants created an affirmative duty for the defendants to disclose the facts underpinning the negligence claims. The Cudas reason that the defendants fraudulently concealed their professional negligence simply not disclosing that they had been negligent. This argument is unavailing.
¶ 35 "Illinois courts have consistently held that if the plaintiff discovers the fraudulent concealment and a reasonable time remains within the relevant limitations period, section 13-215 of the Code will not apply to lengthen the limitations period." Barratt, 296 Ill. App. 3d at 258. As discussed above, the Cudas' complaint alleges that they witnessed numerous negligent acts by Bunn leading up to and during the trial. Then, the circuit court entered a substantial judgment against them. Thus, the Cudas were injured and had sufficient information to suspect that the injury was wrongfully caused on April 10, 2014. At that point, the cat was out of the bag; the defendants' mere silence could not "conceal[] the cause of *** such action from the knowledge of" the Cudas. And because the Cudas did not plead any affirmative acts or representations made by the defendants after that date, there is no reason to apply the extended limitations period of section 13-215.
¶ 36 Further, DeLuna is easily distinguished from this case. The plaintiffs in DeLuna alleged that their attorney affirmatively misled them by telling them that their underlying medical malpractice case was "going very well," when it had actually been dismissed. Id. at 79-80. They
also alleged that the attorney failed to disclose material facts bearing on the procedural status of the case, delaying the plaintiffs' timely discovery of their injury. Id. at 80. By hiding from his clients that their case had been dismissed, the attorney in DeLuna concealed not only his own professional negligence, but the very fact that his clients had suffered an injury.
¶ 37 In this case, there is no allegation that the defendants delayed the discovery of the adverse ruling against them. The Cudas failed to plead any allegations that would, if proven, establish that the defendants "pursued a course of conduct intended to conceal the facts giving rise to their legal malpractice action." See Id. at 81. Indeed, all of the Cudas' allegations of concealment amount to reiterations of the underlying malpractice allegations. Such allegations are insufficient to bring the case within the ambit of section 13-215 because "the allegedly fraudulent statements or omissions that form the basis of the cause of action may not constitute the fraudulent concealment in the absence of a showing that they tend to conceal the cause of action." Barratt, 296 Ill. App. 3d at 257. Consequently, the circuit court did not err in finding that the Cudas failed to adequately plead fraudulent concealment.
¶ 38 D. Constructive Fraud
¶ 39 The Cudas brief contains no argument regarding the dismissal of count IV, alleging constructive fraud. Points that an appellant fails to raise in his opening brief are forfeited. Ill. S. Ct. R. 341(h)(7) (eff. Oct. 1, 2020). Consequently, we affirm the dismissal of count IV. See Atlas v. Union Pacific R.R. Co., 2019 IL App (1st) 181474, ¶¶ 37-39 (affirming summary judgment on a claim for common law negligence because the appellant raised no arguments related to that specific claim in his opening brief).
¶ 40 CONCLUSION
¶ 41 The circuit court did not err in dismissing the Cudas' complaint in its entirety. We affirm the judgment of the circuit court.
¶ 42 Affirmed.