By Samson Habte
Feb. 25 — Illinois's six-year limit on filing suit against attorneys for damages “arising out of … the performance of professional services” applies to all claims, even those filed by a nonclient, asserted against a lawyer based on his representation of a client, a divided Illinois Supreme Court held Feb. 21 (Evanston Ins. Co. v. Riseborough,Ill., No. 114271, 2/21/14).
The decision reverses an appellate court's determination that the statute of repose—Illinois Code of Civil Procedure Section 13-214.3(c), which establishes a six-year window for bringing claims against lawyers that are connected to their professional services—“did not apply to an action brought by a nonclient of the [lawyer] for a cause of action other than legal malpractice.”
Writing for a 5-2 majority, Justice Anne Marie Burke said that conclusion “is contrary to the plain language” of the statute. “There is nothing in section 13-214.3 that requires the plaintiff to be a client of the attorney who rendered the professional services,” she wrote.
“[I]t is the nature of the act or omission, rather than the identity of the plaintiff, that determines whether the statute of repose applies to a claim brought against an attorney.”Justice Anne Marie Burke
The two dissenting justices said the appellate court got it right.
The defendants in the present action, attorney George Riseborough and his law firm, Jacobsen & Riseborough, represented Kiferbaum Construction Corp. in a personal injury suit filed by an injured worker for a subcontractor.
Kiferbaum's primary insurer, Statewide Insurance Co., disclaimed coverage. Three excess liability carriers—including Evanston Insurance Co., the plaintiff here—then entered into a “Fund and Fight Agreement” in 2000 whereby each agreed to contribute at least $1 million to fund a settlement while reserving the right to litigate coverage issues among themselves.
Statewide did not contribute any funds but did sign the Fund and Fight Agreement; Riseborough signed the agreement as the “duly authorized agent and representative” of Kiferbaum. The agreement stipulated that Statewide and Kiferbaum would reimburse the contributing excess insurers if Statewide's disclaimer of coverage was found invalid.
Evanston then sued Kiferbaum and Statewide in an attempt to recoup its $1 million. Kiferbaum asserted as a defense that it was not bound by the Fund and Fight Agreement because it never authorized Riseborough to sign the agreement on Kiferbaum's behalf.
Evanston responded by suing Riseborough in 2005 for breach of implied warranty of authority, fraudulent misrepresentation and negligent misrepresentation. Those claims, however, were dismissed as premature because the coverage litigation was still pending and Evanston had not yet established its entitlement to reimbursement from Kiferbaum.
The coverage litigation was resolved in Kiferbaum's favor in 2009, with a summary judgment finding that Riseborough did in fact sign the Fund and Fight Agreement without authorization. Evanston then refiled its breach of implied warranty and misrepresentation claims against Riseborough and his firm.
The defendants moved to dismiss the action, arguing that Evanston's claims were time-barred under Section 13-214.3. That provision 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 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.
(c) An action described in subsection (b) may not be commenced in any event more than 6 years after the date on which the act or omission occurred.
A trial court found that the statute governed Evanston's claims, and that the lawsuit against Riseborough thus had to be dismissed as untimely.
An appellate panel disagreed, holding that Section 13-214.3 only applies to claims filed by attorneys' clients. Accordingly, it revived the lawsuit, finding that because Riseborough never represented Evanston, the insurer's claims were not governed by the limitations periods in Section 13-214.3 and thus not time-barred.
“We hold that section 13-214.3(b) is unambiguous,” the appellate panel declared. The term “professional services,” it said, “contemplates an attorney-client relationship,” and the statute is thus “not applicable to a suit brought by a non-client against an attorney.”
Although the supreme court agreed that Section 12-214.3 is “unambiguous,” it reversed the appellate panel.
“The appellate court's conclusion that section 13-214.3 applies only to a claim asserted by a client of the attorney is contrary to the plain language expressed in the statute,” Burke wrote. “There is nothing in section 13-214.3 that requires the plaintiff to be a client of the attorney who rendered the professional services.”
“The statute does not refer to a ‘client' nor does it place any restrictions on who may bring an action against an attorney,” Burke said. “The statute simply provides that an action for damages against an attorney ‘arising out of an act or omission in the performance of professional services' is subject to the six-year repose period. Thus, under the express language of the statute, it is the nature of the act or omission, rather than the identity of the plaintiff, that determines whether the statute of repose applies to a claim brought against an attorney.”
Burke said the appeals court cited the general rule that lawyers only owe duties of care to their clients as a “justification for reading into the statute an additional requirement that the plaintiff and defendant must have an attorney-client relationship.”
That rule was the basis for one decision relied on by the appellate panel: Ganci v. Blauvelt, 690 N.E.2d 649 (Ill. App. Ct. 1998). In that case, the son of a deceased woman was sued by other children who claimed that they were deprived a portion of the mother's estate. The defendant son filed a third-party complaint for contribution against his mother's attorney. The lawyer moved to dismiss the claim as untimely, but the court allowed the case to go forward after concluding that the statute of limitations applied only to claims filed by a client.
Burke acknowledged that several federal district courts “have followed Ganci in concluding that the statute of limitations in section 13-214.3(b) applies solely to claims of legal malpractice brought by a client of the attorney.” But the majority said it was more persuaded by a more recent decision, 800 S. Wells Commercial, LLC v. Marcus, 995 N.E.2d 472 (Ill. App. Ct. 2013). which said the statute of repose is not limited to claims brought by clients.
“To the extent that Ganci holds that section 13-214.3 is applicable only to actions brought by clients for legal malpractice, that case is overruled,” Burke wrote.
Justice Thomas L. Kilbride, in a dissent joined by Justice Mary Jane Theis, said the lower court got it right.
“I agree with the appellate court's reasoning that section 13-214.3 ‘contemplates an action where a client brings suit against his or her attorney arising out of an attorney-client relationship,' and is not applicable to bar a suit brought by a nonclient against an attorney in a case that does not allege legal malpractice,” Kilbride wrote.
“The majority reasons that this ‘narrow' reading overlooks the language in the statute that the repose period applies to claims ‘arising out of an act or omission in the performance of professional services,'” Kilbride said. However, he added: “I believe the majority opinion places too much emphasis on the ‘arising out of' language, while ignoring the fundamental ‘in the performance of professional services' language.”
That latter phrase, Kilbride contended, “clearly indicates legislative intent to limit the applicability of the statute of repose to legal malpractice claims by clients.”
Riseborough's attorney, Terry D. Weissman of Neal Gerber Eisenberg in Chicago, said in an interview with Bloomberg BNA that the dissenters simply misread the plain language of the statute.
He also remarked on what he sees as the incongruity of the dissenters' conclusion that the statute of repose should cut off a client's right to pursue a remedy against his lawyer but not cut off a nonclient's right to sue that lawyer.
It seems strange, Weissman said, that a person to whom a lawyer owes no fiduciary responsibility should have the ability to pursue a remedy that would be unavailable to another person to whom such a fiduciary duty is owed.
Joseph R. Marconi of Johnson & Bell, Chicago, argued for Evanston.
To contact the reporter on this story: Samson Habte in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Kirk Swanson at email@example.com
Copyright 2014, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).