Indiana Court of Appeals Reinstates Missed Statute of Limitations Legal Malpractice Claim

One reason legal malpractice cases are difficult to prosecute is due to having to prove the underlying case on top of the attorney’s negligence.  Defendants commonly argue that despite their negligence, they did not cause the plaintiff any injury because the plaintiff would not have prevailed in their underlying case anyway.  Essentially attacking the third element of professional negligence actions – proximate cause.  This type of defense strategy was employed in Roumbos v. Vazanellis. 2017 Ind. App. LEXIS 83 (Ind. App. Ct. 2017).

There, the plaintiff in 2011 was visiting her husband at a hospital and tripped over wires that ran flush along the floor, which resulted in a severe injury.  She hired defendants to file a negligence claim against the hospital; but, they failed to file the claim within the applicable statute of limitations period.  Afterwards, the plaintiff filed a legal malpractice action against the Defendants due to their failure to file within the required period of time.

Defendants moved for summary judgment in 2016 based upon the supposed inability to win the underlying case.  During her deposition, the plaintiff acknowledged that she knew of the wires existence and consciously avoided them because she knew if she stepped on them there was the possibility that she could have fallen.  Additionally, she testified that the day that she fell, she had not looked down at where the wires were located and, if she had done so, she probably would have seen the wires and avoided them.  Based on these statements, the trial court granted summary judgment reasoning that the plaintiff was aware of the dangerous condition. 

But, the Indiana Court of Appeals reversed this decision because the trial court did not consider the entirety of Section 343 Restatement (Second) of Torts when reaching its decision.  Rather, qualifying circumstances exist under Section 343(a)(1) where a landowner may be liable for an invitee’s injury despite their knowledge or the obviousness of a dangerous condition. In such cases, the landowner is not relieved of the duty of reasonable care that it owes to the invitee for their protection.  The Court relied upon an illustration in the Restatement to reach its conclusion.  In the illustration, an invitee was aware of an open and obvious condition but forgets about and it and is injured.  Despite being aware of the condition, under this illustration the landlord was nevertheless still liable because the it could reasonably anticipate the event.  Consequently, the Indiana Court of Appeals reversed and remanded for further proceedings.

Alex Passo and the Patterson Law Firm, LLC handle legal malpractice actions throughout Illinois and Indiana.  Alex can be reached at (312) 750-1820 or apasso@pattersonlawfirm.com.

Alexander I. Passo Named An Illinois Super Lawyer Rising Star

CHICAGO – January 2017– Patterson Law Firm, a commercial litigation law firm, is pleased to announce that attorney Alexander I. Passo has been selected as an Illinois Super Lawyers Rising Star for 2017. 

Alexander I. Passo is a commercial litigation attorney who represents clients on a variety of matters with a concentration on internal business disputes, emergency business litigation, breaches of contract, fraud and professional negligence.  Mr. Passo has obtained several multi-million dollar settlements in several shareholder disputes which he has handled. Recently, Mr. Passo defeated all claims brought by a cigarette distributor and obtained a six-figure judgment entered on the behalf of his client for a copyright violation.  

Mr. Passo received a Bachelor of Arts from Purdue University, West Lafayette, IN, where he majored in history and law and society. He received his law degree from the Illinois Institute of Technology Chicago-Kent College of Law, where he graduated in the top 5% of his class. Mr. Passo served as editor-in-chief of a law journal and argued in a national moot court competition. He joined Patterson Law Firm in July 2013 and is licensed in Illinois and Indiana.

Super Lawyers is a preeminent rating service of outstanding lawyers covering more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. All peer-nominated candidates undergo the Super Lawyers selection process. This selection process includes independent research, peer nominations, peer evaluations and professional achievements. Selections are made on an annual, state-by-state basis. The objective is to create a credible, comprehensive and diverse listing of outstanding attorneys that can be used as a resource for attorneys and consumers searching for legal counsel. Rising Star nominees must be under 40 years of age or in practice for less than 10 years. No more than the top 2.5% of lawyers in each state are named to the annual Rising Stars list.

Fee-Shifting Provision Strictly Construed

Under the American Rule, attorney fees are the burden of each party in a lawsuit unless they’re granted under a statute or an agreement to a prevailing party in litigation.  For this reason fee-shifting provisions are ubiquitous in contracts and settlement agreements to frivolous drawn out litigation by a party that is clearly in the wrong.  Recently, the 4th District Appellate Court of Illinois strictly construed a fee-shifting provision in a real estate purchase agreement and upheld the trial court’s denial of attorney fees to a prevailing party despite the agreement containing the provision.  

In Cantrall v. Bergner, a roof defect was discovered during a home inspection prior to closing.  The parties inserted an addendum in the real estate purchase agreement that the sellers, if competent to do so themselves, or by qualified contractor, would repair the defective roof.  The sellers elected to repair the roof themselves.  Within two weeks of the purchaser moving into the house, it rained and the roof leaked.  The purchaser then brought suit against the sellers for breach of contract and requested fees under the fee-shifting provision which provided that “[a]ll costs, expenses[,] and reasonable attorney’s fees incurred by one party in enforcing said party’s rights under this [c]ontract may be recovered from the other party.”  The purchaser prevailed on their breach of contract claim but the trial court elected to decline awarding attorney’s fees under the provision.

The 4th District Appellate Court affirmed.  When analyzing the provision, the Court strictly construed its plain language.  In this instance, since the provision stated that the Court “may” award attorney’s fees to the prevailing party, the trial court had discretion on whether it would award the fees. 

Cantrall v. Bergner, 2016 IL App (4th) 150984 (4th Dist. 2016).

Alex Passo and Patterson Law Firm, LLC handle commercial litigation throughout Illinois and Indiana.  Alex can be reached at (312) 750-1820 or apasso@pattersonlawfirm.com.

Court of Appeals of Indiana Upholds Preliminary Injunction in Breach of Non-Compete Agreement Dispute

While courts are remiss in enforcing non-compete and non-solicitation agreements since they are restraints on trade, such covenants are nevertheless enforceable if the language and terms are narrowly crafted.  When business competitors poach valuable employees the damage to the business can be severe.  For this reason, it is now common for these covenants to be inserted in employee and executive agreements for high-ranking members of businesses and their sales force.

Recently, the Court of Appeals of Indiana upheld a preliminary injunction against former workers of an engineering firm who joined a competitor and engaged in competitive practices against their former firm.  In Hannum Wagle & Cline v. American Consulting, Inc., Marlin Knowles (“Knowles”), a former owner and employee of American Consulting, Inc. (“American”) resigned from his position as Vice-President of Sales Administration and joined a competitor, Hannum Wagle & Cline Engineering, Inc. (“HWC”) as its Vice-President of Operations. 

While at American, Knowles was responsible for overseeing American’s sales and he was actively involved in obtaining business for the company and developing client relationships.  He frequently attended business development activities and networked with clients at golf outings, sporting events, and industry conferences.  Knowles was originally hired as an employee; but, he received an offer of ownership during his tenure at American.  Knowles accepted American's offer and at that time executed an Employment, Non-Disclosure, and Non-Competition Agreement which restrained him from competing for a period of 2 years if he left the company.

At HWC, Knowles had no formal contact with his former clients and was not involved in the sales process.  However, he continued to attend industry related networking events, sports games, and golf outings. Knowles also contacted several of his former colleagues at American and assisted them in applying for positions at HWC.  American discovered this by accidently receiving an e-mail that disclosed this information by one of the departing employees.  Thereafter, American filed for a preliminary injunction to enforce the restrictive covenants against the former employees and Knowles.  The Court ultimately upheld that business development activities, like industry networking or golf outings, while not directly related to the business are nevertheless considered competitive acts.  Furthermore, these activities can result in a diversion of business opportunities for a company that can constitute as an irreparable harm to justify a preliminary injunction.

The Court also considered Knowles laches argument because American had knowledge of his competitive acts for 10 months before filing suit.  The Court acknowledged that laches may apply as an affirmative defense in these circumstances if there is an undue delay in bringing a suit.  However, it found that the trial court did err in applying it in this instance.

Hannum, Wagle, & Cline Engineering, Inc. v. Am. Consulting, Inc., 2016 Ind. App. LEXIS 425 (Ind. App. 2016).

Alex Passo and Patterson Law Firm, LLC handle commercial litigation, including enforcing and defending claims related to restrictive covenants, throughout Illinois and Indiana.  Alex can be reached at (312) 750-1820 or apasso@pattersonlawfirm.com.

First District Appellate Court of Illinois Tosses $1.5 Million Legal Malpractice Action

In a recent decision, the First District Appellate Court of Illinois rejected a legal malpractice action brought against an estate’s former attorneys.  In the underlying case, the estate’s attorneys brought a wrongful death action on the behalf of the estate of Willie Taylor.  Taylor had been unloading his truck when another truck backed into him causing his death.

During the wrongful death trial a pharmacologist opined that at the time of Taylor’s death he had between 10 to 20 times the amount of morphine that would be in a patient experiencing moderate pain.   Defendants argued that Taylor was impaired during the accident and therefore was also partly to blame for his own death.  The jury awarded the estate $3 million in the underlying case; but it was cut in half due their finding that Taylor was also 50% at fault. The estate’s attorneys initially filed a notice of appeal but voluntarily withdrew it in order to keep the $1.5 million judgment intact.

The plaintiffs alleged that this withdrawal was legal malpractice because it would have won the remaining $1.5 million by way of a successful appeal.  From their perspective, the plaintiffs believed that the pharmacologist’s testimony should have been barred as more prejudicial then probative and, that the jury’s finding that Taylor was partly to blame was against the manifest weight of evidence.

Ultimately the court rejected the plaintiffs’ arguments and ruled that they failed to establish proximate cause.  It held that the trial court’s “decision to admit or not admit expert testimony of impairment based solely upon the presence of narcotics in an individual’s blood should be informed by the level of narcotics in his blood.”  Since Taylor had a high-level of morphine in him at the time of his death, the jury should be allowed to consider whether it played a role in his death.  Therefore, because the pharmacologist’s statements were properly admitted, the panel also rejected the plaintiff’s claim that the jury’s finding that Taylor was also to blame for his death was against the manifest weight of evidence.

Kia Rashiki Logan, et al. v. U.S. Bank, et al., 2016 IL App (1st) 152549

Alex Passo and Patterson Law Firm, LLC handle legal malpractice actions and commercial litigation throughout Illinois and Indiana.  Alex can be reached at (312) 750-1820 or apasso@pattersonlawfirm.com.

Non-Compete Unenforceable against Amusement Park Performer Due to Lack of Adequate Consideration

In Hineline v. Weston, the Illinois First District Appellate Court provides a good analysis of the requirement of adequate consideration for the enforcement of non-compete agreements.  2016 IL App (1st) 1142142 (1st Dist. 2016).  In 2013, Hineline was hired by an amusement park in Iowa as a “variety performer”. While under his contract  to perform with the amusement park Hineline wished to take 10 days off work.  Another performer, Weston, was selected to stand in for Hineline while he was off work for the 10 days.

An agreement was negotiated and entered into between the parties for this stand-in employment arrangement.  Pursuant to the agreement Hineline would continue to receive payments directly from the amusement park.   Instead of the amusement park paying Weston for his stand-in employment, Hineline agreed to pay Weston $1,750 for his work as his replacement.  The contract included a non-compete clause that stated Weston “agrees not to work for the venue for a period of 24 months after this contract.”  Weston executed the contract and performed his obligations as Hineline’s replacement.  Hineline thereafter paid Weston the agreed upon $1,750.

In 2014, Weston contracted with the amusement park to work as a “variety performer” which violated the 2 year non-compete clause in their agreement.  Hineline subsequently filed suit against Weston.  The trial court ultimately granted summary judgment in favor of Weston and, Hineline appealed.

The appellate court analyzed whether the trial court’s decision was in error and upheld the trial court’s determination.  It initially examined whether the non-compete was supported with adequate consideration.  In Illinois, in order for a restrictive covenant concerning employment to be enforceable specific consideration must be included in the contract.  Absent specific consideration, Illinois considers continued employment of two years to be “adequate consideration”.  Here, Weston was only employed for 10 days and there was no specific consideration articulated in the agreement.  On this ground alone, the non-compete was unenforceable.  The appellate court continued its analysis further however and determined that the restrictive covenant was not “reasonable” since Hineline had no protectable interest as well.

Kevin Hineline v. Brad Weston, 2016 IL App (1st) 1142142 (1st Dist. 2016).

Alex Passo and Patterson Law Firm, LLC handle commercial litigation and professional negligence cases throughout Illinois.  Alex can be reached at (312) 750-1820 or apasso@pattersonlawfirm.com.

Legal Malpractice Claim Equitably Tolled by Attorney's Representations

The Indiana Appellate Court reversed a trial court’s dismissal of a case on the grounds of statute of limitations by reasoning that the claim was equitably tolled.  In this case, Elaine Chenore v. Robert Plantz, et. al, Ms. Chenorepossessed a judgment against an individual.  In 2005, Ms. Chenore retained Plantz to seek the recovery of this judgment.  The individual later declared bankruptcy, which Plantz informed Ms. Chenore about, but nevertheless, never filed a claim on her behalf.  In 2012, Ms. Chenore learned that the individual’s bankruptcy was discharged and he had paid 100% of the claims filed.  However, Ms. Chenore never received anything from the individual because Plantz failed to file a claim on her behalf.

Ms. Chenore then filed a legal malpractice action against Plantz.  But, the trial court dismissed the claim on the basis that it was barred by Indiana’s legal malpractice statute of limitations, which is two years.  Ms. Chenore appealed this decision and the Indiana Appellate Court reversed the trial court’s decision by reasoning that based upon the complaint’s allegations, Plantz’s representations to Ms. Chenore – stating he would file a claim on her behalf - could amount to an equitable tolling of the statute of limitations and, thus, dismissal was inappropriate.

Alex Passo and Patterson Law Firm, LLC handle commercial litigation and professional negligence cases throughout Illinois.  Alex can be reached at (312) 750-1820 or apasso@pattersonlawfirm.com

Breach of Employment Agreement Entitles Attorney Split of Fees for Case she Referred to Firm while still Employed.

Generally, in order for attorneys to split fees for a referral of a client under Illinois Rule of Professional Conduct 1.5(e), the split must be disclosed and approved by the client.  Bridget Clark v. Francisco Olavarria illustrates an exception to this rule. 

Here, Clark was employed by the Law Offices of Francisco Olavarria as an attorney.  In 2008, Clark and Francisco, individually and as an officer of the firm, entered into an employment agreement where Clark would receive one-third of the firm’s fees received from any personal injury or medical malpractice case that Clark brought into the firm.

Clark later brought in Patricia Burkowski for representation of a personal injury matter.  The case was settled for $325,00.  But, the settlement was continued for the approval of the bankruptcy court and to resolve outstanding liens.  While the settlement was pending, Clark informed Francisco that she was leaving the firm.

Thereafter, the bankruptcy court approved the settlement and the law firm received $90,333 for its fee.  Clark asked for her one-third but Francisco refused to provide her share.  She then filed a breach of contract suit.

Francisco argued that 1.5(e) prohibited Clark from sharing the fee because there was no written agreement establishing Burkowski’s assent to Clark splitting the fee.  Clark then argued that Rule 1.5(e) was inapplicable in this instance the rule only applied to “a division of fees between lawyers who are not in the same firm” at the time of the agreement.  Ultimately the First District agreed with Clark. 

Alex Passo and Patterson Law Firm, LLC handle commercial litigation and professional negligence cases throughout Illinois.  Alex can be reached at (312) 750-1820 or apasso@pattersonlawfirm.com

Insurance Company that paid one million dollar life insurance policy to wrong party found to be non-liable.

The Seventh Circuit Court of Appeals upheld a finding of summary judgment by Judge Lozano of the Northern District of Indiana in a case where the United of Omaha Life Insurance Company paid a non-beneficiary of a life insurance policy.  In this case, Troyer Products purchased a key-man life insurance policy for its President, Ron Clark, with the intended beneficiary named as Dave Buck, its COO.  The policy was purchased with the intent to enable Clark to use the proceeds of the policy to purchase Clark’s shares and come to control the company.  Thereafter, the insurance policy was amended and the beneficiary was changed to reflect that Troyer would receive the insurance proceeds.

In 2005, Clark retired from Troyer and sold a controlling interest of his shares of the company to Dan Holtz, who became Troyer’s new President.  Buck remained COO.  As part of the purchase, Holtz received a copy of the amended keyman policy that indicated Troyer was the beneficiary.  Clark died in 2011.  Despite the amendment to the policy, Buck received the insurance proceeds.  He subsequently tried to purchase Holtz shares, but was rejected and ousted from Troyer by its board.

Troyer then filed an action against United claiming that it breached its contract by paying the wrong beneficiary.  Omaha conceded that it made a mistake in paying the wrong party; however, argued that Troyer knew all along that it was the beneficiary and allowed the wrong party to be paid.  Thereby waiving its claim.  Holtz and Troyer both insisted that they had no reason to believe that Troyer was in fact the beneficiary and instead relied upon United Omaha.

Through discovery United Omaha revealed that Troyer in fact knew all along that it was the beneficiary.  Both Holtz and Troyer both possessed a copy of the amended insurance policy in their records.  Moreover, during a Troyer board meeting prior to the policy payout, Buck repeatedly told Holtz that Troyer was the policy’s beneficiary.  The court found that this conclusively refuted Troyer’s argument that it had no knowledge of the intended beneficiary and, therefore, granted summary judgment in favor of United Omaha.

Samaron Corp. d/b/a/ Troyer Products v. United of Omaha Life Insurance Co., (7th Cir. 2016)

New Federal Trade Secrets Act provides civil remedy to misappropriation.

A significant development in federal and intellectual property law recently occurred due to the enactment of the Defend Trade Secrets Act (“DTSA”).  Prior to the DTSA, trade secrets owners were required to rely upon a complex patchwork of state law to bring a claim of misappropriation.  Now, with the DTSA, trade secrets owners have been provided a powerful tool to bring a claim of trade secret misappropriation by way of federal law in federal district courts.  Through the DTSA, trade secrets owners may request an immediate ex parte temporary restraining order for seizure of misappropriated trade secrets, injunctive relief, and, the court has the discretion to award exemplary damages including treble damages and attorneys’ fees.  Conversely, if the court finds that a claim was brought under the DTSA in bad-faith, the court may award reasonable attorneys’ fees to a prevailing defendant in the litigation.