First District Rules Improper Joinder of Legal Malpractice Case With Underlying Action Does Not Foreclose Defenses


In a Chicago legal malpractice lawsuit, the First District Court of Appeal has ruled that the defendant is not barred from certain defenses because the plaintiff improperly joined the malpractice claim with its underlying action. Preferred Personnel Services, Inc. v. Meltzer, Purtill & Stelle, LLP, No. 1-08-0389 (Ill. 1st. Jan 23, 2009).

Preferred is a staffing company with a claim against insurance broker Arthur J. Gallagher & Co. Gallagher told Preferred that it had secured malpractice insurance for the company and accepted payment for those services, but Preferred later discovered that it had no insurance. Preferred hired Illinois law firm Meltzer, Purtill & Stelle to sue Gallagher, but the firm never started its case. More than two years later, Preferred and its new lawyers sued Gallagher for breach of contract, negligence and fraud. In the same suit, it also sued Meltzer and one of its attorneys, Thomas Palmer (collectively “Meltzer”), for malpractice.

Gallagher moved to dismiss because the statute of limitations had passed in 2001, a motion that was granted by the trial court and upheld by the appellate court. While that motion was pending, Meltzer moved to dismiss the claims against it, saying the malpractice claims were premature because the underlying claim was still viable until the appeals court had ruled. This motion was denied. After the appellate decision on the Gallagher dismissal, Preferred moved for partial summary judgment, asking the court to foreclose arguments by Meltzer that the statute had not run on the Gallagher claims. The trial court granted this motion, but also certified three questions for the First District Court of Appeal to answer:

  1. ”Did the Legal Malpractice Defendants in this action have standing to oppose the Company’s [Gallagher’s] Motion to Dismiss where the Legal Malpractice Defendants’ motion based on prematurity was pending?
  2. Are the Legal Malpractice Defendants in this action collaterally estopped from
    raising an issue that was decided in favor of the defendant Company where the Legal
    Malpractice Defendants’ motion based on prematurity was pending and notwithstanding
    facts which might have changed the outcome?
  3. Did the ruling on the statute of limitations when it was decided in favor of a
    separate defendant become the ‘law of the case’ as it relates to the claims against the
    Legal Malpractice Defendants and notwithstanding facts which might have changed the

The court started its analysis by noting that it would not address Meltzer’s request to reverse the summary judgment ruling against it. It then explained that this case presents an unusual situation: A legal malpractice claim joined with the claim that underlies it. Preferred raised multiple arguments for this approach, all of which the appeals court rejected. Preferred’s true reason for joining them, the court noted, was explicitly stated in the Gallagher appeal: “To foreclose Meltzer-Palmer from arguing that Preferred prematurely abandoned a viable claim against Gallagher.”
However, the court did not accept Meltzer’s argument that it lacks standing to be joine in the argument. Instead, the court said, the issue is prematurity, citing Weber v. St. Paul Fire & Marine Insurance Co., 251 Ill. App. 3d (1993). To win a legal malpractice claim, plaintiffs must show they have been damaged — which would include a dismissal of the case, the court said. Because there was no dismissal at the time Preferred filed its legal malpractice claim, the claim was not ripe. Thus, the court answered its first question in the negative: Meltzer had no standing to oppose Gallagher’s motion to dismiss, though it felt that ripeness was the real problem.

For similar reasons, it also answered the second question in the negative: Meltzer was not collaterally estopped from relitigating the statute of limitations in the Gallagher claim. Preferred argued that Meltzer should be estopped because it had failed to weigh in on Gallagher’s motion to dismiss or Preferred’s own appeal. The court had several reasons for finding this untrue: The firm had not previously litigated the question; Illinois courts generally do not favor offensive use of collateral estoppel; and most importantly, the doctrine cannot be used in Illinois unless it results in no unfairness to the defendant. Kessinger v. Grefco, Inc., 173 Ill. 2d (1996).

Finally, the court addressed the “law of the case” doctrine, which prohibits courts from relitigating issues that had already been decided in a related case. This doctrine is not binding on a trial court that’s considering different issues, different parties or different facts, the First noted. In this case, Meltzer was not a party to the Gallagher appeal, and the issue of alternative legal theories against Gallagher was not exhausted anyway, the judges wrote. Thus, it answered the third question in the negative as well and remanded the matter to the trial court.

Lubin Austermuehle is a business trial and litigation law firm based in Chicago and Oak Brook, Illinois. Our Illinois legal malpractice attorneys help wronged clients seeking to hold their former lawyers responsible for costly mistakes. We also handle Illinois legal malpractice litigation for attorney clients seeking to defend themselves from a malpractice claim. If you’re in this position and you would like to learn more, please contact our firm online for a confidential consultation.

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