A Cook County judge was wrong to dismiss a $496,000 legal
malpractice case a commodity futures brokerage had lodged against its
ex-lawyer, simply because its initial attempt to serve the lawyer with a
summons failed, a state appeals court has ruled.
In an unpublished order issued Jan. 9, a three-justice panel
of the Illinois First District Appellate Court overturned the ruling of Cook
County Circuit Judge Sanjay Tailor.
Justice Maureen Connors wrote the opinion; Justices Sheldon
A. Harris and John B. Simon concurred. The order was issued under Supreme Court
Rule 23, which restricts its use as precedent, except under limited
circumstances permitted by the Supreme Court rule.
The root issue is a Jan. 8, 2015, malpractice claim commodities
futures brokerage Ironbeam, Inc., brought against attorney Howard J. Stein,
saying his failures as a lawyer caused it to be liable for $496,696 in
compensatory damages. Stein moved to dismiss the case, saying Ironbeam
displayed a lack of diligence in serving him notification of its lawsuit. Tailor
granted that motion with prejudice and denied Ironbeam’s motion to reconsider. Ironbeam
appealed that decision, arguing Tailor abused discretion in dismissing with
Ironbeam’s complaint against Stein draws from legal advice
he allegedly provided in January 2012, regarding the immediate termination of the
contracts of two introducing brokers, rather than providing 30 days’ notice as
stipulated in their contracts. The brokers, identified as Expo Futures and
Options and Sonic Futures and Options, filed arbitration claims with the
National Futures Association. Arbitrators ordered Ironbeam to pay $200,356 to Expo and $296,340 to Sonic. An agreement with the brokers’ lawyers
reduced the combined total to $450,565.
Ironbeam alleged Stein had advised the firm to request
introducing brokers provide a security deposit, and that failure to do so would
entitle Ironbeam to terminate the agreement without the 30 days’ notice.
Stein’s motion to dismiss, filed July 14, 2015, argued that
since Ironbeam’s claim related to provision of legal services, it was barred by
a two-year statue of limitations. Stein also argued he had not been served with
process until May 21, 2015, despite a litany of reasons process servers should
have been able to reach him. Ironbeam’s appeal contended it did not lack
diligence in its attempt to serve papers.
The justices noted Ironbeam’s original summons were returned
Jan. 13, 2015, after being sent to an incorrect address, but the immediate
attempt to serve papers was satisfied. Further, they wrote the delay in service
of summons would seem to have no adverse effect on Stein’s defense.
“There is no dispute that Ironbeam sent the original summons
to defendant's former address at the same time the complaint was filed,” Connors
wrote. “While there was a subsequent delay in filing the alias summons, there
is simply no indication that such delay was due to anything besides
inadvertence on the part of Ironbeam.”
In his argument, Stein relied on the 2014 Illinois Appellate
decision in Wilder Chiropractic Inc. v.
State Farm Fire and Casualty Co., but Connors wrote that case involved allegations
of intentional delays in serving summons to keep State Farm ignorant of ongoing
class action proceedings in Wisconsin. In Stein’s case, the justices said, “there
was no suggestion that Ironbeam purposefully delayed service in order to
circumvent the statute of limitations, or for any other purpose. It offered a
justification as well — a mistake of address, combined with a substitution of
counsel — for its delay.
“We simply can find no reason upon which to base a finding
that the delay served to deny defendant a fair opportunity to investigate the
circumstances upon which liability against him was predicated while the facts
Tailor’s decision was reversed and the case is remanded for
Cook County court records indicate Ironbeam is represented
by attorney Robert Dlugajczyk, of Mt. Prospect.
Stein was defended by the firm of Hinshaw & Culbertson,